Legislators Can Commit Property Rights Violations, Too

The Constitution’s Taking Clause provides that government cannot conscript property to its own purposes without compensating the rightful owner for the value of what is taken. The most direct application of this principle is in cases of eminent domain, where the government takes title to a piece of land for some public purpose—or sometimes a not-so-public purpose. But the takings principle applies to other impositions on property rights as well, such as regulations that render a previously expensive piece of property valueless. Courts recognize that in these cases there is likewise an infringement on property rights in the name of the public good, and that such a public good should come at the expense of the public as a whole, not some particularly unlucky land owner.

The Supreme Court has repeatedly recognized the potential for these abuses and, in a series of cases beginning with 1987’s Nollan v. California Coastal Commission, it has demanded that permit requirements and development exactions bear some relationship to the actual impacts of the project. If one wishes to build an apartment building, its reasonable enough to say one should contribute to the public expense that creates when the municipality needs to build a new road to serve it. Requiring a landowner to pay for an unrelated project many miles away for the privilege of making perfectly legal improvements to their own property should be out of bounds.

But lower courts friendlier to acts of state extortion believe they have found a loophole: Nollan and its progeny dealt with specific ad hoc permitting requirements by local planning agencies. Where the legislature imposes the exaction as part of a general ordinance, however, these courts claim Nollan doesn’t apply. What principle of aggregation renders an act that is unconstitutional when applied to a specific person constitutional when applied to the public generally?

Such was the fate of William Dabbs. Anne Arundel County, Maryland required him to pay an “impact fee” to build a house on a piece of property he owned. Ostensibly, this fee was to compensate for the costs of new development on “public schools, transportation, and public safety,” but a brief glace at the ordinance demonstrates that this pretext is illusory: rather than charging, say, per unit of new development, the fee is based on the size of the house. A family living in a 3,000-square-foot house does not, on average, use more public schooling or transportation than a family in a 2,000-square-foot house (if anything, arguably the opposite), but under the ordinance it is charged more. This therefore represents an attempt to raise general revenue on the backs of disfavored individuals—precisely the evil the Takings Clause is supposed to prevent.

Dabbs has filed a petition asking the Supreme Court to hear his case and affirm that takings performed by ordinance are no less offensive to the Constitution than takings performed ad hoc. Cato, joined by the Reason Foundation, has filed a brief encouraging the Court to take the case.

New development is often opposed by a coalition of vested interests, be they governments like Anne Arundel County who demand their cut or environmental activists who live in perpetual fear of paving paradise to put up a parking lot. Thankfully, the Constitution recognizes that property rights are central to the liberty of citizens and should not be enjoyed at the sufferance of ninnying NIMBYsim.

The Supreme Court should take up Dabbs v. Anne Arundel County and reaffirm that these protections cannot be circumvented by legislative gamesmanship.

There Is More Than One Way to “Spin” a Stat

I recently wrote about how ideology and confirmation bias has infiltrated research into the opioid overdose issue. I spoke about how researchers can “spin” their findings to comport with the prevailing narrative and improve the likelihood of getting published in peer-reviewed journals.

An example occurred yesterday, when the University of Michigan’s Institute for Healthcare Policy and Innovation announced, with the headline “Unwise opioids for wisdom teeth: Study shows link to long-term use in teens and young adults,” the publication of a research letter in JAMA that day by a team of its researchers.

The study of over 70,000 dental patients, ranging from 13 to 30 years in age, who had wisdom teeth extracted between 2009 and 2015 found, 

In all, 1.3 percent of 56,686 wisdom tooth patients who filled their opioid prescription between 2009 and 2015 went on to persistent opioid use, defined as two or more prescriptions filled in the next year written by any provider for any reason. That’s compared with 0.5 percent of the 14,256 wisdom tooth patients who didn’t fill a prescription.” 

Set aside the fact this study shows prolonged use is very low. Is there something inherently bad about refilling opioid prescriptions and staying on opioids longer than the average person if one is not addicted? Since we know that opioids have very few harmful effects on organs compared to alcohol, acetaminophen, or NSAIDs (with prolonged use), and since the addiction and misuse rate is somewhere around 1 percent, why are the authors so upset if some people stay on the drug longer than others. The lead author calls this a “long term ill effect.” Really?

Meanwhile, on the same day, another research letter was also published in JAMA by researchers at Brigham and Women’s Hospital in Boston that looked at 1.3 million patients who received 22 types of surgical procedures between the years 2004 and 2015. The study found a 30-day post-discharge overdose rate of 10.3 per 100,000 patients (0.01 percent), dropping to 3.2 overdoses per 100,000 patients (0.0032 percent) for those 61 to 90 days post-discharge. The authors found overdoses within 30 days post-discharge were very low in patients who were “opioid naïve”—2.8 per 100,000 patients (0.0028 percent)—as opposed to patients who were receiving opioids prior to surgery. In patients who were chronically receiving high-dose opioids prior to the operation (defined by the authors as greater than the equivalent of 100mg of morphine per day) that rate jumped to 142.5 per 100,000 patients (0.14 percent).

The authors stated in their concluding discussion:

This study demonstrated that opioid overdose after surgical discharge was rare. Patients were at risk of experiencing an overdose after leaving the hospital, especially in the first month. Furthermore, patients using high quantities of opioids preoperatively were at a heightened risk compared with those not receiving high-dose opioid therapy prior to the operation.”

The big takeaway from this study is that overdose rates in patients discharged on opioids postoperatively are extremely low—even in those who had been chronically receiving high-dose opioids preoperatively. But the authors of the study spent most of the time discussing the fact that overdoses can and do occur in patients discharged from surgery on opioids and occur more frequently in patients who had been on opioids preoperatively.

Give credit to the medical news service MedPage Today for providing dispassionate, no-spin coverage to both studies by covering them together in a story on August 7 entitled: “Post-Surgery Overdoses Are Rare—but higher odds of persistent use seen following some procedures.”

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No Jones Act Cost to Puerto Rico? I Have My Doubts

In a new op-ed I take issue Rep. Duncan Hunter (R-CA) for his unstinting support of maritime special interests and the Jones Act at the expense of average Americans. Particularly egregious is Hunter’s promotion of a recent report funded by a special interest group, the American Maritime Partnership, which makes the incredible claim that the Jones Act imposes no cost to consumers in Puerto Rico. Indeed, Hunter actually presided over a gathering of the House Subcommittee on Maritime Transportation meant to highlight its dubious findings.

While Hunter’s support for the AMP and the unseemly nexus between legislators and maritime special interests is the op-ed’s focus, the shortcomings of the AMP-funded report are worth exploring in greater detail.

From simply a theoretical perspective, the notion that the Jones Act would leave consumers in Puerto Rico unscathed is highly implausible. The Jones Act, which among other provisions prohibits foreign-flagged ships from transporting cargo between domestic ports and Puerto Rico, is a protectionist law. Keeping out competition is the entire point. It violates our understanding of economics to believe this is consequence-free for either costs or prices. Further note that competition among Jones Act carriers that provide service to Puerto Rico is sufficiently restrained that several of them were found guilty of price fixing.

Even if we were to believe that a perfectly competitive market exists in Puerto Rico despite the Jones Act’s restrictions, let us also remember that the law raises costs to those providing cargo transport by mandating the use of ships built in the United States. These ships are wildly more expensive than those constructed overseas, with a purchase price up to eight times higher. If consumers aren’t feeling the impact of these higher costs, then who is? Are we to believe that profit-maximizing companies that transport the cargo or the retailers who sell the goods in Puerto Rico happily absorb the costs of these expensive vessels?

If the theoretical underpinnings of the AMP’s claim are questionable, the methodology used to support it is doubly so. The finding that the Jones Act has no impact on consumers in Puerto Rico is in large part based on a price comparison, conducted via Walmart’s website, for 10 grocery items and three durable goods at the retailer’s locations in Jacksonville, Florida and San Juan, Puerto Rico. For these 13 items the price of each was found to be either the same or less in San Juan.

Walmart goods

The defects of this approach are numerous. For starters, no explanation is provided for how the basket of goods was selected. Walmart sells thousands of items—why were these chosen? This is significant as it isn’t difficult to find items for sale at both locations that tell a rather different story. A 48 oz container of Breyers ice cream, for example, is priced at $2.98 in Jacksonville but $8.12 in San Juan. Numerous other price discrepancies indicating a premium paid by consumers in San Juan are easily found.

Jacksonville

San Juan

Beyond questions over how the limited basket of goods was selected, one must also wonder why Walmart should be considered representative of Puerto Rico’s retail sector and the impact that the Jones Act has on the territory’s consumers. Walmart is an extraordinarily efficient firm famous for its ability to squeeze margins from suppliers, likely including those it depends on for transportation. Do other retailers in Puerto Rico enjoy Walmart’s cost structure, or share in any discounts on ocean transport it is able to negotiate? 

Furthermore, why should retail prices be regarded as a proxy for transportation costs or evidence of their burden? As Crowley Maritime, a member of AMP and the largest carrier that provides service to Puerto Rico states, “There are many factors affecting prices on the island – energy, taxes, trucking, warehousing, rent, market size and more.” Indeed. Unless all other costs are controlled for, the impact of transportation alone is unknowable.

One retailer. Thirteen items. No explanation for how the goods are selected. No controls to isolate the cost of transportation. And yet on this basis we are offered a rather sweeping conclusion.

A conclusion, it should be added, that is at odds with respected resources on cost of living differences in the United States. According to the Instituto de Estadísticas de Puerto Rico, grocery items in the territory are the 13th most expensive out of 297 locations in the United States. The group also shows food items, contra the AMP report, as 18.4 percent higher in Puerto Rico than in Jacksonville.

Other aspects of the report’s approach are similarly questionable. To bolster its case that the Jones Act does not impose higher costs on Puerto Rico the report offers up a chart (based, it appears, on confidential data from the carriers that is unverifiable) which shows revenue per container for ships traveling between the continental United States and other ports in the northern Caribbean:

Revenue per container

At first glance this appears to show that Puerto Ricans are getting a relative deal compared to a number of neighboring islands, but are they really? St. Croix, for example, has a smaller container port than San Juan, and likely operates with less efficiency due to its reduced scale. The fact that Puerto Rico has vastly greater trade volumes with the rest of the United States—nearly four times that of other Caribbean countries combined per a 2002 report—also likely unlocks efficiencies unavailable to other Caribbean ports.

To the extent higher revenue per container reflects the higher prices necessary to cover the higher costs of providing service on less efficient routes, this tells us nothing about the Jones Act’s impact or what freight rates between Puerto Rico and the continental United States might look like in a post-Jones Act environment. In short, it is not apparent that this is an apples-to-apples comparison or that such figures provide much in the way of relevant information.

The remainder of the report in large part consists of claims about the high level of service provided by Jones Act carriers to Puerto Rico. It cites, for example, that the use of “vessels and intermodal equipment that are uniquely designed to closely integrate the commonwealth with the advanced logistics systems of the mainland provides cargo owners with major economic and service advantages.”

But the alleged advantages and cost-effectiveness of the Jones Act carriers raises the question of why the law is then needed. If the Jones Act carriers already provide a high-quality service at a competitive price, then why should they fear a change to the status quo? If they are as competitive as they claim to be, why not open the market for sea transport with other parts of the United States to foreign competition?

The evident fear of such competition and employment of dubious analytical methods are instructive. Equally so is that pro-Jones Act politicians such as Duncan Hunter eagerly seize on this special interest-funded report despite its obvious flaws. It’s time to give the residents of Puerto Rico, and the rest of the United States, a break from this costly and outdated law.

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Transit Death Spiral Continues

Transit ridership has been dropping for four years and increased subsidies won’t fix the problem. Data released by the Federal Transit Administration yesterday show that nationwide ridership was 3.1 percent less in June 2018 than it had been in June 2017. Ridership fell for all major modes of transit, including commuter rail (-2.6%), heavy rail (-2.5%), light rail (-3.3%), and buses (-3.8%). 

June 2018 had one fewer work day than June 2017, which may account for part of the ridership decline. But ridership in the first six months of 2018 was 3.0 percent less than the same months of 2017, and again ridership declined for all major modes of transit.

As in previous months, I’ve posted an enhanced spreadsheet that has all of the raw monthly data from the FTA spreadsheet but includes annual totals from 2002 through 2018 in columns GZ through HP, modal totals in rows 2125 through 2131, transit agency totals in rows 2140 through 3139, and urban area totals for the nation’s 200 largest urban areas in rows 3141 through 3340. The same enhancements are included on the “VRM” or vehicle-revenue miles worksheet.

June 30 is the end of the fiscal year for many if not most transit agencies, so now we can compare transit’s 2018 fiscal year performance against 2017 (see columns HU to HW in the spreadsheet). Nationwide ridership in FY 2018 declined 2.7 percent from 2017 and of course it fell for hundreds of transit agencies.

Of the nation’s 50 largest urban areas, June ridership grew in eleven, January through June ridership grew in ten, and fiscal year ridership grew in just six. Seattle is one of the six, having grown by 1.4 percent, the others being Pittsburgh (0.2%), Providence (1.1%), Nashville (3.5%), Hartford (3.3%), and Raleigh (6.1%). Except Seattle, these urban areas have seen declines in other recent years so this increase is not a great victory and probably won’t be sustained for long in the future. 

As I’ve noted elsewhere, Seattle has enjoyed steady growth in transit ridership not because it built light rail but because it has increased downtown jobs from 216,000 in 2010 to 292,000 in 2017. Downtown jobs are the key to transit ridership because most transit agencies run hub-and-spoke systems focused on central city downtowns. But replicating Seattle’s downtown growth is impossible in most regions, as all but six American cities have far fewer downtown jobs; nor would most people agree to accept the costs Seattle is paying in terms of subsidies to new employers, traffic congestion, and high housing prices resulting from land-use restrictions that prevent jobs and housing from moving to the suburbs.

Fiscal year ridership declines in many urban areas were larger than the increases in the few regions where ridership grew. The worst were Charlotte (-15.1%), Cleveland (-11.7%), Miami (-10.3%), St. Louis (-8.2%), Memphis (-7.7%), Jacksonville (-7.0%), Baltimore (-6.6%), Richmond (-6.6%), Philadelphia (-6.5%), Cincinnati (-6.2%), Virginia Beach (-6.1%), Dallas-Ft. Worth (-5.9%), Phoenix (-5.6%), and Boston (-5.2%). This is in addition to significant declines in all of these urban areas between 2014 and 2017.

Officials at the Charlotte Area Transit System must be proud that the light-rail expansion they opened in March led to a 65 percent increase in June light-rail ridership over June 2017. Yet this was a hollow victory as the agency lost 36,000 more bus riders than it gained in rail riders.

Transit agencies get about a third of their operating funds from fare revenues, and the decline in ridership has forced many to reduce service. The vehicle-revenue miles page shows that nationwide transit service declined by 5.1 percent in June 2018 vs. 2017. While some people blame the ridership declines on the service reductions, at least one study says it is the other way around: service has declined because riders abandoned transit, forcing agencies to cut back on spending.

Transit ridership has declined in many urban areas despite increasing service. Among many others, Phoenix increased 2018 service by 11.0 percent yet lost 5.6 percent of its riders; San Jose increased service by 3.1 percent but lost 4.2 percent of its riders; Indianapolis increased service by 4.3 percent yet lost 3.9 percent of its riders; Austin increased service by 6.5 percent yet lost 1.1 percent of its riders.

It appears that ride hailing is the principal factor in ridership declines. A recent study estimates that ride hailing grew by 710 million trips in 2017. If just 36 percent of those trips were people who would otherwise would have taken transit, then ride hailing is responsible for all of the decline in 2017. Declining ridership leads to service reductions, which results in more ridership declines, producing a death spiral of revenue shortfalls followed by service reductions followed by more revenue shortfalls.

Some cities are supplementing transit revenues by taxing ride-hailing companies, which I’ve noted elsewhere is a little like taxing word processors to protect the typewriter industry or pocket calculators to protect the slide rule industry. At least one city is looking at taxing marijuana to subsidize transit.

It doesn’t really matter. The decline in transit ridership is beyond the control of transit agencies, and increasing subsidies to what is already the nation’s most-heavily-subsidized form of transportation won’t make much difference. The only question is when will appropriators realize that it is pointless to continue subsidizing a dying industry and start winding down those subsidies.

CAFE Standards

Last week the Trump administration announced its intent to freeze Corporate Average Fuel Economy standards (CAFE) at 2020 levels. Rules implemented in 2012 under the Obama administration would require a fleet average fuel economy of 54.5 miles per gallon (mpg) by 2025, but the new rule change would instead hold average fuel economy at about 37 mpg.

Predictably, the announcement created a flurry of criticism, with the New York Times editorial board characterizing the plan as reckless in the face of climate change. Much of this criticism misses a key point: CAFE has been repurposed to manage a problem for which it was not designed and is thus a very costly and imperfect remedy. 

Enacted after the 1973-74 oil shock, CAFE was a political solution to a political problem: soaring oil prices. The standards were premised on the belief that consumers would not pay more for cars that used less fuel even if the reduced fuel use more than paid for the extra initial cost. Instead, CAFE sought to force automakers to produce higher mileage cars and thereby reduce fuel use despite the supposed myopia of consumers. But subsequent economic research has shown that consumers were not myopic. Consumers’ willingness to pay for higher mileage capability approximately equals the expected future fuel cost savings without government intervention.

Even though the original rationale for CAFE has been undermined by the evidence, CAFE lives on with a new purpose: climate change. Since the 2007 Supreme Court decision in Massachusetts v. Environmental Protection Agency that the EPA has authority to regulate tailpipe greenhouse gas emissions, CAFE has become a tool for CO2 emissions reduction. But, as I have previously argued and my colleague Randal O’Toole recently discussed, CAFE is an inefficient and clumsy tool because it targets only one source of greenhouse gas emissions and it does so indirectly. Directly taxing carbon emissions would much more effectively incentivize businesses and consumers to reduce their greenhouse gas emissions.  The indirect CAFE program costs the economy at least six times as much as a carbon tax that reduces emissions equivalently. If reducing greenhouse gas emissions is a worthwhile goal, we should pursue policies that directly address the problem and utilize market forces to reduce emissions.

Politics, Confirmation Bias, and Opioids

This post co-authored with Rafael Fonseca, MD, Chairman of the Department of Medicine, Mayo Clinic, Phoenix, AZ

Much has been written about how politics and ideology influence research funding, suppress research in certain areas, and lead to the cherry-picking and misrepresentation of evidence in support of a narrative or agenda. Science journalist John Tierney explored “The Real War on Science” in an excellent essay in City Journal in 2016. Reflecting on this phenomenon in 2011, Patrick J. Michaels stated:

The process is synergistic and self-fulfilling. Periodicals like Science are what academia uses to define the current truth. But the monolithic leftward inclination of the reviewing   community clearly permits one interpretation (even if not supported by the results) and not another. This type of blatant politicized science is becoming the norm in the environmental arena, and probably has infiltrated most every other discipline, too.

It certainly has infiltrated research into the emotionally charged opioid overdose problem afflicting the US and many other western nations. Policy decisions have been rooted in a narrative seemingly immune to the facts: that the problem is largely the result of greedy pharmaceutical companies manipulating careless and poorly-trained doctors into “hooking” patients on highly addictive opioids and condemning them to a nightmarish life of drug addiction.

Tierney writes of confirmation bias—the tendency of people to seek out and accept information that confirms their beliefs and prejudices. He bemoans the “groupthink” that allows confirmation bias to infiltrate the peer review process. He cites a well-known study that demonstrated reviewers were more likely to find problems with a study’s methodology if the findings were contrary to their prejudices yet overlook methodological shortcomings if the findings were confirmatory.

Sometimes investigators try to “spin” their findings to make them comport to the narrative and appear confirmatory, increasing the likelihood that their research gets published. 

Both of us are practicing physicians, and each of us recently experienced reminders that research into the opioid overdose issue is not exempt from politicization and confirmation bias. We would like to present two recent examples where this confirmation bias became self-evident. 

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