Category: Government

Unintended Consequences of “Protecting” Rare Woodpecker

  Red-cockaded woodpecker.  Source of image:  http://www.fws.gov/athens/images/Red-cockaded%20woodpecker%20120%20KB%205×7.jpg

 

BOILING SPRING LAKES, N.C., Sept. 23 (AP) — Over the past six months, landowners here have been clear-cutting thousands of trees to keep them from becoming homes for the endangered red-cockaded woodpecker.

The chain saws started in February, when the federal Fish and Wildlife Service put Boiling Spring Lakes on notice that rapid development threatened to squeeze out the woodpecker.

The agency issued a map marking 15 active woodpecker “clusters,” and announced it was working on a new one that could potentially designate whole neighborhoods of this town in southeastern North Carolina as protected habitat, subject to more-stringent building restrictions.

Hoping to beat the mapmakers, landowners swarmed City Hall to apply for lot-clearing permits.  Treeless land, after all, would not need to be set aside for woodpeckers.  Since February, the city has issued 368 logging permits, a vast majority without accompanying building permits.

The results can be seen all over town.  Along the roadsides, scattered brown bark is all that is left of pine stands.  Mayor Joan Kinney has watched with dismay as waterfront lots across from her home on Big Lake have been stripped down to sandy wasteland.

. . .

Like the woodpeckers, humans are also looking to defend their nest eggs.

Bonner Stiller has been holding on to two wooded half-acre lakefront lots for 23 years.  He stripped both lots of longleaf pines before the government could issue its new map.

“They have finally developed a value,” said Mr. Stiller, a Republican member of the state General Assembly.  “And then to have that taken away from you?”

 

For the full story, see:

"Rare Woodpecker Sends a Town Running for Its Chain Saws."  The New York Times, Section 1 (Sun., September 24, 2006):  20.

 

Reforms Make it Easier to Start and Run a Business in Africa

(p. A12) Authors of the report, ”Doing Business,” by the World Bank and the International Finance Corporation, the bank’s private sector arm, say they hope simplifying and easing the rules of the capitalist game will entice more businesses above ground.

A team of 30 researchers found that African countries had made many incremental changes.

”The most surprising thing for me was to see the pickup of reform in Africa,” said Simeon Djankov, a World Bank economist who four years ago developed the rankings on the ease of doing business.  ”Something has happened this year.  At least two-thirds of Africa’s countries have at least one positive reform.”

Tanzania computerized its business and tax registries and reduced delays in customs inspections and the courts.

Ghana has cut the corporate tax rate to 25 percent, from 32.5 percent, and made it easier to export goods.

Rwanda scrapped a law adopted during Belgian colonial rule that had given one official a monopoly on notarizing documents for the entire country.

Ivory Coast slashed the time to register property to a month from more than a year by eliminating a requirement that the urban minister give his consent.

Wealthy donors like the World Bank, the United States and Britain, which focus on spurring economic growth and job creation, are putting heavier emphasis on such changes in deciding where to provide aid.

The Millennium Challenge Account, President Bush’s aid program, explicitly uses the bank report’s measure of days to start a business as one criterion for deciding who qualifies for large grants.

 

For the full story, see:

CELIA W. DUGGER.  "Africa Moves Up the Ladder of Business-Friendly Regions."   The New York Times (Weds., September 6, 2006):  A12.

(Note:  the online version of the article had this, slightly different, title:  "In Africa, a More Business-Friendly Approach.")   

Sprint to Risk Billions on New Infrastructure

WiMaxSprintGraphic.gif  Source of graphic:  online version of the WSJ article cited below.

 

If Sprint bets on WiFi, they’re betting with their money; if the government bets on WiFi, they’re betting with your money.  If Sprint succeeds, thereby benefiting the consumer, at no risk to the consumer, the consumer should not object to their earning huge profits.

Note also, that this is a plausble candidate for a firm trying to follow Clayton Christensen’s advice to try to disrupt itself.  (And see the comment at the end, for someone who hasn’t read Christensen, or doesn’t believe what he has read.)

 

Analysts say building a nationwide WiMax network could cost Sprint between $1 billion and $4 billion, a hefty sum for a company that is already struggling to meet Wall Street’s expectations.  Sprint said it expects to invest $1 billion on the project in 2007 and between $1.5 billion and $2 billion in 2008.

Sprint’s decision carries considerable risks:  Investors have hammered telecom companies that have made large capital investments in new technologies, banking on future markets to emerge.  For example, among other things, Verizon Communications Inc.’s stock has been under fire as the company is rolling out a costly new fiber optic network that it says will position the company to deliver a bundled TV, Internet, and phone service.  Also, WiMax technology is still untested on a large scale.

Sprint is making a huge bet that consumer demand for wireless Internet access and services such as cellphone downloads of music and video will continue to grow in the coming years.  Consumers already can get access to wireless Internet service at Wi-Fi "hotspots" in airports and coffee shops, and some cities, like Anaheim, Calif., are blanketing their terrain with Wi-Fi connections.

. . .

. . . , some analysts and industry experts question why the company is gearing up for such a major capital investment when it is already even or ahead the other top U.S. carriers, Verizon and Cingular Wireless, when it comes to data services. "Why compete against yourself? It doesn’t make a lot of sense at this point," said Mike Thelander, principal analyst at Signals Research Group who predicted several weeks ago that Sprint would choose WiMax.

 

For the full story, see:

AMOL SHARMA and DON CLARK.  "Sprint Bets on New Wireless ‘WiMax’."  Wall Street Journal  (Tues.,  August 8, 2006):  B1-B2.

(Note:  the above passages are from the online version, which was later, and less tentative about Sprint’s intentions, than the print version.) 

(Note:  ellipses added.)

Turkey Farmer Ben Nelson Avoids Taxes

  Source of image:  screen capture from the campaign ad cited below.

 

Early in the 2006 senate campaign, the supporters of Democrat Ben Nelson made fun of Republican candidate Pete Ricketts for challenging the property assessment on his house.  (They ran newspaper ads with ridiculing poetry, written in the manner of Dr. Seuss, and wore hats associated with the cat in Seuss’s famous Cat in the Hat book.)

Well, they say what goes around, comes around.  Nelson was himself getting a significant tax break on vacation land he owned, based on its being classified as being used primarily for agricultural purposes ("green-belt" status).  The only agricultural use that could be found was that each year, a few turkeys were released on the land.

Now the Rickett’s campaign has released a funny video ad satirizing "Farmer Nelson." 

 

To download, or watch, the ad, go to:  http://www.petericketts.com/comm_092506.asp

A Tale of Two Churches: Russia Has an Entrepreneurial Tradition Too

 

Two old and exotic churches, St. Basil’s in Moscow and Kizhi in the Russian north, survived the Soviet era and are invariably depicted in brochures and books to suggest the distinctiveness of Russian culture.  Both feature the tent roofs and onion domes that dominated the skyline of medieval Russia.  But each bears mute witness to a very different tradition:  one, imperial centralism; the other, entrepreneurial regionalism.  Both are embedded in Russia’s history; the conflict between them may well determine Russia’s destiny.

St. Basil’s, looming over Red Square, is an enduring symbol of theatrical autocracy; the Kizhi church, of frontier inventiveness.  Authoritarian centralism has been growing recently under President Putin.  But he also is fond of Kizhi and brought its new priest with him on his last trip to New York.

. . .

Tolerance was implicit in the northern tradition of dvoeveria:  the simultaneous belief in both the old pagan spirits and the new Christian God.  Medieval petroglyphs of the Kizhi region freely intermixed symbols of both.  Peasants in the region were not enserfed.  The northern region lost much of its independent power when Moscow sacked and subdued Novgorod.

. . .

Many more people have seen St. Basil’s on Red Square than Kizhi on an island in Lake Onega — and most see Russian history in terms of autocratic power in Moscow rather than creativity amid adversity in the regions.  Kizhi is the supreme monument to this forgotten tradition that continued to unfold as the vast Russian domain spread north to the Arctic Ocean and across the Pacific to Alaska in the 17th and 18th centuries.

No one knows who was the architect of either monument.  But Russian popular folklore suggests that the creator of St. Basil’s was forcefully either blinded or drowned to assure that it could never be duplicated.  In contrast, the creator of Kizhi is said to have simply thrown his ax into the lake and lived on peacefully as a holy man in the northern forests.

During that time, Moscow autocrats looked out from the closed front porch of St. Basil’s to see the enemies of central power drawn and quartered publicly in Red Square.  By contrast, the Kizhi church was wider and open to the sky — and where local people gathered to solve practical problems, facing a vista of lakes and forests.

Much of the renewed vitality in Russia today is coming from young people in the regions.  Their hopes for a more participatory and accountable political and economic future depend on the kind of open community that created Kizhi — not the closed circles that cling to St. Basil’s.

 

For the full commentary, see: 

JAMES H. BILLINGTON.  "MASTERPIECE; Two Churches, Two Russias; One born of authoritarian centralism, the other of entrepreneurial regionalism."  Wall Street Journal   (Sat., September 16, 2006):  P18.

 

Gym Classes Promote Sports, Not Healthy Exercise

 

Here is more evidence that public school physical education classes should be turned over to private sector firms like "24 Hour Fitness."  

Ms. Jackie Lund, who is quoted below, is the President of NASPE, which the article identifies as "an association of fitness educators and professionals.  Note well that she as much as admits that fitness is not the purpose of gym classes.

 

Researchers report that in the typical high-school gym class students are active for an average of 16 minutes.

The report by Cornell University researchers also found that adding 200 minutes more of physical-education time a week had little effect. (See the report.)

"What’s actually going on in gym classes?  Is it a joke?" asked John Cawley, lead author of the study and a professor of policy analysis and management at Cornell.

. . .

The rest of the extra gym time is likely spent being idle — most likely standing around while playing sports like softball or volleyball that don’t require constant movement, Mr. Cawley said.

. . .

. . . , Ms. Lund says merely counting how many minutes students are moving may not be a fair measure of a gym class.  "It’s not supposed to be aerobics class.  The activity level is going to vary depending on the sport they’re learning," she said.

 

For the full story, see: 

"High-Schoolers Get Scant Exercise in Gym Class."   Wall Street Journal  (Weds., September 20, 2006):  D4.

(Note:  the online version of the article has the title:  "Is High-School Gym Class An Exercise in Futility?")

(Note:  ellipses are added.)

 

Life Is Better, But Could Be Better Still

  November 9, 1952 NYT ad announcing the introduction of the snowblower.  Source of image:  online version of the NYT article cited below.

 

(p. C1)  When the first snow falls on the North Shore of Chicago this winter, Robert Gordon will take his Toro snow blower out of the garage and think about how lucky he is not to be using a shovel.  Mr. Gordon is 66 years old and evidently quite healthy, but his doctor has told him that he should never clear his driveway with his own hands.  “People can die from shoveling snow,” Mr. Gordon said.  “I bet a lot of lives have been saved by snow blowers.”

If so, most of them have been saved in the last few decades.  A Canadian teenager named Arthur Sicard came up with the idea for the snow blower in the late 1800’s, while watching the blades on a piece of farm equipment, but he didn’t sell any until 1927.  For the next 30 years or so, snow blowers were hulking machines typically bought by cities and schools.  Only recently have they become a suburban staple.

Yet the benefits of the snow blower, namely more free time and less health risk, are largely missing from the government’s attempts to determine Americans’ economic well-being.  The same goes for dozens of other inventions, be they air-conditioners, cellphones or medical devices.  The reasons are a little technical — they involve the measurement of inflation — but they’re important to understand, because the implications are so large.

. . .

(p. C10)  In the early 1950’s, Toro began selling mass-market snow blowers, which weighed up to 500 pounds and cost at least $150.  As far as the Bureau of the Labor Statistics was concerned, however, snow blowers did not exist until 1978.  That was the year when the machines began to be counted in the Consumer Price Index, the source of the official inflation rate.  By then, the cheapest model sold for about $100.

In practical terms, this was an enormous price decline compared with the 1950’s, because incomes had risen enormously over this period.  Yet the price index completely missed it and, by doing so, overstated inflation.  It counted the rising cost of cars and groceries but not the falling cost of snow blowers.

. . .

Mr. Gordon, besides being a fan of snow blowers, also happens to be one of the country’s leading macroeconomists.  A decade ago he served on a government-appointed group known as the Boskin Commission.  It argued, as Mr. Gordon still does, that the government exaggerated inflation by more than one percentage point every year.

. . .

. . .  Mr. Gordon’s adjustments show that men actually got a 27 percent raise in this period and women 65 percent.  The gains are not as big as those of the 1950’s and 60’s, but they do sound far more realistic than the official numbers.  Think about it:  we live longer than people did in the 1970’s, we’re healthier while alive, we graduate from college in much greater numbers, we’re surrounded by new gadgets and we live in bigger houses.  Is it really plausible, as some Democrats claim, that the middle class has made only marginal progress?

 

For the full commentary, see: 

DAVID LEONHARDT.  "Economix; Life Is Better; It Isn’t Better. Which Is It?"  The New York Times  (Weds., September 20, 2006):  C1 & C10.

(Note:  ellipsis added.)

 

 PayTwoViewsGraph.gif  Source of graphic:  online version of the NYT article cited above.

“Free to Choose” Turns Estonia into “Boomtown”

  Source of book image:  http://search.barnesandnoble.com/booksearch/imageviewer.asp?ean=9780156334600

 

If, like Mr. Laar, you are only going to read one book in economics, Milton Friedman’s Free to Choose, is not too bad a choice:

(p. A23) Philippe Benoit du Rey is not one of those gloomy Frenchmen who frets about the threat to Gallic civilization from McDonald’s and Microsoft.  He thinks international competition is good for his countrymen.  He’s confident France will flourish in a global economy — eventually.

But for now, he has left the Loire Valley for Tallinn, the capital of Estonia and the economic model for New Europe.  It’s a boomtown with a beautifully preserved medieval quarter along with new skyscrapers, gleaming malls and sprawling housing developments:  Prague meets Houston, except that Houston’s economy is cool by comparison.

Economists call Estonia the Baltic tiger, the sequel to the Celtic tiger as Europe’s success story, and its policies are more radical than Ireland’s.  On this year’s State of World Liberty Index, a ranking of countries by their economic and political freedom, Estonia is in first place, just ahead of Ireland and seven places ahead of the U.S. (North Korea comes in last at 159th.)

It transformed itself from an isolated, impoverished part of the Soviet Union thanks to a former prime minister, Mart Laar, a history teacher who took office not long after Estonia was liberated.  He was 32 years old and had read just one book on economics:  ”Free to Choose,” by Milton Friedman, which he liked especially because he knew Friedman was despised by the Soviets.

Laar was politically naïve enough to put the theories into practice.  Instead of worrying about winning trade wars, he unilaterally disarmed by abolishing almost all tariffs.  He welcomed foreign investors and privatized most government functions (with the help of a privatization czar who had formerly been the manager of the Swedish pop group Abba).  He drastically cut taxes on businesses and individuals, instituting a simple flat income tax of 26 percent.

 

For the full commentary, see:

JOHN TIERNEY.  "New Europe’s Boomtown."  The New York Times  (Tues., September 5, 2006):  A23.

 

Wal-Mart Really Does Benefit Consumers by Lowering Prices

 

Scholarly studies show Wal-Mart’s price reductions to be sizable.  Economist Emek Basker of the University of Missouri found long-term reductions of 7 to 13 percent on items such as toothpaste, shampoo and detergent.  Other companies are forced to reduce their prices.  On food, Wal-Mart produces consumer savings that average 20 percent, estimate Jerry Hausman of the Massachusetts Institute of Technology and Ephraim Leibtag of the Agriculture Department.

All told, these cuts have significantly raised living standards.  How much is unclear.  A study by the economic consulting firm Global Insight found that from 1985 to 2004, Wal-Mart’s expansion lowered the consumer price index by a cumulative 3.1 percent from what it would have been.  That produced savings of $263 billion in 2004, equal to $2,329 for each U.S. household.  Because Wal-Mart financed this study, its results have been criticized as too high.  But even if price savings are only half as much ($132 billion and $1,165 per household), they’d dwarf the benefits of all but the biggest government programs. 

 

For the full commentary, see:

Robert J. Samuelson.  "Wal-Mart as Red Herring."  The Washington Post  (Wednesday, August 30, 2006):  A19.

 

Daley Shows Chicago is Still the “City of the Outstuck Neck”

I think it was the poet Gwendolyn Brooks who once described Chicago as the "city of the out-stuck neck."  Chicago’s current Mayor Daley did himself and the city proud recently when he had the guts to stick his neck out by vetoing the proposed Chicago minimum wage. He deserves a salute from Chicago’s consumers and poor.  Democrat Daley is the mayor of the out-stuck neck.

 

Chicago Mayor Richard M. Daley used the first veto of his 17-year tenure to reject a living-wage ordinance aimed at forcing big retailers to pay wages of $10 an hour and health benefits equivalent to $3 an hour by 2010.

The veto is important to Wal-Mart Stores Inc., which plans to open its first store in Chicago late this month in the economically depressed 37th ward.

. . .

In vetoing the ordinance, Mayor Daley cited a potential loss of jobs.  In recent weeks, several big retailers had written to his office to oppose the ordinance.  "I understand and share a desire to ensure that everyone who works in the city of Chicago earns a decent wage," the mayor wrote to the aldermen yesterday.  "But I do not believe that this ordinance, well intentioned as it may be, would achieve that end.  Rather, I believe that it would drive jobs and business from our city."

 

For the full story, see: 

KRIS HUDSON.  "Chicago’s Daley Vetoes Bill Aimed At Big Retailers."   Wall Street Journal  (Thurs.,   September 12, 2006):  A4.

 

(Note:  I can’t find the exact source of the out-stuck neck quote, but one reference on the web is:  http://starbulletin.com/97/05/22/sports/fitzgerald.html )

 

Case for Wind Power is “Absolute Baloney”

I once heard a top MidAmerican Energy executive express considerable, articulate, scepticism about the economics of wind power.  (Wind power is unreliable, so that electric companies still must stand ready to provide the electricity by other means.)  If wind power made economic sense, you wouldn’t need subsidies to promote it—profit maximizing power companies would pursue it on their own.  MidAmerican now invests in wind power, not because it has become an efficient energy source, but because wasteful government subsidies, make wind power profitable for MidAmerican.

Glen Schleede, a retired power company executive, has nothing to lose by speaking the truth: 

 

(p. 1B) The turbines do bother some folks, including Glenn R. Schleede, a retired power company executive from Round Hill, Va., who said the wind power industry puts out "absolute baloney" to justify its existence.

"I’m tired of subsidizing Warren Buffett companies," Schleede said, referring to federal tax subsidies that go to MidAmerican Energy Holdings Co., a division of Omaha-based Berkshire Hathaway Inc. that is headed by Buffett.  Those are MidAmerican’s turbines in the fields around Schaller.

Schleede’s criticisms, mostly in academic-style papers he writes, concentrate on the economics of wind power and what he called "false claims about how this is good for an energy system."

"In fact, these things, because they’re intermittent and volatile and unpredictable, they don’t really add a lot of capacity to an electric grid," he said.  "When you see these things advertised, they talk about how many megawatts of capacity, the number of homes served and all that garbage.

"I would maintain that they don’t serve any homes."

 

For the full story, see: 

Jordon,  Steve.  "Harvesting Wind;Farmers like payout, but critics of wind power point to costs."  Omaha World-Herald  (Sunday September 3, 2006):  1D-2D.