Category: Government

Fewer Regulations and Lower Taxes Rouse “Animal Spirits” in Small Businesses

(p. B1) More than any other president since Ronald Reagan, President Trump is moving to strip away regulations and slash taxes, said Jeffrey Korzenik, an investment strategist with Fifth Third, a large regional bank in the Midwest and Southeast. In meetings with clients, Mr. Korzenik has been making the case that these policies will rouse the slumbering animal spirits in businesses across America.
“And now we have seen this huge spike in small-business confidence since the election,” Mr. Korzenik said, pointing to a chart. “So I have to ask you: Do you feel more confident now?”
There was a moment of silence, broken only by a howling northwestern Ohio wind that rattled the floor-to-ceiling windows in the bank’s boardroom.
Then, with rapid-fire speed, came the responses.
The president of a trucking company spoke of a “tremendous dark cloud” lifting when he realized he would no longer be feeling the burden of rules and regulations imposed by the Obama administration.
The owner of an automotive parts assembler gave thanks that he would not be receiving visits from pesky envi-(p. B3)ronmental and workplace overseers.
And the head of a seating manufacturer expressed hope that, finally, his health care costs would come down when the Affordable Care Act was repealed.
“My gut just feels better,” said Bob Fleisher, president of a local car dealership. “With Obama, you felt it was personal — like he just didn’t want you to make money. Now we have a guy who is cutting regulations and taxes. And when I see my taxes going down every quarter — well, that means I am going to start investing again.”
. . .
A heavier regulatory burden and uncertainty born of a weak economic recovery have kept small-business owners from making big bets in investments or hiring.
But in Toledo, this reluctance is changing — and quickly.
Louis M. Soltis owns a small company that manufactures control panels for large factories and machines. After four years of not adding to his work force of 22, he has seen orders for panels jump in the last two months and is looking to take on as many as six new workers.
There may not be a direct correlation between his surging order book and the new president, but there is no doubting the psychological boost.
“That guy is a junkyard dog, doing his tweets at 3 a.m. and taking on the news media — I just get strength from him,” Mr. Soltis said over a wine-soaked dinner with a large group of his small-business friends and peers from around town. “And I have to say, it makes you feel gutsy — ready to step up and start investing again.”
. . .
Yet there is a downside to animal spirits that persist too long, especially in labor markets, like Toledo’s, that are operating on the tight side.
And that is a sharp uptick in inflation.
In his presentation to Fifth Third’s banking clients, Mr. Korzenik raised this issue, suggesting that the broader economy was in the “seventh inning” of what has been a pretty long business cycle.
. . .
Still, no one in the room seemed overly concerned. As the group saw it, the party was just beginning.
“Most businesses I know are just taking a deep breath, happy that there is finally someone in the White House who understands what they do,” said Mr. Fleisher, the owner of the Lincoln car dealership. “So you say we are in the seventh inning — well, I am not sure we are.”

For the full story, see:
LANDON THOMAS Jr. “Small Businesses’ Hopes Are Up.” The New York Times (Mon., MARCH 13, 2017): B1 & B3.
(Note: ellipses added.)
(Note: the online version of the story has the date MARCH 12, 2017, and has the title “The President Changed. So Has Small Businesses’ Confidence.”)

Restaurants Add Labor Surcharges to Help Pay Minimum Wage Costs

(p. B1) In lieu of steep menu price increases, many independent and regional chain restaurants in states including Arizona, California, Colorado and New York are adding surcharges of 3% to 4% to help offset rising labor costs. Industry analysts expect the practice to become widespread as more cities and states increase minimum wages.
“It’s the emerging new norm,” said Sharokina Shams, spokeswoman for the California Restaurant Association. She said California restaurants are adding surcharges as the state lifts the minimum wage every year until it reaches $15 an hour by 2023. It is currently at $10.50 an hour for employers with 26 or more workers.
. . .
While adding a surcharge risks turning diners away, some restaurateurs say they want customers to understand the consequences of higher wages on a business with profit margins of generally between 2% and 6%.
. . .
(p. B2) Sami Ladeki added surcharges to the menu at six Sammy’s Woodfired Pizza & Grill restaurants in San Diego and eight more across California. He said it was a mistake to call the charge a state mandate, and has changed the wording. But he remains critical of rising minimum wages.
“This is not sustainable,” said Mr. Ladeki, who says he makes a profit of around 1% charging $12 to $14 a pizza. “People are not going to pay $15 or $20 for a pizza.”
. . .
David Cohn, who owns 15 restaurants in San Diego, including BO-beau, said his 3% surcharge wasn’t a stunt.
“We want people to understand there is a cost,” Mr. Cohn said. “How do we stay in business with margins shrinking and competition increasing?”

For the full story, see:
JULIE JARGON. “New on Your Dinner Tab: A Labor Surcharge.” The Wall Street Journal (Fri., March 10, 2017): B1-B2.
(Note: ellipses added.)
(Note: the online version of the story has the date March 9, 2017.)

China’s “Ruthless” One Child Policy Forced Some Women to Have Abortions

(p. 15) Deng Xiaoping, China’s leader after 1978, had set a target of quadrupling the country’s per capita national income by 2000. China’s planners decided that they could achieve this goal only if, in addition to increasing the size of the pie, there were fewer people to share it.
So they determined, in their words, to “adjust women’s average fertility rate in advance.” The man who ran the program that treated women as if they were production functions was a rocket scientist, Song Jian, who had worked on ballistic missiles. Song went on to help manage the giant Three Gorges Dam on the Yangtze River. His was a world in which unintended consequences were not important.
Population control was not unusual in the 1980s. India also had a fertility-­control program. The United Nations gave its first-ever population award to the Chinese minister for population planning in 1983 (along with Indira Gandhi). But China’s application of population control was particularly ruthless.
In 2012, Feng Jianmei, a factory worker pregnant with her second child, was taken to a clinic, forced to sign a document consenting to an abortion and injected with an abortifacient. She was in her seventh month. Pictures of her lying next to her perfectly formed seven-month dead fetus went viral. But hers was hardly an unusual case. In the 1990s, population targets became a major criterion for judging the performance of officials. It is no surprise that they carried out the one-child policy ruthlessly. Reading this account, one wonders why rape as a weapon of war is (rightly) seen as a war crime, whereas the forcible violation of women’s bodies in pursuit of government policy wins United Nations awards.

For the full review, see:
JOHN PARKER. “Little Emperors.” The New York Times Book Review (Sun., JAN. 10, 2016): 15.
(Note: the online version of the review has the date JAN. 8, 2016, and has the title “”One Child,’ by Mei Fong.”)

The book under review, is:
Fong, Mei. One Child: The Story of China’s Most Radical Experiment. Boston, MA: Houghton Mifflin Harcourt, 2016.

U.S. Science Agencies Omit Margin of Error in Warming Stats

(p. A13) The year 2016 was the warmest ever recorded–so claimed two U.S. agencies, NASA’s Goddard Institute for Space Studies and the Commerce Department’s National Oceanic and Atmospheric Administration. Except it wasn’t, according to the agencies’ own measures of statistical uncertainty.
Such fudge is of fairly recent vintage. Leaving any discussion of the uncertainty interval out of press releases only became the norm in the second year of the Obama administration. Back when he was presenting the 2008 numbers, NASA’s James Hansen, no slouch in raising climate alarms, nevertheless made a point of being quoted saying such annual rankings can be “misleading because the difference in temperature between one year and another is often less than the uncertainty in the global average.”
Statisticians wouldn’t go through the trouble of assigning an uncertainty value unless it meant something. Two measurements separated by less than the margin of error are the same. And yet NASA’s Goddard Institute, now under Mr. Hansen’s successor Gavin Schmidt, put out a release declaring 2014 the “warmest year in the modern record” when it was statistically indistinguishable from 2005 and 2010.
. . .
. . . other countries like the U.K. and Japan also do sophisticated monitoring and end up with findings roughly similar to the findings of U.S. agencies, yet they don’t feel the need to lie about it. For instance, the U.K. Met Office headlined its 2016 report “one of the warmest two years on record.” A reader only had to progress to the third paragraph to discover that the difference over 2015 was one-tenth the margin of error.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “Change Would Be Healthy at U.S. Climate Agencies; In the Obama era, it was routine for press releases to avoid mentioning any margin of error..” The Wall Street Journal (Mon., Feb. 4, 2017): A13.
(Note: ellipses added.)

How Uber Resisted Regulation

(p. B1) Uber Technologies Inc. has for years employed a program that uses data from its ride-hailing app and other tools to evade government officials seeking to identify and block the service’s drivers, according to a person familiar with the matter.
. . .
Uber has set up GPS rings around government offices, tracked low-cost phones and looked for other clues that regulators were targeting its drivers, such as frequently opening or closing the app or using credit cards tied to city agencies, according to the Times report. Once identified, Uber kept regulators out of vehicles by failing to send drivers their way, according to the newspaper.

For the full story, see:
GREG BENSINGER. “Uber Used Program to Evade Authorities.” The Wall Street Journal (Mon., March 6, 2017): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 4, 2017, and has the title “Uber Used ‘Greyball’ Program to Circumvent Authorities.” )

British Government Environmentalists Increase London Air Pollution

(p. A4) London is choking from record levels of pollution, much of it caused by diesel cars and trucks, as well as wood-burning fires in private homes, a growing trend.
. . .
London’s air pollution today is different from seven decades ago, and more insidious. No longer thick as “pea soup,” as it was traditionally described, the city’s air is now laced with nitrogen dioxide — a toxic gas mostly produced by vehicles with diesel engines.
. . .
The current problem is, in part, an unintended consequence of previous efforts to aid the environment.
The British government provided financial incentives to encourage a shift to diesel engines because laboratory tests suggested that would cut harmful emissions and combat climate change. Yet, it turned out that diesel cars emit on average five times as much emissions in real-world driving conditions as in the tests, according to a British Department for Transport study.
“No one at the time thought of the consequences of increased nitrogen dioxide emissions from diesel, and the policy of incentivizing diesel was so successful that an awful lot of people bought diesel cars,” said Anna Heslop, a lawyer at ClientEarth, an environmental law firm that last year forced the British government to produce a better plan to improve air quality.
. . .
Bob Miller, 69, a cabdriver who has crisscrossed London for 30 years, wasn’t convinced. He has lost faith in recommendations by policy makers and experts, he said.
“We were told how wonderful diesel is, how they were supposed to be cleaner than petrol,” Mr. Miller said, idling his cab in heavy traffic with the window open.
“The experts make the rules, then they’re wrong,” he said, shaking his head. “I give up.”

For the full story, see:
KIMIKO de FREYTAS-TAMURA. “A Push for Diesel Leaves London Gasping Amid Record Pollution.” The New York Times (Sat., FEB. 18, 2017): A4.
(Note: ellipses added.)
(Note: the online version of the story has the date FEB. 17, 2017.)

U.S. Forest Service Killed “Prometheus,” World’s Oldest Tree

(p. D9) Great Basin’s . . . big draw–trees about as old as Egyptian hieroglyphics–sits at the top of the sky island in Wheeler Peak Bristlecone Grove.
. . .
At the grove, a stand of weather-battered bristlecone pines await, just as they have for between 3,000 and 4,000 years. With their knobby trunks and gnarled branches, the trees look like characters in an animated film’s enchanted forest, ready to burst into song. They often have only a small strip of bark, with the rest of the trunk bare, exposing the smooth, rich browns, yellows and grays in its fine grain.
At one time the oldest known tree in the world lived here. Its dignified appearance earned it the name Prometheus. In 1964, two decades before Great Basin became a national park, a researcher, trying to collect data about the area’s climate history, drilled into defenseless Prometheus (not knowing its exact age) to examine its rings. When his coring instrument got stuck, the Forest Service felled the tree to retrieve his tool– only to discover that the tree was 4,900 years old.
Oops.

For the full story, see:
JIM ROBBINS. “In a Strange Land; One of the country’s least-hyped nature preserves, Nevada’s Great Basin National Park has a weird, wild beauty all its own.” The Wall Street Journal (Sat., MARCH 11, 2017): D9.
(Note: ellipses added.)
(Note: the online version of the story has the date MARCH 9, 2017, and has the title “A Hike Through America’s Otherworldly Outback.”)

“High Expectations, High Support” Charter Schools Work Well

(p. 2) The briefest summary is this: Many charter schools fail to live up to their promise, but one type has repeatedly shown impressive results.
Hannah Larkin, the principal at Match, refers to such schools as “high expectations, high support” schools. They devote more of their resources to classroom teaching and less to almost everything else. They keep students in class for more hours. They set high standards for students and try to instill confidence in them. They focus on giving teachers feedback about their craft and helping them get better.
. . .
The latest batch of evidence about this approach is among the most rigorous. Professors at M.I.T., Columbia, Michigan and Berkeley have tracked thousands of charter-school applicants, through high school and beyond, in Boston, where most charters fit the “high expectations, high support” model.
Crucially, the researchers took several steps to make sure the findings were real. They compared lottery winners with losers, controlling for the fact that families who applied for the lotteries were different from families who didn’t. They also counted as charter students all those who enrolled, including any who later left.
When you talk to the professors about their findings, you hear a degree of excitement that’s uncommon for academic researchers. “Relative to other things that social scientists and education policy people have tried to boost performance — class sizes, tracking, new buildings — these schools are producing spectacular gains,” said Joshua Angrist, an M.I.T. professor.

For the full commentary, see:
Leonhardt, David. “Schools That Work.” The New York Times, SundayReview Section (Sun., NOV. 6, 2016): 2.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date NOV. 4, 2016.)

The “latest batch of evidence” mentioned above, includes:
Angrist, Joshua D., Sarah R. Cohodes, Susan M. Dynarski, Parag A. Pathak, and Christopher R. Walters. “Stand and Deliver: Effects of Boston’s Charter High Schools on College Preparation, Entry, and Choice.” Journal of Labor Economics 34, no. 2 (April 2016): 275-318.

Privatized Airports Are Better Managed

(p. A15) The highest-ranked American airport on the list of the world’s top 100, as determined by the Passengers Choice Awards, is Denver–at 28. Atlanta comes in at 43, Dallas at 58, Los Angeles at 91.
Why do American passengers pay so much to get so little? Because their airports, by global standards, are terribly managed.
Cities from London to Buenos Aires have sold or leased their airports to private companies. To make a profit, these firms must hold down costs while enticing customers with lots of flights, competitive fares and appealing terminals. The firm that manages London’s Heathrow, currently eighth in the international ranking, was so intent on attracting passengers that it built a nonstop express train to the city’s center. It’s also seeking to add another runway, as is the rival firm running Gatwick Airport.
American airports are typically run by politicians in conjunction with the dominant airlines, which help finance the terminals in return for long-term leases on gates and facilities. The airlines use their control to keep out competitors; the politicians use their share of the revenue to reward unionized airport workers. No one puts the passenger first.

For the full commentary, see:
JOHN TIERNEY. “‘Third World’ U.S. Airports? That Insults the Third World; Private managers make terminals sparkle and hum the world over. Here we’re stuck with LaGuardia.” The Wall Street Journal (Sat., Jan. 21, 2017): A15.
(Note: the online version of the commentary has the date Jan. 23 [sic], 2017.)

Steady Increase in Federal Regulations

RegulationsRiseGraph2017-02-03.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A2) In a high-profile attack on growth-killing red tape, President Donald Trump this week ordered that any agency issuing a new rule find two to repeal.

He will likely discover that the only thing harder than getting something done in Washington is getting it undone.
Vast swaths of rules are untouchable because Congress ordered them to be written or the president himself demanded them..

For the full story, see
Ip, Greg. “CAPITAL ACCOUNT; Trump May Find Leviathan Hard to Tame.” The Wall Street Journal (Thurs., Feb. 2, 2017): A2.
(Note: the online version of the story has the date Feb. 1, 2017, and has the title “CAPITAL ACCOUNT; Donald Trump May Find Leviathan Hard to Tame.”)

Hong Kong Is No Longer a Libertarian Dream Come True

(p. 5) HONG KONG — For the 23rd year running, Hong Kong is, in the opinion of the conservative Heritage Foundation, the freest economy in the world. With low taxes, an efficient government and private businesses running the city buses and its spotless subways, this place is a libertarian dream come true.
So the story goes.
Many people who live in Hong Kong beg to differ. This has long been a city of tycoons, with a few families holding sway over the supermarkets, drugstores and real estate market, limiting competition and keeping prices high. And in the past few weeks, four words have further shaken the story line that this former British colony is a free-market nirvana.
Food Truck Pilot Scheme.
. . .
In Hong Kong, the government agency that devised the Food Truck Pilot Scheme had a new, bold and innovative idea: stationary food trucks that don’t park on the street. A spokesman for the city’s Tourism Commission explained why in an email:
“Since the urban area of Hong Kong is already saturated with traffic, it would not be desirable from the traffic management and road safety angles to allow food trucks to park and operate on public roads. Moreover, as many locations in Hong Kong have already got a number of food establishments, it would thus be desirable to introduce food trucks away from those areas.”
It’s all explained in a raft of guidelines. There are seven annexes in all, including licensing requirements (Annex D), special government loan programs (Annex B) and fixed venues (Annex F).
Then there is Annex C — “Mandatory Requirements for a Food Truck” — that lists in painstaking detail what each truck must have. Some examples: The kitchen floor space must be at least 65 square feet. Each truck must have a potable water tank with a capacity of about 32 gallons, and a wastewater tank at least one and a half times that size. The sink must be at least a foot and a half in length. And so on.
To meet all of those regulations, Hong Kong food trucks must be custom vehicles, bearing little resemblance to the decades-old trucks that congregate near the National Mall in Washington, the capital of a country that has only the 17th freest economy in the world.
All these rules and regulations have Liu Chun-ho, the owner of Ma Ma’s Dumpling, very worried. To meet the stringent requirements, he paid about one million Hong Kong dollars ($129,000) for his new Isuzu truck.
. . .
The workers at Book Brothers hope that their next location, closer to the city’s central business district, will be busier. And if they can’t sell their pork buns, they could always try something else, right? After all, that’s what capitalism is all about.
Not so fast. Please refer to Answer No. 8 of the government’s “Frequently Asked Questions: Application of the Food Truck Pilot Scheme (Pilot Scheme).”
“No alteration of the signature dish proposed by the applicant in the application form will be allowed after the submission of Application and throughout the Scheme,” it declares. “If the operator wishes to change dishes other than the signature dish, he should obtain prior written approval from the Venues and the Food and Environmental Hygiene Department.”

For the full story, see:
MICHAEL FORSYTHE. “Food Truck Rules Outnumber Patrons in Hong Kong.” The New York Times, First Section (Sun., FEB. 19, 2017): 5.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 18, 2017, and has the title “The Economy Is Free in Hong Kong. Running a Food Truck Isn’t (See Annex C).”)