Category: Public Choice

Regulators Allowed New York City to Exploit Taxi Medallion Buyers

(p. A1) . . . The New York Times published a two-part investigation revealing that a handful of taxi industry leaders artificially inflated the price of a medallion — the coveted permit that allows a driver to own and operate a cab — and made hundreds of millions of dollars by issuing reckless loans to low-income buyers.

The investigation also found that regulators at every level of government ignored warning signs, and the city fed the frenzy by selling medallions and promoting them in ads as being “better than the stock market.”

The price of a medallion rose to more than $1 million before crashing in late 2014, which left borrowers with debt they had little hope of repaying. More than 950 medallion owners have filed for bankruptcy, (p. A20) and thousands more are struggling to stay afloat.

For the full story, see:

Niraj Chokshi. “New York’s Top Lawyer Begins Inquiry Into Reckless Taxi Loans.” The New York Times (Tuesday, MAY 21, 2019): A1 & A20.

(Note: ellipsis added.)

(Note: the online version of the story has the date MAY 20, 2019, and has the title “Inquiries Into Reckless Loans to Taxi Drivers Ordered by State Attorney General and Mayor.” Where the online version includes a few extra words, or slightly different wording, the quotes above follow the online version.)

“When the Forts of Folly Fall”

When I read the poem below I smiled. Part of me found it inspiring and part of me found it foolish. But I smiled.

(p. A11) . . . from the final stanza of Matthew Arnold’s poem “The Last Word”: “Charge once more, then, and be dumb! / Let the victors, when they come, / When the forts of folly fall, / Find thy body by the wall.”

For the full commentary, see:

Abigail Shrier, interviewer. “THE WEEKEND INTERVIEW; Standing Against Psychiatry’s Crazes.” The Wall Street Journal (Saturday, May 4, 2019): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date May 3, 2019.)

Cities Stop Recycling as Costs Exceed Benefits

(p. A1) Recycling, for decades an almost reflexive effort by American households and businesses to reduce waste and help the environment, is collapsing in many parts of the country.

Philadelphia is now burning about half of its 1.5 million residents’ recycling material in an incinerator that converts waste to energy. In Memphis, the international airport still has recycling bins around the terminals, but every collected can, bottle and newspaper is sent to a landfill. And last month, officials in the central Florida city of Deltona faced the reality that, despite their best efforts to recycle, their curbside program was not working and suspended it.

Those are just three of the hundreds of towns and cities across the country that have canceled recycling programs, limited the types of material they accepted or agreed to huge price increases.

“We are in a crisis moment in the recycling movement right now,” said Fiona Ma, the treasurer of California, where recycling costs have increased in some cities.

. . .

(p. A25)  With fewer buyers, recycling companies are recouping their lost profits by charging cities more, in some cases four times what they charged last year.

Amid the soaring costs, cities and towns are making hard choices about whether to raise taxes, cut other municipal services or abandon an effort that took hold during the environmental movement of the 1970s.

“Recycling has been dysfunctional for a long time,” said Mitch Hedlund, executive director of Recycle Across America, . . .

. . .

In Deltona, higher costs were not the only factor behind the decision last month to stop recycling. Even if the city agreed to pay the additional $25,000 a month that its recycling company was charging, there was no assurance that all the plastic containers and junk mail would be turned into something new, Mayor Heidi Herzberg said.

“We all did recycling because it was easy, but the reality is that not much was actually being recycled,” Ms. Herzberg said.

. . .

Some large waste producers are still going through the motions of recycling, no matter how futile.

Across Memphis, large commercial enterprises have had to stop recycling for now because of contamination problems. But the airport is keeping its recycling bins in place to preserve “the culture” of recycling among passengers and employees, a spokesman said.

For the full story, see:

Michael Corkery.  “More Cities Stop Recycling.  They Can’t Afford It.”  The New York Times, First Section  (Sunday, March 17, 2019):  A1 & A25.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 16, 2019, and has the title “As Costs Skyrocket, More U.S. Cities Stop Recycling.”  The online version says that the New York print version had the title “As Costs Surge, Cities’ Recycling Becomes Refuse.”  My National print edition had the title given in the citation above.)

“Clever” Developers Evade New York City’s “Labyrinthine Zoning Laws”

(p. A1)  Some of the tallest residential buildings in the world soar above Central Park, including 432 Park Avenue, which rises 1,400 feet and features an array of penthouses and apartments for the ultrarich.

But 432 Park also has an increasingly common feature in these new towers: swaths of unoccupied space. About a quarter of its 88 floors will have no homes because they are filled with structural and mechanical equipment.

The building and nearby towers are able to push high into the sky because of a loophole in the city’s labyrinthine zoning laws. Floors reserved for structural and mechanical equipment, no matter how much, do not count against a building’s maximum size under the laws, so developers explicitly use them to make buildings far higher than would otherwise be permitted.

. . .

(p. A20)  “It’s pretty outrageous, but it’s also pretty clever,” said George M. Janes, a planning consultant who has tracked and filed challenges against buildings in New York with vast unoccupied spaces. “What is the primary purpose of these spaces? The primary purpose is to build very tall buildings.”

. . .

New York City’s complicated building regulations are meant to produce predictable developments. Height requirements are imposed in most of the city, though parts of Manhattan are exempt. Every block is also effectively assigned a maximum square footage, which can be spread across smaller buildings on a block or condensed in larger developments.

Savvy, well-heeled and patient developers have worked that system to their benefit. A developer seeking to build a supertall tower might start with one lot on a block and then buy unused square footage from its neighbors.

With advancements in engineering and construction, that developer can take the accumulated square footage and concentrate it in a skinny mega-tower. Floors of mechanical space, exempt from the square footage calculations, make the tower even taller.

For the full story, see:

Matthew Haag.  “Builders Use Ploy to Create the Luxury of Height.”  The New York Times (Saturday, April 20, 2019):  A1 & A20.

(Note:  ellipses added.)

(Note:  the online version of the story also has the date April 20, 2019, but has the title “How Luxury Developers Use a Loophole to Build Soaring Towers for the Ultrarich in N.Y.”)

Universal Basic Income Increases Taxes and Does Not Increase Work Among Unemployed

(p. 13) HELSINKI, Finland — A basic income made recipients happier than they were on unemployment benefits, a two-year government experiment in Finland has found. But it did not, as proponents had hoped, make them more likely to work.
. . .
The basic income has been controversial, however, with leaders of the main Finnish political parties keen to streamline the benefits system but wary of offering “money for nothing,” especially ahead of parliamentary elections due in April [2019].
. . .
The higher taxes that the Organization for Economic Cooperation and Development says would be needed to pay for basic income schemes might also be off-putting for voters.
In a review of the Finnish scheme last year, the organization warned that implementing it nationally and cost-neutrally for the state would imply significant income redistribution, especially toward couples from single people, and increase poverty.
The researchers have acknowledged that the Finnish pilot was less than realistic because it did not include any tax clawback once participants found work and reached a certain income level.
Swiss voters rejected a similar scheme in 2016.

For the full story, see:
Reuters. “Experiment Explores Income, Jobs and Happiness.” The New York Times, First Section (Sunday, Feb. 10, 2019): 13.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date Feb. 9, 2019, and has the title “Finland’s Basic Income Trial Boosts Happiness, but Not Employment.”)

Hickenlooper Should Be Proud He Worked Hard to Build a Business Under Capitalism

(p. A21) John Hickenlooper ought to be a poster child for American capitalism. After being laid off from his job as a geologist during the oil bust of the 1980s, he and his business partners turned an empty warehouse into a thriving brewery.
. . .
Yet there he was on MSNBC’s “Morning Joe,” squirming in his seat as Joe Scarborough asked if he would call himself “a proud capitalist.” Hickenlooper protested the divisiveness of labels. He refused to reject the term “socialism.” He tried, like a vegetarian who still wants his bacon, to have it both ways: “There are parts of socialism, parts of capitalism, in everything.”
But Hickenlooper did allow this: “We worked 70, 80, 90 hours a week to build the business; and we worked with the other business owners in [Lower Downtown Denver] to help them build their business. Is that capitalism? I guess.”
He guessed right.
. . .
An economy in which private property is protected, private enterprise is rewarded, markets set prices and profits provide incentives will, over time, generate more wealth, innovation and charity — and distribute each far more widely — than any form of central planning.
. . .
To the extent that Sanders’s concept of democratic socialism has gained traction, it’s not because capitalism has failed the masses. It’s because Sanders, beyond any of his peers, has consistent convictions and an authentic persona.
To prevail, a moderate Democrat will need to behave likewise. The message can go like this: Capitalism has worked for millions of Americans. It worked for me. We need to reform it so it can work for everyone.

For the full commentary, see:
Stephens, Bret. “Capitalism and the Democrats; The most successful economic system shouldn’t be a dirty word.” The New York Times (Saturday, March 9, 2019): A21.
(Note: ellipses added; italics in original.)
(Note: the online version of the commentary has the date March 8, 2019, and has the title “Capitalism and the Democratic Party; The most successful economic system shouldn’t be a dirty word.”)

Central Planning Elitism Leads to Rule by the Corrupt or the Incompetent

(p. A23) . . . the underlying faith of the Green New Deal is a faith in the guiding wisdom of the political elite. The authors of the Green New Deal assume that technocratic planners can master the movements of 328 million Americans and design a transportation system so that “air travel stops becoming necessary.” (This is from people who couldn’t even organize the successful release of their own background document.)
They assume that congressional leaders have the ability to direct what in effect would be gigantic energy firms and gigantic investment houses without giving sweetheart deals to vested interests, without getting corrupted by this newfound power, without letting the whole thing get swallowed up by incompetence. (This is a Congress that can’t pass a budget.)
. . .
The impulse to create a highly centralized superstate recurs throughout American history. There were people writing such grand master plans in the 1880s, the 1910s, the 1930s. They never work out. As Richard Weaver once put it, the problem with the next generation is that it hasn’t read the minutes of the last meeting.

For the full commentary, see:
Brooks, David. “How the Left Embraced Elitism; The progressives’ Green New Deal centralizes power.” The New York Times (Tuesday, Feb. 12, 2019): A23.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Feb. 11, 2019.)