Category: Public Choice

Initially Socialist Israeli Kibbutzim Gradually Embraced Entrepreneurial Capitalism

(p. C4) Today, in a break with . . . [its] communal past, Ms. Barnea’s kibbutz is farming for profit, and its main cash crop is medical marijuana. She recently retired from managing the greenhouse that grows the drug.

The shift at Kibbutz Beit HaEmek is just the latest sign of how much Israel’s kibbutzim are changing, as both Israel and the kibbutz movement move away from their socialist roots to become more entrepreneurial and profit-driven.

“We have to survive,” said Ms. Barnea, now 64, walking around the greenhouse as the smell of marijuana wafted past.

. . .

Facing a bleak financial future, young people abandoned the kibbutzim in the 1990s. Meanwhile, Israel’s vibrant technology sector took off, providing an additional pull away from the communes.

To reverse the exodus, Israel’s kibbutzim dismantled much of their socialist model. In 1995, Kibbutz Merom HaGolan became the first to go through a so-called privatization process, paying members salaries on a scale.

Today, most kibbutzim have undergone some form of privatization. Many members now earn salaries outside the kibbutz but pay taxes for the community’s upkeep. New members can take out mortgages with banks and buy land on the kibbutz for their homes.

. . .

Only about 40 kibbutzim still share resources and give equal allowances as envisioned in the original model. Most of these communities had created successful businesses that helped them maintain the communal way of living.

One such community is Kibbutz Sdot Yam, on Israel’s central coast between Tel Aviv and Haifa. In the 1980s, the kibbutz opened a factory that constructed quartz surfaces for tables and floors. Despite that venture’s success, the kibbutz is now considering whether to allow members—most of whom work outside the community—to earn their own salaries, rather than sharing them with the commune, said Doron Stansill, a 47-year-old member.

For the full essay, see:

Rory Jones. “The Kibbutz in a Capitalist Israel.” The Wall Street Journal (Saturday, Oct. 14, 2017 ): C4.

(Note: ellipses added.)

(Note: the online version of the essay has the date Oct. 13, 2017 , and has the title “The Kibbutz Movement Adapts to a Capitalist Israel.”)

Forest Service Banned Private Logging to Thin Forests; Then Started an Uncontrolled “Controlled” Fire to Thin Same Forests

(p. A11) SEATTLE — In a high-altitude landscape parched by drought, U.S. Forest Service crews took advantage of some stable weather in eastern Oregon this month and prepared to burn off some thick underbrush and shrubbery at the edge of the Blue Mountains, part of an expanding strategy to remove forest fuel that can turn fires into conflagrations.

The target was a 300-acre tract of woodlands in the Malheur National Forest, adjacent to a private cattle ranch. But the controlled fire that the crew set on the afternoon of Oct. 19 [2022] jumped a containment line and charred through a portion of the nearby ranch. Two sisters from the family-owned Windy Point Cattle Company made their way through the smoke-filled landscape for a furious confrontation with the Forest Service’s “burn boss,” Ricky Snodgrass, and then dialed 911.

What happened next, federal officials say, was highly unusual in the modern history of the Forest Service and its programs for managing federal lands across the country. The Grant County sheriff arrived on scene, placed Mr. Snodgrass in handcuffs and sent him to jail.

. . .

With climate change driving an increase in the size, frequency and ferocity of wildfires, the Forest Service adopted a plan this year to step up those prescribed burns, and also more aggressively thin forest stands with strategic logging programs.

. . .

The Forest Service’s operations in this part of Oregon have long been the subject of contention in Grant County, where the U.S. government manages some 60 percent of the land.

Locals have long stewed over federal land management policies, including logging restrictions that have contributed to declines in timber production and the shuttering of the region’s sawmills.

For the full story, see:

Mike Baker. “A Strategy to Protect Forests Reopens Old Wounds in Oregon.” The New York Times (Saturday, October 29, 2022): A11.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date Oct. 28, 2022, and has the title “Prescribed Burns Are Encouraged. Why Was a Federal Employee Arrested for One?”)

Senate Cedes Sovereignty on Air Conditioning HFC Regulation

(p. A17) WASHINGTON — The Senate voted on Wednesday to approve an international climate treaty for the first time in 30 years, agreeing in a rare bipartisan deal to phase out of the use of planet-warming industrial chemicals commonly found in refrigerators and air-conditioners.

. . .

Many American manufacturers had a business incentive to support the amendment. Under the pact, nations that do not ratify the amendment will have restricted access to expanding international markets starting in 2033.

Some Republicans from states with many chemical manufacturers supported the Kigali deal.

. . .

Americans for Prosperity, a political action committee founded by the billionaire Koch brothers, sent a letter to lawmakers last week saying that ratifying the Kigali Amendment would be an “abdication of U.S. sovereignty over environmental regulation” to the United Nations. The group also argued it would raise the price of air-conditioning, refrigeration and industrial cooling for American consumers.

For the full story, see:

Lisa Friedman and Coral Davenport. “Senate Ratifies Global Pact to Curb HFCs, Used in Cooling.” The New York Times (Thursday, September 22, 2022): A17.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 21, 2022, and has the title “Senate Ratifies Pact to Curb a Broad Category of Potent Greenhouse Gases.” Where there is a minor difference between the online and print versions, the passages quoted above follow the online version.)

California $113 Billion Bullet Train “Is a Case Study” in How Boondoggle Infrastructure Grows “Too Big to Fail”

(p. A1) LOS ANGELES — Building the nation’s first bullet train, which would connect Los Angeles and San Francisco, was always going to be a formidable technical challenge, pushing through the steep mountains and treacherous seismic faults of Southern California with a series of long tunnels and towering viaducts.

But the design for the nation’s most ambitious infrastructure project was never based on the easiest or most direct route. Instead, the train’s path out of Los Angeles was diverted across a second mountain range to the rapidly growing suburbs of the Mojave Desert — a route whose most salient advantage appeared to be that it ran through the district of a powerful Los Angeles county supervisor.

The dogleg through the desert was only one of several times over the years when the project fell victim to political forces that have added billions of dollars in costs and called into question whether the project can ever be finished.

Now, as the nation embarks on a historic, $1 trillion infrastructure building spree, the tortured effort to build the country’s first high-speed rail system is a case study in how ambitious public works projects can become perilously encumbered by political compromise, unrealistic cost estimates, flawed engineering and a determination to persist on projects that have become, like the crippled financial institutions of 2008, too big to fail.

. . .

Political compromises, the records show, produced difficult and costly routes through the state’s farm belt. They routed the train across a geologically complex mountain pass in the Bay Area. And they dictated that construction would begin in the center of the state, in the agricultural heartland, not at either of the urban ends where tens of millions of potential riders live.

The pros and cons of these routing choices have been debated for years. Only now, though, is it be-(p. A15)coming apparent how costly the political choices have been. Collectively, they turned a project that might have been built more quickly and cheaply into a behemoth so expensive that, without a major new source of funding, there is little chance it can ever reach its original goal of connecting California’s two biggest metropolitan areas in two hours and 40 minutes.

When California voters first approved a bond issue for the project in 2008, the rail line was to be completed by 2020, and its cost seemed astronomical at the time — $33 billion — but it was still considered worthwhile as an alternative to the state’s endless web of freeways and the carbon emissions generated in one of the nation’s busiest air corridors.

Fourteen years later, construction is now underway on part of a 171-mile “starter” line connecting a few cities in the middle of California, which has been promised for 2030. But few expect it to make that goal.

Meanwhile, costs have continued to escalate. When the California High-Speed Rail Authority issued its new 2022 draft business plan in February, it estimated an ultimate cost as high as $105 billion. Less than three months later, the “final plan” raised the estimate to $113 billion.

The rail authority said it has accelerated the pace of construction on the starter system, but at the current spending rate of $1.8 million a day, according to projections widely used by engineers and project managers, the train could not be completed in this century.

For the full story, see:

Ralph Vartabedian. “Costs Soaring As Bullet Train Goes Nowhere.” The New York Times (Monday, October 10, 2022): A1 & A15.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 9, 2022, and has the title “How California’s Bullet Train Went Off the Rails.”)

Non-Partisan Congressional Budget Office Estimates Cost of Biden Student Loan Forgiveness at $400 Billion

(p. A1) WASHINGTON — President Biden’s plan to erase significant amounts of student loan debt for tens of millions of Americans could cost about $400 billion, the nonpartisan Congressional Budget Office said in a report Monday [Sept. 26, 2022], making it one of the costliest programs in the president’s agenda.

The C.B.O. said the price tag might rise even higher because of Mr. Biden’s decision to extend a pause on federal student loan repayments through the end of the year, which could end up costing some $20 billion. The report gauged the cost over a period of 30 years, though the bulk of the effects to the economy would be felt over the next decade.

. . .

. . . , critics have accused the Biden administration of hiding the plan’s true cost.

Marc Goldwein, the senior vice president for the Committee for a Responsible Federal Budget, said that the C.B.O. score did not take into account a significant part of (p. A13) the administration’s loan relief program: a plan to reduce payments for future borrowers who go on to earn low incomes after college, which outside analysts say could host hundreds of billions of dollars more.

“You’re basically buying a very expensive lottery ticket,” Mr. Goldwein said. “When you’re taking out the loan, you’re going to have no idea of how much you’re going to be paying back.”
Monday’s report, issued by a nonpolitical budget scorekeeper, is one of several attempts to estimate the total cost of the program, which Mr. Biden enacted using executive action rather than legislation.

For the full story, see:

Katie Rogers and Jim Tankersley. “Cost of Erasing Students’ Debt Will Be Steep.” The New York Times (Tuesday, September 27, 2022): A1 & A13.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Sept. 26, 2022, and has the title ‘White House Student Loan Forgiveness Could Cost About $400 Billion.”)

To Avoid “Misconduct” Starbucks Asks “That All Future Elections Be Conducted Fully in Person”

(p. B5) As the union drive at Starbucks stores accelerates, Starbucks has ratcheted up its efforts to push back on the campaign, asking on Monday [Sept. 15, 2022] that the National Labor Relations Board investigate allegations of misconduct during a union vote in the Kansas City area.

Starbucks, in a letter to the labor board, asked that the agency investigate reports by an N.L.R.B. employee that there was unfair coordination between the agency and the union, specifically that several employees were given special voting arrangements and that the N.L.R.B. provided confidential real-time election results to the union. The company asked that the agency suspend all elections until the allegations could be investigated. In addition, Starbucks asked that all future elections be conducted fully in person.

For the full story, see:

Emma Goldberg. “Citing Misconduct Claims, Starbucks Asks to Halt Union Elections.” The New York Times (Tuesday, August 16, 2022): B5.

(Note: bracketed date added.)

(Note: the online version has the date Aug. 15, 2022, and has the title “Starbucks Asks for a Suspension of Union Elections.”)

After Defending Nuclear Power, Green German Energy Minister Is Popular in Polls

(p. A8) BERLIN — Germany will keep two of its three remaining nuclear power plants operational as an emergency reserve for its electricity supply, its energy minister announced on Monday [Sept. 5, 2022], delaying the country’s plans to become the first industrial power to go nuclear-free for its energy.

. . .

. . . the decision to extend the life of it nuclear reactors is one of the most symbolic, if not consequential, the government has taken, breaking a political taboo as it tries to show that it is doing all it can to alleviate the crisis. The government said it made the decision based on a series of stress tests playing out worst-case energy scenarios.

. . .

. . . even as he has led his party into sacrificing nearly all of its sacred cows, Mr. Habeck has become one of the most popular politicians in Germany. In polls, he now regularly receives higher ratings than the chancellor.

“We are doing everything that is necessary,” said Mr. Habeck said.

For the full story, see:

Erika Solomon and Melissa Eddy. “As Energy Crisis Worsens, Germany Extends Life of Two Nuclear Reactors.” The New York Times (Tuesday, September 6, 2022): A8.

(Note: ellipses, and bracketed date, added.)

(Note: the online version has the date Sept. 5, 2022, and has the title “Breaking Taboo, Germany Extends Life of 2 Nuclear Reactors.” The online version of the article says that the print version of the article had the title “Germany Extends Life of Two Reactors” but my national print edition of the NYT had the longer title “As Energy Crisis Worsens, Germany Extends Life of Two Nuclear Reactors.”)

Omaha Streetcar Will Look More Like St. Louis Failure Than Kansas City Success

(p. A1) After decades of stops and starts, Omaha is the closest it’s ever been to the development of a modern streetcar line.

But where city officials and local developers see an asset for economic development connecting midtown to the riverfront, one transit professional urges caution.

Tom Rubin knows a few things about public transportation and finance, having worked as the chief financial officer for the large transit system serving Los Angeles. And the Omaha native is skeptical of the plans for a streetcar in his hometown that he fears could financially run off the rails.

He’s concerned that rising inflation and interest rates could raise the cost of building the system and at the same time reduce the private development that’s being counted on to pay for it.

He questions why the city has not thought further about pursuing federal dollars to help defray the construction costs.

(p. A3) And he thinks there needs to be much more independent study of its financial feasibility beyond the lone review to date that was written by an engineering firm in the business of designing streetcars.

. . .

Rubin is not an Omaha taxpayer. But the Omaha native, who has more than four decades of experience in public transit as a senior executive, consultant, auditor and author, has taken an interest in the Omaha proposal.

Rubin founded the transit practice of what is now accounting firm Deloitte, formerly served as CFO of the nation’s third-largest public transit system in Los Angeles and has served as a consultant to numerous federal, state and local transit agencies and planning organizations.

He also has written papers and studies on transit issues for groups as varied as the Environmental Defense Fund and the free-market Reason Institute. He has said he may seek to publish a paper on the Omaha project.

. . .

“What is the magic that will make people decide to put their new office building along the streetcar route?” he said. “I’m far from convinced that putting tracks down generates development.”

Streetcar supporters disagree, often pointing to the Kansas City streetcar as a shining example of the development potential.

. . .

But there are other systems built in recent years that Rubin holds up as less than ideal. He mentioned St. Louis, where a streetcar shut down shortly after going into service. In that city, the line’s developers chose a route that did not have nearly enough ridership to support it.

Rubin said the current economic environment also raises concerns about bonding the Omaha project. Inflation could raise building costs, and higher interest rates figure to raise the cost of borrowing.

“It’s a lot easier to show you can make the debt service with a 2.5% bond than a 5% bond,” he said.

And higher interest rates also could slow development along the streetcar line. Less development would mean fewer TIF dollars to pay the bonds.

Another concern Rubin raises is the high cost of the streetcar system, which he said makes it hard to justify as a mode of transit. It is much more expensive per rider, for example, than Metro’s new ORBT rapid bus transit service.

Rubin said that prior to a major investment in a streetcar, an independent and unbiased analysis of the alternatives is needed. The HDR draft analysis at this point isn’t enough to convince him the streetcar is either a good idea or financially feasible for Omaha.

He noted Omaha-based HDR has long been a heavy hitter in the world of massive transit projects, including streetcars. On the Omaha project, the company did some initial design work on the streetcar route, utility coordination, the location of the streetcar vehicle maintenance facility and vehicle specifications.

. . .

Rubin acknowledged the Kansas City streetcar is working well but questioned whether Omaha could replicate that success. He’s not sure the Omaha route would be as viable as the one in Kansas City, which links the city’s riverfront and downtown with the arena district and Crown Center.

“They have a good route and some things that work well for them,” Rubin said. “I don’t think Omaha, even best case, could be as successful as Kansas City.”

For the full story see:

Jessica Wade and Henry J. Cordes. “Transit Consultant Skeptical of Omaha’s Streetcar Project.” Omaha World-Herald (Sunday, June 5, 2022): A1 & A3.

(Note: ellipses added.)

(Note: the online version of the article was updated Aug. 5, 2022, and has the title “Public transit consultant skeptical of Omaha’s streetcar project.”

Corrupt Crony “Emergent” Firm Emerges as Incompetent Too

Emergent’s role in crony capitalism was documented in an earlier entry, that documented the donations and lobbying gifts they bestowed on congress and regulators in order to fill the emergency health stockpile with dubious anthrax vaccine instead of the masks and ventilators that were in demand during the Covid-19 pandemic.

(p. A7) WASHINGTON — Workers at a plant in Baltimore manufacturing two coronavirus vaccines accidentally conflated the ingredients several weeks ago, contaminating up to 15 million doses of Johnson & Johnson’s vaccine and forcing regulators to delay authorization of the plant’s production lines.

The plant is run by Emergent BioSolutions, a manufacturing partner to both Johnson & Johnson and AstraZeneca, the British-Swedish company whose vaccine has yet to be authorized for use in the United States. Federal officials attributed the mistake to human error.

. . .

The mistake is a major embarrassment both for Johnson & Johnson, whose one-dose vaccine has been credited with speeding up the national immunization program, and for Emergent, its subcontractor, which has faced fierce criticism for its heavy lobbying for federal contracts, especially for the government’s emergency health stockpile.

For the full story see:

Sharon LaFraniere and Noah Weiland. “Factory Mix-Up Ruins 15 Million Doses Of Vaccine From Johnson & Johnson.” The New York Times (Thursday, April 1, 2021): A7.

(Note: ellipsis added.)

(Note: the online version of the article was updated Aug. [sic] 1, 2021, and has the title “Factory Mix-Up Ruins Up to 15 Million Vaccine Doses From Johnson & Johnson.”

Wealthiest Resident of Illinois Moving His Business to Florida for Lower Taxes and Less Crime

(p. B1) Billionaire Ken Griffin is relocating his hedge-fund firm Citadel from Chicago to Miami, the third major employer to announce the move of a corporate headquarters from Illinois in the past two months.

In a letter to employees Thursday [June 23, 2022], Mr. Griffin said he had personally moved to Florida—a state that doesn’t collect personal income tax—and that his market-making business, Citadel Securities, would also transfer. He wrote that he views Florida as a better corporate environment and though he didn’t specifically cite crime as a factor, company officials said it was a consideration.

Mr. Griffin has been the wealthiest resident of Illinois, so his departure will hurt state tax collections on both the individual and corporate side. It could also be a blow to Chicago’s philanthropic scene. Mr. Griffin has given more than $600 million in gifts to educational, cultural, medical and civic organizations in the area, spokesman Zia Ahmed said.

For the full story see:

John McCormick and Juliet Chung. “Citadel Plans to Relocate to Florida.” The Wall Street Journal (Friday, June 24, 2022): B1-B2.

(Note: bracketed date added.)

(Note: the online version of the story was updated June 30 [sic], 2022, and has the title “Ken Griffin Moving Citadel From Chicago to Miami Following Crime Complaints.”)

New York City Hurt as Wealthy Residents Move to Miami

(p. A1) When roughly 300,000 New York City residents left during the early part of the pandemic, officials described the exodus as a once-in-a-century shock to the city’s population.

Now, new data from the Internal Revenue Service shows that the residents who moved to other states by the time they filed their 2019 taxes collectively reported $21 billion in total income, substantially more than those who departed in any prior year on record. The IRS said the data captured filings received in 2020 and as late as July 2021.

Many new or returning residents have since moved in. But the total income of those who had initially left was double the average amount of those who had departed over the previous decade, a potential loss that could have long-term effects on a city that relies heavily on its wealthiest residents to support schools, law enforcement and other public services.

The sheer number of people who left in such a short period raises uncertainty about New York City’s competitiveness and economic stability. The top 1 percent of earners, who make more than $804,000 a year, contributed 41 percent of the city’s personal income taxes in 2019.

About one-third of the people who left moved from Manhattan, and had an average income of $214,300. No other large American county had a similar exodus of wealth.

Early in the pandemic, Sam Williamson, 51, a white-collar defense lawyer living on the Upper West Side of Manhattan, first relocated to Utah, then to Long Island. After a return to the city, he and (p. A19) his family permanently moved to Miami last year when his law firm opened an office there.

“I love New York City, but it’s been a challenging time,” Mr. Williamson said. “I didn’t feel like the city handled the pandemic very well.”

. . .

Gergana Ivanova, 28, a clothing designer and social media influencer, said her decision to move to Miami was less about taxes. The pandemic made the downsides of living in New York City more noticeable, she said, including the lack of space in her tiny Queens apartment and the trash piling up on the sidewalks. She felt less safe walking around when the streets were emptier.

“It didn’t feel happy and positive like it used to,” she said.

. . .

The exodus to Florida was especially robust, and not just for the retiree crowd. In 2020, New York City had a net loss of nearly 21,000 residents to Florida, IRS data showed, almost double the average annual net loss from before the pandemic.

. . .

Zak Jacoby was the general manager of a bar on the Lower East Side when the pandemic hit. Throughout 2020, his employment status fluctuated with the city’s changing indoor dining rules, a stressful period that put him on and off unemployment benefits.

Mr. Jacoby, 37, flew to Miami in January 2021 to see a friend — and decided to stay permanently after getting a job offer at a local restaurant group. If there was another virus surge, he said, the state would be less likely to shut down businesses, giving him more job security.

“My mind-set was, Florida’s more lenient on Covid, and there’s going to be less regulation,” he said.

For the full story see:

Nicole Hong and Matthew Haag. “Exodus of New York’s Wealthy Leaves Lasting Costs in Wake.” The New York Times (Tuesday, June 28, 2022): A1 & A19.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version, and has the title “The Flight of New York City’s Wealthy Was a Once-in-a-Century Shock.” The online version of the story says that the print version has the title “An Exodus of New York’s Wealthy Has Left Lasting Costs,” but my National print version has the somewhat different title “Exodus of New York’s Wealthy Leaves Lasting Costs in Wake.”)