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.)

In a “Terribly Regulated” Germany “People Look for Their Little Spaces of Freedom”

(p. A1) BERLIN — It seemed like a no-brainer: Lower Germany’s embarrassingly high carbon emissions at no cost, and save some lives in the process.
But when a government-appointed commission in January [2019] dared to float the idea of a speed limit on the autobahn, the country’s storied highway network, it almost caused rioting.
. . .
(p. A10) Call it Germany’s Wild West: The autobahn is the one place in a highly regulated society where no rule is the rule — and that place is sacred.
. . .
Germany is woefully behind on meeting its 2020 climate goals, so the government appointed a group of experts to find ways to lower emissions in the transport sector. Cars account for 11 percent of total emissions, and their share is rising.
A highway speed limit of 120 kilometers an hour, or 75 miles per hour, could cover a fifth of the gap to reach the 2020 goals for the transport sector, environmental experts say.
“Of all the individual measures, it is the one that would be the most impactful — and it costs nothing,” said Dorothee Saar, of Deutsche Umwelthilfe, a nonprofit environmental organization that has lobbied for a speed limit.
. . .
Once, during the oil crisis in 1973, a German transport minister took his chances and imposed a speed limit. Road deaths stood at over 20,000 a year at the time (six times today’s level) and with oil prices skyrocketing, Lauritz Lauritzen thought Germans might reasonably see the benefits of saving some lives and some money on gas, too.
The speed limit lasted four months, and Mr. Lauritzen not much longer.
The experiment gave birth to the “Freie Fahrt für freie Bürger!” campaign — or “Freedom to drive for free citizens!” — the car lobby’s most powerful slogan to this day, and one used by political parties and car companies alike, a sort of unwritten second amendment.
“It’s all about freedom,” said John C. Kornblum, a former United States ambassador to Germany, who first arrived here in the 1960s, and has been living (and driving) here on and off ever since.
. . .
“Germany is terribly regulated, for reasons which have to do with the past, with a fear of uncertainty, a fear of being overwhelmed,” Mr. Kornblum said. “But then people look for their little spaces of freedom and the autobahn is one of them.”
And speeding isn’t the only freedom the autobahn offers.
Driving naked in Germany is legal, too. But if you get out of the car nude, you face a $45 fine.

For the full story, see:
Katrin Bennhold. “Autobahn Speed Limits? Voting With Lead Feet.” The New York Times (Monday, Feb. 4, 2019): A1 & A10.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date Feb. 3, 2019, and has the title “‘GERMANY DISPATCH; Impose a Speed Limit on the Autobahn? Not So Fast, Many Germans Say.”)

Bureaucratic FDA Delays Approvals for Fear “We’ll Be Toast”

(p. A21) Oct. 30 [2018] marks the 36th anniversary of the FDA’s approval of human insulin synthesized in genetically engineered bacteria, the first product made with “gene splicing” techniques. As the head of the FDA’s evaluation team, I had a front-row seat.
. . .
My team and I were ready to recommend approval after four months’ review. But when I took the packet to my supervisor, he said, “Four months? No way! If anything goes wrong with this product down the road, people will say we rushed it, and we’ll be toast.” That’s the bureaucratic mind-set. I don’t know how long he would have delayed it, but when he went on vacation a month later, I took the packet to his boss, the division director, who signed off.
That anecdote is an example of Milton Friedman’s observation that to understand the motivation of an individual or organization, you need to “follow the self-interest.” A large part of regulators’ self-interest lies in staying out of trouble. One way to do that, my supervisor understood, is not to approve in record time products that might experience unanticipated problems.

For the full commentary, see:
Miller, Henry I. “Follow the FDA’s Self-Interest; While approving a new form of insulin, I saw how regulators protect themselves.” The Wall Street Journal (Monday, Oct. 29, 2018: A21.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the commentary has the date Oct. 28, 2018.)

Politicians and Special Interests “Are Joined at the Hip”

(p. A15) In August 1979, when Paul Volcker began what would prove to be an eight-year stint as chairman of the Federal Reserve, inflation was running at a rate of more than 11% a year.
. . .
Before Jay Powell and Janet Yellen, before Ben Bernanke and Alan Greenspan, there was “tall Paul,” the thrifty, 6-foot-7 career civil servant who smoked cheap cigars and fished for trout with a fly rod. His policy, announced in an extraordinary Saturday press conference just two months after he took office, was the polar opposite of the radical “stimulus” imposed after the downfall of Lehman Brothers in 2008.
. . .
“Good government” and “sound” money are Mr. Volcker’s themes, in life as in print.
. . .
Washington in the early 1960s was a “comfortable, convenient medium-sized city,” he writes; its law firms were “entirely local and small, occupying maybe a floor or two in a K Street office building.” Today the capital is “a very different, unpleasant, place, dominated by wealth and lobbyists who are joined at the hip with the Congress and too many officials. I stay away.”
Humility is one of the charms of both the man and his book (written with Christine Harper, editor in chief of Bloomberg Markets). Though his kindergarten teacher, Miss Palmer, saw in young Paul a worrying lack of self-confidence, the grown man stuck to his anti-inflationary guns, let joblessness mount, bankruptcies climb and brickbats rain down. Refusing to flinch, he made the paper dollar, if not actually sound, then respectable. Tall Paul, indeed.

For the full review, see:
James Grant. “BOOKSHELF; The Last Monetary Hero; The Fed under Ben Bernanke opened the monetary spigots; the Fed under Paul Volcker shut them off–and ended an inflation crisis.” The Wall Street Journal (Monday, Nov. 26, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date Nov. 25, 2018, and has the title “BOOKSHELF; ‘Keeping At It’ Review: The Last Monetary Hero; The Fed under Ben Bernanke opened the monetary spigots; the Fed under Paul Volcker shut them off–and ended an inflation crisis.”)

The book under review, is:
Volcker, Paul. Keeping at It: The Quest for Sound Money and Good Government. New York: PublicAffairs, 2018.

Hollywood Should Respond When “the Audience Starts Voting with Their Feet”

(p. C1) Those who cannot remember the past are condemned to repeat it. Heading into the holidays, there still was no host for the 2019 Academy Awards, following the withdrawal of Kevin Hart over his controversial Twitter history. Next year’s ceremony will be the 30th anniversary of the last time the Oscars went emcee-free, in 1989.
The telecast’s producer, Allan Carr (“Grease,” “Can’t Stop the Music”), tried to fill the void by staging a kitschy opening number that is now considered the most cringe-worthy moment in awards-show history: Rob Lowe’s duet with Snow White on a reworked version of “Proud Mary.” (Sample lyric: “I used to work a lot for Walt Disney, starring in cartoons every night and day.”)
“It’s fitting and proper that we continue to honor the dark and tragic event that befell our nation 30 years later,” Lowe deadpanned. “I’m particularly looking forward to the candlelight vigils.”
. . .
(p. C6) Do you think the Oscars learned a lesson from this debacle?
[Sarcastically] It’s always been a huge relief to me that after Snow White, the Oscars got their act together and avoided any further controversy and embarrassment. By the way, it’s basically a show that nobody wants to do. It’s really sad. But honestly, they’ve got nobody to blame but themselves.
Why do you say that?
Making movies is about the audience, and when the audience starts voting with their feet, like they have been, only people who take themselves so seriously and self-reverentially would be incapable of making the kind of changes that one would need to make to be relevant to the times.

For the full story, see:
Bruce Fretts. “‘Rob Lowe Has A Last Laugh At the Oscars.” The New York Times (Saturday, Dec. 22, 2018): C1 & C6.
(Note: ellipsis added; bold in original online version.)
(Note: the online version of the story has the date Dec. 21, 2018, and has the title “Rob Lowe on Dancing With Snow White and Getting the Last Laugh.” The bold questions are by Bruce Fretts. The answers that follow are by Rob Lowe.)