Uncomfortable truths about the progressive legacy

Yesterday I was listening to the pre-inaugural concert at the Lincoln Memorial on the radio, and one of the speakers said something that struck me as emblematic of the challenges that Barack Obama faces, though I doubt she realized the ironic significance. She was praising Theodore Roosevelt's conservationist legacy as a model for Obama, though she only touched on a small sliver of Roosevelt's environmental legacy. He definitely did cherish the environment; a timeline of his life shows that in early April 1903 he "communes with deer while writing letters in Yellowstone, WY." He was indeed a conservationist, as were many progressives at the time.

But the progressives were also something else – something that today's progressives would do well to remember: ardent planners whose plans often had grave unforeseen consequences. Just after his time communing with the deer at Yellowstone, Roosevelt traveled to St. Louis to address the 1903 Good Roads Convention. The "good roads" movement dated back to before the automobile rose to prominence, and was formed to agitate for improved roads for bicyclists and farmers. But around the time of Roosevelt's speech, the movement was hijacked by the automobile industry. Unwilling or unable to compete on their own against mass transit, the automakers sought for the government to clear and pave the roads they needed in order to sell their cars – an advantage the streetcars and railroads did not generally have. Not wanting to appear to be too blatant in their rent seeking, the automobile industry lobbied the government indirectly, giving organizations like the AAA money in exchange for influence and seats on their boards.

The nascent auto industry was not the only booster of subsidized roads – even the private railroads were not immune to the siren song of the great new progressive future. They joined the cause in the 1890s with the idea that improved roads would mean more business for railroads, unaware of the threat that the long-haul trucking industry would come to pose to their business. This new semi-public, semi-private corporatist transportation model suited the progressives as well, who believed in a statist future where "private" enterprise was directed and controlled, though not outright owned, by the government.

In the years since the 1903 Good Roads Convention, the idea that government ought to be providing "good roads" has fundamentally altered the landscape of the country in ways that Theodore Roosevelt never could have imagined. The highway lobby gathered strength throughout the early half of the 20th century, eventually culminating in the Interstate Highway System, the widespread suburbanization of America, and the deterioration of once-great American cities. Urban planners like Robert Moses razed neighborhoods and blighted the remaining barren expanses with highways that have become increasingly congested ever since. In order to stave off this inevitable overuse, planners flattened America with zoning laws and parking regulations that forced America to sprawl ever farther from its city centers, to areas reachable only by cars and trucks. A century later it's hard to imagine it happening any other way, and it's often forgotten that there was a workable free market urbanism before there was unsustainable sprawl.

Theodore Roosevelt might be more commonly remembered for his conservationist work, but it's important for people today to remember the unforeseen consequences of the progressives' other grand plans. The "good roads" path that he helped put America on has shown itself to be an enabler of global climate change and belligerent petrostates, encouraging Americans to live farther apart, travel longer distances each day, have bigger houses, and fill those houses with more things. The common telling of the roading of America is that it greased the wheels of commerce and is an integral part of the "American dream," but it's impossible to know what sort of advances in mass transit technology would have come about and how we'd be living had the government not favored the automobile and the truck over the streetcar and the train. Theodore Roosevelt's conservationist efforts are indeed praiseworthy, but might both the environment and the economy be in better shape today had the progressives not interrupted the rail-based urbanization of turn-of-the-century America and put us on the car-based sprawling sub- and exurbanization that characterizes America today?

In calling for the government to fund mass transit and urban projects, Barack Obama has shown that he recognizes the problems of America's land use configuration. But in doing so, he shows himself to be ignorant of the root causes of the crisis: government meddling in the transportation and land use industries. Just as the progressives and futurists failed to use the government to direct a more efficient transportation scheme, Obama will likely fail in using the government to fix America's energy problems. Unless he renounces the legacy of the progressives and admits to America that it needs to return to its market-based roots – at least with respect to transportation and land use policy – his campaign promises of reversing our unsustainable ways will go unfulfilled.

Could Obama's energy plan destroy the environment?

Wired has a headline story today about about a biofuel start-up, and while the article is generally pretty disappointing (nothing about whether or not this company is receiving – or looking for – subsidies?), it's got an absolutely horrifying caveat at the end that some environmentalists think that a biofuel-based energy industry could spell environmental disaster. The article (.pdf) cites a report by the ETC Group, an environmental organization, which warns that even if our economy comes to depend on biofuels not made from food, there is still the risk that the land needs of whatever biomass we end up using will become untenable, and the impact on global food prices could be analogous to what happened with ethanol and food prices in 2007-08.

They term this a "sugar economy," and by sugar they mean carbohydrates in general – foods like corn, but also just generally anything that has ever been living (switchgrass, trees, leaves, etc.). These environmentalists worry that the Economist was being naïve when it said "there's plenty of biomass to go around," and that the poor of the global South will be the ones who end up yielding their cropland to the production of biomass to be liquified for use as America's fuel. The parallel with one form of biofuel – ethanol – is striking. The US government recently believed (ridiculously enough) that ethanol would be an effective and environmentally-friendly way of weening the US off of oil. As it turns out, ethanol is both environmentally deleterious and was responsible for the vast majority of the recent spike in global food prices, which hit developing countries especially hard.

Ethanol's rise began when the government started subsidizing it, and the ETC Group's conclusions would suggest that Obama's promise to subsidize biofuel research and production could lead to similar problems, as biofuel production crowds out the marketplace for food and land in general. What's even more jarring, though, is that Obama's energy plans are much more ambitious than America's recent corn ethanol subsidies, which barely made a dent in the market for fuel in the US. The world's big biggest rent-seekers feel the subsidies about to stream in, and have begun partnering with biofuel startups – the list (36-37 of the report) is a who's-who of America's greatest rent-seeking corporations, with ADM, DuPont, GM, and literally every major pharmaceutical and oil company looking to get in on Obama's promised subsidy binge.

As for the veracity of ETC's claims, it all depends on a) the efficiency that biofuel producers can achieve; and b) whether or not they receive the subsidies that Obama promises, and on what basis he chooses to allocate them. I guess we'll see in the coming months and years how serious Obama is about creating a new government-dependent energy industry, and how firms react to the incentives of his policy.

Edit: More on potential ecological destruction caused by non-food biofuels.

T. Boone Pickens, pickin' your pocket

T. Boone Pickens is up to his rent-seeking mischief again. He's managed to capitalize on the green trend by advocating subsidies for his "green" projects. This includes a vast wind farm in Texas, which he's gone ahead with and now is lobbying to get the subsidies he needs for it to be profitable. Now he's up to it again in California, lobbying for the passage of Proposition 10 on the November ballot, which would grant $5 billion in subsidies for natural gas and alternative energy. Over half of the total would go to cars and trucks, and most of that would go to trucks and SUVs. Pickens is heavily invested in natural gas, and has a company that provides natural gas to government fleets. The subsidies go overwhelmingly to natural gas over other more efficient vehicles, like the Prius:

Consumer Federation of California executive director Richard Holober said most hybrid vehicles, which run on either electricity or gasoline, would not qualify for rebates under Proposition 10 except for the Toyota Prius, which gets the unusually high 45 miles per gallon.

"That will get you a $2,000 rebate," Holober said at a recent legislative hearing on the ballot measure. "A natural gas Honda Civic which is purely natural gas-fueled gets you at least a $10,000 rebate, even though the state of California's website rates them as identical in clean air standards and the Prius is much more energy-efficient."

"Clearly this is an attempt to distort the market for one particular product," he said

So, despite the fact that there are few natural gas filling stations in California, backers (i.e., Pickens and two other natural gas business) defend the emphasis on non-gasoline vehicles by saying that cars that don't run on any gas deserve a special place, ostensibly so as to "foster independence from foreign oil." This might be a valid suggestion if America were narrowing in on energy independence and we needed to just close that 2% gap that all of our cars were still using, but that's not where America is: we can't even stop growing our oil needs. Considering the far superior mileage that more efficient traditional and hybrid cars get, it seems ridiculous to say that they aren't more deserving than natural gas vehicles. (Obviously, I don't think any of them are deserving of subsidies, though I'd say that there are much bigger and badder subsidies and regulations relating to transportation, land use, and energy in place that need to be tackled first.)

Impairing creative destruction

Last week we heard that Detroit was getting a bailout to the tune of $25 billion, and today we heard that it's a done deal that'll be signed as early as this weekend. US News & World Report gives the details:

• Adjusted for inflation, the Chrystler bailout of 1980 cost $4 billion, while today each big three US carmarkers is getting $5 billion, with $10 billion left over for suppliers.
• The law actually requires nothing of the automarkers. It mandates uses for the money (fuel-efficient technology and some other things), but money is fungible if they were already planning on spending that much money on whatever it was that it was earmarked for.
• Chrystler is owned by a private equity firm, and is not a publicly-traded company. I.e., unless you happen to have a couple billion dollars, you don't have a stake in it.
• Without the money, at least some of the automakers would probably go bankrupt. There is a very real chance that this is preventing or delaying the creative destruction that is necessary in a capitalist system.
  
• "There's more aid coming." According to the article, Detroit is going to try again next year for another $25 billion.

What I implied last week – that Detroit got the bailout as a sort of consolation prize – turns out to be only 76% true:

It might seem like a stealth rescue, but the plan has been in the works for at least 18 months. Approval for the loans was first included in last year's Energy Independence Act. Earlier this year, the automakers sought a first installment of loans totaling about $6 billion. But the nationwide credit crunch severely crimped their ability to borrow, and besides, next to bailouts like $200 billion for Fannie Mae and Freddie Mac, a mere $6 billion started to seem unduly modest. So Detroit raised the ante to $25 billion, the most allowed under current law.

Oh Detroit, don't think we forgot about you!

I have to admit, I didn't see this one coming: virtually every major political and American auto industry players has all but confirmed that Detroit will also get a bailout, to the tune of a $25 mbillion loan guarantee. Political considerations (Michigan and Ohio are big industrial states) meant that Obama, McCain, Pelosi, Reid have already voiced their support for the plan. After negotiations, the chairman of Chrystler said the negotiations were "successful," and the head of Ford said that "It was a great day."

Hobbled with the detritus of a failed healthcare system, a trade policy inclined towards anti-competitive protectionism, and the perverse incentives of government handouts, no loan guarantee is even going to begin to fix Detroit's, and the nation's problems. The auto industry in America is inextricably linked to the nation's nationalized road system and individual state and municipal land use regulations, and it will rise and fall based on the degree to which our laws favor automobiles and roads.

Ethanol redux: Wind!

It seems that we have not learned the lessons of ethanol, and that wind power might be another example of a technology subsidized based on its ecological value that turns out to be more environmentally degrading than the alternative. The Atlantic has an article questioning the policy and comparing it to the ethanol debacle. The article cites two issues which make wind both highly uneconomical and not nearly as efficient as "less sexy" measures:

Powering plants up and down is inefficient, and when backup power is included, wind energy costs 10 to 30 percent more than fossil-fuel energy, even without factoring in the cost of new power lines. (Wind-energy costs have risen, not fallen, in recent years.) And once you include backup power, the cost of averting carbon-dioxide emissions by building a wind plant rises to $67 a ton, according to Cambridge Energy Research Associates. Less sexy emissions-reduction strategies, such as increasing efficiency at current electrical plants, cost between $10 and $30 a ton.

The author, Matthew Quirk, correctly sees the folly in the government choosing technologies and elevating them in the market. His suggestion is ultimately that this means that as a solution to the climate change problem, we ought to instead levy a neutral carbon tax. It's a logic idea, but only if you consider current legislation inviolable. The truth is that so many of our carbon emissions are exacerbated by other government policies – land use and transportation laws, from the municipal government to the feds, mostly.

There's a far more direct way to get at pollution rather than another tax (albeit a fairly "fair" sounding one, whatever that means), and it's repealing the suburban-auto lobby's influence in our legal code. Restoring property rights (i.e., doing away with zoning rules and minimum parking requirements) would go a long way to moving to a more free market allocation of property and people – that is, more dense and dynamic clusters surrounded by inevitably less people in suburban and rural areas. Privatizing roads would be the ultimate step to restoring land use to the market, but that seems like just a little too much to wish for within the 21st century.

Edit: The NYT Magazine this weekend also had a piece on the politics and economics of wind. Ultimately, everyone concedes that wind is economically viable thanks to subsidies, but at the end the author focuses on the broader picture: the entire energy industry is subsidized, and the idea that it runs based on a free market is a myth. However, the subject of the article – Peter Mandalstam, a wind entrepreneuer, a sort of not-rich version of T. Boone Pickens – draws different conclusions from this fact than I do. He touches on an important point at the end of the article – "Let’s line up all the subsidies of coal and nuclear power and oil and natural gas and wind — and let’s have a debate," but rather than concluding that we ought to dismantle the original subsidies, his argument is that we ought to tack on additional subsidies, in this case for wind power.

Anarchy on the airwaves

Google has recently launced a campaign to lobby the FCC to free up radio spectrum currently used as whitespace between channels. The main opponents of the move seem to be high-end audio equipment manufacturers, who say that interference would be much more common and difficult to deal with if the space were free to be used by any device.

Ultimately, though, the problem is not insurmountable – technological solutions do exist:

Meanwhile, companies are preparing for the worst. For instance, Lectrosonics is now offering a wider range of frequencies for its wireless microphones.

Until last year, the company's wireless microphones spanned a range of 537 MHz to 768 MHz. Now that a part of that band has been auctioned off, the company has reworked its devices to operate in the 470 MHz to 691 MHz spectrum. It has also added another band, the 944 MHz to 952 MHz spectrum, to the mix.

Those changes haven’t been easy. Over the course of a year, Lectrosonics reallocated engineering resources and spent "several thousand dollars" getting each new product certified by the FCC.

"We have a limited amount of engineering resources and there are hard costs such as FCC licenses that we have had to get," says Winkler.

It's interesting how one of the big costs – FCC licenses – are not reflective of inherent technological issues, but rather the bureaucratic process for allocating spectrum.

Of course, the spectrum itself has no hard limit on use, and can theoretically be divided infinitely. Someone at Intel rebuts broadcasters' claims that allowing the whitespace between channels to be used would damage reception of existing channels by pointing out that the aforementioned audio devices already use the spectrum in question (though broadcasters obviously have bigger reasons to fear competition). The infinite divisibility argument and the idea that individuals can successfully defend their airspace using technology without resorting to top-down allocation are the rationales behind the open spectrum movement.

Google has reason to advocate such a policy, since they are very strong on content but are choked by the monopoly on wireless delivery in America and abroad. Obviously they believe that small amounts of the existing bandwidth, if left free to anyone to use, could be successfully developed and eventually used by Google to push content to consumers while bypassing the traditional wireless gatekeepers. Many hardware companies supports open spectrum, as increasing the ubiquity of wireless communications would increase demand for wireless devices and software.

Possible false flag operations in Somalia

The NYT today has a story about Somalia and the recent spate of violence against aid workers, both foreign and domestic. At least twenty have been killed this year alone, something that is apparently unprecedented in the two decades since the collapse of the Siad Barre regime. But the funny thing about the killings is that no one can quite figure out who's behind them. Though the attacks are apparently committed by radical Islamists, the groups claiming responsibility are little known. The government maintains that the Islamists are behind it, though they have a good reason to present that picture: the current federal government was put into place on the back of an American-backed, Ethiopian-led invasion of the country that drove the Islamic Courts Union out of power in 2006. But not everyone buys it:

Some Western security analysts theorize that in the violent murkiness that has overtaken the country, unsavory elements within the Somali government may be killing aid workers to discredit Islamist opposition groups and draw in United Nations peacekeepers, who may be the government’s last hope for survival.

The government admits that it desperately needs peacekeepers. But it denies that it is attacking aid workers to get them.

“It’s obvious who’s doing this,” said Abdi Awaleh Jama, a Somali ambassador at large. “It’s hard-liner Islamists who hate the West. They are forces of darkness, not forces of light.”

Considering that foreign intervention in Somalia is always a not-too-distant possibility, and that the current regime was installed by fiat, this theory isn't as crazy as it seems. The scepter of al-Qaeda led the Americans and Ethiopians to invade and expel the ICU two years ago, so hey, maybe it will work again.

Here's the archive of my posts about Somalia, everyone's favorite failed state, which includes a pretty long post I wrote taking the media to task for their uncritical look at how Somalia's fared since it descended into statelessness twenty years ago.

Naomi Klein's misguided understanding of capitalism

Normally I wouldn't waste time trying to debunk Naomi Klein, but her use of the term "capitalism" to describe decidedly statist policies has really been getting to me lately. In an article for The Nation called "Disaster Capitalism, State of Extortion" she again pulls what I like to call "pulling a Naomi Klein" – she berates the Bush administration for its obeisance to markets, admits that it's interfering with markets, and concludes capitalism is therefore the problem. The article is a bit schizophrenic (but then again, when are here thoughts not?), but focuses on three main issues: oil in Iraq, oil in Anwar, and the food crisis.

On Iraqi oil, apparently she thinks that no-bid contracts are the paragon of capitalism, and even that these uncompetitive contracts "will raise more money" – but how handing over concessions to a company without looking for higher bidders will raise more money, she never explains. Furthermore, she never explains why a capitalist – that is, someone with a single-minded drive for profit – wouldn't put a contract out for competitive bidding. On Anwar she makes a little more sense, saying that the resources up there are miniscule compared to the global market for oil.

But on food prices, she again loses it. Despite a leaked report by the World Bank that says the rises in food prices are largely due to pro-ethanol, anti-capitalist state intervention in agriculture, she conveniently ignores the fact that capitalism is obviously the solution to the food crisis, not the problem (Raționalitate on food here). She goes on a little rant about genetically modified crops, saying "there is no evidence that GMOs increase crop yields, and they often decrease them." This might be true (though I kind of doubt it), but if it were, then what's the problem? Has the Bush administration been forcing farmers to use GM crops? If they're so ineffective, then wouldn't those greedy profit seekers not use them? And in the same breath that she deprecates GM crops, she berates corporations for patenting those oh-so-ineffective crops and depriving others of their use. Although attacking intellectual property as it relates to food genetics is certainly justified, she implicitly associates intellectual property with a free market agenda, despite the divide among libertarians on whether IP is justified (and, hence, whether or not it qualifies as "capitalist"). Those who come out (to some degree or another) against IP range from the traditionally libertarian to the hard-core anarcho-capitalists (not to mention myself), though you'd have no way of knowing that from her article.

Naomi Klein almost always has legitimate points, but she's often profoundly confused about the difference between capitalism and statism. What she calls "disaster capitalism" (a favorite topic of hers – she even wrote a book about it) is more accurately termed state capitalism, but don't count on Naomi to be able to discern distinctions so subtle.

Edit: Cato actually has a takedown of Klein's aforementioned book here if you're interested – I haven't read her book, and I've only skimmed this article, but from what I've read of Klein's, debunking her is a job that anyone with half a brain could do pretty well.

NYT: a bit behind the times on Obama and ethanol

Fun fact about this blog: by far the single largest driver of visitors to it is a single trackback link on a post about Obama, McCain, and ethanol on Gary Mankiw's blog. Anyway, because of that link (which I can't see in Safari, but can in Firefox) and the NYT's story about Obama and ethanol that appeared on A1 below the fold today, I've been getting a lot of hits.

Anyway, the article was a pretty standard critique about Obama's pro-ethanol fuel policies and his ties to lobbyists, including the obligatory reference to agribusiness rent-seekers extraordinaire, Archer Daniels Midland ("ADM: supermarket to the world," to NPR listeners). However, something that struck me as a little bizarre and unbecoming of the Times' stature was that throughout the whole article, the author never once mentioned the fact that Obama recently stepped off a bit from his ethanol platitudes and admitted that it might not be such a great idea, after all. Since then, I don't remember having heard him talk about it, but then again I also have been trying my damnedest not to hear the presidential candidates at all. But it seems like something that might have warranted at least a mention, eh?

The revolution will not be broadcast on satellite radio

It looks like the Sirius and XM satellite radio merger will go forward, but not before some representatives hold the deal hostage so that they can steer some business towards a favored private-equity firm. Apparently the new über-station will not be black enough:

Members of the black caucus on Capitol Hill have been arguing for the merged company to lease five times that amount of spectrum to companies owned by racial minorities. Short of that, caucus members have warned in letters to the commission and meetings with Martin, they would oppose the merger.

In an interview yesterday, Rep. G.K. Butterfield (D-N.C.), chairman of the Congressional Black Caucus's working group on satellite radio, called Martin's proposed compromise "completely unacceptable."

The article doesn't really explain why, however, these esteemed black members of our illustrious legislative branch of government are all of the sudden so worried – is part of the merger a plan to fire all of the black DJs? Why is the situation right now tenable, but if they merge, it will not be? But anyway, I digress. The most shocking party is how blithely Butterfield admits that he's engaging in blatant rent-seeking on behalf of a "minority-run" firm:

Butterfield said he got the idea for the 20 percent set-aside for minority-owned companies from Georgetown Partners, a minority-run private-equity firm based in Bethesda, and its managing director, Chester Davenport.

But wait – it gets better! Despite the fact that "he hoped Georgetown Partners would fill that role" (i.e., the 20% stake set aside for minority-owned companies), "Butterfield said he was not pressing for the 20 percent leasing arrangement on behalf of Georgetown Partners or anyone else." Yeah right.

...by the way, I should add that I think that all discussion of dividing the bandwidth is pretty ridiculous in the first place. The FCC came into being to divide up the spectrum and stop anyone from interfering with anyone else's transmission. However since then, we've gained a more nuanced view of the spectrum, and it's now generally understood that it can be infinitely divided. Technology that can better parse out the individual signals is already available and would be developed at a much faster pace if the government were to relinquish control of the airwaves. That's the theory behind the open spectrum movement, which I've talked about before.

Overregulation in overdrive

Today, my brother went to the dermatologist for his acne, and my friend went to see a doctor for a urinary tract infection. He got the standard treatment (doxycycline), and she got the standard treatment (nitrofurantoin). Both had to pay more for the visit to the doctor than for the medications to cure the ailments, neither of which are under patent protection. However, both had diagnosed their own illnesses before seeing the doctors, and the standard treatments for both are relatively uncontroversial – surely in these cases, both of them could have correctly chosen what drug to take. And even if you think it's abhorrent that people can make their own decisions with regards to standard antibiotics, both conditions and cures could have been easily diagnosed by a nurse or pharmacist. Neither of the drugs were addictive or in any way pleasurable unless you needed them (I know from experience that doxycycline makes me nauseous if I take it before eating – and the doctor didn't even tell me that; I had to figure it out on my own!), and yet both require a visit to someone with an MD in order to acquire. A waste of time, a waste of money, and an obvious case of rent-seeking, in my opinion. And also a cause of spam and computer viruses, apparently. And yet, with all the hubbub this presidential campaign season about the soaring costs of healthcare, no one seems to be proposing loosening restrictions on consumers' access to prescription medications. (Unless, of course, you're a rural Alaskan, in which case you don't need a doctor to get a prescription.)

Environmentalists make sure solar technology will never see the light of day

EcoGeek has an article up which summarizes the findings of a Prometheus Institute report, and the conclusion is that solar panels will plummet in cost due to coming oversupplies of silicon, which is currently in short supply. However, the article turns bizarre when the authors insert this editorial comment in the last paragraph:

It may also, though this is probably wishful thinking, push governments to start offering more incentives to those who install solar in a bid to use up the remaining capacity and financially support their manufacturers who by this point will be a very large industry, employing tens of thousands of people.

First of all, one of the benefits of falling prices is precisely the opposite of what the author wants to happen: solar panels might become competitive without the need for subsidies, which would free them from the vagaries of politics. It would blunt any criticism of green technology as government waste, since government would no longer be propping it up. But, to add insult to injury, the cure that they prescribe seems worse than the disease: by propping up the sector, the government would remove the incentives to innovate, and increase the jockeying among solar panel companies for public funds. It could possibly be one of the worst things that the government could do to an infant industry – distort the price mechanism and incentives faced, and ensure that the industry will forever be dependent on the whims of those who hold the pursestrings in Washington. And the "labor-friendly" overtones of supporting industries that create jobs smacks of the techniques that the manufacturing and auto unions used to ensure their own demise, or the increasingly perverse farm subsidies to support a way of life that's long gone despite the money lavished on farmers.

The NYT preaches to the choir

The NYT has an editorial today about industrial farming called "The Worst Way of Farming." While I generally agree with the gist of the editorial – that industrial farming is not efficient and is a bad idea – I think the way they authors go about making their point is a bit bizarre. Since the NYT is a liberal paper, and its readers are generally wont to agree with calls for regulation, centering the editorial around a call for environmental regulations and heavy-handed mandates seems too much like preaching to the choir. The editors ought to be promoting, first and foremost, market-enhancing reforms before encouraging further regulations. While the article suggests that government distortions in the markets for water and animal feed encourage this type of farming, the editors don't mention it more than once, and don't make it explicitly clear that a part of solving the problem is to reintroduce market competition into the farm sector. This would be much more palatable to the general public, which is (I would suppose) much less warm to the statist policies that the NYT concludes at the end are necessary. Rather than backing an idea that only statist liberals could get behind, why not center the piece on a call for dismantling the barriers to free enterprise that currently exist? That way, neither Democrats nor Republicans could credibly disagree.

This is something that's relevant not just to the issue of farming, but to every issue: an issue whose main constituency is the left would do itself huge favors by focusing on arguments that appeal to right-wingers.

American steel makes a comeback

According to the WaPo, steel is experiencing a resurgence in America. On the back of the declining dollar, skyrocketing demand overseas, and leaner plants, Amex's steel index has grown by 50% annually for the past half-decade. The Post also mentions that organized labor's diminished role at the plants might have something to do with American steel's competitiveness:

Part of the credit for steel's rebirth goes to the pragmatism of the United Steelworkers. The union become a supporter of mill consolidations, agreed to more job flexibility in labor contracts and went along with a move to replace guaranteed pensions with defined-contribution plans. The union was able to extract agreements from owners to streamline companies' management ranks and set aside a share of profits to fund health-care and prescription drug plans for retirees and their families who had lost them in the wave of bankruptcies. [...]

The mills themselves emerged much leaner and more technologically advanced, allowing many fewer workers to make roughly the same amount of steel.

Back in the 1970s, there were more than 500,000 steel workers in the United States, a number that has been reduced by more than two-thirds, even as the number of workers has edged up in recent years, according to the American Iron and Steel Institute. The amount of labor required to manufacture a ton of steel has gone from roughly 12 man-hours to about 1.2, analysts say. Steel workers continue to be well paid, union officials say, earning $65,000 a year or more, when incentive pay, profit sharing and a modest amount of overtime are included.

"Labor has become much less of a factor in the cost of steel," Rhody said. "That particular part of the equation has equalized, making domestic steel much more competitive."

Astute recent historians might remember that Bush slapped some tariffs on steel in 2002, but those restrictions were lifted by 2003. However, the Post article doesn't mention the voluntary export restraints that China placed on its steel industry, which likely boosted the ability of American firms to sell their steel on world markets. I'm not sure what the extent of these barriers were, or if they're still in place.

Fraud at the Pentagon

Though the US military's budget has doubled since 2000 to more than $600 billion annually, the amount of auditors checking for fraud and abuse has stayed essentially flat, says Wired. Over $150 billion each year goes unaudited, and each auditor is responsible for reviewing the mind-bogglingly high amount of over $2 billion per year. From the article:

Crime – and even threats to national security – have also been allowed to flourish, thanks to the staffing shortages. Working with other agencies, the DOD IG's criminal investigators have brought in "770 criminal indictments, 644 convictions, and over $3.14 billion in criminal, civil, and administrative recoveries." But many other incidents are going unchecked. "Technology/Munitions theft and diversion crimes cannot be adequately investigated allowing these items to fall into the hands of those that would do the United States harm," according to the report.

"There have been massive holes in oversight for years, and in these shadows, criminals have been ripping off taxpayers and depriving our soldiers by wasting and stealing money and supplying defective equipment," Project on Government Oversight investigator Nick Schwellenbach tells Danger Room.

The DOD IG's office has certainly stayed busy. In just the last few months, the DOD IG caught a Philippine corporation bilking $100 million from the military health care system; nabbed a trio trying to bribe their way into drinking water contracts for troops; busted an Air Force general who tried to steer a $50 million deal to his buddies; and launched investigations into the Pentagon's propaganda projects and the youthful arms-dealer who sold tens of millions of dollars' worth of dud ammunition to the government.

Florida legalizes cheap healthcare

Both houses of the Florida legislature have passed a bill allowing for the creation of bare-bones healthcare plans, which begs the question: why in the hell wasn't this allowed before?? The key provision in the bill is one that allows insurance providers to make available plans that don't cover the whole battery of possible ailments: "To make the policies affordable, Florida will allow insurers to offer policies that do not include many of the 52 services that standard policies must currently cover, like acupuncture and podiatry." The goal is that these plans will sell for under $150/month.

Of course, that doesn't mean regulators and legislators sat on their hands and are going to let these insurance companies sell any plan they want to anyone who's willing to buy it. The plans will still have to cover "preventive services, office visits, screenings, surgery, prescription drugs, durable medical equipment and diabetes supplies," and companies are not allowed to discriminate in their offerings with regards to health and age. In addition, the plans will only be available to Floridians who have been uninsured for six months and are not eligible for public insurance – because, God forbid, we wouldn't want poor people voluntarily going off the public dole and engaging in voluntary commerce!

According to the NYT article, this idea has been tried in a handful of states, but the plans haven't proven very popular with consumers. Sherry Glied at Columbia says that people "are only somewhat responsive to the price of health insurance," but I think a more accurate statement would be that people are only somewhat responsive to price under current conditions. Health insurance – especially for things other than accidents and uncommon health problems – might very well not even exist if medicine and healthcare were left up to the market, given that healthcare isn't something that one would normally expect to be paid for through insurance. It's rarely totally unexpected, it's often recurring (diabetes medication, for example), and most interactions with healthcare professionals are for rather mundane and easily diagnosable and treatable ailments.

It's a wonder that pundits still claim that America has a free-market healthcare system when the government serves 45% of the market, with the rest still heavily regulated.

Private companies receive 70% of intelligence money

In keeping with the defense contractors theme, about a week ago I heard an interview on NPR with Tim Shorrock, author of the book Spies for Hire: The Secret World of Intelligence Outsourcing. In it, he cites a fantastic figure as the percentage of intelligence spending that's doled out to the "private" sector (as if state intelligence and espionage could be considered a market-driven industry):

What happened at Abu Ghraib, and CACI's refusal to discuss it, stands as a kind of high-water mark for intelligence contracting. In 2006, the year Humphrey delivered his comments, the cost of America's spying and surveillance activities outsourced to contractors reached $42 billion, or about 70 percent of the estimated $60 billion the government spends every year on foreign and domestic intelligence. Unfortunately, we cannot know the true extent of outsourcing, for two reasons. First, in 2007, the Office of the Director of National Intelligence (ODNI) refused to release an internal report on contracting out of fear that its disclosure would harm U.S. national security interests. Second, most intelligence contracts are classified, allowing companies like CACI to hide their activities behind a veil of secrecy.

What this actually is is a sort of retirement plan for intelligence officers: working in the private sector requires a security clearance, which is easiest to have if you've already worked for the government and already posses one – it's a revolving door between government and industry, and of course the private sector pays more. According to the interview, most of the contractors are former government employees. I did a little more research, and apparently this isn't even a new revelation – Salon published an article citing the 70% figure a year ago. I'm just surprised that the figure doesn't get more play in the media.

Available wherever military-grade weapons and services are sold

I've wondered before why government contractors like Raytheon and BAE advertise: they aren't selling products to consumers, and theoretically the people making purchasing decisions aren't going to base contracts worth billions of dollars on 30-second TV ads. But I think I've found the answer: in case any of their deals come under public scrutiny. Essentially, it's a PR hedge against unflattering information surfacing in the media. The ads both soften up the public, and – I would assume – make media bosses think twice before digging up dirt on their advertisers.

Road building and the Great Depression

I was reading today a book on the history of roads in 20th century America called The Geography of Nowhere. I was a bit disappointed in the book itself – I was looking for a more detailed treatment of the funding and scope of government road projects – but I came across this interesting bit about road expenditures before the Great Depression: "A commission under President Hoover concluded that the automobile was the 'most potent influence' on the rise of local taxes between 1913 and 1930." This caught my eye because according to Amity Schlaes' The Forgotten Man, property taxes were the most difficult tax for Americans to pay during the Great Depression. In a time before the widespread adoption of income and sales taxes, property taxes made up the lion's share of local government revenues: two-thirds of all revenue according to Dick Netzer, and over 90% of all taxes levied in cities of more than 30,000 according to David Beito.

Because this was in an era before politicians recognized the incremental wisdom in at least pretending to fund roads with user fees, this run-up in taxes was part of a larger trend of the pre-WWII era: property owners and renters were subsidizing roads for the benefit of the wealthy. Real estate developers who ran private forms of mass transit (mostly streetcars) and who were in direct competition with government-financed roads were some of the biggest payers of taxes, which makes the transfer especially ironic. I'd known that road construction was a big driver of industry and commerce in the first half of the twentieth century, but I hadn't realized the exacerbating effect those costs had during the Great Depression.