Anti-protectionist street protests in the Russian Far East

Not something you see every day – crowds clamoring for free trade. Via Cathy Young, the Moscow Times reports that inhabitants of Russia's far eastern territory have taken to the streets to protest a new tax that I presume would fall mostly on cheap used Asian cars imported via China (in Eastern Europe and its colonies in the far east, used cars are a big deal).

In a rare example of grassroots political power, angry protests by drivers prompted lawmakers in the far eastern Primorye region on Monday to ask the country's two leaders to delay raising import duties on foreign cars. [...]

Thousands of drivers took to the streets in several far eastern cities and towns Sunday to protest the tariffs, blocking traffic, clashing with police, openly insulting Putin and Medvedev and even calling on Putin to resign.

Putin's decree would increase the prices for imported cars by between 10 and 20 percent, a move the government has defended as a way of protecting domestic auto makers during the growing financial crisis.

The Primorye region's representative in the Federation Council, hockey legend Vyacheslav Fetisov, met with regional car dealers in Vladivostok on Monday and promised to pass on their request to the government to call off the tariffs, which they say would ravage their business.

Then again, I don't know if clamoring for reduced tariffs on cars really counts as libertarian activism when you think about it...

Is Houston really unplanned?

It seems to be an article of faith among many land use commentators – both coming from the pro- and anti-planning positions – that Houston is a fundamentally unplanned city, and that whatever's built there is the manifest destiny of the free market in action. But is this true? Did Houston really escape the planning spree that resulted from Progressive Era obsessions with local planning and the subsequent grander plans of the post-WWII age of the automobile? Michael Lewyn, in a paper published in 2005, argues that commentators often overlook Houston's subtler land use strictures, and recent developments in the city's urban core reaffirm this.

It is definitely true that Houston lacks one of the oldest and most well-known planning tools: Euclidean single-use zoning. This means that residential, commercial, and industrial zones are not legally separated, though as I will explain later, Houston remains as segregated in its land uses as any other American city. But single-use zoning is not the only type of planning law that Houston's government can use to hamper development.

As Lewyn lays out in his paper, minimum lot sizes and minimum parking regulations abound in this supposedly unplanned City upon a Floodplain. He discusses a recently-amended law that all but precludes the building of row houses, a stalwart of dense urban areas (the paper is heavily cited and poorly formatted, so I've removed the citations):

Until 1998, Houston's city code provided that the minimum lot size for detached single-family dwellings was 5000 square feet. And until 1998, Houston's government made it virtually impossible for developers to build large numbers of non-detached single-family homes such as townhouses, by requiring townhouses to sit on at least 2250 square feet of land. As Siegan admits, this law "tend[ed] to preclude the erection of lower cost townhouses" and thus effectively meant that townhouses "cannot be built for the lower and lower middle income groups." Houston's townhouse regulations, unlike its regulations governing detached houses, were significantly more restrictive than those of other North American cities. For example, town houses may be as small as 647 square feet of land in Dallas, 560 square feet in Phoenix, and 390 square feet in Toronto, Canada.

Though this law was eventually changed to allow denser homes within Houston's ring road (though not nearly as dense as some American cities allow), this change only affected a quarter of Houston's homeowners, leaving the rest still as regulated as ever. Not to mention the fact that even for those within the ring road, the rules only matter to new construction, leaving the vast majority of the building stock in compliance with the old rules.

Not to be outdone by minimum lot restrictions, the parking planners are also hard at work in Houston. As Donald Shoup explains in his magnum opus on parking regulations and the free market, minimum parking regulations are an oft-used and under-appreciated way for city planners to decrease density, push development farther from the city's core, increase an area's auto dependency, and decrease walkability and the viability of mass transit. Houston's planning code mandates that developers, regardless of what they perceive as the actual demand, build 1.25 parking spaces per apartment bedroom, and 1.33 spaces per efficiency apartment. Retail stores are also saddled with these parking minimums, and even bars as Lewyn notes are required to build "10 parking spaces per 1000 feet of gross area," flying in the face of common sense. To add insult to injury, the city requires that structures on major roads have a significant setback from the street, and the only rational thing to do with this unbuildable space is to put the mandated parking there, meaning that Houston actual codifies the hideous and inconvenient parking lot-out-front model of sprawl that is so typical across the US.

Another form of planning that Houston has, which is celebrated by the self-titled Antiplanner, is the institution of supposedly voluntary deed restrictions, or private land use covenants agreed upon by the owners of the property under restriction. I'm personally torn over the "libertarianness" of such schemes – are they truly voluntary? Can an individual owner of a property opt out of them once they've been signed? What's the statute of limitations? One thing that makes me suspect that they perhaps aren't as "free market" as they seem is that though the contracts are between individuals, Houston's city code allows the city attorney to prosecute these lawsuits at no cost to the supposed victims – fellow property-owners. In this way, as Lewyn explains, Houston's land uses are just as "Euclidean" as in other American cities:

But in Houston, restrictive covenants are so heavily facilitated by government involvement that they resemble zoning regulation almost as much as they resemble traditional contracts. Houston's city code, unlike that of most American cities, allows the city attorney to sue to enforce restrictive covenants. The city may seek civil penalties of up to $1,000.00 per day for violation of a covenant. Thus, Houston forces its taxpayers to subsidize enforcement of restrictive covenants even when litigation is too costly for individuals to pursue. In its covenant litigation, the city focuses on enforcement of use restrictions (that is, covenant provisions requiring separation of uses), as opposed to enforcement of other restrictions such as aesthetic rules. By subsidizing enforcement of use restrictions, Houston's city government subsidizes segregation of land uses--and in fact, land uses in Houston are only slightly less segregated than in most cities with zoning codes.

More recently, Houston's supposedly laissez-faire attitudes towards planning have again been tested by the proposed 23-story tower at 1717 Bissonnet Street. The tower would have been in a low-rise residential neighborhood, within walking distance of Rice University. After years of wrangling, the project was finally denied by the city, on grounds that the developers failed to prove that the project would not adversely affect traffic flow (a pretty arbitrary and un-libertarian requirement considering Houston's legendary congestion and the fact that developers have little say over where the city places its roads). And this, despite the fact that many of the tower's prospective residents – Rice students and staff – could have either walked or biked to school/work.

Boosters of Houston's land use policy – those who believe that Houston's land use patterns are the free market, revealed – never mention the restrictive minimum lot size and minimum parking requirements. They mention deed restrictions as free market innovations but fail to see how the city's prosecutors turn private concerns into public budget drains. And though the Antiplanner in his aforelinked comments on Houston recognizes the anti-density movement that reared its ugly head after the 1717 Bissonnet proposal, he evidently doesn't see this as seriously detracting from Houston's anything-goes land use policy.

Matt Yglesias fails to make the right case against highways

Matt Yglesias is one of the best mainstream bloggers on land use/transportation that I know of, and, as one blogger who I don't recall right now once said, his urban planning and transportation posts could be blogs in their own right. However, it's puzzling that in an article for Cato Unbound, he comes up with such a pathetic rejoinder to the O'Toole/Cox/Poole vulgar libertarian transportation cabal, who don't seem to have ever met a road they didn't like:

Or consider the fact that Randall [sic] O’Toole is indignant about the prospect of public expenditures on mass transit systems, but appears to have little to say about public funding of highways. This, too, looks more like a case of narrow business interests than sterling free market principles.

While Yglesias' instincts are right – current transportation markets in America are highly distorted – the reason they're distorted has little to do with the ways highways are financed. Based on some basic figures, Randal O'Toole concludes that the vast majority of road funding – over 80% – comes out of user fees. Now, of course there're still some subsidies there, but it's really nothing compared to the subsidies that mass transit systems receive, which in America never even come close to covering operating costs, nevermind capital expenditures. Now, there are some problems with the 80% number, such as the government's favorable access to bond markets and the legacy of infrastructure that wasn't paid for with user fees, but all in all, it's hard to argue that roads have a subsidy advantage over mass transit.

However, that's not to say that Yglesias doesn't have a point when he says that libertarians and conservatives have blind spots when it comes to how they see transportation. But the real government benefit that the road/car system has over mass transit is density: there are innumerable regulations at every level of government in the United States which favor low-density, single-family detached housing over the denser forms that dominated non-rural areas before the 20th century. Successful roads as we have in America require this low density to remain (almost) financially solvent – it would be very difficult to cope with people's road needs if they were allowed to build as densely as they would without maximum density zoning rules and minimum parking regulations.

As a thought experiment, imagine your local town/neighborhood with twice the density. Chances are, the roads would quickly become very congested. They would have to be widened, which would require money, and even more money than normal, because the government would have to purchase valuable land next to existing roads. (That is, assuming that eminent domain is not used.) The gas tax would have to be raised, and soon the costs would get out of hand. On the other hand, mass transit would become more profitable rather than less, because much less track needs to be laid to satisfy the same demand, and mass transit systems have much more excess capacity than roads. If densities are limited, though, then this alleviates both stress on roads that go through valuable urban property (which are expensive and difficult to widen) and forces people to drive farther, thus paying more in user fees.

There's a legitimate case to be made against American transportation and land use policy, but condemning highway subsidies ain't it.

Reason's commenters put Reason contributers to shame

Reason Magazine, the Reason Foundation, and Cato are generally pretty okay libertarian standard-bearers, but they lose serious libertarian cred when it comes to land use. In those areas, they've been completely coopted by hacks like Randal O'Toole, Wendell Cox, and Robert Poole, who take every opportunity to bash the budding New Urbanist movement over its support of anti-sprawl land use regulations, without recognizing that the biggest part of the New Urbanist agenda is to repeal the highly restrictive minimum density zoning laws, minimum parking requirements, and other regulations that limit the sort of unregulated, organic growth that we see in the oldest and most desired parts of American and European cities today.

So anyway, it was totally unsurprising to see this article by Cox referenced in reason.com's blog, where he blames the recent subprime meltdown on New Urbanism. But what I was surprised to see is the incredible outpour of knowledge in the comments section, where various commenters methodically rip Cox's argument to shreds. Reason ought to look into its land use and transportation coverage, and instead of relying on these tired one-trick ponies, perhaps hire some of the commentators. They, at least, recognize that New Urbanism is nothing compared to the already-entrenched pro-sprawl regulations that have been in place since the advent of the automobile.

The subsidized roads/zoning feedback loop

I've been reading this fascinating article by William Fischel at Dartmouth about the history of zoning in America. The ultimate conclusion is that zoning is a political manifestation of home value insurance and that such insurance might be valuable in lessening the exclusionary impacts of zoning, but the history that the author gives is much more interesting.

The most interesting conclusion he has is that zoning was a direct response to the freedom of the automobile, bus, and freight truck. Whereas previously the rich (always the most fervent advocates of zoning, both then and now) were secluded from the city and inner-suburb riff-raff by higher subway fares and the expense of owning and operating a car, the author argues that the coming of trucks and buses in the 1910's is what really did in unregulated land use. Apartment blocks were the bane of every wealthy single-family homeowner's existence, and they were seen as lowering housing prices and destroying the character of a neighborhood.

All well and good – an explanation that rings true even today – but there's something that I find lacking in it. Namely, the car, bus, and truck weren't the only ingredients in this whole shift: there was also the not insignificant matter of the roads they ran on. The capital costs of laying streetcar tracks were financed by sale of houses and real estate around the streetcars, and the operating costs were financed through user fees.* The roads, on the other hand, were, at this point in time, both constructed and maintained by various levels of government. Though "libertarian" writers from the Cato Institute would have you believe otherwise, the government spending binge on roads preceded the nation's first state fuel tax (passed in Oregon in 1919) by at least half a decade. As early as 1913, the costs of building roads were already weighing on state and local budgets, who didn't fund those projects out of dedicated fuel taxes. The federal government didn't start collecting user fees in the form of fuel taxes until 1932, despite passing its first highway bill in 1916, and really getting into the highway funding game with the Federal-Aid Highway Act of 1921.

If the increased mobility afforded by buses and trucks is seen as a direct result of subsidized roads, then zoning is as well. Sadly, not only was zoning driven by the subsidized roads, but now zoning begets even more roads. Populations grow but legislated densities rarely do, so the natural tendency is to build outwards rather than upwards to accommodate the change. Though our current road system may be more-or-less pay-as-you-go, looking somewhat like a self-sustaining independent free market creation, the truth is that the current patterns are only sustainable because of the zoning regulations that spread people far enough out that everyone's driveway doesn't have to open into a six-lane highway. Were the government forced to provide roads for any density that required it, it would be overwhelmed with the costs of constantly widening streets.

* The land use situation wasn't completely laissez-faire. Real estate developers (i.e., streetcar magnates) often used their political connections to get the government to grand monopolies on streetcar lines, creating a sort of de fact exclusionary zoning code.

Tax policy and the subprime crisis

Here's a cause for the real estate bubble that I'd never heard before, via Russ Roberts at Cafe Hayek: bad tax policy. In 1997, Clinton signed into law a tax act which gave taxpayers a substantial exemption from the capital gains tax when they sell their home. Married homeowners filing jointly could pay 0% capital gains tax on up to $500,000 of the difference between the selling price and the buying price. This gave real estate investment an edge over salaried/wage labor – you could never get away with earning half a million dollars through a job and not paying any tax on it. It diverted resources in the economy towards real estate and away from other sorts of work and entrepreneurship. Chris Farrell at Business Week summed it up well in 2005:

The issue goes way beyond tax fairness. A growing number of economists are deeply concerned that residential real estate is absorbing far too many economic resources. Money is pouring into concrete foundations rather than high-tech innovation. "Residential investment accounted for 35% of private investment in the past year, a level not seen since the early 1970s," notes Martin Barnes, the perceptive financial-market observer at Bank Credit Analyst.

Upon reading this, my first inclination is to say that this might have been a more important impetus for the bubble than state intervention in housing through government-backed mortgage agencies.

This reminds me of an article that I read yesterday by Kevin Carson, founder of the vulgar libertarian watch. In it he argues that you cannot evaluate a policy in an "atomistic" way, but rather how it relates to other laws in a "dialectical" way. As it applies to this tax policy change, though the action – lowering real estate capital gains taxes – was a very libertarian thing to do if you look at it in isolation, the fact that the law left all other tax levels unchanged makes it an illiberal policy. When people decide how they're going to earn money, real estate speculation will receive more consideration in relation to working than it otherwise would it a totally free market.

Sweden: a great place to be a pirate

Today I learned something refreshing: there are countries where the party of the free market doesn't support intellectual property laws. I was reading today about the Pirate Bay – the infamous giant Swedish aggregator of pirated music, movies, software, and more – and it led me to read this very interesting and copiously cited Wikipedia article on the Swedish Pirate party. It was founded in 2006 on a single issue: pro-piracy, anti-intellectual property. The party didn't do as well as expected, with under 1% of the parliamentary vote in 2006, but it brought the issue to the foreground of Swedish politics for a little bit a few years ago. After heavy reporting on the issue, one Swedish paper found that 61% of Swedes had a positive image of the pro-piracy movement. Earlier this year, six MPs from the Moderate Party – a free market party that has been included in governing coalitions – wrote a letter calling on the government to "decriminalize all non-commercial file sharing and force the market to adapt." Can you imagine the same in America – the Republicans, the supposed party of markets, telling the RIAA and MPAA to fuck off, because pirates are just part of the free market? Maybe if Naomi Klein had heard of the pro-piracy movement, she wouldn't idiotically mistake intellectual property with free market ideology.

The problem with subsidies

From the NYT, an article that is recommended reading in light of recent campaign promises to shore up the environment with subsidies. Apparently a practice that was hip among the green scene – putting small turbines in urban areas – is highly inefficient. In fact, it's so inefficient that "making and transporting turbines for cities may lead to more carbon dioxide emissions than the turbines save," according to some nameless "British studies." Though most people who put up small turbines on their property did it out of curiosity and not financial incentive, there are some who were likely swayed by the kinds of tax benefits and subsidies that people often receive from governments for installing supposedly energy efficient technology. The same sort of benefits that would surely be part of Obama's promise to involve the federal government heavily in technology and science, "investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future." At one point, this would have included Obama's support for ethanol, which similarly turned out to be a net environmental negative.

Remember, kids: if the government is "catalyzing private efforts," they ain't private efforts no more. The free market isn't just being free to innovate: it's also being free of unfairly subsidized competition.

The folly of Obamanomics

The NYT Magazine this week has a feature article on Obama's economic vision, and the article is a lot less interesting or novel than the author himself imagines. Basically, it rehashes the standard narrative of Obamanomics: acknowledge the good in markets, raise taxes for the richest quintile and lower them for the rest, and then spend massive amounts of money on infrastructure and energy-efficient technology. The author reveals, from the beginning, that this is going to be a standard liberal narrative, and that he isn't going to question the central tenets which underpin American liberal economic thinking:

In its more extreme forms, the Chicago School’s ideas have some obvious flaws. History has shown that free markets aren’t so good at, say, preventing pollution or the issuance of fantastically unrealistic mortgages.

Really?! It's "obvious" that the free market has failed us when it comes to pollution and the mortgage market? Because last I checked, one of the biggest determinants of energy use – transportation – is an almost entirely nationalized industry in the US, its closely-related cousins of land use and construction are highly regulated and 25% nationalized, and the field of energy generation is regulated to the point where efficiency is punished by bureaucracy. And then there is the American mortgage market, which since the middle of the 20th century has been used as a public policy tool, up until today when 40% of all mortgages go through the decidedly anti-market institutions of Fannie Mae and Freddie Mac, including many that turned toxic when the mortgage market collapsed last year.

Admittedly, this is the NYT's David Leonhardt speaking, not Obama. But in the world of American politics and economics, they might as well be one in the same – there are few who will try to refute Leonhardt's statement; even conservatives and liberatarians, whose economic ideas are being attacked, are more likely to try to convince you that everything's not as bad as it seems, rather than try to explain how these supposed market failures are actually failures of the government.

Is piracy more like stealing, or ad-blocking?

Though major media industry groups would have you believe that stealing music or other digital content is like stealing a physical object, a more appropriate analogy would be that it's a little like blocking ads on the internet. Ad revenue funds the content – you're paying for the content with your time – while the distribution costs are very little compared to distributing the content through physical media. But, people (and courts) often view the two issues very differently. While sharing an episode of The Office on BitTorrent could land you in court, no such case would be imaginable against someone who removed the ads from the official ad-supported version of the show on NBC's website. While copyright laws are viewed by all but anarchists (both anarcho-communists and market anarchists, actually) as sacrosanct, the WaPo leaves readers with the idea that the problem of ad-blocking might just work itself out.

The idea behind it is pretty obvious: blocking ads takes time, and people only do it if ads are obtrusive enough. If content providers are losing money because of missed ad revenues, they can respond by either two ways: an arms race to block and get around blocks, or by making the ads not worth blocking. Whereas the internet used to be filled with annoying talking ads, I haven't seen a video ad that starts automatically with the sound on in a long time. Even on a Romanian news website that I used to read which always had annoying ads long after professional American sites did, I haven't seen one lately. (The site, like most others, has gone upscale in a lot of other ways, but because of the brand name recognition it has, it can't shed its ridiculous name – HotNews.ro.) And though I almost always use Safari's pop-up suppressor, anecdotal evidence from when I surf without it tells me that pop-ups aren't nearly as prevalent as they once were. And though privacy advocates bemoan ad algorithms that analyze your habits and deliver ads that would appeal to you, ads are often helpful, and they can be a lot more helpful and less annoying to the consumer if they're better targeted.

Even though the media, courts, and lawmakers don't realize it yet, piracy has already forced producers of media content to make their products even more appealing than the pirated product. For example, I used to illegally download episodes of The Office with BitTorrent, until NBC started offering episodes with ads online for free. Though the pirated version is better quality, more enjoyable to watch since it doesn't have ads, and doesn't take much time if I plan properly, the ad-supported version is more appealing because I don't have to plan in advance. In fact, it even beats out (for me) streaming video pirate video sites like alluc.org, because it's faster and more reliable. Everyone I know who watches The Office (people who are the most appealing cohort: young people) watches it on nbc.com, and that includes people who also use pirate streaming video sites to watch shows that aren't available legally online.

Philadelphia urban planning

Urban planning has been in the news a lot lately in Philadelphia because of a combination of its sudden trendiness, high gas prices revitalizing urban cores, and its new mayor. Here's a recap of planning news during the last few days in the City of Brotherly Love:

• Dense buildings are hot in Philadelphia – just this month the largest skyscraper in the city opened, and this week plans were announced to top that record by 50%. The tower at 18th and Arch would be 1,500 feet high, while taking up half the space as the current tallest building in the city. As usual, neighbors are complaining, despite the fact that the site is well within Philadelphia's central business district. The neighbors are worried about reduced availability of parking since the site is being built on a parking spot, though they don't seem to care that market forces dictated (with the caveat that no land use is truly market-based in America) that that plot of land be turned into high-density office (and perhaps residential?) space.
• One of Philadelphia's very successful "edge cities," King of Prussia, has finally been fully developed, but the last development is a decidedly anti-exurban "new urbanism" type project. Though the area doesn't have any hope to be connected to rail any time soon, the project does aim to create the walkable, urban-looking core than KoP never had. The area became popular when big government-style planning conspired to run three major highways through the town in the '50s, and its place was confirmed when big government-style Cold War military spending was directed at the town, where weapons contractor GE poured money into the town in the '60s. And of course no story about the suburbs would ever be complete with an anecdote about WWII veterans building houses in the area, financed by subsidized mortgages through the GI bill. The article doesn't mention whether or not government officials prodded developers into building this sort of project, but it seems unlikely given that the NIMBY forces were too busy decrying the development of the golf course, which some apparently thought counted as the last bit of undeveloped land in the area. It took a specific PA Supreme Court ruling to protect owners of golf courses from zoning that would proscribe further development of their property.
• The Delaware River waterfront – a centrally-located but poorly-developed area of Philadelphia – is probably going to be rezoned and developed in the near future. One of the big debates is whether or not to allow slot machine gambling on the riverfront. Many people are against the idea, especially in light of the fact that the casinos would have huge parking lots and would not adhere to the urban image that Philadelphia is trying to cultivate. While at first my libertarian instincts say to allow the development, on second thought I wonder if the profitability of the casino there isn't due only to restrictions on casinos elsewhere. If casinos were allowed to be built throughout the region, would the most profitable location for them really be on high-value riverfront property?

The WaPo finally realizes the root cause of the subprime crisis

The Washington Post had an article about the roots of subprime mortgage crisis which was the paper's website's headline in the morning, and has gradually been pushed lower and lower on the page to the point where now it's not even on the front page of the website. Anyway, the article puts the blame on the government's distortionary activity within the mortgage markets. Beginning around the year 2000, as part of Bush's "ownership society," federal agencies like began aggressively purchasing subprime mortgages, effectively creating a market for them where they otherwise did not exist. Agencies like FHA and HUD, and pseudo-private agencies like Fannie Mae and Freddie Mac, were the government's tool to manipulate the market for mortgages, and manipulate it they did: 40% of all mortgages are financed by lending companies Fannie Mae and Freddie Mac, which hold $5.3 trillion in outstanding debt, and receive tax breaks (read: subsidies) to the tune of $6.5 billion a year.

Part of the irony of Bush's "ownership society" is that it requires taxpayers to fund it. While on its face home ownership might seem like the paragon of private property and private ownership, it's really not in very high demand in the actual free market. While America does indeed have very high rates of homeownership, it's in spite of the market, not because of it. I can't find the statistic at the moment, but I remember reading that only 10% of all Americans owned their own homes in the beginning of the twentieth century. After WWII, mortgages subsidized by the VA (which accounted for, I believe, over half of all mortgages) became the primary vehicle for the widespread fleeing the white middle class from rented apartments, and into the suburbs. These subsidized mortgages were often cheaper than rent, despite the fact that renting doesn't give any permanent rights to the property, while mortgage payments due – a dead giveaway that the proposal was anti-market. After the immediate post-WWII era, homeownership was encouraged with the mortgage interest tax write-off, and the surfeit of lots zoned exclusively for single-family homes, regardless of what the market might actually demand in those locales. The aforementioned federal agencies and pseudo-private corporations also play a role, extending subsidized mortgages to people in the name of encouraging homeownership, which politicians and pundits have for some reason deemed a better option than renting. And, to complete the picture, most recently those left behind from the subsidies – the poor, and especially poor blacks – have had their incentives manipulated through subprime mortgages, increasing (at least temporarily) their rates of homeownership. Only, while in the past the government accounted for the full cost of this subsidy, during the subprime crisis, all the government did was allow the mortgages to be made, but isn't going to be left holding the bag when the payments don't come.

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.

Libertarians for statism

I was reading a blog I just found about/called Market Urbanism, and in it the author links to an article in Governing Magazine about the hypocrisy of libertarian think-tanks advocating tax dollars be spent on public roads. It's the first time I've ever seen something in print about this sort of vulgar libertarianism when it comes to transportation (something I've written about a few times). The author calls out the Reason Foundation and its founder Robert Poole for their especially egregious violations of free market principle, and this paragraph just about sums up my thoughts on why American so-called libertarians love socialized roads:

Many of the authors of these studies are a rotating castof writers who pop up again and again, including Randal O'Toole and Wendell Cox. They "extol the autonomy made possible by automobiles" wrote fellow libertarian and New York Times columnist John Tierney in a 2004 article on the subject. Tierney calls them, including himself, "the autonomists." That is, libertarians who have embraced highway spending, although they focus more on the individually-bought car, not the government-built road it requires.

The article isn't all good, though. Even though the author correctly recognizes that America's "automobile-based landscape of suburbs, single-family homes, office parks, mega churches and shopping malls" is a government machination, he still reminds us that "[o]ur national road system would never have been built if every street were required to pay for itself." Yeah, that's exactly the point! Our "national road system" is the problem, and the author's implication is that not only would there be no "national road system," but that roads are indeed synonymous with transportation. But just because we wouldn't have trillion-dollar pavement stretching across the continent doesn't mean we wouldn't be able to get across the continent – or, more importantly, wherever it is that we want to go.

Tibet protests a reaction to meat prices?

In an article from AsianWeek about the roots of the discord in Tibet, the author puts forth the thesis that the agrarian nature of Tibet has clashed with rising demand for meat and grains worldwide. Raising livestock across the fertile Tibetan Plateau is the primary economic activity of Tibet, and China's voracious appetite for meat means that controlling the fertile lands of Tibet is important to the Chinese Communist Party as a means of controlling food prices, which if left unchecked could engender discontent among China's billions. Prices for meat are already highly distorted thanks to Western countries' farm subsidies, transportation subsidies, and ethanol subsidies, and the Chinese economy is hobbled by the remnants of a socialism.

It's no wonder that these two highly anti-market forces would conspire to oppress the average Tibetan, who is at the mercy of Beijing thanks to the lopsided economic outcome of the Communist Party's foray into pseudo-capitalism. It also explains the attacks on noodle shops in Tibet as a form of protest:

Tibetans were buying a leg of lamb for the price of a whole animal, and few would ever stop to consider the inflated price of fuel and truck leasing for the Muslim middleman. In the first day of the Lhasa riots, most of the casualties of arson were Hui Muslim noodle restaurant workers, who migrated to the newly prosperous provincial capital over the past decade — just as Mexican immigrants have gone to major cities to work as dishwashers.

And in other, slightly-related news, on Intrade, futures in any EU country officially boycotting the Olympics are trading at 45%.

Cato's great libertarian idea

I was stumbling around the shadier corridors of the internets and I stumbled upon this jarringly mindless comment from someone at the Cato Institute, the supposedly libertarian think-tank:

"Too many American cities are spending far too much money on expensive rail transit projects, which are used for only 1 to 2 percent of local travel, and far too little on highway projects which are used for 95 to 99 percent of local travel," Randal O'Toole, a senior fellow with the Cato Institute, said in an e-mail interview.

So, Cato's "libertarian" position on the matter: the government subsidized and supported roads and cars and we now have lots of roads and cars, therefore the government ought to continue to to build and maintain highway projects to maintain continuity. Wow – this could take the prize for vulgar libertarianism.

History at the Atlantic starts in the 1950s

From the Atlantic, blogger J. Goodrich asks: "Haven't we been injecting competition into the health insurance markets for a very long time?" From the tone of the question, one would presume that top-down government programs have been around since the dawn of time, and it's up to free market radicals ("conservatives" in her parlance, just in case you were under the mistaken impression that there was no Manichaeistic Democrat-Republican dichotomy to the world) to create markets through regulation. Goodrich seems to be under the impression that time started in the latter half of the 20th century with intensely regulated physicians and health insurance plans.

In the next sentence, she declares emphatically: "Even the establishment of the government Medicare and Medicaid programs in the 1960's had a pro-competitive edge, because it removed from the commercial markets the most expensive and the poorest paying cases, leaving them with the most lucrative consumers to insure." Um, no, not quite. Removing an entire class of patients from the market means that there is no incentive to innovate with the services that they provide to that quite-needy market, and thus that entire class of patients are left behind with regards to innovation. Those who don't have as serious of ailments also don't get the benefit of increased medical productivity that would come from serving those markets. As a result, if you have a serious condition, don't even think of trying to pay for it without some government-subsidized insurance, because it will likely cost you thousands per month. If the federal government took over the manufacture of servers and mainframe computers, would the market for PCs be more competitive?

She then says, "The Health Maintenance Organization movement of the 1970's was another injection of that competitive hormone into the insurance markets in the form of prepaid group plans which combined insurance with the provision of care." Again, not quite! HMOs are a reaction to government mandates which artificially limit the supply of doctors, and limit the type of care they are allowed to offer. We're stuck with insurance for something that insurance doesn't usually cover – it's not like people expect they'll never get sick! Insurance is usually there for catastrophic, but unlikely events. What are the chances that you'll never have to see a doctor? Do most people just presume that they'll die healthy at the age of 35?

"The truth is that not all competition is helpful to consumers." Well, definitely not pseudo-competition. From what I understand, about half of all healthcare dollars in the US are spent by government programs – someone remind me, can you have a competitive market with a state-imposed monopsony? Before the cartelization of medical services by the AMA and the like (which prompted federal and state governments to take over when that proved to be a not-so-commodious arrangement), health insurance was widely and cheaply available from mutual aid societies. While I agree with the author that McCain's pseudo-libertarian plan will not work, we disagree in that I think it's pseudo-libertarian, and she takes it as given that his plan is the best that laissez-faire can do. If Goodrich is looking for the golden area before state control in medicine, she would do well to turn the clock back to before the government took over the provision of medical services.

Edit: In reading J. Goodrich's own blog, I find out that I am correct, and that she believes that the world is orders of magnitude younger than do Young Earth Creationists: "Health care markets have never been allowed to operate without government intervention, by the way." Really? Never?!

Rigged college admissions

In an article at San Francisco Chronicle, Shikha Dalmia makes the case that elite universities' increasing promises of aid are meaningless if they keep the number of legacy admissions that they currently have. In another article for Reason, she makes the same case and cites a chancellor at Berkeley as saying that "at one Ivy League school only 40 percent of the seats are open to candidates competing on pure educational merit." This is a problem, she explains, since:

Admissions are a zero-sum game in which students vie for a finite number of seats. So every seat that a less-talented legacy gets is one less spot at Stanford available to a talented poor kid. The crucial determinant of economic diversity on campus is not how much largesse legacies expend on poor kids - but how many seats they take away from them.

It's all fine and good, until she gets to the end, where she says that she doesn't believe that private schools should have to do this, since "Stanford is a private school and should be free to set whatever admission standards it deems fit." But, is this really true? Given the tax breaks given to schools and grants for research and other things and the cross-subsidization by colleges of the different kinds of education, can you really say that "private" schools really retain the distinction as not dependent or beholden to the state? Private universities like the University of Chicago, Johns Hopkins, Caltech, Stanford and MIT have all received over a half billion dollars each in federal contracts in recent years, to say nothing of state and local contracts and grants, tax breaks of all kinds, bond issues, and political clout.

If the public is going to subsidize all of this research, it ought to have the option of mandating that the entities be separate from and not cross-subsidizing rigged undergrad programs.

"Private" highways

The Washington Post today had a very interesting, but also depressing, article on the Bush administration's latest effort at corporatizing what is currently socialized: the roads. The United States, unlike countries in Europe, has largely resisted calls for the "privatization" of the nation's highways and highways-to-be (of which we have many). As a result, the government, by some estimates, spends 10% of our GNP on highway and parking subsidies.

Already, there are some conceptual issues with private highways. Firstly, and most obviously, highways derive their value from the millions of miles of auxiliary, feeder roads. These are almost never private, except in rare cases of large office parks, malls, etc. Oftentimes, the road itself was built with public money and is being privatized – it is quite possible (and likely) that in the absence of that road, no private builder would be willing to construct it. And finally, these so-called private companies make use of eminent domain, taking on quasi-governmental roles and acquiring land at non-market rates. In Colorado, the legislature banned the use of eminent domain in the building of private roads, and the governor vetoed it. The end result was an agreement whereby the state DOT makes the call, which makes me wonder how Colorado Senator Wiens could say with a straight face: "no private toll-road company will be able to condemn the private property of a Colorado citizen, period, end of story."

But as the article continues, the contradictions become startling. First of all, the focus is on a federal program that took $850 million away from the regular budget in earmarks from the Democrats (I get the feeling a lot of it was mass transit-related), which has so far not led to the construction of any highways. The money is the same money that Bloomberg wanted to use for New York's congestion fee idea. These supposedly-free market roads were not only benefitting from the government's power of eminent domain, but also received (along with private freight lines) $15 billion in tax-exempt bonds, essentially a subsidy. Pseudo-private roads have become a big industry – attracting over $100 billion in 2006. And then there's the cascading patronage, with a healthy exchange of high-salaried executives between private road operators and builders and federal government.

To me, this seems like another effort by the Bush administration to cash in on libertarian rhetoric while putting in forth plans that subsidize favored industries. The idea that a private company could ever independently build the kinds of roads that we're used to in America and be profitable while doing it is as absurd as thinking that mercenaries would have any clients if governments stopped hiring them. What these crypto-libertarians are looking to do is privatize government and have it perform the same function, and since that's obviously impossible, they settled with just corporatizing it.

Ronald Bailey on global warming

After reading about libertarian science journalist Ron Bailey's recent conversion to the man-made global warming camp, I asked myself the question that I often ask myself when reading about libertarians and global warming: why the hell wouldn't you believe in it? It's obvious to most conservatives and libertarians that communism and central planning would produce horrific environmental tragedies: the tragedy of the commons would destroy communally-owned property, and the state wouldn't have proper incentives or knowledge to maintain the environment that it controls. However, they fail to apply that logic to the American economy. Though we might indeed be one of the freest economies in the world, it would be absurd to say that the economy is totally free. In fact, the sectors of the economy which emit the most carbon – transportation, energy production, and "buildings" – are incredibly subsidized and regulated, often with environmentally damaging results.

Since at least the beginning of the 20th century, various levels of government have decided that America's mode of transportation should be almost exclusively the automobile. Before World War II, in cities, the majority of urban commuters' journeys were made via mass transit (mass transit, but rarely public transit). This all changed when local governments began instituting low density zoning regulations and building tax-payer funded roads free for public consumption, and when state and federal governments began ponying up the cash for extensive highway systems. Given that low density development, roads, and police officers patrolling roads are all complementary goods for the automobile, it's no wonder the technology took off. Throughout Americans cities and suburbs, medium or high density development is all but impossible in a lot of places, and this is an obvious prerequisite for profitable mass transit. Today, the largest public works project in the nation's history is the Interstate Highway System, governments still don't cover anywhere near the full cost of their roads with gas taxes, and the overwhelming majority of the trips made by Americans are made in cars (definitely over 90%). Due to the intense network effects associated with transit and land use, it's no surprise that the entire transportation industry has been co-opted by the state, and that it is impossible to run a profitable transit firm that doesn't rely heavily on government subsidies (as do all auto manufacturers and even privatized highways).

Now, this is clearly a problem from an economic point of view, but more relevantly, it's a huge problem from an environmental point of view. The direct effects of road travel are pretty large: over 25% of all carbon emissions in the US come directly out of the tailpipes of cars and trucks. The indirect effects are even larger: low density development encourages larger living spaces, which require more materials to construct and more energy to heat. They are also less efficiently heated/cooled than stacked spaces (i.e., tall buildings) due to the fact that they're surrounded by the elements, whereas an apartment on the 25th floor of a 50-story building is much better insulated.

So, I come away from that article wondering primarily why free market adherents are so blinded to government intervention in transportation (a complementary good to...everything) to the point that they can't fathom that our supposedly free market system could ever result in a poor outcome. But secondly, how come Ron Bailey doesn't see this, and instead decides that the way to deal with the issue is a carbon tax? Or does he recognize that it's a problem of government intervention, and believes simply (and perhaps correctly) that these state policies are too ingrained to change? (How do you explain to the American people that the American dream of owning your own single-family home in the suburbs and two SUVs parked in the driveway is a sham?)