Commentary Magazine


Topic: transportation

Chris Christie Makes His First Mistake

New Jersey Governor Chris Christie has led a largely charmed life since taking office in January. In the year since he defeated incumbent Democrat Jon Corzine, he has become the darling of conservatives who applaud his take-no-prisoners style in dealing with all comers and become a hit on YouTube with videos showing him taking on the press and the teachers unions. Last week he was afforded a star turn on 60 Minutes, where he was able to lambast his predecessors and highlight the fact that contracts with public sector workers are bankrupting his state. Despite being a magnet for confrontation and controversy, Christie has avoided mistakes. That is, he did up until this past weekend when he left the state Sunday morning for a trip with his family to Disney World — just as a massive snowstorm was about to bury the state — and decided to stay there instead of coming home to direct the recovery.

Apparently, Christie has never heard of Tom Meskill, the Republican governor of Connecticut who decided to stay in Vermont on a ski vacation in 1974 while his state was slammed by a blizzard. Meskill never recovered from the hit to his reputation. And there are many other examples of political careers being buried in snow. But the statement issued by Christie’s office about his absence seemed not to realize that the governor had blundered:

Snow in the Northeast happens often, which is why the response was handled expeditiously between the acting governor, secretary of transportation, state police and governor’s staff with all the appropriate and necessary coordination. And like every other day, the governor was and continues to be in regular contact with his staff and cabinet officers.

While it’s true that “snow happens,” people expect their elected leaders to be on the scene and stay there during emergencies, whether it’s a snowstorm or a terror attack. While Christie’s “so what” attitude may be consistent with his general demeanor in office, it’s not enough to be on the phone coordinating things. The symbolism of sharing the experiences of other citizens and being on hand to show concern is an important aspect of leadership. Telling off your critics and not being intimidated by powerful groups is one thing. Acting as if the normal rules of political life don’t apply to you is quite another. It might be unfair to ask anyone to abandon what was, no doubt, a planned family vacation, just to be around during a snow emergency. But that comes with the territory when you choose to be governor of a state.

Christie also needs to take responsibility for the fact that his lieutenant governor was out of the state at the same time he was in Florida. While this was obviously a scheduling snafu, it left the state in the hands of the president of the State Senate, a Democrat, who behaved appropriately while in charge. New Jersey didn’t used to have a lieutenant governor but residents of the state are probably wondering why they bothered creating the post if they aren’t going to be around in the governor’s absence.

Fortunately for Christie, nothing terribly bad happened during the storm so perhaps this incident will not alter his image as a rising star. For all of the plaudits that have rightly come his way during the past year, we need to remember that this is Christie’s first major elected office and that he is, for all of his natural talent, still something of a novice. Rather than just arrogantly tossing this off as not his problem, he needs to recognize that he made a rookie mistake and that the next time he puts his personal agenda above his official responsibilities, he might not be so lucky.

New Jersey Governor Chris Christie has led a largely charmed life since taking office in January. In the year since he defeated incumbent Democrat Jon Corzine, he has become the darling of conservatives who applaud his take-no-prisoners style in dealing with all comers and become a hit on YouTube with videos showing him taking on the press and the teachers unions. Last week he was afforded a star turn on 60 Minutes, where he was able to lambast his predecessors and highlight the fact that contracts with public sector workers are bankrupting his state. Despite being a magnet for confrontation and controversy, Christie has avoided mistakes. That is, he did up until this past weekend when he left the state Sunday morning for a trip with his family to Disney World — just as a massive snowstorm was about to bury the state — and decided to stay there instead of coming home to direct the recovery.

Apparently, Christie has never heard of Tom Meskill, the Republican governor of Connecticut who decided to stay in Vermont on a ski vacation in 1974 while his state was slammed by a blizzard. Meskill never recovered from the hit to his reputation. And there are many other examples of political careers being buried in snow. But the statement issued by Christie’s office about his absence seemed not to realize that the governor had blundered:

Snow in the Northeast happens often, which is why the response was handled expeditiously between the acting governor, secretary of transportation, state police and governor’s staff with all the appropriate and necessary coordination. And like every other day, the governor was and continues to be in regular contact with his staff and cabinet officers.

While it’s true that “snow happens,” people expect their elected leaders to be on the scene and stay there during emergencies, whether it’s a snowstorm or a terror attack. While Christie’s “so what” attitude may be consistent with his general demeanor in office, it’s not enough to be on the phone coordinating things. The symbolism of sharing the experiences of other citizens and being on hand to show concern is an important aspect of leadership. Telling off your critics and not being intimidated by powerful groups is one thing. Acting as if the normal rules of political life don’t apply to you is quite another. It might be unfair to ask anyone to abandon what was, no doubt, a planned family vacation, just to be around during a snow emergency. But that comes with the territory when you choose to be governor of a state.

Christie also needs to take responsibility for the fact that his lieutenant governor was out of the state at the same time he was in Florida. While this was obviously a scheduling snafu, it left the state in the hands of the president of the State Senate, a Democrat, who behaved appropriately while in charge. New Jersey didn’t used to have a lieutenant governor but residents of the state are probably wondering why they bothered creating the post if they aren’t going to be around in the governor’s absence.

Fortunately for Christie, nothing terribly bad happened during the storm so perhaps this incident will not alter his image as a rising star. For all of the plaudits that have rightly come his way during the past year, we need to remember that this is Christie’s first major elected office and that he is, for all of his natural talent, still something of a novice. Rather than just arrogantly tossing this off as not his problem, he needs to recognize that he made a rookie mistake and that the next time he puts his personal agenda above his official responsibilities, he might not be so lucky.

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Not Spending Enough?!

The Obama team is crying deficit crocodile tears over the prospect of an extension of the Bush tax cuts to upper-income taxpayers, which it claims wouldn’t be fiscally prudent. (The more expensive extension for the “non-rich” is fine with the administration, however.) It’s laughable considering the utter lack of fiscal discipline by Obama and the Democratic Congress.

We learned from the CBO that “[s]pending rolled in for the year [2010] that ended September 30 at $3.45 trillion, second only to 2009′s $3.52 trillion in the record books.” Well, Obama blames the wars. Hardly. We know that “despite two wars, defense spending rose by 4.7% to $667 billion, down from an annual average increase of 8% from 2005 to 2009.”

What, then, are we spending gobs of money on?

Once again domestic accounts far and away led the increases. Medicaid rose by 8.7%, and unemployment benefits by an astonishing 34.3%—to $160 billion. The costs of jobless insurance have tripled in two years. CBO adds that if you take out the savings for deposit insurance, funding for all “other activities” of government—education, transportation, foreign aid, housing, and so on—rose by 13% in 2010.

As for the deficits, the 2010 total was $1.29 trillion, down slightly from $1.42 trillion. That’s a two-year total of $2.7 trillion, or more than the entire amount during the Reagan Administration, when deficits were supposed to be ruinous. Now liberal economists tell us that deficits are the key to restoring prosperity. But all we have to show for spending nearly 25% of GDP for two years running is a growth rate of 1.7% and 9.6% unemployment.

The Paul Krugman wing of the Democratic Party has convinced itself that we haven’t spent enough. But how much would suffice? The answer is always “more than we are now.” As the Wall Street Journal editors point out: “The 21.4% federal spending increase in two years ought to put to rest any debate about the nature of America’s fiscal problem. The Pelosi Congress has used the recession as an excuse to send spending to record heights, and its economic policies have contributed to a lousy recovery.”

It is an unconscionable record — and the reason, in large part, why its authors are going to take a drubbing in November.

The Obama team is crying deficit crocodile tears over the prospect of an extension of the Bush tax cuts to upper-income taxpayers, which it claims wouldn’t be fiscally prudent. (The more expensive extension for the “non-rich” is fine with the administration, however.) It’s laughable considering the utter lack of fiscal discipline by Obama and the Democratic Congress.

We learned from the CBO that “[s]pending rolled in for the year [2010] that ended September 30 at $3.45 trillion, second only to 2009′s $3.52 trillion in the record books.” Well, Obama blames the wars. Hardly. We know that “despite two wars, defense spending rose by 4.7% to $667 billion, down from an annual average increase of 8% from 2005 to 2009.”

What, then, are we spending gobs of money on?

Once again domestic accounts far and away led the increases. Medicaid rose by 8.7%, and unemployment benefits by an astonishing 34.3%—to $160 billion. The costs of jobless insurance have tripled in two years. CBO adds that if you take out the savings for deposit insurance, funding for all “other activities” of government—education, transportation, foreign aid, housing, and so on—rose by 13% in 2010.

As for the deficits, the 2010 total was $1.29 trillion, down slightly from $1.42 trillion. That’s a two-year total of $2.7 trillion, or more than the entire amount during the Reagan Administration, when deficits were supposed to be ruinous. Now liberal economists tell us that deficits are the key to restoring prosperity. But all we have to show for spending nearly 25% of GDP for two years running is a growth rate of 1.7% and 9.6% unemployment.

The Paul Krugman wing of the Democratic Party has convinced itself that we haven’t spent enough. But how much would suffice? The answer is always “more than we are now.” As the Wall Street Journal editors point out: “The 21.4% federal spending increase in two years ought to put to rest any debate about the nature of America’s fiscal problem. The Pelosi Congress has used the recession as an excuse to send spending to record heights, and its economic policies have contributed to a lousy recovery.”

It is an unconscionable record — and the reason, in large part, why its authors are going to take a drubbing in November.

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Back to the Future

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world. Read More

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world.

He writes:

Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.

This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.

The Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

Where do I begin? The depression that began in 1929 came out of a severe depression in American agriculture, caused by a revival in European agriculture and falling food prices owing to land once devoted to fodder crops for horses and mules being turned over to production of human food as the internal combustion engine took over the transportation and farm-equipment sectors. It did not come out of excess personal debt and a real estate bubble.

They didn’t know in 1929 that you could avoid immediate financial calamity by flooding the economy with money? Here’s what Benjamin Strong, governor of the New York Federal Reserve and effectively head of the Fed, wrote in 1928. “The very existence of the Federal Reserve System is a safeguard against anything like a calamity growing out of money rates. … We have the power to deal with such an emergency instantly by flooding the Street with money.” The problem was that the Federal Reserve didn’t flood the economy with money after the crash in 1929 (Ben Strong died in late 1928) but kept interest rates high. An ordinary stock market crash and economic depression were turned into the Great Depression by horrendous government mistakes, of which the Fed’s was only one.

And if the New Deal was the way back to full recovery, why did it take 10 years (and suddenly vast orders for war materiél) to achieve it? Robert Reich should read Amity Shlaes’s The Forgotten Man: A New History of the Great Depression, which pretty well demolishes the now ancient notions about the New Deal that liberals cling to, sort of like the way people in fly-over country cling to guns and religion.

He writes,

In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes.

Ah, the good old days of 91 percent tax rates on those rascally rich guys! Of course, those were mere nominal rates, the rich didn’t pay anything like that much, because deductions and other tax fiddles were nearly limitless in those days. All interest rates were deductible, for instance, allowing someone in the 91 percent bracket to borrow money and have Uncle Sam pay 91 percent of the interest costs.

I could go on, but you get the picture.

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The Problem of Economic Calculation

This morning, while riding the express train to work, I stood facing one of those ubiquitous census ads and, for the first time, began considering its wording in earnest. I am sure you’ve seen it too: “If we don’t know how many schoolchildren we have, how can we know how many schools to build? … If we don’t know how many people we have, how can we know how many hospitals to build?” And so on and so forth.

That the government should still pose such questions — innocent as they are — suggests that the so-called problem of economic calculation afflicts the endeavors of central planners today no less than it did in the 1920s, when Ludwig Von Mises first set it forth. Not only that, but the government has also failed to find tools more efficacious in tackling this problem than the nationwide survey — that is, the census. And what a crude device that is!

For one thing, any information collected through it soon becomes outdated, since the census is taken at intervals of no less than 10 years, during which time a lot can happen in terms of economic development and population shifts. For another, delivering the surveys to every doorstep in the country, entreating the citizens to fill them out, and ensuring that a tolerable number of them actually do so amounts to an onerous affair not cheap to orchestrate — as is plainly evinced by the budget of $11.3 billion set aside for the accomplishment thereof. And for all the pains that go into collecting it, this information winds up reaching the government incomplete and only approximately accurate — the proportion of falsified surveys that alloy the census results being a matter of contentious and largely partisan debate.

Numerous and intractable as these difficulties are, they don’t even touch on the core inadequacy of the census at informing central planning — which is that no questionnaire could possibly gauge supply and demand. Only the market can take their measure, through prices and, to some extent, interest rates — its two chief signalers. It is by dollars that people vote for what they want and how much of it they want and how badly. The results of such “elections,” the likes of which are held daily in the marketplace, might differ widely from anything obtainable by aggregating the individual wish lists of the “voters.” And because, on the whole, they reflect practical reality as opposed to vague or impossible fancies, the former results are always preferable to the latter and form the only sound basis for business planning. This is the crux of the problem of economic calculation: the reason why in every kind of regime past or present, even the most well meaning of central planners have found it impossible to allocate scarce resources efficiently throughout the economy.

To the not-so-rhetorical questions of the census ads, such as, “If we don’t know how many people we have, how do we know how many … (fill in the blank) buses we need?” one all-purpose answer comes to mind: you, the public sector, cannot know how many buses a line needs, or how many schools and hospitals should be built in an area, and knowing how many people live nearby might not even help you to find out. But the private sector eventually gets those answers right. If there are too many buses in a line, the private transportation company incurs a loss and cuts some of them. If there are not enough, someone will endeavor to introduce one more and thus realize a profit. The same argument applies to hospitals, clinics, and schools. Leave the matter to the businessmen and entrepreneurs, whose livelihoods depend on it. And don’t employ the census toward any end except the one dictated by the Constitution — i.e., to apportion the number of members of the United States House of Representatives among the several states.

This morning, while riding the express train to work, I stood facing one of those ubiquitous census ads and, for the first time, began considering its wording in earnest. I am sure you’ve seen it too: “If we don’t know how many schoolchildren we have, how can we know how many schools to build? … If we don’t know how many people we have, how can we know how many hospitals to build?” And so on and so forth.

That the government should still pose such questions — innocent as they are — suggests that the so-called problem of economic calculation afflicts the endeavors of central planners today no less than it did in the 1920s, when Ludwig Von Mises first set it forth. Not only that, but the government has also failed to find tools more efficacious in tackling this problem than the nationwide survey — that is, the census. And what a crude device that is!

For one thing, any information collected through it soon becomes outdated, since the census is taken at intervals of no less than 10 years, during which time a lot can happen in terms of economic development and population shifts. For another, delivering the surveys to every doorstep in the country, entreating the citizens to fill them out, and ensuring that a tolerable number of them actually do so amounts to an onerous affair not cheap to orchestrate — as is plainly evinced by the budget of $11.3 billion set aside for the accomplishment thereof. And for all the pains that go into collecting it, this information winds up reaching the government incomplete and only approximately accurate — the proportion of falsified surveys that alloy the census results being a matter of contentious and largely partisan debate.

Numerous and intractable as these difficulties are, they don’t even touch on the core inadequacy of the census at informing central planning — which is that no questionnaire could possibly gauge supply and demand. Only the market can take their measure, through prices and, to some extent, interest rates — its two chief signalers. It is by dollars that people vote for what they want and how much of it they want and how badly. The results of such “elections,” the likes of which are held daily in the marketplace, might differ widely from anything obtainable by aggregating the individual wish lists of the “voters.” And because, on the whole, they reflect practical reality as opposed to vague or impossible fancies, the former results are always preferable to the latter and form the only sound basis for business planning. This is the crux of the problem of economic calculation: the reason why in every kind of regime past or present, even the most well meaning of central planners have found it impossible to allocate scarce resources efficiently throughout the economy.

To the not-so-rhetorical questions of the census ads, such as, “If we don’t know how many people we have, how do we know how many … (fill in the blank) buses we need?” one all-purpose answer comes to mind: you, the public sector, cannot know how many buses a line needs, or how many schools and hospitals should be built in an area, and knowing how many people live nearby might not even help you to find out. But the private sector eventually gets those answers right. If there are too many buses in a line, the private transportation company incurs a loss and cuts some of them. If there are not enough, someone will endeavor to introduce one more and thus realize a profit. The same argument applies to hospitals, clinics, and schools. Leave the matter to the businessmen and entrepreneurs, whose livelihoods depend on it. And don’t employ the census toward any end except the one dictated by the Constitution — i.e., to apportion the number of members of the United States House of Representatives among the several states.

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The Public Recoils

Obama sold himself as the image of moderation and superior temperament. But there has been nothing moderate about his first year, and his temperament has turned crabby, irritable, and condescending. Perhaps that was always his disposition, but only on occasion did the mask slip (“Can’t I eat my waffle?” and his crack about Bible-clutching Americans, being two vivid examples). Some cling fast to the campaign persona. David Brooks insists that Obama “has created a thoughtful, pragmatic administration marked by a culture of honest and vigorous debate.” That would come as a shock to those whom he has vilified (the list includes Fox News and Gallup, remember) and the voters, who see an attempted government takeover of health care and a mound of debt. Indeed Brooks himself concedes:

Driven by circumstances and self-confidence, the president has made himself the star performer in the national drama. He has been ubiquitous, appearing everywhere, trying to overhaul most sectors of national life: finance, health, energy, automobiles and transportation, housing, and education, among others.

So perhaps Obama’s not so moderate after all. But the unveiling of Obama’s personality and of his policy goals has stirred the public, which, as Brooks concedes, recoils from “any effort to centralize authority or increase the role of government.” Unfortunately for Obama and his faithful pundits, that gives voters plenty to recoil from. Unlike Brooks, they no longer consider him “temperate, thoughtful and pragmatic.” His actions tell a different story; his policies reveal a radicalism and arrogance born of the belief that the federal government has nearly unlimited capacity to take over more and more decision-making authority and aggrandize more and more power.

There was an alternative for Obama, an alternative to this narcissism and aggressive statism. He could have governed as he campaigned. But he made a choice, and unless he reverses course, he’ll be judged on the results.

Obama sold himself as the image of moderation and superior temperament. But there has been nothing moderate about his first year, and his temperament has turned crabby, irritable, and condescending. Perhaps that was always his disposition, but only on occasion did the mask slip (“Can’t I eat my waffle?” and his crack about Bible-clutching Americans, being two vivid examples). Some cling fast to the campaign persona. David Brooks insists that Obama “has created a thoughtful, pragmatic administration marked by a culture of honest and vigorous debate.” That would come as a shock to those whom he has vilified (the list includes Fox News and Gallup, remember) and the voters, who see an attempted government takeover of health care and a mound of debt. Indeed Brooks himself concedes:

Driven by circumstances and self-confidence, the president has made himself the star performer in the national drama. He has been ubiquitous, appearing everywhere, trying to overhaul most sectors of national life: finance, health, energy, automobiles and transportation, housing, and education, among others.

So perhaps Obama’s not so moderate after all. But the unveiling of Obama’s personality and of his policy goals has stirred the public, which, as Brooks concedes, recoils from “any effort to centralize authority or increase the role of government.” Unfortunately for Obama and his faithful pundits, that gives voters plenty to recoil from. Unlike Brooks, they no longer consider him “temperate, thoughtful and pragmatic.” His actions tell a different story; his policies reveal a radicalism and arrogance born of the belief that the federal government has nearly unlimited capacity to take over more and more decision-making authority and aggrandize more and more power.

There was an alternative for Obama, an alternative to this narcissism and aggressive statism. He could have governed as he campaigned. But he made a choice, and unless he reverses course, he’ll be judged on the results.

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AP: Stimulus Is a Bust

The stimulus money to be spent on infrastructure really did nothing to save or create jobs. That’s not a conservative talking point; that’s the AP:

Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus, but what would be the point? (“AP’s analysis, which was reviewed by independent economists at five universities, showed that strategy hasn’t affected unemployment rates so far. And there’s concern it won’t work the second time.”) The reaction of economists is instructive:

“My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who reviewed AP’s analysis.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

Nor are business people impressed. (“‘The stimulus has not benefited the working-class people of Marshall County at all,’ said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008. That year, he built 30 homes. But prospects this year look grim.”) But politicians love this stuff. Despite ample evidence to the contrary, they continue to parrot the same rhetoric. Economic adviser Jared Bernstein insists, “When you invest in this kind of infrastructure, you’re creating good jobs for people who need them.” But not really.

What did we get for all this? Maybe some temporary jobs, especially in the public sector. But that’s a far cry from “creating” jobs. And we know by the unemployment figures that the Obami have been spectacularly unsuccessful in keeping unemployment to 8 percent, which they promised would be the result if Congress passed the stimulus plan. Maybe it’s time to stop repeating the same failed Keynesian policies and try something different. Lower taxes and fewer mandates on employers might be good for starters. But I think that’s not in the cards anytime soon. Well, not until the Democrats get really, really scared about the 2010 elections.

The stimulus money to be spent on infrastructure really did nothing to save or create jobs. That’s not a conservative talking point; that’s the AP:

Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus, but what would be the point? (“AP’s analysis, which was reviewed by independent economists at five universities, showed that strategy hasn’t affected unemployment rates so far. And there’s concern it won’t work the second time.”) The reaction of economists is instructive:

“My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who reviewed AP’s analysis.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

Nor are business people impressed. (“‘The stimulus has not benefited the working-class people of Marshall County at all,’ said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008. That year, he built 30 homes. But prospects this year look grim.”) But politicians love this stuff. Despite ample evidence to the contrary, they continue to parrot the same rhetoric. Economic adviser Jared Bernstein insists, “When you invest in this kind of infrastructure, you’re creating good jobs for people who need them.” But not really.

What did we get for all this? Maybe some temporary jobs, especially in the public sector. But that’s a far cry from “creating” jobs. And we know by the unemployment figures that the Obami have been spectacularly unsuccessful in keeping unemployment to 8 percent, which they promised would be the result if Congress passed the stimulus plan. Maybe it’s time to stop repeating the same failed Keynesian policies and try something different. Lower taxes and fewer mandates on employers might be good for starters. But I think that’s not in the cards anytime soon. Well, not until the Democrats get really, really scared about the 2010 elections.

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Ehud Olmert, Company Man

John Podhoretz has noted here that Ehud Olmert managed–somehow–to survive the release of the Winograd Report, which details his grievous failures in the Lebanon war. John didn’t comment further: Olmert’s record speaks (miserably) for itself. But the excellent Yossi Klein Halevi, at TNR, condemns him full-throatedly:

Olmert, neither founder nor hero, is the first professional politician to serve as prime minister. Yet, in resisting calls for his resignation, he is insisting on being absolved of the standards for personal accountability in war to which other prime ministers were held. Golda Meir and her defense minister, Moshe Dayan, were forced from office by an outraged public because of failure in the 1973 Yom Kippur War, while Menachem Begin and his defense minister, Ariel Sharon, were compelled to resign because of failure in the first Lebanon War in 1982. Olmert, though, sees himself as immune from such archaic values as personal responsibility. Even before the release of the final version of the Winograd report, Olmert had announced that he wouldn’t resign no matter what the commission concluded.

Olmert’s fatal flaw, and the source of his failure in Lebanon, is arrogance. No Israeli leader ever decided to go to war faster than Olmert did–in a matter of hours. And no Israeli leader was worse prepared: Not only did Olmert have no security expertise, but neither did his defense minister. The one member of his cabinet with top military credentials–former IDF chief of staff Shaul Mofaz–was serving as transportation minister, and Olmert didn’t include him in his inner circle. Olmert failed to establish clear goals for Israel’s counter-attack or to inquire whether the IDF had alternative plans. Olmert’s policy was, in effect: Let’s go to war and see what happens.

You should read the whole thing.

John Podhoretz has noted here that Ehud Olmert managed–somehow–to survive the release of the Winograd Report, which details his grievous failures in the Lebanon war. John didn’t comment further: Olmert’s record speaks (miserably) for itself. But the excellent Yossi Klein Halevi, at TNR, condemns him full-throatedly:

Olmert, neither founder nor hero, is the first professional politician to serve as prime minister. Yet, in resisting calls for his resignation, he is insisting on being absolved of the standards for personal accountability in war to which other prime ministers were held. Golda Meir and her defense minister, Moshe Dayan, were forced from office by an outraged public because of failure in the 1973 Yom Kippur War, while Menachem Begin and his defense minister, Ariel Sharon, were compelled to resign because of failure in the first Lebanon War in 1982. Olmert, though, sees himself as immune from such archaic values as personal responsibility. Even before the release of the final version of the Winograd report, Olmert had announced that he wouldn’t resign no matter what the commission concluded.

Olmert’s fatal flaw, and the source of his failure in Lebanon, is arrogance. No Israeli leader ever decided to go to war faster than Olmert did–in a matter of hours. And no Israeli leader was worse prepared: Not only did Olmert have no security expertise, but neither did his defense minister. The one member of his cabinet with top military credentials–former IDF chief of staff Shaul Mofaz–was serving as transportation minister, and Olmert didn’t include him in his inner circle. Olmert failed to establish clear goals for Israel’s counter-attack or to inquire whether the IDF had alternative plans. Olmert’s policy was, in effect: Let’s go to war and see what happens.

You should read the whole thing.

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Overseeing Contractors

It’s good news that Secretary of Defense Bob Gates and Secretary of State Condoleezza Rice have agreed that the armed forces will supervise all security contractors operating in Iraq, including those like Blackwater, Triple Canopy, and DynCorp that guard State Department officials. This is a welcome step toward achieving greater unity of command and making contractors more useful in aiding the overall coalition effort to stabilize Iraq.

Unfortunately, as this New York Times article points out,

the Defense Department has had its own difficulties controlling its nearly 130,000 contractors, who handle a variety of jobs including interrogations of prisoners and transportation of fuel and ammunition. Auditors have uncovered numerous instances of cost overruns, sloppy work, theft, and corruption in the tens of billions of dollars in logistics and reconstruction contracts in Iraq.

The core problem was laid out in July in this Washington Post article:

The Defense Department’s civilian acquisition workforce has shrunk by about 40 percent since the early 1990s and now has about 270,000 employees, according to Pentagon statistics and Government Accountability Office reports. Yet defense spending on service contracts increased 78 percent, to $151 billion, from 1996 to 2006, the reports said.

There are 7.5 million federal contractors, 1.5 million more than in 2002, without a corresponding increase in government officials to oversee them, said Paul C. Light, a public service professor at New York University.

There is nothing wrong with contracting per se, but there needs to be appropriate oversight, which, as these statistics suggest, has been lacking. The problems are compounded in Iraq, where it’s much harder for federal employees to get around, and which therefore gives contractors much greater leeway.

If the Defense Department is serious about overseeing Blackwater and other contractors, it will have to devote serious resources to the effort. As suggested by veteran contractor Malcolm Nance, the military may even have to set up a new Force Protection Command. While the Gates-Rice agreement is a step forward, the real test will be in implementation.

It’s good news that Secretary of Defense Bob Gates and Secretary of State Condoleezza Rice have agreed that the armed forces will supervise all security contractors operating in Iraq, including those like Blackwater, Triple Canopy, and DynCorp that guard State Department officials. This is a welcome step toward achieving greater unity of command and making contractors more useful in aiding the overall coalition effort to stabilize Iraq.

Unfortunately, as this New York Times article points out,

the Defense Department has had its own difficulties controlling its nearly 130,000 contractors, who handle a variety of jobs including interrogations of prisoners and transportation of fuel and ammunition. Auditors have uncovered numerous instances of cost overruns, sloppy work, theft, and corruption in the tens of billions of dollars in logistics and reconstruction contracts in Iraq.

The core problem was laid out in July in this Washington Post article:

The Defense Department’s civilian acquisition workforce has shrunk by about 40 percent since the early 1990s and now has about 270,000 employees, according to Pentagon statistics and Government Accountability Office reports. Yet defense spending on service contracts increased 78 percent, to $151 billion, from 1996 to 2006, the reports said.

There are 7.5 million federal contractors, 1.5 million more than in 2002, without a corresponding increase in government officials to oversee them, said Paul C. Light, a public service professor at New York University.

There is nothing wrong with contracting per se, but there needs to be appropriate oversight, which, as these statistics suggest, has been lacking. The problems are compounded in Iraq, where it’s much harder for federal employees to get around, and which therefore gives contractors much greater leeway.

If the Defense Department is serious about overseeing Blackwater and other contractors, it will have to devote serious resources to the effort. As suggested by veteran contractor Malcolm Nance, the military may even have to set up a new Force Protection Command. While the Gates-Rice agreement is a step forward, the real test will be in implementation.

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Our Chandelier Problem

While we are on the subject of the USSR—Boris Yeltsin’s death was the subject of one of my posts here yesterday—it is a good moment to remember that one of the very best things about the now defunct Soviet Union was its centrally planned economy. If nothing else, it could be counted on to produce an endless series of amusing anecdotes. In the topsy-turvy world of the five-year plan, factory managers and workers were rewarded not for profits but for maximizing other success indicators, like gross physical output, often with bizarre results.

Nikita Khrushchev famously complained about the immense size and weight of chandeliers. It turned out that workers at a Moscow lamp factory were awarded bonuses for production measured in tons. The chandeliers they produced grew ever heavier until they led to a rash of ceiling collapses.

The United States has a market economy—but we also have a huge government sector, where amusing Soviet-style distortions often creep in. Yesterday’s Washington Post reported on the “Metrochek” program in Washington D.C. These transportation vouchers are issued to government employees to encourage use of subways, buses, and trains. But it turns out, unsurprisingly to any student of the old Soviet economy, that a thriving black market has emerged.

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While we are on the subject of the USSR—Boris Yeltsin’s death was the subject of one of my posts here yesterday—it is a good moment to remember that one of the very best things about the now defunct Soviet Union was its centrally planned economy. If nothing else, it could be counted on to produce an endless series of amusing anecdotes. In the topsy-turvy world of the five-year plan, factory managers and workers were rewarded not for profits but for maximizing other success indicators, like gross physical output, often with bizarre results.

Nikita Khrushchev famously complained about the immense size and weight of chandeliers. It turned out that workers at a Moscow lamp factory were awarded bonuses for production measured in tons. The chandeliers they produced grew ever heavier until they led to a rash of ceiling collapses.

The United States has a market economy—but we also have a huge government sector, where amusing Soviet-style distortions often creep in. Yesterday’s Washington Post reported on the “Metrochek” program in Washington D.C. These transportation vouchers are issued to government employees to encourage use of subways, buses, and trains. But it turns out, unsurprisingly to any student of the old Soviet economy, that a thriving black market has emerged.

Some 300,000 federal employees across the country receive the transportation vouchers, and some unknown number of them are not using them but rather driving to work and reselling the coupons to others, sometimes in the hyper-efficient auction marketplace of ebay (where, as of yesterday, a $100 metrochek was selling for $75).

Predictably, in the face of the emergence of a market for these discounted vouchers, there are calls for tighter controls, like verification of commuting expenses and ensuring that government employees who use the program do not also receive parking spaces. Administrative sanctions and criminal prosecutions are also now being contemplated. But as in the Soviet economy, more controls will only produce more ingenious forms of evasion, followed by calls for even more stringent controls.

Congress, in its wisdom, has also created Metrochek-type programs in the private sector, where they are known as “cafeteria” or “flexible-benefit” plans. Employees can set aside pre-tax money for transportation, medical expenses, and childcare. The rules include a use-it or lose-it feature, rife with perverse effects. If one sets aside too much money for, say, medical care in a given year, at the end of the year the money is lost. To avoid wasting hard-earned funds, employees are sometimes compelled to go on spending binges at the end of the year, stocking up on approved items like extra eye-glasses that they do not need. Unsurprisingly, optometrists love the flexible spending plans every bit as much as Soviet chandelier workers loved the weight-output norms.

Here in New York City, there are other curious effects. Even as the city tries to discourage drivers from commuting to work in congested Manhattan, the flexible-spending programs cover parking, making it available at a significant discount. And because parking in the city is so expensive, the benefit for driving to work can far exceed the benefit for traveling on mass transit, sometimes by a factor of two or three.

Public-policy objectives are being tied in knots by such programs, but reform or outright abolition is not in the cards. The reason why is that everyone who takes part in them profits (full disclosure: Commentary Inc. has a flexible-benefit program for its employees and I am enrolled in it) even as the net result is economic distortion and waste. Nikita Khrushchev would have smiled.

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The Global-Warming “Consensus”

I thought that Max Boot’s analogy between the conventional wisdom on climate change and the pre-war intelligence on Iraq’s WMD’s was an apt one. But I’m not sure why he concluded from this that conservatives should abandon their skepticism about efforts to “fight” climate change by curtailing CO2 emissions. It seems to me that one should logically draw the opposite conclusion—namely, that we ought to be wary of the “consensus” of “experts” on matters where the uncertainty is large, the stakes are high, and political pressures are at work.

In this respect, the latest IPCC Summary for Policymakers doesn’t really do much to change the picture. (These summaries have tended to offer a rather skewed representation of the actual reports they purport to summarize, as the Wall Street Journal reminds us.) The latest summary hardly even qualifies as news: it merely reiterates the “consensus” that human activity has contributed to an increase in the atmospheric levels of various greenhouse gases, and that such increases are correlated with climate change. Whereas previous IPCC reports told us that a causal relationship was simply likely, now we are told that it is almost certain. The question is, precisely what kind of causation is almost certain?

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I thought that Max Boot’s analogy between the conventional wisdom on climate change and the pre-war intelligence on Iraq’s WMD’s was an apt one. But I’m not sure why he concluded from this that conservatives should abandon their skepticism about efforts to “fight” climate change by curtailing CO2 emissions. It seems to me that one should logically draw the opposite conclusion—namely, that we ought to be wary of the “consensus” of “experts” on matters where the uncertainty is large, the stakes are high, and political pressures are at work.

In this respect, the latest IPCC Summary for Policymakers doesn’t really do much to change the picture. (These summaries have tended to offer a rather skewed representation of the actual reports they purport to summarize, as the Wall Street Journal reminds us.) The latest summary hardly even qualifies as news: it merely reiterates the “consensus” that human activity has contributed to an increase in the atmospheric levels of various greenhouse gases, and that such increases are correlated with climate change. Whereas previous IPCC reports told us that a causal relationship was simply likely, now we are told that it is almost certain. The question is, precisely what kind of causation is almost certain?

Some facts are not in serious dispute: the earth has certainly warmed over the past 120 years, by somewhat less than one degree Centigrade; atmospheric levels of CO2 have increased from about 270 parts per million by volume (ppmv) in pre-industrial times to about 385 ppmv today; and all else being equal, increased CO2 should contribute to warming. But it is warming’s potential corollaries, such as droughts, rising sea levels, and increased storm activity, that worry people—and which are far less certain to occur than simple warming, as the IPCC Summary acknowledges.

Trying to estimate the human contribution to these various trends merely compounds the unknowns. But let’s suppose, for argument’s sake, that everything that Al Gore has said about climate change, its anthropogenic origins, and our need to respond immediately to it is true. Does it follow from this assumption that the best solution is to impose Kyoto-style caps on industrial emissions, or some sort of carbon tax? Not so fast. There’s another question we should be asking first: where’s the CO2 coming from?

Much of it does come from the burning of fossil fuels for transportation and industry, as we all know by now. But up to a third of the CO2 added to the atmosphere by human beings comes from the combustion of biomass in places like sub-Saharan Africa. Burning biomass isn’t exactly a clean process—it directly releases various pollutants, including aerosols (which contribute to climate change in ways that are still unclear), nitrogen oxides (major contributors to smog), and methane (a far more potent greenhouse gas than CO2).

I haven’t done the math, but it seems pretty obvious that trying to end biomass burning—for example, by boosting aid to Africa—would be a much more effective first step in combating climate change than the Kyoto Protocol, which, as even its backers acknowledge, will accomplish more or less nothing. It would probably be much cheaper, too. So why don’t we hear more about the biomass burning problem?

My hunch is that it’s for the same reason we don’t hear climate watchdogs aggressively promoting low-carbon energy sources like nuclear power: they are less interested in the problem than in solutions that involve more government, less industry, and a redistribution of wealth. If this is true, conservatives are right to remain highly skeptical. One doesn’t have to be scientifically literate to recognize the political attractiveness of the climate-change issue to the Al Gores of the world.

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