This week, the civil grand jury for Monterey County issued its report on the Monterey-Salinas Transit. It was tasked with answering a specific question. Go here if you want to read more about the question and the grand jury’s answer. But here is what I found striking: fares account for only 5 percent of the MST’s revenues. The rest is subsidies. (0 COMMENTS)

Over the past 90 years, the public has frequently been warned that the US budget deficit would lead to an economic crisis. As in the famous story about the boy who cried wolf, they eventually began to tune out those warnings. And it does no good to cite specific data about the budget deficit rising to hundreds of billions or even trillions of dollars; those figures have no meaning to average people. I suspect that if you polled people on the consequences of a $800 million deficit and a $800 billion dollar deficit, the answers would be similar. But this time is different, as something important has changed. The wolf is not yet at the door, but it’s getting closer. Over the past 5 years, the US budget deficit has shifted to a more unsustainable path. Matt Yglesias directed me to this tweet by Jason Furman: The dotted line is upward sloping because deficits are typically worse during periods of high unemployment, which is as it should be. The further above the dotted line, the more out of line the deficit, given the condition of the business cycle. Back in 2019, I argued that US fiscal policy was the most reckless in US history. It’s not that the budget deficit was all that high (4.6% of GDP), rather it was unusually high given that unemployment was near an all-time low. I knew that things would become far worse in the next recession, although I did not know that the recession would come so soon.   I stand by my claim that (at the time) 2019 fiscal policy was the most reckless in American history, even though each of the next 4 years ended up being even more reckless. In terms of vertical distance above the dotted line, 2020 was the very worst, then 2021, then 2023 (estimated—red dot), then 2022, and then 2019 (roughly tied with 2009.) The consequence of the reckless fiscal policy will not be a financial crisis. Nor will it be a default. Even the permanent monetization of the debt is unlikely, in my view. The most likely consequence will be higher future taxes and slower economic growth. This will lead to reduced living standards. It might also push politics in a more “populist” direction, with consequences that are difficult to predict (but unlikely to be desirable.) P.S.  The distinction between higher taxes and lower spending is less clear than you might assume. Thus one option is a $1000 tax increase on rich people. Another option is a $1000 cut in Social Security benefits for rich people. The first represents higher taxes while the second is lower spending. But the consequences for implicit marginal tax rates are quite similar. (1 COMMENTS)

For years, libertarians and conservatives have charged that much of what passes for environmentalism in the West is little more than faith-based religion. Paul Greenberg and Carl Safina, both environmentalists and university professors, want to make it official.  In their Time magazine article, The Case for Making Earth Day a Religious Holiday, they take full ownership of the charge: For the two of us environmentalists—one of us nominally Jewish, the other a recovering Catholic—we find the ill-defined nature of the only day honoring the place that makes life itself possible more than a little sacrilegious. So, on this 53rd Earth Day we thought it useful to pose what a real Earth Day should represent and how it could form a central time for a new approach to worship. But their ambitions stretch far beyond a single day. Greenberg and Safina also modestly suggest that we “reframe” the Christian holy days of Christmas and Easter; the Jewish holy days of Hanukkah, Passover, and Sukkot; the Indian holy day of Diwali; and the Muslim holy days of Eid “as days of thanks for what the natural world gives and reminders that our responsibility for what remains is an ongoing covenant.” Marriage “might be an opportunity to remind young couples to consider the burden children place upon the planet and to make vows of sustainable patterns of behavior going forward.” Finally, they argue that for environmentalism to become a full-fledged religion, a “Bible of the Natural World” is needed, “replete with hymns to this world of the living,” and containing “the stories of the prophets of natural earth knowledge—Darwin and Carson, Galileo and Humboldt.” “In short,” the authors contend, “We must make nature central to our belief system with Earth Day or any number of earth-focused ceremonial days serving as regular reminders of what we owe our home planet.” What to make of this declaration of faith that each new child is a “burden” to the earth – another mouth to feed rather than a new mind and a new pair of hands? What to make of this call for a return to paganism? This modest suggestion that the world’s major religions be remade in radical environmentalism’s image? This rejection of science in the name of science? I for one welcome it as a forthright admission that they wish to replace discussion, reason, and scientific inquiry with religious dogma. Better a visible adversary than one shrouded behind words and phrases meant to conceal and deflect rather than to enlighten.   Richard Fulmer worked as a mechanical engineer and a systems analyst in industry. He is now retired and does free-lance writing. He has published some fifty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource (0 COMMENTS)

Edmund Burke once said, “It is the nature of all greatness not to be exact.” There is a certain kind of conversation I often have that brings this point to mind. I often argue that we underestimate the degree to which bottom-up, evolved orders can solve the kinds of public goods or externality problems that some insist can only be solved through top-down coercion. Occasionally, an interlocuter will follow up with what they imagine is a killer question – “Do you have a specific mechanism in mind people will use to solve this particular problem?” But asking this question only shows one has misunderstood the argument. Innovation occurs when someone comes up with an idea that nobody has thought of before. By their very nature, innovative ideas can’t be identified in advance. If we already knew what they were, they wouldn’t be innovative ideas, they would be established ideas. Similarly, freedom isn’t simply the liberty to stick to established ideas – freedom means giving people the room to deal with the troubles of life in ways that are new and innovative, ways that haven’t been tried before or specified in advance. In advance, I could not have identified the specific mechanisms people would have used to solve common pool resource problems of the kind Elinor Ostrom made a career out of identifying. Nor could I, in advance, have specified the “custom of the orchard” that emerged among beekeepers to handle the externalities associated with beekeeping. I’ve criticized this sort of thinking with the terribly clunky term “the 5-1 error” before – the inability to see solutions to collective action problems that evolve organically because one can only conceive of them as functioning by known mechanisms specified in advance. There is a certain breed of intellectual who holds their intellect in such high esteem that they fail to grasp how little their own mind can contain about the world around them. Thus, if they cannot see or identify a way for people to solve a problem among themselves, that’s as good as saying no such solution exists. Alternatively, intellectuals of this sort can go a step further, and offer a positive argument for why bottom-up solutions cannot work, thus requiring top-down coercive solutions to be created and imposed by…well, intellectuals such as themselves. In terms of raw brainpower, few people in history could claim to be at the level of John Stuart Mill. Yet Mill had many curious blind spots. He was very concerned with issues of distribution over production, because he believed the potential for productive growth had basically peaked – so all further improvements in the standard of living would have to come about through ever more efficient and clever distribution instead of increased production. He worried that we would soon run out of music to create, because the range of musical notes we can hear is finite and the number of possible note combinations is also finite. From his armchair, he produced an argument for why lighthouses, as public goods, could not be provided on the private market and thus required public provision. But Mill was wrong about all of these things. It should be obvious to the reader how Mill failed to predict how our capacity for production would continue to grow, and that musical innovation has only grown as well. But these are only failures of prediction on Mill’s part. His conclusion about lighthouses was not merely a failure of prediction, it was a failure of observation as well. Even as Mill made that argument, as Michael Munger points out, “most — more than three-quarters — of all lighthouses had been built, and were being operated, by private individuals.” Had Mill gotten out of his armchair and gone out to a port to check, he could have seen that his argument was mistaken, and people found private solutions to the public goods problem. But he saw no need to check – he had his argument showing private actors couldn’t solve the public goods problem and state action was needed. He saw no mechanism which he could specify in advance to solve this problem – which was as good as proving no such mechanism existed. J. E. Meade, too, had his argument for why beekeepers could not solve the externality problems related to beekeeping, and he felt no need to bother to actually check to see if he was right. He couldn’t think of a way to specify a solution, so no solution existed as far as he was concerned. He was wrong too. If people were only granted freedom when its benefits can be identified and specified in advance, freedom and innovation would utterly cease. Too many intellectuals see themselves as fit to set the boundaries on other peoples’ freedoms based on nothing more than the limits of their own understanding. As is often the case, Thomas Sowell said it better than anyone else: Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their “betters.”     (0 COMMENTS)

There are ideal governments that some ideologues think will be born if they only dream about them hard enough; and there are actual governments, where politicians and bureaucrats respond to their ordinary incentives. Not every consumer wants to buy a luxury car at the cost of foregoing more of other things. We should should also expect poor consumers, ceteris paribus, to buy more bottom-of-the-line Kias and Hyundais. For idealistic lovers of government power, it might (and should) be puzzling why the government of New York City and of other municipal governments in America are suing the manufacturer of these cars because they are more often stolen (“New York Sues Hyundai and Kia over ‘Explosion’ of Car Thefts,” Financial Times, June 7, 2023). The move from New York City comes after “a $200mn consumer class action settlement last month,” which means that all members of the class will get a tiny amount of money on top of having benefited from a low purchase price. Thieves are attracted to these inexpensive cars’ less efficient anti-theft features (which, the company says, still comply with federal regulations). The victimized owners may end up paying more in insurance, but it’s their own business and risk—just as it is for those who prefer not to buy a more solid, safer, and more expensive Mercedes. A car with more features and gadgets is more expensive. Don’t government economists know that simple fact? Wouldn’t one think that do-gooder governments would spend their energy fighting car thieves rather than by penalising poor or thrifty crime victims and their suppliers? If only the federal government were as thrifty as buyers of inexpensive Kias and Hyundais! It is far from the only instance of make-believe Robin-Hood governments actually hurting the poor and denying them the freedom to make their own choices. It seems difficult for governments to accept that there exist poorer individuals who pay for exactly what they want given their circumstances. Any political theory incapable of explaining these realities is useless, if not mere propaganda. (0 COMMENTS)

There are ideal governments that some ideologues think will be born if they only dream about them hard enough; and there are actual governments, where politicians and bureaucrats respond to their ordinary incentives. Not every consumer wants to buy a luxury car at the cost of foregoing more of other things. We should would also expect poor consumers, ceteris paribus, to buy more bottom-of-the-line Kias and Hyundais. For idealistic lovers of government power, it might (and should) be puzzling why the government of New York City and of other municipal governments in America are suing the manufacturer of these cars because they are more often stolen (“New York Sues Hyundai and Kia over ‘Explosion’ of Car Thefts,” Financial Times, June 7, 2023). The move from New York City comes after “a $200mn consumer class action settlement last month,” which means that all members of the class will get a tiny amount of money on top of having benefited from a low purchase price. Thieves are attracted to these inexpensive cars’ less efficient anti-theft features (which, the company says, still comply with federal regulations). The victimized owners may end up paying more in insurance, but it’s their own business and risk—just as it is for those who prefer not to buy a more solid, safer, and more expensive Mercedes. A car with more features and gadgets is more expensive. Don’t government economists know that simple fact? Wouldn’t one think that do-gooder governments should spend their energy fighting car thieves rather than by penalising poor or thrifty crime victims and their suppliers? If only the federal government were as thrifty as buyers of inexpensive Kias and Hyundais! It is far from the only instance of make-believe Robin-Hood governments actually hurting the poor and denying them the freedom to make their own choices. It seems difficult for governments to accept that there exist poorer individuals who pay for exactly what they want given their circumstances. Any political theory incapable of explaining these realities is useless, if not mere propaganda. (2 COMMENTS)

Les Snead is in his twelfth year as General Manager of the Los Angeles Rams. Snead is the fifth-longest tenured GM in the NFL today. Snead and the Rams won Super Bowl LVI in 2022. In this episode of EconTalk, host Russ Roberts welcomes Les Snead to explore the role of the NFL GM. The two discuss how Snead operates in this risk-filled role—his take on the NFL draft, the adrenaline-filled experience of watching his Rams play, and the application of Sisyphus to the results-driven league are just a few highlights from the episode. I hope you enjoyed this episode as much as I did! Now, we’d like to hear your thoughts.     1- Snead describes how a key feature of his role is the installation of a successful, cohesive team unit. In addition to him, the team ownership, its executive leadership, and coaches are each key players in developing a team mission. How do you think various levels of power within an NFL organization react to each other’s different ideologies? What are examples you can think of where ownership became too involved in the on-field product?   2- In addressing Roberts’ question about his in-season duties, Snead points to his focus on the draft- the “April thesis” he calls it. Snead has two incredible draft picks on his resume that have dominated the NFL for a long time in Aaron Donald and more recently, Cooper Kupp, but he has also traded first-round picks for players in the prime of their careers like Jalen Ramsey, Brandin Cooks, and most recently, Matthew Stafford. Roberts presses on Snead’s decision to trade for Stafford, and whether the trade was worth it if Stafford’s health and play continue to decline. Snead says yes. Do you agree? Are there examples you can think of where your favorite team failed at balancing the win-now or draft for the future strategies?   3- Throughout the episode, Roberts and Snead discuss the draft: projectability of players, value of picks, and the ignorance of those outside of the NFL (commentators and fans) who try to forecast picks and grade a team’s collective drafts. Snead alludes to both the strength of quantitative measurements available along with the need for GMs to make the best picks based on a combination of  natural talent and the intangibles which make up the players’ football skill. What do you think is (or should be) the dominant strategy today for drafting players? How do teams balance drafting a player to fill a need in their team versus drafting the best players available? Who in this year’s draft do you think brought a GM the elation that Les Snead felt when he drafted future hall of famer Aaron Donald?   4- Roberts and Snead discuss Giannis Antetokounmpo’s quote dismissing the ‘failure’ of the Milwaukee Bucks season in the NBA after they fell to the Miami Heat in the first round of the playoffs. Snead appreciated Giannis’ quote, but he and Roberts also speak to the agony of defeat when the standard you reach for is always a championship. Snead comments on the Rams’ loss to the Patriots in Super Bowl LIII as one that brought pain. But the pain did not wear off; he still feels relentless regret that the Rams could not come out on top in 2018. Do you agree with Giannis’ quote about failure? Are there events in your professional life that you think could compare to the agony of a Super Bowl defeat, or is that feeling unique to sports?   5- Snead applies the Myth of Sisyphus who must face the task of rolling a monstrous boulder up a mountain—restarting each day—for the rest of eternity. NFL games are extremely consequential compared to other sports, given how short the season is. The sport is also incredibly violent, and Roberts and Snead allude to the camaraderie and respect felt between the fraternity of NFL players. What is so compelling and rewarding for fans and players who have such intense passion for football? How does Snead relate to the Sisyphus myth? What could society at large learn from football about humanity, humility, and respect?   Brennan Beausir is a student at Wabash College studying Philosophy, Politics, and Economics and is a 2023 Summer Scholar at Liberty Fund. (0 COMMENTS)

Consider, for example, one potential effect of global warming: rising ocean levels. For the past three decades, writes physicist and former Caltech provost Steven E. Koonin in his 2021 book, Unsettled, sea levels have risen by 0.12 inches per year. If sea levels continued to rise at that rate, then, by the year 2100, they would be about ten inches higher than now. That is not a large problem, and we have a lot of time to adjust. Moreover, even in the Netherlands where, a thousand years ago, the vast majority of people were poor by modern standards, people had the resources to build dikes to keep the ocean out. Since then, technology has no doubt improved and, as noted above, standards of living are a huge multiple of what they were a few centuries ago. That means that it should be even easier and more affordable to build dams in, say, Miami, and other low-lying areas. Another way to adapt is to change where we grow food. Economist David Friedman recently quoted the EPA’s statement that “Overall, climate change could make it more difficult to grow crops, raise animals, and catch fish in the same ways and same places as we have done in the past.” That, he noted, is not the end of the story because although global warming will make currently cultivated land somewhat less productive, it will make land that is closer to the poles more productive. Friedman also points out that people will adjust crops, change the amount of irrigation, and adjust in several other ways. His whole detailed analysis is worth reading, but if you don’t have time, here’s his summary statement about what’s wrong with the EPA’s approach: These 3 paragraphs are from my article “Destructive Energy Policies,” Defining Ideas, June 8, 2023. Later in the piece I get into the details about how destructive energy policies are in the United States and, particularly, where I live: California. Read the whole thing, which is a little longer than my usual Defining Ideas article. (0 COMMENTS)

David Beckworth directed me to this tweet: If the Fed had a single mandate to target inflation, then there would be an argument for switching from a point target like 2% to a band such as 1.5% to 2.5%.  But the Fed has a dual mandate, under which an inflation band would be completely pointless.  The Fed already allows inflation to fluctuate above and below 2% as required to achieve the high employment side of their mandate. Calling something “pointless” might be viewed as mild criticism, but I have other concerns.  I fear that something like this might be the sole outcome of the next Fed review of its operating procedure, which is scheduled for 2025.  In that case, an inflation band would shift from pointless to deplorable. The past two years have clearly demonstrated that the Fed is off track, and it’s not hard to see where the problem lies.  Fed policy since 2021 has been far too expansionary.  The biggest problem seems to have been the Fed’s “flexible average inflation target”, which despite its name does not call for flexible average inflation targeting.  The best outcome for the Fed upcoming policy review would be to actually adopt flexible average inflation targeting.  Under this regime, the Fed would make up for inflation overshoots with lower than 2% inflation going forward, and inflation undershoots with above 2% inflation going forward.  Over longer periods, the Fed would keep the average inflation rate close to 2%.  Obviously, the Fed isn’t doing that today.  The policy must be symmetrical. As for the “flexible” part of the policy, the Fed would allow transitory deviations from 2% inflation due to supply shocks.  The best way of implementing flexible average inflation targeting would be to set a target path for the level of NGDP at a rate of 2% plus the Fed’s estimate of long run RGDP growth.  Those trend growth estimates might be updated every 5 or 10 years.   I’d actually prefer a simple NGDP level target, but as long as Congress gives the Fed a mandate for stable prices, they cannot entirely ignore inflation.  Fortunately, the two options are pretty similar in practice, as long run growth trends change very slowly over time. (0 COMMENTS)

A few years ago, when Obama was president, I read that new federal dishwasher standards were coming. So even though we didn’t really need a new dishwasher, ours was fairly old and so I bought a new one before the new standards would be implemented. My reason? The standards required future dishwashers to use less water, meaning that the dishes would take longer to clean and probably would be dirtier. When Trump was president, he lightened the rules a little. But now President Biden’s Department of Energy has repealed the Trump liberalization and is imposing new standards that will require less water and less energy. How much energy will the dishwasher rules save. Christian Britschgi of Reason writes: The department [of energy] estimates that consumers will save $3 billion over the next 30 years, or $100 million per year, on their utility bills thanks to the rougher rules. That’s a pretty small per capita savings when spread across the 89 million dishwasher-owning households. Yes, that is small. It amounts to $1.12 per year. And your dishes will likely take longer to wash and be dirtier. So if you were thinking of replacing your dishwasher, now would be a good time. (1 COMMENTS)