Friday, September 30, 2011
I have often felt that small business owners can be considered rich in terms of certain measures of their income yet at times, the entrepreneurial nature of small business can spur on sacrifices made by the owner in order to save and later invest in the expansion of their business. Maybe at times a rich entrepreneur makes an income of $200,000 in store revenue, yet can only take home $30,000 for themselves annually. I’m no expert in the inner workings of the IRS or its workings of the tax code, but it seems to me that there is plenty of room for business owners and “rich” people can get mixed up.
I fear that what happens in a debate when class warfare gets involved, is that employees forget the symbiotic nature of their relationship with their employer. Granted small business owners and “rich” people generally have more money than I do but maybe we should ask ourselves what these people may have done to deserve this income and perhaps the large accumulation of wealth that goes along with it. These people may have taken a risk where they luckily came out on top and were able to support a lot of us little people by paying our wages.
I don’t want a large amount of rich people’s money flowing out of their bank accounts and into the governments coffers. Without that vast sum of money in the free market innovation is stifled because the rich people won’t have enough money to pay the innovators that come up with new ideas and products which happen to be really expensive because of the time and valuable resources that were poured into them.
But how does this relate to sprawl you may ask? I would answer that the ways in which the money is going to be spent has a direct impact on sprawl. This money is taken by the government from the “rich” a demographic which presumably would end up including entrepreneurs of all types, even the small business types everyone loves. So envision a world where these people have less money to spend on expanding their businesses which would most likely lead to more jobs on the market.
What does the government do with the money you ask? It utilizes some tax money, engages in a little deficit spending and uses it just like the Gazette states in the article:
The president, who remains popular in California despite his national slump, urged the crowd to press members of Congress to approve not only higher taxes on the wealthy but also new spending on roads and bridges and the rest of his economic agenda.
According to many of the articles we have discussed in class is that it is the construction of roads that facilitate transport that is so cheap, it leads to incentive's that cause movement out of the city.
I find it rather humorous that some of the very actions the government takes to shape the state and nature of the economy ends up conflicting with some of their other aims such as preventing the hemorrhaging of the cities of the U.S.
Aside from that it is also intriguing to think of the alternative that was presented in our discussion of the past week in which we considered a world in which private owners and entrepreneurs formed associations so that they could properly take care of the roads instead of the government.
While I think a transition from government maintained roads would be difficult I think after the transfer of ownership was complete, we would see some positive trends in American road ways. With individual ownership of smaller segments of road the owners could focus on their own areas and their respective flaws. Things like pot holes could be fixed much quicker because people at a smaller level would then be permitted to fix the road. Instead of blaming a large and impersonal government for roads that weren’t up to our standards by saying “someone should fix that” we can take charge of our own areas pooling our money with other people in our communities so that we can finally be able to say “we can do something to fix that.”
Private ownership of the road way would mean that construction and maintenance would no longer lead to deficit spending that drives up taxes. Many roads nowadays could be classified as a bit superfluous and a strain on government budgets. Privately owned roads would utilize concepts from the open market that would prices to be ascribed to road ways so that efficiency could be maximized. A reduction in congestion would presumably follow.
This is a concept I had never really considered but after realizing a road system based on the market would stand a fair chance of not degenerating into a chaotic anarchy I think it is an interesting concept that should at least be examined more closely before being dismissed entirely.
Wayne Laugesen, controversial editorial page editor of the Colorado Springs Gazette and a self-proclaimed libertarian, published an article in the Opinion section of the paper on September 29th urging Gazette readers (mainly Colorado Springs, but also Denver residents) to support the “long overdue widening of I-25” one lane in each direction.
According to the article, the Colorado Transportation Commission will meet on October 20th to decide whether they will spend $215 million in unanticipated funds (from federal and state governments and various local sources) on widening I-25 or on widening the eastbound tunnel of I-70.
Laugesen asserts that “any bottleneck along the I-25 corridor impedes the economic advantages that all of Colorado would gain from high-volume travel between the state’s two economic powerhouses”, and that widening the highway between Woodmen and the Douglas County line north of Monument would “speed economic activity by reducing congestion.” We have frequently discussed this topic in class, but I found it especially interesting to discover a situation that directly affects us.
Economists would use the theory of latent demand to counter this assertion by explaining why widening highways acts counterproductively on congestion; as the supply of road capacity increases, the price of traveling on the road decreases. This decrease in the price of traveling (which includes the cost of fuel and the opportunity cost of time spent on the road) encourages people to live further and further away from their workplace and economic activities, and consequently, traffic congestion increases and returns to the original state to begin the cycle over again. Laugesen neglected to consider this very basic theory of economics in his reasoning for supporting this quick fix to highway congestion.
Additionally, after our discussion in class about renowned libertarian, Murray Rothbard, I am surprised that Laugesen claims to be a libertarian. While Rothbard strongly supported the privatization of streets and roads, Laugesen seems to be an adamant proponent for government intervention as a solution for traffic congestion. I am curious as to why Laugesen would not be more interested in promoting a solution, such as the privatization of highways in the form of public-private partnership toll roads, instead of lane expansion.
Public-private partnership toll roads safeguard against the creation of projects that possess larger costs than benefits. Elected officials usually choose to initiate projects that yield political benefits. In the case of PPP toll roads, people will only invest in the project if they can expect a positive return on their investment. Additionally, the private company assumes the responsibility of both building and maintaining the toll road once it undertakes the project. Thus, unlike traditional highway projects, which are built by the lowest bidder and usually require costly repairs over time, private companies build PPP toll roads correctly in the beginning to minimize total life cycle cost. This also protects taxpayers from bearing the costs of schedule delays and cost over-runs such as with traditional highway projects. Finally, toll roads avoid the vicious cycle of increasing congestion by providing sustainable congestion relief through variable pricing instead of lane expansion.
Contrary to Laugesen and the 86% of Gazette readers who showed their support for the widening of I-25 in the online poll, I do not support the “long overdue widening of I-25.” In this case, the old adage “Third time’s a charm” does not apply. As long as I-25 is a free good, congestion will exist. Indubitably, a third lane will not solve this issue.
Thursday, September 29, 2011
Tuesday, September 27, 2011
This week's readings, over policy versus private property, started with a textbook reading that was, as always, very neoclassical. Lots of static multipliers, and static equations that frankly make me wonder where the researchers park their time machines so they can jump back to the precise moment when their models are accurate. Still, amongst all these instructions for making visual aids there were a few useful reminders. That equilibriums are never constant, because education, population, and technological advancement change things practically on an hourly basis. Also that a policy, to, for example, build a sports stadium, does not create wealth so much as redistribute it.
Nevertheless, it was a useful framework for the articles. The reading from For a New Liberty talks about a world that is completely privately owned, where everything is driven my profit, and it really doesn't sound so bad. There is the temptation to be resistant to it because it describes a utopia, just like the champions of Smart Growth, but it has something that Smart Growth testimonials that I have read have not: historical examples and proofs. The economic stimulation of the railroads and good service of their private police in the 19th century, and the private building of roads in the 18th century in England that had the same economic effect. Proof by statistics is much stronger than proof by anecdote.
Anecdotal proof is really all that the deliberative democracy article has to offer. Not in its charges, oddly; it not only says that there is considerable evidence sprawl is a contributing factor to several health problems, it also lists 42 references, so it thinks that it can back that claim. But it lists anecdotal proof for deliberation, and, while sounding good, offers no framework for decisions. Debate is well and good, but government is force, and force requires a decision to be made. The "Symposium" article by Ikeda and Staley actually sums it up pretty well, I think: "...public support for Smart Growth rests on (a) a faith in government intervention and planning to effectively steer (and sometimes predetermine) the growth of a community and/or (b) a fear that new development will fundamentally alter a community."
That quote actually sums up the "Symposium" article pretty well, too. The only thing that I have to add is that it is only the introduction to a symposium, but it has piqued my interest. As soon as I have the time, I think I'll be tracking down more of this material.
And those are my short reviews: static information, Utopian vision, saber rattling, and raised curiosity.