Rather than post on anything directly connected to the election, I’ll post on things that will be with us no matter who wins.
by Timothy Taylor, Conversable Economist, October 31, 2024.
Excerpt:
At least to me, it isn’t obvious that the 4th Industrial Revolution is different in this way. I’ve been reading for decades that the 3rd Industrial Revolution involved “skill-based” technical change, and in this way helped to generate growing inequality of incomes since about 1980. In addition, the very limited evidence now available on effects of artificial intelligence tools in the workplace suggests that they can be especially valuable to lower-skill workers, rather than higher-skill workers. The underlying reason is that AI tools in effect can make pre-existing expertise more available to everyone, which is a bigger boost for those with less experience or lower skill.
DRH comment: Tim’s reasoning, and the reasoning in the article he cites, strikes me as more reasonable than the reasoning of recent Nobel Prize winner Daron Acemoglu.
by Marc Joffe, Cato at Liberty, October 31,2024.
Once construction starts, there is no guarantee that it will be completed in six years. Indeed, other projects provide cautionary tales. Honolulu took 12 years to build its 10.75-mile Skyline. Maryland started construction of the 16-mile Purple Line in the Washington, DC, suburbs seven years ago and is not expected to start carrying passengers for another three years.
When Austin’s light rail begins operations, its impact on traffic congestion may not be that great. Project sponsors expect 28,500 daily riders by 2040, but past projections by other agencies have sometimes proved to be wildly overoptimistic. In Honolulu, for example, city officials expected 10,000 daily riders on phase one of its Skyline service, but thus far, actual ridership is only about a third of this projection. Rail projects in San Francisco and Southern California have also seen large shortfalls in actual versus expected ridership.
Further many future light rail riders may switch from existing bus service. Cap Metro’s 801 Rapid bus covers much of the route to be served by the light rail project, and many passengers from this bus line could be expected to become light rail passengers. As a result, even if light rail attracted 28,500 passenger trips in 2040, only a portion of those would replace car trips.
DRH comment: The late George Hilton, who taught the course on urban transportation to Ph.D. students (the two in the class were Harry Watson and I) and undergrad students at UCLA in the winter quarter of 1973, would have liked Marc Joffe’s article a lot. And Marc Joffe would have loved George’s course. I still remember George saying, of many urban mass transit projects in the 1970s (the three he highlighted were San Francisco’s BART, which had opened a few months earlier, and Washington’s Metro and Atlanta’s MARTA, which were being built), that the proponents admitted that the project would replace only one or two years of secular growth in automobile traffic. One thing I don’t recall George mentioning is that while these projects were built, they slowed traffic. And that happened for years. Any reasonable cost/benefit analysis should include the value of people’s time lost for a few years. Remember also that we discount the flow of benefits and costs using a reasonable interest rate. So those costs of time lost, which are incurred upfront, would loom large.
by Timothy Taylor, Conversable Economist, November 1, 2024.
Excerpt:
[B]etween $11,000 and $65,000 our hypothetical family experiences no overall financial gain from an increase in earnings. … [A]n increase in income from $11,000 to $65,000 results in a complete or partial loss of most of the public assistance programs and tax credits. Paired with an increase in tax liability, these losses fully offset income gains. … We observe that at certain levels of employment income within the $11,000 to $65,000 range the family’s net resources dip. It means that the combined loss of public assistance programs outweighs the gain in income, meaning the family faces benefits cliffs. The first dip occurs at $22,000 when the family loses access to SNAP. A second benefits cliff occurs at $27,000, where the family loses TANF. That is followed by several small benefits cliffs that occur due to the loss of school meals, WIC, federal and state EITCs, Medicaid for Adults, and Medicaid for Children/CHIP. Finally, at $61,000 the last and the largest benefits cliff occurs, which entails a loss of the CCDF childcare subsidy.
The authors call this a “benefit cliff.” I have sometimes called it a “poverty trap” (for example, here and here), because of the work disincentives it provides to poor and near-poor households. There’s no simple way to address this situation. Cutting benefits to low-income households has an obvious downside for those families. Phasing out the benefits more slowly, as income rises, will mean providing benefits to more households and will cost substantially more. Ultimately, I think our society ends up relying on the fact that many low-income households would actually like to be self-supporting, to work, and to avoid or minimize their use of government assistance. But for other low-income households, the work disincentives of the poverty trap will bite.
DRH note: Read that first sentence and let it sink in. For a huge swath of the population–tens of millions of households–there is little financial gain from working, at least in the above-ground economy.
My late Hoover colleague Martin Anderson, in his writing on welfare, stated that there are 3 goals that people typically want from a welfare system and that you can achieve at most 2: (1) a system with good incentives to get off welfare, (2) a generous system, and (3) a relatively inexpensive system.
This was why welfare reform in the mid-1990s made so much sense and actually worked until the federal government whittled away at the rules. It limited how long people could be on welfare at one time and over a lifetime. Of course, welfare in the narrow sense is only one component of the welfare state.
by Daryl James and Renee Flaherty, Reason, October 29, 2024.
Excerpt:
Certificate of need (CON) laws exist in various forms in 38 states and Washington, D.C. The stated goal of such laws is to keep costs down by preventing overinvestment in any single market. If regulators decide an area already has enough of any type of service, they can block new construction.
As a result, nobody in North Carolina can open or expand certain medical facilities without these regulators’ permission. Even purchasing an MRI scanner without their approval can be illegal. These restrictions prohibit Singleton from using his own clinic in New Bern for most of the surgeries he performs. He must drive two miles up the road to a competitor’s office, as it is owned by a major health care player. This unnecessary red tape increases costs and decreases scheduling options, and patients suffer.
DRH comment: The acronym CON is apt.
