Out of Control

The FCC-mandated conversion to digital TV broadcasting next February is touching off a battle among cable TV and telephone companies to hook-up so-called “nevers,” consumers, who for whatever reason, have been content to watch over-the-air TV and have never been interested in purchasing cable, so reports cable industry trade Multichannel News.

When the DTV conversion becomes effective Feb. 17, 2009, consumers who have older analog models will have a choice of purchasing a new TV, using a government-provided $40 voucher to purchase a digital signal converter, or sign up with a cable, telco or satellite TV provider.

Naturally, multichannel video service providers are hoping to entice consumers to embrace the last option. AT&T reportedly will offer a bundled package at $44 a month. Comcast is prepping a basic cable tier, with less frills, priced at $15 to $20 a month. Their target: people like Andrew King, a 45-year-old airplane mechanic who watches off-air television in Culpeper, Va., 70 miles from Washington, D.C.

King is satisfied with his free TV experience. He picks up broadcast stations from two markets, Charlottesville, Va., and the nation’s capital. He is unenthusiastic about the prospect of paying a cable, satellite or telephone company for television.

“I’m kind of a cheapskate,” he said wryly, adding he’d sign up for subscription television and then the “rates will shoot sky high.”

King’s objections echo responses cable researchers have long heard from TV viewers they classify as “nevers” or “formers.” This audience of 14 million to 19 million households are viewers who have steadfastly refused to take, or keep, pay television programming. Winning the hearts, minds and pocketbooks of such consumers is a top priority for cable, satellite and telco TV providers during the next year.

“Frankly, this may be the last big chance to gain market share,” said Cox Communications vice president of product marketing David Pugliese.

Regulators and legislators should note, that despite accusations that cable TV is a stagnant duopoly and needs competition from local government to meet all consumer needs, the article lays out four important facts, backed up by market research:

1) There is heated competition for cable customers.
2) Consumers are aware of service provider choices.
3) Video service providers are interested in attracting budget-conscious customers, even those who might pay only $15 to $30 a month.
4) That even when prices drop, there is still a segment of the population who does not desire cable service.

This Forbes article is a must read.

California's Assembly approved $5.3 million spending on salmon fisheries. Doesn't sound to horrible in isolation, but. . . .

1. California is wrestling with a $14-20 BILLION budget deficit. Time for hard core prioritization.

2. The money to be spent comes from a water infrastructure bond approved in 2006. So the idea is to use debt to pay for a programatic expense, not for infrastructure. So we can pay interest on a one-time expenditure and benefit. Brilliant.

The Justice Department has approved the XM-Sirius merger. The objections were quite absurd, relying on denying that sattellite radio competes with many other forms of broadcast entertainment.

Comcast and BitTorrent have reached an agreement about how the cable company will manage traffic from BitTorrent users.

The deal represents a successful market-based resolution to a network neutrality issue that some said only government regulation could fix. We at Reason note that the government has been trying to "fix" net neutrality since at least 2005. Comcast and BitTorrent settled their differences just five months after reports of Comcast’s throttling down of BitTorrent traffic came to light.

Under the terms of the accord, Comcast will pursue more “agnostic” network management technology that does not target the BitTorrent protocol directly, but, at peak times, prevents a user of any application from hogging too much bandwidth. For its part, BitTorrent acknowledged Comcast’s right to manage its network in order to assure a quality online experience for as many users as possible.

This is significant because BitTorrent is not claiming its rights were violated or that the Comcast violated the FCC’s existing net neutrality guidelines, a charge net neutrality activists, along with at least one member of Congress, made. Instead, BitTorrent sees its issue with Comcast as a conflict in business objectives – something that both were able to work out.

And, as in any agreement, both sides had something to gain. Comcast, of course, is looking to stave off unnecessary and counterproductive regulation. BitTorrent is looking to be seen as the legitimate business it has become, and get away from its association with online piracy, which many of its erstwhile “advocates” were coming close to defending.

Everybody wins in this type of deal. Users get better quality, BitTorrent users are not singled out, Comcast’s property rights are respected. Unfortunately deals like this are precisely what network neutrality legislation such as Snowe-Dorgan would prohibit. Deals like this are also potent testimony as to why bills like Snowe-Dorgan are not needed at all.

…And it’s done.

Citing “unrealistic ambitions and technological ambitions,” The New York Times all but wrote an obituary for big city municipal WiFi last Saturday, acknowledging the problems in Philadelphia, San Francisco, Portland, Ore., Tempe, Ariz., that for years municipal proponents attributed to exaggeration by industry lobbyists if they did not deny them altogether.

The article, by Ian Urbina, is password-protected, but in three paragraphs summed up the universal problem of municipal wireless, long demonstrated in reports from the Reason Foundation, the Heartland Institute and other think tanks where a sound undertstanding of market and technical reality trumped wishful thinking:

In Philadelphia, the agreement was that the city would provide free access to city utility poles for the mounting of routers; in return the Internet service provider would agree to build the infrastructure for 23 free hotspots and to provide inexpensive citywide residential service, including 25,000 special accounts that were even cheaper for lower-income households.

But soon it became clear that dependable reception required more routers than initially predicted, which drastically raised the cost of building the networks. Marketing was also slow to begin, so paid subscribers did not sign up in the numbers that providers initially hoped, Mr. Phillis said.

Prices for Internet service on the broader market also began dropping to a level that, while above what many poor people could afford, was below what municipal Wi-Fi providers were offering, so the companies had to lower their rates even further, making investment in infrastructure even more risky, he said.

Recently the editor of the useful magazine TrafficWorld wrote an unfortunately absurd opinion column damning the DOT for its "singular goal" of privatization of roads. I could say a lot about it, but my colleague Bob Poole beat me to it with this excellent letter to the editor.
~~~~~~~~~~~~~~~~~~~~~~~~~~
Dear Paul,

I am dismayed by your editorial, “Private Plan,” in the March 24th issue. I don’t have a problem with people having different views on what makes for sound transportation policy. That’s the normal give-and-take of testing new ideas. But I’m upset when people mis-represent what is actually going on.

First, you criticize the five Urban Partnership Agreement grants whose purpose is to implement some form of road pricing as part of an integrated set of measures to reduce congestion. You criticize this as part of DOT’s “privatization policies”—but none of these five projects involves any privatization whatever. I know, from first-hand involvement, partly as a consultant to Florida DOT helping them craft their winning proposal, and partly as a policy researcher keeping track of cutting-edge policy developments.

Second, you uncritically repeat an allegation in the Washington Post article that the $850 million used for these grants “would have gone to cities for plans including public transit.” This is wrong on two counts. First, the funds in question arose unexpectedly when Congress failed to do its normal extent of annual earmarking of transportation funds, leaving these funds available as discretionary funds for DOT to use as it judged productive. The Office of the Secretary decided to use these funds for Urban Partnerships as part of its Department-wide Congestion Initiative (launched by former Secretary Norm Mineta). These added funds supplemented the very modest amounts DOT had on hand for the ITS and Value Pricing pilot programs, to provide large enough sums to make it worth cities’ while to overcome the usual inertia about making significant change in transportation policy. (They succeeded, generating something like 19 proposals.) Second, to have a chance of winning, an Urban Partnership proposal needed to include all four of the following “T”s: tolling, transit, technology, and telecommuting. So as you can see, transit enhancement was a requirement.

Third, you make the astonishing statement that public transit “is the most cost-efficient way to move people around population centers.” If you have supporting documentation for that statement, I would certainly like to read it. I have been doing transportation policy research for nearly three decades, and apart from extremely high-density traditional central business districts (Manhattan, London, Paris, Tokyo, etc.), public transit is hardly ever a cost-effective choice. There are dozens of peer-reviewed policy papers on the Reason Foundation website (www.reason.org/transportation) dealing with these issues. Most of urban/suburban America – Atlanta, Dallas, Denver, St Louis, Phoenix, etc. – has nowhere near the density to make transit viable, especially rail transit.

Finally, I would be interested in your source for the statement that “this DOT has cut backing for bus and rail projects by more than two-thirds.” The last time I checked, it is the appropriations committees in Congress that decide how much federal support there will be for public transit, and that support has been going steadily upward during the Bush administration.

Sincerely,
Bob Poole
Director of Transportation Studies
Reason Foundation

Congress set aside a record $2.3 billion in pet projects for colleges and universities last year for research on subjects like berries and reducing odors from swine and poultry, according to an analysis by The Chronicle of Higher Education to be published on Monday.

Despite recent calls in Congress for a moratorium on the home state projects, known as earmarks, the sum was $300 million more than the last time The Chronicle conducted its survey, in 2003, when the total was $2.01 billion. When the publication first analyzed earmarks in 1990, legislators set aside $270 million for colleges and universities.

Congress approved 2,306 earmarks last year for higher education, compared with 223 in 1990, The Chronicle said.

Full fatty story at theNew York Times.

Failing schools in Bay state get euphemism for their euphemism.

Via Boston Globe

To soothe the bruised egos of educators and children in lackluster schools, Massachusetts officials are now pushing for kinder, gentler euphemisms for failure.

Schools in the direst straits, now known as "chronically underperforming," would get the more urgent but still vague label of "priority one."

Reason on "failing schools," I mean "underperforming schools," oops I mean "priority one schools" here.

In what is becoming an all-to-regular development, another U.S. government agency suffered a breach of confidential information. This time, a laptop containing sensitive medical information on 2,500 patients enrolled in a National Institutes of Health clinical trial was stolen in February. As is par for the course, NIH is only getting around to reporting it now.

In a letter to affected individuals, Andrew Arai, a laboratory chief at the National Heart, Lung and Blood Institute (NHLBI), said the laptop was stolen from the trunk of his car. He told the patients that some personally identifiable information was on the stolen computer, including names, birth dates, hospital medical record numbers and MRI information reports, such as measurements and diagnoses. Social Security numbers, phone numbers, addresses and financial information were not on the laptop, officials said.

We're supposed to find this last part reassuring.

You can almost set you watch by it. Once again, members of Congress is calling for regulation of marketing and customer service rules in the wireless industry.

Here’s a report from Friday’s Chicago Tribune:

The latest draft legislation is a wireless consumer protection act from Rep. Edward Markey (D-Mass.) who proposes, among other items, requiring operators to offer a service plan with no early termination fee and letting consumers cancel their contracts within 30 days without penalty.

Sen. Mark Pryor (D-Ark.) has also floated legislation to set up uniform requirements for wireless customer service.

The cell phone industry, a category that includes service and equipment, generates the most complaints out of the roughly 3,800 industries tracked by the Council of Better Business Bureaus. However, according to BBB data, the wireless industry has a higher rate of resolving consumer complaints than the overall rate for all businesses.

The industry says it's open to light national regulation, though it emphasizes that operators already respond to consumer and competitive pressures.

Regulations should protect customers from false or intentionally misleading service offers and pricing plans, but legislators should of careful of sweeping rules that address anecdotal problems. With millions of people using their cell phones on daily, sometimes hourly basis, it’s no surprise that service, pricing and quality problems occur. Yet overall, usage continues to grow, prices have declined measurably, companies that have failed to meet competitive standards have been punished by loss of market share. Many Americans are comfortable enough with the reliability of wireless service that it’s the only phone service they use.

The problem with large-scale customer service regulations, such as a “Wireless User’s Bill of Rights,” however well-intended, is that government, not the marketplace, ends up setting the customer service standard. If the law mandates cell phone companies offer a 30-day service cancellation window, or reduce on-hold waiting time to no more than five minutes, that’s the requirement every service provider will meet. Go light on regulation, and competition will force service providers to make quality a differentiator. Pro-rated service contracts, pre-paid phone accounts and more flexible service bundling all emerged due to competition, not regulation, as service providers sought more ways to one-up the other.

You get these kind of unitended consequences when you have a centralized system, even from policies with good intentions and mostly good results.

More than 43,000 patients had to wait outside in ambulances for at least an hour last year before they could be seen in Britain's National Health Service emergency rooms. Standards require that patients must been seen within four hours when they arrive at an emergency room, so when busy, patients must wait outside so the clock doesn't start ticking. A Department of Health spokesman shrugged off the report. "These figures must be seen in the ontext of the 4.3 million patient journeys undertaken by emergency vehicles," he said.

Whole story here. Synopsis and hat tip thanks to This is True.

According to a poll just released by the National Center for Public Policy Research, 48% of Americans aren't
willing to spend even a single penny more in gasoline taxes to reduce greenhouse gas emissions. Seventy-six percent aren't willing to spend as much as 50 cents.

Opposition to higher gas taxes to curb greenhouse gas emissions is particularly strong among minorities, with 53% of blacks opposing any increase in the gas tax and 84% saying they wouldn't be willing to go as high as 50 cents.
What's more 78% of Democrats, 80% of Independents, and 85% of Republicans aged 55 and above wouldn't be willing to pay as much as 50 cents more in gas taxes -- even though that would translate, on average, only to about $300 per year -- less than a dollar a day.

This poses a huge political dilemma for the current slate of presidential candidates, all of whom have promised big action on global warming: If they recant after they get elected, they will enrage the enviros and risk being branded as planet destroyers, much like the current administration. If they impose a tax, they can expect a huge voter backlash.

The lesson here for politicians is: Think with a cool head before emitting hot air.

To look at the press release and the full study, click here:
http://www.nationalcenter.org/PR-Global_Warming_Gas_Tax_Poll_0308.html

San Francisco Chronicle transportation writer Michael Cabanatuan reports the Golden Gate Bridge is pursuing variable tolls. The hypocrisy of affluent Marin County commuters and their elected officials in the article is unfortunate. Many are opposing the eminently sensible idea of charging a higher toll at rush hour, which will encourage those who can shift trips to other hours to do so, encourage some commuters to carpool or take the bus, and reduce congestion for all vehicles on the bridge during rush hours. Even more remarkable is the strident opposition to using some or all of the increased toll revenue to replace the worn-out and dangerous approach to the bridge, Doyle Drive. Who do they think is going to finance that project, the tooth fairy? Commuters to and from the San Francisco business district are the primary users of Doyle Drive, and their gas taxes don’t produce anything like the half a billion dollars needed to construct the replacement in the next decade or two. I can’t think of a more urgent and appropriate use for Golden Gate toll revenues than fixing Doyle Drive.

The world lost a true visionary yesterday. Arthur C. Clarke, scientist and science fiction writer, never lost his fascination with the possibilities that lay just over the horizon of human evolution. Childhood’s End and "The Sentinel," Clarke's novel and short story that together fused plot and theme into the landmark film 2001: A Space Odyssey, speculated that the current human condition was but an early development phase that was a pre-cursor a wiser and more noble race.

On a more practical level, his brilliance contributed immeasurably to modern telecommunications: combining mathematics, astronomy and gravitational physics, Clarke theorized in a 1945 paper that artificial satellites, if placed approximately 22,000 miles above the Earth, would orbit at exactly the same rate relative to the planet’s rotation, essentially fixing them in space above a single point, where they could then serve as relays for radio signals around the globe.

Peers thought the idea was so outlandish that Clarke never applied for a patent, which he cheekily noted in a later essay, “A Short Pre-History of Comsats, Or How I Lost a Billion Dollars in My Spare Time.”

But the paper helped spark the space race. And thanks to Clarke, you can now send email or make a phone call from any spot in the world. You can navigate your next car trip with a GPS system and watch all the NCAA Tournament games on your DirecTV system.

Clarke’s science fiction rarely took the political directions that contemporaries such as Robert A. Heinlein or Brian Aldiss explored, but a reader can glean from the subtext of his writings that for Clarke, the struggle to transcend material boundaries that limit human potential, be it political, technological or even biological, was central to his thinking.

Obits at Fox News and MSNBC.

Is the Internet addictive? The American Journal of Psychiatry, the publication of the American Psychiatric Association feels strongly enough to give space to one psychologist who favors listing it in the next version (the fifth) of the Diagnostic and Statistical Manual of Mental Disorders (DSM-V).

The editorial, by Dr. Jerald Block, can be found here.

Mike Masnick at Techdirt spied the report, noting that it is not the first time the psychiatric community has attempted to find something pathological in a technology-related activity that people like to spend a great deal of their time doing.

Over the past few years, we've seen so many "calls" to label the use of certain technologies as "addictions" that we've noticed something of a... well... addiction by some to call for new technology addictions. Among the long, long list of possible addictions has been email addiction, web addiction, online porn addiction, video game addiction, internet addiction, and mobile phones or other gadget addictions.

In the past Masnick has not been shy to express the opinion that such dubious calls to classify higher-than-average use of email, video gaming and Internet use as a clinical disorder are merely attempts to expand “therapies” that insurance must cover.

If the fact that some Korean teenagers average 3 hours a day on the Internet (what U.S. teenagers average in front of the TV) amounts to a mental illness, what do we say about those retirees in Florida and Arizona retirees who play one, if not two rounds of golf a day (four to eight hours). The 10 recorded cardio-pulmonary deaths among users in Internet cafes that Block cites does not a social problem make. Going back to the golf example, I’ll wager that the number of players who have had heart attacks while out on the links number far more than 10.

Masnick provides a sounder perspective.

Of course, there are a few problems, including the fact that research has shown little evidence that the internet is really addictive, and almost every story of internet addiction really tends to be about deeper issues that resulted in someone seeking an outlet on the internet (from depression, bad family situations, alcoholism, etc.). Focusing on the "internet" part tends to have people trying to treat a symptom, not the disease. Hopefully, this new push will follow the same path as the one last year to have video games declared an addiction too. It didn't take long for that idea to get shot down.

The U.S. Supreme Court, taking its first major case of broadcast indecency in 30 years, will hear an FCC appeal of a Second U.S. Circuit Court of Appeals ruling that nullified the agency’s enforcement regime regarding “fleeting expletives,” AP is reporting.

The case stems from an FCC claim that broadcasts of entertainment awards shows in 2002 and 2003 were indecent because of profanity uttered by U2 Lead singer Bono, Cher and Nicole Richie. Although no fines were issued, the FCC’s policy reserves the right to levy financial penalties in the future.

At issue is whether the passing use of language that might be objectionable to some viewers constitutes indecency under FCC guidelines. The Second Circuit Court sidestepped the content issue by citing procedural irregularities, namely that the FCC policy was invalid because the agency had changed it without adequate explanation. The case stemmed from Bono’s ad-libbed, apparently unscripted, exclamation, “f***ing brilliant!” during the NBC broadcast of the 2003 Golden Globes Awards show. The same FCC case also cited the Fox network over similar language by Cher and Richie during the 2002 and 2003 Billboard Music Awards.

Despite the FCC’s contention that it received hundreds of thousands of complaints over the language, the Second Circuit “was skeptical that the commission can provide a reasoned explanation for its fleeting expletive regime that would pass constitutional muster,” AP reporter Mark Sherman wrote.

Although the Supreme Court won’t hear the case until the fall, it will be interesting to see how it plays out. When it comes to regulating content, the FCC is fighting for relevance. FCC Chairman Kevin Martin has made no secret of his desire to police premium cable content (think The Sopranos, The Wire and The L Word) for “indecency,” not to mention Web content, and he might try to leverage a court decision in this regard (assuming he keeps his post in 2009). Yet Martin has often been subjective. In the past he has given an official past to broadcast airings of Saving Private Ryan, the Steven Spielberg war film that contains a fair amount of (scripted) profanity.

That tendency to pick-and-chose has reduced Martin’s legal arguments to the notion that the government needs to be watching out for public taste. At the same time, he did a fine job bolstering the First Amendment argument against banning profanity speech by choosing to use examples of it—mostly for shock effect—in his official comment on the Second Court’s decision.

Stating, as Solicitor General Paul Clement did, that the Second Circuit put the FCC “in an untenable position,” powerless to stop the airing of expletives even when children are watching, presupposes that it’s the FCC’s business to decide what children should be watching. Hence, the Second Court did at least address the correct constitutional questions the FCC action raised, and, for my part came, down on the right side—rules can’t be vague and subjective.

So, the conservative government in Canada reported this week that almost 500,000 foreigners moved to Canada last year, a record number. Unlike their counterparts to the South, however, they said this was a good thing and patted themselves on the back for managing a program that is "responding to Canada's needs."

They also used to the announcement to outline plans to "speed up the processing of permanent residency applications, ensuring shorter wait times and making Canada's immigration system more competitive."

Well.

In the last several years, countries around the world--even Old Europe--have slashed corporate tax rates to levels below ours. Most have continued to liberalize trade, while we are re-debating NAFTA. In Europe, labor mobility is nearly universal, so innovation can spring up-and find the labor it needs-in the most favorable climate. Even if you are using new math, these moves do add up.

Nativists in our country who are obsessed with 'protecting American jobs' may soon find there aren't any to protect.

For more commentary from Reason Foundation on immigration, go here.

For articles from reason magazine, go here.

In this LA Times commentary, a female anthropologist explains what she learned spending a year with a mexican brothel, and how that reflects on Elliot Spitzer's fall.

A Joplin Globe editorial says "here is a toll plan that ought to be included in the discussion the next time legislators talk about long-term highway solutions: a public-private partnership to build toll roads for big trucks. Those four-lane routes would parallel interstates 44 and 70 and perhaps even U.S. 71, which one day will be folded into the interstate system."

The column cites Reason Foundation's recent toll roads study, a joint effort with the Show-Me Institute.

Back in 2004 USA Today noted, "Truck-only toll lanes are the brainchild of Robert Poole, an engineer who oversees transportation studies at the Reason Foundation, a libertarian think tank in Los Angeles."

Poole's Studies:
Corridors for Toll Truckways: Suggested Locations for Pilot Projects
Toll Truckways: A New Path Toward Safer and More Efficient Freight Transportation

MSNBC has an exciting interactive feature today (well, interactive, anyway) that provides a walk through of the debate over plastic bag bans.

The feature starts with a survey which asks which type of bags you normally choose at a grocery store, what factor is most important in your decision, and which bag you think is more environmentally friendly. With roughly 54,000 people weighing in at this time, the answers are, overwhelmingly: plastic, reusability, and paper, respectively. 25 percent have the right answer to the question of which bag is environmentally superior--neither--and the 38 percent plurality who say they choose the bag that they are most likely to reuse are also on the right track, environmentally speaking.

This result is encouraging, because it shows that most people are making the "right" decision based purely on their personal incentives. Bag bans and related schemes, ironically, limit the optimization of the natural resource use represented in the "paper or plastic?" dilemma.

In an audio clip provided for the MSNBC feature, American Forest and Paper Association CEO, Donna Harman, gets it about right:

Our industry really supports the marketplace being the ultimate decider of whether customers choose paper versus plastic, because, given appropriate information, consumers will make the right choice for the environment.

With oil hitting $110 a barrel and gas prices creeping towards $4 a gallon, the federal government continues to prohibit U.S. farmers from growing hemp, which could be used to efficiently produce biofuels, including cellulosic ethanol.

Hemp is also a cost-effective, environmentally-friendly substitute for polyester, cotton, fiberglass and concrete, according to a new Reason Foundation study that examines hemp's potential uses and the ways other countries are benefitting from it. Industrial hemp production is banned in the U.S. as an archaic consequence of the war on drugs.

"There are numerous environmental advantages to hemp," said Skaidra Smith-Heisters, a policy analyst at Reason Foundation and author of the report. "Hemp often requires less energy to manufacture into products. It is less toxic to process. And it is easier to recycle and more biodegradable than most competing crops and products. Unfortunately, we won't realize the full economic and environmental benefits of hemp until the crop is legal in the United States."

Full Study (.pdf)
Summary of Study (.pdf)
Press Release

Probably not, but Case Western University law professor's Jonathan Adler makes an excellent case for why they should be considered a key climate adaptation strategy.

This article argues that climate change, and its projected effects on water use and supply, calls for a fundamental reexamination of water institutions. In particular, this article suggests that market-based institutions are well suited to address the additional pressures on water supplies due to climate change. Many aspects of water markets, including their flexibility, decentralized nature, and ability to create and harness economic incentives, make them particularly well suited to address the uncertain water forecast. A gradual shift toward water marketing and market pricing will improve the management of water supplies, ensure more efficient allocation of available water supplies and encourage cost-effective conservation measures.

An application to urban planning can be found on my Planetize blog post here:

My most recent critique of urban planning can be found on Planetizen Interchange, the blog hosted by the web portal for the planning profession.

Why plan? That’s an important question for a planning skeptic like myself. I’m not at all convinced that conventional public urban planning has much value, despite (or because of?) spending eight years on a city planning commission.

Via the Indianapolis Star – "Indiana Treasurer Richard Mourdock announced Monday that in 2007 the state earned more than $287 million in interest from its investment of proceeds from the $3.8 billion lease of the Indiana Toll Road."

It’s important to revisit and highlight this massive toll road and financial success because the popular (and incorrect) take on Gov. Mitch Daniels’ lease of the Indiana Toll Road (ITR) for $3.8 billion early in 2006 went something like this: ‘Though it raised a lot of money, the deal was a political loser, costing the GOP control of one house of the legislature and making Daniels a likely one-term governor. Those perceptions weighed heavily in New Jersey Gov. Jon Corzine’s rejection of privatization, in favor of a state-agency 'monetization' of that state’s toll roads (which is also proving very unpopular).’

But the politics of the Indiana Toll Road privatization are not what they seem. To begin with, the initial 2006 election-day fallout was limited to three seats changing hands, which did lead to the Democrats gaining a slim 51-49 edge in the House. But that was then. Today, as the invested proceeds from the ITR lease have jump-started $6.5 billion of major new construction between 2005 and 2015, many labor unions seem to be having a love-fest with the Republican governor. Several union leaders are on Daniels’ re-election campaign steering committee, and last December a bevy of others formally endorsed him for re-election—including the Teamsters, the Operating Engineers, Carpenters, Sheet Metal Workers, etc. And pundits think the GOP has a decent shot at winning back the lost House seats this November.

Besides welcoming all the new highway construction, the labor movement also appreciates that no ITR employees were made worse off by the privatization. All 550 employees were offered jobs with no reduction in pay and benefits either with the toll road company or with the state. According to a recent GAO report, about 85% transitioned to the toll road company, and 115 were offered jobs with the state. All those that left state employment got paid for accrued vacation time, and their pension plan contributions and vested benefits were preserved.

Operationally, the concession company is well along on widening 10 miles of the ITR on the western end, where it is used heavily by commuters into the Chicago metro area, at a cost of $250 million—part of about $700 million in near-term improvements the company committed to as part of the deal. It is also equipping the entire ITR with electronic toll collection (which it never had before)—and has joined the interagency group for interoperable electronic tolling throughout the Northeast and Midwest: the E-ZPass system. The western portion is already in operation, and the eastern section’s electronic tolling will be completed by April.

All of this was enough to provoke Governing magazine into a long and mostly positive profile of Daniels and his first term. Obviously, leasing existing toll roads carries political risks. But when done carefully, the benefits can outweigh the costs.

A USA Today editorial says, "If you want to be president, you have to sacrifice privacy."

In the "Opposing View,” Reason magazine editor-in-chief Matt Welch writes, "In this era of the Imperial Presidency, so much attention is lavished onto presidential candidates that the focus has strayed from ‘What do we need to know?’ to ‘What are they hiding?’ The former is a matter of citizen self-defense; the latter is a game of gotcha — and one with potentially damaging consequences for the rest of us."

WashingtonPost.com says Matt is “one of the world's foremost experts on all things McCain.” You can find his book, McCain: The Myth of a Maverick, here, and you can watch him discuss McCain, conservatives and the religious right on the newest episode of PBS’ Bill Moyers Journal here.

Planner Bill Fulton has come up with with a few interesting back of the envelope figures on congestion pricing in a recent blog post at California Planning and Development Report. California allows hybrid car owners with a sticker to use the states HOV lanes free of charge. The stickers were handed out for free, and they've become valuable. A hybrid car with the sticker sells for $4,000 more on the used market than one without it.

In other words, the State of California gave away to owners of 85,000 hybrid cars a carpool access sticker worth $4,000. That value – somewhere around $300 million – is now in the hands of hybrid car owners. It is not in the hands of state and regional transportation agencies that could use it for other transportation improvements.

The full post can be found here.

A new poll shows New Jersey's taxpayers aren’t happy with Gov. Jon Corzine and his toll road plan is getting some of the blame. I've talked with quite a few reporters over the last several weeks, discussing Gov. Corzine's plan to "monetize" the state's toll roads, refinancing them based on huge increases in toll rates in order to bail the state out of its current fiscal hole. In order to get around existing bond covenants, under which all toll revenues must be used to operate, maintain, rebuild, and expand the toll roads, Corzine would create a new "public benefit corporation" which would take over the toll roads. By paying off their existing bonds, the new entity would be free to use toll revenues for whatever its charter called for. Under Corzine's proposal, that would include paying off $16 billion of general state debt.

My problem with this plan is twofold. First, it's grossly unfair to motorists and truckers who use the New Jersey toll roads, 51% of whom (on the NJ Turnpike) are from out of state. They are not responsible for decades of fiscal mismanagement. If anyone should be bailing out the state, it should be the voters and taxpayers of New Jersey, who were asleep at the switch while their public officials spent the state into ruination.

And this gets to my second, related, objection. The extremely high new toll rates—for a truck they would go from $5 in 2008 to $52 in 2033—combine a toll and a tax. The portion that ends up actually spent on maintaining, expanding, and modernizing the toll roads is a toll. But the portion that goes for general state purposes is a tax, plain and simple. Blurring that distinction could greatly harm America's highway system. Converting a toll (a pure user fee) into a tax at the same time as the rates are greatly increased is virtually guaranteed to stimulate opposition to tolls as a method of highway financing.

And that could not happen at a worse time. During the last few years, the global capital markets have discovered the U.S. highway sector as a new investment category. This has occurred just as we're starting to realize the enormity of the investment needs facing us in this sector—for urban congestion relief and for long-haul truck routes, in addition to reconstructing much of our 30- to 50-year-old freeway and Interstate system. The last thing we need is a large-scale backlash against tolling by the motorists and truckers who should be looking to toll finance as a key part of the answer to our highway capital shortfall.

Gov. Corzine decided on the public benefit corporation approach after getting negative feedback to a trial balloon proposal for leasing the toll roads, as Indiana did. Yet it may be that leasing the toll roads to a toll road company with a global track record could raise what the Governor claims to need—without such sky-high toll rates. A source at one such company shared with me some internal number-crunching they have done recently. Remember that the Governor says his plan is expected to generate $37 billion for the state, thanks to the aggressive schedule of toll increases. My source said that when they ran their valuation model using the Governor's toll increase schedule, the value totaled $50 billion. To get the same $37 billion value, their model showed tolls increasing only 3.3 times over the next 15 years, compared with 5 times under the Gov's plan. Alternatively, starting with an even more modest toll rate schedule (today's rates adjusted annually for CPI increases), the model yields a valuation of $18 billion.

So what's with the Governor's numbers? My source could only speculate, citing their own assumptions about "substantial operational savings" and life-cycle cost savings in the modernization program. In other words, the proposition here is that the Gov's plan requires significantly higher tolls because it assumes business-as-usual in how the toll roads operate. It would be very interesting to see what kinds of bids the private sector might submit, if outrage over the Gov's proposed toll increases leads to a search for alternatives.

Reason Foundation's Toll Roads and Transportation Research and Commentary

Reason Foundation's Sam Staley has an op-ed in today's Ohio's Times-Gazette on the state's proposed stimulus package. Sam writes, "Restoring Ohio's economic vitality will be difficult under the best of circumstances. But the solution is not in having state government pick winners and losers by rewarding favored, politically correct businesses over others not on their political radar screen. On the contrary, the key will be in creating a policy environment where broad-based entrepreneurship and business investment is welcomed and nurtured."

In a new column, Reason Foundation's Adam Summers takes a look at California's $16 billion budget deficit and writes, "Despite what some lawmakers would like us to believe, this is a budget crisis borne of an addiction to spending, not a revenue problem. In the past four years, the state's general fund revenues have increased approximately 32 percent. In fact, total revenue has grown steadily since the early 1990s, shortly after major tax increases were imposed under Gov. Pete Wilson's administration. Legislators intent on trying to solve their spending problem on the backs of taxpayers through tax increases would be wise to take this lesson to heart, especially considering the ongoing housing crisis and threat of economic recession."

Reason's California Research and Commentary

If the reporting by the Washington Post on grizzly bears is any indication, earmarks are going to be around for a very long time. John McCain has been using a $3 million earmark for DNA research on grizzly bears as an example--along with the infamous Bridget to Nowhere in Alaska and Hillary Clinton's support for a museum on the site of Woodstock--as an example of Congress Gone Wild on Spending. Well, apparently, the Washington Post thinks the grizzly bear earmark was a great thing. How do we know?

Actually, it was a scientific and logistical triumph, argues Katherine Kendall, 56, mastermind of the Northern Divide Grizzly Bear Project.

Kendall is one tough field biologist: She's rafted wild rivers, forded swollen streams and hiked through remote backcountry for weeks at a time. She goes to places inhabited by all manner of large creatures with sharp teeth. She was once charged by an enraged grizzly. She stared the bear down.

McCain doesn't get a similar puff paragraph on his war experience or standing down opposition to earmarks.

The article goes on to quote several bear lovers on how valuable their research is. Oh, their jobs are being funded by the grant from Congress or other government agencies. No conflict of interest there.

So, were any skeptics interviewed? Just a staffer at Sen. McCain's office.

For political reporting, this is pretty shabby stuff. The reporter doesn't bother to tell the reader why this program might have been wasteful, or perhaps not even the job of the federal government. That's what the debate is about.

If the Bridge to Nowhere was an excellent piece of engineering (which is should be), does that make it a justifiable public expenditure? No. Is a sports stadium a justifiable public expenditure if it represents state of the art architecture (which further lines the pockets of wealthy sports club owners and athletes). No.

But, apparently if a lovable (at a distance) furry beast of the forest is the object of Congressional largess, any federal expenditure must be justifiable unless the program crashes and burns. And the Washington Post will weigh in with shallow, uncritical, and unbalanced reporting to keep the program's funding flowing.

Anyone interested in a good overview of how economist's view cities should peruse Ed Glaeser's new working paper from Harvard. It's an excellent, relatively accessible summary of the state of economic thinking on cities from the 20,000 foot level.

Here's the abstract:

The economic approach to cities relies on a spatial equilibrium for workers, employers and builders. The worker's equilibrium implies that positive attributes in one location, like access to downtown or high wages, are offset by negative attributes, like high housing prices. The employer's equilibrium requires that high wages be offset by a high level of productivity, perhaps due to easy access to customers or suppliers. The search for the sources of productivity differences that can justify high wages is the basis for the study of agglomeration economies which has been a significant branch of urban economics in the past 20 years. The builder's equilibrium condition pushes us to understand the causes of supply differences across space that can explain why some places have abundant construction and low prices while others have little construction and high prices. Since the economic theory of cities emphasizes a search for exogenous causes of endogenous outcomes like local wages, housing prices and city growth, it is unsurprising that the economic empirics on cities have increasingly focused on the quest for exogenous sources of variation. The economic approach to urban policy emphasizes the need to focus on people, rather than places, as the ultimate objects of policy concern and the need for policy to anticipate the mobility of people and firms.

Glaeser has dozens of pithy, up-to-date, one and two paragraph summaries of what economic research has to say about urban growth.

You can find Ed's other working papers here.

A California court has a ruling that implies that California's more than 166,000 homeschoolers are simply truant and their parents are criminals.

Today's San Francisco Chronicle covers the panic.

The ruling arose from a child welfare dispute between the Los Angeles County Department of Children and Family Services and Philip and Mary Long of Lynwood, who have been homeschooling their eight children. Mary Long is their teacher, but holds no teaching credential.

"A primary purpose of the educational system is to train school children in good citizenship, patriotism and loyalty to the state and the nation as a means of protecting the public welfare," the judge wrote, quoting from a 1961 case on a similar issue.

Katherine Mangu-Ward covers the ruling yesterday at Reason's Hita and Run under the great headline: "Hey Teacher! Don't Leave Those kids at Home."

Education Week also covers the story this week with nationwide trends on burdensome homeschooling regulation from mandatory state testing to parental credentials.

Our Vice President Adrian Moore, writes that "this may turn out to be a big blow against homeschooling, or just a rogue judge case that does not matter. Each year we file a form with the state in which we declare our home to be a private school, and that is all we have to do to comply. This law does not fundamentally change the legality of homeschooling wich is legal through statute 48222."

48222. Children who are being instructed in a private full-time day
school by persons capable of teaching shall be exempted. Such
school shall, except under the circumstances described in Section 30,
be taught in the English language and shall offer instruction in the
several branches of study required to be taught in the public
schools of the state. The attendance of the pupils shall be kept by
private school authorities in a register, and the record of
attendance shall indicate clearly every absence of the pupil from
school for a half day or more during each day that school is
maintained during the year.

Exemptions under this section shall be valid only after
verification by the attendance supervisor of the district, or other
person designated by the board of education, that the private school
has complied with the provisions of Section 33190 requiring the
annual filing by the owner or other head of a private school of an
affidavit or statement of prescribed information with the
Superintendent of Public Instruction. The verification required by
this section shall not be construed as an evaluation, recognition,
approval, or endorsement of any private school or course.

In other words, until now most homeschoolers file as private schools and parents fall under "persons capable of teaching." The big question is will this ruling change that standard interpretation?

The AP reports on a near mid-air collision that saw two planes come within 400 feet of each other. As air traffic becomes ever more congested, it’s absurd that we still rely on a 1960s’-design air traffic control system. That system uses very imprecise radar to tell controllers approximately where planes are, and relies on these controllers to keep them far enough apart to avoid colliding. This “by-hand” operation urgently needs replacing by a 21st century air traffic management system that relies on (a) far more precise augmented GPS to keep track of plane locations in real-time, (b) digital communications for faster and more accurate exchange of information, and (c) automation of routine separation functions to get beyond the limitations of how many moving targets the controller can keep track of in his head. Nearly all the technology to do this is in hand, and the NextGen system concept is being finalized by an interagency group that includes NASA, DOD, and the FAA. But unless Congress enacts fundamental reforms in how air traffic control is funded and governed, it will be at least 20 years before we see anything like the NextGen system in place. So expect more near-misses and some crashes as the airways become ever more congested and the obsolete 20th century system becomes ever more overburdened.

Reason Foundation's Air Traffic Control Reform Research

The New York Times runs an editorial “Mass Transit Needs Congestion Pricing” that shows the problem with many U.S. transit systems – people who don’t use them are asked to massively subsidize them. Congestion pricing makes sense for Manhattan’s horribly congested streets. But I question the Times’ automatic assumption that the revenues from congestion pricing must be used for mass transit. In most toll road systems, the revenues from the prices charged are used to improve the road or bridge for which the motorist pays. Motorists entering Manhattan via the Triborough Bridge, the Midtown Tunnel, and the Battery Tunnel pay high tolls for the privilege, but the majority of those funds are used for the MTA’s transit program—as opposed to modernizing the bridges and tunnels. There are many ways in which congestion pricing fees paid by motorists could be used to improve the City’s inadequate roadway system. But if congestion pricing revenues are going to all be used to subsidize transit, Mayor Bloomberg should at least call the program by an honest name: a Congestion Tax.

Reason Foundation's Transportation and Congestion Pricing Research

John F. Kennedy International Airport could reduce delays and increase capacity by adding a new runway between two existing runways, according to a new study by the Reason Foundation. Even with the new runway, JFK would still have runway spacing that is greater than the separation between runways at today's San Francisco International Airport and similar to Boston's Logan International.

The report highlights numerous technological improvements expected to be implemented as part of the Federal Aviation Administration's NextGen efforts, which will completely revamp the nation's air traffic control system over the next two decades. Full implementation of some of these new systems would increase runway throughput at JFK by 50 percent and by as much as 45 percent at Newark Liberty International. Reduced spacing on approaches would also permit an additional 10 percent throughput on LaGuardia's runways.

Aero-News.net Article

Full Study (.pdf)

Reason's Airport and Air Traffic Research and Commentary

The government is now searching and confiscating laptop computers and cell phones as they come through customs - and it might take a year for you to get your property back. The Washington Post reports some companies are now telling employees to erase their data before going on international trips because they don't want private data and trade secrets in the government's hands.

In a new column, Reason Foundation's Steve Titch Titch writes, "seizures of laptops and other electronic devices continue the troubling pattern on the part of the federal government to erode civil liberties in the name of security. Rather than make us safer, they likely put Americans and American interests at greater risk because they expose private and secure information."

Full Column

Reason Foundation's Joanne Jacobs reports, "More than a thousand Catholic schools have closed since 2000 and more are being lost every year. Enrollment, which peaked at 5.2 million in 13,000 schools in 1960, has fallen to 2.3 million students in 7,500 schools...While parochial schools are much cheaper than most private alternatives, they are having trouble competing against tuition-free charter schools, which are expanding rapidly in urban areas with low-performing schools."

Jacobs concludes, "If poor children are going to be liberated [from failing schools], private philanthropists will have to take the lead...Ninety-nine percent of Catholic high school students graduate and 97 percent of graduates go on to college, says the National Catholic Educational Association. That track record has drawn support from donors of all religious backgrounds. For donors who want more brains for the buck, the Catholic schools are a good investment."

Full Column

Reason Foundation's Education Research and Commentary

In his latest column for Public Works Financing, Reason Foundation's Robert Poole writes,

"Twenty years ago, when some of us began seriously promoting long-term toll concessions as a better way to finance and manage limited-access U.S. highways, we had no idea how difficult the struggle would be. The early wave of enabling legislation-in Arizona, California, Minnesota, Virginia, and Washington State-led to only a handful of projects in what we can look back on as the false dawn of this new paradigm in the early 1990s.

But the second wave that began with the long-term lease of the Chicago Skyway and the 50-year concession deal for the first Trans-Texas Corridor is much larger and more promising. Despite a populist reaction in Texas last year, and some hostile rhetoric from House transportation committee members last spring, states like Florida, Texas, and Virginia have moved forward with billion-dollar-scale greenfield toll projects-and the capital markets are crying for more.

But as I wrote last month, the split on the National Surface Transportation Policy and Revenue Commission exposed the extent of the chasm that must be bridged if the toll concession paradigm is going to be accepted as more than a possibly helpful side-show in 21st-century highways."

Full Column

Reason Foundation’s Transportation Research and Commentary

In no particular order:

Do state laws allowing medical use of marijuana increase overall marijuana use?

No, according to statistical anaylses by Texas A&M Health Science Center researchers Dennis M. Gorman and J. Charles Huber Jr. The researchers looked at reported marijuana use in two high risk populations (arrestees and emergency department patients) in select cities in California, Oregon, Colorado and Washington before and after the states approved medical marijuana laws. They concluded "consistent with other studies of the liberalization of cannabis laws, medical cannabis laws do not appear to increase use of the drug. One reason for this might be that relatively few individuals are registered medical cannabis patients or caregivers. In addition, use of the drug by those already sick might 'de-glamorise' it and thereby do little to encourage use among others." More here.

If marijuana is not highly addictive, why do people enroll in drug treatment programs for marijuana?

According to the most recent data from SAMHSA, the Substance Abuse and Mental Health Services Administration, 58 percent of substance abuse treatment admissions for marijuana tracked by the feds last year were the result of referrals through the criminal justice system. Additionally, 36 percent of those purportedly "in treatment" for marijuana abuse reported they had not used the drug in the month prior to their admission for treatment (and 16 percent had only used it between one and three times in the month prior). When ONDCP and others make the argument that the number of people in treatment for marijuana proves the drug should remain illegal, they're essentially saying that the number of people arrested for marijuana proves that we should arrest people for marijuana. Legalization advocates are more likely to see this data as support for our own position--that the greatest risk to marijuana users is the threat of arrest itself.

Our colleague Joel Schwartz called our attention to a forthcoming article in the Journal of Urban Economics that fnds strong, robust empirical evidence that sprawl promotes social interaction.

Jan Brueckner and Ann Largey examine metropolitan level data to determine whether people living in lower density urban areas interact less with neighbors, have fewer friends, participate in fewer activities, etc. They drew on the survey responses from 29,000 people in the Social Capital Benchmark Survey at Harvard University's Kennedy School of Government. What is remarkable is that their results are robust and consistent, regardless of how they specified their empirical model.

The paper’s maintained hypothesis, that social interaction is stronger in denser areas, arose from the conjecture that high densities facilitate interaction by putting people in close proximity. The results, however, show the opposite effect, and a key question is why. One possibility is that the crowding associated with a dense environment might instead spur a need for privacy, causing people to draw inward. Such behavior could reflect the old saying: “good fences make good neighbors.” Alternatively, higher interaction in low-density suburbs could be a consequence of the spatial layout of residences. Outdoor activities like gardening and mowing the lawn could provide opportunities for relaxed, unplanned encounters with neighbors involved in similar activities. By contrast, neighbor contact for apartment dwellers must rely on fleeting encounters in building hallways or elevators, which may be less fruitful. Another possibility is that dense environments offer residents more sources of entertainment (museums, theaters, etc.), lessening the need to interact with others in the pursuit of stimulation.28 Finally, even though the overall MSA murder rate is included as a covariate, high densities at the individual tract level may be associated with higher-than-average criminal activity, making people suspicious of one another and more reluctant to interact.

The paper is well worth a read, although it's technical so be warned!

Everyone will, if transit advocates would actually get their way. A recent study from the University of South Florida for the Florida DOT estimated what it would take to shift households from cars to public transit.

Households would save about $3,500 on average if they gave up their car and hoofed it on public transit. But, here's the kicker: to make transit competitive about half of that savings would go into expanding the transit system. Moreover, 88 percent of the increse in transit ridership comes from households moving from one car to zero.

So, the only way to boost transit ridership in a meaningful way is to eliminate automobiles, if not directly then indirectly. By making conditions so miserable for automobile use, people won't even buy a car, let alone use it

Where do these conditions exist? Try Manhattan. At more than 50,000 people per square mile, fewer than 5 percent of residents commute by car.

One of the chief arguments made for public health care programs is that the government's "vast buying power" can win bigger discounts from care providers than private programs. It sounds pretty good. But, as the great philosopher Cab Calloway said, "it ain't necessarily so."

A recent article in the Denver Post chronicles a surprising outcome in a newly created state prescription drug program for low-income residents; people on the program are paying more for drugs than they would pay at many chain pharmacies.

For those keeping score at home: Competition 1 "Vast Buying Power" 0

This seems too cute by half.

The state of Alaska is preparing a lawsuit against BP to recover taxes that would have been collected if the company hadn't experienced a production shutdown.

As this article explains, in 2006, BP was forced to shut down part of its production facility at Prudoe Bay, when corrosive pipes led to a 200,000 gallon oil spill. The company was fined $20 million for the spill and spent several months repairing the ipeline. The repairs caused production to be several million gallons less than it otherwise would have been.

The state argues that their failure to maintain the pipeline caused the state to lose 'hundreds of millions" in tax revenue it would have received if production hadn't been interrupted.

Yes, you can read that sentence again. Remember, this isn't about paying taxes on the oil that was spilled. It is about paying taxes on oil that is still in the ground.

So, if a company has a bad quarter, are they liable to pay taxes of earnings they would have generated if they hadn't made a misstep. Does the "failure" to execute a good marketing campaign make a company liable for lost earnings? Does Toshiba owe taxes on the HD-DVD players it would have sold if it hadn't lost the format wars?

Bonus chilling quote

Explaining why the legislature provided an initial $4 million to build the legal case, Rep. Bill Stoltze (R) said:

"We have a pretty good track record when we supply money to the Department of Law for litigation. The state doesn't lose a lot of cases."

Indeed.