Out of Control

Bob Poole makes an excellent case for congestion pricing and HOT lanes in an "open letter" to elected officials in Souther California published by Planning Report, the "insider's guide to growth management." Bob points out that Southern California has more than a decade of experience showing that market-based pricing for roads works, and should be a central part of getting traffic to flow smoothly and at free flow speeds.

A survey of drivers in Austin, Dallas/Fort Worth and El Paso by the statistical analysis firm Nustats provides revealing evidence of how people are adopting to higher gas prices. Most are reducing vehicle miles traveled by combining trips and cutting out some trips altogether. Most are not giving up their cars.

Here is the summary provided by the folks at Nustats:

Travel Monitor Survey Results *As a direct result of increasing gas prices – people are driving less (67%). *They are doing this by trip chaining (combining trips) and eliminating some trips altogether. To a lesser extent by working from home.

*Reduction in VMT not caused by large decreases in driving by individuals but by large numbers of people making slight reductions in the amount they travel (44% driving <25% less; 90% driving <50% less).

*While a few people have begun to wean themselves off of vehicle travel and onto using alternative modes (walk, transit, bike), most are reacting to higher gas prices by switching their vehicles or carpooling – still preferring auto travel to alternative modes.

*One in five (18%) consider use of toll roads as a solution – the ability to drive quicker and faster with less stop-n-go.

*But if gas prices stay at current levels or increase further, we will see greater shifts to public transit.

Action Have Done Last 12 mths Will Do Total
Combine multiple trip into single trip 66% 8% 74%
Eliminate trips 39% 6% 45%
Downsize to more fuel efficient vehicle 21% 19% 40%
Trade gasoline vehicle for hybrid 3% 19% 21%
Work from home 12% 7% 19%
Use toll roads 12% 6% 18%
Start carpooling 9% 9% 18%
Use public transit instead of drive 4% 13% 17%
Walk instead of drive 9% 6% 15%
Bike instead of drive 4% 7% 11%
Note: Percentages are those that said “a lot”.

Other actions mentioned in open end (rank order and smaller % than above): Use car with better gas mileage, cancel vacation, maintain car, drive slower, look around for lowest price gas, got rid of one vehicle, change spending habits.

Data based on telephone survey (RDD) of 500 households in Austin, Dallas / Ft. Worth, and El Paso the week of July 21, 2008.

Belarus’s government announced earlier this year it would begin a large-scale effort to privatize many of the state’s assets. On Tuesday, a deal was announced between the government and Turkcell, Turkey’s largest mobile phone company, to sell 80 percent of the nation’s state-owned cell phone firm BeST.

Turkcell will pay the Belarusian government $300 million for the majority stake, and an additional $100 million each of the next two years. The half billion-dollar deal follows an earlier sale of 70 percent of Belarus’s second largest mobile phone company, Velcom, to Austria Telecom.

See this Reuters article for full details on the privatization move.

We're not the only ones crazy enough to point out that Americans will be rationale in their response to rising gas prices. Alan Pisarski, author of Commuting in America III, points out the same thing in a recent post on Forbes.com's blog.

Alan notes:

The way we drive will change in the short run [as gas prices rise], and technology will come to the rescue in the long run, just as it has before. But those who predict that the automobile era is over should remember that most excursions have a goal that is valued by both the trip maker and society at large--be it a trip to Grandma's house or a trip to work. In fact, in economic hard times, some of those trips become even more critical. The age of the automobile has a long time to go.

Comanche County, Oklahoma commissioners approved a proposal from Florida-based The GEO Group, Inc. yesterday to build a medium-security prison in Lawton, OK. County Commissioner Gail Turner released a statement today outlining the agreement that will bring 300 new full-time jobs to the area for correctional officers and other personnel.

GEO will build its new facility, Oklahoma’s seventh privatized corrections center, across the road from the Lawton Correctional Facility, another medium-security prison that it already owns and operates. The prison is scheduled to be open by January 2010, with a hopeful contract to house inmates from the Oklahoma Department of Corrections.

The green light to build the new 1,536-bed facility comes as Muskogee County officials to the northeast also consider allowing for a new private prison to be built in Warner, OK. You can read more about that and other private prison developments in Reason’s forthcoming Annual Privatization Report 2008.

Reason Foundation's Adam Summers discusses the real costs of California's high-speed rail plan here.

Bloomberg News posted numbers last Friday showing that 1 in every 171 American homes are in some stage of foreclosure. Totaled, it’s over 260,000 homes. Those numbers sound like a lot until you realize it’s just .58 percent of homes—meaning 99.42 percent of homes are presently in the clear.

While those are real people, with real problems in the foreclosed homes, anything we’re doing with that much success shouldn’t be considered a “crisis”. Such language is the media using hyperbole to gain viewers, and only inspires unnecessary fear that is leading to over reaction.

Top 3 state levels of foreclosure (according to RealtyTrac.com)
2.08% - Nevada
1.47% - California
1.43% - Arizona
(0.58% - National level)

On the macro level, this is acceptable. Panic shouldn’t set in when we’re near perfection. Still, the human element must be considered. While we may not be in a crisis, things are still bad. Those foreclosures represent thousands of American families with ruined lives. When you look at the micro-level, and see specific communities, the situation is bleaker.

Top 3 municipality levels of foreclosure (according to RealtyTrac.com)
4.00% - California Central Valley
3.13% - Riverside-San Bernardino, CA
2.86% - Las Vegas

Several years ago, Thomas Sowell published A Conflict of Visions, dichotomizing “constrained” and “unconstrained” visions. People’s view of the world falls on a line between the extremes of these two worldviews. For the rightist-libertarian, perfection in life is something “constrained”. We assume life won’t be perfect, we can’t have perfect knowledge, and when the Invisible Hand guides the market it isn’t always with a gentle nudge. Why should Vermont’s federal tax dollars bailout mortgage lenders when their state has had only three houses presently in foreclosure?

But not all people think this way. Many have an unconstrained, utopist view of society. People with this view believe in, at some level, the perfectibility of many societal aspects. They believe in the power of government to fix problems. They believe we can have perfection in the housing market. It should be little wonder that the crisis flags have gone up with housing dipping past half a percent.

In reality, we can’t sit at either extreme. Yes, there is no crisis and the problem is nowhere near as bad as it seems. But also, yes, real people are getting hurt in his downturn of the economy. We can’t ignore that as a kneejerk reaction to the hyperbolized verbs pervasive in today’s society. In the end, though, the more we panic, the more we’ll over react—and the more problems we’ll cause for ourselves.

I've had two really important "ah-hah" moments during the last couple of years of transportation research (and building on two decades of urban policy research). One was when I was conducting research on travel patterns in Manhattan and the other four boroughs. It turns out, Manhattan is not so much a transit city as it is a walking city.

The second was when Adrian Moore and I traveled to China and studied transportation investments and travel choice. More than a third of trips in many Chinese cities are by bicycle. In Chengdu, public transit was a small share of overall travel, with bikes and walking capturing the lionshare of travel trips. While Chinese policy was focused on trying to boost transit ridership, we were skeptical because they were trying to substitute a less flexible and adaptable transportation choice (rail and bus) for a more adaptible and flexible one (bikes, walking, automobiles).

So, when I read the following article about the rise of bicycle ridership in DC in the wake of high gas prices, I was intrigued by the following comment by the author, Washington Post reporter Moira McLaughlin:

I don't mind public transportation, but I like the flexibility afforded by a bike. Walking is all right, too, but I'd take my eight-minute morning bike ride over a 20-minute trek.

That's why public transit is what economists call an inferior good. As incomes go up, the demand for mobility increases. Even bikes give us more flexiblity that transit.

The universal preference for mobility is a central theme of Mobility First: A New Vision for Transportation in a Gloablly Competitive 21st Century due out this fall from Rowman & Littlefield, and written by myself and Adrian Moore. Stay tuned!

In the category of "bad ideas never go away", city councilors in San Francisco are pushing for a ban on personal automobiles on one of the city's most traveled roads: Market Street. According to a 23 July 2008 article in the San Francisco Chronicle:

Various San Francisco city leaders, including former Mayor Willie Brown, have proposed closing the downtown stretch of Market Street to private automobiles, only to have merchants and others oppose those efforts as impractical and economically damaging.

But with record gasoline prices, increasing bicycle traffic, growing concern about climate change and Mayor Gavin Newsom's recent efforts to close a 6-mile stretch of road along the city's waterfront on two upcoming Sundays, Supervisor Chris Daly said there's never been a better time to push a car ban on Market Street from Hayes Valley to the Embarcadero.

Great idea, right? Well, not if Chicago's experience is any indication.

After State Street was closed to cars, five of the seven major department stores on that stretch left, theaters shuttered and other businesses faltered, said Peter Scales, a spokesman for Chicago's Department of Planning and Development. Once the ban was lifted, the area was reborn, he said.

"It simply brought more people down to that street with vehicle traffic," said Scales, who was somewhat puzzled that an urban planning idea from the 1970s and 1980s had resurfaced in San Francisco.

"It seems to be an old planning idea," Scales said. "I haven't heard of any new examples. It's kind of interesting that it's coming up there."

Well, Mr. Scales, not really.

Scott Burns has an excellent article in the Houston Chronicle on why it still doesn't make sense to dump your SUV even with $4 per gallon gas and pumps with limits that don't let you fill it up (even if you could afford to). Check it out here.

The Federal Communications Commission acted in an “arbitrary and capricious” manner in fining CBS $550,000 for a broadcasting a glimpse of Janet Jackson’s right breast during the half-time show of the 2004 Super Bowl, said a U.S Court of Appeals yesterday.

The now-famous “wardrobe malfunction” occurred that the end of the live televised performance when co-headliner Justin Timberlake tore open part of Jackson’s jacket. Jackson’s breast was visible for 9/16ths of a second in a long shot taking in the performers, stage and stadium background. It was never clear whether the move was intentional or not. While most viewers could discern that for a fleeting moment Jackson appeared to have flashed them, it took DVR slow-motion replays to confirm the full extent, such as it was, of TV’s most famous nipslip.

That half-second of bared breast sent the Miss Grundys of our nation, most of whom are concentrated at the Parents Television Council, into high dudgeon about the lax mores of broadcasters. They found a ready ear in FCC Chairman Kevin Martin, who slapped CBS and its affiliates with the fine.

The Third Circuit Court of Appeals tossed it out, stating the FCC deviated from its nearly 30-year practice of fining indecent broadcast programming only when it was so “pervasive as to amount to ‘shock treatment’ for the audience.”

The decision echoed a Second Circuit ruling last year that nullified FCC enforcement fines against the use of fleeting instances of profanity that might occur during broadcasts. The FCC had sought to punish MTV and NBC for adult language aired during two music awards programs. Like the Third Circuit, the court again attacked the arbitrary nature of Martin’s enforcement, citing that Martin had not enforced language guidelines for the airing of such films as Saving Private Ryan.

The FCC appealed that decision to the U.S. Supreme Court and a ruling is expected later this term. If the court rules against the FCC (it helps to remember that no government attempt at content regulation has survived a Supreme Court test), we may be a day closer to the point where broadcast TV is given the same content freedom as cable, movies and the Web.

Although he doesn't come at it from a libertarian perspective, MSNBC’s Michael Ventre, summed up the silliness of the case.

Monday’s ruling struck a blow for all those Americans who love nipples and felt the initial uproar was preposterously overstuffed. It also shows how it only took four years for sanity to again reign when it comes to enforcing a moral code in the media. …

[The court] didn’t go the logical step further, though, and declare that the FCC’s behavior constituted indecency in and of itself. The FCC kowtowed to those right-wing fringe elements that were out for blood from an innocent nipple. The agency is an inert and pliable body most of the time anyway, and in most administrations, choosing to act only when one constituency raises such a ruckus that it has no choice.

The $550,000 fine was an example that the FCC had been stormed by Taliban-like elements intent on pouncing at the slightest deviation from a strict code of behavior. The court’s ruling Monday effectively drove those folks back into the hills. Gas bags on Capitol Hill, who at the time used Jackson’s nipple as a jumping-off point to bemoan the decline of our civilization, look a lot dopier today.

The South Bay Expressway toll road in San Diego and its partners were honored with four awards during the month of July for the road's innovative design and construction.

The awards include three PCI Design Awards from the Precast/Prestressed Concrete Institute (PCI) for the use of precast concrete in the construction of the project's signature Otay River Bridge and the 2008 Transportation Innovation Award from Women Transportation Seminar. South Bay Expressway was nominated for the latter award by Chula Vista Mayor Cheryl Cox. Said Mayor Cox, "South Bay Expressway has demonstrated that the public and private sectors can work together to complete a much-needed transportation project. The project is a national example of a well-executed, successful public-private partnership."

In addition to its most recent awards, South Bay Expressway has received six other awards in 2008, including:

Excellence in Highway Design Award - Federal Highway Administration
Conventional Highway Project of the Year TRANNY Award - California Transportation Foundation
Spirit of the Border Award - Otay Mesa Chamber of Commerce
Globe Award - American Road & Transportation Builders Association
Transportation Project Achievement Award - Construction Management Association of America
Concrete Bridge Award - Portland Cement Association

South Bay Expressway is a 10-mile toll road that runs from SR-54 in Spring Valley through eastern Chula Vista down to SR-905 in Otay Mesa near the Mexican border. The road opened in November 2007, was built primarily with private money, and will be operated under a 35-year lease agreement with the State of California. The project was made possible through a public-private partnership among the California Department of Transportation (Caltrans), San Diego Association of Governments (SANDAG), Federal Highway Administration, and South Bay Expressway.

For more information about the South Bay Expressway, visit the SBX Web site at http://southbayexpressway.com/.

Atlanta Journal-Constitution editorial writer Jim Wooten has an excellent dissent on transportation policy in Atlanta. Wooten points out that any solution to Atlanta's traffic congestion has to focus on roads, not transit or land use. In a more interesting twist, he takes local policy makers to task for approving higher density zoning without making the commitment to improving the road network to support it. He writes, for example,

The city of Atlanta, for example, has been active in approving apartments along Marietta Street between downtown and the King Plow arts complex —- without adding street capacity. In three years or less, it'll be a nightmare. That, I think, is by design —- planned inconvenience for the purpose of forcing residents onto buses. That's fine for those who live, work and play entirely on bus or rail lines and have unlimited time to invest in getting there.

For the rest of us, though, a policy of deliberately inconveniencing metro Atlantans to effect the lifestyle changes that planners prefer conflicts with our sense of the role of government. Government should serve us as we wish to live —- and use our tax dollars to provide the schools, fire and police services, and roads and sewers that we need.

This week, the Washington Post discovered yet another indicator of a sagging economy; the national jobless rate for America's youth is now the highest in six decades.

The reporter takes 800 words to explore possible reasons for the sharp increase in youth unemployment. Still, she managed to miss something that might be relevant: almost a year ago, the government hiked the federal minimum wage.

Now, I'm not certain of the exact count, but I think something like 456,000 studies have found that increases in the minimum wage lead to increased unemployment, especially among young and unskilled workers. See here and here, for example.

The article also noted the four cities where youth unemployment is highest; DC, Chicago, Detroit and New York City. Over 80% of 16-19 year olds are unemployed in these cities.

Hmmm...could these four cities have something in common that might be relevant? My gosh, look at this, all four have local minimum wage rates far higher than the federal rate. Now, that might have been an interesting tidbit to include in the story.

See here for more on the minimum wage from Reason

Reason recently received a request from a state legislative staffer for some information on contracting out auditing services. Some research into the issue turned up the following.

First, the federal government has some experience in this area. There is a discussion of outsourcing auditing services, and a pretty good set of guidelines for doing so, available from the Federal Financial Institutions Examination Council (FFIEC) here. For those unfamiliar with the FFIEC, according to the body's Web site,

The Council is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS), and to make recommendations to promote uniformity in the supervision of financial institutions.

Some states have experience with contracting out auditing services as well. The Utah State Auditor's Office sometimes solicits bids from private CPA firms to audit various state agencies (see here). A sample contract can be found here. North Dakota also contracts out auditing services. For those interested in receiving requests for proposals, contact information for the North Dakota Office of the State Auditor is available here. As with Utah, the agency has posted a sample contract for audit services. There are certainly examples from other states ranging from more narrow services like recovery auditing to the auditing of entire programs, agencies, or even the entire state.

Finally, the Massachusetts Office of the Inspector General published "A Local Official's Guide to Procuring and Administering Audit Services," updated as of December 2007, which provides resources for local government officials looking to hire CPA firms and recommends methods for hiring audit firms and managing audit services contracts.

Ohio is trying a novel approach to economic development: sue private companies if they don't keep jobs in the state. The air freight carrier DHL has decided to take advantage of the lower costs that UPS can provide, so its canceling its contract with higher cost ABX. Since ABX is based in Wlimington, Ohio, state Attorney General Lee Fisher has decided the best approach is to sue DHL for antitrust infractions.

According to the Wilimington (Ohio) News Journal:

Short of persuading DHL’s parent company to renegotiate with the Wilmington-based cargo airlines, public officials are in basic agreement that the best chance to stop the transaction — and prevent the massive job loss and harmful impact on area families — is via anti-trust and other legal challenges.

....

Meanwhile Fisher, who is director of the Ohio Department of Development as well as lieutenant governor, briefed the task force on his June 25 phone call with Deutsch Post CEO Frank Appel. Media reports at the time correctly said Appel wasn’t open to alternatives to the planned set-up with UPS, but sometimes omitted how Fisher was equally resolute in his response.
According to Raizk, Fisher made it clear on that phone call that the administration is not taking no for an answer.

There you have it. Official policy is to for companies to tow the line for the state government or get sued. My analysis of this novel approach to economic development written for The Buckeye Institute can be found here.

Jonah Goldberg's book Liberal Fascism, which seems more insightful by the day, can be purchased here.

Ron Bailey disects the problem here and points to the many government policies that reduce food production.

Continuing his personal vendetta with the cable industry, FCC Chairman Kevin Martin recommended that Comcast be punished for “blocking” Internet traffic when it throttled down the bandwidth-insatiable BitTorrent protocol.

If the FCC votes Martin’s way, which it likely will, it will be the first time a service provider is penalized for applying network management techniques in order to balance the bandwidth load being consumed by diverse applications in the network. It will give weight to calls for further network neutrality legislation that aims to regulate all Web traffic management.

The move is surprising because up to now Martin has been urging caution about adopting any principle that might interfere with network management and quality of service. Plus, Comcast had not been actually blocking the BitTorrent application, but had introduced countermeasures to prevent BitTorrent traffic from consuming so much bandwidth that it degraded service to its larger community of customers. BitTorrent users saw their file transfers slow down, but they were not cut off. What’s more, in the wake of the reports, Comcast and BitTorrent worked out an agreement on how the cable company would handle BitTorrent traffic. So not even BitTorrent, the supposed “victim” in this, is crying foul.

What’s not surprising, on the other hand, is that the target of Martin’s action is Comcast, the nation’s largest cable company. His action once again shows that as far as the cable industry goes, there’s no previous position he won’t reverse.

Unfortunately it establishes a precedent on network neutrality we don’t need. Martin’s irrational animosity toward cable has opened the door to wholesale government regulation of the way the Internet works – economically and technologically. It’s a heck of legacy from a Commissioner who claims to support market principles.

Highway 183A outside of Austin, Texas has become the fourth tollroad in the state to go completely cashless.

Eighty percent of users already use an electronic transponder (TXTag, EZ-tag, or Tolltag), and eliminating cash toll booths will save the Central Texas Regional Mobility Authority $1 million per year. Those without tags will be billed via mail.

The transition will take place in November 2008.

183A joins three other cashless tollroads: the Westpark Tollway in Houston (the nation's first, opened in 2004), Loop 49 in Tyler, and SH 121 in Dallas.