The Gulf Spill and the Hidden Vice of Capitalism

Here is one aspect of the Gulf spill no one seems to be talking about. It concerns the same thing that conservatives commentators, libertarian journals, and economists seldom take into consideration: Persons in the upper management of large corporations are not necessarily very intelligent and few are well-educated. That is the hidden vice of capitalism. For once, I am speaking as an expert. (Go ahead, check my vita linked to this blog (pdf) and then, re-check the facts on Google. Make my day!)

The BP-caused oil spill – going on for more of a month as I write – is also a public relations disaster for the corporation. As I said earlier (“The Louisiana Oil Disaster?” Posted 5/21/10), we are still missing the moving photographs of thousands of dead, soiled aquatic birds. There is in and around Plaquemines parish a group of stake-holders that is becoming increasingly vocal: The fishermen. I heard some on NPR on 5/25/10 complaining that BP has mostly ignored their wishes to “volunteer” to help. It sounded true and it sounded incredible to me.

Whatever happens, BP is going to be on the hook for hundreds of millions of dollars, possibly for more than a billion dollars. The fishermen whose livelihood and whose future appears to be threatened by BP’s negligence number in the hundreds. I doubt that there are a thousand of them altogether. At the risk of sounding cynical, I will say that they are the only easily identifiable group of human victims who tug at ordinary Americans’ hearts. It’s easy to imagine that most Louisiana fishermen don’t have a doctorate in solar energy science, for instance; it’s easy to recognize that few can readily switch to another occupation. That they may want to transmit their legacy to their children is also understandable from an emotional standpoint. Finally, the tens of millions of American who fish recreationally will have no trouble grasping that the Louisiana fishermen may love their occupation and the lifestyle that goes with it. I am skeptical myself about the extensiveness of the damage. I don’t hope it will become Obama’s Katrina. Yet my heart goes out to those unknown fishermen deprived of both livelihood and, it seems right now, of a future. Continue reading

A Better Way to San Jose

Today I’m going to pick on the California High Speed Rail (HSR) project.  But that’s almost too easy, like shooting fish in a barrel.  So I’ll be brief and then propose a better alternative.

In case you don’t know, California voters passed an initiative in 2008 authorizing sales of bonds to finance a high-speed rail line from San Francisco to Los Angeles with branches to Sacramento on the north end and Anaheim on the south end.  Ten billion in state bond funds were to be matched by Federal and private funds.  The initiative also specified the running time and the fare to be charged.  (How many voters, who might balk at tax increases, understand that bonds have to be paid back with interest using tax revenue?)

Sure as God made green apples, the budget estimates have skyrocketed, the project scope has shrunk, and completion dates have stretched far out over the horizon.  In addition, citizens and local politicians along the route through the San Francisco Peninsula have risen up as one in response to the destruction and disruption that would accompany the construction and operation of the line through their back yards.  These are people in places like Palo Alto, many of them wealthy, articulate, and well-connected.  They appear to have succeeded in getting the Peninsula segment scaled down to a “blended system” where Caltrain and HSR trains share two tracks through most of the Peninsula rather than expanding to four tracks and wiping out hundreds of homes and businesses in the process.  There will likely be an initiative on the November ballot to kill the whole project and polls favor its passage.

For the record, I’m a rail fan.  I enjoy riding Caltrain to work, volunteering at the Western Railway Museum, and studying railroad history.  I’m fascinated by construction projects and still hold a license to practice civil engineering.  So if anything I should be biased in favor of the project but I hate it.

My alternative involves electric cars.  I know, they’ve been a flop so far (Obamacars?), mainly because the usable energy per kilogram of gasoline is about 35 times that of a lithium-ion battery!  A lot of smart people have been working on better energy storage devices and techniques with scant progress to date.

I propose that inductive pickup devices be added to electric cars and perhaps hybrids.  Induction coils would be buried in roadways like Interstate 5, the main SF-LA freeway.  This should make it easy to complete a long distance journey without stopping for a charge-up.  You would leave the freeway fully charged, probably with enough energy to complete your trip on conventional roads.

The payment for energy could be combined with a toll charge.  Tolls are a long overdue idea for roads like I-5 because they not only impose costs directly on beneficiaries but also because they enable congestion pricing – a toll that rises in times of heavy traffic and falls at other times.  This idea has already been implemented on a few California roads but on a very limited scale.  It has the potential to reduce congestion drastically, something carpool lanes have not accomplished.

A major advantage of this system over HSR is that it could be rolled out incrementally.  As soon as a few thousand cars were equipped with pickup devices and a few hundred miles of roadway fitted with induction coils, the benefits would begin.  In contrast, HSR won’t be much good until it’s completed all the way from downtown San Francisco to Los Angeles.  A good estimate for that time is: never.  There’s a real chance that HSR will be abandoned after a lonely segment has been built through Central Valley farmland.

Another advantage of the roadway proposal is that cabling could be included with the induction coils for future automated operation.  Under this longer-range scenario control of your car would be taken by an automated system soon after you entered I-5.  You would be accelerated to 120 or 150 MPH and safely guided to your exit.  This is not so far-fetched given that Google has been running driverless cars around city streets with great success, though perhaps not on freeways as yet.

Now let’s compare two ways of getting a family from San Jose to Disneyland as an example.  First is high speed rail.  You pack the family into the car and head for the downtown station, where you pay a hefty fee for five days’ parking.  You buy tickets for all, get on your train, and arrive in Anaheim, or downtown LA if the Anaheim branch hasn’t been built.  You rent a car and away you go.  Cost?  You figure it out, surely several hundred.  Elapsed time, several hours in all.

I’ve already laid out the induction-drive car scenario.  You come and go when and where you want at a much lower cost and close to the same elapsed time with automated operation.

So there you have it.  Sure, the devil is in the details.  I’ve given only the barest outline, and yet I guarantee you that no matter how solid a case might be built up for a proposal like mine and no matter how preposterous HSR is shown to be, some will not be swayed.  I’m not thinking of those who are merely dazzled by renderings of sleek trains.  I’m thinking of people ranging from busybodies to downright sociopaths who, to one degree or another, hate the freedom that comes with car ownership and want to herd people into public transportation.  In such people we find the root of the HSR boondoggle and so many other social problems.

Links From Around the Consortium

Jacques Delacroix continues his vendetta against Ron Paul.

Dr. Ninos Malek points out the obvious in regards to guns and public schools

Fred Foldvary has a wonderful piece in the Progress Report on Turkey joining NAFTA

Brian Gothberg (with Gregory Christainsen) writes on property rights and whaling technology

Professor Jeffrey Rogers Hummel on Ben Bernanke versus Milton Friedman (pdf) in the Independent Review

Have a great weekend!

Links From Around the Consortium

Over at the Progress Report, Dr. Fred Foldvary writes on how we can extirpate poverty from the world.

Jacques Delacroix calls out Ron Paul’s statement about Iran being surrounded by the U.S. government.

Professor Jeffrey Rogers Hummel tackles the issue of slavery head-on in a Freeman article.

Brian Gothberg writes about the potential technology has to start protecting the ocean’s resources through property rights.

And our newest blogger, Dr. Ninos Malek, defends stereotyping (defending the undefendable is why I love being a libertarian!).

Links From Around the Consortium

Brian Gothberg’s piece on whaling and property rights deserves another look, as he channels Nobel laureate Ronald Coase:

According to a simple version of the Coase (1960) theorem, if the costs of transacting were very low, it would not much matter for the allocation of resources how stock rights were initially assigned. Trading ensures that rights would be put to their highest-valued uses, whatever they might be. If particular whales have more value as a source of pizza toppings than as the subject of a tourist?s photo session, whale-watching companies would be encouraged to sell any rights that they might have to whalers. If, on the other hand, particular whales have great value simply as magnificent creatures whose existence is to be nurtured and cherished, conservation groups would tend to end up with the rights to those whales.

Reality is not always simple, however. Transaction costs are sometimes high. In particular, there is a free-rider problem […]

Co-editor Fred Foldvary opines on how deregulation hurts the economy.  This is perhaps the best piece I have found on regulation and its effects on the economy at large.

I found this piece by Jeffrey Rogers Hummel on President Martin van Buren, whom he calls the ‘American Gladstone’.  If you’re itching for some historical information on one of the American republic’s little known presidents, I recommend you grab a cup of coffee and enjoy.

And, not to be outdone, Jacques Delacroix asks if the French have it better.  He is specifically referring to the debt-to-GDP ratios of France and the U.S.  The whole thing is good throughout, more so because Delacroix professes to hate the French.

Laundry Day!

Links from around the web by the consortium.

Brian Gothberg wants to save the whales.

In an oldie but goodie, Jeffrey Rogers Hummel writes about Federal Reserve accounting and insolvency.

Jacques Delacroix feels remorse for singing the praises of Newt Gingrich.

And Fred Foldvary gives his take on the Israel-Palestine mess.

Happy Friday, and enjoy your weekends!