When liberals undermine liberalism

I consider myself a liberal.  On social issues, I am very liberal; on economic issues, while in general I like markets, I think governments can and should correct large market failures (such as failures in private insurance markets and negative externalities), that the one percent (maybe even the ten percent) should pay higher taxes than they do now, and that there should be a floor on living standards.

It therefore drives me crazy when liberals embrace waste and hypocrisy.  So the following paragraph in the LA Times caught my eye:

Instead, the rail authority has agreed to run fewer trains at slower speeds on tracks shared with commuter rail systems, Amtrak and freight trains. In the early years, passengers will probably have to transfer trains to get from one end of the system to the other. The concept, known as the blended approach, was pushed last year by Bay Area politicians, who fought the original plan to run high-speed trains through the region on 60-foot high viaducts over local neighborhoods. The idea has attracted support in Southern California as well.

So places that will rail against the automobile are doing everything possible to make sure "bullet train" service (whose potential for success I am skeptical about anyway) cannot possibly be a competitive transport mode. The "blended" system will also make freight rail relatively less competitive with trucks, and will waste a lot of money that could be better spent on places California really needs to spend money, such as K-12 education and state universities (and no, I do not work at one).

The whole thing reminds me of perhaps my all time favorite Onion headline.

Mark Twain on Monetary Policy (h/t Patricia Harris)

First published in 1879 as "Mark Twain as a Presidential Candidate."

My financial views are of the most decided character, but they are not likely, perhaps, to increase my popularity with the advocates of inflation. I do not insist upon the special supremacy of rag money or hard money. The great fundamental principle of my life is to take any kind I can get.

New data since I posted yesterday

From this morning's Economic Times (one of India's leading newspapers).

NEW DELHI: The number of India's poor fell to 29.8% of its population in 2009-10 from 37.2% in 2004-05, one of the sharpest falls ever. This suggests India has not only grown faster than the world economy, but that this growth has lifted millions out of poverty. 

In absolute terms, the number of poor in the country declined by around 13% to 354 million during the fiveyear period with rural poverty falling faster thanurban poverty. During the period, rural poverty declined by 8 percentage points to 33.8%, almost double the decline of urban poor by 4.8 percentage points to 20.9%. 

"This is not surprising. Such an outcome is on expected lines as this is the period when the government increased the expenditure on flagship programmes substantially. We gave money to the people and the result is a direct impact of that," said Mihir Shah, member, Planning Commission. 
The numbers also re-affirm the impact of the government's flagship Mahatma Gandhi National Rural Employment Guarantee Scheme that entitles 100 days of work at a minimum rate of Rs 100 per day to all rural households. The scheme was launched in 2006 and has single-handedly transformed rural India. 

It is interesting that India started a war on poverty in 2006, and it seems to be winning.  Not that one thing necessarily caused the other, but it is some coincidence.

What would Rawls say?

Since India liberalized its economy in 1991, PPP GDP per capita has increased from about 1400 in 1992 to about 3200 in 2009 (see Penn World Tables, I am using only two significant digits because the exact numbers depend on definition).  That is 5 percent per capita per year; by any standard this is an impressive performance.  Eyes, moreover, don't lie--I have been coming to India for eight years now, and one can see living standards improving.  This is gratifying.

But in an enormously important dimension, India has not improved at all.  According to the Food and Agriculture Organization of the United Nations, the share of undernourished people in India moved from 20 percent in 1992 to 19 percent in 2008; the number of hungry rose from 177 million to 224 million. 

China has done much better, having cut the rate of hunger nearly in half over the same time period (from 18 to 10 percent), despite the fact that its GINI coefficient is higher. 

  

Rail transit and what is physically possible

I have written posts in the past that reflect my admiration for John Kain's work in transportation economics.  He is known, among other things, for training legions of students: "bus good, trains bad."

In general, buses are cheaper and much more flexible to operate than trains.  But a visit to Bangalore made me wonder if it can really thrive as a city without a metro system (which it is currently in the process of building).  Bangalore is very dense and the streets are, for the most part, very narrow.  Congestion is already terrible, and is composed mostly of auto-rickshaws, motorcycles, and scooters. The city already has many buses, that move dreadfully slowly.  To get from the airport into the business district, a distance of 40 kilometers, takes a minimum of 90 minutes.

People who know these things better than I have told me metro systems are never cost effective.  In this particular case, however, I can't help but wonder.

"Green Jobs" will be real, but invisible

John Whitehead quotes Joe Romm:

Last week economist William Nordhaus slammed global warming deniersand explained that the cost of delaying action is $4 Trillion. As I wrote, Nordhaus’s blunt piece — “Why the Global Warming Skeptics Are Wrong” – is worth reading because, like most mainstream climate economists, he is no climate hawk. 

Those costs are real.  Those costs shift the supply curve for stuff in.  Those costs reduce employment.  So "Green Jobs" are largely not those building windmills and solar panels (the total number of these jobs will be small relative to the economy).  "Green Jobs" will be the jobs saved from cost reductions associated with reduced greenhouse gases.  This is why good environmental policy is also good economic policy.

(h/t Mark Thoma)

Why owning a house may not be the American Dream

Lots of societies outside of America seem to have a preference for home-ownership. I have spoken to policy makers and scholars in several countries--India, Bangladesh, South Africa, Peru--about the importance of a well functioning rental sector.  Rental housing allows for mobility, and for people to use savings to invest in such things as small businesses.  Rental housing is also a way for small entrepreneurs to earn a return on investment.

Yet everywhere I go, I am told that people don't want to rent, they want to own.  The principal reason seems to be security of tenure; in places where enforcement of contracts remains an issue, fear of abuse by landlords sours people on renting as an option.  And so it is that people want to be owners.

Many countries in Western Europe--Germany and Switzerland in particular--do not have fetishes about homeownership.  But tenant protections in these countries are strong (see this piece on Germany and this piece on security of tenure beyond lease terms in Switzerland), so renting is sort of "owning-light" in these countries.