Riding High

I was reading this story about how new car price increases, coupled with the scaling back of incentives, has rendered such purchases unaffordable for residents of most urban areas.  However, the author did find one city that bucked the trend:

According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.

Government FAIL of the day: The $1.5 Trillion ‘mistake’

Maybe some people when they hear the term ‘government waste’ think of bureaucrats ordering more office supplies than they really need, or requiring a bit too much useless paperwork. Indeed, that’s the impression one might form after seeing the proposals of the four finalists for the White House’s SAVE Awards for ideas on reducing government waste. For instance, bureaucrat James Szender of the Department of the Interior made the White House’s Final Four with the following idea.

A written transcript of Federal meetings or hearings is often required. James from the Department of the Interior proposes, whenever possible, using digital equipment for transcripts instead of hiring a court reporter, as using digital transcription is significantly less expensive than getting a certified court reporter to attend, record, and transcribe the proceedings.

Ha ha, silly bureaucrats hiring a court reporter when they could just turn on a recording device! Still, if that’s one of the most wasteful things the government does, then government waste isn’t really a huge deal. And maybe that’s the impression the political class would like to leave us with.

Unfortunately, the The Fiscal Times reminds us that government waste is indeed massive, and a serious blow to the nation’s wealth. The story concerns the Pentagon’s “next generation” fighter jet, the F-35, which increasingly looks like a “$1.5 trillion mistake.” That’s trillion with a ‘t’. Apparently, for 21st century government, trillion is the new billion.

For the second time in two months, test flights of the F-35 have been grounded due to engine trouble, and the plane on the whole seems to be a lemon.

[A]s problems mount, there are growing concerns that the F-35 will never fly a combat mission….The Pentagon ordered nearly 2,500 planes for $382 billion, or fifty percent more than the original cost.

As the price soared, the Pentagon in 2010 deemed the program “too big to fail.” Yet it continues to fall short. Recent engine troubles are just the latest in a series of mechanical failures. A pilot was killed when oxygen to the cabin was cut off. The aircraft are running too hot, limiting their ability to operate in warm environments.

The original delivery date was supposed to be 2010. Then it was delayed until 2012. Now, it’s not expected to be in service until 2019.

But when they are put into active use, they have multiple tactical problems. They don’t have a long range, so they need to be close to the field of battle. They lack the weapons systems to adequately support ground forces. And they’re at a disadvantage in a dogfight because of limited turning capability.

The article notes that the Pentagon commissioned the F-35 during the Clinton presidency, but the plane won’t enter service until at least 2019. So that means it takes Lockheed Martin two decades to deliver the aircraft. Here at Yet, Freedom!, we are no experts on combat aircraft or military procurement, but two decades? We know the analogy isn’t perfect, but back during WWII, the legendary P-51 Mustang was commissioned in 1940 and entered service in 1942. Or consider the time scale of product development in the private sector.  Does it take Apple two decades to bring a new product to market?

In any event, the cost to taxpayers–for a fighter that doesn’t work–is projected to reach up to $1.5 trillion. The figure is mind-blowing and difficult to conceptualize. To provide perspective, consider dividing the amount by $200,000, the cost of a medium-sized house. The result is 7.5 million homes. Using the average of approximately 2.5 persons per household results in enough homes for 18.75 million people, a bit more than the populations of Ohio and Indiana combined. If a foreign power caused that much destruction of our infrastructure it would be considered a devastating act of war. But that is what the Pentagon is effectively doing to our own country.

Here’s our proposal for next year’s SAVE Awards.

Cancel the F-35, and don’t spend another penny on it. Bring a class-action lawsuit on behalf of taxpayers against Lockheed Martin for malfeasance.

Think we’ll make the White House’s Final Four?

NCAA Freedom

John Feinstein has a good article on the need for radical reform or a total scrapping of the NCAA. He argues that:

The NCAA needs to go the way of typewriters, the Edsel and black-and-white TV. Its time has passed. Collegiate sports can no longer be run with an iron fist — especially an incompetent one — or with the quaint notion that Quinnipiac women’s basketball can operate under the same rules as Alabama football.

Amen. Major college football is a business. Universities should recruit (and pay) athletes to play football at their school. These athletes may be enrolled as students, but would also be employees of the university. Let’s face it, they already are.

Professor Glenn Reynolds: The only legitimate government is Constitutional government

Socialists of all stripes have always resented the U.S. Constitution because it limits state power, and therefore inhibits the ability of the state to implement socialism. Since the financial crisis of 2008, however, the government has engaged in several activities of dubious constitutionality, and apparently gotten away with it. Perhaps encouraged by these events, the enemies of the Constitution are now coming out of the woodwork to tell us that the Constitution is obsolete and questioning whether it still matters.

In a recent podcast with economist Russ Roberts, University of Tennessee law professor Glenn Reynolds, better known to the blogosphere as Instapundit, provides a needed reality check. Prof. Reynolds points out that if the government rejects the Constitution, the people no longer have an obligation to obey the government. All power ultimately resides in the people, and the people lend power to the government through the Constitution. It follows that if the government breaks its contract with the people by refusing to confine itself to those powers lent to it by the people through the Constitution, the government has become lawless and illegitimate. Absent the Constitution, the government’s continued rule is based only on sheer force; in a word, tyranny.

The key exchange in the podcast occurs around the 30:00 mark. Here is a partial transcript, some of which we liberated from Ed Driscoll.

ROBERTS: We had a recent guest on the program, Louis Michael Seidman, and he suggested that the Constitution’s out of date. It makes us beholden to a group of dead people who lived over two hundred years ago, and we should just ignore it, unless something in it makes sense… basically [he thinks] we should keep good laws and get rid of bad ones; [keep] good practices, and get rid of bad ones. So you just avoid the Constitutional Convention all together. You just stop using the Constitution! What do you think of his argument?

After some preliminary remarks, Reynolds gives the following reply.

REYNOLDS: Here’s the problem with public officials — because that’s really [Seidman’s] audience — deciding to ignore the Constitution: If you’re the president, if you’re a member of Congress, if you are a TSA agent, the only reason why somebody should listen to what you say, instead of horsewhipping you out of town for your impertinence, is because you exercise power via the Constitution. If the Constitution doesn’t count, you don’t have any legitimate power. You’re a thief, a brigand, an officious busybody, somebody who should be tarred and feathered and run out of town on a rail for trying to exercise power you don’t possess.

So if we’re going to start ignoring the Constitution, I’m fine with that. The first part I’m going to start ignoring is the part that says, I have to do whatever they say.

ROBERTS: But his argument is that we already ignore the Constitution; it’s not really much of a binding document.

REYNOLDS: Oh, well, then I’m free to do whatever I want!  And actually, that is a damning admission, because what that really says is: If you believe Seidman’s argument; if you believe that we already ignore the Constitution anyway, then in fact, the government rules by sheer naked force, and nothing else. And if that’s what you believe, then all of this talk of revolution suddenly doesn’t seem so crazy, it seems almost mandatory.

ROBERTS: Well, he would say – well, I won’t speak for him, but some would say that, well, there’s a social contract, we’ve all agreed to kind of play by these rules…

REYNOLDS: Oh really?!

ROBERTS: …of electing officials, and…

REYNOLDS: Well, the rules I agreed to electing these officials are the Constitution. I thought we were going to ignore that. That’s my social contract.

REYNOLDS: Call me crazy, but I think that whenever somebody writes a piece in the New York Times saying we should ignore the Constitution and do what we want it’s, again, because they want more government and more power, and I’m not inclined to play along. And again, the only reason why I have to listen to anything any of these people says is twofold. One is that they’ve got a gun and the other is that the Constitution says I should listen. Only one of those isn’t vitiated if I just get a bigger gun.

ROBERTS: Yeah, that’s true.

Indeed, one cannot say on the one hand that government officials are free to ignore the Constitution, the highest law in the land, while on the other hand the people must obey even the rulings of the Spearmint Oil Administrative Committee.

Bloomberg’s Big Sugary Drink Ban

Here is the latest. What struck me most about the story weren’t the unsubstantiated hypotheses regarding beverage consumption and obesity, nor the arbitrary manner in which the policy is to be enforced and inconsistently applied.  Rather, it’s the nonchalant attitude about violating all affected citizen’s (consumers, producers, as well as possible water drinking but liberty loving bystanders) freedom without giving such concerns an iota of thought.

Regulation Data

A large economics literature has been devoted to measuring the harmful effects of regulation on innovation and productivity growth.  Here is a cross-national ranking where the U.S.A. does pretty well.  An interesting state by state data-set is found here.

The minimum wage: Cui bono?

The primary argument against the minimum wage is that it can cause some unskilled workers to lose their jobs or to be unable to find jobs. Yet even those workers who manage to retain their jobs at the higher wage do not necessarily benefit. As Dr. Mark Perry points out, employers can respond to the higher wage by cutting workers’ hours and/or by cutting employee benefits.

Another interesting reason that workers might not benefit from a higher minimum wage is that the minimum wage jobs can become more demanding, that is, the assigned tasks can require more effort. To see this, suppose a Burger King franchise highers six teenagers per shift at $7 per hour. If the minimum wage increases to $9, Burger King cuts the sixth worker and employs only five teenagers per shift. But each shift requires the same total amount of work, so now five teenagers will have to do the work of six. Although the teenagers now get paid $9 per hour, it is possible that they would have preferred to earn just $7 but work less hard.

And workers might also find the job less pleasant in other ways. As economist Gordon Tullock pointed out many years ago, you can force an employer to pay a higher wage, but you can’t force him to keep the air conditioning turned on.

In any event, it’s a mistake to believe that young and unskilled workers are the intended beneficiaries of minimum wage laws. The laws are intended instead to benefit Big Labor, that is, union members whose wages already substantially exceed the minimum wage. The intent of the policy is to enhance the wages and job security of relatively skilled workers, at the expense of relatively unskilled workers, by making it harder for employers to replace one skilled worker with more than one unskilled worker. A skilled worker earning $17 per hour might be replaced by two unskilled workers earning $7, but not by two unskilled workers earning $9.

The sequester, the voters and the media

According to a new poll from the Pew Research Center nearly 30% of all Americans have never heard of the impending “sequester” budget cuts.  This shouldn’t be shocking since it illustrates the theory of “rational ignorance” on the part of voters.  Since people have lives, the theory explains such ignorance as a deliberate choice to not acquire information since the cost of doing so exceeds the expected benefit.  Those people who do try to remain informed about the issues of the day mainly rely on television and newspapers for their information.  This strengthens the case for the importance of a fair and unbiased media.

Notable and quotable

Dr. Mark Perry, writing at Carpe Diem.

How do proponents of the minimum wage law defend using the coercive power of the government…to deny millions of mutually advantageous transactions from taking place? How can your position be defended morally and ethically when you support coercive government action that legally prevents Worker A from agreeing to voluntarily work for Employer B at $5.00, $6.00, $7.00 or $7.20 per hour?