Oil shortgage in Iran

Fuel Rationing in Iran

This is something to look at later, but this is probably the supreme irony of a an economy where the government is heavily involved in both the production and subsidizing of a basic commodity.

The key problem here seems to be that although Iran produces the oil and subsidizes gasoline prices, the country does not actually refine the oil into gasoline.

The government apparently subsidizes the gasoline as a way to garner popularity (the problem being that most people do not see one dime of the country's oil wealth). Not surprisingly, the fuel is wasted far more than necessary since it so heavily subsidized and people in Iran now think of it as an entitlement. That is why they are burning down gasoline stations.

We tend to get the impression that Iranians live in mortal fear of their government and that criticism from the press is dealt with sternly. This crisis seems to indicate otherwise or that at least it is not as bad as we are normally led to believe. The economic situation though is the much more interesting thing.

A similar situation appears to be taking hold in the west where all of the government interference in pushing ethanol has raised food prices since so many food commodities, including grain for animals, comes from corn. The restrictions on sugar-cane based ethanol (based purely on the politics of the Iowa caucuses) are the other contributing factor to this problem. Our leadership in Washington, however, consists of so many cowards and people who want to run for president, that this will never be repealed.

Economics of Septa

The house bill that passed regarding transportation appears to screw Chester County over in the sense that they are getting a diminished share of representation, but being asked to contribute more financially at the same to Septa. One question is whether the benefit we receive justifies remaining with SEPTA. What would happen if we stopped giving them money? They would likely halt most bus service and reduce regional rail. While this may have a bad effect in the short term on the local economy, the question is whether or not such subsidies should have been introduced into the economy in the first place.

Today though I will focus on a much more mundane issue which is the economics of the Chester County based Septa rider. This person will live in Exton and commute to Center City.

Travel by Car:

The distance is 35 miles each way and considering the stop-and-go nature of traffic on 202 and the Schuylkill, it is likely that 4 gallons of gasoline will be spent on each commute. I will revise this if it appears to be otherwise. That makes for a total cost each day of $12.

Parking in the City is usually not free. If the person has a reserved spot, great. If not, parking will be about $150-$225 per month. I have heard many horrible stories though and even knew of someone who purposely got parking tickets rather than pay monthly parking fees because they could negotiate the fines down to a much lower price than they would have paid in monthly parking fees.

2-3 hours in the car each day.


Travel by Train:

Monthly rail pass: $181
Parking: $1/day (I believe)
Gasoline: 5 miles/day and 1 gallon/$3/week

2 hours in the train, 10-30 minutes waiting at station, 15 minutes in car to and from station.


Annual Costs (assuming 250 work days):

Car
Gasoline: $3,000
Parking: $1,800
Total: $4,800

Train
Pass: $2,172
Parking: $250
Gasoline: $235
Total: $3,657

So the train is theoretically $1,200 cheaper each year. Some other costs that might be factored in are the increased maintenance and car insurance for the commute by car into Philadelphia. There are also some intangibles to consider like stress and flexibility offered for each mode of transportation.

All in all, though, I'm simply amazed that more people do not use the train now that gasoline is around $3 per gallon. Also, it appears to me that a rate hike is justified for regional rail commuters not only because the system is not self-sufficient, but also because it would off-set taxpayer contributions to the system.

Argument 2 against toll roads

Another argument against putting tolls on the interstate is that it will increase the price of goods shipped in Pennsylvania.

You betcha!

And if those interstate roads did not exist, those goods would be even more expensive of non-existent. So if the argument is that it will increase the cost of goods, should we do even more to subsidize trucking companies? The answer of course is no, so why do we stand for subsidizing them with the interstate highway system in the first place?

Privatizing the interstates and allowing the owners to collect tolls is the best way to incorporate the free market into highway maintenance. They will easily become self-sufficient as demonstrated in other states and they will no longer be the bastions of wasteful spending, neglect, and patronage that PennDOT and the Turnpike Commission are now. It will also take a huge chunk out of the state budget.

What Value Life?

Modern science continues to predict that we are not far away from extending the average human life span to 120 years. With the baby boomers now reaching retirement age and continuous warnings that social security will not be able to take care of them even if they only reach 80 on average, what does that mean for our society as a whole?

A more fundamental question is should we be attempting to extend life to the age of 120? Novels like Brave New World focus on the idea of a society that has made a conscience decision to euthanize anyone who has gotten past the age of 40. Although there are no real moral overtones in the novel, it is certainly presented to shock us as contrary to human nature to do this as a routine. This type of sentiment has no doubt made its way into our culture which also idolizes youth and beauty more just as it abhors old age and dying.

This is all perceived as betterment of the human condition. And while undoubtedly much of it might benefit the individual, the question is what does it do to the society as a whole? What will the quality of life be for those over 100?

Will they be fully functional, hooked up to machines, or consuming endless quantities of pills? Will people be healthy enough to raise the retirement age? Will we see a two-tier society based on those that have access to the life extending technology versus those who do not? We will decide that a 120 year life expectancy is an entitlement and devote society's resources to extending the life to its fullest limits for everyone as a government program? What will be the cost at the expense of the needs of other members and areas of society?

Will we ever reach a stage where we have extended human life so far that we will be forced to euthanize people past a certain age in order to make room for future generations? Imagine if you grandparents, great-grandparents, and great-great-grandparents were still alive. Where would we all live now? What will the landscape look like in 30 years in nobody dies?

Japan is an example of a society where the focus is on the elderly both in terms of their size and in terms of how much is spent on them for socialized medicine and the like. Demographics show that younger Japanese people are simply not having children at the rates they once were because raising children and buying houses is too expensive. This is a sign of scarcity and the scarcity is likely caused in part, by higher taxes to pay for socialized medicine, and more resources being devoted to the elderly, whether it be land for housing, or services from the private sector.

The Smoking Ban

Even more pathetic than the PA smoking ban is the list of exemptions. Nursing homes and home-based day care centers? Give me a break. These are two groups that are in the worst possible condition to handle second-hand smoke (whatever the real problems with may be). If others smoking around you is dangerous, why the exemptions in these places. If smoking is really the dangerous activity it is supposed to be, why not a state-wide ban.

Is this a major step toward a permanent ban or is it that we can't afford to lose the cigarette tax revenue, so we'll make it legal enough to keep the money flowing?

Private property means nothing if the government can ban any activity on private property that it otherwise deems legal.

The labor market

I am always a big fan of conspiracy theories in the sense that I love to review them and support them if they have any merit.

One thing that is not a conspiracy theory is that business and people who hire people to work for them like to pay as little as possible for someone to do the job correctly or at least sufficiently.

The conspiracy comes in with watching how the labor market is manipulated in this country by those with the power to do so. For example, you can remember back when Bill Clinton's first two nominees for attorney general were called out for hiring illegal immigrants as nannies and not even paying the requisite taxes for them? Do you think these are the only two wealthy people in the nation who are doing this? What does it say when someone nominated to the highest law enforcement position in the country is engaging in this sort of illegal behavior and treating it as a sort of de minimis problem?

The answer is, of course, that everybody who can do it doing this for the simple fact that they don't want to pay what a U.S. citizen would require for such a job. The complaints go that Americans won't do these types of jobs, but the real answer is that they go for the cheapest Americans willing to do the job and of course get poor quality. If they were willing to pay what the labor market demands, they could get the service and quality they expect. So their solution? Violate federal law and manipulate the labor market to their advantage because "they" deserve it.

This type of manipulation is why the U.S. is full of illegal immigrants and that many who import them want them to stay that way. It keeps their wages low and their employers can basically act like they don't exist for tax purposes. Health care providers are forced to take care of these workers even if they don't pay their bills and schools are required to educate their children even if they pay no school taxes.

On the high end of the labor market, off-shoring has permitted American companies to reduce their labor costs by letting non-Americans do the same jobs for less pay. That is perfectly above board and legal, but is a discussion for another day. The real conspiracy those, involves non-citizen workers who come here as essentially indentured servants of U.S. companies under the H-1B program. This is a direct attempt to manipulate the labor market by using a federal program for a purpose other than its original intent.

I will explore this all a little more soon.

Argument 1 against toll roads

One argument put forward against tolling Pennsylvania interstates is the it will create a new bureaucracy.

The idea of course is that we call something a bureaucracy if it is a government program that we do not like. The real meaning of bureaucracy is a set of government officials who are decision makers. Toll booth collectors are not decision makers. They are essentially guards who make sure people pay upon exiting the toll road.

Administering toll booths will not likely create any more management jobs than already exist to govern the maintenance of the interstate. It will, however, require the creation of several new toll both collection jobs. Given that we would like to keep the creation of government jobs to the barest minimum to accomplish a job, how do we do this?

The answer would be the creation of toll gates along various portions of the road. This would have the added bonus of reducing the amount of construction or reconfiguration of roads that would need to take place around the various exits to accommodate toll booths. It may be a better idea simply to place them at the state borders. This would eliminate the inconvenience to those who live and work in-state during their commutes and would put the burden of the tolls primarily on those drivers from out of state who use them. Keep in mind that out of state drivers currently pay nothing to use these roads. That money comes exclusively out of our pockets. Given that much of the out of state users are trucks, it is likely that the trucks themselves are more responsible for the wear and tear on the roads and bridges given their enormous size compared to regular vehicles.

The toll gates could either be placed exclusively at the state borders or, in addition those locations, a few spots near key interchanges with other interstates. That would be it. The system would not be obtrusive in construction or administration and would bring in a lot more revenue from outside of the state to pay for the roads. Right now we don't receive any.

Public Transportation

Pennsylvania is once again facing a budgetary crisis over state financing of its various transportation systems, all of which to one degree or another are publicly financed. The only independently financed public mode of transportation is the Pennsylvania Turnpike which is funded exclusively from highway tolls.

Everything else from highways, buses, trains, trolleys, to the few remaining form of water transportation are funded to one degree or another by the state government. I will need to get a breakdown of final numbers on this to see how much goes to each, but the numbers are substantial no matter what they happen to be.

What is interesting to me is how many people hate the idea of public money going to what are generally called "public transportation" such as buses and trains. These are generally run by governmentally appointed authorities. They all lose money and the usual accusation by the opponents of public transportation is that they are run by corrupt or incompetent people. My own suspicion is that these entities would lose money no matter what even if they were in private hands, but it would be difficult to undertake such a study since there are no privately run inner-city bus companies or private passenger rail companies left in the U.S.

The ones that did originally exist went out of business for various reasons, primarily because they were losing money. This was primarily because cars became very affordable to the average American and people preferred to spend their money for the convenience that a car provided rather than use public transportation. There are all kinds of conspiracy theories out there about how Detroit, Congress, local government, lawyers, and the courts worked to undermine privately owned public transportation, but in all likelihood it would have survived if were economically profitable for those companies to remain. My own very brief research into our local trolley company shows that it was losing money even as it was expanding and eventually went under because of competing private bus services.

This brings me to my next point. The role of roads in transportation and the role of government in the creation and maintenance of those roads (and especially bridges) have always been a tricky subject. Everybody wants and needs roads, but there is always a question of who is going to pay for them. Originally roads were needed for moving soldiers and moving merchant items (who knows which came first). In our modern era though, roads are now for travel and leisure. This was not the case, of course, until the invention of the automobile. Prior to that time, travel for pleasure was restricted to the extremely wealthy due to the amount of time involved, and most travel was done by rail and sea since those were much faster than horse powered transportation.

As I stated yesterday, people tend to arrive at their conclusions first and then find the rationalization after the fact. People also tend to support government spending for X if they use X and oppose government spending for X if they do not use it. X is either an essential function of government or a waste of taxpayers' money depending on whether or not someone uses it. So, of course, I am always taken back a bit by people who call themselves "fiscal conservatives" or believers in the "free market" who think that interstate highways are an essential function of government that should be subsidized by all taxpayers, including those who do not use them. As an aside, the Commonwealth Foundation, a proponent of the free market it everything else in Pennsylvania is curiously silent on the idea of applying these principles to our highway systems.

There are several arguments put forth to explain why this is so important, but the question really is, if you believe in the value of the free market as an item of faith in all other matters (based either on principle or positive results in other areas), why not in this area? I will explore the arguments against the various proposals to incorporate elements of the free market into interstate roads later, but at this point, I would just like to explore some of the different ways the free market impulse can be incorporated into the interstate highway system and why this approach should be taken.

The first method is to use toll booths that are used to fund the entity that maintains the roads. There are, of course, different ways to set up toll booth systems, but at its core, the idea of using toll booths is to make the people who use the highways pay for them. If a person chooses to use the highway, the person pays for it. If the person does not use it, they don't pay for it. This is a simple point, but the entire point behind the free market system. People are given 100% control over how their money is spent.

The second method is to make the entity itself private. While this may be difficult with federal roads, it is certainly possible with the Pennsylvania turnpike.

The third method is to privatize certain aspects of a government-run system on the cost side. This could mean not only how those working on these projects could be hired, but also how permanent employees could be hired. In other words, materials and labor could be run by private companies with governmental oversight.

To repeat, the reason I am exploring this is because of the budget crisis in Pennsylvania over the funding of transportation. Leaving aside the fact that this fight involves the various regional transportation entities, we will just focus on the roads. One article I found this morning mentions that there is an estimated $8 billion worth of repairs need to Pennsylvania roads alone - primarily for bridges. This is in addition to the current shortfall for current road maintenance. We do not have the money for this, so the idea is to find a source of funding.

There has been a strong reaction to placing toll booths on interstate highways for various reasons (as mentioned above), but the fundamental question is why not have those who use the interstate highway system pay for it? The money must come from somewhere, so why not have the users of the system be the ones who pay for it? Otherwise money will have to come from some other source not directly related to the use of the highways. More importantly, if tolls are not used, money can ONLY come from Pennsylvania citizens. The primary advantage of a toll system (whether in public or private hands) is that EVERYONE who uses it pays for it, not just Pennsylvania citizens.

Introduction

This is a place for me to place various thoughts on random topics. I don't care if you read it. I will and I am doing it this way so that it will be easier to track and retrieve what I write.

The first problem that I would like to struggle with is determining when and to what extent government should be involved in solving a problem vis-a-vis the free market. The free market in this case being roughly defined as the recognition and protection of private property by society and the ability of the owners of private property to make and sell goods and services as they wish as well as buy and use goods as they wish.

One problem I always find in these debates is something I observed a long time ago about human nature. People believe that X is a legitimate government function if they use X on a regular basis. If they do not use X, people feel it is a wasteful subsidy for free-loaders and bureaucrats designed to do little more than take their money.

Another tendency I have noticed is the failure of people to "think outside the box" (forgive the expression) with regard to what services can be privatized and what can be put under government care and control. As much as people claim to hate politicians and think for the themselves, most would not dare to speak (or even think) of changing X from the private sector to the government or vice-versa without the idea first coming out of the mouth of some established political figure.

The human propensity to kiss the asses of power knows no bounds even when it does the smoocher no known good. Being on the "winning side" even if it is only in your own mind seems to be tantamount to people. We do fool ourselves a bit into think our society is free forum of ideas. Our propensity to turn to government to regulate things means that ultimately every issue is then solved by creating a strict dichotomy of ideas between one political part or the other.

People seem very uncomfortable if a third idea is produced in such discourse (or heaven forbid a compromise) because of a subconscious affliction that says that every controversy must be conservative against liberal, republican versus democrat. And of course, their must be a winner since this is a zero-sum game. People often don't know what to think until they have heard which side they are on according to their opinion leaders. This makes us little better than cult followers.

Irrespective of that, to me there seems to be a lack of good solid framework from which to operate to make the determination of what is best. Politicians do not elaborate defined principles, but eventually they would contradict themselves. That is, either the principles themselves would contain inherent contradictions or eventually the politicians principles would eventually yield a result they are uncomfortable with in a given situation (perhaps due to personal reasons).

I like to think I come from the "market solution is the best solution" school of thought, but I have never heard much in the way of a more defined set of principles that arise from this general maxim. I hope to flesh those out here. For example, what does this imply for "free trade" among nations? Are they any domestic goods or markets that should be protected? Should all barriers, including political barriers be brought down according to this principle? When should government regulate and to what extent?

I would like to start exploring this topic to see if I can draw out some postulates and theorems from this starting point to see if it is possible to develop a framework. This is important to me and should be important to others because it allows a better understanding of how a conclusion might be argued and reached when analyzing a particular topic. It also helps to frame the discussion better since I have noticed also the human tendency to arrive at the conclusion first and trace the rationalization back to what is best for them. As I pointed out above, this proclivity is apparent when people are deciding what government should pay for and what should be left to the market.

As an end result, a want a book of modern fiscal conservative principles almost in the form of Sun Tzu.