“Fair” is something that happens once a year

MoveOn.org is great for a laugh. Their Labor Day message featured former Secretary of Labor Robert Reich offering six steps for “how workers can get a fair shake.” In his short video, he says that Labor Day is about “celebrating our nation’s legacy of giving workers a fair share.”

Recently, I heard the line, “my mom said ‘fair’ is something that comes to town once a year in the summer.” I never heard it put that way. I was always told, “life isn’t fair.” And it’s not. That doesn’t mean there’s anything wrong with trying to make up for the downsides of life. Whether it’s looking out for friends and family, volunteering or donating to charity, I think these voluntary acts make our society more civil and more virtuous.

But Reich’s “solutions” require people to give up earnings (taxes) and freedom for government to impose its vision of equality. That doesn’t sound like an easy job. No wonder they’re packaging at as “fairness.” It sounds so nice.

Also part of the message is a link to a petition:

McDonalds and Walmart: Pay your employees a decent wage
Your typical employee is now earning $8.25 to $8.80 an hour. Most are adults, responsible for bringing in half their family’s income. You can easily afford to pay them $15 an hour without causing layoffs or requiring price hikes. Your shareholders and executives are doing spectacularly well.

Based on what facts, exactly? It flies against common sense that an employer wouldn’t make any changes if their labor costs nearly doubled.

It’s interesting that there’s debate about whether or not a higher minimum wage affects employment. This Washington Post article from February 2013 does a decent job of explaining why it isn’t a slam dunk for either side: employers have many options when forced to increase their wages, such as cutting wages for other employees, raising prices, reducing hours or benefits or settling for fewer profits (hurting anyone invested in that company). None of these sounds good if you’re one of the workers handed less hours or benefits (or a pink slip) to go with that minimum wage increase.

The Mystery of Capital

Well, this is a first for me: a book review. I’m not sure how I stumbled across this book, but I’m glad I did and I want to share it. The subtitle is “Why capitalism triumphs in the West and fails everywhere else.” Maybe that’s what caught my eye. Capitalism has taken a few knocks in recent years, so I was curious to read why it’s not globally successful.

In a nutshell, the book argues that the lack of property rights keep people in poverty.

Capital is the force that raises the productivity of labor and creates the wealth of nations. It is the lifeblood of the capitalist system, the foundation of progress, and the one thing that the poor countries of the world cannot seem to produce for themselves, no matter how eagerly their people engage in all the other activities that characterize a capitalist economy.

This resonated with me because I read something similar years ago in William Bernstein’s book, The Birth of Plenty. He also argued that property rights and capital markets were required for a society to prosper. (The other two requirements are the scientific method and communications.)

The book documents how the West developed its property rights systems and offers legal and political suggestions on how countries can reclaim their “dead capital” and make the “extralegal” arrangements legitimate.

The author, Hernando de Soto, is the President of the Institute for Liberty and Democracy in Lima, Peru. Their mission is “to provide governments with the expertise and information to implement institutional reforms in property and business rights that allow citizens to be included in the market economy and thus pull themselves out of poverty and prosper.”

Sounds like a good idea to me.

Top Ten Reasons to Oppose Light Rail

Honestly, there are more than ten reasons why light rail should not be a transit option anywhere in the Twin Cities, but here are ten that I compiled for a flyer. The links are the footnotes to my research.

Top Ten Reasons to Oppose Light Rail

10. Our region does not have the population density for light rail. According to the Urban Land Institute, the minimum density needed for supporting light rail is 14,720 people per square mile. Based on the Federal Transit Adminstration’s Project Development Summary, the population density along the route is about 5,600 people per square mile.

9. Light rail does not move people where they want and need to travel. Census data shows that travel by car has increased over the last 50 years while all other options (transit, walking and carpooling) remained constant. Also, travel trends are increasingly suburb to suburb, and the “hub and spoke” system of light rail that’s currently proposed doesn’t address that.

8. Transit “development” takes tax dollars from other priorities. A lot of the housing being built along the Hiawatha line is happening because of government-issued bonds, tax credits, HUD and MetCouncil grants, and financing from city, county and state sources. Using tax dollars for development means there’s less money available for schools, public safety, parks and road maintenance.

7. Light rail will cost more than what they claim. The capital costs for rail are huge and usually underestimated in a way “that cannot be explained by error and is best explained by … lying.” Consider that Hiawatha’s costs increased from $470 million to $715 million. The cost estimate for a Bottineau LRT is currently $900 million. If the same cost overruns happen, it will end up costing almost $1.4 billion. For Southwest and its $1.25 billion estimate, the same cost overrun will be a staggering $1.9 billion.

6. Light rail won’t have as many riders as they claim. “Forecasters do a poor job of estimating the demand for transportation infrastructure projects. Studies show that “for nine out of ten rail projects, passenger forecasts are overestimated,” on average by 106%.

5. The demand for light rail is driven by special interests, not citizens. The strongest advocates for light rail are corporations, special interest groups and the Met Council. Polls use leading questions and omit key facts. The public comments on Southwest LRT represent about .4% of the population of the cities along the route.

4. Light rail will increase your property taxes. Hennepin County is expected to contribute 10% of the cost of the Bottineau light rail line. The county’s single source of revenue is property taxes. The portion dedicated to rail projects has tripled since 2009. The county will need to raise property taxes to pay the light rail bonds, which increases the burden for people on fixed incomes.

3. People with lower incomes will disproportionately bear the costs. There is currently a quarter-cent sales tax in the metro for transit. Governor Dayton has proposed tripling the transit sales tax AND expanding the sales tax base, exposing many previously exempted goods and services to the transit tax. Everyone knows that sales taxes are regressive and hit those with lower incomes.

2. Light rail is simply not worth the cost. In 1999, MNDOT conducted a cost-benefit analysis for the Hiawatha line. It considered the value of intangible benefits such as travel time savings, reduced crash risks and even air quality. The result was a ratio of 0.42, meaning for every public dollar spent, the entire community receives only 42 cents worth of benefits. We need options that return more value and benefit to more people instead of losing 58 cents of every public dollar.

1. There is a better option: Bus Rapid Transit (BRT). In August 2000, MNDOT recommended the “Northwest corridor” to “be given the highest priority for exclusive busway implementation.” As the Urban Land Institute said, “BRT can offer the look and feel of light rail service at substantially lower cost.” BRT is more flexible than light rail. It costs half as much to build. It is also cheaper to operate. In 2011, the operating subsidy was $1.39 for Hiawatha riders, but only $0.56 for I-35W BRT passengers.

Very simply, light rail costs too much, is inflexible, and better options exist. Perhaps the most insidious thing about light rail is that the costs fall disproportionately on those with fixed and limited incomes. You will pay for transit whether you ride it or not, so take action to make those costs as low as possible.

Hungry Kids Rebel

The Agriculture Department relaxed standards on school lunches on the ironically named “Healthy Hunger Free Kids Act,” responding to criticism that children weren’t getting enough to eat.

"We are Hungry" video

As if the USDA couldn’t figure out that kids would be hungry if they reduced the amount of food in lunches, they were warned. In the summary of public comments on the proposed rule changes (published April 2011), the number one objection to these changes was:

The proposed changes would result in decreased participation in the meal programs because the food offered would not be acceptable to students.

Um.. “I told you so.”

Now if they would only do something about the waste of food. In order to qualify for the federal subsidy, a fruit or vegetable MUST be on the tray. I volunteered in the Wayzata High School cafeteria recently and saw so much fruit thrown away, untouched. This law could never solve the childhood obesity problem. All it’s done is create headaches, waste and hassle for school cafeterias across the country. Like the Kansas high school students say in their video, ‘set the bill on fire.’