Monday, May 12, 2014

An article I wrote is at

Streetcars on road to government overreach. It could also get printed tomorrow in the San Antonio Express-News. They cut it down just a bit, so here is the slightly longer version that I sent them.
"Bill Barker claims that some have hijacked the term “American dream” to block projects like the San Antonio streetcar project for their own selfish reasons ("Opposition co-opting the American Dream," April 24).

But it looks like he attempts to hijack economist Adam Smith and Pope Francis in support of street cars.

He quotes Adam Smith with private interests in "some respects" being the opposite of public interest. "Some respects" is not always and Smith actually mentions this in the context of businesses trying to get taxes or regulations imposed on the public.

Smith says when a merchant pursues his self-interest it  "leads him to prefer that employment which is most advantageous to society."

It is well known that he was suspicious of business but he also worried about government going too far with "There is no art which one government sooner learns of another than that of draining money from the pockets of the people."

Smith listed three major functions of government: national defense, crime prevention and beneficial public works that could not be profitable for private firms to undertake. The latter had two ends, facilitating commerce and education.

Barker does not explain how streetcars will facilitate commerce. Maybe they will. But for a project like this, we need cost-benefit analysis and Barker provides none. Adam Smith suggested such public works need this.

It is also strange that Barker quotes Pope Francis on how we should not rely on the invisible hand so much. Pope Francis has no special expertise on economics and he certainly cannot tell us if streetcars here in San Antonio will be cost effective.

It is not even clear that we have been relying on the invisible hand of self-interest in this country. Yes, some industry have been de-regulated in the past 35 years.

But, regulatory spending by federal agencies is about nine times higher today than it was in 1970, adjusted for inflation. We add thousands of pages of new regulations each year. That is not an invisible hand at work.

In the 1950s, about five percent of jobs required a license. Now it is about thirty percent. Female African immigrants come to this country and get told they need to spend much time and money just to get a license to braid hair. That is the government blocking the American Dream.

Now some people in the U.S. today face marginal tax rates of fifty percent or higher when both federal and state income tax rates are considered. Again, it does not look like the invisible hand in action.

Pope Francis doesn't even understand the economy of his home country, Argentina. It has been hurt over the years by turning away from the invisible hand.

According to the book "The Economics of Macro Issues," Argentina fell from being one of the ten richest countries in the world to seventieth over the last hundred years. Why?

"Government spending (and taxes) in Argentina has been growing relative to the overall size of the economy."

Barker also mentions that the Koch brothers at least partially fund the opposition to streetcars. But it looks like the firefighters union in San Antonio are also skeptical of streetcars.

The reason is "the city should focus on public safety and other “core services.”" That sounds like Adam Smith and his three main functions of government.

Sometimes we ask government to do too much and then it can't do anything well. So let's take a good look at streetcars before we give the okay."

Thursday, May 08, 2014