A perfect example of how government programs get re-directed to the well-connected. From Politico:

San Francisco will get $19-a-person in community development block grants this year, while Allentown, with twice the poverty and less than half of the median income, will draw a per-capita allotment of $17.53….Community development block grants rely on outdated, 1970s formulas that have increasingly shuttled dollars to wealthy places like Newton, Mass., while other locales in need, such as Compton, Calif., go wanting.

As Chris Edwards notes, it gets worse:

The federal aid system generates no net value—it is simply a roundabout way of funding local activities. Taxpayers in San Francisco mail checks to the IRS to fund the CDBG program. Their money flows through the HUD bureaucracy, and then is dished out to bureaucracies in Harrisburg and Allentown, with some trickling down to local residents and businesses. Meanwhile, taxpayers in Allentown are also mailing checks to the IRS to fund the CDBG program. Their money flows through the HUD bureaucracy, and then is dished out to bureaucracies in Sacramento and San Francisco, with some trickling down to local residents and businesses.

The Finale:

“The federal aid system thrives not because it benefits the American people, but because it benefits governments and lobbyists.”

Here.

Senator Charles Schumer (D, NY):

“This suspect product has no clear health value,” he said in a statement. “I can’t think of a single parent who thinks it is a good idea for their children to be snorting over-the-counter stimulants up their noses.”

Senator, that’s not a good enough reason. Not every product or service must meet your enfeebled, limited imagination and memory. Interestingly, the good Senator is pro-choice on the abortion issue, so I’ll remind him of their universal mantra: it’s our body, and their our kids.

Here.

 

The presidential administration of Franklin Delano Roosevelt (FDR) refused to accept Jewish refugees from Europe.

One dark period came on the eve of World War II, when the Roosevelt administration refused to accept Jewish refugees fleeing fascism, war, and ultimately extermination.

The story of how the government rejected Jews fleeing Hitler is a horrible and tragic episode in American history. There are many chapters.

The Car Allowance Rebate System (CARS), colloquially known as “cash for clunkers”, was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program was promoted as providing stimulus to the economy by boosting auto sales, while putting safer, cleaner, and more fuel-efficient vehicles on the roadways.

 

Here‘s the latest study on it.

Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.

The abstract of the study tells you everything you need to know.

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

 

 

In an effort for more transparency and accountability within the VA, Secretary of Veterans Affairs David J. Shulkin announced that a public list of employee “accountability actions” will be posted online and updated weekly.

The list outlines a total of 747 disciplinary actions including 526 employees who were fired since January 20. The actions affected a myriad of positons ranging from a tractor operator to VA attorneys.The list does not include employee names due to privacy reasons but does note the employee’s position and VA region.

Here.

 

 

The Trump administration has suggested it will impose tariffs on steel to save or revive the steel producing industry.

The steel industry in the US employs 149k workers but the steel consuming industry employs 6 million workers. So, there is a bigger positive impact on the 149k workers, even if temporary, then on the 6 million workers. This is an old political trick: concentrate the benefits on a few and disperse the relatively lower amount of pain on the many. The benefits to these workers and the firms will be fleeting because the higher cost will reduce quantity demanded for their products.

This video continues to explain why this is a dumb idea.

Recent negative news about United Airlines made me think a bit more about what’s going on in the industry. Applying more regulations that dictate how passengers are treated will make things worse because politicians and regulators cannot possibly know all the intricacies of making flights better. Some information is unknowable. Regulations assume passengers and airline employees act predictably as if they are inhuman such as a rock or car tire. They cannot model all behaviors, just guess. As well, politicians make laws to make themselves look good, then move on. There are always unintended side effects.

Airlines were deregulated in 1978 but the deregulation was incomplete. Airports were left owned by state and local governments. The Federal Aviation Administration (FAA) continues to regulate airlines. A hub-and-spoke system emerged wherein a traveler would start from a non-hub airport (a spoke) then fly into the hub, then reach the final destination by flying from the hub to another airport, the spoke. Some airlines were able to drive out competition from their “fortress hubs.” The growth of low-cost carriers brought more point-to-point service back but the hub-and-spokes remain.

Two problems continues to be that airlines must meet time deadlines for connecting flights, meet arrival commitments, and to keep traffic flowing. This creates a harried situations for airline employees to do what they can to ensure their flights leave on time. All this is coordinated through the FAA, air traffic controllers, baggage handling, and other airport activity. Its quite a feat, actually.

What is needed is deregulation of the gates to let airlines pick and choose and specialize in the routes they can best serve. Airlines would be able to trade routes with other airlines, and as a result, better control the entire route of their flights.