Thursday, September 17, 2009

Chutzpah

Previously I thought the definition of "chutzpah" is when you murder both of your parents, and then throw yourself on the mercy of the court at sentencing time, on the ground that you are an orphan. But now I have a new definition. Chutzpah is when you stage a march on Washington protesting expanded government powers, in which many of your supporters are quoted as saying they have no use for government at all. Then you write a letter to the Washington Metro complaining that they did not provide adequate train service over the weekend to accommodate the crowds. This is what Representative Kevin Brady did this week. In his letter, Brady complained that these protesters "were frustrated and disappointed that our nation’s capital did not make a great effort to simply provide a basic level of transit for them."

You have to wonder. Are these marchers willing to pay higher taxes to support all the overtime and infrastructure costs that would be needed to add more trains on weekends when large crowds are expected? Why were these marchers taking the subway in the first place? As non-believers in government, you would expect them to be taking private cars, or taxis, or for the most self-reliant among them, to power themselves by foot. But I guess they are entitled, since they paid for the subway like the rest of us, to ride it and complain about it like the rest of us.

This is truly a great country that allows its citizens to complain that expanded government services constitute socialism and complain at the very same time that these services should be expanded even further.

11 comments:

  1. I guess whether or not this is a valid complaint depends on whether or not the DC metro normally increases capacity for large protests. But even if they do, it then gets into the realm of what the projected attendance would be, and where those numbers come from. Since those numbers varied before the event from 60k to 2m and varied AFTER the event from 60k to 2m, I just gotta shrug.

    However, it does raise the paradox inherent in opposing socialism when the state and federal governments already do so much. Do you use the government-run service because you're "already paying for it?" Or do you eschew it because you philosophically disagree with its inception?

    Surely there could be no argument that a privately run metro would have, in the interest in the glut of fares, provided additional capacity, but even then they would be running off of the same 60k-2m estimates, and would likely have fallen short. (why go high when empty metros cost money, and those full to capacity make the most?) But then; if the privately run metro fails to balance availability with cost, it gets sold to someone else who can.

    Such is not the case in a government run metro that has less interest in capacity and cost, since it gets the same amount of money whether it serves efficiently or not.

    Wow. That got long quickly.

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  2. It's not clear that a privately-run train system would be willing to run extra trains when crowds are expected to be greater. The reason is that the marginal cost of putting extra trains in service that are only used very rarely would be so high. Therefore a private company would only be willing to put extra trains into service if they could raise fares at peak hours sufficiently to justify the enormous expense of having trains available that are used very rarely.

    To prove this, look at what rental car companies do. Or airlines. Or hotels. Or Disneyland. When they get excess demand, these private companies do not always find it worthwhile to add sufficient capacity to serve that demand. Many times they would just as soon allow lines to develop or hang out the "no cars available" or "no vacancy" sign.

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  3. But we're still talking about industries that have an infrastructure-imposed limit on their maximum capacity.

    Airlines operating out of airports can only run so many flights a day. If they buy a fleet of new passenger jets, they will not necessarily be able to fly every one out of the same airport. Rail systems can only run so many cars. If they have 10 cars and they buy 90 more they didn't just increase capacity tenfold, because there are limits on the rail lines. You can only increase operations so much before you need to make a heavy capital investment to increase the capacity of infrastructure. (building more tunnels, expanding the airport, etc)

    Whether or not the company feels there is sufficient ROI to make that infrastructure investment is up to them. If the hypothetical privately owned DC metro company buys those trains, and charges a premium on days when they're active, and charge too much, people will choose to use taxis, buses, or other modes of transportation. This will cause that hypothetical company to lose money and possibly fail, and be replaced with a company that makes better decisions. If people ARE willing to pay the premium, then the company pays off the new cars after a few years, and has the opportunity of eliminating the premium in order to undercut the taxis, buses, and other modes of transportation. Some companies expand and lose, some expand and win. But when the losers lose, they get replaced with people who can do it better.

    But more to the topic; I think the peak hours are key. Since the DC is a metropolitan area, it's only natural to assume the DC metro must have different operating capacities for "rush hour" vs weekends. If they already have the trains for increased capacity, the only significant added expense of operation is paying the conductors and operation managers. If they were operating at "rush hour" capacity over this particular weekend, I can't say they did anything wrong. If not, I think it was a failure on their part.

    As for your proof on rental car companies, airlines, hotels (disneyland is a bit of a special case, IMHO), and issues with pricing in general; that's the beauty of the market. If you get off the plane at John Wayne, and Enterprise has a sign out that says "no cars available," you have a variety of other choices. If you are looking for a hotel, and one has a "no vacancy" sign, you simply look for another. The same can be seen in the price wars among airlines. This is the point of the market, you choose where to spend your money. If one company wants to overcharge, there is another that will undercut them, and take their customers. Similarly, if a private company (or companies) does not see fit to add capacity to serve demand, an entrepreneur will see an untapped market, and seek to profit from it by providing the service the others can't or won't supply.

    The DC metro has no competition, and therefore, has no financial inclination to maintain a customerbase or high level of service. If they increase the efficiency of their operation, and reduce operating expenses by 5%, their budget next year will only by 95% of what it was. If they spend 100%, they can ask for a larger budget. I have a few friends who work for the state, and when the end of the fiscal year comes, they marvel at the flurry of spending on unnecessary items to spend every single penny, in order to secure more funding next year. (closets full of brand new printers and computers!) For this reason, these types of governmentally funded services usually cost more and more each year, and run heavily in the red.

    I'm not going to say that if a private company ran the trains in DC things would be perfect; just that they would be better, and less of a drain on funding. To be fair, though, the fares probably would be more expensive, but only because it was being funded by a finite amount of money and had that pesky requirement of being profitable.

    Good heavens. I've gone and done it again.

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  4. Is that sort of like Democrats being in favor of the 1st Amendment but then passing a resolution banning certain types of words? Are those the same types of issues?

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  5. Harrison, I will stipulate that the Democrats are also guilty of hypocrisy at times. We all are. I can still get a bit annoyed or amused, however, when people refuse to acknowledge that they benefit from public schools, public libraries, public sanitation, or public transportation, and pretend that they have no need for government services of any kind.

    In response to Ernest Thing, I took some economics courses also, so I am well aware that those who believe that the free market is always the most efficient allocator of resources, sleep well at night knowing that scarcity does not exist in their system. They are never troubled by the evidence right in front of their eyes that some people lack food, clothing, shelter or adequate medical care, because they know that the supply always proves equal to the demand.

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  6. I think you'll find that part of being a free marketer and/or fiscal conservative is the understanding that charities are necessary and require donations. There is also a more common understanding that those same private charities will provide better service more efficiently than a government program.

    A belief that there should be no government "safety net" necessitates that individuals support a private one.

    The notion that free marketers or conservatives are islands unto themselves, hoarding their time, money, and efforts is a shamefully uninformed pejorative.

    May I recommend the book "Who really cares" by Arthur C. Brooks? While his data-cited conclusions are more based on religiosity than political leanings, it would be silly to suggest there is no overlap between the two.

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  7. I am well aware that those who believe that the free market is always the most efficient allocator of resources

    A good start...

    sleep well at night knowing that scarcity does not exist in their system.

    Too bad you just set your strawman on fire.

    scarcity does not exist in their system.

    Scarcity (as you should know from your economics courses) always exists. In every system. The question is how much is scarce, and how it's allocated.

    Government-run systems has demonstrated quite to my satisfaction that there is more scarcity when they're making the decisions.

    They are never troubled by the evidence right in front of their eyes that some people lack food, clothing, shelter or adequate medical care, because they know that the supply always proves equal to the demand.

    A complete non-sequitur.

    Your argument that only if the free market (which we don't have now - we have only in relation to other markets that are more regulated) can be perfect is it allowed.

    Yet when private charity provides more services for less cost than the government (thus your government programs increase scarcity) and government programs are riddled with corruption and waste you would excuse them?

    If you just want to think you're a good person because you think right, well, that's fine, but it's a lousy mechanism to decide on policy.

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  8. What I meant by saying that scarcity does not exist, is that the market solves the problem of scarcity by the pricing mechanism, such that there is always enough supply to equal the demand. But that doesn't always result in everyone getting everything they need, only in everyone getting what they can afford.

    And as far as private charities performing more services than the government, my understanding was that most of the studies have shown that private charities generally have much higher administrative costs than the government. But that point is always debatable, because when you talk to free market believers, nothing that a private company does can ever be wasteful, almost by definition, even if a private company is paying million dollar salaries to its executives, or even if a private charity spends 90% of its funds on the mailings that are used to solicit more funds, which is actually true for some charities.

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  9. But that doesn't always result in everyone getting everything they need,

    Indeed. Our current system has obsoleted the term "poverty".

    Because people are now getting so much more than they need, that the "greatest health threat" that the people at the bottom of the wealth ladder now are facing is obesity.

    only in everyone getting what they can afford.

    Amazingly, you can't really point to a system where that doesn't end up happening. And we have that now in many areas and places.

    And as far as private charities performing more services than the government, my understanding was that most of the studies have shown that private charities generally have much higher administrative costs than the government.


    Your understanding is horribly flawed. I suggest you go research that again. The government's overhead is almost always over 50% of the total funding, wherase private charities are usually under 25%, and some are barely at 10%.

    And that includes things like what Obama did the other night, where he said that Medicaid was "more efficient".... No, it's not. They've externalized costs and aren't counting them. Because collection is under the IRS, and enforcement is under the DOJ...


    But that point is always debatable, because when you talk to free market believers, nothing that a private company does can ever be wasteful, almost by definition

    Again, you're breaking many EPA rules with your toxic and unpermitted strawman burning.

    Furthermore, you can't really even prove that point, that's an exceptionally silly extreme you're taking to mean "ALL" free-marketers, and it demonstrates that you don't understand the mindset.

    By the way, what do you do for a living?

    even if a private company is paying million dollar salaries to its executives

    A private company must be profitable to keep paying those salaries. As a result, there is an endpoint to how long they can pay salaries without making sales. The government for better or ill, has no such restriction or accountability.

    If you're worth millions of dollars, you deserve to be paid that?

    or even if a private charity spends 90% of its funds on the mailings that are used to solicit more funds, which is actually true for some charities.

    Except you're talking about "scams" more than "charities". They call themselves charities - and they do exist, but let's look at the comparison:

    Medicaid: Outlay exceeds income, requires supplemental funding from Congress
    USPS: Outlay exceeds income, requires supplemental funding from Congress
    Social Security: Outlay will exceed income in the next decade.

    Where's your demonstrations of successes that can compare in terms of efficiency such as the Red Cross and Salvation Army?

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  10. "even if a private company is paying million dollar salaries to its executives"

    Ignoring the fact that private companies can pay or not pay whomever whatever they want; you speak as though the government is bereft of million dollar executives. May I suggest some research on Jamie Gorelick?

    If a private company defrauded its shareholders, or cooked its books, those execs would be behind bars.

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  11. You seem to be confusing adequate pubic transportation allocation with people not liking to pay higher taxes. I'm sure there were some people there who are against mass transit but used it anyway probably figuring since they were being forced to pay for it in taxes that they might as well use it anyway. But I think that is beside the point here. I think the issue is that Metro just didn't think that many people would show up... maybe they were told this as a lie, maybe not, but I think that's the issue although you do raise an interesting point.

    And I don't think public education, the way it exists now, benefits everybody (and I don't just mean people without kids).

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