Shall we grow bananas in America?

"The principal purpose of agriculture policy in the United States is to guarantee we're not as dependent on other countries for our food as we are for our fuel," declared House Republican Conference Chairman Adam H. Putnam (Fla.). He broke not only with Bush but also with House Minority Leader John A. Boehner (R-Ohio) and the presumptive Republican nominee, Sen. John McCain (Ariz.), who opposes a bill he has called wasteful.

"If I was a farm-belt guy, I would be all over my district now, saying, 'I stood with you, not the party of the president,' " said Rep. Tom Davis (R-Va.), who wrote to GOP leaders last week, urging them to defy Bush or at least allow rank-and-file members to save themselves. "Anytime you can separate yourself from someone with a 28 percent favorability rating, that's a good thing."

The five-year measure continues and in some cases expands traditional farm subsidies, and it is stuffed with billions of dollars of new money for anti-hunger programs, conservation programs, fruit and vegetable growers, and the biofuels industry. Dairy farmers will get as much as $410 million more over 10 years to cover higher feed costs. House and Senate negotiators tucked in an annual authorization of $15 million to help "geographically disadvantaged farmers" in Alaska, Hawaii and Puerto Rico.

The bill assures growers of basic crops such as wheat, cotton, corn and soybeans $5 billion a year in automatic payments, even if farm and food prices stay at record levels. And subsidies for the ethanol industry will decline only slightly, leaving largely intact support for the biofuel industry, which has been blamed for contributing to higher food prices.

An unusual coalition of urban liberals and Republican fiscal conservatives tried to sustain Bush's veto. "Merely because the president is not the most popular person in the country today doesn't mean he's always wrong," said Rep. Ron Kind (D-Wis.), who pushed for sweeping changes to the farm-support system.

But that coalition was overwhelmed by the larger bipartisan coalition committed to defending rural constituents, food stamp and school nutrition programs, and new benefits for African American farmers. Nutrition programs will consume about two-thirds of the spending.

"This is a bill about feeding the hungry," pleaded Sen. Ken Salazar (D-Colo.). "This president is turning his back on the people of America."

Hundreds of grass-roots organizations, including food banks, supported the legislation. The National Farmers Union rallied more than 1,000 organizations in favor of the override.

"Although it's pork to most of the country, it's prime rib to the farm belt," Davis said.

This is the essence of pork. Read the rest of it here. By the way, this week I started teaching principles of microeconomics, which I believe should include an introduction to public choice. This article will provide a good illustration of the special interest theory of politics.

Education roundup

1) Alex Tabarrok and the New York Times on New Orleans' new schools.

2) Paul Peterson on the eduction industrial complex.

3) Marion Barry comes out in support of school choice.

4) Juliet Williams on teachers unions busting the budget in California.

Obama's dilemma

A) This survey indicates that 80% of African-Americans favor school choice, and 70% of African-American Democrats would be more likely to vote for a candidate supporting school choice.

B) 41% of the National Education Associations' rank and file likes McCain, while the 1% in charge do not.

Education reform in DC looking ever more likely

Mayor Fentry has named Rick Hess and Kenneth Wong as independent evaluators of the city's school reforms. That is yet more good news for DC's kids, maybe not so good for the adult interest groups which stand in the way of reform. Here is Hess on the need to focus on labor market reform:

For two decades, choice-based reform has been unwisely and deceptively offered by its proponents as something akin to a miracle cure that will boost student achievement, unleash competition, and advance core democratic values.

Along the way, little attention has been paid to the design of these efforts to deregulate a $500 billion a year industry, fostering a vibrant supply of effective providers, nurturing effective mechanisms for quality control, or understanding the multiplicity of arrangements and practices that stifle even nontraditional schools and service providers. For instance, the choice community has had next to nothing to say about the need for venture capital in education, about the ways in which personnel policies and benefit systems stifle new ventures, or about how consumer choices should impact the compensation and job security of educators and school leaders.

One result is that some who were once enthusiastic proponents of “choice” have reversed course and expressed doubts about the viability of educational markets — without ever having stopped to consider all the ways in which simply promoting one-off choice programs falls desperately short of any serious effort to thoughtfully deregulate schooling or promote a coherent K-12 marketplace. Indeed, some have abandoned the choice bandwagon with the same ill-considered haste that marked their initial enthusiasm.

For decades, we have poured money into schooling while seeing few obvious benefits. Current per-pupil spending in constant dollars more than tripled between 1961-62 and 2003-04, from $2,603 to $8,886. Pupil-to-teacher ratios plunged, from 25.1 students per teacher in 1965 to 15.3 per teacher in 2007. Meanwhile, educational progress has been disappointing, at best, over the past quarter-century. This is the epitome of pushing on a string. In an economy marked by new technologies, labor-saving devices, steady growth in productivity, and an evolving labor pool, we are hiring and deploying educators just the way we did a half-century ago. The result is that new investments have not delivered the hoped-for results.

In other words, we need to do what is difficult, we need to fire people, and overcome the special interests which protect them. School Chancellor Michelle Rhee is doing just that. God bless her.

Addendum: Good to see the DCist is in agreement.

Wondering why education reform is so hard?

Largely because the teachers unions have an inside track on pulling down money for themselves, money that could have been used to educate kids. For example:

New York City is paying $81 million over two years in salaries and benefits for teachers without permanent teaching jobs, according to a report being released on Tuesday.

The teachers are part of the so-called reserve pool, which holds teachers whose positions have been eliminated, but who have yet to secure a new permanent teaching position at another school.

The reserve is an outgrowth of the city’s contract with the teachers’ union, which ended seniority rights in staffing decisions as well as the automatic transfer of teachers who had been cut because of shrinking enrollment, the closing of large schools or the elimination of particular programs. At the time, Chancellor Joel I. Klein said he would rather absorb the cost of the teachers in the reserve pool than saddle principals with teachers they did not want.

Under the contract, teachers whose positions have been eliminated from one school and cannot find another to hire them, or who simply do not look for a new job, are assigned to schools to fill in as substitute teachers or temporary replacements. They collect full teacher salary and benefits.

Teachers at those schools are required to show up every day at regular school hours and are available for principals to use as substitutes, but the principals are not required to do so. Officials at the Education Department said they did not track how often the principals used the assigned substitutes, or whether they did at all.

It's not just New York, or the U.S., it's anywhere special interest politics is allowed to prosper. New Zealand in the 1990s came closest to a complete overhaul of education, and yet one institution remained: the teachers unions lobbied to prevent any real changes to the labor market, effectively preventing schools, principles and parents, from choosing their personnel.

As for which candidate is most likely to fight these interests, it's looking like it might be McCain, though Obama may be better suited to negotiate the increasing gap between teachers unions and black voters.

Photos of Tollesbury and Morocco

On the way back from India we stopped in Tollesbury, England to see some friends. Then we went to Marrakesh, Morocco to see another friend. Then I came home.

Photos of India

The rest are here, here, here, and here. Enjoy!

How conservation happens

Through the right incentives, namely profit:

"The pressure is immense" to cut weight, said John Heimlich, chief economist for the Air Transport Association of America, an industry trade group. "Every penny more per gallon adds $195 million to the industry's expenses per year. You simply cannot make all of that up with fare increases."

"Reducing consumption is a certainty," Heimlich said. "You're always going to win by consuming less energy."

To that end, carriers have pulled out unused ovens, magazine racks and trash compactors during the past few years. Some removed paper manuals in the cockpit and installed electronic maintenance logbooks.

Fort Worth, Texas-based American Airlines created a Fuel Smart Team in 2005 as fuel prices started to go up. Tom Opderbeck, American's manager of strategic programs, said the team tried to cut weight in places that customers wouldn't notice. The team capped electrical outlets in the lavatories and cut the power converters from the wall. It took out phones in seat backs and removed the heavy telephone wiring that was folded inside. "I always think we've come to the end of the list, but we keep on finding new items" to remove, Opderbeck said.

Read the rest here. Do you think any government agency or non-profit would go to these lengths to conserve energy? I'm afraid dimming the lights for an hour won't cut it. But if you like that idea maybe we can agree on flipping the lights off completely on about 95% of government operations.

Addendum: While we're on the subject, it looks like biofuel subsidies are proving to be a monstrous reminder of the law of unintended consequences.

India's environmental disaster

While I still don't have pictures from my trip to India, I can't help spilling the beans on the most striking and surprising aspect, especially after reading Tyler Cowen's poignant dissection of Jeff Sach's book Common Wealth: Economics for a Crowded Planet. Per Tyler:

I am much more pessimistic, partly for reasons Sachs already outlines. I won't recapitulate all of my previous writings on the topic (follow the links here), so let me give a kind of "splat" response: Chinese CO2 emissions are much worse than we had thought, China resists outside pressure, Chinese governance is often of very poor quality, China is currently subsidizing energy consumption, China thinks it is our problem to solve, China won't automatically keep on becoming prosperous, the super eco-conscious Europeans in fact haven't made much of a dent in the problem in terms of percentage change, the U.S. has done better on carbon emissions than most of the Kyoto signatories, the price of oil rose fivefold in a relatively short period of time without much helping, a gradual increase in carbon taxes (in a Hotelling model) can lead to more extraction today thus worsening the problem, and if the rich countries massively cut their carbon consumption the prices of coal and oil would plummet and the incentive for someone to buy and smoke the stuff will be all that much stronger.

Much of this resonates with my experience in India. It was not a romantic vacation, it probably took years off my life. The air quality was so bad that in three weeks of travelling I never once observed anything like a crystal blue sky, really it looked more like a nuclear winter (believe me, pictures will confirm this). There was a severe drought pushing its way eastward from the Thar desert, effecting the entire northeast region in which I travelled, Mumbai, Delhi, and Rajasthan primarily. For instance, the Bharatpur wetlands bird sanctuary, a World Heritage site, done dried up. Read some of these ridiculous Rajasthan tourism sites for Ranakpur and Udaipur, the "romantic city of lakes" and "Venice of the East," etc. More like a dust bowl.

North of Mumbai, in the state of Maharashtra, we observed streets lined with trees, their trunks painted red and white to indicate government protection. The rest of the countryside was barren. In Mumbai and Delhi the problem was more due to streets jammed with all manner of transport and refuse, ox drawn carts, cows, auto-rickshaws, and dump-trucks serving the booming economy. Eventually, I developed terrible asthma and a hacking cough which only subsided once I reentered the 1st world.

One optimistic view, propounded by the likes of Jeff Sachs, is that India's environmental problems can be corrected through some combination of regulation, carbon taxes, and subsidies for alternative energy technologies. Another optimistic view is that this is but a temporary phase that all industrializing economies go through. Compare London in the 1950s to today. That is, eventually India will get rich and then enjoy the luxury of harping about the environment.

Like Tyler, I now have a more pessimistic view. Jeff Sachs places too much faith in government, especially 3rd world governments. I spent a few days with Vivek Pandit, a politician of sorts, who has spent 20 years battling slavery in India. He lives like the Godfather on a compound outside of Mumbai, surrounded by body guards and adoring tribals and Dalits who he's helped free. The love they have for him is undeniable. And he has succeeded in many ways, particularly by holding politicians feet to the fire and making them accountable to the law. While I was there he took a group of tribals to the unemployment office to get their promised benefits. After waiting in line all day, in the end most were denied because they couldn't read the application.

The point is that government, especially in a place like India, serves those who can take advantage of it. As such, it becomes a tool for special interests, perpetuated my the misplaced hopes of the disadvantaged. I simply don't trust the Indian government to produce effective environmental policy.

Jeff Sachs is right about one thing, that the solution will likely come in the form of new technology from European countries, the U.S., and Japan. But how many years will this take? And as the situation worsens, how many years will it take the largely illiterate and disadvantaged lower castes of India to figure out a) what's causing pollution, b) what are the long term effects, and c) how to avoid it? I'm with Jared Diamond on this: environmental collapse is a distinct possibility.

David Mamet on the tragic view

Is the military always right? No. Neither is government, nor are the corporations—they are just different signposts for the particular amalgamation of our country into separate working groups, if you will. Are these groups infallible, free from the possibility of mismanagement, corruption, or crime? No, and neither are you or I. So, taking the tragic view, the question was not "Is everything perfect?" but "How could it be better, at what cost, and according to whose definition?" Put into which form, things appeared to me to be unfolding pretty well.

Read the whole thing here. Or just read some Adam Smith:

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.

Back in the 1st world

I've been travelling in India and Morocco for the last month, which I'll fully elaborate upon as soon as I get all the pictures. But first I need to get a handle on this subprime meltdown situation.

Guess where

Only sporadic violence marred the celebration. Last Wednesday, a stray bullet shattered a hotel window and struck and wounded a tour guide standing inside.

Yep, it's Mardi Gras in New Orleans.

Nation's Bachelors Demand Health-Care Coverage For All Their Buddies

That's today's Onion Radio News. Which of the candidate's would find this funny? When are we going to see an Onion debate?

Help is on the way in DC?

From the Examiner:

Columbia Heights is getting a new Target store, a Staples, new condos, a Starbucks, sit down restaurants, parking and other services. The new commerce is made possible because the local government provided initial funding (Tax Increment Funding TIF) for the projects. Mayor Adrian Fenty and several councilmembers unveiled a new $95 million TIF Tuesday to bring new development to other blighted neighborhood corridors. These include a total of $35 million for Georgia Avenue in Northwest, $10 million for Martin Luther King and South Capitol in Southeast.The H street Corridor in Northeast will see 25 million. Minnesota-Benning in Northeast will get $15 million and Pennsylvania Avenue in Southeast will receive $10 million.

What's not reported here is that Columbia Heights residents waited for these businesses for a decade or more. Columbia Heights has a tragic history going back to the 1968 riots. I've only observed it since early 2000 when I moved there. For seven years, the commercial center of the neighborhood, around the metro, looked like a moonscape - literally several acres of dirt. Until a Giant opened in the neighborhood in 2005 you'd have been hard pressed to find a place to buy milk. It remains to be seen if the sudden big box development will really produce a viable, organic neighborhood.

So why did this happen in Columbia Heights while surrounding neighborhoods, such as Adams Morgan and U street, and the city as a whole experienced a historic rebirth? The answer is that city bureaucrats essentially owned Columbia Heights, treated it as an urban planning experiment, and doled out the development rights to a single monopolist, unaccountable to the taxpayer. Columbia Heights never suffered from a lack of access to capital. It suffered from central planning.

A much simpler, more straightforward, and less discriminatory approach to revitalizing DC's neighborhoods would be to make them more attractive to business by reducing DC's notoriously high taxes and regulation.

Lower taxes lead to population growth

Wendell Cox, Peter Gordon, and Christian Redfearn have an interesting article in the new issue of Econ Journal Watch in which they refute Baum-Snow's conclusion that highways caused suburbanization. From Baum-Snow's abstract:

Between 1950 and 1990, the aggregate population of central cities in the United States declined by 17 percent despite population growth of 72 percent in metropolitan areas as a whole. This paper assesses the extent to which the construction of new limited access highways has contributed to central city population decline. Using planned portions of the interstate highway system as a source of exogenous variation, empirical estimates indicate that one new highway passing through a central city reduces its population by about 18 percent. Estimates imply that aggregate central city population would have grown by about 8 percent had the interstate highway system not been built.

As far as I can tell, Baum-Snow did not correct for local taxes, which is likely be a more important driver of population growth. For instance, Suitably Flip looks at state tax rankings from the Tax Foundation and population growth from the Census Bureau. He finds that lower taxes (especially on property) lead to population growth:

The trend is obvious even though this represents only one year of data (July 1 2006 -July 1 2007). I imagine the relationship is even stronger and more significant when looking at longer time periods.