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My weekly reading for November 3, 2024

by trpliquidation
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My Weekly Reading for November 3, 2024

Instead of posting about something directly related to the election, I’ll post about things that will stick with us regardless of who wins.

by Timothy Taylor, Conversable economistOctober 31, 2024.

Extract:

In any case, it is not clear to me that the Fourth Industrial Revolution is different in this way. I have been reading for decades that the Third Industrial Revolution brought ‘skills-based’ technical change, and in this way has helped generate growing income inequality since about 1980. the very limited evidence now available on the effects of artificial intelligence tools in the workplace suggests that they may be particularly valuable for lower-skilled workersinstead of highly educated workers. The underlying reason is that AI tools can actually make existing expertise more accessible to everyone, giving a bigger boost to those with less experience or lower skills.

Comment from DRH: Tim’s reasoning, and the reasoning in the article he cites, seems to me more reasonable than the reasoning by the recent Nobel Prize winner Daron Acemoglu.

by Marc Joffe, Cato at FreedomOctober 31, 2024.

Once construction begins, there is no guarantee it will be completed within six years. Other projects do indeed offer cautionary tales. Honolulu lasted twelve years to build its 17.75-mile Skyline. Maryland began construction of the 26-mile Purple Line in the suburbs of Washington, D.C., seven years ago, and that’s not expected to happen start carrying passengers for another three years.

When Austin’s light rail comes into service, the impact on traffic congestion may not be as significant. Project sponsors expect 28,500 daily riders by 2040, but previous forecasts from other agencies have sometimes proven overly optimistic. In Honolulu, for example, city officials expected 10,000 daily passengers during the first phase of Skyline service, but so far actual ridership is only about a third of this projection. Rail projects San Francisco And Southern California have also seen major shortfalls in actual versus projected passenger numbers.

Furthermore, many future light rail riders may switch from existing bus service. Cap Metro’s 801 Rapid bus covers much of the route that will be served by the light rail project, and many passengers on this bus line can be expected to become light rail passengers. As a result, even if light rail attracted 28,500 passenger trips by 2040, only a portion of those would replace car trips.

DRH Comment: The late George Hilton, who taught the urban transportation course at Ph.D. students (the two in the class were Harry Watson and I) and students at UCLA in the winter quarter of 1973, would have found Marc Joffe’s article very useful. And Marc Joffe would have loved George’s course. I remember George saying of many urban mass transit projects in the 1970s (the three he highlighted were San Francisco’s BART, which had opened a few months earlier, and the Washington Metro and Atlanta’s MARTA, which were under construction were), that the advocates admitted that the project would only replace one or two years of long-term growth in car traffic. One thing I don’t remember George saying is that while these projects were being built, they slowed down traffic. And that happened for years. Any reasonable cost-benefit analysis should include the value of time lost over a few years. Also remember that we discount the flow of benefits and costs based on a reasonable interest rate. The costs of lost time, incurred in advance, would therefore be large.

by Timothy Taylor, Conversable economistNovember 1, 2024.

Extract:

[B]between $11,000 and $65,000, our hypothetical family experiences no overall financial benefit from an increase in income. … [A]An increase in income from $11,000 to $65,000 results in a full or partial loss of most public assistance programs and tax credits. Combined with an increase in tax liability, these losses fully offset income gains. … We see that at certain income levels in the range of $11,000 to $65,000, net household incomes decline. It means that the combined loss of public assistance programs is greater than the income gain, meaning the family will be hit with benefits. The first dip occurs at $22,000 when the family loses access to SNAP. A second benefits cliff occurs at $27,000, with the family losing TANF. That is followed by several small benefit cliffs that occur due to the loss of school meals, WIC, federal and state EITCs, Medicaid for Adults, and Medicaid for Children/CHIP. Finally, at $61,000 the last and largest benefit cliff occurs, which involves a loss of the CCDF childcare subsidy.

The authors call this a ‘benefit cliff’. I have sometimes called it a ‘poverty trap’ (e.g here And here), because of the negative work incentives it provides to poor and near-poor households. There is no easy way to handle this situation. Cutting benefits for low-income households has a clear disadvantage for these families. If benefits are phased out more slowly as income rises, more households will receive benefits and costs will be significantly higher. Ultimately, I think our society ultimately depends on many low-income households actually wanting to be self-sufficient, wanting to work, and avoiding or minimizing their use of government assistance. But for other low-income households, the negative work incentives of the poverty trap will take hold.

Note from DRH: Read that first sentence and let it sink in. For a large part of the population – tens of millions of households – there is little financial benefit to be gained from working, at least in the above-ground economy.

My late colleague from Hoover, Martin Anderson, writing on Social Security, stated that there are generally three goals that people want from a Social Security system and that at most you can achieve two of them: (1) a system with good incentives to benefit from Social Security. certainty, (2) a generous system, and (3) a relatively cheap system.

This was why Social Security reforms made so much sense and actually worked in the mid-1990s, until the federal government narrowed the rules. It limited how long people could be on welfare at any given time and throughout their lives. Of course, prosperity in the narrow sense is only one part of the welfare state.

by Daryl James and Renée Flaherty, RodeOctober 29, 2024.

Extract:

Certificate of Need (CON) laws exist in various forms in 38 states and Washington, DC. The stated purpose of such laws is to keep costs low by preventing overinvestment in a single market. If regulators decide that an area already has enough facilities, they can block new construction.

As a result, no one in North Carolina can open or expand certain medical facilities without approval from these regulators. Even buying an MRI scanner without their approval can be illegal. These restrictions prohibit Singleton from using his own clinic in New Bern for most of the surgeries he performs. He has to drive two miles up the road to a competitor’s office, as it is owned by a major healthcare player. This unnecessary administrative burden increases costs and reduces scheduling options, and patients suffer as a result.

DRH Comment: The acronym CON is appropriate.

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