This is a CU Colorado Springs student blog for the following courses: Economic Freedom, and Power & Prosperity.
Wednesday, October 31, 2007
Only you can prevent forest fires
However, the real culprit is government. Government will bail these people out and thereby distort local knowledge and these distortions will cause further stupid behavior. For example, if it wasn't the government maintaining the levies in New Orleans, a private firm would have the incentive to ensure the levies never failed. They would also have the incentive to charge a high price to balance out the risk associated with maintaining the levies.
Before blaming a ten year old boy, entire communities of adults should ask themselves why they lived in a place where the hand of fate resembles the Ritalin riddled digits of a ten year old with matches.
Credit Card Debt, Whose Fault Is It?
A lot of attention is currently being paid to credit cards and the evil policies that surround them and the innocent and unknowing consumers that are affected. The overwhelming problem of credit card debt and the steadily increasing rate of debt has caused Congress to focus heavily on this issue and consider passing several bills to further regulate the growing problem.
One practice being investigated is that of universal default. Universal defalut is currently a legal practice that allows your credit card company to increase your interest rate based on the status of any of your other accounts. Exceeding your credit line (even by just a few dollars), carrying a debt to income ratio that is deemed too high, utilizing more than 50% of your available credit on other accounts, excessive number of inquiries on your credit report, making a payment that is rejected for non sufficient funds or taking out an additional loan with another lender are all consumer actions that can result in universal default. Fair? It's legal. All of this information is provided to you at the time of application. Who reads all that fine print, right?
Now, while all of these practices can simply be avoided by mainintaing a good grasp on your finances and making sure you make timely payments on all accounts, Congress is posing the question; "Are the penalties too high?" Sure, the information is available to us and yes we do have the option to educate ourselves before signing anything but when we don't or when we make a mistake, who is responsible? Not the consumer, of course not! How could we possibly be held responsible for our actions when the price to pay is so steep. So Congress says that rather than hold consumers responsible for their actions, the government must intervene. The 850 billion dollars that Americans owe in revolving debt is said to be leading this country into a downward spiral as more and more families are turning to bankruptcy for freedom from debt. Is this something that the government should place more emphasis on and provide more rules for everyone to follow and if so at what point do we point to the consumer and say "Stop Spending!"
Saving traditon... or stuck in the past.
The problem is that they cannot buy or rent new cropland. The cost of land in the area around these farms is prohibitively high.
Using economic reasoning to examine the situation,I would conclude that the reason the cost of land on the outskirts of these towns is sky rocketing is because there is a greater numer of highly valued uses. More and more people are bidding the land up.
If the goods and services offered by these small family farms were highly valued, they would be profitable. If they were profitable, then they ould be able to afford more land for expansion.
In short, these family farms are not valued because there are more efficient ways of producing food. There desire for a preserving of their way of life I equate to a sliderule maker wishing to maintain his way of life. It is the same as the postal sevice wishing the internet and email had not taken a lot of its business.
On the surface it may seem tragic, but it is not. Things come and things go. New, better ways of doing things are devised and champions of the old ways find themselves with skill sets that are now obsolete, in this case running a small farm.
These farmers would probably be best to cash out, sell their valuable for the top dollar for which it would undoubtably sell and retire, living luxuriously.
Sometimescertain ways of life go out of style or a very small sub sect of the economy for the benefit of the whole. Fighting to preseve them is usually not for the economic value, but for the novelty value of preserving these relics. It is an uphill battle. Sorry family farm, it might be time to join your friends in the buggywhip business.
IHS Essay Contest
Congress funds more unprofitable business
I won't even question the 'sincerity' of our leaders. They are all politicians. Enough said.
But I do question the funding of a business that if allowed to run in the real world would be OUT of business because it is unprofitable and caters to a virtually non-existent demand.
We all know our Congressional leaders lack the skills to carefully think about something like this. Obviously, or they would have cut the program once they figured out it had LOST money, let's see, EVERY YEAR since its inception in 1997. But a few things about this bill are incredibly moronic and thus worth noting.
First, part of the $12 billion, 6 year project (1.8 billion) would be devoted to paying off the debts of the unprofitable business. Wonderful. Is it just me, or does it seem pointless to try to reduce a debt that is constantly growing (and will be as long as we Americans prefer driving)? By financing this sort of debt, the government is diverting tax-payer's hard earned money to what boils down to a pointless exercise in 'debt management.'
Next, the project grants $1.4 billion to NEW RAIL PROJECTS run by the individual states. Great, we now know that the government wants to fund MORE losing businesses.
Let me explain why I think this is bad (I know you all agree with that premise...). The government is funding losing businesses. Businesses that otherwise would fail (if run on a scale as large as Amtrak-perhaps smaller scoped rail lines would be run efficiently) in a free market society accumulate debt, and if that debt is financed by the gov’t, it comes from taxpayers. Taxpayers are thus incurring costs that most of them are not receiving the corresponding benefits for, and thus there is a distorted (and unfair) diversion of funds.
Now, one thing about the bill is somewhat reasonable. In the past, the government has financed Amtrak with the goal of making it financially self-sufficient. Since it hasn’t been able to do that, it is trying something else with most of the funds: Make the trains better. Improve service, quality, speed, and overall efficiency. That, in my mind, is at least a better use of funds than trying to pay off debt that will continue to accumulate for all time…
But you cannot change people’s preferences (at least not ethically), and that is the crux of the matter. The government is attempting to stem global warming by making us all want to use a rail service that it finances. I would argue, though, that if Americans truly valued train service over cars, train services would have developed prior to Amtrak, because somebody could have made some money. Clearly, Americans don’t value rails, and this applies even more directly to Amtrak: Government goods and services are, quite honestly, shoddy at best and hardly as good as free-market driven goods (in most instances). I think that unless the people’s preferences change to reflect greater demand for rail, the funding of Amtrak is inefficient (because it artificially creates something for which there is a relatively small demand) and unfair (because it takes our money and allocates it to something that I, for one, do not use). Theoretically, money could be allocated much more efficiently if we were allowed to have it, but obviously the government thinks we are too stupid to know what’s best for ourselves and use our resources accordingly.
Bush Is A Baby Killer
Making President Bush’s remarks seem politically motivated, crass, and unsympathetic toward dying children, the AP suggested that his speech was directed toward Hillary Clinton. The article ended with a quote from chairman of the Democratic Caucus Rahm Emanuel, “"At 1600 Pennsylvania Avenue, President Bush is having what he calls SCHIP Halloween - it's all trick no treat. He's preventing health care for millions of kids."
This AP article has missed the President’s reasoning for vetoing the bill altogether. A step toward Federalized Health Care in America would cost taxpayers too much money. In an American society where the national budget has run a deficit almost every year for the past 40 years, it seems unintelligible why this discussion is even occurring. A state owned enterprise (ie, government health care) has little incentive to be forward thinking, is often a loss making enterprise, costs the state a substantial amount of capital and financing, and not to mention the lack of quality that will eventually arise in the system! It is no surprise that the former Soviet Union was not known for its efficient use of resources and the manufacturing of high quality goods.
Before the AP runs an article bashing the President for his baby killing vetoes, maybe the discussion should be more economic in nature. The American budget will soon not be able to support its own social security system and the House of Representatives wants to increase spending on health care by 30 billion dollars! The intelligence of the federal government is again beyond anything we lesser plebes can ever hope to understand.
City of Colorado Springs Budget Cuts
Transportation costs, in specific fuel costs have increased over the last two years. I can understand fare increases as a method of cutting costs. Although, the price elasticity for a 10 percent increase is only 3.3% decrease in ridership, for many individuals bus travel is their only means of public transportation. It does not make sense to cut the routes currently offered by the city. In the past year ridership on the bus routes has increased every month. As this is the only means of mass transit in the city it will greatly effect this primary source of transportation to work, schools, medical appointments and travel in general.
I don't belive that a fare increase will reduce ridership due to price elasticity. People understand that transportation costs have risen over the last year. It is being proposed that routes to newly emerging economic growth areas, such as Fort Carson and Fountain are slated to be cut. This makes little sense as these growth areas require transit for workers to these areas along with other areas that have a need for workers. The bottom-line is that I propose fare increases, yet don't propose cutting bus routes as a budget cutting method. It may be a good time to explore deregulation of this city service and allow private enterprise to more efficiently provide this valuable service to the Colorado Springs market.
Tuesday, October 30, 2007
The Unnoticed Link Between Trick-R-Treating and Urban Sprawl
This blog posting is going to discuss how urban sprawl and trick-r-treating are related. Based on the trick-r-treater’s dilemma, “where to go trick-r-treating to maximize candy collection while minimizing walking distance”. This is a question that I’m sure we can all remember asking our selves or our friends before heading out on that spooky night. When we were thinking that as kids, we were limited to where our parents would take us and once we were old enough to drive, we were too old to trick-r-treat. But were would have been the ideal place, the inner city, the suburbs or a “smart growth” community?
Let’s start with the inner city. This is where walking distance will be minimized. In the inner city, most of the residents are located in tall apartment buildings. This presents a situation with a high door count to square mile. The door count to square mile ratio should mean more treats but another equation also needs to be taken into account. Answers to doors knocked, this ratio, from personal experience, seems to be exceptionally low in apartments. So while the door count to square mile is high, the answers to doors knocked is low, resulting in an ineffective night of trick-r-treating.
So if the inner city isn’t the best place to go, how bout the suburbs? The suburbs seem to be the opposite of the inner city, a low door count to square mile, but a high answers to doors knocked. The reason for the difference in the door count to square mile ratio is simple, suburbs have a tendency to be a sprawling community, as people require more space for the kids to play in the yard while having a bigger driveway and garage to park their cars, they tend to move farther away from each other. The higher answers to doors knocked ratio is a little harder to pin down, while they do need a little more research to confirm, I will offer my personal experience. Most of the inhabitants of the inner city are D.I.N.K.s (Dual Income No Kids) and poor families. The first usually don’t have the time or desire to devote to decorating and passing out candy while the former usually don’t have discretionary income required for the same activities. Out in the suburbs though, there are a greater number of young families that enjoy the experience of Halloween and taking their kids out on that night. So they decorate their oversized front yard and one parent stays home to pass out candy to all the neighbors while the other goes out with the kids to keep them safe and make sure they don’t get lost. All of these factors will lead to more walking but will also return more candy.
Sunday, October 28, 2007
Is it time to rethink California fire policy?
Furthermore, the rapid growth of the San Diego area endangers more people and developments. If the recent fires had occurred in 1980 only 61,000 homes would have been within close proximity to the fires. Today the number is around 125,000 according to analysis by the University of Wisconsin.
California State Fire Marshall Kate Dargan claims that discussions have begun at the highest levels of Californian government on how to address the issue but action is between 5 to 10 years away due to the size of the endeavor. There are currently some actions in effect to prevent these problems. In 2004 laws were made to enforce strict building code in fire prone areas. These new rules mandate that new homes locate attic vents away from the forest and decks with overhangs are regulated as well. Voluntary standards include fire-resistant building materials, sprinkler systems, and fire-resistant vegetation controls. These voluntary standards seem to be working as housing projects built under voluntary standards have all survived the fires.
Even with these new laws the fact remains that California experiences these fires because of its unwillingness to follow the effective methods of Mexico in it's Californian Baja. Building codes do little to clear the hillsides of the large amount of brush that the natural fire cycle would consume. Californian cities will continue to sprawl/grow and the threat of these super-fires will not subside without changing fire policy.
A city in turmoil
Saturday, October 27, 2007
Preparing for the next time
Cities in California, like San-Diego, have sprawled out into remote, inaccessible, fire-prone canyons and forests. Bad zoning practises are to blame, the article says. As a result, there is a lack of protection for these residents. Cities like San-Diego do not have enough money to pay for the fire protection they require. The Cities are simply too sprawled out. The limited number of fire fighters and fire engines cannot cover the entire area of the sprawled out cities.
The article then mentions that residents in these areas commute farther, increasing carbon emissions, contributing to global warming, and worsening drought.
Personally, I would blame the southern California's climate rather than the residents that live in sprawl. I think anyone who lives in southern California needs to be aware that their house may some day end up in a fire, just like those in Florida or Louisiana may end up in a hurricane. The people who live in these fire prone areas take the risk of fire in exchange for the luxury of living on the edge of the city. I don't think any zoning practices would have prevented the wild fires and even if I had lost my house in the fire, changing zoning regulations would most likely not be on my mind when it comes to preventing wild fires in the future.