Category: Current Affairs

The Treasury Department announced the hiring of senior leadership for the Consumer Financial Protection Bureau. Among the hires: Harvard University economist Sendhil Mullainathan .

The leading behavioral economist of his generation, his research has focused on how people’s biases and weaknesses lead them to make bad economic decisions. He is also a founder, with Esther Duflo and Abhijit Banerjee, of MIT’s Jameel Poverty Action Lab.

His research has provided much of the intellectual foundation for the establishment of the CFPB, which is tasked with making “markets for consumer financial products and services work for Americans.”

Here is more.

1. In defense of flogging by Peter Moskos. I was pretty sure I wrote something like this a few years ago but after a search all I could find was this post on sex and spanking.

2. Google lobbies Nevada to allow Self-Driving Cars. The future isn’t here until suddenly it is. FYI, texting while in the “driver’s” seat would be made legal in such cars.

3. Used car prices are rising so much that many models are selling for more today than a year ago.

4. Conor Friedersdorf’s Nearly 100 Fantastic Pieces of Journalism.

In November of 2008 I wrote:

The Federal Government owns more than half of Oregon, Utah, Nevada, Idaho and Alaska and it owns nearly half of California, Arizona, New Mexico and Wyoming. See the map (PDF) for more [N.B. the vast majority of this land is NOT parks, AT 2011]. It is time for a sale. Selling even some western land could raise hundreds of billions of dollars – perhaps trillions of dollars – for the Federal government at a time when the funds are badly needed and no one want to raise taxes. At the same time, a sale of western land would improve the efficiency of land allocation.

The Obama administration is beginning to implement just such a proposal. Jonathan Easley of Salon summarizes:

The administration has identified a massive asset class worth unloading. The federal government is the largest owner of real estate in the nation, sitting on hundreds of millions of acres of land that takes up about 30 percent of the country’s surface. The value of Uncle Sam’s nondefense real estate portfolio is estimated at $230 billion, and it carries a maintenance cost of around $20 billion a year.

If Congress moves ahead on the White House’s recommendation, 60 percent of sale proceeds from properties the White House has deemed excess will go to paying down the deficit, with 40 percent to cover costs on other government-run facilities. In addition to the one-time cash from the sale, the government can begin generating tax revenues on land that was previously an expense.

The first set of assets proposed to go on the auction block are mostly empty or little used warehouses, office buildings, barracks and other properties, quite a few of which are now scheduled to be demolished. The total acreage up for sale is very small so Easley greatly exaggerates when he says the proposed sale is Obama’s “libertarian turn,” but heh, it’s a start.

The Chinese government has reduced speed on its high speed rail line over concerns about safety, the rail ministry is in debt to the tune of $271 billion dollars, its charismatic leader, Liu Zhijun, was fired for embezzlement, and cheaper buses are turning out to be more appealing to typical travelers. Charles Lane at the Washington Post has the story.

Liu exploited the communist leadership’s fascination with bigness and national prestige….

In 2004, the State Council signed off on Liu’s plan to build the world’s largest high-speed-rail network by 2020. The first leg, a 72-mile stretch between Beijing and Tianjin, would open in time for the 2008 Olympics.

Word went forth that state-owned banks and local governments were to give Liu all the money, land and labor he required. When Chinese journalists found that Liu’s ministry was using cheap, low-quality concrete, creating a safety hazard, the Communist Party’s propaganda department quashed the reports, according to a January piece in the South China Morning Post.

Students and other humble citizens greeted the first fast trains with complaints about high ticket prices. They crowded aboard buses instead.

Oh well, at least the train didn’t go to Ordos.

By simple virtue of its size, China’s government can spend huge amounts on marvels monuments but monuments don’t pay the bills. Communism set China back so far relative to its capabilities that catch-up growth can still drive it forward, even with a poor allocation of capital, but a cutting-edge economy requires more efficient (even if imperfect!), capitalist allocation.