Category: Economics

Going to the free money vending machine

Now, for something close to home for me:

Fairfax County will consider legislation intended to lift thousands of workers out of poverty by requiring the government and companies it does business with to pay far more than the federal minimum wage.

A so-called living wage ordinance, introduced yesterday by Supervisor Catherine M. Hudgins (D-Hunter Mill), would bring Virginia’s largest — and wealthiest — jurisdiction in line with the District and Alexandria and Montgomery, Prince George’s and Arlington counties, which have adopted similar policies.

“Fairfax County . . . has worked to welcome all that [sic] want to live and do business in this county,” said Hudgins, an advocate for those left behind economically in the region’s most affluent suburb. The county has “made a commitment to assist the community by providing affordable housing,” she said, “but for many, the wages they earn require three or four individuals working in a household to meet even the most modest housing cost.” A full-time worker who receives the federal minimum wage has a salary of $10,712 a year.

I had roommates for five of the first seven years I lived in the D.C. area, many of those in Fairfax County. I didn’t do it because I liked people. I wanted to live somewhere more expensive than I was either able or willing to afford on my own. I made sacrifices. Where in any notion of responsible government is the implication that government should prevent citizens from being economically or physically inconvenienced because someone else has more? It’s okay to steal tax from the wealthy so that the poorer citizens don’t get their feelings hurt? Wrong.

“A whole array of wages are under discussion,” Hudgins said, referring to proposals to raise salaries of public safety workers and of the county supervisors. She reminded the board that Fairfax began contracting custodial work to private companies during the recession of the early 1990s, effectively lowering pay to minimum wage. “It’s only fair we look back at what we can do with our own contracts,” she said.

Why is it “only fair”? Are the contracts still valid? Did the contractors get strong-armed into doing the work for minimum wage? Have county residents decided that they’d rather pay a few dollars more an hour for the custodial services in their government buildings? They can get services for $5.15, but they won’t mind paying $9 or $10 an hour. After all, they’re wealthy.

“We continue to provide high-paying jobs through our economic vitality and not by regulatory fiat,” [ed. note: Yay for economic sense!] said William D. Lecos, president of the Fairfax County Chamber of Commerce, which represents 1,000 businesses. Clayton Sinyai, chairman of Campaign for a Living Wage and political director of Laborers Local Union 11, representing Northern Virginia construction workers, said most Fairfax workers receive more than minimum wage. But he cited thousands of custodial workers, landscapers and parking attendants earning “poverty wages.”

“As housing prices continue to go up, people can’t afford to live here,” said Sinyai, of Fairfax.

Oh, I don’t know what could possibly be the solution. I’m going to guess, anyway. Here goes. Are you ready for it? Quit. Or move.

Holy Batman, it’s that simple. If the people earning those wages leave, and no one is willing to fill the positions for the offered wage, the wage associated will increase. The market will recreate an equilibrium in toilet cleaning wages. Everyone will be just a smidge happier. Allegedly happier, of course, because Fairfax County officials are assuming that those affected just want more money. Maybe they want better jobs. I suppose that’s the next right they’ll have guaranteed by central planners.

Instead, the cost of government is going up. Taxes and fees are going up. Services are going down. Employment is going down. Overall, living in too-expensive Fairfax is about to get more expensive. And just a little bit sucky. Good plan, guys.

Newsflash: Central planning creates inefficiency

Let me tell you why New Jersey sucks as a state. Driving through the state, as Danielle and I did yesterday, often requires refueling the car. It’s not a particularly strange concept, as mankind hasn’t yet figured out perpetual motion or cheap hydrogen fuel. It’s inevitable, really, so our stop on the New Jersey Turnpike yesterday was unsurprising. However, I’d forgotten that New Jersey is simple-minded.

Yesterday, we waited in line for full-service gas because full-service is the law. I haven’t used a full-service gas station since the last time I purchased gas in New Jersey. I won’t use a full-service gas station again until I’m in New Jersey again ever. If there’s a stupider law that affects everyday life, I’m not sure I can imagine what it might be.

Danielle and I discussed it as we waited in the twenty-plus minute line to have someone perform a menial task that I’m perfectly willing to perform on my own. I could only come up with two reasons why this would still be New Jersey law. Either politicians believe self-service pumps are too dangerous for untrained citizens to operate or they believe full-service will somehow lead to greater employment within the state. Considering I’ve been refueling my cars safely since 1989, I’m almost certain that safety can’t be the reason this law still exists. After a little research, safety was the reason legislators originally passed the full-service requirement. Gas is still a flammable liquid, of course, but technology has improved considerably from standards that existed early in the development of the car and refueling stations. Our friends and neighbors aren’t regularly setting themselves on fire or blowing up while pumping gas. The average Joe can handle it. Factor in the clearly untrained nature of New Jersey gas station attendants, as evidenced by the fine individual who pumped our gas shortly after taking a walk two car lengths away to smoke a cigarette, this reason is no longer valid.

So it must be socialism economics that perpetuates the practice. Sure, more attendants are needed to pump gas, but that cost gets passed to the customer. In my research I noticed a few links suggesting that full-service gas is still cheaper than it is in states that don’t prohibit self-service. That’s fine, but I don’t doubt that gas is more expensive than it needs to be. Regardless, I’ll discard the notion that it costs more. It’s a big item to dismiss, of course, but even if it made sense to do so, the environmental and productivity impact can’t be dismissed.

During our wait, we left our car running. So did every other driver in line. Every one of us wasted gas. We polluted the air for more than twenty minutes for no reason. Surely the danger from the cumulative toxins we all released yesterday is greater than the risk that one of us would set the place ablaze. Having seen the smog hanging over much of the Turnpike, who would deny this?

Of course, the economic impact of that wasted gas must surely be figured into the absolute cost of gasoline in New Jersey.

As for productivity, what else could every motorist in New Jersey have accomplished in the time wasted while waiting for full-service? Danielle and I wasted more than forty minutes combined. Multiply that by every family. On a Sunday afternoon, maybe that amounts to lost beer-drinking soymilk-drinking time. What about Monday thru Friday? What about commercial vehicle drivers? Surely this loss of efficiency should matter. It did to us.

I could almost think it was just a quirky feature of New Jersey and it added flavor to our culture. A few minutes after we left the gas station, we crossed the state line. The first service area off I-95 had a gas station. It had a few customers, each scattered among the various self-service pumps. No one was on fire. No one was spilling gas on the ground. Everything was fine, operating as smoothly as New Jersey. The only difference? The gas station had no lines. I don’t wonder why.

Other thoughts: Marginal Revolution from Nov. ’03, and NRO, from Sept. ’03

Roads? Where we’re going, we don’t need roads.

As in most cities, traffic is atrocious in the metro Washington area. I missed the train one day last week and my morning commute took me almost two-and-a-half hours. My highway miles, which constitute probably 90% of the drive into the District consist of HOV lanes, whether in the one designated lane outside the Beltway or both lanes inside the Beltway. (I-66 is all HOV once it crosses inside the Beltway.) The area needs a transportation solution.

As a libertarian, this story about some localities in Northern Virginia considering offers from private developers to pay for road upgrades in exchange for zoning approvals fascinated me. I’m certainly in favor of privatizing governmental activities wherever possible, and as I’ve read more, I’m not opposed to private roads instead of public roads. (I’m not rah-rah over the idea yet, but that’s the practical side of me. The intellectual battle continues.) Whether or not this current scenario in Virginia could work is worth discussing, as it provides insight into the debate. Consider:

“This is one of the prices we pay for not adequately funding our transportation system,” said Ronald F. Kirby, director of transportation planning for the Metropolitan Washington Council of Governments. “We’re getting into a situation where we’re so desperate for improvements that we’re willing to make deals like this.”

County officials say they are aware that the offers are a Faustian bargain of sorts, since the deals would draw even more cars onto the roads that need fixing. But they are fed up with waiting, they said, and if legislators fail to agree on a funding package in the coming weeks — one with clear guidelines for where the money’s going — turning down the developers will be more difficult.

I read the first quote with a skeptic’s interpretation. For the purpose of today’s debate, I’ll agree that we’re not funding transportation adequately. But where does that simple statement end? Do we raise taxes? Or do we analyze what we’re spending public funds on today? Essentially, it’s worth separating any idea of a causal link between transportation funding and government tax receipts. Mr. Kirby doesn’t carry it that far, so I have no idea what his position is regarding how to fix it. But the natural inclination of legislators is to not eliminate spending if funds aren’t available when new needs arise. That shouldn’t be the automatic leap in Virginia, although I suspect that’s where the plan is going.

Of course, turning over funding and construction to private developers could lead to the Faustian bargain some fear. My morning commute shows that it’s not unfounded. It would be unwise for local politicians to use that theory as the sole deciding factor in the deals. Let the developers present a cost-benefit analysis and present it for consideration. Then review it thoroughly. It sounds simple, but I hold little confidence. A few circuitous re-election campaign donations seem more likely.

Later in the article, more details arise. What I find most telling is this passage:

Some local officials are less impressed by the developers’ largesse than others. Skeptics note that builders are paying for many of the improvements by establishing special tax districts within their developments, thereby passing on much of the cost to the new residents.

That sounds sinister, but how is passing the cost to new residents different than how the state would pay for increased spending on improvements? Leprechauns don’t deliver pots of gold to government coffers every time a rainbow appears. Since I’m certain residents in the new development will know that they’re in a special tax district, they’ll be in the best position to decide if they want to buy a home in the neighborhood, given the tax implications. If the developer over-estimates what home-buyers are willing to pay, it could lose money or go bankrupt. It comes down to two private parties negotiating terms for conducting a transaction. It’s capitalism. Where’s the flaw?

It’s clear that hurdles to privatizing exist. Whether or not this is the place to start is a question worth asking. The debate should be interesting, at least. However, it should teach legislators and the voters who elect them that the private market isn’t scary. Profit motive isn’t dangerous. When private entities seek to get something done, that’s a sign of where the market wants to go. Government doesn’t need to rubber stamp anything just because it’s a private individual or company, but government shouldn’t be a hurdle just to keep its action in the monopoly.

Chocolate, Baseball, and Economics

On Wednesday, I read this entry at The Dredge Report. In it the author refers to this article from the Washington Post about Moleskine notebooks. She explains that she spends money on a few items that some might consider an extravagant waste, such as $8 for a bar of soap, before expressing a “WTF?” about people spending more than $10 on a notebook that has many much cheaper alternatives. I got her point, since I agree that one person’s view of irrational spending doesn’t translate to unacceptable. There can be tangible and intangible benefits in any product. Personal preference matters, and it’s what makes capitalism so interesting and effective. She concluded by asking what people spend their money on that some might find crazy.

For me, it’s a $4 pack of Cowboy Cookies or a $3 pack of baseball cards. I’ve written in the past about how perfect Liz Lovely cookies are, and Cowboy Cookies are easily the best cookies in their product line. Two giant, vegan cookies are enough to brighten any day, and $4 never seemed irrational after tasting one bite. They’re so good that sometimes I’m thankful that they’re $4 and not $2 or less, which would seem more “rational”. At $2 or less, I’d weigh 600 pounds and would clearly be a diabetic by now. I’m mostly kidding, but those cookies are that kick ass.

Now, baseball cards. This one’s a bit easier for me to accept the strange looks I might get. I’m 32-years-old and I’m still buying baseball cards. I’m not really collecting any more, because that involves too much expense and time. Instead, I buy them as a holdover, visceral feeling from my childhood. I began collecting in the early ’80s, expanding into a major hobby in the late ’80s. My interest waned in the early ’90s as the perfect storm converged: price per pack rose by a factor of three to six, depending on the brand, I went to college, and my funds reflected those of a jobless college student. When I entered the workforce after graduate school, trips to Target, where a reasonable variety of cards could be purchased, my interest reappeared. It’s continued more than sporadically over the last seven years or so.

There’s no rational reason for continuing to buy them, as they mostly sit in stacks in my closet. They’re unsorted until Spring Training every year, when I scramble at the last minute to find a few suitable for autographs when I arrive in Clearwater. It’s one of those silly habits that appears alongside disposable income. It would vanish if necessary, but it’s not at the current time. And it’s cheaper than a Porsche.

That’s where I blow my money. What about you?