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Friday, September 19, 2008

Why is our power so crappy?

Last week, thousands of locals lost power after the remnants of Hurricane Ike passed through, bringing very strong winds and rain. Probably a million people in this state over all. Many still don't have it back on yet. I was fortunate that my power remained on, but many of my friends and coworkers weren't so lucky. West of Cleveland and south towards Columbus seem to have been hit pretty hard.

It's puzzling that we don't have a stronger, better system in place after 100+ years of operation. We are paying through the nose for barely adequate service. Who is the culprit in this problematic industry? Is it the nature of for-profit business is to provide shoddy service at the highest possible cost? Or maybe our utilities are deemed a natural monopoly by the government and then given rights over wide areas. I whole-heartedly agree with the latter.

If you look at the different sectors of the economy today, the ones that are thriving all seem to be competitive industries. Technology and retail are perfect examples. My question is why on earth can there be successful businesses in one industry and not in another. We probably could have gotten better electricity service if the government hadn't screwed it up so badly back when it was all nationalized and regulated.

Don't try to tell me that utilities are a natural monopoly. There's no such thing as a natural monopoly unless it is created by the government. We all know that monopolies are bad for the economy, and states are always the worst offender when it comes to monopolies. Just look at the history of Ohio Edison. This is a company that was formed from the forced consolidation of 200 electric companies. Can you even imagine 200 electric companies being in this service area?

I would be willing to bet good money that those companies back in 1930 had good service before they were all brought together. They would have had to in order to stay in business. If you have easily disrupted power lines, you can bet your ass you won't stay in business, because customers will take their money elsewhere. And if there's a storm, their crews would be out servicing their limited area and have you back up in no time. At least, that's what it would look like without government regulation.

If you have any doubts about this please read The Myth of the Natural Monopoly by Thomas J. DiLorenzo. One interesting excerpt follows:

The theory of natural monopoly is a-historical. There is no evidence of the "natural monopoly" story ever having been carried out of one producer achieving lower long-run average total costs than everyone else in the industry and thereby establishing a permanent monopoly. As discussed below, in many of the so-called public utility industries of the late eighteenth and early nineteenth centuries, there were often literally dozens of competitors.

Tuesday, September 16, 2008

State budget cuts

Ohio's democratic governor is cutting the state budget for the second time this year. Cuts this year will be a total of $1.27 billion. At least they can't run on perennial deficits like the feds. How bad is the government's money management skills? Well, this page is one telling source. As of 2008, the total debt was $8,631,565,254, or $753 per person. Ridiculous. If they came and nicely asked each person to give them that much money, there's no way in hell I would comply.

How is it that the state's debt continues to rise while the population falls? One would think that they wouldn't need as much money to service the fewer people who are left. It's obviously not just a Democrat or Republican issue. Both parties are involved in the budgets. Both have to approve what is going on. It's absurd to think they need so much more money each year to govern me effectively.

There are some interesting tidbits about ohio's tax burden at the The Tax Foundation. Here we can see that Ohio's tax burden has been rising pretty much across the board.

Ohio taxpayers have gone from some of the least taxed in the 1970s to some of the most heavily taxed today, climbing 38 places from 45th highest in 1977 to 7th highest in 2008.
Our state's population growth can be seen here. Ohio's growth is 47th in percentage change. So we can begin to see Ohio's recipe for success. Relentlessly raise taxes while the population steadily declines. Kind of makes me wonder why I even choose to live in this state anymore.

In spite of these cuts in Ohio's two-year $52 billion budget mentioned above, governor Strickland insists that his pet programs will still be paid for. Well, hallelujah. As long as the state continues to pay for children's health and college tuition, everything will be alright. I would be in favor of cutting those too. It's not like it does a very good job in health or education. It's funny when people act as if the sky is falling when the state has to cut its budget. I couldn't be happer. Let those people work in gainful employment rather than consume our tax dollars.

Saturday, September 6, 2008

More city waste - on traffic lights

I can't count the number of times I've been stopped at a city light when there's no traffic waiting at the other direction. I've wondered before how much money they spend keeping up this waste of electricity. At least now I know how much they cost over all: Cleveland paid FirstEnergy $4 million for this dubious traffic control.

I'll readily admit that I am no traffic flow expert. But in my admittedly uneducated opinion, this represents pure waste on the city's part. I can't stand driving in the city because of the number of times I have to stop for no reason. If nobody's coming for the next mile, and you can clearly see that there is no other traffic around, you shouldn't have to sit at a traffic light for nothing. Lee road south of shaker is one of the offenders. I would say at least half the lights on Carnegie never have cars waiting when I am stopped.

Even stop signs are an issue. Although they don't waste electricity like lights do, they still waste gas when you have to stop and go so much, thus increasing wear on your car and reducing your gas mileage. On the road I take to get to the highway, Valley View, there are at least two or three completely pointless stop signs. One of them is there only because it's a sharp curve in the road. Given the amount of traffic I see on the road, I simply cannot justify having four way stop signs there. The least they could do is have stop signs in one direction and remove them in the other. Traffic could then flow smoothly on the busier road.

Why do they do this, if there's really no need? I would guess money. I've been pulled over two or three times for running stop signs. I was driving the speed limit, I slowed down and make sure nobody was coming for a long time, and just went. I did absolutely nothing wrong, yet I still ended up having to pay several hundred dollars directly to the state. Not to mention the increased cost on my insurance, even though I am actually a pretty careful driver nowadays. I never speed anymore or drive recklessly.

The state needs to feel like it is doing something important, so they heap all sorts of regulations on us that do absolutely nothing to improve safety. In fact, there are an alarming number of accidents despite all of the state's vain attempts at traffic control. They are even stepping up control with red light cameras at some intersections.

There have been studies that these cameras actually increase collisions. Use google if you're interested in that. It's all about the money and control to these people. They take our money to use in enforcing and implementing these pointless regulations. Then they take it again when we violate them. Perhaps private ownership of roads would bring some sanity back to driving.

I can understand having traffic lights at some busy intersections, like Euclid and East 9th. That's not the issue here. The issue as far as I'm concerned is excessive traffic control and congestion on city streets. A clear majority of lights I see in the city where there's no traffic, even at busy hours, could be downgraded to stop signs. Many four-way stop signs could easily be downgraded to two-way stop signs on side streets only.

Friday, September 5, 2008

Cuyahoga County: Housing market falls, but property taxes won't

Cuyahoga's county auditor promised to work 12 to 15 hours a day to make sure everyone in has a chance to appeal their property taxes. Why would they need to do this? Because he decided to freeze 500,000 home values. The government knows they won't be getting as much property taxes with home values falling as they are. They just can't afford to let people pay fair taxes. Poor guys!

Thank goodness Russo is there to take this extraordinary step to serve the people! If it weren't for him, people might not have a chance to make this appeal and get lower taxes. Oh wait, he's the reason they're not being lowered in the first place. FAIL.

People in this state are suffering. They can't make their home payments as it is. Now the government is making it that much harder. It's no wonder Cleveland's main county is losing population so quickly. Home foreclosures are high, and this is supposed to help the state how? Let's make it harder for people to pay for their homes. Then, when they can no longer afford it, they will have to walk away and give it back to the bank. More banks will be burdened with getting rid of homes at a steep discount. Rinse and repeat.

As always, government actions will make the situation worse. They will end up losing more money with less homeowners than before. Homes will sit vacant with property taxes being more than it's worth. Nobody in their right mind will want to buy. Less home buyers, less home owners, less taxes for the government. Maybe we should all be thankful they're digging such a big hole for themselves.

We call this a democracy, yet our taxes are repeatedly raised without representation. One of the most fervent battle cries of the American revolution has been turned around on itself. Maybe some day people will finally wise up to this charade and put an end to these shenanigans. I think a good start would be an amendment requiring a public vote on every single proposed tax increase anywhere in the state. And each time it fails, make them wait at least two years before trying again. State and county legislatures and appointed officials are clearly abusing this privilege. We need to take it away from them now.

Ideally though, taxes need to be abolished, not lowered. Taxes only by voting sounds better than what we have now, but even that is not really a solution. Only a start to a good solution. Imagine if Ohio had no city, state or county taxes. People would flock here to take advantage of freedom rarely seen elsewhere in the country. New businesses would flourish, enough jobs for everyone. No regional states would be able to compete with Ohio. How would necessary government services be funded in this state without them? Same way as all the other necessary services we depend on - voluntary trade.

Wednesday, September 3, 2008

Dear Gov Strickland, please leave my economy alone.

We're saved! Ohio's government now has a super awesome, totally strategic plan for economic development. The veritable magic wand - all they have to do is wave it and jobs will be created, people will be richer, and we can finally start living the good life. If only the state came out with this before, things could have been so much better.

Their plan has three goals: growing our income, creating jobs, and expanding productivity through innovation. All great things for sure. One of the most laughable parts of the executive summary is their goal to "operate government at the speed of business". For this, all they have to do is check off a list of initiatives and their goal will be accomplished. Good for them!

The unfortunate part of the plan is that it will never work. How can I know this without even trying out the plan first? Because governments simply do not create jobs. They don't increase our income in any way, shape or form. The best they can possibly do is take one person's income and give it to someone else who wasn't quite as productive.

There was recently a great article about this very subject. Claiming that governments create jobs and wealth is nothing more than a simple exercise in Frédéric Bastiat's parable of the broken window. The money they would use to create these jobs and wealth only comes from others who would be spending it more efficiently on the same goods on the open market. It's the equivalent of paying someone to move a pile of dirt across the field. The person you pay to move it will have a job and get more money. But it does absolutely nothing to increase the wealth of society. It's still just a pile of dirt in a different location.

This isn't just a party issue, either. People from both political parties, left and right, from all economic classes still believe this. They say that if the candidates from their own party were elected, there would be more jobs created. I think they're all wrong.