Showing posts with label Government Failure. Show all posts
Showing posts with label Government Failure. Show all posts

Monday, July 20, 2026

China’s Economy Is in Worse Shape Than You Think

The estimate of 4.3% GDP growth is below Beijing’s lowest projection—and it’s probably far too high

By Joseph C. Sternberg. Excerpts:

"Beijing’s statisticians on Wednesday said the gross domestic product grew 4.3% year-on-year in inflation-adjusted terms in the April through June quarter. China’s economic data are notoriously prone to fiddling for political purposes. And only this March, the Communist Party set a GDP growth target range of 4.5% to 5% for the year, its most pessimistic since the 1990s."

"Meanwhile there’s accumulating evidence that the country’s true GDP growth rate may be zero, or that the economy is in outright recession. Retail sales were a bright spot in the latest data, increasing 1% year-on-year in June, but looking across recent months this measure of domestic household consumption may be stuck in neutral. Measures of investment are in free fall: Fixed-asset investment has declined 5.7% year-to-date and real-estate investment is down 18%."

"Crude imports in July hit their lowest level in roughly a decade."

"refinery output also is declining"

"demand for energy within China . . . is dropping rapidly."

"it’s hard to find anyone who thinks any of this (more economic “stimulus”) would launch a durable economic recovery. One reason domestic consumption is dipping is that previous iterations of the consumption subsidy (a trade-in scheme, akin to the Obama-era “cash for clunkers” in the U.S., that rewards replacement of old items) pulled forward in time purchases that households would have made anyway, without setting in motion a Keynesian virtuous circle of new corporate investment to meet higher demand. As for public works, China has enough and Beijing’s more important fiscal priority remains bailing out heavily indebted local governments." 

"Domestic consumption is unlikely to revive until the real-estate market has found its bottom." 

Thursday, July 16, 2026

Ridley: Why our public sector is so unproductive

The enduring lessons of Jevons and Baumol

By Matt Ridley

"Agatha Christie once remarked that she had never expected to grow rich enough to own a car or poor enough not to have servants. The reason this strikes us as bizarre today boils down to two names that you hear invoked a lot in the tech industry: Jevons and Baumol. One is shorthand for the expansion of products or professions with rising efficiency, the other for the shrinkage of products or professions with stagnant efficiency.

There’s a pleasing chronological symmetry between these twin ideas: William Stanley Jevons coined the Jevons paradox in 1865; William Jack Baumol described Baumol’s cost disease exactly a century later in 1965.

In his pessimistic book The Coal Question, Jevons forecast peak coal and consequent economic catastrophe for Britain. Energy efficiency would not come to our rescue, he argued. “It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.” If you double the efficiency of steam engines, you do not burn less coal, you install more engines and soon burn more coal. He was wrong about peak coal, as later pessimists were wrong about peak oil and peak gas, but right about increased consumption.

A modern example: light-emitting diodes (LEDs) use about 15 per cent as much electricity as incandescent bulbs. Do we save that difference? Only at first, then we install more lights, leave them on longer and build things like the Las Vegas Sphere, which uses as much electricity as 50,000 homes.

The tech guru Erik Brynjolfsson points out that: “Pilots became dramatically more productive and effective once jets were invented. Did that mean that we didn’t need as many pilots because now pilots could do more work? No. We consumers decided that we’re going to fly more than ever. So now a lot more people fly. And there’s more demand for pilots.” If supersonic commercial flight eventually takes off, the falling cost of pilots and flight attendants (in the air for less time) will only increase demand for air travel.

The price of a single transistor has fallen over half a century from about $1 to less than a millionth of a cent. So we not only buy more of them but spend more on them. As Alex Danco puts it: “At $1 per transistor, computers made sense for military calculations and corporate payroll. At a thousandth of a cent, they made sense for word processing and databases. At a millionth of a cent, they made sense in thermostats and greeting cards. At a billionth of a cent, we embed them in disposable shipping tags that transmit their location once and are thrown away.”

Drones, space launches and genome sequencing are being Jevonised right now. As for artificial intelligence, “Jevons paradox strikes again,” says Satya Nadella of Microsoft. “As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of.” Aaron Levie of Box says: “Jevons paradox is coming to knowledge work. By making it far cheaper to take on any type of task that we can possibly imagine, we’re ultimately going to be doing far more.” AI will mean more jobs for lawyers, not fewer.

Marc Andreessen muses that it is “like the Daniel Day Lewis character in There Will Be Blood worrying ‘but what will happen, once we’ve satiated their demand for whale blubber?!’ Well, it turns out that there were a lot more useful ways to consume energy than burning the midnight oil.” As the cost of AI tokens collapses, we will use vastly more of them for vastly more uses.

But here’s where the Baumol twin comes in. For every industry that experiences efficiency gains, there’s another that does not. And this latter industry inevitably becomes less affordable. Baumol’s first example was string quartets: violinists are no more productive but you have to pay them more to prevent them running off to become software engineers. The productive industries drive up the labour costs in the rest of the economy. Andreessen jokes that if a hole appears in the wall of your house in California these days it is probably cheaper to glue a flat-screen television over it than hire a builder to repair it: a Jevons-deflated cost beats a Baumol-inflated one.

The big question of our age is can AI drag Baumol-shaded industries back into the sunlight of Jevons? Can it make things like healthcare, education, or government switch from rising costs to falling costs?

I fear not in the case of government because of a bureaucratic version of the Jevons and Baumol effects. As Cyril Northcote Parkinson put it in an article in the Economist in 1955: “Politicians and taxpayers have assumed (with occasional phases of doubt) that a rising total in the number of civil servants must reflect a growing volume of work to be done. Cynics, in questioning this belief, have imagined that the multiplication of officials must have left some of them idle or all of them able to work for shorter hours. But this is a matter in which faith and doubt seem equally misplaced.”

Since 1997, the British public sector has seen zero increase in productivity. That is to say, the average civil servant generates about the same output today as he did three decades ago. Think about this for a second. Thirty years ago fax machines were high-tech, the internet was in its infancy, emails were new, Wi-Fi was scarce, mobile phones were voice-only. How is it remotely possible to be no more productive today than then?

We know the answer. Each email is now copied to a dozen people, each report is pasted and copied till it is twice as long, each Zoom call has five times as many attendees, each mobile call is followed up by three times as many WhatsApp messages – and each day at the desk is interrupted by a training session on transgender anticolonial sustainability. That’s a sort of Jevons-Baumol effect: a Jevol?

Thursday, May 14, 2026

Anne O. Krueger on market failures, government failures and incentive

From David Henderson.
"Some of these arguments about the market assume that if there are market failures, then whatever the government will do will be better. Maybe the market failures are huge, but that does not persuade me that government failures will not automatically be as huge. That’s the part that’s wrong. I still think that when you’re talking about lots of economic activities, you want to just look at incentives. If there’s something wrong with the market, get the incentives right. Giving bureaucrats the incentive to regulate is not the incentive that will work best in most cases."

Saturday, February 21, 2026

Congress should short-circuit the nation’s electric vehicle charging program

By Steve Swedberg of CEI. Excerpt:

"how many EV charging stations has NEVI installed? After all, the NEVI program was enacted in November 2021. The Biden administration was hoping to have 500,000 charging ports installed by 2030. With $5 billion allocated over a five-year period, one would think that NEVI would have established a well-functioning network of EV chargers by now. Here are some estimates as to how many EV chargers have been installed under NEVI:

·      The EV States Clearinghouse, which is co-maintained by the National Association of State Energy Officials and the American Association of State Highway and Transportation Officials, has the estimate at 532 charging ports currently open.

·      An industry analysis reported that EV charging data analytics company Paren puts the estimate at 725 ports.

·      The Government Accountability Office calculated that as of April 2025, there were 384 EV charging ports installed under federal government programs. Notably, this figure includes ports from NEVI and another program called the Charging and Fueling Infrastructure Grant Program.

Regardless of the estimate used, the number of charging ports installed by the federal government is less than 1,000 and accounts for much less than one percent of the 235,428 charging ports available as of January 2026 and the 500,000 charging ports promised by the Biden administration by 2030. More than four years after enactment, and with billions appropriated, this level of deployment suggests more than ordinary implementation lag. Even a backloaded program would show clearer signs of growth by this point. Instead, NEVI’s output indicates structural bottlenecks embedded in its design rather than temporary startup delays.

Paperwork over power

Even before the Trump administration decided to rescind the existing NEVI Formula Program Guidance and suspend state approvals of deployment plans, NEVI was already floundering in red tape. As of February 6, 2025, which was a few days after USDOT Secretary Sean Duffy was sworn into office, $2.7 billion of the $3.3 billion available in NEVI funds were unobligated. In plain terms, most of the money Congress set aside had not been committed to projects.

According to the center-left think tank Third Way, NEVI’s slow progress is not due to lack of need or funding, but to bureaucratic hurdles. Complex requirements and delayed federal guidance left states navigating red tape instead of building charging stations, highlighting inefficiencies in the program’s design.

The Environmental Law Institute further breaks down these hurdles mentioned by Third Way by showing that NEVI’s deployment delays are baked into the program’s structure. States and contractors must navigate local building approvals, utility interconnection studies, and environmental reviews for each proposed site, which often stalls projects for months before a single charger goes live.

In addition, federal “Buy America” requirements add supply-chain constraints that create additional bottlenecks and increases production costs. Industry groups and state Departments of Transportation have warned that “Buy America” requirements could delay federal EV infrastructure projects due to limited domestic suppliers and complex compliance processes. These intertwined requirements illustrate how well-intentioned federal oversight can transform a supposedly fast-moving infrastructure program into a slow-moving bureaucratic behemoth.

Private sector vs. NEVI deployment timelines

An interesting point of comparison is the project timelines between the private sector and NEVI installations. Industry analysis indicates that regulatory and utility interconnection processes alone commonly add a year to 18 months to the timeline for NEVI‑funded charging projects, well before construction begins. Although all 50 states have submitted and received approval for NEVI EV charging deployment plans, the plans do not include uniform benchmarks for how long it takes from award to station operation. Arizona expected it to take a year to install once approved, whereas California provides a range of one to two years.

By contrast, the private sector reports shorter timelines. EV charging financing company Sustainable Capital Finance (SCF) estimates that it can take 3 to 16 months to install an EV charger, whereas EV charging company EVgo puts the figure at 18 months. EV charging stations take time to install, irrespective of red tape. At the same time, these diverging timelines illustrate why the private sector is able to generate tens of thousands of ports in the time that NEVI has installed fewer than 1,000 ports. 

Daren Bakst, director of CEI’s Center for Energy and Environment, has noted this discrepancy reflects a broader principle: states and private actors ultimately determine where and when chargers are built, and government mandates cannot substitute for market-driven deployment. In fact, Bakst highlighted that even with billions allocated to NEVI, no chargers had yet been installed at the time of his analysis in December 2023. This insight reinforces the idea that federal intervention cannot reliably accelerate infrastructure deployment.

Beyond regulatory red tape, NEVI has been hampered by predictable governance failures that exacerbate the timeline issues. For example, a federal court recently ruled that the US Department of Transportation unlawfully froze congressionally appropriated NEVI funds, which forced states to litigate simply to access money already authorized by law. Such administrative paralysis is not an anomaly. It is a predictable outcome when a program centralizes decision-making in federal agencies subject to shifting priorities, complex compliance rules, and political interference.

NEVI spending fails the traveler

Despite a $5 billion commitment made in 2021 to build a nationwide EV charging network, there are fewer than 1,000 operational charging ports. This amount represents a miniscule fraction of the ports already available nationwide, and more importantly, the amount promised by the Biden administration. The Government Accountability Office highlights how NEVI lacks clear performance goals or benchmarks, meaning policymakers cannot even track whether NEVI is meeting its intended outcomes. Combined with bureaucratic hurdles, slow deployment, and small scale of charging ports at this stage, it becomes difficult to argue that NEVI is doing anything of substance to positively contribute to transportation infrastructure.

At the same time, private companies continue to expand the EV charging network across the US and often complete projects in a matter of months instead of years. History has shown that building a nationwide network of fueling infrastructure does not require subsidies. Gas stations achieved this growth organically in the 20th century without subsidies. Those same market forces can drive and already have been driving EV charger deployment."

Sunday, February 15, 2026

Why Unemployment is Rising Among Young College Grads

Their skills, experience and ability to function are increasingly out of step with employers’ needs

By Allysia Finley. Excerpts:

"last . . . unemployment among college grads age 22 to 27 rose to 5.6% in December, roughly what it was in February 2009 during the financial panic." 

"Artificial intelligence isn’t taking their jobs. Young grads’ struggles started before AI went mainstream. Between 1990 and 2014, unemployment for young college grads was generally 1 to 3 percentage points lower than for all workers. The gap started to tighten around 2014 and reversed in late 2018. Unemployment for young college grads is now about 1.4 points higher than for all workers."

"Government subsidies and public schools have funneled too many young people to credential mills, which churn out grads who lack the skills that employers demand."

"More than half of high-school grads matriculate to college, even though only 35% of 12th graders score proficient in reading and 22% in math on the National Assessment of Educational Progress."

"U.S. colleges awarded 2.2 million bachelor’s degrees last year, about twice as many as in 1990. That’s also double the number of associate’s degrees. Another 860,000 Americans last year received a master’s degree, nearly triple the 1990 figure. Nearly 40% of Americans with a bachelor’s now have an advanced degree."

"Colleges have added graduate programs in fields like urban planning, sustainability and fine arts to rake in more federal dollars."

"market that is saturated with heavily credentialed workers."

"Many skated through college by relying on AI to do their work."

"Some also struggle with executive functioning because of disability accommodations in high school and college that allowed them extra time to complete tests and assignments. More than 20% of undergrads at Harvard and Brown and 38% at Stanford have registered disabilities."

"31% of small-business owners had job openings they couldn’t fill, compared with a historical average of 24%." 

Friday, December 19, 2025

Billions Spent, Few Trucks Delivered: The USPS EV Fiasco

By Craig Eyermann of the Independent Institute.

"At any given time, the U.S. government is spending taxpayer dollars that are being wasted. Today’s example is being delivered by the U.S. Postal Service (USPS).

That’s a shame, because with around 533,000 career employees and another 106,000 non-career employees, the Postal Service accounts for about one out of every five of the U.S. government’s three million civilian employees. From post offices to stamp machines, mailboxes, and mail trucks, they represent the most visible connection Americans have with the federal government in their daily lives.

But that connection doesn’t prevent them from squandering the resources of the taxpayers whose interests they are supposed to serve.

In August 2022, when the Biden administration’s Inflation Reduction Act became law, taxpayers provided over $3 billion to government contractor Oshkosh Defense to design and build 35,000 electric battery-powered mail trucks. These supposedly environmentally friendly vehicles were intended to replace the Postal Service’s fleet of gasoline-powered mail trucks.

It has been described as both “unusual” and “ugly.” It’s certainly very different than the very familiar vehicles that have preceded it

Three years later, the U.S. Postal Service is far behind schedule in its ambition to switch over to battery-powered mail trucks. As of November 10, 2025, it is operating a total of 612 electric battery-powered mail trucks.

Oshkosh Defense’s production of the Postal Service’s Next Generation Delivery Vehicle (NGDV) has been troubled. According to the New York Post, the company is producing the vehicles at a rate of about 3 to 4 per day. That is far short of the 80 vehicles per day the company projected it would be making by December 2024.

The massive shortfall in actual versus projected deliveries of functional battery-electric mail trucks has prompted several fiscally responsible members of Congress to attempt to claw back funding and halt production of the vehicles, in favor of other vehicles that the Postal Service can acquire and operate in greater numbers.

They have a strong case. If Americans want to rely on receiving regular mail service, having postal carriers in mail trucks that can be built and operated as needed is vital to meet that demand. Despite its years in development and billions of dollars in cost to taxpayers, it doesn’t seem that the Postal Service’s battery-electric NGDV is going to deliver anytime soon."

Saturday, September 27, 2025

More on Government Ownership of Land, Wildfires, and the Advantages of Private Stewardship

By Lawrence J. McQuillan. He is a Senior Fellow at the Independent Institute.

"I recently published two commentaries on why private stewardship of land decreases wildfire risks compared to federal and state governments owning and managing the land: “Private Ownership of Forests and Land Reduces Wildfires” (published in 78 newspapers across the country, August 20, 2025), and “Rescue ‘Stranded’ Federal Lands by Selling It” (published in The American Spectator, September 8, 2025).

Since publishing those commentaries, I ran across two more scholarly journal articles that support my thesis that private stewardship of land tends to reduce wildfire risks compared to government ownership.

In 2024, Liang Diao and Huiqian Song published a paper in the Journal of Environmental Economics and Management titled “Does Improved Tenure Security Reduce Fires? Evidence from the Greece Land Registry.” The researchers found that strengthening private property rights for agricultural land in fire-prone Greece from 2014 to 2019 resulted in “large declines” in wildfires (17 percent), burned areas (39 percent), and associated air pollution (18 percent). Those reductions are significant.

The researchers found that “the observed reduction in fires is likely attributable to private landowners rather than public services, as it predominantly occurs in areas remote from local fire stations. This suggests that landowners are intensifying their efforts in both fire prevention and suppression. . . . [F]ires in Greece can be decreased through incentivizing land owners to reduce fuel loads and fire-prone landscapes.”

Diao and Song concluded, “Our findings indicate that strengthening property rights can lead to more sustainable farming practices and promote long-term land investment, thereby reducing fire hazards.” Part of that investment involved “stocking more fire-suppression equipment.” The study demonstrated that the benefits of more secure private property rights over land, particularly fewer wildfires, are not confined to the United States.

In 2018, Carlin Frances Starrs, Van Butsic, Connor Stephens, and William Stewart, all professors at the University of California, Berkeley, published a paper in Environmental Research Letters titled “The Impact of Land Ownership, Firefighting, and Reserve Status on Fire Probability in California.” The researchers examined average fire probability in California from 1950 to 2015 (involving more than 13,000 unique fires) and found that “federal ownership and [federal] firefighting was associated with increased fire probability,” and “the difference in fire probability on federal versus non-federal lands is increasing over time.” Those findings are worrisome.

Perhaps most importantly, federal ownership of land was found to have “much greater influence” on fire probability than climate factors such as temperature, precipitation, and topsoil moisture, a strong argument in favor of less federal control of land, especially in fire-prone California. Federal land ownership and federal firefighting decisions play critical roles in increasing wildfire probability in California.

Those two studies, and others, support the conclusion that private stewards are better incentivized than government bureaucrats to undertake the difficult work of fire-risk mitigation through active land management.

Private stewardship of land properly aligns incentives with effective, innovative, and cost-efficient fire prevention that saves lives, preserves property and restores forest health. Wildfires can’t be eliminated, but their incidence and severity can be minimized.

Below is a list of scholarly research supporting the thesis that private stewardship of land reduces wildfire risks and/or government ownership of land increases wildfire risks. I will update the list as I discover more papers:

Ana M. G. Barros, Michelle A. Day, Thomas A. Spies, and Alan A. Ager, “Effects of Ownership Patterns on Cross-Boundary Wildfires,” Scientific Reports v11, September 2021.

Carlin Frances Starrs, Van Butsic, Connor Stephens, and William Stewart, “The Impact of Land Ownership, Firefighting, and Reserve Status on Fire Probability in California,” Environmental Research Letters v13, February 2018.

Liang Diao and Huiqian Song, “Does Improved Tenure Security Reduce Fires? Evidence from the Greece Land Registry,” Journal of Environmental Economics and Management v127, September 2024.

Vibhu Vikramaditya, Free Market Environmentalism: A Market and Private Property-Based Approach to Environmental Conservation, MIT World Peace University (WPU) School of Economics, Pune, India, dissertation, 2022."

Tuesday, July 29, 2025

California’s Bullet Train Is a Model of Progressive Governance

Trump gave Newsom a perfect opportunity to cut his losses and shift blame. Why didn’t he take it?

By Allysia Finley. Excerpts:

"At the current construction rate, the 500-mile choo choo between San Francisco and Orange County won’t be completed in the governor’s lifetime. The state as of last month hadn’t begun to lay tracks on the first 119-mile segment between Madera (pop: 68,079) and Shafter (pop: 21,915).

This first leg should have been relatively easy since the state’s rural Central Valley is lightly developed and populated. No need to raze strip malls and housing developments. A private company built a 235-mile high-speed train from Orlando to Miami in 11 years for about $6 billion. Yet it has taken California more than a decade merely to bulldoze permitting barriers and clear lawsuits."

"China has borrowed some $1 trillion to build nearly 30,000 miles of high-speed rail lines, many of which connect lightly populated towns and carry few passengers."

"Democrats claimed the train would cost a mere $33 billion and be complete by 2020. The 500-mile train trip from San Francisco to Anaheim would supposedly take only 2½ hours and cost less than flying."

"The state high-speed rail authority at the time projected 65.5 million annual riders by 2030, about five times as many passengers who take Amtrak’s trains in the more densely and heavily populated Northeast Corridor."

"But the rail authority is at least $7 billion short of what it needs to complete the first segment and needs more than $90 billion to build all 500 miles."

"healthcare for undocumented immigrants (estimated to cost $12 billion this year)."

"Democrats spent $24 billion to combat homelessness, yet the result was more homelessness. State K-12 spending has risen by 50% since 2018, but student test scores have fallen. Electric rates have surged yet power has become less reliable." 

Thursday, July 10, 2025

NASA Gets a $10 Billion Windfall From the 'Big Beautiful Bill'

NASA Gets a $10 Billion Windfall From the 'Big Beautiful Bill'

By Tosin Akintola of Reason

"The pork-barrel spending of President Donald Trump's One Big Beautiful Bill Act (OBBBA) doesn't just fund terrestrial programs like military spending and immigration enforcement, it also rockets taxpayer money to outer space. Under the bill, which the president signed into law on Friday, NASA will receive nearly $10 billion, $7.4 billion of which will be allocated to finance the agency's Moon to Mars program

The Moon to Mars program launched in November 2022 to establish humanity's presence "on and around the Moon before embarking on the first human missions to Mars" in the coming decades, according to NASA. To that end, the OBBBA allocates $700 million for the "procurement…of a high-performance Mars telecommunications orbiter," $2.6 billion for the Gateway lunar space station, and $4.1 billion for the Artemis IV and V missions, currently scheduled to launch in 2028 and 2029, respectively.

The prospect of a lunar colony and a Mars expedition may seem intriguing, but the OBBBA's funding for these objectives will likely lead to even more wasteful spending at NASA.

Since its launch in 2017, the Artemis program has completed just one mission: Artemis I, a 25-day unmanned lunar orbital flight in December 2022. Artemis II and III, which will actually carry humans to the moon, are scheduled for April 2026 and mid-2027, respectively. Though it's yet to transport anyone to space, the cost of the Artemis program is expected to reach $93 billion through FY 2025.

In July, the Government Accountability Office (GAO) found that three Artemis projects were responsible for nearly $7 billion in cost overruns since the agency began measuring the cost of NASA's major projects in 2009. This accounts for roughly half of all cost overruns across NASA's 53 current projects, according to the GAO.

The Gateway lunar space station, with a baseline cost estimate of $5.3 billion, is intended to be a "multi-purpose" outpost for moon-based missions, serving as a launch point for further explorations in space. Initially scheduled to launch in 2022, it's now expected to launch its first components in December 2027, according to a 2024 GAO report.

While the federal government has struggled to be efficient in its endeavors into space, the private sector has achieved remarkable success. SpaceX has completed several manned and unmanned missions faster and cheaper than NASA. A 2022 study comparing NASA and SpaceX missions showed that SpaceX's platform strategy is 10 times cheaper and twice as fast as NASA's traditional project approach. The same study found that SpaceX had an average cost overrun of 1.1 percent across its 16 missions. In NASA's 118 missions, the agency's average cost overrun was 90 percent. The success of their partnership landed SpaceX a key role in NASA's Artemis campaign, developing the agency's Starship Human Landing System.

With SpaceX's successes and a flood of private financing into the aeronautical industry—globally, private equity firms invested $8.6 billion in the sector in 2024—it's hard to see why the federal government still plays a leading role in space exploration. Rather than reducing the scope of government in space travel, the OBBBA shovels more taxpayer dollars into an agency that's been surpassed by its competitors in the private sector."

Thursday, May 29, 2025

Affordable Housing Is Almost Pointless

By Alex Tabarrok.

"What is the most important feature of affordable housing? Simple! It’s right there in the name, right? Affordable. But no. When the Illinois Housing Development Authority (IHDA) evaluates housing projects for tax credits it gives out points for desirable projects. Quoting Richard Day:

For the general scoring track, 10% of points are awarded for extra accessibility features, 13% are awarded for additional energy efficiency criteria, 15% are awarded based on the makeup of the development team, and an extra 4% are headed out to non-profit developers. Only 3% of scorecard points are awarded based on project cost.

Thus, when you look at what the affordable housing authority actually does it awards more than four times as many points to energy efficiency than cost which ultimately determines affordability and availability. “Development team” includes some mandatory requirements for experience, which makes sense, but also:

(a) incentivizing Black, Indigenous, or People of Color (“BIPOC”) and minority participation on the development team,

Indeed, a for-profit “certified” BIPOC-led business can earn up to 11 points (and a BIPOC-led non-profit up to 7 points) and you can get a few more points if you go the intersectionality route and have a certified female headed BIPOC team. Cost Containment in Project Design & Construction tops out at only 3 points (plus there are 8 more potential points for targeting to extremely poor residents which presumably also gets you some cost control).

Thus, rather than affordable housing what is actually being incentivized is some combination of:

  • Racial equity goals
  • Environmental sustainability
  • Community development
  • Supporting vulnerable populations
  • Universal design for accessibility (7 points for going beyond code)

This is what Ezra Klein calls Everything Bagel Liberalism and what I called in one of my favorite posts the Happy Meal Fallacy.

The icing on the cake, by the way, is that Day argues that the IHDA is a better system than the even more convoluted and expensive system for affordable housing promoted by Chicago’s Department of Housing."

Wednesday, May 21, 2025

Eisenhower Warned Us About the 'Scientific Elite': The Trump administration's plans to slash science funding could end up liberating researchers from the corrupting influence Dwight Eisenhower warned about

Reason talked to Terence Kealey, a professor of clinical biochemistry at the University of Buckingham.

By Zach Weissmueller

"In President Dwight D. Eisenhower's famous 1961 speech about the dangers of the military-industrial complex, he also cautioned Americans about the growing power of a "scientific, technological elite."

"The prospect of domination of the nation's scholars by federal employment project allocations and the power of money is ever present," warned Eisenhower.

The federal government had become a major financier of scientific research after World War II, and Eisenhower was worried that the spirit of open inquiry and progress would be corrupted by the priorities of the federal bureaucracy.

And he was right.

Today, many of the people protesting the Trump administration's cuts to federal funding for scientific research are part of that scientific, technological elite.

But there's a good chance that slashing federal spending will liberate science from the corrupting forces that Eisenhower warned us about.

"If you look at, particularly, 19th century Britain when science was absolutely in the private sector, we have some of the best science," says Terence Kealey, a professor of clinical biochemistry at the University of Buckingham and a critic of government science funding. "It comes from the wealth of the rich. Charles Darwin was a rich person. Even [scientists] who had no money had access to rich men's money one way or another. The rich paid for science."

Kealey points out that Britain's gross domestic product (GDP) per capita outpaced that of 19th-century France and Germany—both of which generously subsidized scientific research—indicating that the return on state subsidies in the form of economic growth was low. As America emerged as a superpower, its GDP per capita surpassed Britain's.

"So the Industrial Revolution was British, and the second Industrial Revolution, was American, and both were in the absence of the government funding of science," says Kealey.

Thomas Edison's industrial lab produced huge breakthroughs in telecommunications and electrification. Alexander Graham Bell's lab produced modern telephony and sound recording, all without government money. The Wright Brothers—who ran a bicycle shop before revolutionizing aviation—launched the first successfully manned airplane flight in December 1903, beating out more experienced competitors like Samuel Langley, secretary of the Smithsonian Institution, who had received a grant from the War Department for his research.

The notion that the government needs to accelerate scientific progress was based on America's experience during World War II, when federally funded research led to breakthroughs in rocketry, medicine, and radar. The Manhattan Project, which cost $27 billion in today's dollars, employed more than half a million people and culminated in the creation of the atomic bomb and the discovery of nuclear fission.

"Lobbyists took the Manhattan Project and said, 'Look what government funding of science can do,' and they then twisted it," says Kealey. He acknowledges that the government can accomplish discrete, "mission-based" scientific projects—like racing toward a bomb—but he argues that this is very different from the generalized state funding of "basic research" that followed. 

In November 1944, President Franklin D. Roosevelt sent a letter to Vannevar Bush, director of the U.S. Office of Science and Development during the war. Roosevelt instructed Bush to come up with a plan to make federal funding of scientific research permanent. 

"It has been basic United States policy that government should foster the opening of new frontiers," wrote Bush in calling for the nationalization of basic science research. "It opened the seas to clipper ships and furnished land for pioneers."

Bush's treatise eventually led to the creation of the National Science Foundation in 1950.

But it was a stunning accomplishment from America's greatest rival that would supercharge the nationalization of science. Sputnik, the world's first manmade satellite, seemed to confirm fears that the Soviets, with their centrally planned economy, might eclipse the U.S. in scientific innovation and weapons technology.

That turned out to be completely wrong. But in 1957, Americans were terrified.

After Sputnik, the Eisenhower administration tripled the budget of the National Science Foundation, which would provide federal grants to universities and labs.

If federal funding of science is counterproductive, as Kealey argues, what explains the success of Sputnik and the Manhattan Project?

Of course, government funding has led to major breakthroughs both during and after World War II, such as the synthesis and mass production of penicillin during World War II (though it was accidentally discovered in a contaminated hospital lab in 1928), cancer immunotherapy, artificial heart valves, and the gene-editing technology CRISPR.

But this has to be compared to what might have otherwise happened. Good economics takes into account not only the seen, but the unseen.

What are the unseen innovations the world misses out on when governments set the research agenda?

"If the government funds science, it actually takes the best scientists out of industry puts them in the universities, and then industry in fact suffers," says Kealey.

After Sputnik, government money pushed basic science out of the private sector. By 1964, two-thirds of all research and development was paid for by the federal government.

"If you were a tool maker in Ohio in 1964, and you wanted to invest in R&D to make better tools because you wanted the beat your competitors in Utah, you wrote a grant to the Department of Commerce," says Kealey. "That's how nationalized American science was … Eisenhower's warning is absolutely correct."

In academic science, process often takes precedence over outcomes. Researchers are incentivized to publish peer-reviewed papers that garner citations, which helps them secure prestigious academic posts and more federal grants.

"What happens under peer review under the government is that there's homogenization, and only one set of ideas is allowed to emerge," says Kealey.

The pressure to publish has created a positivity bias, where an increasing number of papers supporting a hypothesis are published, while negative findings are often buried.

One biotech company could confirm the scientific findings of only six out of 53 "landmark" cancer studies.

Swedish researchers found that up to 70 percent of positive findings in certain brain imaging studies could be false.

A team of researchers re-examined 100 psychology studies and successfully replicated only 39. "There is still more work to do to verify whether we know what we think we know," they concluded.

In an influential 2005 paper, Stanford University professor John Ioannidis flatly concluded that "most published research findings are false." He argued that the current peer review model encourages groupthink, writing that "prestigious investigators may suppress via the peer review process the appearance and dissemination of findings that refute their findings, thus condemning their field to perpetuate false dogma."

"You end up with a monolithic view, and so you crush what's so important in science, which is different ideas competing in a marketplace of ideas," says Kealey.

For decades, the federal government advised Americans to avoid saturated fat and prioritize carbohydrates based on the work of a researcher named Ancel Keys, who received substantial funding from the U.S. Public Health Service and the National Institutes of Health (NIH). Today, the debate that Keys suppressed rages on.

"Ancel Keys said, 'I have the solution, it's all to do with fats,'" says Kealey. "And very quickly, you couldn't get grants to the American Heart Association unless you subscribe to Ancel Key's theory of fat. Having captured this small little redoubt, he then moved to the [National Science Foundation], and then suddenly the whole world believed only one thing."

More recently, Stanford's Jay Bhattacharya was attacked by the public health establishment for questioning the COVID-19 lockdowns. He told Reason there's an inherent conflict between the NIH director setting public health policy and doling out grant money.

"If you have an NIH director that [sets policy and distributes money], they control the minds of so many scientists. It's an inherent conflict, and nobody's going to really speak. Nobody's going to disagree with them because that's the cash cow," says Bhattacharya, who President Donald Trump appointed head of the NIH. His agency now faces a proposed 40 percent spending cut.

But if Kealey is right, slashing science funding could, counterintuitively, accelerate medical innovation in the long run.

"If these changes can be managed in such a way that these scientists can move from the NIH into the private sector without massive disruptions to all the work and research they're doing, that will be to the benefit of America," says Kealey.

It would be similar to what happened in the early 1970s, when Congress slashed the Defense Advanced Research Projects Agency's budget in half, laying the groundwork for the rise of the computer age.

"What happens to all those scientists? Well, they all go out to Silicon Valley, because they've all been made redundant … And they invent the modern world," says Kealey. 

"New frontiers of the mind are before us, and if they are pioneered with the same vision, boldness, and drive with which we have waged this war we can create a fuller and more fruitful employment and a fuller and more fruitful life," wrote Roosevelt in his letter to Bush.

But maybe Roosevelt drew the wrong conclusions from the war. "Vision, boldness, and drive" can be found amongst the dreamers and tinkerers working in private laboratories, who are often too iconoclastic to be good candidates for government research grants but whose ideas, simply, work.

"It's technology that keeps science honest," says Kealey. "If you're a scientist and you make an observation which can be tested, 'If you do this, the rocket will go that way, if you do that, the rocket will go this way,' then as a scientist you have to be honest because you'll soon be found out. But if your money comes from the government and it comes by peer review from committees, and the committees subscribe to a false paradigm, no one is going to test your paradigm."

Before government money flooded in, private research facilities like Bell Labs were centers of innovation. AT&T's research lab discovered radio astronomy in 1933 when its scientists tried to figure out why its telephone wires experienced interference the longer they stretched.

"You have a mission, you do research, and many times you make discoveries in pure science that actually are very valuable to everyone else," says Kealey.

Vannevar Bush and FDR were wrong: The private sector can push forward the scientific frontier. In fact, federal funding of R&D in America has flatlined for decades, while business investment keeps going up.

Abandoning NASA's Cold War space race monopoly, the government has outsourced rocket design to competing private companies. The world can barely keep pace with the breakthroughs announced by Silicon Valley's privately funded AI labs.

"Science in America today is actually more private than it was in 1940. People just haven't seen it. No one wants to talk about it because there are no votes in privatizing science," says Kealey. "I would like to see that process continued."

Let's heed Eisenhower's warning. The question is not whether or not America should continue conducting scientific research. It's about who is in control."

Tuesday, May 13, 2025

America’s Air Traffic Fiasco

Here’s why you’re waiting hours to land at Newark airport

WSJ editorial. Excerpts:

"Congress in 2003 directed the FAA to modernize its systems. Yet the NextGen overhaul isn’t set to be complete until 2030."

"the FAA still uses floppy disks."

"76% of FAA systems are “unsustainable” or “potentially unsustainable,” which may have “critical operational impacts”"

"GAO says “completion dates for planned investments for systems” it deems “especially concerning were at least 6 to 10 years away.”"

"FAA labor agreements also require the government to “work collaboratively” with the air traffic controller union on modernization, which can delay upgrades and divert staff from their day jobs."

"The FAA aimed to ease the congestion by shifting control of Newark to its Philadelphia facility last summer, but the union opposed the move"

"Americans who want to become controllers must undergo three to five months of paid training at an FAA academy in Oklahoma City, followed by a three-year apprenticeship at a control facility."

"Half of the students who enter the academy don’t finish their training."

"the best reform would be if the U.S. followed Canada and other nations and turned air traffic over to a private nonprofit."

Saturday, April 26, 2025

BEAD Program and Bureaucratic Failure by Design

A $42.5 billion federal program meant to bridge the digital divide reveals how layers of bureaucracy—not lack of funding—can stall progress by design.

By Craig Eyermann of The Independent Institute

"How can the U.S. government spend billions to bring high speed internet service to digitally deprived Americans and have almost nothing to show for it?

On May 13, 2022, the Biden-Harris administration rolled out its plans to close what it called the “digital divide” in America. The federal government would spend billions to deliver affordable high-speed internet service to underserved communities. The administration’s “Internet for All” initiative would, in their own words, “meaningfully address fundamental economic, educational, social and health-related inequities in our country”.

The biggest part of that effort was the Broadband Equity, Access, and Deployment (BEAD) Program. Under this program, bureaucrats at the Department of Commerce would disperse $42.5 billion in grants to every corner of the United States. With so much money made available to them, surely they would realize their goal of providing high-speed internet connections to all those underserved Americans who lacked them.

Three Years Later and No High-Speed Internet Connections

Almost three years later, there’s no evidence of any American anywhere having connected to the Internet from anything the Commerce Department funded with its BEAD program grants.

Comedian Jon Stewart learned that shocking truth and the reason for it on his Weekly Show podcast. Even though they had $42.5 billion at their disposal, they appear to have had even more bureaucratic red tape at their disposal, which doomed the program. Stewart’s interview with the New York Times‘ Ezra Klein lays out the fourteen bureaucratic hoops that were thrown in the way of progress:

Here’s an excerpt of the craziness of the steps the state and local government applicants had to go through after they made it through the first seven steps, which omits some of Stewart’s more coarse reactions.

Transcript of Bureaucratic Craziness

“Having submitted their five-year plans and letters of intent, step eight is states must submit an ‘initial proposal’ to the NTIA [National Telecommunications and Information Administration],” Klein explained.

“Is that a result of their $5 million planning fund?” Stewart asked, noticeably losing hope.

“I assume, but then what was the five-year plan?” said Klein. “Like, if the five-year action plan isn’t the initial proposal, then what’s the five-year action plan?”

“Step nine, NTIA must review and approve each state’s—again—’initial proposal.’ By my read, we have had at least two initial proposals here, but that’s a different issue,” he continued.

“Step 10, states must publish their own map and allow internal challenges to their own maps. So the government has published a map. They have invited the states to challenge the map. Then states have submitted initial proposals and they then have to publish their own map and allow challenges.”

“Wait, who’s challenging it within the state?”

“Well, you know, organized interest groups, environmental groups,” Klein said. “Literally anybody. I want to say something because it’s very important. This is the Biden administration’s process for its own bill. They wanted this to happen. This is how liberal government works now.”

“This is something they instituted for their bill?”

“For their bill. This is a bill passed by Democrats with a regulatory structure written by a Democratic administration,” he said. “Step 11, the NTIA must review and improve the challenge results and the final map.”

“So, the NTIA has put forward a map. The states have challenged that map. Then the states have put forward their maps, had other challenges, and now the NTIA must review and approve the challenges to the state maps… We’ve lost nine of the applicants at that point.”

“Step 12, states must run a competitive sub-granting process—yeah, none of that could have happened along the way here. We have now lost 17 more applicants. So now 30 of 56 have completed step 12.”

“Step 13, states must submit a final proposal. All the proposals weren’t enough for NTIA. Now that goes to three of 56. So, we’ve gone in the last couple of steps from 56 had gone to this point to three or 56,” he continued.

“Step 14, the NTIA must review and approve the state’s final proposal. And that is three of the 56 jurisdictions and states are there.”

Say what you will about the politicians and bureaucrats behind the Biden-Harris administration’s costly “Internet for All” debacle. They built the exact program they wanted. Its failure was not left to chance. It was built in by design."

Friday, April 18, 2025

The true cost of the Inflation Reduction Act

By Paige Lambermont of CEI.

"The increasingly poorly named Inflation Reduction Act (IRA), signed by President Biden in 2022, comes with incredible costs. These come from massive spending, like tax credits and grants, as well as from the law’s market-distorting effects. The bill was marketed as a way to reduce inflation (but alas, this doesn’t make sense because it spends lots of money) and to decarbonize the economy through subsidies for clean energy and electric vehicles.

At the time of its passage, the cost of the IRA was significantly underestimated. The Congressional Budget Office (CBO) placed the cost of the law’s energy provisions at $370 billion. This estimate was unrealistically low, especially considering that many of those provisions are uncapped, so potential costs are essentially unlimited. This includes two of the law’s costliest subsidies, the Production Tax Credit and Investment Tax Credit, which pay clean energy producers for producing power and investing in new facilities, respectively.

Given the scope of the law and the costly, uncapped provisions, the CBO estimate was woefully low. New analysis from Travis Fisher and Joshua Loucks at the Cato Institute reveals the true extent of the IRA’s costs.

They place the 10-year costs of the IRA between $936 billion and $1.97 trillion. A 2023 estimate from Goldman Sachs for the 10-year costs places them within the Cato report’s window at $1.2 trillion. The report also projects that the costs by 2050 will be between $2.04 trillion and $4.67 trillion. This is an astronomical amount of money—far higher than the initial estimates for the IRA’s costs.

If this weren’t bad enough, the Investment and Production Tax Credits both cause significant market distortions in the power market. Because the qualifying energy sources are receiving so much taxpayer money, it’s hard for other sources to compete economically. The power grid relies on dispatchable sources like gas, coal, and nuclear to be able to respond to demand as it occurs. Nuclear plants receive subsidies under the IRA but would be better served by an undistorted market. Natural gas and coal plants are made uneconomical by these and other distortions.

As Fisher and Loucks point out in their report, making reliable power uneconomical will not necessarily force those facilities to close. They explain, “If the growth in nationwide electricity consumption continues, many of the existing greenhouse gas-emitting power plants will be needed for reliability—and this is true independent of their profitability.” Further intervention will be necessary because those plants keep the lights on. One market distortion leads to another, and another after that. If the initial distortion isn’t removed, the problem only snowballs.

The IRA is far more costly than advertised when it became law, and the market distortions that it creates are just as harmful as the spending. 

Congress should make repealing the energy-related subsidies an important focus."

Saturday, April 12, 2025

On Unemployment Benefit Fraud, Keep Going, DOGE

By Matt Weidinger of AEI.

"Last night the Department of Government Efficiency (DOGE) posted on X the following:


The figures clearly reflect improper payments, which the nonpartisan Government Accountability Office defines as “payments that should not have been made.” They also no doubt include fraud, which GAO defines as requiring “willful misrepresentation,” such as when criminals use the identities of the young and old and everyone in between to steal benefits.

But the $382 million DOGE uncovered sadly reflects only the tip of the iceberg when it comes to improper unemployment payments and fraud during the pandemic. As I noted recently in a National Review op-ed:

The basic facts of pandemic unemployment fraud are staggering and widely accepted. According to the nonpartisan Government Accountability Office, “The amount of fraud in unemployment insurance (UI) programs during the COVID-19 pandemic was likely between $100 billion and $135 billion.” The Department of Labor (DOL) inspector general testified that the estimated “low end” of improper payments (which includes but goes beyond fraud) is $191 billion, while private experts see a high end of $400 billion. The Joe Biden administration admitted that one of the most widely abused pandemic programs had an astonishing 36 percent improper payment rate.

That means what DOGE identified reflects less than half of one percent of what government experts and just one-tenth of one percent of what private experts have projected in fraud involving state and federal unemployment benefits during the pandemic.

For taxpayers, who might rightly ask whether we can get this money back, the latest news is not good. A Department of Labor Office of the Inspector General (OIG) report released last week spotlights improper payments involving widely-abused federal unemployment benefits (which states administered along with state-funded checks). The report finds that states have identified $36.9 billion in overpayments involving federal benefits—only one-third of the $118.1 billion in total overpayments it projects. “This indicates that approximately $81.2 billion of potential overpayments were not established and, thus, were not pursued for collection,” the report finds.

Naturally, what is not identified as an improper payment will not get recovered. The report doesn’t mention the far larger gulf between the $36.9 billion in identified federal overpayments and the broader $400 billion in fraud projected by private experts. And of that $36.9 billion in established overpayments, the report notes that states “waived more overpayments ($3.8 billion) than they recovered ($2.5 billion).”

Whatever the actual taxpayer losses may be, the report offers a depressing litany of reasons why so many overpayments occurred and so few dollars have been recovered, including:

  • Federal unemployment benefits didn’t require confirmation of identity and prior employment: “The (Pandemic Unemployment Assistance) program was particularly vulnerable to fraud because the program initially allowed claimants to self-certify their eligibility for benefits without requiring verification of identity or evidence of employment or self-employment.”
  • Antiquated information systems were a barrier: “One reason (state workforce agencies) did not use the mandatory recovery methods was that they had not made the necessary system modifications to allow them to perform recovery activities.”
  • State and federal laws stood in the way of overpayment recovery: “Existing federal and state laws and regulations limit: (1) what types of overpayments can be recovered, (2) who can recover the overpayments, (3) when to collect the overpayments, and (4) how long overpayments can be recovered.”

This all reflects that, while DOGE’s latest findings are shocking, they simply provide more detail on what we already knew, which is far worse. That is, that during the pandemic hundreds of billions of dollars in unemployment benefits were wrongly paid in the name of prisoners, deceased individuals, people claiming benefits in multiple states, and many others. Domestic and international criminal gangs were behind much of the fraud. Rappers even crooned about how easy it was to rip off the system. And most of that is gone for good.

So keep going, DOGE. And in addition to providing more details on what was lost, work with Congress to require broader data matching and other process improvements to better ensure that in the future rightful claimants are paid in a timely fashion—and criminals seeking to defraud the system are not."