One City Might Have Just Cracked the Housing Crisis

By Binyamin Appelbaum of The New York Times. Excerpts:

"The Canadian government has returned 10 acres in the middle of Vancouver to the Squamish, the First Nation whose ancestors lived there. On that land, the Squamish are building the densest residential neighborhood in the country."

"Cities have largely lost the power to say yes to construction. To prevent officials from acting against the public interest, we have drained them of the power to act in the public interest. Every decision can be appealed, every complaint must be heard, every objection weighed. We are so committed to fairness that we have lost sight of the unfairness of doing nothing."

"Freed from Vancouver’s rules, the Squamish are providing the city’s residents with a chunk of the housing they so desperately need."

"Vancouver, like most cities, prioritized the interests of homeowners at the expense of everyone else"

"It works hard to prevent the replacement of houses with apartment buildings. Sometimes it even replaces apartment buildings with houses. There is an eight-unit apartment building a few blocks from Senakw on the verge of falling down. Under the city’s land-use laws, however, it cannot be replaced by a new eight-unit apartment building. A developer has proposed building three mansions instead." 

"The current generation of Squamish, raised on stories of the old Senakw village, now had the chance to build anew. They could have built single-family homes. They could have built office towers or a shopping mall. They ultimately decided to build a better version of Vancouver."

"The result was a project with more than 6,000 housing units in towers as high as 58 stories"

"Senakw “is literally what the market wants,” said Thomas Davidoff, a professor of real estate finance at the University of British Columbia who supports the project."

"The nation’s leaders frankly acknowledge that money was their most important motivation. The project was a chance for the nation to participate in Vancouver’s pre-eminent industry: real estate development. That is exactly how the economy is supposed to work. To paraphrase Adam Smith, it is not from the benevolence of real estate developers that we expect our housing, but from their regard for their own self-interest. The Squamish are going to make a lot of money, and Vancouver is going to get a lot of new housing."

"Vancouver has moved to reduce its parking requirements and to allow larger buildings in some areas."

"“Restrictive zoning has been pushing people farther and farther away from the communities that they love,” said Christine Boyle, a former Vancouver city councilor who is now housing minister for British Columbia." 

The Railway Safety Act would shift freight from safer rails to deadlier roads

By Steve Swedberg of CEI.

"More than 36,000 Americans died on US roads in 2025. Fewer than 1,000 died on the rail system. Yet while highway fatalities rarely attract sustained attention, a single freight-train derailment can dominate national headlines for weeks.

The 2023 East Palestine derailment has remained in the news for years and has helped prompt Congress to make another attempt to pass the Railway Safety Act (RSA). As previously illustrated, the RSA’s major provisions have not been shown to meaningfully improve safety outcomes. However, beyond the merits of individual mandates lies a broader problem.

Washington repeatedly treats transportation modes as isolated silos rather than parts of a unified transportation network. The result is a fixation on safety within one mode while ignoring how freight, costs, and risk shift across the system as a whole. The RSA fits squarely into that pattern. In reality, freight is allocated across competing systems based on relative cost, reliability, and regulatory friction.

As I have previously argued in the context of the recent TSA security delays, constraints on one mode of transportation do not reduce overall passenger demand. They shift some travelers onto highways, where risks are significantly higher.

A similar substitution effect exists in freight transportation, although it is not uniform across all categories of freight. Bulk commodities, for example, are often rail-captive because trucking them is typically cost-prohibitive.

When rail does compete, it does not compete against an idealized version of itself under perfect safety conditions. It primarily competes against trucks. And trucking is often the default alternative when rail becomes more expensive or operationally constrained.

For the sake of argument, let us assume that this substitution effect applies only to intermodal. Intermodal accounts for a quarter of rail ton-miles, which would be 375 billion ton-miles for intermodal in 2025. The next question is how shippers might react to these regulatory burdens.

For a conservative illustrative estimate, I apply a cross-price elasticity of 0.5 drawn from the Congressional Budget Office (CBO) freight demand modeling to the intermodal share of rail traffic. The CBO example typically reflects policies that increase trucking costs relative to rail, inducing diversion toward rail.

Here, I assume symmetry in cross-price elasticities and apply the inverse relationship. While actual elasticities vary by route, commodity, distance, service quality, and trucking capacity, this assumption implies that a 10 percent increase in rail shipping costs would divert roughly 5 percent of price-sensitive freight toward trucking.

Other rail regulations illustrate how sweeping safety mandates can impose multi-billion-dollar shocks. Positive Train Control (PTC) ultimately exceeded $10 billion. The RSA’s prescriptive wayside bearing detectors alone are projected to cost up to $2.2 billion.

Unlike those one-time capital expenditures, however, the RSA’s operational mandates, such as the prescriptive inspection protocols, would impose recurring compliance and labor costs, thereby creating sustained upward pressure on shipping rates. Taken together, these examples suggest a low- to high-single-digit increase in rail shipping rates over time, depending on the degree of cost pass-through.

Applying a cross-price elasticity of 0.5 consistent with CBO freight demand modeling to the intermodal baseline yields four illustrative diversion scenarios under 5, 10, 20, and 30 percent cost increases, plus a long-run compounded case, ranging from 2.5 to 15 percent diversion rates from rail to highways (9.38 to 56.25 billion ton-miles).

To evaluate the net safety impact of this modal shift, federal transportation data can be normalized by ton-mile exposure. Because the relevant question involves systemwide safety externalities, the numerator includes all fatalities in crashes involving large trucks in order to capture risk to all road users from increased truck exposure. Dividing 5,340 large-truck-involved fatalities by 2.4 trillion highway ton-miles yields a commercial motor carrier fatality rate of 2.23 deaths per billion ton-miles.

Ton-mile normalization provides a useful first-order approximation of exposure, though actual risk varies with vehicle-miles traveled, road class, congestion, payload, and operating conditions. These factors are held constant for purposes of this illustrative comparison.

By contrast, rail had about 1.5 trillion annual ton-miles in 2024. Excluding trespassers, rail recorded 111 rail deaths that year. This adjustment with trespassers ensures consistency with the trucking measure, which captures systemwide crash externalities from freight activity instead of unrelated fatalities outside the transportation function.

Trespasser deaths are not typically affected by marginal changes in freight volumes, which makes operational rail fatalities the more comparable measure for assessing risk from modal shifts.

On this basis, rail exhibits a fatality rate of approximately 0.07 deaths per billion ton-miles. Freight trucking is thus roughly 32 times riskier than freight rail on this ton-mile measure, a result that is directionally consistent with federal data showing that freight trucks are responsible for 84.4 percent of freight fatalities despite moving 44.9 percent freight ton-miles.

This implies a net risk premium of 2.16 additional deaths per billion ton-miles. Under the 2.5 percent diversion scenario, this translates into roughly 20 additional fatalities per year, rising to more than 120 under the 15 percent scenario. These estimates likely understate the effect because they assume no diversion of manifest or other carload freight.

Regardless of the specific baseline assumptions one chooses to employ (see Appendix below for more detail), the structural conclusion remains as clear as it does ironic: policies that reduce rail competitiveness and shift freight onto highways impose transportation risks of their own.

Freight diverted from rail does not disappear. A significant amount ends up on America’s highways. More truck traffic and greater exposure to trucking risk necessarily imply more fatalities relative to rail. Paradoxically, a bill intended to improve rail safety will likely leave the transportation system as a whole more dangerous."

 

Think $6 Gas Is Bad? It’s About to Get Even Worse in California

Golden State depends more on crude-oil shipments from Middle East than any other U.S. state

By Collin Eaton of The WSJ. Excerpts:

"U.S. drillers have fled the state and dozens of refineries have closed since the mid-1980s, forcing California to import 75% of the oil it consumes. Almost one-third of that comes from the Middle East"

"The energy crunch in California is worsening by the day. Gasoline prices averaged $6.16 a gallon Friday, the highest in the U.S. and about $1.61 above the national average. Diesel cost $7.48 a gallon, about $1.82 over the U.S. average."

"two of the state’s major refineries closed in the past six months, cutting off almost one-fifth of its fuel-making capacity."

"In mid-March, the Trump administration issued a 60-day waiver of the Jones Act, a rule put in place by then-President Woodrow Wilson in 1920 that prohibits foreign vessels from carrying goods between American ports. The waiver allows companies to ship oil and fuel to California on bigger tankers"

"The Trump administration also used the Defense Production Act, a Cold War-era law allowing presidents to speed up the flow of goods in emergencies, to allow oil producer Sable Offshore to restart an offshore pipeline. California regulators had kept the pipeline closed following a 2015 oil spill that fouled the coastline. It is now pumping 50,000 barrels a day of crude into the state." 

America’s IPO Mini-Boom

Too bad SpaceX and others didn’t go public sooner, but they are a tribute to the U.S. capitalist system

WSJ editorial. Excerpts:

"Companies are staying private longer because of the 2002 Sarbanes-Oxley Act’s burdensome regulations, shareholder litigation and abundant financing available in private markets. The number of public companies has shrunk by half in three decades.

This means ordinary Americans who invest in the stock market, either directly or through retirement accounts, are sharing less in America’s wealth creation."

"One reason the U.S. boasts the world’s most valuable companies and promising startups is because the government doesn’t seek to punish success—or handcuff entrepreneurs with regulation as the Europeans do. China boasts enormous human capital, but Beijing’s financial markets are stunted by the desire for political control." 

HUD Says Realtors Can Now Speak the Truth (about crime rates and school quality)

By Alex Tabarrok. 

"HUD: The U.S. Department of Housing and Urban Development (HUD) sent a “Dear Colleague” letter to real estate professionals clarifying they are not violating the Fair Housing Act when they share information with prospective homebuyers about neighborhood crime rates and school quality data.

“Buying a home is one on the most significant decisions a family will ever make,” said Secretary Scott Turner. “Americans should not be left in the dark about vital facts like neighborhood safety or school quality. HUD is making clear that real estate professionals can openly and lawfully provide this information in an equal and consistent manner to American families.”

The background is that The Fair Housing Act of 1968 prohibits discrimination in housing based on race, color, religion, sex, national origin (and via later amendments) familial status, and disability. Discrimination included “steering” buyers toward or away from neighborhoods based on protected characteristics. The Biden administration ramped this up with a directive and Executive Order that essentially said the Fair Housing Act must be interpreted not just to prohibit discrimination but to redress and undo past discrimination:

This is not only a mandate to refrain from discrimination but a mandate to take actions that undo historic patterns of segregation and other types of discrimination and that afford access to long-denied opportunities.

…the [HUD] Secretary shall take any necessary steps,…to implement the Fair Housing Act’s requirements that HUD administer its programs in a manner that affirmatively furthers fair housing and HUD’s overall duty to administer the Act (42 U.S.C. 3608(a)) including by preventing practices with an unjustified discriminatory effect.

The “discriminatory effect” language reinforced that so-called disparate impact, not just intentional discrimination counted as discriminatory—and it contributed to a legal and reputational environment in which platforms and agents had strong incentives to avoid anything that could be characterized as steering. As a result, by the end of the year, Realtor.com had removed its crime map from all search results, as did Trulia, Redfin announced it would not add crime data to its platform and since Zillow already didn’t include such data, by early 2022 all the major portals had dropped crime information. Similarly, the National Association of Realtors published material instructing agents not to directly answer client questions about neighborhood safety. One article in “The Safety Series” was titled “‘Is This a Safe Neighborhood?’ Don’t Answer That” and by “Safety Series” they meant safety for the realtor not the client.

So without explicitly making such information illegal, the government created a legal and reputational climate that chilled its provision. Portals removed crime maps and realtors became reluctant to answer ordinary buyer questions about neighborhood safety and school quality. That is a degradation of service, not a civil-rights victory. The pretext was that crime information might not be accurate but the real fear was that it would accurately suggest neighborhoods with high percentages of black residents had more crime. Withholding information about crime and schools, however, does not change the facts; it just shifts the informational advantage toward buyers who are wealthy, well-connected, or sophisticated enough to find the data themselves. Moreover, it should go without saying that black homebuyers also want information about neighborhood crime rates–don’t these buyers count? Suppressing truthful information is rarely a good way to improve outcomes. As with Ban the Box, blocking direct access to relevant information encourages worse proxy-based decision-making.

Trump’s HUD is correct: fair housing law should prohibit discrimination, not prevent realtors from telling the truth."

Per-Task Minimum Pay for Gig Workers?

From Jeffrey Miron. 

"In 2024, Seattle tried to raise wages for app-based workers by requiring that they receive a per-task minimum pay.

By comparing earnings for Seattle workers before and after the law went into effect, a recent study finds that while the policy raised per-task wages,

the increases in base pay per task were partially offset by a substantial reduction in average tips, a major component of delivery pay.

Moreover,

drivers experienced more unpaid idle time and longer distances driven between tasks … [And,] the policy led to a reduction in the number of tasks completed by highly attached incumbent drivers, … completely offsetting increased pay per task and leading to zero effect on monthly earnings.

Yet again, over-zealous intervention backfires."

Philadelphia’s Avenue of the Arts 2.0 Is a Risky Revival

A $150 million campaign to restore the run-down street that is host to many of the city’s performing-arts institutions is noble—but could well backfire

By Michael J. Lewis of The WSJ. Excerpts:

"The sad truth is that Philadelphia’s commercial streets have been ailing for some years. Online shopping has ravaged retail in Center City (true Philadelphians do not say “downtown”), and it is not as if there is a surfeit of boutiques searching for fashionable new quarters. One of Jane Jacobs’s other insights is that a city’s most vibrant neighborhoods have a mix of new and old buildings, because it is the low-rent older ones that let the entrepreneur take risks and try something new." 

"A city is an infinitely complex organism, where commerce, urban amenities, street traffic and pedestrian life interact in mysterious ways. Decisions made with the noblest of ideals can have unintended consequences. Philadelphia has been here before. In 1975, on the eve of another national anniversary, the city created the Transitway, a sweeping transformation of Chestnut Street—then the city’s most successful commercial corridor. It would be closed to automobile traffic during working hours, with the exception of buses, turning it into a pedestrian mall by day. After an initial flourish of activity, commercial life declined. Ultimately, it succeeded only in shifting business a block south. A few decades later, the Transitway was abandoned, traffic resumed, and the concrete planters with their shriveled pear trees and ginkgoes were quietly removed." 

The problems with government mandated healthcare technology

See ‘A Giant Leap’ Review: Disruption for Doctors: Digital innovation in healthcare has proceeded in fits and starts. Will generative artificial intelligence solve more problems than it creates? by David A. Shaywitz. He is a lecturer at Harvard Medical School.

He reviewed the book A Giant Leap: How AI Is Transforming Healthcare and What That Means for Our Future by Robert Wachter. Excerpts:

"Health-policy wonks in the Obama administration tucked $30 billion into the 2009 stimulus package to accelerate EHR adoption, a move that had unanticipated consequences. The problem, Dr. Wachter points out, was that EHRs provide a mechanism for “hospital administrators, regulators, and payors” to “shape what the doctor did in real time,” generating ever more tasks requiring ever more documentation.

The introduction of patient-communication portals added another burden, creating a torrent of messages with “no workforce, workflow, or business model to sustain it,” and forcing doctors to work increasingly late hours. Healthcare systems responded by hiring more administrative staff to manage the paperwork, and more nurse practitioners to take on clinical tasks."

"He offers a useful outline of digital transformation: digitization, integration, analysis and finally acting on insights to change behavior. He argues that healthcare remains maddeningly stuck at Step 2, as practitioners struggle to connect siloed information. Such work can be “brutally difficult,” he writes, because “trying to get data from health systems or insurers often feels like dragging an anchor through the sand.”" 

How a $30 Billion Welfare Program Became a ‘Slush Fund’ for States

Republicans and Democrats alike decry the lack of oversight for America’s famous antipoverty experiment. ‘Fraud by design.’

By Cameron McWhirter, Dan Frosch and Scott Calvert of The WSJ. Excerpts:

"Temporary Assistance for Needy Families, or TANF, has long been plagued by poor financial oversight and questionable spending in states led by both Republicans and Democrats.

"Auditors in numerous states . . . . have uncovered problems with TANF"

"TANF funds flow annually through block grants to states, which have wide latitude to spend them and minimal reporting requirements—a structure critics say hampers oversight."

"States now award most of the money to nonprofits, companies and their own state agencies. An average of about 849,000 families got direct cash aid each month in fiscal 2025, federal data shows, down from about 1.9 million in fiscal 2010."

"states inaccurately reporting large expenditures and disbursing millions of dollars to contractors without tracking how the cash was spent."

"states  . . . have directed hundreds of millions of dollars to programs with tenuous—or no—connections to TANF’s goals."

"college scholarships that benefited middle- or upper-income families, antiabortion centers, a volleyball stadium in Mississippi, and an Ohio job-training nonprofit where leaders and employees were later sentenced to prison after prosecutors said they used TANF money for vacations, real estate and salaries for people who didn’t work there."

"the GAO identified 37 states where recent audits found 162 deficiencies in financial oversight, “56 of which were severe.”"

"“opaque accounting practices”"

"States often use TANF money as a “slush fund” to plug budget shortfalls and finance initiatives that don’t help poor people"

"The most prominent scandal involving TANF funds, at least $77 million, took place several years ago in Mississippi."

"officials have often failed to track where the money goes or whether it is spent properly."

"Louisiana . . . state employees didn’t verify or document the hours worked by some TANF enrollees"

"hadn’t accurately documented TANF distributions to contractors."

"In Connecticut, auditors said the state in 2024 didn’t sufficiently review the financial reports of 131 subcontractors who received $53.6 million in TANF funds"

"states don’t have to spend all their TANF money in a single year, and many have built up large surpluses. In times of fiscal pressure, such as the 2007-09 recession, many states used TANF funds for purposes that had little to do with the program’s original goals"

"Several states have also used TANF money for programs available to people well above the poverty threshold.

Between 2011 and 2024, Michigan faced criticism for pumping more than $750 million in TANF funds into two college scholarship programs that aided many students from middle-income and even affluent families" 

How to Shrink Credit for the Poor

Like Bernie Sanders and AOC, Trump wants to fix prices on credit cards.

WSJ editorial. Excerpts:

"Credit-card rates are set by markets. They are based largely on the Federal Reserve’s benchmark interest rate and borrower risk. Restricting rates will limit access to credit for lower-income Americans. That’s what price controls do: They limit supply."

"The average annual percentage rate (APR) rose to 24.9% from 19.3% between 2021 and 2024 as the Fed raised interest rates to control inflation. The average APR has since ticked down to about 23.8% after the Fed cut rates last year."

"Rates on credit cards are higher than on auto and home loans because they aren’t secured by property."

"Those with lower credit scores are charged higher rates to compensate for their greater risk of default. Rising delinquencies have contributed to higher rates. About 12.4% of credit-card balances were severely delinquent in last year’s third quarter, about the same as in the 2008-09 recession."

"Capping rates at 10% would inevitably force issuers to slash rewards and curtail credit. The latter is what happened after Democrats in 2009 restricted the kind of fees that credit cards could charge and when they could raise rates. A paper by the Philadelphia Fed concluded the 2009 law “likely had an adverse effect on non-prime borrowers.”"

"Studies have also found that lenders restricted credit in states like Arkansas and Illinois after they capped interest rates."

[people then] "may turn to payday loans that charge even higher rates." 

Regulation and entrepreneurship in the U.S. child care market

By Anna Claire Flowers.

"Abstract

This paper examines how regulations affect entrepreneurial activity in the U.S. child care industry. By analyzing research on child care affordability, availability, and quality, I contrast the regulatory process against the entrepreneurial market process to identify key sources of market dysfunction. State-level regulations for formal child care aim to resolve information asymmetries and establish standards for measuring quality. In practice, they produce at least three significant unintended consequences that hinder entrepreneurship and innovation in the child care market: regulations create barriers to entry, disrupt essential feedback loops between consumers and providers, and generate profit opportunities for entrepreneurship outside the regulated sector. These effects directly undermine the stated policy objectives for licensed child care by inhibiting transparency, availability, and affordability for families."

Did California's Carbon Cap and Trade Program Increase Toxic Waste?

By Jeffrey Miron.

"Apparently, yes:

In California, recent evidence shows that facilities subject to cap-and-trade have reduced their greenhouse gas emissions by 3–9 percent. Our findings, however, reveal that toxic emissions from facilities subject to cap-and-trade policies were about 26–42 percent higher on average in the five years after the introduction of the program than they would have been otherwise.

Why? Treating toxic waste is a substantial source of greenhouse gas emissions; hence, increasing the cost of greenhouse gas emissions also makes treating toxic waste more expensive. As a result, cap-and-trade has inadvertently prompted firms to strategically cut back on their efforts to treat toxic waste, causing them to release more of it.

These results do not, by themselves, mean the cap and trade program was a mistake; that depends on the magnitude of the harms from carbon emissions versus those from toxic waste.

The example nevertheless illustrates that reducing environmental harms can be difficult; reducing one kind can increase another, since most productive activities generate a range of externalities."

Report Highlights the Environmental Costs of Wind and Solar

Wind and solar power carry hidden costs, from heavy mineral use to short lifespans and vast land demands

By Paige Lambermont of CEI. 

"A Center of the American Experiment, authored by Sarah Montalbano, explores the environmental costs of wind, solar, and battery storage technologies. These “green” technologies are often hailed for their ability to reduce carbon emissions, but their environmental costs are often not even considered. 

The paper highlights something that is one of my favorite points to bring up in any energy discussion. All energy sources involve tradeoffs. Often the tradeoffs of wind and solar are ignored, while the tradeoffs involved with other electricity sources such as nuclear and natural gas are highlighted constantly. 

Wind and solar involve plenty of tradeoffs. Despite being considered clean, they require significant amounts of rare minerals, many of which are primarily produced in countries that lack standards for worker safety and environmental impact. These minerals are also often controlled by authoritarian countries, and their usage fosters a reliance on the supply chains of adversarial nations, especially China.  

In addition to the materials concern, wind and solar facilities have much smaller operating lifespans than nuclear and natural gas power plants. As  points out, “The operating lifespan of wind turbines and solar panels is between 20 and 25 years at maximum, while natural gas plants may operate for 40 years, and nuclear plants operate between 40 and 80 years. Repowering often occurs well before expected lifespans, which further exacerbates the environmental impacts of wind and solar.” 

The time that a facility is usable is essential to understanding its lifetime impact, so it’s vital to understand how much shorter the average operating life of wind and solar facilities is. Because of this, the material inputs are spread over less useful life of a facility, and the same resources need to be used to build a replacement facility sooner.  Their components are also notably  or dispose of, an issue that is compounded by their short lifespans. 

Land use is another essential problem with wind and solar. The paper points out that wind and solar facilities use 10 times more land than natural gas and coal facilities. Nuclear facilities are even less land intensive than natural gas and coal, so the ratio for those facilities is even higher. More land use can lead to habitat loss for wildlife. Land use concerns often also create more tension with communities that facilities are sited in, so the wider footprint of wind and solar facilities can lead to more conflict than facilities that take up less space may experience.

Wind and solar have problems when it comes to energy production in general and their effect on the reliability of the grid. Their intermittent nature means that they aren’t always available at times of peak power demand, leaving reliability at risk. In addition to these well-known production problems, wind and solar have their own environmental and material concerns that often get overlooked." 

Free Buses Are a Recipe for Disaster

By Charles Lane of AEI. Excerpts:

"In April, Kansas City, Missouri, announced that it was reinstating fares—five years after becoming the first major city to eliminate them. Kansas City’s program had run out of the federal Covid-19 relief dollars it had relied on to cover foregone annual fare revenue, which had amounted to $9 million in 2019, the last year before zero fares. Other sources of revenue are not sufficient and, facing competing budgetary demands, local authorities plan to impose a $2.00 per ride fare."

[there] "was an increase of “loop riders”—passengers who, when offered a free ride, would occupy bus seats for hours, sometimes all day, as they refused to get off at the end of a given route. Many of these were homeless people, and they often clashed with ordinary commuters. Assaults on drivers fell after zero-fare began, but this was partly offset by new violence among passengers, and vandalism.

The city had to increase security, including bringing in new officers, at an eventual cost of $6 million per year. When the Kansas City area transit system surveyed its bus drivers in April 2024, 92 percent who had worked before zero-fares were instituted said that safety had deteriorated. Bus operator morale suffered, causing absenteeism and turnover.

Passengers complained—loudly."

"Kansas City’s system had an operating budget of about $114 million when it initiated zero fares, 8 percent of which came from fares. New York City’s buses, by contrast, derive about twice that percentage of their operating budget from fares"

"What, exactly, is progressive, or socially just, about shifting the entire burden of funding bus transit to taxpayers, including many who don’t use it, when many of those who do use the bus are willing and able to chip in? Like modest co-pays for doctor visits, bus fares (which are already subsidized) ensure that consumers of a public service have “skin in the game”—an incentive to use as much as needed, but no more."

"As it happens, the MTA has already run a one-year free-fare pilot program, under a bill Mamdani co-sponsored in the state legislature. Completed in August 2024, the plan created one free-fare bus route in each of the five boroughs. The results were decidedly underwhelming. Ridership grew significantly—no surprise there—but only 12 percent of the growth came from new riders. The rest were existing riders taking more trips—and picking them up caused bus speeds to fall by 4.3 percent. It cost the MTA $16.5 million in foregone fare revenue."

"the new riders enjoying the free fares were a bit more likely to be earning above $100,000 per year than the pre-pilot clientele: 11 percent vs. 9 percent."

"The Soviet Union used to charge a few kopecks to ride the bus or the subway in Moscow. Mamdani’s idea of socialism doesn’t have room for even that much individual responsibility—or realism."  

The weight of research opinion against minimum wage hikes continues to shift

By Tyler Cowen.

"This piece is by DuckKi Cho and is titled “Downward Wage Rigidity and Corporate Investment”:

Firms reduce investment when facing downward wage rigidity, the inability or unwillingness to adjust wages downward. To document this behavior, I exploit staggered state-level changes in minimum wage laws as an exogenous variation in downward wage rigidity. Following a 1-standard-deviation increase in the minimum wage, firms reduce their investment rate (the ratio of capital expenditure to capital stock) by 3.08 percentage points. The negative impact is more acute for firms with a higher fraction of minimum wage workers, stronger employment protections, or higher labor intensity. The investment reductions cannot be explained by labor adjustment under capital-labor complementarities. Rather, I identify the aggravation of debt overhang and increased operating leverage crowding out debt financing as two mechanisms by which downward wage rigidity impedes investment. The findings highlight the unintended consequences of minimum wage policies on corporate investment.

From the Journal of Law and Economics.  I fear that for the next thirty years people still will be claiming that Card and Krueger showed that minimum wage hikes do not damage employment.  After numerous recent revisions, many of them catalogued here, that is no longer such a plausible belief."

How Overregulation Burned Out Competition in the Fire Retardant Industry

Companies chose to exit the market rather than deal with the excessive regulations baked into the industry.

By Tosin Akintola of Reason. 

"Government regulations stifle competition across multiple sectors of the economy, protecting incumbents and making it hard for new companies to emerge. While this is well-documented in areas such as health care and baby formula, it is also present in a niche yet vital industry: fire retardant. 

"Fire retardant, the reddish liquid dropped from planes to slow spreading flames, has become an indispensable tool for saving lives and property from more frequent and intense wildfires," The New York Times reported on Wednesday. "But the entire supply of the product in the United States is controlled by a single company." That company is Perimeter Solutions.

Perimeter is the exclusive long-term fire retardant (LTFR) provider to the U.S. Forest Service—a position it has held since 2005—and is currently under a contract that grants it sole supply rights. For years, the federal government has sought to diversify its supply of LTFR. A 2022 memo from the Agriculture Department described this sole-source relationship as a "massive risk," and a 2023 Government Accountability Office (GAO) report also flagged agencies' reliance on a single approved manufacturer.

Since 2018, the Forest Service has taken steps to encourage potential competitors in the industry, to no avail. Competing in the fire retardant industry is difficult due to high start-up costs and complex regulations. 

To receive approval from regulators, companies must test their products to demonstrate compliance with various complex environmental laws. The applicant bears all costs for tests and retests. Regulators can require additional testing if products "trigger concern," potentially delaying or complicating the development of these products.

Products also undergo field evaluations that include firefighting operations under varying conditions for several months. Potential competitors, such as Fortress Fire Retardant Systems, faced over a year of lab and field testing to gain entry onto the Forest Service's Qualified Products List (QPL), which would enable them to sell their products not only to the U.S. government but also to other fire management organizations worldwide. 

After Fortress finally received federal approval in 2022, Perimeter ratcheted up pressure against its new rival. The company launched a website, which claimed magnesium chloride, the key ingredient in Fortress's retardant, should "only be used to clear ice off highways and not dropped from airplanes to protect you or your home from wildfire." 

Perimeter's then-chief executive Edward Goldberg also wrote a magazine feature, and the company formed the United Aerial Firefighting Association (UAFA) to lobby federal officials against Fortress by raising concerns about alleged safety issues with its product. Interestingly, a 2025 LAist.com investigation revealed Perimeter's fire retardant contains harmful heavy metals like "lead, arsenic, cadmium and chromium," which Perimeter failed to disclose in public safety documents.

Perimeter's efforts paid off, and in 2024, the Forest Service revoked Fortress' permit. However, in January, Fortress was awarded a $13 million deal by the Forest Service to supply testing materials. Perimeter then filed a protest against Fortress' deal, claiming that the agency failed to consider it as an alternative and that the sole-source contract awarded to Fortress created an unfair competitive advantage.

Though Fortress survived the initial public relations campaign against it, Compass Minerals, the company that owns Fortress, shuttered the fire-retardant arm of its company to "improve the profitability," as it could no longer afford the fight.

Its work consolidating the market has resulted in a significant boost to Perimeter's bottom line; the company's stock price increased by 6.83 percent in the first quarter of 2025. In January, as California's firefighting agency sought to protect Los Angeles from the wildfires ravaging the city, the LTFR used costs "20 to 30 percent more than it did four years ago, substantially outpacing inflation," according to The New York Times. 

The Times also found that the U.S. government spent double the amount on fire retardant between 2021 and 2024, resulting in over $250 million paid to Perimeter in the latter year. Already in 2025, the company has signed federal contracts with the Forest Service totalling $166 million. 

It's easy to frame Perimeter's success as a monopoly acting in an unfavorable way to crush competition in the market. 

Still, excessive licensing regulations and poor management of federal lands—which have made wildfires more damaging and expensive, boosting Perimeter's bottom line—have arguably played a larger role in entrenching Perimeter's place in the industry than sharp or unethical conduct."

When Towns Rebuild From Disaster, Some Get Priced Out (federal aid facilitates displacement and gentrification)

In Panama City, Fla., and Paradise, Calif., money poured in after natural disasters, squeezing some residents out. The dynamic is repeating across the U.S.

By Arian Campo-Flores, Cameron McWhirter and Paul Overberg of The WSJ.  Excerpts:

"Government aid and insurance payouts deliver an infusion of investment. Rebuilt homes become sturdier. Property values rise, infrastructure is upgraded and some neighborhoods get makeovers.

“A natural disaster can be a galvanization moment for a community,” said Allan Branch, the mayor of Panama City.

Yet the upheaval pushes others out. Poor residents have a tougher time navigating bureaucratic procedures for disaster aid and weathering job losses. Renters often get evicted from damaged properties and face spiraling rents as the supply of units shrinks. Low-income homeowners frequently struggle to pay for repairs that must comply with stricter building codes and to buy sufficient insurance coverage.

“Social inequalities are exacerbated after a disaster,” said Kathryn McConnell, a sociology professor at the University of British Columbia who has studied how destructive wildfires affect migration.

One study of the Paradise Camp Fire earlier this year found that the more than $1 billion of federal aid aimed at recovery “facilitated displacement and gentrification by enabling socially advantaged previous and new residents to return and rebuild.”"  

Minimum wage hikes hurt vulnerable workers

Latest economic research shows harm to Blacks, disabled

By Warren Anderson. He is an associate professor of economics at the University of Michigan-Dearborn. He wrote this for the Mackinac Center for Public Policy in Michigan.

"Michigan is raising its minimum wage gradually until it reaches $15 by 2027. What many people don’t know is how few workers earn the minimum wage. Nationally, roughly 55% of workers are paid hourly, and of those just 1.1% are paid at or below the federal minimum wage of $7.25 per hour. Michigan’s minimum wage is $13.73 per hour. Increasing the minimum wage will disproportionately affect different groups, according to recent economic research.

A new study analyzes the impact of minimum wage hikes on different racial groups in America. The authors look at the effect on African Americans and non-Hispanic whites from 2005 to 2019. They find that black workers were impacted more than white ones, with larger effects for men.

One reason for this could be that most workers earning the minimum wage are younger, and blacks in America are younger than whites on average. However, the researchers control for age. Even when this is done, higher minimum wages lead to more unemployment among blacks. In their conclusion, the authors quote Milton Friedman, who said that minimum wage laws are “the most anti-Negro law on our statute books.” This new paper is consistent with what Friedman predicted back in the 1960s.

Another recent paper studied what happens to the disabled when the minimum wage increases. The authors analyzed this group, who comprise roughly one-eighth of the labor force, during the 2010s. This study found the typical effect that large minimum wage increases impact younger workers overall more than adults. For the disabled, the authors found that small changes to the mandated wage had no effect. But large increases led to about a 3% lower employment rate among the disabled.

A paper published this year looks at college students from a Washington state university. Many students find summer work, and higher minimum wages could hamper their ability to find jobs. The authors gather individual data from the university and the state of Washington. Combining these sources allowed the authors to analyze the work history of students individually. Looking at the years from 2013 to 2019, they find that jumps in the minimum wage lowered employment for students, especially those with little work experience or those from out of town.

A 2024 paper looked at accident rates and the minimum wage. If firms have a fixed amount of money to spend on production, labor cost increases might lead to lower spending on safety. The authors studied state-level minimum wage increases greater than $1 from 2002 to 2011. They found that such wage hikes led to about 4.5% more workplace accidents, with a larger effect for more cash-constrained firms. Findings like these raise the question of whether workers are automatically better off when the government forces businesses to pay them more.

The number of people impacted by the proposed minimum wage hike in Michigan will most likely be minuscule. However, based on research from the past couple of years, we can make some predictions. Black workers, the disabled and college students with little work experience will probably see the largest effects. They will have a harder time finding jobs.

Thomas Sowell has said, “There are no solutions; there are only trade-offs.” In considering an increase to the minimum wage, it is important to look beyond the immediate impact of higher wages and to recognize the unintended consequences of forcing employers to pay more for hourly work."

No Exit, No Entry (when it is hard to fire workers fewer get hired)

By Alex Tabarrok.

"In our textbook, Modern Principles, Tyler and I contrast basic U.S. labor law, at-will employment—where employers may terminate workers for any reason not explicitly illegal (e.g., racial or sexual discrimination), without notice or severance—with Portugal’s “just cause” regime, which requires employers to prove a valid reason, give advance notice, pay severance, and endure extensive regulatory and court involvement before terminating any workers.

Portugal’s laws look pro-worker until you realize that making it more difficult to fire also makes it more difficult to get hired: As we write in MP:

Imagine how difficult it would be to get a date if every date required marriage? In the same way, it’s more difficult to find a job when every job requires a long-term commitment from the employer.

As a result, European unemployment rates—especially for youth and high-risk groups (minorities, immigrants, the less-educated)—tend to exceed those in the U.S. and dynamism is lower.

Like Portugal, India makes it very difficult to fire workers, especially for firms with more than 100 employees. As a result, Indian firms are too small to succeed. Rajagopalan and Shah write:

India’s business regulatory framework consists of an overwhelming 1,536 laws, 69,233 compliance requirements, and 6,632 filings at the Union and state levels cumulatively, which Manish Sabharwal has dubbed India’s “regulatory cholesterol.” This regulatory cholesterol incentivizes firms to limit their size or operate in the informal sector to avoid compliance costs, thereby bifurcating the labor market into a small formal workforce and a large group left vulnerable in the informal sector. India’s labor laws are among the most rigid, contributing to jobless growth and increasing informality.

High hiring/firing costs aren’t the only exit barriers. British/American bankruptcy law, for example, aims to reduce the transaction costs of bankruptcy–quickly and efficiently shifting ownership to creditors, for example–in order to maximize the “scrap value” of a firm. Bankruptcy law in other countries often aims to discourage liquidation. Until ~2017, India had no well-specified bankruptcy law. Even today, the bankruptcy law is honored more in the breach as politicians and judges interfere in large bankruptcy proceedings. Thus, it can take more than 4 years to close a firm in India, if all goes well, and much longer if there are intervening factors. As a result, India has a very high percentage of “dormant firms,” firms–often with employees–but zero output.

In No Country for Dying Firms: Evidence from India, Chatterjee, Krishna, Padmakumar, and Zhao use firm‐level data and a structural model to estimate various exit costs and their effects. Their findings: exit barriers reduce entry, investment, and aggregate productivity.

Three points stand out. First, a simple but often overlooked point. Exit costs trap resources in unproductive firms, depriving more efficient firms of the inputs they need to grow. Second, governments typically focus on entry—offering tax breaks, land, and subsidies to attract firms—because ribbon-cutting is politically rewarding. But the author’s models suggest it’s more effective to subsidize exit. Picking winners is hard; picking losers is easier. Of course,  direct subsidies for exit are unlikely and unwise but reforms like streamlined bankruptcy, faster courts, and lower firing costs achieve the same goal and the losers self-select.

Third, the authors argue that improving bankruptcy law—more broadly, reducing the cost of capital reallocation—should take time-priority over reducing firing costs. Capital reallocation raises employment by moving resources to more productive firms. Once that groundwork is laid, labor law reform is more likely to succeed and endure politically.

Thus, unusually, these economists offer not just policy prescriptions but politically savvy guidance on sequencing reform."

How a Lawsuit Against Realtors Went Sideways

By Craig Richardson. He is a Professor of Economics at Winston-Salem State University.

"On March 15th, 2024, the Chicago-based National Association of Realtors (NAR) came forward with a stunning announcement: in response to two 2019 class-action lawsuits, it finally agreed to a settlement sum of $626 million and promised dramatic changes in the real estate business. The lawsuit charged that the NAR had excessive market power that allowed them to create handsome commissions for their agents, resulting in higher housing prices for prospective home buyers. 

A year later, a few law firms earned millions of dollars, but the settlement provided scant benefits to prospective homeowners other than some important clarifications about the structure of agent commissions. Indeed, the lawsuit was all based on a mistake about the scope of NAR’s market power. That mistake led to a domino effect of further errors in how to fix the supposed problem. 

The major “fix” proposed by the lawsuit hinged on shutting down online information about buyers’ agent commissions. The idea was to put more power in the hands of home buyers to freely negotiate with their agent what the commission would be. But what sounded good in theory to some was actually a naive misunderstanding of how well the real estate market was working in practice.  

One lesson learned: a lawsuit bent on trying to suppress valuable market information is a fool’s errand with unintended consequences that can hurt more than they help. A second one: sometimes what looks like excessive market power is actually a result of buyers and sellers freely deciding on the price of a service which provides high value.

Some history and more details:  in the past, when a house sold, a traditional 6% fee came out of the selling price, which was typically split between the buyer’s and seller’s agent, each getting a 3% cut.  The theory of the lawsuit was that if the commission could be lowered, that would also lower home prices across the country.  

Here’s how the lawsuit promised to upend the home real estate market and lower home prices.  

First, it pushed for a ban on information about how commissions would be paid on the multiple listing services (MLS) so buyers wouldn’t be steered by their agents to listed homes with the highest commissions.  After the settlement, no information on commission splits is allowed on the listing service. 

Second, it added clarity that home sellers could freely pick their own commission structure instead of the traditional 3%-3% split. For example, a seller could pay his listing agent, say 3%, and the buyer’s agent 1%. Or maybe pay 3% to the listing agent and 0% to the buyer’s agent. The buyers could instead come up with their own agreed upon commission rate and negotiate terms with their agent directly.

The idea was to empower buyers and sellers by handing them the negotiation keys with endless possibilities to lower agent commissions. 

On the first count, the MLS information ban has been pretty much a joke in terms of stopping information about commission splits. It shows that when information is valuable in the marketplace, people will always find a workaround. 

Reportedly in some homes for sale, listing agents leave three cookies on the kitchen counter, a key fob with the number 3, or even the movie Three Amigos playing on the television to slyly indicate the commission of 3% paid to the buying agent. A recent story in The New York Times turned this into a story of real estate agents acting as supposed villains who are evading new policies. 

In fact, it is a rational response to an irrational policy solution of attempting to quash market information.  

Indeed, aside from a few reported stories like these, most agents aren’t engaging in such colorful behavior. Without MLS indicating commission splits online, it’s just a far more clunky system. A buyer’s agent who is intent on showing ten homes to a client has to make 10 phone calls or texts to find out the structure of the commission split.

Second, the plaintiff’s theory was that after buyers and sellers had the power to negotiate lower commissions, commissions would drop and so would home prices. Yet a year later, very little has changed except that now agents have an upfront conversation with their buyers about who will pay them. That’s the one benefit of the lawsuit. 

 “It has created a higher level of transparency between buyers and their agents, which I think is terrific,” said Harvey Blankfeld, a Las Vegas-based real estate agent who was quoted in a recent article on the subject. Home buyers now need to sign an upfront contract with their agent as to the structure of the commission and promise to pay if the seller doesn’t. “However, it has not impacted costs here in Vegas,” noted Blankfeld. 

The plaintiffs in the lawsuit seemed to forget that few buyers want to come up with the cash themselves to pay their agent when previously the seller paid for it.  Putting them on the hook creates more stress and pressure around a home purchase. 

As a result, sellers who thought they would save money by paying, say 3%, to their own agent and 0% to the buyer’s agent faced a lot of problems they didn’t anticipate. When buyers discover this arrangement, more than likely it’s time to move onto another listing that pays their agent. A smaller pool of buyers will translate into fewer offers and lower home prices. This explains the lack of change in the commission structure a year later. The traditional 3%-3% split seems to be an equilibrium towards which the market naturally gravitates. 

Indeed, the largest change from last year is that the plaintiff lawyers got massively rich. The plaintiff’s lawyers walked away with a third of the settlement- $208 million- and the estimated 50 million affected homeowners will pocket $8 on average, if they bother to apply for past damages. 

The NAR is not an all-powerful oligopoly, contrary to The New York Times reporting. Companies like Open Door and Redfin often pay commissions closer to 2% but they are not that popular, with less than 1% of the market. For sale by owner (FSBO)  is another option for every homeowner. Most pass because they will get a lower home price, and more hassle in selling their home. The FSBO market share hit an all-time low of 7% in 2023 according to NAR statistics. 

In other words, even though there are alternatives, most buyers and sellers aren’t seeing the value proposition. Any hungry new real estate company could enter the market paying lower commission splits, yet this is rare. More than 9 in 10  home buyers and sellers apparently prefer the traditional approach of having a highly personal interaction with an agent from a trusted real estate company.  

The reason: Buyers and sellers got a reminder that agents provide value that is both tangible and intangible, and often difficult for newcomers to foresee. They have connections to reputable service providers, checking on everything from plumbing to roofing, understand the fair market value of a home relative to other homes in the area, and provide intuition on the negotiating position of the buyer or the seller. 

In addition, there are intangibles that include an agent navigating a client’s idiosyncratic tastes that may differ from the spouse, local environment, style of the home, and much more.

By attempting to shut down important information about disclosing commissions on MLS, the unintended consequence of the NAR lawsuit could have been a decline in new homeowners,  unable to come up with cash payments for their agents. Luckily, the market innovated with information hacks that helped these prospective homeowners dodge a bullet. 

The nearly 80-year-old custom of sellers paying buyers’ agents about a 3% commission may have its faults, but the principal advantage of having commission-based norms is simplicity and open information that greases the wheels for complex and highly emotional transactions. As we have seen, people are never more clever when there is money to be made. 

A year after the judgement, in most cases we are right back where we started, with regard to the 5%-6% commission split paid by the seller.  Buyers and sellers transmitted signals to the market that this outcome is what they preferred in most cases, but flexibility still provides options like FSBO. We didn’t need an expensive lawsuit to tell us this. 

While greater transparency of the commission structure between buyers and sellers was a needed and welcome outcome, some simple modifications to the buyer’s agent agreement could have spared us the $600 million legal bill that primarily enriched the lawyers."