Archives for government



“If Mayors Ruled the World”: A New Freakonomics Radio Podcast

Our latest Freakonomics Radio episode is called “’If Mayors Ruled the World.’” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

The episode expands on an idea from political theorist Benjamin Barber, whose latest book is called If Mayors Ruled the World: Dysfunctional Nations, Rising Cities. Barber argues that cities are paragons of good governance – compared at least to nation-states – and that is largely due to their mayors. Mayors, Barber argues, are can-do people who inevitably cut through the inertia and partisanship that can plague state and federal governments. To that end, Barber would like to see a global “Parliament of Mayors,” to help solve the kind of big, borderless problems that national leaders aren’t so good at solving. Read More »



Air Force General Gone Wild

Our podcast “Government Employees Gone Wild” was about The Encyclopedia of Ethical Failure, a guide published by the U.S. Department of Defense that details the true stories of big screw-ups by government employees. We are guessing that this story of Air Force general Michael Carey‘s trip to Moscow will make it into next year’s edition. From The Washington Post:

The Air Force has just released its official report on its investigation into Maj. Gen. Michael Carey’s July trip to Moscow, which got him fired in October. Carey oversaw three wings of nuclear-armed intercontinental ballistic missiles, with 450 ICBMs in all. At the time, the dismissal was reportedly over personal misconduct during the official trip. But “misconduct,” it turns out, does not even come close.

Read More »



A 12-Step Program for Fuel Subsidy-aholics

Back when blog posts were composed with reed styluses on clay tablets, I put up a couple of posts (here and here) on fuel subsidies in the developing world. These are generally 1) fiscally ruinous; 2) terrible for the environment and traffic congestion;  3) highly regressive with regard to wealth distribution; and 4) market-distorting by artificially promoting fuel-guzzling industries. So I made the case that this is a pretty foolish public policy, in fact one of the worst I can think of. It’s up there with tobacco subsidies, the Concorde, pretty much everything the North Korean government has ever done, and our government’s failure in spending a paltry $615,000 taxpayer dollars for UC Santa Cruz students to digitize priceless Grateful Dead photographs, t-shirts and concert tickets.

Given the problems with fuel subsidies, I promised a third post on what to do to eliminate them. But since I have a day job, and being a professor is much more difficult than it looked when I was undergrad, I’ve procrastinated on putting this last post up. However, engineering student Kishore from India wrote asking where part three is, and customer satisfaction is a goal here at Freakonomics. Besides, no doubt governments around the world have been waiting impatiently for my post before they start dismantling their fuel subsidies, so here it is.

Given the damning case against fuel subsidies, and a rising swell of opinion that they are counterproductive on many levels, why don’t these policies go away? The IMF (see this) and I offer several reasons: Read More »



What the President Does — and, Importantly, Doesn’t — Do

Between the N.S.A./Merkel mess and the ObamaCare mess, it seems a good time to ask a question we’ve asked in the past: just how much does the President of the United States really matter? Our original podcast on the topic came out in 2010; we overhauled the episode in 2012, adding interviews with Donald Rumsfeld and Austan Goolsbee.

As Jon Stewart puts it so well in the video below, if the President is out of the loop on Merkel eavesdropping and his namesake healthcare law, just what loops is he in? I do not mean to cast aspersions on President Obama himself (although you are free to cast away). I mean to highlight the possibility that we assign way too much weight to the role of the President generally.

What are the odds that you agree with my argument? Who knows. What are the odds that, even if you do agree, you will disagree once it’s time to elect the next President, and we get caught up once again in our Great Man Theory of Voting?  Read More »



The Folly of Eminent Domain Takings of Failing Mortgage Loans

University of Arizona economist Price Fishback, who has been on this blog before, is one of the leading scholars of the economics of the New Deal. He has a great new set of insights to share on the U.S. mortgage mess. He’s also the co-author of the forthcoming book Well Worth Saving: How the New Deal Safeguarded Home Ownership, with Jonathan Rose and Kenneth Snowden.

 

The Folly of Eminent Domain Takings of Failing Mortgage Loans
By Price Fishback

Several cities around the country are considering using eminent domain to take control of troubled mortgages in their cities.  An Associated Press example of how the proposal will work calls for the city to use eminent domain to force the lender to accept $150,000 for a $300,000 mortgage on a home that has a current market value of $200,000.  The city would then refinance the loan while cutting the principal owed by the borrower to $190,000.    

Eminent domain requires a public purpose for the taking of an asset.   The public purpose claimed here is that property values and property tax revenues can be boosted by preventing a mass of foreclosure sales.  Real estate studies do show that increasing numbers of foreclosure sales are associated with lower housing values in nearby neighborhoods.  However, the spillover benefits of preventing foreclosures, tend to be focused on houses in nearby neighborhoods.  Read More »



Dismantling the Social Safety Net

One of the major complaints of right-wing politicians against the Affordable Care Act (Obamacare) is its imposed mandates that individuals obtain health insurance and that larger businesses offer health insurance to employees.  The professed opposition is to the mandates, per se.  It ignores the mandates that both employers and workers pay taxes for Social Security coverage—old-age, disability, Medicare, and unemployment compensation.  Mandates are not new—nor is “government interference” in private choices about private insurance.

Opposition to the ACA mandates is really just a stalking horse for the eventual dismantling of the American social safety net. If the new mandates were to be dropped (unlikely, thank goodness), I would expect that their opponents would quickly move on to removing mandates for other programs that have been in effect for 70+ years.



Rent at Public Markets

At the Queen Victoria Market, an immense city-run collection of stalls and shops in Melbourne, Australia, a fishmonger at a prime corner is paying $5,500 per month to the City to operate there.  Since other fishmongers pay less, much of this payment is economic rent — payment for the visibility/access at this corner. But is the City extracting all the rent, or is it giving the fishmonger a good deal? 

This fishmonger has been in business at this location for a very long time.  That fact suggests that at most the City is not overcharging him, and perhaps it isn’t even extracting all the rent.  Whenever many public lessees in competitive businesses stay in business a long time, the public agency is probably granting them excess profits — at the public’s expense.



A Model of Government Efficiency (Not a Typo)

Ray Fisman and Tim Sullivan use the example of New York City’s surprisingly efficient passport office to explore an interesting question: “Why do some government offices perform well and others poorly, even when they’re providing the same services and working with comparable resources?” Fisman and Sullivan think it’s all about the management:

There’s an emerging body of research that chalks up these productivity gaps to the all-too-human ways that different companies (and divisions within a single organization) are managed. The fact that management matters—a lot—shouldn’t come as a shock to anyone who has ever worked under a good manager and also a bad one: Good managers coach, listen, support, and make their employees feel like they’re making progress. Bad ones don’t—often in uniquely horrible ways. And if this is true at for-profit companies, why wouldn’t it be true for branches of the government?

At the Hudson Street New York Passport Office, the management is Michael Hoffman: Read More »