Petrol Defies the Dirges

It’s been said for a few years now that gasoline sales in the U.S. would retreat as better mileage standards applied to combustion-engine vehicles and hybrids and EVs steadily took their place anyway. This has been a frequent rationale for increasing the fuel excise taxes that federal, state and local governments apply on petrol: They need a higher rate to compensate for less gas sold per motorist in order to maintain the roads. Well, for probably multiple reasons, we’re buying more gas, not less, as this item from Eno Transportation Weekly notes, citing tax receipts for fiscal 2022. Although recent spikes in gasoline prices may counter this rise in a subsequent measure, it’s clear that the rhetorical dirges we hear for the gas engine are premature. If anything, the pandemic and its aftermath seem to have spurred more driving–and frequently driving at a high (even reckless) speed, which sucks up more petrol. Despite the intense unpopularity of higher pump prices, it’s probably going to take a steady stream of those hikes to alter this trend, at least until left-leaning jurisdictions actually try banning fossil-fuel vehicle sales. Higher taxes (instead of the reductions recently put in place by some fearful politicians) could contribute to bending the curve. And more road use could be priced, ideally based on congestion. Finally, more pervasive fining of flagrantly fast drivers would either deter their behavior or raise the cost to them, either way discouraging as many fill-ups. Otherwise, we’d better hope that today’s “filling stations” stay in business, or the lines at the pump are likely to get longer.

U.S. Gasoline Use Hit All-Time High in FY 2022

October 20, 2022 | Jeff Davis

Hamptons Hint: Bigger Is No Longer Better

Even in places that like to think they “live and let live,” it’s possible to get too much in other people’s faces. That’s basically where we are on the East End of Long Island, where the McMansion binge is leading to many new homes being built to the legal limits of size and footprint, often dwarfing neighbors in their more restrained dwellings of earlier affluence. The huge new structures frequently (if not usually) are “spec” construction–the work of developers and realty shops looking to market multimillion-dollar properties to nouveau-riche buyers wanting to “live the life” of the greater Hamptons second home. (After positioning the houses just within the zoning code, they sometimes then request and get variances for extras like tennis courts.) Well, even on the more conservative North Fork, a political reaction in the form of tighter building limits has materialized, as this story from the greenish monthly East End Beacon reports. On the South Fork, where vastly more wealth is at play, a similar if stricter movement is afoot, led by citizen activist Jaine Mehring of Amagansett, a hamlet of East Hampton town. Development issues have produced electoral watersheds in these parts before–most memorably in East Hampton in the booming 1980s. The money at stake, on both sides, is a multiple now of what it was then. A classic showdown between property rights–even as understood within existing regulations–and the “character of a community” is brewing where once you legendarily didn’t trouble or even know the people next door.

Southold Votes to Restrict House Size | East End Beacon

Pictured Above: New construction on the North Fork has begun to echo the extravagance of The Hamptons, dwarfing longstanding modest

Cast Your Political Eyes Past 2022, to Kentucky

We’ll soon know what the electoral verdict of 2022 is, but as this Kentucky political newsletter shows, underlying issues are going to carry forward into 2023 and beyond. Kentucky is a useful case study–a (Civil War) border state that in recent decades has trended Republican but where the loss of affluent suburbs has hurt the GOP lately. In a telling if not widely followed 2019 election (the state, like New Jersey holds odd-year balloting), a mainstream liberal Democrat, Andy Beshear, won the governorship by 5,000 votes, ousting Republican incumbent Matt Bevin. A blustery sort, Bevin was linked to Donald Trump but was primarily unpopular for tightening public-school spending, which angered teacher unions and many parents in those affluent suburbs. Now we see the school-funding battles continue, although with the added twist that Beshear (aligned with the teacher unions) is accused of having kept classrooms shut too long during Covid. It’s of no small significance for Democrats if Beshear (the son of another Kentucky governor) can maintain his hold next year in the wake of whatever happens this November. He’s pushing many of the buttons that the 2020 Biden victory utilized nationally, stressing expansion of state medical-care and subsidized economic development, as well as the school budgets. Will these again be winning stances after the passions of 2022 have receded? Even if he is not on the 2024 ticket, Beshear’s fate may foretell where the Democrats are headed then.

Beshear Proposes Education First Plan; GOP Responds Telling Governor Budgeting Will be Done Again in 2024 | KFP

Surrounded by education leaders in the Capitol Rotunda Gov. Andy Beshear unveiled a new plan to address student learning loss brought on by the

Dwindling Ranks of the Unbanked

It turns out that getting a bank account in the U.S. these days is not so difficult after all. That was the news this week, after years of stories about the many unbanked among us and various possible government remedies for this, including having the Postal Service open deposit accounts. But, as this Associated Press report suggests, the incentive of having somewhere to wire those Covid relief benefits was enough to galvanize many holdouts into action. The fact is, however difficult some major banks made it for entry-level customers in the past (I had such an experience when moving to New York City in 1983), the industry has changed and some institutions seem to want your money so badly they will seek even the small fry out. If fees on otherwise unprofitable low-balance accounts remain a banking problem, the rules for entry to America’s 4,800 credit unions have been so loosened that most workers can access this alternative. Still, of course, there will be hardship cases, particularly among illegal-immigrant laborers. Yet, the cautionary tale here is that, despite a tendency among pressure groups and their attendant media to depict a nation full of helpless waifs hurting for state beneficence, few lack the means to muster at least stopgap solutions when necessary. Better recognition of this reality might serve to train public resources on those who do desperately need a lift.

Record number of Americans have bank accounts, gov’t says

NEW YORK (AP) — The number of Americans who do not have a bank account fell to a record low last year, as the proliferation of online-only banks and an improving economy is bringing more Americans into the traditional financial system.

Deconstructing a Case for Re-use of Building Materials

I hate waste, so I’m usually tempted by articles about recycling or reuse. The NY Times has this magazine-length one in print today, primarily about efforts to take down a Dutch office tower but salvage the parts. The theme is that building materials and demolitions account for a huge swath of the carbon footprint, among other blights. The story’s reporting was funded by left-of-center foundations as part of the Times’ “Headway initiative…exploring the world’s challenges through the lens of progress.” Thus alerted, what I looked for were economic considerations to what’s called “circularity,” or the effort to maintain the usability of things or at least their recyclability. It’s an important element of what’s broadly known as sustainability. Surely, the junking of building interiors and exteriors is a glaring example of the contrary. Anecdotally, it seems that each time a high-end New York City restaurant fails, the new tenant operator has to rip out the wonderful decor and replace it with an even costlier look. This kind of debris constitutes not only “half of all waste in the Netherlands,” as per the Times, but big chunks of landfill in housing-mad places like Long Island. (Just wait until the current crop of McMansions comes down!) The efficiency question for an economist, however, is whether the cost of disposal–even with all of the externalities such as pollution figured in–exceeds that of an alternative, “sustainable” model. We know that currently most recycling programs for consumer products do not meet that test. In the long Times piece, I found one reference to this aspect: a 2012 study by McKinsey & Co. for a British environmental foundation that argued E.U. manufacturers could save $630 billion a year from design-for-reuse. A breakdown that applies such analysis to case-at-hand scrutiny would be useful. Instead what I read here were more ideological appeals to a “sharing” economy with less ownership prerogatives. That’s an interesting but, in my view, more fanciful concept than getting the highest return from scarce resources in our moment on this planet.

How to Recycle a 14-Story Office Tower

Buildings are responsible for nearly 40 percent of the world’s carbon emissions. In Amsterdam, they are trying to create a blueprint to do something about it.

When New York Emptied ‘Excess’ Jail Cells

For some time, many libertarians have joined reformers on the left in pushing various decarceration measures, out of conviction that too many people are behind bars in America and that this is both unjust and excessively expensive. In the last five years or so, this cause has led to changed policies in major jurisdictions, including New York State. A combination of pandemic-related releases and legislated shifts in procedures has appreciably held down the count in the state’s prisons and jails. Correspondingly, rates of many street crimes have begun to take off. Conservatives who have mostly resisted these changes see a direct connection, and Republican candidates are blaming majority Democrats for bringing on a wave of victimization. The Manhattan Institute think tank has long hewed to a law-and-order line and could be expected to back this criticism. But it should be said that its fellow Charles Fain Lehman has taken a careful and measured approach to the issue, as shown in this new paper on the parole system’s part in the recent policy drama. His co-authored analysis of Gov. Kathy Hochul’s “Less Is More” revisions (a perfect titling of the reformist spirit) cannot hope directly to link legislation to crime, except anecdotally, but it does pose rather clear circumstantial evidence. Supporters of individual rights against state lockup powers cannot ignore the potential, and probably real, consequences of helping the many–that it has released the relative few to wreak havoc on us all. Lehman suggests changes to reach a better result.

Is Less Always More? The Unintended Consequences of New York State’s Parole Reform | Manhattan Institute

On July 10, 2021, an unknown assailant barged into the boarding-house room where 47-year-old Heather Majors was sleeping and attacked her with a hatchet, slashing her more than 30 times. Rochester, New York, emergency responders were called to the scene, but Majors’s injuries proved too…

Frequent Fliers, Please Report to the Counter

One acid test of the sincerity of those who want to seriously reduce carbon emissions to arrest climate change is whether they will support reasonable-cost nuclear power. The rapid onset of new atomic plants would be one way actually to come close to net-zero in emissions without drastically changing first-world lifestyles. The alternative acid test is whether these climate advocates will honestly address how those lifestyles would need to change absent a nuclear fallback. This New York Times article, buried in the Oct. 8 print edition, caught my eye because it hints at how much and whose flying would need to be curbed to meet international aviation targets now set for 2050. The key passage: “The richest 20% of people worldwide take 80% of the flights….The top 2% of frequent fliers take about 40% of the flights.” You’re going to have to stop those folks from doing so (either commercially or on private jets) if you’re serious about “equity” and about keeping fossil-fuel aircraft within these tight limits. This stands to be an interesting test for the economy, for democracy and (not least) for compliance. Europe is leading so far on this aviation campaign but the U.S. is now committed as well. After we get the skies worked out, we can tackle cruise ships and yachts.

Nations Agree to Curb Emissions From Flying by 2050

The agreement, years in the making, is a milestone in the effort to reduce greenhouse gas emissions from airplanes worldwide.

Consultants Fuel Costs of the College Cream

If one strained to find a core example of what has driven the widely-lamented rise in premium enrollment costs at America’s prestige universities, there’d be no better source than the rising-revenues chart of this Economist article on the big 3 U.S. management consultancies. This three-cylinder engine generated better than 10-fold nominal growth in the decades from 1990 to 2020, and if anything the rate of increase quickened in the last five of those years. Those billions of bucks, in turn, led to the recruitment of thousands of consultants fresh with degrees from these very universities. Of course, the trio of McKinsey, BCG and Bain are far from the only lucrative salary and bonus draws on elite American graduates–Wall Street and Big Tech are famously hungry for smarts and pedigree as well–but they are symptomatic of a rich-and-richer strain in the economy. The consultancies are getting more frequent scrutiny of their practices, which prompts the (also elite) Economist’s nonetheless sympathetic accounting. These “practices” offer high-priced hand-holding to executives of the world’s biggest outfits, and arguably more: Operating conditions are changing faster than internal managements can handle, the story goes. Distilled intelligence is thus vital. A friend who works at the Big 3 and can laugh at their efforts to demark supposedly novel concepts in charts and lexicon, nevertheless argues that the pandemic shocks really did call for outside help. Maybe, but 2020 was only the last year of this steep fee incline. Who knows how the industrialists of old adjusted, on their own, to electricity and the light bulb when Harvard produced only gentlemen.

Where next for management’s consiglieri?

Forget the scandals. McKinsey and its peers are more powerful than ever

Fed’s Mary Daly Misses a Labor Component in Price Rises

It fell to me to ask the obligatory question about the strong dollar at this appearance of San Francisco Federal Reserve president Mary C. Daly at the Council on Foreign Relations today, and she gave the obligatory response that the currency’s forex value is not one of the Fed’s mandates. She elaborated a bit in the quotation in this Reuters account. {A previous version of this item said she is a Fed governor–she currently is not on its policy-making committee, as she was in 2021; Fed regional bank presidents rotate out of those voting slots.]

Of more substance, if not news value, was her discussion as a labor economist of the reasons the Fed, among other Washington policymakers, miscalculated the onset of persistent inflation coming out of the pandemic. She cited a couple of factors: an inability to foresee the sluggishness of supply forces, both in the U.S. and internationally, in pulling out of the Covid-19 disruption; and an underestimation of how strong demand would be, especially for goods, as Americans began to stir again. She made no mention of the role that fiscal subsidies–some of which continue under “emergency” edicts–played in discouraging labor-force participation. The drawdown of that labor force was something Daly nonetheless cited as a “worrisome” damper on future economic health–she even made a joking reference to a “quit to find myself” mentality among some who left jobs. Might the fact that so many bills were deferred or diminished have something to do with that?

Fed knows how to fight inflation, will seek to do so ‘gently’ -Daly

San Francisco Federal Reserve Bank President Mary Daly on Tuesday said the U.S. central bank has the tools and the knowledge to bring down high inflation, and will use them, even as it tries to find the “gentlest” way to do so.

If Only Your 401(k) Was in the NFL

Trillions of dollars of nominal global wealth have been wiped out in the current bear market for stocks and bonds. But, as this Bloomberg item notes, there’s at least one major exception to the asset-price declines: pro sports franchises. For reasons Gerry Smith describes here–and others such as Mike Ozanian and his crew at Forbes have long chronicled–the valuations of even poorly performing (and managed) clubs continue to escalate. In an age when inequalities are immediately suspect, this ought to raise hackles, because owning a team is definitely a rich guy thing. Yet as many (including myself) have been noting for years, municipal and state governments often fall over themselves to extend more inducements (subsidies) to these same sports barons to locate their wares in those sponsoring jurisdictions. At its root, this is a bread-and-circuses syndrome very much implicating the local populations but also the chorus of marketers (including supposedly neutral news media) that lend themselves to the endless promotion. Maybe, as redistribution (not to mention reparations) becomes an everyday talking point among the political class, a certain sector of rank and privilege might attract attention that, for once, it doesn’t seek.

TV Has Turned Pro Sports Into a Recession-Proof Investment

Four US professional sports teams are for sale with one more on the way. Why this could be just the beginning of a sports deal bonanza.