L.A.’s Loosening Grip on the Golden Goose of Trade

California’s middle class, a mainstay of the state’s prosperous growth in the mid-20th century, is due to suffer another pinch. Already pressed between the high land costs driven by a technology and entertainment elite and the galloping social costs of large poverty pockets and tight environmental and legal strictures, this median economic sector is beginning to lose one of its great employment bases–trade logistics. Today’s Wall Street Journal captures the shift under way in port traffic in the U.S.–generally away from West Coast docks and toward the Gulf and East coasts. The cause: A supply chain adjustment to reduce reliance on China and to find more reliable and less congested entry and transfer points. Part of the story (which also affects Seattle) is the intransigence of the International Longshore and Warehouse Union, which includes many highly-paid members along the Pacific waterfronts. The ILWU’s leverage for real and threatened walkouts compounds the bottleneck issues in critical ports like Los Angeles-Long Beach, historically the busiest in the U.S. The traffic there in turn has supported hundreds of thousands of trade-related jobs in Southern California, reaching well inland. We therefore see another example of what author-pundit Joel Kotkin has deemed “neo-feudalism” in the Golden State: a privileged (if rough-hewn, in this case) stratum of the economy whose status effectively stresses the broader working population.

California Long Ruled U.S. Shipping. Importers Are Drifting East.

Companies that depended on the West Coast as a point of entry for their goods are turning to other parts of the country as global trade gets upended.

Trade Divides the D.C. Parties Internally

Among the issues continuing to split the majority (Democrat) party in America is global trade, especially in goods. Today’s report in the New York Times about warnings within the Biden administration of inordinate harm to blacks and the poor from freer trade is further indication that a return to the national party’s international commercial bent of recent decades is not in the offing. Instead, the current White House has maintained many of the preceding Trump barriers and may selectively seek more. Increasingly anti-corporate Republicans could go along. This, despite the generally inflationary effects of trade restrictions. While the “McKinsey” wing of the governing establishment continues to tout globalism (and in its own new report says trade remains healthy, particularly in services), the consensus for such policies is as fragile as the supply chains that lately have broken down in the wake of Covid-19. Of course, most trade proponents always recognized that it can have short-run losers, but argued, in the spirit of Pareto optimality, for compensating appropriate parties from the general bounty to be gained. One method for doing this, the often-controversial Trade Adjustment Assistance program, has expired amid congressional division. Any movement on that front, as on freer trade overall, appears unlikely in the current political environment.

Foreign Trade Competition Has Hurt Black and Disadvantaged Workers Most, Report Says

A government trade agency report suggested that the impact of trade policy differed for workers depending on their race and socioeconomic status.

Where Trump Took the GOP Down

One notable casualty of the Donald Trump deadweight that burdened Republicans on Tuesday was a previously safe GOP seat in Michigan that had been held by one of the most libertarian members of Congress, Peter Meijer. The incumbent was defeated in a party primary by a Trumpist after having voted for an impeachment article against the 45th president. (D.C. Democrats helped fund the hit on Meijer.) Sure enough, an Obama Democrat captured the seat in what was a general setback for Republicans in the swing state, as well as in other key parts of the national election map. It was a reminder to the GOP that, whatever galvanizing effect Trump may have on parts of the “base,” his influence also puts a ceiling on the party’s gains even during a period of unpopularity for many Democrats. Together with Florida Gov. Ron DeSantis’s smashing victory yesterday, this may dissuade many party officeholders and funders from jumping aboard any Trump candidacy for 2024 that materializes as early as next week. A lot may depend on how Tuesday’s results are described in the realms of Fox News and other right-wing media, which had led their audiences to expect much better returns in the midterms. These echo chambers did not do their side any favors this time.

Michigan Elects Hillary Scholten to Fill Longtime GOP-Held House Seat

Democrat Hillary Scholten Tuesday captured a Western Michigan House seat, defeating Trump-endorsed candidate John Gibbs in the onetime Republican stronghold, the AP has projected. Ms. Scholten, a lawyer who focuses on immigration issues and who worked in the Justice Department during the Obama admi

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.