Tuesday, March 17, 2020
Wednesday, November 05, 2014
Thinking Economically: Building a Safer, Less Congested Future
| Musings on Economic Freedom from the Texas Public Policy Foundation’s
Building a safer, less congested future Texans went to the polls yesterday to decide whether to take $1.7 billion a year out the state’s savings account to build more roads, while Austinites decided if they want to go $600 million into debt to build a 9.5 mile, $1.4 billion light-rail line. Both choices presented to voters reflect an outdated approach to transportation—hardly the direction a city and state poised to become 21st century leaders should be heading. Last year, 3,377 people were killed while traveling on Texas roads, more than died from either homicide, breast cancer, or non-traffic injuries. Yet there was no large public outcry over these deaths. We simply accept the fact that people are going to die on government-owned and –operated roads. While it doesn’t have to be this way, re-adopting 19th century rail technology isn’t going to change this—or reduce congestion. By the 1940s, Austin and other Texas cities had eliminated trolley lines—the urban rail of the day—and replaced them with buses, which are less expensive, more flexible in their routes, and thus can carry more passengers than rail. Today, though, Austin wants to stand athwart history by spending billions of dollars to replace buses with rail rather than investing in ways to reduce congestion and make roads safer. At least the choice before Texas voters might actually help reduce congestion by building more roads. But those simply calling for $5 billion per year of increased spending on concrete and engineers without reform still represent 20th century thinking that ignores the great advances in transportation technology that are already appearing today. Most of us have cars today that can control our speed or tell us when other cars or objects are too close. Some cars can already drive with little help, and within a decade these cars should be available on the market. In 20 years or so, fully-autonomous cars will be making their appearance. Many may see such claims as fantasy. But the same rapid pace saw the adoption of cars go from zero to 60 from 1895 to 1915. The same is true for personal computers from 1975 to 1995. The adoption of new technology often surprises us, yet before we know it it becomes the new normal. The new normal for transportation will change our lives dramatically. Cars will travel down highways at high speeds within a few feet of each other, greatly reducing congestion even during rush hour. Traffic lights for cars will disappear—computers won’t need them. One hour commutes will drop to 30 minutes, with the “driver” being able to read emails or reports on the way. More importantly, deaths at the hands of drivers—including drunk drivers—will rapidly diminish. All of this requires new investment, though, which means that we need to change our spending habits to pave the way for this future. Randal O’Toole of the Cato Institute recommends that we eliminate funding for rail projects, end centralized, long-range transportation planning, and stop efforts by the government to mandate new technologies in cars. Instead, Texas should “cooperate in the development and use of consistent road striping, sign, signal, and similar standards that can be read by autonomous vehicles.” Additionally, the Texas Department of Transportation should turn road design and construction over to the private sector and focus on directing state transportation funds toward this future. We are not finished building new roads. But Texas’ roads of the future will be far safer and move traffic far more efficiently if we are willing to change our ways and let market-based advances lead the way.
Recent Research and Commentary Insurance Rates Are Too Damn High by Kathleen Hunker Regulation of the Texas Electricity Market by Bill Peacock
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Thursday, October 30, 2014
Thinking Economically: Racing Commission Approves "Historical Racing" Machines
| Musings on Economic Freedom from the Texas Public Policy Foundation’s The Texas Racing Commission has decided to allow gambling on “historical racing, … a previously run horse or greyhound race.” While on the surface “historical racing” may sound like something akin to horse racing and pari-mutuel wagering, a quick glance at the picture to the left of the type of “instant-racing” machine that could be allowed under this proposed rule change paints a very different picture.
When voters went to the polls in 1987, they were asked to vote for or against “the legalization of pari-mutuel wagering under the Texas Racing Act.” Voters approved the proposition, and Texas has allowed betting on horse and greyhound racing since about that time. It is highly doubtful, however, that Texas voters in 1987 or today would recognize the form of gambling the Commission is now trying to make legal as a type of pari-mutuel wagering on horse races. The same goes for members of the Texas Legislature who voted to send the question of legalizing pari-mutuel wagering to the voters. Acting without clear statutory authority is often a problem with state agencies as they attempt to tackle issues that are clearly the prerogative of the Texas Legislature—or the Texas people. The Legislature should respond by making it clear that playing slot machines is not pari-mutuel wagering and by reminding the Racing Commission to stay within its statutory bounds. Recent Research and Commentary Toxic “Consumer-Friendly” Insurance Laws More Bane Boon Bill Peacock | |||||||||
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Monday, February 24, 2014
Thinking Economically: Consumers pay to soothe the fears of Texas policymakers
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Musings on Economic Freedom from the Texas Public Policy Foundation’s
| by Bill Peacock |
| A newly released study suggests that policymakers’ fears of being held responsible for power outages lead to higher costs for consumers.
The study found that policymakers usually desire a higher level of reliability than is “economically optimal,” so they set capacity reliability standards for electricity markets above the level that best balances the costs of outages with consumer prices.
The higher standard means higher prices.
Although the study’s author, the Brattle Group, doesn’t explicitly blame higher prices on the fears of policymakers, this is clearly the phenomenon at work in the Texas debate over shifting to what’s called a “capacity market.”
Back in 2012, two reports projecting future supplies of electricity below Texas’ reliability standard (a smaller reserve margin) triggered a panic among Texas policymakers.
Ignoring the obvious flaws in the reports, Texas’ Public Utility Commission began a push for a $3.2 billion electricity tax on Texas consumers to subsidize generators and, at least in theory, increase capacity (a higher reserve margin).
Perhaps the panic stemmed from policymakers’ fears of not wanting to be in charge when the lights went out. In any case, the fear of blackouts led to support for a system that actually makes outages more likely to occur.
As we know from experiences outside Texas, capacity markets are less efficient and less reliable than competitive markets. So while blackouts become more likely, the centralized nature of capacity markets may give policymakers the illusion of control.
The result is that while policymakers feel more confidant, consumers wind up paying more for a less-reliable system.
This commentary originally appeared in this weekend’s Ft. Worth Star-Telegram.
Texas prides itself on being the living model of American entrepreneurship. Our commitment to economic freedom and low taxes—to say nothing of our rugged individualism—all work to ensure that Texas remains a place where job creators are forged.
Yet, despite the high value Texans see in free enterprise, too often we join the rest of the country in using a parade of ill-conceived regulations to penalize children who experiment with opening a business.
For example, a couple of years ago officials ticketed the grandmother of a brother and sister in McAllen, Texas, who were selling lemonade without a permit. Both kids had planned on using the money to buy food for their pet crab.
This commentary originally appeared in Austin America-Statesman.
Conservative talk show host Sean Hannity is considering moving to Texas in order to escape the big government, high-tax mentality of New York policymakers.
Before he makes a decision, however, he ought to look a little closer at the effort to re-regulate Texas’ world class, competitive electricity market and impose a $3.2 billion electricity tax on Texas consumers.
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Bill
Bill Peacock
Vice President of Research
Director, Center for Economic Freedom
Texas Public Policy Foundation
Thursday, January 23, 2014
Thinking Economically: Texas’ Competitive Capacity Market
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Musings on Economic Freedom from the Texas Public Policy Foundation’s
Texas’ Competitive Capacity Market
| Regulators and special interests are pushing for a capacity market—and its associated $4 billion a year electricity tax—to replace Texas’ competitive electricity market. But what if a capacity market already existed in Texas?
The term “energy-only,” used to describe the current Texas market, is at best a misleading term because a large portion of power flows under contracts between REPs and generators focused on providing adequate capacity. The truth is that Texas’ competitive market is already functioning as a capacity market without the $4 billion electricity tax andexcessive regulation proposed by advocates of a centralized capacity market.
Energy economist and Foundation Senior Fellow Robert Michaels details how the current competitive market accomplishes the goal of maintaining enough capacity to ensure a reliable electricity grid in his latest Foundation paper and presentation.
Electricity in Texas: Markets, not Manipulation
Profits are hard to come by for some generators in Texas. But Bill Peacock explains in his latest paper why this doesn’t justify increased regulation of the Texas electricity market and a $4 billion a year electricity tax.
The projections of low future reserves used to justify the interventions don’t match with reality. The Brattle Group, for instance, assumes unchanging market conditions. And the projections of both Brattle and ERCOT don’t explain how the future could look so bleak compared to the affordable, reliable supply of electricity the competitive market has provided us for more than the last decade.
Manipulating prices and mandating reserves aren’t the answer for Texas; instead, we should release the full potential of Texas’ world-class electricity market by reducing excessive market intervention by the PUC, supporting the ongoing process of improving the systems and protocols at ERCOT, and eliminating subsidies for renewable energy.
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Bill
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Bill Peacock
Vice President of Research
Director, Center for Economic Freedom
Texas Public Policy Foundation
Tuesday, January 07, 2014
Thinking Economically: If It Ain't Broke, Don't Fix It
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Musings on Economic Freedom from the Texas Public Policy Foundation’s
If It Ain't Broke, Don't Fix It
| Some people like to tinker with things. And they can be quite handy around the house taking care of all those odd jobs that keep popping up.
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Bill
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Bill Peacock
Vice President of Research
Director, Center for Economic Freedom
Texas Public Policy Foundation