A week ago an offshoot of our discussion of 465 Hoffman turned to the undergrounding of utilities in San Francisco. Some new numbers from the Examiner today:
The cost of undergrounding utilities has escalated to $7.2 million per mile from around $4 million per mile two years ago.
San Francisco’s funding to underground the utilities has dried up, too, leaving 470 miles — out of a total 990 miles — of city streets with a tangle of telephone poles and wiring.
While above-ground utilities are no longer permitted in The City, “we’re at a point where there are no more resources identified to continue a proactive undergrounding,” DPW spokeswoman Christine Falvey said.
Apparently San Francisco has used up its share of utility bill fees set aside for undergrounding “and won’t get additional money until 2016.” Perhaps a special tax on photoshopped listing photos and renderings without utility lines could fill the coffers.
∙ Stick ‘Em Where The Sun Don’t Shine (And Views Aren’t Obstructed) [SocketSite]
∙ Undergrounding out of reach [San Francisco Examiner]
∙ Where Do You Draw The Line(s)? [SocketSite]
I’m still voting ‘no’ on the bond issue mentioned in the Examiner article.
Those wires have been up there for 80-100 years, 7 more won’t hurt. For that matter, 70 more years won’t hurt either. Why not just wait until the poles rot out or rust out and then replace? $7M a mile seems absurd anyway … does that include the environmental review and neighborhood input process?
~1000 miles @$7.2M per mile means it costs >$7BILLION to underground the wires?
Doesn’t that seem like a lot?
with 700k residents that is $10k per resident. I’d rather risk the outage and have my $10k please.
Ah, yes Bum, but then the government would not get to spend the money, the politicians would not be able to award the contracts to friends who will later employ them at exorbitant wages, etc.
No no, much better to have them take it from you and spend it as they like – whatever gave you the idea that you should have a voice in, let alone control of, the spending of money you earned? That’s not the San Francisco way. Big Brother knows best.
Just out of curiosity, given the appalling financial condition of the state/county/city, doesn’t it seem a little excessive to be spending an additional $3.3 BILLION on putting some wires underground?
Isn’t there anything better we could possibly do with those billions like, say, pay off the city’s huge debts? Or give $100k to each and every homeless person living on the streets right now so that they could all have one giant booze, whores and coke party at our expense?
Wow, guys, a mite bit cynical, perhaps?. I live in an area that is not yet undergrounded, and would welcome this appalling intrusion of government into our life. The wires are ugly, distract from the view (which is a big part of the beauty of living in SF), create a sense of clutter, and prevent me from planting a tree in front (which “green curb appeal” several posters have mentioned is sorely lacking in SF). Their disappearance makes a HUGE difference in a neighborhood’s aesthetics. Even if that neighborhood (like mine) isn’t too classy to start with.
Yes, there is the individual homeowner’s cost for the connection to the new utility infrastructure, but one that is recouped through increased property value and potentially ameliorated through various assistance programs.
Yes, the cost involves money that could potentially be spent on something else. But, without getting into philosophical arguements about the nature of the greater good, isn’t this exactly what we want from government? To tackle improvement projects that would be unreasonable to expect the private sector to ever undertake? Because it’s not about “preventing outages” — studies have shown that above-ground utilities are actually LESS expensive to maintain; it’s about making the City more “livable” for the residents.
I don’t know what the best solution is to the “homeless problem” — an intractable issue that has no easy answers — but I know I (as a City taxpayer) see here a clearly defined issue with a clearly defined, albeit pricey, solution.
i don’t photoshop… it’s akin to over promising and under delivering and a major marketing mistake. the professional photographers we hire think using wide angle lenses to capture an entire room, which also makes it look at lot larger, only see it as a beautiful picture. i attend all my listing’s photo sessions to make sure they don’t do that.
as for wires…. give me a mill per mile and i’ll get those things underground. only a wasteful city gov could have expenses nearly double in 2 years…. what do they think this is real estate prices???? when can we expect the cost to get down to 2004 prices?
Funny how the funding runs out and the price goes up once the Pac Heights and related neighborhoods get undergrounded. Just sayin’.
So they finished the easy stuff and left the hard stuff (480 volt lines, etc.) for later?
The undergrounding process is all driven by PG&E and the high prices are in part fallout from the power crisis that bankrupted PG&E some years back. Exactly what should be done and how much it should cost goes back to the SF PUC who have authority over this and answer to the public.
Let the landlords pay for it!!! They’ve got money!!!
My block probably doesn’t care much, as we also have muni lines…
Bwahahahahaa on that headline. The best all week !
Maybe stagers can start pasting photoshopped posters (with wires removed) over street facing windows so potential buyers can imagine what their views will look like once utilities go underground. In 2064.
hangemhi – I salute you for your ethical RE photography approach. Lets home that others will catch on to your good example.
I don’t buy that cost per mile for a second. Remember, almost all funding for undergrounding comes from ratepayers to PG&E, and then PG&E handles the undergrounding. So PG&E “accounts” for $7.2M per mile from its rate base. Does that mean the real cost to PG&E is anything close to this? Of course not. The CA PUC (not the SF PUC — they have no jurisdiction over PG&E) needs to get on the ball, but as is generally the case, here too the regulators are controlled by the regulated.
$7.2/mile makes me want to underground the regulators…
The $7.2MM per mile sounds way overstated particularly in light of the tremendous increase from a couple of years ago. It would be interesting to see what a private contractor would charge to get this done.
I am all in favor of undergrounding but at these prices, I am not sure it is worth it. In response to Average Joe, it is really is not the government’s job to do things that citizen’s would not be willing to pay for. The government is spending our money and it is perfectly reasonable to say that there are better uses for that money than undergrounding.
Isn’t there anything better we could possibly do with those billions like, say, pay off the city’s huge debts?
What huge debts does The City have?
Oh, sorry, “bonds.” The city government issues municipal bonds. Those are debt, if I’m not mistaken.
I am a consulting engineer who regularly designs undergrounding projects. $7.2m/ mile ($1364/ft) is outrageous; expect $4-500/ ft in outlying areas; up to around $1000 in a worst case scenario.
The problem stems from the engineering process–PG&E does not allow outside entities to design this work, leading to gross inefficiencies and overbuilding on SF’s dime. Who wouldn’t gold plate a new electric distribution system if you didn’t have to pay for it?
Currently, PG&E only allows private firms to engineer undergrounding projects when connected to a new business development.
An engineering firm such as the one I work for does not design for PG&E’s benefit, we provide detailed, accurate drawings, and provide bid instructions to produce dramatically lower costs for this work.
PG&E, of course, is unwilling to entertain private design work. I have been warned petitioning the CPUC to allow contractors to perform this work could be up to a ten year process, unfortunately.
Almost all Municipal Bonds have call provisions which make them impossible to pay off early.
@NoeValleyJim: Actually a call provision allows one to pay off the bond early. In any case, the City could do what corporations do and just buy the bonds on the open market in order to retire debt — sometimes one will be required to pay a slight premium to do so, but often not.
So you claim that all Municipal Bonds can be paid off early due to their call provisions? I think I know more about them than you do then, because you are wrong.
For example, I have some bonds that have call provisions that allow them to be paid off in 2014, but not before them. Otherwise, they mature in 2043.
In any case, paying down debt is not what governments should be doing in lean years, in times like today, we should be trying to stimulate the economy. We should try to pay down debt in good times, but whenever The State starts to run a surplus, the Jarvisites or GOP ram through a tax cut, leaving us in the terrible situation we are in now.
Call provisions do allow early repayment of debt. They are generally contained in muni and corporate bonds, and agency debt (like Ginnie Maes), but very rarely in US sovereign debt.
On long term debt, they generally allow the debt to be called (repaid early) after 5, but more typically after 7 or 10 years, at an embedded premium that usually declines as time goes by. For instance, a 30 year bond might be issued at par yielding 5% coupon, but would be callable at 105% of face after 7 years, 104% after 8, 103% after 9, and at 102% anytime after 10. For this reason, you will typically see these bonds quoted two ways: YTM (“yield to maturity”) and YTC (“yield to call”).
The fact that debt can be called is a detriment to the bondholder and a benefit for the issuer. If interest rates drop, the issuer will call the bonds and the purchaser will then have to reinvest the proceeds received from the called bond at lower rates. For this reason, this sort of debt will cary a higher interest rate than “straight” debt. In essence, if interest rates rise, the bond’s price will be limited from rising too much (only to the discounted – at then prevailing rates – YTC price).
Analytically, from the point of view of the purchaser, all debt like this can be decomposed into straight debt + an embedded short call in which the purchaser has granted the issuer the right to call the debt if the price goes too high. In the corporate markets, the end purchasers are highly sophisticated because it is taxable debt, and therefore many institutions and prfessional money managers are the natural demand. In muni debt, however, the end users are typically individuals because of the tax aspects of muni debt, and this market is nowhere near as sophisticated or disciplined in its pricing.
Debt can always be retired through open market purchases, regardless of whether or not there are call provisions, so long as the issuer makes an open market tender. There are specific rules regarding how the tenders must be made and under what conditions, which will vary depending on the issuer, size of the tender, registration status of the debt, etc.
About whether paying down debt in lean times is a good idea for governments, well, that’s a philosphical pickle. Personally, I like it, b/c it returns money to private actors, which I think is a better use of cash than allowing foolish gooberment clowns to waste it on political priorities that do nothing long term to stimulate an economy. It’s very enjoyable to watch the California budget/propositions mess, and it should be a good laugh to watch them scramble if the people stay smart and vote those turkey props down 😉
Fair enough, a “call provision” allows for early retirement of debt, just generally not whenever the debt issuer wants, at least not in Muni bonds.
You can create a complicated model for what a call provision is worth, or you can just observe what the YTC and YTM and decide if they are both satisfactory to you. You should assume that the debt issuer will generally follow the provision that is least advantageous to you, of course.
Without government spending to stimulate the economy, the recession would be much worse. Some people believe that government spending is inherently wasteful, but the experiences of Sweden, Norway and The Netherlands during this downturn — and over the long run — should disabuse them of this notion.
Allocating resources inefficiently is always a bad idea, but it is hard for me to imagine a more wasteful use of labor and capital than all those McMansions in the exurbs, which is most of what the last “boom” was all about.
it is hard for me to imagine a more wasteful use of labor and capital than all those McMansions in the exurbs, which is most of what the last “boom” was all about.
I can. How about going further into debt in the middle of a budget “crisis” in order to encourage more building of same?
http://www.sacbee.com/business/story/1859760.html
Read that article closely, preferably with one of those endless union-sponsored radio ads droning on in the background talking about the “children”, “schools”, “police and firefighters”, and all the other buzzwords that demonstrate the utter contempt with which the elite interests view the California populace.
As well they should, the California populace through the initiative process has made this state ungovernable. This populace which deserves to be looked down upon has set how much the state must spend on schools, how much extra in tax rich people should pay for mental heath services, etc. Every couple years the stupid voters of California tie the hands of the politicans a bit tighter, all the while complaining about how much the politicans suck and how they are not doing their jobs.
Now the voters are going to reject these measures and let the politicans go back to Sacramento to do nothing but argue and be unable to reach a compromise because they need a 2/3rd’s majority they will never get.
The reason those buzzwords work is because the general voting population of the state is stupid LMRIM. They have elected the elistist government they deserve.
PS – I love it when the guy that talks about how he made enough trading in March to buy a “crappy” condo in the mission calls other people out as elitists.
Touche, Rillion! I totally agree that the “stupid” population is getting the government it deserves. You aren’t a closet elitist, too, are you? 🙂
NoeValleyJim wrote: “but whenever The State starts to run a surplus, the Jarvisites or GOP ram through a tax cut, leaving us in the terrible situation we are in now.”
That’s laughable. Whenever revenues rise, spending rises dramatically to match – any tax cuts (few and far between here in the HIGHEST TAXED STATE IN THE NATION ALREADY) are far smaller than the increases in spending.
How about blaming the Democrats for IMMEDIATELY SPENDING THE MONEY WHENEVER REVENUES INCREASE rather than the GOP for wanting people to keep more of what the earn? Or does that not fit with your preconceived notions that people who want to keep more than a fraction of what they make are evil and selfish?
Let’s blame everybody for the state’s budget problems (Democrats, Republicans, Independents – and everyone who voted for anyone). But somebody has to fix the problem – and spending is the problem, not revenues (which are still too high). I posted this link in another thread yesterday:
http://www.cfo.com/article.cfm/13526142/c_13526469?f=magazine_featured
It’s from CFO magazine based on a survey of chief financial officers. The CFO’s rank California as having the worst and most unfair tax environment of any state and we are the least likely place that they want to locate or expand their business. Do you think that our budget problems are going to be solved as long as this perception exists?
As to the $7.2M per mile cost to underground utilities, I appreciate vapor’s comments that this is outrageous. Vapor – you stated that costs could be $4-500 per foot. You meant $400-500, right? $2 – 2.5M per mile still seems too high. I’ve seen it done recently for well under $1M per mile ($200 per foot) in other urban areas (in other states of course). There is just too much acceptance in this city and state for high prices. If we had the collective will, we could lower the entire cost structure. (But, of course, that’s not going to happen – and very little will ever get done here.)
JimAtLaw is a perfect example of the kind of muddled populist thinking that has gotten us into our current mess.
California’s overall tax burden is moderate:
http://money.cnn.com/pf/features/lists/taxesbystate2005/
State spending as a percentage of GDP is relatively flat:
http://www.cbpp.org/archiveSite/7-31-07sfp-f2.jpg
Where the extra money is really going:
http://www.mercurynews.com/ci_11649004?nclick_check=1
Summary, “Three Strikes” is costing The State $13B this year, up from $4B when passed. And the VLF tax cut, which is what got Grey Davis recalled, is costing us $6B is reduced revenue.
So in good times, anti-tax crusader types like JAL are listened to by voters and taxes are cut (which has the side effect of goosing an already booming economy, helping blow up bubbles) and in down times, voters demand more services.
I agree with Rillion and LMRiM, California has tied the hands of the legislature with dozens of badly thought out initiatives and now is furious that they can’t clean up the mess the voters themselves have made of the State budget.
I can. How about going further into debt in the middle of a budget “crisis” in order to encourage more building of same?
http://www.sacbee.com/business/story/1859760.html
Wow, that really is something else. Talk about compounding one error with another.
You’ve got to be philosophical about the budget mess. Absolutely nothing can be done about – nothing. Too many entrenched interests and too many people spending other people’s money means there is never going to be accountability.
Just sit back and watch it all unfold and keep good humour about it. In the end, the politicos will just call 1-800-OBAMMY and beg for some more Federal scraps, and cede more and more autonomy. The craven Washington politicos will then step in to steal what they can, and whatever they can’t steal they’ll simply print out of thin air and shower it upon their buddies.
Plenty of people will do very well, and a much larger group will get slaughtered. I’m just hoping I’ll be able to navigate the environment for myself and loved ones as we progress through the various stages – it’s going to turn into a free for all. No big deal, nothing is guaranteed and life has always been tough, even if things have gone very well for some of us over the past few decades.
@FSBO
Yes, standard undergrounding projects in built out areas run $400-500/ ft. Depends on ## of service terminations to underground and presence of fiber optic cables on poles. We have seen numbers in the $200/ft range for simpler projects without fiber.
Well said in that the problem is in the acceptance of high prices. Big government work= big prices. Concise, consolidated bid packages lower contractor costs dramatically, eliminating contingency adders.
PG&E needs to open this line of work to outside contractors. We can underground twice the facilities for the same dollar.
Having worked at PG&E, these projects are about the only opportunity to engineer with an open checkbook, both in infrastructure design and hours spent. There needs to be accountability in this work, where there is none now.
Now if I only had time to petition the CPUC.
>You aren’t a closet elitist, too, are you? 🙂
Well I may be an elitist in that I think I’m better then everyone else but that’s because its true. As me trying to using my elitism to influence voters, I have a friend that says he uses me as a predictor of which state prop’s will pass or fail, whichever ones I vote for will fail and whichever ones I vote against will pass. Hence why I blame most of today’s problems on the stupidity of the voters.
Good philosophy LMRiM.
NoeValleyJim, putting aside your ad hominem (way to show a weak hand: make it about the person and not the counterargument), you unwittingly bolstered my point – if state spending is, as you say, relatively constant as a percentage of GDP, then exactly as I said, when revenues go up, they spend it all! “Muddied populist thinking” indeed! And then when revenues fall, by golly, imagine that, they sometimes have to cut!
But no, by your un-muddy, oh so clear thinking, when revenues increase, the government should spend, spend away (’cause you know, they’re so good with rainy day funds, right? They’d never spend that money… and I have a bridge to sell you in Alaska), and when revenues fall, no need to cut anything, just increase taxes to make up the difference! Always increase the government’s take, never let people keep what they earn.
Suffice it to say we will never agree.
No, the government should pay down debt or put away money in a rainy day fund when revenue increases. But the hate government crowd always sways enough voters to demand a tax cut as soon as there is a surplus. That is what led to Prop 13, the fact that The State of California was running a surplus. A similar argument was used to overturn the VLF, remember?
Too bad, we could sure use the money now. In SF, we started putting away a rainy day fund three years ago and it sure has come in handy during the downturn. But the “level headed” sorts would rather splurge in the good times and then cut back during recessions, when increased government spending could really help.
Do you run your household finances the same way?
You mean like they’ve put away our social security? The fact is, the government doesn’t run things like a responsible household or business – any person with a modicum of sense will acknowledge this rather than assuming that they would, e.g., put huge sums of money and not spend it when they had it.
And do you seriously think the few tax cuts during good times have amounted to more than a small fraction of the revenue and spending increases during those times? To blame the problem on miniscule tax cuts is pointing at the mouse in the corner while ignoring the elephant – and the GOP and people who want to pay less taxes are not responsible for those spending increases, so if you need to get partisan and blame someone for this mess, why don’t you take a look in the mirror.
In general, the GOP is the only party that runs large deficits during expansionary periods. Compare Reagan and Bush era deficits with Clinton or even Carter and Johnson. These “easy money” policies are profoundly distorting to the economy.
The Bush Era tax cuts were a particular egregious example of irresponsible budgeting:
http://www.cbpp.org/images/cms/4-14-04tax-f1.jpg
The Bush tax cuts are calculated at over 3% of the overall GDP, which is actually a pretty large number.
The VLF cuts alone cost The State of California $6B a year, which is almost 5% of the total budget and about 1/3 of the total deficit this year. If we had been banking them for the last five years, we would not even have a problem at all this year.
Most of the spending increases are due to initiatives passed directly by the people of California, not the legislature. Now perhaps the legislature should have found ways to cut costs in response to the directives of the people, but the current 2/3 requirements make passing a budget difficult. It is true that the legislature has used way too many gimmicks and one-time expansions of revenue to avoid the structural problems in the California budget. I am opposed to Prop 1C because it continues this same response.
I can give you dozens of examples of governments behaving responsibly and saving money during boom times, starting with our own local government in Menlo Park, to the State of Wyoming, to the national governments of Norway and The Netherlands. So there is nothing inherently pernicious and irresponsible about “government” spending, just our recent implementations of it.
Now it is anybodies guess as to what the current Administration is going to do after the economy recovers. I have to admit that current projections don’t look promising, but we won’t really know for sure until we get there. Public pressure can have a huge difference here, I think.
Your assumption that the Democrats would ever have banked the extra revenue rather than spent it, as they have at nearly every opportunity for decades now, is one which rational argument cannot overcome.
You point to the Republicans as overspending at the federal level during boom times, giving two examples both during times of war, but choose to ignore, e.g., CA state spending during the same time period because it is inconvenient to do so – a small tax cut against the background of a huge revenue increase, the rest of which was spent, not saved. But they would have saved the rest, if only there were increased taxes? Yeah right – just give them more taxes and they’ll save it this time. Again, give me a call about that bridge.
You will get the government you vote for – let’s see what the Democrats do now that they control the legislative and executive branches. Wanna bet there’s no saving for a rainy day going on at any point during the next 10 years, even after we’ve recovered from the recession? I’ll give you dollars to donuts.
Er, ok, let me rephrase – unlike Bush’s, Reagan’s spending was not mostly technically “time of war,” but unlike you, I’ll give him credit for ending the cold war with military buildup, while you blame all problems of government on the GOP and its supporters and ignore anything they’ve accomplished.
BTW, I doubt you’re wondering or care (you started ad hominem attacking me without even asking), but I’m NOT actually a Republican – I’m a libertarian and have voted both for and against them. The difference is, I watch what each party DOES and vote depending on the situation, while you apparently adopt the Democratic party line and defend everything they do, blaming the problems of government entirely on the GOP and people who don’t want to give all their earnings away. (What percentage of your income did you give to charity last year, if I may ask? A substantial percentage I hope?) Your attitude is pretty funny in a state which has had a Democratically controlled legislature for how long now?
In any event, again, you’ll get the government you have voted for now – let’s see how they do.
The problem with all these discussions about government is that they degenerate into partisan battles of partisanship, and the simple first principles upon which every reasonable person can agree are obscured.
I always enjoy reading the articles on the mises.org site for their clarity of thought and every week there is at least one piece (and often three or four) piece that gets the starting principle exactly right:
The purpose of government is for those who run it to plunder those who do not. Throughout history, governments have used violence, intimidation, coercion, and mass murder to enforce this system. But governments’ first line of “defense” is always a blizzard of lies — about its own alleged benevolence, altruism, heroism, and greatness, along with equally big lies about the “evils” of the civil society, especially the free market.
http://www.mises.org/story/3446
Truer words have (almost) never been spoken imo. NO on props 1A-1E on Tuesday – see you at the polling places!
Agreed on all counts LRMiM. Well said.
No LMRiM, that view is too simplistic. The true bargain between the ruler and the ruled goes something like this:
In the Hobbesian state of nature the individual must spend large amounts of effort protecting themselves instead of producing wealth. Investment and savings is discouraged because it simply creates targets for thieves to take.
The ruler says, “I am going to steal from you but only a fixed amount and I will prevent anyone else from stealing from you.”
Within the order that the ruler creates the ruled can devote themselves to generating wealth. Optimally more wealth than the ruler siphons away.
It’s a win-win situation if it’s done right but, of course, it can easily go wrong as well. When it does, the people will eventually overthrow their government and put in a new one.
The problem with the anti-government position is that it doesn’t put forth a credible alternative to how society should organize itself.
That said, I’m going to vote no too.
Actually, now that I think about it LMRiM, I don’t think NoeValleyJim would agree at all.
When they say “We’re from the government and we’re here to help you,” he believes, along with a lot of SF’s populace. They seem to forget that to be governed is the opposite of to be free and invite more and more government into our lives, and less and less freedom, without a moment’s critical thought or doubt.
I don’t disagree, diemos, with most of that. Obviously, a balance must be struck between functions that are ceded to central government and those that are retained by the people.
From my perspective regarding how society should organize itself, the Founders got it just about perfect: limited central government (with numerous checks and balances) and a group of states more powerful than the central authority and which would be disciplined by competition among each other. Less Federal government involvement in economics and more in creating and enforcing a uniform system of laws and legal infrastructure (courts, prisons, etc.). A “prophylactic” state, which protects citizens from foreign invasion and domestic violence against one another, but leaves the vast bulk of the rest up to private and nongovernmental institutions that exist and would grow up in the absence of government coming in and seizing the function (along with plenty of loot for itself).
As just one example, do people really think that old people would be dying in the streets and poor people would be starving all over the place if benevolent gooberment hadn’t come in and stolen (probably) $1-1.5 trillion (state + federal) per year to redistribute out to others? If you do, you really have to consider exactly who has the dark view of human nature.
Glad to hear that you’re voting no as well. It doesn’t matter anyway if the props fail – the Obamites will just print up some more money for California, rewarding failed policies as is their inclination.
LMRiM, I’d be interested in your thoughts on proper amount of government spending on foreign policy affairs (up to and including military). The US has been in the unique (enviable or unenviable, depending on your view) of “setting the rules” for quite some time, in large part because of the amount of dough that we put forth for foreign affairs.
How would you feel about say, increasing domestic taxes on things like oil that we clearly don’t have enough of, with the end goal being to spend less on foreign policy? Clearly, our current way is not “free market,” but neither would the domestic taxation way. Which would you (or Mises) propose to be better? (I’m just back from a two month long assignment in Dubai, so the amount of money that we’re pumping – directly and indirectly – into that portion of the world is fresh on my mind)
As just one example, do people really think that old people would be dying in the streets and poor people would be starving all over the place if benevolent gooberment hadn’t come in and stolen (probably) $1-1.5 trillion (state + federal) per year to redistribute out to others? If you do, you really have to consider exactly who has the dark view of human nature.
Isn’t this essentially what happened during the Great Depression, and the reason that things like Social Security gained enough traction to be put into place? I can agree that many things perhaps have gone too far, but things tend to get started for a reason. Prior to the GD, there was a progressive income tax system, but very little “redistribution” of that money, it was more set up in a progressive manner because of the diminishing marginal utility of money/wealth to individuals.
BTW – I’ve already voted no too, though mostly it’s because I see no reason to have direct democracy intertwined with representative government – it should be all one or all the other. That said, direct democracy in a multicultural and undereducated place like California is a ridiculous idea that needs to be scrapped (it could probably work in the Scandinavian countries and seems to work ok in Switzerland).
Hey Brutus,
Good to see you back – I hope you had a good time in Dubai.
About “proper” level of government, who knows exactly? With the caveat that I understand that this will never be implemented (and I wouldn’t structure my life/investment choices around the idea that it would), my sense is that Fed spending should be less than 10% of GDP (it’s about 20-25% now). Once social security and medicare would be eliminated, along with attendant bureaucracies and associated interest on debt (even if that interest is just being accrued in the phony trust accounts), you’d eliminate half the federal government right there. I think a priori that about 4-5% of a country’s output should be spent on external defense and associated bureaucracies (I know, it’s expensive and inefficient, but I break ranks with pure libertarians here b/c the world is a dangerous place and always has been – more so in the era of modern weaponry that began with WWI in my estimation).
State spending should pick up some of the slack from the elimination of the Federal welfare programs (SS and Medicare) but even there I’d cut back welfare to truly destitute cases that a rich society shouldn’t tolerate. Eliminate public schools, again with the caveat that perhaps there needs to be a safety net basic education system for the tough cases (very poor, mentally challenged/handicapped, etc.). You do need some significant spending on infrastructure pucblic goods, and some spending on basic scientific research on both the Fed and the state levels seems justified for a rich society.
All told, I’ll just throw out a figure of 10% total spending for Feds, and let the states choose for themselves but I’d guess around 10% of total GDP is appropriate for the states (aggregated all together). Again, all told, that would be about $2.5-3.0 Trillion annually returned to the people, as compared with current total Federal and state predations, and I think with that we could create a civil society, educate our kids, and provide a decent standard of living for the overwhelming majority of people in the US, with freedom and opportunity for all. (We haven’t done that poorly, after all, even with government stealing upwards of 40% of our output for a long time).
About the rationale for social security, it wasn’t old people dying on the streets in the Depression. It was FDR wanting 20 million votes in the 1936 elections. At the time, it was specifically pointed out that the scheme was a ponzi, and it was suggested that benefits not be paid until existing workers had paid in to the system, but that would not secure the votes of the 20 million elderly who didn’t have the time to accrue the benefits, but still wanted the check and could vote. Shlaes goes into it pretty well iirc in her Forgotten Man book. Sounded a lot like the sort of calculus undertaken by Bush with regard to the drug entitlement or LBJ and medicare or BHO is going to undertek with respect to illegal aliens. It’s the oldest adage in politics: “I’m going to take from Peter to give to Paul” sounds pretty good to Paul 😉
I was going to let you have the last word JAL, but it seems you want to continue the conversation, which is fine.
Saying that your ideas are a good example of muddled populism is not an ad hominem attack by the way, it is an attack on your ideas, not on you. I guess I should have said “Jim’s ideas are a good example…” instead of “Jim is” but my meaning was clear enough. I apologize if my words gave you offence.
When they say “We’re from the government and we’re here to help you,” he believes, along with a lot of SF’s populace…
I don’t think you should put words in my mouth, since you don’t really know what I believe. I am not particularly ideological, but I am a big believer in what works. I have travelled all over the world and the societies that function best, by a large margin, are the Northern European ones, particularly The Netherlands, but also Sweden, Norway and Finland.
I don’t particularly believe in government for governments sake, but I do like to see society organized in the way that has the least waste, corruption and violence. I am certainly a Democrat now, perhaps even a Democratic Party activist, but for most of my life I was independent. I was driven into the arms of the Democrats by the increasingly bizarre and incompetent leadership of Bush, Rove, Cheney and DeLay.
If the libertarian system was so great, you would think that it would have been adopted somewhere, so I ask you, where is a place that has a form of government you think that the United States should emulate, or at least adopt portions of?
LMRiM has a particularly ammoral view of human nature, one that I believe in contraindicated by the evidence.
The purpose of government is for those who run it to plunder those who do not
Where is the plundering in Sweden?
Just because our leadership over the last 27 years has had a particularly venal view of human nature and has taken advantage of their position of power to enrich themselves personally does not mean that this is the inevitable outcome.
If you look on a continuum of state power, you can see that those with the least government, such as Somalia are terrible places to live as are those with the most, like North Korea. Libertarians in general love to point to places like North Korea, but ignore the human suffering in Somalia. Or even in our own country in the 18th century.
If a smaller government was so great LMRiM, why do we see old people dying in the streets and poor people starving all over the place in Mexico. Mexico has a much smaller government tax take, as a percentage of GDP. You can see where a weak central government leads, just by looking south of the border. In weak states, people are exploited by the wealthy, instead of by government. I can see how a rich person might like that.
Those things that are best run by the private sector should be run by them and those that are best run by government should be run by them. Simple in theory, hard in practice, I know. And I agree that the populace does have to engage in eternal vigilance in watching the government, or we end up with messes like we are cleaning up now in the banking sector. There were plenty of us warning of the danger when Glass-Steagal was overturned, we were just ignored in the general rush to deregulation.
As to your specific question about charitable contributions, do I get to include political contributions and non-deductible contributions to groups like the ACLU and EFF? How about contributions to extended family member’s education, health care and housing? If so, my contribution rate is something like 10% of my net, if not, a few percent less. It was higher before I was married, but my wife does approve of me giving so much away. I am also in a 44%+ marginal tax bracket and subject to AMT, so it is not like I am advocating for everyone else to contribute to civil society without doing my part.
What percentage of your income did you give away last year?
Good to see you back – I hope you had a good time in Dubai.
Let’s just say I’m glad to be back 😉 I got a new laptop just before leaving to go over there, and somehow Socketsite didn’t make it into my “rotation” of websites before I left. I hadn’t really thought much of it until I got back here and needed my SF real estate fix 🙂
You want to see a real estate bubble that puts anything in the US to shame? Visit Dubai…
LOL… including support of your own family as a charitable contribution? And advocacy for your political causes? Neither of these count as “charity” IMHO.
My givings were nowhere near 10% (though of course, neither were yours apparently), but then again, I’m not the one arguing that the government should be taking even more. (Still, even if it were only a percentage or two to real charity, that makes you better than most Democrats, who argue for dramatically increased taxes on others while giving little or nothing themselves.)
Any any event, look, I’m not the one who started with the partisanship here – I responded to your labeling the GOP and people like me the cause of the state’s fiscal problems, merely pointing out that the Democrats have controlled the legislature for quite some time now, and that neither I nor most other sane people believe that the government can be trusted not to spend a rainy day fund.
You want more taxes and bigger government, and think they can be trusted not to overspend, blaming the party which has not controlled the legislature in god knows how long for our problems. I, on the other hand, think our government is already too big and horribly wasteful as it is, that I should be able to keep more of what I earn, and that neither party can be trusted not to overspend, but certainly not the party in control – and I say this as someone who has spent thousands of hours working for the government in procurement and had direct exposure to the level of waste, a level which so far exceeds anything in the private sector as to be shocking and sickening.
We’re just not going to agree. Peace to you and yours, and g-d save us all.
“You want to see a real estate bubble that puts anything in the US to shame? Visit Dubai…”
Worse than Florida!? (just kidding)
Brutus, did you happen to see the labor camps on your way in from Dubai International airport? It is truly one of the most disturbing places on the planet, and a sad result of all that is wrong with modern society and “free markets”. It is a place I hope to never have to visit again.
http://www.qatarliving.com/node/14416
http://www.guardian.co.uk/global/gallery/2008/oct/08/1
As a former 1.5 year resident of Sweden working on a resort project near Helsingborg, I would rather pay their higher taxes as long as I could enjoy the benefits of their society including their healthcare, safety, education and much more compassionate society.
Sorry Morgan, wish though you might (and I might be with you there), you cannot buy fundamental cultural changes with higher taxes.
Instead, you will buy more experiences like those with the DMV, IRS, airport security, zoning board, and others here in the good old U-S-of-A.
Sound like fun? Still in for giving them control of health care, education and every other aspect of your life, except by the same kinds of people who run our government institutions here already? Apparently so, because it seems that’s where we’re all going. One big trip to the airport or DMV – I can’t wait.
Oy vey, this debate is not going to go anywhere. I need a beer, have a good weekend all and see you in a later thread.
A favorite tactic of corp. bureaucracies is to blame government bureaucracy/regulations for their own B.S. — large financial institutions and insurance companies are classic examples.
The corps use these excuses as a cover for inferior (cheaper) levels of service, and the hapless customer gets to exercise his/her Constitutional Right to complain about the government (see above).
I guarantee you the feds will not do a worse job of “managing health care” than the corps already do. If I could get a corporate bank account directly from the treasury (e.g., something like treasurydirect.gov), I’d do it.
The DMV comments need to be upgraded too — that is mostly done online now (for rare in-person events, make an appointment online). Airport security can be “solved” with fast pass (e.g., Clear).
From personal experience, the CA state tax bureaucracies (EDD and BOE) are indeed terrible — but by comparison the IRS is actually pretty good, tax code complexity aside.
Re the big, cumbersome, DMV, I just renewed my diver’s license on-line this week. Took 3 minutes and the new one just arrived at my house yesterday, four days after renewing. dub dub is right that the Rush Limbaugh government-is-always-bad types need a new red herring. I’m undecided on gov’t health care, but it’s difficult even to imagine anything worse than the bureaucracy and headaches from my very expensive private plan (about $15,000 for our family of four).
Here’s my latest story from the DMV. My identity was stolen and used repeatedly in falsifying tickets and an accident and arrest as well. The person had memorized my DL number and met my description (height, weight, etc.), so when he gives the cops my name and DL number, they simply believe him. This has happened several times over a period of years, and I’ve had to hire a lawyer and go to court repeatedly to deal with these falsified charges, and even gotten the individual responsible convicted of impersonating me last year.
However, the DMV refuses to issue me a new driver’s license number, despite numerous documented incidents of impersonation using it, including a conviction – their policy only allows new numbers to be issued for financial fraud, and they say that merely using it to impersonate me at the scene of an accident or being ticketed or even arrested repeatedly doesn’t qualify, so I am left with no choice but to let this person use my ID as much as he likes and to fight the charges one by one, over and over again. I’m actually seriously considering not renewing my driver’s license and driving without one since apparently the public is permitted free access to it and if I leave it valid, arrest warrants may be issued on it and I could end up in jail – I’d actually be better off driving without a license than driving with a license that carries unlimited civil and criminal liability for the acts of others.
See, isn’t the DMV helpful and reasonable? Imagine your health care decisions being made by people like this, reading a nonsensical policy from a script, applying no common sense and not caring at all about your predicament, with no liability at all (remember: you can sue an insurer for acting in bad faith, but your chances of recovering from a government worker or agency are zip).
Let’s just say my enthusiasm for government bureaucracy is apparently not quite as high as it is for some others here.
The Governorship of California has been held by Republicans for 21 of the last 26 years, but it is not politically expedient for those who prefer to bash the Legislature to remember that fact. The budget has to be passed by the governor, and is in fact submitted by him, so both parties have as much to blame for the current State of California budgetary mess.
But the initiative process is the main culprit.
I am voting no on 1C, but yes on the rest of them, even though they will probably all fail, except the symbolic 1F. I should really just start voting no on all of them, because of my disgust with the entire process.
Most people don’t like the DMV, but ask them what they think of their public library or their local park. Post-secondary education in California is particularly excellent, though the K-12 public schools could use a little free market competition, imo.
Social Security has been accused of being a “Ponzi Scheme” from the start, but if it really was, it would have collapsed a long time ago. The original recipients, who did not pay into it all, are all dead. We do have the problem of the Baby Boomer demographic being large, but this would be true however you decided to pay for their retirement. A society with a high dependent: worker ratio is going to have a problem, no matter how you arrange it.
If government spending was inherently wasteful, you would tend to see per person GDP trend upward over time in those countries like the US that spend a smaller portion of their total GDP via government expenditures, but what you see is slightly the opposite. The evidence is actually pretty mixed though. I think what really matters is how wisely the money is spent, by either actor.
http://www.stateofworkingamerica.org/swa08-ch08-international.pdf
See chart 8.1
I think our terrible health care system is holding us back.