Thursday, February 17, 2011

Michael O'Hare on "Right-sizing government"

From The Reality-Based Community
All across the northern US, diesel school buses owned by, or contracted for, by government school districts uncontroversially carry kids back and forth to school. The school district could tell parents to get their kids to school themselves, and give out the phone number of a private bus company; government would be smaller, but except for a lot of wasted time on the parents’ part arranging bus transport in phone trees, nothing important would change. About the same amount of fuel, buses, tires, and driver labor would be used up, and about the same value created. If arranging this service privately were so complicated and daunting that people started driving their kids to school, of course, the costs of the private system might be much higher, wasting parents’ labor as private chauffeurs, using much more fossil fuel, and congesting the roads.

Among the costs of school busing, whether private or public, is asthma and respiratory disease caused by the diesels idling for hours to keep the buses warm, polluting the pickup areas with toxic chemicals and soot. It turns out that a propane heater in the bus would allow us to get the same transportation service and save a lot of illness and medical care. How much? According to the EPA, twelve times as much as the heater costs. As the heater isn’t free and the bus company doesn’t pay for the asthma, these heaters are a market failure and undersupplied unless the government does something. What can it do? There are several ways to skin this cat. We could have government issue a job-killing oppressive regulation administered by jack-booted thugs to require that every school bus not only have headlights and good brakes but also a propane heater if operated north of some latitude. We could raise economy-crippling taxes and pay school districts all or part of the cost to install these heaters. We could gin up a nanny-state intrusive public relations campaign to motivate parents to demand that their kids’ buses have and use heaters. The differences among these are interesting and getting it right can save some resources, but at the level of this discussion, if they get the heaters installed and operating, they all cost about the same and provide the same benefits.

Amazingly, EPA has zeroed out the clean diesel program that gets this 12:1 bonanza in the president’s budget. How could this be a good idea? Well, it will make government smaller. A bad idea? Pollution from vehicles is a classic market failure; the market won’t abate it and in this case, it hasn’t, even though ending this particular pollution creates twelve dollars’ worth of health for every dollar’s worth of propane and metal it uses up. Not putting heaters in the buses will also make taxes lower, but the locals will pay at the doctors’ office and the drugstore, twelve times as much. Deciding this question on a “less government” or “lower taxes!” criterion simply destroys net value, in this case in the form of children’s health, impoverishing the citizenry in the name of a vacuous slogan.

What can it mean that we “can’t afford” heaters in school buses? One could better ask, can a society afford to sicken its children this way - when this incredible bargain, where a dollar gets you twelve, is offered for sale, can we afford not to buy all we can get? We are spending the tax dollar it costs privately for things that aren’t even close to being worth what we could get for that dollar in this deal, so we can obviously afford the trade.

Neither of the two decisions, public vs. private provision of school bus transport, and public provision vs. non-provision of bus heaters, is illuminated in the slightest degree by their effect on tax rates or on the size of government, and “can’t afford” in a context like this is simply a lie. Taxes are too high when there are programs in government that create less value than they use up, and too low when there are programs that would create net value if we assigned them to government. Government is too big or too small by precisely the same rules. Trying to make the conversation simple enough for Fox News analysts to rant about by reversing these rules of inference (which actually seem pretty simple to me) is monomaniac lunacy, or cynical mendacity in the service of selling advertising time or getting votes, or both; it’s not politics and certainly not governance.

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