Remember when biking used to be a fun thing rather than An Important Thing?

Lisa Schweitzer: Remember when biking used to be a fun thing rather than An Important Thing? « Sustainable Cities and Transport:

“I think one of the reasons why there is a resistance to otherwise nice things like local foods and bicycling concerns the often terminally joyless way their advocates present the Great Social Good that The Better People Who Do These Things create, unlike you, you indolent, planet-killing dolt.”

Lessons from the state shutdown. Avoiding fragility in governance.

Having recently experienced a Minnesota state government shutdown (and on the verge of a federal one), we should draw some more fundamental lessons than the left vs. right politics are messed up, personalities affect outcomes, etc. These are all true given the structure of the game. Why must the game be structured this way?
We have over the past two centuries centralized government, removing functions from independent groups of individuals (charities, guilds, clubs, companies) and brought those functions into centralized government. (Well, several single centralized governments: national, state, local). There were reasons for all of these changes as they occurred, but the reasons at the time may or may not still apply. Sometimes the government service emerged from a central government when the economies of scale were large, sometimes the function is a result of state takeover of private institutions.

I propose the lesson to be learned is that, to avoid a total government shutdown, the government should not be totally central.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

The budget should not be unitary, with all resources into a giant pot, where it is centrally allocated out to all functions. This structure makes the government fragile. A robust government should not shut down because of an impasse. Each department/division/agency should have its own revenue sources and its own expenditure authority, most of which are not subject to annual legislative approval. So for instance, the Department of Transportation has a gas tax and some miscellany. A transportation commission decides the expenditures and the revenues required to satisfy them, and with approval from a public utilities commission for any changes in rates, goes forth, and collects revenue and spends money as needed to provide services. This kind of DOT is not shut down because of a decision impasse in some other department.

Looking up the functions of state government, I found the list below of the Governor’s Recommendations by agency. The shear number of agencies is almost enough to make one a (big ‘L’) Libertarian.

I believe many of these functions are important, and many of course are relatively small. In the small category, The Barber Board, for instance has $188,000 in expenses and $221,000 in revenue. But does barbering really require (a) state licensure (Matthew Yglesias has been doing a series mocking licensing requirements), and (b) state budgetary approval, i.e. shouldn’t this be self-managing and autonomous, so it does not need to be on budget. Why should a profitable unit of state government be subject to shutdown? Can’t the state just charter a Barber’s Guild (Civil Engineer’s Guild, etc.) and be done with it?

[We could then deregulate, and allow you to get your hair cut by someone not in the Barber’s Guild, at your own risk of a bad haircut. Similarly (if not more controversially) with a Civil Engineer’s Guild, where there would be a regulation for full disclosure so that the building would have to prominently identify the engineers and architects and who certified them. If insurance would not be given on buildings not designed by certified engineers, few would build, live in, or work in such buildings. If insurance is readily given, perhaps the certification is not deemed valuable.]

Many of these regulatory or service units are, or should be, self-funding, suggesting they need not be state agencies. Many of the “Boards” fall into this category.

DOT of course could break even with an appropriate user fees.

Corrections historically was a profitable agency, Stillwater wanted the prison back in Territorial days as the free labor helped the logging industry. I am not suggesting we recreate that, but if we reduced the number of prisoners by decriminalizing more drugs, e.g., and then managed the remainder, we might have companies bidding to operate prisons, rather than subsidizing it.

Police similarly could break-even on many crimes, misdemeanors and offenses, by charging appropriate fines. This might create perverse incentives if carried too far, fines could not be too high or the police would have no revenue due to no crime. But fines instead of, or in addition to, prison could be considered for more non-violent crimes. Other departments also have enforcement/fine characteristics (human rights, agriculture, commerce, labor and industry, etc.) which could be separated. An off-budget Board (appointed by the Governor with Legislative consent) would manage the revenue and expenditures, and would have authority over some revenue stream (e.g. licensing) (as authorized) until the authority was removed.

If we can separate the regulatory and redistributory functions, and rethink what is provided by government vs. what government wants to ensure is provided, we can have a robust network of separate, smaller institutions (public and private), and a minimal centralized structure that can be paralyzed at the whim of a few parties.

This is a blog post, not a thesis, so I won’t go into every department and suggest how it could be given autonomy (revenue + authority), but many of these are self-apparent.
The list of State Departments

  • Administration Dept
  • Agriculture Dept
  • Commerce Dept
  • Corrections Dept
  • Education Dept
  • Employment Economic Development Dept
  • Health Dept
  • Human Rights Department
  • Human Services Dept
  • Labor & Industry Dept
  • Military Affairs Dept
  • Natural Resources Dept
  • Public Safety Dept
  • Revenue Dept
  • Transportation Dept
  • Veterans Affairs Dept
      The full list of state agencies
    • Accountancy Board
    • Administration Dept
    • Administrative Hearings
    • Agriculture Dept
    • Agriculture Utilization Research
    • Amateur Sports Commission
    • Animal Health Board
    • Architecture, Engineering Board
    • Arts Board
    • Asian Pacific Council
    • Attorney General
    • Barber Board
    • Behavioral Health & Therapy Board
    • Black Minnesotans Council
    • Campaign Finance & Public Disclosure Board
    • Capitol Area Architect
    • Chicano Latino Affairs Council
    • Chiropractors Board
    • Combative Sports Commission
    • Commerce Dept
    • Conservation Corps Minnesota
    • Corrections Dept
    • Cosmetology Board
    • Court of Appeals
    • Dentistry Board
    • Dietetics & Nutrition Practice
    • Disability Council
    • Education Dept
    • Emergency Medical Svcs Reg Board
    • Employment Economic Development Dept
    • Enterprise Technology, Office of
    • Explore Minnesota Tourism
    • Gambling Control Board
    • Governor’s Office
    • Guardian Ad Litem Board
    • Health Dept
    • Higher Ed Facilities Authority
    • Higher Education, Office of
    • Historical Society
    • Housing Finance Agency
    • Human Rights Department
    • Human Services Dept
    • Humanities Center
    • Indian Affairs Council
    • Investment Board
    • Iron Range Resources & Rehabilitation
    • Judicial Standards Board
    • Labor & Industry Dept
    • Legal Profession Boards
    • Legislature
    • Lottery
    • Marriage & Family Therapy Board
    • Mayo Medical School
    • Mediation Services Bureau
    • Medical Practice Board
    • Metropolitan Council
    • Military Affairs Dept
    • Minn Management & Budget
    • Minn State Academies
    • Minn State Colleges & Universities
    • Minn State Retirement System
    • Natural Resources Dept
    • Nursing Board
    • Nursing Home Admin Board
    • Ombud For Mental Health & Developmental Disabilities
    • Ombudsperson for Families
    • Optometry Board
    • Peace Officers Board
    • Perpich Center for Arts Education
    • Pharmacy Board
    • Physical Therapy Board
    • Podiatry Board
    • Pollution Control Agency
    • Private Detective Board
    • Psychology Board
    • Public Defense Board
    • Public Employees Retirement Association
    • Public Facilities Authority
    • Public Safety Dept
    • Public Utilities Commission
    • Racing Commission
    • Revenue Dept
    • Science Museum
    • Science & Technology Authority
    • Secretary of State
    • Sentencing Guidelines Comm
    • Social Work Board
    • State Auditor
    • Supreme Court
    • State Taxes and Local Aids and Credits
    • Tax Court
    • Teachers Retirement Association
    • Transportation Dept
    • Trial Courts
    • Uniform Laws Commission
    • University of Minnesota
    • Veterans Affairs Dept
    • Veterinary Medicine Board
    • Water & Soil Resources Board
    • Workers Comp Court Of Appeals
    • Zoological Board

The collapse of the Railway Mania, the development of capital markets, and Robert Lucas Nash, a forgotten pioneer of accounting and financial analysis

Mathematician and Transportation Historian Andrew Odlyzko has just released The collapse of the Railway Mania, the development of capital markets, and Robert Lucas Nash, a forgotten pioneer of accounting and financial analysis

Abstract: It is well known that the great Railway Mania in Britain in the 1840s had a great impact on accounting. This paper contributes a description and analysis of the events that led to the two main upheavals in accounting that took place then, and of the key role played by Robert Lucas Nash in those events. He was a pioneer in accounting and financial analysis, providing studies on the financial performance of railways that were more penetrating and systematic than those available to the public from any one else. His contemporaries credited him with precipitating a market crash that led to one of two dramatic changes in accounting practices that occurred in the late 1840s. Yet his contributions have been totally forgotten.
The collapse of the Railway Mania provides interesting perspectives on the development of capital markets. The accounting revolution was just one of the byproducts of the collision of investors’ rosy profit expectations with cold reality. Shareholders’ struggles to understand, or, more precisely, to avoid understanding, the inevitability of ruin, have many similarities to the events of recent financial crashes. The Railway Mania events thus provide cautionary notes on what even penetrating accounting and financial analysis reports can accomplish. Railway share price behavior suggests that Nash’s contributions had a much smaller effect than his contemporaries gave him credit for.

One of my favorite quotes (p.8), which is still applicable:

On another line, a shareholder complained that his company’s directors kept claiming construction costs were under control for three years, and then “the cloven hoof display[ed] itself” when it was revealed that costs were over 50% higher than projected. When sections of a line were opened for service, the standard claim that shareholders and the public heard was that “traffic had exceeded the most sanguine expectations of the directors,” and it often took years before it became clear this traffic fell far short of initial projections.

Strategic misrepresentation and optimism bias are not new phenomena.

China: Bullet trains collide in Zhejiang province

China HSR Train Crash
China HSR Train Crash

BBC News reports: China: Bullet trains collide in Zhejiang province

At least 11 people have died and 89 people injured after two high-speed trains crashed into each other in eastern China, state media reports.
Two train coaches fell off a bridge after derailing close to Wenzhou in Zhejiang province.
Details are sketchy but Chinese media report that one of the trains came to a halt after being struck by lightning and was then hit by the second train.
Rescue workers are at the scene, near Shuangyu town in Wenzhou.
It is not known how many people were on the trains at the time, but Xinhua news agency says each carriage can carry 100 people.
Initial reports suggested one bullet train had derailed at about 2030 (1230 GMT) – the D3115 travelling from the provincial capital Hangzhou to Wenzhou.
But local television later said the first train had been forced to stop after losing power due to a lightning strike, and was then rear-ended by another train, causing two of its carriages to fall off the bridge.
“D” trains are the first generation of bullet trains in China, with an average speed of just short of 100mph (160km/h).

I suspect at least one official will get executed over this. High Speed Trains should not collide. Japan has had approximately 0 deaths due to these kinds of failures (excluding suicide) in 50 years of Shinkansen operation.

Lane Closed to Ease Congestion

Lane Closed To Ease Congestion (Fail Blog)
Lane Closed To Ease Congestion (Fail Blog)

Phil sends along this funny sign from FAIL Blog: Lane Closed to Ease Congestion
The comments have a plausible explanation. There is debate about whether to force merges at the farthest upstream point, (before the queue starts, so that everyone is orderly) or at the farthest downstream point (to allow people exiting upstream of the bottleneck to have a shorter wait) and have a zipper merge. The answer is probably it depends.
This is discussed in a Times article

An agency spokesman insisted that the traffic would be worse with the lane open. “It may sound barmy but in fact it makes a lot of sense because, if it was left open, traffic from the two lanes would have to merge into one at the top.
“This causes a lot of aggro and a lot of stopping and starting which has been shown to delay traffic even more.”

New lease of life for Kenya’s ‘lunatic’ railway

BBCNew lease of life for Kenya’s ‘lunatic’ railway

Kenya has ambitious plans to build a modern railway that could be a catalyst for transforming East Africa.
A major part of the project involves upgrading the existing line between Mombasa on the Indian Ocean to the shores of Lake Victoria – the route once dubbed the “lunatic line” because of the high cost of building it – both in terms of money and human life.
The upgrade in Kenya will cost between $3bn to $5bn (£1.8bn to £3bn).
Mugo Kibati of Kenya’s Vision 2030, an ambitious development plan for Kenya that aims to see annual growth rates of 10% over the next 20 years, said the new railway would play a key role in bringing that about.

Privately (and/or foreign, in this case Chinese) funded new railways are completely appropriate in “developing” countries, building them is how they replace the “ing” with “ed”.
But what happens when the railroad goes bankrupt? The foreign capitalists (communist/capitalists) lose their stock, but the railroad remains in place, definitely a good thing for the locals. (Now, why would you, or the Chinese, invest in such a thing, that is the difficult question).

North St. Paul’s ‘Living Streets’ program aims to make roads safer, more environmentally friendly

Pioneer Press: North St. Paul’s ‘Living Streets’ program aims to make roads safer, more environmentally friendly

North St. Paul has added its own twist to a metro area street-construction plan.
The city has taken the national “Complete Streets” initiative – a set of policies calling for better-designed and usually narrower roads – a step further by adding eco-friendly elements such as trees and rainwater gardens to the design.
Advocates hope North St. Paul’s plan, dubbed “Living Streets,” will prevent polluted runoff from entering storm drains, create safer streets and make neighborhoods more attractive – all at less cost to the city.
Traditionally, “streets were looked at very narrowly as places for travel,” City Manager Wally Wysopal said. “Now we realize we need to look at their impact for overall environmental concerns.”

Sounds good.
If “living streets” is going to become a movement, it should get a domain like or , the first is held by squatters, the second by an individual advocate. is a pedestrian charity, close but not quite.

The economics of the Michelin Guide — Marginal Revolution

Ce Que Michelin A Fair Pour le Tourisme (Bibendum)
Ce Que Michelin A Fait Pour le Tourisme (Bibendum)

Tyler Cowen on The economics of the Michelin Guide

Michelin stresses though that when taken together, the maps, guides and digital businesses are profitable. But the losses incurred by the red books have become such a concern that Michelin has turned to outside consultants. Accenture looked last year at three different scenarios for the red books, including outright closure.
The nuclear option was quickly rejected, partly in recognition of the undoubted brand value of the guide but also because of the political impossibility in France of such drastic action. However, Accenture warned that to carry on with things as they are today would mean yearly losses at the guide hitting €19m by 2015, representing a cumulative loss of €70m over the next four years.
The thinking seems to be that Michelin would do well to seek a share of the good fortune that its awards bestow on restaurants, possibly by creating a “red book” website that provides paid-for links for those establishments with Michelin stars and allows users to make online reservations.

See article in the Financial Times

Better news for devotees of the red book’s star-system is found in a separate internal study carried out for those now running the company, who wanted to know just how much all that Guide Michelin publicity was worth to the bread and butter business of selling tyres. The study shows that the presence of Guide Michelin in a country means people are up to 3 per cent more likely to buy its tyres. With €5bn of tyre sales in the first three months of this year alone, these are figures to be taken seriously. Certainly, defenders of the faith are eager to stress the huge amount of “buzz” every time a guide is launched or Michelin starts covering a new city.