Wednesday, July 9, 2008

Hours & Roads

From Daniel Hamermesh:
Nonetheless, he wanted to cut back a little, perhaps from 100 percent to 75 percent work time (which meant from 60+ to 45 hours per week), because the money was less important than before and he wanted more leisure. The head of his hospital-based practice said the work was either 100 percent or 0 percent"

A major reason why employers have this kind of leverage is employment-based healthcare. There is nothing magical about the number 40, but in most wage-based industries, an employee must work 40 hours or lose coverage and worry about what could go wrong. Though many universal-coverage healthcare plans can be flawed, this is one major and completely overlooked benefit: it corrects this labor market externality.

Also in the category of "distorted markets as status quo" are roads. Since the gestation of post-war suburbia, fanned by Eisenhower and auto lobbyists, it has been considered a government duty to supply (by which we mean: "subsidize," or perhaps "subsidize in full") roads for transportation. Want to run a train? Get your own damn rails. To paraphrase James Howard Kunstler, America took its post-war wealth and invested in an infrastructure that has no future.

So, when an individual considers transportation options, one sees:
  1. a heavily subsidized automobile option (free roads) with vast hidden social cost (traffic and pollution),
  2. versus public transportation, with internalized infrastructure costs (privatized track), but far fewer of the hidden social costs.

Maybe if we start to see more private roads (as Dubner observed above), people might notice the inconsistency.

Not to say that roads and rail should all be private: a more equitable solution could be to consider rails, roads, and sidewalks to be public infrastructure equally, each to be funded 100%, and then allow both public and private transportation options on all mediums, offering subsidies where there is community benefit and taxes where there is community cost.

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