The Causes of Inflation

Consumer prices are up 7% year over year, the highest rate of increase since 1982. It's causing major headaches for the White House. Until we diagnose what’s really causing the inflation, we won’t be able to treat it, said economist Stephanie Kelton. (Axios, 1/24/2022)

The causes of inflation are rather obvious now. Free government money has created a substantial INCREASE in DEMAND. On the other hand, worker shortages worldwide due to free money from governments (why work... often for less $$$), and more worker shortages due to Covid illness/fears/deaths, retirements and fatigue (see nurses, teachers and cashiers) have caused a substantial DECREASE in SUPPLY. 

The reduced supply of materials and workers to create products and services that people demand has pushed costs up, which is inflation.

These are the main causes for the inflation. Other parts of the cost increase include infrastructure problems (capacity at ports and warehouses), energy jitters due to political games (Russia) and due to renewable and other expensive mandates, regional weather problems that compound the difficulties above, and various national or regional controls and restrictions for Covid that reduce productivity or directly increase costs.

The worst is not over, because now there is pressure for wage increases in both public and private sector. Income increases will affect both demand and production costs, adding more fuel to the inflation fire...

Is Hawaii Becoming a Perfect Contradiction?

 

1. The state depends on tourism but cannot guarantee covid regulations for conventions in 2022.
2. An island state without ferries but more than enough "environmentalists" that killed the Superferry.
3. A state with the best astronomy in the world, but with enough cultural opposers that killed the 30 Meter Telescope.
4. A place where people have multiple jobs and things to do that they cannot carpool two or three at a time, but will take a train 500 at a time.
5. A place where politicians such as Ige and Caldwell do not deserve one term, but were voted into top office twice.
6. A state with a button pusher who drove us all nuts, and still kept his state job.
7. The state with the most workers per capita, but 15 months after the lockdown does not have nearly enough workers to clear the unemployment benefits backlog.
8. The Aloha State takes care of ohana, but has the most homeless per capita.
9. A state with modest incomes and high cost of (basic) living has exorbitant housing costs and a high preference for private K-12 education at $20,000 or more per year!
10. A state having among the highest taxation delivers among the worst public K-12 education in the US.
11. A state that has a waste to energy plant that makes electricity, but prefers to ship recycled paper waste 2,000 miles away.
12. A state that has no connection to external electric grids for help, but focuses on unreliable intermittent energy for baseload power supply.
13. A state with a rich volcanic reservoir enough to solve its energy problem, but hates geothermal energy development (New Zealand has a profit sharing scheme for use of culturally sensitive geothermal energy for the benefit of the indigenous Maori.)
14. A state that has an 85% dependency on imported food, but converts prime agricultural lands such as Koa Ridge and Aloun Farms to cookie cutter suburban subdivisions (that are primarily car dependent too.)

How Much Do We Pay for Roads and Other Utilities?

Robert Poole of the Reason Foundation presented a comparison below in which I added my data from Honolulu, Hawaii. Thanks to the 12 solar panels on the roof of my house, and my moderate annual mileage (about 11,000 miles at 20 mpg), my costs are similar or better than average US costs.

However, the data below do not include vehicle registration fees which are part of the road charges we pay. My vehicle's registration is just under $30 per month but most light duty trucks pay about $500 for registration on Oahu, which is over $40 per month. Even with registration included, the conclusion is the same. Roads are a vital infrastructure utility and we pay less for them than we pay for other infrastructure utilities.

=========== Poole's article:What Americans Pay in Highway User Taxes  ===========

HNTB Corporation last month put out a useful analysis that compares what Americans pay for roads and highways (via gasoline taxes) with what they pay for other basic infrastructure, such as electricity, water, cell phones, broadband, etc. I was not surprised to see that their results showed a far lower annual cost to use roadways (excluding tolled facilities) than for other user-charge-funded infrastructure. But I was surprised by how low the reported gas tax charge was.

In my book, Rethinking America’s Highways (University of Chicago Press, 2018), I presented a similar comparison, using data mostly from 2012-2013. My results were very similar to HNTB’s, except for the highway number. The comparative monthly figures are shown above.

My numbers make the same basic point—that people don’t realize how little they pay for roads compared with other basic infrastructure. But my fuel tax figure is about double that of HNTB. The answer appears to be that all HNTB’s figures are per household, except for fuel tax, which is per driver. By contrast, all of mine, including fuel tax, are calculated on a per-household basis.

I’m grateful to HNTB for making this kind of comparison, but we should not be presenting an unfairly low figure for what households pay for roads. The main point is to get people to understand that even $46 per household per month is far below what they pay for other basic infrastructure and is not sufficient to cover the capital and operating costs of our extensive roadway network.

Some Ways To Stop The Exodus To The Mainland

Quoted in an article on an important subject covered by Dan De Gracia.

Panos Prevedouros, chairman of the UH Civil and Environmental Engineering Department, says four dimensions are vital to retaining young people in Hawaii: “satisfying, well paying jobs; quality of infrastructure and built environment; housing availability and price; and the cost of living.”

I do have a few specific suggestions for the four items I mentioned to Dan, as follows:

1. Satisfying, well paying jobs... There is plenty good news here. Not only we have the lowest unemployment in the nation, but by 2020 the baby boomer retirement will become stronger. Engineers, business majors and other professionals will fare very well in job selection and remuneration.
2. Quality of infrastructure and built environment... This will remain a weakness as the state and city grapple with human centered issues (homeless and elder care), bad choices (rail and misguided energy endeavors) and generous promises (civil service employee retirement and health care) which leave very little left over for infrastructure improvements. Parenthetically, this is why I am no longer interested in running for executive office in Hawaii. My ability to deliver on these fundamental quality of life assets of society will be useless.
3. Housing availability and price... Leadership is needed to develop the remainder a Kakaako not as real estate safety deposit boxes for foreigners but as vibrant community for young (under 35) and old (over 65) with a fifty year P3, public private partnership, to develop reasonably priced rentals for unmarried young adults and for seniors in apartments with 1 and 2 bedrooms priced at, say, $1,200 and $1,600, respectively, with only 0.5 parking stall per apartment rented at $100 per month, plus incentives for transit and bicycle use. Three-four phases of about 500 units each will make a huge impact, and the amount of subsidy will be modest. The P3 is necessary to ensure quick, high quality development of the units and continuous maintenance for the life of the 50 year agreement; we do not want this done as a public housing project but as a long term for profit development with some taxpayer subsidy.
4. Cost of living... The subsidized apartments described in (3) above, in combination with adoption of non motorized transportation for short trips and car-sharing for longer ones, will allow the young to partly defeat Hawaii's high cost of living for a decade or more. Combined with a good income from the start, the young will be able to save enough to afford a house or large unit for developing a family and making Hawaii their forever home.

However, our politicians pay no attention and clearly have no sympathy for young adults making, say, $50,000 a year or more, who are contemplating the choice to stay in Hawaii, and barely make it, or leave Hawaii for better opportunities. They are busy with their liberal kuleana: Taxation, land control, environmental control, more control and regulation, the homeless, the poor, the "living wage" and the like. This tells us a lot about priorities and the future of Hawaii... For decades now, the young ones have heard this message loud and clear.

HART Rail: Local Cost 34 Times More than H-3

I'd like to thank the Honolulu Star Advertiser for publishing my article with Cliff, originally titled HART Rail: Local Cost 34 Times More than H-3.

Rail will never be as practical as roadways
By Panos Prevedouros and Cliff Slater
July 11, 2017

Oahu’s H-3 freeway endured political controversy and major engineering challenges, such as the boring of two miles of tunnels through solid rock of the Koolau mountains and erecting 160-foot columns for the windward viaduct. Even so, the rail’s construction cost is exorbitant compared with the H-3’s — and that cost to local taxpayers, as explained below, shows how poor the rail choice was and how irrational it would be to continue.

If Mayor Kirk Caldwell is to be believed, the 20-mile elevated rail system will cost $10 billion from Kualakai Parkway to Ala Moana Center, minus $1.55 billion (hopefully) covered by the Federal Transit Administration; and about 15 percent paid by Oahu’s unsuspecting tourists. The rail guideway could instead be used to run buses, providing one traffic lane per direction for a total of two lanes. So its cost to the local taxpayer is $180 million per lane-mile.

The H-3 has two lanes per direction, four lanes total. Because the federal government provided 90 percent of its funding, the cost to local taxpayers was only $5 million per lane-mile, after being adjusted to 2017 using the Price Trends for Federal-Aid Highway Construction Index. Therefore, the lane-mile cost of rail to local taxpayers will be 34 times greater than the cost of the H-3.

The long-term cost difference is actually much greater when operating and maintenance costs are considered. Keeping the trains running will require an annual subsidy of $130 million, according to the city. This is dramatically higher than the annual cost of maintaining the H-3. This would be a new annual cost for Oahu, and it is roughly equal to the $150 million that the state Department of Transportation receives annually from the federal government.

But what about the benefits?

Unlike rail, H-3 connects to existing networks to provide door-to-door transportation options, which most residents and visitors require. Unlike rail, the H-3 directly benefits the military, emergency responders, police, commercial service providers, and public health officials.

The H-3 and other highways also facilitate public transportation by buses, taxi companies, ride-hailing services, and stand ready to serve the future dominance of autonomous, on-call vehicles. The vehicle fleet could be mostly electric in a few decades, which diminish the rail’s “green power” advantage claimed by its proponents.

Last but not least is the economy: Without roads, our economy is dead. Without rail, the economy is better off: That’s according to University of Hawaii economist James Roumasset, who explained that a project with benefits lower than its costs shrinks the economy and thereby shrinks employment. He also has pointed out how rail’s astronomical costs freeze out funding for the adoption of many sensible solutions to Oahu’s traffic congestion problem.

Efforts to continue rail past the intermodal transit center at Middle Street is wasteful and irresponsible public policy. No additional funds should be appropriated for rail. HART’s sole effort should be to bring the project to its end at Middle Street with the funds available, and use city funds for any shortage.

After the acceptance of the system for revenue service, HART should be dissolved; Oahu Transit Services should run all public transit so that good transportation service is provided islandwide. This would mitigate the problem experienced in other cities where the high costs of rail operations have resulted in major cuts of bus routes and service. (The rail’s final environmental impact statement states that 24 routes of The Bus will be eliminated or terminated at the nearest rail station.)

The costs of rail clearly show the massive present and future fiscal impact to Oahu and the state. The brave choice is to convert the project to an automated bus operation — but such bravery, imagination and public-duty responsibility are absent.

Hawaii's Demise Through the Eyes of the Economist

Homelessness in Hawaii is now international news. The local socialist mindset proposed to offer the homeless houses for free so we can get them off the streets so Honolulu doesn't look bad.  If this happens, the result is predictable: We will get even more of them.

In fact all this is old news: Homeless? Buy a One-Way Ticket to Hawaii -- Hawaii "is attracting homeless people from the mainland US by offering food, a bed, and health care for just $3 a day."

Obviously we are seeing the payoffs of decades of socialism:

• Homelessness
• Dilapidated infrastructure
• Poorly performing public schools
• Unfunded pensions
• Quick approvals for million dollar apartments in Kakaako
• Destruction of agriculture for cookie-cutter homes (Ho'opili)

 and of course,

• A useless multi-billion dollar rail.

In another article, the political base of Pres. Obama, Illinois, is called America's Greece!

Next year they'll do a follow up: Is Hawaii America's Spain? Spain sunk billions in renewables, trains and overbuilt subdivisions. And they sunk their country.

Ken Orski: A 21st Century Approach to Transportation Funding

As states acquire more familiarity with credit transactions and develop more capacity to pursue public-private partnerships, and as federal budgetary constraints continue, long term financing of new transportation facilities and of multi-year reconstruction programs could become the states’ primary method of expanding and modernizing aging infrastructure. At the same time, states' growing fiscal independence points to a new approach to funding the nation's transportation needs in the 21st century. 

In this prospective new model, routine highway maintenance and system preservation would continue to be funded on a pay-as-you-go basis with current state and local tax revenue as supplemented with federal-aid highway dollars from the Highway Trust Fund . However, capital-intensive multi-year reconstruction programs and new capacity expansion projects ---investments that are beyond the states' fiscal capacity to fund out of current revenue --- would be financed largely through public-private partnerships employing long-term credit and availability payments. 

Provision of credit would remain a shared responsibility of the public and private sectors. Private Activity Bonds, the TIFIA program and State Infrastructure Banks would continue to serve as the main public sources of credit assistance while additional public credit facilities could be created, if need be, to handle a growing backlog of reconstruction needs. Potential candidates include Sen. Mark Warner's National Infrastructure Financing Authority (IFA) and Rep.John Delaney's $50 billion American Infrastructure Fund (AIF). The latter proposal would capitalize the AIF by selling bonds to U.S. companies. In exchange for purchasing the bonds, companies would be able to repatriate a portion of their overseas earnings tax-free. (A somewhat similar approach forms part of Rep.Camp's tax reform proposal).

The Highway Trust Fund--- freed from the obligation to fund new infrastructure and large  reconstruction programs on a cash basis---would be placed on a more stable financial footing, while an ample supply of long-term credit ---both public and private---would reduce the need for contract authority and multi-year transportation authorizations. Meanwhile, states and localities would gain more independence to plan and fund infrastructure improvements on their own terms, free of excessive federal regulatory oversight.

It's a highly plausible answer in our judgment to the nation's search for a long-term solution to the infrastructure funding problem.  

Earlier versions of this commentary were presented at the Transportation Research Board workshop,  "States are leading the charge on transportation revenue initiatives," January 12 2014; at the Conservative Policy Summit of the Heritage Foundation on February 10, 2014; and in a Governing magazine interview dated February 27, 2014.

Kenneth Orski
Editor/Publisher
Innovation NewsBriefs (celebrating our 25th year of publication)

What do Americans Think About Federal Tax Options to Support Trasportation?

A long term study at the Mineta Transportation Institute at San Jose State University contains a number of interesting findings:

• A majority of Americans would support higher taxes for transportation—under certain conditions. For example, a gas tax increase of 10¢ per gallon to improve road maintenance was supported by 67% of respondents, whereas support levels dropped to just 23% if the revenues were to be used more generally to maintain and improve the transportation system.

In other words, people are tired of potholed and rutted pavements.  Fix it and stop the "system" talk which in most cases are more union bureaucracies or projects custom-set for special interests and favors.

• With respect to public transit, the survey results show that most people want good public transit service in their state. In addition, two-thirds of respondents support spending gas tax revenues on transit. However, questions exploring different methods to raise new revenues found relatively low levels of support for raising gas tax or transit fare rates.

See the point below. Most people want "good transit" because they think it costs a couple bucks per trip whereas the reality is much different and nationally the cost per trip on transit is over $10. How many people in San Francisco know that large portion of BART is over 30 years old and its refurbishment requires over $3 Billion?

• Not all respondents were well informed about how transit is funded, with only about half knowing that fares do not cover the full cost of transit.

I think that "about half" is a huge underestimation.  Only a small fraction of Honolulu's population knows that the average trip revenue on TheBus is about $1.50 but the actual average cost per trip is over $6.00.

AIKEA FOR HONOLULU No. 33 – American History 2000-2016: Early Summary of the Barack Bush* Era in 200 Keywords

• 9/11, Al-Qaeda, Taliban and IEDs.  Patriot Act, TSA, Homeland Security, drones. WikiLeaks and the Snownden-NSA leaks.
  
• Appointed Czars: Bush 33, Obama 38.  Executive orders: Bush 146, Obama 147. (First term only.)
• TEA Party and Occupy Wall Street. Universal Health Care (Obamacare) and Sequester. Debt ceiling.
• Bailouts and cash-for-clunkers.  Retro cars: Mini, VW Beetle, PT Cruiser, Chevy SSR, Toyota GT86.
• Big Presidential lies: “Saddam has WMDs” and “You can keep your plan.”
• So long Ronald Reagan, Steve Jobs and space shuttle.
• Gates Foundation. Gay marriage. GMO labeling.
• Kyoto protocol, and (less) global warming.
• “Smart Growth” and “Livability” = Pack people in condos and trains. U.N. Agenda 21.
  
• I-35W bridge collapse. D grade for Infrastructure. Hurricane Katrina, BP Deepwater Horizon.
• Green energy black holes: Electric car/Fisker, solar/Solyndra, corn ethanol and wind farm subsidies.
• Oil at $147/barrel in mid-2008. Frack it! Natural gas to the rescue. Keystone XL pipeline.
• Infrastructure finance, PPP, open road tolling, road concession, EZPASS, HOT lanes.
• Google car and Google glass. Toyota Prius, Twitter, and tablets. Nanotechnology, carbon fiber, and composites. 
• Boom: Android, Bitcoin, e-cigarettes, iMac, iBook, iTunes, iPod, iPhone, iPad, Made in China, Marijuana,  Facebook, Lipitor, Smart Phones, Tesla car, Viagra.
• Bust: AOL, AltaVista, Pontiac, Plymouth, Lehman Brothers, BlackBerry, HealthCare.gov (?)

Around 2016: The Baby Boom social security and other social net overloading, the large pension underfunding of several states, and ObamaCare direct and indirect costs come to full bloom (and gloom.)

Notable International: The economies of BRICs and PIIGS *** No “Arab Spring,” Egypt, Syria and Benghazi *** ~270,000 dead by 2004 Indian Ocean tsunami *** 2004 Athens Olympics *** 3/11 Tsunami and Fukushima disaster in Japan *** Castro, Chavez, Gaddafi, Kim Jong-Il and Bin Laden gone *** So long Margaret Thatcher, Nelson Mandela and supersonic passenger flight (Concorde) *** Full double-decker 550-850 passenger A380.

Notes (*): The Economist, Barack Hussein Bush, Dec 17th 2008 *** The Wall Street Journal, Barack Hussein Bush, June 5, 2009

PPP = public-private partnership (or P3)

BRIC = Brazil, Russia, India and China

PIIGS = Portugal, Ireland, Italy, Greece and Spain

This summary does not include Entertainment and Sports highlights.

Current Social and Economic Trends

Current major social and economic trends that affect the US and Hawaii are presented in this installment of my O'lelo show PANOS 2050: Solutions for a Sustainable Hawaii. From developments in China to politicians' pay in several countries.

Let Them Eat Cake

Honolulu's public is starved for traffic congestion relief. The power elite has responded with "let them have rail."

To many citizens and to most elected officials it is clear that if the government provides overhead rail, people stuck in traffic congestion will take it. "How come you don't support the rail?" They ask me. "Haven't you seen the traffic from Kapolei to the UH?"

Planners, politicians and hired spinsters have spend a lot of time and money in trying to convince people that rail is a solution to traffic congestion, jobs, development, the environment, etc. They've made many false promises. People are desperate for some relief to their daily commute after all the taxes they pay. It's easy to sell false hope.

Having lost most arguments about traffic congestion relief, environmental benefits and "thousands of new jobs," the propaganda has shifted to "transit oriented development" or TOD.

Planners, politicians and hired spinsters are extolling the mostly imaginary virtues of TOD.  Banks, developers and contractors are salivating (and bankrolling politicians) over those TODs because they are indeed, Taxes Offered to Developers to develop subsidized properties around transit stations. By the way, TOD needs Transit not Rail. Buses on express lanes will do fine, at a much lower cost than rail and transit buses offer direct connections to many locations because they are flexible.

There is little doubt that drivers and passengers dislike bumper to bumper traffic. However, they need their vehicle to meet the obligations of their daily life in space and time. Have you seen city administration and HART officials going places on TheBus?

People need and consume electricity in Hawaii. Electricity in Hawaii costs over 300% the mainland average. Have you seen people gathering wood to cook and heat water? No? Expect a similar reaction to rail. Very very few will switch to it.

John Brizdle recently commented: "It will be very hard to get car commuters to get out of their cars to ride rail. They will have to give up their comfortable seats, door to door service, snacks, drinks, Bluetooth phone conversations and then stand-up on rail averaging 27 miles per hour."

Indeed, the reality is this. If you build it, they won't come. Here is the evidence: During the last decade, the U.S. spent hundreds of billions of dollars in new rail systems and upgraded transit buses. Did transit share grow? No! Look at the U.S. Census data below. The share of mass transit is stuck at or below 5%. All the rest of urban travel is done by car, carpool, bike, walk, or telecommuting.

When the 2010 U.S. Census numbers came out in 2011, the American Public Transit Association gloated that mass transit ridership grew by 8.5% in the ten years between 2000 and 2010. True, but in the same decade the U.S. population grew by 9.7%. Clearly despite large expenditures and expansions, mass transit usage does not even keep up with population growth, let alone gaining share to provide any relief to roadway congestion.

No matter how sleek and expensive the new transit offerings are, less than 5% of the travelers chose them. Year after year. But government and politicians support these boondoggles. Why?  Follow the money.

Professor Bent Flyvbjerg of Oxford University has proved that government rail projects are by far the most fraught with deception and delusion among all large infrastructure projects:

• Deception means that the proponents lie to their constituents. Basically most cost and ridership forecasts for rail are very wrong. Costs are stated too low. Ridership is stated too high.
• Delusion means that the rail proponents believe that their project is better and different than all the failures of the past, including the national evidence shown above. 

This history of public trust and public funds mismanagement is repeating in Honolulu. There is little doubt that Honolulu Rail will be much like the Tren Urbano of San Juan, Puerto Rico. It was finished in 2006, almost 100% over budget and its ridership level has not even reached 50% of the forecast!

Rail projects are tax-payer financed and government-controlled. They take a decade or more to complete and in the end, like Puerto Rico, nobody is held accountable for the gross errors and lies. In addition to "history repeating itself" in Honolulu, I have 10+1 reasons why I do not support the Honolulu rail:

1. Rail is the 1% solution to Oahu's traffic congestion problem.
2. Spending over five billion dollars for a non-solution is unethical.
3. The original and the current system are very different. Offering the public 41% less for a 73% higher price is a lie and a breach of public trust.
4. Construction will cause critical lane closures and result in debilitating congestion for a decade.
5. TheBus will be changed from a core operation to a feeder operation hurting those that need its service the most.
6. Rail comes with a high security risk. It's a magnet for shooters, suicides, groping, robberies, drug trafficking...
7. Rail makes Honolulu less resilient during and after a natural disaster.
8. Cannot afford it. Hawaii is fifth worst state in the country in pension and health benefit funding liability.
9. City budgets will be crushed by the union raises, the EPA sewer consent decree and the pension liabilities. Adding the rail construction cost-overruns will lower credit rating and ability to borrow and pay debt and other obligations. This is a long spelling for bankruptcy.
10. During 2008 elections the ratio of pro-rail lies to anti-rail information in advertising media was more than 10 to 1. Taxpayer monies were used to support rail and, indirectly, rail-supporting politicians. That election process was indeed unethical. This repeated in 2012 with a smear campaign against Gov. Cayetano.

Last but not least, Honolulu is beautiful. Overhead rail is ugly and noisy. Installing overhead rail in beautiful Honolulu is a crime.

Rail is politics. Hawaii politics is all about Democrats. They proclaim their care for the little guy but they are cutting the little guy's bus, degrade his quality of life and cost of living with ever worsening traffic congestion, and raise the tax for one million little guys by several billion dollars for the benefit of capitalist interests!

Such politics take us back to eighteenth century France.  Instead of cheap roads for the 80% of travelers they offer pricy rail for the 6% who ride transit... "Let them eat cake" 250 years later.

-------------
Postscript: Visit John Pritchett's collection of rail cartoons. Although the rail is no joke, his cartoons are a humorous take of the history of Hawaii's biggest fiasco ever.

Comparing Economies: Hawaii and Greece -- The Writing on the Wall

Recently UHERO, that is the Economic Research Organization of the University of Hawaii, presented a detailed inforgraphic of jobs in Hawaii. The inforgraphic answers questions like: What type of jobs, how many and how much do they make?

UHERO explains their graphic as follows: Each colored rectangle represents a single occupation. The size of the rectangle indicates the number of jobs. The color of the rectangle indicates that occupation's median annual salary relative to the overall median.

The inforgraphic is pictured below but I strongly encourage to visit UHERO so that you can use your mouse to explore the data in each category that interests you.

What I found stunning is this: How is it possible that all these people live in Hawaii where a (roughly) $75,000 income is necessary, nearly double US average?

This graph suggests to me that Hawaii's economy is very much like Greece's pre-default economy. The majority of Hawaii earners are low earners particularly in comparison with the cost of living in Hawaii. So how do so many people make it in Hawaii? (How was it possible for Greece to be one of the largest markets for luxury cars?)

I suppose that at least three things are in play in Hawaii (like Greece):
(1) A large para-economy such as groups of laborers building rock walls, cutting trees and trimming bushes that never report any income. This is just an example. Check Craigslist for carport car mechanics as another example. And so on.
(2) Some under-reporting of taxes by people who have proper jobs or own businesses. (This was vast in Greece.) Do you recall the Hawaii Dept. of Taxation efforts to put cashier machines in farmers markets?
(3) A vast governmental welfare operation dedicated to income redistribution and supporting "the poor with Escalades in the public housing parking lots", as car repairman Nitta, 2008 mayor candidate used to say. Greece had that too.

The score Hawaii-Greece is 4 for 4: Many low income earners, para-economy, tax evasion and big welfare. Wouldn't you say that the writing on the wall is too obvious for Hawaii?

Ten Plus One Reasons Why I Do Not Support The Honolulu Rail Project

1. Among all travel options on Oahu, mass transit serves 6% of the travelers, just slightly above the U.S average of 5%. Focusing on this small piece of the pie is no way to solve the mobility problem of the 80% that drive and carpool, i.e., rail is the 1% solution because City's rosy numbers show that transit share will grow from 6% now to 7% with rail.
2. Spending over five billion dollars for a non-solution is clearly unethical and all responsible for it are breaching their professional and fiduciary duty. As an engineering professional and past candidate for mayor I want no part in this unethical endeavor.
3. The original system was supposed to be 34 miles through Kapolei to UH and Waikiki for about $3 Billion as shown in the headline above.  The current project starts a mile out of Kapolei and dead-ends at Ala Moana shopping center with no service to Waikiki or UH. Just 20 miles for over $5 Billion. If offering the public 41% less for a 73% higher price is not a lie then what is it?
4. In some respects Oahu's congestion is comparable to that of the largest cities in the nation chiefly because Oahu is lane deficient.  20 miles of rail and 20 overhead stations will cause critical lane closures and result in debilitating congestion for a decade or more. For example, look at the image below and consider what traffic in downtown Honolulu will be like with Ala Moana Boulevard closed for about a year? The impact on quality of life, economy and tourism will be huge.
5. B, C, E, 3, 9, 11, 20, 43, 53, 73, 81, 90, 91, 92, 93, 94, 96, 97, 98A, 101, 102, 103, 201, 202 are all the bus routes that will be eliminated or terminated to the nearest rail station. TheBus will be changed from a core operation to a feeder operation. This will add a lot of inconvenience and disappointment to the people that need transit service the most.
6. Rail is high security risk. Mentally ill shooters and terrorists typically attack work, school and train station locations. Third rail systems like Honolulu's are a magnet for suicides. Train stations are a hot spot for robberies and drug trafficking.
7. Rail makes Honolulu less resilient:It is practically certain that a major storm will hit Oahu in the next 50 years. Ten miles of reversible lanes not only will reduce congestion by over 30% for one third the cost of rail, but also they will be a critical backbone for post-storm recovery. Instead rail will be incapacitated for a prolonged period and critical resources will wasted to revive it.
8. Cannot afford it. Hawaii is among the five worse states in the country in pension and health benefit funding liability. Future budgets will be very tight for the state. Outer islands should worry about their loss of big subsidies they receive from Oahu (i.e., they too will pay for it.)
9. The City already has big problems finding a few million dollars for important services. Its budgets will be crushed by the union raises, the EPA sewer consent decree and the pension liabilities. Then add the rail construction cost-overruns and bankruptcy may not be far off.
10. Out of more than 650,000 adults on Oahu only 156,000 voted YES to rail in the 2008 elections. That yielded a marginal 50.6% approval among those who bothered to vote. During elections the ratio of pro-rail lies to anti-rail information in advertising media was more than 10 to 1. Taxpayer monies were used to support rail and, indirectly, rail-supporting politicians. Calling this a "mandate" is disingenuous and the process was indeed unethical.

Last but not least, the aesthetics of the system are undesirable for the small, tropical capital of Honolulu. Here is just one before/after picture offered in city's renderings.

Ode to the American Freeway

History, Landscape, Beauty on the American Freeway is a brief summary of the many positives of freeways for the U.S. University of Illinois at Chicago professor emeritus of Art history, Architecture and Urban Planning Robert Bruegmann developed a well written piece with great photos as a bonus.  Here are a couple of the opening passages.

"Freeways, particularly urban freeways, have had a bad press for several decades now.  They are accused of despoiling scenery, destroying habitat and causing urban sprawl.  Many observers report with glee on the latest news of a small segment of urban freeway being dismantled.

This blanket condemnation makes it easy to overlook the remarkable contribution that these freeways have made to the American economy and to American culture.  It is hard to imagine the growth in productivity in the country during the postwar years without these roads, which vastly increased the mobility of goods and people and connected parts of the country together in ways that were unprecedented.

The constant criticism also makes it difficult to appreciate these roads as cultural artifacts and a wonderful way to see the country." [Link to the article.]

Remember that free in freeway comes from free-from-interruptions such as stop signs and traffic signals; not free-of-charge for their use.  Whether by gas tax, toll or other taxation, freeways need to be paid for. But keep in mind that:

• Moving one person one mile on the freeway costs about $1 all inclusive (i.e., cost for the design, construction and maintenance of the freeway plus the vehicle to use on it).
• Moving one person one mile on transit (all inclusive) costs about $5 (and the calculation assumes that buses use the roads for free.)
• All goods, delivery and emergency services run on freeways. None of them run on transit.

Electric Vehicles Are Here to Stay. In Moderate Numbers.

The MIT Review titles the infographic below: Electric Vehicles are Here to Stay.

Yes, but the case for them is not particularly strong and their market penetration will be small for a very long time, for two big reasons.  One is EV's marginal environmental benefit. The infographic clearly shows that the big improvement comes when a gasoline-powered vehicle is converted to hybrid: Its emissions drop from 0.87 pounds of CO2 per mile to 0.57 pounds per mile. All the fuss to get to EV cuts CO2 down only to 0.54 pounds per mile (and probably leaves a much bigger problem with battery recycling at the end.) In addition this estimate does not likely account for all the charging infrastructure that is being installed from scratch.

The second reason is the affordable price of fuel, gasoline in particular. It will be priced at around $4 per gallon for a long time thanks to major forces that work against major price increases, such as:

1. Hydraulic fracturing of fracking for natural gas extraction, which curbs the demand for oil by vast amounts. (In 2000 fracking yielded 1% of the natural gas production in the US. In 2010 it yielded 20% of the production. A breakneck acceleration in such a capital intensive industry thanks to my fellow Greek and father of fracking George Phydias Mitchell.)
2. Sustained oil prices in the $50 to $100 per barrel make expensive explorations affordable, so a healthy supply of oil will be available to satiate the increasing demands of the developing world.
3. Substantially decreased demand for gasoline due to the popularity of high mpg vehicles (CAFE requirements and sales success of hybrids and plug-in hybrids; can't buy a Hummer anymore.)
4. Less travel due to persistent high unemployment and mega economic downers such as debt, deficit, bankrupt cities and countries, and looming pension and health care social costs in the US.
5. Continued public and private investment in renewable sources of energy.

More Intelligent Technology. Fewer Jobs.

The MIT Review article How Technology Is Destroying Jobs summarizes the potential on-set of the Human Labor-free Economy. Others call it the Autonomous Economy; an economy that runs without people!

This is of course an exaggeration but the fact is that since people invented tools many laborious tasks became simpler. Then the industrial revolution accelerated the pace of machine substitution of the labor. However, the big and varied tools and machines wound up increasing the demand of human labor because they changed the scale of what is achievable in agriculture, infrastructure, war equipment, etc.

Then came IT, computers and robotics. The MIT Review graph below illustrates the decoupling between Economic Productivity and Employed Labor. Automated vehicle manufacturing plants, automated warehouses, automated luggage handlers, etc. are already present. Currently at some health providers the first level diagnosis of patient ailment is conducted by registered nurses who also have some prescription authority. A large number of patients do not see an MD.

The short term outcome was angrily revealed by the Occupy Wall Street movement nearly two years ago: The MIT Review a notes that big progress in technology grows the economy and creates wealth, “but there is no economic law that says everyone will benefit. In other words, in the race against the machine, some are likely to win while many others lose.” Income inequality is a well researched topic.

However, this analysis on the effects of technology on labor is only the beginning. The hundreds of thoughtful comments below the article are enlightening and perhaps frightening.

• In the future, people may be “chipped” like animals. As a result there will be no need for laborious ID inspections at airports and elsewhere. There will be much less need for credit cards or buying tickets for transit, theater and museum admission, etc. The individual’s presence is enough to trigger a charge which minimizes the need for conductors, inspectors and clerks.

• Autonomous cars are here and they drive in actual traffic. They will take several more years to perfect but eventually there may be no need for taxi drivers, bus drivers and trash collectors.

• Mail, if there is paper mail 50 years from now, can be fully robotized. The central processing at major handlers such as USPS, FedEx and UPS is already automated.

• Distance learning is quickly becoming ubiquitous. The number of college courses is finite.  A few thousand of the "best professors” in each subject may tape the lecture and offer real time updates thus reducing the need for tens of thousands of in-class lecturers and professors.

A very large part of the population on Earth is still developing, so substitution of labor will take a long time because it takes an advanced and rich economy with the knowledge and capital base to develop the substitution, and eventually result in gross social instability as unemployment departs the tolerable 10% and moves to 30% or more.

If the means are found to control social instability, accelerating substitution is not sustainable unless regional Uber Governments are formed that control all the machines and humans on a continental scale. The central authority will regulate human birth rate, goods consumption and life duration, to keep a balance. Not surprisingly national and local policies for such control of human activity already exist.


One of the long term effects of unemployment (and draconian controls) is lower birth rate. This puts the Earth on a more sustainable path because the current path of population growth and consumption is clearly unsustainable.

There is also some likelihood that an electromagnetic pulse or an IT superbug will render this interconnected IT and automation useless. At that point, the remaining third world populations will have a distinct advantage.


The most likely short term outcome is that the recently observed trend of accelerating income disparity and unemployment will continue. The regulation of automation may follow to control unemployment and social instability.

The long term outcome has been postulated by MIT researchers since the early 1970s: For many reasons such as technological substitution, energy availability and cost, climate change combined with food production for an ever increasing population will produce a vast global imbalance. As a result, around 2030 they predicted, there will be a global reduction of the standard of living and population.

Why Aren’t Younger Americans Driving Anymore?

The nation's congestion problem has lessened largely due to youth unemployment and high fuel prices. Read this interesting Washington Post blog for more details.

One has to be careful to not overreact to the sharp change in the trend of miles driven because the graph is population adjusted. It shows the rate of driving per person. The rate is dropping but population is growing, so the next effect is likely a 1% to 5% reduction in traffic, depending on the area.

Local and International Threats to Hawaii's Sustainability

Earthquakes, Energy Supply, Tsunamis, Taxes and ... Politicians. A dozen long term threats to Hawaii's sustainability are explained in this installment of my O'lelo show PANOS 2050: Solutions for a Sustainable Hawaii.

Improving Hawaii's Energy and Transportation Structures

Late February 2013 interviews with Hawaii Reporter's Malia Zimmerman:

• Dr. Panos Prevedouros: Improving Hawaii's Energy and Transportation Structures

• Former Hawaii Ben Cayetano talks about politics and economy 

Honolulu’s Poor Economic Growth and What to Do about It

The Brookings Institution, rated No. 1 think tank in the world, published the Global Metro Monitor update which “provides economic growth data.” Where does Honolulu rank among 300 cities? It ranks 284th for the 1993 to 2007 period, and 217th for the 2007 to 2011 period. Honolulu ranks 54th in terms of population in the U.S.

While Honolulu ranks 284th, for the same period Portland ranks 93rd, Tucson ranks 100th, Tampa ranks 106th, Salt Lake City ranks 130th and depressed Cincinnati ranks 206th. Honolulu is much closer to 297th ranked New Orleans than any of its peer cities.

Why is Honolulu ranking so low? In large part because of the excessive waste of funds on unproductive endeavors. Unfortunately, this is a lesson that has not been learned. Here is a list of 10 large mistakes:

1. We invested in the 2nd city and more housing. As a result we get worse congestion and continuously escalating housing prices because of land controls. Creating a 100,000 population city on prime agricultural land is a mistake that Honolulu county will be paying for, for centuries.

2. We invested in buses: 200 more buses, express buses, and HandiVan in the last 30 years. Yet we got flat ridership. In 1980 Honolulu had 760,000 residents and TheBus carried 71.6 million trips, or 7.5 trips per resident per month. In 2010 Honolulu had 960,000 residents and TheBus carried 73 million trips, or 6.4 trips per resident per month, a 15% drop in per capita productivity. Transit is a declining business.

3. The last thing we need is a multi‐billion dollar investment in transit. But that’s a local priority!

4. We invested in high-occupancy and zipper lanes but we don’t do anything to manage the flow on them.  As a result drive alone and carpool share was 81% in 1990 and 81% in 2012. More people drive alone now than 20 years ago, despite the tripling of fuel prices. Carpooling has lost share because the freeway HOV lanes provide a low travel time benefit.

5. We invest in government. As a result we get over-regulation and slow innovation. Many government operations in Hawaii still use carbon copying and physical walking of papers from place to place, then pay extra workers to enter the information on a computer.

6. A private consortium launched the Superferry. The supermajority of people loved it.  Corporatist politicians and special interests killed it.

7. We invest in junk renewables like concentrated solar. Taxpayers paid millions in tax credits to a company on the Big Island that installed 1,008 panels on four acres of land to produce 0.1 MW which is mostly used internally and no power is sold to HELCO!

8. We do not invest much in tourism, infrastructure upkeep, congestion relief and park cleanliness. Despite the brouhaha about our banner 2012 year for tourism, the fact is that growth in tourism has not kept up with Honolulu’s modest growth in population: In 1990 we had about 8 visitors per local resident. In 2010 we had 7.25 visitors per local resident. Taxes generated from tourists do not keep up with local needs for services on a per capita basis.

9. Now we want to invest in "one iPad for each public school student" as if Apple can stuff knowledge in pupils’ brains.

10. We also want to invest in one super-casino so we can collect voluntary money losses from gamblers. We seem to know how to get from 284th to 300th.

What if we wanted to improve our ranking (and our quality of life)?

First we need to place our trust on data and not on “visionaries.” Given Hawaii’s great loss in Congressional seniority, an economic decline followed by bumpy stability will be the trend as I explained previously. Honolulu’s basic 0.5% annual growth will be flattened by local, national and international pressures.

Then proceed with this sample half dozen of economically productive actions:

1. Plans focused on growth for Oahu must be abandoned.
2. Top Priority: Maintain, Rehabilitate, Replace, Modernize.
3 Scrap rail. Use $3 billion to fix roads and add express lanes and urban underpasses.
4. Scrap wind. Focus on natural gas, waste‐to‐energy and geothermal.
5. Scrap the EPA agreement for secondary sewage treatment. (Many cities are taking EPA to task for its unreasonable consent decrees.) Focus on accelerated replacement of water and sewer lines.
6. Manage current and future budgets to sustain item 2.

[Also published in Hawaii Reporter.]