Jobs: Fundamental Trends – 2000 to 2050. How Did We Get Here and What’s in Store?

There are three fundamental trends at play in this half century:

• Aging of both population and infrastructure;
• Advanced economies cannot absorb unskilled and low skilled laborers; and,
• Too many crises in one decade took our eye off the ball.

The first trend affects the US more than other nations. Baby-boomers have started reaching the age of retirement and the age when health maintenance expenses increase. As a result many state pension and health funds are under substantial stress and their situation is likely to rapidly worsen as more workers age and fewer workers find high paying jobs that pay high enough taxes to sustain pension and health expenses. One of the proposals toward retirement fund solvency is to raise the age of retirement from the typical of 65 year of age to 70.

Along with the baby boom in the US also came the second infrastructure boom (the first one was during the Great Depression.) The second boom focused mostly on transportation and the road and air modes in particular, along with a misguided urban rail renaissance* of the late 1970s till the 1990s. For example, BART in San Francisco and Metro in Washington. DC are facing work backlogs in the order of tens of billions of dollars for required refurbishment and rehabilitation to bring those systems to a top operational condition. The bills are in the billions for bridges and elevated highway sections, and for the strengthening and restoration of millions of lane-miles of roadways.

While infrastructure presents a great opportunity for boosting the job count, a lot of the work is both highly technical and very expensive. The former implies that unskilled labor is unsuitable, and the latter implies that a lot of infrastructure projects may be unaffordable. The existing gasoline taxes which have been constant for almost 20 years at the federal level have lost value and are insufficient to cover highway maintenance. In addition about 20% of these funds is re-purposed to pay for loss-making transit systems.

Electric and other non-fossil fuel powered vehicles are not visiting the gas pump regularly (or ever), thus no tax for their road usage is collected. The highway tax system needs both a tax rate update and modernization. This will create new jobs, but again, the expertise will vary from technician to engineer; no need for unskilled labor.

This segways us to the second trend which is the progressive evolution of advanced technologies out of labor intensive jobs. Agriculture, construction and manufacturing are increasingly automated. They require fewer and more skilled staff. A good example is driverless trains in France. They replace approximately 100 motormen with two dozen rail engineers and train management technicians in a control room. This cuts the job count by 75% and costs by 50%. Fewer, more comfortable and better paid jobs is what advanced economies provide.

Retailing absorbs low skill labor. But there are many changes that reduce the unskilled job count in retailing such as Internet retailing, big box store retailing and upscale retailing, all of which require fewer and better skilled workers.

The transportation sector employees roughly 5% to 15% of a region’s workers (the count is higher in highly urbanized areas). This sector is dominated by federal and state regulations as well as unions. Both regulations and unions make the absorption of low skill labor more difficult.

The third trend is actually a series of calamities that caused stress to the economy and inattention to its drifting into deep losses. I list eight major ones:

1. Global Warming related regulations leading to various stresses on energy production and pricing.
2. The September 11, 2001 attacks in the US and the subsequent wars in Afghanistan and Iraq.
3. Hurricane Katrina in New Orleans which, among other things, caused a fuel price escalation.
4. Drought in Texas with major impacts on jobs and food prices.
5. Huge losses in wind and solar projects, and erratic US energy policy.
6. Rapid increase in commodity and energy prices due in part to rising demand in Asia.
7. The sub-prime lending melt down.
8. Euro crisis, weakening US dollar, and Chinese RMB strengthening are causing various currency instabilities.

How did we get here? The discussion above suggests that large losses in the count of jobs in 2009 and 2010 can be explained by natural trends (aging), structural trends (modernization) and calamities (man and nature-made losses).

What’s in store? Prognostication is both fun and faulty. One thing that is certain is that the BAU model, that is, Business As Usual will bring more of the same.

If Congress remains dysfunctional, if state and federal administrations focus on government expansion and business regulation, if unions stress demands for perks instead of modernization and productivity improvements, if US energy policy continues to be an assortment of mostly special-interest ideas and incentives, then job count and quality of life will certainly deteriorate.

It does not have to be this way. Upcoming articles look into ways for more sustainable jobs.

------------------
(*) Rail Transit: Are we creating new life or resuscitating a dinosaur? This was the title of an 1980s article by Northwestern University’s Joseph Schofer, a distinguished professor of transportation at the McCormick School of Engineering and its Associate Dean.

ECONOMY Survey -- The Economist and Hawaii Results

I like people, global and local issues, and numbers ... so I present a mini-series of surveys on major issues which have been debated at The Economist. Obviously the results only represent people with at least a basic level of computer and Internet savvy. However, the results may be sufficiently indicative because most questions along with the careful wording of questions lead to a straightforward answer: Agree, Disagree or Do Not Know. The Economist has received a few thousand responses to each of their questions. I post results only when Hawaii surveys exceed 100 responses.

ECONOMY Survey Results (click to take the survey, part 1, and economy survey part 2.)

The results are summarized in the Table and discussed below.


The first three issues shown in the table results in solid agreement for both Economist and Hawaii respondents.

• Brand AMERICA will regain its shine, although some may question whether brand AMERICA has lost its shine in the first place.
  
• People do not have much faith in corporations to take measures towards sustainability. Although one might argue that it is people who force corporations to make "cheap" choices since they demand inexpensive products. You can't run an operation on solar power at current costs and expect to have a cost similar to a competitor using coal or hydro-electric power.
• 75% of both Economist and Hawaii respondents agree that workers do not get enough sleep. This has important implication on weight gain, diabetes, productivity at work, safety in traffic and personal relations. How much of this is due to electronic gaming and social media engagement is an open question.

The next four issues show a solid disagreement between Economist and Hawaii respondents.

• Almost 75% believe that China's currency won't be a reserve currency any time soon. Currently the basket of reserve currencies include the US Dollar, the Euro and the British Pound but dollar super dominated the basket accounting for 890-100% of most reserve applications.
• A woman's place is at work is a controversial statement; it is the only statement for which I received complaining emails. Recall that The Economist has developed all these statements. Economist respondents give a slim margin of disagreement to this, but two thirds of Hawaii respondents do not agree that a woman's place is at work.
• Almost 75% believe that senior company executives are not worth what they are paid. No surprise here and both the perception of the respondents and the reality are so, in my opinion.
• The clear majority of the respondents do not agree that sustainable development is unsustainable. In other words, they believe that we can continue to develop but in a sustainable, Earth-friendly manner. Sure, but only up to a point. There will likely be too many challenges to overcome one Earth's population approaches 10 billion people. This bring up the divisive issue of population. (See below.)
  

The remaining four issues reveal opposing views between Economist and Hawaii responses.

• 80% of Economist responses believe that the world would be better off with fewer people, but only 42% of "spirit of aloha" Hawaii respondents think so. Are we seeing the result of Western selfish culture and Hawaii's more accepting multi-ethnic culture?
• Who should pay for higher education? Almost 80% of socialist-minded European respondents of the Economist want the state to pay. Free market minded Hawaii respondents make this an individual pocket-book and career choice.
• Economist respondents come from industrial nations so it's no surprise that 78% feel that an economy cannot succeed without a big manufacturing base. In Hawaii with its sparse and light industrial base the response is about 50-50.
• Again socialist-minded European respondents are split about 50-50 on the effect of government regulation of business finance, but Hawaii respondents are resoundingly against multi-billion bailouts and the ropes (not strings) that come attached to them.

Chrysler's Super Bowl Ad with Clint Eastwood

Half Time in America: Chrysler's 2-minute long TV commercial with Clint Eastwood during the 46th Super Bowl was a strong political statement. It was likely washed down too quickly with beer, pizza and nachos, but it did generate a lot of media coverage.

What did Clint's message say to people in Hawaii? My small sample survey reveals the following:

78% of the respondents agree that Clint is talking about American patriotism, Detroit rebounding, union jobs or all of these.

The majority opinion is that this commercial has nothing to do with Chrysler cars or cars in general, but 43% think that Clint is also talking about the importance of the car industry for America. See details below.


75% of the respondents feel that Clint is raising an alarm about the condition of our country, the upcoming elections and the future of America or all of these.

Clint himself stated that he is not in agreement with the president's policies but he did not think that this commercial was about Obama. 43% of Hawaii respondents agree, but 49% responded that the ad support Obama policies. Only 8% responded that the ad goes against Obama policies. See details below.



Kudos to Chrysler for developing a thought provoking ad which some have labelled as a payback to Obama administration for arranging the auto industry bailouts.

The 60% Lie: Less than 6% of Oahu's people live within walking distance of the proposed rail!

Dennis Callan, planner and rail aficionado says this:

"The city claims that more than 60% of Oahu residents, some 600,000 people, live along the rail route, but in reality less than 6% of Oahu's population resides within walking distance of the proposed train stations.

"Such misleading inflated numbers from our city government are part of their ongoing propaganda campaign, which has distorted most aspects of the rail system in their attempt to sell it to the public with rosy projections. They would like you to think the rail is very accessible and useful, but it is not."

Callan's video Who Will Ride Honolulu's Train has the analysis and numbers that proves the city's exaggeration and illustrates the continuous dishonesty of HART members who support the wrong facts in the media.

Jobs. Jobs. Jobs.

Seth Godin, marketing guru, ex-VP at Yahoo! and author of 13 books, believes that “the current recession is a forever recession” because the industrial age has ended and this means that the days when people were able to get above average pay for average work are over. Self-improvement, continuous learning and investment on oneself are key to employment otherwise “never mind the race to the top, you'll be racing to the bottom.”

While this is useful advice for those currently employed, the pressing problem is unemployment and under-employment. The Bureau of Labor Statistics (BLS) calculates the official unemployment rate by looking at those who are employed or who have actively looked for work within the last four weeks. As a result, the official rate excludes workers who have decided to drop out of the labor market altogether. The official rate also ignores those who settle for part-time work since they are unable to find a full-time job.

Recognizing this shortcoming, the BLS also reports the U-6 rate, which includes those who have sought a job sometime in the last 12 months and those who have accepted part-time jobs but would prefer full time. The U-6 rate is a better representation of the ability of the economy to provide jobs. Let's take a look at the numbers as summarized in NCPA's Tracking the Unreported Unemployed:

• The 1948-2007 unemployment average is 5.6%.
• The unemployment rate moved from 5% in January 2008 to a high of 10.1% in October 2009, and a current rate of 8.6%.
• The U-6 rate moved from 8.8% in December 2007 to 17.4% in October 2009 and 15.6% in November 2011.
• U-6 rate is almost twice as high as the official unemployment rate. It explains the increasing pressure for economic improvement and jobs.
  
• By the end of 2011, 43% of all unemployed have been unemployed for more than 27 weeks. Besides being jobless, their skills deteriorate, which worsens their employment prospects.
  

Without doubt the unemployment challenge is serious. What causes a high unemployment rate? There are several causes. Here is a big one: The disconnect between supply and demand for jobs. There is a glut of low skill laborer supply. There is demand for high skill, specialized jobs. Unemployed carpenters. Engineers wanted.

The problem of turning 500 unemployed carpenters to 500 engineers is impossible to legislate. In general, turning thousands of low skilled workers to thousands of high skilled workers is very difficult to solve. We need to understand and address the root causes of the problem some of which have deep cultural roots such as over-emphasis in sports instead of scholarly achievement, under-performing public education systems, and stereotypes based on race and gender. Another part of the problem is government regulations and union rules. I’ll cover most of these in a series of articles.

Instead of addressing the root causes of unemployment, politicians in the recent past responded to the cries for “jobs, jobs, jobs!” in two wrong ways: (1) They approved “make work” projects for low skill and construction labor, and (2) they “incentivized” new high tech industries.

“Make work” projects is the use of taxpayer funds to develop unnecessary or low effectiveness infrastructure projects, typically show-off projects or transit projects. These provide some jobs for low skill labor but in reality the unemployment problem is postponed for a few years while the tax hole becomes bigger. “Make work” policies are unsustainable. They develop dangerous dependencies for thousands of low skill laborers instead of providing opportunities for advancement and job diversification.

The current genre of “high tech incentives” is the green industry. Incentives are typically taxpayer handouts to targeted groups, e.g., relating to solar panels and electric cars. People and industry respond to incentives. While accounting in Hawaii is poor, it is much better in the UK where the conclusion in Worth The Candle? The Economic Impact of Renewable Energy Policy the UK was that “for every job created in the UK in renewable energy, 3.7 jobs are lost.” In Hawaii, misguided policies will likely result in more solar guys than nurses per 1,000 people; and a deeper tax hole. Such outcomes are unsustainable and undesirable.

Politically expedient solutions to unemployment are both costly and ineffective. We can’t talk about solutions until we are able to wrap our brain around the issue of “jobs.” What are some of the many facets of employment and unemployment?

Unemployment varies widely by level of education. The Chronicle of Higher Education reports this: The overall unemployment rate for recent Bachelors degree recipients is 8.9%, compared with 22.9% for recent high-school graduates and 31.5% for recent high-school dropouts. It also varies by fields: Unemployment is higher among recent graduates with nontechnical fields of study, such as the arts (11.1%) and humanities and liberal arts (9.4%), but it is only 5.4% for graduates who studied health or education.

College pays off: The Los Angeles Times reports that the average take-home pay of college graduates is $38,950, compared with $21,500 for high school graduates. A college graduate's earnings would exceed a high school graduate's by more than $1 million over 40 years.

Gender makes a difference. The Economist published detailed analysis which I’ll summarize elsewhere but the bottom line of "The Cashier and The Carpenter" is that men and women do different work for different pay. For example, by working shorter paid hours, women are managing to achieve a reasonable balance in their lives. The Economist cites results that show that work-life balance dissatisfaction is about 18% for women and 27% for men in Europe.

The New York Times reports that in the two and a half years since the recovery officially began, men age 16 to 24 have gained 178,000 jobs, and women have lost 255,000 positions. “Apparently discouraged by scant openings, 412,000 young women have dropped out of the labor force entirely in the last two and a half years, meaning they are not looking for work. Young women in their late teens and early 20’s view today’s economic lull as an opportunity to upgrade their skills, their male counterparts are more likely to take whatever job they can find.” As a result, the next generation of women may have a significant advantage over their male counterparts in the near future.

The NYT article continues to say that many of the occupations expected to have the most growth, like nurses, home health aides and dental hygienists, have traditionally been filled by women. Jobs in male-dominated industries such as manufacturing and construction have been in decline. Manual labor careers can also be hard to maintain indefinitely because youthful strength eventually fades. The pension coverage of construction and manufacturing workers is also lagging which presents a challenge for males as they age.

Knowledge and understanding of the true causes of a problem are the right foundation for crafting solutions. My series of summary articles on “jobs” throws light onto the employment and unemployment challenges. Stay tuned!



1. Jobs. Jobs. Jobs. This article.

2. Jobs: Fundamental Trends – 2000 to 2050. How Did We Get Here and What’s in Store?

3. Jobs Hawaii: Outlook for Jobs in Education, Government, Military and Tourism

4. Jobs: The Young and Unskilled

5. Jobs: What Women Want

6. Top Jobs: 10 Hot Careers for 2012

7. The Right Job: Sustainable, Desirable Employment

Rail and Weather Forecasters

Hawaii weather is meant to frustrate weather forecasters. They predicted buckets of rain for Sunday and we got next to nothing. Then they predicted next to nothing for Monday and we got buckets of rain! As in the picture below.


Speaking of weather forecasts, professor Bent Flybjerg of Oxford University places weather and rail forecasters at opposite ends of the spectrum of truth and honesty.

Weather forecasters are neither deluded nor deceptive; they use some of the most complex models and report their forecast for a few days in the future. They get it right most of the time.

Honolulu Rail forecasters have used primitive models (*) and gobbles of delusion and deception (Dr. Flybjerg's words; see graph below) to predict rail's efficacy 20 to 30 years in the future! And they never get it right.


(*) Oahu rail forecasts were based on a relatively ancient OMPO zonal model from a 1994 survey. Much to the discredit of our local government at all levels, we have not conducted a comprehensive origin-destination survey since 1994. So we have developed a five billion dollar transportation investment using old and primitive data. We all know "garbage in, garbage out" and that's exactly what we are dealing with here.

Do not get me started about the traffic tools they have used in the multimillion dollar analyses to predict future traffic conditions. These rock bottom tools are acceptable to Hawaii government, and FTA simply does not care about traffic conditions. However, the Federal Highway Administration has this opinion: "Equation tools are very appropriate for localized study areas like a single intersection or a highway section. Equation tools also are appropriate for a quick-and-dirty preliminary analysis that may lead to or warrant a future, more detailed analysis." Above those tools come four more classes of tools with increasingly advanced sophistication, but hardly any of them were used in the rail EIS.

JOBS: 10 Hot Careers for 2012

At the end of 2011 CNN-Money posted 10 hot careers for 2012 - and beyond.

Of course nobody should be surprised that IT experts, engineers and health professionals dominate the list. They have been in top-10 spots for two decades and despite the relatively high unemployment in the U.S., college enrollment in demanding technical and professional fields has been relatively stable when adjusted for population growth and GDP fluctuations. The U.S. Congress is considering expedited immigration procedures for retaining foreigners who obtain advanced degrees in the U.S., many of which are lured back to China, India and to developing members of the EU.

This list contains one big surprise for me. No mention at all of "green jobs" or "renewable energy." This is because this list is sane, as opposed to less-than-sane proposals, incentives and "renewable portfolios" setup by legislatures attentive to zealous environmentalists. The result of these as manifest by Spain and other "green energy pioneers" is the substantial squandering of public funds with minimal impact on oil dependence or advancement of the state-of-the-art (e.g., Solyndra, Spopogy, etc.)

How Stimulus Spending Ruined Buffalo -- Lessons for Honolulu

Recently Steven Manlanga of the Manhattan Institute authored "How Stimulus Spending Ruined Buffalo" in the Wall Street Journal. It describes that stimulus was the vehicle for ruining Buffalo, New York and at the core of this stimulus was none other but a light rail system:

• In his State of the State Address this month, New York Gov. Andrew Cuomo announced $1 billion in incentives to attract new investment. Too bad Mr. Cuomo ignores the factors that help keep areas like Buffalo inhospitable to new investment—namely steep tax rates and the high cost of government.
• Sometimes these schemes have done real harm. In the 1970s, the federal government decided to invest $530 million to build a 6.2-mile light-rail system through downtown Buffalo. It was supposed to further spur redevelopment.
• Opened in 1985 and anchored by a transit mall that banned cars, the rail line fell well below ridership projections—and downtown businesses suffered mightily from the lack of traffic. As Buffalo landlord Stephen P. Fitzmaurice wrote in 2009: "Walk down Main Street on the transit mall; aside from a few necessities like drug and cell phone stores, blight dominates." Last month the city received a $15 million federal grant to restore traffic to Main Street.
• These massive investment subsidies failed partly because officials were ill-suited to select the right projects and often instead gave money to favored insiders. Even former Mayor Anthony Masiello described the federal government's redevelopment funds as "a politically motivated system trying to please everybody."
• Image: Main Street in Buffalo: Emptied of traffic and stores by a light-rail infrastructure stimulus project in the 1980s.

Lesson 1: Factors that help keep areas like Honolulu inhospitable to new investment—namely steep tax rates and the high cost of government.

Lesson 2: Rail systems are planned as reasons to spur development. They do not. Quite the opposite they produce blight which cost even more money to reverse.

Lesson 3: Yet another rail line where projected rail ridership was a myth ( a lie.)

Lesson 4: Clueless politicians (i.e., Hannemann, Carlisle, Calwell) and appointed boards (HART) are “ill-suited to select the right projects and often instead gave money to favored insiders” (Mr. Malanga refers to pay-to-play politics which are prominent in Hawaii.)

Did You Ever Think that Honolulu Rail Will Turn ... Sexual?

Rail pimping university economics professor appears to be a real life pimp!

Serious City Mayor: Assessment, Priorities, Solutions, Policies(Tulsa)

Tulsa: Open for Business -- Tackling city's challenges requires willingness to embrace innovation, competition and market ideas. By Dewey Bartlett, Jr. Mayor of Tulsa, Oklahoma

This is an excellent article that summarizes how to run a city under financial distress. (Aren't they all?)

I quote this passage:
Water/Wastewater Study: As a result of the KPMG recommendations, the local public utility authority issued an RFP and engaged Infrastructure Management Group, a nationally recognized team of public infrastructure efficiency experts, to review the governance, operations, finances and strategy of Tulsa’s entire utility operations.

And I note that the highly reputed IMG quoted above conducted the Honolulu Rail financial report for Gov. Lingle, issued in December 2009. The report said that the likely minimum cost to build the elevated rail would be $7.2 Billion as opposed to City's $5.3 Billion estimate.

Demographia's W. Cox on Honolulu Infrastructure

Wendell Cox of St. Louis based Demographia.com made an interesting presentation at the 36th annual Business and Investment Conference organized by Smart Business Hawaii at the Ala Moana Hotel on January 11. Link to Cox's 1/11/12 slideshow.

Some of his important findings and suggestions include:

• Honolulu lost 50,000 residents between 2000 and 2009 in terms of domestic migration. Its taxes, jobs, congestion, housing prices, etc. have caused a loss of domestic residents to other Hawaii counties or other states.
• Hawaii was 8th highest in taxation in 2009 in the U.S.
• Honolulu housing affordability was the worst in the U.S., about three times worse that the US average!
• From the U.S., only Los Angeles and Honolulu are included in the 25 most congested cities in the world.
• Several other cities in the US have gone bankrupt and Honolulu is racing to bankruptcy with multi-billion dollar liabilities (pensions, sewers, rail, etc.)
• Politicians are ignorant of the fast approaching demographic time bomb of Baby Boomers who are switching from taxable paychecks to pensions and healthcare.
• Honolulu rail ridership projections are "rosy."
• Cautions about the rail's budget "You Won’t Know the Bill Until It’s Too Late"

Follow the Money... Follow the Loop ...

Urban Rail and Terrorism

The recent article "For Transit Agencies, Terrorists Are Moving Targets" in the magazine of the New Jersey Transportation Planning Authority raises many critical issues relating to the security of urban rail systems.

• Security experts and transit officials alike all but guarantee that some intentional tragedy will, sooner or later, befall the transit infrastructure of a major American city.
• al Qaeda and other terrorist organizations have also struck mass transit. Since 2011, bombings have taken place on transit systems in Mumbai (2002, 2003 and 2006), Madrid (2004), Moscow (2004 and 2010) and London (2005).
• According to the Mineta Transportation Institute (MTI) Data Base of Terrorists Attacks against Public Surface Transportation, over 4,000 people were killed in 1,434 attacks between 2004 and 2010.
• Transit infrastructure by its very nature presents a ripe target, terror experts say. While airline passengers have to go so far as to take off their shoes and submit to controversial full-body scans, transit passengers move freely through portals like ghosts. And what passengers can do, so can couriers of bombs, nerve gas and anthrax.
• To combat everyday crime, such as theft, that takes place on their systems, transit agencies have long maintained their own police forces, or contracted out to other law agencies.
• Regardless of the money that Washington, D.C., does not provide, transit officials say that vigilance is their most important resource. Waiting for a threat that may never emerge—scanning subway platforms day-in, and day-out—can, however, be a mind-numbing task.

The bottom line is that:

(1) FTA does not provide funds for security,

(2) Substantial funds are necessary just to combat groping, pickpocketing and other petty crime, and,

(3) Rail transit security is nearly impossible to accomplish at any level comparable to aviation, but the cost for it is very high given the number of stations and passengers (and potential criminals and terrorists) that utilize the rail systems.

In the picture below from LA's Gold Line rail one can see six security officers (that is, six salaries and benefits) and no passengers!

Privacy Issues Survey -- The Economist and Hawaii Results

I like people, global and local issues, and numbers ... so I present a mini-series of surveys on major issues which have been debated at The Economist. I recommend that you visit their site and learn more if the issue presented is of interest to you.

I selected blocks of questions on Privacy, Economy, Technology, Energy and U.S. Politics. I used my several thousand contacts and Internet friends as well as SurveyMonkey to conduct surveys and solicit responses from Hawaii. Both my and The Economist surveys are based on "self selected" respondents so the results may provide trends or indications but they are not scientific.

Obviously the results only represent people with at least a basic level of computer and Internet savvy. However, the results may be sufficiently indicative because most questions along with the careful wording of questions lead to straightforward answer: Agree, Disagree or Do Not Know. The Economist has received a few thousand responses to each of their questions. I post results only when Hawaii surveys exceed 100 responses.

Privacy Issues Survey (click to take the survey)

I grouped four of The Economist questions into a privacy issues survey, as follows:

• DNA sequence is a person's business, and nobody else's.
• Loss of privacy from digitizing health care will be more than compensated by increased efficiency.
• Cloud computing can't be trusted.
• Government must do far more to protect online privacy.

The results are summarized below.


The immediate observation is that Hawaii responses are more agreeable than The Economist responses. The graph shows that both Hawaii and The Economist responses trend in the same way. By a large margin, Hawaii respondents prefer high levels of privacy for a person's DNA and for online transactions.

Public Apathy "Promotes" Boondoggles. Another H-3? The Obama Effect on the Rail Vote

PUBLIC APATHY. It is one of the major boosters of the ridiculous Honolulu rail, according to award winning journalist and author John Fund of the Wall Street Journal. He spoke about it yesterday at the 36th annual Business and Investment Conference organized by Smart Business Hawaii at the Ala Moana Hotel.

Cost is ridiculous, environmental impact is horrendous and federal monies are no more. Yet Honolulu rail rolls along. Why?

Because too few local citizens participate in protests, contact and pressure elected officials, contribute money and time, etc., etc. He also acknowledged that in most cases major successes are achieved by a few, so those of us really working on stopping the rail are not the exception.

So, I say, if rail happens Abe Lincoln will be correct one more time. In a moment of disappointment Abe said "People get who (or what) they deserve."

ANOTHER H-3? John also quoted past Mayor Mufi Hannemann who after the marginal 50.6% "yes to steel on steel rail" vote proclaimed that "this is not going to be another H-3." Yet as you know from my previous posts the cost of rail was predicted in late 2010 to be at least 40% higher compared with the cost estimates during 2008 campaign. Project construction is 3.5 years late.

Rail has already faced one lawsuit in state court on Hawaiian issues and is facing a major one in federal court for NEPA violations. But this is only the beginning. There will be lawsuits for illegal agricultural land conversions and usage. Noise impacts in the proximity of HUD financed homes and apartments because rail noise violates HUD night time noise levels. A challenge for the misuse of TheBus funds to sore-up TheRail finances is also in consideration. And of course dozens of eminent domain lawsuits.

H-3 was built in the middle of nowhere, whereas rail steps on the toes of thousands of citizens. We have not seen anything yet in terms of legal challenges.

THE 2008 ELECTIONS OBAMA EFFECT ON RAIL. John Fund provided statistical evidence that in the 2008 election "island son" presidential candidate Barrack Obama drew thousands of new voters in the polls particularly younger ones who overwhelmingly voted in favor of rail. (I add that I have noted this attitude in young people. Rail is a government project for their future which will cost them next to nothing because it is the government's monies and not theirs...) John argued that if there was a more typical election without the prominent "Obama effect" in the local polls, the rail question would have been a solid No.

Survival of the Unfittest: Why the Worst Infrastructure Gets Built

The worst infrastructure gets built! This is the concise conclusion of analysis by Oxford University professor Bent Flybjerg who for many years has been emphasizing the pitfalls of "megaprojects" which typically turn out to:

• be much more costly than predicted before construction started
• provide fewer benefits that planners predicted, and
• attain a 50% lower ridership than predicted, for urban rail systems

Dr. Flybjerg attributes this to several factors, many of which are prevalent in the proposed Honolulu rail megaproject, as shown below, followed by my assessment from * meaning "not so much in Honolulu rail " to ***** "spot on for Honolulu rail":

• Such projects are inherently risky owing to long planning horizons and complex interfaces. (***** Honolulu rail is all elevated, heavy rail in the middle of vital arterial streets of a a crowded city with cultural, historical and soils issues)
  
• Technology and design are often non-standard. (** Honolulu rail is heavy rail guideway with light rail automatic trains by Ansaldo)
  
• Decision-making, planning, and management are typically multi-actor processes with
• conflicting interests. (**** Honolulu rail is heavily political project built as a city project in the middle of state highways with political push from Senator Inouye in Washington DC.)
  
• Often there is ‘lock in’ or ‘capture’ of a certain project concept at an early stage, leaving analysis of alternatives weak or absent. (***** This is exactly why the NEPA-based lawsuit was filled in federal court. Mufi Hannemann took office in Jan. 2005 and by late fall 2006 the ~100 page Alternatives Analysis had selected elevated rail as the "winner".)
  
• The project scope or ambition level will typically change significantly over time. (**** Honolulu rail started as a 34 mile proposal for about $4 Billion and right before construction it is a 20-mile $5.2 Billion project that excludes Kapolei town, Waikiki and UH-Manoa!)
  
• Statistical evidence shows that such unplanned events are often unaccounted for, leaving budget and time contingencies sorely inadequate. (*** Honolulu rail will be subjected to many changes as eminent domain lawsuits begin once construction starts.)
  
• As a consequence, misinformation about costs, benefits, and risks is the norm throughout project development and decision-making, including in the business case. (**** Even pro-rail local newspapers and City Council members gripe about the lack of transparency and the ever evolving changes in costs.)
  
• The result is cost overruns and/or benefit shortfalls during project implementation. (***** If built, Honolulu rail's ultimate result will be a 50% cost overrun and a 50% ridership attainment, at best.)
  

LINK to the full article Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it by Bent Flyvbjerg. Sa¨ıd Business School, University of Oxford, e-mail: bent.flyvbjerg@sbs.ox.ac.uk. Part of the research for this paper was carried out while the author was professor at Aalborg University, Denmark, and Delft University of Technology, the Netherlands.

Large Unions and Massive Labor Laws Lead to Fewer Jobs

France is a prime example of having large and powerful unions, a 3,300-page Labor Law and employee payroll taxation at 39%. The result of all this is more automation and fewer jobs.

In the late 1990s Paris totally retrofitted metro line 14 which today carries 725,000 passengers a day. It is totally automated and the computerized trains run much closer to each other.

Self checkout has proliferated and continues to gain ground in countries where labor is expensive. Other examples from France include:

• Orders at many McDonald's are taken via touchscreen devices.
• Transit services operate with smart cards
  
• Self-serve car washing Elephant Bleu has grown to 472 stations

One result is that France is a leader in the creation and adoption of automation. Another is that unemployment rarely drops below 10%. More details in The Economist's Driverless, Workless article.

Honolulu Rail 2011 Summary

In 2004 I started keeping tabs on major events of the infamous Honolulu Rail. This link takes you to the 2004 to 2010 highlights. The 2011 highlights are below.

January 18: FTA issues Record of Decision. The ROD allows the city to take these actions if it so chooses (but read the statement after the list):

• the acquisition of any real property or real property rights identified in the Final EIS or ROD as needed for the Project;
• the relocation of persons and businesses on that property;
• the relocation of the Banana Patch community, if it so desires, in accordance with the ROD;
• the relocation of utilities affected by the Project; and
• the acquisition of rail vehicles for the Project.

This pre-award authorization is not a real or implied commitment by FTA to provide any funding for the Project or any element of the Project. However, if FTA were to provide grant funding for the Project, the cost of the actions listed above, performed after RAMP approval, would be eligible expenses. No other Project action has pre-award authorization at this time." [Underlined in the original].

January 31: The Native Hawaiian Legal Corporation filed a lawsuit Monday afternoon in Honolulu Circuit Court to stop construction of the city's $5.5 billion rail project.
"The complaint filed by Paulette Ka'anohiokalani Kaleikini claims both the city and state failed to perform a complete archeological survey of native Hawaiian remains, or iwi, along the entire 20 mile rail line as required by state law. Kaleikini is being represented by the Native Hawaiian Legal Corporation, a non-profit group dedicated to preserving the indigenous people."

February 4: The University of Hawaii Economic Research Organization released a Brief titled, "Honolulu rail Transit: Do the Benefits Justify the Costs?" Their conclusion was that, "Preliminary considerations suggest a high degree of uncertainty about whether the benefits of rail justify the costs. As the conversation about rail costs advances, we should continue to consider the relative size of the benefits."

February 16: "FTA Administrator Peter Rogoff said Tuesday the City and County of Honolulu’s revised financial plan for rail transit must be more robust and not compromise public bus service. "We need to see a financial plan that shows that they have not only the funding to meet their obligations above the federal commitment (but) they also need to demonstrate to us that they have sufficient resources to keep the existing bus service operating and well maintained,” said Rogoff, during a nationwide conference call with reporters. “In the most recent financial plan submitted to the FTA in September of 2009, the city uses of $300 million in federal bus subsidies to fund construction of the $5.5 billion elevated rail system.”

The city's current financial plan for funding rail construction shows it will use $1.5 billion in federal New Starts funds, $300 million from the federal bus funds, and $3.5 billion from the additional ½ percent GE tax. As of the end of 2011 a "robust" financial plan is unavailable.

February 22: City has a "ceremonial groundbreaking", not a groundbreaking ceremony in the middle of nowhere along the North-South Road.

March 22: Ansaldo Honolulu wins the bid to build the city transit cars for $574 million, and will also operate and maintain the system. See below a quick summary of the bids. Phase 1 is called Design-Build (DB) and phase 2 is called Operation and Maintenance (OM)

------- Ansaldo---------Bombardier------ Phase
----$573,782,793----$697,263,592-------1, DB
----$506,030,806----$262,717,960-------2, OM
--$1,079,813,599----$959,981,552-------Total build and 15 years of operation

For Phase 1 Ansaldo is $125 Million less than Bombardier, but in total Bombardier is $125 Million less than Ansaldo, and Ansaldo won! (Honolulu math....)

May 14: Complaint (LAWSUIT) filed against against the U.S. Secretary of Transportation, various executives of the Federal Transit Administration, and the City Transportation Director:

• Count 1: defining the purpose and need so narrowly as to preclude consideration of all reasonable alternatives
• Count 2: failure to consider all reasonable alternatives (NEPA)
• Count 3: failure properly to analyze the environmental consequences of alternatives (NEPA)
• Count 4: improper segmentation (NEPA)
• Count 5: failure to identify and evaluate use of native Hawaiian burials and traditional cultural properties (section 4(f))
• Count 6: arbitrary and capricious evaluation of the project’s use of section 4(f) resources
• Count 7: improper project approval (section 4(f))
• Count 8: failure to account for effects on historic properties (NEPA)

July 14: Rail contract appeals set for Sumitomo, Bombardier

July 16: Honolulu Magazine publishes critical article on rail

August 15: HART Board set-- Eight of the ten-person “apolitical” and rail-clueless HART board consists of six current and former City employees and two union officials. The minority two are businesspeople. Also, Bombardier appeals to FTA in Honolulu rail dispute. And Sumitomo--Losing bidder on Honolulu rail project goes to HART of the matter.

August 21: How the city misled the public. By Walter Heen, Benjamin Cayetano, Cliff Slater and Randall Roth.

August 24: Closer look shows why Sumitomo may have decided against Honolulu rail appeal

August 27: Pacific Business News reverses position to now oppose rail.

September 13: Bombardier loses latest appeal of Honolulu rail contract

October 14: Bombardier files new appeal of Honolulu rail contract

October 21: Ansaldo, State Reach Deal on Licensing Violation
Ansaldo Honolulu JV has agreed to pay the state $150,000 to settle two cases alleging that the company didn't have a contractor's license. Submitting a bid without a contractor’s license constitutes unlicensed contracting. The fine for unlicensed contracting activity ranges from $2,500 and can run as high as 40% of the total contract price.

October 26, 2011: Ansaldo penalty 'slap on the wrist,' councilman says
City Councilman Tom Berg, a critic of the selection of rail car contractor Ansaldo Honolulu, said the city should have disqualified the Italian-based company because it was in violation of state law by bidding for the project before obtaining a contractor's license.

November 23: Pro-rail Star Advertiser editorial tells HART "Honolulu's contract with a subsidiary of an Italian conglomerate to design, build and operate the city's rail transit project was scheduled to be signed next Friday, but a delay is needed to reassess what increasingly looks as shaky as the euro." And "In our 100 year history The Outdoor Circle (TOC) has seen no other venture that holds the potential to degrade the landscape of Oahu as the proposed Honolulu Rail Transit project. TOC has been involved in virtually every step of the project from the moment it was first brought to the public for discussion. For more than five years, at every opportunity, we have urged the City to explain how it will mitigate Transit’s horrific visual damage to this island as well as the degradation to neighborhoods and communities along the route of this six billion dollar project."

November 28, 2011: Why Does Carlisle / Hamayasu / Horner Stick with Ansaldo while Under so Much Fire?

November 29, 2011: The Honolulu Authority for Rapid Transportation signed a $1.4 billion contract Monday with Ansaldo Honolulu JV, giving it the go-ahead to start construction on the system’s cars and other key components. There will be no guideway and rails for at least another 5 years. So why did we order trains?

December 12: Senior Federal Judge A. Wallace Tashima denied the City/FTA Motion to a) dismiss certain of the plaintiffs for lack of standing, and b) the plaintiffs did not identify certain historical sites during the environmental process. The lawsuit is definitely GO!

December 18: Bidding Irregularity and Delays Imperil Honolulu Rail Insurance Program
"A program that was supposed to reduce insurance costs for the Honolulu rail transit project by $20 million has been indefinitely delayed after irregularities in the city purchasing process forced the city to cancel a key contract award. "

December 29: FTA grants HART permission to enter the Final Design phase but has many difficulties with HART's financial plan. The FTA asks HART to the State legislature and the City Council to get an unspecified extension of the ½ percent General Excise Tax increase or find other monies ... "these revenue sources require actions by the State of Hawaii and/or the City that have not been taken and which are beyond HART's ability to control. In addition, "HART made assumptions in three areas that require justification."

The figure below is an exact copy of the City's mid-2008 Draft EIS. The blue dashed line is my addition that shows that the project is late by 3.5 years well before any actual construction has started!

US: Gas v. Wind -- Hawaii: Geothermal v. Wind

Matt Ridley concludes his article Gas Against Wind as follows:

To persist with a policy of pursuing subsidized renewable energy in the midst of a terrible recession, at a time when vast reserves of cheap low-carbon gas have suddenly become available is so perverse it borders on the insane. Nothing but bureaucratic inertia and vested interest can explain it.

Like the U.S. mainland has abundant gas Hawaii has abundant geothermal energy. Tapping into geothermal power can be more expensive than hydraulic fracturing or fracking for natural gas but geothermal power in Hawaii is less exhaustible than natural gas on the mainland, and once developed its use does not produce greenhouse gasses.

Like in the U.S. natural gas is in shale hundreds of miles away from big metropolitan areas, but a national grid makes electric power transmission feasible, although billions need to be spent to the existing grid if gigawatts are to be transmitted efficiently and reliably.

In Hawaii a cable to connect Oahu, Maui and the Big island may be too expensive, but there are alternatives: Hydrogen, and Ammonia (as a carrier of Hydrogen.) Hawaii can utilize abundant geothermal energy to transform into a hydrogen/electric economy for long term sustainability, instead of blowing Billions in the wind.

In addition to blowing Billions on unreliable power production, I quote from Ridley's article: The wind farm requires eight tonnes of an element called neodymium, which is produced only in Inner Mongolia, by boiling ores in acid leaving lakes of radioactive tailings so toxic no creature goes near them.

California Rail Boondoggle

Outside Hawaii infrastructure boondoggles are called what they are... boondoggles. Hawaii is too insular and managed by an inner political cast of characters. As a result lies and misrepresentations prevail at all government levels when it comes to billion dollar issues such as Rail, Wind (and other suspicious Renewables), Government Pensions, and Employee Health Coverage.

I quote a brief article from the Wall Street Journal below. Note that:

1. Congress will ask tough questions about rail projects
   
2. Congress will refuse to fund billion dollar shares for rail projects
   
3. California's fast rail at over $100 Billion comes to $2,700 per person
   
4. Hawaii's elevated rail at over $7 Billion(*) comes to $7,600 per person
   

(*) You do not believe the Mufi / Carlisle / Toru / Horner / PB co$t e$timates, do you? They are of the same quality as their ridership estimates shown below:




Bullet Train Boondoggle

The House Transportation and Infrastructure Committee put California's high-speed rail plan on trial last week, asking rail experts and local officials some questions that the project's planners and state lawmakers apparently failed to consider. Like how the state will finance its 500-mile bullet train from Anaheim to San Francisco.

California voters approved a $10 billion bond initiative to fund the project in 2008. At the time, the state's high-speed rail authority, which is responsible for planning the project, estimated that the train would cost only $33 billion and be financed primarily by the federal government and private sector. The authority also promised that the train wouldn't require a subsidy. However, a few months ago the authority released a revised business plan that estimates the rail will cost between $98 billion and $116 billion. The authority expects the federal government to put up $73 billion and the private sector to invest $10 billion. Jerry Brown, the state's Democratic governor, praised the new plan as more "honest."

Investors have refused to finance the bullet train without a subsidy, and Congress isn't appropriating any more money for high-speed rail. Of the $11 billion that Congress has already appropriated, the Obama administration has authorized $3.9 billion for the California project on the condition that the state build the first segment in the Central Valley, presumably because there's less resistance to the train in rural areas than big cities. That may be true, but the train's a losing proposition everywhere. According to a new Field poll, two-thirds of Californians want a referendum on the project. And by a 2-to-1 margin, they'd vote to kill it.

Greg Gatzka, director of the King County Community Development Agency, testified at the hearing that the train would result in "approximately 7,100 acres of severed and/or disrupted" farmland and cost the dairy industry $50 million. It would also interfere with a $67 million broadband infrastructure project. Kings County has sued the rail authority because of the numerous disturbances, as have the cities of Palo Alto and Palmdale.

Even if the rail authority were to settle these legal challenges, a high-speed train wouldn't be operable until the state comes up with an additional $25 billion to complete the segment and electrify the tracks. In the meantime, the authority plans to run Amtrak trains on the tracks, though there may be problems with that plan, too. Elizabeth Alexis, cofounder of the group Californians Advocating Responsible Rail Design, testified that it's uncertain whether diesel trains could safely run on tracks built for electric trains.

In any event, Federal Railroad Administrator Joseph Szabo insisted that $100 billion is a small price to pay for a modern transportation system and that "adding and maintaining transportation capacity in California, while vital, is expensive." For instance, repairing the Bay Bridge will cost roughly $6 billion; a 10-mile expansion of the 405 freeway will run around $1 billion; and the ongoing modernization of Los Angeles's biggest airport is pegged at $4.1 billion.

So why is a state that is already struggling to finance basic infrastructure initiating an exorbitant project that most taxpayers don't want? None of the witnesses had a good answer.

-- Allysia Finley

HOT Lane Transponders, Congestion as an Advantage, Congestion Pricing, Roadbuilding Costs

A potpourri of interrelated recent articles ...

HOT Lanes are supposed to be free for large carpools, discounted for small carpools and full price for solo drivers. Recall that the purpose of HOT Lanes is twofold: (1) Incentivize Transit and Carpooling and, (2) Have low occupancy vehicles pay congestion insurance (toll). The correct term is not toll but Congestion Insurance because HOT Lanes guarantee over 45 mph speed, whereas common tollways charge a toll and may serve abundant bumper-to-bumper traffic.

The problem is this: HOT Lanes use electronic non-stop no-toll-booth tolling at freeway speeds. So how do large carpools go free, low carpools pay a discounted toll and solo drivers pay the full toll? This article from Orange County shows the electronic solution.

Yogi Berra once said, "nobody goes there anymore. It’s too crowded." In the article The Case for Congestion, John Norquist who served as mayor of Milwaukee from 1988-2004 proposes that congestion is a positive attribute for a city. It shows that a city is vibrant, dynamic and bustling, as opposed to decaying and lethargic.

However, too much congestion puts a lid on the economic growth and long term sustainability of a city, so congestion reduction techniques are always in demand, particularly when they tend to be popular and relatively inexpensive. In A Blueprint for Beating Traffic, Eric Jaffe summarizes the success of Road Pricing in Stockholm, Sweden. Interestingly, some of the road pricing collections are being used by the Swedeish government to build one of the modern under-city roadway tunnels, Södra Länken, to relieve bottlenecks and to facilitate traffic and the economy of the city.

And when it comes to costs, new U.S. roadways cost much much less that new U.S. rail lines, as Randal O'Toole explains in Highway Cost Overruns.

Jitney Advantages for Transit Service

A seriously thought out plan for JITNEY service can have many advantages, in addition to those identified in this article focused on poor and disadvantaged populations. They include:

• Low government cost, mostly for safety and health inspections
• Scalable, from trunk arterial routes to ridges and valleys
• Flexible to reroute as needed by time of day, day of the week, special events
• Congestion reduction by offering fast and competitive service,
• Cost savings to the poorest especially,
• Cost savings to government to target bus routes on high demand routes only
• Creation of a new industry with very low entry costs for self employed.

Google Atlantic City Jitney to read more about one successful deployment of jitneys in the US:

Jitneys are Atlantic City's most convenient and chief mode of affordable transportation around town. The Jitney Association is comprised of 190 individual owner-operated vehicles.

17 Miles in just 78 Minutes!

Humor has an advantage in exposing reality. Here is a story by Reason Foundation on LA's "light" rail.

Pay attention to the factual pop-ups and note that all this inconvenience cost him $5 and another $22 to the taxpayer (for just one 17 mile trip!)

Honolulu Rail is a White Elephant in the Jungle of Transportation Infrastructure

This slideshow explains why the proposed rail is a white elephant in the jungle of transportation infrastructure. Here is a short list of reasons:

1. Honolulu has a severe traffic congestion problem, not a transit problem
2. Honolulu is the most lane deficient medium/large metro area in the U.S.
3. Honolulu's bus is good but is becoming increasingly unproductive due to added low density routes
4. Voters with a tiny 50.6% "yes" margin approved light rail costing well under $5 Billion, not heavy rail costing well above $5 Billion
5. Successful rail systems are networks in multimillion population cities not 20 miles of single line on a corridor of less than 600,000 people
   
6. Proposed rail has an exorbitant cost per mile, per resident and per passenger... 2 to 3 times more than the hugely expensive Washington D.C. metro
7. Ridership forecasts are outright ridiculous and of course the majority of the projected riders are current bus riders; also about one fifth of the riders projected for year 2030 have not been born yet
   
8. Due to its huge construction costs, the proposed rail will absorb transportation funds for decades causing accumulated deterioration to the already mediocre roads and bus operations
   
9. For the price of rail and its foreign and environmentally intrusive technology Honolulu can build enough congestion relieving infrastructure to achieve 20-minute commutes for 75% of its population
10. 95% of Honolulu electric power comes from fossil fuel and thanks to utopian sun and wind policies dependence on oil for power will stay there for a long time
11. Reversible express HOT Lanes is clearly the best solution for Honolulu given the prevailing high Bus and Carpool use rates, and huge AM and PM commuting demand peaks; small trains with a capacity of 300 will do very little to demand peaks and even less off peak
    
12. The path to sustainability for Oahu requires HOT Lanes, Bus Rapid Transit, institutionalized TeleCommuting and expanded Bikeways but none of these are active projects
    
13. Independent macroeconomic analysis has confirmed that the proposed rail has a huge negative surplus (benefits minus costs) over a 40+ year horizon
    
14. Rail is unsustainable as a tax and energy black hole; Oahu has a $40 Billion funding liability and rail is the only discretionary project
15. Adding insult to injury, it is so ugly ... (see slide 21)
    

Jones Act Hurts Alaska and Hawaii

Here is an example of how the Jones Act endangered a community in Alaska. Even in a critical situation like this, the Russian ice breaker could not load oil from an Alaska port and take it to Nome, Alaska, but it had to backtrack to Korea to get the oil and back to Nome, Alaska.

Russian Icebreaker to Make History in Alaska

While Jones Act in general protects the shipping interests of the United States, it has huge implications for states that are dependent heavily on marine transportation, Alaska and Hawaii, and particularly the later. Special shipping interests must be protected even when the health and safety of populations are in jeopardy.

Hawaii's Congressional delegation has been fully unwilling to entertain any modifications to the Jones Act for Hawaii.

Infrastructure projects to fix the economy? Don’t bank on it.

Many good points in this Washington Post guest opinion:

• Even if federal agencies calculate the numbers properly, members of Congress often push ahead with "trash" projects anyway.
• As Morgan noted in his 1971 book, these big projects have often damaged both taxpayers and ecology.
• Taxpayers are double losers from all this infrastructure. They paid to build it, and now they are paying to clean up the environmental damage.
• When the federal government "thinks big," it often makes big mistakes.
• When the federal government is paying for infrastructure, state officials and members of Congress fight for their shares of the funding, without worrying too much about efficiency, environmental issues or other longer-term factors.
• The recent infrastructure debate has focused on job creation, and whether projects are "shovel ready." The more important question is who is holding the shovel.
• The federal government subsidizes the construction of urban light-rail systems, for example, which has caused these systems to spring up across the country. But urban rail systems are generally less efficient and flexible than bus systems, and they saddle cities with higher operating and maintenance costs down the road.