By Katy Grimes

Only two full days into the BART worker strike, it appears the 400,000 people who usually rely on the train system to get around the San Francisco Bay Area are resourceful. And, they’ve turned to a free market solution.

While Bay Area Rapid Transit employees strike for higher pay and “safer” working conditions, their unions, the Service Employees International Union Local 1021 and the Amalgamated Transit Union Local 1555, duke it out with government officials.

But not everyone in the Bay Area is stranded.

Avego, one of the clever  startup rideshare companies, jumped into action just in time for the strike Monday morning.

Avego marketed their services “with gusto” to commuters coming from the East Bay to San Francisco. “Avego was going beyond offering an easy way to share a ride with a stranger. The company was giving a few lucky commuters who downloaded its smartphone app a free helicopter ride to bypass the traffic,” CNBC reported.

“Sign-ups jumped from hundreds before the strike to thousands over the weekend, said Paul Steinberg, Avego’s director of operations for the Americas. ‘We’re getting creamed,’ he said.”

Rideshare under attack

The online rideshares, peer-to-peer taxis and carpool apps have come under attack by local politicians and regulating state agencies. There have been calls for bans because they compete with public transportation and taxis.

But these rideshare companies are the ultimate free market solution. Even with mass-transportation in the San Francisco Bay Area, the roads are horrifically congested. Commuters are always looking for creative ways to get around the problem.

“Some offer prescreened cars owned by professional drivers with black sedans or SUVs, while others provide ways to find commute partners and share the travel costs,” CNBC reported. “Some of the services get around safety regulations and government fees by offering a donation-based system.

The market has surged in the past year, with several leading firms saying this week that their business has been soaring.”

Most of the San Francisco rideshare companies have been running promoted Tweets that ensured tens of thousands of people who searched Twitter for “BART strike” would see ads and contact the companies.

Need a Lyft?

“John Zimmer started Zimride, a service that matches drivers and riders for long trips, such as from San Francisco to Los Angeles,” KQED reported. “He launched Lyft and describes it as a safer way to ride-share.”

Lyft is an on-demand rideshare service that bills itself as your friend with a car. You contact your “friend” with a phone app, and a car shows up with fuzzy pink mustache strapped to the car’s front grille.

Lyft drivers avoid taxi regulations because they take only prearranged rides, and never pick up fares curbside.

Uber, an on-demand town car service, also avoids the city’s taxi regulations by never picking up fares on the street.

Lyft lists their ride payments as “voluntary donations,” unlike Uber, which charges a minimum of $15 per ride.

SideCar, whose theme is “My ride is your ride,” is another online rideshare car service in San Francisco, and also uses a donation-based payment.

When users finish their Lyft or SideCar ride, they are provided a suggested price on their phone, based on the distance traveled and time in the car.

Riders can tap to accept and have money taken from their credit card or adjust the price and pay what they want.

But any time a new industry pops up,and usually out of need, another feels displaced.

“San Francisco’s taxi industry considers them unfair competition. And the California Public Utilities Commission, which regulates limo services, says they’re breaking the law,” KQED reported. “Over the past few months, the agency has sent cease-and-desist letters to Lyft and at least two similar services, SideCar and Uber.”

Hopefully, the free market will prevail. These rideshare car companies are brilliant and a very creative way to get around the congested Bay Area… as long as California doesn’t regulate them into oblivion.

BART pay vs. rideshare

BART employees’ average base salary for both station agents and full time train operators is around $56,000 a year, according to Mother Jones. And, the average overtime pay is around $10,000 for station agents and $17,000 for full time train operators.

A one-way BART ride from the city of Richmond to Embarcadero Square in downtown San Francisco is $4.60.

When I entered the same route on Avego, 23 different drivers popped up ready to give me a ride.

For just a few bucks, you can hitch a ride into the City with a “friend,” from the comfortable back seat of a car — and avoid the striking employees.

By Katy Grimes

Just when Californians thought implementation of the state’s Global Warming Solutions Act couldn’t get any worse, it is.

AB 32, California’s Global Warming Solutions Act of 2006, and SB 375, the sustainable communities companion bill enacted in 2008, both are under implementation by the California Air Resources Board. But CARB has taken a great deal of liberty, particularly with its interpretation of AB 32.

CARB devised a cap-and-trade system whereby it holds a quarterly auction program “requiring many California employers to bid significant amounts of money for the privilege of continuing to emit carbon dioxide — or be faced with closing their doors in California, laying off their employees, and moving their businesses to other states,” the Pacific Legal Foundation recently said.

The PLF ought to know. They are suing CARB over its cap-and-trade scheme, calling it an “unconstitutional state tax.”

Now, using the guise of AB 32 and SB 375 implementation, a new bill would assist the cap-and-trade program by directing the hundreds of millions of dollars of revenues into the “Sustainable Communities Infrastructure Program.” However, AB 574 by Assemblywoman Bonnie Lowenthal, D-Long Beach, also is about justifying the the cap-and-trade tax revenues for use on the California High-Speed Rail Authority.

While Democrats may hold a supermajority in the Legislature, Lowenthal got an earful from Republican Assemblyman Jim Patterson, R-Fresno, in the Assembly Transportation Committee Monday. (Video here)

Money to blow

If AB 574 is passed, Californians could expect to see a jump in the size of the massive state bureaucracy. This would allow for even more government waste, and the state would be exposed to substantial legal liability by improperly, and possibly illegally, authorizing the use of cap-and-trade revenue for high-speed rail.

Assemblyman Patterson lit into the bill with a directness rarely seen in California politics. “Are cap-and-trade funds going to be used for high-speed rail?” he asked Lowenthal.

But Lowenthal did not answer Patterson, and instead deferred to Jim Earp with the California Alliance for Jobs, the sponsor of AB 574. CAJ is a big supporter of public infrastructure and represents 80,000 union construction workers in the state.

“They could be used for rail modernization… yes, for high-speed rail,” Earp said.

Patterson asked Lowenthal and Earp if they or anyone had addressed the concerns the Legislative Analyst’s Office expressed over the use of the cap-and-trade auction revenues. But Earp insisted that the cap-and-trade revenues would have to pass intense scrutiny before anything was spent.

Patterson was not satisfied. “While high-speed rail could in the long run help reduce greenhouse gasses, not by 2020,” he said.

“I believe high-speed rail could support that,” Earp said.

“I want to know the justification and rationale for supporting this bill,” Patterson said. But he got no justification.

Patterson was referring to the LAO report, which found that construction of the massive rail project would actually increase carbon emissions. The LAO found that, because reducing greenhouse gases is not the primary purpose of high-speed rail, it would be difficult to justify how the cap-and-trade revenues could be used to pay the large capital costs, when it is not the reason why the rail system is even being built.

Transportation and sustainability

“For cities to remain habitable, profound changes need to occur both in cities themselves and in the ways they impact the surrounding landscapes and hinterlands,” the UCLA Center for Sustainable Communities claims. The center’s main research themes include:

* “Integrated social-biophysical research on human environmental interactions and their impacts and feedback loops.

* “Social justice and urban environmental sustainability through revitalizing and renaturalizing the urban environment.

* “Research and analysis of systems of governance and government for democratic accountability and greater sustainability.”

AB 574 establishes the statutory framework to be able to spend cap-and-trade auction revenues on sustainable communities plans. The Strategic Growth Council, only created in 2008, and the California Transportation Commission, in conjunction with CARB, will be charged with establishing the standards for the use of the cap-and-trade tax revenues.

Lowenthal told the committee that Sustainable Communities Strategies would create:

* “Livable Communities — Funding to increase transit mode share through focused transit expansion and ridership programs, transit-oriented development, and complete streets investment.

* “Rail Modernization — Infrastructure investments in high-speed rail, conventional passenger rail, and local mass transit that maximize system integration and increase rail and transit trips.

* “Infrastructure — Funding for infrastructure for smooth/GHG pavements, complete streets, ramp meters/traffic management.

* “Active Transportation – increasing bike and pedestrian trips and associated infrastructure.”

And CARB has indicated that 25 percent of these funds will be used to benefit disadvantaged communities.

But this is merely loosely worded language to allow the money go to “rail modernization,” as well as local transportation projects. And the only “rail modernization” taking place in California is the $68 billion high-speed rail scheme.

What is AB 32 and cap and trade?

AB 32 established the goal of reducing greenhouse gas emissions statewide to 1990 levels by 2020. Ostensibly, in order to achieve this goal, CARB implemented regulations to establish a cap-and-trade program that places a “cap” on aggregate greenhouse gas emissions from businesses and utilities, which CARB says are responsible for most of the state’s greenhouse gas emissions.

CARB issues carbon allowances and businesses are required to buy or sell these in the open market.

CARB has already conducted two quarterly cap-and-trade auctions, in November and March. Allowances were purchased by the regulated businesses in order to be allowed to continue doing business in the state. The LAO estimates roughly $660 million to upwards of $3 billion will be generated by the early auctions, and in the tens of billions of dollars over subsequent years.

This is the money Lowenthal wants funneled to transportation projects and sustainable community programs.

Authorizing the use of cap-and-trade revenue for high-speed rail could expose the state to legal liability, particularly if the Pacific Legal Foundation lawsuit against the CARB prevails.

‘Sustainable Communities’: Is this government housing?

Opponents of AB 574 say the Legislature cannot fund a program designed to dictate where Californians live, where they work, and how they travel. Nor should all Californians be forced to live in urban high-density developments, and be forced to use public transit, as the sustainable communities programs dictate.

This is government at its worst. This is central planning, which will force citizens into a government-sanctioned lifestyle incompatible with a free market economy. This is a fundamental threat to liberty. Yet this is what AB 32 and SB 375 really were about.

By Steven Greenhut

SACRAMENTO — Advocates for bigger government — which is just about everyone these days, it seems — believe that government is the most efficient and humane provider of goods and services. It’s such a bizarre way of viewing the world, but lessons about the wonders of the free market apparently aren’t taught anywhere anymore.

The presidential election and ongoing debates in the California Legislature illustrate this frightening phenomenon. Voters chose a president who has an undying faith in the power of government, and even the Republican candidate failed to clearly explain his most-obvious advantage — why free enterprise is superior to government coercion.

I don’t like to toss around pejoratives such as “socialist,” but what do you call a state Legislature where the dominant faction seethes with hostility toward private firms and does little more than hatch plans to create new government programs?

This in spite of the fact that, wherever we look, government fails.

A reckless — and incompetent — federal agency

The Sacramento Bee recently published an instructive article about how a federal wildlife agency is gaining contracts for pest-control services of the type that private-sector companies already provide.

One of the basics of government is that it should not assume tasks that private companies already are doing, but now that government is seemingly unlimited, no one seems to care about that idea anymore.

In the Agriculture Department’s Wildlife Services program, many of the costs are off the books — i.e., unfunded pension and overhead costs, which makes it seem as if the agency is more cost competitive than it really is.

Essentially, taxpayers are footing the bill for something that should be paid for by those who need to contract for such services. And the government is putting private firms out of business.

But the most instructive aspect of this story is how poorly the agency provides pest-control services. It is notorious for its ham-fisted approach to pest management, including killing of endangered species and a culture in which such deaths are concealed by workers. The agency has simply ignored calls for reform by members of Congress and activist groups.

“[Concern] is directed at an agency called Wildlife Services, which is already under scrutiny for its lethal control of predators and other animals in the rural West,” the Bee reported. “A … series earlier this year found the agency targets wildlife in ways that have killed thousands of nontarget animals, including family pets, and can trigger unintended, negative ecological consequences.”

If a private company operated in such a way, there would be accountability — legal efforts to control its practices, lawsuits by people whose family pets were killed due to the company’s irresponsibility, and criminal prosecutions for violations of environmental laws.

Government disregards its own laws

But the government doesn’t have to live up to the same laws that apply to the rest of us. Instead of having to cease and desist, Wildlife Services goes along its merry way, expanding more deeply into an activity the private market already is handling in a better and less-costly way.

As the article pointed out, the federal agency operates in virtual secrecy, which is another hallmark of government endeavors. Here is the Bee again: “‘It’s been such an uphill struggle,” said Erick Wolf, CEO of a California firm called Innolytics, which developed a form of birth control for Canada geese and pigeons with help from Wildlife Services’ scientists in Colorado. … ‘All they want to do is shoot, trap and poison,’ said Wolf. ‘They don’t want to consider anything else.'”

Government does not have a bottom line so its incentives are different. Government agencies often are protected from meaningful oversight. This is why a federal wildlife agency can wreak havoc on wildlife and why governments often are the biggest polluters.

These days I even hear people argue that government is the best way to provide services because there is no profit motive. That reflects an almost unbelievable level of economic ignorance, but it is a point officials make as they try to use government’s power of eminent domain against private water companies, for instance.

Businesses need to earn a profit, but the prices of their products are determined by competition, which relentlessly drives down costs and increases efficiencies as the less-able providers go out of business.

There is no place to offload private costs onto the public in a free market, even though some businesses despicably lobby the government for special privileges and bailouts.

No incentives to do good job, keep costs down

If the advocates for government efficiency were right, then the Soviet Union — where thousands of unneeded tractors rusted in vacant lots as the public waited in line for toilet paper — would have been the most successful economy on the globe. We would all be happily driving Trabants rather than Toyotas, Fords and Volkswagens.

Private industry creates wealth whereas government efforts consume it.

If my neighbor starts a business, he must win over customers without coercion. He can’t force them to patronize his business or to pay his expenses. Even when government operates as a business, it forces the rest of us to subsidize its operations. Private industry must please consumers or it loses money.

Governments’ only customers are politicians and the unions that represent their workers.

It’s no wonder the results are lousy customer service and shoddy products.

There are no shareholders to please, few incentives to rein in costs, no days of reckoning when it fails.

There are two ways to provide services — through the market, which energizes private initiative as people freely pursue their own dreams, or through the political world, where government officials take money by force (taxes) and protect government providers from competition. There’s a reason the teachers unions, for instance, fight vociferously against charter schools, vouchers and other competitive systems that would embarrass them.

If we want a humane, efficient and accountable society, then we need less government, not more of it. Advocates for freedom need to quickly figure out how to better impart these lessons in a society that is bounding toward limitless government.

Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at steven.greenhut@franklincenterhq.org.

By Katy Grimes

As free marketeers celebrate famed Nobel Prize winning economist Milton Friedman’s 100 birthday today, revisiting Friedman’s 1979 interview with Phil Donahue, where Friedman schooled Donahue, a 1970’s liberal television talk show host, on capitalism. This is an important reminder of why we fight for the free market.

Friedman, born July 31, 1912, and died November 16, 2006, easily dispelled the common liberal notion that capitalists are greedy, and demonstrated to Donahue how manipulated America has become by anti-free market government forces.

Donahue asked Friedman if the maldistribution of wealth, the haves and have nots, and greed, a good idea to run countries on?

Friedman asked Donahue if he thought Russia, China or the rest of the world doesn’t run on greed?

“The masses are worst off in the kinds of societies that depart from capitalism, and free enterprise,” Friedman said.

“But it seems to reward not virtue as much as it does the ability to manipulate the system,” said Donahue.

“And what does reward virtue?” asked Friedman. “Does a communist commisary reward virtue? You think a Hitler rewards virture?”

This short video clip is as important today as it was in 1979. Enjoy Milton Friedman – Greed.

And remember that “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

A few more of my favorite Friedman quotes:

* “Nothing is so permanent as a temporary government program.”

* “Underlying most arguments against the free market is a lack of belief in freedom itself.”

* “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.”

* The economic miracle that has been the United States was not produced by socialized enterprises, by government-union-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.

* “There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent — William Graham Sumner’s famous example of B and C decided what D shall do for A. The first may be wise or unwise, an effective or ineffective way to help the disadvantaged — but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and is entirely antithetical to liberty.”

*  “Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”

* “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”

By Joseph Perkins

A civil war has broken out within California’s dairy industry, pitting milk producers against cheesemakers.

The two sides are at odds over the state Department of Food and Agriculture’s valuation of whey, the liquid left after curds are separated from milk to make cheese.

But the real issue is the Ag Department’s anachronistic milk marketing program, which has regulated dairy prices here in California for more than three-quarters of a century.

The state’s milk producers have petitioned the Ag Department’s to revisit the decision it made this past September in which it revalued whey from a fixed 25 cents/cwt. to an adjustable 25 cents to 65 cents/cwt.

The valuation is factored into the state-regulated pricing formula for Class 4B milk, which is used in cheese (other than cottage cheese) and whey products.

Even with the Ag Department’s markedly increased valuation of whey, milk producers complain that it’s still not high enough. They say demand has driven up whey’s value above the state’s 65 cents/cwt. cap.

The state Milk Producers Council asserts that, since the Ag Department’s whey price controls took effect eight months ago, the price for Class 4B milk has been $2.54/cwt. less than the price for comparable milk produced in states operating under the federal milk marketing order.

The disparity between milk prices in California and other dairy states is “disturbing and outrageous,” said MRC spokesman Rob Vandenheuval, in a recent newsletter the group published.

Since last September, according to MRC, the state’s milk producers have sold more than 1.4 billion pounds of milk per month to the state’s cheesemakers. That means cheesemakers have received “a state-sponsored discount of $260 million,” said Vandenheuval, at the expense of the state’s milk producers.

The state’s cheesemakers see things differently. With the valuation of whey more than doubling over the past eight months, the petition by milk producers to further increase the valuation of whey is an “onerous and obscene demand,” wrote Norman Shotts II and Scott Hofferber of Farmdale Creamery, a smaller cheesemaker, in a letter to the state Ag Department.

The sentiment expressed by Shotts and Hoffberger represents that of most of the state’s cheese processors. According to the Dairy Institute of California, which has sided with cheesemakers in their civil war with milk producers, since the Ag Department ratcheted up its valuation of whey, most smaller and midsize cheese manufacturing have seen their profit margins erode, because they have been forced to pay sharply higher prices for milk.

The state Ag Department will try to broker peace between the state’s milk producers and cheesemakers when it holds three days of hearings next week, after which it will decide whether it should revalue whey yet again.

But that won’t address the real issue, which is the state continuing to regulate milk prices from the dairy farm to the dairy case.

It’s time the state abandoned such price controls. The free market — rather than Ag Department bureaucrats — should determine the value of whey as well as the price milk producers fetch for their commodity.