Friday, January 30, 2009

National Personal Transit and Health Care

If a system on the scale of a national personal transit system is ever realized, there will be a large corporate-like structure required to operate it. The people involved in this enterprise should be large enough in number to consider a health care system of their own or if the government is running it, could be combined with Medicare, V.A., etc into a single system. If nothing else this would save duplication of governmental efforts and there are enough V.A. hospitals and Medicare centers around the country for a good starting network. One of the problems the auto manufacturers and others have run into is lack of any ability to control health care costs. {GM may well have been smarter to buy its own health care company instead of its own bank (GMAC)}. By combining all of these health care entities we will also have a good start at a standardized national health care system and it may be preferable to separate that entity from any transit system entity. At any rate there will be time to consider this more fully after committing to automating our transportation system.

Friday, November 14, 2008

Tuesday, November 11, 2008

The National Economic Crisis

America and the world are undergoing the worst economic crisis in most of our lifetimes. Rather than scuttling plans for a national personal transit system, it seems to me that it is even more imperative to begin as soon as possible. The current crisis has been blamed on falling real estate prices but that is only the tip of the iceberg. The fact that many borrowers got loans based on an inflated value of their assets, with little regard toward their cash flow situation, only begins to tell the story. On top of that you have financial institutions making the loans then immediately "selling" the loan to a third party, frequently another financial institution. This gives the originator of the loan little incentive to make sure that any payments are made after the first ones, they will have their money and whoever bought the loan has to deal with any consequences. Then you have derivitives, complicated investing devices based on the assets of whatever the derivitive is being written for, in the case under discussion real estate and they are known as credit default swaps. Other sources describe derivitives and credit default swaps far better and in more detail than I could ever hope to so I won't go into them any further than to state that they essentially allow leveraging of investments, an important concept to consider here. What leveraging does is allow you to buy more of something for less money (similar but not to be confused with a loan) by requiring less money up front to acquire it. Many leveraging schemes will allow 10% or less of the price to be actually put up in the initial transaction, meaning you are 90% or more "leveraged". This is almost identical to the situation in 1929 when most of the banks were leveraged to the point that they had no way of paying off their depositors once the market started crashing, causing a run on the banks for people to get money. A lot of people lost money then but there was no FDIC or SEC, which may still not help us out now, but at least there is someone to assign the problem to. Nobody seems to know the worth of all the derivitives out there, much less the ones related to credit default swaps, but the estimates I have seen are in the $500 trillion range. That is more than 10 times the worlds annual GDP in one financial instrument. I am not intending this to be a complete economic evaluation of our financial institutions but only to point out that the sector is in deep doodoo even if real estate prices and investment pick up soon and the former values have been nearly recovered. This is not the sole component to our current situation.
Converging with the bad economy, is a situation where demand for resources, especially petroleum, is threatening to outstrip our ability to produce them, driving up prices. I am very surprised this hasn't caused a higher rate of inflation than it has, but the pressure is there. Additionally, it is becoming apparent that fossil fuel use must be curbed for other reasons as well (i.e. environment). Resource demand also creates a situation where national leaders have decided that use of the military is imperative to ensure supply. The military has long been the poster child for wasteful spending and manages to dispose of around a trillion dollars of our wealth every year, more than all other countries in the world combined spend on theirs. Not only that but subcontractors are hired for exhorbitant prices to do most of the work that isn't actual fighting. One sector of the economy that is not hurting is the military supply part, only problem is that military funding is not a net gain for the economy of the average person. I wonder what would benefit our economy more, a war in Iraq or a national personal transit system?
Now we come to the third reason the economy is tanking, it is overly tied to the motorized vehicle. Far and away the biggest manufacturing component of the economy has been historically automobile and related industries. This in itself is not a bad thing. What is bad, is the fact that automobiles are very destructive both environmentally and socially (you can read entire rants about this on other threads) and show no sign of going away anytime soon. However, when the cost of gas goes up and credit tightens it almost guarantees people buying fewer new cars and traveling less, not good for stimulating the economy or very predictable. Right now the car manufacturers are asking for a bailout to keep producing dinosaurs. While this might help in the short term, I believe it to only be prolonging the problem for some future greater collapse.
How will a national personal transit system solve any of these problems, especially when it requires significant investment on its own? Let me make the case for the auto industry first, since it is the most straightforward. If the industry is not to be nationalized, one or more manufacturers will be chosen to build vehicles uniformly to exact specifications for the system, rather than every car being "different". This will likely eventually leave some car manufacturers finding another line of work (how many different companies do you need making the same exact car) as a result of efficiency of scale. The same efficiency of scale will apply to mechanics, road construction workers and many others. These effects will not be noticable until the system has started operation on more than a small scale and begins to have widespread use, about 5 years or so at least for the timeline I would like to see. This sounds like a drastic change but the reality is that it will happen anyway as fewer and fewer people can afford to drive and support for road improvements dwindles. The difference is that if we do it in the fashion I advocate people will have a chance to retrain and adjust before they lose their livelihood and we will end up with a better system besides. If we shift resources from the military to build our transit system, we will have essentially "leveraged our investment". What I mean is that instead of a dubious return for each dollar invested in the military, you will have solid benefit from a better transit system ( I can see those with vested interest in the military rolling their eyes now). In addition the transit system will pay for itself whereas the military does not. As for the financial system, I am not even sure they can or should be bailed out but it looks like our elected reps will try their hardest to do so. At any rate, it seems like it sould be easier and more likely to get money back from a transit system than from the banks. Near as I can tell the only thing the banks will do anyway is keep track of the transactions (they certainly don't have the money to loan us). The biggest problem will be getting started before those financial institutions lose the rest of our money (that we don't really have anyway).

Tuesday, September 16, 2008

Who Will Benefit

Everyone in America will benefit in some manner. There will surely be some who suffer as well, as always seems to happen during any great change, but with careful attention I believe most of the suffering can be ameliorated (auto workers can build vehicles for the new sysem, mechanics can be retrained to repair them, etc.). For the rest of us the worst things we will have to suffer are the construction and paying for it, not too bad a deal in my opinion. What we will get in return is far more than a faster, safer, more convenient, more efficient, greener, and less expensive system. It will provide a new economic stimulus to our economy on a massive scale, seemingly something that is going to have to be done anyway. It will also provide more stability to the American economy by helping blunt the effects of energy cost fluctuations, which never seem to go downward very far or for very long. Eliminating all the oil required for over 1/4 of our national energy use will do more good than any amount of drilling, plus it gives oil producers (national and corporate) far less leverage over us. Over 40,000 people every year will benefit by still being alive instead of dying in gruesome accidents, likewise, almost another 2.5 million will benefit from not being injured in those accidents. I dont know the number of people that will benefit, but it would be all those who own the property recieving damage to the tune of tens of billions of dollars every year. Government at all levels stands to benefit directly from not having to worry about transportation financing or enforcing traffic regulations and safety, the lost revenue from tickets, personal property taxes, etc. should be more than made up by this. People unable to drive for physical, medical, legal, or other reasons would have unprecedented ability to get where they need to go without assistance. Folks who have an altruistic streak in them will also be able to say that their generation did something that will be useful to us all, far into the future. Finally, the planet will benefit, from the skunk meeting its untimely demise in the middle of the road, to the pelican that is covered with oil after a spill, to a biosphere that is undergoing more rapid change than likely has ever been seen on earth (other than meteor impact or other major disaster).

Friday, September 12, 2008

Its Never Been Done Before

The fact that a system like I propose has never been built before will likely require a working model to demonstrate to skeptics its utility and feasibility. A scale model should be constructed as soon as possible along with designs for vehicles and infrastructure, hopefully to be well on the way to completion by the end of 2009. Never having been done before should be no excuse for pressing forward. Who ever built craft capable of taking and returning humans to the moon before the Appolo project or built a nuclear bomb before the Manhattan project? Yet Americans did both of those unprecedented things. For sure every idea and proposal needs thorough vetting for both technical feasibility and practicality, if it is to succeed. That is one of the reasons for this blog. I have talked with a fair number of individuals who believe the whole thing is impossible (see The Politics of Personal Transit thread) even if the federal government can be convinced to undertake it. What encourages me the most, however, is that most of those people have come more to my way of thinking about it, when facts are pointed to and discussed, than have stubbornly clung to their point of view. Additionally, the vast majority of people I have spoken with have thought it would be a great thing to begin with, if we could actually make it a reality. The sheer scale of the project is not the biggest obstacle, it is convincing people that the effort to do it is worthwhile. This ought to be the great legacy of positive effect from the current generation and for many reasons a way to get out of and control our national debt, the probable legacy we will leave instead if we continue our present course. The choice is ours.

Wednesday, September 10, 2008

A Corporation Larger Than Exxon/Mobil

What follows may be the most controversial part of my proposed system but I dont think any of the current corporate models of government or the fortune 500 are up to the task of successfully managing the system efficiently. So let me jump right in with both feet, the national personal transit corporation will be owned by the federal government, possibly with some private investment. The first reason for this is the fact that it is the federal government who will own all of the assets, build, maintain, and regulate it anyway. Why should American society hand over trillions of dollars in investments to any private entity? The second reason is that it is the federal government that will ensure the system operates and remains solvent, it already insures that any corporation "too big to fail" will get a government bailout, so why not have a direct stake in the corporation? I realize many people will oppose the gov owning and operating anything, but it already de facto owns nearly all of the roads and associated equipment for construction, upkeep, and operation of roadways, plus it frequently infuses cash into the rail system. About the only part not owned by government is the actual vehicle, which is manufactured to more government standards than any product and even then you pay taxes to rent them. While there is no reason a person couldnt own their own vehicle for my system, it should be unnecessary. The biggest problem with government ownership (aside from purely ideological objections) is the waste and corruption that seems to inevitably plague government run enterprises, our department of defense is a glaring example. So how can we minimize that in our national personal transit corporation? The first way, I propose, is to tie the salary of every employee to success of the system. The method I like is to give every employee a base salary (say for example 110% of industry average for similar job) plus bonuses (monthly, quarterly or annually) when the system generates surplus or if they have an idea that cuts costs or improves services. This, I believe, would greatly improve the chances for efficient operation and ferreting out corruption. The goal of this corporation should be to provide its services to the public as cheaply as possible and still make a profit and mangement bonuses ought to reflect that when it happens (or doesnt). All profits should be split between system employees and the federal government according to a prescribed formula (say 80/20 the first billion $, 50/50 for the next billion $ and 20/80 above that), with so many quarters at some level of profit (if ever met) triggering fare reductions (which ought to give top managers big bonuses). As with any corporation, there will have to be some kind of oversight. This corporation will be the largest in the world (or very close to it) and will need to be subject to public opinion and scrutiny if it is to serve that public. I propose a board that will report directly to the secretary of transportation, that should include at least 2 independent financial auditors, 2 engineers (structural, transportation, civil, etc.), a management expert, all presidential appointees and a member each appointed by management and whatever organization the workers have. This board would be the final arbiter in all things npts not actully taken to a court of law and is ultimately answerable to both congress and the public marketplace. Unions should not need to be encouraged or discouraged since most of the usual issues will be automatically resolved (pay raises and bonuses tied to economy and success of system, arbitration instead of strike agreement, standardized working conditions, board to appeal management decisions, standardized health care plan...not currently available in America, etc.) but every employee should have a vote on their representitive to the board. None of this is intended to be a comprehensive or immutable, just my general idea of how to operate, what ought to be a model corporation, the likes of which to encourage on a broader scale. The ideas I have presented here are how to hopefully use the self interest of people for a positive result.

Monday, September 8, 2008

The Largest Public Works Project Ever

I have been told my idea for automating our transportation system is crazy or undoable by different people, mostly because of the scale of it and political realities that exist today. If someone were to attempt this by themselves, there is little doubt of failure. Any project of this sort will require the efforts of a very large number of people and a vast amount of resources, akin to building pyramids or the great wall. This requires a well-thought out plan of execution and, in a representative democracy, the support of a large majority of the citizenry. In the beginning, there will be work for public relations people and planners (computer programmers, designers, engineers, etc). Public relations should be the number one emphasis until sufficient interest is generated to begin planning. Generating that interest will possibly be the most ambitious part of this whole idea and must be carried out in a thoughtful manner for any chance of success. Right now the plan for generating interest is to keep this blog up to date, do a valid cost/benefit analysis, comment every place I can find relevant (i.e. letters, newspapers, blog forums, conversations etc), find other people to participate in publicizing, and to write a book. Once a good cost/benefit analysis is done the rest should be much easier but still not easy. The next step will be finalizing the design of the system, requiring the work of many design engineers and others. If all of this is done and it is finally decided that the system will be built, there will be work for literally millions of people, from the most unskilled laborers to the most highly qualified engineers. I would expect construction to require more peoples efforts than the CCC work projects of FDR and if it is to be done in the time frame of by mid-century a societal commitment nearly on the order of what it took to build pyramids many centuries ago. The reason I don't think it is hopeless, is that I have seen most people work very hard when they can see that their efforts are producing a positive effect and not mostly wasted or for some unknown benefit.