The efficiency of the private sector

Via Priceonomics:

In 2004, UPS announced a new policy for its drivers: the right way to get to any destination was to avoid left-hand turns. ...

When better tracking systems emerged in 2001, the package delivery service took a closer look at how trucks performed when delivering packages. As a logistics company with some 96,000 trucks and several hundred aircraft, much of UPS's business can be distilled to a series of optimization problems around reducing the amount of fuel used, saving time, and using space more efficiently. (Trucks in UPS facilities park just a few inches apart with their side mirrors overlapping to save space.)

UPS engineers found that left-hand turns were a major drag on efficiency. Turning against traffic resulted in long waits in left-hand turn lanes that wasted time and fuel, and it also led to a disproportionate number of accidents. By mapping out routes that involved "a series of right-hand loops," UPS improved profits and safety while touting their catchy, environmentally friendly policy. As of 2012, the right turn rule combined with other improvements... saved around 10 million gallons of gas and reduced emissions by the equivalent of taking 5,300 cars of the road for a year.

It probably says a lot about me that I find this extremely cool. I love it when someone comes up with a better way to do something we've been doing the same way for years.

I also love pointing out that it's invariably in the private sector that these innovations emerge. Private companies exist to make a profit, and so they have a huge incentive to figure out more efficient ways to do things. Rethinking these types of things saved UPS a ton of money. That's not only good for their bottom line, but good for consumers as well, as it allows them to keep their prices very competitive.

Contrast this to the Unites States Postal Service, which operates in the red to the tune of a billion dollars a year. The USPS has little incentive to be efficient. It's not their money, and the people who run it aren't really answerable to anyone, so there's no real reason to seek out better and cheaper ways of moving packages.

UPS is able to make money because they provide a superior service. Their continued existence depends on their continuing to provide a superior service. The USPS continues to exist because tax payers are forced to fund it, and because federal law makes it illegal for companies like UPS to deliver first class mail. Who has the best incentive to, er, deliver the best service?

Out of desperation, Obama makes the conservative case

Last week, President Obama gave an interview to Spanish-language media. In a question from the audience, a man observed that he can't afford the plans available to his family under ObamaCare. Obama's response is interesting.

I guess what I would say is if you looked at that person's budget, and you looked at their cable bill, their telephone bill... other things that they're spending on, it may turn out that it's just they haven't prioritized health care.

What is interesting is that this is a fundamentally conservative argument. The notion that individuals are responsible for their own needs, and that they must prioritize and make informed choices about what is best for them is not something we hear from the Left very often.

If only Obama actually believed this and championed policies that were grounded on this philosophy. We would be spared programs like ObamaCare, Common Core, minimum wage laws, "stimulus" bills, and the rest. All these programs are founded on exactly the opposite premise: that the needs of every person and family are the same, and that only a few Really Smart People in Washington know what those needs are, how they should be provided, how much they should cost, and how much you should be fined if you don't do as you're told.

The truth is, Obama doesn't believe the things he said in the interview. He only said them because they were convenient. When confronted with the on-the-ground reality that the "Affordable" Care Act isn't actually affordable, he adopted an argument his opponents have been making all along for why ObamaCare is a bad idea: Everyone's circumstances are different. They know their circumstances better than anyone else. And so they need as much freedom as possible to prioritize and make the choices that are best for them and their families.

Red States vs. Blue States

Here's something.

The Mercatus Center has just released a study that examines states’ abilities to meet their financial obligations. It isn't a pretty picture, mostly due to rising health care costs and the burden of government worker pensions.

Here's the thing I found most interesting. Take a look at the top and bottom 10 and notice how Red States states compare to Blue States. (Wikipedia has some handy maps which show voting trends over the past couple of decades.)

Top 10:
1. Alaska
2. South Dakota
3. North Dakota
4. Nebraska
5. Wyoming
6. Florida
7. Ohio
8. Tennessee
9. Montana
10. Alabama

Bottom 10:
50. New Jersey
49. Connecticut
48. Illinois
47. Massachusetts
46. California
45. New York
44. Maryland
43. Hawaii
42. Pennsylvania
41. West Virginia
40. Kentucky

 Pretty definitive, no?

Eight of the top 10 fiscally solvent states are solidly Red; eight of the bottom 10 fiscally solvent states are solidly Blue.

Further, the same striking pattern emerges when we look at other measures of success. I took a look at William P. Ruger and Jason Sorens' latest edition of Freedom in the 50 States. In it, they rank the states by a host of measures of personal and economic freedom. If you take a few minutes to thumb through the various charts, you'll see that Red states consistently outperform Blue states, especially when it comes to fiscal issues.

There was a time when we didn't have the data to determine whether conservative or liberal policies lead to better outcomes over the long run. But that time has long past. We now have many decades of data to examine, and the results are clear: liberal policies don't hold up over time.

And this is true on the world stage as well. Compare East Germany to West Germany, Hong Kong to mainland China, or North Korea to South Korea. In each case we see free market policies along side state-controlled economies within the same culture and time. The free market approach wins every time, and the differences are dramatic.