SHAKING OUT THE SUBOPTIMAL CAPACITY.

Some years ago, I estimated the minimum efficient scale of a fully integrated steel plant as about six million tons of raw steel per year.  The turmoil that was going on along the rivers of Ohio and Pennsylvania I interpreted as a shakeout of suboptimally small capacity at locations with relatively high inbound transportation costs.  My subsequent research suggested that, Rust Belt lamentations notwithstanding, steel was a lively corpse.  That was the message of The Renaissance of American Steel, reviewed here.

The creative destruction goes on.

The US steel industry really stands out: over the period 1972-2002, it witnessed impressive productivity growth – 28% compared with the median of 3% – and this while the sector contracted by 35%. The starkest difference was the drop in employment of 80% compared with a decline of 5% for the average sector. This left the industry with only 100,000 workers in 2002 compared with about 500,000 in 1972.

That wasn't the effect of Chinese dumping, either.

The increase in productivity in the US steel industry can be directly linked to the introduction of a new production technology: the ‘minimill’. We find that minimill plants were significantly more productive than traditional steel plants, and that this productivity premium initiated a reallocation process whereby minimills displaced the older technology. Minimill plants were significantly more productive than traditional steel plants, and that this productivity premium initiated a reallocation process whereby minimills displaced the older technology known as vertically integrated production. The reallocation of output was responsible for about a third of the increase in the industry’s total factor productivity. In addition, the productivity of minimills steadily increased.

Plus the ability of the minimills to recycle scrap into ever-better products improved.  (Tramp elements in reinforcing bar are less of a problem than those same elements in sheet intended for automobile fenders.)

We see the exit of vertically integrated producers in precisely the product segments where they competed head-to-head with minimills. The entry and expansion of minimills was thus responsible for the reallocation process among incumbents.

When we evaluate the impact of a drastic technological change on aggregate productivity growth, we control for other potential drivers of productivity growth, including international competition, geography, and firm-level factors such as organization and management. We also show that mark-ups in this industry fell by 50% over the last 40 years, which is not surprising if we look at the output and input price changes in the industry. The joint increase in productivity and reduction in mark-ups led to an increase in consumer surplus of $9-11 billion per year.

Sometimes, the big steel firms had to be mugged by reality.  And -- as is the case with Marshallian improvements, steel consumers gained, but some communities and many steel workers, lost.  Social scientists will never lack for work.

ALL IN ON THE CONRAIL OPTION.

Never mind the ways in which the so-called Patient Protection and Affordable Care Act went wrong, it's not enough government intervention.

The latest U.S. Census Bureau data clearly illustrates that the need for a single-payer, Medicare-for-all health program has never been more urgent, the advocacy group Physicians for a National Health Program (PNHP) said Tuesday.

The census found that 29 million people went uninsured last year, including 3.7 million children, and that deductibles and other out-of-pocket costs have continued to rise well after the Affordable Care Act (ACA) went into law in 2010.

The state is that grand fiction by which everyone attempts to live at the expense of everyone else.  And the only response to government failure is ... more actions by the national government.

[Pediatrician and association president Robert] Zarr added, the bureau neglected to mention that the quality of healthcare in the U.S. has also decreased, with rising copay and deductible costs and narrow provider networks—an effect known as "hollowing out."

"That tens of millions of people will remain uninsured under our current arrangements is perhaps the most compelling argument for why our nation needs to swiftly adopt a single-payer system, where everyone, without exception, would be covered and get first-dollar coverage for all medically necessary care," he said.

"Too many people have skimpy policies that deter them from seeking care when they should get treatment, and that leave them unprotected against financial hardship when illness or injury strikes. And their number is growing."

Meanwhile, the recent announcement by health insurance giant Aetna that it would pull out of ACA exchanges in 11 states—and similar actions by United Health Group and other private insurers—shows the corporations cannot be trusted to protect their patients' financial security, Zarr added.

"Our patients and our economy can't wait any longer for an effective remedy to our healthcare woes," he said. "The stakes are too high. We need to swiftly move beyond the ACA to a single-payer national health insurance program."

Yes, that Medicare reimbursement rate is doing a lot to make sure that participants in the part of the health industry that is run along single payer lines get that first-dollar coverage.  The best fix is to make sure that everyone's physician is subject to monopsonistic buying practices?  I'm not having it.  Neither is Reason's Shikha Dalmia.  "Obamacare has become such a quagmire that the proposed 'fixes' may create an even bigger mess." What are those fixes?  Mandatory purchase of insurance, with a stiffer penalty for not buying.  A Government Issue policy.  "Obamacare tried to remake a sector that constitutes one-eighth of the economy from the ground up. But it made a mess that it just doesn't know how to fix. That will be President Obama's legacy. He should be worried. Very worried."

But we're likely to see the public option, or the nationalization, followed by the inevitable crash.  There's still time to move toward medical savings accounts and interstate competition among insurers and greater commercial freedom for providers of medical care, particularly that involving machinery and prescriptions as opposed to examinations and surgery.

HILLARY'S DEPLORABLE HEALTH.

Retrieved from Soviet Art.

LOGIC FROM THE BASKET OF DEPLORABLES.

Play the clip of Hillary Clinton trashing the basket of deplorables and listen (if you can stand it) to the usual litany of dog-whistles.  And yes, argues Neo-Neocon, they are dog whistles.  "Clinton also listed a string of types of bigotry she alleges that these Trump supporters exhibit, not just the white supremacy aspect: 'Racist, sexist, homophobic, xenophobic, Islamaphobic, you name it.'"  Go read both posts.  She explains why it's an error to refer to sensible fears as phobias.

Rod Dreher takes the response in a different direction.

I do firmly believe that in her basket of deplorables she puts traditional Christians, thinking us “homophobic.” In fact, I would love to hear her talk about what, exactly, are the factors she considers in whether or not someone is a “homophobe,” a “xenophobe,” an “Islamophobe,” a “racist,” or a “sexist.”

For example, is it possible to hold any traditional Christian beliefs about human sexuality and not be considered homophobic by Hillary Clinton? Is there any position on immigration to the right of her own that people can hold without being judged mentally ill or morally deficient by her? How about on Islam? Let’s hear it.

Because what I hear when I listen to her words is that Hillary Clinton thinks anybody who disagrees with her on race, women’s issues, LGBT issues, and the rest, is wicked.

Plus a True Summation of Hillary of the Deplorable Health's mindset.

[The clip] plays directly into the stereotype of Hillary Clinton as an arrogant, bossypants liberal elitist. And it confirms another stereotype: that the Left doesn’t simply consider its opponents wrong, but also terrified and hate-filled, and therefore irrational and evil. You can’t reason with people like that, you know; you just have to use the power of the state to roll over them.

Indeed.

THOSE PARALLELS TO THE TRANSPORTATION CARTEL.

The point of turning rail transportation into a cartel was to limit what the punditry used to refer to as "wasteful and duplicative competition" by issuing operating authority first to railroads and then to trucks.  There was a separate cartel for air carriers that worked equally badly.  That Depression-era experiment ended 35 years ago.  But medicine is still on that course.

What does it take to open a new hospital or health facility? Certainly a building, equipment, supplies, and a staff of trained medical professionals. But in most states, this is not enough. Health care providers must also obtain a “certificate of need” from a state board certifying that there is an “economic necessity” for their services.

The controversy plays out among hospitals precisely the same way it played out in transportation.

Some economic theorists argue that when costs are fixed, free markets will lead to excess entry, making regulatory restrictions on entry desirable (Mankiw and Whinston 1986). But we should not conclude that because markets are imperfect, regulation can necessarily improve upon them—this is a logical leap which must always be taken carefully.

There are good reasons to be especially suspicious in this case. Top theorists of industrial organization, including some who published one of the first proofs of excess entry, have warned of the dangers of regulatory capture leading to too little competition (Laffont and Tirole 1993, Suzumura 2012). More ominously, theoretical work shows how even a well-meaning and well-informed regulator charged with limiting entry to the socially optimal level can be tricked by incumbents into permitting too few new entrants (Kim 1997).

CON restrictions are an example of how such entry barriers fail in practice. Certainly we see abuses and regulatory capture. Yet the real problem is not the abuse, but the thing itself. Reducing the supply of an inelastically demanded good such as health care simply isn’t a recipe for lower spending. It is a recipe for high prices and high spending, which is what we see in practice.

By repealing CON laws and allowing more health care providers and competition, states have the opportunity to attract new investment and innovation while reducing spending and keeping care affordable.

Indeed.  But regulation in the public interest generates juicy rents.

THE CASE FOR LATE-NIGHT TRAINS.

Amtrak's Saturday evening Hiawatha service will continue until further notice.  "The Saturday late evening trains have shown higher ridership during a trial period than the early morning trains they replaced."  This is a positive development.  We don't refer to Milwaukee as the Beer City for nothing.

There might be other days of the week, starting with Friday, for which a late evening train proves useful.  Perhaps the day will come when the Chicago Wolves hockey team refer to their series with the Milwaukee Admirals as the Amtrak series for reasons other than naming rights.

IT'S THE TOXIC POPULAR CULTURE.

Laura McKenna has to protect her sons from it.

He, like all the teens in town, are “friends” with hundreds of other kids. Kids he doesn’t even really know. These “friends” post pictures and videos of their parties gleefully recording every shotgun, every pong game, every blurry eyed drunk face. Idiots. And it’s not just the skateboarding, shop class kid. It’s the AP honors kid, the going to Harvard kid, the marching band kid.

And then a friend who has two teenage daughters warned me that I needed to watch out for the girls now that Jonah got so cute over the summer. She said that I would have to be careful, because girls would start launching themselves in his direction. So, we had lots of talks about all this over the weekend, but would I be a terrible feminist, if I asked the parents of girls to talk with their daughters about this, too? Perhaps teenage girls shouldn’t give themselves nicknames on their finsta-accounts that call themselves “hoes.”

Another parent in town was so dismayed by his kid’s behavior and the general culture of the town that he made his kid drop out of school and join the military. That seems a bit extreme. The parents who put their kids in fancy Catholic schools in the area say that the same problems exist there, too. In fact, the private kids are even worse, because their parents go away to Thailand for two weeks and leave the kids alone in their McMansions with an unlocked liquor cabinet.

As much as we would like, we can’t wrap our kids in cotton and lock them in their room until 25. How do you parent properly, when other parents aren’t? When other parents buy the booze for the kids? How does a kid make good choices, when he lives in a world where everybody else is making bad choices?

I should probably lodge a protest about the perpetuation of the canard that shop class is for burnouts.

But is anybody surprised, when the aspirational Leave It To Beaver and Father Knows Best give way to reality TV and the tabloid culture, and bad behavior in some circles is transgressiveness or authenticity to be celebrated in other circles, that bad choices become the default?

DENOUNCING DEPLORABLE HILLARY.

Her "basket of deplorables" crack did not sit well with Judge Jeanine.  It's unlikely that the judge is going to change any minds, but she's hot when she's hot.

The other half of the Trump voters, as perceived by Mrs Clinton and the rich freakazoids, exist as people to be condescended to.  Here's how the editorial board of The Wall Street Journal see it.

She said Mr. Trump’s other supporters are “people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they’re just desperate for change. It doesn’t really even matter where it comes from. They don’t buy everything he says, but he seems to hold out some hope that their lives will be different. They won’t wake up and see their jobs disappear, lose a kid to heroin, feel like they’re in a dead-end. Those are people we have to understand and empathize with as well.”

So she thinks half of Mr. Trump’s voters are loathsome bigots and the other half are losers and dupes who deserve Democratic pity. It’s no accident that Mrs. Clinton said this at a fundraiser headlined by Barbra Streisand, the friendliest of crowds, because this really is what today’s elite progressives believe about America’s great unwashed.

But Hillary of the deplorable health, the deplorable state of what used to be mainstream America is the predictable consequence of the deplorable last seven years of Hope and Change.

Stuart Artistry.

OKTOBERFEST.

The original goes on in Munich.

Hamburg gets in on the fun.

It runs for several weekends in (just north of, if you want to be picky) Milwaukee.

Satisfy your Inner German.

KNOW YOUR PLACE, PEASANTS!

Hillary Clinton's #basketofdeplorables clip.  Watch and understand.

Clip retrieved from NBC.

IF YOU WANT FEWER TACO TRUCKS, VOTE DEMOCRAT.

That was last week's election folly.

But a taco truck is an entrepreneurial venture serving food.  That means it must be taxed and regulated.

In both Texas and California, street vendors found themselves increasingly popular with the city, but struggling to fend off concerted attacks from the city government. The San Antonio city fathers restricted hours of sale and then finally ejected chili stands from Alamo Plaza near the turn of the century, but met resistance when chili queens continued to set up stands in defiance of the law.

Instead, the Wise Experts prescribed the commercial strip, with its strip malls and nationally franchised bun-'n-runs.

Major roadways turn into strip malls fronted with parking lots and endless stretches of chain retail. These strip-mall arterials exist nationwide, robbing cities of their appeal. The common wisdom is that they result from “the market,” as monuments to American capitalism and consumerism. But that is a big fat myth—they have been forced into existence by government regulations.

Indeed, many of the regulations that prevent livelier downtown areas also harm the potential of low-density, outlying, suburban ones, by mandating that retail stay confined into this strip mall model. Below is a list of these regulations, which are enforced to various degrees across America, explaining the uniform look of our municipalities from coast to coast.

In addition to being aesthetically deadening, the strip malls and the zoning by Wise Experts are tax syphons.

At Strong Towns, we see that our cities, towns and neighborhoods are dripping with opportunity. These opportunities are not of the mega-project variety. They don't come with ribbon cuttings, press releases and legislative approvals. They are small -- seemingly beneath us, perhaps -- but they can positively transform everything about how we live our lives. A row of trees here. A bike lane there. A crosswalk. A street light. A sidewalk. Some benches. In the nation we've built, the high returning infrastructure investments are now of the details, details, details variety.

Put another way, public capital that might be complemented by a taco truck or a popcorn wagon.

A SIGN OF ECONOMIC WEAKNESS?

Hanjin Shipping have sought bankruptcy protection.

While Hanjin’s finances are crumbling, it’s created a strange and unsettling situation on the high seas. Hanjin ships are currently docked offshore, effectively marooned as ports in Europe, the U.S., and Asia turn them away. The concern is that Hanjin won’t be able to pay port fees or crew wages — and that the contents of the ships might be seized by creditors upon entry to port. One captain near Japan was given permission to unload cargo, but his request for food and water was denied.

Hanjin’s lawyers are scrambling to arrange legal cover, and global officials must instruct ports to prevent any humanitarian disaster on Hanjin ships.

Putting aside the very serious matter of crew safety, the bankruptcy comes at a crucial time for retailers and product suppliers. They’re starting to get ready for the all-important holiday season — and even small ripples in global supply chains can create product shortages and affect companies’ bottom lines.

“Those who have containers on a Hanjin ship right now are certainly concerned about getting their cargo,” said Mike Zampa, communications director for the Port of Oakland.

And nothing might concentrate the minds of even the most technology-addled hipsters like spot shortages of smart 'phones.

Samsung said an order this week by a U.S. bankruptcy judge did not encourage the Hanjin ships to enter U.S. ports as intended, which the company blamed on a misunderstanding of maritime law, the bankruptcy code and Korean law.

The maker of electronic goods including Galaxy smartphones said the judge should issue an order barring the seizure of ships and allow it and other cargo owners to retrieve their goods by paying cargo handlers, who have been demanding payment guarantees.

Yes, and with just-in-time logistics, Christmas packages are enroute to the docks or at sea.  Isn't the existence of inventories of unsold goods one of the warnings of a recession?  "But if the larger problem is that the world wants fewer computers and clothes, there may be a lot more ships — and their parent companies — stranded at sea."

We have much to look forward to.

EMERGENCE IS MESSY.

A Republican court intellectual suggests this year's presidential election is the "Flight 93 election."  The messy emergence is apparent in the article's summation of the ways in which the times are out of joint.

One of the paradoxes—there are so many—of conservative thought over the last decade at least is the unwillingness even to entertain the possibility that America and the West are on a trajectory toward something very bad. On the one hand, conservatives routinely present a litany of ills plaguing the body politic. Illegitimacy. Crime. Massive, expensive, intrusive, out-of-control government. Politically correct McCarthyism. Ever-higher taxes and ever-deteriorating services and infrastructure. Inability to win wars against tribal, sub-Third-World foes. A disastrously awful educational system that churns out kids who don’t know anything and, at the primary and secondary levels, can’t (or won’t) discipline disruptive punks, and at the higher levels saddles students with six figure debts for the privilege. And so on and drearily on. Like that portion of the mass where the priest asks for your private intentions, fill in any dismal fact about American decline that you want and I’ll stipulate it.

Conservatives spend at least several hundred million dollars a year on think-tanks, magazines, conferences, fellowships, and such, complaining about this, that, the other, and everything. And yet these same conservatives are, at root, keepers of the status quo. Oh, sure, they want some things to change. They want their pet ideas adopted—tax deductions for having more babies and the like. Many of them are even good ideas. But are any of them truly fundamental? Do they get to the heart of our problems?

Keepers of the status quo?  In the political sphere, that would be the Vital Progressive Center, still peddling Governance By Wise Experts in a form that either of the Roosevelt presidents or Harry Truman or Lyndon Johnson would recognize, and they'd recognize in the formulations of Hillary Clinton precisely the strategies that they were "fighting" for back in the day.

IT TAKES SOMETHING TO BEAT EVEN DEMOCRAT FAILURE.

[Editor's note, three years later: this post repeats an earlier post with a different title and otherwise the same text.  I promise to be more careful checking the "drafts" folder going forward.]

Yes, there's plenty of failure to go around, and Donald Trump has been attempting to pry some of the vassals from their squires.  Is it enough?  Not according to Chicago Tribune columnist Dahleen Glanton.

The Democratic Party has failed African-Americans.

Ever since blacks forcefully abandoned the party of Lincoln in 1964 and turned out 94 percent of their vote for President Lyndon B. Johnson, Democrats have enjoyed a cozy relationship with a dedicated constituency that has demanded very little in return.

Blacks have repeatedly given the Democratic Party a blank check to do whatever it chooses and still guarantee voter turnout of an average of 88 percent. Thus far, blacks have seen minimal economic return on their investment.

Yes, Trump spoke the truth. Too many African-Americans are living in poverty. Too many of our schools are no good. We have too few jobs. And large numbers of our youth are unemployed.So what the hell do we have to lose by voting for him, he asks? But the question most African-Americans have for Trump is what the hell would they gain?

African-Americans have no idea because Trump has been too much of a coward to look them in the eye and tell them. He turned down several opportunities to speak directly to African-Americans, declining invitations from the NAACP, the National Association of Black Journalists and the National Urban League.

Blacks are left to assume that he has no workable solutions to the unique problems that plague African-American communities.

Ultimately, she argues, both symbolism and substance matter.

So far, what the Democratic Party has done for blacks has been mostly symbolic. Maybe when the Republican Party figures out a way to put another Barack Obama at the head of its presidential ticket, rather than someone who fueled the birther movement, blacks would happily flock over to the other side.

In the meantime, it's certainly going to take a better candidate than Donald Trump to make that happen.

Substantively, Mr Obama has been a failure, certainly overseas, but the two-lies-for-the-price-of-one Affordable Care Act and the non-stimulus stimulus, both enacted with the help of reconciliation, a filibuster-resistant Senate, and a few political favors to Nebraska, for good measure.

TIME TO BRING THE SMACK.

A Lament for These Times by Sgt. Mom of Chicago Boyz.  "Yes, politics and the social scene appear to be getting stupider, reactionary and more risible in every passing day."  She doesn't have the time to respond to everything, thus a sampler.  Neither do I.  But there's progress to report on the construction of the railroad, and of the circus train to run on it.

WATCH THIS SPACE.

In the near future, I hope to have a model of an open hearth shop.  The smokestacks will work, once I rig some piping from a Hallowe'en fogger to the base of the stacks.

At Home Depot, which cut a 10 foot length of electrical conduit for me, I also found some small sheets of 18 and 22 gauge mild steel that, when cut to size, will be perfect flat car loads of plate destined for the shipyards.

RENT SEEKING IS GOUGING THE TAXPAYER.

Earlier this week, we had some fun with a rather silly statement by Florida attorney general Pam Bondi, committing to enforcing a price gouging law.

Corrupt Pam Bondi is also a supporter of Donald Trump, and not averse to trafficking in influence.

Mr. Trump and Ms. Bondi, who is supporting his campaign, have denied any connection between his donation and her office’s decision not to proceed with an investigation. Asked about the subject on Monday, he called Ms. Bondi “beyond reproach” and said that he “never spoke to her about that at all.”

A spokesman for the Florida attorney general’s office, Gerald Whitney Ray, said the office’s inquiry never came across Ms. Bondi’s desk: Lower-level staff members made the decision not to proceed with an investigation of their own. Mr. Ray also said the office never gave any thought to joining in the New York attorney general’s case.

But Democrats and liberal watchdogs seized the opportunity to accuse Mr. Trump of practicing exactly the sort of corrupt politics that he rails against on the campaign trail.

Campaigning in Tampa, Fla., on Tuesday, Hillary Clinton demanded details of the conversation in which Ms. Bondi solicited Mr. Trump’s donation. “The American people deserve to know what was said, because clearly the attorney general did not proceed with the investigation,” she told reporters.

And Jordan Libowitz, a spokesman for the liberal-leaning Citizens for Responsibility and Ethics in Washington, said Mr. Trump’s donation to Ms. Bondi gave new meaning to his more recent boasts about the efficacy of his political giving. “It sure looks like that is what is going on here,” said Mr. Libowitz, whose group filed a complaint about the donation with the I.R.S.

Though Mr. Trump denies it in the case of Ms. Bondi, he has been brazen in asserting that he has used political donations to buy influence — and routinely asks voters to trust that, because he possesses that insider’s knowledge, he can reform a system that he calls “rigged.”

Without a massive rollback of the regulatory state, there will be no reform, as any regulation, no matter how well-intended or carefully crafted, generates rents, and opportunities to dissipate them.

TAX DONUTS TO PAY FOR MORE POLICE?

Chicago's pop tax might be a Pigouvian tax that generalises.  "The daily allowance for a person's sugar intake should be halved to six teaspoons, the World Health Organisation (WHO) has said."  I'm in trouble, that sounds like what goes into the morning cups of coffee.  I leave the incidence implications of taxing sugary foods -- in the developed world, obesity correlates with poverty -- to somebody else.

FUNDAMENTAL NONCONVEXITIES IN THE ADJUSTMENT OF THE POLICE FORCE.

As an economy measure, of sorts, Chicago's police department makes extensive use of overtime.  So much, in fact, that the union is suggesting its members mark off on overtime calls.

The union says the move is meant to give officers more time with their families, but some critics see it as a way for police to make a point at the expense of the people living in violent neighborhoods.

It is turning into a war of words between the powerful police union president and one of Chicago's most respected religious leaders, and it all comes on the heels of Chicago recording its 492nd homicide of the year, more than New York and Los Angeles combined.

Chicago has already surpassed the total number of homicides from last year, having just ended the bloodiest August in nearly two decades.

It's the classical activists' dilemma: the only thing worse than having a police presence in the 'hood is having no police in the 'hood.

"I guess I expressed my anger a little stronger than I would have liked to, but I can`t tell you how much it disturbs me for the president of the Fraternal Order of Police to be telling police to not take overtime on a weekend we traditionally have an enormous amount of violence," [South side priest Michael] Pfleger said.

"We agree on one thing and it certainly isn`t where I should spend eternity," said [union president Dean] Angelo. "We need more policemen."

Angelo says the police force is down to 12,000, with fewer than 900 detectives investigating hundreds of homicides and more than 2,500 shootings.

But, despite the hotel tax and the pop tax and the higher property tax and all the other ways the Combine fleeces residents, finding additional payroll in the budget is hard.

“It’s less of a change in strategy and more of a response to this incredible streak of gun violence. By doing this, we hope to begin to get control of the gun violence that seems to grow all the time,” [alderman Pat] O’Connor told the Chicago Sun-Times.

“We have a large number of police officers retiring and a big increase in crime and people demanding more cops. We’re not gonna be able to keep up with attrition with the current numbers. We need to put more officers on the street.”

O’Connor refused to say how the hiring blitz would be paid for at a time when Chicago faces a $137.6 million budget shortfall, the city’s smallest in a decade.

But, he argued that there is room to maneuver, now that Emanuel has identified dedicated funding sources to put all four city employee pension funds on the road to financial health.

Last year, the City Council approved a $588 million property tax increase for police and fire pensions and school construction. Last week, [mayor Rahm] Emanuel’s handpicked Board of Education signed off on a $250 million property tax increase for teacher pensions.

On Sept. 14, the City Council will be asked to put the final piece of the pension puzzle in place — by approving Emanuel’s plan to slap a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund, the largest of the city’s four pension funds.

But there's a startup package for new police officers.

For years, many aldermen have been criticizing Emanuel's policy of using cops on overtime to flood troubled neighborhoods when violence flares. They have unsuccessfully pushed the mayor to hire more officers, with the administration contending it's more cost-effective to use overtime because that doesn't push up benefit costs.

Ald. George Cardenas, 12th, said the city needs to go beyond hiring only enough officers to replace those who are retiring, as has been done in previous years.

Downsizing has long worked like that, whether it's downsizing induced by market forces, or by tax pressures.

Fringe benefits affect the relative costs of regular and overtime hours. They play a key role in determining the equilibrium employment and hours, and the speed at which employers adjust employment to equilibrium. Increases in fringe benefits in recent years induced employers to schedule considerable overtime while simultaneously laying off workers.

Sound theory is sound theory; perhaps there's a public economics Ph.D. candidate looking for a thesis topic?