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Wall Street Journal columnist Allysia Finley writes that “Gavin Newsom promised to ‘Trump-proof’ the Golden State. If only he’d fireproofed it instead.” Here’s more:

Start with its environmental obsessions. The Los Angeles Department of Water and Power in 2019 sought to widen a fire-access road and replace old wooden utility poles in the Topanga Canyon abutting the Palisades with steel ones to make power lines fire- and wind-resistant. In the process, crews removed an estimated 182 Braunton’s milkvetch plants, an endangered species.

The utility halted the project as state officials investigated the plant destruction. More than a year later, the California Coastal Commission issued a cease-and-desist order, fined the utility $2 million, and required “mitigation” for the project’s impact on the species. This involved replacing “nonnative” vegetation with plants native to the state. You have to chuckle at the contradiction: California’s progressives want to expel foreign flora and fauna but provide a sanctuary for illegal immigrants.

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Wealthy liberals have long been shielded from the consequences of their government’s blunders. State regulators until recently even suppressed insurance rates for high-priced homes by barring insurers from fully pricing in wildfire risk and reinsurance costs.

Like King Canute, who tried to command the tides, Insurance Commissioner Ricardo Lara on Thursday prohibited insurers from dropping homeowners in areas affected by the fires. People who lose their homes deserve sympathy. But if insurers aren’t allowed to limit their liabilities or adjust premiums based on risk, they will instead raise rates on everyone.

Democrats think they can wave away economic reality, much as they do when they pretend there are no costs to raising the minimum wage or taxes. Will the fires prompt Mr. Newsom and company to rethink their delusions? Forget it, it’s La La Land.

Peter Earle and Tom Savidge warn of the harmful consequences destined to arise as a result of the recent hike that state’s minimum wage.

Arnold Kling wisely counsels that we mind our economic metaphors. Two slices:

I believe that the supply-and-demand metaphor is useful. It guides a student toward thinking of prices as reflecting overall systemic forces, rather than treating prices as dictated by all-powerful businesses.

It also is important to understand that supply and demand curves intersect. I wish that we did not call the intersection point “equilibrium,” because that suggests stability. The metaphor I would use instead is “market-clearing price,” meaning the price at which there is neither a shortage nor a surplus. The student should understand why we expect shortages and surpluses to be only temporary, unless the government imposes price controls.

I like the metaphor of “roundabout production.” It can describe a production process in which you arrive at final output by first building tools to produce that output, which is how Austrian economics thinks of capital equipment. But it can also describe the process of obtaining output through trade, as in David Friedman’s classic description of Americans “growing automobiles” by growing wheat, loading the wheat onto ships for Japan, and having the ships come back carrying automobiles.

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Another metaphor that disturbs me is what I call the GDP factory. You think of the entire economy as producing a single good. When “aggregate demand” falls off, the factory/economy lays off workers. Spending creates jobs, and jobs create spending. Newspaper stories about the economy are forever describing it in such terms. Worse, and, sad to say, this metaphor is hardly limited to non-economists. Much of mainstream macroeconomics uses this metaphor.

I prefer to think of job creation as businesses discovering new patterns of sustainable specialization and trade. They are sustainable because everyone involved earns a profit. When something happens that makes a business unprofitable, the pattern gets broken and workers get laid off.

In fact, non-economists are not the only ones stuck in misleading metaphors. In my opinion, there are many metaphors used by economists that lead to more confusion that insight.

One such metaphor is the metaphor of perfect markets. A perfect market requires a simple good with very many sellers competing on a level playing field. There is a “fundamental welfare theorem” which says that perfect markets foster efficiency according to a criterion known as Pareto Optimality.

But in practice, the metaphor of perfect markets almost never applies. Almost every real-world market “fails” in that it violates at least one condition required for perfection.

Because “market failure” is everywhere, many economists argue for government intervention in a variety of markets. This I regard as an intellectual swindle. Just because the market will not produce the perfect outcome does not mean that government intervention will do so.

Interventionists accuse free-market economists of believing that markets are perfect. But in fact, free-market advocates look at markets and government intervention as processes. We see the market process as doing a better job of providing continuous improvement than the government intervention process.

My Mercatus Center colleagues Liya Palagashvili and Revana Sharfuddin report the results of their new research on government interventions into the labor market. Two slices:

Freelancing, platform-mediated “gig” work, and other forms of self-employment are at an all-time high in the United States. Over a third of America’s workforce engaged in some type of independent work in 2023. While independent work continues to play a larger and unprecedented role in the economy, efforts have sprung up in recent years to regulate it.

Most notably, stricter worker classification laws, such as the ABC test, have emerged as the key response to tackle potential cases of misclassification (e.g., when a worker is functionally an employee but legally classified as an independent contractor). An ABC test limits the circumstances under which a worker can legally work as an independent contractor. Supporters of ABC test laws argue that those laws can address misclassification and induce employers to reclassify independent contractors as employees to comply with the law, thereby increasing the share of workers who are employees.

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Our findings show that the ABC test does not lead to more workers becoming W-2 employees. Instead, an ABC test caused significant declines in employment: traditional (W2) employment fell by 4.73%, self-employment fell by 6.43%, and overall employment fell by 4.79%. Occupations with high shares of independent contractors experienced the largest reductions in W-2 employment.

These results suggest that ABC tests are not altering the worker composition, with more workers becoming traditional W-2 employees as intended, but they are reducing employment for both W-2 employees and self-employed workers.

On this matter, Trump is correct: Wind power is not an economically viable source of energy.

Here’s the abstract of a new paper by Leonardo D’Amico, Edward Glaeser, Joseph Gyourko, William Kerr, and Giacomo A. M. Ponzetto:

We document a Kuznets curve for construction productivity in 20th-century America. Homes built per construction worker remained stagnant between 1900 and 1940, boomed after World War II, and then plummeted after 1970. The productivity boom from 1940 to 1970 shows that nothing makes technological progress inherently impossible in construction. What stopped it? We present a model in which local land-use controls limit the size of building projects. This constraint reduces the equilibrium size of construction companies, reducing both scale economies and incentives to invest in innovation. Our model shows that, in a competitive industry, such inefficient reductions in firm size and technology investment are a distinctive consequence of restrictive project regulation, while classic regulatory barriers to entry increase firm size. The model is consistent with an extensive series of key facts about the nature of the construction sector. The post-1970 productivity decline coincides with increases in our best proxies for land-use regulation. The size of development projects is small today and has declined over time. The size of construction firms is also quite small, especially relative to other goods-producing firms, and smaller builders are less productive. Areas with stricter land use regulation have particularly small and unproductive construction establishments. Patenting activity in construction stagnated and diverged from other sectors. A back-of-the-envelope calculation indicates that, if half of the observed link between establishment size and productivity is causal, America’s residential construction firms would be approximately 60 percent more productive if their size distribution matched that of manufacturing.