Thanks Vancouver (BC) for a 40-minute Black Car Wait

Vancouver BC is one of those places that have banned Uber.  So lacking that alternative, I tried to book a black car (from the largest local car service) for the fairly long ride to our hotel.  In trying to complete the transaction, I was told that they were very busy and that my wait would be up to 40 minutes for them to show up.

This is the second time in a week (Vegas was the first) that I have had to spend some serious wait-time just because the local government has decided to artificially limit competition and capacity.  I am sure the politicians would tell me its for my own good, though.

Dodd-Frank a Disaster for the Poorest People in Africa

Yeah, that headline seems a bit odd -- Dodd-Frank is about banking, right?  Well, apparently buried within Dodd-Frank are conflict minerals rules which I suppose were spurred by the efforts of a few dim-bulb celebrities who have a knack for latching onto poorly thought out "solutions" for Africa that tend to have staggering unintended consequences.

In this case, the logic was that minerals sales to western companies were  propping up dangerous warlords and militias, particularly in the Congo.  The law imposed huge penalties on American companies that did not purge their supply chain eight, ten, twelve steps deep of any suspected bad actors in the mineral world.

The problem for US companies is that this imposes a ton of cost, and is very hard to do.  So hard that the US government has not been able to successfully differentiate conflict from non-conflict suppliers.   However, as we learned on issues like cybersecurity, the US Government is still more than willing to impose enormous penalties on private businesses for failing at tasks the government can't even do itself.  So companies play it safe and don't buy from any source anywhere near places like Congo, even avoiding neighboring countries that have no such conflict issues.

Because what Progressive supporters forgot in patting themselves on the back for their sensitivity in passing such laws is that minerals extraction and related labor is about the only source of income for citizens of these countries, which are among the poorest in the world.  We may cut have off some of the money flowing to warlords (though not much as they turn out to do pretty well in the new bootlegging environment), but we are cutting off all the money that went to the struggling population.   Further, by driving the trade underground, it becomes impossible to impose event he most basic rules on the trade.   Dodd-Frank turned the mineral trade in these countries into the cocaine trade.

Via Overlawyered, from the CEI

The 2010 Dodd-Frank Act increased violence in the Congo by 143 percent (and looting by 291 percent) through its “conflict minerals” rule, which has backfired on its intended beneficiaries. So concludes a new study by Dominic Parker of the University of Wisconsin and Bryan Vadheim of the London School of Economics.

As we noted earlier, Dodd-Frank conflict minerals regulations have also caused starvation in the Congo, harmed U.S. businesses, and resulted in increased smuggling—even as they punish peaceful neighboring countries in Africa just for being near the Congo, whose civil wars have killed millions over the last 20 years. They have inflicted great harm on a country that was just beginning to recover from years of mass killing and had the world’s lowest per capita income. The new study is consistent with a 2013 paper by St. Thomas University law professor Marcia Narine that criticized the conflict minerals rule for its dire consequences for the Congolese people.

To his credit, David Aronson was on this four years ago:

For locals, however, the law has been a catastrophe. In South Kivu Province, I heard from scores of artisanal miners and small-scale purchasers, who used to make a few dollars a day digging ore out of mountainsides with hand tools. Paltry as it may seem, this income was a lifeline for people in a region that was devastated by 32 years of misrule under the kleptocracy of Mobutu Sese Seko (when the country was known as Zaire) and that is now just beginning to emerge from over a decade of brutal war and internal strife.

...

Meanwhile, the law is benefiting some of the very people it was meant to single out. The chief beneficiary is Gen. Bosco Ntaganda, who is nicknamed The Terminator and is sought by the International Criminal Court. Ostensibly a member of the Congolese Army, he is in fact a freelance killer with his own ethnic Tutsi militia, which provides “security” to traders smuggling minerals across the border to neighboring Rwanda.

...

The people of eastern Congo agree that it would be beneficial to bring greater clarity and transparency to the mineral trade. A variety of local and international initiatives to do so were under way when the embargo hit. Those efforts may now become a casualty of the Dodd-Frank law.

A Good Roundup on the Minimum Wage

David Brooks has what looks to be a pretty even-handed piece on what academic work shows on the minimum wage.  A few highlights:

Recently, Michael Wither and Jeffrey Clemens of the University of California, San Diego looked at data from the 2007 federal minimum-wage hike and found that it reduced the national employment-to-population ratio by 0.7 percentage points (which is actually a lot), and led to a six percentage point decrease in the likelihood that a low-wage worker would have a job.

Because low-wage workers get less work experience under a higher minimum-wage regime, they are less likely to transition to higher-wage jobs down the road. Wither and Clemens found that two years later, workers’ chances of making $1,500 a month was reduced by five percentage points.

Many economists have pointed out that as a poverty-fighting measure the minimum wage is horribly targeted. A 2010 study by Joseph Sabia and Richard Burkhauser found that only 11.3 percent of workers who would benefit from raising the wage to $9.50 an hour would come from poor households. An earlier study by Sabia found that single mothers’ employment dropped 6 percent for every 10 percent increase in the minimum wage....

What we have, in sum, is a very complicated situation. If we do raise the minimum wage a lot of people will clearly benefit and a lot of people will clearly be hurt. The most objective and broadest bits of evidence provoke ambivalence. One survey of economists by the University of Chicago found that 59 percent believed that a rise to $9 an hour would make it “noticeably harder” for poor people to find work. But a slight majority also thought the hike would be worthwhile for those in jobs. A study by the Congressional Budget Office found that a hike to $10.10 might lift 900,000 out of poverty but cost roughly 500,000 jobs.

So 900,000 would get up to a 25-40% raise while 500,000 would get a 100% cut.

What Happens to Poverty and Other State Economic Stats When One Finally Takes Into Account Different State Cost of Living Levels

This is really interesting, and I suppose not surprisingly, quite under-reported.  It appears the blue state model is even worse than we thought for combating poverty.  Not only does it suppress economic growth, but it also tends to raise prices of housing and other necesities

The familiar official [poverty] measure is more than 50 years old, and is showing its age. It has two huge shortcomings: it considers the cost of living to be the same in the 48 contiguous states (a patently ridiculous proposition when considering that the average rent in San Francisco in the first quarter of 2015 was $3,458 vs. $867 in Houston), and it doesn’t account for in-kind benefits, such as Section Eight housing subsidies and Electronic Benefit Transfer cards (food stamps).

Thus, the federal government’s main poverty gauge undercounts material poverty levels in high-cost states such as California, New York, and Hawaii, while over-counting true poverty in much of the low-cost Midwest and South.

Responding to concerns from Congress, advocates for the poor, and academics, some 20 years ago the U.S. Census Bureau began developing an alternative measure of poverty to address weaknesses in the official measure. The Census Bureau’s new, more comprehensive Supplemental Poverty Measure (SPM) is the result....

The authors use this data to compare Texas and California

Official Poverty Measure Rate, 2011-2013 Supplemental Poverty Measure (SPM) Rate, 2011-2013
California 16.0% 23.4%
Texas 17.2% 15.9%
National Average 14.9% 15.9%

The share of minorities in California and Texas is about 50 percent higher than in the nation as a whole, triple that of Wisconsin or Minnesota, more than quadruple that of Iowa, and about six-and-a-half times that of New Hampshire. Thus, it is an illuminating measure the wellbeing of America’s four largest racial or ethnic groups in the two most-populous states that one-fifth of Americans call home. The table below shows the average SPM for four years, 2010 to 2013, for these four groups.

White, non-Hispanic SPM Rate, 2010-13 Black, non-Hispanic SPM Rate, 2010-13 Hispanic SPM Rate, 2010-13 Asian SPM Rate,2010-13
California 14.8% 30.1% 33.7% 17.9%
Texas 9.7% 19.9% 22.7% 14.1%
National Average 10.8% 24.7% 27.7% 17.1%

I guess its time for a disparate impact suit against California!

In a related bit of data, here is the real value of $100 in each state (higher is better) which is sort of the inverse of cost of living.  States with higher costs of living will have lower numbers

$100 Map

Leading to this interesting outcome:

$100 Chart

 

The Most Racist Housing Markets Are In... San Francisco

In advance of the Obama Administration trying to pursue cities and neighborhoods for not being sufficiently racially integrated, Cato has an interesting take on the question.

The real problem with housing affordability is not at the community level but at the regional level. In a region that has few land-use restrictions, a community that has attracted wealthy people is not going to have much of an effect on the affordability of the region as a whole because builders can always construct more affordable housing elsewhere. The problem is in regions with urban-growth boundaries and other restrictions that limit the construction of affordable housing over the entire region.

If HUD were to apply disparate-impact criteria to regions, it might look at the change in African-American populations between 2000 and 2010. Nationwide, the black population grew by 11 percent in that time period, which was about 1.3 percent faster than the population as a whole. Regions whose black populations grew less than 1.3 percent faster than their whole populations could be considered guilty of housing discrimination.

Based on this, the most racist major (more than a million people) urban area in America is San Francisco-Oakland. Though that region’s population grew by 285,000 people between 2000 and 2010, or 9.5 percent, the region’s black population actually shrank by nearly 49,000, or 14.2 percent, for a difference in growth rates of minus 23.7 percent.

That decline was entirely due to strict land-use policies that prevent development outside of the 17 percent of the region that has already been urbanized, making the Bay Area one of the least affordable housing markets in the nation. Moreover, a recent planto improve affordability by following HUD’s prescription of building more high-density housing was found to actually reduce affordability.

Other major urban areas that would be found racist include Austin (-21.5% difference between black and overall population growth), Riverside-San Bernardino (-17.5%), Honolulu (-15.4%), San Diego (-14.6%), Los Angeles (-14.5%), Bakersfield (-13.6%), and San Jose (-11.1%). All of these regions except Austin have some form of growth-management policy, while Austin has become the least affordable housing market in Texas due to local housing policies.

By comparison, the least racist major urban area is Salt Lake City, whose black population grew 57 percent faster than its total population. Other non-racist areas include Minneapolis-St. Paul (42%), Phoenix (34%), Providence (25%), Boston (19%), Las Vegas (17%), Columbus (14%), Orlando (14%), Atlanta (13%), Tampa (13%), and Miami (10%). Of these, only Providence and Boston are surprises since both have serious housing affordability problems.

The folks at Cato argue that the HUD's preferred approach of promoting high-density housing actually makes the problem worse.  This should not be surprising, since Federal policy driven by New Deal Democrats is responsible for most of the worst segregation issues in major cities.

Immigrants and Crime

Virtually every study done points to the fact the immigrants, even illegal immigrants, are less prone to crime than American citizens.  That is why immigration opponents must rely on repetition of lurid single examples to try to make their case, a bit like global warming advocates point to individual heat waves as a substitute for having any warming show up in the recent global temperature metrics.

From the Foundation for Economic Education

With few exceptions, immigrants are less crime prone than natives or have no effect on crime rates. As described below, the research is fairly one-sided.

There are two broad types of studies that investigate immigrant criminality. The first type uses Census and American Community Survey (ACS) data from the institutionalized population and broadly concludes that immigrants are less crime prone than the native-born population. It is important to note that immigrants convicted of crimes serve their sentences before being deported with few exceptions.

However, there are some potential problems with Census-based studies that could lead to inaccurate results. That’s where the second type of study comes in. The second type is a macro level analysis to judge the impact of immigration on crime rates, generally finding that increased immigration does not increase crime and sometimes even causes crime rates to fall.

Butcher and Piehl examine the incarceration rates for men aged 18-40 in the 1980, 1990, and 2000 Censuses. In each year, immigrants are less likely to be incarcerated than natives with the gap widening each decade. By 2000, immigrants have incarceration rates that are one-fifth those of the native-born

There is a lot more at the link.

Ultimate Proof Green Energy is About Cronyism, Not the Environment

Government green energy programs are supposedly about subsidizing new energy technologies to reduce their cost and increase their adoption rate.  But it appears to me that they are in fact merely about subsidizing favored companies.

Why?  Well consider this:

Over the last couple of years, trade remedy actions on clean energy products have intensified. In the wind industry, the Wind Tower Trade Coalition, an association of U.S. producers of wind towers, brought an AD/CVD complaint against imported wind towers in 2011. The U.S. Commerce Department started an investigation, and announced a preliminary decision in December 2012.

This decision found both subsidization and dumping in relation to Chinese imports and imposed an antidumping tariff of between 44.99% and 70.63%, as well as countervailing duties of 21.86%–34.81%. The Commerce Department also established a separate antidumping duty of 51.40%–58.49% on Vietnamese wind tower manufacturers.

In the solar industry, in October 2011, the Coalition for American Solar Manufacturing, a group of seven U.S. solar panel manufacturers led by Solar World Industries America, accused Chinese solar panel companies of dumping products in the United States. The Commerce Department opened an investigation in 2011 and announced the final ruling in 2012. The decision was to impose antidumping tariffs ranging from 24% to 36% on Chinese producers.

All of those actions are not only not consistent with reducing the cost of new energy technologies, they actually raise the cost of wind and solar.  The only benefit of these actions is to improve the bottom line of crony-connected green energy companies.  There is no reason to believe that this cronyism is not the real rational behind the whole program.   If government subsidizes consumer solar purchases 30% and then raises solar panel costs by 30%, they are not making the technology cheaper for consumers, but just finding an excuse to pour tax money into the pockets of a few folks like Elon Musk.

So How Can Anyone Be Opposed to Non-Discrimination Laws

First, let me establish a few background facts.  Several years ago I headed an attempt to put a Constitutional amendment legalizing gay marriage on the ballot here in Arizona.  As far back as 2004 I had a gay couple running a campground, and faced a customer petition demanding we remove them because they promoted moral degeneracy by being gay (it's for the children!).  I told those customers to camp somewhere else, as we were not changing our staffing.  Since then I have probably hired more gay couples to run campgrounds than anyone else in the business.

So how could I possibly be opposed to this:

After a period of foreshadowing and rumor, the Equal Employment Opportunity Commission has now gone ahead and ruled that employment discrimination on the basis of sexual orientation is forbidden under existing federal civil rights law, specifically the current ban on sex discrimination. Congress may have declined to pass the long-pending Employment Non-Discrimination Act (ENDA), but no matter; the commission can reach the same result on its own just by reinterpreting current law.

There are multiple problems with non-discrimination law as currently implemented and enforced in the US.  Larger companies, for example, struggle with disparate impact lawsuits from the EEOC, where statistical metrics that may have nothing to do with past discrimination are never-the-less used to justify discrimination penalties.

Smaller companies like mine tend to have a different problem.  It is an unfortunate fact of life that the employees who do the worst job and/or break the rules the most frequently tend to be the same ones with the least self-awareness.  As a result, no one wants to believe their termination is "fair", no matter how well documented or justified (I wrote yesterday that I have personally struggled with the same thing in my past employment).

Most folks grumble and walk away.  But what if one is in a "protected group" under discrimination law?  Now, not only is this person personally convinced that their firing was unfair, but there is a whole body of law geared to the assumption that their group may be treated unfairly.  There are also many lawyers and activists who will tell them that they were almost certainly treated unfairly.

So a fair percentage of people in protected groups whom we fire for cause will file complaints with the government or outright sue us for discrimination.  I will begin by saying that we have never lost a single one of these cases.   In one or two we paid someone a nominal amount just to save legal costs of pursuing the case to the bitter end, but none of these cases were even close.

This easy ability to sue, enabled by our current implementation of discrimination law, imposes a couple of costs on us.  First, each of these suits cost us about $20,000 to win (insurance companies are smart, they know exactly how this game works, and will not sell one an employment practices defense policy without at least a $25,000 deductible, particularly in California).  It takes a lot of effort for the government, even if neutral and not biased against employers as they are in California, to determine if the employee who was fired happened to be Eskimo or if the employee was fired because he was an Eskimo.  Unfortunately, the costs of this discovery are not symmetric.  It costs employees and their attorneys virtually nothing to take a shot at us with such discrimination cases, but costs us$20,000 each to defend and win (talk about Pyrrhic victories).  Which is why we sometimes will hand someone a few bucks even if their claim is absurd, just to avoid what turns out to be essentially legal blackmail.

Second, the threat of such suits and legal costs sometimes changes our behavior in ways that might be detrimental to our customers.  A natural response to this kind of threat is to be double careful in documenting issues with employees in protected groups, meaning their termination for cause is often delayed.  In a service business, almost anyone fired for cause has demonstrated characteristics that seriously hinder customer service, so drawing out the termination process also extends the negative impact on customers.

To make all this worse, many employees have discovered a legal dodge to enhance their post-employment lawsuits (I know that several advocacy groups in California recommend this tactic).  If the employee suspects he or she is about to be fired, they will, before getting fired, claim all sorts of past discrimination.  Now, when terminated, they can claim they where a whistle blower that that their termination was not for cause but really was retaliation against them for being a whistle-blower.

I remember one employee in California taking just this tactic, claiming discrimination just ahead of his termination, though he never presented any evidence beyond the vague claim.  We wasted weeks with an outside investigator checking into his claims, all while customer complaints about the employee continued to come in.  Eventually, we found nothing and fired him.  And got sued.  The case was so weak it was eventually dropped but it cost us -- you guessed it -- about $20,000 to defend.  Given that this was more than the entire amount this operation had made over five years, it was the straw that broke the camel's back and led to us walking about from that particular operation and over half of our other California business.

My One and Only Thought on Harper Lee's "Go Set a Watchman"

I have not read the book "Go Set a Watchman" nor will I likely.  But it seems like a lot of folks are disappointed that the characters and themes in this book are different from Lee's later "To Kill a Mockingbird."  Which causes me to ask a question that surprisingly has not been asked in anything I have read, which is:  "Maybe Harper Lee didn't publish the novel for a reason."  I mean, Lee had decades in which to do so and apparently chose not to.  Should we really be surprised that a novel does not represent a writer in the way we expected when the writer themselves chose not to sanction the work by trying to publish it?

Which reminds me of this unrelated bit in a discussion of a recently re-published early work by Ayn Rand

This spectacular claim—that Ayn Rand’s impassioned idealism is a species of murderous fanaticism—comes a bit out of the blue, but Heller hangs it on a rather selective discussion of notes Ayn Rand made in her journals in 1928 about a murderer named William Hickman. Hickman’s defiance after his capture, and the reaction against him—a reaction she saw as being less about the evil of his crime than about his refusal to conform to social convention—caught her attention and caused her to work on a fictionalized version called The Little Street, a project she worked on for a while and then dropped.

Hickman has been long forgotten everywhere else, but he will live forever in the minds of Ayn Rand’s detractors, because they can now cite her notes on his case as proof that she was an admirer of serial killers and probably a psychopath herself, which means that they can now safely ignore every argument she ever made. Isn’t that convenient?

In fact, this is only proof that writers should burn their notes before they die, because inevitably some idiot is going to come along and use your half-though-out ramblings as proof of what you really believed, in contradiction to the thousands of pages of meticulously edited work that you actually published.

Update:  This is a really good article sent to me by a reader about the editorial process that led from "Go Set a Watchman" to "To Kill a Mockingbird" which essentially calls them draft 1.0 and draft 2.0 of the same, yet very different, novel.

Since Watchman was written before Mockingbird (even though the time period in the book is later), Harper Lee did not “change” Atticus. The characterization in Watchmanwas the original. It was her first shot. It was Atticus 1.0.

The real story, if you ask me, is that Harper Lee rethought, reconceived, and reconfigured the Atticus of Watchman into the icon of honorableness that he became in To Kill A Mockingbird.

Think of that for a minute from a writer’s point of view. How hard is that to do? I can think of few things that are harder, not just from a practical point of view (the work, the recasting, the reimagining) but from a psychological perspective. How do you manage your emotions? How do you submerge your ego? How do you let go of expectations?

Somehow Harper Lee, God bless her, was able to do all that.

She set aside the manuscript of Watchman (the product of more than two years’ labor) when her editor Tay Hohoff declared it not ready for prime time—and went back to the drawing board.

I would give a lot of money to see Ms. Hohoff’s notes, or the correspondence between her and Ms. Lee, or to listen to a tape of their conversations over the two-plus years it took Ms. Lee to revamp the original story and turn it into To Kill A Mockingbird.

This much we know. Ms. Hohoff advised Ms. Lee to re-set the world of Watchman twenty years earlier. Take the character of Scout from a grown woman and wind her back to a little girl. Tell us the story, not through the eyes of a bitterly disillusioned daughter who had left Maycomb, Alabama and moved to New York City, but from the perspective of an innocent but whip-smart six- to nine-year-old tomboy, still at home, still in awe of her father.

Imagine doing that yourself. Could you? I’m not sure I could.

At the risk of summarizing a manuscript I have not read, it sounds like she shifted the book from a dreary story of what the South was, to a more optimistic story of what it was but also what it could be.

Name The Human Decision-Making Process Which Claims a Low 0.25% Error Rate

Give up?  It's Chicago Police shooting people.  Despite the fact that the decisions must be made by folks who likely have no past experience or practice in making such decisions, Chicago claims its police officers have one of the lowest error rates of any known human decision-making process

Chicago's Independent Police Review Authority (IPRA) has conducted investigations of close to 400 police shootings of citizens and has found just one to have been unjustified.

Of course, it could be that the process is far more error-prone, but that the people tasked with declaring any shooting in error are the exact same people who have an interest in never admitting an error.  Also, it could be because anyone who does label a shooting as an error gets fired:

That little factoid comes from Chicago public radio station WBEZ as some background context for the news that Lorenzo Davis, a supervising investigator for IPRA, had been fired earlier in July.

Davis isn't going out quietly. WBEZ interviewedthe man, a former Chicago police officer himself who retired in 2004. Davis is saying that the reason why he was fired is because he insisted that several recent police shootings were unjustified and would not comply with orders to change his findings. Performance evaluations indicated everybody thought Davis' work was just great until recently.

Capitalism Finally Dismantling Indian Feudalism

This is a great story:

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study,  in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste—dalits—like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

Must Make for Interesting Family Dinners: If Anything, Ellen Pao's Husband is In The Middle of An Even Bigger Mess

Ellen Pao has had some career problems of late, but as I wrote yesterday, if she takes some responsibility for her own mis-steps and stops blaming it all on misogyny, she might learn something useful and build positive things on the experience.

A very loyal reader gives me a heads up that her husband, who is never mentioned in recent stories, actually faces a LOT more serious trouble (it is probably journalistically appropriate to leave her husband out of the recent stories, but one wonders if the New York Times would show the same scruples on a story about the CEO of Exxon if, say, his wife were independently in the midst of some sort of scandal).

Ellen Pao's husband is Buddy Fletcher, former Wall Street Wunderkind and now subject of a LOT of regulator scrutiny and pension fund lawsuits.  Here is one:

The firefighters’ system eventually said yes, and along with two other pension funds — the Municipal Employees’ Retirement System and the New Orleans Firefighters’ Pension and Relief Fund — invested a combined $100 million in one of Mr. Fletcher’s funds, FIA Leveraged. As they understood it, the fund would invest in liquid securities that could be sold in a matter of weeks.

The details sounded, as one board member put it, “too good to be true.”

In fact, they were.

Mr. Fletcher’s hedge fund has since been described by a court-appointed bankruptcy trustee as having elements of a Ponzi scheme, and four retirement systems are fighting to recover their money. A federal judge is scheduled to rule in March on a plan to liquidate the fund’s assets, which the trustee deemed “virtually worthless” in a report last November.

And another:

New York investment manager Alphonse “Buddy” Fletcher Jr. is being sued by the MBTA Retirement Fund and some of his own hedge funds on accusations that he defrauded them of more than $50 million.

The lawsuit, filed Monday in New York, accuses Fletcher and his firm, Fletcher Asset Management , and other parties of conducting a “long-running fraud” in which they misused money for their own benefit, inappropriately took inflated management fees, and overstated the value of assets.

As previously reported, the MBTA pension fund invested $25 million with Fletcher in 2007 on the advice of the fund’s former executive director, Karl White.

White pitched the investment to the pension fund just nine months after he had resigned to work for Fletcher.

The pension fund’s holding is now worthless, and the bankruptcy trustee investigating the case has alleged that Fletcher never invested the money as promised.

And here is an older, in-depth look at Fletcher.

It is starting to look like most of the money went to his family (e.g. $8 to his brother to fund a film), to buffing his image (e.g. $4+ million donation to Harvard), and to an incredibly opulent lifestyle (e.g. 4!! apartments in the Dakota).

Despite the fact that he seems to have grossly overstated income and assets of his funds, no one -- regulators, clients, auditors -- figured it out.  The most interesting part to me was the first group to detect the potential fraud was, of all groups, the governing board of the Dakota.  This group, full of successful Wall Streeters, looked at his financial statements and turned down his application to buy yet another apartment, coming to the conclusion he not only did not have the funds to buy this apartment but they were unsure how he was paying the vig on the $20 million loan securitized by his existing apartments.

One thing Fletcher apparently has in common with his wife is that he seems to respond to every negative business decision with a discrimination lawsuit.  This one backfired, however, and only served to point public attention to the fact that a group of savvy financiers thought Fletcher's wealth was potentially imaginary.  Government investigations and lawsuits have followed.

He still has a chance to escape, though.  Despite Jon Corzine's outright theft of funds from MF Global commodity investor accounts, he got off scott-free due to his close ties to the Democratic Party.  Time for Fletcher to start giving any free assets he still holds (if there are any) to Hillary's campaign.

Trump is Actually Useful: Proves Once and For All That Business Licensing is Corrupted by Politics

Business licensing and awarding of government contracts is supposed to be entirely viewpoint neutral and related only to factors explicitly listed in the licensing legislation (e.g. training attained, cleanliness, whatever).  Of course, I believe that licensing is generally total BS and is basically a way for incumbent businesses to restrict potential competitors and throttle supply.

Of course, defenders of licensing laws piously intone that they are only there to protect consumers and are enforced in a totally neutral way that has nothing to do with viewpoints or political pull (lol).

Trump is a complete loss as a candidate but he is at least proving once and for all what total BS this is.  Both of the following are via the definitely indispensable Overlawyered.

Boston mayor says Trump will never get any city permits because of his political views.

If Donald Trump ever wants to build a hotel in Boston, he’ll need to apologize for his comments about Mexican immigrants first, the Hub’s mayor said.

“I just don’t agree with him at all,” Boston Mayor Martin J. Walsh told the Herald yesterday. “I think his comments are inappropriate. And if he wanted to build a hotel here, he’d have to make some apologies to people in this country.”

New York mayor says Trump will never get any city business because of his political views.

New York City Mayor Bill de Blasio said Monday that his city may not be able to break its business contracts with Donald Trump but will avoid future deals with the 2016 GOP contender.

"My impression is that unless there has been some breaking of a contract or something that gives us a legal opportunity to act, I'm not sure we have a specific course of action," the Democratic mayor told reporters Monday, according to CNN and Capital New York.

"But we're certainly not looking to do any business with him going forward," de Blasio added.

De Blasio indicated Monday that he has yet to receive a final analysis on whether the city could get out of several contracts with Trump, a celebrity real estate developer turned presidential candidate.

New York City officials began reviewing the contracts, including a Central Park carousel, two rinks and a Bronx golf course, several weeks ago in light of Trump's controversial remarks on immigrants.

From Up-and-Coming Manager to Do-The-Minimum Timecard Puncher

A couple of weeks ago I wrote about the negative effects of the Administrations new overtime rules for managers.

The only people who now have the right to work more than the minimum to demonstrate one's readiness for more responsibility are those paid over $48,000 a year.  McKinsey consultants and lawyers and investment bankers can choose to work extra hours in order to gain promotions.  McDonald's shift managers no longer have that same right.  This is a law written by salaried professionals telling younger and lower-paid workers that they have no right to be ... salaried professionals.

One of the things that I failed to mention was the reaction of my own managers, which has been universally negative.  No one wants to go back to filling out time sheets.  I know this will sound odd to Progressives, who seem to envision that all workers only want to do the minimum, but my managers fear (rightly) that I will have to set arbitrary maximum numbers of work hours for them.  They take incredible pride in the facilities I ask them to manage, and worry what will happen if something needs doing and they have run out of hours.

A reader of mine sent me another example from the Albuquerque paper that really sums up the change in relationship demanded by the new rules

Although the proposal aims to increase pay for an estimated 5 million workers, including many at restaurants and retailers, some employees are saying, “no thanks.” Bret Crowder, a general manager in one of Shriver’s cafes, doesn’t want to go back to being an hourly paid worker.

“All of a sudden, the government has just demoted me,” he says. “It would basically put me back down to being a teenager.”

My longer post on the effects of this law is here.  Some notes about the arbitrary nature of this decision, and how it was dressed up as science, are here.  And even the DOL admits it won't result in much extra pay.

Gawker Was Always Vile

Even before the current unpleasantness, Gawker was always vile.  Here is Adam Weinstein in Gawker arguing that people who disagree with him should be jailed.  Incredibly, Weinstein has been held up in certain quarters as a voice of moderation and reasonableness in the current Gawker brouhaha

Those [climate] denialists should face jail. They should face fines. They should face lawsuits from the classes of people whose lives and livelihoods are most threatened by denialist tactics...

'm talking about Rush and his multi-million-dollar ilk in the disinformation business. I'm talking about Americans for Prosperity and the businesses and billionaires who back its obfuscatory propaganda. I'm talking about public persons and organizations and corporations for whom denying a fundamental scientific fact is profitable, who encourage the acceleration of an anti-environment course of unregulated consumption and production that, frankly, will screw my son and your children and whatever progeny they manage to have.

Those malcontents must be punished and stopped.

Deniers will, of course, fuss and stomp and beat their breasts and claim this is persecution, this is a violation of free speech. Of course, they already say that now, when judges force them into doing penance for comparing climate scientists to child-rapist and denial poster-boy Jerry Sandusky.

But First Amendment rights have never been absolute. You still can't yell "fire" in a crowded theater. You shouldn't be able to yell "balderdash" at 10,883 scientific journal articles a year, all saying the same thing: This is a problem, and we should take some preparations for when it becomes a bigger problem.

Incredibly, he makes this plea while arguing that it is wrong "to deny people the tools they need to inform themselves" --  which we will accomplish by throwing one side of the debate in jail?  Really?

I am so sick of this "First Amendment is not absolute" bullshit.  It is absolute when it comes to issues like debating the merit of a scientific conclusion or debating the political implications of scientific research.  It is absolutely absolute.  In sports terms, this is a pop fly hit to second base.  It is no where near the foul lines.   It is so far from the foul lines that people would look askance at an umpire who screamed "fair ball" when the fact was already so patently obvious.

And no: motives, funding sources, and even being demonstrably right or wrong does not affect this absolute First Amendment protection.

Which all leaves an interesting question for Gawker:  Under what First Amendment theory is outing salacious sexual details of private citizens who happen to work for Gawker's competition in order to gain advertising revenue somehow protected but discussing the shortcomings and political consequences of climate forecasts is not?  I think they are both protected, but the former sure looks closer to the foul line than the latter.

Why It Is Good to Be A White Male: I Had to Take Ownership for My Business Failures

Ellen Pao's supporters are blaming her departure from Reddit on sexism, despite the fact that the much of the opposition to her inside Reddit resulted from her termination of a popular female employee.  I don't know what is inside her head of course, but after reading her piece in the WaPo, it sure doesn't look like she blames anything she did at Reddit for her failure there.

It is certainly possible to build a case that her decision-making at Reddit was ham-fisted and reactionary and not what the organization needed.  I am the first to acknowledge that the dialog over large swaths of Reddit is toxic, but that is not a new thing.  The odd bit to me is that Pao seems to have jumped right into the fray and immediately started swinging randomly.  Why?  What was the rush?  I have never heard of a new leader jumping into an organization and immediately firing off culture-changing orders (there are a few exceptions to this, such as there-are-only -6-weeks-of-cash-in-the-bank crises, but this was not one of those).  Even if you think you know what ails the company, you have to show the organization some respect and talk to a lot of people first.   To me, it looked like a classic impatient arrogant technocrat's mistake -- but what does she think?  Does she acknowledge error at all, even privately?

I say all this because I know quite personally what it is like to fail in business, and more importantly, just how very hard it is to acknowledge that such failure is one's own fault.  To explain it, I have to give some background that will seem self-promoting.

I was always top in my class at school.  I had my choice of Ivy League schools to attend, and graduated Princeton just a few hundredths of a GPA point (on the north side of 4) from being top of my department.  Five years later, I did graduate first in my class at Harvard Business School.  I write all this to say I entered the business world with supreme confidence.

The first signs of trouble were there in my very first job, though I only see them now.  The engineering work at Exxon was easy, but I tended to drag my feet on tasks that required I seek out and pull together coalitions of experts.  Ditto for my consulting work at McKinsey, where my analytical work and modelling were first-rate but my client building work was mediocre.

It was hard, really impossible at this point in my life, to accept I was failing at something.  Even McKinsey's sending me to executive charm school (I kid you not, such things exist) was not a wake up call.  I KNEW my analysis was awesome.  I figured that was all that mattered.  McKinsey was instead seeing an ADD guy with awkward people skills who would wander around the room eating off the side-board while in a formal meeting with a Fortune 25 CEO.

Things finally fell apart when I was working for a guy, really a legendary guy, named Chuck Knight at Emerson Electric.  Again, I kept telling myself the analytical work I was doing was awesome, and I am sure it was.  But even I couldn't fail to figure out that somehow my other people skills were totally wrong for corporate America.

And even then, when the organization made it abundantly clear I was not going to get any further promotions, pressing my face against the glass so to speak, I STILL could not fully face reality.  I blamed my failings on a culture clash and similar things.  You have heard this before -- "I left that company because it was totally screwed up."  But it wasn't screwed up.  It was a very solid, well-managed organization and a great place to work for the right people.

I was allowed to continue to avoid reality because I continued to fail upwards, getting an even larger job at a new company after Emerson based on my academic record and ability to do fabulous interviews (don't ask me why as an introvert I could do interviews but not one-on-one business discussions with my superiors, or why I thrive at speaking to large audiences but can't handle a cocktail party -- I don't know).

Again, at a large aerospace company, I had more great insights but little impact on the company.  I created this awesome presentation -- it is still the best description of how profits are and are going to shift within the aerospace industry I have ever seen -- but I was being paid to do stuff that improved this year's sales and it wasn't happening (though to be a little fair to myself, making change in the aerospace business is a bit like trying to turn an aircraft carrier by pushing on the prow with a fishing boat).

It took me a couple more jobs and a taking a year off around the age of 40 to finally acknowledge all of this.  After the pain of accepting failure, though, things really improved.  I thought about what I did well and what I don't, and built my own company in large part based on those insights.   Examples:  Sales in my business are based more on creating huge, analytical written bid documents rather than face-to-face persuasion.  Management is more about creating a great process and implementing that process consistently in scores of locations using technology and training.    Most importantly, I am the boss, and many of my past interpersonal failures had to do with interacting with people with more authority, of which there are none in my company.

I don't deny that women or people of color in business likely face obstacles I have never faced, and I long for a world where that will no longer be true.  But in trying to be sympathetic to women and people of various races and the discrimination they face, we also may be doing them a disservice, making it harder for them to gain self-awareness of their own abilities.  After all, if I had been able to play the race or gender card as an excuse, I likely would never have gained what self-awareness I have today.

Thanks Nevada for This Taxi Line

You gotta love crony capitalism.  Bowing to the demands of taxi companies, Uber is banned in Las Vegas.  As a result, this is me and many others standing in a taxi line waiting for a non-existent taxi.

no-taxi

 

My son** tells me that it was way worse when the club shows ended at 4AM.   Never since I was in pre-Uber Paris have I had so much trouble finding a damn cab.  Fortunately the weather was under 100F so walking was a fairly nice option.

Libertarian Moment? Feh.

I am increasingly convinced all this "libertarian moment" stuff is a pile of crap.  I am watching the two Presidential candidates garnering the most attention, and incredibly the least bad of the two is an out-of-the-closet Marxist.

Vote "NO!" on Phoenix Prop 104 Transit Tax

Randal O'Toole and the Arizona Free Enterprise Club have weighed in with a comprehensive report on Phoenix's Prop 104 transit tax, and the results are ugly.  A few findings:

  • The oft-repeated claim that light rail has generated $7 Billion dollars in economic development is simply untrue. In fact, many of the projects included in this claim have never been built (like the Sycamore Station development) or involve projects that have nothing to do with light rail (such as the $600 million Convention Center Expansion, which was funded largely by state tax dollars).
  • The main beneficiaries of the transit plan appear to be contractors and developers who have projects near rail stations. The tax revenue from the plan combined with the generous subsidies offered to select developments ensures that this plan will benefit a few contractors and developers at the expense of others.
  • The plan is unbalanced and ignores vehicle street improvements. Despite the fact that only 3% of the population uses transit (less than 1% use light rail), 95% of the funding in the plan goes toward expanded bus and rail service. Only 3% goes toward vehicle street improvements.
  • Transit ridership actually fell after the light rail opened. From when light rail opened in 2009 through 2014, any gains in light rail ridership were offset by the loss of more than one bus rider. Ridership is still 1.2 million less per year than it was in 2009.
  • The transit plan as proposed will increase traffic congestion, energy usage and greenhouse gas emissions. In fact, the transit plan will use more

The complete report is here.

Coyoteblog readers will be totally familiar with this statement from the report about light rail merely cannibalizing bus riders, echoing past articles I have had saying the same thing:

According to the city of Phoenix and Valley Metro, light rail is a great success in Phoenix, generating a 42-percent increase in transit ridership since 2001 and stimulating the construction of $7 billion in new real estate development along its route. A close look, however, reveals that both of these claims are wrong.

The increase in ridership took place between 2001 and 2009, the (fiscal) year that the light-rail line opened. Since that year, for every light-rail rider gained, the region’s transit systems lost more than one bus rider. Per capita transit ridership has declined by 8 percent since 2009 partly because the high cost of light rail forced a 34-percent increase in average bus fares by 2010 and an 18-percent decrease in bus service by 2013.

You can see this perfectly well from a chart right off of our transit authority's web site (except for my annotation in red), which I discussed in depth here.

click to enlarge

It is just incredibly disingenuous that light rail supporters are trying to claim credit for transit ridership increases that occurred before the line was built and whose growth the line essentially halted.

Another claim the report demolishes is that light rail is somehow spurring development.  Supporters claim $7 billion of light rail development planned or built along the line, but oddly enough that is the exact same figure they were touting almost 8 years ago before the line was even completed.  Doesn't seem like they are getting much traction, huh?  In fact, the list actually shortens with every year as projects get cancelled and no new ones are added.  But beyond this, simply adding up development along the line and claiming that it is all incremental to the line's construction is simply moronic, the same facile BS analysis often used to support publicly funded football stadiums.    The obvious questions are:

  • How do they know this development is incremental, and not development that would have occurred anyway?  In particular, this line was built through the three of the largest pre-existing development hubs in the metropolitan area (North Central Ave, Downtown Phoenix, and Tempe/ASU).  There was always development activity in these areas, and always going to be
  • Much of the new activity they cite is near Tempe Town Lake, and I would give that project, not the rail, much of the credit.  The city did a marvelous job (see, I can give props to government once in a while) converting a big wide ugly dry ditch into a lake that is the centerpiece for business and condo development
  • Much of this development is subsidized by various government programs.  It is impossible to separate the effects of the subsidy from the rail line.

Finally, if you don't believe me about the relative costs of the two modes, let's take a look at the number from Phoenix's own plan.  They speak for themselves:

phoenix-transit-plan-1

So what does one get for the 5x higher operating costs and 134x higher capital costs of light rail over buses?  Well on the negative side, one gets a system that is substantially less flexible and responsive to changes.  The only positive I can come up with is that middle and upper class white people consider buses low class and want a transportation mode of their own.

1997 Prediction: "Monetary union, in the end, will result in a gigantic blackmailing operation"

Arnulf Baring in 1997

"They will be subsidizing scroungers, lounging in cafes on the Mediterranean beaches.

Monetary union, in the end, will result in a gigantic blackmailing operation.

When we Germans demand monetray discipline, other countries will blame their financial woes on that same discipline, and by extension, on us. More they will perceive us as a kind of economic policeman.

We risk once again becoming the most hated people in Europe."

Excellent Slate Article on GMO Safety

It is a long article, covering a lot of ground, and is full of links to literature on both sides of the debate.  But its conclusions are pretty definite

I’ve spent much of the past year digging into the evidence. Here’s what I’ve learned. First, it’s true that the issue is complicated. But the deeper you dig, the more fraud you find in the case against GMOs. It’s full of errors, fallacies, misconceptions, misrepresentations, and lies. The people who tell you that Monsanto is hiding the truth are themselves hiding evidence that their own allegations about GMOs are false. They’re counting on you to feel overwhelmed by the science and to accept, as a gut presumption, their message of distrust.

Second, the central argument of the anti-GMO movement—that prudence and caution are reasons to avoid genetically engineered, or GE, food—is a sham. Activists who tell you to play it safe around GMOs take no such care in evaluating the alternatives. They denounce proteins in GE crops as toxic, even as they defend drugs, pesticides, and non-GMO crops that are loaded with the same proteins. They portray genetic engineering as chaotic and unpredictable, even when studies indicate that other crop improvement methods, including those favored by the same activists, are more disruptive to plant genomes.

Third, there are valid concerns about some aspects of GE agriculture, such as herbicides, monocultures, and patents. But none of these concerns is fundamentally about genetic engineering. Genetic engineering isn’t a thing. It’s a process that can be used in different ways to create different things. To think clearly about GMOs, you have to distinguish among the applications and focus on the substance of each case. If you’re concerned about pesticides and transparency, you need to know about the toxins to which your food has been exposed. A GMO label won’t tell you that. And it can lull you into buying a non-GMO product even when the GE alternative is safer.

This is just the management summary, the article goes into great depth on all of these.

 

July 4 Shooters

july-4-shooters

I wanted to make an appropriate cocktail for our July 4 party, so I tried a red, white, and blue layered drink. The key to all layered drinks is to put the densest material on bottom, followed by the next lighter, and so on. The problem with this kind of flag drink is that most clear liquors tend to be the lightest and thus aren't appropriate for the middle band.

The bottom of this drink is grenadine syrup. The middle is peach schnapps. The top is blue curacao. Unfortunately, both the blue and the red on the first try were too close to the clear such that after about 5 minutes they started bleeding into the clear area. I solved this by adding some honey to the grenadine to make it heavier, and I diluted the blue curacao with water to make it lighter (even a 50:50 dilution did not seem to have much affect on its color). That did the trick.

Typically, one carefully pours each layer over an inverted spoon to keep them from mixing, but I wanted to use these tall thin glasses and a spoon would not fit. After trying several things, I used one of those large 4-6 ounce eyedroppers that are for feeding babies and pets. That worked great.

How do they taste?  Uh, don't they look great!  Actually, they tasted better than I had imagined for a drink concocted of ingredients chosen solely for their color and density.  Tasted sort of like grape juice.

Great Hand Vacuum

After a lot of unsatisfactory purchases of handheld vacuums, I can say this one is fabulous.  The only problem is that it sites in a charging cradle that does not attach well to a wall.  I am not sure why all these handheld vacuum makers have abandoned wall-mounting, but they seem to have.

LOL, Team Names & Political Correctness

A reader pointed me to this letter apparently sent to the Chicago Tribune last year in response to an editorial saying the Redskins name had to go.  I can't prove it was real, but who cares at this point?  It is funny:

Dear Mr. Page...

I always love your articles. and I generally agree with them. I would suggest, as in an email I received, they change the name to the "Foreskins" to better represent their community, paying tribute to the di@k heads in Congress.

Here are some other politically correctness to consider: I agree with our Native American population. I am highly insulted by the racially charged name of the Washington Redskins. One might argue that to name a professional football team after Native Americans would exalt them as fine warriors, but nay, nay. We must be careful not to offend, and in the spirit of political correctness and courtesy, we must move forward. Let's ditch the Kansas City Chiefs, the Atlanta Braves and the Cleveland Indians. If your shorts are in a wad because of the reference the name Redskins makes to skin color, then we need to get rid of the Cleveland Browns.

The Carolina Panthers obviously were named to keep the memory of militant Blacks from the 60's alive. Gone. It's offensive to us white folk.
The New York Yankees offend the Southern population. Do you see a team named for the Confederacy? No! There is no room for any reference to that tragic war that cost this country so many young men's lives.
I am also offended by the blatant references to the Catholic religion among our sports team names. Totally inappropriate to have the New Orleans Saints, the Los Angeles Angels or the San Diego Padres.
Then there are the team names that glorify criminals who raped and pillaged. We are talking about the horrible Oakland Raiders, the Minnesota Vikings, the Tampa Bay Buccaneers and the Pittsburgh Pirates!

Now, let us address those teams that clearly send the wrong message to our children. The San Diego Chargers promote irresponsible fighting or even spending habits. Wrong message to our children.
The New York Giants and the San Francisco Giants promote obesity, a growing childhood epidemic. Wrong message to our children.
The Cincinnati Reds promote downers/barbiturates . Wrong message to our children.
The Milwaukee Brewers---well that goes without saying . . . Wrong message to our children.
So, there you go. We need to support any legislation that comes out to rectify this travesty, because the government will likely become involved with this issue, as they should. Just the kind of thing the do-nothing congress loves . . .

As a die hard Oregon State fan, my wife and I, with all of this in mind, it might also make some sense to change the name of the Oregon State women's athletic teams to something other than "the Beavers."

It's Not A Market Failure When People Avoid a Crappy Investment

Environmentalists often claim that people systematically under-invest in energy conservation, something they call a market failure.   This is why Obama and the Left put in a much heralded provision in the stimulus package that used Federal money to subsidize home energy conservation (new windows and insulation and such).

A new study in the NBER looks at the results.  This is the abstract:

Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.

The only failure here is the government diverting capital from productive uses into money-losing ventures like this one.