More on Matte Paintings in Movies

Matte paintings from the pre-CGI movie era are total catnip for me, and are probably my favorite topic in film.  I remember first learning about matte painting after being blown away with the the huge hanger scenes and infinite drops on the Death Star in Star Wars.

The Matte Shot blog has another great post up about the golden age of matte paining,  This blog does not produce a lot of posts but when it does, they are long and fascinating.

Transpartisan Plan #2: A Better Approach to Government Health Care: Focus the Government on the One Thing It Does Best

So this is my second in a series of transpartisan proposals, the unintended consequence of which is likely to have me ostracized not just by the two major parties but by the libertarian community as well.  My first such proposal, on climate, helped get me ostracized from the climate skeptic community.  Much of this article is based on a proposal I first made in 2015.

I want to say at the top that unlike my climate plan, this is not a plan so much as a concept for a plan.  As in climate, tribalism and muddled thinking about goals has made it hard to make forward progress on the role of government in health care.  The Democrats in 2008 and 2018 and the Republicans in 2010 arguably won a lot of Congressional seats stirring up fears about health care, so it is a vital issue with the public.  For those who want to just dig in their heals and wait until it all goes away, I don't think this will happen.  And I think the logic I outline is superior to the typical political process described by Megan McArdle as 

  1. Something must be done.
  2. This is something.
  3. Therefore, this must be done.

I think the key to creating a viable program for health care depends on being very clear on the goals that one is trying to achieve and matching those goals well with the capabilities of government.  Obamacare was a huge mess in this regard, weaving all over the place in terms of goals (increasing insurance coverage, lowering costs, improving care effectiveness) and assigning roles to the government that were laughably poorly matched to its skills.

Take increasing the percentage of Americans with health insurance, probably the number one goal of Obamacare and the metric most cited to evaluate its success.  Is the core need of Americans really to have health insurance, or it something else?  Is mandating that people buy insurance they don't value in order to improve this metric really improving individual well-being?  Does increased coverage really translate to increased health? (spoiler -- any causal link here is really tenuous in the data).  All these questions and more exist because increasing insurance coverage was the wrong goal.  So is anything having to do with "pre-existing conditions" as Democrats framed it (fairly successfully) in the recent election.

The #1 Consumer Need and Fear in Health Care

Here is my main assumption:  The real, core need of individuals is that a) when they or a family member get dreadfully sick, lack of money will not be a barrier to getting them the needed care and b) even if they can get the care, they would really prefer not to be bankrupted by it.  All these other things -- percent covered by insurance, mandates to accept pre-existing conditions, insurance mandates and subsidies -- are all imperfect proxies for this core need.

This is exactly the kind of need that we buy catastrophic insurance to cover.  I would be bankrupted and homeless if my house burned down and I was still responsible for the mortgage but relatively inexpensive fire insurance covers that.  Losses are not usually correlated (ie one loss does not make it more likely I have a second loss, except in flood insurance which is why there is no private flood insurance any more) so I don't worry about non-renewal even after a major fire.

But obviously health care is different.  Health problems this year greatly raise the probability of health problems in future years.  There is every incentive for an insurer to bail on you after one bad year.   This is the major fear that then follows the need - that catastrophic insurance will no longer be available after the first claim.  Had health insurance developed differently (e.g. with policies that covered more than just one year, more like term life) we might be in a different situation, but here we are.

Government is Good at Having Lots of Money on Call

And the good news is that the one thing the government is really, really good at is being an insurer of last resort -- they have the deep pockets and the fiat money power to do this better than anyone else -- that is why they are the insurer of last resort of bank deposits and for flood insurance (I am not saying that there are not moral hazards in these or unintended consequences, but the insurance works).  So there is the clear opportunity -- what people need most is catastrophic insurance even when the private market won't provide it and the government does really well is provide catastrophic insurance as a last resort.

Before we get into the plan itself, let's discuss a few things that the government does NOT do well:

Government is Bad at Cost control.

I feel like arguing that government is bad at cost control should be about as necessary as arguing that socialism always fails, but I guess it just needs to be repeated over and over.  A large part of the PPACA (Obamacare) was adding provisions meant to reap cost savings in health care.  None of it has worked.  The problem is that any real markets for health care have been disappearing for decades as more and more health care expenses get paid by third parties rather than individuals making price/value trade-offs (as they do with pretty much everything else -- the prosaic word for this is "shopping").

Now, Democrats are increasingly seeking "single payer" health care, arguing that aggregating all purchases in one entity will result in huge negotiating leverage.  But this never has been true.  It is impossible to have a real price negotiation without a market, and market price, to reference.   Look at another area of government spending where the government does 100% of the industry purchasing:  military hardware.  Do you really have the sense that the military is getting great pricing due to their purchasing power?  Supporters will site discounts that Medicare gets over other buyers for certain services and pharmaceuticals.  But note again that this is all in reference to a market price benchmark, that will disappear with single payer.  Further, many of the savings Medicare gets are not real savings, but cross subsidies where other customers end up paying more so Medicare can get something below cost.  When the government is buying everything, this cross-subsidy goes away.  And can you even imagine the lobbying and cronyism and opportunities for graft that will exist once government pricing is untethered from any market price?  Just think again about military procurement.

I suppose that the government could turn all health care suppliers into a huge regulated utility, for example paying pharmaceutical companies a utility-like cost plus a fixed return on drugs.  If this occurs, I hope you are satisfied with the range of treatments you have today because you won't get many others -- if you don't believe me, name the three most recent innovations that have come out of your local regulated utility.  Typically all they do is fight innovation (e.g. rooftop solar and co-generation).Finally, the government has a lot of regulations that Congress did not touch in the PPACA that restrict supply and greatly increase costs.  For example, many states and municipalities have certificate of need processes that prevent new entrants from adding hospitals or even new equipment without the permission of existing competitors.  The same is true in occupational licensing, which protects the most skilled (and expensive) health care workers from competition on simple procedures (e.g. why is someone required to go through a decade of medical training to put stitches in my kid's elbow?)

I will say that the PPACA has perhaps had an accidental effect on costs but not through any intended mechanism.  As deductibles in the gold/silver/bronze exchange plans have gone up to try to keep a lid on premiums, individuals previously used to first dollar health care now find themselves responsible for making spending choices.  This is a good thing, maybe the best part of the whole program.

Government is Bad at Service Effectiveness. 

The PPACA also sought to increase the effectiveness of health care providers.  The problem is that it is impossible for a small group of people in Washington to do this.  We are 300 million consumers who each make trade-offs in different ways and define effectiveness differently.  Take an example from another field:  Hair care.  In the state of AZ, hair cutters must go through 2000 hours of training to be licensed to cut hair -- they must demonstrate proficiency in all sorts of hair styles.  I personally don't give a cr*p about that -- I tend to choose the fastest, cheapest person who does a reasonable job.  But no one in government has anticipated that as a valid consumer need.

The PPACA was larded with expensive provisions that reflected the vision of a few elites about how they personally wanted health care performed.  A great example is the whole electronic medical records requirement, likely stuck in their based on a lot of intensive lobbying by makers of this software.  I have yet to meet a doctor who likes this software, or who feels that their patient service is improved by it, but everyone has to do it none-the-less.Perhaps even more than the cost issue, it is amazing to me that anyone believes that government involvement will make some service more effective.  If you think it can, I urge you to take two identical copies of documents, and go through the process of sending and tracking one by Fedex and sending and tracking one via the post office

Outlines of A Plan

I am not sure how you actually do this, but I think being clear on the goal and the useful (and not useful) roles of government in the process are good.  Rather than a plan, I offer some design goals for a plan

  1. Make the government the insurer of last resort to make sure that all Americans are protected against catastrophic health care costs in a year.  One approach, though probably not the most compact, is to make the government responsible for all non-discretionary individual health care expenditures in a year above a certain percentage of that person's adjusted gross income for that year.   I am thinking personal responsibility numbers that start at 15% of AGI and could increase in higher income brackets. Yes, if you are a person making $50,000 a year, then $7,500 of out of pocket health care expenses will be difficult -- but likely not bankrupting and not a barrier to getting needed care.   Perhaps we exclude social security from AGI and apply this to seniors as well, effectively eliminating medicare and phasing out government benefits for wealthy seniors.I am open to a more compact way of doing this. Perhaps guaranteed-entry government subsidized high-risk pools for health insurance.  The problem is that insurance companies will just dump all their expensive customers into those pools and we will end up with a system as costly to the taxpayers as the one above but less rationally organized.
  2. Shift as many of the individual spending price / value tradeoffs as possible into individual hands.  The step outlined above in #1 is a good start, at least for more routine purchases.  As a design goal, at every turn, try to build in ways for consumers to get money back or get rewarded for choices to use less or more inexpensive care.I do not think there is anything with more potential leverage for improving the health care world than bringing back individual shopping for medical care.  My kid used to injure himself a lot in sports and we had a high deductible on our insurance, so we found a sports medicine guy who charged us only $50 a visit if we paid cash.  Then he told us that when we went downstairs to the radiology company, to tell them we were paying cash.  Sure enough, the lady there pulled out a special book from behind the counter and the $300+ they charge to the insurance companies became $40 to us.  On the other hand, we have spent weeks talking to doctors and hospitals about  heart surgery my mother-in-law (who is covered by Medicare) needs.  You know what has not come up a single time?  Price.  I have zero idea how much it will cost -- but let's say it is $100,000.  Can you imagine buying anything else that expensive without discussing the price once?
  3. Any medical benefits paid by the employer become fully taxable
  4. Price transparency mandates -- every provider must disclose the best price it sells a product and service at, as well as your price.  For all but emergency procedures, a cost estimate must be given in advance (My dog had to have surgery and even in an emergency condition they gave me a detailed cost estimate in advance).
  5. Systematic review of supply restrictions and rethinking of licensing arrangements. Banning of state and local certificate of need processes.
  6. Accelerated and streamlined drug approval process.  Really what I would like to see is that there is a government led testing process that leads not to an approval/refusal but to the publication of safety/effectiveness data that doctors and patients can then use to make their own decisions.

Hat tip to Megan McArdle who has been suggesting something like this for years, probably long before I started thinking about it.

Looking At Causes of Recent Wildfires and Resultant Property Damage, It's Hard To Point The Finger Solely or Even Mostly at CO2

Today I want to talk a bit about trends in wildfires in the US.  And as regular readers know, I have a real pet peeve about declaring a trend without actual, you know, trend data.  The media may be willing to jump from "most devastating fire in California history" to a trend just based on this one data point, but I am not going to play.

It turns out, though, that we don't have to play the one data point extrapolation game because there actually does seem to be a trend in wildfire.  Here is the national chart:

You might be saying:  Hey Coyote, you are cherry picking -- I have seen this same data but with a huge hump in the early part of the century.  Here is the chart you saw:

(source for both)  The problem with this chart is a huge definitional change in the data between the first and second half of the century.  In short, the early half of the century included controlled burns and other purposeful manmade actions (mostly in the southeast) and the latter half does not.  I described this here -- skeptics who use this chart are in serious danger of committing the same sloppy data errors we accuse warmists of (confession:  I made this mistake for a number of years).

To complete our proof there is indeed a trend in wildfire and not just in wildfire news stories, here is the chart for California, though I cannot vet the source.  I will say its not a slam dunk trend but I will take it on faith, at least for now, that the recent years would be high and make the trend more obvious

OK, so there seems to be a wildfire trend in the West.  I will focus on California because that has been the area in the news.  Let's consider 4 possible causes:

  1. Temperature.  The state of California has seen a 0.02C per decade, or 0.2C per century increase in temperatures.  This is a very tiny increase and well below the increase thought to have occurred in other parts of the world.  The rise has been faster over the last 10 years or so but it is unclear if this is a long-term trend or a near-term weather effect (e.g. tied to the PDO)
  2. Precipitation.   Total precipitation has decreased by ever so slightly over the last 100 years.  A half inch per century is about a 2% reduction
  3. Forest management.  The amount of wood harvested, and thus fuel removed, from forests has dropped by 80% since the 1950s
  4. Urbanization.  This does not necessarily increase fire acreage but it does substantially increase the probability a given fire will impinge on man-made structures.  Also, given the enormous almost exponential increase in total CA real estate value, the likely cost of fires of the same size and intensity has risen dramatically.  Much of the developed area affected by fires the last several years have been in the red and purple parts of the map that were developed most recently.  Fifty years ago they would have just burned trees (source).  More CA urbanization trends here.

So, what is causing the large fires?  Well, probably a lot of things.  I am a big believer that changes in outputs from complex systems can have complex causes (which is why I think the whole meme that "CO2 is the Earth's thermostat" is an embarrassing joke).  But given that over the last 50 years temperatures have risen by a fraction of a degree, precipitation has dropped by a fraction of an inch, but fuel removal has dropped by 80% and urbanization has skyrocketed, it is really hard for me to pin all or even most of the blame on manmade CO2.

Postscript:  One other point -- California is less than 0.1% of the total land area of the Earth.  I have a hard time extrapolating global climate trends from a few big events in 1/1000th of the world.

Be Especially Careful When Media and Pundits "Teach" You the History of Nazi Germany

I once was taking a course on the history of the Roman Empire (Garrett Fagan via the Teaching Company) in which the lecturer at the end of the course engaged the ever-popular topic of "why did the Roman Empire fall?**"  He made an interesting observation that could equally well be applied to many of the great questions of history -- that many explanations said more about the time the explanations were made in than they necessarily said about the historical period being studied.  Edward Gibbon was part of an 18th century anti-religious enlightenment movement and thus concluded the Roman Empire was brought down by Christianity, which made the Romans too docile to fight back against the barbarians.  Similarly Victorians found the Romans fell due to moral dissipation, Marxists discovered it was due to class warfare, and modern academics steeped in environmental sustainability have found that the Empire collapsed due to various man-made environmental disasters (e.g. lead drinking water pipes).

I have found that a lot of what is said about Nazi Germany follows much the same rule.  Because Nazi Germany represents for most the single greatest national embodiment of evil in history, people are always looking to associate what they don't like with Nazi German and Hitler.  I am reminded of this from Tyler Cowen's article this morning about Tim Wu attempting to draw a straight line from monopolies to Hitler.  In an era where many of our public intellectuals consider Trump the reincarnation of Hitler, it is fashionable to try to find ways to connect the dots.  It is a bit odd in this case, since the monopolies that seem to have the most political power in this country (Google, Facebook) are actually arrayed pretty strongly against Trump.  Cowen does not mention it, but if one is worried about economic concentration that is closely linked to government and has long-term stability, one should look at modern France and Germany long before they look at the US.

Cowen links to a great article by Thomas Childers exploding common myths about Nazi Germany that folks like Tim Wu are working from.  I have taken all of Childers' courses at the Teaching Company, including his 12 lecture course focused narrowly on the rise of Nazi Germany and his longer course on the history of WWII, and I recommend him highly.  I have taken 75+ courses at the Teaching company and he is one of my 3-4 favorite lecturers.

If you want to avoid the inter-mediation of historians, I have read two primary source books that really tell a FAR different story about the Nazi's than is commonly understood.  The first is Albert Speer's Inside the Third Reich.  While Speer seems to spare himself a lot, he spares no one else in the Nazi hierarchy and tells an interesting insider's story about a Nazi government that was astonishingly dysfunctional and inefficient.  The other is Gunter Reimann's The Vampire Economy about the insane regulation in the Nazi economy that makes even California look libertarian.  It was written before the war and the Holocaust, so it predates our current biases to project whatever economic system we don't like onto the Nazis.

The Vampire Economy is a study of the actual workings of business under National Socialism. Written in 1939, Günter Reimann's work discusses the effects of heavy regulation, inflation, price controls, trade interference, national economic planning, and attacks on private property, and their impact on human rights and economic development.

I would add that an entire book could be written on the seemingly simple question of "were the Nazi's socialist?"  Because the civics textbooks we had as kids included that stupid "heads I win, tails you lose" political spectrum from communism on the Left to Nazis on the Right, many folks think of the Nazis as "conservative."  And while they received some conservative support for their nationalism and militarism, the Nazis were not conservative -- they were revolutionaries and thought of themselves that way.  They were absolutely against the status quo.    The problem was figuring out what they were revolutionaries FOR.  One Nazi once answered that question as "we're for the opposite."  Which made sense to Germans who had lived through economic hell, but it is not very specific.

There were many socialists in the upper ranks of the Nazis.  It can be said that Hitler seemed less enthusiastic about socialism but in general Hitler was surprisingly indolent about being more specific or making decisions on any policy details.  He preferred that his folks just fight it out (again, see Speer's book).  Folks often assume Hitler hated socialism because he was outwardly so anti-communist.  But I get the impression that he hated socialists and communists, but maybe did not hate their policies -- a bit like a Republican voter might vehemently hate Obamacare but in a poll support most of its individual prescriptions.   To illustrate this, he did not rant against communism but something called judeo-bolshevism, which sounds more like a made up enemy than a description of a set of specific policies.

 

** Including arguments that it did not fall -- eg that it continued for another 1000 years as the Byzantine Empire (who called themselves Romans right to the end) or that it continued through Visigothic and Ostrogothic culture that looked a lot like Roman culture.

Your Government Outrage of the Week -- The Feds Try To Collect a Retroactive Rent Increase

Years ago the Forest Service wanted to eliminate car traffic in popular Sabino Canyon near Tucson, AZ, so they closed the road and asked companies for proposals to run a tram service to various stops in the canyon.  While a bit unusual at the time this service started, this is now a very common response to overcrowding in popular natural areas.  These services are typically leased as concessions, with the operator charging some sort of fee or fare from passengers, paying all expenses, and then paying the government an agreed rent in the form of a percentage-of-revenue concession fee.

In my world of campground operations, these concession fees are typically competitively bid and thus variable, but in the world of services like this one, there is a fixed list in the regulations of services and the percentage to be paid.  The problem here started because there is no item on the list for "tram operator".  So the government, in this case the local Forest Service, picked a logical equivalent from the table and told the tram operator what the percentage would be.  The tram operator set his fares based on this and his other costs and went on with business.

Flash forward many years.  The tour operator does a good job and has great reviews but the owner is a crusty guy who sometimes rubs the Forest Service staff the wrong way.  The Forest Service decides at the end of his term to compete the contract (called a permit by the FS) and give it to a non-profit.  Its not clear by the rules the FS can do this -- there are supposed to be protections built in for good-performing concessionaires who have invested a lot in the operation -- so the old permit-holder sued but the courts backed the Forest Service.

That is all back story.  This is what happened next though:

The Forest Service recently and retroactively imposed a 150% increase in a permittee’s fees for the period 2011-2015.  The Forest Service decision was based on the views of outside third party auditors it had hired to audit the agency’s fee assessments during that period.  The permit involved shuttle operations and fees were established under the Graduated Rate Fee Structure (GRFS) which sets fees based on the type of operations.  Because GRFS does not contain a classification for shuttle operations, the agency had previously categorized the operations as “Outfitting/Guiding.”  When the third party auditors reviewed the agency’s prior fees, they believed that the shuttle operations should have been classified as “Rental and Services” by the agency.

In 2016, the auditors completed their review of the prior five years of fee assessments and issued their final audit.  The permittee had paid fees totaling $99,231 for the period 2011-2015.  After changing the classification of the operations under GRFS, the auditors asserted that the permittee owed an additional $148,305 for that period.

This is really outrageous.  The mistake made was by the government -- the private operator logically trusted the numbers on his signed contract and assumed that those were the numbers he was operating under.  To retroactively charge this poor guy an enormous amount of money for a government mistake he had nothing to do with and couldn't even know about is just absurd.  Had he known the government wanted a higher fee before he actually started operations, he could have charged a higher fare to make up for it but now he can do nothing because it is all retroactive.  Its all the worse because this decision has a whiff of retribution about it given that this concessionaire took the government to court earlier over the loss of his permit.

This penalizing of a private company for a government mistake is not atypical in a government audit.  Years ago I had the Forest Service tell our company to do X and Y maintenance projects for them and that they would reimburse us for the costs (it was their responsibility but we were closer and and cheaper so it made sense).  Years later an auditor said that the FS should not have asked us to do the project that way, and that the FS had violated their internal rules.  So instead of just fixing their internal procedures or punishing those guilty in their agency they ... judged I was at fault and told me I had to refund all the money we were reimbursed for the project.  I obviously cried foul -- I told them I was authorized in writing, that I could not un-spend the money, that I had no responsibility for their internal compliance to their internal procedures, and that the error was theirs and I should not be the one punished for it.  As logical as this seems, it took me a surprisingly long time to get them to stop demanding this money back.

Does the Zero-Sum Nature of Academic Success Contribute to the Left-wards Bias of Academia?

For a while now, I have  had a theory that the zero-sum nature of academic success (competition for a fixed and perhaps shrinking number of tenured positions) affects the larger world-view of academia. (This article that compares academia to a harmful cult demonstrates this zero-sum thinking pretty well.)

It is pretty well-established that the American academic community is disproportionately of the Left, and in fact tilts pretty strongly in many cases to the far Left / progressive side.  People debate a lot about why this should be, but I think one contributing factor (but certainly not the only one) that I have never heard anyone discuss is the zer0-sum game these academics must play in their own careers.  I think that many of them incorrectly assume that all professions, and all of the economy and capitalism, is dominated by this same dog-eat-dog zero sum game -- remember, for most, academia is the only industry they have ever experienced from the inside.  And once you assume that the whole economy is zero-sum, it is small step from there to overly-narrow focus on distribution of wealth and income.

One of the mistakes folks on the Left make about capitalism is to describe capitalism as mostly about competition.  In fact, capitalism is mostly about cooperation, its a self-organizing process where people who don't even know each other cooperate to deliver products and services, facilitated by markets and the magic of prices.  Sure, competition exists but it is not the fundamental feature, but an enabler that makes sure the cooperation occurs as efficiently as possible.  Capitalism in fact is about zillions of voluntary trades and transactions every day that each make both parties better off -- or else both sides would not have agreed to it.  Capitalism in fact is a giant positive sum game, a fact that many on the Left simply do not grasp.

Never in my business life have I thought any company I worked for was playing in a zero-sum game.  Sure, individual sales to an individual customer might be zero sum -- UPS is going to order its bearings from Rockwell or Emerson and winning and losing that one order is zero sum.  But as a whole no business I have been in has ever felt zero sum.  In my business running campgrounds, I want our campgrounds to be the best but our growth is generally not at the expense of some other campground -- it is about attracting more people for more days to camping and offering those who do camp more value-added services.

Postscript on Metrics:  As an aside, it struck me that one improvement to the dysfunctional academic experience described in the Washington Post article linked above might be to an a measurement of the professoriate that went beyond just counting published articles and their citations.  Start counting the number of advisees each professor has that lands teaching and tenured positions and you could change some behavior.

Incredible Evidence of P Hacking in Research Studies, Demonstrated with One Chart

Hat tip to Kevin Drum for finding this:

I will let him explain the chart, it is worth understanding:

The authors collected every significant clinical study of drugs and dietary supplements for the treatment or prevention of cardiovascular disease between 1974 and 2012. Then they displayed them on a scatterplot.

Prior to 2000, researchers could do just about anything they wanted. All they had to do was run the study, collect the data, and then look to see if they could pull something positive out of it. And they did! Out of 22 studies, 13 showed significant benefits. That’s 59 percent of all studies. Pretty good!

Then, in 2000, the rules changed. Researchers were required before the study started to say what they were looking for. They couldn’t just mine the data afterward looking for anything that happened to be positive. They had to report the results they said they were going to report.

And guess what? Out of 21 studies, only two showed significant benefits. That’s 10 percent of all studies. Ugh. And one of the studies even demonstrated harm, something that had never happened before 2000

Reports for all-cause mortality were similar. Before 2000, 5 out of 24 trials showed reductions in mortality. After 2000, not a single study showed a reduction in mortality.

Note that these sensible rules for conducting a study do NOT exist for pretty much any study in any field that you see in the media.  Peer review generally does not address it.  Links to the full study in Drum's article.

I Think I Have Lost the Plot -- When Did AG Jeff Sessions Become a Liberal Icon?

I simply cannot believe that the same folks on the Left who loathed Jeff Sessions a few months ago are now protesting in the street because Trump has fired him.  This is just bizarre beyond words.  I celebrate his firing.  Sessions has been as illiberal an AG as I can remember.  He has been hostile to the fourth amendment, particularly on asset seizures, and is an old-school drug warrior even on marijuana.  The Left has become incredibly near-sighted in defending this guy solely because they fear his firing might slow down a generally useless investigation on Russia.  There are probably 20 fertile areas in which to investigate Trump and the Left wants to focus on the one area where there is probably nothing (in fact the one area I suspect Ms. Clinton may well be at least or more guilty than Trump).

Hotels: For the Love Of God, I Just Want to Turn the Lights On

Well, in a now familiar experience, I had to search around yet another darkened hotel room tonight with my cell phone in flashlight mode trying to just turn on the freaking lights.  The Lutron sales folks have been busy again, selling yet another hotel on some sort of complex mood lighting control center with 7 or 8 different mood settings but no obvious way just to turn on the lights.  This system would be bitchin if I was going to have a cocktail party in the room or try to seduce some woman I met in the bar but I just want to be able to see to fire up my computer and unpack.  Tonight I actually had to stand outside the room while maintenance came up and had to reboot the sytem.

Tesla Is A Finely Crafted Machine for Sucking Money Out of Taxpayers' Pockets

I have ranted about this before, but the numbers for Tesla subsidies in the third quarter were simply staggering:

Tesla's Main Product Isn't Cars, It's Subsidies

Tesla received $713 million in U.S. subsidies in Q3, compared to its $312 million profit.

That's a pace of $2.8 billion a year.   More than half of this starts going away January 1 with the phased expiration of the $7,500 per car subsidy to buyers.   I predict that high on the list of Tesla's post-election to-do list will be to lobby what they hope is a Democratic Congress for extension of the expiring subsidies.

Capitalism and Sexual Assault

Point (via the International Socialist Review)

This article examines the phenomenon of sexual assault from a Marxist perspective—that is, analyzed in the context of capitalist social relations. Like imperialism and war, oppression is a necessary byproduct of the rule of capital. Exploitation is the method by which the ruling class robs workers of surplus value; the various forms of oppression (such as sexism, racism, and homophobia) play a primary role in maintaining the rule of a tiny minority over the vast majority, on a global scale. This approach allows Marxists to understand not only the root causes of oppression but also which strategies can most effectively combat it.

To be sure, sexual assault is not inflicted by “the system” as a whole, but by individual people. Nevertheless, women’s oppression does not originate with individual people—it stems from institutional inequality that is organized from above, in the traditional family structure, the legal system, and other social structures that define women as second-class citizens. It therefore can be ended at the individual or personal level only if we do away with the capitalist system.

Counterpoint (via CNN)

Harrowing accounts of widespread sexual abuse allegedly carried out by North Korean officials against ordinary women have been laid out in a new report, that details evidence of a culture where officials commit acts with near total impunity.

The extensive 98-page report by Human Rights Watch (HRW), which was released Thursday and took more than two years to compile, is based on dozens of interviews with sexual abuse victims who have fled from North Korea. It reveals an oppressive world where officials -- from police officers and prison guards to market supervisors -- faced virtually no consequences for their routine abuse of women.

"Unwanted sexual contact and violence that is so common in North Korea it has come to be accepted as part of ordinary life," the report alleges....

"On the days they felt like it, market guards or police officials could ask me to follow them to an empty room outside the market, or some other place they'd pick," the report quoted a former trader in her 40s who fled North Korea in 2014 (HRW uses an alias). She says she had been sexually assaulted many times.
"They consider us (sex) toys. We are at the mercy of men." She said that the climate of sexual abuse was so pervasive that it had been normalized -- both by the perpetrators and their victims, but nonetheless, "sometimes, out of nowhere, you cry at night and don't know why."
Medical professionals who fled the repressive country said that "there are no protocols for medical treatment and examination of victims of sexual violence to provide therapeutic care or secure medical evidence," the report adds.

How I Am Getting Driven Towards Being A Single Issue Voter

I confess that historically, I have always had a bit of disdain for folks who say they are single issue voters.  "Really?" I would ask, "You are going to ignore everything else going on and only vote based on X?"  I thought it was a narrow-minded and shallow way to vote.

My apologies.  I may have become a single issue voter myself.  Here is why:

Two years ago, when the Republicans manage to elect Trump, I was sure I was going to vote straight-ticket Democrat in reaction.  I find Trump's entire style distasteful in the extreme.  And while I think there has been some good news on the regulatory front in various Departments under him, on his signature issues of immigration and trade I am 100% opposed to his goals and his approach.  And while I have always believed Trump is probably a social liberal himself, he has a lot of advisors and cabinet members who are pretty hard-core opposed to a variety of freedoms, from gay marriage to marijuana use.

But that was two years ago, before the Democrats decided that their future was in a hard left turn into Marxism.   I am not sure how a serious person can really entertain socialism  given its pathetic history, but it seems to be a product of several cardinal sins of the modern generation (e.g. ignorance of history, evaluating policy based on its intentions rather than its logical consequences, and categorizing all perceived problems as resulting from white male European hetereosexual priviledge).  At first I thought perhaps people were just using "democratic socialism" as a synonym for more redistributive taxes and greater welfare spending within an otherwise capitalist society.  But over time I see proposals like one in Congress with fully 100+ Democratic sponsors calling for banning health care companies of all sorts from making a profit.  This is straight-on socialism and ignorant in the extreme of any consequences beyond good intentions.  By the way, I actually don't think we will end up with socialism under the Democrats but a form of European-style corporatism.  This will mean that large companies like Google and Amazon with political influence will be ok, maybe even better.  But small companies like mine with no hope of political access will get hammered.

So here is my voting problem.  Republicans suck on many issues -- gay rights, drug law liberalization, immigration, trade -- that I am extremely passionate about (I briefly ran an Arizona initiative to legalize gay marriage) but that don't directly affect me.  Yes, they affect many of my friends -- I have friends with potential immigration issues, I have friends with businesses getting hammered by tariffs, I have friends who are gay and married, I have friends that smoke rope and would rather not go to jail for it -- but not me directly.  On the other hand, Democrats suck on most business regulatory issues, trying in the near term to turn the US into California and in the long-term into Venezuela.  These are issues that DO affect me directly and greatly as a business owner.   Already I have had to red line states such as California, Oregon, Illinois, New York, and Rhode Island where I formerly did business but backed out because the business climate was impossible.  If this spreads to more states, I will be wiped out.

All of this is being made worse as both parties have started to get worse in the areas where they were traditionally more sensible.  Republicans have abandoned whatever free market credentials they had by pursuing trade protectionism and increased restrictions on companies trying to hire foreign workers.  Democrats are in the process of turning against free speech and have started sticking their nose in the bedroom (for example, by shifting the discussion of sex work to "trafficking," Republicans have successfully gotten Democrats to turn against a number of sorts of sexual freedom).

For years I have voted against my personal interests in elections, because my interests did not seem as weighty as other issues in play.  Folks are being denied basic civil rights, so am I really going to vote for the folks enabling that just to avoid (admittedly costly and loony) California meal break laws to be applied in Arizona? Now, though, I am starting to rethink this position.  In part because threats to businesses like me are more existential, and part because I am exhausted spending time defending other people's rights who in turn actively work to take away mine.  For certain offices like sheriff, that don't affect my business, I will still be voting as I always have -- which person is least likely to harass the sh*t out of certain marginalized groups.  But for others, and particularly the national offices, I am thinking about voting a straight "it's all about me" ticket (I am reminded, ironically, of the old "Me, Al Franken" SNL news bit he used to do.)

By the way, you might ask, "Coyote, you are a libertarian, why not just vote for the Libertarian candidate."  Good question.  Well, it turns out that the Arizona state legislature changed the rules for third parties explicitly to get the libertarian party off the ballot and prevent libertarians from "taking" votes from Republicans.  Seriously, they were not even subtle about it.  Instead of having to get a certain percentage of libertarians to sign a petition to get on the ballot, libertarian candidates now have to get a certain percentage of all independents to sign a petitions to get on the ballot.  This is an very high bar and one that most libertarians could not clear this year (cynically, somehow the rules allowed green candidates to get on easier as Republicans want them on the ballot to "steal" votes from Democrats.)  This is the #1 reason I may not vote tomorrow at all -- I cannot vote for our Marxist Democratic candidate for Senator, but I refuse to be forced to vote for the Republican.  Ugh.

When #metoo and #blacklivesmatter Collide

Readers will know I have been sympathetic with the animating goals, though not necessarily with the tactics and policy prescriptions, of Black Live Matter.  I do believe there are problems with police accountability and violations of due process that disproportionately (though not exclusively) affect the black community.  While we have come an extremely long way (I grew up in East Texas and saw a lot of bad sh*t), brown skin can still incur a presumption of guilt that simply should not be there in our justice system.

On the flip side I have sympathy with the animating goals of the Me Too movement, and have been utterly offended by stories like the ones about Matt Lauer's automatic door lock to trap women in his office (the same Matt Lauer NBC may have fired Megyn Kelly in order to bring back some day).  And as in the case of BLM, while I am sympathetic to MeToo problems, I have not agreed with their tactics or policy prescriptions.

So despite having roughly the same reaction to both movements, why do I say that #blm and #metoo may be headed for a collision?  Let's start with #metoo.  This is basically a victim's rights movement -- lamenting that victims do not get a fair shake in the justice system.  In many ways the movement is a direct descendent of movies like Dirty Harry and Death Wish whose theme was that the justice system catered too much to criminals and gave criminals too many rights to the detriment of victims and society.  MeToo argues that "women should always be believed," which in practice is interpreted as meaning that the presumption of innocence and due process for the accused should be dialed back or eliminated.  These would be very familiar ideas to Harry Callahan and Paul Kersey.  So much so that I am almost surprised no director has done a female #metoo version of Death Wish.  Oh wait, Clint Eastwood already made that movie as part of the Dirty Harry series, it was called Sudden Impact.

In this context it is easy to see the potential train wreck that may be coming between MeToo and BLM.  The BLM movement at its core is about people of color being treated as guilty -- by police, by the system, by society -- based on the color of their skin.  BLM is about getting due process for the accused (or merely suspected) where it does not exist today.  Metoo, on the other hand, wants to reduce due process rights of the accused.  These two purposes almost have to come into conflict.

This should not come as a surprise, except perhaps to a generation who grew up in crappy public schools that no longer assign real books like, say, To Kill a Mockingbird.  This literary classic, which in my day was a progressive icon but now is being pushed into the background, was about the trial of a white woman falsely accusing a black man of rape, and how this black man was barely saved in a town where everyone automatically believed the white woman.

But we don't just have to look in fiction for examples, we are seeing it today in universities.  Universities are the one place in America that (due to the mandates of the Obama Department of Education) substantially reduced due process and presumption of innocence for men accused of a variety of sexual crimes by women.  The College Fix is one of the many sites in my feed reader, and it has featured numerous cases of college men suing universities over their being railroaded out of school in kangaroo courts over dubious assault charges.  And do you know what I have observed? A disproportionate number of these men who feel victimized by this system appear to me to be men of color and/or non-European foreigners (example from today).  It should not be a surprise to our SJW friends -- I venture that it is zero surprise to BLM -- that these folks with the least power are hurt the most by the loss of due process rights.

Postscript:  I have written before about where BLM and MeToo went wrong in what were originally good causes.  Here is where I think BLM went wrong.  I can't find where I have talked about MeToo going off the rails in one concise article, so here is a brief description of my view:  For years, and I presume still in some cases today, women have gone to their university or police or employer and reported sexual harassment or sex crime and have sometimes been met with lethargy -- they get patted on the head and told to go away or worse they get blamed for the incident.  But the net result is no serious investigation.  In this context, "believe the woman" makes sense.  A woman's accusations should be treated seriously and get a serious investigation without negative consequences for the woman who reported it.  But for a variety of reasons that desire to have real due diligence in response to accusations has morphed into a desire that the accusation be the same as a conviction.  So we went from a system with no investigation, though with a default to the accused to now a system with no investigation and a default to the accuser.  Neither system makes sense or is consistent with individual liberties and the rule of law and the entire history of our justice system.  "Treat every woman's accusations seriously" would have been a better motto (though maybe with an asterisk for women brought forward by Michael Avenatti).

As a disclosure, I once had a female ex-employee (who I never met face-to-face) accuse me of all kinds of crazy stuff.  The campgrounds I ran were training camps for the Taliban, I was a narcotics dealer, I was harboring fugitives, etc. She posted these accusations on facebook, tried to sue me, wrote letters to the government, tried to get on the news, and even put up yard signs.  She threatened me and my family with pictures of her holding her gun and we had to get a restraining order and a better security system.  It was a nerve-wracking time, and if we had believed all women, I would probably be in Guantanamo now.  By the way, I remember my wife really blasting me for this piece when I said how reluctant I am being alone with a young woman.  I responded to her, "what if I had been alone with [lady described above] for any amount of time?"  She thought for a second and said, "you would have been hosed - she would have accused you of rape for sure."

Have We Already Been Seeing Inflation, Just Concentrated in Financial Assets Rather than Consumer Products?

A while back I wrote:

Is it possible that inflation exists but it shows up mainly in financial assets (stocks, bonds, perhaps real estate) that don't really factor into standard inflation metrics?  Every step the Fed has taken, as well as other western central banks, appears to me to be crafted to pump money into securities markets rather than into main street.  Certainly we have seen a huge inflation in the value of financial assets and real estate over the past several years.

It was an honest question -- I am not an economist.  Business school gives one a pretty good working knowledge of micro but macro is usually outside my ken.  However, I see this is not a new idea and others make the same point.  Saw this chart on the Zero Hedge Twitter feed

I will add that progressives want to use this data to make some sort of fairness / income inequality point about wages vs. rich people's asset holdings, but this chart is not a natural result of unbridled capitalism.  It is the predictable result, even the desired result by its creators, of Fed policy in general and quantitative easing in particular.

Warmists and Skeptics Should Agree That This is The Real Scandal in Climate Science

Imagine that for some reason you desperately needed to be under a certain weight.  I am old enough to think of the relatively obscure movie Vision Quest where a high school wrestler is trying to drop two weight classes.  If you were in that situation, what is the first investment you would make?  Exercise equipment?  Nutrition guides?  A personal trainer?  No!  You would invest in a good, accurate scale.  Because without being able to measure the variable (in this case weight) you care about, everything else is worthless.

As trivial an observation as this may seem, the fact is that the world's governments have spent tens, perhaps hundreds of billions of dollars on global warming research and mitigation and have done almost zero to build out and improve a reliable temperature measurement system and historical temperature database.   We have absolutely failed over the last 30 years to substantially improve our actual measurement of the warming we are so concerned about.

There are at least two problems with our temperature data, the first of which I have written about many times before -- our surface temperature measurement infrastructure is full of bad installations whose design and location bear no resemblance to best-practice standards.  The most common problem is that temperature measurement stations are located in places that are subject to a lot of local biases, particularly urban development and heat islands.  I wrote about a classic example I discovered right here in Arizona.  And while the US has taken a few steps to eliminate the most egregious locations, many bad ones still exist.  And problems with the US infrastructure are nothing compared to issues with the infrastructure in other countries.  There still are only a handful of measurement locations in huge continents such as Africa and Antarctica, with quality problems equal to or greater than those in the US.

Parallel to the land surface data, we have a second temperature data set taken from satellites that has nearly as many issues.  Satellite data eliminates some of the problems of the surface data set:  it does not have large gaps in coverage and it is not subject to local biases, such as urban heat islands.  It does have the problem of not actually measuring the surface temperature, but rather the lower troposphere, but this is exactly where computer models predict the largest global warming signal to occur, so it is still useful.  But there have been many under-investment problems here, too.  The history of temperature versions of the UAH satellite temperature data base has many ups and downs that must be corrected -- this satellite fell out of the sky and then this one has sensor drift and then this other one went off course.  Despite the large and vocal role of the Goddard Institute for Space Studies (GISS) in climate research, the database they maintain is a surface temperature database and they seem to do little to support space measurement, leaving it to a few small groups to learn something from the satellites.   It's as big mess, made worse by the political factor of the space temperature database getting lower warming rates and being maintained by a skeptic while the surface temperature databases show more warming and are maintained by folks more pessimistic about warming rates.

To this picture we can add substantial problems with the historical temperature record.  The Hadley CRUT database is generally considered the gold standard in surface temperature records and is used by most researchers.  There are some problems with the database that are hard to fix -- for example, for 1850 there is apparently only 1 temperature station in the database for the entire southern hemisphere, which means half the world's temperature is being extrapolated from one site in Indonesia.  We can't get in a time machine and sprinkle the world in 1850 with more thermometers.  But we can try to take some sort of estimate of the potential error induced by such spotty measurement, something I have never seen done in the CRUT database.  The data in 1850 is always presented as just as solid as that in 1950 (see my last global temperature update).

Apparently, a PHD student in Australia recently audited the CRUT database as his thesis project. Before you get into his results, here is one thing to consider: Literally trillion-dollar decisions are being made based on this database and based on research which uses this database, and no one has bothered to do this previously until some random grad student in Australia gives it a shot?  By the way, it should be noted that once he completed what should have been warmly welcomed by the climate community with a "Dang, can't believe we didn't do that already," he has instead gotten nothing but grief and criticism.

The thesis is paywalled, (just $8, I have bought a copy and am slogging through it now) but Anthony Watt summarizes:

HadCRUT4 is the primary global temperature dataset used by the Intergovernmental Panel on Climate Change (IPCC) to make its dramatic claims about “man-made global warming”.  It’s also the dataset at the center of “ClimateGate” from 2009, managed by the Climate Research Unit (CRU) at East Anglia University.

The audit finds more than 70 areas of concern about data quality and accuracy.

But according to an analysis by Australian researcher John McLean it’s far too sloppy to be taken seriously even by climate scientists, let alone a body as influential as the IPCC or by the governments of the world.

Main points:

  • The Hadley data is one of the most cited, most important databases for climate modeling, and thus for policies involving billions of dollars.
  • McLean found freakishly improbable data, and systematic adjustment errors , large gaps where there is no data, location errors, Fahrenheit temperatures reported as Celsius, and spelling errors.
  • Almost no quality control checks have been done: outliers that are obvious mistakes have not been corrected – one town in Columbia spent three months in 1978 at an average daily temperature of over 80 degrees C.  One town in Romania stepped out from summer in 1953 straight into a month of Spring at minus 46°C. These are supposedly “average” temperatures for a full month at a time. St Kitts, a Caribbean island, was recorded at 0°C for a whole month, and twice!
  • Temperatures for the entire Southern Hemisphere in 1850 and for the next three years are calculated from just one site in Indonesia and some random ships.
  • Sea surface temperatures represent 70% of the Earth’s surface, but some measurements come from ships which are logged at locations 100km inland. Others are in harbors which are hardly representative of the open ocean.
  • When a thermometer is relocated to a new site, the adjustment assumes that the old site was always built up and “heated” by concrete and buildings. In reality, the artificial warming probably crept in slowly. By correcting for buildings that likely didn’t exist in 1880, old records are artificially cooled. Adjustments for a few site changes can create a whole century of artificial warming trends.

Details of the worst outliers

  • For April, June and July of 1978 Apto Uto (Colombia, ID:800890)  had an average monthly temperature of  81.5°C, 83.4°C and 83.4°C respectively.
  • The monthly mean temperature in September 1953 at Paltinis, Romania is reported as -46.4 °C (in other years the September average was about 11.5°C).
  • At Golden Rock Airport, on the island of St Kitts in the Caribbean, mean monthly temperatures for December in 1981 and 1984 are reported as 0.0°C. But from 1971 to 1990 the average in all the other years was 26.0°C.

The last point about past thermometer adjustments is one I have run into before when I was looking at urban heat islands and their effect on temperature measurement (by the way this is a really great science fair project if you are looking for one).  Past urban heat adjustments seem to imply (by cooling the past more than the present) that urban heat biases on measured temperatures have gone down over time, which defies all logic and experience.

There is a lot more of interest at the link, but it strikes me as shear madness, bordering on fraud, that there seems to have been so little effort put into data integrity of perhaps the single most important non-economic dataset in the world.  I would presume that warmists, who constantly accuse skeptics of being "anti-science" would be the first to line up in favor of investing whatever is necessary in better, cleaner data.  So far, there has only been criticism of the effort.

Postscript:  The temperature adjustment issue is an important one.  In short, as seen below, the magnitude of the temperature adjustments in the US temperature database equal the magnitude of the warming.  In other words, the warming signal comes entirely from the adjustments.  This does not mean the signal is being read incorrectly, but it does mean that getting the adjustments (and their error bars, which no one ever includes) correct is perhaps the single most important issue to a good historical database.

Yelp Has Surpassed Even Toner Sales People as My Most Persistent And Irritating Cold Callers

For some reason, Yelp has invested in a massive spamming infrastructure and has become easily my most frequent and persistent source of spam calls and emails.  I went through my email trash (unfortunately it clears itself out every few months) but I still found a dozen different Yelp people contacting me.  Each of them tends to contact me with at least 2 calls and 2 emails before they go way, but if I respond (even to tell them to get lost) they take that as an invitation to contact me more.

Perhaps I have a unique problem -- I actually operate over 150 sites that could potentially be reviewed, and my gut feel is that each of these has been assigned to a different person and they all feel the need to call me without any cooperation between them.  For someone who is looking for more ways to consolidate an already complicated mass of reviews on the web, a review company that cannot coordinate its contacts with a single company is unnerving.  Further, I have to say that I have a distrust in what is essentially an online advertising platform that resorts to cold-calling to advertise their business.  If they don't trust their own platform to get the word out adequately, why should I?

There are other problems, but here is a sample of my communications with them when I made the mistake of actually responding:

Yelp:

Hi Warren,

I am sorry to hear this [I told them to stop spamming me], you actually have 3 amazing reviews on your page for Honeycomb Campground. I am sorry you have been contacted by many different Account Executives from Yelp.

The reason we keep reaching out is because we have consumers every day on Yelp in Grant looking for a campground and see this as a great opportunity for you to fill your spots. All I am asking for is the chance to show you how we can generate more traffic onto your page.

Again if you really would like to be removed from out call list I can do so, and I am sorry to hear that.

My Response:
  1. If it were just one person calling, it would be OK.  But I have over 100 locations and it seems like a different yelp person harasses me about every location.  And as soon as I get one to go away, the next one calls.  Frankly, you are worse than toner sales calls
  2. You do not work with my review aggregator (reputology).  I understand you are likely trying to force everyone to your platform, but I cannot work that way.  Especially for a review company that is a trivial part of my business
  3. The site you mention with 3 Yelp reviews has 227 Google reviews and 281 Facebook reviews and 16 in Tripadvisor making Yelp less than 0.6% of my review activity

Postscript:  I likely am also influenced by my past run-ins with Yelp where I suspect they suppressed my accurate reviews of a large company due to legal threats from that company.

Some Thoughts About Income Growth and Mobility Part 2: Hours of Work Matter More Than Wage Rates

In part 1, we discussed different ways of measuring income mobility and income growth for the poor, and discovered that many traditional measurement approaches are overly pessimistic -- when one focuses on actual individuals, instead of income quintiles, income for the poor has improved substantially.

Unlike some libertarians, I don't have a problem with intelligently structured income transfer and safety net programs to help the very poor. In fact, I believe that such income transfer programs can be far less distortive and economically inefficient that many other anti-poverty programs.  One of the latter I will focus on in this article is the minimum wage.

Each year, Mark Perry puts together an awesome demographic snapshot of how various income quintiles differ from each other.  Here is his latest:

I want to first call your attention to the figures at the top for mean number of earners per household and household income per earner.  Much of anti-poverty policy seems to be based on the assumption that poor people, because they lack bargaining power, get hosed on wages and other work rules.  Public policy thus tends to focus on minimum wage and overtime rules and a myriad of other workplace interventions.

But in fact, if we compare the lowest quintile with the middle quintile in the chart above, we see something very different.  What we see is the main difference is hours worked, not the relative wage rates.  Let's consider two scenarios

  1. We keep the amount of work done the same, but raise the wage rates of the poorest quintile to the middle quintile.  In this case, their average income would go up by about 50% from $12,319 to $18,654  (calculated as 0.41 mean earners times middle income per earner of $45,497).
  2. We keep wage rates the same but raise the amount of work done in the poorest quintile household to that of the middle quintile. In this case, their average income more than triples from $12,319 to $41,163 (calculated as 1.37 middle income earners times poor income per earner of $30,046)

So in this example, increasing the poor's wage rates to middle class levels yields $6,335 a year while increasing the poor's amount of work done to middle class levels yields $28,844 a year.  Public policy that focuses on increasing work hours for the poor has 4.5 times the effect of public policy focused on wage rates.  A corollary to this is that any public intervention on wage rates for the poor that has negative employment effects is likely to have little net effect on poverty.  

But in fact this understates the relative benefits of approach #2. Look at the education levels in the poorest quintile vs. the middle.  The poorest quintile has 2.5 times as many people without even a high school degree as in the middle.   For these folks to progress, the only way they can develop skills is on a job and they can't do this without a job.  Or said another way, another advantage of approach #2 and getting them more hours of work is that they gain more skills to overcome their starting disadvantage in education.

I wrote about this in the summer issue of Regulation magazine, in a article entitled "How Labor Regulation Harms Unskilled Labor."  I argued that while likely intended to help the very poor, most labor regulation may be harming the poor, particularly those without skills or much experience, by making it harder and harder for them to find work.  This not only impoverishes them, but makes it harder for them to progress to better jobs and higher income levels.

In my business,which staffs and operates public campgrounds, I employ about 350 people in unskilled labor positions, most at wages close to the minimum wage. I had perhaps 40 job openings last year and over 25,000 applications for those jobs. I am flooded with people begging to work and I have many people asking for our services. But I have turned away customers and cut back on operations in certain states like California. Why? Because labor regulation is making it almost impossible to run a profitable, innovative business based on unskilled labor.

Why is this important? Why can’t everyone just go to college and be a programmer at Google? Higher education has indeed been one path by which people gain skills and opportunity, but until recently it has never been the most common. Most skilled workers started as unskilled workers and gained their skills through work. But this work-based learning and advancement path is broken without that initial unskilled job. For people unwilling, unable, or unsuited to college, the loss of unskilled work removes the only route to prosperity.

...the mass of government labor regulation is making it harder and harder to create profitable business models that employ unskilled labor. For those without the interest or ability to get a college degree, the avoidance of the unskilled by employers is undermining those workers’ bridge to future success, both in this generation and the next.

Public policy could best help the poor by lowering the regulatory barriers to hiring unskilled labor and promoting economic growth that will help keep us close to full employment.

Part 1 of this series was here.

Postscript:  This update on the Seattle minimum wage study is interesting.  Note that this study is occuring near peak employment, a time when one would expect the minimum employment impact from a minimum wage increase.  However, I do think the findings are roughly consistent with the discussion above:

In their latest paper, which has not been formally peer reviewed, Mr. Vigdor and his colleagues considered how the minimum-wage increases affected three broad groups: People in low-wage jobs who worked the most during the nine months leading up to and including the quarter in which the increase took effect (more than about 600 or 700 hours, depending on the year); people who worked less during that nine-month period (fewer than 600 or 700 hours); and people who didn’t work at all and hadn’t during several previous years, but might later work. The latter were potential “new entrants” to the ranks of the employed, in the authors’ words.

The workers who worked the most ahead of the minimum-wage increase appeared to do the best. They saw a significant increase in their wages and only a small percentage decrease in their hours, leading to a healthy bump in overall pay — an average of $84 a month for the nine months that followed the 2016 minimum-wage increase.

The workers who worked less in the months before the minimum-wage increase saw almost no improvement in overall pay — $4 a month on average over the same period, although the result was not statistically significant. While their hourly wage increased, their hours fell substantially. (That doesn’t mean they were no better off, however. Earning roughly the same wage while working fewer hours is a trade most workers would accept.)

It’s the final group of workers — the potential new entrants who were not employed at the time of the first minimum-wage increase — that Mr. Vigdor and his colleagues believe fared the worst. They note that, at the time of the first increase, the growth rate in new workers in Seattle making less than $15 an hour flattened out and was lagging behind the growth rate in new workers making less than $15 outside Seattle’s county. This suggests that the minimum wage had priced some workers out of the labor market, according to the authors.

“For folks trying to get a job with no prior experience, it might have been worth hiring and training them when the going rate for them was $10 an hour,” Mr. Vigdor speculated, but perhaps not at $13 an hour.

I would add as an aside that I think the NYT is being a bit arrogant an narrowly focused on money (vs. other benefits of employment) when they added the parenthetical phrase at the end of the third paragraph.

Some Thoughts About Income Growth and Mobility Part 1: The Right Way To Measure It

This is part 1 of a 2 part series.  Part 2 is here

The typical way of talking about income mobility and inequality is to look at the relative income and growth rates of different income quartiles.  Here is a chart used recently by Kevin Drum over at Mother Jones:

As you can see, since the three lines here have their steepest upwards slopes at different times, there are a myriad of possibilities for cherry-picking endpoints to make whatever point you want to make.  I would say this is a pretty healthy picture, with real income growth for everyone, though the general flatness of the middle income brackets since 2007 seems to get the most notice.

A healthy and growing economy should cause all of these quintiles to grow. But income growth and mobility for individuals is about more than just the quintiles.  As a small business owner over the last 20 years, I have had tax returns in all five quintiles -- I have had blowout years when I was "rich" and I have had years when my taxable income would qualify me for food stamps.  In other words, I move between the lines -- and so do a lot of other people.

Young people gaining experience and promotions move from lower to higher quintiles as they age.  New immigrants often come in at the bottom and progress over time.  When people retire, they may fall down a few quintiles.  Marriage might kick someone up to a higher quintile, and divorce may lead to them falling down a few.  There is a constant ebb and flow that is hidden by merely looking at quintiles.

Russ Roberts, who seems to be the token non-socialist at Medium, writes:

but the biggest problem with the pessimistic studies is that they rarely follow the same people to see how they do over time. Instead, they rely on a snapshot at two points in time. So for example, researchers look at the median income of the middle quintile in 1975 and compare that to the median income of the median quintile in 2014, say. When they find little or no change, they conclude that the average American is making no progress.

But the people in the snapshots are not the same people. These snapshots fail to correct for changes in the composition of workers and changes in household structure that distort the measurement of economic progress. There is immigration. There are large changes in the marriage rate over the period being examined. And there is economic mobility as people move up and down the economic ladder as their luck and opportunities fluctuate.

Roberts describes several studies that follow actual people, not quintiles, and finds that the American ideal of income mobility is still alive and well

This first study, from the Pew Charitable Trusts, conducted by Leonard Lopoo and Thomas DeLeire uses the Panel Study of Income Dynamics (PSID) and compares the family incomes of children to the income of their parents.⁴ Parents income is taken from a series of years in the 1960s. Children’s income is taken from a series of years in the early 2000s. As shown in Figure 1, 84% earned more than their parents, corrected for inflation. But 93% of the children in the poorest households, the bottom 20%, surpassed their parents. Only 70% of those raised in the top quintile exceeded their parent’s income.

... Julia Isaacs’s study for the Pew Charitable Trusts finds that children raised in the poorest families made the largest gains as adults relative to children born into richer families.

The children from the poorest families ended up twice as well-off as their parents when they became adults. The children from the poorest families had the largest absolute gains as well. Children raised in the top quintile did no better or worse than their parents once those children became adults.

He has a lot more at the link.

In part 2, I will discuss why public policy is missing the boat, and in some cases doing exactly the wrong thing, to promote income mobility particularly for the poor.

A Request To Send Me Graphs of Negative Climate Trends

For years I have been mocking attempts to "prove" negative climate trends from a single data point. Too often a single event (e.g. strong hurricane landfall) is treated as "proof" of a trend, though how anyone who styles themself as "scientific" can claim a trend from a single data point is beyond me.  Every time someone claims a trend in, say, hurricane strength or drought or crop yields, I never can see any trend in the actual archived data for those phenomena.

So I am soliciting real medium and long-term trend data that points to some sort of negative climate trend.  To save folks time, I know of and have the data for several already:

  • Increasing worldwide average temperatures, as measured both on the ground and in the lower troposphere by satellites
  • Increasing number of record high nighttime low temperatures (yes, I know, this is always confusing)
  • Arctic (but not Antarctic) sea ice extent, at least over the last 50 years
  • US heavy rainfall events
  • Sea level rise

Note that at this point I do not care if the trend is natural or manmade or if you can really specify a difference (which I would argue you likely cannot).  For example the sea level rise trend of 2-3mm a year goes all the way back to before 1850, and thus is hard to ascribe totally to man-made CO2 which has mostly been produced in the latter half of the 20th century.

Here are some rules:

  • Must have a link to original data source or at least the original chart source (some groups are terrible about archiving the actual data), which can be a study or a group that actively measures the phenomenon.
  • It can't just be for a limited geography.  North Carolina is too small.  The Antarctic Peninsula is too small.  The US is really too small but I will accept it because the US temperature data is some of the most complete in the world.  But don't send me a limited geography when the same data is available for a larger geography (ie only hurricanes in the Indian Ocean when we have hurricane data for the whole globe).
  • It needs to be for as long of a time period as possible, and if you cut off early or late data there has to be a reason.  large changes in measurement approach can be a valid reason for leaving out data -- for example, small tornadoes before the advent of doppler radar and moder tornado tracking are likely undercounted.  Ditto hurricanes.
  • It can't be based on a model.  It has to be actual readings, not model estimates.  Have a care on this -- many pieces of historical data that are presented as actual measurements are actually model results.
  • It needs to be a weather or climate metric.  If you want, you can send me potentially derivative variables and I might present these in another section, but they tend to be suspect because the causality extends beyond climate.  An example of this is forest fire acreage burned, which can relate to climate but also can relate to forest management, forest health and insect threats, and firefighting philosophy as well.  Other similar metrics include crop yields, disease rates, refugees, wars, and a zillion other things that get attributed in some study to climate change.

Anything that passes these rules will get posted, though I reserve the right to comment.

Update:  Comments section is OK, but email is better.  Click the contact link up at the top.

This is The Resistance's Real Failure (Assuming They Want to Make Progress on Their Issues, and Not Just Score Political Points)

From even before day 1 of the Trump Administration, the "resistance" has proclaimed that Trump is an illegitimate President and anyone who even has civil discourse with him will be othered and humiliated.

Readers know that I find Trump and his style to be distasteful, and believe he is dead wrong on immigration and trade, but the irony of the Resistance's position is:

  1. I am not sure there ever has been a President more open to a deal (at least on issues outside of his hot buttons like immigration and trade).  If one approaches him to bargain, he will bargain.  If one instead challenges his manhood, he is going to dig in his heels and likely childishly harden his position against whatever you support.
  2. There are very few things that Trump seems to have a hard-and-fast ideological position on, which tells me he is likely to act pragmatically (or in the case where he is resisted, vindictively).
  3. There is zero evidence that he is anything but a liberal on social issues  (OK, yes, he has been crass and offensive with women, but many other prominent social liberals have done the same thing).  I have gay friends who were horrified at his election, but I still don't see any evidence Trump has a problem with gay people. Prominent gay rights groups should go to the White House and could make some real progress (and then maybe create a Kickstarter campaign to help beef up Trump's Secret Service protection because Pence could be a real problem on gay rights issues if President).

I have said all this for a while but am reminded of it from this story by Jacob Sullum entitled, "Kanye’s real success: Trump now backs criminal justice reform"

Kanye West’s literal embrace of President Trump was all over the news last week. The president’s rhetorical embrace of criminal justice reform got considerably less attention, but may prove more consequential.

In an interview with Fox News on the morning of his meeting with the rap impresario, Trump signaled that he was ready to go beyond “back-end” reform, which focuses on rehabilitation of inmates, and support “front-end” reform, which focuses on reducing sentences and sending fewer people to prison.

The key to understanding Trump’s remarks is Alice Marie Johnson, whose sentence the president commuted in June at the behest of West’s wife, Kim Kardashian.

If Feel Like I Called The Elon Musk - Popular Mechanics Love Fest

In my extended article the other day about Tesla I wrote of Elon Musk

Elon Musk is not the smartest guy in the world.  He is clearly a genius at marketing and brand building.  He has a creative mind -- I have said before he would have been fabulous at coming up with each issue's cover story for Popular Mechanics.  A mile-long freight blimp!  Trains that run in underground vacuum tubes!  A colony on Mars!  But he suffers, I think, from the same lack of self-awareness many people develop when they are expert or successful in one thing -- they assume they will automatically be equally as brilliant and successful in other things.  Musk creates fanciful ideas that are exciting and might work technically, but will never ever pencil out as profitable business (e.g. Boring company, Hyperloop).

Seriously, go back and look at old popular mechanics covers.  Here is one in my domain:

The magazine specialized in really cool ideas that 14-year-old geeky boys like me ate up in the 1970s.  But most of them share in common with Elon Musk's ideas that they will never be practical.  So it is not surprising that Popular Mechanics put out an absolute puff issue on Elon Musk, apparently aimed at helping the man Popular Mechanics loves rehabilitate his reputation after getting some bad press for making false promises and breaking securities laws.   The piece was such a hopeless PR piece masquerading as journalism that the Atlantic felt the need to call them out for it.

Other readers, particularly journalists, were flabbergasted, including several Popular Mechanics staffers and contributors who declined to speak on the record because they feared jeopardizing their jobs. “It’s not the job of a magazine to do some PR recovery efforts for somebody exhibiting unstable behavior just because you like that he makes cool cars and rockets,” one Popular Mechanics writer said. (Disclosure: I worked at Popular Mechanics as a web intern for about a month in 2012.) For many journalists, the essay collection was a love letter bursting with unbridled, unfiltered admiration for Musk, a public figure the magazine covers, regularly and objectively. The material reads as if it came straight from the public-relations managers whose jobs are to make their boss look good.

In response to criticism the Popular Mechanics editor said:

D’Agostino said he decided to do the project after reading a slew of negative press of Musk and his properties, and, as he put it in the final collection, “myopic and small-brained” criticism. He cited as examples news coverage of the misleading tweet about Tesla, the ensuing SEC debacle, Musk’s weed experience on Joe Rogan’s podcast, and the entrepreneur’s relationship with the singer Grimes....

Musk, he said, is a good representative for the Popular Mechanics ethos. “It’s always been a magazine about what’s possible and the people who sort of tinker with things and solve problems with the aim and goal of improving human life and existence, and using technology to make things better,” he said. “When you look at someone like Elon Musk, we kind of think of him as one of us. He’s doing something very Popular Mechanics—you don’t know if it’s going to work, but he tries these things and gives it his all.”

I am perfectly willing to acknowledge Musk's good points, as I did in my long essay linked above, but in my opinion Musk is leading a lot of very naive investors over a cliff.  Go read the Tesla fan boards and the $tsla tag at twitter and you will see a series of investors who have never bought a stock before talking about how they put all their savings into Tesla.  Ugh.  Magazines like Popular Mechanics have some responsibility not to shamelessly tout a high-risk stock to naive investors.

For those who don't want to read my whole essay, the biggest problem at Tesla is that Musk has promised a lot of things, all of which take capital which it is increasingly clear Tesla does not have.  The promised Semi, pickup truck, coupe, solar shingle, China expansion, EU sales of the model 3, expansion of the sales and service network, bringing body shops in house, implementation of full self-driving -- not to mention repaying a growing accounts payable backlog and over a billion dollars in debt coming due in the next 6 months -- all will require billions of capital and Tesla is hitting bottom.  Musk claims he will be able to fund this with organic cash production but this almost has to be an outright lie.  He needs to raise equity, but has not done so when his stock was at all-time highs.  Now that he is in trouble with the SEC, rumors swirl that he may not be able to raise new capital.  If he cannot, Tesla will be bankrupt in 6 months or less.  Tesla might survive if it can find a white knight (though many of the obvious candidates have turned him down) but this is a lot of risk for noob investors to take on and a lot of risk to simply IGNORE in a Popular Mechanics puff piece.

Postscript:

By the way, is the balance problem on Elon Musk coverage really a dirth of hagiography? This is the man the press explicitly calls the real life Tony Stark.  If anything, he needs that guy referred to in the final seconds of the movie Patton, the person who rides with the Roman general during his Triumph and whispers in his ear that all glory is fleeting.  I have no problem talking about the wonderful things Musk has helped push forward (and I do) but good God aren't you obligated to also include stuff like this, out of his own mouth?

You can click on the tweet and see my whole response, but eschewing 3rd party dealers and having its own sales and service network has been a Musk strategic pillar for 8 years.  The production ramp for the Model 3 is years behind.  And the CEO just looked at the map and realized they did not have enough service locations even for their less-than-expected sales?  This may be a great idea man and visionary and man who can get great efforts started, but this is not the tweet of a great, or even a good, CEO.

Bleg: A Reliable LED Christmas Light String for All-Year Outdoor Wrapping of a Tree

The subject says it all.  I have wrapped this damn ironwood tree twice and both times the lighting has not lasted.  Since a lot of lighting is designed for holiday use of 3 weeks a year, even something designed for 5 years of life dies in 4 months of continuous use.  For those who do not know, an Arizona native ironwood is gorgeous, one of the most sculptural trees I know of, but it is covered over every single surface with the sharpest thorns imaginable.  I lose a pint of blood every time I wrap this sucker so I want this to be the last time.

More Entrepreneurship Would Help Progressive Causes, But Progressives Do Not Understand It At All

Last week I was walking through one of our area's  large upscale resorts.  The resort was hosting what looked like a huge conference of a large franchising organization.  What struck me immediately in the lobby and everywhere on the grounds was how many people of color were there -- it might have been as many as half.  And the crowd was WAY more than half women.  I don't want to argue right now about buying a franchise as a path to entrepreneurship -- there are pros and cons.  But it really helped reinforce something I always suspected -- that entrepreneurship is a particularly important path of self-improvement for women and people of color.

These all sound like worth progressive goals, and in fact many progressive profess to support entrepreneurship.  Here is a screen shot from Beto O'Rourke's web site a loyal reader sent me:

Amazing.  We are going to promote entrepreneurship by showering the economy with regulations (1000 new bills a year in progressive CA) and making sure many of the returns from an entrepreneurs' money and effort go to other people.**  This is like saying we really want to promote the growth of the rabbit population and we are going to do it by putting out lots of rabbit traps and making sure all the carrots the rabbits are eating are given to others.

** By the way, perhaps the #1 great progressive misunderstanding is that without one single government intervention, the vast majority of the entrepreneur's efforts go to others.  Employees will earn far more in total than will the entrepreneur herself, and  consumers will be left with far more value from the products and services they buy than the entrepreneur ever got back in profit.  Steve Jobs created far more wealth and well-being for the rest of us than he did for himself.

OMG: NYT Discovers President's Son-In-Law Using Tax Deductions That ... Every Single Entrepreneur I Know, Including Me, Uses

This New York Times article here could have been a perfectly reasonable thought piece on the (perhaps unintended) effects of several provisions in the tax code.  But in an institutional desire to land a few more blows on Trump, they tried to morph it into a hit piece on Jared Kushner --"Jared Kushner Paid No Federal Income Tax for Years" screams the headline.

Look NYT:  I find Trump distasteful as well.  But you only embarrass yourself presenting as some kind of investigative bombshell that Jared Kushner used perfectly legal deductions to minimize his tax bill.

I recommend this ZeroHedge summary to you as a quick way to get to the meat of the Times article.  As they summarize it, the Kushner tax "maneuver" consists of:

tep 1: The Purchase

Kushner Companies buys a property. The majority of the money for the purchase comes in the form of mortgages and personal loans from banks.

Step 2: The Write-Off

Under the federal tax code, real estate investors can write off the purchase price of the building — excluding the cost of the land — over a period of decades. Although Kushner Companies has spent little or no cash of its own, the firm takes large annual deductions based on the theoretical depreciation of the building.

Step 3: The Loss

The property generates cash for the Kushners. But any earnings, which would be subject to the federal income tax, are swamped by the amount that the company is taking in write-offs for depreciation. The result is that Kushner Companies records a net loss for tax purposes.

Step 4: The Investors

The company passes on that loss to its owners, including Mr. Kushner and his father, Charles.

Step 5: The Offset

The loss can be used to offset the Kushners’ income in the year it is recorded, and it can be carried forward to cancel out future income or to get refunds for taxes they paid in previous years.

Step 6: The Deferral

When Kushner Companies sells a property, it can use the proceeds to finance a new acquisition. If done within the right time frame, the company can indefinitely defer any capital-gains taxes it might owe on the sale of the original property.

So here is my confession.  I did the exact same thing just last year on my taxes.  Take one example:  One of my businesses bought and installed $350,000 of equipment.  I financed 100% of this purchase.  The article says that Kushner depreciated his real estate purchases over decades but the tax code's accelerated depreciation provisions allowed me to depreciate this purchase 100% in the first year.  So I had an immediately $350,000 loss that I netted against other income, grealy reducing my taxes on that income.  In fact, I don't think I was able to use it all due to various tax rules and I carried over a part of it to cover 2018 taxes or beyond.

One could argue about whether the accelerated depreciation provision I took advantage of is too generous, but the tax code is always going to allow depreciation against some formula (or else every business would be substituting crazy rental schemes for capital investment).

Let's take each step from above

  1. The Times wants to make a big deal that somehow the fact that he is using borrowed money to buy assets is a factor in this, but why?  They imply a couple of times that all the debt reduces his ownership, but that is not true.  He still owns 100% of the asset (with the proviso the bank has a lien that is only meaningful in case of default.  His equity is only a fraction of the purchase price, but that is a different thing and says nothing about his ownership
  2. The depreciation provisions are pretty standards as described across all businesses, except to say that they are less generous than the ones I get buying equipment.  Again they seem to think that somehow the fact that he borrowed most of the money is relevant to this -"Mr. Kushner is getting tax-reducing losses for spending someone else’s money" -- but his financing strategy is not the least relevant.  He took on a costly and risky long-term obligation when he borrowed the money.  Is the NYT arguing for requiring cash accounting for taxes??  This is just embarrassingly ignorant.
  3. This is entirely normal
  4. This is entirely normal for s-corporations and LLC's.  These were promoted for small business, and they are fabulous tools for entrepreneurs, but you have to provide these legal tools to all people, even to rich people in families you don't like.
  5. This is entirely normal.  Any other rule would be grossly unfair and a kick in the nuts for entrepreneurs.  I often spend money this year that generates revenues next year.  The tax code recognizes this and agrees that the losses I took this year can be netted against the revenues next year that they helped to facilitate.
  6. This is the only thing that is mildly unique to real estate and his business.  I don't really get the same rights with any of my assets, though my assets mostly depreciate rather than increase in value.  I won't pass judgement on this one, but I suspect that it has a lot of support (homeowners get it, for example, as do owners of second homes).

Nowhere is there even a suggestion of how the tax code might be altered to fix those things the NYT does not like about it.  I would suggest that any step that would alter any of the 6 steps above would be opposed even in a Democratic Congress.  This all reminds me of a piece a few years ago arguing that oil companies got a lot more subsidies than renewables like wind and solar.  Checking it out, the vast, vast majority of the subsidies were ... LIFO inventory accounting and depreciation, both tax rules that are 1) merely about timing of taxes and not total paid and 2) apply to all manufacturing businesses in all industries.

Humans Saved Again By Our Opposable Thumbs

From a fascinating article on Amazon and its automation vision:

After a customer places an order, a robot carrying the desired item scoots over to a worker, who reads on a screen what item to pick and what cubby it’s located in, scans a bar code and places the item in a bright-yellow bin that travels by conveyor belt to a packing station. AI suggests an appropriate box size; a worker places the item in the box, which a robot tapes shut and, after applying a shipping label, sends on its way. Humans are needed mostly for grasping and placing, tasks that robots haven’t mastered yet.

Amazon’s robots signal a sea change in how the things we buy will be aggregated, stored and delivered. The company requires one minute of human labor to get a package onto a truck, but that number is headed to zero. Autonomous warehouses will merge with autonomous manufacturing and delivery to form a fully automated supply chain.

I got some cr*p on twitter a while back about writing this, but I think it is pretty much vindicated by the "one minute" factoid above:

Amazon likely is being pressured by the tightening labor market to raise wages anyway.  But its call for a general $15 minimum wage is strategically brilliant.  The largest employers of labor below $15 are Amazon's retail competitors.  If Amazon is successful in getting a $15 minimum wage passed, all retailers will see their costs rise but Amazon's competition will be hit much harder.