Archive for July 2006

Answer: Wealth

From the NY Times:

People of Valentin Keller's era [mid 19th century], like those before and after them,
expected to develop chronic diseases by their 40's or 50's. Keller's
descendants had lung problems, they had heart problems, they had liver
problems. They died in their 50's or 60's.

Now, though, life has changed. The family's baby boomers are reaching middle age and beyond and are doing fine.

"I feel good," says Keller's great-great-great-grandson Craig Keller.
At 45, Mr. Keller says he has no health problems, nor does his
45-year-old wife, Sandy.

The Keller family illustrates what may
prove to be one of the most striking shifts in human existence "” a
change from small, relatively weak and sickly people to humans who are
so big and robust that their ancestors seem almost unrecognizable.

Scientists are looking for the explanation of a generation of humans so much stronger and healthier than those who preceded them.  Hypotheses seem to center on pre-natal maternal health and early life nutrition.  But I can give the bigger picture answer:  wealth.  Not Bill Gates wealth, but the generally enormous increase in wealth, even among the poorest Americans.  I discussed this issue along with other related ones in this article on wealth creation.  And this cartoon seems relevant.  Also makes you wonder about whether the obsession with obesity nowadays makes much sense.

The biggest surprise emerging from the new studies is that many chronic ailments like heart disease,
lung disease and arthritis are occurring an average of 10 to 25 years
later than they used to. There is also less disability among older
people today, according to a federal study that directly measures it.
And that is not just because medical treatments like cataract surgery
keep people functioning. Human bodies are simply not breaking down the
way they did before.

Even the human mind seems improved. The
average I.Q. has been increasing for decades, and at least one study
found that a person's chances of having dementia in old age appeared to
have fallen in recent years....

People
even look different today. American men, for example, are nearly three
inches taller than they were 100 years ago and about 50 pounds heavier.

A nice perspective to maintain during modern media-fed health panics.

Update:  Brian Doherty makes a similar observation.

World's Largest Banana Republic

Unfortunately, it is behind the WSJ paid firewall and not on their opinion journal site, but Gary Kasparov has a very interesting editorial that confirms my fears about Russia:

Russia may not have much industry or democracy left, but we do have
massive amounts of oil and gas plus other natural resources. When
combined with our nuclear weapons, these resources are sufficient to
buy entry into the G-8 despite Mr. Putin's transformation of Russia
back into a one-party dictatorship. This newfound international sway is
also having serious repercussions inside my country. Many here would
like to believe that Mr. Putin is ushering in a return to our Soviet
superpower glory

He tells some pretty amazing tales of self-dealing by government officials on a massive scale. 

In perhaps the best example, the giant energy company Yukos was
dismembered and its chairman jailed. Next, Yukos assets were put up for
auction and the crown jewel, oil unit Yuganskneftegaz, was purchased at
a bargain price by the state-owned company Rosneft, which received
billions in mysterious loans. On July 14, Rosneft had an IPO in London
to sell these stolen assets and, of course, the money didn't go into
the treasury. This isn't nationalization, it's simple robbery. In
Russia the expenses are nationalized and the revenues are privatized.

That last line is a great one.  I for one have scratched my head at why Bush as consistently given Putin a pass.  My only guess is that he has prioritized his war with Muslim fundamentalism so high that he needs Putin as a potential ally in the area, though Kasparov presents evidence that Putin is likely exactly the opposite.  He concludes:

The West is making a terrible mistake by mixing realpolitik with a
battle of values. Drawing and defending moral lines is the first and
most essential step in combating extremism and there is no room for
double standards. If the West is keeping track of its friends, it's
time to take Mr. Putin off the list.

Photography Bleg

I am only a novice photographer, but am trying to get better results than I used to with just a compact digital camera.  I am using a Nikon D50, in this case with a 18-55 zoom lens and a UV filter.  I am shooting at maximum res. and quality because I have a big memory card so what the heck.

This is the kind of shot that is frustrating the heck out of me.  This was taken in the afternoon down the beach from the Torry Pines glider port.  The problem is that the subject on this day looked gorgeous through the viewfinder, but the pictures are coming out looking much hazier than I remember it being.  Is this a filter issue, a settings issue?  Or is it just normal under certain light conditions?  And is there anything in post-processing (e.g. photoshop) that I can do to get rid of some of the haziness?  On the latter note, I played around with contrast and color saturation but couldn't get anything that looked natural.  [click on thumbnail below to see larger version]

Torrypines

Update:  I played around with this link in the comments, and got this, which is OK but I introduced some noise, but with some practice I got better.

Test_beach

After practicing, I tried it with my photos out the window of the London Eye and saw a great improvement, with before and after below:

BeforeAfter

Nothing substitutes, of course, for taking the right picture with the right initial settings at the right time of day, something I need a lot of practice on.

On the upside, I took some closeups of flowers that just looked gorgeous:

Flower

Bathroom Liability?

I was in the Peoples Republic of Santa Monica this weekend.  Yes, I'm glad I don't have to live there (but I paid $50 per night in hotel taxes -- wow!) but the beach is gorgeous and the weather usually good.  We were shopping down the 3rd Avenue outdoor mall and were in a fairly large (3 story) Borders Books store when we found there was no bathrooms for customers.  The manager told us that it was for liability reasons.

Liability?  Has it really gotten this bad, or is this just becoming the convenient excuse nowadays when any public service is not offered?  I did a search and found that Santa Monica is ruthless in going after ADA access issues, so my guess is that they could not bring their bathroom into compliance in this older building for the 0.1% of customers who were handicapped so they closed it for the other 99.9%.  My other guess is that it might have something to do with the huge homeless population in Santa Monica, perhaps with them having trouble barring access to them (the public restroom we finally found had a homeless man camped out in it).

Climate Web Site

A couple of days ago I expressed frustration at finding a source for even-handed analysis of climate issues.  As someone who accepts more warming than zero but less than Al Gore espouses, I'd like to find a source of climate analysis that I could count on to look at all sides of the issue.  Recently the Prometheus web site was recommended to me.  I am still reviewing it, but you might want to check it out.

By the way, coming soon is the climate cage match to be held by the US House of Representatives.

Asking for Conservation

Have you ever heard of government authorities making public statements around Valentine's Day to please conserve on roses since we are entering our peak demand season for them and rolling shortages could ensue?  No?  Never?  Well, the demand spike for roses on Valentines is much more dramatic than the demand spike for power on a hot summer day.  So why no urgent government messages for conservation of the former but constant ones for the latter?

Because the rose market is not heavily regulated.  Producers are free to manage their capacity without government interference, and, perhaps more importantly, producers are free to charge peak pricing in high demand periods.  In fact, prices for roses on Valentines go for a multiple of everyday pricing that a similar differential in a peak supply period at, say, a gas station would likely get the proprietor arrested for price gouging.  But we recognize that its tough to manage a business to supply all its capacity in one day of the year, and accept the higher pricing.  Why is it we can't accept the same facts of life in electrical generation, where capacity is orders of magnitude more expensive to manage than rose growing?

More from Llewellyn Rockwell at the Mises Blog and Lynn Kiesling at the Knowledge Problem

AZ and Small Government

One of the good things about living in AZ is that it is the home of several of the unfortunately dwindling number of Republicans who consistently cast votes for lower taxes and smaller government. 

Recently Arizona Congressman Jeff Flake, who I have given props to in a number of columns on this blog, sponsored a series of 19 bills aimed at cleaning up the appropriations process and making it harder for Congress to slip earmarks through the appropriations process, at least without having gone explicitly on the record as having done so. 

The Club for Growth has a scorecard of how each Congressman voted on these bills.  In each case, a 'YES' vote is a vote against pork and a vote to clean up the Congressional appropriations process. 

My Congressman, John Shadegg, who is another reliable small government low tax voter, came through with 19 of 19 'Yes' votes.  Way to go Congressman!

A Final Note on "Don't Know Much About History"

In an earlier post, I observed that my audio CD of the bestselling book "Don't Know Much About History" struck me as extremely odd, focusing on only the lowest points in American history.  I can report after finishing the CD that it stayed on this path to the end.  After the Cuban Missile Crisis we had conspiracy theories of JFKs death, then the Mai Lai massacre, then Watergate, then Iran Contra, then Monica Lewinsky.  Yes, the last 40 years were summed up in total as Mai Lai - Watergate - Iran Contra - Lewinsky and essentially nothing else.  Wow, what a view of history!  As a libertarian, I am happy to showcase the foibles of government, but this seems like a crazy loss of perspective even to me.

In addition, bits of the history were just terrible.  For example, he said that the Puritans who came to America were much like a cult today and treated as such.  That is a lame simplification of history.  Sure, one can argue that today's religions were yesterday's cults, but it is silly to say that the Puritans were treated poorly in England for the same reasons a cult might be today.  This completely ignores the whole reality of having a state religion in England at the time of the Puritans.  A state religion trying to purge itself of dissent is a really different dynamic than a modern cult getting shunned by mainstream society  (except perhaps when Janet Reno controls some tanks).  This distinction is also important because avoiding state religions is an important foundation block of our government, and its prohibition is buried in that arcane and little discussed thing called, uh, the First Amendment. 

It's clear the author is not a big fan of capitalism, and I would generally not even comment on such a thing because it is so common in academia.  I managed to mostly ignore numerous off-the-cuff quips he makes about evil corporations and greed and the assumption that any action by a rich person had to be out of a desire to repress the masses rather than from principle.  However, his bias creates some really bad history in at least one instance.  In discussing Hoover and the depression, he really lays into Hoover for how block-headed and absurd Hoover was for not initiating massive government welfare programs earlier in his administration.  I mean, he absolutely hammers Hoover for being a total cretin, and the author laughs at various Laissez-Faire speeches by HH. 

But this is a stunning loss of context for a historian.  While government handouts to people who are out of work may seem a no-brainer today, it was absolutely unprecedented at the time.  It had never been done.  And, nowhere in the Constitution, whose 10th Amendment specifically says that Congress only has the specific powers enumerated in the Constitution, does it say Congress has the power to tax one person and give the proceeds as a handout to another to relieve economic distress.  In fact, it was enough of a Constitutional question mark that the Supreme Court would later rule unconstitutional most of FDR's new deal, at least until FDR could repack the Court with his guys.  HH had good reason, beyond just his principles, to believe that he would be breaking the law and violating the Constitution to do as the author suggests.  But nothing of this context is mentioned.  The author only portrays Hoover as an idiot for not being interventionist enough. 

In fact, the author leaves out a point I would tend to make first -- that the Depression would have been much better off if Hoover had in fact been truly Laissez Faire.  Unfortunately, his tightening of money supply in the face of a depression and liquidity crisis via the relatively new Federal Reserve, his acquiescence to the Hawley Smoot tariffs, and his tax increases to close the budget deficit all contributed far more to sending the train off the rails than any intervention could have ameliorated.

This is Sick - Dukakis Advocates Jobs Go To White People First

Many of you will know that a big impetus for the original minimum wage laws in this country were a racist effort by unions (almost exclusively made up of white workers at the time) to protect white jobs from competition by low-skilled blacks.  [note:  This is not the only impetus, however.  Many of the original minimum wage supporters were not racist at all.  However, a large number of the original supporters of the legislation liked it in part because it was seen as sheltering higher skilled white workers from black competition, particularly in northern states experiencing substantial migration of black workers from the deep south]

This week, in the New York Times of all places, Michael Dukakis and Daniel Mitchell return to these same racist roots to justify a substantial hike in the minimum wage.  Their logic is that it will protect white workers from competition from immigrant (read: Mexican) labor:

But if we want to reduce illegal immigration, it makes sense to reduce the
abundance of extremely low-paying jobs that fuels it. If we raise the minimum
wage, it's possible some low-end jobs may be lost; but more Americans would also
be willing to work in such jobs, thereby denying them to people who aren't
supposed to be here in the first place

By the way, note that we finally have prominent liberal voices who will acknowledge that raising the minimum wage reduces the number of jobs.  Also note that while the authors try to narrow their focus to illegal immigrants, no such narrowing of effect would occur in real life:  All low skilled people, legal or illegal in their immigration status, would lose jobs.  But for the authors this is OK as long as more brown people than white people lose their jobs.  I mean really, that's what they are saying:  We like this law because it will preferentially put low-skill people, particularly brown people, out of work.  If Rush Limbaugh had said the same thing, there would be a freaking firestorm, but there's the good old NYT lending their editorial page to this sick stuff.  Marginal Revolution has more comments along the same lines.

I am sick of the condescension and arrogance that comes with statements like theirs that Americans won't work for the minimum wage.  That's ridiculous, because many do, and have good reason to.

Take my company.  A number of my workers are paid minimum wage. Am I the great Satan? Why do my employees accept it?  Because 99% of my workers are over the age of 70 -- they work slower and are less productive, but I like them because they are reliable.  There's no way anyone is going to pay them $15 an hour to run a campground -- for that price, someone younger and faster will be hired, but at or near minimum wage they are great.  And they are generally happy to start at minimum wage (plus a place to park their RV for the summer).  In fact, I have more discussions with employees trying to get paid less (conflicts with social security and retirement benefits and disability payments) than I have people asking for more. 

Granted, my situation is fairly unique.  But Michael Dukakis in his infinite wisdom thinks no one under any circumstances should be allowed to accept less than $8 an hour for his labor.  What does he know about campgrounds or my employees?  Nothing, but he is going to try to override my and my employees' decision-making if he can.  Because he knows better. 

Maybe Mr. Dukakis can write a note to all my older, slower employees after the new minimum wage passes and explain to them why they should be happier without a job camp-hosting (which most of them love to do, probably more than you like your job) than having to accept a wage that Mr. Dukakis thinks to be too low. 

Continue reading ‘This is Sick - Dukakis Advocates Jobs Go To White People First’ »

Don't Know Much Good About America

One of the ways I like to pass the time on long drives (we went to San Diego this week with the kids) is to listen to audio books in the car.  For this trip, my wife picked out Kenneth Davis's Don't know much About History.  This particular version had been edited down to a quick 3-1/2 hours.

Its of course impossible to edit American history down to this short of a time, but we thought it might be enjoyable for the kids.  Also, I am used to the general "America sucks and its heros suck too" tone of most modern revisionist history, so I was kind of prepared for what I was going to get from a modern academician.   But my God, the whole history of this country had been edited down to only the bad stuff.  Columbus as a source of genocide -- the pettiness of American grievances in the revolution -- the notion that all the ideals of the Revolution were so much intellectual cover for rich men getting over on the masses -- the alien and sedition acts -- slavery -- massacre of Indians and trail of tears -- more slavery -- civil war -- mistreatment of the South after the war by the North -- more massacre of Indians -- Brown vs. board of education -- the great depression as the great failure of laissez faire economics -- did Roosevelt know about Pearl Harbor in advance -- McCarthyism -- racism and civil rights movement.   All of this with numerous snide remarks about evil corporations and rich people and the never-ending hosing of the poor and women/blacks/Indians (often in contexts entirely unrelated to what he is talking about, such that the remark is entirely gratuitous).

That's as far as we have gotten so far, but I am really giving you a pretty honest outline of the segments.   I have zero problem admitting that America's treatment of its native populations was shameful and worth some modern soul-searching.  Ditto slavery.  But to focus solely on this litany, with nothing about the rising tide of standard of living for even the poorest, of increasing health and longevity, of the intelligent ways we managed expansion (like the homestead act), of having the wealth and power to defeat fascism and later communism in the 20th century when no one else could do it.  Of creating, in fits and starts and with many long-delayed milestones, the freest country in the world.  Of a history where every other democratic revolution of the 18th and 19th century failed and fell into chaos and dictatorship but this one succeeded.  He begins the book by saying that he is bravely going to bust all the myths we have grown up with, but in essence helps to reinforce the #1 myth of our era:  That America is a bad actor on the world stage and less moral than the countries around us.

Which of course, is insane.  And remember, I am the first one to criticize our government over any number of issues, but the moral relativism that academics apply to America represents a shameless lack of correct context.  To borrow from a famous saying, I am willing to admit that America has the most shameful history, except for that of every other country in the world.

Postscript:
I don't even deny that a book with the premise that "schools and media often gloss over the bad stuff, so I want to let you know that America has a dark side too" would be a perfectly viable project.  However, this book represents itself as a general history text, and does not claim this particular mission as its context.  By the way, I am not sure what country he is living in if he thinks this stuff is not taught in schools.  My kids' schools totally wallow on all the bad stuff - the racism, the environmental problems, etc.  I would be willing to bet more graduates of public schools today could answer "Maintenance of slavery" to the question "what was the biggest failure of the Constitution" than they could answer the question "Why did the US Constitution succeed when so many other democratic revolutions failed?"  The latter is a much more interesting question.  Of course, in this audio book, predictably, Mr. Davis addresses the former in great depth and never even hints at the latter.

Special Minimum Wage for Big-Box Retailers

Chicago has become the latest city to try to impose special wage requirements solely on one sector of one industry, ie on big-box retailers like Wal-mart.  One wonders how anyone can bend the notion of "equal protection" to support this kind of hash, but rather than again refuting this silliness for about the 89th time on this blog, I will leave it to Cafe Hayek and Russel Roberts.  I particularly liked the way he rewrote the story for the Chicago papers:

Imagine a different world. A world where the City Council was blamed for the
failure of Wal-Mart and Target to pay a decent wage. Here's how the story might
read:

After years of disastrous decisions in running the public
schools, it has become clear that Chicago's City Council has failed the children
of the Chicago area. After attending these mediocre schools, many children of
the city have inadequate skills to be successful in the labor
market.

"Something must be done," declared Ald. Johnson. "If we had
decent schools, we wouldn't have this problem and people could live on the money
they made."

Johnson has proposed a bill that would require all Chicago
City Council members and teachers and administrators in the Chicago school
system to pay a special tax. The proceeds of the tax would help provide workers
in the member's district with a living wage.

A Skeptics Primer for "An Inconvenient Truth"

Update:  Please enjoy this post; however, I have published a (free) more comprehensive guide to the skeptics arguments concerning man-made global warming.  You can find the HTML version here and a free pdf download here.

A few days ago, my wife announced to me that she wanted me to take her to
"An Inconvenient Truth", the recent movie vehicle for communicating
Al Gore's views on climate change.  I told my wife that I found the
climate issue incredibly interesting -- I have always had a passion for
inter-disciplinary science and climate requires integration of bits not just
from climate science but from economics, statistics, biology, and more.  I
told her I would love to see a true documentary on climate change, but I was as
interested in seeing a "science" film from the group that put this movie
together as I presume she was in seeing a "even-handed" movie on
abortion produced by the Catholic Church.

Never-the-less, she has insisted, so I put together a skeptic's primer for
her, which I will also share with you.  Note that I am not actively involved in climate research myself, so the following is my admittedly incomplete understanding of all the issues.  It is meant to raise issues that you may not find discussed in most global warming accounts.

Overview:  The earth has warmed by 2/3 of a degree to as much as a degree (all temperatures in Celsius)
over the last 100 years, of which man may be responsible for no more than half
through CO2 emissions.  The poles, which are important to all the global
deluge scare scenarios, have warmed less than the average.  Man's CO2
emissions will warm the earth another degree or so over the next 100
years.  There is a possibility the warming will be greater than this, but
scary-large warming numbers that are typical of most climate reports today
depend on positive feedback loops in the climate that are theoretical and whose
effect has not yet been observed.  The effects of warming will be a mix of
positive and negative outcomes, recognizing that the former never seem to get
discussed in various media scare stories.  If the effects of warming are a
net negative on mankind, it is not clear that this negative outweighs the costs
in terms of lost economic growth (and the poverty, disease, and misery that
comes with lower growth) of avoiding the warming.  In other words, I
suspect a warmer but richer world may be better than a cooler but poorer world.

The Hockey Stick:  The Hockey Stick graph as become the emblem,
the sort of coat-of-arms, for the climate change intelligentsia.  Until
recently, the climate consensus for the last 1000 years, taken from reams of
historical records (things like the history of X river freezing in winter or Y
region having droughts) was this:

1000yearold

This chart is from the 1990 IPCC climate report, and in it you can see
features that both historians and scientists have discussed for years -- the
warm period during the Middle Ages and the "little ice age" of the
late 17th century.  Of course, this chart is barely better than a guess,
as are most all historical climate surveys.  For example, 3/4 of the earth
is water (where few consistent observations were taken) and only a small percentage of the rest was "civilized" to
the extent of having any historical records.  In addition to historical
records, scientists try to use things like ice cores and tree rings to get a
sense of long-term global climate patterns.

This long-held consensus changed with Mann, et. al., a study that created a new climate
picture for the last millennia that has immediately caught the fancy of nearly
every advocate of climate Armageddon.

1000yearold

For obvious reasons, this graph is called "the hockey stick" and
it is beloved by the global warming crowd because it hammers home the following
message:  Climate has been incredibly steady over the past 900 years with a flat to declining temperature trend until
man came along and caused a dramatic shift.  Based on this analysis, Mann
famously declared that the 1990's were the warmest decade in a millennia and
that 1998 was the hottest year in the last 1000 years.  (For real hubris, check
out this recent USAToday
graphic
, which purports to know the world's temperature within .001 degree
for every year going back two thousand years)

In fact, what Mann's chart shows for the last 100 years is about what I said in my overview - that
the world has warmed a degree and that man maybe has contributed up to half of
this.  Notice that tacked onto the end of the previous consensus view, the
last 100 years seem like it might just be the start of another natural cyclical
climate variation.    Not necesarily a reason for panic.  Ah,
but Mann's chart!  That's a chart that anyone eager to have the government
intervene massively in the economy is bound to love. It says that we are currently entering an unprecedented anomoly, and that the chief suspect for creating this change must be human civilization.

So is Mann right?  Well, a couple of things to note.  First, its
instructive to observe how eagerly the climate community threw out its old
consensus based on years of research in favor of Mann's study.  It's
unusual for a healthy
scientific community
to throw out their old consensus on the basis of one
study, especially when no one had replicated its findings independently.
Which no one has ever been able to do, since Mann has refused to share his
models or methodology details.  In fact, it took a US Congressional subpoena
to get any of his underlying models into the public domain.  This behavior
by a scientist would normally engender ENORMOUS skepticism in the community --
normally, I mean, except for in climate science, where mountaintop revelation without 3rd party repeatability
is OK as long as it supports a dire man-made climate catastrophe model.
In short, climate change advocates wanted the study to be true, because it was such a
powerful image to show the public.

Despite Mann's reticence to allow anyone to check his work, skeptics still
began to emerge.    Take that big temperature bulge in the Middle
Ages shown in the previous concensus view.  This bulge was annoying to climate
interventionists, because it showed that large variations in temperature on a
global scale can be natural and not necessarily the fault of modern man.
But Mann made this whole medieval bulge go away.  How?  Well, one of
the early revelations about Mann's work is that all the data before 1450 or so
comes from studying the tree rings of one single tree.  Yes, that's one tree
(1).  Using the evidence of this one tree, Mann flattened the temperature
over the 500 year period from 1000-1500 and made the Medieval warm period just go poof.  Wow!

The bigger criticism of Mann has come from statisticians.  Two Canadian
statisticians began questioning Mann's methodology, arguing that his
statistical approach was incorrect.  They demonstrated that Mann's
statistical approach was biased towards creating hockey sticks, and they showed
how the Mann model could be applied to random noise and produce a hockey
stick.   The climate change establishment did not take this criticism
well, and tried their hardest to rip these two guys up.  In fact, you might have believed that the two had been molesting little boys or declaring the world is flat rather than just questioning another scientist's statistical methodology. 

Recently, a US Congressional Committee asked a group of independent statisticians led by
Dr. Edward Wegman, Chair of the National Science Foundation's Statistical
Sciences Committee, to evaluate the Mann methodology.  Wegman
et. al. savaged the Mann methodology
as well as the peer review process
within the climate community:

It is important to note the isolation of the paleoclimate community; even
though they rely heavily on statistical methods they do not seem to be
interacting with the statistical community. Additionally, we judge that the
sharing of research materials, data and results was haphazardly and grudgingly
done. In this case we judge that there was too much reliance on peer review,
which was not necessarily independent. Moreover, the work has been sufficiently
politicized that this community can hardly reassess their public positions
without losing credibility. Overall, our committee believes that Dr. Mann's
assessments that the decade of the 1990s was the hottest decade of the
millennium and that 1998 was the hottest year of the millennium cannot be
supported by his analysis.

Further, Wegman concurred on almost every point with the Canadians, coming to the conclusion that the hockey stick was deepfly flawed.  In most other scientific communities, the Mann analysis would have been sent
to the dustbin along with cold fusion and Archbishop James Ussher's dating of
the earth to October 23, 4004 BC.
The problem is that the Mann chart has become too politically important.  Prominent men
like Al Gore have waved it around for years and put it in his books.  No
one in the core of the climate community can back away from the hockey stick
now without the rest of the world asking, rightly, what else is wrong with your
analyses?  If I seem too hard on the climate science community, then
consider this
quote
from National Center for Atmospheric Research (NOAA) climate researcher and global warming action promoter,
Steven Schneider:

We have to offer up scary scenarios, make simplified, dramatic statements,
and make little mention of any doubts we have. Each of us has to decide what
the right balance is between being effective and being honest.

Now you know why, for all its flaws, you will continue to see the hockey
stick in the press.  Because it is not about the facts, but about "scary scenarios" and "dramatic statements".

Has Man Been Causing the Warming?

Yes, some of it.  But its a little more complicated than the global
warming community lets on.   First, note the last 100 years of the
hockey stick.  The big upwards spike begins in 1900, long before any large
man-made concentrations of CO2 were put into the atmosphere.  In fact,
even those most fanatical about assigning maximum blame for climate change to
man don't blame man-made effects for most of the first half of the 20th century
temperature spike. 

Which begs the question, what caused the 1900-1940 spike of about 1/2 a
degree?  Answer:  Nobody really knows.  Which begs the follow-on
question:  If we don't know what caused the 1900-1940 run-up, how do we
know that this same force is not responsible for some of the run-up since
1950?  Answer:  We don't.  As I will explain below, climate
scientists trying to validate their models have reasons for wanting the
post-1950 temperature rise to be all man-made.  But just because they
assume it to be due to man-made rises in atmospheric CO2 concentrations does
not make it so -- correlation does not equal causation.

Well, what else could be causing this increase?  It could at least partially be
natural
cyclical variations in climate that we don't really understand.
Or it could be something more obvious, like, say, the sun was brighter.  I
can imagine your reaction -- no way it could be just a brighter sun,
Coyote.  I mean, that's the first thing the climate scientists would check
if earth temperatures were rising, right?

Irradiance

This chart compiled from data by Judith Lean of the Naval Research Library
and charted from her data at NOAA by Junkscience.com
shows that interestingly, the sun's output does appear to be higher today than they have been in many, perhaps hundreds of years.  Would such increased activity be
expected to result in higher earth temperatures?  I don't know, but if you
think it odd that scientists talk about global warming without mentioning how
hot the sun is, well, welcome to the world of climate science.   Its kind of like scrambling to find out why your room is too hot without first checking to see where the thermostat on the furnace is set.  More
on the sun's variance
and climate change here
.

Future Warming:  The key question, of course, is about future warming - i.e.,
based on man's economic growth and projected output of CO2, how much can the
world be expected to warm, say over the next 50-100 years.  I don't know
what the movie "An Inconvenient Truth" will claim until I see it, but
most recent studies have shown warming from 2-8 degrees (consistent with what is depicted by the
USAToday graphic linked above).

There are lots of issues with these forecasts that occasionally might even get
mentioned in the popular press.  Some issues are unavoidable, like the
inherent complexity and unpredictability of climate.  Some issues probably
could be avoided, like the egregiously bad economic forecasting that drives CO2
output forecasts in many of these models.  I won't delve into these issues
much, except to say that we are dealing with massively complex systems.
If an economist came up with a computer model that he claimed could predict the
market value of every house in the world in the year 2106 within $10,000, would
you believe him?  No, you would say he was nuts -- there is way to
much uncertainty.  Climate, of course, is not the same as housing
prices.  It is in fact, much, much more complex and more difficult to
predict. 

All these forecasts are created by a pretty insular and incestuous climate
science community that seems to compete to see who can come up with the most
dire forecast.  Certainly there are financial incentives to be as aggressive
as possible in forecasting climate change, since funding dollars tend to get
channeled to the most pessimistic.   The global warming community spends
a lot of time with ad hominem attacks on skeptics, usually accusing them of
being in the pay of oil and power companies, but they all know that their own
funding in turn would dry up rapidly if they were to show any bit of skepticism
in their own work.

Leaving aside all the other modeling problems and focus on one fact:
Most climate scientists would agree that if you focus narrowly just on the
effects of CO2 on warming, that even under the most extravagant assumptions of
CO2 production, the world will not warm more than a degree or two in total,
some of which we have already seen.  The reason is that the effect of CO2
concentration on global temperature is logarithmic.  This means that
increasing concentrations of CO2 have diminishing returns on temperature.
For example, if the first doubling of CO2 concentration raises temperatures by
a degree, then the next doubling may only raise it by a tenths of a
degree.  This is because CO2 only absorbs sunlight and energy in certain
frequency bands and this ability to absorb energy gets saturated, much like a
pot of water can only dissolve so much salt before it is saturated.

There is fair amount of argument over just how saturated the CO2 layers are
in terms of energy absorption, but most scientists will agree that at some
point, in isolation, additional CO2 added to the atmosphere by man stops having
any significant effect on global temperature.

So how do we get these dire forecasts of 6, 7, 8 degrees of warming?
Well, I was careful to say the effect of CO2 in isolation maxes
out.  To get to higher levels of warming, scientists posit "positive
feedback loops" that augment the warming effect.  Positive feedback generally means that once a process gets going in a direction, there is some force that will accelerate the process
faster or farther in the same direction.  Negative feedback means that
once a process is moving there is some force that tends to try to slow the process back down.
Positive feedback is a boulder balanced on the top of a mountain, where one
push will cause it to roll down the mountain faster and faster; Negative
feedback is a boulder in a valley, where despite lots of effort, the rock will
keep coming to rest back where it started.

In global warming models, water vapor plays a key role as both a positive and a negative feedback loop to climate change.  Water vapor
is a far more powerful greenhouse gas than CO2.  It comes into play because CO2 driven warming will
put more water vapor in the atmosphere, because greater heat will vaporize more
water.  If this extra vapor shows up as more humid clear air, then this in
turn will cause more warming as the extra water vapor absorbs more energy and
accelerates warming.  However, if this extra water vapor shows up as
clouds, the cloud cover will tend to reflect energy back into space and retard
temperature growth. 

Which will happen?  Well, nobody knows.  And this is just one
example of the many, many feedback loops that scientists are able to posit but
not prove. And climate scientists are coming up
with numerous other positive feedback looks.  As one skeptic put it:

Regardless, climate models are made
interesting by the inclusion of "positive feedbacks" (multiplier
effects) so that a small temperature increment expected from increasing
atmospheric carbon dioxide invokes large increases in water vapor, which seem
to produce exponential rather than logarithmic temperature response in the
models. It appears to have become something of a game to see who can add in the
most creative feedback mechanisms to produce the scariest warming scenarios
from their models but there remains no evidence the planet includes any such
effects or behaves in a similar manner.

So, is it reasonable to assume these feedback loops?  First, none have
really been proven empirically, which does not of course necessarily make them
wrong.  More damning is the fact that models using mostly positive feedback
loops do a terrible job of modeling the last 100 years.  It is a perfectly
reasonable back check on any model to see if it predicts history.   Most of the aggressive climate models (ie the ones that tend to get quoted in the press) turn out to predict a warming for the
last 50 years far above what we have actually observed, which of course might make one
suspicious of their ability to predict the future.  A while back, I said
that climate scientists had a strong incentive to "claim" as much of
the 20th century warming as possible and attribute it to man.  This is
why:  The need to validate models that predict a lot of manmade warming
over the last 50 years that hasn't shown up.  Scientists will tell you
that they have fixed these problems, but we skeptics are fairly certain they have done it by adding artificial
fudge factors of dubious scientific merit  (I will confess to my embarassment that I have done exactly this when I have created industry models for a consulting client).

But one can also answer these questions about positive feedback loops from a
broader perspective.  Positive feedback loops are not unknown in nature
but are much rarer than negative feedback loops.  The reason is that
positive feedback loops lead to runaway processes that we seldom see in
nature.  Atomic fission is one of these thankfully rare process, and one can see that it is
probably lucky our universe is not populated with many such positive feedback
processes.  In our daily lives, we generally deal with negative
feedback:  inertia, wind resistance, friction are all negative feedback
processes.  If one knew nothing else, and had to guess if a natural
process was governed by negative or positive feedback, Occam's razor would say
bet on negative.  So, what about climate?  The evidence is equivocal,
but to be fair there is an example in our near universe of a runaway global
warming event - on Venus - though it occurred for reasons very different than
we are discussing with man-made climate change.

Negatives (and Positives) of Warming: While I have some trouble with
the science employed by global warming activists up to this point, it is on the
topic of the effects of global warming that the science really gets
flaky.  Now, certain effects are fairly likely.  For example,
hurricane activity will likely increase with warmer ocean temperatures.
Warmer ocean temperatures will also cause sea levels to rise, even without ice
melting, due to thermal expansion of the water.  And ice will melt, though
there is a really broad range of forecasts.

One reason that the ice
melting forecasts are hard
is because while me may talk about the world
warming a degree, the world does not warm evenly.  Most climate models
show the most warming on dry winter nights  (Siberian winters, for
example, get a disproportionate share of the warming).  An extra summer
degree in Arizona would suck; an
extra winter degree in Siberia would probably be
welcomed, and would likely extend growing seasons.

And it is here that you get the greatest silence from warming
fanatics.  Because
it should be self-evident that warming can be good and bad
.  Warming
can raise ocean levels and lead to droughts.  It can also extend growing
seasons and increase rain.  It all depends on where you are and what
forecast you are using.  The only common denominator is that most official
warming reports, such as those from the UN, spend an inordinate amount of time
discussing the negatives and very little time, if any, mentioning positive
offsets.  One of the reasons for this is that there is a culture in which
every environmental activist has been steeped in for years -- that man always
ruins nature.  That everything man does is bad.  Growth is bad.
Technology is bad.  To be fair, its not that many environmental scientists
are hiding the positive offsets, it's that they have been programmed for years to be
unable to recognize or acknowledge them.

Shouldn't We Fix it, Just to Be Safe:  If you get beyond the
hard core of near religious believers in the massive warming scenarios, the
average global warming supporter would answer this post by saying:
"Yes there is a lot of uncertainty, but you said it yourself: 
Though the doomsday warming scenarios via positive feedback in the climate
can't be proven, they are so bad that we need to cut back on CO2 production
just to be safe."

This would be a perfectly reasonable approach if cutting back on CO2
production was nearly cost-free.  But it is not.  The burning of
hydrocarbons that create CO2 is an entrenched part of our lives and our economies.
Forty years ago we might have had an easier time of it, as we were on a path to dramatically cut back on CO2 production
via what is still the only viable technology to massively replace fossil fuel
consumption -- nuclear power.  Ironically, it was environmentalists that
shut down this effort, and power industries around the world replaced capacity
that would have gone nuclear mostly with coal, the worst fossil fuel in terms
of CO2 production (per btu of power, Nuclear and hydrogen produce no CO2,
natural gas produces some, gasoline produces more, and coal produces the most).

Just halting CO2 production at current levels (not even rolling it back)
would knock several points off of world economic growth.  Every point of
economic growth you knock off guarantees you that you will get more poverty,
more disease, more early death.  If you could, politically, even
make such a freeze stick, you would lock China and India,
nearly 2 billion people, into continued poverty just when they were about to
escape it.  You would in the process make the world less secure, because
growing wealth is always the best way to maintain peace.  Right now, China can become wealthier from peaceful internal growth than it can from trying to loot
its neighbors.  But in a zero sum world created by a CO2 freeze, countries
like China would have much more incentive to create trouble outside its borders.  This
tradeoff is often referred to as a cooler but poorer world vs. a richer but
warmer world.  Its not at all clear which is better.
 

One final  statement:  I have lost trust in the scientific
community on this.  There are just too many statements floating around like
this one
that make it clear that getting people converted to the global
warming cause is more important than getting the science right.  Mann's
refusal to share his data so that his results can be validated (or invalidated,
as seems more likely now), the refusal
to consider any dissenting views
in its "scientific" conferences,
the sloppy
science
uncovered, the willingness to absurdly blame
every natural event on global warming
  -- all these create the
impression that global warming is a religion with doctrines that can't be
questioned, rather than what it actually is -- a really, really chaotic and complex area
of science we have only just begun to understand.

For other reading, probably the first place to look is the Skeptical Environmentalist by Bjorn
Lomborg
. Lomborg in this book has probably the best counter-case to the
enviro-disaster stories filling the media. He has become an object of absolute
hatred among the anti-growth anti globalization fanatics who have latched onto climate
change as the key to advancing their anti-technology and anti-capitalist
political agenda. The attacks on him have become nearly as edifying about what
drives the environmental movement as his book itself. The Economist has
a nice article about his book and about the wild-eyed furious reaction of
environmental activists to it. The Economist also editorializes
here
, and you can follow all the criticism and response here on Lomborg's site.

The site junkscience.com is
invaluable, in fact with a better compendium of data on climate than most
climate sites.  A good
place to start is this article
.

Other sources: This paper is
a good roundup of all the issues I have addressed. Cato has a lot of other
material here
as does the Heartland
Institute
and at The
Commons.
  A great post from Silflay Hraka that is much more eloquent
(and concise) than I am is linked here.

Update:  I have published a (free) more comprehensive guide to the skeptics
arguments concerning man-made global warming.  You can find the HTML version here and a free pdf download here.

Maintaining the Lawyer Cartel

Frequent readers of this blog will know that this quote from Milton Friedman on licensing is one of my favorites:

The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.

Ilya Somin at Volokh has an interesting post (though right this moment their site seems to be down) about the American Bar Associations (ABA) role in accrediting colleges.

To my mind, the problem goes beyond the shortcomings of specific ABA standards.
The real mistake is allowing an organization with a blatant conflict of interest
to take over the accreditation role in the first place. As an interest group
representing lawyers, the ABA has an obvious stake in limiting entry into the
profession so as to decrease the competition faced by its members. One way of
doing so is by restricting the number of accredited law schools, at least in the
vast majority of states that require all or most aspiring lawyers to attend an
ABA-accredited school in order to take the bar exam.  We would not allow an
organization run by Chrysler, GM, and Ford to set regulatory standards
determining who has the right to sell cars in the United States. Requiring ABA
accreditation for law schools is the exact equivalent in our industry....

To be completely clear, I am NOT arguing that the ABA should be prevented from
certifying schools as meeting what it considers to be appropriate standards. I
am merely suggesting that ABA accreditation should not be required by law as a
prerequisite for allowing a school's graduates to take the bar. If ABA
accreditation really is a sign of school quality, then applicants can take that
into account in making their decisions on what school to attend, just as they
currently consider US News rankings and other data. If some form of legally
mandated accreditation is needed (and I highly doubt that it is), the system
should be run by an independent agency insulated as much as possible from
control by the ABA and other interest groups representing practicing lawyers.
There should be similar insulation, by the way, from influence by established
law schools, since we too have an obvious self-interest in limiting competition
by preventing new entry into the legal education market.

Guilt or Innocence is Irrelevant, I Guess

I thought this article by Robert Johnson (via Instapundit) about the Duke Lacrosse case was interesting in that it highlighted how many people on the Duke campus believed that the actual guilt of innocence of the players involved was irrelevant.

First, there was the Duke administration.  I don't think anyone can doubt at this point that the players' guilt or innocence was irrelevant to the actions of the Duke administration, since they meted out their punishments long before the investigation into the facts of the case had even really begun.  Duke was clearly worried most about its reputation and about protecting itself from lawsuits, a not unreasonable fear given this.

It is the actions of the faculty that are truly amazing.  Johnson shows us the thinking of a number of members of the Duke faculty, known as the group of 88, that came out with public statements about the matter.

[Duke Professor Wahneema Lubiano] was pleased "that the Duke administration is getting the point":
the banging of pots and pans had hammered home that a specific claim to
innocence in this case mattered little. "Regardless of the 'truth'
established in whatever period of time about the incident at the house
on N. Buchanan Blvd.," she mused, "the engine of outcry in this moment
has been fueled by the difficult and mundane reality that pre-existed
this incident." To Lubiano, the "members of the team are almost perfect
offenders in the sense that [critical race theorist Kimberle] Crenshaw
writes about," since they are "the exemplars of the upper end of the
class hierarchy, the politically dominant race and ethnicity, the
dominant gender, the dominant sexuality, and the dominant social group
on campus."

Professor Alex Rosenberg added:

The sole defenders of the lacrosse players in this case, the professor
suggested, are extreme advocates of the economic status quo

Though its not really news nowadays, I guess, the article is a nice reminder that universities tend to have a hard core of faculty that see the world in terms of race, class, and gender rather than individuals and individual action.  Makes you wonder how they go about assigning grades.  In fact, their desire to see the Duke case cast in terms of race and gender apparently caused them to ignore outright political abuses one would normally expect them to decry:

Most stunningly, Rosenberg claimed that every member of the
Group of 88 believed that Nifong was motivated not by the pursuit of
justice but by the looming Democratic primary for D.A. If true, this
breathtaking assertion means that the Duke faculty, despite recognizing
that a local prosecutor was abusing his office to railroad their own
institution's students, chose to go public instead with a mass
statement denouncing the students targeted by that very same prosecutor.

From Rags to Riches at Taxpayer Expense

Some of you may have heard of him -- about a year ago blogger Kyle MacDonald started on a quest to make a series of barter transactions with a red paper clip as his starting item that would result in his owning a home.  Since to make this work he had to get a higher monetary value out of each successive transaction, one had to believe either that he was a really really good exploiter of market inefficiencies, or, more likely, would advance in each trade with a premium related to the publicity value of his effort.  In other words, people would trade him value X for something less than value X to either garner publicity for themselves or because they just wanted to participate.

Well, for most of the effort, all proceeded well.  People traded with him voluntarily, in many cases knowing that on a strictly financial market value assessment, they may have lost in transactions with him but making up for it with the non-tangible benefit they got from participating.  Well, I say it was voluntary, and it was, right up to the final transaction.  But then it fell apart.  Because in that last transaction, the town government of Kipling, Saskatchewan bought Mr. MacDonald a house with taxpayer money, in exchange for a movie role (the article is not clear on how the town will use a speaking part in a movie) and I am pretty sure this was not done with the voluntary consent of every taxpayer in Kipling.

Intriguingly enough, he was offered this item of value (a movie role) from actor director Corbin Bernsen as pure gift, rather than a trade.  Macdonald, interestingly enough, did not accept the role as a gift because he "feared the integrity of his journey would be compromised if he
accepted the role without trading Bernsen something he really could
use".  And the taxpayers of Kipling really could use a movie role, how?  It says volumes about the philosophic state of western man that accepting a gift freely offered challenged the "integrity" of what he was doing but accepting taxpayer money taken by force without the owners' permission is A-OK.

Arizona Pioneers a Really, Really Bad Idea

A group in Arizona has pioneered what may turn out to be the greatest tool for promoting socialist redistributionist government in this country since income tax withholding:  Having the government pay people to vote.

There's going to be a new reason for Arizonans to go to the polls this year:
They could win $1 million.

The Secretary of State's Office certified Thursday that backers of the
voter lottery plan had submitted more than enough signatures to qualify for the
November ballot.

But the measure is worded in a way to actually encourage people to vote
both in the primary this September as well as two months later when the actual
initiative will be on the ballot. If it is approved in November, it will be
retroactive: One lucky person who voted in this year's primary and another who
cast a ballot in the general election each will get $1 million.

A number of people have made the obvious point:  just how informed is the incremental voter who votes only because of this lottery ticket incentive really going to be?  I think most people's answer is "not".  The backers of the referendum poo-poo this concern, but do any of you really share this man's confidence:

Osterloh said he believes that providing a carrot for would-be voters would
increase participation in the democratic process. The Tucson physician dismissed
concerns that the kind of people who would vote solely for a chance to win the
lottery are likely to be ill-informed about the candidates and the issues.

"Once they decide they're going to vote, they will study the issues and
candidates," he said. "And they will vote in their own enlightened
self-interest."
Yeah, right. 

However, I am even more concerned because the incremental voter will be someone whose interest in the government is only as a source of money.  The new process will attract people who believe, and in fact train people to believe, that the purpose of voting is to direct money from the government to oneself.  I am convinced that the incremental voter attracted by this approach will tend to be strongly redistributionist, and further I believe that the backers of the plan know it. 

Update:  I am waiting to see how long it will be before we see this ballot initiative on some state ballot:  "Resolved:  That each year, the richest 40% of taxpayers in the state, as defined by last year's income, shall pay 10% of their income, above and beyond all other taxes, into a state fund that will be divided evenly and given to the remaining 60% of state residents."

Universities Becoming Their Own Country (and a repressive one at that)

Both based on outside pressure (mostly from torts) and internal desire, universities are rapidly modeling themselves into mini-governments, really mini-super-nanny-states.  FIRE, the Foundation for Individual Rights in Education, observes of a recent gathering of University attorneys:

At one panel I attended, San Francisco lawyer Zachary Hutton explained
Williams v. Board of Regents, a recent case in which a University of
Georgia student alleged having been raped by two student-athletes while a third
student watched. The police charged the athletes with rape, and the university
decided not to conduct its own investigation until the criminal case was
resolved.
That turned out to be a mistake. The plaintiff then sued the university for
sexual harassment, and the 11th Circuit held this year that the university could
be liable because, by waiting to conduct an independent investigation until the
criminal case was resolved, it had exhibited deliberate indifference to the
alleged rape. "The court emphasized," Mr. Hutton told the college lawyers, "that
the pending criminal trial . . . did not affect the university's ability to
institute its own proceedings, and the criminal charges would not have prevented
future attacks while the charges were pending."
There are excellent reasons for the university not to conduct its own
investigation. For one thing, instead of police detectives and professional
prosecutors conducting the investigation, you are likely to get Campus Public
Safety and the Associate Dean for Student Affairs. How having inexperienced
college administrators and college safety officers conduct a rape investigation
is likely to benefit either the victim or the accused is beyond me. The
potential for violating the Fifth Amendment, damaging evidence, and coming to
wildly inaccurate conclusions is immense, and if any of these things were to
happen, the university would risk botching an important criminal case. Rape is a
serious crime; victims and the accused deserve better than college justice.

In some ways, this was even more illuminating of the drive to mini-nanny-statehood:

The most entertaining discussion I heard at the lawyers' convention
centered on what to do about facebook.com and myspace.com--how to prevent
slander, harassment and rumor-mongering on these online communities popular with
undergrads.
What these attorneys were talking about is wholesale regulation of online
speech. Slander is, of course, a tort, and engaging in slander or libel can get
a person sued. It's hard to see how or why a college should be involved in this,
though. If I libel someone online, it's the business of those affected, not the
college. As for harassment, one of its main characteristics is that the person
being harassed finds the harassing behavior hard to avoid. Unless the "harasser"
is hacking into the victim's MySpace page, it's hard to see how going to a
"harassing" website isn't completely avoidable. As for "rumor-mongering," horror
of horrors! Regulating that on a college campus will mean tripling the number of
administrators (and probably tuition), but I suppose no expense is too large to
make sure that everyone stays comfortable.

College campuses were probably among the first and most vociferous critics of GWB's various domestic surveillance programs.  Its interesting to see that while opposing such programs at the national level, they are crafting far more far-reaching speech monitoring and restriction programs on their own campuses:

The room was evenly divided: Some lawyers recommended ignoring the students' Web
sites unless something offensive was brought to administrators' attention, while
others suggested taking aggressive action....

By my calculations, if half the lawyers thought that "offensive" speech that is
reported should be punished, and half the lawyers thought that administrators
should spend their time cruising the websites and proactively stamping out
"offensive" speech, that leaves ZERO lawyers who believed that perhaps merely
"offensive" speech should be protected, as the First Amendment (at public
schools), or respect for fundamental freedoms (at all schools), requires.

Estate Tax Confusion

It is not surprising that that a debate like the one over estate taxes that attracts so many class warfare fanatics should miss the point on a lot of issues.  However, the estate tax debate has been handled in the media perhaps worse than even other tax debates, which is a pretty low bar to try to crawl under.  The reason I say this is that the most serious "end the estate tax" type proposals out there have two parts, only one of which I have ever seen mentioned in the press:

  1. End the federal tax on estates (this, of course, is the part that gets the press)
  2. End the stepping-up of the cost basis of financial assets at death (this part never gets mentioned)

This 2nd piece of the proposal may seem arcane to some -- let me explain.  Most large estates (ie, the ones that estate tax supporters are concerned about) are dominated by financial assets (e.g. stocks, bonds).  These financial assets, typically held for years, tend to have a cost basis far below their current market value.  An example might be shares of Microsoft held for 10 years that were purchased for only a small fraction of the current price.  The cost basis of a financial asset is generally its purchase price plus commissions and other transaction charges.

Lets take a gentleman who dies and whose estate is made up entirely of $10 million worth of Coca-Cola stock bought years ago for just $5 million.  The estate all goes to his one daughter.  Under estate law, two things would happen.  The estate pays a large tax on the $10 million, and the remainder flows through to his daughter.  Lets say taxes take half, and his daughter now has $5 million of stock with an original price of $2.5 million.  The other thing that happens is the basis of assets is stepped up to current market value.  That means that as far as the IRS is concerned, his daughter owns stock worth $5 million with a basis of $5 million.  If she immediately sold the stock, she would have no capital gains tax.

There are a couple of good arguments against the estate tax.  From an efficiency standpoint, it diverts large pools of capital from private investments into the hands of the Federal Government, where only the most ardent statist would argue that it is better spent.  Also, billions and billions of dollars are spent every year with lawyers, accountants and financial planners to find ways to dampen the impact of the estate tax.  This is all wasted, unproductive effort that would immediately be redirected to more productive uses if the estate tax were eliminated.

From a fairness standpoint, the estate tax acts as a second tax on income that has already been taxed before.  In our example, though the $5 million capital gain is getting taxed for the first time in the estate, the $5 million original costs, which must have come from taxed income at one time, is getting taxed for at least a second time.  The other fairness problem becomes visible if we change the name of the stock from Coca-Cola to "Dad's private company."  For family businesses, ownership is not as easily divisible - you can't sell half or two-thirds that easily in part because there is not much market for minority shares of small family businesses.  What therefore happens in practice is that the daughter must sell the family business to pay the taxes.

The estate tax reform plan outlined above eliminates both these latter problems.  Under these rules, the daughter would inherit the full $10 million of stock, but, unlike today, her basis would remain the same as her dad's -- in this case, $5 million.  She would not pay any tax until she sold any of the assets.  And then she would pay capital gains taxes using the lower basis of her father's.

This results in two beneficial outcomes:  a)  taxes are only charged on the part of estates that have not already faced income taxes and b)  taxes are only paid when the individuals who inherit choose to make an asset sale and convert assets to cash.  The timing of assets sales drive taxes, whereas today, in all too many cases, taxes drive the timing of asset sales.  (By the way, supporters of the estate tax also argue that it is good because the estate tax incentivizes charitable giving.  The argument is that the tax is so confiscatory, and that the government so well-known as a black hole for money, that rich people decide it is better to give it away than to let the government take it all.  This is an odd argument for statists to make, but they do.  Note that in this estate tax proposal, the daughter would inherit a lot of low-basis stocks.  The same charitable giving incentives exist for low-basis stocks, since the IRS will give you credit for the market value as a deductible gift but you don't have to pay the capital gains).

Asymmetrical Information has been on this case for a while:

There is no case for saying, as the New York Times inexplicably does, that "Repeal would shield
the estates of the very wealthiest Americans from the tax." It does not. It
does, however, defer taxation. Because basis will no longer be 'stepped-up'
after death (except for a $1.3 million exemption) they will simply be taxed like
all other capital gains - at the time those gains are realized.

Stepped-up basis is one of the four legs of the estate-planning stool along
with the life insurance tax exemption, minority discount valuations and the division of income and
principal interests (such as the "estate
freeze
"). It is not entirely clear that beneficiaries of large estates are
better off after repeal when the full toolkit of estate planning techniques is
taken into account - unless capital gains tax is done away with altogether and
the states stop taxing estates. Neither is likely to happen.

Given the large estates I've seen avoid taxes, I am skeptical of analyses
that suggest an enormous impact to revenues from this repeal. I don't believe
they factor in the new potential revenues from carryover basis outside the
traditional estate tax shelter vehicles. Certainly, the capital gains rate is
lower than the estate rate, but when estate tax shelter vehicles dwindle away,
more assets will ultimately be subject to capital gains taxation. Based on what
estate planning professionals tell me, it will be a wash in many cases and more
expensive in some significant estates. In other words, with respect to the
Estate Tax, we may still be in the fat part of the Laffer curve, where a lower statutory rate may yield higher
revenues over time (due to avoidance behavior, not a lack of work
incentives).

This post also cites a study that says that increased capital gains taxes on inherited assets could offset estate tax losses to the government.  That seems aggressive, assuming a lot of assets are getting passed in vehicles (trusts?) that avoid or limit estate taxes, but the offset is there never-the-less and is something you will never ever see in a newspaper article about the estate tax.

I haven't paid attention to the current Congressional proposals out there, but the post goes on to argue that Congress, as is its wont, has chosen the worst of both worlds while maximizing rent-seeking opportunities.

postscript: By the way, shame on all of those accountants, lawyers, and others in the estate planning profession.  They all tell their clients that the estate tax is confiscatory, and can go on for hours with a client about various things that are unfair in the system.  But at the same time they run to Congress begging them to keep the whole tottering complex system in place to protect the rent they extract from inefficiencies in the system

How to Steal a Moped in England

Answer: Don't wear a helmet!(via Overlawyered)

Police refused to chase a thief who had stolen a moped because
the youth was not wearing a helmet, the victim said yesterday.

Max Foster, 18, said officers told him they feared being sued if
the thief fell off the moped and injured himself....

The Association of Chief Police Officers said: "There is no blanket ban on
calling off chases where a rider has no helmet, however most forces will adopt
similar stances."

In Case You Thought Anti-Trust Was About Consumers

I could spend all day discussing the follies of anti-trust law.  But one of the memes that still seems to hang on is that anti-trust was designed as a form of consumer protection, with the government protecting consumers from the monopoly power of consolidated enterprises.

I am not enough of a business historian to comment on whether anti-trust has ever been used for consumer protection, but it is clear that it is not any more.  That has been one very expensive lesson we can all learn from the Microsoft anti-trust cases, both in the US and Europe. 

If you remember the US cases, Sun, Netscape, Oracle and other Microsoft competitors, having failed to best Microsoft in the marketplace, went running to the FTC to get them to sit on Microsoft for them.  And they were successful, with a series of high-profile settlements.  Nowhere was there even a hint that these cases were about the consumer -- in fact, the settlement demanded was to remove functionality and free add-on components from the Windows OS, making it less attractive to consumers.

We can see this again in the recent decision by an EU court, which seems very happy to use anti-trust law to step on an American competitor in favor of local companies (my emphasis added).

Microsoft was fined $357 million, on top of the record $613 million
fine it paid in the original order. It also faces new penalties of
$3.82 million a day beginning July 31....

The commission has said that it is concerned about Vista's Internet
search capabilities and method of managing digital rights. Regulators
also are worried about the implications for competitors of a new
technology for saving documents that is similar to the Portable
Document Format developed by Adobe Systems Inc.

Microsoft's chief crime is not doing enough to help competitors compete against them:

The fines announced Wednesday come after the EU told Microsoft to
supply "complete and accurate technical specifications" to developers,
so they could make software for servers that help computers running
Windows, printers and other devices on a network talk to each other. It
accused Microsoft of using its monopoly position with Windows to elbow
into the server software market.

Kroes said Microsoft's earlier efforts had not come even close to a readable manual developers could use.

Again, settlements are taking the form of defeaturing the product consumers get:

Smith said Microsoft had suggested various ways it could offer Vista in
Europe, to address concerns about XPS. One option is to ship Vista
without it, while another is to include ways for PC makers or others to
either remove certain XPS utilities or make them invisible.

And, by the way, this certainly gives one a lot of confidence in the due process the courts in Europe are going to give you as an American:

"In some ways, these fines are only partially about complying with the
... prior case, and half about sending a message to Microsoft that the
European Commission is not going away,"

You get that?  It sounds like a mafioso beating someone up because they didn't show him enough respect.

By the way, I am frustrated with Microsoft and their pricing as well.  Rather than run to the government, though, I have employed this and this and this.

State of Arizona Channeling Enron

In May of this year I got a form from the Arizona Department of Revenue that said my company was now large enough to make estimated sales tax pre-payments.  Some states do this when you are large enough - they don't like you holding their sales tax money a whole month until the reporting deadline, they want their cash in hand.  It's a pain, so I sighed, but we did it.  We prepaid estimated full-month June sales tax in mid-June as required, rather than in mid-July when the payment would normally be due.  Note that we still have to fill out all the sales tax reports in July, so paperwork is doubled, not to mention the extra work to reconcile between the estimate and actual results.

So this month, I was looking for the July pre-payment form.  I figured the July pre-payment must be due soon, so I called the Department of Revenue and asked where my form was.  They said there was no form for July.  The pre-payment is only one time.  I said, "its only for June?" and they said yes.

Then it dawned on me:  Arizona is on a June 30 fiscal year.  The entire point of this exercise is to pull July revenues into June to artificially inflate the prior fiscal year financials.  Wow - all those pious government workers artificially manipulating results just like an evil old corporation.  Because there is absolutely no other reason to do this for just one month.  The time value of money gained is dwarfed by the costs of changing your payment processing approach for just one month, and is certainly dwarfed if you consider the extra taxpayer effort required (which of course the government never does).

But it's even worse!  Because, in effect, this only worked one time -- the first time.  The first time they did this, they helped the fiscal year.  But now, pulling forward July this year just offsets losing the July revenues from last year.  So politicians have saddled us with a tax process that costs the government more money and the taxpayer more time and has no benefit beyond generating a slightly more positive press release about the budget for some politician several
years ago (whatever year this was first implemented).

Not Happy

I spent much of the morning blogging yesterday, and typepad has managed to lose all the data.  I will say this is the first time I have been unhappy with Typepad, but I am very unhappy.

As Good A Theory as Any

For those who, like me, have trouble decoding why certain SCOTUS justices make the rulings that they do, Richard Epstein propounds an interesting theory in the WSJ ($) today.  He says that you can't relay on traditional conservative or liberal monikers to predict when a justice will back an expansion of government and when she/he will rule to reign it in.

In principle, it would nice if both sides of the
ideological spectrum displayed a sound and consistent position on
statutory construction. Unfortunately, each bloc is opportunistic. The
litmus test for this erratic behavior boils down to a factor not found
in any statute: trust.

The court's two wings share one trait: They defer only
to the government officials they trust. Otherwise, they read a statute
carefully to rein in the authority of officials they don't trust. The
two factions don't differ in their philosophy of language, or in their
on-again, off-again adherence to the rule of law. Rather, the court's
liberal wing profoundly distrusts this president, but has great
confidence in the domestic administrative agencies that regulate
matters such as the environment. The conservative wing of the court
flips over. It willingly defers to the president on national security
issues while looking askance at expansionist tendencies of the
administrative agencies.

This feels as right as any theory I have read of late.  And I certainly can get behind this:

Our Constitution starts out with a presumption of distrust of all
government actors, which is why it drew a sharp line between the
legislative and executive branches. We can argue until the cows come
home whether national security or environmental protection presents the
greater threat of executive or administrative misuse. But that ranking
really doesn't matter, because there is no reason why the Supreme Court
has to defer to overaggressive public officials in either context.
Justice Stevens rightly chastised the president for flouting the rule
of law in Hamdan. But he was tone deaf on the easier question
of statutory construction when blessing the Corps' extravagant reading
of the statute in Rapanos.

Spanish Derangement Syndrome

I have written several times about the phenomena of certain nativist Americans who get absolutely freaked out whenever they even encounter Spanish in the good old USA.  Here is another example of what I have started calling Spanish Derangement Syndrome:

A Spanish-language billboard promoting iced coffee is getting a chilly reception from some Bogota officials.

Mayor Steve Lonegan said the McDonald's billboard on River Road near
Elm Avenue and the railroad overpass is offensive because it sends the
message that Spanish speakers and immigrants do not need to learn how
to speak English.

Boy would this guy ever blow a gasket here in Phoenix!  So I have a counter proposal.  Everywhere that Steve Lonegan travels overseas, I think they should remove their English signs and everyone should refuse to speak English.  No English signs in airports, no English-speaking people at the hotel desk, no International Herald Tribune on the newsstand.   After all, having English signs and English-speaking customer contact people all over, say, Germany, just sends the message that Americans don't have to learn German to travel there.

I am reminded that nearly every country in the world has an "American School" where expats send their kids to learn in English and avoid as much contact and assimilation as possible with the local populous.  For example, I had several business associates in Singapore who all sent their kids to the local American School.  Can you imagine what a hissy-fit nativists in the US would throw if there were similar Mexican schools in the US?

Update:  By the way, I don't have any particular problem with English as a criteria for citizenship, but not for mere presence in the country.  Note that I don't consider citizenship the restrictive license that nativists do, as I explained here, among other places.

Also, one would be hard-pressed to argue that the Constitution somehow restricts first amendment speech protections to speech made in English.

Update #2:  Formatting has wigged out a couple of times with this post, with the word "English" formatted out on separate lines each time it appears.  Weird.  Hacker?

Botox and Boob Jobs

I am sure that, since I sort-of live in Scottsdale, you have all been waiting for me to comment on this:

  It started out small, with people all across the country nicknaming this city "Snottsdale."

Then came the reality television show about a local women's book club
where members spend almost no time delving into fine literature but
endless hours discussing Botox, marrying for money and the latest
fashions.

Soon after began the headlines about America's most
famous porn queen buying a Scottsdale strip club and the city's rapid
response: an ordinance that would prohibit dancers from being closer
than 4 feet from clients.

And then--as if all that hadn't been
enough--a guy from Las Vegas carpetbagged into town and opened a
restaurant named after a not-to-be-mentioned-in-polite-company part of
the female anatomy.

I say that I sort-of live in Scottsdale, because I actually live in neighboring Paradise Valley, another suburb of Phoenix, but since almost all the famous people listed in the article as Scottsdale residents actually live in PV, I guess I must count as Scottsdale too.

Anyway, here is my comment:  I think it is freaking hilarious.  Any city that actually spends tax money and chamber of commerce funds to advertise itself nationally as a rich enclave deserves what it gets.  If you try to advertise yourself as the next Beverly Hills 90210, you shouldn't be surprised when the media treats you like, well, Beverly Hills 90210. 

I will say that growing up in Houston and living in Dallas for years has somewhat immunized me to the hijinx of the tacky biologically-augmented nouveau riche.  While those who grew up in the Scottsdale that was the quiet horse town seem to be pretty bent out of shape by the town's new reputation, I don't see many of them complaining about the increases they have had of late in their real estate values.  And if the rich scene is more like Paris Hilton than like a Literary Lions Ball at the Met, well, at least it has some entertainment value.  (Though not too much, since CBS is cancelling their reality show).

The best feature of Scottsdale has to be school functions, because Scottsdale does lead the nation on the hot mom index.  I remember when we first moved here both my wife and I were floored at the women at the first school function we attended.  Heck, I still volunteer to drive the kids to school in the morning.  And don't even get me started about women at the Phoenix Open -- there is a reason the tournament is still a favorite among tour players despite the roudy crowds.

In conclusion, returning to the article, I couldn't have said it better than this:

"Oh, get over it," she said. "So what
if people want to make fun of us? Every city has its own particular
brand of strangeness. For some it may be gangs or drugs or troubled
youth. We just happen to have some over-Botoxed blonds with oversexed
tendencies."