Archive for February 2007

Updates on the Smugness Coupons

For RSS readers who probably don't get the updates to posts, I have added a number of updates to my post on smugness coupons, also known as offset certificates.

How Climate Science Works

When I was an undergraduate in physics, and later in engineering, we had this quaint process where we would conduct experiments and generate data, and from these results generate conclusions.

Climate science works differently.  First, political types and activists write the management summary in as alarming and as headlines-grabbing terms as they can, largely without the help or concurrence of the majority of the scientists involved in the study.  Then, they spend months modifying the underlying data, models, and scientific analysis to fit this management summary.

The summary of the most recent IPCC climate survey has already been released.  The body of the study, with the actual facts and models and stuff, has not been released (won't be for months) and carries this warning on the last draft:

"Changes (other than
grammatical or minor editorial changes) made after acceptance by the
Working Group or the Panel shall be those necessary to ensure
consistency with the Summary for Policymakers or the Overview Chapter.
"

Interesting Data on Immigration

Via Kevin Drum, the results from a couple of studies in California:

A study released Tuesday by the Public Policy Institute
of California found that immigrants who arrived in the state between
1990 and 2004 increased wages for native workers by an average 4%.

UC Davis economist Giovanni Peri, who conducted the study, said the
benefits were shared by all native-born workers, from high school
dropouts to college graduates....

Another study released Monday by the Washington-based Immigration
Policy Center showed that immigrant men ages 18 to 39 had an
incarceration rate five times lower than native-born citizens in every
ethnic group examined. Among men of Mexican descent, for instance, 0.7%
of those foreign-born were incarcerated compared to 5.9% of
native-born, according to the study, co-written by UC Irvine
sociologist Ruben G. Rumbaut.

This is great stuff, I hope we see more of it, because it takes on two of the more common arguments against immigration.  In particular, its good to see someone taking on the crime angle, an issue I have suspected all along of being more about racial prejudices than true statistics.  This is a particularly telling table:

Blog_immigration_studies

I previously took on the the meme that immigration causes crime here.  My case for open immigration is here and here.  My proposed plan is here.  Note that I really try to stay away from arguing immigration within the "who is going to pick the lettuce" framework.  I think free movement across borders of people, goods, and services is a basic human right, irrespective of the effect it has on wages or lettuce.

Oddly enough, Drum didn't focus much on the positive results on wages, as he has way too much invested in the whole "erosion of the middle class" thing to acknowledge that immigration might not hurt wages (since if immigration does not hurt wages, neither does free trade or outsourcing).  Mr. Drum says he wants to think about the study.  My prediction is that he will decide the crime study is a good one but the wage study was flawed.

History I Never Knew

Via Maggie's Farm, the heretofore unknown (to me) history of the Republic of West Florida.  Its annexation into the US denied Dickie Scruggs and Trent Lott the chance to be king of their own banana republic.

Smugness Coupon with Enron Accounting

Apparently one of the reasons all those stars at the Oscars were so pleased with themselves is that they all got a smugness coupon in their gift bags (emphasis added):

Hollywood's wealthy liberals can now avoid any guilt they might feel
for consuming so much non-renewable fossil fuel in their private jets,
their SUVs, and their multiple air-conditioned mansions. This year's
Oscar goodie bag contained gift certificates representing 100,000
pounds of greenhouse gas reductions from TerraPass, which describes
itself as a "carbon offset retailer." The 100,000 pounds "are enough to
balance out an average year in the life of an Academy Award presenter,"
a press release from TerraPass asserts. "For example, 100,000 pounds is
the total amount of carbon dioxide created by 20,000 miles of driving,
40,000 miles on commercial airlines, 20 hours in a private jet and a
large house in Los Angeles
. The greenhouse gas reductions will be
accomplished through TerraPass' [program] of verified wind energy, cow
power [collecting methane from manure] and efficiency projects." Voila,
guilt-free consumption! It reminds us of the era when rich Catholics
paid the church for "dispensations" that would shorten their terms in
Purgatory.

Something smells here, and it is not the cow-poop methane.  This 100,000 pound coupon retails for $399.75 (5x79.95) on the TerraPass web site.  First, this rate implies that all 300 million Americans could offset their CO2 emissions for about $100 billion a year, a ridiculously low figure that would be great news if true. 

Lets look at solar, something I know because I live in Arizona and have looked at it a few times.  Here is the smallest, cheapest installation I can find.  It produces 295 CO2-free Kw-hours in a month if you live in Phoenix, less everywhere else.  That is enough to run one PC 24 hours a day -- and nothing else.  Or, it is enough to run about 10 75-watt light bulbs 12 hours a day -- and nothing else.  In other words, it is way, way, way short of powering up a star's Beverly Hills mansion, not to mention their car and private jet.  It would not run one of the air conditioning units on my house.  And it costs $12,000!  Even with a 20 year life and a 0% discount rate, that still is more than $399.75 a year.  For TerraPass's offset claim to be correct, they have to have a technology that is one and probably two orders of magnitude more efficient than solar in Arizona.

[update:  Al Gore's house 221,000 kwH last year.  Call it 18,400KwH per month, that would require about 62 of these solar installations for $744,000.  I don't think $399.75 is really offsetting it]

So if Al Gore and the Hollywood-ites start whipping out these coupons and claiming to be green, be very, very skeptical.  My guess is that TerraPass is less like a real carbon offset and more like, say, the International Star Registry, where you get a nice certificate for the wall and the internal glow of having a star named after you (which, officially, it really is not).  Both the star registry and TerraPass are selling the exact same thing -- fluff.  Actually, TerraPass's certificate is a bit cheaper than the star registry.  Smugness on sale!  Think of it as the "International Earth Good-Guy Registry."

Update:  This type of thing is incredibly amenable to fraud.  If you sell more than 100% of an investment, eventually the day of reckoning will come when you can't pay everyone their shares (a la the Producers).  But if people are investing in CO2 abatement -- you can sell the same ton over and over and no one will ever know.

Also, this is a brilliant way to finance a power station.  Say you want to build a wind power station.  Actual regular investors will, you know, want a return paid to them on their investment.  But TerraPass has apparently found a way to get capital from people without paying any return.  They just give these people a feel-good share of the lack of CO2 emissions and a little certificate for the wall, and TerraPass gets capital they never have to repay to build a power station they likely would have built anyway that they can then in turn sell the power from and not have to give any of the revenues to investors.  Smart.

More thoughts:  My guess is that TerraPass, when it sells the electricity from these projects to customers, is selling it on the basis that it is earth-friendly and causes no CO2 emissions.  This lack of emissions is likely part of the "bundle" sold to electricity customers.  But note that this would be selling the same lack of emissions twice -- once to TerraPass certificate holders, and once to the electricity customers.  I am sure they are both told they are avoiding X tons of emissions, but it is the same X tons, sold twice (at least).  Even Enron didn't try this. 

I really wish I had fewer scruples, because this would be a fabulous business model -- free capital, the ability to sell the same goods multiple times to different people, all the while getting lauded for saving the world in the press and getting invited to the Academy Awards.

Update #2:  LOL. IowaHawk is offering the same thing, but for the discounted rate of $9.95!  And with much better bumper stickers.  He also suggests a multi-level marketing approach.  Here are just two of many choices:

Bumpersticker1

Bumpersticker2

Arizona's Sometime Libertarianism

Arizona has a pretty strong libertarian streak, and we done some pretty good stuff, like electing Jeff Flake to Congress.  But from time to time, this weird code-of-the-wild-west streak comes out, and we elect a ridiculously self-promoting sheriff.  Or we give someone 200 years in jail for having for possessing (not producing) child pornography.  Or we take away the free speech rights of academics.  As to the latter:

The bill, whose chief sponsor is the Republican majority leader in the
Senate, would ban professors at public colleges and universities, while
working, from:

  • Endorsing, supporting or opposing any candidate for local, state or national office.
  • Endorsing,
    supporting or opposing any pending legislation, regulation or rule
    under consideration by local, state or federal agencies.
  • Endorsing, supporting or opposing any litigation in any court.
  • Advocating "one side of a social, political, or cultural issue that is a matter of partisan controversy."
  • Hindering military recruiting on campus or endorsing the activities of those who do.

Is Climate Becoming More Extreme?

Bruce Hall at Hall of Record has performed a really interesting analysis.  He created a data base for each state which shows in what year that state's monthly temperature records were set.   So for each state, he has the years when the twelve monthly high temperature records were set (e.g. year of highest Arizona Jan temp, year of highest Arizona Feb temp, etc.) and the years when the twelve monthly low temperature records were set.  Here, for example, is his data for Arizona:

Extremetempsarizona

So, for example, the record for the highest July temperature was set in 1905 at Parker, Arizona with a scorching 127 degrees.  The entry in his database would then be Arizona-July:  1905.  He notes that there is a bias in the data toward more recent years, since if the record was set in 1905 and tied in 1983, only the newer 1983 date will show in the data.  I would also observe that this data is uncorrected for urban heat island effects (as cities urbanize they get hotter, and effect that is different than CO2-cause global warming and is usually corrected for in global warming studies).  There is also a bias towards the present in having more measurement points today than 100 years ago:  More measurement points means that, over a state, one is more likely to pick up the true high (or low).

Though I have other problems with the anthropomorphic global warming hypothesis, I have never really doubted that the world has warmed up over the last century.  So even I, a skeptic, would expect a disproportionate number of the all-time high temperatures to be in the last decade, particularly without UHI correction and with the bias discussed above.  The global warming folks would argue that the effect should be doubly pronounced, since they claim that we are seeing not just a general heating, but an increase in volatility (ie more extreme variation around the mean).

But Hall doesn't find this when he graphs the data.  Take the 600 state monthly high temperature records that exist on the books today (50 states times 12 months) and graph the distribution of years in which these records were set:

Hightempchart

Assuming about 120 years of data, you should expect to see a high temperature record on average in a database of 600 records at 5 per year, which is precisely where we have been of late and well below the record years in the thirties (remember the dust bowl?) and the fifties. It seems to actually show a reduction in temperatures or volatility or both.  Hmm.

Of course, the US is not the whole world -- in fact, all developed land masses are only 25% of the world, so there is a lot not covered by such records.  Also, statisticians are welcome to comment on whether looking only at extremes in a data set is even meaningful.  But this sure isn't what you might expect from, say, watching the Oscar telecast or the nightly news.

Hall also has the low temperature records in his very comprehensive post, which, surprisingly, do show more activity in the last several decades.  He has a follow-up here.  Finally, Hall has summarized his data a different way in this post -- you have to click on the chart to really see it in all its beauty.  Just take a quick look.  I won't steal his thunder by reproducing it here, but suffice it to say it reminded me of some of the best examples in the book Visual Display of Quantitative Information.

Legislating Taste

TJIC has a good example of relying on the government to legislate taste.

More than 30 years after outlawing big flashing signs"¦
Boston wants to bring back some glitz to parts of town deemed too dark
and staid at night.

It's a good thing we've got a single monopolistic authority making aesthetic decisions for everyone.

Saying it wants colorful electronic marquees to create an
atmosphere like Times Square in New York, the Boston Redevelopment
Authority is planning to amend the city's zoning code to permit
electronic signs that make "bold use of graphics" and create a sense of
"animation and motion" and "images that engage the public."

So, basically, the rationale 30 years ago was "some bureaucrat
finds these tacky, so they're forbidden", and now the rationale is
"some bureaucrat likes these, so they're encouraged".

This from the city of Boston, whose government's sense of aesthetics dropped this butt-ugly eyesore of a city hall into the middle of historic downtown Boston:

Govcenter

And, in case you are one who supports government "redevelopment" and mandates on aesthetics but think that it would all work out fine if architectural experts and committees of academics made the decisions, here is the hideous Peabody Terrace at Harvard University, presumably vetted by the finest architectural academic minds in the country:

Peabody

These buildings, where Harvard stuck me for a full year, were transported right out of East Berlin, right down to the elevators that only stopped on every third floor for efficiency sake (efficiency of the builder, obviously, not the occupant).  The interior walls were bare cast concrete and no amount of heat could warm them in the winter.  It was the most depressing place, bar none, I have every lived.  But the "experts" loved them, and wished that this vision could have been forced by urban planners on all of America:

Leland Cott, an adjunct professor of
urban design at the [Harvard] GSD, calls Peabody Terrace 'a model of design
efficiency, economy, and attention to scale.'

Fortunately, someone gets it:

The magazine Architecture Boston has focused attention on the
controversial aspects of Sert's work by devoting its July/August 2003
issue to an examination of Peabody Terrace, expressing the essential
disagreement about the work in the form of a stark conundrum:
"Architects love Peabody Terrace. The public hates it."

In fact, the public's hostility to the structures may be in
proportion to its degree of proximity, with the most intense feelings
confined to those households on the front lines of the town/gown divide....

Otile McManus, in a companion essay, discusses the reactions of many
Cambridge residents, who have described the complex as "monstrous,"
"cold," "uninviting," "overwhelming," and "hostile," and have compared
it to Soviet housing.

Actually, the most intense feeling were by those who lived there, who really, really hated it  (though I will admit there were several third world students who loved it -- must have been nostalgic for them).  The article goes on to accuse detractors of being anti-modernist.  Which is a laugh, since my house is one of the most starkly modern in the area, so modern I could not sell it several years ago.  I am not anti-modern.  I am anti-bad-design.

Wow!  I am kindof amazed at the hostility I still feel fifteen years after the fact.  I had started out just to link TJIC's post, and here I am in full-blown rant mode.  Sorry.

On Being Skeptical of Data That Supports My Point of View

I am pretty convinced that the case for anthropomorphic global warming is being overblown, and part of my reasoning is that other factors, like recent increases in solar activity, are being virtually ignored in the race to place a big fat blame sign on man (and on the US in specific).

So I was ready to really like this chart, via Q&O via RedState via Hall of Record (click image for larger view):

Globalwarmingaa

Increases in sunspot activity are generally correlated with increases in solar output, so the chart seems to show a correlation between solar output and global temperatures that is much better than the correlation with CO2 concentration.  Now, this still may be correct (I have what is probably a better chart below), but this particular graph is odd in a few ways.  First, the Y-axis scale is "Sunspot Cycle Length" presumably in years (thus the "y").  But how does that make sense?  If it is the length of the trailing cycle, it should go up uniformly then drop to zero, like a sawtooth.  I don't know who a cycle length that seems to average around 11 years can look like that line on that timescale.  I tried to get back to the original, but it was attributed to a presentation that did not seem to be online by a professor that doesn't seem to work in exactly this field of study.  If anyone has any insight on this chart, please comment.

So, as much as this chart would be good news (remember my definition of good news here), I have to be skeptical of it.  I do think the underlying point is a good one:  It is well known that we are in a period of unusually high sunspot activity and solar output.  A better chart may be this one, from this study and via junkscience.com:

Global Warming "Good News"

Regular readers will know I am skeptical that anthropomorphic global warming and its effects will be as bad as generally predicted.  However, if I can work around this bias, I would like to cast the issue as neutrally as I can:  Man-made CO2 will likely cause the world to warm some, and the negative effects of this for man are likely higher than the positive effects.  Under some assumptions, these net negative effects of man-made warming could be astronomical in cost, while under other assumptions they will be less so.  Against this variable outcome, efforts to substantially reduce CO2 production world wide and prevent further increases of atmospheric CO2 concentrations will carry a staggering cost, both in dollars and the inevitable social effects of locking developing countries into poverty they are just now escaping (not to mention loss of individual liberty from more government controls).

The political choice we therefore face is daunting:  Do we pay an incredibly high price to abate an environmental change that may or may not be more costly than the cure?  Reasonable people disagree on this, and I recognize that I may fall in the minority on which side I currently stand on (I think both warming and its abatement costs are overblown, mainly because I have a Julian-Simonesque confidence in man's adaptability and innovation).

Against this backdrop, we have Kevin Drum declaring "More good news on the global warming front:"

Seeking to shape legislation before Congress, three major energy trade
associations have shifted their stances and decided to back mandatory
federal curbs on carbon dioxide and other man-made emissions that could
accelerate climate change.

Here is my news flash:  Having some Washington lobbying organizations switch which side of this incredibly difficult trade off they support is not "good news."  Good news is finding out that this trade off may not be as stark as we think it is.  Good news is finding some new technology that reduces emissions and which private citizens are willing to adopt without government coercion (e.g. sheets of solar cells that can be run out of factories like carpet from Dalton, Georgia).  Or, good news is finding out that man's CO2 production has less of an effect on world climate than once thought.  Oddly enough, this latter category of good news, surely the best possible news we could get on the topic, is seldom treated as good news by global warming activists.  In fact, scientists with this message are called Holocaust deniers.  I wonder why?

Update: LOL

Wacky Business Models

A reader sends this one in, after reading my book BMOC.  One of the characters in the book is a business man who has a knack for monetizing wacky business models  (one example:  providing free fountains to malls in exchange for being able to harvest the coins out of them).  The book is named after his new company called BMOC, which specializes in making teens popular.

This caused a reader to send me this web site for FakeYourSpace.com.  They are selling popularity their own way, by providing you comments and visits from hot and cool friends on your MySpace pages.  Sort of sock puppetry for teens.

Welcome to Fake Your Space. You have found a new and
exciting service which offers help to all the men and women out there
who don't feel like they are popular enough on social networking sites
such as MySpace, Facebook, and Friendster.
If you are tired of seeing everyone else with the hottest friends and
want some hotties of your own, then this is the place for you.

LOL.  Wish I had thought of it for my book.  Below the fold is the business model for BMOC, which I thought was crazy enough:

Continue reading ‘Wacky Business Models’ »

The "Happy Days" Framework for Understanding the Two Parties

Here is all you need to know to understand the two political parties as they are in 2007:  Both parties want to return to the 1950's.  The Republican Party wants to return to Leave-it-to-Beaver type social/sexual options and media offerings.  The Democratic Party wants to return to the large company / heavily union work models and economy of the 1950's

Which makes the titles "Conservative" and "Liberal" worse than meaningless, since each vision is inherently small-c conservative.  Both fear change, diversity, and risk, though in different sectors of our lives.  In some sense this is the real culture war, between dynamism and fear of change.

I need 24 Help

I have no tolerance for watching TV series on the network's schedule.  If a series gets good reviews, I will watch it on DVD (e.g. Serenity, Deadwood, Rome, Sopranos, Alias, Wonderfalls, etc).  In this same vain, I watched the first season of 24 straight through and really enjoyed it.  The second season was OK but weaker and less believable (even a hard-core libertarian paranoiac like myself had trouble buying the cabinet coup).  Plus I got about the same feeling when the Kim Bauer character was on-screen as I did when there was Anakin-Padme dialog in the last Star Wars movie.

So I am a third of the way through season 3 and I am having trouble really getting into it -- maybe the threat is not immediate enough at the mid-point.  Should I stick it out?  Is there anything out there left worth seeing?  Is there anything interesting in seasons 4 or 5 that bring back what made the first season great?

I Wish I Could Like Activists

I sure wish I could like activists like Al Gore.  Last night, at the Oscars, he was charming and passionate.  He has something he cares deeply about and flies around the world speaking about.    It's terribly compelling, which you could see in the reaction Al got last night from an adoring audience and various fawning actors.

And if Mr. Gore were there last night to convince the audience to get out of their stretch limos and G-V's and drive Prius's and use compact fluorescent bulbs, I'd be fine.  Sure I might laugh that it was all pointless and the movie Inconvenient Truth was terribly overblown, but its a free society and Mr. Gore would be welcome to make his call to other individuals that they change their lifestyle. 

Unfortunately, Mr. Gore's only goal last night was not just to rally the TV audience to change its lifestyle.  The more important goal was to increase the likelihood that government will compel Americans to do what Mr. Gore wants.  And this is what makes me cringe nowadays when I hear the term "activist."  I don't want to cringe, because passionately advocating for you cause, even if I disagree with it, should be part of the rich fabric of a free society.  Unfortunately, though, at the heart of nearly every modern activist's agenda is compulsion -- the desire to use the coercive power of the government to force you to do something you would not otherwise choose to do.  It is the very unusual activist today who is not trying, whether they admit it or not, to chisel away at individual freedom for some "higher cause."

By the way, speaking of higher cause, did anyone else note the religious parallels in the green-speak last night at the Oscars?  You had Al Gore in the role of Bill Graham, with several people talking about how Al had helped them "see the light."  Even more amazing to me was the parallel with a confessional at Catholic Church.  I have been lucky enough in the past to attend the Academy Awards, and I can tell you from experience what was sitting right outside:  The largest collection of stretch limousines you can ever imagine -- I am talking about enough limos to create a traffic tie-up four lanes wide and extending back for miles, all running their engines for six hours waiting to whisk stars to late-night parties and private jets.  I am fairly certain that no other small group in America generated more CO2 yesterday through their private use than the audience at the Oscars.  Yet by declaring the Oscars to be "green", voting for an Inconvenient Truth, and cheering Al Gore, the audience was in effect saying 10 hail mary's in the confessional, washing away all sin. 

Update:  How I can be sure Al Gore's activism is about government control and not individual action:

Drudge reports  that Al Gore's Nashville mansion consumes more than 20 times the average amount of power for an American household.

Since
Gore's whole deal is that civilization-saving absolutely and vitally
requires an action on everyone's part that he seems to refuse to do
himself, it leads one to wonder about how this whole global warming
thing is going to play out with the public and with the government.
(Unless Gore's house is powered completely or partially off a
conventional coal-burning grid, which doesn't seem to be true based on
Drudge's piece.)

Does Gore's seeming inability to curb his
power consumption--which has apparently grown since the release of his
Oscar-winning flick--mean it isn't true that we really do all
have to scrupulously use less carbon-burning energy or doom the planet?
No. But it does make it a little hard to believe that he really
believes it--or that if even the biggest believer in global warming of
all can't control himself in this regard, that a serious planetwide
reduction in the short or medium term short of draconian outside
controls has much hope.

From the Left: OK, Real Wages Are Growing

I know that my short-term memory isn't very good (a result of my Y chromosome, by my wife's explanation) but I could have sworn that the big issue in the last election from the left (beyond the war of course) was the indictment that real wages were not increasing -- i.e. that the average worker's wages were growing more slowly than inflation.

Now, this hypothesis was mostly bullshit, particularly when you factored in benefits with wages, but economic facts have never stood in the way of a little populist class demagoguing.  However, now it appears that when push comes to shove, no one on the left really believed any of it.

The other day, Kevin Drum posted this:

At the Democratic debate yesterday, Tom Vilsack
proposed a slow reduction in future Social Security benefits by
switching from wage indexing to price indexing

A number of folks, most on the left, called it a really bad idea.  Drum himself didn't have a definitive opinion, but seemed to think the idea at least screwy.  Why?  Well, these folks all thought that a shift from wage to price indexing would reduce benefits, and in fact that is what Vilsack thought -- he proposed it as a way to help close the future cash flow gap in Social Security.  Am I understanding this right?  Because the only way that this switch could reduce benefits would be if wages were growing faster than prices!  Surely I must be missing something?  Do we really have a bunch of Democrats all criticizing a plan because everyone universally assumes wages increase faster than prices?  Doesn't this contradict their whole meme in the election?

So I followed a link in one of these posts to the Center for Budget and Policy Priorities (I don't know how they would describe themselves politically, but looking at their body of work on the home page, you won't confuse them with Cato).  Apparently, this re-indexing scheme was also proposed by GWB (I missed that) and this site was criticizing his plan because it would reduce benefits.  And yes, there was the key line (emphasis added):

Under current law, initial Social Security
  benefits for each generation of retirees grow in tandem with average wages in the economy.  This ensures that each generation receives Social Security benefits that reflect the living standards of its times.  Full "price indexing" would make a change in the Social Security benefit formula so that initial Social Security benefits would keep pace only with prices, rather than wages, from one generation to the next.  Because prices increase more slowly than wages, this would result in progressively larger benefit reductions over time

There you have it.  Democrats and the left criticizing a plan because they assume wages go up faster than prices, so re-indexing from wages to prices would reduce benefits.  In fact, the folks I read accept this fact as so fundamental, everyone just assumes it to be true.  Is this wildly hypocritical or what?

Entertaining Libertarian Voice

One of the problems with us libertarians is that we all sound like a bunch of academic dweebs when we talk.  Well, thanks to YouTube and Human Advancement, I saw Mike Lee, who I found unpolished but curiously entertaining as a defender of individual rights (though he's bit hawkish internationally for my tastes).  Anyone who can, in about 2 minutes, shift from Duke Lacrosse to North Korea to jury nullifaction has got to be interesting to listen to.

By the way, it is increasingly clear that Google and YouTube don't really want to be a free speech outlet, as they seem to be banning stuff as fast as it can be posted.  They are private concerns, and so can do whatever they like, and I can understand from their perspective why they want to avoid controversy  (though if they ban everything the RIAA wants banned and political groups of every stripe want banned and end up with just home videos of pet tricks, I am not sure it will remain as popular).  This in turn got me thinking about Neal Stephenson  (and I accused Mike Lee of rambling?)

In Cryptonomicon, one of the plot lines is a group of guys trying to create an offshore data haven free from threats by government censors, tax inspectors, and, I presume, copyright enforcers from the RIAA and the NFL.  While such a comprehensive haven may be out of reach, I do think there could be a great role for an offshore blogging/podcasting/video haven that would protect identities and be immune or out of reach from third party censorship.  The problem is that as an officer of such an endeavor, you would likely be subject to immediate arrest in many countries once you landed there.  Oh, that would never happen in a free country like the US would it?  Yeah, right.

Same Event Inspires Across the Political Spectrum

The other night our local libertarian discussion group had a presentation by Larry Reed of the Mackinac Institute.  Mr. Reed discussed why he thought that individuals who are lone voices in the wilderness should not give up hope (a topic particularly relevant to us libertarians) and he used the William Wilberforce story as one example.  Wilberforce, who is profiled in the movie Amazing Grace, fought a nearly fifty year battle in the British Parliament first against slave trading, and then against slavery itself.   (Mr. Reed, who has written and spoken about the Wilberforce story for years, said he had seen the movie three times and highly recommended it).

Not surprisingly, the libertarians in the room found the story inspiring -- here was a man who successfully fought for protection of individual rights against great odds.  The Wilberforce story is part of the great 19th century liberal tradition that is bedrock for libertarians today.

However, what is interesting to me is how other parts of the political spectrum also look to the Wilberforce story as an essential part of their own history.  Conservatives see the Wilberforce story as an example of the beneficial effects of an activist religious fundamentalist (which Wilberforce was) bending law to fit his religious beliefs.  At the same time, progressives on the left can look to the story as an early example of the central government looking out for a downtrodden group, a precursor to modern "social justice" legislation.

In other words, libertarians see a direct line from Wilberforce to, say, fighting Kelo-type government takings or indefinite detainments at Gitmo.  Religious conservatives see a direct line from Wilberforce to reducing violence on TV and preventing gay marriage.  Progressive see a direct line from Wilberforce to universal health care and affirmative action. 

I'm not really sure I have a point here, except that Amazing Grace may find a pretty good audience if everyone thinks it is "their" movie.  The only other thing I would observe is that it is nice to know that for all our differences today, there are some things we can agree on.  Which causes me to wonder why modern slavery, which is still all-too-prevalent, does not get more attention (except perhaps because certain folks are so invested in the Westerners-as-bad-guys view of history that they are blind to exploitation from other directions).

Cost of Centralization

This post actually takes me back to the roots of this blog, roots that most new readers probably have not seen much of.  I originally started this blog as place to share my lessons learned in starting, running, and growing a small business.  I still do some of that, but not nearly as much as I would like.

My company has about 25 line managers who each run the operations for one recreation area (these are spread over 13 states).  I give these managers nearly complete P&L authority.  I set base labor rates and most fee levels, and we have a very clear management process everyone follows.  However, line managers have the responsibility to do all the hiring for their area, as well as most purchasing.   One issue that comes up a lot for us as we grow is how much we should centralize some of these functions for efficiency, most significantly HR and purchasing.  In general, I have resisted efforts to centralize.  Here is why.

Human Resources

Several of my competitors, even ones smaller than I am, have centralized their hiring functions.  They have one person (or more) at central HQ who does all the hiring for the company's operations.  My managers often come to me and say "wouldn't it be more efficient to do this hiring in one place?" 
I say no.  The reason is one of accountability.  I want my managers fully accountable for their operations, and poor-performance excuse #1 is always "well, we're struggling because you saddled us with some bad employees."  No one uses this excuse in my company.  If you have an employee that sucks, you hired him/her and you have to deal with it. 

What I did instead was centralize the Human Resource support for our managers, making their lives easier without relieving them of accountability.  So I invested in some new web sites that capture potential workers and drive them to an application database that collects 10 resumes a day  (I am results 1,3, 4 &8 on Google for camp host jobs and results 5, 6, & 7 for campground jobs).  Then I built a system where all my managers can access these resumes.  I also centralized the HR record keeping and payroll processing.

Purchasing

Centralized purchasing has been a harder impulse to resist, but I still do so.  We order a lot of the same supplies in our various locations, and with more and more stores, many of the same goods for resale.  But I still have my local managers buy most of that stuff for themselves.

Am I crazy?  Well, I would have thought so when I was in business school.  After all, its fairly easy to demonstrate that vendors will give better rates for larger orders, and surely it's inefficient from a labor standpoint to disperse purchasing and to duplicate efforts.

First and foremost, though, I am still a stickler for accountability.  Much of my thinking was shaped by Chuck Knight at Emerson Electric, who was nearly always willing to trade centralized cost savings for accountability.  I would much rather my managers have no excuses than save a few pennies on toilet paper purchases.

However, there are a few things we can do.  We are starting to build a shared supplier database, where managers can share particularly good supplier deals with their peers.  We also have centralized purchasing of uniforms and forms, but even here we have been burned.  In the past, we assigned this task to a central person, who eventually built up a huge warehouse of crap it has taken us years to clean out.  Though we don't get quite as good of a deal, we now have printing and uniform contracts with negotiated corporate rates based on our combined corporate usage, but where managers place their own orders and shipping is directly to the field (rather to a central location for reshipment).  Net, we saved thousands in labor, shipping, and inventory getting out of the central break-bulk business.

For our resale items, I get a lot of presure from individual store managers to let them do purchasing of so-and-so product for the whole company in order to get quantity discounts.   I have allowed this in a few cases, but it may cause more problems than it is worth.  I immediately started getting complaints from manager A that manager B was buying all the wrong stuff, or whatever.  Soon, the folks doing the central purchasing started demanding that they needed more and better information, and started asking for written inventory reports from various store managers each month.  Eek! 

I think instead that I am going to mostly stick with the approach of negotiating corporate deals, and having local managers continue to do their own ordering using these deals.  I also work hard to make sure managers understand that in most cases the corporate negotiated products are optional, and that they may buy other products if they think those are better for their locations (I can guarantee that visitors in Northern California, Nogales Arizona, and Central Florida want different things).

Anti-Trust is Not About Consumers, Yet Again

I have written numerous times about how most anti-trust actions are initiated for the benefit not of consumers but of industry competitors.  The incredible claim that Microsoft's giving away free applications with its OS somehow hurts consumers is just the most famous such example. 

Now we face the specter of anti-trust review of the XM-Sirius satellite radio deal.  All you need to know is that the National Association of Broadcasters, who represent the terrestrial competitors of satellite radio, are lobbying hard for the deal to be rejected.  Nearly every line of the statement is hilarious, but this one caught me:

When
the FCC authorized satellite radio, it specifically found that
the public
would be served best by two competitive nationwide systems. Now,

with  their stock prices at rock bottom and their business model in
disarray
because of profligate spending practices, they seek a government

bail-out to avoid competing in the marketplace.

First, I am sure that the NAB is deeply, deeply concerned about satellite radio serving the public well -- NOT.  Customers gained by satellite radio are customers lost by the NAB**.  In fact, if they really believed the merger would hurt the consumer experience with satellite radio, their statement would instead be "we are thrilled by this merger because it means that customers will be served poorly in the future by the new company and that means customers will defect back to us."

Second, I love the term "government bailout."  What they mean by government bailout is the prospect that the government might not block this merger.  Which, given the white-hot merger activity between NAB members over the past 5 years, means that most NAB members have received the same "bailout."

(HT: Hit and Run)

** In the TV market, terrestrial broadcasters, particularly their local affiliates, got the government to cover their butts by passing a "Must Carry" law, which basically requires that cable companies have to include all the local broadcasters in their feed.  In practice, this and similar laws have forced satellite providers to give you your network feed only through your local affiliate.  This means that instead of DirecTV being able to just give me the NBC national feed, they have to give me the NBC Phoenix affiliate.  As a result, DirecTV has whole satellites that carry forty, fifty, sixty or more identical feeds.  What a screaming waste, and it only gets worse with HDTV.  Anyway, in radio, there is no similar law, so satellite growth is more of a zero-sum loss for terrestrial competitors.  I think the NAB is just huffy they did not get their own must-carry subsidy law passed.

NFL Tightens the Screws

As most people know, the NFL doesn't want you to use the word "Superbowl" when hosting a party, sale, event, etc, and they aggressively enforce their trademark on this term.  In response, since all the country does in fact have parties, sales, events, etc. associated with the Superbowl, folks have adopted the euphemism 'the big game" in their communications. 

I observed that this not only pointed out some of the silliness in our intellectual property laws, but also was counter-productive for the NFL -- shouldn't they want people talking about and holding events for the Superbowl?  I suggested a simple licensing program that would raise a little money and probably work better for everyone:

The NFL needs to offer a one time use license each year for a bar or
other establishment to hold a Superbowl party and actually use
Superbowl in the promotion.  The license would of course be
non-exclusive, and would carry a myriad of restrictions on how you use
the name, etc.   The license could be purchased for a price that would
be cheap for a business, maybe $200, and could be purchased right over
the web.  It would actually be easier, I think, to go after violators
because the NFL could point to the existence of a legal licensing
program the violator could easily have participated in.  I would think
they could easily bring in a couple of million dollars, not to mention
saving them enforcement money and PR headaches.

The NFL has decided to go in a different direction.  It is trying to trademark the term "the big game" so that term can't be used either (HT Overlawyered).  I particularly liked this from the application:

Disclaimer NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE "GAME" APART FROM THE MARK AS SHOWN

Jeez, why not?  Who at the NFL is sleeping on the job here?

Well, that's what I get as a libertarian for trying to work within the system to make things incrementally better rather than going on one of my usual idealistic rants.  So I officially withdraw my previous suggestion in favor of a new one:  Trademarks should, at most, only give one the protection from someone else labeling a similar product with the trademarked name.  By trademarking Jif, P&G gets protection from another company selling peanut butter under the same name in the US.  However, any other use of Jif in communication should be entirely legal.  If I communicate to people that I am having Jif party, that communication is protected under the first amendment and P&G can't shut down my party.  If I want to put out a poster and sell it with Jif peanut butter labels and how they have changed over the past 100 years, I should have the right to do so.   Ditto if I want to print bumper stickers that say "Jif sucks."

Similarly, the NFL can be legally protected from having another group host a football game (and if I am in a generous mood, maybe any type of sporting event) and calling it the Superbowl.  And that is it.  They should not be granted an exclusive government monopoly to use the word Superbowl, or more ludicrously, "the big game":

posters, calendars, trading cards, series
of non-fiction books relating to football; magazines relating to
football, newsletters relating to football,notepads, stickers, bumper
stickers, paper pennants; greeting cards; printed tickets to sports
games and events; pens and pencils, note paper, wrapping paper, paper
table cloths, paper napkins, printed paper party invitations, paper
gift cards; paper party decorations, collectible cards; collectible
card and memorabilia holders, souvenir programs for sports events,...toys and sporting goods, namely, plush toys, stuffed toy
animals, play figures, golf balls, footballs, sport balls, toy banks,
playing cards, Christmas tree ornaments...Men's, women's and children's apparel, namely T-shirts, fleece tops, caps, headwear

And don't even get me started on Pat Riley's "Threepeat."

Punitive Damages and Due Process

For several years, I have been wondering why punitive damage awards like this one, that punish a company for various misdeeds, don't create a double jeapardy situation where defendents must pay over and over for the same "crime" (since the next individual suing also gets punitive damages).

Here's the problem:  A jury in Texas already hit Merck with $259
million in punitive damages*.  This number was based on a lot of
testimony about Merck's sales and profits from Vioxx, so it was
presumably aimed at punishing Merck for "errors" in their whole Vioxx
program.  So if that is the case, how can Merck end up facing a jury
again coming up with a separate punitive damage award for the same
"crime"?  Sure, it makes sense that Merck can owe actual damages to
individual claimants in trial after trial.  But how can they owe
punitive damages for the whole Vioxx program over and over again?
Aren't they being punished over and over for the same misdeed,
violating their Constitutional protection against double jeopardy?

In the recent Supreme Court decision involving a judgment against Philip Morris, the SCOTUS didn't really take this issue on, but did take on a related issue, arguing that punitive damage awards that take into account damages against more than just the defendant violate due process, since these other damages were not tried on the facts in that case.

Today, in a decision involving an astonishing $79.5 million punitive
damage award to the widow of an Oregon man who died of lung cancer
after smoking Marlboros for 42 years, the U.S. Supreme Court ruled
that a jury in a civil case may not punish a defendant for harm to
people who are not parties to the case. To do so, the five-justice
majority said,
violates the defendant's right to due process because he cannot defend
against hypothetical damage claims by people who are not involved in
the lawsuit. Furthermore, the Court said, "to permit punishment for
injuring a nonparty victim would add a near standardless dimension to
the punitive damages equation." Although this makes sense to me, the
Court's proposed solution"”that juries may consider harm to nonparties
in judging the "reprehensibility" of a defendant's conduct but not to
"punish a defendant directly" for that harm"”seems untenable.

Enron Verdicts Starting to Unravel

Tom Kirkendall has an update on the various Enron cases, starting with the Nigerian barge case where  the conviction of four Merrill Lynch executives was vacated by the Fifth Circuit.  In fact, the appeals court ruling was so damning that the DOJ has decided not to retry the executives, and the case may well be a leading indicator that other Enron-related prosecutions are in jeopardy.

Although expected, the DOJ's decision in the Nigerian Barge case
reverberates through several other pending Enron-related cases. The DOJ
can retry three of the four former Merrill Lynch executives, but that
would be petty by even the DOJ's standards given the eviscerated nature
of the original charges and the fact that each of the defendants has
already spent a year of their lives in prison based on a prosecution
that was based more on resentment than on true criminal conduct. The
Fifth Circuit's now final decision in the barge case casts doubt (see also here) on a substantial number of the charges upon which former Enron CEO Jeff Skilling was convicted, and dispositively blows away over 80% of the case against former Enron Broadband executive Kevin Howard. In addition, the re-trials of Howard's former co-defendants from the disaster that was the first Enron Broadband case are now in various states of disarray, as is the pressured plea deal of former mid-level Enron executive, Chris Calger. And don't forget the mess that is the DOJ's case against the NatWest Three (see also here).

Mississippi Considering Directive 10-289

First, Mississippi regulated flood insurance rates down to a level that it was impossible to make money, so State Farm's property coverage on the coast did not cover flood/storm damage.  Then, after Katrina, Dickie Scruggs and company sued State Farm, and others, forcing them to cover storm damage from Katrina that their policies explicitly did not cover and were not priced to cover.  So, facing a state government that, by fiat, forces their fees lower and their coverage higher, State Farm is trying to exit the property insurance business in Mississippi, and the state legislature is considering legislation to prevent them from leaving.

Mississippi Attorney General Jim Hood said Friday he will seek
legislation aimed at blocking State Farm Insurance Cos. from refusing
to write new homeowners and commercial policies in the
hurricane-battered state.

Hood's plan would require any company
that writes automobile insurance in Mississippi and also writes
homeowners policies in other states to offer homeowners and commercial
properties throughout Mississippi....

Hood also said he his urging Gov. Haley Barbour to issue an executive
order that would force the insurer to continue writing new policies
until the Mississippi Legislature can deal with the issue.

Quoting from directive 10-289 (Atlas Shrugged):

Point Two: All industrial, commercial, manufacturing, and business
establishments of any nature whatsoever shall henceforth remain in
operation, and the owners of such establishments shall not quit, nor
leave, nor retire, nor close, sell or transfer their business, under
penalty of the nationalization of their establishment and of any or all
their property.

So I ask you, is the following statement ridiculous  over-the-top regulator-speak from Atlas Shrugged, or was it actually made by a US state AG?

"We're looking at a robber baron in the face that is trying to make an example of Mississippi," Hood said of State Farm.

OK, so lets see:  The state government decides what rates you can charge.  The state government decides what your policy has to cover.  The state government decides if you will be allowed to go out of business.  But State Farm is the robber baron.  LOL.

Hat tip:  Tom Kirkendall

Open Up to Cuba

The Bush administration is in the unenviable but not historically unprecedented position of not really being able to accomplish much of anything over the next two years.  Bush's credibility is such that a solid majority in Congress may oppose any plan he suggests, just because he suggested it.  Also, it is unlikely that any third-rail-type reforms will be considered in a presidential election cycle.  And I am generally OK with government legislative inaction.  In fact, it would be great if the Democrats chose to pursue impeachment hearings, not because Bush is any more or less a lying sack of shit than other politicians, but because it would divert Congress onto an enforced lassaiz faire path on every other issue.

However, one thing Bush could productively accomplish is to open up relations with Cuba.  If we are ready to pull out of Iraq after five years, even at the cost of being seen as "losing," we should be ready to reconsider our cold war with Cuba after over 46 years.  After all, our cold war with Russia, if dated from the end of WWII, only lasted 44 years.  We trade freely with communist China, and even with communist Vietnam, despite the fact that we were in a shooting war with them more recently than the Castro takeover.  And what have we accomplished?  Cuba is nowhere close to an anti-communist revolution, and its people suffer.  In fact, I think the embargo on Cuba, by turning Cuba's attention away from its natural trading partner the US, causes it to look for allies in places like Venezuela.

I think history has proven time and time again the power of open commerce and interchange in bringing closed, unfree societies into the modern age.  I can't for the life of me figure out why we still pursue the proven-pointless embargoes against Cuba except:

  • The sugar lobby like it that way
  • The Cuban expat community, operating on wounded latin pride, have stubbornly made it clear that anyone who suggests opening up to Cuba will lose the typically tight vote for Florida's key electoral votes.

With GWB's lame-duckracy and his brother moving on from the Florida governor's mansion, no Bush has to run for election in Florida again. With Castro's death (I'm not dead yet - yes you are, you'll be stone dead in a moment) the anti-Castro movement in the expat community loses focus, and might be reshaped into what it should be, that is pro-Cuba rather than anti-Castro.  I think these two stars are lining up to provide a unique opportunity to do something about Cuba, and in fact might be a useful step in counterpoint to Hugo Chavez's recent actions. 

Brains Too Scrambled to Blog

I took my daughter on a day trip to Magic Mountain, one of the better parks around for roller coasters (it's it still not Cedar Point, IMHO, though if you like inversions, Magic Mountain is the place).  We went on Friday because she had a special day off from school, and there was no one at the park.  In the first 30 minutes, we rode several of the top coasters all alone.  The only problem is that I am more used to getting a bit of a break between rides, waiting in line and such.  Anyway, we had a blast.

For those not up on their amusement park trivia, Magic Mountain was "Wallyworld" in the movie Vacation and is home to the first ever looping rollercoaster, the Revolution, which was featured in the movie Rollercoaster.  Since that first inversion, coaster designers have gone nuts.  The first roller coaster we rode on Friday, called Scream, had seven inversions in one ride.  It was also cool because it had no car.  When we were in the front, we were just strapped into chairs with nothing around us but the track below our feet - really cool.  Picture being the front guys in this photo. Through the day, we probably survived 50 inversions. 

Coaster designers have really gotten creative.  We rode sitting, standing, and lying on our stomach (what is called a flying roller coaster, you are sort of in the same position as in a hang-glider).  We rode on top of the track and hanging from the track.  One of the challenges of ride designers is to push the gees, both positive and negative, without making it downright painful.  Millennium Force at Sandusky Park is rightly considered perhaps the best roller coaster in the world because it plays with the gees without torturing you (the negative-G hills are great).  I thought several of the rides at Magic Mountain went over the line, in particular the Batman hanging coaster and the Tatsu flying coaster, when there were a few turns when I thought my head was going to explode.  Overall, we liked Scream the best - smooth, fun, scary without being painful.

Update: I said Millennium Force is the best coaster out there.  This one, also at Cedar Point, which I have not ridden, is the most elemental --  No  subtlety here  (go to the POV gallery on the right and watch the video).