Archive for March 2010

In Case You Didn't Already Know that California has Lost It

California has a ballot initiative to raise taxes on wine, perhaps the state's highest profile export after movies, by 12,600%.  The South Bend Seven find the real howler though -- apparently 15% of this tax increase or over  a billion dollars a year will be directed to naturopathy programs.  Apperently a bid by astrologists to get a share of the tax increase narrowly failed.

Hair of the Dog?

WTF is this designed to accomplish, except to give Obama something to crow about in one or two news cycles while doubling down on the same kind of practices that got the housing market and banks into the current mess?  This reminds me so much of the final days of the government in Atlas Shrugged.  Fannie and Freddie are bankrupt?  Well, lets do the same thing to the FHA, just to save our sorry government jobs for a few weeks longer.

The Federal Housing Administration is heading toward a taxpayer bailout, yet the president's latest mortgage modification plan would further increase the agency's exposure to risky mortgages. Mark Calabria calls it a "Backdoor Bank Bailout."The administration's plan would encourage borrowers who owe more than their house is worth to refinance into FHA-insured mortgages. Therefore, the risk of a future foreclosure on these mortgages would fall to the government and taxpayers instead of private lenders.

A recent study from economists at New York University found that the FHA is underestimating its risk exposure. One of the problems is that the FHA isn't properly accounting for the risk to underwater FHA mortgages that have been refinanced into new FHA mortgages. So it's hard to see how the president's plan to refinance private underwater mortgages into FHA mortgages won't further exacerbate the situation.

Great Moments in Asymmetry

I accept the following reaction, as embodied in the last sentence, from the University of Florida as entirely rational.  However, can you imagine this same reaction if all the facts were the same but the genders were reversed?

According to University of Florida spokesman Steve Orlando, six out of 10 new UF students will be women in fall 2010, which is the largest gender gap favoring female students that UF has ever had. UF's fall 2009 enrollment was 54% female and 46% male, according to the UF Office of Institutional Planning and Research.

UF is aware of the gap but not doing anything to balance the numbers, Orlando said. But he said the school isn't discriminating against male applicants. "Boys wouldn't be admitted because they're boys," he said. "Girls are being admitted because they are doing the things to be admitted and boys aren't."

Raise Taxes and Give the Money to Our Industry

It's hard to imagine a more naked example of rent-seeking than this one

A group representing Arizona hospitals is pursuing a ballot initiative that would tax the state's high-income earners to help pay the health-care tab for the state's neediest kids and adults.

The Arizona Hospital and Healthcare Association expects to file paperwork for the initiative later this week, aiming for a place on the November ballot.

It asks voters to raise the state income-tax rate 1 percentage point on income exceeding $150,000 per individual and $300,000 per couple.

The association estimates the initiative would raise more than $140 million each year to pay for health insurance for low-income children and adults, graduate-school medical education and reimbursement to hospitals that care for the poor.

In other words, the government will take the money and hand it over to hospitals to do the things they are already doing.  I could put together a heartwarming story too for my industry -- we think there should be a 1% tax on all Arizona residents for kids to visit parks and campgrounds to fight childhood obesity and improve their connection with nature -- but you don't see me rent-seeking like this.

My gut feel, though I have no direct evidence, is that this is being rushed through to beat the deadline on Obamacare implentation -- my guess being that this will be somehow moot once that program is in place so the hospitals want to get their licks in before anyone really figures out the new health care law.  Once the tax and program is in place, it will be virtually impossible to kill, even if it is irrelevent post-Obamacare.  Anyone have knowlege about this one way or the other?

The Payoff

Hollywood delivered for Obama in the last election, and he is ready to pay them back.  The world's most open and honest administration is again using closed hearings and executive fiat to force legal changes that likely would create a firestorm of controversy in a normal legislative process.

It's hard to know, then, which is more appalling: the fact that the Obama Administration has conducted the ACTA negotiations in secret, or that it has indicated that it plans to adopt the final Agreement as an "Executive Order," one that does not require submission to or ratification by the Senate (or any Congressional action whatsoever) to become effective. ...

But even this summary makes it clear that, once again (see Clinton Administration) the Democratic Party has caved in to Hollywood's demands regarding intellectual property enforcement. As David Fewer of the Canadian Internet Policy and Public Interest Clinic and the University of Ottawa noted, "if Hollywood could order intellectual property laws for Christmas what would they look like? This is pretty close."

Why Politicians Love the Global Warming Issue

James Lovelock in the Guardian, via Bishop Hill

One of the main obstructions to meaningful action is "modern democracy", he added. "Even the best democracies agree that when a major war approaches, democracy must be put on hold for the time being. I have a feeling that climate change may be an issue as severe as a war. It may be necessary to put democracy on hold for a while."

I am pretty sure Nancy Pelosi and Harry Reid would like to put democracy on hold for a while.

Climate Presentation in Colorado

I will be making a presentation on the science of the climate skeptic's position on April 12 from 5-7PM at the University of Colorado "“ Colorado Springs (UCCS) in the UC 302 theater  (campus map).  I hope folks who are interested in the Denver / Colorado Springs area will attend.

The Organization of No

Government bureaucracies do not exercise power by allowing activities to occur - they only have power, and thus have reason to justify their continued funding and jobs, when they say no.   Every incentive that they have is to say no.  When a government agency allows progress to proceed smoothly, it is doing so because some person or small group is fighting against the very nature of the organization.  Anyone who believes otherwise about government agencies is challenged to go build and open a new restaurant in Ventura County, California.  Here is the latest example:

The [weatherizing] program was a hallmark of the American Recovery and Reinvestment Act, a way to shore up the economy while encouraging people to conserve energy at home. But government rules about how to run what was deemed to be a ''shovel-ready'' project, including how much to pay contractors and how to protect historic homes during renovations, have thwarted chances at early success, according to an Associated Press review of the program.

''It seems like every day there is a new wrench in the works that keeps us from moving ahead,'' said program manager Joanne Chappell-Theunissen. She has spent the past several months mailing in photographs of old houses in rural Michigan to meet federal historic preservation rules. ''We keep playing catch-up.''

And of course, even in a skeptical article about a "stimulus" project, no one ever mentioned what productive activities the $5 billion was being used for by private individuals before the government yanked it away for this little catastrophe.

By the way, the overblown rhetoric award has to go to this:

''This is the beginning of the next industrial revolution with the explosion of clean energy investments,'' said assistant U.S. Energy Secretary Cathy Zoi. ''These are good jobs that are here to stay.''

Given that the first one was about steel mills and railroads and oil and electricity, if this new industrial revolution is all about caulking, I think I am getting nostalgic for the first one.

Out this Week

Spring skiing in Utah.  I may blog, I may not.

Illegal Immigration and the Rule of Law

As is usual when I make an immigration post (wherein I am supportive of open immigration and suspicious of gung-ho enforcement efforts) I got mail saying that the real concern here is the rule of law.   People inevitably want to inform me that this immigration is ILLEGAL (usually in caps) and that these immigrants are BREAKING THE LAW and that the law cannot be enforced unevenly.

First, I am happy to listen to this argument from any commenter who has never broken the speed limit or done a rolling stop at a stop sign.

Second, I would like to offer the rule of law folks, especially those on the right side of the aisle, a thought problem:  Soon, it will be illegal to not purchase a health insurance policy that meets specifications set by Congress.  It is anticipated, however, given relatively low fines, that many people will break this law and not obtain health insurance.   This failure will be ILLEGAL.  These people will be criminals.  Do those of you who seek higher penalties, more robust enforcement, police sweeps, and reduced standards of probable cause for people committing the crime of illegal immigration also plan to seek the same higher penalties for lawbreakers who do not buy an insurance policy?   After all, as you have said, this is not about the law itself but respect for the rule of law.

By your immigration logic, we should be ruthless about lawbreakers who do not have the right insurance policy.  We should encourage the Minutemen to patrol for people without health insurance -- after all, they have said that their concern is with people breaking the law, not immigration or Mexicans per se.  There should be sweeps where people can be arrested for suspicion of not having health insurance, just as they can be arrested under our new AZ law for suspicion that they do not have a green card.

If there is a difference, please explain it to me.  I understand that you may be opposed to open immigration or high immigration rates or immigration by poor uneducated people or whatever.  If so, fine, we disagree -- but stop saying that this is all about the rule of law, or telling me we can't pick and choose what laws we violate.  Because we do the latter all the time.  Our willingness to challenge the state is a large part of American exceptionalism.

PS- Just to avoid misunderstandings from trolls who do not usually read this site, of course I do not advocate the above for health insurance violations.  Just as I don't for Mexicans seeking a better life in this country without obtaining a license to do so from the government.

Disclosure: I have several good friends who are illegal immigrants.  They are wonderful, hard-working people who have been in this country for years.  If we were to conduct tests of people's acceptability to be present in this country, they would pass with scores far ahead of many US citizens.

Update:  I find the argument that open immigration and an overly-generous welfare state can't coexist to be moderately compelling, though I don't see why we could tie citizenship narrowly to receiving these benefits.  I have problems saying that a government license in the form of a green card is required for mere presence in the country.  I have no problem imposing this licensing requirement for receipt of unearned goodies.

Hypocrisy Watch -- Sports Stadium Edition

In the past, local governments and the legislature have blithely hit up taxpayers to pay for new sports stadiums for local teams.  You may think you have it bad in your city with 4 major sports teams, but we have 4 major sports teams PLUS about seven or eight baseball spring training stadiums.

It seems like the legislature and local government finally got tired of putting all taxpayers on the hook for these stadiums, and had the radical idea that maybe actual, you know, fans who want to use the stadiums should pay for them.  This turned out to be too expensive for ticket prices at the proposed new Cubs spring training facility -- fans aren't used to paying for the full price of their sporting event in their ticket price -- they are used to getting subsidized by non-sports fans.  As a compromise, the legislature proposed a tax on tickets for all spring training games at all stadiums to pay for this one new field.  This seems stupid to me, but it elicited this hilarious response from the baseball commissioner:

Selig told reporters at HoHoKam Park that it was a "dangerous precedent" to tax all ticket buyers primarily to benefit one team and that Major League Baseball has taken over negotiations for a new Cubs spring home.

Right, but it is A-OK if all taxpayers, including those who will never see a baseball game, are taxed to pay for the new stadium.

When Conservatives Turn Against Private Property and Private Contracts

Update:  Yes, I am aware that it is ILLEGAL as many people have informed me in all caps.  Here is my response, and a thought problem for those posing that issue to me.

Apparently, our Arizona legislature is about to past a tough new anti-immigrant bill, to make sure that no one can work for us or be on our property without the government's permission.  Why is it that Conservatives who are nominally supportive of private property and private contracts disavow these rights when Mexicans are involved?

First, to the issue of property:

A bill empowering police to arrest illegal immigrants and charge them with trespassing for simply being in the state of Arizona, is likely just weeks away from becoming the toughest law of its kind anywhere in the country....

"When you come to America you must have a permission slip, period," said state Sen. Russell Pearce, the Mesa Republican who sponsored the bill. "You can't break into my country, just like you can't break into my house."

So aren't they essentially using a socialist view of property here?   This means that a person can be found to be trespassing on my property, even if he has my permission, if he doesn't have permission of certain members of the government.   It means that the government has more say over who can and can't be present on property than does the private owner.  This is horrendous precedent that Conservatives will someday come to lament.

As for contracts:

The measure allows police to detain people on the suspicion that they are illegal immigrants, outlaws citizens from employing day laborers, and makes it illegal for anyone to transport an illegal immigrant, even a family member, anywhere in the state.

Oops, so much for my ability to hire and fire at will.  And doesn't it make one all warm and fuzzy to think that having brown skin is officially going to be sufficient probable cause for Sheriff Joe to haul your ass into custody?  Because I am not exaggerating, Arpaio will haul in thousands on mere suspicion of being an illegal immigrant.  He already hauls in hundreds without this law.  What's next, checkpoints with state troopers telling us that "ve vant to see your papers" like we were living in occupied France?  Because the bill essentially requires that people present in Arizona be able to prove they are a citizen at all times.  Do I need to carry my passport when I am jogging?

I know a few paranoiacs here have managed to convince even relatively smart people outside this state that we are somehow in the midst of an invasion.  I live here, and no such thing is true.  We have a large Hispanic population that makes the state more interesting, and the limited number of problems immigrants cause for infrastructure here are no worse than the issues any major city faces.  I operate business all over the state, including right down at the border, and there is simply nothing awful going on here to justify this kind of paranoia.

Postscript:  Just to be clear, I believe I have the right to hire anyone I please, and to lease an apartment to anyone I please.  I don't think that people who happen to be born in another country should have to get a license from the state to be able to contract with me in these ways.  Both Democrats and Republicans are awful about this -- they rail against some modest state intrusion in their lives and then support an even bigger one.

Blaming Private Companies for Government Procurement Errors

The blaming of private companies for government procurement errors is one I deal with frequently at my privatization blog.  This seems to be a particularly egregious example:

Maricopa County officials can't sue the Sheriff's Office for buying a $465,000 bus without their approval, so now they want to sue the bus company.

Precisely why Motor Coach Industries would be sued over the internal squabble remains unclear.

The county has maintained in this months-long bus battle that Sheriff Arpaio's office bought the vehicle with Jail Enhancement funds, when it should have used a typical county procurement process.

From the bus company's point of view, though, the Sheriff's Office was a customer with cash. For the county to demand a full refund, without so much as a deduction for the depreciation, seems like a raw deal for MCI.

Cari Gerchick, spokeswoman for the county, says text of the lawsuit won't be released until after the Board of Supervisors votes on it at Monday's meeting. She could not provide the legal justification for the expected lawsuit, beyond saying that MCI "should have known" the MCSO had not followed the county's procurement process.

Get that?  The company should have known that our County's chief law enforcement officer was not following the law.  This is obviously an absurd contention, but further the company had two geographic disadvantages:  1.  Not being from AZ, they don't know just how unethical our sheriff really is; and 2.  Being from Chicago, even if they had recognized unethical behavior, they would have assumed it was perfectly legal

Stock Up on Meeses and Gippers

The CBO, which Democrats frequently tell us to pay close attention to only when it is giving them the answers they want, is not particularly sanguine about the US budget deficit:

President Obama's fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation's economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president's budget would generate a combined $9.75 trillion in deficits over the next decade.

Bruce McQuain, as always, has some good analysis.

States, apparently, are not in much better shape:

Pension plans for state government employees today report they are underfunded by $450 billion, according to a recent report from the Pew Charitable Trusts. But this vastly underestimates the true shortfall, because public pension accounting wrongly assumes that plans can earn high investment returns without risk. My research indicates that overall underfunding tops $3 trillion.

The problem is fundamental: According to accounting rules adopted by the states, a public sector pension plan may call itself "fully funded" even if there is a better-than-even chance it will be unable to meet its obligations. When that happens, the taxpayer is on the hook. Yet public pension plans ignore market risk even as they shift into risky foreign investments, hedge funds and private equity....

In a recent AEI working paper I've shown that the typical state employee public pension plan has only a 16% chance of solvency. More public pensions have a zero probability of solvency than have a probability in excess of 50%. When public pension assets fall short, taxpayers are legally obligated to make up the difference. The market value of this contingent liability exceeds $3 trillion.

Productive people in this country are about to get plastered with huge new taxes.  Hang on.

Assessing the Marginal Price for a Congressional Vote

Via the Sunlight Foundation:

A day after Rep. Bart Stupak, D-Mich., and ten other House members compromised on their pro-life position to deliver the necessary yes-votes to pass health care reform, the "Stupak 11" released their fiscal year 2011 earmark requests, which total more than $4.7 billion--an average of $429 million worth of earmark requests for each lawmaker.

The eleven members were the focus of high level pressure by House Speaker Nancy Pelosi and other top Democrats because they threatened to vote against the health care reform bill, which passed the House on Sunday, March 21, by a seven vote margin. Granting earmark requests are one of the ways leadership can encourage members to vote their way.

When it was announced the other day that three little-used airports in Stupak's district were given about 3/4 of a million dollars on the day before the health care vote, Stupak made it clear that he would never sell his vote for so little.  "It is absurd to think I would change my vote for a tow truck and a fence to keep deer from walking onto the runway of an airport in my district," Stupak said in a statement.  So it should not be surprising that he is asking for more.

Update:  The Sunlight Foundation has partially backed off on this story

It Seems I Was Right About Daylight Savings Time

For years I have said that daylight savings time likely made no sense as an energy saving program.  It was first used back in World War I, when electricity demand was primarily driven by illumination.  At that time, shifting the clock around to better match working hours with sunny hours (ie times with natural light) probably did save electricity.  But today, electricity demands are driven much more heating and cooling.  The same logic no longer holds.  In Arizona, the earlier the sun goes down, the less electricity we have to use when we are home in the evenings to keep the house cool.

It seems that research has confirmed my gut feel:

The result of the study showed that electricity use went up in the counties adopting daylight saving time in 2006, costing $8.6 million more in household electricity bills. The conclusion reached by Kotchen and Grant was that while the lighting costs were reduced in the afternoons by daylight saving, the greater heating costs in the mornings, and more use of air-conditioners on hot afternoons more than offset these savings. Kotchen said the results were more "clear and unambiguous" than results in any other paper he had presented.

Of course, daylight savings time will never go away, because modern environmentalism has become more a matter of making empty feel-good gestures than performing rational acts that actually improve something.

EPA Silliness

Over the last several years, we have been replacing many of the full-sized pickups we use in our campground business with mini-trucks from Japan.  They are cheaper to insure, cheaper to buy, easy to repair, and get about 60 miles to the gallon.  We typically buy them used in container-loads of six or seven, and we used to get them for less than $10,000 a container -- now they cost almost this much individually.

This year the prices have sky-rocketed, and they have been hard to find.  I finally discovered the reason.  It seems the EPA has halted their importation.  These are trucks that are from an emissions regime (in Japan) harsher than ours and that have three times the gas mileage of the trucks they are replacing.  But apparently the EPA doesn't have rules for them and doesn't know how to categorize them, and anything a bureaucrat doesn't have rules for must be illegal, right?  So now we are forced to go back to full-size pickup truck purchases until the EPA can catch up with the market.

Update: Apparently the EPA is going to review these trucks model by model.  This is so stupid.  They need some kind of class waiver.

Sheriff Joe and Andrew Thomas

The absolute dysfunctionality of our county government here in Phoenix is just beyond belief.   While not really breaking any new ground, this article in the ABA journal has a pretty good history of Arpaio and Thomas hyjinx.

Congress

Via Katherine Mangu-Ward, word count by Pew Research when Americans are asked about Congress

This would make a great piece of modern art to put on the walls of the Rotunda.

I Guess I Was Wrong. Arne Duncan Really Does Favor School Choice

From Ed Morrissey:

Chicago Breaking News reported late last night that former Chicago schools chief and current Secretary of Education Arne Duncan manipulated a system to favor powerful political allies by placing their children in the schools of their choice.  The discovery of a  list, the existence of which had been long denied by the city, and its composition of mainly high-powered political figures calls into question the appeals system used to reconsider applications that had been denied by the top Chicago-area schools:

This is going to be even more fun when this game is applied to jumping the hospital waiting list.

Government Stimulus in One Picture

Looking at the chart below, attempt to convince yourself that the cash-for-clunkers program had any real effect on economic activity.

And consider what was NOT purchased by the previous holders of the billions of dollars the government took from them to give to car buyers.

My Bracket Looks Like Berlin in 1945

For the first time in five years, I am apparently mathematically eliminated after the first weekend, with my best possible finish in 7th.    Congratulations to our current leaders, who navigated through an incredible series of upsets far better than I did:

Leaderboard after 48 games - See full standings
Bracket Rank Points
Todd Ramsey 1 107
Casey Hills #2 2 90
Brad Warbiany #2 3 86
Casey Hills 4 83
Neal Charleston 5 83
Bracket Rank Points
William Apel 6 80
Todd Erickson 7 80
Kelly McLean #2 8 79
Jason Storck 9 79
Keith Wesley 10 78

Perhaps even more incredibly, Todd Ramsey is shown to have a 71+% chance of winning it all, which are pretty unprecedented odds in our pool this early in the tournament.

Made Some Money on Intrade

A while back, Megan McArdle had what I thought was good advice - using betting as a way to hedge emotional risks.  For example, I was going to be really disappointed if the health care bill passed, so I bet that its passage would occur.  I am still unhappy, but I have some extra cash.

I have been buying on the dips for a while now.  I predicted way back last July that it was going to pass no matter what

It is totally clear to me that Obama and Pelosi will spend any amount of money to pass their key legislative initiatives.  In the case of Waxman-Markey, the marginal price per vote turned out to be about $3.5 billion.  But they didn't even blink at paying this.  That is why I fear that some horrible form of health care "reform" may actually pass.  If it does, the marginal cost per vote may be higher, but I don't think our leaders care.

Getting Ready for the New Health Care Regime

Well, My Health Insurance Policy Just Became Illegal

My health insurance policy, which is an actual "insurance" policy that insures me against catastrophic medical costs but leaves me with responsibility for day to day expenses, just became illegal.   Over the last couple of years, I have documented my learning curve as, for the first time, I actually had an incentive to shop around for medical care, or to push back on doctors when I thought they are calling for too many tests and procedures.  I have learned a lot about saving money, but all of this education is now for naught, as I will now be required to buy a pre-paid medical policy that leaves very little of the decision-making to my family and provides zero incentives for me to be cost conscious.  Apparently, the operators of the US Postal Service and US military procurement felt they were better qualified to manage these cost/value trade-offs than I am.

Here, by the way, is my favorite quote from today, from Nancy Pelosi (who else):

House Speaker Nancy Pelosi praised the health care legislation for its ability to "unleash tremendous entrepreneurial power into our economy."

Only if one considers rent-seeking to be entrepreneurship.  There will certainly be a mad rush of special interests to Congress to get their pet procedure or drug included in national must-cover rules.  I discussed this rent-seeking process, which used to have to proceed inefficiently state by state but now can be achieved single-source, here.   Naturopath coverage, anyone? (already required under coverage rules in 4 states).   Already a lot of so-called medical research is really just thinly disguised pleas to have a certain procedure in must-cover rules.  For example, I wrote about one study:

In other words, the study surveyed a bunch of cosmetic surgeons.  They were asked "should an expensive procedure you provide be covered by insurance."  They all answered "Hell YES!"  Anyone want to bet whether the funding for the study came from the company that makes the laser equipment?