Archive for April 2010

The Cost of our New Corporate State

As Obama pushes the US into a corporate state model like those in Europe, here is one cost we will face: increases in long-term unemployment.  Already we see higher structural barriers being created to employment (preference for preferred unions, higher minimum wage, reduced internships) combined with increasing incentives to remain unemployed (extension of unemployment benefits, subsidized medical services).

Most countries who move to this model experience very high long-term structural unemployment.   The costs to add an employee in Europe are really, really high, meaning that it is only done reluctantly and the preference is for highly skilled workers  (who is going to give a job for life to an untested, unskilled young worker?)  Further, these states are run by a troika of large corporations, unions, and government insiders who protect each other from competition.  Young unskilled workers are a competitive threat to established unions.  Since these unions workers get above-market wages, they are protected from younger workers who are willing to offer their admittedly less skilled labor much cheaper.

I was playing around with data released from the World Bank, and compared the US to a number of other industrialized countries on this metric.  Even in past recessions, long-term unemployment has remained low in the US (click to enlarge).  The metric is percent of total unemployed that are unemployed for longer than 1 year.

I Love New York, Just Not Enought to Live There

I am endlessly fascinated by the architecture and infrastructure of Manhattan.  I am probably one of the few non-locals who owns this book, as well as others in the series.  I highly recommend the Scouting New York blog for those of you who love the hardware of Gotham more than its software.  This post is a good index to many of his best features.

"Rights": I Do Not Think That Word Means What You Think It Means

I wish I had the book in front of me, but in one of the collections of Ayn Rand's essays (either the Virtue of Selfishness or Capitalism:  The Unknown Ideal) she quoted a bit of the 1968 Democratic Party platform, which called for all kinds of fake rights, the most hilarious being the right to vacation or leisure.

Well it turns out that absurd corruptions of the concept of individual liberty are never unthinkable, just ahead of their time:

Brussels has declared that tourism is a human right and pensioners, youths and those too poor to afford it should have their travel subsidised by the taxpayer

"Travelling for tourism today is a right. The way we spend our holidays is a formidable indicator of our quality of life," [European Union commissioner for enterprise and industry Antonio Tajani], said

Tajani's programme will be piloted until 2013 and then put into full operation it is expected the EU will subsidise about 30% of the cost.

Public Sector Unions

Readers of the site know that I do not generally join in with the Conservative bashing of unions, except to the extent that they feed at the public trough (e.g. at GM) where I will bash them equally with all other similar hogs.  Unions are perfectly acceptable associations of individuals in a free society for a generally rational purpose.  What upsets this equation is when the government attempts to intervene to tilt the playing field either towards employers or unions in their negotiations -- but this is a government intervention issue, not a union issue per se.

Far more problematic is the growing influence of public employee unions.  Union advocates talk about the need to help private unions in a power imbalance with large corporations, but talk about a power imbalance!  In the public sector, we have hugely powerful unions with absolutely no one willing to take them on.  Government leaders who supposedly should be advocates of taxpayers and pushing back against union demands are typically in bed with unions.  One might say it is a similar case to unions owning the private company in which they work, but in that case there are market dynamics that mitigate against overly high pay or indifferent customer service.  No such balancing mechanisms exist in government monopoly institutions.

There have been a lot of articles on this topic of late that I have been keeping in my reader but have not linked, so to do a bit of tab-clearing, here are some good recent articles on public sector unions.

Carpe Diem shows the direct relationship between increasing public sector unionization and public sector debt.  Chris Edwards appears to be the original source.

Chris Edwards followed up to show an inverse relationship between state management quality and unionization.

Bruce McQuain discusses the $500 billion California unfunded pension liability.  And this does not include the unfunded liabilities of all the state's cities and towns and counties, which typically don't book any liability at all for their future pension and medical commitments.

Steven Malanga on how public sector unions broke California.

The camera focuses on an official of the Service Employees International Union (SEIU), California's largest public-employee union, sitting in a legislative chamber and speaking into a microphone. "We helped to get you into office, and we got a good memory," she says matter-of-factly to the elected officials outside the shot. "Come November, if you don't back our program, we'll get you out of office.'

Traditionally, public sector unions have exercised a lot of power in elections, as evidenced by this example of the success of unions in fielding winning candidates in California school board elections.   Bruce McQuain reports that the SEIU has even formed its own 3rd party in North Carolina.  Its amazing that candidates whose main platform is to shift more taxpayer resources to the pockets of government workers has success.

Finally, according to the GAO, union contracts have a lot to do with why the USPS is failing  (as labor accounts for 80% of USPS costs).  They seem to have all the labor problems GM had, except there is even less pressure to correct the problems, since after all we can't get our mail delivered by Honda or Toyota.  Here is an example:

  • USPS workers participate in the federal workers' compensation program, which generally provides larger benefits than the private sector. And instead of retiring when eligible, USPS workers can stay on the "more generous" workers' compensation rolls.
  • Collective bargaining agreements limit the amount of part-time and contract workers the USPS can use to fit its workload needs, and they limit managers from assigning work to employees outside of their crafts. The latter explains why you get stuck waiting in line at the post office while other postal employees seemingly oblivious to customers' needs go about doing less important tasks.
  • Most postal employees are protected by "no-layoff" provisions, and the USPS must let go lower-cost part-time and temporary employees before it can lay off a full-time worker not covered by a no-layoff provision.
  • The USPS covers a higher proportion of employee premiums for health care and life insurance than most other federal agencies, which is impressive because it's hard to be more generous than federal agencies.
  • If the collective bargaining process reaches binding arbitration, there is no statutory requirement for the USPS's financial condition to be considered. This is like making the decision whether or not to go fishing, but not taking into consideration the fact that the boat has holes in its bottom.

Here is the Key Bait and Switch

Bill Clinton joined a number other leftish writers of late trying to marginalize those who criticize the government (and in particular, I think, the Tea Party folks).   I am really not going to comment much on this attempt, except to say that we endured something identical during the Iraq war, with the BS about not criticizing the President during wartime.

Here is the key bait and switch in Clinton's argument:

But we should remember that there is a big difference between criticizing a policy or a politician and demonizing the government that guarantees our freedoms and the public servants who enforce our laws.

The government that guarantees our freedoms?  I suppose this sounds sort of good if one just lets it roll by, but in the context of our country's formation, this is absurd.  The only threat to freedom that the founders of this nation were concerned about was the government itself.

The government is the only entity with the power to use force and the power to grab money without permission.  As such, the founders recognized it as the single most potent threat to freedom that could possibly exist.  All their efforts were aimed at constructing limitations and protections from the power of government itself.

It would be far more correct to say "the Constitution that guarantees our freedoms" by limiting the power of government, but in fact that is exactly what the left is trying to overturn, with a hundred years of efforts to slowly whittle the Constitutional limitations on the power of government down to zero.

Update: Wow, this is an amazing excerpt from a 1995 memo from Dick Morris to Clinton just after the Oklahoma City bombing.  Seems like he is still following the same playbook:

Later, under the heading "How to use extremism as issue against Republicans," Morris told Clinton that "direct accusations" of extremism wouldn't work because the Republicans were not, in fact, extremists. Rather, Morris recommended what he called the "ricochet theory." Clinton would "stimulate national concern over extremism and terror," and then, "when issue is at top of national agenda, suspicion naturally gravitates to Republicans." As that happened, Morris recommended, Clinton would use his executive authority to impose "intrusive" measures against so-called extremist groups. Clinton would explain that such intrusive measures were necessary to prevent future violence, knowing that his actions would, Morris wrote, "provoke outrage by extremist groups who will write their local Republican congressmen." Then, if members of Congress complained, that would "link right-wing of the party to extremist groups." The net effect, Morris concluded, would be "self-inflicted linkage between [GOP] and extremists."

And People Trust Government?

I have total sympathy with those who distrust corporations.  Distrust and skepticism are fine things, and are critical foundations to individual responsibility.   History proves that market mechanisms tend to weed out bad behaviors, but sometimes these corrections can take time, and in the mean time its good to watch out for oneself.

However, I can't understand how these same people who distrust the power of large corporations tend to throw all their trust and faith into government.  The government tends to have more power (it has police and jails after all, not to mention sovereign immunity), is way larger, and the control mechanisms and incentives that supposedly might check bad behavior in governments seldom work.

Here is a great example of behavior that is inconcieveable in the private sector, or, if found at a private company, would quickly result in its extinction.

The system that Lower Merion school officials used to track lost and stolen laptops wound up secretly capturing thousands of images, including photographs of students in their homes, Web sites they visited, and excerpts of their online chats, says a new motion filed in a suit against the district.

More than once, the motion asserts, the camera on Robbins' school-issued laptop took photos of Robbins as he slept in his bed. Each time, it fired the images off to network servers at the school district.

Back at district offices, the Robbins motion says, employees with access to the images marveled at the tracking software. It was like a window into "a little LMSD soap opera," a staffer is quoted as saying in an e-mail to Carol Cafiero, the administrator running the program.

"I know, I love it," she is quoted as having replied.

Anyone want to be how many of the guilty in this case will be around in 5 years.  The over / under from Vegas is "all."

Duh

Of course this was going to happen.

An audit of solar-power generation from November 2009 to January 2010 found that some panel operators were paid for doing the "impossible" -- producing electricity from sunlight during the night, El Mundo reported today, citing a letter from Secretary of State for Energy Pedro Marin....

Preliminary evidence shows some solar stations may have run diesel-burning generators and sold the output as solar power, which earns several times more than electricity from fossil fuels, El Mundo said, citing unidentified people from the energy industry. The power grid received 4,500 megawatt-hours of power from midnight to 7 a.m. in the months audited, El Mundo said.

Electric current is electric current.  However, in a country like Germany, the price that utilities are required to pay for electric current varies based on its source.  While electricity from, say, a diesel generator gets 4-5 Euro cents per KwH, ground-based solar gets about 48 Euro cents per KwH.  This is a 10x greater price paid solely for absolutely identical power manufactured in a different way.  So of course there is going to be fraud as to the current's source.

10 Rules for Dealing With Police

This is a pretty useful primer. The "keep quiet" and "refuse searches" portions are good advice.  Most of us hesitate to follow this advice as we think, "well, I am innocent and have nothing to hide and being silent and refusing searches just makes me look guilty."  The fact of the matter is that there are times -- either due to poor incentives (see "the Wire"), misunderstandings, or bad officers -- where the state is looking to make a case on anyone where they think it could fit.  Don't give them any extra information that might help them make it fit on you.

Update: And for those with a deep and abiding trust of police, see here.  Or this.  How Maryland police make a routine traffic stop:

Another Union Bailout by Obama

After famously throwing out 200 years of bankruptcy law to hose secured creditors in favor of uni0ns at GM and Chrysler, the Obama Administration is again bailing out the unions that helped get him elected

Barely 15 percent of all construction-industry workers in the United States are union members, while the remaining 85 percent are nonunion, according to the U.S. Department of Labor's Bureau of Labor Statistics. So why has President Obama signed Executive Order 13502 directing federal agencies taking bids for government construction projects to accept only those from contractors who agree in advance to a project labor agreement that requires a union work force? Obama's new order applies to all federal construction projects with price tags of $25 million or more, and it means all such contracts will only be awarded to companies with unionized work forces.

The costs of this to the public are pretty obvious, not only in terms of fairness but in increased costs and reduced competition.

Another factor helps explain Obama's willingness to sign an executive order that will put millions more tax dollars in union coffers. Mix points out that unions under PLAs typically exact agreements that include requiring contractors to make payments to union pension funds. This is an increasingly urgent issue, as the Washington Examiner's Mark Hemingway has recently detailed in these pages. According to Labor Department filings, the average union pension has only enough money on hand to cover 62 percent of the benefits it has promised to union members. Pension plans with 80 percent funding are considered "endangered" by federal auditors, while those with less than 65 percent funding are put on the "critical" list. With this latest executive order, it's clear that Obama intends to give unions on the critical list a massive dose of federal tax dollars to cure what ails them.

I'll keep saying it - this is right from the playbook of the European-style corporate state.

I'm Almost Glad I Am Getting Old...

... because I won't have to face the full consequences of this:

The 2009 federal balance sheet indicates that the government's net position (total assets less total liabilities) is a negative $11.5 trillion, 12.3 percent worse than the previous year. But that's just the tip of the iceberg. That negative balance excludes government obligations for social insurance programs, mainly Social Security and Medicare.

Whether social insurance should be booked as a liability has long been a controversial issue among government accountants....

Unable to reach agreement as to whether social insurance should be included as a balance sheet liability, the members of the FASAB compromised, and thus, immediately following the balance sheet is a "Statement of Social Insurance." In the 2009 annual report this indicates that the total present value of estimated social insurance expenditures over revenues is $45.9 trillion.

Hence, simple addition indicates that the total net position of the government is a whopping negative $57.4 trillion.

Equipment Financing Bleg

As a small business, there is just about no way to get a bank loan based on cash flow -- not just on future projections of cash flow, but even just based on a history of strong cash flows in the company.  This is not particularly new post-financial-crash... I wrote about this issue years ago.

In contrast, it is fairly easy to get equipment financing.  I get 10 calls a week from folks trying to finance my equipment purchases.  If they can slap a lien against a moveable asset, people will lend money.  The only change I have noticed of late is that fewer of these folks will do titled assets (like road vehicles).  This is kind of ironic, since they can perfect their lien on titled assets more strongly, but apparently the government paperwork hassles with titles makes lending expensive for these assets.

The one exception to this is for boats.  We would like to buy a bunch of new pontoon boats for rental service at some of our lakeside marinas.  Pontoon boats are great assets - they have fast payback, they are tanks so they last forever, and they don't go very fast so they don't usually get in accidents.  But no one will touch boat lending.  Apparently there is too much liability for lenders.  Which is just crazy, when you think about it.  How in the world have we created a tort structure where Bank X is somehow liable for the actions of a boat user that gets hurt, just because Bank X lent the money for our company to buy the boat and then rent the boat to the user?\

Anyway, if anyone knows someone who finances such commercial boat purchases, drop me an email.

Hope and Change

Libertarians vote for Republicans when they get tired of Democrat's authoritarian meddling in economics.  Libertarians vote for Democrats when they get tired of Republican's tough-on-crime/terrorism/sex/drugs civil rights violations.  But what to do when Republicans like Bush expand government like Democrats, and Democrats like Obama show little respect for individual liberties:

Google and an alliance of privacy groups have come to Yahoo's aid by helping the Web portal fend off a broad request from the U.S. Department of Justice for e-mail messages, CNET has learned.

In a brief filed Tuesday afternoon, the coalition says a search warrant signed by a judge is necessary before the FBI or other police agencies can read the contents of Yahoo Mail messages--a position that puts those companies directly at odds with the Obama administration.

Yahoo has been quietly fighting prosecutors' requests in front of a federal judge in Colorado, with many documents filed under seal. Tuesday's brief from Google and the other groups aims to buttress Yahoo's position by saying users who store their e-mail in the cloud enjoy a reasonable expectation of privacy that is protected by the U.S. Constitution.

The government theory in the case seems pretty bizarre to me.  I guess the folks who have been trying to convince me to use PGP aren't so paranoid after all.

But all that aside, it strikes me there is a need for legislative action here to cement electronic privacy.  A couple of weeks ago, Julian Sanchez had a good article describing the crazy state of electronic privacy law -- its worth a read because it is hard to excerpt, the rules being so Byzantine.  But here is one snippet:

Suppose the police want to read your e-mail. To come into your home and look through your computer, of course, they'd need a full Fourth Amendment search warrant based on probable cause. If they want to intercept the e-mail in transit, they have to go still further and meet the "super-warrant" standards of the Wiretap Act. Once it lands on your Internet Service Provider's server, a regular search warrant is once again the standard"”assuming your ISP is providing access "to the public." If it's a more closed network like your work account, your employer is permitted to voluntarily hand it over. But if you read the e-mail, or leave it on the server for more than 180 days, then suddenly your ISP has become a "remote computing service" provider rather than an "electronic communications service provider" vis a vis that e-mail. So instead of a probable cause warrant, police can get a 2703(d) order based on "specific and articulable facts" showing the information is "relevant and material" to an investigation"”a much lower standard"”provided they notify you. Except they can ask a judge to delay notification if they think that would impede the investigation. Oh, unless your ISP is in the Ninth Circuit, where opened e-mails still get the higher level of protection until they've "expired in the normal course," whatever that means.

Unfortunately, this aggressive approach to the Fourth Amendment seems to be well embedded in the Obama administration:

Yesterday a federal judge in San Francisco ruled that the Al Haramain Islamic Foundation can recover damages under the Foreign Intelligence Surveillance Act (FISA) for illegal eavesdropping on telephone conversations between its officials and its American lawyers. U.S. District Judge Vaughan Walker rejected the Obama administration's argument that the state secrets privilege barred the foundation's lawsuit. Although Barack Obama ran on a promise to use the privilege less promiscuously than his predecessor, his Justice Department, like Bush's, claimed that even acknowledging the warrantless wiretapping of Al Haramain would endanger national security.

Al Haramain learned about the surveillance after the government accidentally gave its lawyers a classified document discussing it, but the foundation was not allowed to cite that document in making its case. Instead it relied on public statements by various federal officials that Walker concluded were sufficient to show the surveillance had occurred. Since there was never any serious question that warrantless surveillance of communications involving people in the United States violated FISA, the government lost its case once Walker refused to let it hide behind the state secrets privilege. "Under defendants' theory," he noted, "executive branch officials may treat FISA as optional and freely employ the SSP to evade FISA, a statute enacted specifically to rein in and create a judicial check for executive-branch abuses of surveillance authority....Because FISA displaces the SSP in cases within its purview, the existence of a FISA warrant is a fact that cannot be concealed through the device of the SSP."

This story was interesting, in a creepy Orwellian sort of way, in that it has turned out to be really, really hard to bring suit against this administration for this crime because people have a hard time demonstrating in court that they have standing to sue.  In effect, one has to show that he has been wiretapped to then sue that the surveillance was illegal, but the information to prove that one has been wiretapped is classified and therefore unavailable.  Only an accidental leak allowed this case to proceed.

Entrepreneurs and Government

I think a majority of small business owners and entrepreneurs are skeptical about government and taxes for a variety of reasons.  Large companies tend to shelter their workers from the vagaries of changing and hostile government regulation, but there is no such shield for people who own their own business.  At tax time this year, I had two thoughts about small business owners and taxes:

1.  We see the cost of taxes directly.  This year my taxes were X higher than I expected, where X is a pretty large five figure number (pretty large for me, at least).  To pay off X, I took the money directly out of an order we were placing for capital investment and new equipment, reducing the order by X.  At our company this year, there was a one-to-one scavenging of capital investment by taxes.

2.  Unlike most workers, entrepreneurs actually write checks for their tax bill rather than have it deducted stealthily from their paycheck.  I have always thought that this was the true purpose of withholding -- not compliance, but to try to hide people's tax bill from them.  If everyone wrote a check  (or four quarterly checks) each year for their tax bill (as I do), there would almost certainly have been a tax revolt years ago.

Obama and the Corporate State

For a while now I have been saying that Obama is not promoting Socialism, but rather an European-style corporate state -- where a troika of large unions, powerful politicians, and favored corporations worked together mainly to get themselves in power and to protect each other from competition.

It seems that Ron Paul sees it the same way:

Republicans and tea party activists are fond of accusing President Barack Obama of being a socialist, but today party gadfly Ron Paul said they had it wrong."In the technical sense, in the economic definition, he is not a socialist," the Texas Republican said to a smattering of applause at the Southern Republican Leadership Conference.

"He's a corporatist," Paul quickly added, meaning the president takes "care of corporations and corporations take over and run the country."

Reminder: Colorado Climate Presentation Next Monday

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 Only Health Care Cost Control Idea the Democrats Have Ever Had

I think this article makes it clear that, no matter what the rhetoric, the only health care cost control idea Obama and the Democrats ever had was saying "no" to care.  Whatever one calls this (managed care, rationing, death panels) it is really not that much different from what insurance companies have been doing for years.  And it is areal irony that Democrats passed this legislation feeding off anger of voters with insurance companies saying "no", when their plan really depends on the government saying "no" even more often  (or else there won't be any cost savings).

The author argues that information is important for patients to make better decisions:

When patients are given information about potential benefits and risks, they seem to choose less invasive care, on average, than doctors do, according to early studies. Some people, of course, decide that aggressive care is right for them "” like the cancer patient (and palliative care doctor) profiled in this newspaper a few days ago. They are willing to accept the risks and side effects that come with treatment. Many people, however, go the other way once they understand the trade-offs.

They decide the risk of incontinence and impotence isn't worth the marginal chance of preventing prostate cancer. Or they choose cardiac drugs and lifestyle changes over stenting. Or they opt to skip the prenatal test to determine if their baby has Down syndrome. Or, in the toughest situation of all, they decide to leave an intensive care unit and enter a hospice.

I agree, but I would go further -- information and incentives are important.  And the absolute most important bit of information when it comes to cost control is price, and patients under Obamacare have absolutely no incentive to give a sh*t about price even if they were informed of it.  Exactly the opposite of the incentives I have had since I took on a high-deductible health care policy several years ago.

Update: Brad Warbiany discusses the proposed IPAB and its powers to shape health care spending in the context of Congress as an addict trying to control its impulses.  However, I think Brad underestimates the power of the board to be captured.  What will result is rulings for more coverage of procedures with powerful lobbies, offset by less coverage of procedures with weaker lobbies, irrespective of the science.   Just look at the diseases the NIH and NSF gives grant money for -- the grants have nothing to do with the science of where research could be most productive and everything to do with diseases that have large and powerful constituencies.

Update #2: Isn't it interesting to see the NY Times, after arguing for months that Obamacare was not about rationing, is now admitting that rationing is the key to success.  It reminds me of this that I wrote a while back:

I have decided there is something that is very predictable about the media:  they usually are very sympathetic to legislation expanding government powers or spending when the legislation is being discussed in Congress.  Then, after the legislation is passed, and there is nothing that can be done to get rid of it, the media gets really insightful all of a sudden, running thoughtful pieces about the hidden problems and unintended consequences of the legislation.

Change Indeed

From the Telegraph, via  Q&O:

Barack Obama's administration has authorised the assassination of the radical Muslim cleric Anwar al-Awlaki, a rare move against an American citizen.

I am reminded of what I wrote on the day of Obama's inauguration:

I will be suitably thrilled if the Obama administration renounces some of the creeping executive power grabs of the last 16 years, but he has been oddly silent about this.  It seems that creeping executive power is a lot more worrisome when someone else is in power.

But don't worry, separation of powers has been respected:

The decision to add him to the US hit list required a National Security Council review because of his citizenship.

You see, before Obama can unilaterally order an American citizen killed, he has to review the decision with, uh, a group of people he appointed and that work directly for him.  From Bruce McQuain:

But who the hell is Barack Obama to arbitrarily and unilaterally waive Constitutional due process (oh, that's right, he's a Constitutional law professor, isn't he?) and order the assassination of a US citizen?  And as an aside "“ where are all the liberal voices who spent every waking hour worrying about George Bush's eavesdropping and loudly denouncing it, forever and ever, amen?  Why are they, for the most part, silent on the subject of assassinating a US citizen?

Labor Law Reduces Employees' Freedoms Too

I get tired of the perception that labor law is universally beneficial to people selling their labor, and that these laws are solely intended to reduce the ability of rapacious employers to exploit powerless workers.  It confuses people to no end when I say that minimum wage laws prevent workers from selling their labor for less than the minimum wage, and is therefore a restriction on every worker's freedom.  Supporters of the law say, that's can't be right, it simply must be helping all workers.

But I think anyone who has gone through the experience lately of trying to help their teen get a summer job knows this is not the case.  My son would gladly work for free or below minimum wage at any number of jobs to get experience.  Unfortunately, he must be paid the same minimum wage as someone with years of experience, and many large corporate chains have simply banned hiring of kids under 18 to avoid liability and labor law hassles associated with hiring teens.  The result is an astronomical unemployment rate for teens.

So here is another example, with the Feds cracking down on unpaid internships.  This is simply crazy.  The government has got to realize that there are useful and valuable things one can trade his labor for (e.g. experience, training) that can't be measured in money.

Of course, you know who is the greatest violator of these internship rules?  The organization that requires the longest hours for the least pay (well under minimum wage) for a huge portion of its staff?  Why, its the US Congress, but of course they exempt themselves from these laws.

UpdateFrom a commenter on Stossel's blog:

Maggie Hanson:

I have an unemployed friend trying to land work in a new field where she has no experience. She's up against experienced applicants. I suggested she offer her services for free as an intern for 3 months in exchange for learning on the job and a letter of recommendation. She told me she didn't think that was legal. I'm appalled to learn she is right! Yet how else is she going to get experience? She can't afford school. Internships are a free education.

Congrats to Todd Ramsey

Todd Ramsey has won our annual bracket contest - actually, he had it locked up last week statistically, but I did not want to discourage everyone.  Yours truly had his worst finish every, coming in *cough* mumble mumble, but importantly placed ahead of my son Nic, which is all that matters around our household.  The full rankings can be found here.

I thought the finals were great, and I am sure Butler fans will be replaying that last shot in their heads for years, in the same way I can still see Alonzo Mourning or this backdoor cut in my sleep.

Public Testimony on Private Parks Management

I will be testifying in Pennsylvania in a hearing on public-private partnerships, with my 20 minutes on private parks management:

Tuesday, April 6th, 1:00 PM

Grove City College Hall of Arts and Letters, Sticht Auditorium

100 Campus Drive, Grove City

Topic:  Public Private Partnerships

Grove City Campus:   http://www.gcc.edu/Campus_Map.php

My presentation slides are here:  Keeping Parks Open with Private Management

More From the Science-Based Administration

Every study I have ever seen has said that corn ethanol is only marginally energy-positive when its growing and production costs are considered and barely breakeven on CO2.  In other words, it costs a lot and does nothing, even before one considers negative effects to food prices and land use.

So of course, the Obama administration may soon demand that we subsidize more of it

Burdened by falling gasoline consumption and excess production capacity, ethanol producers appealed to the government on Friday to raise the 10 percent limit on ethanol in most gasoline blends to as high as 15 percent.

Ethanol plants are closing across the country and some ethanol producers are declaring bankruptcy. The appeal will require the Obama administration to decide whether to increase federal support for the industry, which has already benefited from an array of subsidies, tax credits and Congressional production mandates.

"Approving the use of ethanol blends up to 15 percent is a necessary and positive step," said Bob Dinneen, president of the Renewable Fuels Association, an industry lobbying group, "to ensure the full potential of a robust domestic ethanol industry."

The Environmental Protection Agency and the Energy Department have been testing higher ethanol blends. The E.P.A. has nine months to review the request, but it could decide before that to increase the blend cap slightly, to 12 or 13 percent.

Energy Secretary Steven Chu has indicated that he would favor at least a small increase in ethanol levels unless auto companies said there was a risk the change would damage their products.

At least the article is marginally honest - its starts with the true reason for the mandate - improving the bottom line of favored businesses, not energy or environmental policy.  Chu seems to be joining Krugman as another Nobel prize winner turned political hack.  In the past I have had Chu's supposed gravitas thrown at me in climate debates -- I think this should settle just how Chu makes choices between what science tells him vs. what politcal pressures are demanding.

Facts vs. the Narrative

The narrative is that small business credit markets are frozen.  John Stossel argues the facts say otherwise?

More melodramatic prose from today's Washington Post: "White House moves to free up lending for small businesses."  "Unfreeze the markets." "Free up lending." Given such language, I would think that loans to small businesses have stopped. The market must be broken, right?

... lending to [small] companies has fallen. Federal data show that lending to small businesses by community banks declined by about $8 billion, or 2 percent, between September 2008 and September 2009.

A decline of two percent. TWO PERCENT. That constitutes a credit "freeze"? Considering the rash of bank failures from 2008 - 2009 due in large part to bad loans made by banks, a decline of two percent in loans to small businesses strikes me as a prudent response.

So does our science-based President address the narrative or the facts?  Here is a hint:  narratives can affect elections, while facts are often ignored.  Therefore, Obama is proposing to use $30 billion of TARP money to so something about the $8 billion drop in small business lending.

The Danger of Community Rating

From Boston.com. via a reader:

Thousands of consumers are gaming Massachusetts' 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state's largest private insurer provided the Globe.

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company's data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.

Other insurers could not produce such detailed information for short-term customers but said they have witnessed a similar pattern. And, they said, the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014, unless federal regulators craft regulations to avoid the pitfall.

I would argue that these numbers for system gamers would be even higher save for a residual sense of honor in the population that resists such gaming, a sense of honor that will tend to be eroded over time by these incentives.  This is a theme I have discussed before, in answer to the question of why socialized nations seem to do well at first.  My answer to that question was that residual work ethic and values tend to mitigate, initially, against the horrible incentives inherent in socialism, but that these values erode when people see themselves effectively punished for their values and work ethic.