Archive for August 2010

Ground Zero Mosque and Limited Government

It appears that for a principled defense of property rights, the exercise of religion in America, and limited government we have to turn to ... liberal blogger Kevin Drum

We already know that a large majority of Americans are opposed to building it, but here are the results of an Economist poll on a slightly different question:

Whether or not you think the Islamic cultural centre and mosque should be built near the World Trade Center site, do you think that Muslims have a constitutional right to build a mosque there?

Technically, I think the wording of this question should have been turned around: not whether Muslims have the right to build a mosque on Park Place, but whether the government has the constitutional right to stop them from building a mosque on Park Place.

Still, I think everyone probably understands what this means, and it's just depressing as hell. It's one thing to oppose the mosque just because you don't like the idea, but to deny that Muslims even have a constitutional right to build it? That should be a no-brainer. Of course they do.

Seriously, this is from a man who probably does not think you have the Constitutional right to choose your own doctor. Why are Republicans ceding the high ground on this to Democrats? Well, it turns out that is the theme of my new column this week in Forbes.

...prospective mosque-banners would argue that I simply don't understand how utterly, deeply offensive the proposed location of this mosque is to them. But that is not the case. I am offended as well by what might be a laudatory memorial to a terrorist incident. But the question for me is, do we have a right not to be offended?

The irony is that for the last decade or so, conservatives have fought the political correctness movement over exactly this issue. Conservative commentators, rightly I think, were up in arms over the "hate speech" trial of Mark Steyn in Canada, and more recently the cancellation of Ann Coulter's Canadian speaking tour. In both cases Canadian government and university officials argued that Steyn's and Coulter's criticisms of radical Islam were too divisive, too defamatory to Muslims, and in general too offensive to be allowed public voice....

This is what truly floors me about the Ground Zero controversy: Republicans all over the country are standing up and begging House Speaker Nancy Pelosi and President Barack Obama to void the property rights of a private entity, shut down the construction of a church, and do so to protect some mythical right not to be offended, a right that, until recently, conservatives argued did not exist. Do Republicans really want to encourage the federal government to tear up property rights and First Amendment protections, all in the name of hurt feelings? If conservatives set this precedent today, they are almost certainly not going to like how it is used tomorrow.

Postscript: I notice something in this poll that I have seen several times lately.  Traditionally, poll results for independents always fell somewhere between Republicans and Democrats.  In this poll, as in several others I have seen, Independent responses actually fell outside of these bounds.  Increasingly independents are shedding the "moderate" label and actually pacing the two political parties.  I find this encouraging, though it is probably too much to hope for that this is the leading indicator of some type of radical ideological restructuring of the Coke and Pepsi parties.

I am Enormously Skeptical About This

I have absolutely no confidence that we will get 25% more work from our city employees on Mon-Thur to make up for a Friday day off.

Thursday could become the new Friday for thousands of Phoenix city employees in an effort to save money and keep workers happy.

Phoenix officials are considering mandatory Fridays off for administrative employees but would exempt those who support functions that can't be shut down such as water-plant employees, aviation workers and public-safety staff.

If approved, Phoenix would become the largest municipality in the state and the country on a mandatory four-day schedule, where employees typically work 10-hour days with Fridays off.

I am not sure we currently get 8 hours of work from many of them, and having been programmed for years or decades to an 8 hour day, I don't see them changing their behavior.  My alternate plan would be to cut everyone back to 32 hours a week, cut their pay by 20%, AND save energy on Friday.  By "alternate" I mean alternate to my base case of sending them all home permanently and waiting to see how long it takes for anyone to notice.

The Problem with Polls

I have no particular problem with this post from Kevin Drum where he would like to see some different polling questions about the Ground Zero mosque (though I do think they reflect some naivite about the founders' intentions in building the mosque, as telegraphed pretty strongly by its proposed name).  I think the underlying desire to raise awareness about how small changes to poll question wording can make big changes to poll outcomes is a good one.

Here is my problem with all polls like this.  Consider the question

Do you oppose construction of the Ground Zero mosque?

How I answer this is influenced by the unstated intent of the poller or whomever is paying for the poll.  That is, the answer is likely be used as justification for some government action, in this case confiscation of the property rights of the owners of the land by not allowing them to do with the land as they wish.

In this nanny state of micro-fascism, we have a very hard time separating opposition to something from be desirous of government intervention.  For example, I oppose teenagers spending all day watching crappy TV and playing PS3 games rather than reading.  I oppose overcooked steaks.  I oppose people who take forever in buffet lines, selecting one leaf of lettuce at a time.  I oppose airplane bathrooms that smell bad.  I oppose using "incent" as a verb.  I oppose writers who have really long passages without paragraph breaks.  I oppose commenters who constantly harass me about my horrible proof-reading rather than just getting over it and accepting that I suck.

However, in none of these instances would I advocate government action.  Now, of course, I go further than most, in that I also oppose government action in any number of more controversial activities that I also personally oppose but would never ask to be banned, including prostitution, meth use polygamy, driving without a seat belt, and pulling tags off mattresses.   So a better question would be:

Do you oppose government action to block construction of the Ground Zero mosque?

The Conservative Impulse

I find all the angst over evolution of the Internet in articles like this one in Wired to be pretty funny.  It used to be that nostalgic conservatism longed for days 40,50, even 100 years ago.  Now apparently in high tech, nostalgia is for the good old days five years ago, in this case before iPhones, YouTube, and Facebook.   Yawn.

We all know Conservatives are supposed to be conservative, but I have written a number of times about the enormous conservatism of self-styled progressives.   I suppose its a human trait that at some point in time, say in their teens or twenties, people psychologically define the world to be "normal," after which change is disconcerting.  I am not sure I have ever felt that way, so I am only guessing and trying to read between the lines of others' comments.

The only reason I followed the link to the Wired article at all is that I saw this terrible graph reproduced:

I mean, its pretty, but implies that email and web browsing are going to zero, which is absurd.  In fact, my guess is that they continue to grow, but shrink as a percentage because of the growth of new uses, which are disproportionately bandwidth-heavy so skew the chart.  And by the way, is anyone but a few hardcore geeks sitting around lamenting the decline of FTP and newsgroups, which died about 5 seconds after there was a more efficient way to download porn.  Is Facebook really anything but a much more capable substitute for newsgroups and chat rooms?

Heads I am Cheated, Tails You Owe Me Something

Read this story, and then imagine if the facts had been reversed:

"A sports conference that always scheduled weekday basketball doubleheaders in which women's teams played the first game -- letting the men play in the later time slot -- has altered the practice, after an anonymous sex discrimination complaint charged that this made the women's games appear to be a "warm-up" act for the men's games.

Now, hoping to avoid possible gender equity suits, other athletic conferences are considering similar scheduling changes.  Last month, the Great Lakes Intercollegiate Athletics Conference announced that it would alternate from season to season the order in which men's and women's teams would play in doubleheaders. The men will play first this season, and the women will play first next season.

Dell Robinson, the conference commissioner, said the decision was made after the league received an inquiry in March from the U.S. Department of Education's Office for Civil Rights. An anonymous complaint filed with the agency argued that the negative connotation conveyed by always having women's teams play first in these doubleheaders was detrimental to women's athletics."

So let's imagine a alternate world where women's basketball games had always traditionally been played in the second game of the double-header, after men's games.  Does anyone believe that the civil rights folks wouldn't have filed a complaint saying

Having women's games always played after men's games makes them appear to be an after-thought to the main contest, positioning the game later in the prime social hours where potential student fans will be more likely to leave early and head to the bar instead of staying to watch.  The negative connotation conveyed by always having women't teams play last in these doubleheaders is detrimental to women's athletics.

See, its easy to be a race/gender advocate.

Unions are About Power, Not Principle

A couple of stories really drive the title of this post home to me.  First, flash back to any number of these type of stories

To Protest Hiring of Nonunion Help, Union Hires Nonunion Pickets

Billy Raye, a 51-year-old unemployed bike courier, is looking for work.  Fortunately for him, the Mid-Atlantic Regional Council of Carpenters is seeking paid demonstrators to march and chant in its current picket line outside the McPherson Building, an office complex here where the council says work is being done with nonunion labor.

"For a lot of our members, it's really difficult to have them come out, either because of parking or something else," explains Vincente Garcia, a union representative who is supervising the picketing.

So instead, the union hires unemployed people at the minimum wage"”$8.25 an hour"”to walk picket lines. Mr. Raye says he's grateful for the work, even though he's not sure why he's doing it. "I could care less," he says. "I am being paid to march around and sound off."

So we follow that up with this story of a union employee who was fired for... wait for it ... trying to unionize his fellow employees

In a move of stunning hypocrisy, the United Federation of Teachers axed one of its longtime employees -- for trying to unionize the powerful labor organization's own workers, it was charged yesterday.

Jim Callaghan, a veteran writer for the teachers union, told The Post he was booted from his $100,000-a-year job just two months after he informed UFT President Michael Mulgrew that he was trying to unionize some of his co-workers.

"I was fired for trying to start a union at the UFT," said a dumbfounded Callaghan, who worked for the union's newsletter and as a speechwriter for union leaders for the past 13 years.

Callaghan said he personally told Mulgrew on June 9 about his intention to try to organize nonunionized workers at UFT headquarters.

"I told him I want to have the same rights that teachers have," said Callaghan, 63, of Staten Island. "He told me he didn't want that, that he wanted to be able to fire whoever he wanted to."

The UFT has long strenuously resisted city efforts to make it easier for school administrators to fire teachers.

"This is the exact antithesis of what they preach, and Michael Mulgrew is the biggest hypocrite out there," Callaghan fumed.

As it turns out, when unions like the UAW get an ownership position in a company, they tend to act exactly like management

You could also entitle it "meet the new boss, same as the old boss". What I'm talking about is a recent meeting between UAW bosses and GM workers. To say it didn't go well would be a vast understatement)(via Sweetness and Light):

Workers at a General Motors stamping plant in Indianapolis, Indiana chased United Auto Workers executives out of a union meeting Sunday, after the UAW demanded workers accept a contract that would cut their wages in half.As soon as three UAW International representatives took the podium, they were met with boos and shouts of opposition from many of the 631 workers currently employed at the plant. The officials, attempting to speak at the only informational meeting on the proposed contract changes, were forced out within minutes of taking the floor.

The incident once again exposes the immense class divide between workers and union officials, who are working actively with the auto companies to drive down wages and eliminate benefits.

Actively working with the auto companies? They are part owners now of the auto companies "“ they're "management" for heaven sake.

In each situation, when the tables are turned, union leaders suddenly discover the economic realities those of us who run businesses have always understood, ie

  • You don't pay more for labor than you have to.  That is what markets are about.  If good people are running around unemployed who are grateful to make $9 an hour, then hiring them is a win-win for both of you.  Setting an arbitrary price floor out of some notion of fairness merely leaves more people unemployed.  From the first story, this is a position the union never takes with any business but itself, but is certainly correct

The union's Mr. Garcia sees no conflict in a union that insists on union labor hiring nonunion people to protest the hiring of nonunion labor.

He says the pickets are not only about "union issues" but also about fair wages and benefits for American workers. By hiring the unemployed, "we are also giving back to the community a bit," he says.

  • Its nearly impossible to run a business if one can't hire and fire at will.  If, once hired, it becomes impossible (e.g. through a tangle of grievance processes) to fire people, then no business can operate well
  • Contrary to certain progressive notions, corporations do not have some sort of infinite treasury full of horded Nazi gold that can pay for any possible wage level.  Given product pricing in a particular industry as well as productivity levels, the labor budget is finite.  At GM, the reasonable labor budget is both finite and likely lower than its current level.  It is admirable at some level to see UAW officials dealing with this hard fact of fiscal responsibility (better, in fact, than are most government officials).  But one wonders how incentives could have been structured better in the past so that this epiphany could have been reached 30 years ago before the golden goose was already killed.

Gmail Intelligence

Everyone else may know about this feature, but I wrote an email today where I was going to attach some tax documents for my accountant.  The email said something like "see attached..." but I forgot to attach the files before I hit "send."  Gmail popped up a message that said something like "you had 'see attached' in your text but did not attach a file, did you mean to?"  Why, thanks.

Your Tax Money At Work

In this week's episode, your tax money goes to subsidizing low cost, low down payment loans for New York luxury condo buyers.

Letter to the Travis Irvine Campaign

To:  David DeWitt (Press Secretary)

I am always happy to see more libertarian candidates in our Congressional races, but in the year 2010 I just don't think there is an excuse for sending out a mass email for anything other than Viagra without an "unsubscribe" link. This is particularly true given that your campaign must be harvesting email addresses from a variety of sources rather than using an opt-in system, since up until today I had never even heard of Travis Irvine nor do I live in Ohio.  There are many services that provide automated mailings that take care of all the list management and unsubscribe mechanics.  Constant Contact has a very nice service.

Since your candidate is a libertarian and, I assume, familiar with the concept of rational self-interest, I will put my suggestion in those terms.  Without an "unsubscribe" link, I am forced to hit the "report spam" button in Gmail.  If enough people do the same, there is a good chance your candidate's email will not be getting through to anyone's email box, even those who are interested.

I Was Too Harsh?

Several observers, including Megan McArdle, said that I was too harsh when I wrote this in a post about pre-employment screening:

I understand that this is exactly what the Left is shooting for "“ an environment where the competent have no advantage over the incompetent.  If employers are resorting to FICO scores, it just demonstrates how all the other reasonable avenues of obtaining information have been closed to them.

Unreasonable?  Perhaps.  Or perhaps not.  From the US EEOC site:

There is no Federal law that clearly prohibits an employer from asking about arrest and conviction records. However, using such records as an absolute measure to prevent an individual from being hired could limit the employment opportunities of some protected groups and thus cannot be used in this way....

Even if the employer believes that the applicant did engage in the conduct for which he or she was arrested that information should prevent him or her from employment only to the extent that it is evident that the applicant cannot be trusted to perform the duties of the position when

  • considering the nature of the job,
  • the nature and seriousness of the offense,
  • and the length of time since it occurred.

...

Several state laws limit the use of arrest and conviction records by prospective employers. These range from laws and rules prohibiting the employer from asking the applicant any questions about arrest records to those restricting the employer's use of conviction data in making an employment decision.

This means that a company cannot, according to the EEOC, maintain a blanket policy of, for example, never hiring anyone convicted of murder or bank robbery.  Just take that as your happy thought for the day next time you are snuggling up for bed at night in some hotel, wondering if you are in a state where the hotel was allowed to screen its night-time employees for felonies.

My sense is that the Left is shooting for employment based on paper qualifications rather than perceived capability.   I wrote before that the Left has cheered on tort actions that have almost shut down the provision of job references.  Or look at civil service or schools.  Hiring is based on minimum qualifications (e.g. possessing the correct teaching degree) rather than ability.  Promotion is based on seniority rather than performance.  Every grievance system ever invented makes it almost impossible to fire employees even for cause, much less for performance shortfalls.

Omission vs. Commission

A while back in my Forbes column on the incentives faces by government workers, I wrote

People sometimes say that problems involving difficult trade-offs are hard for government bureaucracies to handle. This isn't true--most of these trade-offs are in fact easy for them to handle, because the outcome is as predetermined as a river's path through a well-worn valley. The problem is having these trade-offs made well.

Most of the tough decisions in the Gulf involve violating a rule or standard practice for which an agency and its staff have specific accountability for compliance. This is balanced against the opportunity to gain some benefit that is outside of the agency's responsibility and for which it will not be rewarded or punished. An example would be the administration's ban, at EPA insistence, of what BP ( BP - news - people ) claims is the most effective oil dispersant because it is potentially toxic. Does this dispersant's toxicity create more or less harm than the lost opportunity of preventing a lot of oil from entering coastal wetlands? The answer doesn't matter, because there was only one way the EPA was ever going to rule on this--their employees are easily able to duck blame for any damage from the spill, but they would be right on the firing line if even a single living creature was provably harmed by their allowing the dispersant to be utilized. Fear of blame for consequences of an action outweigh the opportunity costs of inaction every single time.

We see this again in this video, where school teachers and nurses in California argue that it is better to allow kids to die from their inaction than to take an action (e.g. dispense a life-saving medication)  that might have harmful consequences.

Licensing Naivite

OK, so after the monks and coffins, here is the future licensing act ripe for abuse by industry incumbents to protect their position.

New state licenses required for anyone handling a mortgage application could help prevent a repeat of the bad loans that contributed to Phoenix's housing crash....

The law, passed in 2008, creates state oversight for people who take loan applications, gives consumers an avenue for reporting misconduct and establishes a fund to help repay borrowers who lose money because of unethical or illegal acts by their loan officers.

The law faces hurdles, as cash-strapped Arizona struggles to process thousands of new applications.

Still, advocates call it a success. Many of the risky - and sometimes illegal - home loans that helped lead to record foreclosures in Arizona might not have been made if the more than 10,000 unlicensed loan officers working then had been subject to more oversight.

How?  If people were selling illegal home loans before, they were already breaking the law and the state obviously was unable to enforce the law.  How is adding a piece of paper that must be applied for each year going to help?  My company has all kinds of silly licenses - liquor licenses, guiding licenses, health licenses, tobacco sales licenses, over-the-counter drug sales licenses, even egg licenses - and in not a single case does the issuer of these licenses exercise any sort of oversight of our operations.  If they get their extensive paperwork (so workers have an excuse to retain their jobs - after all someone has to process the paperwork) and their check, that is generally the sum of interactions with these organizations.

Now, some of these licenses were hard to get in the first place, but not for any reason of my character or ethics or business model.  They were hard to get because their issuance has been co-opted by incumbent businesses in the state who use the process to limit competition.  Liquor licenses are a great example - in places like Shasta County CA and Lake Havasu City AZ, we had a real problem getting the liquor license over opposition from existing businesses.

This is almost mindless naivete:

"Loan-officer licensing is long overdue in Arizona," said Felecia Rotellini, who for five years served as superintendent of the Department of Financial Institutions, the state agency regulating the mortgage industry. She is running for Arizona attorney general.

"A lot of bad loans wouldn't have been made if we had it before," Rotellini said. "It gives me peace of mind for consumers to know we have licensing now."

The author of the article just throws the following statement out there without any source, as if it was an axiom with which we all would agree

In Arizona, the housing boom and crash were partly fueled by loan officers, how they operated and how they were paid.

In fact, the author's incredible confidence in licensing is undermined in this adjacent statement:

Mortgage brokers, who run firms that connect borrowers with the best loans, have long been regulated by the Department of Financial Institutions.

Brokers employ loan officers, who work directly with borrowers, collecting their Social Security numbers and financial information to determine whether they qualify for a loan. Loan officers usually recommend types of mortgages and lenders.

These officers, sometimes called originators, weren't subject to state scrutiny. They worked under the licenses of their brokers, much the way an apprentice would work for a licensed contractor. Previously, that oversight was considered sufficient.

So the firms these guys worked for were licensed, but the individual employees were not. But if that licensing of firms, which after all is the level where loan practices and compensation policy are set which supposedly are at fault, how does licensing individual employees help? This is a typical political step that a) gets some state organization more money and power, b) generates one sound bite in a news cycle for some politician to tell voters that they care and c) does zero for consumers.

At the end of the day, the real cause of the housing boom was easy credit, and yes loan officers participated in this given that their commission-based incentives caused them to want to make every loan possible.  But this incentive outcome would not have been some kind of insight to the people and system that employed the loan officers.  In fact, everyone from the loan officer to the Congress wanted easy credit, and to blame one link in the chain of delivering this credit to consumers is madness.  Going forward, there is absolutely no evidence that the government is going to reduce its history of promoting easy credit, as evidenced by any number of federal loan modification and lending programs over the last 2 years.  So the likelihood that a government regulatory agency could have somehow headed off the bubble and its bursting is just silly.  The government was a party to it.

In the long run this mechanism will almost certainly be co-opted by current loan issuers as a way to limit competition, much as real estate agents and lawyers and funeral home directors already do.  As a minimum, this is a way for mortgage brokers to outsource some of the cost of running background checks and such on their employment candidates onto taxpayers.  In fact, I wonder who was behind this law in the first place?

Backed by mortgage brokers and real-estate regulators, the law quietly went into affect on July 1

Licensing is Anti-Consumer (An Ongoing Series)

This week's episode -- Monk's making simple caskets to support themselves must desist because Louisiana has detailed licensing laws to protect current funeral homes from just this type of low-cost competition. This is what the monks would have to do to sell what is basically a nice wooden box

Louisiana law purports to require that anyone who is going to sell a casket has to jump through all same regulatory hoops as a full-fledged mortuary operation that embalms bodies. See, selling "funeral merchandise" (including caskets) means you are a "funeral director." And to be a "funeral director," you must be approved for "good moral character and temperate habits" by a funeral-related government entity [of course, that's in Louisiana, but still], complete 30 semester hours at college, apprentice with a funeral director for a year, pay an application fee, and pass an exam. But that's not all. If you want your facility to sell caskets, it's got to qualify as a facility for funeral directing, including a showroom and "embalming facilities for the sanitation, disinfection, and preparation of a human body."

The monks are being represented by the IJ (what the ACLU should have been if it weren't for its Stalinist founders) which hopes to get to the Supreme Court.  If I were one of the monks (wildly unlikely as that is) I might be tempted to sell them as "human-sized wood boxes" rather than coffins and see where that got me.

Insurance Expense Ratios

One of the arguments Democrats have made for nationalized health care is that government expenses will be much lower than private companies.  This is on its face absurd, given most people's experience with government agencies, but is nominally supported by low expense ratios in Medicare.  I won't go into this today, but this is more an artifact of the way government does accounting as well as operations decisions at Medicare which may be non-optimal (e.g. Medicare does much less claims verification and investigation than private companies, which is why we see huge fraud cases from time to time).

Anyway, we get a fresh example of private vs. public expenses on a very comparable basis in California workers comp.  The public State Fund acts as an insurer of last resort as well as a competitor to many private providers.  The fact that it is an insurer of last resort will increase its loss ratios, but its expense ratios of management or "claims adjustment" expenses should be similar.  But of course they are not.

State Fund's unallocated loss adjustment expense ratio was a whopping 51.4% last year compared to 8.9% for private carriers, while State Funds allocated loss adjustment expenses were 9.8% compared to the industry's 13.8% respectively.

This means the management expense ration of the state agency is 61.2% of premiums vs. 18.7% for private companies.  This just makes laughable the pious requirement in Obamacare that insurance companies keep their expense ratios under 20% -- or else the more efficient government agency will take over.

We are facing a huge 29.6% increase in workers comp rates in California, in part because the very high State Fund expense ratios are averaged into the calculation.

The Anti-Stimulus

My column for Forbes is up this week, and yet again I address issues related to the stimulus.  This time, rather than questioning the Keynesian multiplier, I observe that Congress has passed several pieces of legislation which act as "anti-stimulus" whose magnitudes dwarf that of any fiscal stimulus programs, even at multipliers greater than one.

Larger corporations are going to face different economics, but they too seem to be anticipating higher future costs from this legislation. For example, while they may not face the penalty for having no health care plan, they will face higher Medicare taxes, taxes on overly rich plans, and increases in health care premiums. If the average business is anticipating a 5% increase in payroll-related expenses, and given that total private payrolls in the U.S. are around $6 trillion, this implies that businesses may be planning for $3 trillion of health care anti-stimulus over the next 10 years.

Similar scale numbers can be found for the overall effects of cap-and-trade. Perhaps the best estimate we have is the CBO scoring of the Kerry-Lieberman bill, which estimated that payments for carbon allowances over the first ten years would total $751 billion. Assuming that the costs of most of these allowances are passed on to consumers, then this bill represents another three quarters of a trillion in anti-stimulus. In addition, expiration of the Bush tax cuts, card check, and a number of new regulatory initiatives all will drive this anti-stimulus expectation higher. Is it any wonder, then, that the private sector yawns when the Congress rushes back from vacation to pass a $26 billion jobs bill?

The Anti-Responsibility Law

Congress just passed a new $26 billion payoff to state governments, easing the pressure on states to institute some sort of fiscal responsibility.  The follows on the heals of last year's tens of billions of dollars in direct aid to state budgets in the original stimulus bill.

Taking the pressure off states for real fiscal reform is bad enough, but this is worse:

Maintaining the salaries and generous benefit plans for members of teachers unions is indeed a top Democratic priority. That's why $10 billion of the bill's funding is allocated to education, and the money comes with strings that will multiply the benefits for this core Obama constituency.Specifically, the bill stipulates that federal funds must supplement, not replace, state spending on education. Also, in each state, next year's spending on elementary and secondary education as a percentage of total state revenues must be equal to or greater than the previous year's level.

This is roughly equivalent to the government telling mortgage holders that took on too much debt that the government will bail them out, a clear moral hazard.  But then it goes further to force the mortgage-holder to promise to take on a bigger mortgage next year.  Unbelievable.

In a move right out of Atlas Shrugged, Texas is singled out for special penalties in the law because, well, it seems to be doing better than all the other states economically and is one of the few that seem comitted to fiscal responsibility

For Texas, and only Texas, this funding rule will be in place through 2013 [rather than 2011]. This is a form of punishment because the Beltway crowd believes the Lone Star State didn't spend enough of its 2009 stimulus money.

So much for equal protection.  This Congress sure has set an incredible record for itself in choosing to reward and punish individual states (remember Nebraska and Louisiana) in its legislation.

The WSJ thinks perhaps a different kind of multiplier, other than the Keynesian one, is behind this legislation.

Keep in mind that this teacher bailout also amounts to a huge contribution by Democrats to their own election campaigns. The National Right to Work Committee estimates that two of every three teachers belong to unions. The average union dues payment varies, but a reasonable estimate is that between 1% and 1.5% of teacher salaries goes to dues. The National Education Association and other unions will thus get as much as $100 million in additional dues from this bill, much of which will flow immediately to endangered Democratic candidates in competitive House and Senate races this year.

Very Funny if True

The word is out around town that Ben Quayle (yes, from that Quayle family) who is running for the Republican nomination for Congress, may be one of the founders and chief writers for local (very sleazy) gossip site Dirty Scottsdale  (which has since gone national as the Dirty -- barely SFW).  The site seems to specialize in printing pictures of club-hopping local girls and calling them out for either their looks, plastic surgery, or sexual preferences.

Update: Quayle denies it.  Either this is an incredible revelation of a secret life whose writing marks him as a real sleazy loser or it is an incredibly brazen (given that the accusation comes from his supposed partner) political hit-job.  Either way its a really interesting story.

Update #2: Quayle, uh, un-denies it.

The High Price of the GM Bailout

This week in Forbes, I argue that tallying up the taxpayer money that has been poured into GM actually under-estimates the price of the bailout.

So what if the U.S. government had let GM's bankruptcy proceed unhindered? Allowing the GMs of the world be liquidated, with their assets and employees taken up by more vital entities, is critical to the health of our economy and the wealth of our nation. Assuming GM's DNA has a multiplier below one, releasing GM's assets from GM's control actually increases value. New owners of the assets might take radically different approaches to the automobile market. Talented employees who lose their jobs in the transition, after some admittedly painful personal dislocation, can find jobs designing and building things people want and value. Their output has more value, which in the long run helps everyone, including themselves....

This is the real cost of the GM bailout--not just tens of billions of dollars of wasted taxpayer money, but continued unimaginative use of one of the largest aggregations of wealth and talent in the world.

Purging Real Characters

I am not sure that Tiger Mike Davis was really missed in the business world after his bankruptcy, but I have to say that my reaction to these memos of his (via Tom Kirkendall) waiver back and forth between "what an asshole, glad I never worked for him" and "too bad political correctness has purged the world of a lot of real characters."

The memos seem to have a common theme of reminding everyone who is boss.  I run a 500-person business and have never in 10 years felt the need to remind any employee that I was boss, or to make it clear that I was somehow subject to different rules.  I could subject myself to different rules, but the downsides of doing so would be large and fairly predictable.  I try to work at least as hard as everyone who works for me.

If I was, say, LeBron James and 99% of the value created among myself and the circle of people working for me was created by me, I might see copping an attitude.  But since 99% of the value in my company is created by someone who works for me, I spend most of my time convincing my employees that I don't know everything and that I am therefore reliant on their ideas and initiative.  A long while back I wrote that I tend to hide my degrees from Ivy League schools from my employees, as these tend to intimidate people into assuming I know more than they do.  This may be a correct assumption about, say, the origins of the reformation or solution approaches to partial differential equations.  It is not correct, however, when it comes to knowledge of day to day operating issues (and their potential solution) at our facilities my employees manage for me.

Interestingly, and almost inevitably, Tiger Mike seems to have a problem with his employees not sharing information or ideas with him, as evidenced by this memo:

Carbon Offset Scams

I have written before about carbon offset scams -- even well intentioned programs are unlikely to achieve their promised benefits because

  • The projects they fund are typically not incremental -- many likely would have proceeded without the offset funds, so that the benefits are effectively double counted.
  • I have never seen any of these programs submit themselves to 3rd party offset of their supposed CO2 reductions.  In most cases, these are faith-based programs where it is impolite to ask if the promised reductions actually occur.

Randal O'Toole has a good example of a program that makes all these mistakes, and compounds them with absurdly high administrative costs.  One is left to wonder whether the Oregon state-run program is actually reducing CO2 or simply making sure a number of government salaries get paid.

In 2006, Climate Trust spent about two-thirds of its funds on carbon offsets, while most of the rest went for payroll and professional fees. In 2007, the share going to carbon offsets declined to 64 percent. By 2008, as near as I can tell, none of Climate Trust's money went for carbon offsets. Instead, 73 percent of its $1.65 million budget went for salaries, fees, and other compensation. It also spent more than $120,000 on travel and conferences and $95,000 on rent and office expenses. In 2008, Climate Trust paid its executive director $154,000, not counting health insurance and other fringe benefits. At least one other staff member whose title was "director of offset programs" was paid more than $100,000 and a third one received $88,000.

Back from the Big Floating Leisure Suit

I am back from the family reunion (my wife's family) which was held on a cruise last week.  The cruise was a really good venue for a family reunion -- small enough that you run into people, but large enough to escape them too.  Every night we had 4 large tables to ourselves in the restaurant.

The cruise itself was a little disappointing, but it was chosen more for being low cost and accesible to the entire group, so I can live with that.   There were way too many people in my space for my personal taste.  Someday I want to take a much smaller boat, maybe in the Greek Isles.

A couple of things amazed me.  One, the port of call in Mexico was really a dump.  And this is from someone who has spent time in Mexico, good places and bad, and has some fondness for the country.  I figured out the reason when I was laying on the deck and saw the Panamanian flag flying form the back of the boat.  By US law, for a non-US flagged ship to leave and return to a port (in this case Long Beach), it must stop in between in another country.  I am sure the cruise line would love to run four day cruises say between San Diego and Santa Barbara or San Francisco, but that would be illegal unless they took on the prohibitive cost of operating a US-flagged ship.  So we stopped in a little industrial town just over the border to make it all legal.

The other thing that amazed me was the decor of the ship.  I would have bet money that the ship was designed in the 1970's.  Our room, which had a balcony, was nice, but the common areas were right out of bad 1970's casino ambiance.  Amazingly, though, the nameplate said it was built in 1998.  Not sure what these guys were thinking.  I called it the great floating leisure suit.

Internet service was $24 per hour, so I did not do any blogging, but the good news is I got a ton of writing done on my new novel.

Wow

Gone This Week

At a family reunion (my wife's side) all this week.  Joy.  May or may not get to blog.