Archive for September 2013

Seriously, Media Cannot Find Cost to Closure Beyond Parks

I wrote earlier that the only downside the AP could find with the looming shutdown were National Park closures.  I am not exaggerating.  It is the only thing they have.  Here is the CNN site about 45 minutes before midnight.  I added the red arrow



As I wrote earlier, the only other function the 800,000 to-be-furloughed government employees seem to have is drawing a paycheck. Clicking on the article above the parks article entitled "multibillion$$ hit", we find absolutely no hint that these employees do anything of economic value or that their lost work will hurt the economy.   The only thing that they apparently usefully do is spend tax money

A government shutdown could cost the still-struggling U.S. economy roughly $1 billion a week in pay lost by furloughed federal workers. And that's only the tip of the iceberg....

The total economic impact is likely to be at least 10 times greater than the simple calculation of wages lost by federal workers, said Brian Kessler, economist with Moody's Analytics. His firm estimates that a three to four week shutdown will cost the economy about $55 billion.

Really?  There is a 10x Keynesian multiplier on these people's paychecks?   I would sure love to see what kinds of stuff they spend money on because I have never heard of a number that absurdly high.

What else can they think of to worry about beyond these lost paychecks?  Only one other specific is mentioned in the article.  Get ready for it -- the national parks will close!

Many federal contractors will also have to cut back on staffing if they don't get the business they normally do from the government. There's also a large variety of businesses that depend on the government to conduct their normal operations -- tourism businessesthat depend on national parks staying open, for example.

So there you have it.  The government shutdown does two things:  It closes the national parks and lays off 800,000 people who apparently do no valuable work (other than keep parks open!) but who have the highest Keynesian multipliers on their spending of any individuals in the nation.

What Is Wrong With Health Care, Though My Diagnosis is Opposite of the Left's

Note:  I did not like the way I first wrote this post so I have re-written it extensively.  

Progressives are passing around this chart from Brookings as an indicator of "what is wrong" with the US healthcare system.


This is how Kevin Drum interprets the chart:

In other words, the supposed advantage of PRT—that it targets cancers more precisely and has fewer toxic side effects—doesn't seem to be true. It might be better in certain very specialized cases, but not for garden variety prostate cancer.

And yet, new facilities are being constructed at a breakneck pace. Why? Because if they build them, patients will come. "They're simply done to generate profits," says health care advisor Ezekiel Emanuel. Roger that.

This is an analysis that may be true, but let's take a moment to consider how strange it is.  Forget health care for a minute.  Think about any other industry.  Here is what they are effectively saying:

  1. Industry competitors are making huge investments in a technology that has no consumer value
  2. The competitors in this industry are all making investments in this technology so rapidly that the industry is exponentially over-saturating with capacity.

And from these two facts they conclude that the profits of industry competitors will increase??

Let's for a moment say this is true -- an enormous investment that has no customer utility and that is made by so many players that the market is quickly over-saturated actually increases industry profits.  Let's take a moment to recognize that this is BIZARRE.  We have to be suspicious of some structural issue for something so bizarre to happen.  As is typical of progressives, their diagnosis seems to be that private actors are somehow at fault for being bad people to make these investments.  But these same private actors, even if they wanted to, could never make this work in any other industry, and besides there is no evidence that hospital managers are any worse people than, say, cookie company managers.  The problem is that we have fashioned a bizarre system through heavy government intervention that apparently makes these pointless investments sensible to otherwise rational actors.

One problem is that in any normal industry, consumers would simply refuse to buy, or at least refuse to pay a very high price, for services that have little or no value.  But in health care, we have completely eliminated any consumer visibility to prices.  Worse, we have eliminated any incentive for them to care about prices or really even the utility of a given procedure.  This proton beam thingie might improve my outcomes 1%?   Why not, it's not costing me anything.  Perhaps the biggest problem in health care is that the consumer has no incentive to shop.  Obamacare does nothing to fix this issue, and in fact if anything is taking us further away from consumer shopping and price transparency by working to kill high deductible health insurance and HSA's.

There is only one other industry I can think of where capital investment, even stupid capital investment, automatically translates to more profits, and that is the regulated utility business.  And that is what hospitals have become -- regulated utilities that get nearly automatic returns on investment.

In a truly free market, if these investments made no sense, one would expect very soon a reckoning as those who made these nutty investments go bankrupt.  But they obviously don't expect this.  They expect that even if it turns out to be a bad investment, they will use their political ties to get these costs built into their rate base (essentially built into reimbursement rates).  If any private or public entity refuses to pay, you just run around screaming to the media that they want to deny old people care and let sick people die.  Further, the government can't let large hospitals go bankrupt because it has already artificially limited their supply through certificate of need processes in most parts of the country.

The Left has proposed to fix this by creating the IPAB, a group so divorced from accountability that it can theoretically make unpopular care rationing decisions and survive the political fallout.  But the cost of this approach is enormous, as it essentially creates an un-elected dictatorship for 1/7 of the economy.  Which tends to be awesome if your interests and preferences line up with those of the dictator, but sucks for everyone else.  Which category do you expect to be in?  (Oh, and let's not forget how many examples we have from history of benevolent technocratic dictatorships - zero.)

The much more reasonable solution, of course, is to handle these issues the same way we do in cookies and virtually every other product -- let consumers make price-value tradeoffs with their own money.

Liberal Douchebag vs. Liberal Douchebag: Google Employees Invade San Francisco

This is an article a reader described as being from the "screw them all" category, and I am inclined to agree.  There are many funny bits in the piece, but I particularly liked the San Francisco lefties arguing that these new Google millionaires should act more like the Rockefellers and the Vanderbilts.  LOL for sure.

Incredibly, no one asks the obvious question -- why is home supply in San Francisco treated as zero sum, such that a Google millionaire moving in by necessity kicks some  poor people out.  The reason is that no place in the country does more than San Francisco and the Bay Area to make it impossible to build new housing.  San Francisco has some unique geographic constraints but you don't hear people complaining about this in Houston (which is in fact a much larger city).  In fact, I am trying to imagine Houston complaining about too many rich people moving in.  I just can't seem to focus that image in my head.

Actually, the article does very briefly consider the supply side of the equation, but of course no one mentions government development and zoning restrictions -- its the fault of capitalist speculators!  My reader highlights this paragraph:

Though he doesn’t much care for the start-up douchebags, Redmond blames not individual tech workers for the current crisis, but property speculators and the lawmakers who have let them take advantage of their precious commodity: space. “If we had a major earthquake in San Francisco, the water mains all broke, and some guy showed up with a water truck and started selling water for $10 a gallon, people would be pissed,” he says. “That guy would be ridden out of town; he’d be attacked with sticks and pitchforks. But that’s what the real estate people are doing right now – and they’re getting away with it.”

Memo to speculators:  If I have lost all access to water and am dying of thirst, you are welcome to come to my house and sell water to me for $100 a gallon.  I promise no pitchforks at my house.

PS-  One thing I did not know is that tech companies seem to be running large private bus systems

The Google buses, which often stop in spaces supposedly reserved for public transport, are a particular point of contention. This growing fleet of unmarked luxury coaches carries some 14,000 people on their 35-mile trip from the city to Silicon Valley and back. Since the search giant introduced the buses a decade ago, Facebook, Apple, eBay and almost 40 other companies have followed suit. Each new route quickly becomes a corridor of hip clothing stores and restaurants.

This is an interesting exercise in privatization.  For riders, it certainly would be nice to have routes custom designed to match your needs (ie exactly from your origin to your destination without changing trains or busses), something that is often an issue with public transport networks.  Als0- and this is going to sound awful but it is from many public surveys and not my own point of view - these private bus networks get around the social mixing issue that turns a lot of middle class riders off on bus systems.

This is obviously expensive but I understand why some companies do it.  As someone wrote a while back, no one in their right mind would put Silicon Valley in California today if it were not already there.  It is absurdly expensive to do business in CA and it is expensive to live there as an employee.  However, tech companies have found that  a certain good called "access to San Francisco" is quite valuable to the types of young smart employees they want to hire and can overcome these negatives.  So the bus system is a way for companies to better provide this good.  The irony of the article is that as so many tech companies are selling this good (ie access to San Francisco) they may be changing the character of San Francisco in a way that makes the good less valuable over time.

Still Holding Off on iOS7

There was some back and forth at Glenn Reynolds site about delaying iOS 7 upgrades.  The day before the iOS 7 rollout I emailed all my family and told them not to install it until some time had passed and Apple had a chance to do revisions.  This is my general policy with all major OS upgrades (and many program upgrades) but all the more so with Apple software because they never allow download of older versions of things like iOS or iTunes and thus make it impossible to roll back problematic releases.    Now that we see issues about battery life and slow performance with iOS 7 on certain iPhone versions, I am glad we are waiting.  Feature-wise this is a very incremental release (masked to some extent by a totally new visual look) so I can certainly wait.

(The other software that is very much in this category is Quickbooks.  Their history of buggy software is terrible, and because upgrades tend to modify the database in ways that cannot be rolled back, it is another example of software where one needs to be very, very careful before upgrading.  Let others be the bleeding edge).

The Key Disconnect in the Climate Debate

Much of the climate debate turns on a single logical fallacy.  This fallacy is clearly on display in some comments by UK Prime Minister David Cameron:

It’s worth looking at what this report this week says – that [there is a] 95 per cent certainty that human activity is altering the climate. I think I said this almost 10 years ago: if someone came to you and said there is a 95 per cent chance that your house might burn down, even if you are in the 5 per cent that doesn’t agree with it, you still take out the insurance, just in case.”

"Human activity altering climate" is not the same thing as an environmental catastrophe (or one's house burning down).  The statement that he is 95% certain that human activity is altering climate is one that most skeptics (including myself) are 100% sure is true.  There is evidence that human activity has been altering the climate since the dawn of agriculture.  Man's changing land uses have been demonstrated to alter climate, and certainly man's incremental CO2 is raising temperatures somewhat.

The key question is -- by how much?  This is a totally different question, and, as I have written before, is largely dependent on climate theories unrelated to greenhouse gas theory, specifically that the Earth's climate system is dominated by large positive feedbacks.  (Roy Spenser has a good summary of the issue here.)

The catastrophe is so uncertain that for the first time, the IPCC left estimates of climate sensitivity to CO2 out of its recently released summary for policy makers, mainly because it was not ready to (or did not want to) deal with a number of recent studies yielding sensitivity numbers well below catastrophic levels.  Further, the IPCC nearly entirely punted on the key question of how it can reconcile its past high sensitivity/ high feedback based temperature forecasts with past relative modest measured warming rates, including a 15+ year pause in warming which none of its models predicted.

The overall tone of the new IPCC report is one of declining certainty -- they are less confident of their sensitivity numbers and less confident of their models which have all been a total failure over the last 15 years. They have also backed off of other statements, for example saying they are far less confident that warming is leading to severe weather.

Most skeptics are sure mankind is affecting climate somewhat, but believe that this effect will not be catastrophic.  On both fronts, the IPCC is slowly catching up to us.

A Third of Government is Shutting Down and The Only Lost Function Anyone Can Name is Parks

First, you did not read the title wrong.  A government shutdown means only about a third of the government actually shuts down.  But the more amazing thing is that given multiple opportunities to name what we would lose if this one third goes away, all anyone can name is parks.  This is from a Q&A by the Associated Press via Zero Hedge, which says we would lose parks and have some delays in new disability applications and, uh, we would lose parks.

About one-third of the government will shut down. About 800,000 of about 2.1 million federal employees will be sent home without pay. National parks will close.

NASA will continue to keep workers at Mission Control in Houston and elsewhere to support the International Space station, where two Americans and four other people live. Aside from that only about 3 percent of NASA's 18,000 workers will keep working.

The military and other agencies involving safety and security would continue to function. These include air traffic controllers, border patrol and law enforcement officers. Social Security, Medicare and veterans' benefits payments would continue, but there could be delays in processing new disability applications.

A partial shutdown that lasts no more than a few days wouldn't likely nick the economy much. But if the shutdown were to persist for two weeks or more, the economy would likely begin to slow, economists say.

Extended closures of national parks would hurt hotels, restaurants and other tourism-related businesses. Delays in processing visas for overseas visitors could interrupt trade. And the one-third of the federal workforce that lost pay would cut back on spending, thereby slowing growth.

So there you have it -- we lay off 800,000 government workers and the only two losses the AP can come up with is that national parks will close and those 800,000 people will have less to spend.    Since the NPS employs about 22,000 people, this means that the other 778,000 have a contribution to the economy that consists mainly of drawing and then spending a salary?

I would love to see the government shutdown rules modified to add National Parks to the critical assets that remain open in a shutdown, since this seems the only thing anyone cares about.  Then it would be fascinating to see how the downside of the shutdown would be spun.  I can see the headlines now.   "AP:  Millions of TPS reports go unfiled".

Update:  My company runs parks under concession contract in the National Forest and for other government agencies.  In all previous shutdowns, we have remained open, since we pay money into the government budget rather than draw money out, and since the parks we operate employ no government workers.  This time, though, we are starting to get notices we have to shut down too.  This may be an attempt by the administration to artificially make the shutdown worse than it needs to be.  I will update you as I learn more.

Apparently No Mistakes Were Made in Yarnell Fire

The official report is out, and apparently absolutely no mistakes were made by anyone leading to the deaths of 19 in the Yarnell Hill fires.  Despite the fact that -- these 19 men were totally out of communication;  and no one knew where they were; and they entered a ridiculously dangerous patch of ground; and they were not pursuing any coherent goal anyone can name -- no one made any mistakes and there is nothing here to learn from.  Wow.

Here is my analysis of what is going on with this report:  Substantial mistakes were made by both the fire team and by their leaders.  Their leaders wrote the report, and certainly were not going to incriminate themselves, particularly given that they likely face years of litigation.  They could have perhaps outlined the mistakes the team made, but the families and supporters of the dead men would have raised a howl if the dead firefighters were blamed for mistakes while the leadership let themselves off the hook, and surely would have pushed back on the culpability of the firefighting effort's management.

So this report represents an implicit deal being offered to the families -- we will let your dead rest in peace by not highlighting the mistakes they made if you will lay off of us and the mistakes we made.   We will just blame it on God (I kid you not, see Prescott chief's statements here).  Most Arizonans I know seem willing to have these folks die as heroes who succumbed to the inherent risks of the profession, rather than stupid errors, so we may never have an honest assessment of what happened.  And yet again the opportunity to do a major housecleaning of wildland firefighting is missed.

Republican Incompetence

I am just floored at the political incompetence of the Republicans in Congress.  Conservatives are arguing that it is all about how the media unfairly  makes Republicans the bad guys in all budget fights, and I think there is some truth in that.  But this was something that was known in advance, and which could be planned for.  I am not a political expert, but if the press really creates a messaging headwind for Republicans, then that means that they need to begin early and push often on a consistent message.

I thought the attempt to roll back Obamacare altogether was an absurd overreach that was merely attempted to help Congressmen head off primary challenges from the Right.  But even so, the GOP only settled on this approach to the budget battle at the absolute last minute.  What they really needed to do was pick a realistic item they were going to fight for, all agree to it 3-4 weeks ago, and then press like hell at every opportunity on the message for that one thing.

Now even political insiders can't name what is in the mish mash bill the House sent yesterday to the Senate.  I know it has a one year individual mandate delay (just in time to bail the Administration out of dire implementation issues) and a few other random things.  Of COURSE Republicans are going to lose the messaging war when they have not even bothered to message at all, even to those of us who could be convinced to start cutting government almost anywhere.

Coyote Blog 9 Years Old Today

My first post was on September 29, 2004.    Thanks for the support over the years.  Those first few months were bizarre, and felt like lecturing to an empty room.  6266 posts with 54,901 comments, which probably makes me solidly mid-size as far as blogs go.  I have no idea any more how many readers I have -- page views lost all meaning in the era of RSS feeds and with Facebook and Twitter, it's even more difficult to track.

Resort with Spectacular Views

I don't like to recommend destinations that are really expensive (why get people excited about a place they can't afford to visit) but we splurged this weekend on the Enchantment Resort in Sedona, Arizona.  It is the most spectacular location I have ever seen for a landlocked (ie non ocean-front) resort.  It is almost impossible to do it justice in photos, because it sits at the end of a box canyon and is surrounded on three sides by red rock walls.    Some pictures are here in the google image result.  Expect to pay $300-400 and up for a night, though you will get a very nice room even for the lower rates, and large casitas for higher rates.  As is usual for resorts, meals are crazy expensive -- its hard to get through breakfast, for example, for less than $20 a person.  But the views and hiking and everything else here are just beautiful.

One of the things I enjoyed was the resort had a native american climb onto a local rock outcropping a couple of times a day and play peaceful flute music that echoed around the resort.  You can see a group gathered around to watch (update:  A reader was nice enough to Photoshop out some of the haze using a levels command trick he taught me a while back -- you can compare below to this original)

enchantment1 copy

It freaked me out for a while because I would here this low-volume music as I walked around the resort and I could not figure out where it was coming from (I kept looking for hidden speakers until I figured it out).

As an added bonus, the night sky is totally dark -- you are out in the wilderness about 15 miles from Sedona and out of site of any other habitation of any sort and almost completely surrounded by canyon walls.  As a result, it is one of the few places where us city folk can see the Milky Way in all its glory (below is my amateur photography (you may have to click to enlarge to really see the Milky Way, but its there).

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The restaurant there is quite good and there are excellent tables on the deck outside to watch the sunset.  But if you want a slightly different Sedona experience (though equally expensive) the Restaurant at the L'Auberge resort right in the town of Sedona on Oak Creek is terrific.  The food is great and the location on the creek is very romantic at night.  Here is the view from my table right around sunset.


You can't get closer to the water than that!

Postscript:  If you like the idea of creekside dining but don't want to blow a hundred bucks a person for dinner, I have eaten at a much less expensive, much less highbrow restaurant that had a very similar location.  It is the Rapids Lodge Restaurant at Grand Lake, Colorado, and is a great place to eat on a trip through Rocky Mountain National Park before you turn around and head back to Estes Park.  Here is the view from our table there:

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PPS:  Other US resort views I like:  Highlands Inn, near Carmel;  Hapuna Resort, Big Island, Hawaii;  Sanctuary Resort, Phoenix, AZ (though the rooms really need an update);  Trump Hotel, Las Vegas (located right on the bend of the strip so the strip view rooms look straight down the strip at night).

Update:  In the spirit of equal time, a reader writes that the Enchantment Resort ruined Boynton Canyon.  Its impossible for me to say -- I never knew it in its pristine state.  I will say the resort itself does a pretty good job of keeping a low profile in the canyon -- no buildings that I saw over 2 stories tall, most of the old trees are preserved.

The Greatest Product Ever for Hyperactive Adults with the Attention Span of a Four Year Old

The Red Zone channel from DirecTV.  Basically the show's producers channel surf for you, flipping obsessively between as many as 8 simultaneous pro football games (sometimes with two split-screened at a time).  My wife says she gets a headache from watching it even for a few minutes.  But I think its awesome.  I actually flip back and forth between the RZC and whatever game I have chosen to watch that day for extra hyperactive bonus points.

A Brief Rant -- Believe it or Not -- On Table Legs

Last night I was at a wonderful dinner in Sedona (report to follow in a later post).  However, at this very nice restaurant, the table wobbled, as tables so often do in restaurants.

Here is my question:  Why do restaurants still buy tables with four legs?? I understand in the old style table, where legs were at each corner of the table, four legs facilitates having 1-4 guests at a table without the legs getting in the way.  But most restaurants nowadays use tables that have a single pedestal in the middle, that then sits on -- and this is my problem -- four legs.   Here is an example:


Why not three legs?  Three legs are inherently stable, and in the pedestal design don't have to be any more obtrusive than four.  Even if the ground is uneven flagstone, a table with three legs still will not wobble.  A table with four legs almost always will.

Stop the madness.

Hearing What You Want to Hear from the Climate Report

After over 15 years of no warming, which the IPCC still cannot explain, and with climate sensitivity numbers dropping so much in recent studies that the IPCC left climate sensitivity estimates out of their summary report rather than address the drop, the Weather Channel is running this headline on their site:



The IPCC does claim more confidence that warming over the past 60 years is partly or mostly due to man (I have not yet seen the exact wording they landed on), from 90% to 95%.  But this is odd given that the warming all came from 1978 to 1998 (see for yourself in temperature data about halfway through this post).  Temperatures are flat or cooling for the other 40 years of the period.  The IPCC cannot explain these 40 years of no warming in the context of high temperature sensitivities to CO2.  And, they can't explain why they can be 95% confident of what drove temperatures in the 20 year period of 1978-1998 but simultaneously have no clue what drove temperatures in the other years.

At some point I will read the thing and comment further.


All Is Right With the World Again

Arizona State has climbed back into the top 10 party school rankings.

This is the same institution that is opposing Grand Canyon University's entry into Division I athletics because, as a for-profit university, they are apparently not academically serious enough.  For some reasons GCU's accountability to shareholders isn't as pure and wonderful as ASU's accountability to former customers who will never use their product again except perhaps to attend a football game (e.g. alumni).

OK, This Is The Most Absurd Defense I Have Seen of Obama, At Least This Week

Via Kevin Drum

Dave Weigel notes a conundrum today: according to a new poll, 54 percent of the public disapproves of Barack Obama's handling of the deficit. And yet, as the chart on the right shows, the deficit is shrinking dramatically. Last year it dropped by $200 billion, and this year, thanks to a recovering economy, lower spending from the sequester, and the increased taxes in the fiscal cliff deal, it's projected to fall another $450 billion.

Weigel notes that this has deprived conservative yakkers of one of their favorite applause lines: "You don't hear Republicans lulz-ing at Obama for failing to 'cut the deficit in half in my first four years,' because he basically did this, albeit in four and a half." That's true. It's also true that contrary to Republican orthodoxy, it turns out that raising taxes on the rich does bring in higher revenues and therefore reduces the deficit.

The logic here is that Obama has been diligent about cutting the deficit, so therefore Republicans are wrong to try to use the debt ceiling and continuing resolution as a vehicle for forcing more cuts.

It is just possible that a person from another planet landing today might buy this story, but how can anyone who has lived through the last 5 years read this without laughing their butts off?  Every one of Obama's budgets have been dead on arrival, even within his own party, because they have raised spending to such stupid levels.  There has not been even a hint of fiscal responsibility in them.  And the Democratic Senate has passed one budget in something like five years**.

The only fiscal discipline at all has come from the Republican House, and they have only had success in keeping these deficit down by ... using continuing resolutions and debt ceilings as bargaining chips.  This is the President that treated the almost insignificant sequester as if it were the end of the world, and now these sycophants from team Donkey are giving Obama the credit for the deficit reduction?

PS-  This is not an advocacy for Republicans as much as for divided government.  The Republicans when they had years of controlling the Presidency and both houses of Congress under Bush II did zero to get our fiscal house in order and in fact with the Iraq war and Medicare part D, among other things, showed a profligacy that belies their current pious words.

PPS- Kevin Drum needs to have the balls not to play both sides of the street.  He has made it clear in other articles that he thinks it is an economic disaster that the government is spending so little right now.  When he shows a deficit reduction chart, if he were consistent, he should be saying that Republicans suck for forcing this kind of deficit reduction against Obama's better judgement and we need the deficit to go back up.  Have the courage of your convictions.  Instead, he plays team loyalty rather than intellectual consistency, crediting Obama for deficit reduction while at the same time hammering Republicans for austerity.  Dude, its one or the other.

PPPS-  For the first time during this Presidency, both the President and both house of Congress offered a budget:

[The] House passed a budget calling for spending $3.5 trillion in 2014, the Senate passed one calling for $3.7 trillion, and Obama submitted one calling for $3.77 trillion

So the actor that submitted the highest budget gets the credit for deficit reduction?

Me & Eliot

In a hard-hitting, incredibly researched piece of journalism entitled "Me & Ted", Josh Marshall polled his progressive friends at Princeton and found that they all thought Ted Cruz was an asshole.

Well, it turns out Ted and I went to college together. And not just we happened to be at the same place at the same time. We were both at a pretty small part of a relatively small university. We both went to Princeton. I was one year ahead of him. But we were both in the same residential college, which basically meant a small cluster of dorms of freshmen and sophomores numbering four or five hundred students who all ate in the same dining hall.

As it turned out, though, almost everyone I knew well in college remembered him really well. Vividly. And I knew a number of his friends. But for whatever reason I just didn't remember him. When I saw college pictures of him, I thought okay, yeah, I remember that guy but sort of in the way where you're not 100% sure you're not manufacturing the recollection.

I was curious. Was this just my wife who tends to be a get-along and go-along kind of person? So I started getting in touch with a lot of old friends and asking whether they remembered Ted. It was an experience really unlike I've ever had. Everybody I talked to - men and women, cool kids and nerds, conservative and liberal - started the conversation pretty much the same.

"Ted? Oh yeah, immense a*#hole." Sometimes "total raging a#%hole." Sometimes other variations on the theme. But you get the idea. Very common reaction.

Wow, so this is what famous journalists do?  Hey, I can do the same thing.

I went to Princeton with Eliot Spitzer.  He was a couple of years ahead of me but had a really high profile on campus, in part due to his running for various University Student Government offices.  So I checked with many of my friends back in college, and you know what?  They all thought Spitzer was an asshole.  I was reminded that we all disliked him so much that when one person (full disclosure, it was me) drunkenly asked who wanted to go moon Spitzer and the governing council meeting next door, we got 30 volunteers.  He was so irritating that he actually inspired a successful opposition party cum performance art troupe called the Antarctic Liberation Front (Virginia Postrel also wrote about it here).

Wow, am I a big time journalist now?  Will GQ be calling for me to do an article on Spitzer?

Look, this is going to be true for lots of politicians, because they share a number of qualities.  They tend to have huge egos, which eventually manifest as a desire to tell us what to do because they know better than we do.  They are willful, meaning they can work obsessively to get their own way even over trivial stuff.  And they are charismatic, meaning they generally have a group of people who adore them and whose sycophancy pisses everyone else off.  In other words, they are all assholes.

Single-Minded Obsession on Home Ownership

This article from the LA Times confused me greatly:

Advocates for borrowers took such comments to mean that the banks would prioritize debt write-downs on first mortgages, which banks resisted before the [$25 billion] settlement. Now, with nearly all the promised relief handed out, it is clear that the banks had other ideas.

The vast majority of the aid to borrowers, it turns out, came in the form of short sales and forgiveness of second mortgages. Just 20% of the aid doled out under the national settlement went to forgiveness of first-mortgage principal, the kind of help most likely to keep troubled borrowers in their homes. In terms of borrowers helped, just 15% of the total received first-mortgage forgiveness.

The five banks collectively delivered twice as much aid using short sales, in which owners sell their homes for less than the amount owed and move out, with the shortfall forgiven.

In all, the lenders sought credit for nearly $21 billion related to short sales and $15 billion related to second mortgages. That compares with $10.4 billion in write-downs on first mortgages.

Critics on the Left (example) are calling this a failure of the program, that most of the relief went to short-sales and 2nd mortgage forgiveness rather than first mortgage forgiveness.  The original article has this quote:

"It just shows you that the banks are running the government," Marks said. "There's virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway."

Hmm, well I am not the biggest fan of bankers in the world, but short sales and second lien forgiveness are principle forgiveness as well, just of a different form.  If they wanted a settlement that was first-lien forgiveness only, they should have specified that.

In fact, both short sales and second lien forgiveness have tremendous value to individuals if one considers individual well-being one's goal rather than just this obsessive fixation on home ownership.  

For many people, the worst part of their negative equity is that it created a barrier to their moving.  Perhaps they could find a job in another part of the state or country, or they wanted to move into a home or apartment with less expensive payments but were stuck in their current home because they could not afford to bring tens of thousands of dollars to closing.  In such cases, a short sale is exactly what the homeowner needs and facilitating and expediting this likely helped a ton of people  (It is also an example of just how unique our mortgage rules are in the US -- in almost any other country in the world, the amount of the negative equity in a short sale would get hung on the seller as a lien that must be paid off over time.  Only in the US do buyers routinely walk away clean from such situations).  Given that first mortgage loan forgiveness more often than not does not save the loan (ie it eventually ends in foreclosure anyway), short sales are the one approach that lets lenders get away clean for a fresh start.

As for second mortgages, I can tell you from personal experience that it is virtually impossible in the current environment to restructure or refinance a first mortgage with a second lien on the house -- even in my case where everything is performing and the underlying home value is well above the total of the two liens.  Seriously, what is the point in reducing principle in the first mortgage if there is a second mortgage there, particularly when the second mortgage is likely far more expensive?  For people with a second mortgage, forgiveness of that is probably the first and best gift they could get.  They may end up still losing their home, but they can't even begin to discuss a restructure or refinance without that other mortgage going away.

Unbalanced Ecosystem ... In My Ear

A while back I wrote about how hard it was to get in to see an ENT here in Phoenix.  I finally got my ear infection diagnosed by one of those local walk-in emergency clinics that are popping up in malls.  They prescribed antibiotic pills and drops, which I took diligently for 10 days.

My ear stopped hurting, but the hearing did not clear up.  Eventually, it started hurting again and my hearing was really blocked.  Fortunately I had held onto my appointment I made weeks ago with an ENT, and went in yesterday.  Apparently, I had an enormous fungal infestation.  The bacteria competes with the fungus normally and keeps it in check.  Once the bacteria were temporarily wiped out, the ecosystem in my ear canal was out of whack and the fungus went crazy.

The doctor vacuumed out an absolutely disgustingly large chunk of, uh, gross stuff from my ear and it was immediately better.  He put some topical cream on it, and it feels great this morning and my hearing is back.

Update:  I am not trying to make any point about the health care system.  I got perfectly good service from both doctors, though I was frustrated it took so long to see an ENT.  I find the whole microscopic ecosystem on and in our bodies fascinating, so I overshared on this experience.  I saw something the other day about twins, one of whom was fatter and one of whom was thinner, with the differences attributed to differences in the bacteria in their gut.

After Criticizing Capitalism For Using Advertising to Trick Consumers into Bad Deals, Progressives Try to Use the Same Tactic for Obamacare

From our favorite politically-blinkered economist who used to be smart:

Chait stresses the youth aspect:

Fortunately for Obama, this field of battle favors his side. To pass the law, he needed to win over skeptical senators. To defend it in court, he needed conservative jurists. But identifying and persuading young people is a battle Obama does not expect to lose to Republicans, and in place of the federal outreach funds, the administration is deploying a campaignlike array of weapons: microtargeting, including door-to-door outreach, and all forms of media. (A few weeks ago, Katy Perry tweeted out a link informing her 42 million followers that health care was available beginning October 1.)

Yep, when it comes to reaching hipsters, or young people in general — I know, Katy Perry — Dems have big advantages; all that coastal cultural elite hatred suddenly turns into a big disadvantage for the right.

A couple of thoughts:

  • Katy Perry is part of the cultural elite?  We have sure dumbed down that concept.
  • As to Ms. Perry, whose music is actually a guilty pleasure of mine, health care has been available to your twitter followers all their lives, not just beginning October 1.  A better way to put this is that, as of October 1 you will be forced to buy some amount of health care whether you want it or not.  
  • The whole campaign aimed at young people is simply obscene.  I understand that folks like Ms. Perry honestly believe that young people are getting a better deal, and that she is doing them a service.  Fine, millionaires can be low information voters too.  But people in the Administration have a much more cynical purpose, which explains the magnitude of the campaign described by Chait:  For Obamacare to work and not be a fiscal disaster, it depends on young people overpaying for health insurance.  The Administration knows that young people are overpaying -- the whole system depends on it -- and yet they are telling them it is in their interest to sign up.   A private company that did this would be in jail.
  • I think this whole campaign is going to fail due to a basic fallacy of Progressive thinking.  Progressives are convinced that consumers are helpless dupes of advertising.  They in fact criticized health care advertising expenses in the private world for years for this reason, making this whole campaign incredibly ironic.  Obama and company are convinced that with enough advertising, average consumers will buy anything, even if it is a bad deal, because they are convinced that this is how consumer capitalism works (it got him elected, didn't it?)  I think they are going to be disappointed.

Government Obsession Over Race

This morning I received yet another mandatory survey from the US Census Bureau.  I have written about these before.  We have to fill out the Census lodging survey (a long and tedious detailed financial report) as well as a myriad of other Department of Labor and Commerce surveys.  Where I can legally, I throw them away.  If I risk prison not filling it out, I do so reluctantly.**

So this morning I got the Survey of Business Owners and Self-Employed Persons (SBO).  Apparently the SBO comes out every five years.  It's got a big MANDATORY stamped on it so with a sigh I started it up online to get it over with.

The survey was mercifully short, but it was bizarre.  After asking me my address, it asked how many owners there were, and then for each owned asked his or her race and gender.  And that was it.  Suddenly the survey was over, particularly quickly for me because I always refuse to answer race questions on surveys.

But that is the sum total of what the government wants to know about business owners - race and gender and nothing else matters I guess.


** I know I always engender outraged comments over this.  I refuse to supply the government with data that they will use to pass new laws to make my life harder or take more of my money.  As for economists and academics, they are welcome to pay me for the effort of filling this out but I should not be obligated to labor for their benefit.

Republican Fail on Obamacare

I find Republican strategy in the recent Obamacare and budget fight to have been insanely aggravating, and that is coming from someone who hates Obamacare.

Yes, I understand why things are happening as they are.  From a re-election strategy, their approach makes total sense.  A lot of these House guys come from majority Republic districts where their biggest re-election fear comes from a primary challenge to the right of them.  I live in one of these districts, so I see what perhaps coastal media does not.  In everyday conversation Republicans are always criticizing their Congressmen for not rolling back Obamacare.  Republicans need to be able to say in a primary, "I voted to defund Obamacare".  Otherwise I guarantee every one of them will be facing a primary opponent who will hammer them every day.

But from the perspective of someone who just wants the worst aspects of this thing to go away, this was a terrible approach.  Defunding Obamacare entirely was never, ever, ever going to succeed.  Obama and Democrats would be happy to have a shutdown last months before they would roll back his one and only signature piece of legislation.  They may have caved in the past on other issues but he is not going to cave on this one (and needs to be seen not caving given his recent foreign policy mis-steps that has him perceived as weak even in his own party).  And, because all the focus is on Obamacare, we are going to end up with a budget deal that makes no further progress on containing other spending.

The Republicans should have taken the opportunity to seek targeted changes that would more likely have been accepted.  The most obvious one is to trade a continuing resolution for an elimination of the IPAB, one of the most undemocratic bits of legislation since the National Industrial Recovery Act.  Another strategy would have been to trade a CR for a 1-year delay in the individual mandate, a riskier strategy but one the Administration might leap at given that implementation problems in exchanges are giving them a black eye.  Finally, an even riskier strategy would have been to tie a CR to a legislative acknowledgement that the PPACA does not allow subsidies in Federally-run exchanges.  This latter might not have been achievable (and they might get it in the courts some day anyway) but if one argues that any of these is unrealistic, then certainly defunding Obamacare as a whole was unrealistic.

I think as a minimum they could have killed the IPAB, but now they will get nothing.

Update:  This line from All the President's Men seems relevant:

You've done worse than let Haldeman slip away: you've got people feeling sorry for him. I didn't think that was possible. In a conspiracy like this, you build from the outer edges and go step by step. If you shoot too high and miss, everybody feels more secure. You've put the investigation back months.

IRS Argues Your Tax Return is Just Like a Dead Horse

Normally this would be a good Friday story, but you can't always control when Washington is going to bring the crazy.

The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War....

[the Obama Administration attorney] explained that the administration sees the "Horse Act of 1884" as providing ample authority for the U.S. Internal Revenue Service to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.

Here is the logic, such that it is

A post-war industry emerged of agents who would press war loss claims for a fee, usually a percentage of the claim collected. Soon, claim values were being fraudulently inflated.

In response, the government started regulating these intermediaries, barring unscrupulous ones and certifying honest ones as "enrolled agents," a title that is still used today by people who represent clients in matters before the IRS.

The IRS is arguing that tax return preparers represent their customers in much the same way that enrolled agents do, so the agency should be able to expand regulation to include preparers.

Note that tax preparers are not actually IRS enrolled agents, they just argue they are kind of sort of like them (in that they both deal with tax returns, I suppose).  But enrolled agents explicitly act as an intermediary between citizens and the government in disputes and claims.  This is not the role of tax preparers.  They merely charge a fee to fill out time-consuming and confusion paperwork.  My tax accountant has never once had any conversations with the IRS on my behalf, nor should he.  I would engage an attorney for that.

Other Views on Teach for America

Since I have posted positively about Teach for America, it is only fair I post this article from the Atlantic of a Teach for America alum who felt she was unprepared for what she faced in the classroom.

Over the years, I have met many TFA teachers and have been in their classrooms, and have never gotten this vibe from them, but perhaps one of our samples (mine or the author's) are flawed**.

I guess my reaction to the article is this:  TFA is the best program I have encountered to try to improve education within the framework of our deeply flawed public education system***.  However, understanding the flaws of public education, and being someone who would much rather see competition introduced into the k-12 education system, I suppose I am not surprised that putting really talented people in a bad system can only do so much.

The education establishment, which is implicitly backed by most of the media, really wants to kill TFA, which just goes to show, perhaps, the impossibility of making change happen within the system.  Think of it this way:  TFA is everything liberals have wanted in teaching reform.  It brings the brightest of the bright from America's colleges and diverts them from Wall Street and Harvard Law to teaching schoolkids.  It is modeled roughly on the Peace Corps.  It is the most establishment-friendly way I can think of to try to make public schools better and still the public school system immune system rejects it.  If TFA cannot work, then we should take that as proof that it is time for a radically new system that eliminates the government monopoly on education.


** I confess it may be my sample.  When we pay to sponsor a teacher, we specify that we will only sponsor one in a charter school.  Consistent with my comments in the rest of the article, I despair of throwing even really good people into typical public schools, and want to send them where they might have a chance.  The school where we have sponsored a teacher the last couple of years is doing great, with a population of kids nearly 100% eligible for the Federal school lunch program and most of whose parents do not speak English as a first language (or at all) significantly outperforming their peers.

*** I also think it is a great program for the young adults in it.  I have seen many of the not-for-profit and NGO jobs smart kids go into out of college, and they are awful.  They teach bad organizational lessons that will make these folks less employable in the future by productive enterprises and they at best do nothing (at worst spend their time lobbying to make my life harder and more expensive).  Against this backdrop, it is a much better experience for folks who want a service type of job out of college - the life skills taught are more relevant and the work has a higher impact.

Differing Perspectives

I have been taking a course in World War I, something I know little about relative to the rest of the 20th century.

We often think of WWI as a horrible, wasteful, pointless war that solved nothing and WWII as an expensive yet "good" war that achieved positive aims.  But as we approach the 75th anniversary of the Munich conference, it is interesting to note that if you ask someone in Eastern Europe, you are likely to get the opposite answer.  Most Eastern European countries can date their modern statehood from the end of WWI, while WWII led to 50+ years of Soviet subjugation.  WWI was their good war.

Appeals to Authority

A reader sends me a story of global warming activist who clearly doesn't know even the most basic facts about global warming.  Since this article is about avoiding appeals to authority, so I hate to ask you to take my word for it, but it is simply impossible to immerse oneself in the science of global warming for any amount of time without being able to immediately rattle off the four major global temperature data bases (or at least one of them!)

I don't typically find it very compelling to knock a particular point of view just because one of its defenders is a moron, unless that defender has been set up as a quasi-official representative of that point of view (e.g. Al Gore).  After all, there are plenty of folks on my side of issues, including those who are voicing opinions skeptical of catastrophic global warming, who are making screwed up arguments.

However, I have found over time this to be an absolutely typical situation in the global warming advocacy world.  Every single time I have publicly debated this issue, I have understood the opposing argument, ie the argument for catastrophic global warming, better than my opponent.   In fact, I finally had to write a first chapter to my usual presentation.  In this preamble, I outline the case and evidence for manmade global warming so the audience could understand it before I then set out to refute it.

The problem is that the global warming alarm movement has come to rely very heavily on appeals to authority and ad hominem attacks in making their case.  What headlines do you see? 97% of scientists agree, the IPCC is 95% sure, etc.  These "studies", which Lord Monkton (with whom I often disagree but who can be very clever) calls "no better than a show of hands", dominate the news.  When have you ever seen a story in the media about the core issue of global warming, which is diagnosing whether positive feedbacks truly multiply small bits of manmade warming to catastrophic levels.  The answer is never.

Global warming advocates thus have failed to learn how to really argue the science of their theory.  In their echo chambers, they have all agreed that saying "the science is settled" over and over and then responding to criticism by saying "skeptics are just like tobacco lawyers and holocaust deniers and are paid off by oil companies" represents a sufficient argument.**  Which means that in an actual debate, they can be surprisingly easy to rip to pieces.  Which may be why most, taking Al Gore's lead, refuse to debate.

All of this is particularly ironic since it is the global warming alarmists who try to wrap themselves in the mantle of the defenders of science.  Ironic because the scientific revolution began only when men and women were willing to reject appeals to authority and try to understand things for themselves.


** Another very typical tactic:  They will present whole presentations without a single citation.   But make one statement in your rebuttal as a skeptic that is not backed with a named, peer-reviewed study, and they will call you out on it.  I remember in one presentation, I was presenting some material that was based on my own analysis.  "But this is not peer-reviewed" said one participant, implying that it should therefore be ignored.  I retorted that it was basic math, that the data sources were all cited, and they were my peers -- review it.  Use you brains.  Does it make sense?  Is there a flaw?  But they don't want to do that.  Increasingly, oddly, science is about having officially licensed scientists delivery findings to them on a platter.