Archive for September 2013

Good God, How Does This Help Anyone Except Perhaps Helping Government Officials Feel Powerful

Via Reason

A Paris appeals court this week ordered the French cosmetics chain Sephora to close its flagship boutique on the iconic Champs Élysées boulevard at 9pm, angering salespeople who say they have freely accepted to work until midnight for years and now risk losing their jobs.

Following a trend among other businesses on Paris's most celebrated street, Sephora began extending its opening hours in 1996. Its designer perfumes, makeup and other cosmetics were, until this week, sold until midnight between Monday and Thursday, and as late as 1am on Friday and Saturday.

Citing labour laws that restrict night-time work, France’s largest unions collectively sued the shop. An administrative court sided with Sephora on December 6, 2012, allowing the cosmetics giant to keep its exceptionally late hours on the Champs-Élysées.

However, the appeals court overturned that decision on Sunday, agreeing with unions that the store’s “normal activity” does not “make night-time work a necessarity,” as the law states.

The World Needs Obsessive People, Even If I Am Not One Of Them

This photo is kind of cool of a disassembled VW (via Twisted Sifter)

But this response from the from a user at the Club GTI forum is simply awesome.  An excerpt:

They left the 3/4 sync hub pressed onto the input shaft, and captured by that would have to be 3rd gear, because 3rd isn't on the floor.

The selector detent bolt is missing as well.

They're short one roller bearing, unless it is in the case still.

They're missing the 13mm nut to hold the selector bracket to the selector assembly.

They show 12 of the 14 bolts used around the trans casing, missing the 2 shorter ones under the selector area.

5th gear circlip and washer are missing.

5th gear retention bolt and washer are missing.

They're short one 17mm drain/fill plug too.

etc. etc.  This is exactly the guy I want in charge of the engine overhaul on the next aircraft I fly in.

Eeek! Austerity! Oh, Never Mind.

Yesterday I challenged a graph by Kevin Drum in Mother Jones as being a disingenuous attempt to paint US government spending as some sort of crazed austerity program which is making the recovery worse.  He uses this graph to "prove" that our fiscal response to this recession is weak vis a vis past recessions.  The graph is a bit counter-intuitive -- note that it begins at the end of each recession.  His point is that Keynesian spending needs to continue long after (five years ?!) after the recession is over to guarantee a good recovery, and that we have not done that.

For anyone not steeped in the special reality of the reality-based community, it is a bit counter intuitive for those of us who have actually lived through the last 5 years to call government spending austere.

The key is in the dates he selects.  He leaves out the actual recession years.  So by his chart, responses that are late and occur after the recession look better than responses that are fast and large but happen during the recession.  This seems odd, but it is the conclusion one has to draw.

I took roughly the same data and started each line two years earlier, so that my first year is two years ahead of his graph and the zero year in my graph is the same as the zero point in Drum's chart.  His data is better in the sense that he has quarterly data and I only have annual.  Mine is better in that it looks at changes in spending as a percentage of GDP, which I would guess would be the more relevant Keynesian metric (it also helps us correct for the chicken and egg problem of increased government spending being due to, rather than causing, economic expansion).

Here are the results (I tried to use roughly the same colors for the same data series, but who in the world with the choice of the entire color pallet uses two almost identical blues?)

You can see that Drum makes spending look lower in the current recession by carefully dating the data series to the peak of the spending, rather than comparing it to pre-recession levels.  The right hand scale is the difference in government spending as a percentage of GDP from the -2 year.  So, for example, in the current recession government spending was 34.2% in 2007 and 41.4% in 2009 for a reading of 7.2% in year 0.

Even with the flat spending over the last three or four years in the current recession (flat nominal spending leads do a declining percent of GDP) the spending increase from pre-recession levels is still about twice as high as in other recent recessions.

Does this look like austerity to anyone?

IPCC: We Count on Lazy Reporters

We will see the final version of the IPCC's Fifth climate assessment soon.  But here is something interesting from the last draft circulated.  First, here is there chart comparing actual temperatures to model forecasts.  As you can see, all the actuals fall outside the published ranges from all previous reports (with a couple of the most recent data points added by Steve McIntyre in red).

click to enlarge

 

A problem, though not necessarily a fatal problem if the divergence can be explained.  And the IPCC is throwing out a lot of last minute explanations, though none of them are backed with any actual science.  I discussed one of these explanations here.  Anyway, you see their data above.  This is what they actually write in the text:

the globally-averaged surface temperatures are well within the uncertainty range of all previous IPCC projections, and generally are in the middle of the scenario ranges”.

This is completely absurd, of course, given their own data, but it has lasted through several drafts, so we will see if it makes it into the final draft.  My guess is that they will leave this issue out entirely in the summary for policy makers (the only part the media reads).  Steve McIntyre discusses the whole history of this divergence issue, along with a series of studies highlighting this divergence that have been consistently kept out of publication by climate gatekeepers.

The frustrating part is that the IPCC is running around saying they can't have a complete answer on this critical issue because it is so new.  By "new" they mean a frequent skeptics' observation and criticism of climate models for over a decade that they have only recently been forced under duress to finally consider.

Because Shut Up

Via the Hill

Former vice president Al Gore on Monday called for making climate change "denial" a taboo in society.

“Within the market system we have to put a price on carbon, and within the political system, we have to put a price on denial,” Gore said at the Social Good Summit New York City.

Incredibly, the suggestion of introducing taboos and penalties in a scientific debate is coming from the side that claims to be the great defenders of science.

Blackberry Handset Business Apparently Valued at Zero

I don't really have a horse in this race, but I found it interesting to look at the deal Blackberry has made to sell itself to a Canadian insurance company.  The part of the business we all know and used to love -- the famous Blackberry handset business -- apparently is worth zero.

In a WSJ article, they cite the following valuations:

  • Cash on hand:  $2.6 billion
  • Patent portfolio:  $1 billion +
  • Blackberry secure phone network:  $1 billion

Given that the price for the transaction is $4.7 billion, that implies the handset / smartphone business is worth zero.  Which comes as no surprise, given Blackberry's eroding position over the last 5 years or so.

The last item on the list above seems to cause a lot of debate.  I don't know enough to participate in that debate, but it appears to me that Blackberry's one last market bastion is the enterprise market where their enterprise servers and more proprietary network gave enterprises more control over their employees devices and how they used them.  Which made their decision in 2012 to apparently obsolete their installed base of enterprise servers with Blackberry 10 all the more bewildering.

I have wondered why Microsoft didn't try to use the enterprise market as a way to get into the tablet and handset market.  It would seem to play to its strengths and neither Android nor iOS are particularly enterprise-friendly.

Deceptive Chart of the Day from Kevin Drum and Mother Jones to Desperately Sell the "Austerity" Hypothesis

Update:  OK, I pulled together the data and did what Drum should have done, is take the graph back to pre-recession levels.  Shouldn't it be even better if the increase in spending came during the recession rather than after?  See update here.

Kevin Drum complains about US government austerity (I know, I know, only some cocooned progressive could describe recent history as austerity, but let's deal with his argument).  He uses this chart to "prove" that we have been austere vs. other recessions, and thus austerity helps explain why recovery from this recession has been particularly slow.  Here is his chart

This is absurdly disingenuous.  Why?  Simple -- it is impossible to evaluate post recession spending without looking at what spending did during the recession.   All these numbers begin after the recession is over.  But what if, in the current recession, we increased spending much more than in other recessions.  We would still be at a higher level vs. pre-recession spending now, despite a lack of further increases after the recession.

In the time before this chart even starts, total state, local, Federal spending increased from 2007 to 2008 by 10.2%.  It increased another 11.1 % from 2008 to 2009.  So he starts the chart at the peak, only AFTER spending had increased in response to the recession by 22.5%.  Had he started the chart at the correct date and not at a self-serving one, my guess is that it would have shown that in this recession we increased spending more than any other recent recession, not less.  So went digging for some data.

I actually have a day job, so I don't have time to create a chart of total government spending since 1981, so I will look at just Federal spending, but it makes my point.  I scavenged this chart from Factcheck.org.  The purple bars are the year that each of Drum's data series begin plus the year prior (which is excluded from Drum's chart).  Essentially the growth in spending between the two purple lines is the growth left out just ahead of when Drum started each data series in his chart.  The chart did not go back to 1981 so I could not do that year.

Hopefully, you can see why I say that Drum is disingenuous for not going back to pre-recession numbers.  In this case, you can see the current recession has an unprecedented pop in spending in the year before Drum starts his data series, so it is not surprising that post recession spending might be flatter (remember, the pairs of purple lines are essentially the change in spending the year before each of Drum's data series).  In fact, it is very clear that relative to the pre-recession year of 2008 (really 2007, but I will give him a small break), even after 5 years of "austerity" our federal spending as a percent of GDP will be far higher than in any other recession he considers.  In no previous recession in this era did post recession spending end up more than 2 points higher (as a percent of GDP) than pre-recession levels.    In this recession, we are likely to end up 4-5 points higher.

By the way, isn't it possible that he has cause and effect reversed?  He argues that post-recession recovery was faster in other recessions because government spending kept increasing over five years after the recession is over.  But isn't it just possible that the truth is the reverse -- that government spending increased more rapidly after other recessions because recovery was faster, thus increasing tax revenues. Congress then promptly spent the new revenues on new toys.

Let's look at the same chart, highlighted in a different way.  I will circle the 4-5 years included in each of Drum's data series:

You can see that despite the fact that government spending in these prior recessions was increasing in real terms, it was falling in two our of three of them as a percentage of GDP (the third increased due to war spending in Afghanistan and Iraq, spending which I, and I suspect Drum, would hesitate to call stimulative, particular since he and others at the time called it a jobless recovery).

How can it be that spending was increasing but falling as a percent of GDP?  Because the GDP was growing really fast, faster than government spending.  This does not prove my point, but is a good indicator that recovery is likely leading spending increases, rather than the other way around.

Scouting the Monopoly Board

This is kind of clever.  Surprised no one has tried to make a movie based on the board game.  Though perhaps since this gentleman is a Hollywood location scout, someone may be.

Trying to Overcome My Ignorance on the Banking System

Over the last year, I have learned that those of us who took economics back in the 1980's with textbooks written in the 1960's and 1970's are not very well prepared to understand the modern banking system.  This was a pretty good article that whetted my appetite for understanding what has changed.  A couple of interesting bits from the piece:

One cannot think straight about the future impact of different exit strategies without understanding of the role of bank reserves in today’s financial markets.

  • Banking and money creation has not worked for at least two decades in the way that most people learned in school.

The old system was rather simple in the textbooks. The basic assumptions were (i) all credit was provided by banks; (ii) all bank credit (assets) were funded by the issuance, or creation, of depository liabilities (money) subject to a reserve requirement; and (iii) central banks controlled credit/money/inflation by rationing bank reserves. A stable 'money multiplier' was hypothesised to allow central banks to accurately predict the eventual impact of changes in bank reserves on money and credit.

The problem with the old theory of monetary operations is that none of the three assumptions has been true for at least a generation.
Most credit in the US is created by nonbanks; virtually all bank lending is funded by the creation of liabilities that are not subject to reserve requirements,3 and central banks do not ration reserves. In fact they take great pains to provide banks with the amount of reserves they desire. Central banks influence credit not by rationing the quantity of reserves but by altering the interest rate that banks must pay to obtain the quantity of reserves they desire.

  • Today, credit creation in general and money creation in particular are no longer tied to the stock of reserves (i.e. the stock of banks’ deposits at the Fed).

This gets to the heart of the question of why over $2 trillion in excess bank deposits built up at the Fed over the last 4 years are not really moving the needle on bank lending  (of course, this is a supply AND demand problem, and part of the issue with flat bank lending is tie to lack of demand as many businesses deleverage).  But in terms of supply, I am increasingly coming to terms with the following statement which seems counter-intuitive to someone who studied banking 30 years ago

One of the unintended consequences of Fed LSAPs has been the withdrawal of high quality liquid collateral such as US Treasuries from the financial markets paid for by crediting commercial bank reserve accounts. As discussed above, the banking system as a whole cannot dispose of these assets (reserves). At the same time, banks are under massive pressure world-wide to deleverage. This can take place either by increasing capital (a bank liability), which is costly to shareholders, or by reducing assets. Thus banks’ massive holdings of reserves at the Fed are ‘deadwood’ as far as the banks and their credit-creation capacity are concerned. They may crowd out credit.

The deadwood problem will get worse if the US tightens regulatory leverage ratios – that is, reduces the maximum ratio permitted between a bank’s total assets and capital.6

There is a great irony in the journalistic history of monetary policy. What many are calling central bank “money creation” “helicopter money” or “rolling the printing presses” may – in combination with tighter leverage ratios – lead to a tightening of bank credit and deflationary pressures.  And all this is occurring while the spectre of uncontrolled credit expansion and monetary debasement are being decried countless times by those who have not recognized that yesteryear’s monetary paradigm is defunct.

Interesting.  I hear this from a lot of people in the know about the system.  The author suggests one solution is having the Fed begin to do reverse repos with non-banks, which would drain excess reserves while adding high quality collateral back to the banking system which would allow more lending.  Which appears to be exactly what the Fed is considering.

I am reading this article next to see if I can get a better handle on how all this works.  I will let you know if I find it useful.

Great Moments in Predictions -- Al Gore's Ice Forecast

Via Icecap (I still don't think they have permalinks that work)

In his Dec. 10, 2007 “Earth has a fever” speech, Gore referred to a prediction by U.S. climate scientist Wieslaw Maslowski that the Arctic’s summer ice could “completely disappear” by 2013 due to global warming caused by carbon emissions.

Gore said that on Sept. 21, 2007, “scientists reported with unprecedented alarm that the North Polar icecap is, in their words, ‘falling off a cliff.’ One study estimated that it could be completely gone during summer in less than 22 years. Another new study to be presented by U.S. Navy researchers later this week warns that it could happen in as little as seven years, seven years from now.”

Maslowski told members of the American Geophysical Union in 2007 that the Arctic’s summer ice could completely disappear within the decade. “If anything,” he said, “our projection of 2013 for the removal of ice in summer...is already too conservative.”

The former vice president also warned that rising temperatures were “a planetary emergency and a threat to the survival of our civilization.”

However, instead of completely melting away, the polar icecap is at now at its highest level for this time of year since 2006.

Some Responsible Press Coverage of Record Temperatures

The Phoenix New Times blog had a fairly remarkable story on a record-hot Phoenix summer.  The core of the article is a chart from the NOAA.  There are three things to notice in it:

  • The article actually acknowledges that higher temperatures were due to higher night-time lows rather than higher daytime highs  Any mention of this is exceedingly rare in media stories on temperatures, perhaps because the idea of a higher low is confusing to communicate
  • It actually attributes urban warming to the urban heat island effect
  • It makes no mention of global warming

Here is the graphic:

 

This puts me in the odd role of switching sides, so to speak, and observing that greenhouse warming could very likely manifest itself as rising nighttime lows (rather than rising daytime highs).  I can only assume the surrounding area of Arizona did not see the same sort of records, which would support the theory that this is a UHI effect.

Phoenix has a huge urban heat island effect, which my son actually measured.  At 9-10 in the evening, we measured a temperature differential of 8-12F from city center to rural areas outside the city.  By the way, this is a fabulous science fair project if you know a junior high or high school student trying to do something different than growing bean plants under different color lights.

We Are In the Best of Hands: Janet Yellen Edition

The Arizona Republic today reviews a speech given by Yellen in January, 2007 in Phoenix:

It was January 2007 when Yellen, then head of the Federal Reserve Bank of San Francisco, spoke here about financial literacy before transitioning into comments about the economy — comments that now look remarkably unperceptive.

Back then, months before the real-estate and banking crisis took down the economy, Yellen expressed concern that inflation was uncomfortably high while job gains were coming too swiftly.

“If labor markets are as tight as the unemployment rate suggests, then there may be reason for concern about building inflationary pressures,” she said according to my Jan. 18, 2007, article.

Subsequent events showed that inflation was the last thing we had to worry about, while the lack of jobs has emerged as a central drag on the economy. Back then, U.S. unemployment was around 4.5 percent. But after the recession took hold, it more than doubled, peaking at 10 percent in late 2009. At 7.3 percent currently, it remains well above where it should be this far into an economic recovery.

In contrast, core consumer inflation (which excludes food and energy costs) of 1.8 percent today has hardly budged from the 2.2 percent rate that had Yellen all worked up back then.

In another comment during her Phoenix talk that now looks wildly off-base, Yellen, who later was named vice chair of the Fed’s board of governors, said recession risks had receded despite lingering weakness in housing. She cited the Valley as a place where home-price appreciation had come down from unsustainably high rates of increase.

The Great Recession, as we all now know in hindsight, began later that year, triggered by a home-price slide of epic proportions.

I don't want to beat her up too bad for missing the bubble burst, since most everyone did.  They also all missed the last bubble burst, and the one before that, etc.

This is what makes me crazy:  not that these folks were wrong, even consistently brutally wrong, but that they display absolutely no modesty in their actions given that they were so wrong.  They propose policy steps, such as seemingly eternal QE, that are astoundingly risky unless one assumes that they have a very, very good grasp on exactly where the economy is going.  Which they clearly never have had in the past.  If they acted like they had been wrong most of the time, then I would have little to criticize.  But to be consistently wrong and then make huge risky bets as if you have reliable predictive powers is hubris of the worst sort.

Update On My Climate Model (Spoiler: It's Doing a Lot Better than the Pros)

In this post, I want to discuss my just-for-fun model of global temperatures I developed 6 years ago.  But more importantly, I am going to come back to some lessons about natural climate drivers and historic temperature trends that should have great relevance to the upcoming IPCC report.

In 2007, for my first climate video, I created an admittedly simplistic model of global temperatures.  I did not try to model any details within the climate system.  Instead, I attempted to tease out a very few (it ended up being three) trends from the historic temperature data and simply projected them forward.  Each of these trends has a logic grounded in physical processes, but the values I used were pure regression rather than any bottom up calculation from physics.  Here they are:

  • A long term trend of 0.4C warming per century.  This can be thought of as a sort of base natural rate for the post-little ice age era.
  • An additional linear trend beginning in 1945 of an additional 0.35C per century.  This represents combined effects of CO2 (whose effects should largely appear after mid-century) and higher solar activity in the second half of the 20th century  (Note that this is way, way below the mainstream estimates in the IPCC of the historic contribution of CO2, as it implies the maximum historic contribution is less than 0.2C)
  • A cyclic trend that looks like a sine wave centered on zero (such that over time it adds nothing to the long term trend) with a period of about 63 years.  Think of this as representing the net effect of cyclical climate processes such as the PDO and AMO.

Put in graphical form, here are these three drivers (the left axis in both is degrees C, re-centered to match the centering of Hadley CRUT4 temperature anomalies).  The two linear trends (click on any image in this post to enlarge it)

 

And the cyclic trend:

These two charts are simply added and then can be compared to actual temperatures.  This is the way the comparison looked in 2007 when I first created this "model"

The historic match is no great feat.  The model was admittedly tuned to match history (yes, unlike the pros who all tune their models, I admit it).  The linear trends as well as the sine wave period and amplitude were adjusted to make the fit work.

However, it is instructive to note that a simple model of a linear trend plus sine wave matches history so well, particularly since it assumes such a small contribution from CO2 (yet matches history well) and since in prior IPCC reports, the IPCC and most modelers simply refused to include cyclic functions like AMO and PDO in their models.  You will note that the Coyote Climate Model was projecting a flattening, even a decrease in temperatures when everyone else in the climate community was projecting that blue temperature line heading up and to the right.

So, how are we doing?  I never really meant the model to have predictive power.  I built it just to make some points about the potential role of cyclic functions in the historic temperature trend.  But based on updated Hadley CRUT4 data through July, 2013, this is how we are doing:

 

Not too shabby.  Anyway, I do not insist on the model, but I do want to come back to a few points about temperature modeling and cyclic climate processes in light of the new IPCC report coming soon.

The decisions of climate modelers do not always make sense or seem consistent.  The best framework I can find for explaining their choices is to hypothesize that every choice is driven by trying to make the forecast future temperature increase as large as possible.  In past IPCC reports, modelers refused to acknowledge any natural or cyclic effects on global temperatures, and actually made statements that a) variations in the sun's output were too small to change temperatures in any measurable way and b) it was not necessary to include cyclic processes like the PDO and AMO in their climate models.

I do not know why these decisions were made, but they had the effect of maximizing the amount of past warming that could be attributed to CO2, thus maximizing potential climate sensitivity numbers and future warming forecasts.  The reason for this was that the IPCC based nearly the totality of their conclusions about past warming rates and CO2 from the period 1978-1998.  They may talk about "since 1950", but you can see from the chart above that all of the warming since 1950 actually happened in that narrow 20 year window.  During that 20-year window, though, solar activity, the PDO and the AMO were also all peaking or in their warm phases.  So if the IPCC were to acknowledge that any of those natural effects had any influence on temperatures, they would have to reduce the amount of warming scored to CO2 between 1978 and 1998 and thus their large future warming forecasts would have become even harder to justify.

Now, fast forward to today.  Global temperatures have been flat since about 1998, or for about 15 years or so.  This is difficult to explain for the IPCC, since about none of the 60+ models in their ensembles predicted this kind of pause in warming.  In fact, temperature trends over the last 15 years have fallen below the 95% confidence level of nearly every climate model used by the IPCC.  So scientists must either change their models (eek!) or else they must explain why they still are correct but missed the last 15 years of flat temperatures.

The IPCC is likely to take the latter course.  Rumor has it that they will attribute the warming pause to... ocean cycles and the sun (those things the IPCC said last time were irrelevant).  As you can see from my model above, this is entirely plausible.  My model has an underlying 0.75C per century trend after 1945, but even with this trend actual temperatures hit a 30-year flat spot after the year 2000.   So it is entirely possible for an underlying trend to be temporarily masked by cyclical factors.

BUT.  And this is a big but.  You can also see from my model that you can't assume that these factors caused the current "pause" in warming without also acknowledging that they contributed to the warming from 1978-1998, something the IPCC seems loath to do.  I do not know how the ICC is going to deal with this.  I hate to think the worst of people, but I do not think it is beyond them to say that these factors offset greenhouse warming for the last 15 years but did not increase warming the 20 years before that.

We shall see.  To be continued....

Update:  Seriously, on a relative basis, I am kicking ass

The Urge to Control

This is the personality of the people we are electing to higher office.  They have such an urge for control that they will not allow cell phone pictures taken of them in public.  By personality, these people have to control everything.  Is it really any surprise when they turn around and read our email?

From the article at the fabulous Photography is Not a Crime:

Hillary Clinton’s henchmen snatched a smartphone from a man who had photographed her giving a speech in Miami Thursday, deleting the image before returning the phone.

“That’s American politics,” one of the individuals in charge of preventing the presidential hopeful from being photographed told a Miami Herald reporter covering the meeting.

No, that’s Russian politics. Or Chinese politics. Or Cuban politics.

By the way (and I could be wrong here) Carlos Miller strikes me as much more Occupy than Tea Party in his political preferences.  But he obviously doesn't pull any punches on his issue (legality of public photography) when his team is involved.

This Was My Take As Well: Cut Farm Subsidies, Not Food Stamps

First, as many of you may have guessed, the "massive cuts" in food stamps over the next 10 years proposed by House Republicans are basically just a modest reduction in their rate of growth.  All attempts to slow the spending growth in any government program will always be treated by the media as Armageddon, which is why government spending seldom slows (see: Sequester).

But I have been amazed through this whole deal that Republicans want to extract a pound (actually probably just an ounce or so) of flesh out of the Food Stamp program but explicitly left the rest of the farm bill with all of its bloated subsidies alone.  Henry Olson asks the same question at NRO.

I will add one other observation about food stamps that is sure to have just about everyone disagreeing with me.  Of late, Republicans have released a number of reports on food stamp fraud, showing people converting food stamps to cash, presumably so they can buy things with the money that food stamps are allowed to be used for.

Once upon a time, maybe 30 years ago in my more Conservative days, I would get all worked up by the same things.  Look at those guys, we give them money for food and they buy booze with it!  It must be stopped.  Since that time, I suppose I never really revisited this point of view until I was watching the recent stories on food stamp fraud.

But what I began thinking about was this:  As a libertarian, I always say that the government needs to respect and keep its hands off the decision-making of individuals.  If people make bad choices, paraphrasing from the HBO show Deadwood, then let them go to hell however they choose.  And, more often than not, it turns out that when you really look, people are not necessarily making what from the outside looks like a bad choice -- they have information, incentives, pressures, and preferences we folks sitting in our tidy Washington offices, chauffeured to work every day, may not understand.

So if we are going to give people charity - money to survive on when poor and out of work - shouldn't we respect them and their choices?  Why attach a myriad of conditions and surveillance to the use of the funds?  Of course, this is an opinion that puts me way out of the mainstream.  Liberals will treat these folks as potential victims that must be guided paternally, and Conservatives will treat them as potential fraudsters who must be watched carefully.  I think either of these attitudes are insidious, and it is better to treat these folks as adults who need help.

I Would Really Like To Know: Does She Honestly Believe This, or Is Her Job To Spin This Kind of BS With A Straight Face

I can create a long list of reasons for disliking Republicans, but Nancy Pelosi just seems either totally insane or totally brazen when she makes this observation about Obama and Republicans:

“He [President Obama] has been … open, practically apolitical, certainly nonpartisan, in terms of welcoming every idea and solution. I think that’s one of the reasons the Republicans want to take him down politically, because they know he is a nonpartisan president, and that’s something very hard for them to cope with.”

As a truly non-partisan observer, I would say that I have not seen a President in my lifetime as empty of strategic thinking and substantive ideas.  Jeez, Bill Clinton did more substantive thinking in the shower in the morning than Obama has done in five years.  This man is all hyper-divisive rhetoric.  If Obama supporters want to compare him to a great leader, he reminds me in some ways of Bismark in the sense that Bismark was the master of negative integration, of defining an internal enemy (a Reichsfeinde) on every issue and marginalizing that enemy to unify everyone else on his side.  Of course, eventually, the legacy of that approach did not work out so well.

Corleone-Style Government

This is pretty amazing -- a FOIA and a subsequent string of emails between a USA Today reporter and the Department of Justice.  Like any email string, you need to go to the end and then read up.  Essentially, the DOJ tells the reporter that they have information that undermines the reporter's story but won't tell him what it is.  Instead, they threaten to hold it until after the reporter has published, and then give the information to another media outlet in order to embarrass the reporter, all because the reporter is "biased" which in Obama Administration speak means that he is an outlier that does not dutifully fall in line with the Administration's talking points.

My guess is that this is a cheap bluff to prevent a story from being published that the DOJ does not want to see in the public domain.  Even if it is not a bluff, this is a horrendous approach to releasing information to the public.

Don't Ever Have an Ear Emergency in Phoenix

A couple of weeks ago, I started losing hearing in one ear.  A bit later, it started to hurt.  Suspecting an infection, I called my ENT's office.  They said they couldn't see me for four weeks, and would not let me switch to see anyone else in their 10-person practice (against their practice rules, which raises the question of, from a customer point of view, why there is any benefit to a large practice at all -- the large pool of doctors provides the illusion of more customer service capability but in fact the sole logic of the practice is cost-sharing of overhead and support staff).  So eventually I just went to one of those walk-in urgent care clinics in a strip mall near me and had the GP there look at it.  I found that I did in fact have an infection and got an antibiotic scrip and some drops and was told if it did not get better in 7 days, go see a specialist.

So it has been a week and the pain is mostly gone but I still have lost most of my hearing in the ear.  So I tried to make an appointment at my ENT again -- 4 weeks.  I described my situation, and said something seemed wrong.  4 weeks.

So I talked to two friends who are both semi-retired ENT's.  They said to get my butt to a doctor ASAP because it could be nothing or it could be something really bad that needs immediate intervention.  But no ENT would see me for weeks.  So one of my friends said they would help me, but they needed audiology tests.  Turns out, those are being scheduled 3 weeks out.  I finally called in a favor with a friend of a friend and found someone to test me next Monday, just four days from now.  Four days seems a long wait for something that could be an emergency, but it beats the hell out of 4 weeks.

This is what we have done to the practice of medicine.  With a myriad of professional licensing requirements and regulatory burdens that raise the fixed cost of opening a practice, we have managed to simultaneously raise prices while limiting supply.

Trend That is Not A Trend: Rolling Stone Wildfire Article

Rolling Stone brings us an absolutely great example of an article that claims a trend without actually showing the trend data, and where the actual data point to a trend in the opposite direction as the one claimed.

I won't go into the conclusions of the article.  Suffice it to say it is as polemical as anything I have read of late and could be subtitled "the Tea Party and Republicans suck."  Apparently Republicans are wrong to criticize government wildfire management and do so only because they suck, and the government should not spend any effort to fight wildfires that threaten private property but does so only because Republicans, who suck, make them.  Or something.

What I want to delve into is the claim by the author that wildfires are increasing due to global warming, and only evil Republicans (who suck) could possibly deny this obvious trend (numbers in parenthesis added so I can reference passages below):

 But the United States is facing an even more basic question: How should we manage fire, given the fact that, thanks to climate change, the destruction potential for wildfires across the nation has never been greater? In the past decade alone, at least 10 states – from Alaska to Florida – have been hit by the largest or most destructive wildfires in their respective histories (1). Nationally, the cost of fighting fires has increased from $1.1 billion in 1994 to $2.7 billion in 2011.(2)

The line separating "fire season" from the rest of the year is becoming blurry. A wildfire that began in Colorado in early October continued smoldering into May of this year. Arizona's first wildfire of 2013 began in February, months ahead of the traditional firefighting season(3). A year-round fire season may be the new normal. The danger is particularly acute in the Intermountain West, but with drought and record-high temperatures in the Northwest, Midwest, South and Southeast over the past several years, the threat is spreading to the point that few regions can be considered safe....

For wildland firefighters, the debate about global warming was over years ago. "On the fire lines, it is clear," fire geographer Michael Medler told a House committee in 2007. "Global warming is changing fire behavior, creating longer fire seasons and causing more frequent, large-scale, high-severity wildfires."...(4)

Scientists have cited climate change as a major contributor in some of the biggest wildfires in recent years, including the massive Siberian fires during a record heat wave in 2010 and the bushfires that killed 173 people in Australia in 2009.(5)...

The problem is especially acute in Arizona, where average annual temperatures have risen nearly three-quarters of a degree Fahrenheit each decade since 1970, making it the fastest­-warming state in the nation. Over the same period, the average annual number of Arizona wildfires on more than 1,000 acres has nearly quadrupled, a record unsurpassed by any other state and matched only by Idaho. One-quarter of Arizona's signature ponderosa pine and mixed-conifer forests have burned in just the past decade. (6)...

At a Senate hearing in June, United States Forest Service Chief Thomas Tidwell testified that the average wildfire today burns twice as many acres as it did 40 years ago(7). "In 2012, over 9.3 million acres burned in the United States," he said – an area larger than New Jersey, Connecticut and Delaware combined. Tidwell warned that the outlook for this year's fire season was particularly grave, with nearly 400 million acres – more than double the size of Texas – at a moderate-to-high risk of burning.(8)

These are the 8 statements I can find to support an upward trend in fires.  And you will note, I hope, that none of them include the most obvious data - what has the actual trend been in number of US wildfires and acres burned.  Each of these is either a statement of opinion or a data point related to fire severity in a particular year, but none actually address the point at hand:  are we getting more and larger fires?

Maybe the data does not exist.  But in fact it does, and I will say there is absolutely no way, no way, the author has not seen the data.  The reason it is not in this article is because it does not fit the "reporters" point of view so it is left out.  Here is where the US government tracks fires by year, at the National Interagency Fire Center.   To save you clicking through, here is the data as of this moment:

 

Well what do you know?  The number of fires and the acres burned in 2013 are not some sort of record high -- in fact they actually are the, respectively, lowest and second lowest numbers of the last 10 years.  In fact, both the number of fires and the total acres burned are running a third below average.

The one thing this does not address is the size of fires.  The author implies that there are more fires burning more acres, which we see is clearly wrong, but perhaps the fires are getting larger?  Well, 2012 was indeed an outlier year in that fires were larger than average, but 2013 has returned to the trend which has actually been flat to down, again exactly opposite of the author's contention (data below is just math from chart above)

 

In the rest of the post, I will briefly walk through his 8 statements highlighted above and show why they exhibit many of the classic fallacies in trying to assert a trend where none exists.  In the postscript, I will address one other inconsistency from the article as to the cause of these fires which is a pretty hilarious of how to turn any data to supporting you hypothesis, even if it is unrelated.  Now to his 8 statements:

(1) Again, no trend here, this is simply a single data point.  He says that  10 states have set in one year or another in the last decade a record for one of two variables related to fires.  With 50 states and 2 variables, we have 100 measurements that can potentially hit a record in any one year.  So if we have measured fires and fire damage for about 100 years (about the age of the US Forest Service), then we would expect on average 10 new records every decade, exactly what the author found.  Further, at least one of these -- costliness of the fires -- should be increasing over time due to higher property valuations and inflation, factors I am betting the author did not adjust for.

(2)  This cost increase over 17 years represents a 5.4% per year inflation.  It is very possible this is entirely due to changes in firefighting unit costs and methods rather than any change in underlying fire counts.

(3) This is idiotic, a desperate reach by an author with an axe to grind.  Wildfires in Arizona often occur out of fire season.   Having a single fire in the winter means nothing.

(4) Again, we know the data does not support the point.  If the data does not support your point, find some "authority" that will say it is true.  There is always someone somewhere who will say anything is true.

(5) It is true that there are scientists who have blamed global warming for these fires.  Left unmentioned is that there are also scientists who think that it is impossible to parse the effect of a 0.5C increase in global temperatures from all the other potential causes of individual weather events and disasters.  If there is no data to support a trend in the mean, it is absolutely irresponsible to claim causality in isolated data points in the tails of the distribution

(6) The idea that temperatures in Arizona have risen 3/4 a degree F for four decades is madness.  Not even close.  This would be 3F, and there is simply no basis in any reputable data base I have seen to support this.  It is potentially possible to take a few AZ urban thermometers to see temperature increases of this magnitude, but they would be measuring mostly urban heat island effects, and not rural temperatures that drive wildfires (more discussion here).  The statement that "the average annual number of Arizona wildfires on more than 1,000 acres has nearly quadrupled" is so awkwardly worded we have to suspect the author is reaching here.  In fact, since wildfires average about 100 acres, the 1000 acre fire is going to be rare.  My bet is that this is a volatility in small numbers (e.g. 1 to 4) rather than a real trend.  His final statement that "One-quarter of Arizona's signature ponderosa pine and mixed-conifer forests have burned in just the past decade" is extremely disingenuous.  The reader will be forgiven for thinking that a quarter of the trees in Arizona have burned.  But in fact this only means there have been fires in a quarter of the forests -- a single tree in one forest burning would likely count for this metric as a forest which burned.

(7) This may well be true, but means nothing really.  It is more likely, particularly given the evidence of the rest of the article, to be due to forest management processes than global warming.

(8)  This is a data point, not a trend.  Is this a lot or a little?  And remember, no matter how much he says is at risk (and remember this man is testifying to get more budget money out of Congress, so he is going to exaggerate) the actual acreage burning is flat to down.

Postscript:  The article contains one of the most blatant data bait and switches I have ever seen.  The following quote is taken as-is in the article and has no breaks or editing and nothing left out.   Here is what you are going to see.  All the way up to the last paragraph, the author tells a compelling story that the fires are due to a series of USFS firefighting and fuel-management policies.  Fair enough.   His last paragraph says that Republicans are the big problem for opposing... opposing what?  Changes to the USFS fire management practices?  No, for opposing the Obama climate change plan. What??  He just spent paragraphs building a case that this is a fire and fuel management issue, but suddenly Republicans suck for opposing the climate change bill?

Like most land in the West, Yarnell is part of an ecosystem that evolved with fire. "The area has become unhealthy and unnatural," Hawes says, "because fires have been suppressed." Yarnell is in chaparral, a mix of small juniper, oak and manzanita trees, brush and grasses. For centuries, fires swept across the chaparral periodically, clearing out and resetting the "fuel load." But beginning in the early 1900s, U.S. wildfire policy was dominated by fire suppression, formalized in 1936 as "the 10 a.m. rule" – fires were to be extinguished by the morning after they were spotted; no exceptions. Back in the day, the logic behind the rule appeared sound: If you stop a fire when it's small, it won't become big. But wildland ecosystems need fire as much as they need rain, and it had been some 45 years since a large fire burned around Yarnell. Hawes estimates that there could have been up to five times more fuel to feed the Yarnell Hill fire than was natural.

The speed and intensity of a fire in overgrown chaparral is a wildland firefighter's nightmare, according to Rick Heron, part of another Arizona crew that worked on the Yarnell Hill fire. Volatile resins and waxy leaves make manzanita "gasoline in plant form," says Heron. He's worked chaparral fires where five-foot-tall manzanitas produced 25-foot-high flames. Then there are the decades of dried-up grasses, easily ignitable, and the quick-burning material known as "fine" or "flash" fuels. "That's the stuff that gets you," says Heron. "The fine, flashy fuels are just insane. It doesn't look like it's going to be a problem. But when the fire turns on you, man, you can't outdrive it. Let alone outrun it."

Beginning with the Forest Service in 1978, the 10 a.m. rule was gradually replaced by a plan that gave federal agencies the discretion to allow fires to burn where appropriate. But putting fire back in the landscape has proved harder to do in practice, where political pressures often trump science and best-management practices. That was the case last year when the Forest Service once again made fire suppression its default position. Fire managers were ordered to wage an "aggressive initial attack" on fires, and had to seek permission to deviate from this practice. The change was made for financial reasons. Faced with skyrocketing costs of battling major blazes and simultaneous cuts to the Forest Service firefighting budget, earlier suppression would, it was hoped, keep wildfires small and thus reduce the cost of battling big fires.

Some critics think election-year politics may have played a role in the decision. "The political liability of a house burning down is greater than the political liability of having a firefighter die," says Kierán Suckling, head of the Tucson-based Center for Biological Diversity. "If they die, you just hope that the public narrative is that they were American heroes."

The problem will only get worse as extremist Republicans and conservative Democrats foster a climate of malign neglect. Even before President Obama unveiled a new climate-change initiative days before the fire, House Speaker John Boehner dismissed the reported proposal as "absolutely crazy." Before he was elected to the Senate last November, Jeff Flake, then an Arizona congressman, fought to prohibit the National Science Foundation from funding research on developing a new model for international climate-change analysis, part of a program he called "meritless." The biggest contributor to Flake's Senate campaign was the Club for Growth, whose founder, Stephen Moore, called global warming "the biggest myth of the last one hundred years."

By the way, the Yarnell firefighters did not die due to global warming or even the 10am rule.  They died due to stupidity.  Whether their own or their leaders may never be clear, but I have yet to meet a single firefighter that thought they had any business being where they were and as out of communication as they were.

 

Let's Not Forget Martha Coakley's Crimes

Martha Coakley, former Massachusetts Attorney General, is apparently running for Governor of that state after her failed bid to be Senator.

Walter Olson has a round-up of Coakley's various abuses of power, which start with her shameful hounding of the Amirault family against all reason and facts, apparently for the sole purpose of self-aggrandizement.  Unfortunately, all too frequently AG's are rewarded for prosecutorial abuse in the form of media attention and often election to higher offices (Janet Reno rode witch hunts of day care operators very similar to Coakley's into the White House).

The day care worker witch hunt was one of the more bizarre events to occur in my lifetime.  I even sat on a jury of such a case, the only jury I have ever been on.  You have heard of copycat murders?  This turned out to be a copycat false accusation.  It eventually became clear that the teenage babysitter who made the main accusations really wanted to be on the Oprah show, and saw how other day care and child abuse whistle blowers had been interviewed by Oprah.   I kid you not.   By the time of this case, defense lawyers had become wise to the prosecutors' game of using brainwashing techniques to try to get small children to make bizarre sexual allegations against adults in the case.  So the defense was able to highlight the extremes that a couple of state psychologists had gone through to effectively break one poor 6 year old girl.  It was sickening, and it took us about 15 minutes to acquit.   But this is the type of behavior Ms. Coakley and her staff were engaging in.

Will Health Insurance on Obamacare Exchanges Cost More Than People Are Paying Today?

I am not going to add to the confusion on this.  For a lot of people who already have health insurance, the answer will be "maybe".  Older folks and folks with health problems may see less expensive policies, and younger people will likely pay more.

I do, however, want to add two observations that are often lost in this discussion:

  • For the millions of people who have chosen not to buy health insurance and now will be forced to do so by law, they will certainly be paying more.  Anything is more than the "zero" which has been these peoples' preference to date.
  • A more interesting question is:  what will happen to premiums in the second year.  Right now, insurance companies are pricing as if all these young people who have not been buying policies will be forced to do so by the law (a key, maybe the key, funding source for Obamacare is forcing young healthy people to buy overpriced policies to subsidize older people).  What if they refuse?  After all, the penalties in the first several years are not very severe, and Obamacare removes any risk from not being covered, because if one gets sick he can just run and sign up then, like getting home insurance once your house is on fire.  The prices on the exchanges in 2014 will be very interesting.

About That "Thousand Year" Storm in Colorado....

Last week I expressed my doubts that the storm in Colorado was really, as described breathlessly at the Weather Underground, a once in a thousand year storm (the logic of the article, and many others, being that one in a thousand is the same as "zero" and thus the storm could not have occurred naturally and therefore Global Warming).

Turns out it is not even close.  From the Colorado Climate Center at Colorado State University:

How much rain fell on Colorado this week? And where? Colorado residents can help the weather experts at Colorado State University answer these questions.

In response to the incredible recent rains and flooding in parts of the state, the Colorado Climate Center will be mapping rainfall totals and graphing hourly intensities for the entire state for the period beginning Sunday, Sept. 8 (as storms first developed over southern Colorado) through the end of the storm later this weekend

"As is typical of Colorado storms, some parts of the state were hard hit and others were untouched. Still, this storm is ranking in the top ten extreme flooding events since Colorado statehood," said Nolan Doesken, State Climatologist at CSU. "It isn't yet as extreme or widespread as the June 1965 floods or as dramatic as the 1935 floods but it ranks right up there among some of the worst.”

Among the worst, according to Climate Center data, occurred in May 1904, October 1911, June 1921, May 1935, September 1938, May 1955, June 1965, May 1969, October 1970, July 1976, July 1981, and, of course, the Spring Creek Flood of July 1997 that ravaged Fort Collins and the CSU campus.

."Every flood event in Colorado has its own unique characteristics," said Doesken. "But the topography of the Colorado Front Range makes this area particularly vulnerable when the necessary meteorological conditions come together as they did this week."

So it is perhaps a one in fifteen year flood.  Note that (by the math in my previous article linked above) a one in fifteen year flood covering an area half the size of Colorado should occur on overage over 60+ times a year around the world.  Our intuition about tail of the distribution event frequency is not very good, which is just another reason they make a poor proxy for drawing conclusions about trends in the mean of some phenomenon.

 

Money for Nothing, Detroit Edition

A huge portion of Detroit's operating costs go to police and fire.  If you include retiree health care and pensions, way over half of Detroit's budget goes to police and fire**.  That is an enormous increase since 1960.

So one might expect the schools to suck and the streetlights to be broken (which they do and are), but you would expect great freaking fire and police coverage.  But you would be wrong.  Detroit has one of the highest crime rates in the country.  This is what you get for your money there:

If you're a Detroiter who needs a police officer, it will take 58 minutes to get help -- more than five times what it takes elsewhere in the United States...

Here are some of the other problems outlined in the bankruptcy filing:

-- Response times for Emergency Medical Services and the Detroit Fire Department average 15 minutes, which is more than double the 7-minute averages seen in other cities.

-- The police department closes only 8.7% of its criminal cases, which the filing blames on the department's "lack of a case management system, lack of accountability for detectives, unfavorable work rules imposed by collective bargaining agreements and a high attrition rate in the investigative operations unit."

-- The city's violent crime rate is five times the national average, and the highest of any city with a population exceeding 200,000.

 

** This is in large part due to the power of their unions, and their ability in elections to translate hero worship for police and fire fighters into political power that will allow them to get anything they want.  As a politician, try to stand up for sanity and you will be deluged by union ads arguing that you don't respect our men who are risking their lives for you, etc. etc.

Absolute Fecklessness

I am still reading through the Detroit Free Press report on Detroit's financial history and it is really amazing.  All the stuff you expect to see is there -- over taxation, over regulation, crony gifts, huge government pay and pensions, etc.  But this was new to me, and even worse than I expected:

Gifting a billion in bonuses: Pension officials handed out about $1 billion in bonuses from the city’s two pension funds to retirees and active city workers from 1985 to 2008. That money — mostly in the form of so-called 13th checks — could have shored up the funds and possibly prevented the city from filing for bankruptcy. If that money had been saved, it would have been worth more than $1.9 billion today to the city and pension funds, by one expert’s estimate.

Outright gifts of taxpayer money to government workers, even beyond their already rich salary and pensions!  Folks on the Left from Paul Krugman to Obama are trying to portray Detroit as the innocent victim of economic and demographic exogenous forces beyond their control.  Don't let them.  The exodus from Detroit and the destruction of its economy were not random events the city had to endure, but self-inflicted wounds.

The Government, Nudging, and Delay Discounting

The theory behind the idea that government should nudge (or coerce, as the case may be) us into "better" behavior is based on the idea that many people are bad at delay discounting.  In other words, we tend to apply huge discount rates to pain in the future, such that we will sometimes make decisions to avoid small costs today even if that causes us to incur huge costs in the future (e.g. we refuse to walk away from the McDonalds french fries today which may cause us to die of obesity later).

There are many problems with this theory, not the least of which is that many decisions that may appear to be based on bad delay discounting are actually based on logical and rational premises that outsiders are unaware of.

But the most obvious problem is that people in government, who will supposedly save us from this poor decision-making, are human beings as well and should therefore have the exact same cognitive weaknesses.  No one has ever managed to suggest a plausible theory as to how our methods of choosing politicians or staffing government jobs somehow selects for people who have better decision-making abilities.

Here is a great example.  These are the people who think YOU have a problem with delay discounting:

When all the numbers are crunched, one fact is crystal clear: Yes, a disaster was looming for Detroit. But there were ample opportunities when decisive action by city leaders might have fended off bankruptcy.

If Mayors Jerome Cavanagh and Roman Gribbs had cut the workforce in the 1960s and early 1970s as the population and property values dropped. If Mayor Dennis Archer hadn’t added more than 1,100 employees in the 1990s when the city was flush but still losing population. If Kilpatrick had shown more fiscal discipline and not launched a borrowing spree to cover operating expenses that continued into Mayor Dave Bing’s tenure. Over five decades, there were many ‘if only’ moments.

“Detroit got into a trap of doing a lot of borrowing for cash flow purposes and then trying to figure out how to push costs (out) as much as possible,” said Bettie Buss, a former city budget staffer who spent years analyzing city finances for the nonpartisan Citizens Research Council of Michigan. “That was the whole culture — how do we get what we want and not pay for it until tomorrow and tomorrow and tomorrow?”

Ultimately, Detroit ended up with $18 billion to $20 billion in debt and unfunded pension and health care liabilities. Gov. Rick Snyder appointed bankruptcy attorney Kevyn Orr as the city’s emergency manager, and Orr filed for Chapter 9 on July 18.