Archive for the ‘Uncategorized’ Category.

OMG -- More Smoke!

Kudos to a reader who pointed this one out to me from the Mail online.  It is a favorite topic of mine, the use by the more-scientific-than-thou media of steam to illustrate articles on smoke and pollution.

Check out the captions - smoke is billowing out.  Of course, what they are likely referring to -- the white plumes from the 8 funnel-shaped towers -- is almost certainly pure water.  These are cooling towers, which cool water through evaporative cooling.  These towers are often associated with nuclear plants (you can see that in the comments) but are used for fossil fuel plants as well.  There does appear to be a bit of smoke in the picture, but you have to look all the way in the upper left from the two tall thin towers, and one can see a hint of emissions.  Even in this case, the plume from the nearer and smaller of the two stacks appears to contain a lot of water vapor as well.  My guess is the nasty stuff, to the extent it exists, is coming from the tallest stack, and it is barely in the picture and surely not the focus of the caption.

The article itself is worth a read, arguing that figures from the UK Met office show there has not been any global warming for 16 years.  This is not an insight for most folks who follow the field, so I did not make a big deal about it, but it is interesting that a government body would admit it.

Web Site Fixes

I had a surprisingly angry email about some web site issues here, but it did get me off my butt to fix things.

1.  The email address was broken yet again at the link.  I fixed that.

2.  When I bring in blocks of quotes text from other sites, the smart quotes break and end up with things like â€™ instead of a single quote.  This obviously makes the text astronomically hard to read, so I have fixed it in all the archives and will work to make sure it is turned off in the future, though that is a surprisingly rich tech support discussion area on WordPress.

Land Use Regulation and Income Inequality

I don't have time to comment or peruse the study in depth, but this looks interesting.  From Randal O'Toole:

Harvard economists have proven one of the major theses of American Nightmare, which is that land-use regulation is a major cause of growing income inequality in the United States. By restricting labor mobility, the economists say, such regulation has played a “central role” in income disparities.

When measured on a state-by-state basis, American income inequality declined at a steady rate of 1.8 percent per year from 1880 to 1980. The slowing and reversal of this long-term trend after 1980 is startling. Not by coincidence, the states with the strongest land-use regulations–those on the Pacific Coast and in New England–began such regulation in the 1970s and 1980s.

Forty to 75 percent of the decline in inequality before 1880, the Harvard economists say, was due to migration of workers from low-income states to high-income states. The freedom to easily move faded after 1980 as many of the highest-income states used land-use regulation to make housing unaffordable to low-income workers. Average incomes in those states grew, leading them to congratulate themselves for attracting high-paid workers when what they were really doing is driving out low- and (in California, at least) middle-income workers.

As Virginia Postrel puts it, “the best-educated, most-affluent, most politically influential Americans like th[e] result” of economic segregation, because it “keeps out fat people with bad taste.” Postrel refers to these well-educated people as “elites,” but I simply call them “middle class.”

I have not read the study, but I think the word "proven" in the first sentence likely goes to far.  Economic systems are way too complex to absolutely show one variable among millions causes another.  I am convinced that the way we have regulated the housing market and promoted home ownership has reduced labor mobility.

Quiz: Who is This Wearing Prince Leia's Dress?

Our Next Environmental Crisis

Via the Onion (via Master Resource)

A coalition of geologists are challenging the way we look at global stone reserves, claiming that, unless smarter methods of preservation are developed, mankind will eventually run out of rocks.

"If we do not stop using them up at our current rate, rocks as we know them will be a thing of the past," renowned geologist Henry Kaiser said at a press conference Tuesday. "Igneous, metamorphic, even sedimentary: all of them could be gone in as little as 500,000 years."

"Think about it," Kaiser added. "When was the last time you even saw a boulder?"

The scientists warned that, although people have long considered the world's rock supply to be inexhaustible, it has not created a significant number of new rocks since the planet cooled some 3.5 billion years ago. Moreover, the earth's rocks have been very slowly depleting in the last century due to growing demand for fireplace mantels, rock gardens, gravel, and paperweights.

Kaiser claims that humanity has "wreaked havoc" on the earth's stones by picking them up, carrying them around, and displacing them from their natural habitat.

"A rock can take millions of years to form, but it only takes a second for someone to skip a smooth pebble into a lake, and then it is gone." Dr. Kaiser said. "Perhaps these thoughtless rock-skippers don't care if they leave our planet completely devoid of rocks, but what about our children? Don't they deserve the chance to hold a rock and toss it up and down a few times?"

I Wonder if this Lesson is Getting Through?

There are certain contradictions involved in attempting minimum-rules radical self-expression on government land via a government permit.  Government employees incentives are all geared towards following procedures.  There are no rewards for results or innovation, just punishments for violations of bureaucratic minutia.  It is not surprising that the government and Burning Man cultures have come into conflict.

I'm Not Dead Yet

This is an interesting perspective on why Blackberry / RIM may not be dead yet.  After a weekend trying to futz with iPhone access to Gmail and a failed iPhone OS upgrade, I am sympathetic to the enterprise argument that modern iOS and Android smart phones may be lacking in the security and stability that corporations want.  There is still an enterprise market out there -- after all, IBM completely left most of the sexy and high-profile consumer markets but still does about  hundred billion in sales each year at a respectable 15% profit margin.

Surprise: Fisker Automotive Struggling

Apparently electric vehicle maker -- and recipient of lots of your and my money -- Fisker Automotive is struggling.    Who would have thought that a company that could not fully fund itself privately and had to rely on political connections to use the coercive power of government to take money from taxpayers might be a bad investment?

As a reminder, Fisker's taxpayer largesse likely came at the behest of politically powerful Ray Lane of Kleiner Perkins.  It is his firm's investment returns we taxpayers are supporting.  So it should come as no surprise that Ray Lane says, in the video below, that he thinks Obama is the greatest public sector venture capitalist ever.  What does he use as justification for this conclusion?  Why, Solyndra!  I kid you not, check it out.

By the way, if you did not see it, check out my Forbes article on how the Fisker Karma gets worse mileage than an SUV when you trace its electricity back to the power plant.

When Consumer Regulation is Anti-Consumer

Frequently, so-called consumer regulation is coopted by large corporations to limit the ways competitors can try to unseat them.  For example, limo services will get laws passed that all limos have to have certain features.  Ostensibly, this is so consumers will be protected from having a limo without a wet bar, or whatever, but in fact its to prevent upstart competitors from taking them on with a different kind of business model potentially using different kinds of vehicles.

I find that this is frequently the case with regulated utilities.  Utilities are able to get all kinds of crazy laws passed to protect business practices that would never survive the marketplace.  Just today I was trying to open a business account with Duck River Electric in Tennessee.  We are attempting to reopen a TVA campground that has been closed for several years.  The campground is tiny, so I was flabberghasted when the utility told me that we had to put down a permanent deposit of $4100.  I found this to be shockingly high.  Apparently, it is based on the highest two months demand in the highest year (several years ago) in history.  Since the campground is only open for five months, it means that we have to give the utility an indefinite interest free loan equal to half the annual business we do with them.

This is simply insane.  Name one reasonably competitive business where one has to put down anywhere near this kind of advanced deposit to become a regular customer.  If there was any sort of competition in this business, the sales people for the other company would have a field day with this.  Sure, vendors often do a credit check on us, and a very few times (mostly early in our history) we had to pay COD for orders.  But this is absurd.

PS-  The only vendors we work with that are even close to this for abusiveness are the state authorities from whom we buy fishing licenses for resale.  Many of these agencies require expensive payment bonds not required by any of our other (private) vendors.  Arizona Game and Fish even forces us in January to accept an inventory of many products we do not sell (e.g. hunting stamps) and cannot sell by the terms of our lease.  We have to keep these in the safe for a year and if we lose any and are unable to return them at the end of the year, we have to pay for them.  Imagine Amazon.com sent you a bunch of crap you did not want and required you to hold them for a year, and then pay the expenses of returning them, and then pay for any item you might have lost.   Anyone like myself who was dumb enough to fall into the Columbia House records thing will know the danger of this.

Fritz Vahrenholt Climate Book

A lot of folks have asked me if I am going to comment on this

One of the fathers of Germany’s modern green movement, Professor Dr. Fritz Vahrenholt, a social democrat and green activist, decided to author a climate science skeptical book together with geologist/paleontologist Dr. Sebastian Lüning. Vahrenholt’s skepticism started when he was asked to review an IPCC report on renewable energy. He found hundreds of errors. When he pointed them out, IPCC officials simply brushed them aside. Stunned, he asked himself, “Is this the way they approached the climate assessment reports?”

I have not seen the book nor the Der Spiegel feature, but I can say that, contrary to the various memes running around, many science-based skeptics became such by exactly this process -- looking at the so-called settled science and realizing a lot of it was really garbage.  Not because we were paid off in oil money or mesmerized by Rush Limbaugh, but because the actual detail behind many of the IPCC conclusions is really a joke.

For tomorrow, I am working on an article I have been trying to write literally for years.  One of the confusing parts of the climate debate is that there are really portions of the science that are pretty solid.  When skeptics point to other parts of the science that is not well-done, defenders tend to run back to the solid parts and point to those.  That is why Michael Mann frequently answers his critics by saying that skeptics are dumb because they don't accept greenhouse gas theory, but most skeptics do indeed accept greenhouse gas theory, what they don't accept is the separate theory that the climate is dominated by positive feedbacks that amplify small warming from CO2 into a catastrophe.

This is an enormous source of confusion in the debate, facilitated by a scientifically illiterate press and alarmists who explicitly attempt to make this bate and switch so they can avoid arguing the tough points.  Even the author linked above is confused on this

Skeptic readers should not think that the book will fortify their existing skepticism of CO2 causing warming. The authors agree it does. but have major qualms about the assumed positive CO2-related feed-backs and believe the sun plays a far greater role in the whole scheme of things.

This is in fact exactly the same position that most skeptics, at least the science-based non-talkshow-host ones have.  Look for my Forbes piece tomorrow.

Beating Rush Hour

via Twisted Sifter, who commented "+1 for crazy, reckless insanity. Idiocy at it’s finest. Do not attempt."

MF Global: Unethical, But Perhaps Not Illegal

Investors everywhere were shocked to see that MF Global seems to have lost over a billion dollars of their customers capital.  In most cases, this capital was cash customers thought was sequestered as collateral for their trading accounts.  MF Global took its customers money and used that money as collateral in making risky, leveraged bets on European sovereign debt, bets that fell apart as debt prices fell and MF Global faced margin calls on its bets that it did not have the liquidity to cover.

Certainly it strikes most folks as unethical to lose the assets in your customers' brokerage accounts making bets for the house.  But it turns out, it may have been entirely legal.  This article is quite good, and helps explain what was going on, what this "hypothecation" thing is (basically a fancy term for leveraging up assets by using them as collateral on loans), and why it may have been legal.

In short, the article discusses two regulatory changes that seemed to be important.  The first was a 2000 (ie Clinton era, for those who still think these regulatory screwups are attributable to a single Party) relaxation in how brokerages could invest customers' collateral in their trading accounts.  The second was a loophole where brokerages created subsidiaries in countries with no controls on how client money was re-used (in this case mostly the UK) and used those subsidiaries to reinvest money even in US brokerage accounts.

The increase in leverage was staggering.  Already, cash in most commodities trading accounts is leveraged - customers might have only 30% of the value of their trading positions as collateral on their margin account.  Then the brokerage houses took this collateral and used it as collateral on new loans.  Those receiving the collateral on the other end often did the same.

MF Global would be bad if it were fraud.  But it is even worse if MF Global is doing legally what every other brokerage house is still doing.

Here is the minimum one should do:  Diversify brokerage accounts.  We diversify between bonds and stocks and other investments, but many people have everything in one account with one company.  I am not sure anyone can be trusted any more.  My mutual funds are now spread across three firms and, if I grow my brokerage account for individual stocks and investments (right now it is tiny) I will split that as well.

Huh? Is This Like the Lake Wobegon Effect?

This article at Kevin Drum's titled "The Death of Middle Class Neighborhoods" really had me scratching my head.

At first I thought this was about an end to self-segregation of the middle class.  After all, if middle class neighborhoods are gone, but middle class people are still living somewhere, then they must be living mixed up with other groups.

But then Drum says the problem is the increasing self-segregation of the middle class.  Huh?  How can they be self-segregating more but we end up with fewer all middle class neighborhoods?

But then the problem appears to be that the middle class want to hang out with the rich people.    Um, OK, I don't find this wildly surprising, though the evidence he cites for this is awful, the typical low standard of science practiced by sociologists everywhere.  But Drum himself admits he self-segregates with more educated people, so there you have your proof.

Finally, as usually is the case with the Left, the problem turns out to be not with the middle class at all but with rich people

We've been fretting for a long time about the rise of gated communities, the abandonment of public schools by prosperous city residents, and the booming market in McMansions. And more and more, this kind of segregation doesn't apply only to the truly rich. Increasingly, even the merely well off hardly have any social interaction outside their own class: they live in different neighborhoods, eat in different restaurants, send their kids to different schools and different sports leagues, and vacation in different places.

Really?  Like you had a much better chance as a poor person to be hanging out with Andrew Carnegie at the pub than you do today chilling with Bill Gates at a Starbucks?  When was this magic past time when the affluent liked to mix more with the unwashed?  I hate to just use my personal observations, but Drum does, so here is mine:  I feel like many of our meeting places today are less rather than more exclusive.  I know a lot of very rich folks, and they simply don't cloister themselves in exclusive clubs and stores like they used to -- I am not at all surprised to see them in the Costco or at the public golf course.

I can be persuaded to accept schools as an exception to this, but this hardly does much to help Drum's argument as the government school system has been run (and run into the ground) by his fellow progressives for decades.  It says a lot about private vs. public solutions that Costco has found a way to appeal equally to rich and poor but the public schools have not.

Update:  From the NYT article on the underlying study, note the problem on these maps- the urban boundary in the study is static, so as the city expands, more of the metro area is outside the bounds of the study area.  What group likely is the predominent occupant of new suburbs on the leading edge of urban boundaries?  Dare I say middle class?

The central core of older American cities has always been where the richest and poorest live.You can see this on the Philadelphia maps.  The pattern is not changing, just each area is getting larger.  A full picture would show the middle class area expanding out as well, but the study cuts off the boundary at arbitrary country lines and never expands the boundary as the city's geographic size grows.  The "trend" they are supposedly seeing are middle class continuing to move outwards from the city center, and their flawed study methodology  loses visibility to them.  This makes more sense than the study's finding, that somehow there is this weird lake Wobegon-type effect where no one is in the middle band of the percentile range.

When Did We Vote For This?

Lost in the discussion of Dan Carol's criticism of Steven Chu and his conduct in the Energy Department was an amazing implicit assumption about the DOE's mission:

“Secretary Chu is a wonderful and brilliant man, but he is not perfect for the other critical DOE mission: deploying existing technologies at scale and creating jobs,”

Seriously, is this really their mission?

Chinese Consumers Thank the US Senate

From my Forbes post today, the following letter:

From:  The Consumers and Small Businesses of China

To:   The United States Senate

Re:  Currency Exchange Rate Oversight Reform Act of 2011

Dear Senators:

Thanks!  For years, our government has pursued a currency and trade policy that has subsidized your American consumers at the expense of our own here in China, and while we are unsure exactly why you would want to end this arrangement (we presume due to powerful lobby by your large manufacturers), we are happy that you are doing so....

A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called "dumping" represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields and creating inflationary pressures.

Every single step China takes to promote exports is in effect a transfer of wealth from Chinese citizens to Americans, and we are tired of it.

Read it all.

Ten Years Ago Today

Ten years ago, for the first and only time in my life, I invited my wife to come along on a business trip from Seattle to New York.

On 9/11, I was sitting in the restaurant at the W hotel in Midtown Manhattan having breakfast with some bankers. I had recently been hired to see if I could make something out of a startup that was trying to manage aircraft parts sales and inventories over the web. My incredibly ill-timed pitch to the bankers was that the commercial aviation business, which had been somewhat in the doldrums, was on the verge of a turnaround. Oops.

My wife came down to breakfast to tell us something funny was going on in the news. We ended up going to one of the banker's hotel rooms -- he had a penthouse suite with a balcony from which we watched the now-famous and horrible events play out.

The rest of the day was odd to say the least. People on the street flinched whenever a plane flew over. The entire island emptied out, such that in the evening, we walked through Times Square and not a single care came through in 5 minutes. Someone was skateboarding in lazy circles, I suppose just because he could.

For us, 9/11 fortunately was only a hassle. We scrambled to find someone to watch our kids in Seattle, and found the last rent car in the city and ended up driving all the way back to Seattle from New York. We still made it back before air travel resumed.

Many of our friends were not so lucky. As both my wife and I were grads of the Harvard Business School, we knew scores of people who worked in the WTC. Over the coming weeks, word floated in of friends that had died that day, including our friend Steve who did not work there but got talked into going to a training session he really did not want to be at. I actually think of him many times, when I am asked to do tedious business trips I see not value in. I have learned to skip a lot of them. Life is too short.

Baseball showcase

I am not sure if this really comes through, but this is the batting showcase discussed in my earlier post. 100 coaches, one lonely spot in the cage.

- Posted using BlogPress from my iPad

The Fountainhead and Credentialism

This seems like good news -- there were over 30,000 essay submissions by high school juniors and seniors into the Ayn Rand essay contest, this year on the Fountainhead.  My son entered an essay, pondering his college choices in the context of Howard Roark and the Dean.  He has it online at his blog, follow the link.

A China Scare I Might Actually Entertain

I am not one for China-bashing (or Japan-bashing 20 years ago).  But it is interesting to consider just how sane and peaceful a country will be if it is dominated by 100 million men who can't get laid.

Discretionary Spending: Support Thyself

Many of you may know that my business is engaged in private management of public recreation.  We get a lot of pushback from certain sectors who believe access to government lands or services should be free -- ie already paid for by their income taxes.

I often argue that this notion of discretionary services (like parks and campgrounds) being run with high cost government labor and funded by general revenue taxes is a dead one - in fact it has been dead for at least 10 years.  Just look around at public parks organizations.  Odds are that your state is facing parks closures and is very likely not fully funding park maintenance. I wrote about this failed model here.

In the future, anything discretionary government program that can charge use fees or be privatized or both will do so.  Or else it will be provided at terrible quality with long queues and frequent closures.  Don't believe me?  Lets look at the US government budget data from last year. This chart has been making the rounds -- I have not checked the data source but I presume it is correct (as usual click for larger version)

I have some interest in the science of chartmanship.  McKinsey & Company did a great job teaching me how to make a presentation, a skill I have honed somewhat in way too many planning and strategy jobs that seemed to revolve around Powerpoint  (one of the criteria for my current job is that it did not involve Powerpoint).

This chart is a case where the author used the wrong chart type.  The pie chart is not appropriate to show a changing total (as the author does with the size of the pie).  The eye has trouble assessing volumes.  I have taken the same data and put it in a slightly different form.  I did not take time to make it pretty, but I think it works better in this format:

Now do you see my point about discretionary spending?  Last year government taxes just about covered entitlements and interest on the debt.  Had we not borrowed, there was no money left over for any discretionary spending, including all of the Defense budget!  Now, even without action, the picture will improve in 2011 as taxes go up with a rising economy and some of the unemployment spending goes down.  But this might just get us to still having a defense department.  Either large swaths of discretionary spending is going to have to be zeroed out, or some sort of entitlement restructuring is necessary.

Of course, tax increases will likely be part of the mix as well, but look at the individual income tax bar.  Even doubling it would not close the budget gap!

Great Toy

I have to second Glenn Reynolds recommendation of this Snap Circuits electronic kit.  This is BY FAR the most user friendly electronic building toy we have found, and it works great.  I don't see that many kids with these so its a great gift for nieces and nephews who you are not sure what they already own.

Awesome Story of the Day

California Cap-and-trade plan may be put on hold because they failed to do an Environmental impact study.  LOLOLOL

The California Air Resources Board violated state environmental law in 2008 when it adopted a comprehensive plan to reduce greenhouse gases and again last year when it passed cap-and-trade regulations, a San Francisco Superior Court judge has ruled in a tentative decision.

If the decision is made final, California would be barred from implementing its ambitious plan to combat global warming until it complies with portions of the California Environmental Quality Act, though it is not yet clear what the air board would have to do to be in compliance. The state’s plan, which implements AB32, the Global Warming Solutions Act of 2006, would reduce carbon emissions to 1990 levels by 2020.

Tucson Shooting Prediction

Here is the next bit of news I bet we will hear:  One of the victims or his/her families will sue Safeway, whose only involvement in the crime was that it had offered the parking lot as a location for Ms. Giffords constituent meeting.  Increasingly, though, the tort system is not about justice, but about finding deep pockets somehow tangentially connected to a tragedy.  I will bet that some lawyer right now is crafting a suit based on Safeway's inadequate security, poor judgement in allowing the meeting on their property, failure to warn customers of the potential dangers of attending such a political meeting, etc. etc.

Yogurt Bubble

For some reason, Phoenix is in the midst of frozen yogurt wars.  A few years ago a store opened with a new concept - they set up about 12 self-serve frozen yogurt machines so you could fill your own bowl, and then gave the customer direct access to heaps and heaps of toppings (e.g sprinkles, chocolate sauce, m&m's, gummie bears, etc).  At the end, you weigh your bowl and pay based on weight, exactly as one might do in one of those salad bar restaurants.

Over the last few years, the market has exploded with new stores in the same model.  We must have at least 10 different chains.  We have about 6 within a short drive of our house.  Already, the price per ounce they charge has fallen by over half.

I have learned from my out-of-town visitors that this is not a concept that is common in other parts of the country.  Which leads me to ask why so many restaurants with the same concept are piling into Phoenix.  Is it just people in the local market thinking it is a great idea and deciding to copy the idea in their neighborhood? I can sort of see the appeal - these stores were (initially) popular, had low barriers to entry, and probably elicit dreams of creating a franchisable concept.  Which leads me to two questions:

  • Why is the tenth or twentieth incremental store being opened in Phoenix?  I would find some place like Georgetown or Harvard Square that has not seen this concept yet and open it there.  Or even better, open one on Sand Hill Road or wherever retail investors work.
  • Seeing the low barriers to entry and the quick proliferation in this market, combined with sagging visitation as the novelty wears off and steeply falling prices, why is anyone attracted to this at all?  One guy will probably get out ahead on this and establish a national brand, and everyone else will likely get slaughtered  (and the first mover will probably go bankrupt anyway as many fast-growing franchise model from Jiffy Lube to Boston Chicken have).  Is it the lottery value?  Or am I too much like the joke about Milton Friedman, who refused to pick up a twenty dollar bill on the ground because he argued that the money couldn't be real since in a free market someone would have already picked it up.

Ditto Hamburgers

Apparently, the folks in France are at it again, valiantly trying to retroactively create trademark rights that don't exist.  I saw this link below:

Which leads to this site, which says in part:

When it comes to wine, there is no ingredient more important than location. The land, air, water and weather where grapes are grown are what make each wine unique. That is why we, as wine enthusiasts, demand that a wine's true origin be clearly identified on its label in order for us to make informed decisions when purchasing and consuming wine. This ensures we know where our wine comes from and protects wine growing regions worldwide.

Use the form below to sign the petition to protect wine place and origin names:

I hereby sign the Wine Place & Origin Petition. In doing so, I join the signatories of the Joint Declaration to Protect Wine Place & Origin - Champagne, Chianti Classico, Jerez, Napa Valley, Oregon, Paso Robles, Porto, Sonoma County, Tokaj, Victoria, Walla Walla, Washington State and Western Australia - and a growing list of consumers in supporting clear and accurate labeling to better ensure consumers will not be misled by wine labels.

Some countries like Germany cannot use "champagne" or "Cognac" to describe similar products.  Do you know why?  These conditions were actually thrown in to the Treaty of Versailles at the end of WWI.  Since the US never signed the treaty, it and its citizens and growers are not bound by this restriction.

In the same spirit I demand that:  1) Hamburgers only be made in Hamburg 2)  Franfurters can only be made in Frankfort 3) Wiener Snitzel can only be made in Vienna 4) Hollandaise Sauce can only be made in the Netherlands  5) Boston baked beans can only be made in Boston.  Obviously we consumers are all duped, thinking our hamburger was actually made in Germany.  Had I only known!