Coyote Blog

The Goldwater Institute is threatening to sue the City of Phoenix in order to stop pension spiking.  According to the Arizona Republic,

State law says “unused sick leave, payment in lieu of vacation, payment for unused compensatory time or payment for any fringe benefits” cannot be used as compensation to compute retirement benefits.

State law also says that only “base salary, overtime pay, shift differential pay, military differential wage pay, compensatory time used by an employee in lieu of overtime not otherwise paid by an employer and holiday pay” may be used to calculate pension benefits.

This seems pretty explicit.  The City admits to using sick leave, vacation pay, and fringe benefit values (e.g. cars and cell phones) in the pension calculation.  So this seems pretty cut and dried.  The city is breaking the explicit letter of the law.

That Goldwater has a good case can be judged from the fairly lame defenses of Phoenix practices by local unions.  None seem to address the basic legal issue, but instead accuse Goldwater of "wasting taxpayer funds if it forced Phoenix to defend itself in court", a fairly hilarious attempt to claim the moral high ground of fiscal responsibility.

In fact, it appears that public workers believe  (and I think this is a fairly common belief) that their collective bargaining agreements trump state law.

John Teffy, a Phoenix Fire Department captain, said Goldwater should stand down.

“It seems to me that if the Goldwater Institute took the time to understand how the city works and how contracts work, they would know there is a much simpler way to address this than with (threats of) frivolous lawsuits,” Teffy said.

I did not understand this statement at first, but what I think he is saying is that since the "Contract" in his mind supersedes all laws, then the way to deal with this is through a contract renegotiation.  I think public workers see the writing on the wall and know that pension spiking is illegal, so they are hoping to handle this through a contract negotiation that just shifts this lost spiked value to workers in some other more legal form.  A great strategy for them, but a terrible one for taxpayers, who should not have to pay for the union's past illegality.

Via the AZ Republic

The true cost to operate Jobing.com Arena ranges from $5.1 million to $5.5 million a year, which is about $10 million to $20 million a year less than the Glendale City Council has agreed to pay hockey-related interests to manage the facility in recent years.

The net management costs, included in documents recently published on the city’s website, are bundled in the city’s solicitation for a new company to operate the city-owned arena.

Glendale council members interviewed by The Arizona Republic said they hadn’t reviewed the documents and were surprised by the figures.

“I wasn’t aware of that,” Mayor Jerry Weiers said. “Then again, I know damn good and well that the way it’s been run, they’re not putting anything extra into it whatsoever.”

This is unbelievably easy to understand .  It is a hidden subsidy, and everyone knows it.  The pictures of politicians running around saying "what, we had not idea" is just hilarious.  The Phoenix Coyotes hockey team has the lowest attendance in the league, and loses money.  In addition, the NHL, which owns the team, has committed to its members that it will not take a loss on the team, meaning that it needs to sell the team for north of $200 million.  The team is worth over $200 million, but only if moved to Canada.  In Glendale, it is worth $100 million or less.

The city was close to a deal a few years ago to sell the team.  It tackled the team value problem by basically throwing $100 million in taxpayer money into the pot for the sale (to make up for the difference in value between the asking price and actual worth).  When this encountered a Constitutional challenge (under the AZ Constitution corporate welfare is illegal though you would never know it living here) the city council disguised the subsidy in the form of an above-market-rate payment for running the arena.

So absolutely everyone knows what is going on here.  This has become a massive black hole for the town of 250,000 people that achieves nothing but the self-aggrandizement of the local politicians, who feel like bigshots if they have a real major sports franchise in town.  Oh, you heard that this all actually pays for itself in tax money?  Hah!

The justifications for previous management deals revolved around a commitment to keeping the team in Glendale. Loyal fans pleaded with council members for the team’s future. And a council majority saw advantages, including thousands of fans trekking to their city 41 nights a year to watch hockey and spend money in the city’s restaurants and shops.

The city collects revenue associated with the team and arena through leases, parking fees and tax collections for food and merchandise sales in the nearby Westgate Entertainment District. Those figures have been on the upswing, particularly since an outlet mall opened last fall.

Total collections were $4.7 million in fiscal 2011, and reached $6.4 million through just the first eight months of the 2013 fiscal year, according to the city. That money helps pay, but doesn’t fully cover, the city’s debt to build the arena.

The town spent $300 million on a stadium and subsidized the team between $25 and $40 million a year, depending on how you count it, all to get an "incremental" $6-8 million in tax money.  And by the way, just because they collect it in this area does not make it incremental -- these sales could well have cannibalized another area of town.

OK, so the Eastern narrative on Arizona is that it is full of a bunch of wacked-out xenophobic conservatives.  And sure, we have our share.  But the NY Times delves into an issue that, living here, I had never even heard of

The massive dust storms that swept through central Arizona this month have stirred up not just clouds of sand but a debate over what to call them.

The blinding waves of brown particles, the most recent of which hit Phoenix on Monday, are caused by thunderstorms that emit gusts of wind, roiling the desert landscape. Use of the term “haboob,” which is what such storms have long been called in the Middle East, has rubbed some Arizona residents the wrong way.

“I am insulted that local TV news crews are now calling this kind of storm a haboob,” Don Yonts, a resident of Gilbert, Ariz., wrote to The Arizona Republic after a particularly fierce, mile-high dust storm swept through the state on July 5. “How do they think our soldiers feel coming back to Arizona and hearing some Middle Eastern term?”

Presumably Yonts also uses some numeric system other than arabic numerals for his math as well.  Seriously, I could mine any community and find some wacko with some crazy idea.  Good journalists are supposed to have some kind of filter on these things to determine if they really are some pressing regional issue.  I live here and I have not heard one word about any such controversy.  But it fits the NY Times caricature of AZ, so they ran with it.

In fact, I think "haboob" has caught on pretty fast because it is a fun sounding name and it is something that is unique to AZ vs. other states.    After living on the Gulf Coast and in tornado alley and on the west coast, it is kind of nice to live in a place where the worst natural disaster you get is a dust tsunami that makes you have to go out and wash your car.

Lefties are struggling with the concept of a libertarian doing a good deed (in this case, Radley Balko's great journalism leading to the release of Cory Maye.

Here is the real problem for the Left:  This is exactly the kind of story -- a black man  railroaded into jail in Mississippi -- that leftish reporters used to pursue, before they shifted their attention to sorting through Sarah Palin's emails.  A lot of investigative journalism has gone by the wayside -- in Phoenix, it has really been left to independent Phoenix New Times to do real investigative journalism on folks like Joe Arpiao, as our main paper the Arizona Republic has largely fled the field.

Electing law enforcement officers is a terrible idea, but like most of the country, we do it here in Arizona.  We shouldn't be surprised, then, when Sheriff's try to pump up their image by portraying themselves as the last bastion against an invading horde.

When it was over, Sheriff Paul Babeu issued a news release declaring that Pinal County is "the No. 1 pass-through county in all of America for drug and human trafficking."

It's a line the sheriff has used countless times - most recently on Thursday in testimony before the U.S. Senate Committee on Homeland Security - as he criticizes the federal government for failing to secure the border.

There's just one problem: There is no data to support the assertion.

In fact, an Arizona Republic analysis of statistics from local, state and federal sources found that, while sheriff's officials do bust smugglers and seize pot, Pinal County accounts for only a fraction of overall trafficking.

The newspaper also found that other headline-grabbing claims by Babeu are contradicted by statistical evidence or greatly exaggerated.

Babeu's County, for example, does not even touch the border.   And crime rates in AZ have fallen faster over the last 10 years than the national average, right during the period of high illegal immigration.

Perhaps this is just a pet peeve of mine, but I really hate it when local news organizations try to find a local angle to a huge international story.  This headline from the Arizona Republic today is a good example:

No injuries reported to workers in Japan employed by Arizona companies

I was absolutely astounded several years ago when the city of Glendale (a suburb NW of Phoenix) agreed to shell out $180 million to build an arena to try to keep a pro hockey team (the Coyotes) in town.   Now, they are considering doubling their investment:

Will the Glendale City Council vote to shell out nearly $200 million in a deal aimed at keeping the Coyotes in town for at least 30 years?

But there is nothing simple about the decision facing elected officials in the West Valley city that has yearned to build its reputation as a sports and entertainment hot spot.

The deal involves Glendale taxpayers giving $100 million to Matthew Hulsizer, a Chicago businessman poised to buy the Phoenix Coyotes from the National Hockey League.

And, the Arizona Republic's Rebekah Sanders reports that "Glendale would pay Hulsizer $97 million over the next 5 1/2 years to manage the arena, schedule concerts and other non-hockey events."

Unbelievable.  The value destruction here is amazing.  A few years ago, the Coyotes were only valued at $117 million.  So the government will have subsidized an entity worth just north of $100 million with $400 million in taxpayer dollars?  Nice investment.  Of course they have a BS study about net economic impact of the Coyotes, with a sure-to-be exaggerated figure of $24.5 million a year.  But even accepting this figure, they are spending $400 million for at most $24.5 million in economic impact, which at best maybe translates into $2-3 million a year in extra taxes.  That works, how?

Losing more than 40 major events, that is hockey games, per year at the arena would be a punch-in-the-gut to bars, restaurants and retail shops that also call Westgate home.

Here is a hint:  I pretty much guarantee the buyout value or moving cost of these businesses is less than $200 million.  But here are the most amazing "economics"

that would only further jam up Glendale, which counts on sales tax revenues those businesses generate to pay off the debt it has amassed in trying to build its sports empire.

So we are going to spend $200 million to make sure we can keep up the debt service on the previous $180 million?  So where does the $200 million come from.  I am increasingly buying into Radley Balko's theory that the media is not liberal or conservative, just consistently statist.  Here is the comment on the Goldwater Institute's legal challenge

City officials also may face a legal challenge from the Goldwater Institute over the conservative think-tank's belief that the deal Glendale has cooked up violates state laws that prohibit government subsidies to private entities.

That, of course, means that the city will rack up untold legal fees to defend their deal.

Waaaaa!  More legal fees.  Is that really their biggest concern?  How about the strong possibility that Goldwater is correct, or a mention that they have won in court recently in similar cases.  But we will end with this happy thought:

Now, if they say yes to the $200-million giveaway, they may keep the team in town but are only piling on to that massive debt.

And as their initial deal with the team and previous team owners has proven, there are no guarantees that the $200 million will be enough.

Postscript: Local papers have never seen a sports team subsidy or new stadium they did not love.  Given the quality of their news departments, local sports teams sell newspapers.

PS#2: Long ago I wrote a post on subsidies for business relocations and the prisoners dilemma.

That's the headline from the Arizona Republic today.  Do editors realize this is becoming a national running joke?

The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The surge is evidence of how volatile the job market remains, even as the economy grows.

One of the perils of being a populist, as John McCain is finding out, is that the public is allowed to change its mind, but politicians who attempt to follow them end up looking bad.

the four-term senator says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

"Obviously, that didn't happen," McCain said in a meeting Thursday with The [Arizona] Republic's Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. "They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors.... What they figured was that if they stabilized Wall Street - I guess it was trickle-down economics - that therefore Main Street would be fine."

I am not sure this is much of a defense.  Even without McCain's access to such financial luminaries, I and many others predicted at the time the $700 billion slush fund would be used as, well, as slush fund to bail out the politically well-connected.  I must admit I didn't see the GM/UAW bailout coming, but its not wildly surprising in retrospect.

Unfortunately for all of us, McCain's competition in the next election, JD Hayworth, is even less appealing.

Via the Arizona Republic, from a deposition by Sheriff Joe Arpaio:

Arpaio says he was not well versed on the Fourth Amendment to the U.S. Constitution, or its counterpart in the Arizona Constitution, which prohibit unreasonable searches and seizures.

Yeah, no kidding.  This is just kind of bizarre.  I get the whole ghost-writer thing, but at least Obama actually seems to have read the book that was ghost-written for him:

Maricopa County Sheriff Joe Arpaio has not read the book he co-authored in 2008, which includes information on Arpaio's philosophy on America's immigration problem and how to cope with the nation's porous borders.

Arpaio's lack of familiarity with the book, "Joe's Law - America's Toughest Sheriff Takes on Illegal Immigration, Drugs and Everything Else That Threatens America," was among the revelations to emerge from a nine-hour deposition the sheriff gave as part of a racial-profiling lawsuit filed against the Sheriff's Office.

Update: There is a spin in the article that Sheriff Joe is just a delegator, like any good corporate executive.  I am generally considered to be far more comfortable with delegation than average, and even I know a lot more about my business than Sheriff Joe does about his.    Part of the reason is likely that I don't spend 95% of my time on media and PR events to boost my name recognition at public expense.  And you can be dang sure that I know certain pieces of legislation that are important to my business, like the Fair Labor Standards Act and the Service Contract Act, better than my lawyers.

Another 2600 word essay in the Arizona Republic on trying to balance water supply and demand in the state with only a one-sentence mention of water rates.

Over the years, some communities have tried to reduce demand. Years ago, Tucson devised a set of water rates that escalated steeply with use. As a result, many people simply stopped planting grass or other thirsty landscaping.

Amazingly, it is the only thing in the whole article that has been demonstrated to work, but still the author leans towards land-use planning and goofy dictats like rainwater harvesting rather than raising rates as a way of managing water supply and demand.

I wrote a lot more here, including an analysis that showed Phoenix has some of the cheapest water rates in the country.

These guys have totally lost it. OK, they have always been bonkers, but they have finally lost their ability to paper over their nutty paranoia and quest for power in the media.  Remember I told you the other day that Arpiao and Thomas keep filing wider and wider criminal conspiracy charges against their critics.  Basically anyone who criticizes them or seeks to keep their power limited within Constitutional boundaries is a criminal in their eyes.

Maricopa County Attorney Andrew Thomas called for investigations into the chief prosecutors of two neighboring counties on Thursday because they publicly criticized him and Sheriff Joe Arpaio earlier this week.

Yavapai County Attorney Sheila Polk and Pinal County Attorney James Walsh sent separate letters to the Arizona Republic, criticizing what they called "abuses of power" by Thomas and his close ally, Arpaio.

Polk, a Republican who described herself as a passionate believer in limited government, accused the two men of "totalitarianism" and said they have become "a threat to the entire criminal-justice system" because of a series of a investigations they have launched against their foes.

In recent weeks, Thomas and Arpaio have announced more than a dozen criminal investigations into public officials who have criticized them in the past. The pair has said their fellow Maricopa County officials are engaging in a massive conspiracy to obstruct justice and limit their power. The investigations have resulted in criminal charges against two elected officials and a judge.

Now, Thomas wants a former state Supreme Court justice to investigate his neighboring prosecutors as part of what he calls "an orchestrated campaign to pressure law enforcement in Maricopa County to drop charges against influential criminal defendants and suspects."...

In his request to McGregor [PDF], Thomas ... accused the other prosecutors of essentially breaking the law by criticizing him and the sheriff. He said the pair violated rules for attorneys in Arizona, as well as tainted the pool of possible jurors in the ongoing cases....

In his request for an investigation into the comments, Thomas alluded to a supposed campaign to enlist these attorneys "and possibly other third parties" to criticize him and the sheriff.

Arpaio is the same paranoid who cost the County hundreds of thousands of dollars when he demanded extra security because he believed himself to be an assassination target.

If it wasn't so overdone, I would do another Downfall mash-up on this for YouTube.

Can't say that I really care, but I find all the quivering excitement here hilarious:

If Tiger Woods winds up in Wickenburg for rehab over his apparent sexual compulsion and pill addiction, local businesses are ready.As the rumor mill seems to suggest, Tiger would be checking into the Meadows Rehabilitation Center in Wickenburg just after New Years, and despite being a little late in covering Tiger-gate's Arizona connection, the Arizona Republic reports today that local businesses are gearing up for golf's greatest Lothario.

For example, the owner of Sundance Pizza in Wickenburg, Bob Halsey, has already placed a sign in front of his store that says "Hey, Tiger, we deliver."

Chances of Tiger ordering some of Halsey's take-out are probably unlikely -- perhaps a more suiting sign should say "hey, droves of paparazzi, we deliver."

If Tiger does end up in Wickenburg, the number of paparazzi that will descend on the tiny town is certain to cause a boom for the local economy. Some tabloids are even rumored to have placed journalists in the rehab center themselves, in order to get the real dirt on the golf great.

Paying lots of money to stop having sex with hot women seems an odd thing to do.  From my experience he could take up playing Dungeons and Dragons and have the same result for a lot less money.

It is not uncommon for certain shady dealing to go on for years, with a small group of critics but never really breaking out into the media.  We skeptics have been criticizing climate scientists for years for various problems with their temperature indexes and historical temperature reconstructions, but never really got traction until the CRU emails were made public, and then there has been a real firestorm of media attention.  Criticisms that never got much traction before are now being actively investigated.

I am hoping that we have a similar situation with Sheriff Joe Arpaio and County Attorney Andrew Thomas.  The story is so wacky it simply defies easy description, but Arpaio and Thomas have been pursuing a number of corruption probes against their bosses in the County government.  All well and good, except for the funny fact that the targets of the probes all seem to be historic critics of Arpaio and Thomas, who have brought out their biggest guns for the one Democrat on the County Council (Arpaio and Thomas are both Republicans).

Both these men have  a history of indifference to civil liberties.   When Arpaio is not busy arresting folks for breathing while Mexican (he once managed to make a crime sweep through the 99% Anglo neighborhood of Fountain Hills and arrest 75% Mexicans), he likes to haul folks off to jail whose only crime is speaking out against the Sheriff .   He arrested (with Thomas's help) newspaper reporters and editors who wrote critically of him.  This is a man who in his paranoia invented an assassination plot (against himself, of course) and got the city to spend $500,000 protecting him.  If his deputies want to see a defense attorney's working papers, they just take them.  If he can't get a judge to release computer records, he has his posse storm into the County computer center and take it over at gunpoint.

Most recently, Thomas and Arpaio wanted a judge who has handed them a number of court losses removed from a certain case.  To make that happen, Arpaio and Thomas bizarrely charged the judge and numerous other county employees in a giant RICO case, a case attorneys are still laughing about because it was so transparent and shoddy.  When that didn't work, he charged the judge with felony bribery, apparently on the interesting theory that getting a new, updated court house building was effectively a bribe to the judges working there.

It gets much weirder even than this, with Arpaio's stealing documents from a defense counsel in court (caught on video) with this same judge holding Arpaio's deputy in contempt for the action and then the sheriff's deputies essentially going on strike at court, refusing to bring in prisoners.

But after years of fawning, positive publicity as "Americas Toughest Sheriff," the dam may finally be breaking.  When the AZ Republic finally covers it, you know the situation has to be bad:

Hundreds of attorneys gathered on the courthouse steps in downtown Phoenix to protest Thomas and Arpaio's public campaign against public corruption.

LOL, I have a picture of these guys with suits and holding placards.  Anyway, this was a real blow:

And, in a scathing letter to The Arizona Republic, the Yavapai County attorney

, who previously handled some of Thomas' cases against county officials, blasted the prosecutor and sheriff as "a threat to the entire criminal-justice system."

Oops, so much for the respect of your peers.  Shelia Polk, the Yavapai County attorney (that is a neighboring county) handled the investigations into some of Arpaio and Thomas's early charges against our County officials, so she knows the details of the story.  And she is a Republican, the same party as Arpaio and Thomas:

In her letter, Polk wrote that although Maricopa County isn't her jurisdiction, she can't sit by and watch the abuses from a distance anymore.

"I am conservative and passionately believe in limited government, not the totalitarianism that is spreading before my eyes," she wrote. "The actions of Arpaio and Thomas are a disservice to the hundreds of dedicated men and women who work in their offices and a threat to the entire criminal-justice system."

Polk had stayed out of the legal drama in Maricopa County, and her remarks offer the first insight from an outside law-enforcement official who has some knowledge of the cases Arpaio and Thomas have lodged against county officials.

Arpaio's response was predictable:

Hendershott spoke on behalf of Arpaio. Hendershott said that Polk's office repeatedly failed to issue subpoenas the Sheriff's Office needed.

"It seemed clear to us that this case was being deliberately stalled," he said. "We basically let her know that her work product was ineffective."

This is a constant refrain from the sheriff - anyone who seeks to impose any limit on his power is therefore evil and conspiring to thwart his will.  It comes up time and time again - he simply does not react well when denied a subpoena, or a search warrant, or access to certain information.  If they are not rubber stamping Sheriff Joe's requests, then they must be corrupt.  If he had been honest, his RICO charges would have simply read "they didn't give me what I want."  But there is a reason these third parties are part of the process, and you can see it in Polk's letter:

Polk said she worked with the Sheriff's Office on the cases for the next six months, then returned the cases to the Maricopa County Attorney's Office.

In Polk's letter, she wrote that she was "happy to remove myself from the cases and from contact with Sheriff Arpaio. My discomfort grew daily and my role in restraining potential abuses of power increasingly more difficult."

Certainly one driver of statism is arrogance -- the technocratic belief that one's intellectual capacity and decision-making ability is superior to that of the masses, and therefore should be substituted (via authoritarian control) for that of the masses.  This was clearly the driver of statism in the early to mid-century.  Its what caused FDR to be so enamored of Mussolini-stype fascism.  A few smart people making the trains run on time.

But I am starting to wonder if there isn't a second driver of statism that comes from the opposite direction -- projecting one's own weaknesses on the rest of humanity and, assuming they share these weaknesses, using this assumption as a reason for mommy-state controls.  This latter reasoning came through in this article summary in my feed reader from the Arizona Republic:

Lamenting his first teenage cigarette, President Barack Obama ruefully admitted on Monday that he's spent his adult life fighting the habit. Then he signed the nation's toughest anti-smoking law, aiming to keep thousands of other teens from getting hooked.

Via the Arizona Republic:

"Non-native turtles removed from zoo"

This story comes from the Arizona Republic as part of the general effort to maintain the ban on payday loan companies passed earlier this year (their is a proposition on the ballot in November to overturn the ban).

At least 5 percent of last year's freshmen at the University of Arizona obtained a payday loan, a figure the surveyor described as "very alarming."

Arizona's Norton School of Family and Consumer Sciences conducted
the survey, which measured the financial habits of 2,172 freshmen -
about a third of the class - who enrolled in fall 2007.

Student use of payday loans
more than doubled based on a survey taken a year ago that included
freshmen through seniors, said professor Soyeon Shim, the group's
director.

"As consumers, students shouldn't be using payday loans as a resort to deal with financial stress," Shim said.

I wouldn't really recommend that students use this expensive form of ready cash, but I can't say I am particularly alarmed.  How can any of us know what pressures they are under.  In most circumstances, paying a 30% interest rate seems too high.  But I know, from personal experience, there are times when short term liquidity is so valuable you might pay anything for it  (just look - the American taxpayers are paying about a trillion dollars this year just for short-term liquidity).

In fact, if students have a bad experience, it's probably better to learn a $100 life lesson in college rather than a $500,000 life lesson later flipping condos on interest-only loans.  I personally had my own caveat emptor eye-opener with Columbia House Records in college.  Nothing like getting stuck with a couple of over-priced America albums to teach financial horse sense.  Muskrat Love... aaaarrrggghhh!

Anyway, the effort to ban payday loans altogether is one of those elitist, snobby, holier-than-thou, we're smarter than you unwashed masses issues.  Middle class homeowners who are upside down in their mortgages are not calling for inexpensive mortgages to be banned, they just want a government bailout.  The government may spend a trillion dollars in the end supporting the mortgage market.  But if poor people pay a high fee for a $100 loan, we have to ban the whole industry. 

The fact is that there is always a demand for ready cash at high interest rates, and if you drive it under ground, people just go to Tony Soprano instead. 

Oh, but you are not for banning payday loans, you just think the interest rates are too high, and that what is needed is government regulation of the rates?  Uh, OK, I'm sure that will go well.  Past government efforts to reduce the interest rate premium for risk have worked out really well *cough* mortgages *cough*. 

But, if you are still thinking that you are much smarter in money management than people who go to payday loan stores and you really want to use the coercive power of government to force poor people to make the same decisions you would, here's this:

However, for those who think they are ever so much smarter than payday
loan customers, who are charged a lot of money for small liquidity
boosts, consider this:  Let's say you take out $40 each week from an
ATM to keep you liquid and that the ATM fee is $1.50.  You are
therefore spending $1.50 or 3.75% for a one week liquidity boost of
$40, which you must again refresh next week.  Annualized, you are
effectively paying 195% to get liquid with your own money.  For this kind of vig, at least payday loan customers are getting the use of someone else's money.

The Arizona Republic had another of its cheerleading articles on light rail this morning.  In it was a chart that, contrary to the intent of the article, summarized exactly why Phoenix light rail is doomed.  Below is a chart of the employment density (top chart) and population density (bottom chart) at each stop along the first rail route.  Note that this line goes through what passes for the central business district of Phoenix and the oldest parts of town, so it was chosen to run through the highest density areas - all future extensions will likely have lower numbers.  Unfortunately, they do not reproduce this chart online so here is a scan:

Take the population density chart.  As a benchmark, lets take Boston.  The average density for all of the city of Boston is 12,199 people per square mile.  Phoenix's light rail line cut through the highest density areas of town has only one stop where density reaches this level, and most stops are less than half this density.  And this is against Boston's average, not against the density along its rail routes which are likely much higher than the average.

Rail makes zero sense in a city like Phoenix.  All this will do is create a financial black hole into which we shift all of our bus money, so the city will inevitably end up with a worse transportation system, not a better one.  Cities that build light rail almost always experience a reduction in total transit use (even the great God of planners Portland) for just this reason - budgets are limited, so since rail costs so much more per passenger, other transit is cut back.   But the pictures of the train will look pretty in the visitor's guide.

Postscript: Phoenix's overall average density is around 2,500 per square mile.  Assuming that the 12,000 in the chart above is one of the densest areas of Phoenix, this gives a ratio of about 5:1 between peak and average density.  This same ratio in Boston would imply peak density areas of 60,000 per square mile.  This may be high, but indicates how much higher route densities on Boston rail should be.  Oh, and by the way, Boston rail is losing a ton of money.

Other city densities here from 1990.  People think of LA as spread out, but LA has a density over three times higher than Phoenix!

Our light rail cheerleader in chief, the Arizona Republic, laments that if Proposition 203 does not make it to the ballot this November, "light rail [in Phoenix & Maricopa County] will lose a chance to win hundreds of millions of dollars for the system's expansion".

Well, let's think about that.  The proposition would raise $42.6 billion statewide through a 1% point increase in the state sales tax rate.  But here's the rub:  Phoenix and Maricopa County constitute a huge part of the state's population, and presumably, retail spending.  In fact, checking the most recent Arizona state tax facts (for May, 2008), we find that Maricopa County pays about 64% of the state sales tax.  That means that approximately $27.3 Billion of that $42.6 billion in new taxes will be paid right here in the Phoenix metropolitan area. 

Good grief.  So, with a tax increase of $27.3 billion in Phoenix, we can get $0.6 billion back from the state for our light rail boondoggle.  Gee, thanks.  That hardly sounds like my definition of "winning" money.

By the way, this was hilarious:

Ziemba believes that Proposition 203 would have an "extremely significant" impact on light rail expansion if it becomes law.

"This would be the funding to really take our light rail system to
the next level, to expand it to more roots, to connect it to more of
the county," he said. "It will provide the resources to connect the
light rail system in a meaningful way throughout Maricopa County."

Why is that so funny?  Well, because the next $306 million in light rail spending is expected to get us 3.2 whole miles of track.  So at this rate, this $27.3 billion tax increase would net us $600 million which would, before inevitable cost overruns, get us at most 6.5 miles of track.  Wow, that sure sounds meaninful to me.

For a while, I have been writing that traditional silicon/germanium based solar-electric panels are not yet economic as an electricity source.

I have hopes for other technologies eventually making direct solar conversion to electricity.  However, there seems to be some activity in solar concentrating plants, where solar energy is reflected onto tubes to boil water and drive traditional steam turbines to generate electricity.  Fortune has an article on one such plant opening recently:

The completed solar arrays will be trucked to California where Ausra
is building a 177-megawatt solar power station for utility PG&E (PCG)  on 640 acres of agricultural land in San Luis Obispo County. (To see a video of the robots in action, click here.)
The arrays focus sunlight on water-filled tubes to create steam to
drive a turbine. Ausra manufacturing exec David McKay points to where
standard-issue boiler pipe will be fed into a machine and treated with
a proprietary coating that transforms it into a solar receiver.

I would love for this to work, but the article goes on to say that this approach still requires federal tax subsidies to compete with other electricity sources.  I am not very familiar with the economics of such plants.  Does anyone have a link or source that delves into the economics.  I am increasingly frustrated of late with alternate energy articles that fail to give any of the relevent economic info.  For example, I read an article in the Arizona Republic (sorry, lost the link) about Arizona's first wind project, but I could not get a sense from the article if the power was being purchased at market rates or some special inflated rate.

I thought this was kind of funny, from the false hysteria department.  The Arizona Republic begins ominously:

If you're already mad about gas prices, prepare to get madder.  Besides paying prices at the pump that were unthinkable a few months
ago, many consumers also are getting ripped off by the pump itself.

Uh, Oh.  I can see it coming.  The AZ Republic has smoked out more evil doings from the oil industry.  I shudder to think what horrors await.

About 9 percent, or about 2,000, of the 20,400 gas pumps inspected this
fiscal year by the Arizona Department of Weights and Measures since
July 1, 2007, failed to pass muster.

Oh my freaking God!  Every fill up, I have a one in 11 chance of my gas being measured wrong.  I just bet those oil companies are coming out in the night to tweak the pump so I get hosed. 

Half of those were malfunctioning to the detriment of customers.

See!  There you go!  Half are to the detriment of customers! 

Oh.  Wait a minute.  Doesn't that mean the other half are to the benefit of customers?  Why would those oil guys be doing that?  This sure isn't a bunch of very smart conspirators.  Could it be that this is just the result of random drift in a measurement device, with the direction of drift equally distributed between "reads high" and "reads low"?

As it turns out, I worked for a very large flow measurement instrument maker for several years.  For a variety of reasons, flow measurement devices can drift or can be mis-calibrated.  To fail the state standard, the meter has to be off about 2.5%, which is about 6 tablespoons to the gallon.  State governments have taken on the task of making sure commercial weights and measures are accurate, and though I think this could be done privately, I don't find it a terribly offensive government task.  Having taken this task on, it is reasonable to question whether it is doing its oversight job well.  But let's not try to turn this into a consumer nightmare by only discussing one half of the normal distribution of outcomes.

Post title stolen from an old Dilbert cartoon.

Frequent readers will know that I have little love for our self-aggrandizing, civil rights violating Sheriff Joe Arpaio.  A recent Arizona Republic article wrote:

A veteran Republican lawmaker wants to know why a high-level chief for
the Maricopa County Sheriff has made recent trips to China.

Because China is Sheriff Joe's role model!  It's telling that our sheriff sends his deputies on fact-finding missions to Latin American countries and China to learn new policing techniques.  Also, the article gets into some of the increasingly weird dealings in the Sheriff Joe's infatuation with facial recognition software.

The Arizona Republic has taken to embedding the code for their on-site advertising in the middle of sentences, sometimes in between two letters of a word.  This means that sometimes when I copy snippets from their web site, I end up with popups and spam on the blog, particularly since this stuff does not show up on the post preview, only when it goes to the site.  Sorry.

The Arizona Republic the other day had this headline which certainly caught me attention:

Report: 35% of Arizona jobs  'bad'

I can sympathize.  I have had jobs that were boring and unrewarding.  My last couple of Fortune 50 corporate jobs, while nominally cool on paper, were hugely frustrating.  But it seems this particular "report" had different criteria for "bad" jobs:

The new report calls 35 percent of jobs "bad" because they pay less
than $17 an hour, or $34,000 a year, and offer no insurance or
retirement plans. In a typical state, only 30 percent of the jobs are
considered "bad."

Here is the heart of these studies:  A bunch of middle class people sit around and try to decide what jobs they would be willing to accept and which ones they would not.  Any job that they would not accept is a "bad" job, despite the fact that $12 or $14 an hour might be very good pay for someone with no skills, despite the fact that it makes no consideration of a person's circumstances (e.g. single, married, 2nd job, teenager, etc), and despite the fact that $34,000 would probably put a person in the top 20th  percentile of global wages.  I made a similar point vis a vis jobs in the third world.

Just so I can't be accused of cherry-picking, I will use my own company as an example.  We have a about 80 employees in Arizona, about 70 of which are paid less than $10 an hour and none of whom have a retirement plan or insurance.  All of my jobs in Arizona are included in their count of "bad jobs."  And you know what?  We have a waiting list of over 200 names of people who would take another of these jobs tomorrow if I had one to offer.  That's because my employees are not middle-class academics.   Most are older people who already have a health plan, who don't need a retirement plan (because they have already retired) and who just want a fun job in a nice location where they can live in their RV. 

This has to be one of the most utterly pointless studies of all time.  Sure, $14 an hour would probably suck as a 45-year-old college grad with 2 kids.  But it would be a windfall to a 16-year-old new immigrant with few skills and no English.  The only thing that would be more pointless would be to try to compare states - which they also do:

About 22 percent of Arizona jobs are considered "good" because they pay
at least $17 and offer benefits. That is less than the typical state,
which has 25 percent "good" jobs. The rest of the jobs are in between
because they offer some benefits.

Since cost of living is totally comparable between Phoenix and Manhattan, then using a fixed wage rate to compare states makes complete sense.  By the way, by the study's definition, my job, which is usually awesome, is not "good" because I have no health plan.  In fact, in this study, a $40,000 job with a health plan is ranked as good while a $400,000 job with no health plan is not good.  Yeah, that makes sense.

Chad Graham of the Arizona Republic writes an article this week that begins with this headline:

Phoenix can learn economically from robust Seattle and Austin

Already, my BS antenna are deployed.  Why?  I don't know anything about Mr. Graham, but nearly every 20- or 30-something journalist would like all the world to be hip and freaky and trendy and cool like Seattle or Austin (or Boulder or San Francisco).  So they have a natural predisposition to writing a story and interpreting facts to say that Phoenix (or whatever uncool city they hail from) should do everything it can to emulate Seattle or Portland or whatever is the hip city of the moment. 

I have lived in Phoenix and Seattle and Boulder, and have done business in Portland and Austin.  And if you want to find a really great music club, Austin would be your place.  And if you are a really rich guy who wants a unique lake front home and a dock for his floatplane, Seattle would be the pick.  But if you were a middle class family trying to get the most home for your money, you would take Phoenix all the way.  And if you wanted to start a real business that makes stuff, you would be insane to do it in any of these cities except Phoenix (and perhaps Austin).  Portland and Seattle and Boulder and (more recently) Austin are what one might call rich snob - poor snob towns.  They appeal to the millionaire with the fractional ownership jet and the pierced and tattooed slacker club goer.  Which is fine, but does every city really need to be like them?

Unlike the Valley, some parts of the U.S. such as Seattle and Austin
have been only slightly affected by the national economic slowdown.

Neither area has experienced the Valley's level of falling home prices, increased foreclosure rates nor its slowed job growth.

Those regions are places that Phoenix could learn from as it charts
a future based less on housing and growth and more on competing in the
global economy.

OK, lets start with the home thing, since the article focuses A LOT on housing.  I am willing to concede that in some recent period Austin and Seattle had less of a home price drop than Phoenix.  Ignoring for a moment the absurdity of extrapolating 30 year trends from 6-12 months of data, we should look structurally at these housing markets.  It turns out that Seattle, for example, has MUCH higher median home prices than Phoenix, in large part due to structural regulatory factors that I would presume the author would like Phoenix to emulate. 

As a result, the median home price in Seattle is about $450,000 while the median in Phoenix is closer to $275,000.  In fact, the Seattle median is very close to the Phoenix 75th percentile.  [note figures do not match those in article - I could not find any two median home price numbers that were the same for a market] One comment on Seattle housing was this:

The pattern is very strong: In Seattle you have affluent, largely
single people chasing a small supply of urban housing. The result is
small household size, an exodus of families to the suburbs, and very
high housing prices in the city.

Is this really what Phoenix should emulate, just because our home prices dropped more over a 6 month period?

One year ago, the Valley's job growth ranked No. 7 among
metropolitan markets with more than 1 million workers, according to the
latest Blue Chip Job Growth Update released by the W.P. Carey School of
Business at Arizona State University.

It now ranks No. 20, while Seattle is  No. 2.

In job markets with less than 1 million workers, Austin ranks  No. 14.

So, until recently, Phoenix led both cities in job growth.  In the last year, we have fallen behind.  Can anyone on the planet tell me why the last year of data is more relevant than the previous five, or ten, when Phoenix dusted these markets?  One year of downturn and suddenly Phoenix's economy needs to be restructured by some massive government 5-year plan?

But here is the really funny part.  Let's take Seattle, the economic juggernaut with which the author is so enamored.  In 1960, Seattle had a population of about 550,000 people.  In 2000, Seattle had a population of about.... 550,000.  In the same time period Phoenix grew from 726,000 to 3.2 million.  Wow, that Seattle is a growth juggernaut.  But it is hard to get apples and oranges on MSA's and such, so here is data from a single source:  From 1990-2000, the Austin MSA added 400,000 people, Seattle MSA added 382,000 people and Phoenix added 1.01 million, more than the other two combined.  Presumably, most of these folks found work, so where are all the jobs being added?

In Phoenix, "housing-related employment is falling fast, and the
impact on the economy is extreme since the industry comprises over 15
percent of total employment . . . compared to 10 percent nationwide,"
an April Moody's Economy.com report said.

This is hilarious.  We happen to be in a housing market downturn, so Phoenix is doomed because it is overweighted towards home construction.  But did anyone visit Seattle or Austin in 2001/2002 after the tech bubble crash?  It was a bloodbath, far worse than what Phoenix is experiencing today.  This kind of analysis is so short-sighted as to be absurd. 

Maricopa County's average weekly wages increased 3.8 percent to $822
in the third quarter of 2007, according to the latest numbers available
from the U.S. Department of Labor.

Weekly wages in King County, home to Seattle, rose 8 percent to
$1,129. Wages in Travis County, home to Austin, rose to $911, a 2.7
percent jump.

Meanwhile, Arizona's average per person income ($33,029) grew by the
smallest percentage among states in 2007, according to the U.S. Bureau
of Economic Analysis.

One word for you:  immigration.  Arizona has gotten hundreds of thousands of new immigrants with relatively low skills, so they come in at the bottom of the income scale and drive median wages down.  Seattle and Austin immigration, to the extent they have it, are high-skilled and highly paid.  Does every city have to be a high-income yuppie white-Asian enclave like Seattle?  I like Arizona and its Hispanic influences, even if this immigration means the governor can't puff her chest out at the governors' conference over average wages.

The two cities have a greater percentage of employment in tech jobs,
with 9.2 percent in Austin and 8.8 in Seattle compared with 4.6 percent
in Phoenix.

Sorry, but I have never thought it a goal of government to subsidize and maximize "tech jobs."  The other 95.4% of us in Phoenix without a job statistically categorized by the government as a tech job are happy not to be subsidizing the other 4.6%.  This is the kind of effort that does nothing to help the average person, who will never have a tech job, but makes government officials feel really good about themselves.  Another way of putting it:  The author is suggesting the government single-mindedly focus on subsidizing a class of jobs that 90+% of the people in all three cities do not hold.

Postscript: For those of you who want to laugh yourself silly, you really need to read the "vision" in the sidebar of this article.  It is the most incredible collection of politically correct notions without any relationship to real value creation that I have ever seen.  I can't really do it justice, but here are some highlights:

2010

The latest housing bust finally convinces the Arizona Legislature to
fund an aggressive international-economic-development program that
invests in science, engineering, technology and higher education.

Incentives draw nutraceutical firms, which use food substances to make
products that provide health benefits, such as lycopene.
Green-technology firms partner with universities to launch companies
that turn a profit...

2035

High-paying technology jobs are clustered in three major areas from
Prescott to Phoenix to Tucson. The economy boasts an $800 billion
nutraceutical industry and the world's largest solar facility with
10,000 acres of sun power.

I bet they include no offset in their study for lost growth due to higher taxes to fund this.  And our city of 5-10 million people is going to build its economy on nutraceuticals?  We're going to have a vitamin water business that, at $800 billion, is 6% the current size of the entire US economy?  I sure hope some of the business school students who wrote this either wise up or go into academics, because if they try to walk in to a real corporate board room with this stuff they are going to get skewered.