Posts tagged ‘donations’

Missing the Point

John Hinderaker says that Democrats have been unsuccessful in their anti-Koch brother campaign because only 25% of Americans have a negative opinion of the Kochs and that has not changed much in 6 months.

But that strikes me as missing the point.  The Democrats have raised tens of millions of dollars from those 25% inflaming them with anti-Koch rhetoric.  They will outspend Republicans this year largely on the back of a campaign that, for example, never failed to mention the Kochs in almost every email sent out.  Further, they have succesfully turned the words "Koch Brothers" into some sort of boogeyman.  The media even here in Red state Arizona breathlessly discusses every contact a Republican candidate has with Koch Brothers-funded organizations while never ever mentioning any large backers on the Democratic side.  Despite the fact that Democrats have raised more so-called "dark money" than Republicans, nearly 100% of the media stories on dark money are about Republicans.  Further, by successfully (and asymmetrically) making public life a living hell for prominent Republican supporters, the Democrats are doing important battle space preparation for future elections, giving second thoughts to future potential Republican donors.

That, in my mind, is a political success.

(Of course, it is a disaster for liberty, and demonstrates EXACTLY why anonymous speech and donations have to remain legal.  The campaign waged right from the floor of the Senate by Democrats like Harry Reid to vilify private citizens who have been out-front and transparent about exercising their free speech is an insult to liberty).

On Firefox and Wedding Photographers

The OK Cupid website is protesting the Mozilla CEO's past donations to anti-gay-marriage campaigns by asking visitors to use something other than Firefox to browse their site.  Readers will know that I have actually led a past Equal Marriage effort in Arizona, so while sympathetic to the cause here, I don't think I would go so far as to block a browser to my website.  Establishing this precedent that I would boycott services and products based on the political views of company employees (which is the issue here, Mozilla does not have any official position on gay marriage that I know of), I could consume my whole life doing research.  And then I would be stuck with questions like "Are the gay marriage opinions of the Firefox CEO better or worse than Google/Chrome's enabling of censorship in China?  As I have told some folks before, if I really wanted to do do business only with those who agree with me politically, I would find myself stuck for life listening to a couple of Rush albums and watching Firefly and Wire reruns all day.

But anyway, OK Cupid is a private company and I presume they do this with their owner's approval so all's fair in conducting commerce or choosing not to conduct commerce.  Except that just a few weeks ago everyone was arguing that photographers should be forced to serve gay weddings even when they do not wish to do so.  Is this any different?  If we are going to establish a public accommodation standard that a business cannot turn away customers based on political or religious preferences, then don't we have to enforce that in a value-neutral way?

A Note on 501(c)4 Corporations

This whole notion that  501(c)4 groups are receiving some kind of huge implicit tax subsidy whose use needs to be policed is simply absurd.  I am a board member of several 501(c)6 trade associations, which have roughly the same taxation rules as 501(c)4.

The largest tax subsidy, by far, available to some non-profits is the deductibility of donations to the group.  This is available to 501(c)3 groups (traditional charitable organizations) but NOT to  501(c)4 or  501(c)6 groups.  Whether the Tea Party of Cincinnati is a  501(c)4 or not, you cannot deduct your donations to them.

The one tax break that  501(c)4 corporations get is that they do not pay taxes on any surplus they accumulate in a year.  In general, non profit groups like this collect donations and spend them.  So in general, their outlays match their revenues, such that they tend to show very little income anyway, even if it were taxable.  The only thing the non-profit status brings to  501(c)4 organizations is that they don't have to spend a lot of time and effort trying to make sure, at the end of the fiscal year, that expenditures and revenues exactly match.  Basically, the one benefit granted is that these groups can collect money in November for expenditure in January without paying taxes on this money.  This is hardly much of a subsidy, just a common sense provision.  (By the way, at least in a  501(c)6, there is no break from the paperwork.  We will have to pay an accountant to file a tax return for the Feds and the state of California.

This actually comes up from time to time in my industry.  A couple of my competitors are actually non-profits.  My for profit competitors always complain that these non-profits have an advantage, arguing that they are really for-profit, but just paying their "owners" large salaries rather than dividends.  My general answer is, so what?  My company is a subchapter S corporation, and it does not pay taxes either -- I pay taxes on the profits as regular income in my personal tax return, exactly as if I had paid out all the profits as salary.  Sure, it would be nice to accumulate profits in the company tax free, but seeing the shoe-string way my non-profits competitors run, I don't think that is what they are doing.  It used to be that as non-profits, they considered themselves immune to certain laws, like the Fair Labor Standards Act and minimum wage, but the courts have disabused them of that notion.  So it is hard to see what advantage they enjoy, but folks love to complain none-the-less.

The only real business advantage I have ever found these non-profits have is in perception among leftish politicians -- they are considered "clean" while as a for-profit company I am considered "dirty".  Which is why in California, early laws allowing outside companies to operate public parks allowed non-profits but not for-profits, and almost every state who goes this route tries non-profits first for the same reason.  This no longer bothers me -- anyone who had ever been part of a non-profit can probably guess the reason.  They really are not set up to operate a 24/7/265 service business, and within a year typically fall short, and I, with a bit of patience, then get my chance.

Creative Destruction

I thought this was an interesting example of creative destruction.  Five years ago, Time and Newsweek were running cover stories about the "Blackberry" culture and how ubiquitous the device was in modern business.  Now, people are making fun of it for being outdated tech.  If only we could get the average voter to truly appreciate creative destruction.  We might have fewer bailouts and more economic growth.

By the way, Canada says it won't bail out Blackberry, which is good, but is interesting given that it did bail out the Canadian automotive sector just a few years ago.  In terms of total market value I would guess the Canadian automotive sector is way smaller than Blackberry at its peak.  Only a cynic would suggest the difference is that the auto sector is unionized and therefore politically organized to generate campaign donations and grass roots get-out-the-vote efforts, while RIM is not.  That would imply that bailouts were due to political pull rather than sound and consistent economic reasoning, which I am sure can't possibly be true.

PS- there are still good and valid reasons for enterprises, like the Administration and government agencies, to use the Blackberry over smartphones.  Just because they are out of favor with 16-year-old girls does not mean they don't have utility. Oddly, though, given this particular niche and comparative advantage, RIM seems to be obsoleting its installed base of enterprise servers.   I am not an expert, but I think a lot of enterprises would stick with Blackberry for quite a while just out of inertia and lack of desire to change.  But now that Blackberry is forcing them to rethink their whole enterprise platform anyway, it seems to allow other competitors solutions into play.  Or am I missing something?

Update:  Apparently RIM is saying the previous paragraph is incorrect, that the new servers will support all the old devices ... except for email, calendar, and contacts.  Unfortunately, this seems to encompass the entire Blackberry functionality.  I have had one or two of the devices, and you are a nut if you are trying to surf the web on one as your main usage.

Let Them Eat Tofu

This is just amazing -- Bloomberg has become too nutty even to caricature.  From CBS NY via Overlawyered

Mayor Michael Bloomberg’s food police have struck again!

Outlawed are food donations to homeless shelters because the city can’t assess their salt, fat and fiber content, reports CBS 2’s Marcia Kramer.

Glenn Richter arrived at a West Side synagogue on Monday to collect surplus bagels — fresh nutritious bagels — to donate to the poor. However, under a new edict fromBloomberg’s food police he can no longer donate the food to city homeless shelters.

It’s the “no bagels for you” edict.

“I can’t give you something that’s a supplement to the food you already have? Sorry that’s wrong,” Richter said.

Richter has been collecting food from places like the Ohav Zedek synagogue and bringing it to homeless shelters for more than 20 years, but recently his donation, including a “cholent” or carrot stew, was turned away because the Bloomberg administration wants to monitor the salt, fat and fiber eaten by the homeless.

I AM Doing Good

I accidentally watched a few minutes of a morning show today, something I try really hard to avoid.  Matt whats-his-name was interviewing Richard Branson, and they were talking about the importance of corporations "doing good".  Once startups get going, Branson said, they need to start doing good for people, meaning I guess that they buy carbon offsets or something.

Guess what?  If my startup is succesful, I am already doing good.  I can't make a dime unless I create value for people net of what they pay me.  Every customer walks away from our interaction better off, or they would not have voluntarily elected to trade with me (and if they are not better off, I will never see them again and I will find lots of nasty stuff chasing future customers away on the Internet.)  I am tired of this notion that a succesful business person's value can only be judged by what he or she does with their money and time outside of business.  I understand the frustration with a few Wall Street and GE-type executives who are living like fat ticks on their connections with government, but most of us only are succesful if we do something useful.

This, from Carpe Diem, is along the same lines.  He looks at an editorial from the DC paper about the entry of Walmart, which says among other things

Despite the peacocking by Gray and others after the agreement was signed, the District is receiving mostly crumbs. Walmart has committed to providing $21 million in charitable donations over the next seven years, an average of $3 million a year. That's a pittance."

Walmart does not have to do squat for the community beyond its core business, because selling  a broad range of goods conviniently and at really low prices is enough. Or if it is not enough, they will not make money.  The promise of $21 million to some boondoggle controlled by a  few politician's friends is just a distraction, I wish they had not done it, but I understand that this is essentially a bribe to the officials of the DC banana republic to let them do business.

Postscript:  I have no problem with doing charitable work outside of work.  Both my company and I do, by choice, though unlike Richard Branson I don't need to have a crew of paid PR agents making sure everyone knows it.

Another Problem With Campaign Finance Legislation

There used to be two Americas -- the small portion who were criminals and the large majority of law-abiding citizens.  Now there is just one America, since with the proliferation of regulations, we all are guilty of something.  If we fall out of favor, we can all be rung up on charges.

Local Conservative pundit Greg Patterson makes this observation about the looming Jon Edwards prosecution, and observes that as much as he may dislike Edwards, his prosecution is downright scary

It looks like former Presidential candidate John Edwards is about to get indicted. Edwards is an awful person who embodies the characteristics that most of us despise.  His hypocrisy and hubris together with his unbelievably boorish behavior while his wife was dying of cancer are the stuff of Greek tragedy.

However, Edwards' downfall is also a great example of how the US has so criminalized the political process that the Government can indict anyone who falls out of favor. Once it was clear that Edwards no longer enjoyed any personal political authority, prosecutors combed through his entire political history and found this charge:

Much of the investigation, however, focused on money that eventually went to keep mistress Rielle Hunter in hiding along with former campaign aide Andrew Young, who claimed paternity of Hunter's child in 2007 so that Edwards could continue his White House campaign without the affair tarnishing his reputation. Investigators have been looking at whether those funds should have been considered campaign donations since they arguably aided his presidential bid.

Really?  Someone gave Edwards a bunch of money so that he could hide his mistress...and those funds "arguably aided" his presidential bid? That means that every dime that any candidate has ever received could later be classified as a political contribution because it "arguably aided" his candidacy.

How many millions has Edwards spent defending himself from this charge?  How much time is he going to spend in jail?  How many other candidates--or contributors--can be indicted for falling out of favor?

By the way, kudos to Patterson for bringing up this point in the context of his political opposition.  All too often groups seek to establish terrible precedents in the name of counting coup on political opponents.  For example, I have been depressed at how hard certain of my fellow climate skeptics have labored to try to bring warmist Michael Mann up on criminal charges.

By the way, I disagree with the second half of Patterson's post, wherein he tries to draw a parallel between the Edwards affair and shenanigans and political payoffs around the Fiesta Bowl.  Patterson describes politicians as having been "victimized" by the Fiesta Bowl, such victimization taking the form of the politicians accepting luxurious trips to college football games and failing to do all the necessary reporting for these boondoggles.

I have a hard time seeing this as victimization.  It would take a really, really, really naive and stupid politician to credibly argue that these trips were purely fact-finding trips and that they had no idea these expenditures represented an effort of the Fiesta Bowl to woo them in return for various quid pro quo's.  Politicians should not even be considering public subsidies of college football games, particularly ones that are so incredibly lucrative to the schools and bowl organizations.  Politicians could have avoided being "victimized" by such lobbying by simply saying that their city/county/state was not going to be handing out taxpayer-funded goodies to sports teams and games.  I don't necessarily want to send these guys to jail, but calling them victims is a joke.

It is interesting to see this attitude from a Conservative.  My mother-in-law the Boston Liberal takes the same line, that the evils that result from lobbying and outright bribery are entirely the fault of private enterprises and not of the politicians themselves.  Of course, the libertarian position on this is simple -- the fault is not any particular person, but the changes in government power that have put so many chips on the table.   If the government has the power to give or take billions, to make or kill whole industries, then it is worth a lot of money for individuals to harness this power or at least to protect themselves from being gutted by those who do manipulate the power.  To this end, 19th century corruption arguments are almost quaint, where the biggest concern was politician's ability to appoint their friends as postmaster.  Reduce government's power to give and take arbitrarily, and the amount of money spent on lobbying, elections, and outright bribery will fall precipitously.

What Politicians Really Want From Election Laws

This nifty quote from Senator Jay Rockefeller got me to thinking:

"There's a little bug inside of me which wants to get the FCC to say to FOX and to MSNBC: "˜Out. Off. End. Goodbye.' It would be a big favor to political discourse; our ability to do our work here in Congress, and to the American people, to be able to talk with each other and have some faith in their government and more importantly, in their future."

This last election demonstrated exactly what politicians don't like about election law when they complain about things like Citizens United.  No, its not the influx of campaign donations-- politicians are perfectly thrilled to be on the receiving end of more money.  The failure in the eyes of politicians was the large turnover in Congress and the losses suffered by many incumbents.  For most in Congress, election law is about maintaining their incumbency.  Any law that makes it harder for them to be criticized in the press or by challengers is good.  Anything that increases public criticism of them is bad.

Making Entrepreneurship Harder

The Free Market Project wonders why the government wants to make it harder for entrepreneurs to attract investment capital.

This is the same government that has no problem with the poorest people in our society, or anyone else, playing the lottery every week, or heading to an Indian casino or Las Vegas.  For certain, they don't have an income limit on who can contribute to a political campaign, despite the fact that there is generally no pay-off for that unless you're able to contribute thousands or bundle tens or hundreds of thousands in campaign donations....

My question is this: With the transparency possible using the Internet, why aren't average citizens able to spend small amounts of money (like, lottery ticket money) on seed-money investments?  With proper transparency and protections in place, why aren't entrepreneurs allowed to put their idea online so that the average Joe (or anyone) can look at what they're doing and invest in it if they like the idea?

Libertarian Oddity of the Day

I found this a bit odd.  In Arizona, you can actually make a voluntary contribution to certain causes or political parties via your tax return.  This is not a checkoff, but an amount that is added to the amount you owe in taxes and then passed on by the state to a short list of approved organizations.  As a libertarian, I find it unsettling that the state acts as a collection or sales agent for certain political causes.  In particular, how can the state make fair and reasonable choices as to who is on and not on the list of eligible recipients?

I found this data for 2009 FY giving:

taxes

What was odd for me is that of all the political giving, libertarians had the highest average donation.  I find it weird that libertarians would want to financially support the libertarian cause but they want to do it via the mechanism of the state income tax return.

The good news here is that the combined $28 thousand or so in political donations was dwarfed by every other cause.

Interesting Comparison

Which of these spent more political contribution and lobbying money in the last election cycle:

  • Two largest defense contractors
  • Four largest oil companies
  • Two largest teachers unions

Yes, it was the teachers.  I am sure it was for the kids, though.  This actually understates the teacher's efforts.  The corporate donations of the oil and defense companies are spread pretty evenly between both parties.  They are simply trying to buy access.  The teachers gave their money almost entirely to the Democrats.

Wow, Obama Has Inverted the Supply Curve

I am having a blast at the Change.gov transition site for Obama, now that I have satisfied myself it is not a fake.  Those who doubt that Obama has super-human powers should read this, from the Obama site:

The Obama-Biden plan provides affordable, accessible health care for all Americans, builds on the existing health care system, and uses existing providers, doctors and plans to implement the plan. Under the Obama-Biden plan, patients will be able to make health care decisions with their doctors, instead of being blocked by insurance company bureaucrats.

Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year.

If you don't have health insurance, you will have a choice of new, affordable health insurance options.

Wow - so now you can go out purchase any care you want - any tests, any procedures, whatever - and no one is going to tell you no.  Everything is paid for.  You have a blank check to go spend.  And, by granting you an infinite supply of care, your cost is going to go down.  Obama is really superman, because no one else in history has figured out how to invert the supply curve or make 2x cost less than x.

You see, it's all about insurers' margins.  If we can just cut down on those fat margins, everyone can have full health care and a pony for less money.  You doctors who are worried about health care, you will have it better too:

Prevent insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors.

All these years you thought malpractice insurance costs were high because of huge malpractice court settlements that usually bore little relationship to true malpractice, well, you were wrong.  Its because of the insurers and their margins.  We don't have to reform malpractice tort law (which is just as well since tort lawyers were so generous with donations to our campaign), we just have to get insurers to stop overcharging doctors.

To give you an idea of the absolutely huge amount of savings that can be extracted by just pounding on the insurers to give more coverage for less money, let's take a look at those outsized margins they are making.  These are net profit margins reported by Google Finance for 3Q2008 of the largest health care providers and insurers:

Cigna: 3.50%
United Health Group: 4.56%
Aetna: 3.64%
WellCare:  4.08%
Amerigroup: 3.51%
Humana 2.56%
WellPoint: 5.49%

Freaking robber barons!  Look at those outsized margins.  No wonder we have a health care crisis.  By cutting these guys margins in half, Obama expects to reduce the price of health care by 1-2%, which should be more than enough to pay for large increases in services and 30-50% price cuts.

Update: Oh, its magic.  That explains it.

Update #2: OK, the page has come down, as have most all the pages that had any kind of policy detail or promises in them.  I wish I had screen shots, but I can say everything above was cut and pasted directly form the web site.  Could I make that stuff up?  Too bad, there probably were another 10 blog posts in there somewhere.

Water and Pricing

I while back, I wrote that I could fix our Arizona water "shortage" in about 5 minutes.  I pointed out that we in Phoenix have some of the cheapest water in the country, and if water is really in short supply, it is nuts to send consumers a pricing signal that says it is plentiful. 

David Zetland (via Lynne Keisling) follows up on the same theme:

The real problem is that the price of water in California, as in most
of America, has virtually nothing to do with supply and demand.
Although water is distributed by public and private monopolies that
could easily charge high prices, municipalities and regulators set
prices that are as low as possible. Underpriced water sends the wrong
signal to the people using it: It tells them not to worry about how
much they use.

Unfortunately, water is one of those political pandering commodities.  Municipal and state authorities like to ingratiate themselves with the public by keeping water prices low.  At the same time, their political power is enhanced if shortages are handled through government rationing rather than market forces, since politicians get to make the rationing decision -- just think of all those constituencies who will pour in campaign donations to try to get special rights to water from the water rationers.

More on Public School Spending

Bill Steigerwald has a great editorial in the Pittsburgh Tribune-Review dissecting per-pupil public school spending in Pittsburgh.  Generally, when I quote media articles about school spending, I have to do what should be the obvious analyses myself (as with this pathetic Washington Post piece on school spending).  However, this would be totally redundant for Steigerwald's column.  I encourage you to read it all, but here are some highlights for Pittsburgh schools:

  • Per pupil spending in the public schools is $18,719
  • Quality private schools in Pittsburgh charge from $7,000 to an elite level at $19,500.  Humorously, just over $12,000 will get you a year at the University of Pittsburgh
  • Barely half of this spending goes towards the classroom.  The rest, presumably, goes to funding a probably enormous corps of vice-principals.  (If you ever are at a school board meeting that allows public comment or Q&A, ask how many vice-principals they have in their system).  In Pittsburgh, administrative costs are 72.5% of teacher salary costs, meaning there are likely about 3 administrators for every 4 teachers.  Ugh.
  • Teachers make $86,000 in salary and benefits, or $114,667 if you adjust for the fact they only work 9 months of the year.  Kind of obviates the "teachers are underpaid" myth.

The only other thing I would have called the schools out on is their defense that they have to pay transportation, administration, and debt service out of these costs, as if somehow this made their numbers non-comparable to private benchmarks.  So what?  Do you think my kid's private school evades these costs somehow?  Their school charges about $6,500 for middle school, and they make a profit on this (and do not get any donations).  I am pretty sure they also have to pay for administration of multiple schools (they have a network of 5 schools) and for debt service on the capital costs to build the schools in the first place.  Our schools don't have transportation, but many other private schools do.

Like Bill Gates Complaining About Starbucks Prices

I thought this from

At Montgomery Blair High School in Silver Spring, parents fear cuts in
Montgomery County's proposed $2.1 billion budget will threaten the
math-science magnet program.

Schaeffer puts this in perspective:

The desperate schools of Montgomery County will need to find some way
[to] stretch the $15,246 they have to spend on each of the 137,745 students
in their schools.

This is simply hilarious.  Sometimes it is hard to compare per-pupil spending on an apples to apples basis since each grade tends to be progressively more expensive than the last (high school is more expensive than middle school which is more expensive than elementary school).  Recognize that this is only partially because the education per se is more expensive at each step -- it is more because the expectation of extra-curriculars (sports, theater, etc.) go up at each level. 

However, taking 8th grade as a mean, I can say that my 8th-grader's tuition in a for-profit private school that receives no donations or outside scholarship money is less than half $15,246.  And the education he gets is generally considered the best in the city  (though his school is lighter than some rich-suburb public school on extra-curriculars).

If you have any doubt that local media generally act as cheerleaders for increased public spending, look no further than this.  Note the newspaper quote (from the Washington Post) and then Schaeffer's context:

I have saved the most touching story for last . . .

In Loudoun County, School Board members approved a
budget 14 percent higher than last year's to accommodate an expected
3,000 new students. The county faces a projected $250 million
shortfall, and the 54,000 student system will probably have to look for
new places for savings.

My heart goes out to the Loudoun County administrators. I can't see
how anyone can be expected to educate a child with just $15,000 or to
cover a 6 percent enrollment increase with just a 14 percent increase
in the budget.

Don't Say I Didn't Warn You -- The Environmentalist Case for Fascism

Our (mostly free) society has survived many challenges.  But will it be able to withstand gentlemen like this waving around immensely flawed climate science:

Liberal democracy is sweet and addictive and indeed in the most
extreme case, the USA, unbridled individual liberty overwhelms many of
the collective needs of the citizens. The subject is almost sacrosanct
and those who indulge in criticism are labeled as Marxists, socialists,
fundamentalists and worse. These labels are used because alternatives
to democracy cannot be perceived! Support for Western democracy is
messianic as proselytised by a President leading a flawed democracy

There must be open minds to look critically at liberal democracy.
Reform must involve the adoption of structures to act quickly
regardless of some perceived liberties. ...

We are going to have to look how authoritarian decisions
based on consensus science can be implemented to contain greenhouse
emissions. It is not that we do not tolerate such decisions in the very
heart of our society, in wide range of enterprises from corporate
empires to emergency and intensive care units. If we do not act
urgently we may find we have chosen total liberty rather than life.

He has great admiration for how China does things

The [plastic shopping bag] ban in China will save importation and use of five million tons of
oil used in plastic bag manufacture, only a drop in the ocean of the
world oil well. But the importance in the decision lies in the fact
that China can do it by edict and close the factories. They don't have
to worry about loss of political donations or temporarily unemployed
workers. They have made a judgment that their action favours the needs
of Chinese society as a whole.

Don't say I didn't warn you.

By the way, here is a little "tip."  The author says this:

Unfortunately it seems increasingly likely that the IPCC underestimated
the speed of climate change and failed to recognise the likely effect
of a range of tipping points which may now be acting in concert.

I believe that man is having a warming effect on the earth, but that effect is small and non-catastrophic.  There are reasons I may be wrong.  BUT, you should immediately laugh out of the room anyone who talk about "a range of tipping points" in a system like the earth's climate that has been reasonably stable for tens of millions of years.  When used by climate catastrophists, the word "tipping point" means:  Yeah, we are kind of upset the world is not warming nearly as fast as our computer models say it should, so we will build an inflection point about 10 years out into the forecast where the slope of change really ramps up and we will call it a "tipping point" because, um, that is kindof a cool hip phrase right now and make us sound sophisticated and stuff.

Postscript:  Anyone who makes this statement is WELL grounded in reality:

All this suggests that the savvy Chinese rulers may be first out of the blocks to assuage greenhouse emissions

LOLOLOL.  They are building a new coal plant, what, every three days or so in China?

Postscript #2: Quiz for older folks out there:  How long ago was it that environmentalists were encouraging us to use plastic bags over paper because it saved a tree?

HT:  Tom Nelson

Regulation Protects Industry Incombents

I often see folks who are arguing for increased government regulation of some industry observe that "even those greedy corporations in this industry support this new regulation."  For example, if a power company takes a public position to support greenhouse gas emissions, then that is used as evidence that such regulation must really be necessary if even the to-be-regulated are in favor.  Greg Craven makes such an argument in his global warming video that I refuted the other day.

There are two very good reasons a company in such a position might publicly support even a bad regulation.  The first is basic politics and PR:  If the regulation appears inevitable and has public support, then it is sometimes better to get out ahead of it and try to curry favor with politicians and the public to manage the regulation's implementation.   We all know corporations give donations to political candidates, but look at how they give them.  Corporate donations correlate far better with "who is expected to win" rather than "who would create the most favorable regulatory environment for the corporation."  In fact, corporations are highly likely to give donations to both candidates in a closely-fought election, and a lot of their giving is after the election, to the winner of course.

The other good reason that companies support regulation in their industry is because a lot of regulation is either designed to, or effectively, helps incumbent companies against new entrants.   I have talked about this many times with the questioning of licensing.  Global warming regulation and carbon trading systems in particular give us another great example:

BBC News understands the industry will be allowed to increase emissions
as much as it wants by the European environment council. Aviation is
the fastest growing source of greenhouse gases. But Europe's
environment ministers look set to reject a plan for a strict cap on
emissions from planes. Instead, airlines will be given a set number of
permits to pollute.

Instead, airlines will be given a set number of permits to pollute.

If
they overshoot their limit they will be allowed to buy spare permits
from firms who have managed to cut emissions elsewhere - manufacturing
industry, for instance.

So, current airlines in Europe will be given carbon permits that presumable support their current business level.  However, any new entrant, or any current player wishing to take market share from another airline, must spend money on carbon credits to grab this market share, carbon credits the current established incumbents got for free.  This in effect becomes a tax on market share gains.  This European-style protection of large corporations is typical, and is why the 30 largest companies in Europe are nearly the same as they were in 1965, but are completely different in the US.

This is also why, though I don't think expensive action on CO2 is justified, I think that if we do so the approach must be a carbon tax rather than cap and trade.   But cap and trade has so much potential for political hijinx and giving special deals to the politically influential that my guess is that politicians will want cap and trade.

Private, For-Profit Environmentalism

I toured a commercial seahorse farm here in Hawaii this afternoon.  It was really an interesting tale, of a couple who saw a problem with the over-catching of wild seahorses and attacked it with a private farming effort.  Not only has private seahorse farming cut the capture of wild seahorses for pets almost to zero, it also produces a better pet (their seahorses born in captivity are taught to eat dead shrimp rather than live food, they live much longer than wild seahorses, and they are easier to breed).  Kudos to these folks.  I love seeing private action solving environmental issues, and their story gets me interested again in the many proposals to allow ownership of tigers and rhinos in private farms to save those species.  Their website is here, and if you are in the market for a pet seahorse, I highly recommend their product. 

Postscript:
  The biggest threat to seahorses is the same one faced by rhinos and tigers:  The huge Asian market for fertility drugs based on these animals.  Generally, any animal included in Asian folks wisdom as improving sex in some way is on the fast track to endangered status.  I am hoping that Viagra may turn out to be a savior for these species, as a substitute, in the same way John D. Rockefeller saved the whales in the 19th century with cheap kerosene.  Maybe the Sierra Club should take some of the huge funds they allocate to paying off Congressmen for more regulations and direct it to Viagra donations to China.

Gas Pricing Thought for the Day

Today I was working on a bid for a retail concession in a county park in California.  In these bids we usually promise a set percentage of sales as rent in exchange for the concession and use of certain fixed assets.  One of our standard clauses is to exempt gasoline sales (if there are any) from this rent calculation, because gas sales are so horribly low margin.  Considering the licensing, environmental, and safety issues, gasoline is always a money loser for us that we offer either a) because it is expected, as in the case at large marinas or b) because it gets people in the door to buy other stuff.  And I sell gas in rural areas where I have less price competition than in cities.

It is for this reason that I am always flabbergasted at how much time and attention the government and media tend to pay to retail gasoline pricing.  The portion of my business that is clearly the worst, most unprofitable piece, so much so I have to make special contract provisions for it, gets all the attention for price gouging.   It's like the FEC dedicating most of its labor to investigating Mike Gravel's campaign donations.  I mean, why bother, there's nothing there.

What Drives Government Regulation

Since the mid-1970s, various people have decried the growing amount of money spent on elections.  They have tried numerous approaches to limiting campaign funding, all to no avail.  In part, their lack of success has been due to off-and-on efforts of the courts to protect political speech.  However, a large reason for their failure has been that they are addressing a symptom, rather than the cause of the problem.

The real cause is the growing regulatory state.  Without regulation, there would be only limited incentive for corporations and individuals to make large political contributions.   Regulation (combined with taxation) is the fountain from which most campaign money springs.  Threaten to regulate a sector, and you automatically put politicians in the position of creating winners and losers, both of whom will spend money to try to improve their fates.

Holman Jenkins makes this point in today's WSJ($):

Being a shrewd bunch, the private equity industry
presumably has gotten the message: When vast new fountains of wealth
open up in the economy, Congress must receive its ransom in campaign
donations. Delivering the wagged finger were none other than Max Baucus
and Charles Grassley, chairman and ranking member of the Senate Finance
Committee, who've taken to musing aloud about how the tax code's
treatment of private equity's lately fabulous profits might be revised.

The bipartisan nature of the initiative should
reassure readers that there's no philosophical issue here. It's purely
bidness. You, private equity, have been remiss in your patriotic duty.
Cough up.

Anyone who recalls the junk bond wars of the 1980s
will notice a pattern. Then too, Congress was awash in proposals for
taxing the takeover industry: by eliminating the interest deduction for
junk bond interest, by imposing an excise tax on assets acquired in a
hostile takeover, etc. These ideas came to naught, not least because of
the fright the proposals put into the stock market. But the endless
debate unlimbered a delicious flow of campaign dollars from all
concerned.

It appears that everything will turn out OK for the politicians:

But the message has been received. Private equity has now set up a
Washington trade group and has opened its pockets to politicians, with
Barack Obama being a special heartthrob. Oh, happy day for members of
the House and Senate tax committees, who lived for years off the junk
bond wars and now will live for years off the private equity plutocrats.

I remember stock brokers used to say that they had the best job in the market, because whether the market went up or down, they still got their money.  The same is true of politicians -- whether the regulations help or hurt, whether they end up benefiting the incumbents or the new entrants -- the politicians will still get their money.

I Only Support Incumbent Protection Once I Became an Incumbent

Readers of this blog know that I consider most campaign finance laws to in fact be carefully crafted incumbent protection acts.  Incumbents in major political offices get millions and millions of dollars in free advertising just from their day-to-day ability to get on the evening news.  This free publicity combined with strong name recognition means that upstarts often have to seriously outspend the incumbent to have a chance of defeating them.  So campaign finance laws act as a powerful protection device for these incumbents, limiting the amount upstarts can spend while in no way limiting the incumbents's ability to use their office (and taxpayer money) to shamelessly promote and publicize themselves.

And there is no one better at using elected office to shamelessly publicize himself than new NY Governor Eliot Spitzer.  So absolutely no one should be surprised at this:

Moving swiftly in his efforts to change the culture of
Albany, Governor-elect Eliot Spitzer said Thursday that he would
unilaterally stop accepting campaign contributions greater than
$10,000, which is less than a fifth of the $50,100 in individual
donations currently allowed by state law.

Mr. Spitzer also said that from now on he would refuse to take
advantage of several notorious loopholes in the state's campaign
finance laws that allow corporations and limited liability companies to
circumvent donation limits by contributing through subsidiaries and
other related entities.

Note that he only took these steps just days after he was elected governor the first time.  Spitzer knows that no one can probably offset the PR advantage he wields, but to be on the safe side, this is the opening shot to make sure that no future challenger is going to have the cash to threaten his position in office.

Generally, Eliot Spitzer irritates the hell out of me.  But I will say for one brief period in college, Spitzer, as the butt of a huge campus-wide joke, brought be great mirth.

The Government Disaster Monopoly

I have written a number of times that one of the problems with the Katrina aftermath was not that the federal government did too little, but that they try to do too much.  For example:

While turning down offers to help, when everyone agrees not enough
is being done, may seem unthinkable, these are actually predictable
outcomes from a [government] bureaucracy of technocrats.  Technocrats value process
over results, order and predictability over achievement.  More
important than having problems fixed is having an ordered process,
having everything and everyone under control.  In this context, you can
imagine their revulsion at the thought of having private citizens
running around on their own in the disaster area trying to help
people.  We don't know where they are!  We don't know what they are
doing!  They are not part of our process!  Its too chaotic! Its not
under control!

Nearly everyone who is in government has a technocratic impulse -
after all, if they believed that bottom up efforts by private citizens
working on their own was the way to get things done, they would not be
in government trying to override those efforts.  But most emergency
organizations are off the scale in this regard.  99% of their time,
they don't actually have an emergency to deal with - they are
planning.  They are creating elaborate logistics plans and procedures
and deployment plans.  Planners, rather than people of action,
gravitate to these organizations.  So, once a disaster really hits, the
planners run around in circles, hit by the dual problem of 1) their
beautiful plans are now obsolete, since any good general can tell you
that no plan ever survives first contact with the enemy and 2) they are
by nature still planners, trying to get order and process underway and
create a new updated plan, rather than just getting every possible
resource out there fixing the dang problem.

Kerry Howley in Reason's Hit and Run discusses a similar problem in Southeast Asia in the aftermath of the deadly Tsunami:

A year and a half after the deadliest tsunami in recorded history, a
pan-Asian warning system seems about as likely as, say, competent
airport security stateside. So Sri Lankans have poured donations into
DIY monitoring stations, using the Web and volunteers to watch for quakes...

How do officials react to the exciting new world of distributed warning technology?

But the government does not want ad-hoc tsunami warning centres handing out advice to local communities.

"Only the Met Department is authorised to give tsunami warnings and
evacuation orders. They cannot do it. It is illegal. That creates
unnecessary panic," Darmaratne said.

Just as in the Katrina aftermath, the government answer is that we would rather have nothing happen than positive efforts occur that we don't control (or take credit for).

Price Controls at Work

In many states like California, auto insurance rates have been subject to state price controls for years.  A recent debate over a bill called AB 2840 helps shed some light on the total idiocy of trying to have government set prices.

I have to give you a paragraph of background.  Warning -- the next paragraph is mind-numbingly dull.  Please don't give up.

Apparently, auto insurance rates are higher in California cities in part because claims rates (theft, accidents) are higher in the cities.  The cities, which have a lot of political power, argued that this was unfair that their rates were so much higher than rural folks paid.  State-approved insurance rates were discriminating against cities, they claimed.  I don't know if they made the argument, but they could also have argued that infrastructure costs (sales, claims service) was likely lower in cities per capita because of the concentrated customer base.  So the state insurance board proposed to raise rural rates and cut city rates to make prices to all Californians more even.  Rural folks then freaked, and their legislators have proposed AB 2840 to put things back the way they were before.

So who is right?  How the hell am I supposed to know?  How the hell is anyone supposed to know?  There is absolutely no objective way to settle this argument.  I read the attached article and my eyes just started to blur.  That is why in practice, for all the talk of studies and analysis, issues like this are settled in favor of whoever has more political clout or votes.  Price controls, besides wreaking havoc on supply and demand, always - yes always - result in a transfer of wealth from those without political power to groups that have the power.   That's why politicians love them -- its a great way to raise campaign donations, as groups bid to be on the receiving end of such largess rather than being the sacrificial lamb.  And it's why in a free and just society we use this thing called "markets" to determine prices in most other such complex situations.

Vindicated, but Still Unhappy

Via Kevin Drum, perhaps the most ridiculous example yet of eminent domain abuse in our post-Kelo Amerika:

On May 24, the five-member township committee voted unanimously to authorize
the municipality to seize Segal's land through eminent domain and name its own
developer.

"They want to steal my land," Segal said. "What right do they have when I
intend to do the exact same thing they want to do with my property?"

.... Segal...signed a contract last week to sell his property to Centex Homes
for about $13 million, contingent upon local approval. Centex, a nationally
known developer with projects in Middlesex, Morris and Monmouth counties, would
then build 100 townhouses on Segal's property....

Florio and Capodice [the mayor and deputy mayor] said they preferred AMJM
because it is a local company.

"I've never heard of Centex," Capodice said. "They're not Union County
people."

Un-freaking-believable.  Who wants to bet that AMJM has Tony Soprano on the board, or that AMJM has made some nice donations to the township committee's various election funds. 

By the way, the post title comes from this closing remark from Drum:

Still, it smells pretty bad, and it couldn't have happened if Kelo had
gone the other way. Libertarians should feel free to feel vindicated.

Missed this Gem:  Sorry, the contributions revelation is right up front:

On May 21, Albert G. Mauti Jr. and his cousin Joseph [owners of AMJM] hosted a fundraiser for
Assemblyman Joseph Cryan at the Westmount Country Club in Passaic County. The
two developers and family members picked up the $10,400 dinner tab, donated
another $8,000 and raised more than $70,000 that night for the powerful Union
County Democrat, according to state election records.

Three days later, the governing body in Cryan's hometown of Union Township --
all Democrats -- introduced an ordinance paving the way for the Mautis to build
90 or so townhouses on six acres of abandoned industrial land along the Conrail
line in town.

Louisiana Reconstruction Disaster

If you didn't see it on Instapundit, LSU professor Jeffrey Sadow has a great post on the huge corrupt porkfest that is being proposed in Louisiana:

  • The $250 billion [in proposed federal aid] is not far behind the $350 billion
    estimated spent on the military aspects and their aftermath of the war
    of terror since Sep. 11, 2001 "“ which means in reconstruction terms
    (leaving out the actual war-making expenses), Louisiana actually is
    asking for more than countries with 10 times its population which face
    far more damage.
  • The $40 billion [in proposed Corps of Engineering spending for Louisiana] is ten times the annual
    Corps budget, and 100 times the annual amount typically received by
    Louisiana which gets more such funding than any other state.
  • Also, it is nearly three times the size of the entire request for coastal restoration efforts in the state.
  • He concludes:

    So, let's get this straight. Louisiana, from some of her federal officials through some state officials all they way down to city and other local governments,
    countenanced negligence from benign to irresponsible in ensuring proper
    flood protection and in dealing with hurricanes. And now these same
    people have formulated a plan wanting the country to pay an incredible
    sum of money to the state controlled by people from the state to deal
    with the aftereffects and, apparently, Louisiana's past inability to
    utilize our resources efficiently in other areas?

    The rest of the country is going to look at this and think we're still stuck on stupid.

    Glenn Reynolds also has a long post with other good links on the topic here.  I particularly liked this bit he quotes from John Fund:

    Put bluntly, the local political cultures don't engender confidence
    that aid won't be diverted from the people who truly need and deserve
    it. While the feds can try to ride herd on the money, here's hoping
    folks in the region take the opportunity to finally demand their own
    political housecleaning. Change is past due. Last year, Lou Riegel, the
    agent in charge of the FBI's New Orleans office, described Louisiana's
    public corruption as "epidemic, endemic, and entrenched. No branch of
    government is exempt."

    Louisiana ranks third in the nation in the number of elected
    officials per capita convicted of crimes (Mississippi takes top prize).
    In just the past generation, the Pelican State has had a governor, an
    attorney general, three successive insurance commissioners, a
    congressman, a federal judge, a state Senate president and a swarm of
    local officials convicted. Last year, three top officials at
    Louisiana's Office of Emergency Preparedness were indicted on charges
    they obstructed a probe into how federal money bought out flood-prone
    homes. Last March the Federal Emergency Management Agency ordered
    Louisiana to repay $30 million in flood-control grants it had awarded
    to 23 parishes

    Update: Lots more at Porkopolis

    Louisiana population is 4,468,976, not all of which was
    affected by the hurricane. A reasonable assumption is to say that half the
    population was in the path of the hurricane
    . That would be about 2,234,488,
    but to keep calculations simple we'll round up the affected population to 2,
    500,000. That 2.5 million of affected Louisiana residents will make for an easy
    calculation

    $250 billion divided by 2.5 million affected residents
    results in a disaster relief request of.....(drum rooooooooooll)...$100,000 per person!

    And these juicy details:

    • $100 million for "psychological trauma response early intervention,
      prevention, and disorder treatment by culturally competent counselors and mental
      health professionals for children who are 0 to 5 years of age; see page 38, line
      1.
    • $100 million for mosquito abatement; see page 39, line 12.
    • $1 billion "shall be used for a program to aid the travel and tourism
      industry"; see page 45, line 17
    • $5 million for Project Serv under the Safe and Drug-Free Schools and
      Communities Act; see page 49, line 13
    • NOAA weather radio for every eligible person; see Sec. 526 .

    Occasioning this statement:

    "It's all vital," said Landrieu. "There's not
    anything in here that we would consider a wish list or pie in the sky. This is
    what we really believe is essential."

    This is just the macro-scale version of this, business as usual in Louisiana:

    Police found cases of food, clothes and tools intended for hurricane
    victims in the backyard, shed and rooms throughout the home of a chief
    administrative officer of a New Orleans suburb, officials said
    Wednesday.

    Police in Kenner searched Cedric Floyd's home Tuesday because of
    complaints that city workers were helping themselves to donations for
    hurricane victims. Floyd, who runs the day-to-day operations in Kenner,
    was in charge of distributing the donations.

    The donations, including lanterns, vacuums and clothes with price
    tags attached, had to be removed in four loads in a big pickup truck,
    Kenner police Capt. Steve Caraway said.

    "It was an awful lot of stuff," he said.

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