Posts tagged ‘LA’

Obamacare Newly Insured Numbers Miss by at least 50% vs. Projections

With our new prosthetic memory, called the Internet, it should be easy to go back and look at past predictions and see how well those predictions played out.  Heck, sports talk radio hosts do it all the time, comparing their beginning of season predictions with what actually happened.  But no one ever seems to hold the government or politicians similarly accountable.

Here is one I found by accident.  In July of 2011, Kevin Drum quotes this prediction from the CMS (Center for Medicare and Medicaid Services, a government agency).

In 2014, the Affordable Care Act will greatly expand access to insurance coverage, mainly through Medicaid and new state health insurance exchanges which will facilitate the purchase of insurance. The result will be an estimated 22.9 million newly insured people.

In March of 2014 Kevin Drum quotes this from the LA Times

As the law's initial enrollment period closes, at least 9.5 million previously uninsured people have gained coverage. Some have done so through marketplaces created by the law, some through other private insurance and others through Medicaid, which has expanded under the law in about half the states.

The tally draws from a review of state and federal enrollment reports, surveys and interviews with insurance executives and government officials nationwide.

....Republican critics of the law have suggested that the cancellations last fall have led to a net reduction in coverage. That is not supported by survey data or insurance companies, many of which report they have retained the vast majority of their 2013 customers by renewing old policies, which is permitted in about half the states, or by moving customers to new plans.

This is presented as a great victory, but in fact it is nearly 60% below expectations of less than two years earlier.  We don't know the final number.  Drum, who should be expected to be on the optimistic end of projections, has upped his estimate to 11-13 million, but this is still barely half what was expected.   The disastrous Obamacare exchange rollout did one thing at least -- it hammered expectations so low that even a 50% miss is considered a great victory.

 

Is Their a Guinsess Record for the Longest Correction?

This correction by Michel Taylor of something called the Australian Independent Media Network has got to be the longest correction in history.  You know it is an incredible correction when this is just a tiny part of the errors admitted:

  • Evans does not believe, and has never believed, that 9/11 was an inside job perpetrated by the Rothschild family, that US President Barack Obama is a secret Jew, that the Holocaust never happened or that Jewish bankers and the Rothschild family have assassinated at least two US Presidents.

The author also admits to getting Evans' education, occupation, organization, and sources of funding wrong.

In part I suppose kudos are owed to Mr. Taylor for being so honest, but seriously, how can one be so comprehensively wrong? (I will actually explain why in a minute).  The correction runs on so long in part because he Taylor also has to correct an earlier correction where he blamed one of his original sources for being intentionally misleading.  He also apologizes for that.

I would likely have posted this anyway just because it is sort of funny.  But it just so happens to tie into what I wrote yesterday here.  Because it is clear that Mr. Taylor's core mistake is that he researched the positions of a climate skeptic (Mr. Evans) solely by asking climate alarmists (and climate alarmist web sites) what this skeptic believed.  He felt no need to hear the skeptic case from the skeptic himself.  And what do you know, the descriptions of Mr. Evans' beliefs as portrayed by his ideological enemies were full of errors, exaggerations, straw men, and outright lies.  Who would have thought?

We can laugh at Mr. Taylor, but at least he admitted his mistakes in great depth.  But outlets such as the LA Times and the BBC have recently made it a rule they will never allow skeptic voices into their reporting.  They have institutionalized Mr. Taylor's mistake.

Binge Listening 2013

I find it almost impossible to keep up with all the great music that has been enabled by digital distribution.  So I end up waiting for year-end best lists and then binge listening for a few days.  One of the lists I have come to trust as fitting my tastes pretty well is from LA writer and Coyote Blog reader Steven Humphries.  Here is his 2013 list.  I will echo that I really enjoyed the new Steven Wilson album,which I have had for a while based on his recommendation.  But I had never heard of Vertical Horizon and particularly enjoyed their album on the list.

By the way, this is not 2013-related, but if there are those of you out there who are 60's, 70's, 80's classic rock guys who struggle to engage with rap, a fantastic gateway drug is Girl Talk.  Their All Day album can be downloaded free.  This is the only modern album in my household that migrated from me to my kids rather than vice versa.

Single-Minded Obsession on Home Ownership

This article from the LA Times confused me greatly:

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

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

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

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

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

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

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

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

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

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

Using the the Criminal Activity that Results from Prohibition to Justify Prohibition

Apparently, Los Angeles has tough anti-ticket scalping laws.  This means that one is able to resell virtually any item one owns but no longer has a use for except tickets.  In this case, government officials yet again don't like someone who places little value on an item selling it to someone who places more value on that item (a concept that is otherwise the basis for our entire economy).  We can see the effect of such laws in London, where stadiums full of empty seats are juxtaposed against thousands who want to attend but can't get tickets, all because for some reason we have decided we don't like the secondary market for tickets.

A great example is embedded in this line in today's LA Times about crackdowns on scalping:

Jose Eskenazi, an associate athletic director at USC, said the university distributed football and basketball tickets free to several children's community groups but that scalpers obtained those tickets and sold them "at enormous profits."

I like the coy use of "obtained" in this sentence.  Absent a more direct accusation, I have to assume that this means that scalpers bought the tickets from the community groups.  Which likely means that strapped for cash to maintain their operations, these groups valued cash from the tickets more that the ability to send kids to a USC football game  (in fact, taking them to a USC football game would involve extra costs to the community group of transportation, security, and feeding the kids at inflated stadium prices).  It was probably entirely rational for the community groups to sell the tickets -- this is in fact a positive story.  Selling the tickets likely got them out of an expensive obligation they could not afford and generated resources for the agency.  Sure, USC was deprived of the PR boost, but if they really want the kids to come to the game, they can do it a different way (e.g. by organizing the entire trip).  This is not a reason for curtailing my right to sell my tickets for a profit.

Anyway, I have ranted about this before.  Sports team owners and music promoters have out-sized political influence (particularly in LA) and have enlisted governments to clamp down on the secondary markets for their products.

What I thought was new and interesting in this LA Times story was the evolving justification for banning ticket scalpers.  Those who have followed the war on drugs or prostitution will recognize the argument immediately:

Lee Zeidman, general manager of Staples Center/Nokia Theatre and L.A. Live, said in a separate declaration that scalpers "frequently adopt aggressive and oftentimes intimidating tactics.... To the extent that ticket scalpers are allowed to create an environment that makes guests of ours feel uncomfortable, harassed or threatened, that jeopardizes our ability to attract those guests to our property."

In court papers, prosecutors accuse scalpers of endangering citizens, creating traffic hazards and diverting scarce police resources.

"Defendants personally act as magnets for theft, robbery, and crimes of violence," the filing states. "Areas with high levels of illegal ticket sales have disproportionately high levels of theft, robbery, crimes of violence and narcotics sales and use."

Wow, you mean that if we criminalize a routine type of transaction, then criminals will tend to dominate those who engage in this transaction?  Who would have thought?  If this were true, we might expect activities that normally are run by normal, honest participants -- say, for example, alcohol distribution -- to be replaced with gangs and violent criminals if the activity is prohibited.

It's amazing to me that people can still use the the criminal activity that results from prohibition to justify prohibition.

Update:  John Stossel has an article on the London ticket scalping ban

LA Traffic Bleg

OK, I have to drive on Thursday from San Diego to make a meeting around 10AM just north of LA off I-5.  I am willing to believe that there is no good way across town this time of day, and the only reasonable approach is to leave early and bring emergency rations.  However, if anyone has any advice as to the best way to thread my way south to north through LA during morning rush hour, leave a comment.

Update:  Thanks everyone.  I actually have to be in Ventura County via Santa Clarita so I will probably take the 15 and go around.  I also decided to take my (teenage) kids along to get the carpool lane.  Going to ditch them at Magic Mountain (not a bad fate) as I pass by.  I have my iPad charged with traffic, and will just get up early.

YouTube Mysteries

Via my daughter.  It's a suckers game to try to analyze what is popular on YouTube, but the view count for this video is just staggering.  It apparently also has about a thousand imitators.  If I am going to watch a cover video, why wouldn't I rather one with LA cheerleaders?  But I have to credit Harvard as a trendsetter.  Who knew there could be a whole new genre of videos about lip syncing pop tunes in a moving passenger van?

When the Media Loses Its Skepticism - High Speed Rail Edition

I have said for a long time that I don't really think there is a lot of outright media bias in the sense of conspiring to bury or promote certain memes.   But there are real issues with the leftish monoculture of the media losing its skepticism on certain topics.

For example, high speed rail is one of those things we are just supposed to do, from the Leftish view.  Harry Reid's justification for a high speed rail line is typical:  he wants to see  "America catch up with the rest of the world".  Everyone else has these things, so it must be some failing of ours that we don't.  For the left, the benefits of high speed rail are a given, they are part of the liturgy and not to be questioned.  Which means that it is up to outsiders to do the media's work of applying some degree of skepticism whenever a high speed rail project is proposed.

Thus we get to this article on high speed rail about a supposedly "private" rail line from LA to Las Vegas.  As is usual in the media, none of the assumptions are questioned.

Greg Pollowitz gets at some of the more obvious problems.  First, it is fairly heroic spin to call a line that currently is getting $4.9 billion in public subsidies "privately funded."  Second, he points out that, like the proposed California high speed rail line, this is a train to nowhere as well

And second of all, having grown up in Los Angeles — and having lied to my parents to drive to Vegas since the time I was 16 years old — I consider myself somewhat of an expert on the Los Angeles to Vegas drive. (CNN, Fox, MSDNC — call me!) I remember Victorville fondly as the place where we’d make our food-stop and pick up some In-N-Out burgers for the final half of the journey. And I can tell you this: There is no way anybody would ever drive through L.A.’s notorious traffic only to stop halfway and hop on a train on the other side of the El Cajon Pass and in doing so give up their personal transportation once they actually get to Vegas.

I want to reality-check their usage numbers.

DesertXpress estimates that it will carry around five million round trip passengers in the first full year of operation,with the company charging fares of around $50 for a one-way trip.

OK, right now there are about 3.7 annual air passengers between Las Vegas and the southern California airports, according to rail supporters.  It is hard to get at drivers, but the Las Vegas tourism folks believe that 25% of 36 million annual visitors to Vegas come from Southern California, so that would mean about 9 million total or about 5 million driving.

What this means is that to make this work, they are counting on more than half of all visitors from Southern California (and remember this includes San Diego) taking the train.  Is this reasonable?

  • The train is supposedly $50 (I will believe that when I see it).  Currently JetBlue flies from Burbank to Las Vegas for $56 in a flight that takes 69 minutes (vs. 84 for the train and remember that is from Victorville).   The standard rate from LAX, Burbank, or Long Beach seems to be around $74-77.
  • Airplanes leave for Las Vegas from airports all around LA and in San Diego.  Let's take a couple of locations.  Say you live near downtown LA, not because that is likely but it is relatively central and does not feel like cherry picking.  Victorville is a 84 mile 90 minute drive AT BEST, with no traffic.  The Burbank airport is a 15 mile, 18 minute drive from LA.  LAX is just a bit further.  Victorville is 82 miles and 90 minutes from Irvine and 146 miles/144 minutes from San Diego.  Both of these Southern California towns are just a few minutes from an airport with $70-ish flights to Vegas

So are drivers going to stop half way to Vegas, once they have completed the hard part of the drive, to get on a train?  Are flyers going to drive 1-2 hours further to get to the rail terminal to say $20?  Some will.  But will more than half?  No way.

Postscript:  If you really want to promote the train, forget shoveling tax money at it and pass a law that the TSA may not set up screening operations at its terminus.  That might get a few customers, though the odds this would happen, or that it would stick over time, are minuscule.

This Is How Screwed Up Our Concept of Health "Insurance" Has Become

Kevin Drum quotes favorably from Chad Terhune at the LA Times

Some insurers are chasing after much smaller customers with new plans designed to limit employer payouts for big claims using what's called stop-loss policies. This guarantees that businesses won't be responsible for anything over a certain amount per employee, perhaps as low as $10,000 or $20,000, with the rest paid by an insurer. Regulators and health-policy experts say this arrangement undercuts the notion of self-insurance since employers aren't bearing much of the risk, and it allows companies to circumvent some state insurance rules.

"This is not real self-insurance. This is clearly a sham," said Mark Hall, a professor of law and public health at Wake Forest University who has studied the small-business insurance market. "Regulators have good reason to be concerned about the potential harm to the market."

Self-insurance is attractive for many reasons, particularly the prospect of lower costs. It's exempt from state insurance regulations such as mandated benefits, granting employers the flexibility to design their own benefit package and the opportunity to reap some of the savings from employee wellness programs. A federal law, the Employee Retirement Income Security Act, or ERISA, governs self-funded plans. Some aspects of the Affordable Care Act do apply to self-insurance, such as the elimination of caps on lifetime benefits and some preventive care at no cost.

Drum agrees

Yeah, it's a scam.

In a reasonably sane world, and in all other contexts outside of health care, insurance is obtained at relatively low prices to cover only catastrophic events that would be potentially bankrupting.  Car insurance does not cover oil changes and home insurance does not cover oven repairs.  So why is it that Drum is arguing that we should ban insurance policies that only cover catastrophic losses and not routine costs?   After all, the second sentence in the first paragraph from the LA Times sure seems to define exactly what insurance should be (and is similar to my personal policy, which has a high deductible attached to a health savings account).

The problem is that when Drum and the Left use the word "health insurance" they are actually referring to a bundle of four items

  • Traditional catastrophic insurance against large, unexpected, bankrupting charges
  • Third party payment / capitation for entirely routine and expected health expenditures, from physicals to contraception
  • Crony payoffs for favored constituencies, mainly via mandated benefits rules.  This payoff may be to consumers, e.g. young women like Sandra Fluke who have the rest of us pay to maintain her sex life; or it may be to corporate cronies, who are able to get their particular device or procedure or service included in the mandated benefits, guaranteeing a large stream of customers who don't care a bit what the product or service costs because it is now paid for by a third party.
  • Social engineering, in the form of embedded incentives to promote certain favored behaviors like seeking preventative care or eating better.  And when the government is paying the bill, the policy becomes a Trojon horse for government micro-management of our lives in the name of health cost reduction.

The second item seems to be a paradigm embedded in the mind of everyone in the US today, that health plans somehow need to cover every imaginable health-related expense.  Outside of an HMO model where these expenses are managed, this is a recipe for a cost explosion.  If we all had pre-paid car policies that bought our cars for us with low deductibles, no one would be driving a seven-year-old Nova.  The third and fourth items are Trojan horses for state control and cronyism that politicians are desperate to preserve.   So it is not surprising that efforts to roll back insurance to just be, well, insurance is met with anger by would-be authoritarians.  The question is, why do we listen to them?

Triumphalism Indeed

For years I have argued that most high-speed rail makes no sense economically -- that in fact it is an example of the political impulse towards triumphalism.  Government leaders through the ages have wanted to use other people's money and sweat to build vast monuments to themselves that would last through the ages.

I meant that as ridicule, and assumed most readers would recognize it as such, but apparently not the LA Times, which editorialized in favor of California high speed rail in part because its just like the pyramids

Worthwhile things seldom come without cost or sacrifice. That was as true in ancient times as it is now; pharaoh Sneferu, builder of Egypt's first pyramids, had to try three times before he got it right, with the first two either collapsing under their own weight or leaning precipitously. But who remembers that now? Not many people have heard of Sneferu, but his pyramids and those of his successors are wonders of the world.

As a reminder, this is what I wrote at the article linked above in Forbes

What is it about intellectuals that seem to, generation after generation, fall in love with totalitarian regimes because of their grand and triumphal projects?  Whether it was the trains running on time in Italy, or the Moscow subways, or now high-speed rail lines in China, western dupes constantly fall for the lure of the great pyramid without seeing the diversion of resources and loss of liberty that went into building it.

Los Angeles and Litter

The LA Times talks about the trash and litter cleanup at the OWS site in LA.  For reasons I don't fully understand, the absolute worst trash and litter problems we have in running campgrounds around the country are around LA.  For some reason, the closer a recreation area is to LA, the more trash we get dumped on the ground.  Nowhere else in the country comes close.

Least Surprising Statistic

via here, which has a lot of good data on California job losses.

If you have a service business, I can understand the desire to get access to the large and wealthy populations in these areas.  I even started a service operation in the LA area about 4 years ago, though I regret it intensely (other operations we have in rural CA are difficult but much easier than in LA).  But even so, why would anyone ever, ever start a manufacturing or any other business in these locations if it could be located anywhere else?

I was at a cocktail party the other night lamenting to a number of business owners (more successful folks than I) about problems I am having in CA.  Usually I get sympathy, but there was none to be had.  They looked at me like I was a moron, like I was the guy who went $30,000 in debt for a puppetry degree.  They said they had gotten out of CA years ago, would never go back, and (essentially) if I was stupid enough to be there, it was my own damn fault.

Unfortunately, a lot of the recreation is there, and for better or for worse, we have found that we are better and more efficient at dealing with a lot of the CA-induced mess than other companies.  But I often wonder if I am crazy to be there.

PS- as an example, it took us 4-1/2 years to get a permit for a 1000 gallon double wall gas tank at a marina in Ventura County.  We just got it approved last month, so at last we can stop hauling truckloads of 5-gallon fuel tanks from the gas station.  We are in the third year of trying to get permitting approval to replace (in kind, same size and features) a bathroom building in a campground.

Update:  All the job gains are in industries, like health care and construction, where the jobs have to be near the population served.  Compare that to manufacturing and tech.

Are We Getting Anything Out of Transit Spending?

In the 2012 budget, the DOT will spend about $59.4 billion on highways and $30.2 billion on transit and rail (source).   Highways are getting a smaller and smaller portion of what we think of as the Federal highway budget, with transit and rail spending almost 50% the size of highway spending.  For what results?

Despite huge efforts to get people out of single-occupancy vehicles, nearly 8 million more people drove alone to work in 2010 than in 2000, according to data released by the Census Bureau. Wendell Cox’s review of the data show that the other big gainer was “worked at home,” which grew by nearly 2 million over the decade.

Transit gained less than a million, but transit numbers were so small in 2000 that its share grew from 4.6 percent to 4.9 percent of total workers. While drive alone grew from 75.6 percent to 76.5 percent, the big loser was carpooling, which declined by more than 2 million workers. As a result, driving’s share as a whole declined from 87.9 percent to 86.2 percent.

Though they get less money in absolute dollars, transit and rail have for years gotten wildly disproportionate amounts of money compared to their ridership.  This is not an accident of timing -- rail and mass transit costs per passenger mile are simply way higher than for cars in all but a few very specific high-density urban areas.

Much of this Federal spending is a huge waste of money, made worse by the fact that local authorities who get this money have little incentive to use it wisely.  Its time for the Feds to get out of the transit funding business.  If LA wants more subways, let them pay for it.

Cloudy with 100% Chance of Corporate State

It does not appear that Rick Perry is the guy to dismantle our growing corporate state.

The LA Times investigates the big-money culture of Texas politics, which has gotten even bigger and money-er since Rick Perry became governor:

Perry has received a total of $37 million over the last decade from just 150 individuals and couples, who are likely to form the backbone of his new effort to win the Republican presidential nomination....Nearly half of those mega-donors received hefty business contracts, tax breaks or appointments under Perry, according to a Los Angeles Times analysis.

Perry, campaigning Monday at the Iowa State Fair in Des Moines, declined to comment when asked how he separated the interests of his donors from the needs of his state. His aides vigorously dispute that his contributors received any perks. "They get the same thing that all Texans get," said spokesman Mark Miner.

Nearly half! And this doesn't even include anything about David Nance and the largesse Perry distributes via his $200 million state-managed venture capital slush fund. Doling out political favors in industrial quantities is obviously something that isn't frowned upon by Texas political culture, and Perry has taken it to whole new levels.

Kudos to the LA Times and folks like Kevin Drum for digging this up, but everyone involved should be embarrassed by just how partisan outrage on this kind of thing can be.  The same folks who are rightly upset at Perry actively cheered on Obama as he took ownership of GM away from the secured creditors and handed it to his major campaign supporters in the UAW.  His stimulus program has been a trillion dollar slush fund to pay off nearly every liberal constituency, and while I find the idea of a state-run venture capital fund horrifying, I see no difference here with Obama's green job investments, many of which have gone triends, campaign supporters, and even spouses of prominent administration officials.

As I asked the other day, if the President is really supposed to be our VC in chief (an absurd thought) who in the hell would pick Obama for the job?  As one random example out of my feed reader:

Last year, Seattle Mayor Mike McGinn announced the city had won a coveted $20 million federal grant to invest in weatherization. The unglamorous work of insulating crawl spaces and attics had emerged as a silver bullet in a bleak economy – able to create jobs and shrink carbon footprint – and the announcement came with great fanfare.

McGinn had joined Vice President Joe Biden in the White House to make it. It came on the eve of Earth Day. It had heady goals: creating 2,000 living-wage jobs in Seattle and retrofitting 2,000 homes in poorer neighborhoods.

But more than a year later, Seattle's numbers are lackluster. As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program. Many of the jobs are administrative, and not the entry-level pathways once dreamed of for low-income workers. Some people wonder if the original goals are now achievable.

"The jobs haven't surfaced yet," said Michael Woo, director of Got Green, a Seattle community organizing group focused on the environment and social justice.

"It's been a very slow and tedious process. It's almost painful, the number of meetings people have gone to. Those are the people who got jobs. There's been no real investment for the broader public."

At the same time, heavily subsidized Evergreen Solar is going bankrupt.

Bloomberg News reports that the firm Evergreen Solar will file for bankruptcy and close its operation in Midland, Mich. The maker of solar cells cites over-capacity in the industry, competition from China and fewer government subsidies as contributing factors. According to Bloomberg, the firm has 133 employees worldwide.

Given a Michigan location and participation in a politically faddish industry, readers won't be surprised that Evergreen was the beneficiary of special state subsidies and a local tax break. Specifically, three years ago Evergreen Solar was offered a $1.8 million "refundable" tax credit by the Michigan Economic Growth Authority. For firms with little or no tax liability, this amounts to an outright cash subsidy, contingent on attaining certain employment and investment milestones. Evergreen Solar's specific tax liability is not public information.

The deal was based on crystal-ball projections from the Michigan Economic Development Corporation using a software program known as REMI, which predicted that an Evergreen deal would create exactly 596 direct and "spin-off" jobs by 2018, producing $18.5 million in new state tax revenue.

The city of Midland also granted property tax abatements worth $3.9 million over 12 years, according to Mlive.com. It's not known how much, if any, of these subsidies and tax breaks were ever collected by the company.

This actually understates the total subsidies, as it ignores subsidies to its customers, incoluding above market geed-in tariffs, to buy the solar panels.

Closer to home, a Tucson solar panel manufacturer that was opened to great fanfare with the help of Janet Napolitano and Gabby Giffords just closed after being open barely 2 years.  They scored some subsidies, got some large government and utility contracts on the promise of local employment, and then packed up shop for China.  Apparently they were attempting to compete in the commodity solar panel market on a strategy of having a higher fit and finish on their product, a product that sits on the roof and no one ever looks at.  Good plan.

PS-  Yes, private investments fail all the time, but they are 1) not using my money, unless I voluntarily offer it and 2) there are real consequences for those who make bad investments

Movie Recommendation

Well, I hesitate to recommend this movie, because the first three people I told about this as if it was some kind of clever discovery of mine said "Oh, yeah, loved it, saw it years ago."  So maybe everyone else saw this movie a decade ago and I just missed it.  But I really enjoyed an older Christopher Nolan (Inception) directed movie called Memento.    It stars Guy Pierce (LA Confidential, one of my favorite movies) and Carrie-Anne Moss (Matrix).

The movie is about a man trying to get revenge on his wife's murderer.  The only problem is that somehow, from roughly the point in time his wife died, he lost all of his short term memory.  So he can never remember things more than a few minutes.  He has to trust notes he has written (including tattoos on his body) for clues that he pursues.

The clever part of the movie is that it is shot backwards.  Well, I don't mean everyone walks backwards.  It is shot in a series of 3-10 minute clips with normal forward action, but then the clips are reassembled in the film in reverse order.  The end of each scene is therefore usually the beginning of the previous one  (though there is a second thread in black and white that moves through the movie in a slightly different way).

This seems crazy and confusing, until you realize that at any point in the movie, you are in exactly the same place as the protagonist - you know nothing about the past, or even, in the start of the clip, how you got there.  Its not a casual movie that you can watch while you are doing something else, it requires some concentration, but it worked well for me.   The most incredible thing is that despite the fact you know how it all comes out, the movie is incredibly tense and exciting -- you don't know why it came out that way, and the movie is full of twists and turns.

Postscript: There was a movie last year of completely different style -  straight forward plot line, uneven acting, more of an action movie - that had a sortof kindof similar plot.  The movie was called Vengence, and it was about a man who was losing his memory and slowly degenerating trying to find his daughter's killer.  It is a totally different movie, but cribs some of the Memento plot devices, such as labelled Polaroid pictures as a memory device.  It is pretty good, particularly for fans of Asian-style action movies, and is directed by Johnnie To.

Called This One

Via the NY Times, no flaws found with Toyota accelerators

The Obama administration's investigation intoToyota safety problems found no electronic flaws to account for reports of sudden, unintentional acceleration and other safety problems. Government investigators said Tuesday the only known cause of the problems are mechanical defects that were fixed in previous recalls.

The Transportation Department, assisted by engineers withNASA, said its 10-month study of Toyota vehicles concluded there was no electronic cause of unintended high-speed acceleration in Toyotas. The study, which was launched at the request of Congress, responded to consumer complaints that flawed electronics could be the culprit behind Toyota's spate of recalls.

"We feel that Toyota vehicles are safe to drive," said Transportation Secretary Ray LaHood.

Officials with the National Highway Traffic Safety Administration said they reviewed consumer complaints and warranty data in detail and found that many of the complaints involved cases in which the vehicle accelerated after it was stationary or at very low speeds.

NHTSA Deputy Administrator Ron Medford said that in many cases when a driver complained that the brakes were ineffective, the most likely cause was "pedal misapplication," in which the driver stepped on the accelerator instead of the brakes.

As Walter Olson writes of the original overblown brouhaha

Did it make a difference that the federal government has taken a proprietor's interest in major Toyota competitors GM and Chrysler, or that a former trial lawyer lobbyist heads the National Highway Traffic Safety Administration?

I had more back in July (and here, where I observe that scientific data on breast implant safety did nothing to stop the torts, and is unlikely to do so in this case).  I questioned the US Government's conflict of interest in this matter way back in January of 2010.

By the way, anyone want to reopen the case on that guy in LA with the runaway Prius -- I thought it was concocted at the time (I called him balloon boy in a Prius) and am doubly sure now.  How is what he did, in retrospect, and different from leading the police on a high-speed chase?

What if We Bought Into the Light Rail Hype, and Built It For Everyone?

Last year, there were about 3.2 trillion passenger miles driven by urban drivers in cars in the US.  My point about light rail is that we can barely afford it for just a few people, given that we spent $1.3 billion to build a rail line for just 17,000 daily round trip riders in Phoenix.  If it were truly a sustainable technology, it could be applied to all commuters.  But at a national average taxpayer subsidy per light rail passenger mile of about $2**, this means that to roll light rail out to every urban commuter would cost $6.4 trillion a year in government spending, almost half our annual GDP.  If it required the subsidy rates we have in Phoenix per passenger-mile, such a system would cost over $12 trillion  year.  In fact, the numbers would likely be even higher in reality, because light rail in most cities is almost certainly built on the highest populated corridors with the most bang for the buck (though some of the diminishing returns would be offset by network effects).

Light rail only works today because we drain resources from millions of taxpayers to benefit just a few generally middle class commuters.    This is not a model that will scale.

** This includes both service on the debt, which is payment for the original construction costs, as well as annual operating losses.  This subsidy is required essentially forever.  After 20-30 years when the original bonds are paid off, by that time systems generally have to be rebuilt in their entirety   (as folks in places like Washington DC are learning).  There are probably only 5-6 cities in this country that have the urban population densities to make rail systems come even in the ballpark of working financially, and places like Phoenix, Seattle, Houston, Portland and LA are NOT among them.

Business Relocation Subsidies

I return to an old favorite topic of mine this week, government subsidies for business relocation, in my column at Forbes.com.  An excerpt:

To see this clearer, lets take the example of Major League Baseball (MLB).  We all know that cities and states have for years been massively subsidizing new baseball stadiums for billionaire team owners.  Let’s for a minute say this never happened – that somehow, the mayors of the 50 largest cities got together in 1960 and made a no-stadium-subsidy pledge.  Would baseball still exist?  Sure!  Teams like the Giants have proven that baseball can work financially in a private park, and baseball thrived for years with private parks.  But would baseball be in the same cities?  Well, without subsidies, baseball would likely be in the largest cities, like New York and LA and Chicago, which is exactly where they are now.  The odd city here or there might be different, e.g. Tampa Bay might never have gotten a team, but that might in retrospect have been a good thing.

The net effect in baseball is the same as it is in every other industry:  Relocation subsidies, when everyone is playing the game, do nothing to substantially affect the location of jobs and businesses, but rather just transfer taxpayer money to business owners and workers.

An Agency Problem?

Kevin Drum wonders whether the proposed $700 million bid by Farmers Insurance for naming rights on a prospective LA NFL stadium makes any economic sense.   It is an interesting question.  I wrote:

This has always struck me as one of those agency problems, where the executive's incentives are different from the shareholders. Executives get a ton of benefits personally from this -- higher profile for the company which improves their profile and marketability, they get a prime box for the games, parties, etc.

Before the audience here slips into a round of corporate executive bashing, my sense is that the same perverse incentives are working for municipal leaders who have a mismatch with taxpayer interests when they shove huge amounts of taxpayer funds to owners in stadium deals (deals which economists speak with one voice on -- they never pay off for the community in full). One of the dirty secrets of these deals is that they generally include a sort of kickback in the form of boxes and club seats for the Mayor and city council's use (and sometimes multiple boxes for leaders of other government agencies in the town).

Train to Nowhere

Apparently, Congress just before the election appropriated $900 million to build part of a high speed rail line in CA.  Rather than focusing either on LA or SF, Congress apparently appropriated the money for a mostly rural district that just coincidentally had a Democratic Congressman embroiled in a difficult election.  So now Congress has dedicated a billion dollars of your money for this high speed rail line, from Borden to Corcoran:

I am not kidding you.  More here from the AntiPlanner.

I discussed the CA high speed rail project here and here.  I discussed the practice of building even one useless section as a way to commit the public to building the whole thing here.  An excerpt of how this is done the Chicago way:

But what is really amazing is that Chicago embarked on building a $320 million downtown station for the project without even a plan for the rest of the line "” no design, no route, no land acquisition, no appropriation, no cost estimate, nothing.  There are currently tracks running near the station to the airport, but there are no passing sidings on these tracks, making it impossible for express and local trains to share the same track.  The express service idea would either require an extensive rebuilding of the entire current line using signaling and switching technologies that may not (according to Daley himself) even exist, or it requires an entirely new line cut through some of the densest urban environments in the country.  Even this critical decision on basic approach was not made before they started construction on the station, and in fact still has not been made.

What Fresh Hell Is This?

My new column is up this week at Forbes.  This week it discusses the regulatory burden on small businesses.  Here is an excerpt:

Typically taxation issues get a lot more attention than these regulatory issues in discussions of government drags on the economy. But these small regulations, licenses, and approvals consume management time, the most valuable commodity in small businesses that typically are driven by the energy and leadership of just one or two people. If getting a certain license is a tremendous hassle in California, large corporations have specialized staff they throw at the problem. When a company like ours gets that dreaded call that the County wants a soil sample from under the parking lot, odds are that the owner has to deal with it personally.

So the ultimate cost of many of these silly little regulations is that they each act as a friction that wears away a bit more available time from entrepreneurs and small business owners. The entrepreneur who has to spend two hundred hours of her personal time getting all the licenses in place for a new restaurant is unlikely to have the time to start a second location any time soon. Since small businesses typically drive most new employment growth in the United States, can it be a surprise that new hiring has slowed?

Incredibly, after the column was in the can, I experienced another perfect example of this phenomenon.

In the camping business, July 4 is the busiest day of the year.  This year, on July 3, I got a call from one of my managers saying that the County health department had tested 20 ground squirrels in the area and found one with the plague.  I know this sounds frighteningly medieval, but for those of you who live out west, you may know that some percentage of all the cute little western rodents, from prairie dogs to chipmunks, carry the plague.  Its why its a bad idea for your kids and dogs to play with them.

Anyway, in the past, we have usually been required to post warnings in the area giving safety tips to campers to avoid these animals, what to do if one is bitten, etc.  At the same time, we then begin a program of poisoning all the lairs we can find.  It's about the only time any government body anywhere lets us kill anything, because only the hardest core PETA types will swoon over rubbing out a rodent carrying the black death.

But apparently, in the past when these mitigation approaches applied, the county health department was not in a budget crunch and in need of high-profile PR stories that would reinforce with taxpayers the need to fund their organization.  This time the health department marched out and closed the campground on July 4 weekend, kicking out campers from all 70 sites.  We spent the day dealing with angry customers, refunding money, and trying to find them new lodging on a weekend where most everything was booked up.  Fortunately we have a large overflow area at a nearby campground and offered everyone a special rate over there.

It is hard to imagine that, given the whole year to test, they just suddenly happened to find a problem at one of the busiest sites in the LA area on the busiest weekend of the year, particularly since they simultaneously changed their mitigation approach from notification to closure.   I have tried hard to find the original time stamp on the press release they sent out.  I can't prove it, but it sure seemed like a lot of media had the story before we (operating the campground) had been informed of a thing.  Incredibly, the health department was directing the campers to a nearby campground that was easily close enough to our campground to share the same rodent populations.  But that campground had not had a positive plague test.  Why?  Because that campground has not been tested recently, at least according to the official who brought us the news.  We're in very good hands.

It's Just Going to Get Worse

California high-speed rail advocates are already backpedalling on the numbers, and from experience with other such projects, it will only get worse.

In the face of the state's perpetual budget crisis, some Californians are beginning to regret their votes in favor of the $9.9 billion high-speed rail bond last year. Even though proponents of the train have now admitted the bond was only a down payment on the actual cost to build the system, the numbers that were projected are changing"”and all in the wrong direction.

The business plan released by the train's advocates last month show the dramatic differences in what the voters were told and what reality is. For example, the price of a ticket from San Francisco to Los Angeles is now projected at $105, up from the previous $55 estimate.  That new number changed the ridership predictions: now 41 million annual riders by 2035, down from last year's prediction of 55 million passengers by 2030. The cost for building the train system has also grown.  The proponents had been thinking $33.6 billion (2008 dollars) but have revised upward to $42.6 billion.  Recently, the Obama administration announced $2.25 billion in funding for the project. Proponents said federal money would be used to close the gap between the voter-approved bond and the ultimate cost, but
this is a drop in the bucket and still will not work.

Do not expect a true LA to SF high speed rail line for less than $75 billion and the ridership numbers are still absurd, as discussed here.  By the way, Southwest's advanced fair from LAX to SFO is $114 right now.  If you are willing to go Burbank to Oakland, the fair is $90.

Please Mock These People

Every one of these members of the House Subcommittee on Commerce, Trade, and Consumer Protection voted to pass this absurd law out of committee except Rep. John Barrow, D-Ga.

Bobby L. Rush, Illinois, Chairman

Jan Schakowsky, IL, Vice Chair George Radanovich, CA, Ranking Member
John P. Sarbanes, MD Cliff Stearns, FL
Betty Sutton, OH Ed Whitfield, KY
Frank Pallone, Jr., NJ Joseph R. Pitts, PA
Bart Gordon, TN Mary Bono Mack, CA
Bart Stupak, MI Lee Terry, NE
Gene Green, TX Sue Wilkins Myrick, NC
Charles A. Gonzalez, TX John Sullivan, OK
Anthony D. Weiner, NY Tim Murphy, PA
Jim Matheson, UT Phil Gingrey, GA
G. K. Butterfield, NC Steve Scalise, LA
John Barrow, GA (voted NO!)
Doris O. Matsui, CA
Kathy Castor, FL
Zachary T. Space, OH
Bruce L. Braley, IA
Diana DeGette, CO

Hat tip: Don Boudreaux

I Plead the Third

I consider winning the Olympics for one's town to be roughly equivalent to army choosing to quarter itself in my house.  So I am pleased that this particular financial locust will go someplace else to pig out.  I am happy to watch it occur in some exotic locale to which I do not pay taxes.

I am reluctant to pile on Obama, though he certainly would have claimed credit had Chicago won.  I will say that the US managed to win an Olympic bid during even the Carter administration, though because the Montreal Olympics were such a financial disaster, LA really didn't have any competition when it was bidding in 1978.  One other city expressed interest that year - Tehran.  What a disaster that would have been.

Please don't tell me the LA Olympics "made money."  The city of LA and state of California subsidized the games in all kinds of ways that never hit the income statement of the organizing committee, starting with police and congestion costs.  Only in comparison to the financial disaster that was Montreal could the LA Olympics be called a financial success.

Almost Beyond Parody

There is just so much wrong with this news blurb, entitled "LA Mother Who Beheaded Son Was Allowed To Keep Him Despite Signs of Mental Illness."  Here are just the first four I have thought of:

  • Isn't the boy dead, and if so, why is custody an issue?
  • Why would a mom who assaults her child be allowed to retain custody?
  • Does the "despite signs of mental illness" clause apply to the son or the mother?
  • If the mental illness question applies to the mother, can it even be in question?

The article clears some of this up, barely.