Coyote Blog

Arizona is generally more intelligently managed, at least fiscally, than California.  But while that state still is treated seriously for all its dysfunctionality, Arizona is often a media laughing stock.  This is in large part due to the fact that Conservatives in the Arizona legislature just can't seem to stop themselves from proposing a few absurdly goofy pieces of legislation each session.

House Bill 2467, sponsored by Republican state Representatives Bob Thorpe, Sonny Borrelli, Carl Seel, T.J. Shope, and Steve Smith, proposes the following:

"Before a pupil is allowed to graduate from a public high school in this state, the principal or head teacher of the school shall verify in writing that the pupil has recited the following oath:

"I, _________, do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic, that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge these duties; so help me God."

Smith and Shope are also in on House Bill 2284. Whereas current Arizona law says students in public schools can opt out of doing the pledge if they so choose, Smith's and Shope's proposal says only a child's parents can let them avoid reciting the pledge.

So they want to make it harder to opt-out of the current loyalty oath (Pledge of Allegiance) and then add a new loyalty oath.

Historically, loyalty oaths are the hallmark of dictators, the Caesers and Hitlers of the world.  In a free society, loyalty is earned by a government.  When government officials demand a blank check in the form of a loyalty oath that pledges allegiance no matter what the government does, watch out.

A few other observations:

• I love the part in the oath above that says "I take this obligation freely."  Sure.  We won't give you the diploma you have in every other way earned without taking the oath, a diploma practically required to function in our society, but the oath is voluntary.  This is the kind of double speak that is a hallmark, along with loyalty oaths, of a dictatorship.
• Apparently to graduate in Arizona, this would force every student to acknowledge the existence of God
• I understand what it means for the President to preserve and defend the Constitution.  But what does it mean for the average high school graduate?  Just what is this obligating them to do?  And what is the penalty for not doing it?
• I would gladly trade having all high schoolers in the state embrace this oath for simply having our state officials, in particular our Sheriff Joe Arpaio, being true to this oath.

From Foreign Policy

Every turn in the investigation that led to Petraeus's resignation perfectly illustrates the incredible and dangerous reach of the massive United States surveillance apparatus, which, through hundreds of billions of dollars in post-9/11 programs -- coupled with weakened privacy laws and lack of oversight -- has affected the civil liberties of every American for years. The only difference here is the victim of the surveillance state's reach was not a faceless American, but the head one of the agencies tasked to carry it out.....

It seems the deciding factor in opening the investigation was not the emails' content, but the fact that the FBI agent was friendly with Kelley. (Even more disturbing, the same FBI agent has now been accused of becoming "obsessed" with the Tampa socialite, sent shirtless pictures to her, and has been removed from the case.)...

One would assume, and hope, police have to get probable cause for all emails, just like they would for a physical letter or a phone call. But the law governing email -- the Electronic Communications Privacy Act (ECPA) -- doesn't have such requirements for emails more than 180 days old. Because ECPA was written in 1986, before the World Wide Web even existed, archived emails were an afterthought given the incredibly small storage space on email servers....

While these details may shock the average reader, these privacy-invasive tactics are used regularly by both federal and local law enforcement around the United States. In fact, as the New York Times reported, referring to Petraeus, "Law enforcement officials have said they used only ordinary methods in the case." The only difference here is the target was the director of the CIA and one of the most decorated soldiers in modern military history.

Electronic communication needs better Fourth Amendment protection.

By the way, another scandal here that interests me more than the sex thing is that the head of the CIA has such a terrible grasp on basic fieldcraft

Petraeus and Kelley were communicating not by sending each other emails, but using an old (and apparently ineffective) trick -- "used by terrorists and teenagers alike" -- of saving drafts in the draft folder of Gmail, thinking this was more private than if they sent them to each other. But as the ACLU's Chris Soghoian explained, this was not so

I don't know if its the distance from the Mainland or something about its history, but Hawaii often appears to be among the worst states for regulatory capture by local businesses.  This example was brought to me by a co-worker, who lives in AZ but wants to buy a condo in Hawaii.  They want the condo for their own use, but also hope to rent it out.  This kind of model is more appealing nowadays given the ease (and low cost) with which one can advertise rentals on various Internet sites.

But not so fast, not in Hawaii.  In legislation that reminds be of stuff from the 1990's when businesses tried to fight Internet-driven disintermediation, Hawaii is proposing to force non-Hawaiians to use a local broker to list their rental properties.  Apparently local residents can still list their properties on low-cost Internet sites, but folks on the mainland (also known as "the United States") must use a high-cost locally licensed broker, who typically charge 50% of rental fees as a commission.  These type of commission rates are farcical - they imply that fully half the value of a one-week condominium stay is due to the broker, not the condo itself, its location, etc.  The only way brokers can charge these fees is by maintaining a tight cartel enforced by government licensing laws.

Any reasonable person will look at this law and immediately know it is about crony protection of local real estate brokers.  Of course, that is not what the law says.  It is all about "consumer protection"

The legislature also finds that requiring nonresident owners to employ a licensed professional such as a real estate broker or salesperson or a condominium hotel operator is an important consumer protection measure. Consumers who use real estate companies, real estate brokers, real estate salespersons, or condominium hotel operators for their transient accommodation rental needs can do so with the knowledge that all money generated will flow through a client trust account, the appropriate federal tax form 990s will be generated, and accurate transient accommodations taxes and general excise taxes will be paid. Real estate companies, real estate brokers, real estate salespersons, and condominium hotel operators must comply with specific licensing and bonding requirements, thus offering additional protections for consumers.

So consumer protection is defined as making sure taxes get paid and the government forms get filled out.  Because God knows my entire vacation would be ruined if Federal tax form 990 was not filled out properly.

This is total BS, and Milton Friedman called it years ago when he wrote on licensing:

The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber.

This is also a great example of voters agreeing to add costs on everyone but themselves.  If the almost inevitable Constitutional concerns with this law forced in-state and out-of-state condo owners to be treated equally, local owners would immediately push back, hard, against the costs this law would impose.  Only  by structuring this law to apply to those annoying out-of-staters could it ever be passed.

I have been considering taking advantage of low prices in Hawaii to buy a condo, but I may rethink that plan given this pending legislation.

I know what you are thinking -- in this post title Coyote has engaged in some exaggeration to get our attention.  But I haven't!  Felix Salmon actually says this, in reaction to a group of CEO's who wrote an open letter to the feds seeking less deficit spending.

There are lots of serious threats out there to the economic well-being and security of the United States, and the national debt is simply not one of them.  Nor is it growing. The chart on the right, from Rex Nutting, shows what’s actually going on: total US debt to GDP was rising alarmingly until the crisis, but it has been falling impressively since then. In fact, this is the first time in over half a century that US debt to GDP has been going down rather than up.

So when the CEOs talk about “our growing debt”, what they mean is just the debt owed by the Federal government. And when the Federal government borrows money, that doesn’t even come close to making up for the fact that the CEOs themselves are not borrowing money.

Money is cheaper now than it has been in living memory: the markets are telling corporate America that they are more than willing to fund investments at unbelievably low rates. And yet the CEOs are saying no. That’s a serious threat to the economic well-being of the United States: it’s companies are refusing to invest for the future, even when the markets are begging them to.

Instead, the CEOs come out and start criticizing the Federal government for stepping in and filling the gap. If it wasn’t for the Federal deficit, the debt-to-GDP chart would be declining even more precipitously, and the economy would be a disaster. Deleveraging is a painful process, and the Federal government is — rightly — easing that pain right now. And this is the gratitude it gets in return!

I seldom do this, but let's take this apart paragraph by paragraph:

There are lots of serious threats out there to the economic well-being and security of the United States, and the national debt is simply not one of them.  Nor is it growing. The chart on the right, from Rex Nutting, shows what’s actually going on: total US debt to GDP was rising alarmingly until the crisis, but it has been falling impressively since then. In fact, this is the first time in over half a century that US debt to GDP has been going down rather than up. 

So when the CEOs talk about “our growing debt”, what they mean is just the debt owed by the Federal government.

Duh.  Of course they are talking about the government deficit and not total deficit.   But he is setting up the game he is going to play throughout the piece, switching back and forth between government debt and total debt like a magician moving a pea between two thimbles.  We can already see the game.  "Look folks debt is not a threat, it is going down", but it is going down only at this total public and private debt number.  The letter from the CEO's made the specific argument that rising government debt creates current and future issues (see: Europe).  Just because all debt may be going down does not mean that the rise of one subset of debt is not an issue.

Here are two analogies.  First, consider a neighborhood where most all the residents are paying down their credit card debt except for Fred, who is maxing out his credit cards and has just taken out a third mortgage.  The total debt for your whole neighborhood is going down, but that does not mean that Fred is not in serious trouble.

Or on a larger scale, take consumer debt.  Most categories of consumer debt are falling in the US.  But student debt is rising alarmingly.  Just because total consumer debt may be falling doesn't change the fact that rising student debt is a serious threat to the well-being of a subset of Americans.

And when the Federal government borrows money, that doesn’t even come close to making up for the fact that the CEOs themselves are not borrowing money

What??  Whoever said that the role of the Federal government is to offset changes in corporate borrowing?  In his first paragraph, he already called the rise in total debt "alarming", and I get the sense that both CEO's and consumers agree and so they have been trying to reduce their debts.  So why should the Feds be standing athwart the private unwinding of an "alarming" problem?    And how does he know CEO's and their corporations are part of this deleveraging?  I see no evidence presented.  Corporate debt is but a small part of total US debt.  Corporations may be a part of this, or not.

In fact, they are not.  Corporate borrowing in the securities market has increased almost every quarter since 2008, such that total corporate bond debt is about 10-15% higher than in 2008 (see third chart here).  And here is total debt to GDP broken down by component  (this is for non-financial sectors) source.

Government debt is basically offsetting the consumer deleveraging.  Since consumers have to eventually pay this government debt off, as they are taxpayers too, then the government is basically flipping consumers the bird, forcing them to take on debt they are trying to get rid of.  Hard working consumers think they are making progress paying off debt, but the joke is on them - the feds have taken the debt on for them, and the bill will be coming in future taxes for them and their kids.

He might argue, "this is Keynesianism."  But is it?  If corporations are actually deleveraging, we still don't know how.  Is it through diverting capital investment to debt repayment (as I think Salmon is assuming) or are they raising capital from other sources and rejiggering the right side of their balance sheets?  And even if this deleveraging is coming at the expense of corporate investment, I thought Keynesians virtually ignored investment or "I" in their calculations  (you remember, don't you, from macro: C+I+G+X-M?).  In fact, if I remember right, "I" is treated as an exogenous variable in the famous multiplier "proof".

Money is cheaper now than it has been in living memory: the markets are telling corporate America that they are more than willing to fund investments at unbelievably low rates. And yet the CEOs are saying no. That’s a serious threat to the economic well-being of the United States: it’s companies are refusing to invest for the future, even when the markets are begging them to.

This is the real howler -- that "markets" are sending a low-interest signal.  Markets are doing nothing of the sort.  The Federal Government, via the Fed, is sending this signal with near-zero overnight borrowing rates and $30-$40 billion a month in money printing that is used to buy up government debt from the market.  If any signal is being sent at all, it is that the Federal Government is main economic priority is continuing to prop up the balance sheet and profitability of major US banks.

Investment is also not solely driven by the price of funds.  There must be opportunities where businesses see returns that justify the spending.  Unlike the Federal government, which is A-OK blowing billions on companies like Solyndra, businesses don't invest for the sake of spending, they invest for returns.  A soft economy combined with enormous government driven uncertainties (e.g. what will be our costs to comply with Obamacare) are more likely to affect investment levels than changes in interest rates.

 Instead, the CEOs come out and start criticizing the Federal government for stepping in and filling the gap. If it wasn’t for the Federal deficit, the debt-to-GDP chart would be declining even more precipitously, and the economy would be a disaster. Deleveraging is a painful process, and the Federal government is — rightly — easing that pain right now. And this is the gratitude it gets in return!

This is where economic thinking has ended up in 2012:  To Salmon, it does not matter where the Federal government spends this money, so long as it is spent.  He never even tries to justify that the government is running up debt in a good cause, because what it spends money on does not matter to him.  For him, the worst possible thing for the economy is for people to spend their money paying down debt.  Spend it on more drone strikes or more Solyndras or more squirrel research -- it does not matter to Salmon as long as the money is used for anything other than to pay down debt.

Here is the bottom line:  Businesses and individuals are trying to reduce their debt.  And many hard-working people think they are being successful at this.  But the joke is on them.  The government is running up trillions in debt in their name, thwarting American's desire to de-leverage.  Mr. Salmon wants us to thank the government for this.  Hah.

All-in-all, this is an awful argument to try to justify Congressional and Presidential fecklessness vis a vis  the budget.

Via Cafe Hayek, Paul Krugman says:

And surely the fact that the United States is the only major advanced nation without some form of universal health care is at least part of the reason life expectancy is much lower in America than in Canada or Western Europe.

If I were a cynical person, I might think that the tortured and overly coy syntax of this statement is due to the fact that Krugman knows very well that the causation he is implying here is simply not the case.  Rather than rehash this age-old issue here on Coyote Blog, let's roll tape from a post a few years ago:

Supporters of government medicine often quote a statistic that shows life expectancy in the US lower than most European nations with government-run health systems.  But what they never mention is that this ranking is mainly due to lifestyle and social factors that have nothing to do with health care.  Removing just two factors - death from accidents (mainly car crashes) and murders - vaults the US to the top of the list.  Here, via Carpe Diem, are the raw and corrected numbers:

And so I will fire back and say, "And surely the fact that the United States is the only major advanced nation without some form of universal health care is at least part of the reason life expectancy related to health care outcomes is so much higher in America than in Canada or Western Europe.

And check out the other chart in that post from that study:

US cancer survival rates dwarf, yes dwarf those of other western nations.    Even black males in the US, who one would suppose to be the victims of our rapacious health care system, have higher cancer survival rates than the average in most western nations (black American women seem to have uniquely poor cancer survival rates, I am not sure why.  Early detection issues?)

All this data came originally from a post at Carpe Diem, which I refer you to for source links and methodologies.

I have been watching the old PBS documentary series (in that Ken Burns style but I don't think by Ken Burns) and found this an interesting story of government policy fail that I had never heard much about.  Much like segregated train and bus service, racial redlining that is commonly blamed on private enterprise in fact began as government policy

Government policies began in the 1930s with the New Deal's Federal Mortgage and Loans Program. The government, along with banks and insurance programs, undertook a policy to lower the value of urban housing in order to create a market for the single-family residences they built outside the city.

The Home Owners' Loan Corporation, a federal government initiative established during the early years of the New Deal went into Brooklyn and mapped the population of all 66 neighborhoods in the Borough, block by block, noting on their maps the location of the residence of every black, Latino, Jewish, Italian, Irish, and Polish family they could find. Then they assigned ratings to each neighborhood based on its ethnic makeup. They distributed the demographic maps to banks and held the banks to a certain standard when loaning money for homes and rental. If the ratings went down, the value of housing property went down.

From the perspective of a white city dweller, nothing that you had done personally had altered the value of your home, and your neighborhood had not changed either. The decline in your property's value came simply because, unless the people who wanted to move to your neighborhood were black, the banks would no longer lend people the money needed to move there. And, because of this government initiative, the more black people moved into your neighborhood, the more the value of your property fell.

The Home Owners' Loan Corporation finished their work in the 1940s. In the 1930s when it started, black Brooklynites were the least physically segregated group in the borough. By 1950 they were the most segregated group; all were concentrated in the Bedford-Stuyvesant neighborhood, which became the largest black ghetto in the United States. After the Home Owners Loan Corp began working with local banks in Brooklyn, it worked with them in Manhattan, the Bronx, and Queens.

The state also got involved in redlining. (Initially, redlining literally meant the physical process of drawing on maps red lines through neighborhoods that were to be refused loans and insurance policies based on income or race. Redlining has come to mean, more generally, refusing to serve a particular neighborhood because of income or race.) State officials created their own map of Brooklyn. They too mapped out the city block by block. But this time they looked for only black and Latino individuals.

The academics interviewed in the series argued that nearly every black ghetto in the country was created in the 1930's by this program.

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

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

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

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

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

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

My new column is up, comparing coverage of this summer's heat wave to "Summer of the Shark"

Before I discuss the 2012 global warming version of this process, let's take a step back to 2001 and the "Summer of the Shark."  The media hysteria began in early July, when a young boy was bitten by a shark on a beach in Florida.  Subsequent attacks received breathless media coverage, up to and including near-nightly footage from TV helicopters of swimming sharks.  Until the 9/11 attacks, sharks were the third biggest story of the year as measured by the time dedicated to it on the three major broadcast networks' news shows.

Through this coverage, Americans were left with a strong impression that something unusual was happening -- that an unprecedented number of shark attacks were occurring in that year, and the media dedicated endless coverage to speculation by various "experts" as to the cause of this sharp increase in attacks.

Except there was one problem -- there was no sharp increase in attacks.  In the year 2001, five people died in 76 shark attacks.  However, just a year earlier, 12 people had died in 85 attacks.  The data showed that 2001 actually was  a down year for shark attacks.

This summer we have been absolutely bombarded with stories about the summer heat wave in the United States.  The constant drumbeat of this coverage is being jumped on by many as evidence of catastrophic man-made global warming....

What the Summer of the Shark needed, and what this summer’s US heatwave needs, is a little context.  Specifically, if we are going to talk about supposed “trends”, then we should look at the data series in question over time.  So let’s do so.

I go on to present a number of data series on temperatures, temperature maximums, droughts, and fires.   Enjoy.

From CNN via Carpe Diem

A 24-year scandal was quietly acknowledged last week. On July 3 the U.S. Food and Drug Administration approved the first "rapid home" test for HIV—a test that people can take in the privacy of their own homes to determine whether they have the virus that causes AIDS.

The approval is an unambiguously good thing—or so you would think. The saliva test in question, made by OraSure Technologies and known as OraQuick, costs less than $60 and takes just 20 minutes to self-administer. According to statistics an FDA advisory committee presented at a hearing in May, it holds the potential to prevent the transmission of more than 4,000 new HIV infections in its first year of use alone. That would be about 8 percent of the roughly 50,000 new infections we currently see annually in the United States. (About 1.2 million people in the U.S. are now living with HIV, according to the Centers for Disease Control and Prevention, of whom about 20 percent don't realize they have it. Since the epidemic began in the early 1980s, about 1.1 million people have been diagnosed with AIDS, and more than 619,000 have died from it.)

The scandal is that the approval of a rapid home test for HIV did not occur until last week—about 24 years after the FDA received its first application seeking permission to market one.

Apparently, for years, even decades, only tests of clinical options were allowed to proceed, basically because the government considers Americans to be infants:

There was great concern that the patient receive proper counseling, both before and after the test. The patient needed to appreciate the possibility of false positives, so he wouldn't panic unnecessarily if he got one. He needed to appreciate the danger of false negatives, so he wouldn't become reckless, endangering sexual partners. And he needed to understand the options and support groups available in the event he received a true positive. (On top of all these concerns, many AIDS activists at the time were opposed to almost any form of HIV testing out of fear that results could be used to ostracize and persecute HIV-positive people—though one hopes that public health concerns were paramount to the FDA, rather than political pressure and hysteria.)

That is the purposely inflammatory title of my article this week at Forbes.com, finding the roots of crony capitalism not in capitalism itself, but in progressive legislation.  An excerpt:

The core of capitalism has nothing to do with, and is in fact inherently corrupted by, the exercise of state power.  At its heart, capitalism is one simple proposition -- free exchange between individuals based on mutual self-interest.  There is no room in this definition for subsidies or special government preferences or bailouts.  The meat and potatoes activities of crony capitalism are corruptions rather than features of free markets.  Where state power to intervene in economic activity does not exist, neither does cronyism.

Believe it or not, the Occupy movement reminds me of nothing so much as 1832.  Flash back to that year, and you will find Federal officials with almost no power to help or hinder commerce... with one exception: the Second Bank of the United States, a powerful quasi-public institution that used its monopoly on government deposits as a source of funds for private lending.  The bank was accused of using its immense reserves of government cash to influence elections, enrich the favored, and lend based on political rather than economic formulae (any of this sound familiar?).  Andrew Jackson and his supporters, the raucous occupiers of their day, came into office campaigning against the fraud and cronyism at the Bank.

Jackson, much like the current OWS folks, was a strange blend of sometimes frontier anarchist and sometimes tyrannical authoritarian.  But in the case of the Second Bank, the OWS movement could well learn from Jackson.  He didn't propose new and greater powers for government officials to help check abuses of the existing powers -- he proposed to kill the Bank entirely.  Eliminate the source of power, and men can no longer tap it for their own enrichment.

Unfortunately, the progressive Left which makes up most of the OWS movement has taken exactly the opposite approach over the last century or so, expanding government powers and economic institutions (such that today the scope of the second bank seems quaintly limited) and thus the opportunity for cronyism.   In fact, most of the interventions that make crony capitalism possible are facilitated and enabled by the very progressive legislation that the progressive Left and the OWS protesters tend to favor.  Consider some examples...

From the Hill, the ghost of Hawley-Smoot returns

 The Senate voted Monday to advance legislation pressuring the Chinese government to stop undervaluing its currency, a practice most economists agree is giving the country an unfair trade advantage and is costing the U.S. jobs.

The Senate voted 79-19 to end debate on a motion to proceed to the bill, the Currency Exchange Rate Oversight Reform Act of 2011. While the vote does not mean the bill has passed, the strong show of support suggests it could well be approved in the upper chamber by the week’s end. Passage through the House is less clear, however, and GOP leaders have given no indication they will move forward with it.

Senate Democratic leadership, responsible for bringing the legislation to the Senate floor, heralded it as a way to create jobs and right a long-standing trade imbalance with China.

“China is by far the biggest exploiter of predatory currency practices,” Sen. Charles Schumer (D-N.Y.) said Monday. “[T]hese currency policies artificially raise the price of U.S. exports and suppress the price of imports into the United States, undermining the economic health of American manufacturers and their ability to compete at home and around the globe.”

This is a great example of how a group, in this case the Democratic Party, can say they are against corporate welfare, but in fact be 100% behind it simply by changing the terms used.

Look at the sentence in bold.  Another way to write this would be "we want a law to help a few visible and influential manufacturers who most compete with China, but hurts consumers (ie every single American) and every business that uses imported raw materials.

Protectionism like this is corporate welfare for a few large manufacturers.  I find it amazing the reporter can say that "most economists agree" an undervalued Chinese currency is costing us jobs.  My sense is that most economists don't agree with this statement.  All this law will do is unilaterally increase consumer prices and raw material costs, and I know few economists who think this is stimulative.

A cheap yuan is a direct subsidy of American consumers by the Chinese, and I am not sure why we shouldn't let it continue as long as they are dumb enough to keep doing it.

Tyler Durden finds a creepy RFP at the Fed:

the Federal Reserve Bank of the United States, ... in a Request for Proposals filed to companies that are Fed vendors, is requesting the creation of a "Social Listening Platform" whose function is to "gather data from various social media outlets and news sources." It will "monitor billions of conversations and generate text analytics based on predefined criteria." The Fed's desired product should be able to "determine the sentiment [ED:LOL] of a speaker or writer with respect to some topic or document"... "The solution must be able to gather data from the primary social media platforms – Facebook, Twitter, Blogs, Forums and YouTube. It should also be able to aggregate data from various media outlets such as: CNN, WSJ, Factiva etc." Most importantly, the "Listening Platform" should be able to "Handle crisis situations, Continuously monitor conversations, and Identify and reach out to key bloggers and influencers."

Most of those who read the online libertarian rags have seen this, but its awesome enough to require repitition

What makes me libertarian is what makes me an atheist -- I don't know. If I don't know, I don't believe. I don't know exactly how we got here, and I don't think anyone else does, either. We have some of the pieces of the puzzle and we'll get more, but I'm not going to use faith to fill in the gaps. I'm not going to believe things that TV hosts state without proof. I'll wait for real evidence and then I'll believe.

And I don't think anyone really knows how to help everyone. I don't even know what's best for me. Take my uncertainty about what's best for me and multiply that by every combination of the over 300 million people in the United States and I have no idea what the government should do.

President Obama sure looks and acts way smarter than me, but no one is 2 to the 300 millionth power times smarter than me. No one is even 2 to the 300 millionth times smarter than a squirrel. I sure don't know what to do about an AA+ rating and if we should live beyond our means and about compromise and sacrifice. I have no idea. I'm scared to death of being in debt. I was a street juggler and carny trash -- I couldn't get my debt limit raised, I couldn't even get a debt limit -- my only choice was to live within my means. That's all I understand from my experience, and that's not much.

It's amazing to me how many people think that voting to have the government give poor people money is compassion. Helping poor and suffering people is compassion. Voting for our government to use guns to give money to help poor and suffering people is immoral self-righteous bullying laziness.

People need to be fed, medicated, educated, clothed, and sheltered, and if we're compassionate we'll help them, but you get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in doing it at gunpoint.

Who is at the other end of the spectrum?  Well, how about Brad Delong arguing for a return to technocratic rule by our betters

America's best hope for sane technocratic governance required the elimination of the Republican Party from our political system as rapidly as possible.

Technocratic utopia is of course a mirage, a supreme act of hubris, that any group of people could have the incentives or information required to manage the world top-down for us.  If I told an environmentalists that I wanted ten of the smartest biologists in the world to manage the Amazon top-down and start changing the ratios of species and courses of rivers and such in order to better optimize the rain forest, they would say I was mad.   Any such attempt would lead to disaster (just see what smart management has done for our US forests).  But the same folks will blithely advocate for top-down control of human economic activity.  The same folks who reject top-down creationism in favor of the emergent order of evolution reject the emergent order of markets and human uncoerced interaction in favor of top-down command and control.

More on technocrats here and here

Via the Thin Green Line

The number of farmers markets in the United States has skyrocketed from a measly 340 at the outset of the 1970s to more than 7,000 today, and, according to the USDA, sales of agricultural products directly from farmer to consumer brought in a whopping $1.2 billion in 2007.  [ed- this is a trivial portion of the US agricultural market, and hardly "whopping."]

But even though many markets have started accepting food stamps, critics still charge that they are only affordable for the haves, who are much more likely to have access to other fresh foods.

A new report from the Union of Concerned Scientists puts some holes in that theory. It says that modest public funding for a couple hundred otherwise-unsuccessful farmers markets could generate to 13,500 jobs over a five-year period.

I really do not have much time, so we will have to leave aside how government-forced reallocation of capital from current productive uses to subsidizing small and failing farmers markets will be a net source of employment.

I have another point - as it turns out, we already have highly efficient farmers markets that source produce from the world's agricultural regions best suited to a particular crop and bring them in a very efficient and low-cost way to consumers, taking advantage of scale economies where they exist.  They are called "supermarkets."   If you want crops that don't take advantage of our best chemical and genetic technology, that are grown locally rather than in optimal soils and climates, and are retailed in inefficient, undersized and often unprofessionally managed part-time markets, they are going to cost more.

As is typical, this has nothing to do with helping the poor.  This is about government subsidy of a particular set of lifestyle choices of aging middle class hipsters.

Via Ed Driscoll, from Richard Cohen in the Washington Post:

The odd thing about the Tea Party is that it uses Washington to attack Washington. This is a version of Hannah Arendt’s observation that totalitarian movements use democratic institutions to destroy democracy. (This is what Islamic radicals will do in Egypt.) Note that the Tea Party is nowhere near a majority — not in the House and not in the Senate. Its followers have only 60 seats in the 435-member House, but in a textbook application of political power they were able to use parliamentary rules to drive the congressional agenda. As we have known since Lenin’s day, a determined minority is hands down better than an irresolute majority.

The Tea Party has recklessly diminished the power and reach of the United States. It has shrunk the government and will, if it can, further deprive it of revenue. The domestic economy will suffer and the gap between rich and poor, the educated and the indolently schooled, will continue to widen. International relations will lack a dominant power able to enforce the rule of law, and the bad guys will be freer to be as bad as they want. Maybe the deficit will be brought under control, but nothing else will. I worry — and I envy (but will not forgive) those who don’t

Yep, those dang totalitarians -- always trying to shrink government and diminish its power and reach.

From my column in Forbes this week, an update of a regular feature here in the past:

Every Independence Day, I am struck by how poor an understanding Americans have as to what the Revolution of 1776 was really all about.  For example, I would bet that a depressing number of people in this country, when asked what their most important freedom was, or what made America great, would answer “the right to vote.”

Now, don’t get me wrong, the right to vote in a representative democracy is useful and has proven a moderately effective (but far from perfect) check on creeping statism.  A democracy, however, can still be tyrannical.  After all, Hitler was voted into power in Germany, and without checks, majorities in a democracy would be free to vote away anything it wanted from the minority – their property, their liberty, even their life.    In the US today, majorities routinely vote to take money from or impose their will upon various minorities.

In my mind, there are at least three founding principles of the United States that are far more important than the right to vote:

What three?  You will have to click through to find out.  Have a great July 4 weekend.  Happy 235, United States!

Kevin Drum seems upset that the US Government does not mandate paid time off for all US workers

The map below shows this starkly: the United States is virtually alone in not mandating any annual time off for employees, right along with such economic luminaries as Burma, Guyana, and Nepal. More charts on American overwork here.

I could take the same map and make this statement: "unlike such freedom-loving luminaries as Iran, Russia, Mali, and Chad, the United States government does not interfere in private decisions about vacation pay policies."

By the way, why is it for statists that the lack of a government mandate for something desirable is considered equivalent to the desirable policy being non-existent?  In fact, Kevin Drum himself says his employer has a good paid leave policy.  Wow, how could such a thing have happened without a government mandate?

The PJ Tatler has this bit on the arming of government bureaucrats:

Quin Hillyer discusses the increasing armed firepower of the federal government.  Most people expect agencies like the FBI to be well armed for law enforcement purposes.  But the Railroad Retirement Board?  He reports that federal agencies far and wide now have armed agents, including the Small Business Administration.  For what?  To scare away phony 8(a) applications??  The United States Department of Education bought 27 Remington Model 870 12-gauge shotguns last year

I have no insight into what is going on in these particular agencies.  But I can comment on another agency.  Nearly every state parks organization has seen a proliferation of law enforcement titles among its employees.  Seemingly every field employee nowadays needs to have a gun and a badge.  Why?

Well, there are those who say that this arms race is necessary to keep the parks safe against some mythical crime wave.  But I can say with some authority, since our company runs over 150 public parks across the country, that with very, very few exceptions, parks don't need this kind of on-site law enforcement support.  Most problems can be handled with on-site customer service employees, with the occasional call the the sheriff if things get rough.  In fact, customer service is actually improved without all the badges around.  Rangers with law enforcement credentials tend to solve issues with their visitors by issuing citations.  This is awful customer service -- I am sure McDonald's doesn't like it if someone messes up the bathroom or parks across two parking spaces, but you won't see them issuing citations to their customers.

The reason for this proliferation of law enforcement titles in parks is not demand for order, but incentives among employees.  In most states, getting a law enforcement title in a parks organization gives one an automatic raise, participation in the far-more-lucrative state law enforcement pension plan, and training that can be valuable when one leaves the parks organization.  Also, for some, it carries non-monetary benefits -- some folks think its cool to wield a gun and a badge.

In the 1860's and 1970's, in the United States, there was a great post-war westward migration.  Many settlers began to try to farm lands west of the 100th meridian.  These normally very arid regions experienced a couple of decades of much greater rainfall during this period.  We know today that this was merely a cyclical variation of the type that is constantly occurring in the climate.  However, people of this time chose to believe that this was a permanent change, attributing the shift in rainfall to anthropogenic effects (any of this sound familiar?)  The saying at the time was that "rain followed the plow."

The basic premise of the theory was that human habitation and agriculture through homesteading affected a permanent change in the climate of arid and semi-arid regions, making these regions more humid. The theory was widely promoted in the 1870s as a justification for the settlement of the Great Plains, a region previously known as the "Great American Desert". It was also used to justify the expansion of wheatgrowing on marginal land in South Australia during the same period.

According to the theory, increased human settlement in the region and cultivation of soil would result in an increased rainfall over time, rendering the land more fertile and lush as the population increased. As later historical records of rainfall indicated, the theory was based on faulty evidence arising from brief climatological fluctuations. The theory was later refuted by climatologists and is regarded as a serious error. In South Australia, George Goyder warned as early as 1865, in his famous report on farming in the state, that rain would not follow the plow. Despite this, until further droughts in the 1880s, farmers talked of cultivating cereal crops up to the Northern Territory border. Today, however, grain crops do not grow further north than Quorn.

The result was eventually disaster for thousands and many abandoned farms in places like Eastern Colorado.  To some extent, the theory had a grain of truth - changes in land use do affect the climate.  For example, the loss of snow on Kilimanjaro is generally attributed (by non Al Gore types) to deforestation in the area.  But as is so often the case, the effects of man's land use tended to be more local (as with urban heat islands in cities) rather than regional, and ended up in this case being small compared to natural variations.

My column this week in Forbes is about the declining rate of entrepreneurship and startups in the US.

A recent study by the Beauru of Labor Statistics confirmed a potentially disturbing trend — that the number of new startup businesses in the United States has declined since 2006, and the number of jobs created by those startups has been in decline for over a decade.

This is not just a result of the recent recession.  These declines pre-date the current recession, and besides, startup activity has always held up well in past recessions as unemployed workers try entrepreneurship as a path back to prosperity.

There are likely a myriad of economic and demographic reasons for this decline, but certainly the growth of government power in the economy must be seen as a major contributor.  Government intervention in commerce nearly always favors large companies over small, even if that was not its specific intent, for a couple of reasons:

1. Increasingly complex and pervasive regulations on everything from labor practices to salt content tend to add a compliance cost burden that is more easily born by larger companies
2. Large, entrenched competitors are becoming more facile at manipulating government to create barriers to competition from upstart companies with different business models.

The role of government in throttling entrepreneurship has been evident for years, in the enormous differentials between US and European business startup rates.  Historically, the US has had entrepeneurship rates 3-4 times higher than in the large European industrial countries, due in large part to the barriers these latter countries place in the way of business creation.  But the US, with its current bi-partisan drive towards a corporate state, may soon be engaged in a race to the bottom with these other countries.

I go on to discuss each of these two points in more depth.

Yeah, I know, this is volume one hundred and something in a series, but it is such a crystal clear example of government licensing working primarily to protect incumbent competitors in an industry I have to share it.

Suppose you’re the owner of a taxicab company in a largish metropolitan area. One day you notice some taxis tooling around town—and they’re not yours. They belong to an upstart competitor. His cars are newer, his drivers are nicer, and his fares are lower. Pretty soon your profits start shrinking. What are you going to do about it?

You have a couple of choices. Option A: Invest a lot of money in new vehicles, customer-service training for your drivers, GPS systems to map faster routes and so on. A lot of expense. A lot of effort.

So you go for Option B: Invest a little money in a few politicians, who adopt a medallion law: Only licensed operators with city-issued taxi medallions may operate cabs. The oldest cab companies get first dibs on the medallions, at the lowest rates. Only a few medallions are left over for the new guy, and he can’t afford them anyway. Bingo—your competition problem is solved. The customers might not like it, but what are they going to do—walk?

Apparently this is exactly what is happening in DC

Now it’s the District of Columbia’s turn. Four members of the D.C. City Council have introduced a bill that would create a medallion system for the nation’s capital. Medallion prices would start at $250 for the most established taxi companies and, for the newer entrants, run as high as $10,000. At least initially. As time wore on, it’s likely that the price of a medallion would go up for everyone. That’s what has happened in places such as New York, where a government permission slip to drive a cab costs about $600,000. In Boston, which initially capped medallions at 1,525 in the 1930s—and more than a half-century later had added only 250 more—a medallion will cost you $400,000.

At present the District has more than 10,000 licensed taxi drivers; the proposed legislation would establish only 4,000 medallions. Needless to say, such artificially imposed scarcity also drives up prices. A study by Natwar Gandhi, the District’s chief financial officer, found that fares in cities with medallion systems are 25 percent higher than in cities with open taxi markets.

By the way, for extra points, here is a lawsuit right out of Atlas Shrugged

That story has played out in many cities across the United States, with sometimes amusing variations. A decade or so ago, Minneapolis (population 300,000-plus) allowed a grand total of 343 taxis to operate until Luis Paucar, an immigrant, filed suit. The city council decided to allow another 45 cabs. Then the existing cab companies sued, using the creative legal theory that they had a constitutional right not to face competition. (They lost.)

My Forbes column this week focuses on the US rail system, and argues that despite all the angst that we are somehow missing the boat in emulating Europe, Japan and China in building expensive bullet trains, we actually have the best rail system in the world.

These writers worry that the US is somehow being left behind by China because its government builds more stuff.  We are “asleep.”  Well, here is my retort: Most of the great progress in this country occured when the government was asleep.  The railroads, the steel industry, the auto industry, the computer industry  -  all were built by individuals when the government was at best uninvolved and at worst fighting their progress at every step.

In particular, both Friedman and Epstein think we need to build more high speed passenger trains.  This is exactly the kind of gauzy non-fact-based wishful thinking that makes me extremely pleased that these folks do not have the dictatorial powers they long for.   High speed rail is a terrible investment, a black hole for pouring away money, that has little net impact on efficiency or pollution.   But rail is a powerful example because it demonstrates exactly how this bias for high-profile triumphal projects causes people to miss the obvious.

Which is this:  The US rail system, unlike nearly every other system in the world, was built (mostly) by private individuals with private capital.  It is operated privately, and runs without taxpayer subsidies.    And, it is by far the greatest rail system in the world.  It has by far the cheapest rates in the world (1/2 of China’s, 1/8 of Germany’s).  But here is the real key:  it is almost all freight.

As a percentage, far more freight moves in the US by rail (vs. truck) than almost any other country in the world.  Europe and Japan are not even close.  Specifically, about 40% of US freight moves by rail, vs. just 10% or so in Europe and less than 5% in Japan.   As a result, far more of European and Japanese freight jams up the highways in trucks than in the United States.  For example, the percentage of freight that hits the roads in Japan is nearly double that of the US.

You see, passenger rail is sexy and pretty and visible.  You can build grand stations and entertain visiting dignitaries on your high-speed trains.  This is why statist governments have invested so much in passenger rail — not to be more efficient, but to awe their citizens and foreign observers.

Corn ethanol

The United States spends about $6 billion a year on federal support for ethanol production through tax credits, tariffs, and other programs. Thanks to this financial assistance, one-sixth of the world's corn supply is burned in American cars. That is enough corn to feed 350 million people for an entire year.

Government support of rapid growth in biofuel production has contributed to disarray in food production. Indeed, as a result of official policy in the United States and Europe, including aggressive production targets, biofuel consumed more than 6.5 percent of global grain output and 8 percent of the world's vegetable oil in 2010, up from 2 percent of grain supplies and virtually no vegetable oil in 2004.

This was a real time warp for me: (NY Times via Cato@Liberty)

As President Obama prepares to release a review of American strategy in Afghanistan that will claim progress in the nine-year-old war there, two new classified intelligence reports offer a more negative assessment and say there is a limited chance of success unless Pakistan hunts down insurgents operating from havens on its Afghan border.

The reports, one on Afghanistan and one on Pakistan, say that although there have been gains for the United States and NATO in the war, the unwillingness of Pakistan to shut down militant sanctuaries in its lawless tribal region remains a serious obstacle. American military commanders say insurgents freely cross from Pakistan into Afghanistan to plant bombs and fight American troops and then return to Pakistan for rest and resupply.

The findings in the reports, called National Intelligence Estimates, represent the consensus view of the United States' 16 intelligence agencies, as opposed to the military, and were provided last week to some members of the Senate and House Intelligence Committees. The findings were described by a number of American officials who read the reports' executive summaries.

Perhaps someone who knows better can accuse me of making a shallow comparison, but doesn't this sound exactly like the situation that plagued the US Army in Vietnam, where enemy fighters would hide out across the border in Cambodia?  From Wikipedia:

The People's Army of Vietnam had been utilizing large sections of relatively unpopulated eastern Cambodia as sanctuaries into which they could withdraw from the struggle in South Vietnam to rest and reorganize without being attacked. These base areas were also utilized by the communists to store weapons and other material that had been transported on a large scale into the region on the Sihanouk Trail. PAVN forces had begun moving through Cambodian territory as early as 1963

I don't know why I have so much fun fact checking the "science" at green blog "the Thin Green Line," but I do.  Today's exercise:

There are, right now, at least half a million pieces of junk in orbit around our cosmic Pig Pen of a planet. Space junk isn't just an aesthetic problem, either: Even tiny pieces of junk orbit at speeds above 15,000 miles per hour, so even the tiniest bit of debris can cause serious damage to anything it comes into contact with. Space junk threatens satellites, manned space missions and even the International Space Station.

While certainly space junk can be a problem in certain instances, I am constantly left helpless with laughter at the absolute urgency this type of blog approaches every problem.  Here are a couple of things that might help you sleep better at night:

• The speed space junk is traveling is largely irrelevant.  It could be 15,000 mph or 50,000.  The important variable is the closing speed of two objects, not their absolute speed.  And (thanks to our friend Newton) we know that objects in the same stable orbits have to be moving at the same speed.  Now, orbits don't all have to parallel and can cross, yielding real relative velocities, but recognize that since over 95% of these half million objects are less than 4 inches in diameter, its a bit like you and your friends firing guns and having the bullets meet in mid-air.
• The drawing he shows makes the sky seem really cluttered.  But let's just take a small portion of this space.  Let's consider the volume of space between 100 and 500 miles above the Earth's surface.  Using a bit of geometry, this space works out to be 93 trillion cubic miles of volume.  Which means one object, generally less than 4 inches in diameter, in space per every 186,000 cubic miles, which for scale is the equivalent volume to a building 40 stories tall that covers the entire continental United States.

Certainly avoiding these objects is a navigation concern for powered spacecraft, which is why all these pieces of junk are watched in the first place.  But the idea of a space superfund to clean this stuff up is so hilariously expensive (given current tech) and such a staggering waste of resources compared to other uses of those funds that one would only expect to find it on, well, an environmental blog.