The Saudis Tried to Kill The Shale Oil Business. It May Turn Out The Other Way Around

This article on Saudi Arabia, shale oil, and oil prices was interesting throughout

Saudi Arabia is effectively beached. It relies on oil for 90pc of its budget revenues. There is no other industry to speak of, a full fifty years after the oil bonanza began.

Citizens pay no tax on income, interest, or stock dividends. Subsidized petrol costs twelve cents a litre at the pump. Electricity is given away for 1.3 cents a kilowatt-hour. Spending on patronage exploded after the Arab Spring as the kingdom sought to smother dissent.

The International Monetary Fund estimates that the budget deficit will reach 20pc of GDP this year, or roughly $140bn. The 'fiscal break-even price' is $106.

Far from retrenching, King Salman is spraying money around, giving away $32bn in a coronation bonus for all workers and pensioners.

He has launched a costly war against the Houthis in Yemen and is engaged in a massive military build-up - entirely reliant on imported weapons - that will propel Saudi Arabia to fifth place in the world defence ranking.

The Saudi royal family is leading the Sunni cause against a resurgent Iran, battling for dominance in a bitter struggle between Sunni and Shia across the Middle East. "Right now, the Saudis have only one thing on their mind and that is the Iranians. They have a very serious problem. Iranian proxies are running Yemen, Syria, Iraq, and Lebanon," said Jim Woolsey, the former head of the US Central Intelligence Agency.

Money began to leak out of Saudi Arabia after the Arab Spring, with net capital outflows reaching 8pc of GDP annually even before the oil price crash. The country has since been burning through its foreign reserves at a vertiginous pace.

Just the Moon Orbiting the Earth...

... but the images are pretty awesome.  via here.  Taken from the DSCOVR satellite orbiting a million miles away from Earth (my guess is that it sits at the Earth-Sun L1 Lagrange point, where the side of Earth it could see would always be in full sun and the back side of the moon would be fully illuminated as it passes Earth)

nasa-captures-dark-side-of-the-moon-as-it-crosses-earth

 

Coyote Cocktails

My guess is that there are no new cocktails under the sun, but I have not found anything similar out there so here is my current favorite homegrown concoction.  Call it a Coyote Cocktail if it has not been named yet.   I suppose it is sort of kind of like a Sidecar but I actually started from an Old Fashioned to get here:

  • 2 parts Bourbon (I think a slightly sweeter one like Makers Mark works well)
  • 1 part Cointreau
  • 1 part fresh grapefruit juice (we have a tree so this is easy)
  • a couple dashes of orange bitters

stir over ice.

A lot of restaurants in my area are serving slightly spicy tequila drinks, making Palomas or Spicy Margaritas with pepper-infused tequlia.  We have home-infused a bottle of tequila with peppers and really like it.  Our first try was a disaster -- we put 2 or 3 small dry peppers in bottle of tequila and let it sit for 5 days.  Mistake!  That is way too long.  A day is all that is needed for a good infusion and a nice level of spice.  We held onto the five-day flamethrower tequila.  It is fun to serve as a shot to friends who think they are manly for pounding Jagermeister.  Really gets their attention.

As an awful aside, apparently my son and his friends at college drink some concoction made of Jagermeister and Red Bull.  I am told this is a standard at clubs nowadays.  gahk.  Possibly even worse than the Schmidt Beer I drank occasionally at college when we were short on cash.

My Interview on Recreation PPPs With the World Bank Blog

The interview is fairly short but covers the most common questions about Recreation PPP's and private operation of public parks.  It is on the World Bank blog here.

We're The TSA. Let Us Entertain You By Showing You All Your Neighbor's Stuff

I am hoping this is fake given the joke name of the author. If not, I would point out that we (reluctantly) give TSA employees power to search our luggage solely for seeking out items that might endanger the aircraft or other passengers. We do not give this arguably extra-Constitutional power to TSA employees so they can write titillating articles on the web exposing our private stuff.

In operating campgrounds, I could create a blog with posts every day showing the goofy things that campers bring with them or try to do, or mistakes they make as novice campers. I do not, though, because hosting folks is a kind of trust. I would expect folks empowered to ransack my luggage to show even more discretion.

A Textbook Government Solution

Problem: Long waits at the DMV

Solution: Triple the size of the waiting room

God forbid anyone would rethink an incredibly dysfunctional process.

Race and Petty Traffic Laws

When you hear that police pulled someone over for the totally BS charge of a "partially obscured license plate with only one light," can't you just assume the driver is probably black or Hispanic?

If I were a Mexican in Phoenix, I would do a full walk-around checking my vehicle before every trip.  A visiting friend once asked me if the fact that Hispanics all seem to drive so slow was a cultural thing and I said that more likely, they know they will get busted for going even a hair over the speed limit.

A few years ago I wrote vis a vis our infamous SB1070

When Kris Kobach says "In four different sections, the law [SB1070] reiterates that a law-enforcement official 'may not consider race, color, or national origin' in making any stops or determining an alien's immigration status," he is ignoring reality.  The law asks police to make a determination (e.g. probable cause that one is an illegal immigrant) that is impossible for actual human beings to make without such profiling.  It's like passing a law that says "police must drive their cars 30 miles a day but can't drive their cars to do so."  The reality on the ground here in Arizona is that, illegal or not, Sheriff Joe Arpaio has been using racial profiling to make arrest sweeps for years, and his officers have become masters at finding some pretext to pull over a Mexican they want to check out  (e.g. the broken tail light).   Words in this law about racial profiling are not going to change anything.

Update:  I forgot this story from 2008, which is a great example of what I am talking about here

Arrest records from crime sweeps conducted by the Maricopa County Sheriff's Office add substantial weight to claims that deputies usedracial profiling to pull Latino motorists over to search for illegal immigrants....

even when the patrols were held in mostly White areas such as Fountain Hills and Cave Creek, deputies arrested more Latinos than non-Latinos, the records show. In fact, deputies arrested among the highest percentage of Latinos when patrols were conducted in mostly White areas.

On the arrest records, deputies frequently cited minor traffic violations such as cracked windshields and non-working taillights as the reason to stop drivers.

"These are penny-ante offenses that (police) almost always ignore. This is telling you this is being used to get at something else, and I think that something else is immigration enforcement against Hispanic people," Harris said....

Hiroshima in Historical Context

Well, its that time of year again and folks on the Left are out there with their annual rants against the bombing of Hiroshima as a great crime against humanity.

All war is a crime against humanity by those who start them.  And I am certainly uncomfortable that we let the atomic genie out of the steel casing in August of 1945.  But I think much of what is written about Hiroshima strips the decision to drop the bomb from its historical context.  A few thoughts:

  1. We loath the Hiroshima bombing because we in 2015 know of the nuclear proliferation that was to follow and the  resulting cloud of fear that hung over the globe for decades as most everyone was forced to think about our new ability to destroy humanity.  But all that was in the realm of science fiction in 1945.  And even if they knew something of the Cold War and fear of the Bomb, would many have had sympathy, living as they were through a real war that represented possibly the worst self-inflicted catastrophe man has ever faced?
  2. Several other bombing raids, notably the fire-bombing of Tokyo, took more lives than Hiroshima.  Again, we differentiate the two because we experienced the Cold War that came after and thus developed a special fear and loathing for atomic weapons, but people in 1945 did not have that experience.
  3. The ex post facto mistake many folks make on Hiroshima is similar to the mistake many of us make on Yalta.  Lots of folks, particularly on the Right, criticize FDR for being soft on Stalin and letting him get away with Eastern Europe.  But really,what were they going to do?  Realistically, Russia's armies were already in Eastern Europe and were not going to leave unless we sent armies to throw them out.  Which we were not, because folks were absolutely exhausted by the war.  This war exhaustion also plays a big part in the decision at Hiroshima.  Flip the decision around.  What would have happened if a war-weary public later found out that the government had a secret weapon that might have ended the war but refused to use it?  They would have been run out of office.
  4. I once heard a government official of the time say that it was odd to hear people talking about the "decision" to bomb Hiroshima because there was not a decision to make.  We were in a long, horrible, bloody war.  We had a new weapon.  It was going to be used.
  5. The Japanese were not showing a willingness to negotiate.  Yes, some members of the Japanese state department were making peaceful overtures before Hiroshima, but they had no power.  None of the military ruling clique was anywhere in the ballpark of surrendering.  Even after Hiroshima, and Nagasaki, and the Russian declaration of war, the government STILL would not have voted for surrender except for the absolutely extraordinary and unprecedented  intervention of the Emperor.  And even then, the military rulers were still trying to figure out how to suppress the Emperor or even take him hostage to stop any peace process.
  6. It is argued sometimes that the Hiroshima and Nagasaki bombs were irrelevant and that the Japanese surrendered when the Russians declared war.  The Russian declaration was certainly an important part of the mix, but I find it hard to believe the Emperor would have taken his unprecedented actions without the atomic bomb attacks.  Besides, even if the Russian declaration was critical, it could be argued the bombs played a huge role in that declaration.  After all, we had tried to get the Russians to make such a declaration for years, and it suddenly came coincidentally a couple of days after the atomic bombs start dropping?  I doubt it.  A better theory is that the Russians were waiting for signs that the war was nearly won so they could jump in and grab some costless booty from defeated Japan, and the bombs were that sign.
  7. It is argued that the invasion of Japan would have cost fewer lives than the bomb.  This is a crock.  Sorry.  There is absolutely no way to look at military and civilian casualty figures from Iwo Jima and Okinawa and come to any conclusion other than the fact that the invasion of Japan would have been a bloodbath.
  8. It is argued that we could have blockaded Japan to death.  This is possible, but it would have 1. Taken a lot of time, for which no one had any patience; 2. exposed US ships to relentless Kamikaze attacks and 3.  likely have cost more Japanese civilian lives to continued conventional bombing and starvation than the atomic bombs did.
  9. It is argued that we dropped the bombs on Japan out of some sort of racial hatred.  We can't really test this since by the time the bombs were ready, Japan was our only enemy left in the field.  Certainly, as a minimum, we had developed a deep hatred of Japanese culture that seemed so alien to us and led to atrocities that naturally generated a lot of hatred.  For the soldier, the best simple description of this culture clash I ever heard (I can't remember the source) was a guy who said something like "for us, the war was about winning and going home.  For the Japanese, the war just seemed to be about dying."   In a time where racism was much more normal and accepted, I would say that yes, this cultural hatred became real racism.  But I would add that it was not like we entered the war with some sort of deep, long hatred of Asians.  If anything, we stumbled into the Pacific War in large part because Americans felt a special friendship and sympathy with China and would not accept Japan's military interventions there.

Dispatches from the Crony State

From the Daily Beast

For some wealthy donors, it doesn’t matter who takes the White House in 2016—as long as the president’s name is Clinton or Bush.

More than 60 ultra-rich Americans have contributed to both Jeb Bush’s and Hillary Clinton’s federal campaigns, according to an analysis of Federal Election Commission data by Vocativ and The Daily Beast. Seventeen of those contributors have gone one step further and opened their wallets to fund both Bush’s and Clinton’s 2016 ambitions.

After all, why support just Hillary Clinton or just Jeb Bush when you can hedge your bets and donate to both? This seems to be the thinking of a group of powerful men and women—racetrack owners, bankers, media barons, chicken magnates, hedge funders (and their spouses). Some of them have net worths that can eclipse the GDPs of small countries.

Ideology, policy prescriptions, legislative plans -- nothing matters except influence.  This will always happen as long as we give politicians so much power.  Its why the Coke and Pepsi party look so similar today.   At least a few people are noticing:

Is there a single person alive who believes that corporations, trade associations, NGOs, unions, and the like pay the Clintons enormous sums for speeches because they believe their members actually want to hear the Clintons say the same tedious talking points they have been spewing for years? If that were the only value received no profit-minded enterprise would pay the Clintons these vast fees because they would earn, well, a shitty rate of return.

No, the Clintons are not paid to speak. Businesses and other interest groups pay them for the favor of access at a crucial moment or a thumb on the scale in the future, perhaps when it is time to renew the Ex-Im Bank or at a thousand other occasions when a nod might divert millions of dollars from average people in to the pockets of the crony capitalists. The speaking is just a ragged fig leaf, mostly to allow their allies in the media to say they “earned” the money for “speaking,” which is, after all, hard work.

We have such people as the Clintons (and the tens of thousands of smaller bore looters who have turned the counties around Washington, D.C. in to the richest in the country) because they and their ilk in both parties have transformed the federal government of the United States in to a vast favors factory, an invidious place that not only picks winners and losers and decides the economic fates of millions of people, but which has persuaded itself that this is all quite noble. Instead, the opposite is true: This entire class of people, of which the Clintons are a most ugly apotheosis, are destroying the country while claiming it is all in the “public service.” It is disgusting. We need to say that, at least, out loud. . . .

Tear down the aristocracy of pull. This may be our last chance.

Phoenix Light Rail: We Spent $1.4 Billion (and Growing) To Subsidize ASU Students

The AZ Republic has some of the first information I have ever seen on the nature of Phoenix light rail ridership.  The first part confirms what I have always said, that light rail's primary appeal is to middle and upper class whites who don't want to ride on the bus with the plebes

Light rail has changed the demographics of overall transit users since the system opened in 2008, according to Valley Metro.

Passengers report higher incomes than bus riders, with more than a quarter living in households making more than $50,000 a year. Many riders have cars they could use.

The 20-mile system running through Phoenix, Tempe and Mesa recorded more than than 14 million boardings last year. Still, census data estimate less than one-third of 1 percent of Phoenix commuters — or about 2,000 people — use rail as their main transportation to work.

.0033% huh?  If we built similar facilities to serve everyone, it would only cost us about $420 billion at the rate of $1.4 billion per third of a percent.

But I thought this next bit was the most startling.  I always had a sneaking suspicion this was true but never have seen it in print before:

While the much larger bus system reaches most corners of the Valley, light rail connects specific destinations along a single line. Nearly half of light-rail riders are enrolled in college.

I must have missed this in the original sales pitch for the light rail line: "Let's pay $1.4 billion so ASU students can get to more distant bars."   Note that by these numbers, students likely outnumber commuters 10:1.  Doesn't bode well for light rail extensions that don't plow right through the middle of the most populous college campus in the country.

Postscript:  They don't break out people riding to get to sporting events downtown, but sporting events make up most of the largest traffic days on the system.  From my personal acquaintances, many people use light rail as a substitute for expensive downtown parking at sporting events, parking (often semi-illegally) near light rail stops and taking the train the rest of the way in.  On the whole, its not very compelling as a taxpayer to be helping to subsidize someone else's parking.  And from a municipal fiscal standpoint, it means that light rail fares may be cannibalizing (on a much greater ratio than 1:1 given the price differential) parking fees at municipal parking lots.

Why Valley Metro (Phoenix Light Rail) Can't Be Trusted and Shouldn't Be Given More Tax Money to Play With

I was reading this article in the Arizona Republic (which is generally an unskeptical cheerleader for light rail investments) and looking at the claim that Valley Metro (the operator of Phoenix light rail) had a 45% fare recovery ratio in 2013.  One would think that means that their fares cover 45% of their costs -- which would be awful for any real enterprise but is pretty good for government-run rail systems.

But in fact, Valley Metro (along with rail supporters in the Administration) stack the deck by defining most of the costs out of this metric so it looks far better than it really is.  In fact, by my reading of their financial statements, the true fare recovery is at best 15.2% and likely much worse.

Here are the Valley Metro financials for 2013, from their annual report

vmr-finances

 

Look at their costs of $75+ million and fares of about $12.8 million.  How do they get to 45%?  Simple -- they leave the majority of their costs out.  They exclude administrative costs, financing costs, and depreciation (essentially their capital cost) from the equation.  This means that their fare recover is 45% -- IF you ignore their large administrative costs and you ignore the $1.4+ billion the line cost to build.   Further, because of the way the government does its finances, it is also missing any financing costs (interest and such on debt).

So the true cost recovery, stated in a way that  a reasonable person would think about such a number, is 16.8% at best.  If one takes into account the $8.28 million in "non-operating expenses" the number is 15.2%.  And it is even lower if you were to include interest and other financing costs.

I am sure Valley Metro will argue that this is the way the Feds measure it.  I don't care.  It has an obligation to accurately report its financial position to the public who is paying for it, particularly when the public is considering further investments in the form of higher taxes.  The 45% is a meaningless number that is crafted solely to make light rail look financial stronger than it really is.

This, by the way, is why total ridership of rail + buses has stalled since the construction of the light rail line.  Light rail is so expensive per rider that it is starving cash from the rest of the system.

RRRRR, I Don't Want Another Device I Have to Remember to Charge -- In Praise of the Removable Double A Battery

After years and years of happy service, my Logitech MX Anywhere mouse finally gave up the ghost.  So I bought a new one, though I purchased the new MX 2 thinking it would be new and improved.

Wrong!  At least for me.  The old mouse used a single AA battery that lasted months and months.  By keeping 1 extra AA battery in my backpack, I was able to make sure my mouse would always work.  Now, though, the new MX 2 mouse has a built in battery that has to be charged with a charging cable.  And if it runs down (which is always possible since there is no charge indicator)?  Then you have to plug it in with a cable to recharge, and the mouse does not work while charging.  Basically, if you were planning to work in your hotel room that night, you are out of luck.

Already, I have to remember to plug in my cell phone, my iPod, my iPad, my TV remote, my Jabra earphone, etc.  I don't want to have to charge something else!!

A plug-in rechargeable battery is NOT necesarily better than using a couple of double A's.  I have the same problem with my home theater remote (also Logitech).  My old versions used to use replaceable batteries, so I could just leave it on the coffee table.  The new remote require a charger.  But I have no outlets within 10 feet of my coffee table, so now I have to keep the remote in the kitchen, one room over.  Stupid, stupid, stupid.

Thanks Vancouver For Banning Uber So I Could Wait In 30-Minute Taxi Lines

no-uber-in-vancouver

This picture was taken at my hotel in Vancouver, BC on Saturday.  This is only about a third of the mob trying to get a taxi, a process that took me over 30 minutes.  The whole thing was made doubly frustrating by another bit of government interference -- about half the taxis that showed up dropping folks off left the hotel empty despite the huge mass of people waiting.  Why?  Apparently certain airport taxis are not allowed to pick up people in certain areas.  So the taxis had to go all the way back to the airport empty, despite the fact that people there were waiting to go to the airport.  Absolute madness of crony government intervention.

Yes, I understand that Saturday is "cruise day" and there is a huge spike in demand as these boats load and unload.  But this is exactly why Uber would make so much sense.  Think about all the folks that have weekday jobs that would love to earn some extra money driving on a Saturday.  Uber allows for just this sort of flexibility.

Thanks Vancouver (BC) for a 40-minute Black Car Wait

Vancouver BC is one of those places that have banned Uber.  So lacking that alternative, I tried to book a black car (from the largest local car service) for the fairly long ride to our hotel.  In trying to complete the transaction, I was told that they were very busy and that my wait would be up to 40 minutes for them to show up.

This is the second time in a week (Vegas was the first) that I have had to spend some serious wait-time just because the local government has decided to artificially limit competition and capacity.  I am sure the politicians would tell me its for my own good, though.

Dodd-Frank a Disaster for the Poorest People in Africa

Yeah, that headline seems a bit odd -- Dodd-Frank is about banking, right?  Well, apparently buried within Dodd-Frank are conflict minerals rules which I suppose were spurred by the efforts of a few dim-bulb celebrities who have a knack for latching onto poorly thought out "solutions" for Africa that tend to have staggering unintended consequences.

In this case, the logic was that minerals sales to western companies were  propping up dangerous warlords and militias, particularly in the Congo.  The law imposed huge penalties on American companies that did not purge their supply chain eight, ten, twelve steps deep of any suspected bad actors in the mineral world.

The problem for US companies is that this imposes a ton of cost, and is very hard to do.  So hard that the US government has not been able to successfully differentiate conflict from non-conflict suppliers.   However, as we learned on issues like cybersecurity, the US Government is still more than willing to impose enormous penalties on private businesses for failing at tasks the government can't even do itself.  So companies play it safe and don't buy from any source anywhere near places like Congo, even avoiding neighboring countries that have no such conflict issues.

Because what Progressive supporters forgot in patting themselves on the back for their sensitivity in passing such laws is that minerals extraction and related labor is about the only source of income for citizens of these countries, which are among the poorest in the world.  We may cut have off some of the money flowing to warlords (though not much as they turn out to do pretty well in the new bootlegging environment), but we are cutting off all the money that went to the struggling population.   Further, by driving the trade underground, it becomes impossible to impose event he most basic rules on the trade.   Dodd-Frank turned the mineral trade in these countries into the cocaine trade.

Via Overlawyered, from the CEI

The 2010 Dodd-Frank Act increased violence in the Congo by 143 percent (and looting by 291 percent) through its “conflict minerals” rule, which has backfired on its intended beneficiaries. So concludes a new study by Dominic Parker of the University of Wisconsin and Bryan Vadheim of the London School of Economics.

As we noted earlier, Dodd-Frank conflict minerals regulations have also caused starvation in the Congo, harmed U.S. businesses, and resulted in increased smuggling—even as they punish peaceful neighboring countries in Africa just for being near the Congo, whose civil wars have killed millions over the last 20 years. They have inflicted great harm on a country that was just beginning to recover from years of mass killing and had the world’s lowest per capita income. The new study is consistent with a 2013 paper by St. Thomas University law professor Marcia Narine that criticized the conflict minerals rule for its dire consequences for the Congolese people.

To his credit, David Aronson was on this four years ago:

For locals, however, the law has been a catastrophe. In South Kivu Province, I heard from scores of artisanal miners and small-scale purchasers, who used to make a few dollars a day digging ore out of mountainsides with hand tools. Paltry as it may seem, this income was a lifeline for people in a region that was devastated by 32 years of misrule under the kleptocracy of Mobutu Sese Seko (when the country was known as Zaire) and that is now just beginning to emerge from over a decade of brutal war and internal strife.

...

Meanwhile, the law is benefiting some of the very people it was meant to single out. The chief beneficiary is Gen. Bosco Ntaganda, who is nicknamed The Terminator and is sought by the International Criminal Court. Ostensibly a member of the Congolese Army, he is in fact a freelance killer with his own ethnic Tutsi militia, which provides “security” to traders smuggling minerals across the border to neighboring Rwanda.

...

The people of eastern Congo agree that it would be beneficial to bring greater clarity and transparency to the mineral trade. A variety of local and international initiatives to do so were under way when the embargo hit. Those efforts may now become a casualty of the Dodd-Frank law.

A Good Roundup on the Minimum Wage

David Brooks has what looks to be a pretty even-handed piece on what academic work shows on the minimum wage.  A few highlights:

Recently, Michael Wither and Jeffrey Clemens of the University of California, San Diego looked at data from the 2007 federal minimum-wage hike and found that it reduced the national employment-to-population ratio by 0.7 percentage points (which is actually a lot), and led to a six percentage point decrease in the likelihood that a low-wage worker would have a job.

Because low-wage workers get less work experience under a higher minimum-wage regime, they are less likely to transition to higher-wage jobs down the road. Wither and Clemens found that two years later, workers’ chances of making $1,500 a month was reduced by five percentage points.

Many economists have pointed out that as a poverty-fighting measure the minimum wage is horribly targeted. A 2010 study by Joseph Sabia and Richard Burkhauser found that only 11.3 percent of workers who would benefit from raising the wage to $9.50 an hour would come from poor households. An earlier study by Sabia found that single mothers’ employment dropped 6 percent for every 10 percent increase in the minimum wage....

What we have, in sum, is a very complicated situation. If we do raise the minimum wage a lot of people will clearly benefit and a lot of people will clearly be hurt. The most objective and broadest bits of evidence provoke ambivalence. One survey of economists by the University of Chicago found that 59 percent believed that a rise to $9 an hour would make it “noticeably harder” for poor people to find work. But a slight majority also thought the hike would be worthwhile for those in jobs. A study by the Congressional Budget Office found that a hike to $10.10 might lift 900,000 out of poverty but cost roughly 500,000 jobs.

So 900,000 would get up to a 25-40% raise while 500,000 would get a 100% cut.

What Happens to Poverty and Other State Economic Stats When One Finally Takes Into Account Different State Cost of Living Levels

This is really interesting, and I suppose not surprisingly, quite under-reported.  It appears the blue state model is even worse than we thought for combating poverty.  Not only does it suppress economic growth, but it also tends to raise prices of housing and other necesities

The familiar official [poverty] measure is more than 50 years old, and is showing its age. It has two huge shortcomings: it considers the cost of living to be the same in the 48 contiguous states (a patently ridiculous proposition when considering that the average rent in San Francisco in the first quarter of 2015 was $3,458 vs. $867 in Houston), and it doesn’t account for in-kind benefits, such as Section Eight housing subsidies and Electronic Benefit Transfer cards (food stamps).

Thus, the federal government’s main poverty gauge undercounts material poverty levels in high-cost states such as California, New York, and Hawaii, while over-counting true poverty in much of the low-cost Midwest and South.

Responding to concerns from Congress, advocates for the poor, and academics, some 20 years ago the U.S. Census Bureau began developing an alternative measure of poverty to address weaknesses in the official measure. The Census Bureau’s new, more comprehensive Supplemental Poverty Measure (SPM) is the result....

The authors use this data to compare Texas and California

Official Poverty Measure Rate, 2011-2013 Supplemental Poverty Measure (SPM) Rate, 2011-2013
California 16.0% 23.4%
Texas 17.2% 15.9%
National Average 14.9% 15.9%

The share of minorities in California and Texas is about 50 percent higher than in the nation as a whole, triple that of Wisconsin or Minnesota, more than quadruple that of Iowa, and about six-and-a-half times that of New Hampshire. Thus, it is an illuminating measure the wellbeing of America’s four largest racial or ethnic groups in the two most-populous states that one-fifth of Americans call home. The table below shows the average SPM for four years, 2010 to 2013, for these four groups.

White, non-Hispanic SPM Rate, 2010-13 Black, non-Hispanic SPM Rate, 2010-13 Hispanic SPM Rate, 2010-13 Asian SPM Rate,2010-13
California 14.8% 30.1% 33.7% 17.9%
Texas 9.7% 19.9% 22.7% 14.1%
National Average 10.8% 24.7% 27.7% 17.1%

I guess its time for a disparate impact suit against California!

In a related bit of data, here is the real value of $100 in each state (higher is better) which is sort of the inverse of cost of living.  States with higher costs of living will have lower numbers

$100 Map

Leading to this interesting outcome:

$100 Chart

 

The Most Racist Housing Markets Are In... San Francisco

In advance of the Obama Administration trying to pursue cities and neighborhoods for not being sufficiently racially integrated, Cato has an interesting take on the question.

The real problem with housing affordability is not at the community level but at the regional level. In a region that has few land-use restrictions, a community that has attracted wealthy people is not going to have much of an effect on the affordability of the region as a whole because builders can always construct more affordable housing elsewhere. The problem is in regions with urban-growth boundaries and other restrictions that limit the construction of affordable housing over the entire region.

If HUD were to apply disparate-impact criteria to regions, it might look at the change in African-American populations between 2000 and 2010. Nationwide, the black population grew by 11 percent in that time period, which was about 1.3 percent faster than the population as a whole. Regions whose black populations grew less than 1.3 percent faster than their whole populations could be considered guilty of housing discrimination.

Based on this, the most racist major (more than a million people) urban area in America is San Francisco-Oakland. Though that region’s population grew by 285,000 people between 2000 and 2010, or 9.5 percent, the region’s black population actually shrank by nearly 49,000, or 14.2 percent, for a difference in growth rates of minus 23.7 percent.

That decline was entirely due to strict land-use policies that prevent development outside of the 17 percent of the region that has already been urbanized, making the Bay Area one of the least affordable housing markets in the nation. Moreover, a recent planto improve affordability by following HUD’s prescription of building more high-density housing was found to actually reduce affordability.

Other major urban areas that would be found racist include Austin (-21.5% difference between black and overall population growth), Riverside-San Bernardino (-17.5%), Honolulu (-15.4%), San Diego (-14.6%), Los Angeles (-14.5%), Bakersfield (-13.6%), and San Jose (-11.1%). All of these regions except Austin have some form of growth-management policy, while Austin has become the least affordable housing market in Texas due to local housing policies.

By comparison, the least racist major urban area is Salt Lake City, whose black population grew 57 percent faster than its total population. Other non-racist areas include Minneapolis-St. Paul (42%), Phoenix (34%), Providence (25%), Boston (19%), Las Vegas (17%), Columbus (14%), Orlando (14%), Atlanta (13%), Tampa (13%), and Miami (10%). Of these, only Providence and Boston are surprises since both have serious housing affordability problems.

The folks at Cato argue that the HUD's preferred approach of promoting high-density housing actually makes the problem worse.  This should not be surprising, since Federal policy driven by New Deal Democrats is responsible for most of the worst segregation issues in major cities.

Immigrants and Crime

Virtually every study done points to the fact the immigrants, even illegal immigrants, are less prone to crime than American citizens.  That is why immigration opponents must rely on repetition of lurid single examples to try to make their case, a bit like global warming advocates point to individual heat waves as a substitute for having any warming show up in the recent global temperature metrics.

From the Foundation for Economic Education

With few exceptions, immigrants are less crime prone than natives or have no effect on crime rates. As described below, the research is fairly one-sided.

There are two broad types of studies that investigate immigrant criminality. The first type uses Census and American Community Survey (ACS) data from the institutionalized population and broadly concludes that immigrants are less crime prone than the native-born population. It is important to note that immigrants convicted of crimes serve their sentences before being deported with few exceptions.

However, there are some potential problems with Census-based studies that could lead to inaccurate results. That’s where the second type of study comes in. The second type is a macro level analysis to judge the impact of immigration on crime rates, generally finding that increased immigration does not increase crime and sometimes even causes crime rates to fall.

Butcher and Piehl examine the incarceration rates for men aged 18-40 in the 1980, 1990, and 2000 Censuses. In each year, immigrants are less likely to be incarcerated than natives with the gap widening each decade. By 2000, immigrants have incarceration rates that are one-fifth those of the native-born

There is a lot more at the link.

Ultimate Proof Green Energy is About Cronyism, Not the Environment

Government green energy programs are supposedly about subsidizing new energy technologies to reduce their cost and increase their adoption rate.  But it appears to me that they are in fact merely about subsidizing favored companies.

Why?  Well consider this:

Over the last couple of years, trade remedy actions on clean energy products have intensified. In the wind industry, the Wind Tower Trade Coalition, an association of U.S. producers of wind towers, brought an AD/CVD complaint against imported wind towers in 2011. The U.S. Commerce Department started an investigation, and announced a preliminary decision in December 2012.

This decision found both subsidization and dumping in relation to Chinese imports and imposed an antidumping tariff of between 44.99% and 70.63%, as well as countervailing duties of 21.86%–34.81%. The Commerce Department also established a separate antidumping duty of 51.40%–58.49% on Vietnamese wind tower manufacturers.

In the solar industry, in October 2011, the Coalition for American Solar Manufacturing, a group of seven U.S. solar panel manufacturers led by Solar World Industries America, accused Chinese solar panel companies of dumping products in the United States. The Commerce Department opened an investigation in 2011 and announced the final ruling in 2012. The decision was to impose antidumping tariffs ranging from 24% to 36% on Chinese producers.

All of those actions are not only not consistent with reducing the cost of new energy technologies, they actually raise the cost of wind and solar.  The only benefit of these actions is to improve the bottom line of crony-connected green energy companies.  There is no reason to believe that this cronyism is not the real rational behind the whole program.   If government subsidizes consumer solar purchases 30% and then raises solar panel costs by 30%, they are not making the technology cheaper for consumers, but just finding an excuse to pour tax money into the pockets of a few folks like Elon Musk.

So How Can Anyone Be Opposed to Non-Discrimination Laws

First, let me establish a few background facts.  Several years ago I headed an attempt to put a Constitutional amendment legalizing gay marriage on the ballot here in Arizona.  As far back as 2004 I had a gay couple running a campground, and faced a customer petition demanding we remove them because they promoted moral degeneracy by being gay (it's for the children!).  I told those customers to camp somewhere else, as we were not changing our staffing.  Since then I have probably hired more gay couples to run campgrounds than anyone else in the business.

So how could I possibly be opposed to this:

After a period of foreshadowing and rumor, the Equal Employment Opportunity Commission has now gone ahead and ruled that employment discrimination on the basis of sexual orientation is forbidden under existing federal civil rights law, specifically the current ban on sex discrimination. Congress may have declined to pass the long-pending Employment Non-Discrimination Act (ENDA), but no matter; the commission can reach the same result on its own just by reinterpreting current law.

There are multiple problems with non-discrimination law as currently implemented and enforced in the US.  Larger companies, for example, struggle with disparate impact lawsuits from the EEOC, where statistical metrics that may have nothing to do with past discrimination are never-the-less used to justify discrimination penalties.

Smaller companies like mine tend to have a different problem.  It is an unfortunate fact of life that the employees who do the worst job and/or break the rules the most frequently tend to be the same ones with the least self-awareness.  As a result, no one wants to believe their termination is "fair", no matter how well documented or justified (I wrote yesterday that I have personally struggled with the same thing in my past employment).

Most folks grumble and walk away.  But what if one is in a "protected group" under discrimination law?  Now, not only is this person personally convinced that their firing was unfair, but there is a whole body of law geared to the assumption that their group may be treated unfairly.  There are also many lawyers and activists who will tell them that they were almost certainly treated unfairly.

So a fair percentage of people in protected groups whom we fire for cause will file complaints with the government or outright sue us for discrimination.  I will begin by saying that we have never lost a single one of these cases.   In one or two we paid someone a nominal amount just to save legal costs of pursuing the case to the bitter end, but none of these cases were even close.

This easy ability to sue, enabled by our current implementation of discrimination law, imposes a couple of costs on us.  First, each of these suits cost us about $20,000 to win (insurance companies are smart, they know exactly how this game works, and will not sell one an employment practices defense policy without at least a $25,000 deductible, particularly in California).  It takes a lot of effort for the government, even if neutral and not biased against employers as they are in California, to determine if the employee who was fired happened to be Eskimo or if the employee was fired because he was an Eskimo.  Unfortunately, the costs of this discovery are not symmetric.  It costs employees and their attorneys virtually nothing to take a shot at us with such discrimination cases, but costs us$20,000 each to defend and win (talk about Pyrrhic victories).  Which is why we sometimes will hand someone a few bucks even if their claim is absurd, just to avoid what turns out to be essentially legal blackmail.

Second, the threat of such suits and legal costs sometimes changes our behavior in ways that might be detrimental to our customers.  A natural response to this kind of threat is to be double careful in documenting issues with employees in protected groups, meaning their termination for cause is often delayed.  In a service business, almost anyone fired for cause has demonstrated characteristics that seriously hinder customer service, so drawing out the termination process also extends the negative impact on customers.

To make all this worse, many employees have discovered a legal dodge to enhance their post-employment lawsuits (I know that several advocacy groups in California recommend this tactic).  If the employee suspects he or she is about to be fired, they will, before getting fired, claim all sorts of past discrimination.  Now, when terminated, they can claim they where a whistle blower that that their termination was not for cause but really was retaliation against them for being a whistle-blower.

I remember one employee in California taking just this tactic, claiming discrimination just ahead of his termination, though he never presented any evidence beyond the vague claim.  We wasted weeks with an outside investigator checking into his claims, all while customer complaints about the employee continued to come in.  Eventually, we found nothing and fired him.  And got sued.  The case was so weak it was eventually dropped but it cost us -- you guessed it -- about $20,000 to defend.  Given that this was more than the entire amount this operation had made over five years, it was the straw that broke the camel's back and led to us walking about from that particular operation and over half of our other California business.

My One and Only Thought on Harper Lee's "Go Set a Watchman"

I have not read the book "Go Set a Watchman" nor will I likely.  But it seems like a lot of folks are disappointed that the characters and themes in this book are different from Lee's later "To Kill a Mockingbird."  Which causes me to ask a question that surprisingly has not been asked in anything I have read, which is:  "Maybe Harper Lee didn't publish the novel for a reason."  I mean, Lee had decades in which to do so and apparently chose not to.  Should we really be surprised that a novel does not represent a writer in the way we expected when the writer themselves chose not to sanction the work by trying to publish it?

Which reminds me of this unrelated bit in a discussion of a recently re-published early work by Ayn Rand

This spectacular claim—that Ayn Rand’s impassioned idealism is a species of murderous fanaticism—comes a bit out of the blue, but Heller hangs it on a rather selective discussion of notes Ayn Rand made in her journals in 1928 about a murderer named William Hickman. Hickman’s defiance after his capture, and the reaction against him—a reaction she saw as being less about the evil of his crime than about his refusal to conform to social convention—caught her attention and caused her to work on a fictionalized version called The Little Street, a project she worked on for a while and then dropped.

Hickman has been long forgotten everywhere else, but he will live forever in the minds of Ayn Rand’s detractors, because they can now cite her notes on his case as proof that she was an admirer of serial killers and probably a psychopath herself, which means that they can now safely ignore every argument she ever made. Isn’t that convenient?

In fact, this is only proof that writers should burn their notes before they die, because inevitably some idiot is going to come along and use your half-though-out ramblings as proof of what you really believed, in contradiction to the thousands of pages of meticulously edited work that you actually published.

Update:  This is a really good article sent to me by a reader about the editorial process that led from "Go Set a Watchman" to "To Kill a Mockingbird" which essentially calls them draft 1.0 and draft 2.0 of the same, yet very different, novel.

Since Watchman was written before Mockingbird (even though the time period in the book is later), Harper Lee did not “change” Atticus. The characterization in Watchmanwas the original. It was her first shot. It was Atticus 1.0.

The real story, if you ask me, is that Harper Lee rethought, reconceived, and reconfigured the Atticus of Watchman into the icon of honorableness that he became in To Kill A Mockingbird.

Think of that for a minute from a writer’s point of view. How hard is that to do? I can think of few things that are harder, not just from a practical point of view (the work, the recasting, the reimagining) but from a psychological perspective. How do you manage your emotions? How do you submerge your ego? How do you let go of expectations?

Somehow Harper Lee, God bless her, was able to do all that.

She set aside the manuscript of Watchman (the product of more than two years’ labor) when her editor Tay Hohoff declared it not ready for prime time—and went back to the drawing board.

I would give a lot of money to see Ms. Hohoff’s notes, or the correspondence between her and Ms. Lee, or to listen to a tape of their conversations over the two-plus years it took Ms. Lee to revamp the original story and turn it into To Kill A Mockingbird.

This much we know. Ms. Hohoff advised Ms. Lee to re-set the world of Watchman twenty years earlier. Take the character of Scout from a grown woman and wind her back to a little girl. Tell us the story, not through the eyes of a bitterly disillusioned daughter who had left Maycomb, Alabama and moved to New York City, but from the perspective of an innocent but whip-smart six- to nine-year-old tomboy, still at home, still in awe of her father.

Imagine doing that yourself. Could you? I’m not sure I could.

At the risk of summarizing a manuscript I have not read, it sounds like she shifted the book from a dreary story of what the South was, to a more optimistic story of what it was but also what it could be.

Name The Human Decision-Making Process Which Claims a Low 0.25% Error Rate

Give up?  It's Chicago Police shooting people.  Despite the fact that the decisions must be made by folks who likely have no past experience or practice in making such decisions, Chicago claims its police officers have one of the lowest error rates of any known human decision-making process

Chicago's Independent Police Review Authority (IPRA) has conducted investigations of close to 400 police shootings of citizens and has found just one to have been unjustified.

Of course, it could be that the process is far more error-prone, but that the people tasked with declaring any shooting in error are the exact same people who have an interest in never admitting an error.  Also, it could be because anyone who does label a shooting as an error gets fired:

That little factoid comes from Chicago public radio station WBEZ as some background context for the news that Lorenzo Davis, a supervising investigator for IPRA, had been fired earlier in July.

Davis isn't going out quietly. WBEZ interviewedthe man, a former Chicago police officer himself who retired in 2004. Davis is saying that the reason why he was fired is because he insisted that several recent police shootings were unjustified and would not comply with orders to change his findings. Performance evaluations indicated everybody thought Davis' work was just great until recently.

Capitalism Finally Dismantling Indian Feudalism

This is a great story:

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study,  in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste—dalits—like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

Must Make for Interesting Family Dinners: If Anything, Ellen Pao's Husband is In The Middle of An Even Bigger Mess

Ellen Pao has had some career problems of late, but as I wrote yesterday, if she takes some responsibility for her own mis-steps and stops blaming it all on misogyny, she might learn something useful and build positive things on the experience.

A very loyal reader gives me a heads up that her husband, who is never mentioned in recent stories, actually faces a LOT more serious trouble (it is probably journalistically appropriate to leave her husband out of the recent stories, but one wonders if the New York Times would show the same scruples on a story about the CEO of Exxon if, say, his wife were independently in the midst of some sort of scandal).

Ellen Pao's husband is Buddy Fletcher, former Wall Street Wunderkind and now subject of a LOT of regulator scrutiny and pension fund lawsuits.  Here is one:

The firefighters’ system eventually said yes, and along with two other pension funds — the Municipal Employees’ Retirement System and the New Orleans Firefighters’ Pension and Relief Fund — invested a combined $100 million in one of Mr. Fletcher’s funds, FIA Leveraged. As they understood it, the fund would invest in liquid securities that could be sold in a matter of weeks.

The details sounded, as one board member put it, “too good to be true.”

In fact, they were.

Mr. Fletcher’s hedge fund has since been described by a court-appointed bankruptcy trustee as having elements of a Ponzi scheme, and four retirement systems are fighting to recover their money. A federal judge is scheduled to rule in March on a plan to liquidate the fund’s assets, which the trustee deemed “virtually worthless” in a report last November.

And another:

New York investment manager Alphonse “Buddy” Fletcher Jr. is being sued by the MBTA Retirement Fund and some of his own hedge funds on accusations that he defrauded them of more than $50 million.

The lawsuit, filed Monday in New York, accuses Fletcher and his firm, Fletcher Asset Management , and other parties of conducting a “long-running fraud” in which they misused money for their own benefit, inappropriately took inflated management fees, and overstated the value of assets.

As previously reported, the MBTA pension fund invested $25 million with Fletcher in 2007 on the advice of the fund’s former executive director, Karl White.

White pitched the investment to the pension fund just nine months after he had resigned to work for Fletcher.

The pension fund’s holding is now worthless, and the bankruptcy trustee investigating the case has alleged that Fletcher never invested the money as promised.

And here is an older, in-depth look at Fletcher.

It is starting to look like most of the money went to his family (e.g. $8 to his brother to fund a film), to buffing his image (e.g. $4+ million donation to Harvard), and to an incredibly opulent lifestyle (e.g. 4!! apartments in the Dakota).

Despite the fact that he seems to have grossly overstated income and assets of his funds, no one -- regulators, clients, auditors -- figured it out.  The most interesting part to me was the first group to detect the potential fraud was, of all groups, the governing board of the Dakota.  This group, full of successful Wall Streeters, looked at his financial statements and turned down his application to buy yet another apartment, coming to the conclusion he not only did not have the funds to buy this apartment but they were unsure how he was paying the vig on the $20 million loan securitized by his existing apartments.

One thing Fletcher apparently has in common with his wife is that he seems to respond to every negative business decision with a discrimination lawsuit.  This one backfired, however, and only served to point public attention to the fact that a group of savvy financiers thought Fletcher's wealth was potentially imaginary.  Government investigations and lawsuits have followed.

He still has a chance to escape, though.  Despite Jon Corzine's outright theft of funds from MF Global commodity investor accounts, he got off scott-free due to his close ties to the Democratic Party.  Time for Fletcher to start giving any free assets he still holds (if there are any) to Hillary's campaign.