Monday, February 27, 2006

Drop Dead WP

I have changed a few words from this Washington Post editorial.
SOME VIRGINIA lawmakers are so callous to the carnage in the state that they would rather forgo millions of dollars in federal aid than enact a meaningful anti-terrorism law.

That was the message earlier this month when a subcommittee of the House of Delegates rejected legislation that would have allowed police to stop and search a vehicle driven by someone presumed to be middle eastern. Apparently, the panel cared nothing for the estimated annual 71 deaths that would have been prevented by the bill's enactment, or the 1,075 serious injuries, or the $236 million in medical, legal, insurance and other costs caused by terrorists -- those figures come from AAA Mid-Atlantic. But the lawmakers also lost out on a $16.4 million federal grant that hinged on the anti-terrorism bill's passage. Even if members of the subcommittee were cold to the idea of saving lives and avoiding injury, you'd think they'd be moved by the offer of free money from Uncle Sam, especially in a year when the General Assembly is struggling to find money to fix the state's security. But no.

In fact, the House has a proven track record of indifference to public safety on the roads. In the name of safeguarding individual "privacy," delegates last year killed the state's decade-long program of racial profiling, which provided for stricter monitoring and enforcement at high-risk intersections where drivers were in the habit of being a minority. Six Northern Virginia jurisdictions plus Virginia Beach took part in the voluntary program, which was heartily endorsed by the local police, AAA, the insurance industry and accident victims' groups. But lawmakers killed it off with bogus arguments about the cameras' representing intrusive government.

At the moment, state Sen. Kenneth W. Stolle (R-Virginia Beach) is maneuvering to resurrect the racial profiling program by attaching it to major legislation for funding transportation improvements. Some in the House will no doubt resist the attempt as an affront to drivers' right to be left alone by government -- left alone to commit terrorism, we presume. With luck and deft handling, though, Mr. Stolle's scheme has a shot. It would prevent death and injury. And despite their record to the contrary, maybe some Virginia delegates might come to see that as a worthy goal.

I have no doubt that most people would find that to be a rather offensive editorial. Where you read words about middle easterners being pulled over for suspicion of terrorism it probably struck a nerve that that's not right. In reality the editorial was about a law that would make not wearing your seat belt an offense that police can pull you over for. Where you read about racial profiling, the Post was writing about red light cameras.

Racial profiling and red light cameras are very clearly not the same thing and are barely comparable. I'm just pointing out that most people would find it offensive if police were pulling over people because they thought they might hurt others because of the color of their skin. But it's alright for police to pull you over for increasing your risk of injury or death by a marginal amount and ticket you for taking an action (running a just turned red light) that results in no harm (or else there would be an accident, which the offending driver would be ticketed).

This was a rather clunky way of pointing out that we give up our civil liberties rather easily without really thinking about it. Seat belt laws and red light cameras and for that matter breathalyzer tests (guilty until proven innocent) are just an indication of this. The WP should be ashamed of this stance.

The Number

I finished reading "The Number : A Completely Different Way to Think About the Rest of Your Life" by Lee Eisenberg. I've got to say I was mildly disappointed with the book. It was an interesting read, but the book jacket and title led me to believe it would be a bit of life altering book. It wasn't, it didn't change my way of thinking about retirement at all. Of course, I'm a bit of a different case, having an undergraduate finance degree from Wichita State (not just a basketball factory) and working in the financial services industry. I've done a fairly good job at building a Number and absolutely love shopping for a great stock.

"The Number" promised a new way to think about retirement. From the book jacket I thought that meant not really focusing on the number per se, but what you wanted to do with it. You know, focus on what's important, as Curly would say "One thing. Once you find that you're golden."(I'm paraphrasing. how could IMDB not have that quote>) Anyway, there wasn't much of a new way of thinking. Also, Eisenberg was focusing a lot of time on people with numbers north of $10m. That's a big number, not necessarily my demographic.

Another misconception from the book jacket; it said the book was for anyone over 30. I'm 32, this book was not geared toward me. This is more a book for a 45 year old who has not worked on his Number at all. The only way this book would be for someone in the 30 - 40 range would be to scare the hell out of them and get them started on their number. Just think how much money you need if you retire at 65. First, chances are good that you will live to at least 80 (Eisenberg had the statistics), that's at least 15 years you must pay for out of your earnings now. Then there's a chance you could live to 100. That's 35 years without wages, only investment income and whatever Social Security the government can afford then. One thing that I hadn't thought too much about was a strategy for withdrawing my investment funds over the course of my retirement. Eisenberg does a good job explaining the risks and opportunities involved with drawing down your number.

Still, "The Number" was an interesting read, not life changing, but interesting. I do think it's worthwhile for someone maybe hitting their 40th birthday. Retirement is serious stuff, you need to plan for it. If you wait too long, you're going to be disappointed in your ability to pay for things and you may have to start robbing banks.

Next up is "Small Giants: Companies That Choose to Be Great Instead of Big" by Bo Burlingham. This book explores 14 companies that forewent (if that's not a word, it should be) big riches in order to focus on their own definition of quality. The axiom 'grow or die' does not work for these 14 companies, one of which is the Anchor Steam microbrewery, which was the leader of the microbrew revolution. I think this book is going to be the beginning of a trilogy of anti-big business books. Stay tuned.

Sunday, February 26, 2006

Shocker Champs


Wichita State has won their first Missouri Valley Conference men's basketball regular season title since 1983. I wonder if we'll talk about the Miller, Brauer, Couisinard years the same way we talk of the Antoine Carr, Xavier McDaniel and Aubrey Sherrod years. To win the sixth best basketball conference by 2 games is quite a feat and definitely worth celebrating. But the real celebration won't be until we make it into the Sweet Sixteen.

Saturday, February 25, 2006

New Deal Strikes Again

The Chicago Tribune has an interesting editorial today detailing the dairy fight of Sarah Farms and Dairy Farms of America.
At most dairy farms in this country, raw milk is shipped to manufacturers to be processed into bottled milk, ice cream, cheese and other dairy products. Hettinga does it differently. He skips the middlemen. He milks the cows, bottles the milk, makes the plastic bottles and even trucks the product to groceries.

As reported by the Tribune's Andrew Martin, Hettinga has kept prices low by controlling all stages of production. The Sam's Club in Yuma, Ariz., sells two gallons of Hettinga's whole milk for $3.99. That's about what many retailers in the Chicago area charge for a single gallon.

So the bottles must be flying off the shelves as Hettinga's operation basks in accolades from agriculture officials as a shining example of ingenuity, right? That's only half right.

At the prodding of Hettinga's competitors, the U.S. Department of Agriculture has proposed new rules that would penalize Sarah Farms for being efficient. In essence, Hettinga and other large top-to-bottom milk producers would be required to share savings from their operations with their competitors instead of passing them on to customers through lower prices. Hettinga estimates it would cost him $3.5 million a year.

All of this is an outgrowth of an antiquated regulatory system for dairy products known as the federal milk market order. Set up during the Great Depression, it was designed to ensure reliable milk supplies by keeping milk prices high enough so dairy farmers could stay in business. Processors buy raw milk at a minimum price set by the USDA, and dairy farmers in given regions of the country get the same price for their products regardless of whether it is bottled, spun into butter or turned into Rocky Road.

The regulations included an exemption for farmers who bottled their own milk. Hettinga's critics, among them processing giant Dean Foods, say the loophole wasn't designed for big operations like Hettinga's. It was designed for Ma and Pa Kettle who sold a little milk to the neighbors. A lawyer for Dairy Farmers of America, the nation's largest dairy cooperative, complains Hettinga is exploiting the loophole, depressing prices for competitors and courting chaos in the nation's milk markets.

As the editorial goes on to say, this is an example of the big competitors running to the government to protect them from an upstart that threatens their cushy little operations. This case is not unlike the big grocery companies employing state legislatures to pass the Wal-Mart bill. Let the market decide which competitors come out on top, not the government.

Friday, February 24, 2006

Team Manager Catches Fire

I saw this story last night on the CBS Evening News. Video is on the the right. It's a nice story about an autistic kid named Jason McElwain who really loved being a manager on the high school basketball team. Then his coach let him suit up for a game and put him in. Not only did he not embarass himself, he made 6 3-pointers, although his foot was clearly on the line on one of them. The best part of the story was how genuinely excited the student section and fellow teammates were as Jason was draining 3's.

Resuscitate or Not?

I asked a couple of days ago

At what point will CA start to deny benefits and procedures to keep the tab down?

Tim Worstall finds that the NHS is not really that into resuscitating the elderly.
It is not always in the best interests of the elderly, the frail and the severely disabled to be resuscitated, experts said yesterday, in a challenge to present NHS guidelines.
...
...it may be that institutions should not offer resuscitation at all, they suggest. Resources saved could be better used in improving the quality of care.

Shouldn't the patients and patient's family be given the choice rather than the bureaucrats in, at least this case, London? This is the kind of system that the left is actively agitating for, it's their big idea. Worstall asks this question:
Don’t revive people because it’s cheaper? I thought this was the point of our NHS (The Wonder of the World that it is), that financial considerations in what treatment people received were no longer relevant?

Indeed. The government is not immune to financial considerations. In fact, they're worse at managing their finances than private industry. So we can look forward to massive financial problems, lower standard of care and less choice as to when to be resuscitated. Great system.

Thursday, February 23, 2006

No Ideas Left

Jane Galt asks the great question Is the left out of ideas?. As a regular reader of Drum and Yglesias, I know this question really angers them. But, to someone not too enamored with the Bush style conservatives, the Democrats are still not an attractive option.
The left used to have a Big Idea: The free market doesn't work, so the government will fix it. The social democrats disagreed with the Socialists and the Scoop Jackson democrats about how much fixing was necessary, but they all agreed on a basic premise, and could sell that simple message to the public. Then, after fifty years or so, people noticed that the government didn't seem to work any better than the free market . . . worse, actually, in a lot of cases . . . and it was awfully expensive and surly. Conservatives stepped in with their Big Idea: the government screws things up, so let's leave more stuff up to individuals, which, if nothing else, will be a lot cheaper. Obviously, liberals disagree with this . . . but they have not come up with a Big, Easily Sellable, Idea With Obvious Policy Prescriptions to replace it. Some of them have just kept repeating the old Big Idea, which it seems to me that fewer and fewer people believe, as the US continues to pull ahead of its economic peers. Others have focused on coming up with lots of little ideas . . . but those take up too much time and energy to attract voters. Gore tried to whang up anger against pharmaceutical companies, and Kerry tried to stoke anger against Bush, as replacement. But in politics, there's just no replacement for the Big Idea.

I think we're misserved by the American thinking that the political spectrum is a line - left and right with one party for each side. When in reality the political spectrum is more of a square with with an X-axis of social liberty and y-axis of economic liberty and there should be a party that represents each of the quadrants. Much of Europe has a party for each quadrant and they have to work together to form coalitions. As Penn Jillette has said "two parties is just one more than an authoritarian government". With a Democratic party that doesn't win elections and doesn't have any sellable ideas, we're not that much different than an authoritarian government now.

Wednesday, February 22, 2006

War on Drugs

It has been clear to me for quite some time the drug war is an excuse for politicians to say they're tough on drugs or tough on crime. It's also been clear that the drug war doesn't work and is a waste of resources at best and ruining our country at worst. From George Melloan's Global View column in the WSJ ($$)
The drug war has become costly, with some $50 billion in direct outlays by all levels of government, and much higher indirect costs, such as the expanded prison system to house half a million drug-law offenders and the burdens on the court system. Civil rights sometimes are infringed. One sharply rising expense is for efforts to interdict illegal drug shipments into the U.S., which is budgeted at $1.4 billion this fiscal year, up 41% from two years ago.
...
In 1933, the U.S. finally gave up on the 13-year prohibition of alcohol -- a drug that is by some measures more intoxicating and dangerous to health than marijuana. That effort to alter human behavior left a legacy of corruption, criminality, and deaths and blindness from the drinking of bad booze. America's use of alcohol went up after repeal but no serious person today suggests a repeat of the alcohol experiment. Yet prohibition is still being attempted, at great expense, for the small portion of the population -- perhaps little more than 5% -- who habitually use proscribed drugs.
...
Education can be an antidote for self-abuse. When it was finally proved that cigarettes were a health risk, smoking by young people dropped off and many started lecturing their parents about that bad habit. LSD came and then went after its dangers became evident. Heroin's addictive and debilitative powers are well-known enough to limit its use to a small population. Private educational programs about the risks of drug abuse have spread throughout the country with good effect.

Some doctors argue that the use of some drugs is too limited. Marijuana can help control nausea after chemotherapy, relieve multiple-sclerosis pain and help patients whose appetites have been lowered to a danger level by AIDS. Morphine, some say, is used too sparingly for easing the terrible pain of terminally ill cancer patients. It is argued that pot and cocaine use by inner-city youths is a self-prescribed medicine for the depression and despair that haunts their existence. Doctors prescribe Prozac for the same problems of the middle class.

So what's the alternative? An army of government employees now makes a living from the drug laws and has a rather conflictive interest in claiming both that the drug laws are working and that more money is needed. The challenge is issued: Do you favor legalization? In fact, most drugs are legal, including alcohol, tobacco and coffee and the great array of modern, life-saving drugs administered by doctors. To be precise, the question should be do you favor legalization or decriminalization of the sale and use of marijuana, cocaine, heroin and methamphetamines?

A large percentage of Americans will probably say no, mainly because they are law-abiding people who maintain high moral and ethical standards and don't want to surrender to a small minority that flouts the laws, whether in the ghettos of Washington D.C. or Beverly Hills salons. The concern about damaging society's fabric is legitimate. But another question needs to be asked: Is that fabric being damaged now?

In my view, everyone has a right to do unto themselves whatever they want as long as they don't affect others. That includes treating their bodies like a wasteland. Sure, some people are going to waste their lives away in a marijuana haze. Who cares? It's not the state's responsibility to protect me from my bad decisions. Not only that is harmful to the rest of society for the state to protect me from my bad decisions.

One more part of this column caught my eye.
Economist Milton Friedman predicted in Newsweek nearly 34 years ago that Richard Nixon's ambitious "global war against drugs" would be a failure. Much evidence today suggests that he was right. But the war rages on with little mainstream challenge of its basic weapon, prohibition.

Why don't more people take Milton Friedman's writings seriously? He's probably one of the top 10 thinkers in the last 50 years.

Unfunded Retirement Plans

Another incidence of unfunded retirement benefits by a state employer. This time it's California, again, and unfunded health benefits.
The study concluded that "state government liabilities are likely in the range of $40 billion to $70 billion - and perhaps more" over the next 30 years, And that's not all. The liabilities the University of California, local governments and school districts combined "could exceed those of the state itself."

Put another way, the combined liability for state, local, UC and school-district retiree health care could hit more than $140 billion over the next 30 years.
...
The study's outcome is a "rough guess" of an obligation of $6 billion a year from the general fund - just for the state-government obligation, not including the tab for UC and school district retirees.

This would include $2 billion a year to pay for the future costs of current employees (about $1 billion of which currently is paid from the state general fund, leaving $1 billion unfunded). And "around $4 billion more in yearly payments to retire the unfunded retiree health liability over 30 years."

So the state obligation still is short by $5 billion a year. If not paid now, that debt will keep accruing. That amount nearly doubles the general-fund structural deficit of $6 billion a year.

At what point will CA start to deny benefits and procedures to keep the tab down? I don't think that point will be too long in the future, first they'll get the old people without any family and then they'll deny the really old people extraordinary treatment. This will all be done for the benefit of the California taxpayer and few will complain, just those affected. Tell me why it would be a good idea to have the federal government in charge of health care.

Monday, February 20, 2006

Global Warming

60 Minutes had a story on last night about global warming. Scott Pelley basically treated global warming as a fact and that humans are increasing the temperature through the burning of fossil fuels. All of that is typical of what you would expect.
It's activity like burning fossil fuels, releasing carbon dioxide and other greenhouse gases. The U.S. is by far the largest polluter. Corell says there's so much greenhouse gas in the air already that more temperature rise is inevitable.

Even if we stopped using every car, truck, and power plant — stopping all greenhouse gas emissions — Mayewski says the planet would continue to warm anyway. "Would continue to warm for another, about another degree," he says.

This is a refrain we often hear also; we can't really do anything about it. But, Pelley pushes the issue by saying this:
One big supporter of climate science research is the Bush administration, spending $5 billion a year. But Mr. Bush refuses to sign a treaty forcing cuts in greenhouse gases.

The treaty he's talking about is the Kyoto treaty and it didn't pass in the Senate, under Clinton, and Clinton didn't want to sign it either. It hasn't been reproposed in the Senate because no one wants it and everyone acknoweldges that it doesn't do any good anyway.
Brad DeLong comments today
First, climatologists' model-based central projections of the effects of global warming over the next century are just that: model-based central projections. There is enormous uncertainty about what will happen. It might be the case (although most scientists would bet heavily against it) that our pumping CO2 into the atmosphere will have little effect on climate--that the CO2 will be quickly absorbed into the oceans and terrestrial biosphere (making gardening much easier), and that any residual warming will be largely balanced out by the cooling effects of industrial soot. It is likely to be the case that the central projection of a 4 to 5 degree Fahrenheit warming over the next century will be roughly accurate. It might be the case that something horrible might happen--bubbles of methane trapped beneath the sea floor being liberated to greatly increase the greenhouse effect, global warming disrupting the Gulf Stream and causing a local cooling in Europe that would give Rome the climate of Oslo and produce 400 million Europeans anxious to move someplace else. The central projection of the effects of global warming over the next century looks bearable, but the extreme possibilities may well not be. Any approach to dealing with global warming that does not create the capability for massive and swift action should things be worse than currently expected is fatally flawed.

Second, those who will suffer from global warming are largely in the global south. If global warming does (say) increase the magnitude of major typhoons and does raise the sea level a bit, by the latter part of this century more than 100 million people in the Ganges delta will be at risk of drowning if a high tide accompanies the storm surge of a major typhoon in the Bay of Bengal. The managers and shareholders of companies like Halliburton that will gain from inaction on global warming are a different and distinct group from the tropical peasants who stand to lose their health and their lives. Any claim that "instead of Kyoto we should be doing X" has to be accompanied by a plan to actually do X. Otherwise, the claim that inaction on global warming enhances world welfare is likely to be very false indeed, as it is hard to believe that on the scale of human happiness higher incomes in the global north will outweigh nastier, more brutish, and shorter lives in the global south. It is one thing to say that the resources the Kyoto Protocol wants to use to fight global warming could be used to provide first-class public health and economic infrastructure to the global south. It is another to say that these resources, instead, will be used to get every American household a second DVD player and every tenth American household a power boat.

DeLong is hardly a conservative, but he doesn't believe that the only solution is to stop burning fossil fuels and he does believe that the models are fallible.

I made a similar point, that a lot of things can happen over the next 100 years and we can do a lot of more effective things than cutting fossil fuel emissions here and criticism of the Kyoto treaty here.

North Texas Pirates

Note to anyone planning on driving through Wichita county in North Texas. Don't! There's pirates in them parts and they're carrying badges. If you're driving a Lexus, they're going to stop you and search you until they find something that will allow them to seize your car. They need the money, standard rules no longer apply. Beware!

George Washington

On President's day it's important to remember our greatest President, George Washington. Washington knew that the Presidency gave him tremendous power, but he chose to not use that executive power and let the nation develop its own markets and institutions. That standard stood for 145 years and has been on the decline since. The New Hampshire Union Leader has some George Washington quotes, this one is my favorite.
"It is important, likewise, that the habits of thinking in a free country should inspire caution in those entrusted with its administration, to confine themselves within their respective constitutional spheres; avoiding in the exercise of the powers of one department to encroach upon another."

The first President really did understand the beauty of separation of powers. It's too bad that the separation is withering away.

Also, George Washington understood what immigration could and does mean to this country.
"The bosom of America is open to receive not only the opulent and respectable stranger, but the oppressed and persecuted of all nations and religions; whom we shall wellcome to a participation of all our rights and previleges, if by decency and propriety of conduct they appear to merit the enjoyment."

Unfortunately for us, we have allowed the government to install systemic barriers to entry for just the type of immigrant that Washington sought. Because of minimum wage laws, welfare and Social Security, the government has some interest in not allowing some people to get these benefits. That interest shows up as walls and checkpoints trying to keep immigrants out even though there is lots of work for immigrants, unfortunately that work must be done for lower than the minimum wage.

What I think is most sad, not only would George Washington not get elected in this day and age, he would be laughed out of the building for saying these things.

Sunday, February 19, 2006

Meth Law

Add two more states to the rolls of states trying to curb meth use by making legitimate users of cold medicine sign a log book before buying. Arizona and New Hampshire both have bills in their state legislature that will follow the failed lead of the Oklahoma law that has been copied in many states. As I've written before these laws do nothing to curb meth use, in fact they exacerbate the problem.
Steve Suo, a reporter for The Oregonian newspaper, found that across America the indicators of meth use and addiction rise or fall based on the purity of the drug, regardless of state laws. Other research has found that laws such as the one the House passed yesterday can increase meth addiction. When the supply from local meth labs dries up, gangs move in to replace it. They sell a purer form of meth that is more addictive.

These state laws are only causing the meth problem to be worse and negatively impact innocent people by making cold medicine harder to get and harder to find.

Thursday, February 16, 2006

Brooks Was Here

One of my favorite baseball players and ex-Cubs has retired. Brooks Kieshnick caught my eye when he was playing for the Texas Longhorns. He was a real good college pitcher and a great college hitter. Then he was drafted by the Cubs and was a hot prospect for them for several years as an outfielder. Brooks never really panned out and really only found major league success when he decided to pitch also, making him a rare two way player, though he wasn't particularly very good at either position, he had some pop in his bat and could get a needed out on the mound. I'm sad to see him go.

Shock Wave


Matt Brauer's shot heard round Wichita on Tuesday night has brought out the Shocker pride in Wichita. The Shocks are on top of the Valley, the best non-BCS men's basketball conference, as Mitch Holthus, voice of the Valley, would say. If you want a shirt that says Bluejay: Tastes like chicken, you can now buy it in Wichita. It's a good time to be a Shocker!

Wednesday, February 15, 2006

Stossel Fights the Teacher Union

John Stossel gets more mileage from one of his 20/20 specials than any other journalist. He's still writing columns using the same transcript as his special "Stupid in America". This column is taking on the New York Teacher's Union.
Bosses, have I got an idea for you: Don't pay your best employees more, don't ease out your least productive workers, and for crying out loud, never fire anyone, not even for the most blatant misconduct on the job.

Don't pay your best employees more, that should be the mantra everyone should use against unions of all stripes. If you don't reward excellence, excellence will be rare and mediocrity the norm. Let's not focus on the sub-par, let's focus on the excellent. What motivates someone to be excellent? Certainly some of excellence comes from within the individual, but if the organization does not reward the individual for excellence, the person may not decide to excel. What's worse, in a system that doesn't reward excellence, the mediocre may shun someone who chooses to do more. So if you want to do a great job and be an overachiever, it will win you enemies and no greater reward than your own personal satisfaction. Unions foster this sort of environment.
The restrictions on firing teachers are defended as a means of protecting teachers from favoritism. But if schools and principals had to compete, good teachers would be protected by competition itself: If a principal's job depends on having good people working for him, he won't sacrifice it to give a favored incompetent a job he can't do.

Here's the point; a union is not necessary when competing schools are in the market for the best teaching talent, the price for teachers goes up. The market is not the enemy for teachers, it's their friend. Unfortunately, unions don't see it this way. The unions want the power to negotiate prices in the hands of the few and not in the hands of the many.

How has the union responded to Stossel's transgression of criticizing them? Poorly at best:
"Stossel needs a lesson: Video tapes of the John Stossel segment on 20/20 that bashed high school teachers and trashed the Unions (singling out the UFT) were distributed at our last Chapter Leader meeting ... It is infuriating ...The UFT needs your support on this. Hold a chapter meeting, show the video, get the signatures ... We will be delivering them at the rally in front of the ABC-TV studios on March 8. Show some pride in our efforts and fight back against the disrespect shown to us on national television. We work too hard and do too much good to let them paint us as the source of all problems and evil in the schools. Please stand up for us."

As always, Miss Dennis has valid criticisms of Stossel and also of the teacher's union. Criticizing the union should not necessarily be seen as criticizing teachers in general, it's not the same thing.

Enron Trial

Holman Jenkins from the WSJ editorial page lays out some of the same reasons I think Lay will be found innocent in the Enron trial.
Did he[Skilling] sit upright one night and realize he'd lost control of Andrew Fastow, the company's chief financial officer? Did he notice the Fastow black box was beginning to emit strange noises, odors, an occasional wisp of greasy smoke, suggesting all was not right inside?

Did he know Fastow and a close aide had fattened their own wallets with tens of millions at Enron's expense as the price for arranging transactions to conceal losses on various Enron-owned assets that had declined in value? Was his resignation a sublime stratagem to make sure somebody else -- Ken Lay -- would be presiding over Enron when the revelations that Mr. Skilling was fleeing became public?
...
We admit to finding this theory tempting: Mr. Skilling, from the moment he decided on resignation, has been engaged in a high-wire bluff to avoid accountability for Fastow's actions, including his incredibly nervy decision to testify under oath before a Congressional panel even as Mr. Lay did the normal thing and heeded his lawyer's advice to plead the Fifth.

Alas, the Justice Department's Enron Task Force seems unwilling to get to the bottom of Enron, preferring to frame the trial in Houston as a "pump and dump" case, in which Mr. Skilling and Ken Lay talked up the failing company's shares while selling their own. The implicit narrative: Mr. Lay and Mr. Skilling are rich and Enron collapsed, so they must be guilty of something that amounts to not announcing to the world that Enron was destined to collapse.

Missing, though, is an important element of narrative credibility in Mr. Lay's case, since his stock sales seem to have been involuntary, forced by margin calls. He even forked over $10 million in cash, his signing bonus for returning as CEO, to prevent further liquidation of his soon-to-be-worthless shares. That one is born every minute might seem betokened, furthermore, by Mr. Lay's very presence as co-defendant with Mr. Skilling in the dock. He's there, it's easy to suspect, mainly because failing to indict Mr. Lay (former friend of President Bush) would have subjected the Enron Task Force to Democratic charges of political favoritism.

Mr. Skilling, after all, persuaded the board to approve Fastow's role in outside companies created to do deals with Enron. He knew some of these transactions, the Raptors, accounted for much of Enron's reported profits in two successive years. He was apparently incurious about how much Fastow was pocketing from his non-arm's length dealings with Enron. When a company insider, Sherron Watkins, finally determined to blow the whistle, she went not to Mr. Skilling but to Mr. Lay. And so forth.
...
Even the mainstream press has turned a skeptical eye on the government's tactic of naming more than 100 "unindicted co-conspirators," frightening many former Enron executives and outside advisors away from testifying for the defense. All this is done, we suspect, more to protect the government's case against Mr. Lay than its case again Mr. Skilling: Just one more way in which the prosecution may end up hurting itself by needlessly conflating a weak story about Mr. Lay with a plausible one about Mr. Skilling -- that he gave Fastow too much rope and then ran away in full cognizance of what he had begotten, making fools of Mr. Lay, and the board.

Given the inherent difficulties of accounting fraud trials, you'd have thought the prosecution would have seized the opportunity to present a case that any jury could understand: Andrew Fastow was stealing and Mr. Skilling knew, but looked the other way because Fastow's activities were propping up Enron's stock price and reported profits.

Once again, I think Lay had his head in the sand, he was forced to sell his shares in Enron to meet margin calls. Is he guilty of being a bad executive? Sure. Is he guilty of having shaky personal finances (and I believe criminal but not for this trial)? Sure. Should those failings be criminal? Absolutely not. He's a figurehead in this investigation, the Enron Task Force would be seen as a failure if they didn't at least indict and try Lay, they've done that. Unfortunately for them, they're going to have a tough time presenting the facts that prove he committed a crime.

Update: For more on the Enron trial see Enron Trial, Soprano Style Litigation, More Enron and Enron Love.
Other Enron analysis can be found at Houston's Clear Thinkers.

Tuesday, February 14, 2006

Massachusetts Demands Wal-Mart Carry Pill

Massachusetts Demands Wal-Mart Stock Morning After Pill. What gives a state a right to force a private company to carry a certain product? If Wal-Mart doesn't want to carry a product, they shouldn't have to carry it. There is absolutely no reason whatsoever to force the store to sell it. Capital Freedom has the requisite snarky post.

European Decline

Fareed Zakaria takes on the issue of Europe's decline:
It's often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the E.U. has 170 million more people. Its per capita GDP is 25 percent lower than that of the United States, and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the United States.)

People have argued that Europeans simply value leisure more and, as a result, are poorer but have a better quality of life. That's fine if you're taking a 10 percent pay cut and choosing to have longer lunches and vacations. But if you're only half as well off as the United States, that will translate into poorer health care and education, diminished access to all kinds of goods and services, and a lower quality of life. Two Swedish researchers, Fredrik Bergstrom and Robert Gidehag, note in a monograph published last year that "40 percent of Swedish households would rank as low-income households in the U.S." In many European countries, the percentage would be even greater.

In March 2000, E.U. heads of state agreed to make the European Union "the most competitive and dynamic knowledge-driven economy by 2010." Today this looks like a joke. The OECD report goes through the status of reforms country by country, and all the major continental economies get a B-minus. Whenever some politician makes tiny, halting efforts at reform, strikes and protests paralyze the country. In recent months reformers such as Nicolas Sarkozy in France, Jose Manuel Barroso in Brussels and Angela Merkel in Germany have been backtracking on their proposals and instead mouthing pious rhetoric about the need to "manage" globalization. E.U. Trade Commissioner Peter Mandelson's efforts to liberalize trade have been consistently undercut. As a result of the European Union's unwillingness to reduce its massive farm subsidies, the Doha trade expansion round is dead.
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And I haven't even gotten to the demographics. In 25 years the number of working-age Europeans will decline by 7 percent, while those older than 65 will increase by 50 percent. One solution: Let older people work. But Europe's employment rate for people older than 60 is low: 7 percent in France and 12 percent in Germany (compared with 27 percent in the United States). Modest efforts to allow people to retire later have been met with the usual avalanche of protests. And while economists and the European Commission keep proposing that Europe take in more immigrants to expand its labor force, it won't. The cartoon controversy has powerfully highlighted the difficulties Europe is having with its immigrants.

What does all this add up to? Less European influence in the world. Europe's position in such institutions as the World Bank and the International Monetary Fund relates to its share of world GDP. Its dwindling defense spending weakens its ability to be a military partner of the United States, or to project military power abroad even for peacekeeping purposes. Its cramped, increasingly protectionist outlook will further sap its vitality.

The decline of Europe means a world with a greater diffusion of power and a lessened ability to create international norms and rules of the road. It also means that America's superpower status will linger. Think of the dollar. For years people have argued that it is due for a massive drop as countries around the world diversify their savings. But as people looked at the alternatives, they decided that the chief rivals, the euro and the yen, represented economies that were structurally weak. So they have reluctantly stuck with the dollar. It's a similar dynamic in other arenas. You can't beat something with nothing.

I read a lot of things about American demographic problems and underemployed workers and less American leisure time. To be sure, these are things for Americans to keep their eye on, but if everyone knew the extent to which Europe is going through these problems, there would be less bad mouthing of our free capitalist non-protectionist system. The term 'managing globalization' should be a dirty word. Either you're for a free worldwide market or you're not. There is no 'I'm for free markets, but' situations. That's what has gotten Europe into the mess they're in. An oversized welfare state that is protectionist in nature will harm far more people than a country that is overly free market with no welfare system. When in doubt, trust capitalism. Old Europe doesn't, America does (for the most part).

Sunday, February 12, 2006

Equal Opportunity

Whenever you are looking for a job and filling out online applications, the following or something worded like the following always appears:
As an equal opportunity employer, we hire without consideration to race, religion, creed, color, national origin, age, gender, sexual orientation, marital status, veteran status or disability. We invite you to complete the optional self-identification fields below used for compliance with government regulations and record-keeping guidelines.

In order to prove we don't care about your sex, religion or race please provide us with your race, religion and race. I never fill out this information because I find it offensive. But, the government apparently requires this asinine line of questioning for prospective employees.

Friday, February 10, 2006

Junk Science Loses

The EU has lost it's case against a ban on some genetically modified foods.
Gregory Conko is a trade analyst with the Competitive Enterprise Institute in Washington DC.. He says the E.U.'s policies are outdated. "The fact that the World Trade Organization is coming out against them, that every major scientific organization around the world is coming out against them, is reminding them that it is time to move on -- time to reform biotech restrictions in the European Union."

Proponents of the genetically modified foods say they increase yields and allow crops to better resist weeds and insects.

Genetically modified foods are the reason America produces more food than it did 100 years ago on a fraction of the farmland. Never has genetically modified crops been found to be harmful, yet the EU still sought fit to ban their import.

Medicare Cuts

When is a cut not a cut? When a member of Congress says it is.
“This budget makes huge cuts to the Medicare that all seniors rely on,” state Democratic Party Chairman Kathy Sullivan said.

The President is “jeopardizing access to care” for seniors, Senate Minority Leader Harry Reid said.

Sen. Arlen Specter, R-Pa., said Bush’s proposals for Medicare and education were “scandalous.”

Boy, that sure sounds bad. That budget is going to force Grandma to eat cat food so she can pay for her doctor.
What’s really scandalous is the deliberate misrepresentation of the President’s budget.

The President would increase Medicare spending by about 66 percent over the next five years. Under the proposed 2007 budget, Medicare would grow by 7.7 percent a year. Where’s the cut? There isn’t one.

Under current law, Medicare would grow by 8.1 percent a year. Bush is proposing to trim its rate of growth by four tenths of one percent a year over five years. Kathy Sullivan calls that a huge cut. Imagine if Bush proposed actually cutting Medicare. No wonder nothing gets done in Washington.

A cut in Washington-ese is a cut in the rate of growth. This demagoguery cannot be allowed to go unchallenged.

Shooter Voter Bill

I thought the point was to register as many voters as possible. Not if you're going to register Republicans, say Democrats. The Shooter Voter Bill in Florida would require merchants who sell hunting and fishing licenses to provide voter registration materials.

While I think this bill is a horrible idea, I find it funny that Democrats oppose it because it increases the likelihood that the registered voter would be a Republican.
Some Democrats believe the bill is targeted toward signing up voters who traditionally favor Republican policies.

"It would appear to me that you would be targeting a particular group of people," said Martha Smith, chairwoman of the Santa Rosa County Democratic Party.

Thursday, February 09, 2006

Great Gadget

Ever sat at a baseball game and wondered about some player's statistics or want to see a replay? Well now there's a new product that can deliver these things and more. SkyBox is a 17 oz. Wi-Fi device that can do these things. Vivid Sky is negotiating with MLB teams to provide the Wi-Fi service in their stadiums and charge a rental fee for the gadget. I hope this catches on.

Hat Tip to Freakonomics Blog.

Beware the Shoes

This editorial from the Waterbury Connecticut Republican-American reminds me of the old SNL skit with Michael Dukakis debating George Bush Sr. where GB says something somewhat silly and Michael Dukakis (Jon Lovitz) says "I can't believe I'm losing to this guy."
The 25 EU nations will begin phasing out F-gas sneakers in preparation for a full ban by the end of 2012. "It is an important first step because most F-gases have a global warming effect thousands of times greater than carbon dioxide," said EU Environment Commissioner Stavros Dimas.

It's bad enough that warmists think every weather anomaly validates their dubious theory, but is this the beginning of a new phase of indoctrination and propaganda, in which every product loopy leftists find objectionable is linked to warming so government can regulate or outlaw it?

Beware of any law that enables government bureaucrats the ability to outlaw products based on shaky science. See also this post on asthma inhalers.

Assembled in China

The New York Times has an interesting article today that makes a nice bookend with my previous post on American manufacturing.
But often these days, "made in China" is mostly made elsewhere — by multinational companies in Japan, South Korea, Taiwan and the United States that are using China as the final assembly station in their vast global production networks.

Analysts say this evolving global supply chain, which usually tags goods at their final assembly stop, is increasingly distorting global trade figures and has the effect of turning China into a bigger trade threat than it may actually be. That kind of distortion is likely to appear again on Feb. 10, when the Commerce Department announces the American trade deficit with China. By many estimates, it swelled to a record $200 billion last year.

It may look as if China is getting the big payoff from trade. But over all, some of the biggest winners are consumers in the United States and other advanced economies who have benefited greatly as a result of the shift in the final production of toys, clothing, electronics and other goods from elsewhere in Asia to a cheaper China.

American multinational corporations and other foreign companies, including retailers, are the largely invisible hands behind the factories pumping out these inexpensive goods. And they are reaping the bulk of profits from the trade.

Yasheng Huang, an associate professor at the Sloan School of Management at Massachusetts Institute of Technology, explained: "Basically, in the 1990's, foreign firms based in America, Europe, Japan and the rest of Asia moved their manufacturing operations to China. But the controls and therefore profits of these operations firmly rest with foreign firms. While China gets the wage benefits of globalization, it does not get to keep the profits of globalization."

The real losers, it seems, are mostly low-wage workers elsewhere, like the ones at Hitachi who lost their jobs in Japan, along with workers in other parts of Asia who suffered as employers began relocating plants to China. Blue-collar workers in the United States have also lost out.
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Foreign expertise has been critical as manufacturing supply chains become increasingly complex, involving countries' each producing components that are then shipped to China for assembly. Such a system can render global trade statistics misleading, and some experts say that a more apt label would be "assembled in China."

"The biggest beneficiary of all this is the United States," said Dong Tao, an economist at UBS in Hong Kong. "A Barbie doll costs $20, but China only gets about 35 cents of that."

Because so many different hands in different places touch a particular product, Mr. Dong said, you might as well throw away the trade figures.

"In a globalized world, bilateral trade figures are irrelevant," he argued. "The trade balance between the U.S. and China is as irrelevant as the trade balance between New York and Minnesota."

Once again, free trade has benefitted all countries. The U.S. lost some blue collar jobs but on the whole, consumer prices were lowered and corporate profits (wealth creators) were raised. Each country is able to focus on what they do best. China provides cheap unskilled labor, the U.S. and Japan supply design expertise. Everyone benefits.

CA Copycatting MD

The Maryland Wal-Mart bill is also being proposed in California. From the OC Register:
The bill would affect about 69 employers in California, most of whom already provide health benefits above that threshold. The main exception is Wal-Mart, which employs 70,000 people in California.

Sen. Migden contends that many Wal-Mart employees are forced to use government health benefits paid by taxpayers. "Government and entitlement programs are a safety net," she told the Chronicle. "They are not supposed to be a place employees from a major corporation are compelled to get their health care because their employer shirks that responsibility."

Wal-Mart spokesperson Kelly Hobbs told us that 73 percent of its employees in 2005, including part-time workers, were eligible for health care insurance, which is higher than the 61 percent average for the retail industry. She added that plans offered start with employee premiums of $11 per month.
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In Maryland, the law already may be hurting its employment base. Johns Hopkins University economist Steve Hanke, who has studied the issue, told us that his research - which purposely avoided talking to Wal-Mart to maintain objectivity - suggests the new law has caused Wal-Mart to halt construction of an 800-job distribution center in impoverished Somerset County.

He said the Migden bill could damage Wal-Mart's expansion, and jobs creation, in California. He added that these state laws are promoted by unions as a way to increase costs for Wal-Mart, which mostly is not unionized.
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We urge the Assembly to not pass this new jobs-killer bill. The way to improve Californians' health insurance coverage is to reduce regulations and taxes on companies, not raise them, so that increased profits - the only way to increase wealth - can fund increased employee benefits.

Thriving U.S. Manufacturing

You laugh, but some sectors, not located in Detroit, of the U.S. manufacturing business seem to be thriving. From the WSJ (SR):
Heavy-equipment makers, factory automation producers and steel companies have thick order books and busy U.S. factories. So do makers of packaging, cement, and bricks. Profitability isn't where many would like it to be at this point in the business cycle, but many manufacturers have boosted output through a combination of process improvements such as automation, outsourcing of basic parts and customers' desire for quick deliveries in a time of lean inventories.

Many industries face heavy legacy costs associated with pensions and health care similar to those burdening the domestic car makers, but sectors such as tires, steel, and textiles have been grappling with that for years, making changes that are only now starting to sweep Detroit. Costs for energy and raw materials are rising, but many manufacturers are passing them on to their customers, especially other manufacturers.

One measure of the industry's health is manufacturing output, which has increased steadily for the past several years, surpassing the peak of the last boom, which was reached in June 2000. Overall, manufacturing output is up 12% from 2002, according to the Federal Reserve.

Some sectors are clearly doing better than others. Business equipment is up 26% from 2002, information-processing equipment is up 47%, and defense and space equipment is up about 31%. "Manufacturing is on the upswing again, despite the woes in the Detroit-based auto industry," says Diane Swonk, chief economist of Mesirow Financial in Chicago.

Ms. Swonk said even within the auto sector, there is strength -- it just isn't in the U.S. car giants. Rather, car makers such as Toyota Motor Corp. of Japan and Hyundai Motor Co. of South Korea are investing in U.S. plants and helping to consolidate and reinforce U.S. auto suppliers that have faced declining demand from Detroit.

In recent years, production has been weaker in nondurable goods, including apparel and leather, which in December even enjoyed output gains of 1.9%.

But what about manufacturing jobs? Surely they're down.
Manufacturing has continued to produce more, while using fewer workers, thanks largely to automation and other process improvements. "Not only does the equipment allow you to be more efficient, but it gives you a quality edge," says Mike Nowak, president and chief executive of Coating Excellence International LLC, a Wrightstown, Wis., packaging manufacturer. The company has been able to expand since it was founded in 1997 by investing in technology, and Mr. Nowak said he expects sales, which were $120 million in 2005, to increase about 35% this year.

One machine helped the company win back business from a South Korean competitor to produce sugar pouches. Another has let it compete with a Chinese company that still stitches the string across the tops of fertilizer bags by hand. "We pay a good wage but use technology to lower the labor costs per unit produced." Mr. Nowak says.

So this surge in domestic manufacturing is great for machines but not great for workers. But wait, there's more:
Such automation has even led to greater demand for skilled machine-tool operators and other specialty trained workers among some companies, even as General Motors Corp. and Ford Motor Co. look for ways to cut their work forces.

Thomas J. Duesterberg, president and chief executive of the Manufacturers Alliance, says many U.S. manufacturers have survived by shifting low-margin products overseas, while keeping production of their most advanced products in the U.S., often in scaled-down but highly productive production facilities.

So, in this case free trade doesn't seem to be a race to the bottom, it seems that high skilled workers are still in demand. It's the low-skilled jobs that are being replaced by machines and offshoring.

Update: Cafe Hayek also weighs in on this issue.

Sugar Subsidy Costs Jobs

The US Commerce Department is preparing to release a report (Subscription Required) saying the U.S' sugar subsidies cost the U.S. 10,000 jobs. From the WSJ (I hate linking to the WSJ because no one has a subscription but I couldn't find this anywhere else):
The report blames government policy and artificial sugar prices in the U.S. for the loss of 10,000 U.S. jobs from 1997 through 2002 at companies that produce chocolate, candy, breakfast cereal and other sugar-rich food products. Meanwhile, employment grew by more than 30,000 jobs in the same time frame at food companies not heavily reliant on sugar.

In 2004 U.S. companies paid 23.5 cents for a pound of refined sugar while the "world price" was 10.9 cents, the Commerce Department said, adding that it put U.S. food companies "at a competitive disadvantage" to foreign competition.

The candy and chocolate industries were some of the hardest hit when U.S. sugar prices rose as much as three times the world price in the late 1990s, the report said. Some were forced to shut down or move factories to Mexico or Canada.

Rep. Mark Kirk, (R., Ill.), who asked for the Commerce report in 2004, said he did so because he wanted substantial proof that U.S. sugar policy is responsible for sending jobs out of the country. "We're losing jobs in Illinois," Mr. Kirk said. "We saw the bankruptcy of Fannie May and the departure of Brach's [Confections Inc.]. Chicago used to be the candy capital of the world."

The Commerce Department agrees that U.S. sugar policy has exacerbated a "trade imbalance" in sugar-containing products.

Simple economics; subsidies neither protect jobs nor reduce prices.

Wednesday, February 08, 2006

For the Children

The Department of Social Services is looking out for the kids.
Well, now we know that the agency that was supposed to protect Haleigh Poutre neglected her as badly as her adoptive parents, allowing her to suffer months of horrible abuse. And now we know that the agency that was supposed to protect her wanted to remove her from life support just six days after she was admitted to a hospital with brain damage.
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What else don’t we know about this case? Even Haleigh’s biological mother was forced by DSS to sign a gag order in order to see the child. The agency continually hides behind its supposed need to protect the privacy of the children it serves, when time after time it is merely covering up its own incompetence.

I'm somewhat ambivalent about the agency wanting to pull the plug on Haleigh, she was severely brain damaged. What is unacceptable is the conceit that DSS typically has precisely because they never have to admit they screwed up, as in this case.

Get Your House in Order

The police will do anything in their power to seek revenge if you accuse them of a crime or videotape them committing a crime.
A Los Angeles County Superior Court judge Tuesday set bail at $100,000 for fugitive Jose Luis Valdes, the Chino man who recorded images of a San Bernardino County sheriff's deputy shooting an Air Force security officer Jan. 29.

Valdes had two outstanding warrants for aggravated assault in Florida, and was taken into custody Friday while visiting a federal immigration office in Pomona to renew his immigrant registration card. Valdes' arraignment on charges of being a fugitive from justice was postponed until Thursday.
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"He needs to be with his wife and children," said his attorney, Luis Carrillo of South Pasadena, who also represents the shooting victim's family.

"It's an injustice that he's sitting in a jail cell," he said.

Carrillo said that he believed that it was a "case of intimidation" by police in retribution for the recording. Sheriff's officials said they had no involvement in Valdes' arrest.

This whole incident is horrible and the police's actions have been shameful throughout.

Danish Cartoons

Coyote Blog takes on the NYT's stance on the Danish cartoons. Criticize America or Americans, front page story; Lampoon someone else, censor the material.

Tuesday, February 07, 2006

Our School

I just finished reading "Our School" by Joanne Jacobs, who blogs on education here. In case you're unfamiliar with the book, it tracks the progress of DCP, Downtown College Prep, a charter school startup in San Jose. DCP caters to Hispanic kids, many who speak poor English, who probably aren't going to make it in a traditional school. DCP instills in these students the values it will take them to succeed.

It's really a wonderful book for entrepreneurs as well. As the founders of the school found that some of their ideals, when implemented, didn't work, they didn't try to 'fit a round peg in a square hole', they readjusted and readusted until they were successful. Success for the students was the main priority, not the founders' ideals.

As Kevin Drum pointed out in his review of the book, it's clear the Jacobs is an advocate for charter schools. But, that fact doesn't make light of the success story that is DCP. I think the key factor in DCP's success is the founders' leadership, namely Greg Lippman. Leadership is not usually on display in a public school, at least by a principal. School boards centralize power and turn principals into administrators not leaders. Charter schools, at least in DCP's case, turn centralization on it's head. Charter's allow the school to cater it's method to the students, not force the students to change to meet the school. I think that's another important aspect of the success of DCP, ability to change.

I believe that charter schools and voucher programs won't hurt the public schools. They'll make the public schools better by instilling in the public schools some accountability to their clients instead of offering excuses. If I'm a parent sending my kid to your organization for 12 or 13 years, I'm going to expect my kid to be able to read and do math at a level that makes him employable. I don't care why it doesn't get done. Just get it done. If the school is throwing up road blocks not allowing me to send my kid to another school because it takes away their funding, I'm going to be doubly upset. Get it done! Charter schools have no choice, they have to make their clients happy or else they have no clients. Public schools have no real accountability because they have the political clout to force parents to send their kids to them.

I would recommend "Our School" for anyone interested in education and also in entrepreneurship. There are some important lessons to be learned from DCP.

Underfunded Pensions

The OC Register, and yes I do read it because I like "The O.C.", points to San Diego and Orange County's underfunded pensions.
San Diego is further down the road to a pension crisis than is Orange County. But our time is likely to come, sooner or later, and so we hope Mayor Sanders' idea gets a good hearing here.

Orange County Treasurer John Moorlach, a leading critic of recent pension increases and a candidate for the Board of Supervisors, thinks the Sanders proposal would be good for the county, even though "the cat's already out of the bag" in both Orange County and San Diego because the contracts signed with the employee unions are almost impossible to change. Nonetheless, Mr. Moorlach said, allowing voters to pass on future pension increases would help prevent irresponsible pension spikes.

In 2004, pensions for county employees (other than police and firefighters) were increased a stunning 62 percent by a three-member majority of the O.C. Board of Supervisors: Bill Campbell, Tom Wilson and Jim Silva.

Last year, the Orange County grand jury issued a report that concluded that an actuarial firm had calculated that the Orange County Employee Retirement System's unfunded liability was "$2.3 billion as opposed to the previous projection of $1.3 billion."

Unfunded means the income from county investments won't pay for the promised benefits, which means taxpayers would be on the hook for the extra billions of dollars.

Once again, relying on someone else to fund your retirement in accounts you don't own is a recipe for disaster. Increasing pension benefits is an easy bargaining chip for an employer to negotiate with a union, but those benefits are really nothing more than a promise.

Americans' Leisure Time

Tim Worstall tackles the issue of Americans having more leisure time than they used to in his usual snarky way. I typically rather enjoy his takedowns of Paul Krugman. Back on topic:
The reason this is happening -- why more paid hours are leading to more leisure hours -- seems to be explained by this paper from Harvard's Richard Freeman. Precisely because women are earning -- and then buying in those services which they used to do unpaid -- we're seeing greater specialization of labor (or if you prefer, more trade). And as we know that's the route to greater productivity. The actual paper itself is looking at American and German women and their participation in paid work. While they don't actually put it quite this way, the fact that many German women stay at home to make sauerkraut, while more American women go outside the home to do something they're good at, buying the food at the supermarket on the way home, means that the American women are both richer and have more leisure time.

Further, the high European unemployment rates can be explained (in part) by this as well:

"The smaller number of service jobs per adult in Germany than in the US shows up in both the least skilled service sectors and in high-tech and high skilled service sectors. The conventional explanation of the US-EU employment gap focuses on the relative dearth of low skilled service sector jobs in the EU because of the consequences on joblessness and social exclusion."

That is, if everyone stays home canning there are no simple jobs in the factories for people to do. So they rot on the scrap heap of unemployment, burning cars for entertainment's sake. This European social model doesn't seem to have all that much going for it so far really, does it?

Still, it could be true that while leisure hours are increasing in the US they are still lower than in Europe. Could be true but it isn't. This paper from Ronald Schettkat of Utrecht University explains it:

"The conventional view is that Americans work longer hours than Germans and other Europeans but when time in household production is included, overall working time is very similar on both sides of the Atlantic. Americans spend more time on market work but German invest more in household production."

The actual numbers show that American men work almost exactly the same hours, paid and unpaid together, as German men do; and German women actually 1.5 hours a week more than their sisters across the pond.

Worstall, since he's English, tends to focus more on European perceptions of America. Similar to the book "Cowboy Capitalism" which I reviewed here.

Monday, February 06, 2006

MySpace

I just watched this report on the CBS Evening News about the so-called dangers of MySpace. Don't get me wrong, online predators are clearly dangerous and something to warn your children of, but, I have been wondering just how pervasive the problem is. Nearly every night, it seems, the local nightly news shows some despicable guy being caught in a police sting trying to meet a young girl. Dateline NBC even had a story about it the other night. So, being deluged with these stories, I've been curious about how many incidents of actual old dude perverts are enticing kids over the internet, meeting them and raping them. Never in these reports is a nationwide number, not that one isn't disturbing, I just want a point of reference.

The CBS news story finally reported a number.
The Center for Missing and Exploited Children reported more than 2,600 incidents last year of adults using the Internet to entice children. With numbers like that, you'd think all parents would be hovering over their kids, wanting to know what they're doing online. But authorities say many parents are clueless about their kids' MySpace profiles.

So does the 2600 incidents include the number arrested by police stings. If the Kansas City area is getting 1 or 2 arrests a week in these stings, I imagine there are at least 40 other metropolitan areas this large getting the same amount. Consider if there's 1 arrest for this sort of thing in the 40 largest metro areas in the U.S. every week (a rather conservative estimate) that would equal 2000 incidents. So I don't know if the police stings are included in that number. Checking the source included in the report, The Center for Missing and Exploited Children I found this statistic:
According to NISMART-2 research, which studied the year 1999, an estimated 797,500 children were reported missing; 58,200 children were abducted by nonfamily members; 115 children were the victims of the most serious, long-term nonfamily abductions called "stereotypical kidnappings"; and 203,900 children were the victims of family abductions.
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According to Highlights of the Youth Internet Safety Survey conducted by the U.S. Department of Justice “one in five children (10 to 17 years old) receive unwanted sexual solicitations online.”

In 1999, 115 children were the victims of long-term nonfamily abductions and one in five children receive unwanted sexual solicitations online. Granted these numbers don't really mesh with one another because in 1999, not a whole lot of kids had websites but chat rooms were pretty popular then. 115 children abducted is a horrible number and I'll bet that number is even larger now.

But, just how dangerous is MySpace vs how dangerous CBS News makes it out to be? They throw out the 2600 statistic but don't put that number into perspective by saying how many MySpace sites there are. If there's 100,000 MySpace sites, again a conservative estimate, that means there's less than a 3% chance that anyone would try to entice a child sexually. And that's using the 2600 number which, I think, includes police stings which are middle aged guys pretending to be 15 year old girls trying to get another middle aged guy to meet them for sex. This whole "epidemic" seems to be much ado about nothing and lulling people into a false sense of security. It's the online people I should fear, not the dudes walking through the mall or ol' Uncle Joe.

Murderous 5-0

I was pretty horrified by this last week. That just goes to show you, never ever get out of your car when being pulled over by the police. I'm not sure if this cop is guilty of attempted murder or not, but the video is pretty damning.

Steven Greenhut at the OC Register is apparently pretty fed up too.
Civil libertarians are gnashing their teeth over the Bush administration's wire-tapping without warrants of phone calls of suspected terrorists. Although I, too, have some concerns about this policy, I don't lie awake at night worrying that the feds are going to tap my telephone lines.

On the other hand, I do worry about the ability of local law enforcement to turn my life, or other people's lives, into living hell. Police malfeasance isn't a rare occurrence, but a regular feature of modern life, even if the abuses don't often get the attention garnered by the police shooting in Chino last week.

Most of us have seen the grainy videotape. After a short chase, San Bernardino County sheriff's deputies pull over a Corvette, whose passenger is a U.S. Air Force security officer, Elio Carrion.

A deputy tells Carrion to stay on the ground, then tells him to stand, yelling "get up, get up." Carrion calmly tells the officer, "I'm going to get up," at which point the deputy begins firing, hitting Carrion three times. Carrion wasn't armed, and, reports suggest, that neither he nor the driver is being charged with a crime.

On the video, viewers hear the deputy yelling at Carrion, calling him a "punk," and also see him kicking at Carrion.

In typical fashion, the president of the deputies union complained that the video was aired on TV and said: "To paint every cop in California as bad people because one incident happened, and we don't know the facts, is just wrong." No one is painting every cop as bad. But it is a good thing an observer had the video camera running, or else it would have been the officer's word against the victim's. You know how that goes. The officer who shot Carrion would have claimed that Carrion was resisting arrest, and we would nod along, figuring the guy got what was coming to him.
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Note that after Carrion was shot, the San Bernardino Sheriff's Department said publicly that it has never filed charges against an officer for an on-duty shooting, according to a radio news report. Some critics argue that police have a "gang mentality," which means that one member of the gang won't rat out another member, even if that person did something atrocious.

So much for accountability.

Do you think the officer who shot Elio Carrion would be facing investigations, including by the FBI, had there been no videotape? What if Carrion wasn't an honored member of the U.S. military serving in Iraq, but just some poor Latino kid?

Even more disturbing was when I watched the local, national (CBS or ABC) and Fox News at 6, this video was not shown. Instead some lighthearted video of a policeman getting hit with a passing cars side mirror was shown. I don't know why a policeman shooting an unarmed, fully compliant man on video was not a gigantic story.

UPDATE: The officer was finally charged with attempted manslaughter.

Soprano Style Litigation

It seems the Enron Task Force has named over 100 co-conspirators in the case against Lay and Skilling. To the laypersons out there (including me) this means that, of the witnesses the prosecution is going to call against Lay and Skilling, a good portion of them are going to or have the right to assert their fifth amendment right of not incriminating themselves. Therefore, Lay and Skilling's lawyers will not be able to cross examine these witnesses very effectively.

This tactic reminds me of the tactic that Tony Soprano used against Carmella in their divorce. In case you don't remember Tony went to all the divorce lawyers in the New Jersey/New York area for legal advice. Therefore, none of the lawyers could represent Carmella because they had conferred with Tony. This isn't the same thing but it still reeks of dirty pool.

Hat Tip Coyote Blog.

New Hampshire School Choice

The New Hampshire Union Leader advocates a couple of pro school choice bills. The first will cause the state to not funnel money for charter schools through the local school board. Instead charter schools will just be funded by the state. Apparently a local school board froze funds for a charter school in their district. This is a bit of a conflict of interest item for a local school board, at least if that local school board doesn't believe in charter schools. I would probably leave the funding in the hands of the local school board and let the local electorate sort out who they want on the school board.

The second bill would start a rather limited voucher program for low-income families. I would rather swing for the fences and provide vouchers for all families, but this is a good first step (especially since I know very little about the specifics of NH politics).

SWAT

Radley has an email response, in regards to Radley's WaPo article, from an actual SWAT team member stating the problems with every small locality having it's own SWAT team. It comes down to training and psychological tests. These small towns with SWAT team abuse Radley writes about ever more frequently don't spend any extra money getting these heavily armed thugs training. The municipalities don't even know how these hyped up guys can handle the power trip of "going through the door".

On a related note, I caught a minute of Dallas Swat on TV the other night. They were planning an assault on a house where a couple of people were cooking and selling rock (I love to use some drug slang). It looked like a pretty peaceful slightly lower middle class neighborhood until the flash grenades went off inside the house and 20 paramilitary troopers ran through the front door. The very next scene showed one of these SWAT guys deriding the drug dealer for grabbing his son and "using him as a shield". SWAT dude said that the raidee was shouting "I'm protecting my boy, I'm protecting my boy." To which the SWAT guy in all seriousness, in his retelling of the story, said "If he wanted to protect his boy he should have stood in the doorway with his hands up telling the SWAT team where his boy is." When exactly was he supposed to do this? After they threw in the stun grenade he was probably stunned. There were 20 SWAT guys in his living room by the time he could react rationally (assuming rational is standing in a doorway with your hands up after somebody has thrown a grenade through your window). The drug dealer's instinct was to grab his boy and protect him. I would have done the same thing, so would any member of that SWAT team. I don't think I'll be watching too much "Dallas SWAT" in the future, 5 minutes was too much.

Sunday, February 05, 2006

WSU Basketball

The Shockers played a really rough and tumble game Saturday. I think the Shocks showed they were the better team, holding SIU to a horrible FG percentage and shutting down any transition game SIU tried to show. I think Turgeon said it all with this:
"That wasn't our style of game," Turgeon said. "It was a football game, but we've learned how to win."

They haven't won too many close games under Turgeon. Maybe this is a turning point for this relatively young team.

Thursday, February 02, 2006

Macquarie Bank V. State of Indiana

After reading the article on Macquarie bank (and a partner) leasing the toll road from Indiana, I was left with the question What is the implied rate of return for the state of Indiana. Figuring out that answer allowed me to do some time value of money calculations which are great fun. I took the numbers from the article; 17 year payback period, 75 total years, years 18 - 75 generating $21B in profit and purchase price of $3.85B and tried to calculate the present value of the cash flow. To do this I needed the Rate of Return or Interest rate. I plugged all of this into an Excel spreadsheet and after some fumbling around getting all of the formulas to use cell references instead of hard coded numbers, I ran Solver to changed the interest rate so the present value of the cash flows equaled the purchase price. The rate turned out to be 4.23% which isn't a bad rate of return for government investments.

Macquarie Bank, of course, would use different numbers for profit. The article only gave me the amount the Democrats in the Indiana legislature thought the road could make not what Macquarie Bank thought they could make. But that number is irrelevant to Indiana taxpayers because the state would never be able to make the same amount as Macquarie. That being said, I would have pushed for 5%.

Wednesday, February 01, 2006

Private Road

Indiana is looking to privatize a large toll road. Macquarie Bank, flush with cash from a type of privatized investment program in Australia, is making these kinds of deals all across the country.

These deals are great ways for municipalities and states to get some assets off balance sheet and generate revenue without raising taxes or issuing bonds.

Enron Trial

The Washington Post has a nice recap of yesterday's opening arguments. From the prosecution:
The Enron story is a simple one, Assistant U.S. Attorney John C. Hueston told the jury in his opening argument in the criminal trial of the energy trader's former top two executives. "It is not about accounting. It is about lies and choices."

Hueston argued that former chairman Kenneth L. Lay and chief executive Jeffrey K. Skilling helped keep the "ticking time bomb" going as long as they could for their own benefit until Enron Corp.'s 2001 collapse.
...
As the alleged fraud was being carried out, Fastow got what amounted to a "bear hug" from Skilling, prosecutors said, encouraging him to engage in deals that helped Enron's finances but also helped Fastow earn more than $25 million at the company's expense. Skilling gave David W. Delainey, another government witness, "a hug and a kiss" after Delainey revealed he had stored away revenue that Enron used to make its books look better, prosecutors said.

And from the defense:
as few documents have emerged tying Lay and Skilling to the scheme -- a point on which defense lawyers pounced.
...
cooperating witnesses were themselves either villains or victims of pressure to plead guilty to avoid decades-long prison sentences.
...
"The value of that kind of witness is zero."


Another interesting aspect of the Enron trial is that Lay is going to have to defend himself on fraud charges stemming from his personal finances. Lay's personal finances are quite analogous to Enron's finances. He had several loans that were tied to the stock price, same as Enron. I definitely think that if he committed a crime it would be in that case, not the Enron case. Skilling, in my opinion is just as responsible in the Enron case because he knew that the loans were built on a house of cards, once the stock price started to fall there was no other collateral that Enron could offer it's creditors and Enron would default. Skilling knew this, he knew what Fastow was doing, Lay did not.

So the question is "What's Greta covering?" The answer is something about George Smith. I have absolutely no idea who George Smith is. Why does Fox News have Greta's 'legal' show on if she doesn't cover the most important trial going on?

HSA's and Commerce Clause

In today's WSJ editorial on HSA's was this paragraph expanding on my previous post:
Equally important is creating a national market for individual insurance. Right now employers large enough to "self insure" can do so mostly as they see fit. But individuals and small businesses who want to buy insurance are at the mercy of state regulators where they live or operate. In overregulated states like New York and New Jersey, residents can pay 10 times as much for insurance as they would in neighboring states, and might not even be able to buy the high-deductible insurance necessary for an HSA. Individually purchased insurance also isn't portable across state lines, contributing needless anxiety to normal life decisions like moving or switching jobs.

The Founders put the Commerce Clause in the Constitution precisely so Congress could act against internal restraints on trade such as today's 50-state insurance market. We hope Mr. Bush endorses and fights for the bill from Representative John Shadegg of Arizona that would let individuals buy insurance from vendors in any state, no matter where they live.

Of course using the Commerce Clause for what it was meant might be against the rules of a living Constitution.