Congratulations Bill Pearson, 2019 Coyoteblog Bracket Challenge Winner

Bill rode Virginia all the way to the championship.  Congratulations.

Who Are You Calling Privileged?

A while back on Columbus Day I wrote this on Twitter:

I am reminded of this in a WSJ article I saw today about a lynching of Italian immigrants in New Orleans in 1891

New Orleans Mayor LaToya Cantrell will officially apologize Friday for the largest mass lynching in U.S. history. On March 14, 1891, the city of New Orleans became a charnel house as a mob of as many as 20,000 wantonly slaughtered 11 Italian-Americans. Some of the victims had been charged in the murder of a police chief, but the trials all ended in acquittal or mistrial. A gang descended on the jail where the men were being held, shot them to death, and displayed their bodies for the savage rabble outside. Southern belles in search of souvenirs dipped their lace handkerchiefs in the blood of the butchered Italians.

And the press cheered. The New York Times editorialized on March 16: “These sneaking and cowardly Sicilians, the descendants of bandits and assassins, who have transported to this country the lawless passions, the cut-throat practices, and the oath-bound societies of their native country, are to us a pest without mitigations.”

The Washington Post even extolled the killers as “cool-headed men, lawyers, doctors, merchants, and political leaders, all person of influence and social standing.”

Theodore Roosevelt, then a member of the U.S. Civil Service Commission, wrote to his sister Anna Roosevelt Cowles on March 21: “Monday we dined at the Camerons; various dago diplomats were present, all much wrought up by the lynching of the Italians in New Orleans. Personally I think it rather a good thing, and said so.”

I don't really have a horse in this race.  My family was German, coming to America (thankfully) a bit before WWI.

Postscript:  The quote above also serves to illustrate why Teddy Roosevelt has my vote as most overrated President. His treatment of Columbia, for example, is an embarrassment to this nation.  I will say that he would be high on my list of ex-Presidents to hang out at dinner, though.  He was a fascinating and energetic man -- but also high-handed and racist/nationalist in the same way that many British Victorians were.   On a related topic, my kids once asked me which President I would want to be stranded on an island with.  If it was a desert island necessitating survival skills, TR would be near the top of the list.  If it was a modern island with clubs and resorts I would probably choose Bill Clinton -- he seems to know his way around that scene.

What Admirers of Socialism Like AOC Could Learn From Just the Title of Adam Smith's Classic Book

The full name of Adam Smith's great work is "An Inquiry Into the Nature and Causes of the Wealth of Nations."  Even before we crack the spine of that book, we can learn a lot about that title.

Look at the title -- it might be a bit strange to modern eyes.  Because when we have inquiries today, it's generally on the opposite topic -- why are people still poor?  Most of us look around and see the incredible advancement of the modern economy and if we wonder anything, we wonder why some folks are still poor.

But in Adam Smith's day, human experience was far different.  Basically, the history of humanity to the year 1776 was that pretty much everyone was poor -- grinding, dangerous, subsistence poverty despite backbreaking labor -- and they had been so in a nearly unchanging way for millenia.  In Adam Smith's day, in the early days of the industrial revolution and increasing market-based commerce, the question was why are ordinary people -- people who aren't in ruling classes that just seize the wealth they have -- becoming wealthy.  At the time, the existence of wealth that existed without just looting it was what needed to be explained.

The fact that AOC and other modern admirers of socialism can fret about poverty is, as they imagine, attributable to capitalism, but not in the way they think.  Capitalism did not cause the poverty, it created the situation in which poverty is an issue with but a minority of the population (rather than essentially everyone).  Before capitalism, fretting about poverty would just have been fretting about .. the way things are for everyone.

It is worth a final note here to remind everyone that what we call "poor" today has pretty much nothing in common with what would be considered poor in Adam Smith's day, or at any other time in history.  The poor in America today -- whose major health problem is obesity! -- would be fabulously wealthy in any other pre-capitalist era.  One can even argue that the poor in America are better off than the poor in other supposed socialist paradises like Denmark, Sweden, or France.

Arizona Recognizes Out-of-State Occupational Licenses

Good!  One state down, 49 to go.

Facebook Seeks To Leverage Its Own Failings to Get Congress to Cement Facebook's Monopoly Position

It is something you see all the time -- large companies asking to be regulated, at first glance against self-interest.  Those most interested in expansion of the government and the regulatory state will shout, "See!  Even large evil companies know they need to be subject to government oversight."

But in fact what is usually going on is that the large company knows that regulation will actually cement its position in the industry, making it harder for rivals and new entrants to compete.   Toy-maker Mattel turned a lead scandal of their own making into a coup by creating a regulatory framework that pounded its competitors.  Walmart and Costco often support minimum wage in retail legislation because they know that with their higher sales per employee, they can survive higher minimum wages than their smaller ma and pa competitors.

Mark Zuckerberg, who I am increasingly convinced is the most dangerous man in America, and his testimony to Congress begging for regulation, should be seen in this context.

So in Facebook’s case, they will advocate some institutionalized changes in the way social media should work. Every change will involve compliance costs. Facebook will make sure that it can comply...and that its competitors cannot without great expense. That will give them a distinct advantage in the marketplace, make it more difficult for startups to compete, and guarantee this platform a leading place by law.

This is why Mark readily agreed to be regulated. Regulations always work to the advantage of the largest market players....

Nor should this come as some sort of shock. This is the way government regulations have always worked, from the meatpackers in the early 20th century (who crafted and enforced meatpacking legislation), to all labor legislation (it’s labor-union lawyers who exercise the dominant influence) to Bitcoin regulations (the major exchanges are always involved) to digital technology today (no way are Google and Facebook going to be excluded from writing the regulations that govern their industries).

There is a civics-text myth that imagines government workers and politicians as all-knowing, crafting rules that benefit everyone as opposed to particular players. It imagines that major market players are suffering as government forces new rules that require their operations put greed on hold and serve the public. The on-the-ground reality is otherwise. There is not a single regulation on the books that does not have an author who is unattached in some way to the regulated industry in question.

Milton Friedman called this regulatory capture. The problem is the influence of industry is there from the beginning. It’s absolutely not the case that capitalists are champions of capitalist competition, as the career and policies of Donald Trump should make clear. Lots of people are good at using markets to make money; only very special people become defenders of open competitive processes.

Right now, Facebook faces massive competition from other platforms in social media, copycats, and alternative uses of people’s time. In some ways, it’s the best possible moment to call on government to institutionalize Facebook as a form of public utility. That might actually be the end game that Zuckerberg has in mind. Then the politicians can update their timeline status: today we passed regulations that brought this wayward company to heel.

Zuckerberg said from the very beginning that he was dismissive of individual privacy and he has created the Facebook honeytrap to kill it.  He now is setting his sights on free speech, begging the government to tear up the First Amendment.  He is a one-man individual rights wrecking crew.

Update:  I am actually going to include this from the Reason article about Mattel, because the situation is so similar -- a failing at a large company is used to create a regulatory framework that greatly aids the large company against rivals

Remember the sloppily written "for the children" toy testing law that went into effect last year? The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child's use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat. Makers of books, jewelry, and clothes for kids were also caught in the net. Enforcement of the law was delayed by a year—that grace period ended last week—and many particular exceptions have been carved out, but despite an outcry, there has been no wholesale re-evaluation of the law. Once might think that large toy manufacturers would have made common cause with the little guys begging for mercy. After all, Mattel also stood to gain if the law was repealed, right?

Turns out, when Mattel got lemons, it decided to make lead-tainted lemonade (leadonade?). As luck would have it, Mattel already operates several of its own toy testing labs, including those in Mexico, China, Malaysia, Indonesia and California.

So while most small toymakers had no idea this law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a little provision to be included in the CPSIA permitting companies to test their own toys in "firewalled" labs that have won Consumer Product Safety Commission approval.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above—just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

2019 Bracket Challenge Update

With 3 games to play, we still have three possible winners. Jeff Charleston (if memory serves a long-time coyote bracket leader), Bill Pearson and DontFollowMyAdviceImADummy.  Best of luck to everyone

Through Tuesday, My Amazon Kindle Books Are Free

As a thank you to readers, get my novel and short stories on Amazon for free, at least in the kindle version.  Click on the image to go to the relevant Amazon page.

         

 

Update on Lost Comments

After engaging with my issues briefly within a couple of hours of my support request, Disqus has for 3 business days ignored all further communication from me to multiple email addresses.  Unfortunately, they do not seem to have any kind of support ticket tracking system.

As a reminder, 6 years of comments on thousands of posts, likely tens of thousands of comments have disappeared.  I do have a paid account so supposedly I am owed support.  I know a number of you expressed your frustration to me that years of your contributions have been lost and I will do everything I can to restore them.  I have the main corporate number at Disqus and will try that door if I still don't have any sort of response by tomorrow.

The Insanity of Current Equity Valuations -- The WeWork Unicorn (I Bet You Thought I Was Going to Say Tesla)

WeWork is a provider of work spaces for individuals and startup companies.  Unless I am missing something (and WeWork devotees are welcome to chime in) it is essentially a hipper rebranding of traditional small business office space and services companies like Regus (now IWG).

Currently, Regus / IWG has about $3 billion in annual revenue on which it makes something like a positive 5% net income margin and trades at a valuation of about 1x annual revenues.  WeWork is a private company, though is rumored to be IPOing soon.  It had $1.8 billion of revenue last year but lost $1.9 billion, meaning that it was basically selling $10 bills for $5 each with an negative net income margin of 105%.  Its last funding round was done at a $45 billion valuation, or 81 times 2018 revenue.  This valuation will likely go up in an IPO.

No real point here, except to say that I have not seen valuations this insane since the late 1990's.  What makes the examples of WeWork and Tesla perhaps even more incredible than examples in the 1990's is that the market is putting growth software valuations on bricks and mortar companies.  Oracle or Microsoft might have been expected to scale up easily and relatively cheaply, but scaling a real estate company takes a ton of money.  Not sure where the growth economy of scale is in office space.  And don't even get me started with the extrapolated growth projections here.  When the tech bubble bursts, WeWork is going to have a ton of grief on its hands, and unlike software companies it is not going to be able to slash SG&A by cutting payrolls.  It is going to be stuck in a lot of long term leases and mortgages that it can't break (just ask Tesla about that when they tried to cut SG&A by closing their stores).

PS-  As with Tesla and any number of other examples, many devotees of certain products hear criticism of the company's valuation as criticism of the company's product.  The two do not have to be related.  Grossly overvalued companies can still have products you might want to buy.  In fact, if WeWork is selling you a $10 product for $5, I would not be at all surprised if you are satisfied.

PPS-  This is not to say you can't make money in a bubble.  Careful, observant, and risk tolerant individuals can make money riding stocks up that they know are due for a crash some day.  Readers know that I believe Tesla is headed for a reckoning, but I am making money this week on short term calls I bought last week because I knew that Musk is going to pump the stock like hell last week and this week and pull forward every bit of volume he can into Q1 in a bid to save a dying growth story.  I bet the stock would ride up on early reports of this but fall off once financials are out and further when Q2 shows that the order books have been drained.  But this is risky, risky, risky.  It is a tiny piece of my investment portfolio and this sort of investing is but a hobby for me, a bar bet to determine if I have really come to understand how Elon Musk ticks.  Also, I am just a layman and not a professional so don't listen to me.

Regulation and Engineering Failures

In the aftermath of the two Boeing 737MAX crashes:

For years, the FAA has allowed plane manufacturers to self-certify parts of the oversight process for new planes, called Organization Designation Authorization. This process, in which the aircraft manufacturer’s employees perform some of the safety tests and inspections with FAA oversight, reportedly saved the government body time and money.

That practice was examined at Wednesday’s Senate hearing.

Department of Transportation Inspector General Calvin Scovel III, who testified at the hearing, said the FAA will significantly change the oversight process for new aircraft by July. Speaking in vague terms, Scovel said that the changes would include new ways for the FAA to evaluate the self-certifying process.

Sen. Richard Blumenthal said that putting manufacturers in charge of their own safety audits was like putting “the fox in charge of the henhouse.” Saying he would introduce regulations to ban the practice of companies self-certifying, Blumenthal stated that “the fact is that the FAA decided to do safety on the cheap, which is neither safe nor cheap.”

A few reactions:

  1. The fox in the henhouse analogy is not apt.  The fox wants to eat the chickens, whereas Boeing does not want to have airplane failures.  In fact Boeing is going to be paying out on a bunch of really big lawsuits, not only to families of the folks that died and the airlines that lost their planes but also to airlines that have had to change their flight schedules due to these issues.  Airbus sales people will use this story in their pitches until the end of time.  Regulation is not the only, or the most important, check on Boeing's behaviors.
  2. That being said, aircraft regulation is a dumb hill for libertarians to die on.  This is just not that big of a deal.  Regulation and capital intensity has pretty much reduced choice in large aircraft to two companies and that will not likely change no matter what extra regulatory hoops are added.  Aircraft are a bit more expensive and spare parts are way more expensive due to our regulatory regime, but I don't think there is a public constituency for making a different trade-off.
  3. Whatever the regulatory environment, it is unlikely to actually catch more failures of this sort in the future.  Regulators are notoriously bad at this sort of thing (see: US financial system).
  4. I did engineering failure analysis early in my working career and my experience is that this sort of multiple stacked failure -- lack of pilot training for a bad software response based on a failed piece of instrumentation that was not reported as needing maintenance -- is hard to predict.  What will happen now in addition to some software fixes will be more mandatory training on this particular subsystem and likely a requirement that the specific piece of instrumentation involved needs to have redundancy.  At best we should hope they will also do a review of other instrumentation failures that might lead to a flight control issue and consider redundancy or software changes.  But there's always the problem of failure of imagination, the best dramatization of which is in the fabulous From the Earth to the Moon episode on Apollo 1.

Annual Bracket Challenge Update

We got 72 entries this year, which is pretty good given that I got started late setting it up and promoting it.  Many contestants eschewed the obvious choices -- for example only a third picked Duke to win and barely half had Duke getting to the Finals.

 

 

Robert in Chicago is in the lead, but many are close.  The scoring system favored picking upsets but there just were not that many big upsets in the first 2 rounds

But 42 different people still have a chance to win, including all the top 20 and 20+ more besides.

Good luck to everyone this weekend.  You can see all the rankings at https://www.pickhoops.com/tslatslaq/

A Quick Thought on Brexit

I have not really written on Brexit here, for a couple of reasons.  First, I am not at all informed about the issues, so it is hard to pontificate intelligently.  Second, I am torn because, were I British, I likely would have supported Brexit but for completely different reasons than many others.

My understanding is that many folks (in a parallel with Trump voters in the US) voted for Brexit out of fear of global free trade and immigration, both of which I support.  I, on the other hand, would have voted for Brexit to shed the absurd, overreaching EU regulatory state.  So I likely would have supported it, but don't want to be counted among modern anti-global nationalists.

But if you want to see the type of BS that would have driven me into the arms of the Brexit camp, this is it.

he European Parliament’s approval of the Copyright Directive today is the end of the internet as we know it. This new regulation creates substantial new controls on what we can share online which threaten freedom of expression, undermine creativity, and cement the dominance of technology giants.

The Copyright Directive will create two internets. The first, a heavily censored version for European users, including filters to prevent you from uploading content. The second, a free internet where creativity is encouraged, for everyone else.

The directive represents everything that’s wrong with the EU’s policymaking process. It was written at a substantial distance from Europeans, heavily influenced by lobbyists and national compromises. There is a serious lack of accountability.

By the way, I would have had completely the opposite instincts than President Obama during Brexit.  The day Brexit passed, as President I would have immediately announced to Britain that if they were leaving the EU's common market, they were welcome to join one with the US and would have sent a trade envoy over that day.  Instead, President Obama did nothing but threaten and scold Britain for trying to get out from under the EU's regulatory umbrella.

The Number One Worst Art Experience

A while back I wrote that the Mona Lisa was easily the most disappointing art experience of my life (I believe I put the viewing of Seurat's Grande Jatte on the other end as exceeding expectations.)  If you are not sure why I dinged Da Vinci's lady so harshly, see this.

Watching this scene as she does every day, I now understand her smile.

I Think Disqus Customer Support is All Bots

I sent in a support request to Disqus reporting that Disqus comments exist for posts from the last 2 months but have disappeared for posts from 2012 up to a couple of months ago -- tens of thousands of comments missing.  And the comment box is not even showing up on the posts.  I sent a link to an example post both with and without comments and they responded:

We'd be happy to take a closer look into this, kindly forward us both of the following:
-text of a missing comment;
-link to the page on which the comment should be.

Obviously this is not responsive.  I can't send the text of a comment I don't have.  Thinking that maybe by support request had not gone through completely I resent the request:

I am not communicating well. There is not a particular comment missing. I had between 5 and 100 comments on every single post from 2012 through February 2019 at coyoteblog.com, all with Disqus, and they are all gone. Even the comment links are gone

Here is a recent one that still has comments: http://coyoteblog.com/coyote_blog/2019/03/an-incredible-crony-mess-in-maryland.html

Here is a random one from the past that had over 100 comments and they are all gone: http://coyoteblog.com/coyote_blog/2018/11/i-have-totally-lost-the-thread-here-based-on-what-we-know-now-someone-please-make-the-case-for-me-on-trump-russia-election-collusion.html

this same is true for literally thousands of posts that until recently had disqus comments but now have no comments at all

By the way, between these two posts and all others, they use the same template, code, add-ins, everything.

They answered:

If you give us an example comment, we would have a better idea of what is causing the broader issue across your site.

For folks old enough to remember the program, this is like talking to Eliza.  So I wrote back

How can I give you an example when they are all gone?  Just to be clear, it is not a comment I made that disappeared.  I run the blog coyoteblog.com and it is all the comments of my readers that have disappeared.
Please, go to this link:  http://coyoteblog.com/coyote_blog/2019/01/update-on-tesla-from-the-conference-call-today.html.  Do you see comments?  There were over 100 comments on disqus on this post, now they do not show up at all.  Ditto every post over the last 6 years except for posts over the last 2 months.  Please, rather than sending me these automated replies that don't actually address the issue, compare the comments section of the two post links I sent you.  One has comments on disqus, the other has them all disappeared.

Well, 6+ Years of Disqus Comments Missing

For some reason all comments from about 2012 when I started on Disqus to this February are missing.   There are not even comment links.  Sigh, I apologize for the loss to all those who took the time to participate in the conversation and I have ponied up for a paid Disqus membership to try to get some support and see if its fixable.

An Incredible Crony Mess in Maryland

If you want to see your socialist future, look no further than this mess in Maryland, hat tip to Overlawyered.  Absolutely nothing in this looks like free market capitalism, from the dueling subsidies to the threat by Baltimore to actually seize a business for the crime of trying to move out of their dysfunctional city.

Baltimore Mayor Catherine Pugh sued the owners of Pimlico Race Course in hopes of blocking them from moving the Preakness Stakes or using state bonds to fund improvements at Laurel Park.

In a lawsuit filed Tuesday in Baltimore Circuit Court, Pugh, on behalf of the city, also asks the court to grant ownership of the racetrack and the race to the city through condemnation....

Citing The Baltimore Sun’s reporting, the lawsuit asserts that since 2011, Stronach has “systematically underinvested in Pimlico and invested instead in the Laurel Racetrack.”

Stronach has spent the majority of the state aid it receives for track improvements on Laurel Park for the past several years.

“Through the systemic divestment of Pimlico, Defendants could indeed manufacture an ‘emergency or disaster’ to justify transfer of the Preakness to Laurel, as undermaintained infrastructure begins to fail and crowds attending Pimlico races and the horses racing there are endangered,” the lawsuit states.

Moving the race or shuttering the track would harm the Park Heights and Pimlico neighborhoods around the track, which are significantly poorer than Laurel and Bowie, the lawsuit states.....

Stronach Group officials previously pledged to keep the Preakness at Pimlico through 2020. The 2019 race is planned for May 18.

But they also have made clear that they plan to invest in Laurel Park in Anne Arundel County, in hopes of building a “super track” that could attract a high-profile race such as the Breeders’ Cup.

To accomplish that, Stronach is backing legislation in the General Assembly that would allow the Maryland Economic Development Corp. to issue $80 million worth of bonds to pay for improvements at Laurel and an additional $40 million in bonds for its Bowie Training Center. The bonds would be paid back with money from the state’s Racing Facilities Renewal Fund, which is funded by a portion of slot machine proceeds....

If the court awards ownership of the track and the Preakness to the city, “These properties will be used to continue their historic role in the cultural traditions of Baltimore City, to foster employment and economic development in Baltimore, and in particular in the Park Heights Urban Renewal jurisdiction, as well as to protect the health and safety of the people attending the Preakness and other Pimlico events, as well as the employees and horses working there,” the city wrote in the lawsuit.

All of this is set against the backdrop of horse racing being a dying business.  This almost reminds me of the end days in Atlas Shrugged when rival local governments are fighting over a last, soon-to-close factory.

By the way, the article mentions the poorer Park Heights and Pimlico neighborhoods.  Now, I am not familiar with these parts of Baltimore, but let me venture it is insane to base your local economic development on a business (the Pimlico race course) that has racing just 12 days of the year over a single 3 week period in May (the rest of the time I believe it's just an oversized OTB parlor).  Just about any other business in that space would likely be healthier for Baltimore.

This is a classic case of politicians destroying economic progress by forcing sub-optimal resource investment.  I have observed that politicians love subsidizing the hell out of these high-profile single day businesses.  The Fiesta Bowl in the Phoenix area is another good example.   Look at how much politicians bend over backwards to get a Superbowl, which is at best one day out of every 5 or 6 years.   I am still trying to formulate a theory as to why, but a few elements likely include:

  • Local political leaders get treated as a king-for-a-day at these events.  They get interviewed by national media, they hobnob with stars, they get special seats and boxes at the event
  • Politicians want bullet points and sound bytes for their elections and these events are more widely visible to and understood by voters than the nuts and bolts of real economic prosperity.  A seen and unseen type thing.  From a politician's point of view, even massive unseen prosperity is useless to them.
  • These events act as short-live but meaningful subsidies to a variety of powerful local interests such as hotel owners

My Best Princeton Alumni Benefit -- Thanks @HenryEPayne

Henry Payne, a cartoonist featured on many of the libertarian sites I read and a writer for the Detroit News, was a classmate of mine at Princeton.  Every year he creates a new birthday card that my class sends out to all of us on our birthdays.  I kick myself for not saving them all, but I am not really a keepsake kind of guy.  Here is the one for this year:

Absurd Click Bait

The Daily Mail claimed that this grammar test is so hard no one will get more than 10 or 20 right.  That is absurd, I nailed them all (yes, I have lots of grammatical mistakes in this blog because I am a sucky and indifferent proof-reader, not because I don't know what's correct).

That has to be just click bait or some sort of self-esteem reinforcement process.  The only other explanation is that there really has been a divergence between going to school/college and education.

via Maggie's Farm

Largest Cities in the World, By Year

I encourage you to click through to an animated visualization of the largest cities in the world, by year.

A few surprises, but the biggest one to me was how long Naples hung around on the list.

The fall and rise of the Chinese cities is also interesting.  People seem to get freaked out by China's growing prosperity, a fear for which I have zero sympathy -- people exiting poverty in China is an unalloyed good.  But here is a thought for context.  I can't absolutely prove that it is correct but I am pretty sure it is true.  The history of the world is that, with the exception of the 200 years from about 1800-2000, China has for 4000 years been the largest economy in the world.  Chinese prosperity today is not some aberration, it is a return to normal.

Update:  OK, I think I got it to embed:

The "Shrinking Middle Class" In One Chart

It's shrinking, but only because folks are getting wealthier.

via the always terrific Mark Perry

Please, Please. Please Do Not Rely on Your Tesla Autopilot

You folks can disagree with me about the prospects for the Tesla stock price.  You may hero worship Elon Musk and think he's a genius where I think he is a charlatan with PT Barnum promotion skills.  You may really, really love our Tesla car (I thought the Model S was a fine car when it first came out -- the Model 3, not so much).  But PLEASE do not rely on your Tesla autopilot.  Or at least read this Ars Technica article first.

A while back I went to a party in the suburbs of New York and needed a ride back to my hotel in the city.  A friend of a friend offered to give me a ride.  It turned out he was driving a Tesla Model X (SUV).  In the same way that you can't go 3 minutes with a Vegan without getting a diatribe on the virtues of veganism, for some distance in the ride we heard a paean to Elon Musk and Tesla.  This guy had really drunk the Kool-Aid.  Before my wife started kicking my ankle, I expressed a few of the reservations I had about the company and Musk, and the driver got really defensive. So much so he set out to prove Tesla's superiority.  So he drove us the rest of the way home (mostly) with his hands off the wheel through the freeways around Manhattan.  It scared the cr*p out of me, because I knew that while the AP could drive impressive distances and navigate on its own, it was only 99% reliable.  And since it makes hundreds of decisions every trip, those are not great odds.

What worried me is that he insisted on using the AP almost as a test of religious faith.  There is this weird dichotomy where all the Tesla literature that is actually reviewed by their lawyers and the DOT tell you never to take your hands off the wheel, but Musk goes on 60 Minutes bragging and doing exactly that (almost hitting another car) and verbally the company constantly brags on its AP capability.

This is crazy.  You only have to look at Boeing and the 737MAX experience to understand that even a very careful and experienced company like Boeing can screw up the software-hardware interaction  The 737MAX worked most of the time, just like the Tesla AP, but in Boeing's case you don't see consumers arguing that this makes it OK -- you see the DOJ initiating criminal investigations.  Tesla is a much less experienced and far less careful and organized company than is Boeing.  Despite Musk's bluster, third parties rank them close to dead last in self-driving technology development, but they are the only major self-driving provider who are actively encouraging their customers to use it outside of a carefully controlled test environment.   Everyone who actually understands AI believes Musk is totally full of sh*t when he talks about AI, particularly the much-hyped "shadow mode."

Interestingly, that latter reaction is the same one I hear from nearly everyone who hears Musk discuss something they actually know about. My moment came listening to Musk talk about the hyperloop, which is truly a crazy, unfeasible, uneconomic joke.  As I wrote before:

Elon Musk is not the smartest guy in the world.  He is clearly a genius at marketing and brand building.  He has a creative mind -- I have said before he would have been fabulous at coming up with each issue's cover story for Popular Mechanics.  A mile-long freight blimp!  Trains that run in underground vacuum tubes!  A colony on Mars!  But he suffers, I think, from the same lack of self-awareness many people develop when they are expert or successful in one thing -- they assume they will automatically be equally as brilliant and successful in other things.  Musk creates fanciful ideas that are exciting and might work technically, but will never ever pencil out as profitable business (e.g. Boring company, Hyperloop).

I watched the Ant-man and the Wasp the other night and listening to Musk is a lot like Marvel movie physics -- both use recognizable terms (if you had a drinking game in this last Ant-man movie that took a shot when they said "quantum" you would be dead now) that sound good to laymen but make no sense to people who actually understand the topic.  There may have been some excuse to lionize Musk's brilliance a year or five years ago, but how can anyone think this guy is anything but a knucklehead with an overcharged ego after the Boring Company fiasco?

Anyway, don't rely on this guy's reputation.  If you like what you see in the Tesla showroom (if there are any left), then by all means by the car.  But do not turn on the auto-pilot.  Please.  A loss of even one of you readers could... reduce my blog visitation by whole number percentage points.

Brief Reviews: Theranos and Michael Jackson Documentaries on HBO

Last weekend I watched both the Leaving Neverland documentary about Michael Jackson and the Out for Blood documentary on Elizabeth Holmes and Theranos.

The Theranos documentary was fine -- Theranos is an amazing story and any documentary on it is naturally going to be engaging.  My only issue with it was that it was very spare compared to the depth of the Bad Blood book.  The documentary worked a bit too hard trying to be too stylized.  I would have rather a faster-paced, harder hitting approach.  But if you have not read the book, it is definitely worth your time.

On the other hand, the Michael Jackson documentary was simply riveting.  I really had zero desire to sit and watch 4 hours on child molesting, but I was totally engrossed.  The individuals telling the story were so articulate and honest that I just got sucked in to the story.  The whole thing was simply devastating.  And as an aside, the B-reel footage used in cut scenes and such was simply beautiful.

LAST CHANCE -- Coyoteblog / TSLAQ Bracket Challenge Closes Tomorrow Morning

In a tradition that goes back well over  a decade on this blog, it's time for our 2019 just-for-fun bracket challenge.  You know how it works -- fill out your bracket for the NCAA men's basketball tournament before noon Eastern this Thursday.  First prize  is lots of adulation and a 1 year free subscription to Coyoteblog.  Second prize is a two-year subscription.

We are using the usual scoring method -- 1 point for each correct pick in the first round, then 2 points in the second round, then 4, 8, 16 and 32.  This gives each round the same number of possible points.  In addition, there is a bonus for each game you correctly pick an upset equal to the difference in the two seeds, so there is some incentive to take a bit of risk with your picks.

This year's theme is the ongoing battle of Tesla bulls and bears ($tsla and $tslaq respectively).  You don't have to be part of that mess to play, but if you want to self-identify with a side, put it in your team name. If you need anonymity, you can use a fake name and make sure to check the box not to show your email address publicly.

It is totally free to play (I have paid the fees) and you can sign up and find our bracket here.  

http://www.pickhoops.com/TSLATSLAQ

A Few Tequila Recommendations

I do not consider myself a tequila expert, but I do live in Phoenix where the tequila aisle at the liquor store is longer than the beer aisle in most other places.  Of late, I have discovered that while I am may not be the world's expert, a lot of my friends and family in other places are buying bad or overpriced tequila.  So here are some good choices (these are not the only good choices, but I would rate these as "you can't go wrong" at each price point).

Inexpensive:  Altos.  I prefer the reposado, but both it and the blanco are good and they often can be found at the supermarket at a price that will make you hesitate to buy it because it is so cheap.  But get it, way better than that Cuervo stuff.  If I remember right, it was created by an British company trying to take on the high price of tequila in that country.

Moderate to premium:  Cazadores.  My go-to brand for general use.  If you want to pay a bit more the super anejo is really terrific.  As presents we give bottles of homemade pepper-infused tequila to our friends and when we want it to be really good we infuse the Cazadores super anejo

Expensive:  Clase Azul Reposado:  Don't even think about putting this stuff in a margarita.  It is an amazing sipping tequila.  I did not even know there was such thing as a sipping tequila until I drank this.   Honestly, it is an entirely different experience than most any other tequila you have had.  It comes in a distinctive bottle that looks great on the shelf, too.

Postscript:  The tequila descriptions relate to the amount the tequila has been aged.  Regular or blanco tequila is clear and has not been aged.  Reposado is a golden color and is lightly aged -- I think personally this is the sweet spot in the aging scale.  Anejo and Extra Anejo means aged even more (anejo means "old" in spanish).

Congress Needs to Act on Internet Sales Taxes

Yes, I know, the "Congress needs to act" subject line is an unusual one for this blog.  But great damage is being done on the tax front to businesses and only Congress can mitigate some of the harm.

The taxes in question are sales taxes, and the problem results from a Supreme Court decision that allows states to start collecting sales taxes on interstate internet sales.  Eric Boehm of Reason writes:

Heitman and his wife, Carla, have been running Pegasus Auto Racing Supplies since they founded the company back in 1980, out of a two-story building in New Berlin, Wisconsin. Until last year, that meant Heitman was responsible for collecting and paying sales taxes to exactly one place: the Wisconsin Department of Revenue. But thanks to an under-the-radar ruling from the U.S. Supreme Court in June, he's now receiving letters, phone calls, and emails from revenue officials across the country, each wanting a piece of his business

The source of Heitman's frustrations is Wayfair v. South Dakota,which allowed states to collect sales taxes from online businesses located beyond their borders. Many states view the Wayfair ruling as a potential tax revenue windfall in which the taxes are paid by non-residents who can't vote against them. That's why businesses like Heitman's are now facing the chilling prospect of owing taxes in dozens, and possibly hundreds, of different jurisdictions—while being hounded by out-of-state tax collectors.

Since the Supreme Court issued its ruling in June, Heitman has been scrambling to become compliant with tax commissions and revenue departments from coast to coast. He's spent thousands of dollars on new software to help navigate the complexities of state sales tax law, but that's only been so much help. "It almost seems like I have another full time job dumped on me with this sales tax thing," he says. "It's burning me out."

Like most writes, Mr. Boehm actually understates the problem.  Because the potential exists not to have 50 new taxing authorities for every sales, but thousands.  I have to deal with this every day. I wrote a while back:

Take Arizona, which seems from my experience to be roughly average.  The sales tax rate table is 18 pages long in a small font.  There are 29 separate rate categories which each have different rates in each of Arizona's 15 counties.    My business is in 6 counties and we have 3 rate categories that apply, or 4 if you consider items with no tax as another rate category.  This is 24 different state/county sales tax rates we charge.  But that is the easy part.  Because then there are, in addition to county taxes, 92 different towns and cities that have their own rate tables with up to 29 different rate categories that add to the base state/county rate.  Other states such as Washington (rule of thumb -- if the state has no income tax then it has a LABYRINTHIAN sales and business tax systems) have additional overlay taxes such as for transit and stadium districts.

When my company opens a new location, we have to spend hours on the Internet and with maps trying to figure out what sales taxes to collect, and even with good due diligence we sometimes get it wrong and find in an audit we are actually just inside or outside some line where the rate changes (we once had a location 30 miles outside of Seattle on a long dirt road where we found we had to collect the Seattle Rapid Transit tax).  Thatcher, AZ is a town of like 4000 people but has its own special sales tax rates -- do you know where the town line is?  Well neither do they, because last time I checked they did not have any sort of online lookup system to tell one automatically if the address is inside or outside the town and its sales tax district....

But even after registering in all 50 states, you are STILL not done, because many states don't have a fully unified sales tax collection system.  In Arizona, for example, the larger cities require their own registration and monthly reporting.  Each of these towns in AZ require a separate registration and monthly report:

Apache Junction, Avondale, Chandler, Douglas, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott,Scottsdale, Sedona, Tempe, Tucson

Douglas, Arizona is a town of freaking 16,000 people but make sales there and you have to have a separate local registration and reporting.  And this list is for one not-very-urban state.  Currently my company does business in 9 states but we are registered and pay sales taxes to about 25 different authorities -- and we are mostly a rural business, so we are not in the larger urban areas that are more likely to have their own sales tax systems.

Apparently Congress is considering legislation to pre-empt this tax burden for all but the largest (read: Amazon) retailers

One potential vehicle for resolving problems created by Wayfair is a bill sponsored by Rep. Jim Sensenbrenner (R-Wisc.), first introduced in October and likely to be re-introduced to the new session of Congress within the coming weeks. His bill, the Online Sales Simplicity and Small Business Relief Act, would add important specifics like prohibiting states from collecting out-of-state sales taxes on transactions that occurred before January 1, 2019, essentially giving businesses much-needed time to get up to speed on the new requirements without suddenly being hit with tax bills they weren't expecting.

Most important of all, the bill would create a $10 million sales tax exemption for all small businesses that do not have a physical presence in a given state. That means upping the $100,000 threshold in the South Dakota law that triggered the Wayfaircase to a level far in excess of what a small business would have in sales—effectively removing the ability of states to target all but the largest of remote sellers.

"Small business owners, in particular, have shared fears that they will be unable to bear the new compliance burdens and may have to shutter their businesses," Sensenbrenner says. "I've heard from online sellers in Wisconsin and across the country who are concerned with the complexity of the post-Wayfair tax regime."

The bill is likely to have bipartisan support in the House this year, with Reps. Anna Eshoo (D-Calif.) and Zoe Lofgren (D-Calif.) lined up as co-sponsors, along with Rep. Jeff Duncan (R-S.C.).

This is actually good news if this law has support.  I actually thought that there would be no solution short of a federal sales tax on interstate sales that pre-empts the state rates, and whose proceeds would get shared with the states on some kind of pro rata basis.  I didn't think politicians would walk away from money, and I still think that if the Sensenbrenner bill is to pass it needs to do it this year before states get used to the new money and refuse to part with it.