Archive for June 2005

Blogs for Everything

In the spirit of Marginal Revolution's "markets in everything" series, I think I will start a "blogs for everything" series.  One of my favorite early on in this series was the Remote Blog, blogging on home theater remote control issues.

In this episode, we feature the Baby Names Blog, from the Baby Name Wizard.  It has pretty interesting features on names and why they go in and out of style.  And make sure to check out their name voyager, a cool java app on name popularity over the last century.

When we named our first child Nicholas, we soon found that we were on the front edge of a huge Nicholas revival.  For our second child, we wanted something less common, so we chose Amelia, which was way out of favor at the time but now appears to be in a revival as well.  The one thing that stands out from the chart is that 50 years ago, there were a few dominant names: John, Mary, etc.  Now, there are no dominant names.  I think this is signaling a change in parents attitude, from wanting their name to be safe and fit in, to wanting their kids' names to be unique and distinctive.  Certainly this was the case for us.

GM Employee Pricing

When I first heard the GM ad campaign to give consumers access to the same discounts their employees get, I had two reactions:

  • I sure hope that they have some alternative employee incentive lined up.  I remember when I applied to GM as an engineer, this car discount was high on the list of how they sold the job.  Now what are employees thinking, since their employment buys them nothing on this dimension?  They are probably thinking they weren't getting much of a discount if GM can offer that discount to everyone
  • If I were a stockholder, I would be selling, because it sure smacks as desperation.  If you think of all the incentives GM has offered over the years, if they are offering an incentive that is unprecedented in their 80+ year history, then you know there must be some panic in the boardroom

Only GM could come up with a program that makes both employees and shareholders upset.  George's Emploment Blawg has more thoughts along these lines.  This all assumes that "same pricing as employees"  means just that -- remember that this is the industry where "invoice pricing" means nothing of the sort.

Many people have analyzed GM's problems.  It is tempting to say that their main problem is that they have not good cars, but I want to be careful not to substitute my preferences for market research.  So, instead, I will point out a couple of facts:

  • GM makes most of its profit from SUV's
  • All the profit in a car line, given high fixed costs, come from the last 10-15% of the cars produced.

So, as gas prices rise and silly tax loopholes are closed [thanks Mark], SUV sales only need to fall 10-15% to wipe out most of GM's profitability.

Han and Chewie: The Early Years

If George Lucas needs any more money, here is my movie idea for him:  Make a movie about Han Solo and Chewbacca in their early years.  How did a Wookie prince become a smuggler?  How did he meet Han?  How did Han win the Millennium Falcon from Lando?  In my imagination, the movie would be more in the spirit of Raiders of the Lost Ark rather than the most recent star wars movie, putting the emphasis on adventure and action over special effects, Republic politics, and endless light-saber fights.  The only real challenge would be casting the young Han Solo part -- who would be willing to try to replace Harrison Ford?

Does anyone doubt that this would make a fortune, particularly if you teamed Lucas with someone to do the writing?  The series would easily lend itself to a serial format, with multiple episodes, though in that format it might make a better TV show than movie.


PS-  I got started thinking about this because I saw Star Wars III again this weekend.  As an update to my review:  it did not wear very well.  The back third from the (attempted) arrest of Palpatine forward was still engaging, but the front half actually had me squirming in my seat. The dialog still sucks, the initial mission sequence still makes no sense, and the battle with General Grievous is still just one more gratuitous light saber battle and chase scene.

Why Income Distribution Doesn't Matter in This Country

The NY Times has somehow decided that one of America's real problems is widening income distribution, or more specifically, the exponentially increasing wealth of the top tenth of one percent of US earners.  The series seems to be running to about 47 episodes (actually 10), but a key article is here, entitled "Richest Are Leaving Even the Rich Far Behind,"  There are a number of ways to attack this article.  One is to fisk their really abused and misused numbers, which George Reisman does here on the Mises Economics Blog

Lets accept that the very very rich are getting richer.  So lets move from there to the question of...

"so what?"

The Times is a little weak on the "so what".  I presume that in their intellectual-statist readership,  it is an axiom that rich people suck and rich people getting richer sucks more.  However, it is possible to pull out four things the Times extended editorial-masquerading-as-a-news-story finds bad about increasing income inequality:

  • As the rich get richer, there is less money left for the rest of us
  • The process of the rich getting richer reduces opportunities for the rest of us
  • Having very rich people around make the rest of us feel bad
  • The rich are only getting richer because the rest of us are subsidizing them through tax policy

It has been a while since I have really gotten carried away writing about a topic (at least three or four days) so I will now proceed to address each of these in turn and in some detail.

As the rich get richer, there is less money left for the rest of us.  At the end of the day - this is what is in most people's minds when they decry aggregations of wealth.  There are many, many people in the world, even in this country, who think of wealth as a fixed pie, as a zero sum game where one person's victory requires another persons loss.

If we were living in 17th century France, where the rich nobility got that way by taxing the crap out of the working peasantry, this would probably be an adequate view of reality.  Wealth came from the land and its products, whose supply, given no technology improvements for decades, were both relatively fixed.  This zero sum view of commerce led to a mercantilist view of the world economy, where it was thought that wealth was fixed, and that the only thing that could be done to it was to move it around, or tax it, or steal it, or loot it.

But we don't live in 17th century France.  We live in a modern, dynamic capitalist society where wealth is created.  One proof of this is so obvious that it amazes me anyone clings to the implicit zero sum economy assumption:  Compare the US in 2000 to the US in 1900.  We are so much wealthier top to bottom in our society than in 1900 its not even worth spending much time on the proof.  This is not just in real dollar terms, but in things that affect ones life, from average life span to leisure time to entertainment to technology.  People who live in the poorest 20 percentile today have things -- such as a lifespan over 70, access to cancer cures, cars, computers, VCRs -- that not even the richest one half of one percent had in 1900.  The poorest 20 percentile in this country would be the upper middle class or even the rich in many countries of the world today.

Michael Dell and Bill Gates are both in that evil 1/10 of 1% of richest people.  But how did they get that way?  They made their fortunes by providing me with this incredible tool on my desk that was unimaginable when I was born 40+ years ago, but now is pedestrian.  Right now I am typing on a Dell computer using Microsoft Windows, which I bought from the suppliers for a mutually agreeable price in a totally uncoerced manner.  My computer provides me with thousands of dollars of value - in productivity, in entertainment, in the ability to do new things that could never be done before (e.g. blog).  Most of this value I keep for myself; some, about $1200 in this case, went to the suppliers of labor and materials to build and program this thing.  And a small portion, less than $100, went towards the fortunes of Mr. Dell and Mr. Gates who had the vision to build the businesses they did.  The PC I have creates new value all around:  Thousands of dollars of new value for me the user and  hundreds of dollars in the form of jobs and new markets for suppliers.  Mr. Dell and Mr. Gates keep just a small portion of all that value created.  At some level, they are working cheap. And any one of us, had we had the vision, could have piggy-backed on Mr Gate's or Mr. Dell's wealth creation by buying stock in their firms.

The process of the rich getting richer reduces opportunities for the rest of us.  Since the "zero sum" argument is so easy to disprove, proponents of rich=bad have morphed their argument to this one.  This accusation comes up several times in the NY Times series, but is hard to refute mainly because the authors never explain the mechanism that they think is at work here or show any shred of proof.  The articles cite folks such as Warren Buffett, George Soros, and Ted Turner.  But how has their fortune-making reduced my personal opportunities one iota? 

Do I have less opportunity because Warren Buffet has made good investing decisions?  Heck, one can argue that any American has always had the opportunity to gain wealth in direct proportion to Buffet at any time, merely by buying Berkshire Hathaway stock.

How about Ted Turner.  Do I have less opportunities to improve myself because Ted Turner got rich creating CNN?  I guess I could facetiosly argue that by his creating CNN, others can no longer create a 24-hour cable news service because he has locked up the market, but Fox has disproved even this narrow argument.

What about George Soros?  I guess you could argue that from time to time my Sony Walkman was a buck or two more or less expensive because of some currency game he was playing in the markets, but I don't see how my opportunity has been reduced.  A better argument is that Soros's being wealthy might really threaten my opportunity if only because he funds so many statist-socialist causes with his billions.

In fact, this is one of those black-is-white arguments.  The reality is exactly the opposite.  When most rich people get rich (with the exception maybe of Peter Angelos and other tort lawyers) they do so by creating new value and thereby opportunity.  While all these folks may be really wealthy, in reality the wealth they have amassed is but a small percentage of the wealth and value that they created.  Where did the rest go?  To all of us, of course, in the form of jobs, and tools, and longer lifespans, and better entertainment.

Having very rich people around make the rest of us feel bad.  OK, this sounds like a problem for group therapy, but you see it in print all the time.  The disparity of incomes is "troubling" and could lead to "resentment".  If one were living in Venezuela or Nigeria or some country where, like 17th century France, wealth came from looting rather than the free exchange of goods, then I would agree that the income disparity would be troubling.  Shoot, if people were much wealthier than I because they were using the legal system to loot the rest of us, I would be pissed off (ironically, this is the case with the billionaire tort lawyers, but this is the last group that the Times will ever challenge). 

However, in this country, where most of the very rich got that way through hard work and better ideas, the result of free and uncoerced commerce, why be resentful?  Sure, I would love to have a G-V aircraft and hot Swedish wife [ed note:  oops, my wife might read this] like Tiger Woods, but lacking these, I have zero desire to deny them to Tiger.  I don't even begrudge super-tramp Paris Hilton her millions (but she did inspire me to change my will so my kids don't inherit from me until they are well past their majority).  Heck, I have spent whole vacations touring the discarded toys of the super-rich (e.g. mansions in Newport, RI).  What fun would there be without a moving target to aspire to?

So why do the Times and some many intellectualls legitimize this envy?  This type of envy has driven anti-semitism and in fact all sorts of racism through the ages.

The rich are only getting richer because the rest of us are subsidizing them through tax policy.  Around my house, I joke that everything, at least in my family's opinion, turns out to be my fault.  The equivilent at the NY Times is that everything is Bush's fault, and in particular, the fault of Bush's tax cuts.  The Mises article cited above does a pretty good job of fisking the argument that the tax system post-cuts favors the rich.  I took on took this notion here and here.  The Times "analysis" makes two major mistakes:

  • Social Security Tax hide and seek:  The NY Times article shows the very wealthy paying lower marginal rates than lower level earners.  As I pointed out here, this is entirely because they are including social security taxes in their analysis and that the taxes are capped at $90,000.  If you look at only income taxes, then marginal rates do not drop at higher incomes.

The left's argument here is highly contradictory.  When wanting to make the "rich are not paying enough" argument, they include Social Security taxes, knowing that since those taxes are regressive, they make it look like the rich are somehow getting off easy.  However, when discussing Social Security, the don't want to think of them as taxes - because they want Social Security to be insurance with premiums rather than a transfer program with taxes

  • Bracket Creep: The TImes points out that the income tax rate for the super rich is no higher than the rate for the merely rich or even $100,000 earners.  The implication is that the super rich are somehow getting a better deal.  But in fact, the problem is that the definition of rich, vis a vis taxes, has been lowered through the years.  The whole history of the income tax is to sell a tax as applying only to the very very rich, and then broadening the applicability over time.  The federal income tax followed this path, as has the AMT.  More recently, the top rate on California income taxes is seeing the same creep.  The statist trick is to apply a rate to the super rich, then creep it down so eventually it applies to everyone.  Then, they cry that - hey, the super rich aren't paying more than the middle class, so they institute a new higher super rich rate.  Rinse and repeat.

Conclusion.  I will leave you with the lyrics from Rush's The Trees:

There is unrest in the forest
There is trouble with the trees
For the maples want more sunlight
And the oaks ignore their pleas

The trouble with the maples
(and they're quite convinced they're right)
They say the oaks are just too lofty
And they grab up all the light
But the oaks can't help their feelings
If they like the way they're made
And they wonder why the maples
Can't be happy in their shade?

There is trouble in the forest
And the creatures all have fled
As the maples scream `oppression!`
And the oaks, just shake their heads

So the maples formed a union
And demanded equal rights
'the oaks are just too greedy
We will make them give us light'
Now there's no more oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet,
And saw ...

Update:  Several people said I missed the point about mobility, rather than just the rich getting richer.  I respond to this here.

Disaster in Zimbabwe

I am a little late linking this, but the world is in the midst of one of those pure, tightly controlled experiments to demonstrate the true price of socialism.  And, as usual, no one will learn from it.  Via Jane Galt:

It is depressing to look back at history and see how regularly the same
nice-sounding idea--"let's take the land from the rich people who unjustly own
it and give it to those who need it"--turns into tragedy for everyone. It's even
more depressing to realise that despite the seeming predictibility of the
result, lots of people want to do it anyway.

The Atlantic, which she quote in a follow up post, has more detail:

Mugabe decided on what he called "fast-track land reform" only in February of
2000, after he got shocking results in a constitutional referendum: though he
controlled the media, the schools, the police, and the army, voters rejected a
constitution he put forth to increase his power even further. A new movement was
afoot in Zimbabwe: the Movement for Democratic Change"”a coalition of civic
groups, labor unions, constitutional reformers, and heretofore marginal
opposition parties. Mugabe blamed the whites and their farm workers (who,
although they together made up only 15 percent of the electorate, were enough to
tip the scales) for the growth of the MDC"”and for his humiliating rebuff.

So he played the race card and the land card. "If white settlers just took
the land from us without paying for it," the President declared, "we can, in a
similar way, just take it from them without paying for it." In 1896 Africans had
suffered huge casualties in an eighteen-month rebellion against British pioneers
known as the chimurenga, or "liberation war." The war that brought Zimbabwean
blacks self-rule was known as the second chimurenga. In the immediate aftermath
of his referendum defeat Mugabe announced a third chimurenga, invoking a valiant
history to animate a violent, country-wide land grab...

The drop-off in agricultural production is staggering. Maize farming, which
yielded more than 1.5 million tons annually before 2000, is this year expected
to generate just 500,000 tons. Wheat production, which stood at 309,000 tons in
2000, will hover at 27,000 tons this year. Tobacco production, too, which at
265,000 tons accounted for nearly a third of the total foreign-currency earnings
in 2000, has tumbled, to about 66,000 tons in 2003.

Mugabe's belief that he can strengthen his flagging popularity by destroying
a resented but economically vital minority group is one that dictators elsewhere
have shared. Paranoid about their diminishing support, Stalin wiped out the
wealthy kulak farming class, Idi Amin purged Uganda's Indian commercial class,
and, of course, Hitler went after Jewish businesses even though Germany was
already reeling from the Depression. Whatever spikes in popularity these moves
generated, the economic damage was profound, and the dictators had to exert
great effort to mask it.

Overall, the country has gone from a net exporter of food to outright famine.  For this particular experiment, I am happy to live in the control group.  Stay tuned, as this show is likely to hit the road soon and move to Venezuela

What is "Extreme"?

Per the Washington Post:

But Democrats recited a litany of Brown's controversial statements, including
several from a 2000 speech titled "Fifty Ways to Lose Your Freedom." She said
senior citizens "blithely cannibalize their grandchildren because they have a
right to get as much 'free' stuff as the political system will permit them to
extract." Elsewhere, Brown has said: "Where government moves in, community
retreats, civil society disintegrates. . . . When government advances . . .
freedom is imperiled, civilization itself [is] jeopardized."

Sen. Joseph R. Biden Jr. (D-Del.) told reporters that Brown is "one of
the most extreme nominees that has ever come before the United States Senate in
the 32 years I've been a senator."

OK, so I am an extremist.  Take in particular the last quote from Brown - I bet I could find about 20 similar quotes in the Federalist Papers or from other contributors to the US Constitution.  That quote should be over the front door of the ACLU.  This is the second time I have read statements about her that were intended to scare me off but in fact endeared me to her. The first example was here.

Update:  People for the American Way have other JRB comments that are supposed to scare me, but don't.  Here is an example of what scares PFTAW:

In the New Deal/Great Society era, a rule that was the polar opposite of the
classical era of American law reigned...Protection of property was a major
casualty of the Revolution of 1937"¦Rights were reordered and property acquired a
second class status...It thus became government's job not to protect property
but, rather, to regulate and redistribute it. And, the epic proportions of the
disaster which has befallen millions of people during the ensuing decades has
not altered our fervent commitment to statism.

I am starting to wish she was running for office, so I could vote for her.  Reason has similar thoughts here.

Update #2:  Reason has a profile of her here.  Many more great quotes from her, including this gem:

In a dissent in San Remo Hotel v. City and County of San Francisco
(2002), which upheld the city's sweeping property restrictions, Justice Brown
expanded on that theme. "Theft is still theft even when the government approves
of the thievery," she declared. "The right to express one's individuality and
essential human dignity through the free use of property is just as important as
the right to do so through speech, the press, or the free exercise of religion."

Go Janice, go.

Grade Inflation in the Ivy League

The Boston Globe has an article on John Kerry's recently released Yale grades.  Humorously, after all the sturm and drang of him supposedly being an intellectual titan to George Bush's dim-wittedness, his GPA was actually a notch lower than George's at Yale.  Personally, I could care less - grades are important for getting into grad school or that first job out of college.  I can't even imagine GPA coming up much in assessing one's suitability for a job in his forties or fifties.

Anyway, the point I take from this is more about grade inflation that suitability for the presidency.  Both Kerry and Bush got a selection of D's, C's, and B's, and no A's.  And while these may have not been standout grades, they certainly didn't seem to be out of the norm for the time.  My question:  Does any student today who can fog a mirror in the Ivy League today get grades this low?  My guess is no.

Postscript: By the way, Kerry released his military records (which were the source of the Yale grades) and there does not appear to be any ticking time bombs in it.  In fact, there are several pieces of information that would have helped him in the campaign, including commendations from several of his swift boat vet critics.  Why in the hell did he drag his feet on this and give the Republicans a free campaign issue?

More on Federalism and this Supreme Court

Yesterday I wrote that this Supreme Court confused me - I couldn't find a consistent thread in their federalism-related rulings.  Orin Kerr at Volokh has an explanation that makes more sense to me than any other.  He explains where each justice is coming from, and concludes:

The mathematics of federalism on today's Supreme Court, then, is that the four
Justices who do not favor judicial enforcement of federalism constraints only
need one additional vote to form a majority. Conversely, for the Court to rule
in favor of a federalism limitation, common ground must exist that ties together
the differing viewpoints of all five of the right-of-center Justices. The odds
are that the former will happen more often than the latter, which is why
victories for federalism principles have tended to be rare and on relatively
narrow (that is, symbolic)

The Mises Blog informs me that this notion of "affecting" interstate commerce being sufficient to justify federal intervention originated in 1942 with Wickard v. Filburn.  Apparently the majority was accepting Wickard, though Thomas's dissent that I quoted in my earlier post sure points out how Wickard pretty much demolishes the commerce clause.

So Much for Federalism and the Commerce Clause

I tend to be a pragmatic, rather than a dogmatic, federalist.  What I mean by that is that I support federalism for the pragmatic reason that it tends to slow statism, rather than a dogmatic belief that federalism is somehow morally superior.  Generally, federalism has been good for this country, as it has provided a check to states that go nuts on taxation and over-regulation.  The exodus of businesses from the Northeast in the 60's and 70's and from California more recently are examples of this effect at work, as citizens vote with their feet for the regulatory regime they prefer.

The recent decision on medial marijuana, where the Supreme Court ruled 6-3 that federal marijuana laws trump state medical-marijuana statutes seems to be another nail in the federalism coffin.  One can tell immediately that the ruling is all about federalism (rather than drugs) when you have the spectacle of the three most conservative judges supporting state legalization laws and the most liberal judges ruling for continued marijuana illegality under federal law.  Again reading my handy pocket Constitution (courtesy of Cato), it is hard for me to find where the feds have purview over regulating California home-grown pot smoked in California.  By accepting the argument below, the Supreme Court has basically ruled that the feds can pretty much regulate intra-state commerce, since you can probably make a similar argument in any case:

lawyers for the U.S. Justice Department argued to the Supreme Court
that homegrown marijuana represented interstate commerce, because the
garden patch weed would affect "overall production" of the weed, much
of it imported across American borders by well-financed, often violent
drug gangs

By the way, think about that for a minute.  They are arguing that home-grown weed would "affect" the inter-state commerce of "violent drug gangs".  How would it affect it?  It would reduce their commerce!  So the feds are claiming purview over home-grown pot because it would, what?  Unfairly reduce the inter-state trade of violent drug gangs?

Clarence Thomas makes the point succinctly that accepting this argument is the end of the distinction between inter- and intra-state commerce:

Respondents Diane Monson and Angel Raich use marijuana that has never
been bought or sold, that has never crossed state lines, and that has
had no demonstrable effect on the national market for marijuana. If
Congress can regulate this under the Commerce Clause, then it can
regulate virtually anything and the Federal Government is no longer
one of limited and enumerated powers.

Is it just me, or does this Supreme Court seem all over the place in its rulings?  Maybe you constitutional scholars out there can figure it out.

Update:  More from Reason

More thoughts:  The left complains that the right is trying to create a theocracy via the Supreme Court.  The right argues that it just wants to protect constitutional limits on government, which the left wants to exceed.  I have been and still am suspicious of some conservative judges on the court, but I must say that the way the votes fell in this case certainly hurts the "theocracy" argument.  I would start to believe if it wasn't for the fact that in the next case, if recent history is any guide, everyone will likely reverse their positions again.

Advice to Graduation Speakers

This is the time of year that we get both good and bad reports about graduation speakers.  I think we had Maurice Sendak at my graduation, which was OK.  I also remember that the student body got to vote for one person to receive an honorary degree (rather than the usual criteria for giving the other honorary degrees, which seemed to involve donating a building).  We voted for our UPS driver, who really was one of the most important people in our lives at the time, being our main link to home and the outside world.

Anyway, Ace of Spades has some crude but funny advice for graduation speakers.

Government Is the Leader in "Unfair" Business Practices

I am always amazed at our government, which piously goes after business after business for "unfair" business practices, but never seems to apply the same rules to itself.  My latest example:

Today, I was (finally) granted a liquor license for our store and PWC rental business at Lake Havasu, AZ.  Since the approval process takes so long, I am ready at this point to be happy almost no matter what terms I get the license on.  Unfortunately, the state has rigid dates for licenses - they all expire June 30 of each year.  Since it is June 6 (hey, happy D-Day!) I get a license that runs from Jan 1 to June 30, and so have to renew almost immediately.  But here is the really good part:  They will not pro rate the license cost to June 6.  In other words, I have to pay the full $1000+ for the whole 6 month period, even though I am using only a few weeks.  Sleazy.  I wrote more about the whole liquor license process here

PS-  many will suggest that I just wait and go pay on July 1 for my license.  Well, they thought of that too.  There are rules on the application process such that it has to be completed in a fixed number of days.  If I don't buy the license by June 18, the whole 120-day application process starts over again.

Did Google Change Their Ranking Algorithm Again?

Suddenly, over the last several days, this site has seen a huge increase in Google search hits.  These hits are on a wide variety of articles, and not one in particular.  In following back the search terms on some of these hits, its strikes me that my blog is suddenly oddly high on some search terms that have never hit in the past (by this I mean, higher even than the historical over-ranking of blogs that occurs on Google).  I know that Google changes their algorithms from time to time without notice.  Anyone know if this happened recently.

Browser Market Share? Depends on Who You Ask

I have been a marketer for almost 20 years, and one of the classic mistakes in marketing is to rely too much on your own experience and preferences.  Its often easy to fall into the trap of saying "everyone I know would like that" or vice versa, only to find that "everyone you know" are not necessarily representative of the market as a whole.

When I was a consultant at McKinsey & Co., we often asked people we were interviewing questions like "what is the market size for window glass in Mexico".  The key to successfully completing the exercise was to break the problem down into cascading assumptions, each of which could theoretically be researched and checked.  For example, with the window glass problem, a good answer might be:

The glass market is probably made up of housing, commercial buildings, automotive, and other.  Take the housing market.  Assume 80% of the market is new construction.  Assume the population of Mexico is 50 million, and there are 5 people per home, so there are 10 million homes, and lets assume the housing stock is increased by 5 % a year and that each home has 100 square feet of glass..  etc etc.

It was kind of fun to see if they get to the right answer, but the whole point was to see how they could break down and analytical problem.  The reason I bring up this whole episode was sometimes we would ask our recruits, typically Ivy Leaguers, to come up with the market size for annual snow ski sales.  So they would work through the logic that there are 300 million people in the US and x% ski and these people replace their skis on average every 5 years, etc.  However, it always made me laugh that these folks would be guaranteed to miss the number way, way high.  Why?  Because in coming up with the percentage of people that ski, they would look around the room and say, well 80% of my friends ski and so lets assume 30 or 40 or even more percent of Americans snow ski.  In fact, I have not looked up the number lately, but the actual percentage of Americans that ski is something less than 5%.  Recruits intuition was fooled because, at least in terms of skiing, they were surrounded by an anomalous population.

All of this is a long, long, overly long intro into an interesting set of facts around browser share between IE and Firefox.  A while back I wrote that, from my traffic logs for this site, Firefox appears to be killing IE.  In fact, since I posted this, Firefox has gained even more share on this site:


Now, to the issue of this post, one might suspect that my traffic might not be representative of the whole market.  I would argue that blog readers probably are heavier Internet users, more Internet-savvy on average, and therefore more likely to have investigated browser alternatives beyond the one pre-loaded on their PC.  It turns out that I have a way to test this.  I have another group of sites for my business, including sites for Forest Service Campgrounds, Lake Havasu Jetski Rentals, and Campground Jobs.  The readers of these sites tend to be older on average and less computer proficient.  The browser market share at these sites looks like this:


Wow, that is a huge difference.  Take it from me, its unusual to find a market segmentation that dramatic.  It makes me wonder about all of the talk about blogs replacing the MSM.  How much are we breathing our own exhaust?

Postscript: This is an age-old problem and takes many forms in many businesses.  For example, thousands of farmers have bankrupted themselves in the commodities futures markets making bets on worldwide crop prices based on their local weather and harvest expectations.

Disclosure: Yes, I did take the opportunity to shamelessly Google bomb my own sites.  Sorry.  I don't do it very often, maintaining a pretty solid firewall between my business and blog.

Creating Two Classes of Citizens

Over the past couple of days, the comment period and the resulting debate about FEC rule-making for blogs and campaign finance reform really has me simmering.  As a review, McCain-Feingold for the second* time in modern US history created a dual class of citizenship when it comes to First Amendment speech rights:  The "media" (however defined) was given full speech rights without limitations during an election, while all other citizens had their first amendment rights limited. 

These past few weeks, we have been debating whether this media exemption from speech restrictions should be extended to bloggers.  At first, I was in favorThen I was torn.  Now, I am pissed.  The more I think of it, it is insane that we are creating a 2-tiered system of first amendment rights at all, and I really don't care any more who is in which tier.  Given the wording of the Constitution, how do I decide who gets speech and who doesn't - it sounds like everyone is supposed to:

Congress shall make no law respecting an establishment of religion, or
prohibiting the free exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people peaceably to
assemble, and to petition the government for a redress of grievances.

I have come to the conclusion that arguing over who gets the media exemption is like arguing about whether a Native American in 1960's Alabama should use the white or the colored-only bathroom:  It is an obscene discussion and is missing the whole point, that the facilities shouldn't be segregated in the first place.

I have read my handy pocket Constitution (courtesy of the Cato Institute) through a number of times, and I have yet to find any mention of special constitutional privileges or rights for employees of major media firms.  Unfortunately, we seem to act like its in there somewhere, as I wrote here as well, though in a different context.

*  Footnote:  This is not the first time we have created two classes of citizen when it comes to speech.  Over the last 30-40 years, we have differentiated "political" speech from "commercial" speech.  Until McCain-Feingold, political speech was pretty zealously protected by the courts, while we have gotten to the point that the government can pass nearly any law it wants restricting commercial speech.  Here is a simplistic example.  Unless I am over some spending limit, I can buy an ad in the NY Times and print in 70 point type "Bush Sucks" and no court would bat an eye.  If I am a pissed off Ford customer, I can print an ad in the Times saying "Ford Sucks" and probably be fine as well.  However, if I am a Honda dealer, and place an ad in the NY Times saying "Ford Sucks", I will likely get fined and slapped with an injunction.

When the Constitution says that "Congress shall make no law ... abridging the freedom of speech" it sure seems like there aren't any qualifying words like "political" or "commercial"

Getting Into Ivy League Schools

Since I went to two Ivy League Schools (Princeton undergrad, Harvard MBA), I get asked by parents a lot about how to get their kids into an Ivy League school.  My answer is the same one that I think many of my friends from college give:  "I'm not sure I could have gotten into Princeton if I did it today, rather than 20 years ago".  While the number of bright, qualified students seems to have gone up tenfold over the last decades, the number of admissions spots at Ivy League schools has hardly changed, and few new schools have emerged as Ivy League equivalents (if not in fact, at least in the perceptions of the public).

I have recently discovered this really nice blog by Kurt Johnson, who recently got accepted to attend Wharton business school next year.  He has several good posts about school rankings and admissions, including this one here.  The curves showing that only about 20% of applicants in the top 1 percentile of test scores get into Princeton is scary.  Yes, I had good SAT scores, somewhere in the 1500's  (I would never have believed at the time I would have forgotten the number, but I seem to have).  At the time, that was pretty much a layup for getting into the Ivy League, though I had some decent sports and activities as well.  Now, the odds are I wouldn't make it.

Today, parents are downright crazed in trying to figure out what it takes to get in.  For example, any of the 11 year olds at our elementary school do community service, which I guess is fine though it seems to be driven more by setting up early resume wins rather than saving the world.  Things like piano and violin are out:  Parents are pushing their kids into more unique, differentiated instruments like bagpipes or the xylophone.  My old college roommate, whose kids go to a college prep school in DC, joked that he planned to send the other school parents into a jealous hysteria by telling them his kids were competing in falconry.

Kurt also makes a good point about one of my pet peeves of performance measurement:  that is, measuring a process based on inputs rather than outputs.  You see this all the time, for example, when the department of homeland security talks.  They say things like we have xx thousand agents making xx checks with xx equipment blah blah.  Yes, but are we safer?

Postscript: By the way, after reading Kurt's work, he is basically going to Wharton for a piece of paper.  He already appears to be at least as thoughtful an analyst of business issues as most poeple I know with Ivy League MBA's.  OK, this is a bit unfair.  I learned a lot that was useful in my first year of busienss school, then I entertained myself in the second year with a lot of material that was interesting but I never used much.  My MBA was sort of a 1-year technical degree with an extra year in "business liberal arts".  I have talked to lawyers that say the same thing about law school.

Orange County Moves to Ohio

If you thought the idiots who ran Orange County's finances into the ground were bad, wait until you meet these jokers:

Two months ago, reports emerged that $300,000 in rare coins was missing from a
collection in which the state Bureau of Workers' Compensation (BWC) began
investing in 1998 as a peculiar form of stock hedge. That was bad enough. But
last week, word came that between $10 million and $12 million in coins had
disappeared. That caused BWC director Jim Conrad to announce his resignation,
and launched a flurry of accusations and calls for legal action.

As if my workers comp. rates weren't already too high.  There goes my idea to invest Social Security funds in beanie babies and 60's lunch boxes.  Apparently most of the major lawmakers in the state got large campaign donations from several large coin dealers, and they returned the favor by investing public funds in coins through these dealers.  I often make the argument not to let the government have control of large equity investment funds -- I did not even occur to me to include coins.  One of the things about coins - you have to hold them for a long, long time to make money, in part because commissions markups are so high vis a vis other investments (which explains why coin dealers so readily donated large sums of money for government business).

Reason has a good roundup.  Unfortunately, I am sure this will all lead to more restrictions on spending and speech in campaigns, though it appears the system is working fine - full disclosure of funding sources certainly has everyone running for their lives.

The real solution is to make elected officials take a real fiduciary interest in the state's investment funds (pensions probably being the largest).  What they would prefer to do is to legislate a set of rules and then leave managers to follow these rules, giving them plausible deniability.  What they should do is sit down once a quarter and review portfolio investment performance and asset allocations.

More on Statism and the Housing Bubble

In a followup post to the impact of "smart growth" policies on housing prices and availability, Tim Cavanaugh has this in Reason:

What's weird is how rarely, in San Francisco media, you'll hear the above
argument made at all. The "crisis" in housing prices is almost invariably
described as an inexplicable force of nature (in the local TV news) or as a
conspiracy by developers (in the alt.weeklies). You'd think, in a city full of
progressives who can talk all day about how they wish they could afford a home,
somebody might have started to wonder whether there's a connection between
political decisions and the fact that the city is remarkably segregated and
prohibitively expensive.

He has more, as does Thomas Sowell:

That fact has much to do with skyrocketing home prices. The people who vote on
the laws that severely restrict building, create costly bureaucratic delays, and
impose arbitrary planning commission notions need not pay a dime toward the huge
costs imposed on anyone trying to build anything in the San Francisco Bay area.
Newcomers get stuck with those costs...

People who wring their hands about a need for "affordable housing" seldom
consider that the way to have affordable housing is to stop making it
unaffordable. Foster City housing was affordable before the restrictive land use
laws made all housing astronomically expensive. Contrary to the vision of the
left, the free market produced affordable housing -- before government
intervention made housing unaffordable.

Smart Growth and the Housing "Bubble"

The other day, I wrote fairly tongue-in-cheek about dentists, their investment choices, and the housing "bubble".  In that article I linked to several much weightier analyses, if you are interested in the topic.  The Commons Blog has chimed in today with an interesting point about "smart growth" policies (which I have derided in many other posts):

But few reporters have bothered to ask why some markets have a bubble while
other fast-growing markets do not. The usual answer is that the bubbles are on
the coast because everyone is moving there, but many fast-growing regions in the
West and South do not appear to have a bubble.

The answer appears to be that "smart growth" and other growth-management
policies restrict housing supply. Since housing is an inelastic good, a small
restriction on supply leads to rapid increases in prices. This brings
speculators into the market -- and a large percentage of homes today are being
purchased with no-down-payment, interest-only loans by people who don't plan to
live in the homes; in other words, speculators.

A list of regions that are suffering bubbles reveals that a very high
percentage have implemented some form of growth management such as urban-growth
boundaries, greenbelts, or restrictions on building permits.

More on smart growth and housing bubbles here.  More smart growth resources via Cato.


Response to the FEC

The Online Coalition, put together to fight FEC restrictions to free speech rights as they apply to bloggers, has posted their official response to the FEC.  (hat tip:  Captains Quarters)

This is one of those efforts that leave me torn.  In effect, the rulemaking process is considering whether the media exemption in campaing finance laws should be extended to bloggers.  My point of view is that the media exemption should be extended to everyone.  That, 1) limits to money spent are the equivalent to limits on speech and 2) it is particularly insidious to create multiple classes of citizen, where one class of citizen (exempt media) have more political speech rights than others.

So, while I agree with their comments on blogging narrowly, I disagree when they make broader statements, like this one:

Finally, your rules should be informed by the regulatory purpose of the Federal Election Campaign Act. Your rule should address corruption, the appearance of corruption, the involvement of foreign nationals, or the use of the corporate or labor forms of organization and their "aggregations of wealth" in ways that drown out the views of others.

What does that last part I bolded mean?  Why is the Republican Party or one of George Soros's organizations proper aggregations of wealth for the political process but corporations and labor unions improper?

Anyway, campaign finance reform is one big hypocritical unconstitutional mess.  Let anyone give whatever they want to whomever with the only proviso of full disclosure over the Internet of all sources of funds.

I Don't Necesarily Treasure the Right to Vote

Every Memorial Day, I am assaulted with various quotes from people thanking the military for fighting and dying for our right to vote.  I would bet that a depressing number of people in this country, when asked what their most important freedom was, or what made America great, would answer "the right to vote."

Now, don't get me wrong, the right to vote in a representative democracy is great and has proven a moderately effective (but not perfect) check on creeping statism.  A democracy, however, in and of itself can still be tyrannical.  After all, Hitler was voted into power in Germany, and without checks, majorities in a democracy would be free to vote away anything it wanted from the minority - their property, their liberty, even their life.   Even in the US, majorities vote to curtail the rights of minorities all the time, even when those minorities are not impinging on anyone else.  In the US today, 51% of the population have voted to take money and property of the other 49%.

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

  • The Rule of Law. For about 99% of human history, political power has been exercised at the unchecked capricious whim of a few individuals.  The great innovation of western countries like the US, and before it England and the Netherlands, has been to subjugate the power of individuals to the rule of law.  Criminal justice, adjudication of disputes, contracts, etc. all operate based on a set of laws known to all in advance.

Today the rule of law actually faces a number of threats in this country.  One of the most important aspects of the rule of law is that legality (and illegality) can be objectively determined in a repeatable
manner from written and well-understood rules.  Unfortunately, the massive regulatory and tax code structure in this country have created a set of rules that are subject to change and interpretation constantly at the whim of the regulatory body.  Every day, hundreds of people and companies find themselves facing penalties due to an arbitrary interpretation of obscure regulations (examples I have seen personally here).

  • Sanctity and Protection of Individual Rights.  Laws, though, can be changed.  In a democracy, with a strong rule of law, we could still legally pass a law that said, say, that no one is allowed to criticize or hurt the feelings of a white person.  What prevents such laws from getting passed (except at major universities) is a protection of freedom of speech, or, more broadly, a recognition that individuals have certain rights that no law or vote may take away.  These rights are typically outlined in a Constitution, but are not worth the paper they are written on unless a society has the desire and will, not to mention the political processes in place, to protect these rights and make the Constitution real.

Today, even in the US, we do a pretty mixed job of protecting individual rights, strongly protecting some (like free speech) while letting others, such as property rights or freedom of association, slide.

  • Government is our servant.  The central, really very new concept on which this country was founded is that an individual's rights do not flow from government, but are inherent to man.  That government in fact only makes sense to the extent that it is our servant in the defense of our rights, rather than as the vessel from which these rights grudgingly flow.

Statists of all stripes have tried to challenge this assumption over the last 100 years.   While their exact details have varied, every statist has tried to create some larger entity to which the individual should be subjugated:  the Proletariat, the common good, God, the master race.  They all hold in common that the government's job is to sacrifice one group to another.  A common approach among modern statists is to create a myriad of new non-rights to dilute and replace our fundamental rights as individuals.  These new non-rights, such as the "right" to health care, a job, education, or even recreation, for god sakes, are meaningless in a free society, as they can't exist unless one
person is harnessed involuntarily to provide them to another person.
These non-rights are the exact opposite of freedom, and in fact require
enslavement and sacrifice of one group to another.

Don't believe that this is what statists are working for? The other day I saw this quote from the increasingly insane Lou Dobbs (Did you ever suspect that Lou got pulled into a room a while back by some strange power broker as did Howard Beale in Network?):

Our population explosion not only detracts from our quality of life but threatens our liberties and freedom as well. As Cornell's Pimentel puts it, "Back when we had, say, 100 million people in the U.S., when I voted, I was one of 100 million people. Today, I am one of 285 million people, so my vote and impact decreases with the increase in the population." Pimentel adds, "So our freedoms also go down the drain."


In a society with a rule of law protecting individual rights, how does having a diluted vote reduce your freedom?  The only way it does, and therefore what must be in the author's head, is if one looks at government as a statist tug of war, with various parties jockeying for a majority so they can plunder the minority.  But in this case, freedom and rule of law are already dead, so what does a dilution of vote matter?  He is arguing that dilution of political power reduces freedom -- this country was rightly founded on just the opposite notion, that freedom requires a dilution of political power.

At the end of the day, our freedoms in this country will only last so long as we as a nation continue to hold to the principle that our rights as individuals are our own, and the government's job is to protect them, not to ration them.  Without this common belief, all the other institutions we have discussed, from voting to the rule of law to the Constitution, can be subverted in time.

So to America's soldiers, thank you.  Thank you for protecting this fragile and historically unique notion that men and women own themselves and their lives.

Heads You Win, Tails I Lose, Part 2

In my earlier post, I lamented the fact that "progressives" who criticize Bush for being undemocratic, illiberal, overly dependent on the military, and theocratic are proposing alternatives that are much, much worse.  In that post, they were championing Hugo Chavez of Venezuela as their savior.  Now, they seem to be latching on to Muslim countries like Syria, Saudi Arabia, and Iran as their champions of liberal values. In this interview of George Galloway, recently feted by liberals and progressives on both sides of the Atlantic:

M.B.H.S.: You often call for uniting Muslim and progressive forces globally.

How far is it possible under current situation?

Galloway: Not only do I think it's possible but I think it is vitally necessary

and I think it is happening already. It is possible because the progressive

movement around the world and the Muslims have the same enemies.

*Their enemies are the Zionist occupation, American occupation, British

occupation of poor countries mainly Muslim countries. * * *

*They have the same interest in opposing savage capitalist globalization which

is intent upon homogenizing the entire world turning us basically into factory

chickens which can be forced fed the American diet of everything from food to

Coca-Cola to movies and TV culture*. And *whose only role in life is to consume

the things produced endlessly by the multinational corporations.* And the

progressive organizations & movements agree on that with the Muslims.

Otherwise we believe that we should all have to speak as Texan and eat McDonalds

and be ruled by Bush and Blair. So *on the very grave big issues of the

day-issues of war, occupation, justice, opposition to globalization-the Muslims

and the progressives are on the same side*.

By the way, this is the movement that calls itself "reality-based".

Can't someone today emerge as a rallying point for those of use who are classical liberals and libertarians?

Hat Tip LGF.