Coyote Blog

Via Overlawyered, one of my absolute favorite blogs, comes my favorite headline of the week, courtesy of KCRA in California:

Paraplegic Activist Leaps From Wheelchair, Runs From Police

That's classic.  Apparently, the person involved had defrauded numerous organizations with spurious ADA complaints under California's ridiculous sue-anyone-with-higher-net-worth-than-yours laws.

Police said Laura Lee Medley, who repeatedly filed claims and lawsuits
for noncompliance with the Americans with Disabilities Act, was a con
artist.

A San Bernardino County spokesman, David Wert, said
Medley had complained to police earlier that she was having medical
problems so she was taken to a hospital for treatment.

Wert said, "That's where the great miracle occurred."

Officers
said Medley, 35, leaped from her wheelchair and ran for freedom after
being placed under arrest by Las Vegas police. The barefoot woman was
caught after a brief pursuit.

According to authorities in
Southern California, Medley was never disabled but used her supposed
condition to file many medical claims and lawsuits. Her questionable
claims led to the arrest in Las Vegas.

The vast majority of my employees and many of my customers are over 60, so we try extra-hard to accommodate people with all kinds of disabilities.  That is why this type of fraud really burns me up.  Not once but twice we have killed incipient lawsuits when we have had customers who were claiming severe physical disabilities observed playing football or unloading a truck.  I have had one person I was interviewing for a job tell me that I had to hire him since he was disabled, because if I didn't choose him I would be discriminating against the handicapped (we chose a different candidate).

Update: More Unruh act silliness:

A Los Angeles psychologist who was denied a tote bag during a Mother's
Day giveaway at an Angel game is suing the baseball team, alleging sex
and age discrimination.

Michael Cohn's class-action claim in Orange County Superior Court
alleges that thousands of males and fans under 18 were "treated
unequally" at a "Family Sunday" promotion last May and are entitled to
$4,000 each in damages.

In the next few weeks, Enron leaders Lay and Skilling will or will not be found guilty of various fraud-related charges (betting is that they will be).  You, in turn, may or may not agree with the verdict. (Disclosure:  I used to work with Skilling at McKinsey.  From my knowledge of his brilliant mind and his attention to detail, I thought that his Congressional testimony that he was unaware of the shenanigans in the SPE's was unconvincing, and so thought at the beginning of the trial he would be found guilty.  However, the prosecution's case has had surprisingly little to do with the SPE's and was weaker than I expected, so I am less sure now).

Wherever you are on guilt or innocence, you should be concerned about the increasingly aggressive tactics that prosecutors are getting away with in this and related cases.  Tom Kirkendall is all over this story, and reports:

the Enron Task Force refused Ken Lay and Jeff Skilling's request to
have the prosecution recommend to U.S. District Judge Sim Lake that
half-a-dozen former high-level Enron executives who have declined to
testify during the trial on Fifth Amendment grounds be granted immunity
from having their testimony used against them in a subsequent
prosecution.

Those witnesses -- several of whom have been mentioned prominently
in testimony during the trial -- would likely provide exculpatory
testimony for Lay and Skilling if they were to testify. The
Lay-Skilling defense team limited their immunity request to those six
witnesses even though the Task Force fingered the unprecedented number
of the Task Force identified over 100 former Enron executives
as unindicted co-conspirators in the case for the transparent purpose
of preventing the jury from hearing the full story of what happened at
Enron.

Another potential outcome may be the weakening of attorney-client privilege.

Just before my body decided to purge itself for a few days, USA Today ran a story that the NSA was doing more than just listening in on overseas calls to suspected terrorists.  It claimed that the NSA was also compiling a database of domestic call records.

The National Security Agency has been secretly collecting the phone
call records of tens of millions of Americans, using data provided by
AT&T, Verizon and BellSouth, people with direct knowledge of the
arrangement told USA TODAY.

This bothers me, as much for separation of powers issues that I will describe below as for any  worry about the data being collected.  Conservatives, however, immediately criticized the article, as summarized well here, making a number of points:

1.  Its old news
Shame on conservatives.  This is the same tired line that Clinton used to drive them crazy with.  The theory here is that once a story has run a full news-cycle, it is then too late to report on it or show any further outrage about it.  Once the political boil is lanced, its time to "move on".  Sorry, I don't buy it.

2.  USA Today is exaggerating
The USA Today and those who picked up on the story  are indeed sloppy, perhaps purposefully to make a better story, in blurring the line between collecting phone numbers and eavesdropping.  To date, the evidence is only that phone numbers were collected, which is in fact less intrusive than eavesdropping.  It still pisses me off, for reasons below.

 3.  The IRS already has more data
Yes, and that bothers me too.  Does anyone really doubt that IRS data has been peeked at and used for political purposes?  And I am flabbergasted at how far conservatives have wandered over the last several decades that they hold up the IRS as a model to be emulated.  But here is the key difference that I will get into in a minute:  The IRS is allowed to collect this data by legislative statute passed by Congress.  This statute includes rules for data management and access, with steps for judicial review and criminal penalties for its violation.  The NSA data base has ... none of this.  No legislative authorization.  No process and privacy protections.  No penalties for misuse of data.  No judicial review steps.

4.  Its no big deal, and its good for you
Maybe.  Or maybe not.  The trouble is that we are only getting tiny leaked glimpses into whatever the administration is doing.  The President has created the theory that he can declare war against a vague and in fact impossible to define target, and then take on absolute dictatorial non-reviewable powers to prosecute this war in any way he likes, and that any steps taken in this war can be considered legitimate steps (rather than overstepping his bounds) based on his say-so alone. 

The problem is not the database per se, but the fact that the NSA and this administration feels it can do anything it wants outside the bounds of traditional separation of powers.  If the NSA needs a phone call database, then the President can go to Congress and solicit such an authorization.  A well-crafted piece of legislation would put strict limits on how the data is used, would provide some sort of outside review of its use, and would provide for stiff penalties for its misuse.  This is what I wrote previously:

Here is how we have generally interpreted the 4th amendment:  The
legislative branch sets the ground rules, as followed by the
Administration.  The administrations selection of targets is reviewed
by the Judiciary (warrants) and is also subject to later review at
trial (via the admissibility of evidence).  What we try to avoid is
allowing the same person to set the rules, choose the target, and
perform the surveillance, all in secret and without outside review.
The problems with the NSA wiretapping program is not that it is wrong
per se, but that it may violate this process.  The administration is
claiming the right to choose the target and perform the surveillance
under the own rules and in secret with no possibility of review.   

What really irks me about this is the crass politics going on.  Does anyone doubt that if a Clinton White House had been revealed doing this that Conservatives would have been screaming in outrage?  And liberals are, if anything, even funnier.  These are the folks that trust the government but distrust corporate America.  So why is it that they are upset about a transfer of phone records from evil old AT&T to benevolent old Uncle Sam?  Except, of course, because it is being done by a Republican.

More on eroding separation of powers here and here.

Update: This database may be being used to see who reporters are talking to in order to root out leaks.  Anyone uncomfortable now?  And this is priceless:

Under Bush Administration guidelines, it is not considered illegal for
the government to keep track of numbers dialed by phone customers.

Duh.  Under Bush Administration guidelines, nothing the administration wants to do is considered illegal.

More: Several sources have used the Supreme Court decision to make the case that collection of the phone records is legal without a warrant.  Here is a key passage:

Petitioner in all probability entertained no actual expectation of
privacy in the phone numbers he dialed, and even if he did, his
expectation was not "legitimate." First, it is doubtful that telephone
users in general have any expectation of privacy regarding the numbers
they dial, since they typically know that they must convey phone
numbers to the telephone company and that the company has facilities
for recording this information and does in fact record it for various
legitimate business purposes. And petitioner did not demonstrate an
expectation of privacy merely by using his home phone rather than some
other phone, since his conduct, although perhaps calculated to keep the
contents of his conversation private, was not calculated to preserve
the privacy of the number he dialed. Second, even if petitioner did
harbor some subjective expectation of privacy, this expectation was not
one that society is prepared to recognize as "reasonable." When
petitioner voluntarily conveyed numerical information to the phone
company and "exposed" that information to its equipment in the normal
course of business, he assumed the risk that the company would reveal
the information  to the police,

First, it would be interesting to see if the SCOTUS would agree that this ruling extends to sharing such information with non-law-enforcement branches of the government (NSA is not a law enforcement arm).  Second, it would be interesting to see if the Court came to the same conclusion if the target for the the data sweep was "every citizen in the US" and not just targets of law enforcement investigations.

Third and most importantly, this decision seems to suck.  This exact same logic seemingly applies to any piece of data submitted to any private third party unless the data is specifically protected (e.g. medical records).  Sorry, but this is wrong.  I should be able to have commercial transactions with third parties without the expectation that the government can take the records for its own use without any kind of a warrant. 

Also, the premise that this ruling is based on is provably false, though only by technology instituted after the decision.  There is an entire industry of phone company services and 3rd party technologies aimed right at this area of phone call (and email; and Internet surfing) anonymity and privacy.  With the Internet for example, there is a very, very clear expectation that sharing information with a company for one purpose (e.g. to complete a transaction) does NOT authorize the company to use or share the data for any other purpose.  This use of transaction data and its limits is a CRITICAL and front-of-mind issue for modern communicators.  It is absurd to say, as the justices did, that:

When
petitioner voluntarily conveyed numerical information to the phone
company and "exposed" that information to its equipment in the normal
course of business, he assumed the risk that the company would reveal
the information  to the police

The implication is that by giving a company data for use in a transaction, we are giving them an unwritten license to do whatever they want with the data.  Do you believe you are granting this?  Is it true that you "entertain no expectation of privacy" in such transactions?  If you agree with this ability, then I assume you also agree that the government should be able to see all your:

• Credit card bills
• Records of who you have emailed
• Records of which Internet sites you have visited
• Records of what searches you made in search engines

These are all 100% amenable to the logic the Justices used in this decision.

I don't mean that law enforcement shouldn't be able to subpoena these records ever.  But they need to at least go to a judge and say "we want to see Warren's phone records from X to Y date because we suspect him of Z for the following reasons."

For the last two days I have had some sort of food poisoning or gastro-intestinal something that has made me as sick as I every remember being.  Sopranos fans, think Tony Soprano in the episode he kills Big Pussy.  Starting to recover, I hope.

Update: Little did I know that when I posted this, it was only halftime.  I am finally better, but I can certainly do without getting that again for a while.

Per the WSJ($):

Last week the House of Representatives expressed its
collective outrage over high gas prices by voting as a herd, 389-34, to
make gasoline "price gouging" a federal felony.

Really. This command and control legislation reads
like the kind of law passed by the old Soviet Politburo. If an oil
company is found guilty of charging a "grossly excessive" price for
gasoline, it could face a $250 million fine and its executives face
imprisonment. Even neighborhood service station owners could be
sentenced to two years in jail and a $2 million fine for the high crime
of charging too much at the pump.

So what is price gouging?  What is the objective standard that we can all apply to our behavior to know clearly, before the fact, if our actions are legal or illegal?

One small problem is that no one in Washington can seem to define what
constitutes price gouging. Under the House legislation, the bureaucrats
at the Federal Trade Commission would define a "grossly excessive"
price and then, once prosecutors charge some politically vulnerable
target, juries across the country would decide who's guilty and who's
not. A Senate version, sponsored by Maria Cantwell of Washington,
contains terms like "excessively unconscionable price increases" and "a
gross disparity" between the normal price and the price during a
shortage or an emergency.

If this passes, there are two, and only two, ways this can be enforced:

1. The standards remain incredibly vague, such that there is no objective way to know if you are guilty of a felony until you are in front of a jury listening to the verdict.  Some juries will may decide 6 cents over cost is gouging, others may decide its 50 cents.  But you won't know until you hear the jury's verdict.
2. In an effort to deal with the problem of having no objective standard in advance, a federal bureaucracy is created to set detailed lists of allowable prices, essentially subjecting retail gasoline sales to price controls.  The prices set by regulators will either be above the price the market would have set, meaning that the price-setting is a meaningless waste of money, or it will be less than that set by the market, such that gas shortages and lines will ensue. 

These are the only two choices.  You only have to look at past history with oil price controls, airline regulation, railroad regulation, wage and price controls, etc. to know just how bad this will end.

As Jeff Flake of Arizona, one of the brave 33 no votes, tells us: "None
of my colleagues actually believes this will reduce prices, and many
realize it will ultimately make shortages worse." Yet this is what
happens when petrified politicians allow mob rule to trump economic
common sense.

My company operates several retail gasoline outlets.  We at best break even and probably lose money on the gas, but we continue to sell it to bring people into our stores and because there are so few other local retailers (we are in very rural areas).  If this law passes, I am just not going to risk going to jail because some economically ignorant jury in the future can't figure out that gas is more expensive in rural areas or because some tragic and sympathetic figure decides to sue me.  I'm out.  And if someone observes that in the rural areas in which we operate, consumers will probably be worse off if we exit, then Congress should have thought of that before they passed this Marxist-populist legislation.

Up to now, it was for this and only this reason that I tended to vote Republican more than Democrat.  I held my nose and looked past family-values-based censorship and stupid drug law enforcement and regulation of sexual choices and xenophobic immigration policies and all the rest of the conservative baggage solely because Republicans tended to pass less stupid dumbshit socialist destructive economic regulation than the Democrats. 

I've always told people that as a libertarian for whom neither party is internally consistent, you just have to pick the issues you vote on.  If I was gay or needed frequent abortions or was Howard Stern, I would vote Democrat.  Trying to run a small business against a growing tidal wave of government taxes and regulations, I often vote Republican.   If every Republican was (were?  I always get that subjunctive thing mixed up) like Jeff Flake, I would continue to vote for them.  Right now, though, I may go back to sitting on my hands or vote for whatever goofy person the Libertarian Party has put forward.

I just can't figure out who is making all these imagined profits.  I don't know any retailers of gasoline who make any real money on gasoline sales.   For god sakes, typical gasoline margins are 5-12 cents a gallon, and the credit card processing fee alone at $3 a gallon uses up 9 cents of that!  And even the great Satan ExxonMobil, in their greatest most profitable quarter ever, made a profit of 9.7% of sales, barely above the US industrial average and well below that of most well-known consumer products companies.  If anyone is making profits they don't deserve, it is Hugo Chavez and the Saudi princes, but I don't think there is much we are going to do about that.  And, if one is concerned with pricing in emergencies, I have actually pleaded for gouging when the alternative was not being able to find gas at all.

If Congress really wants to do something about gas prices, it could consider:

• Reducing gas taxes, which take more our of a gallon of gas than any private entity makes in profit
• Opening up exploration in the ANWR and on the US east coast
• Making it easier to build new refining capacity in the US
• Restructuring rules to reduce the number of EPA-mandated unique local gasoline blends are required
• Remove the 40+ cent tariff on important ethanol, which federal rules effectively require in gasoline and which is in short supply domestically

By the way, in the past several weeks, Congress has rejected legislation on every one of these items in favor of this silly gouging legislation.  The WSJ offers this final thought:

If service stations are guilty of extortion because their prices are
rising more than their costs, then are we to have pricing police
preventing homeowners from selling their houses for two or three times
what they bought them for, or movie theaters from charging $6 for
popcorn that costs 25 cents to produce, or Barbra Streisand from
commanding a $1 million fee for a single performance? Now that
Republicans have surrendered to the political expediency of price
controls on big oil, they won't have much standing to stop Democrats
from imposing price ceilings on pharmaceutical drugs, school supplies,
medical equipment, and the like.

Incredibly, there are still depths to be plumbed in bringing TV shows to the big screen, as apparently Knight Rider may soon be made into a movie.  Shows I would have expected to be made into movies before Knight Rider include:

• 6-million dollar man
• A-team
• Hawaii 5-0

And by the way, what kind of world do we live in where I can't buy old Hawaii 5-0 reruns on DVD?

Hat Tip:  Reason's Hit and Run, with a nostalgic look at past efforts to discern KITT's sexual orientation.

Most any reader of this site will know that I am a strong supporter of free and open immigration.  However, I am sad to see Cingular pull this particular ringtone off the market.  The ringtone went as follows:

The ringtone started with a siren, followed by a male voice saying in a
Southern drawl, "This is la Migra," a slang term for the Border Patrol.

"Por favor, put the oranges down and step away from the cell phone.
I repeat-o, put the oranges down and step away from the telephone-o.
I'm deporting you back home-o," the voice continued.

For years I have been a strong supporter of the complete freedom to engage in what is often called "hate speech."  Beyond the usual slippery-slope threat-to-free-speech argument, I have always thought it was important to let idiots publicly identify themselves.  I mean, what could be better than a cell phone ringtone that just shouts out "I'm a racist moron" to the world?  This is an even better idea than the comedian Gallagher's (he of the cuisinarted vegetables) idea for shoot-able stupid flags.  It is the same reason I allow free commenting on this site and love to get opposing email.

I am a bit late on this one, but a California judge has determined that giving kids tests that have consequences is unconstitutional:

A judge in Oakland struck down California's
controversial high school exit exam Monday, issuing a tentative ruling
suggesting the test is unfair to some students who are shortchanged by
substandard schools.

If finalized, the unexpected ruling
would block the state from carrying out its plan to deny diplomas for
the first time to tens of thousands of seniors who have been unable to
pass the exit exam.

Note that this standard essentially means that no tests with real consequences (e.g. denial of grade advancement or diploma) can ever be given, because with 1129 high schools in California, some schools will always be below par.  So his argument will always apply -- there will always be kids who can claim their school is on the low end of the normal distribution.  And even if every school were exactly the same, kids within these schools could, I presume, similarly argue to this judge that they had sub-par teachers or sub-par parents or a sub-par reading light or a sub-par dog that ate their homework.

By the way, doesn't this also imply that California can no longer name state champions among high schools in various sports?  After all, isn't that unfair to schools with lesser sports programs?  And couldn't I extend this ruling to say that California state run colleges shouldn't be using high school grades or SAT scores or any other test-based metric in selecting entrants since some of these folks came from low-performing schools?

This confusion of equal protection with equal outcomes is so absurd its not really even worth commenting on further.  I won't even bother, then, asking how the judge expects sub-par schools to be made to improve without testing-with-teeth, or even what objective standards the judge used to determine that any schools were "substandard" in the first place.

For those who support this ruling, and agree with the plaintiff attorney's language that sounds like students have a right to a diploma that can't be denied without due process, here is a question:  What is a diploma?  Obviously, you don't want it to mean that a student has demonstrated basic knowledge and abilities against an agreed upon standard.  Are we reduced to a diploma being a certificate of attendance, indicating that a student grimly sat through 4 years of classes and nothing else?

This same week, the Florida Senate was unable to rescue the very successful state voucher program in the face of last year's insane Florida Supreme Court ruling that vouchers were unconstitutional because the Florida Constitution's uniformity clause:

the Florida Supreme Court ruled 5-2 that the voucher program violated
the "uniformity clause" of the state constitution guaranteeing a
high-quality system of public schools. Because the performance of the
voucher kids was superior to those in public schools, the court ruled that education was not uniform -- or in this case not uniformly miserable.

The program in question that was struck down by the court awarded vouchers to students of schools that failed to pass state standards. 

The program at issue is Governor Jeb Bush's
seven-year-old "Florida A+ School Accountability and Choice Program."
For the first time, schools have been graded on the reading, writing
and math progress made by the children they are supposed to be
teaching. (Imagine that.) Any school that received an F in two of four
years is deemed a failure, and the kids then get a voucher to attend
another school, public or private.

One immediate impact -- according to researchers at
Harvard, Florida State, and the James Madison Institute -- has been
that the mere threat of competition caused many inner-city school
districts to improve. The percentage of African Americans who are now
performing at or above grade level surged to 66% last year, from 23% in
1999.

What is amazing about the court's decision is that every kid who got a voucher, 90% of whom are minorities, came from a school demonstrated by objective standards to be far below average.  But, according to the court, it is constitutional for these kids to be in schools that are far below average, but becomes unconstitutional when kids are moved to above average schools?  Does this make any sense?  I'ts sort of a reverse Lake Wobegone effect -- the system is constitutional as long as all the schools are below average but once any are above average then its unconstitutional.  LOL.

Here is the reason that the court's logic doesn't make sense:  The real thing they are concerned about with the uniformity clause is not uniform quality, but whether the schools are uniformly controlled by the government and uniformly populated with union rather than non-union teachers.

Note that both these decisions use the existence of flaws within the two states' educational systems (e.g. low-performing schools) combined with a "uniformity" or "equal protection" standard to strike down reforms aimed at fixing these very flaws.  Both are saying that you can't reform the schools until all the schools are equally good,  but of course the schools will never improve without reform. 

Update:  But good news in Newark.  It's depressing but not surprising to see my alma mater's own Cornell West out there fighting against school choice for African-Americans.

Update #2:  Walter Olson comments:

It would appear that from now on a high school diploma is meant to
signify not a student's actual mastery of a certain body of material,
but rather the mastery he or she would have attained had the breaks of
life been fairer. Employers, and all others who rely on California high
school diplomas in evaluating talent, would be well advised to adjust
their expectations accordingly.

About ten years ago, I remember Microsoft started to get pounded by observers for "missing out" on the Internet.  One of their responses was the development of Internet Explorer, which, thanks to a good design and the fact it was bundled with the OS, quickly beat out Netscape and other incumbents.

Recently, PC-Pundit John Dvorak has argued that Microsoft's foray into Explorer has been its biggest blunder.  I'm not usually a Dvorak fan (I find him to be too much of a technocrat, tending to favor top-down standard setting over messy bottom-up innovation) but I thought his take was pretty interesting:

I think it can now be safely said, in hindsight, that Microsoft's entry
into the browser business and its subsequent linking of the browser
into the Windows operating system looks to be the worst decision"”and
perhaps the biggest, most costly gaffe"”the company ever made. I call it
the Great Microsoft Blunder....

If the problem is not weird legal cases against the company, then
it's the incredible losses in productivity at the company from the
never-ending battle against spyware, viruses, and other security
problems. All the work that has to go into keeping the browser afloat
is time that could have been better spent on making Vista work as first
advertised.

All of Microsoft's Internet-era public-relations and legal problems
(in some way or another) stem from Internet Explorer. If you were to
put together a comprehensive profit-and-loss statement for IE, there
would be a zero in the profits column and billions in the losses
column"”billions.

Yeah, I know, the Internet was supposed to be the next platform for applications taking over from the PC.  This has always been a slow phenomena to emerge (I LIKE having my applications on my own PC and available even if Cox cable is having another hiccup) and its not at all clear you need a browser to play well anyway.  While Microsoft has screwed around with Explorer and dot-net, Google has become the gold standard of web-based applications, and they don't have a browser at all.

By the way, if you are waiting for the new version of Explorer, just get Firefox instead.  It is everything Microsoft is trying to make Explorer and it is there already.  And you don't even have to think in Russian to use it.  (OK, did anyone get my movie reference there or am I a total loser?)

Hat tip to the Mises Blog.

Want to get worked up about price collusion in the oil industry?  Don't waste your time.  No study has ever found collusion effects that raised US gasoline prices more than a few percent, and only for a very short period of time.  The reason is that in a free market, there is too much incentive for new entrants undercutting a price collusion attempt.  Railroads and airlines have probably the most severe economic incentives to collude, and they have never pulled it off for any period of time EXCEPT when the government stepped in to enforce the arrangement (e.g, airline controls pre-deregulation).

If you want to see a real cartel at work raising prices at the expense of consumers, check out this from the Mises Blog:

The raisin agricultural marketing order (AMO), with roots in the
Depression-era Agricultural Marketing Agreement Act, is rationalized as
a way to "stabilize" prices. However, it allows the Raisin
Administration Committee (RAC), controlled by producers, to determine
how much of each crop can be sold, with the rest forced into storage.
That power to jointly restrict output to raise price makes it a cartel.
A cartel with so many members would not usually succeed, and the mere
attempt would be prosecuted if antitrust laws were applied, but AMOs
are enforced by the government, through the USDA...

The RAC "stabilization" is accomplished by restricting sales, often
substantially. "Free tonnage" has been as low as 53% of the crop in
2001, and less than 80% in most years. That helps producers by harming
consumers, turning price "stabilization" into price enhancement....

The raisin cartel's effects on American consumers can also be seen
in the gap between the "free tonnage" prices and "reserve pool" prices
for raisins destined for low value markets. In 2001, those prices were
$877.50 per ton versus $250 per ton; in 1998, it was $1250 versus $357;
in 1984 and 1994, the differential approached 10 to 1.

Per the WSJ($):

The Internal Revenue Service dealt a serious blow to
organizations that provide down-payment assistance to home buyers in a
ruling that could curtail the ability of lower-income U.S. citizens to
purchase homes.

In the past eight years or so, a number of large
nonprofit organizations -- including Nehemiah Corp. of America, of
Sacramento, Calif., and AmeriDream Inc., of Gaithersburg, Md. -- have
doled out hundreds of millions of dollars of cash down-payment
assistance to mostly low- and moderate-income home buyers. According to
industry estimates, as many as 625,000 people were assisted by such
groups with their down payments between 2000-05. The programs have been
widely viewed as helping to increase the nation's homeownership rates,
which rose to 69% last year from 67% in 1999.

Why?  A lot of the tax code is skewed to promote home ownership.  So why is the IRS penalizing a program that seems to make a lot of sense?

In its ruling yesterday, the IRS said these aid groups funded largely
by home builders and other sellers no longer qualify for tax-exempt
status because the benefits of the programs are going to sellers and
profit-making entities. In its statement, the IRS said it has found
"that organizations claiming to be charities are being used to funnel
down-payment assistance from sellers to buyers through self-serving,
circular-financing arrangements."

Uh-oh.  Its those nasty profit making ventures again.  What's going on here?  Basically a home-builder gives the down payment for a home to a charity which in turn gives it to a buyer who in turn gives it back to the home-builder.  Let's say the down payment is 10%.  This arrangement acts as if the home-builder is giving the buyer a 10% discount, just circuitously.

So why is it so circuitous?  Why don't they just give the discount directly?  Is it some kind of tax dodge?  The answer to the latter is probably not.  From a corporate tax standpoint, the current circuitous charity method produces a 10% charitable donation on a 100% price sale.  The discount approach just produces a 90% price sale.  Tax wise, these are equivalent.  So why doesn't the home-builder, if it wants to be generous to low-income buyers, just give them the discount?

The answer is, because the government does not allow it! 

The majority of home buyers affected by this ruling are those who
qualify for mortgages insured by the Federal Housing Administration, a
federal agency responsible for aiding first-time and lower-income home
buyers. Under FHA guidelines, home buyers seeking mortgages must have
their own funds to use for a down payment or they can get assistance
from a relative, employer or a charity. They can't get assistance
directly from the seller.

The only argument against this practice made by the IRS is that the price of the house is increase by a fee added in the process by the charity that facilitates the transaction.  But this is one of those classic government regulatory jobs where the result that instead of getting a home with a bit of extra fee in the transaction, people will instead not be able to get a home at all.  No one points to anyone being hurt, and in fact the article points out that 35% of FHA loans depend on these charities for down payments.  (There is also some hint that this process may increase default rates, but the only evidence is that default rates for this type of transaction are up --  but default rates on mortgages are up across the board right now.)

And, by the way, what is wrong with charity by a business that, in addition to helping out a charitable cause, also helps out its business?  For example, my company gives coupons for free one-day jetski rentals at Lake Havasu all the time to charity auctions in our area.  We do it to support charity, but also because it provides us some free advertising and often people who win the certificate also show up with friends who become paying customers.  So what?  Is my charity tainted because I have created a win-win? 

Does it bother anyone else that the only complaint voiced in this article about government requirements for building in surveillance backdoors into the Internet is about the cost?

Oh, and by the way, note the date on the act in question.  1994 makes it a Clinton-era law crafted after the first attempt to bomb the WTC.  All of you Democrats who feel smugly certain that civil liberties will be safe if only your party was in charge should note how closely the Patriot Act resembles Clinton's proposed anti-terrorism bill.  Just as Republicans have found that politicians shed their small government talk once they are in charge, our country's leadership tends to abandon any past queasiness about trampling on civil liberties once in a position of power, no matter what party they represent.

One of the great things about working for myself is that when I have a lot of boring tasks, like arranging my new office or filling out sales tax reports, I can watch a movie and get away with it.  Over the last few weeks I have watched three movies or shows you may have never heard of but I thought were great:

1. Firefly.  Probably the best known of the three, this canceled series is a libertarian favorite. 
2. Wonderfalls.  Only lasted 4 episodes on Fox, but 13 were in the can when it was canceled.  I bought it solely based on the unbelievable Amazon reviews.  I am on episode 5 and its is great so far.
3. Interstate 60:  A movie I completely missed when it was in theaters, it was a lot of fun.  Had some of my favorite characters I have seen in a movie in a long time.

I hate having to moderate comments.  Yesterday I had a ton of comments on my immigration plan post and we could have had a really good conversation going except I was out of the office and did not moderate the comments through until today.  Unfortunately, in the same time-frame I got 12 spam comments and 145 spam trackbacks from mp3 and pr0n and other sites trying to piggy-back on my Google ranking.  Sorry again for the delay in getting comments approved.  As always, I only moderate contents for spam - anything on topic, no matter how poorly written or how much it expresses dislike for yours truly, goes through.

Today, Instapundit linked to this Howard Kurtz article, with the following line as a teaser:

But seriously, folks, has Congress become something of a joke?

I was excited to read on.  You bet Congress is a joke.  An out of control joke.  But then, in the next paragraph, he says this:

Are these toothless lawmakers no longer capable of passing anything with bite?

Bite?  BITE?!  Everything Congress does bites.  Every single day it does something to increase regulation or paperwork requirements or adds another necessary license or government approval process or tax or subsidy.  I may spend as much as half my time in my business just on government compliance and taxation issues.  Is that really Kurtz's concern, that the Congress does not pass enough legislation with bite??

Later in the article, he says something else I thought I would agree with:

isn't it telling that the one thing lawmakers can agree on is handing
out goodies as opposed any measure that involves the slightest
sacrifice?

Absolutely, I thought.  All Congress does is spend money on useless hurricane "relief" and earmarks and bridges to nowhere  and subsidies for ADM and don't forget that new prescription drug entitlement that will cost a ton of money once someone figures it out.  So given a Congress hell bent on spending like a drunken sailor, what does Kurtz use to illustrate his point of "handing out goodies?"

Of course, there is one issue on which Congress seems poised to act: extending tax cuts

I know that we libertarians have fought this issue and never seem to be able to win, but having the government let private citizens keep more of the money they earned is not "handing out goodies".  Handing out goodies is when you take tax money from one person and give it to another who did not earn it.  Tax cuts are one of the few things that inhibit handing out goodies.  Run far away from anyone who claims that tax cuts are handing out goodies, because it means that they consider your money to be the government's, and what portion you keep is yours not by right but by the grace and goodwill of the Congress who determines how much you get to keep.

I really wasn't going to post again on immigration - I've said what I have to say and I want to move on before I get too tedious on the subject.  However, I was reading several conservative blogs over the last several days that had a lot of fun pointing out odd signs and screwball supporters of immigration in the recent immigration marches, as a way to mock the those who support immigration (example here).

I agree that immigration supporters have adopted some fellow travellers that they would do better without, particularly the hard-core Marxist remnants who not accidently chose the traditional Marxist-Soviet May Day holiday for their march.

However, I guess two can play at this game.  I would like to walk through some of the key points from a recent emailer to this site.  Below I will address a few of the best passages, but I have included the email in its entirety in the extended post, per the email's instructions.  Really, I encourage you to read the whole thing.  Every paragraph is priceless.

Being born with our rights is fine, HOWEVER the right to live in a PARTICULAR country within a FORMED AND STRUCTURED society of laws that protects those rights IS STRICTLY for THE "CITIZENS" who built that society TO DECIDE who may join them.!

I will call this the nation-as-country-club theory of government.  Basically he is saying that the US is a big country club where most of us get our memberships by inheritance, and we all get to chose the few new members we take in each year.  Of all the theories of government, this is, um, cetainly one of them.  If anything, it reminds me a little of Heinlin in "Starship Troopers" with a society where only those who completed military service are full citizens. 

This is, however, not the theory of government that our country was built on.  In fact, we didn't have any real immigration restrictions in this country for over 100 years after the Contitution was passed.  This model actually has strongly socialist implications.   I will demonstrate that next...

      Liberal Democrats AND SO CALLED LIBERTARIANS (who are really
displaced commis)  will come to be known as the morons who killed the
goose trying to get the gold faster!!!!

Wow!  All along I thought I was a libertarian anarco-capitalist and come to find out I am a displaced commie!  Who knew? 

Let's take an example.  Lets say a person from Mexico wants to rent my house and then go to work for me in my business here in Phoenix.  I believe that I should be able to rent my house to whomever I want and employ whomever I want without government interferance.  The emailer presumably believes that the government should be able to dictate who I can and can't rent my property to, and whom I can and can't employ in my business.  Who is the real socialist here?  I want to let people go wherever they want, and the emailer presumably wants checkpoints demanding to see your paperwork.  Which model looks more like Soviet Russia?

Recently the Arizona state goverment has discussed making it a crime of trespassing for a foreignor to be found anywhere in Arizona without the proper government paperwork.  This law would dictate that if I have a such a foreignor on my property, he is trespassing.  But he has my permission to be on my property, so how is he trespassing?  The only way he can be trespassing is if one assumes that the government, and not me, ultimately own my property.

Of course, half the emails I get still say "but they are illegal - they don't have rights."  OK, here is my counter-example.  Tomorrow, Congress passes a law that says "No one is allowed to criticize any sitting member of Congress for any reason."  What would you do?  I would run to my blog and immediately start posting "Trent Lott sucks;  John McCain sucks;  Hillary Clinton sucks" etc. etc.  Why -- because I still have the right to free speech, even if Congress makes it technically illegal.  Laws and acts of Congress don't change rights.  And if you believe that your rights do flow from Congress, then, well, we better all hold on because we are screwed.

America and the culture it has developed breeds predominantly decent people, these decent people have died to make America (and the world) a better place to live and little by little the world has learned from us and has begun to change for the better.
   Now very silly people act like all the filth sickeness and desease of the world should be welcomed into america?    No No No!!!!

    American society and its culture of law abiding decency must not be overcome by the selfish unwashed unlawful hordes who would come here and destroy what has taken so long for so many to build!!!

This whole cultural assimilation thing always rings hollow for me.  The very timeframe that folks like this get misty-eyed about when this country was built was a time of massive and nearly unfettered immigration.  If you really are concerned about preserving America's traditions and culture (assuming "culture" isn't being used just as a code word to keep non-WASPs out) then I would think you would be strongly pro-immigration.  Immigration is the norm in this country's history, and the current policies are the aberation.  If you really want to live in a country where the government actively defines its role as maintaining the country's culture intact, then you should go to France.

My family, which came over early in this century, was poor, unskilled, and German.  What could be worse from a "cultural" standpoint?  Surely few could argue that for the period from 1875 to 1945 the Germans had one of the top 3 most destructive cultures in the world.  Why would we ever want poor unskilled workers from a militaristic totalitarian culture?  But my family was accepted none-the-less.

By the way, the corruption of our rights and freedoms and government is not coming from the outside - because we already did it to ourselves.  In our original Constitutional framework, government was extremely limited and there was little it could do to influence lives.  In the last 70 years, we have corrupted this framework, trashing Constitutional protections and limitations on government and replacing them with a tyranny of the majority, where 51% can do unto the other 49% in any way they please.  We shot ourselves in the foot before most any current illegal immigrant was even born.

Latinos must be stupid since they dont even have the sense to adopt america!!  Illegals still want to be known as mexicans!!! You know those silly stupid gutless mexicans who allow corruption and filth to be a way of life in mexico??

We fought and died to eliminate that in America but you want to let it back in here??

Wow, I am getting emails from people who have already died!  Anyway, have you ever been to Boston on St. Patricks Day?  The Irish still show a lot of pride in their mother country but they still also consider themselves Americans.  The Irish are a great example -- Easterners in the 19th century rioted in protest of unskilled Irish immigration, but today they are part of the backbone of that American culture you get so misty-eyed about. 

Mexican culture and traditions are one of the things that make Arizona great.  Cinco de Mayo, for example, is a lot more fun than many of our American holidays and many of us anglos have adopted it in the same way most non-Irish have adopted St. Patricks Day.   I am not particularly religeous, but for you conservatives out there I will offer that Mexicans are far more religious than your average American outside of the South.

Oh, and by the way, aren't these "stupid, gutless" Mexicans you don't like actually risking life and limb and arrest to escape the corruption of their home country?

I hope the first victim of a desease from aN ILLEGAL mexican who was never vaccinated is someone you CARE ABOUT!!! jerk!!!!!   

Whoa, you say.  This guy doesn't represent me!  Well, I'll tell you.  I have watched over the last several weeks as conservative blogs have spent a good amount of time picking out the most extreme and unbalanced immigration supporters and using them to mock the pro-immigration position as a whole.  Turn about is fair play.

Update:  I got a second email substantially similar to this one (but with slight variations) from a different email address today, so this is either copied from another source or part of some campaign.   It could even be a mis-direction campaign by immigration supporters, though I doubt it because it is so dead on the tone and content of many other emails and comments I get.

Continue reading ‘One Last Immigration Post’ »

More than any subject on Coyote Blog, my immigration posts have engendered more disapproving comments than anything else I have written.  I won't repeat my position except to say that I don't care if immigration is currently illegal, because my point is that it should be legal.  In short, my stance has been that our rights do not flow from the government but from our basic humanity, and therefore activities like association, employment decision-making, and property purchase should not be contingent on citizenship.  Its one of those arguments where I wish many on my side of the argument would shut up -- If the best argument you can muster for immigration is 'who will pick the lettuce', you are not helping very much. 

For the first 150 years of this country's history, our country was basically wide-open to immigration.  Sure, there were those opposed (the riots in NYC in the 19th century come to mind) but the opposition was confined mainly to xenophobes and those whose job skills were so minimal that unskilled immigrants who could not speak English were perceived as a threat.   It was only the redistributionist socialism-lite of the New Deal and later the Great Society that began to make unfettered immigration unpopular with a majority of Americans, who rightly did not wish to see the world's poor migrate to the US seeking an indolent life of living off of government handouts.

But, as Congress debates a series of immigration plans that make not sense and don't seem internally consistent, I will propose my own.  I hope that this plan will appeal to those who to date have opposed immigration because of the government handout problem.  I am sure it will continue to be unappealing to those who fear competition in the job market or who don't like to be near people who don't speak English very well.  This is an elaboration of the plan from this post:

1. Anyone may enter or reside in the US. The government may prevent entry of a very short list of terrorists and criminals at the border, but everyone else is welcome to come and stay as long as they want for whatever reason.  Anyone may buy property in the US, regardless or citizenship or residency.  Anyone in the US may trade with anyone in the world on the same terms they trade with their next door neighbor.
2. The US government is obligated to protect the individual rights, particularly those in the Bill of Rights, of all people physically present in our borders, citizen or not.  Anyone, regardless of citizenship status, may buy property, own a business, or seek employment in the United States without any legal distinction vs. US "citizens"
3. Certain government functions, including voting and holding office, may require formal "citizenship".  Citizenship should be easier to achieve, based mainly on some minimum residency period, and can be denied after this residency only for a few limited reasons (e.g. convicted of a felony).  The government may set no quotas or numerical limits on new citizenships.
4. All people present in the US pay the same taxes in the same way.  A non-citizen or even a short term visitor pays sales taxes on purchases and income taxes on income earned while present in the US just like anyone else.  Immigrants will pay property taxes just like long-term residents, either directly or via their rent payments.
5. Pure government handouts, like Welfare, food stamps, the EITC, farm subsidies, and public housing, will only be available to those with full US citizenship.  Vagrancy and squatting on public or private lands without permission will not be tolerated.
6. Most government services and fee-based activities, including emergency services, public education, transportation, access to public recreation, etc. will be open to all people within the US borders, regardless of citizenship status, assuming relevant fees are paid.
7. Social Security is a tough beast to classify - I would put it in the "Citizen" category as currently structured (but would gladly put it in the "available to everyone" category if SS could be restructured to better match contributions with benefits, as in a private account system).  But, as currently configured, I would propose that only citizens can accrue and receive SS benefits.  To equalize the system, the nearly 8% employee and 8% employer social security contributions will still be paid by non-citizens working in the US, but these funds can be distributed differently.  I would suggest the funds be split 50/50 between state and local governments to offset any disproportionate use of services by new immigrants.  The federal portion could go towards social security solvency, while the state and local portion to things like schools and medical programs.

With this plan, we return to the America of our founding fathers, welcoming all immigrants who are willing to take the risk of coming here.  We would end the failed experiment of turning citizenship from a voting right into a comprehensive license that is required to work, own property, or even associate and be present within the US border.  Since immigrants today who are "illegal" pay no income or social security taxes into the system today (they do pay sales and, via rent, property tax), this plan would increase tax revenues while reducing some welfare state burdens.

I think if you asked many prospective immigrants, they would agree to this deal - no handouts, just a fair chance to make a living and a life.  However, immigrant advocacy organizations are hugely unlikely to accept this plan, as most seem today to have been co-opted by various Marxist organizations who are opposed to anyone opting out of the welfare state (it is no coincidence that the recent immigration policy protests all occurred on May Day, the traditional Soviet-Marxist holiday).

Finally, I would like to offer one thought to all those who worry about "absorbing" ten or fifteen million new immigrants.  First, I would argue that we have adopted many more immigrants than this successfully in this country's history, including my grandparents and probably yours.  Second, I would observe that as recently as the last several decades, we managed to absorb 40 million new workers quite successfully, as I wrote here:

Check this data out, from the BLS:

• In 1968, the unemployment rate was 3.8%.  22.9 million women were employed in non-farm jobs, accounting for 34% of the work force.
• In 2000, the unemployment rate was 4.0%.  62.7 million women were employed in the work force, accounting for 48% of the total
• In these years, the number of women employed increased every single year.  Even in the recession years of 1981-1983 when employment of men dropped by 2.5 million, women gained 400,000 jobs

This is phenomenal.  After years of being stay-at-home moms or whatever, women in America decided it was time to go to work.  This was roughly the equivalent of having 40,000,000 immigrants show up on our shores one day looking for work.  And you know what? The American economy found jobs for all of them, despite oil embargos and stagflation and wars and "outsourcing".

My casual, uninformed observation so far has been that for all of its strong-arm tactics and media advantage, the government's case so far in the Enron trial has been weaker than I had been led to expect in the media and publicity run-up.  Tom Kirkendall agrees, and has been all over this case including this recent update.

I am seriously late on this one, but I still want to show my support for Lance Dutson, author of the Main Web Report, who is being sued by an advertising firm and harassed by the state government for uncovering some really dumb activities at the state tourism board.  A summary of what he found is here, and the story of the lawsuits is here.

This story rings absolutely true with me.  Given our significant experience with government agencies, I have seen time and time again that when government bureaucrats embark on an activity out of their traditional comfort zones (in this case, Internet pay-per-click advertising, a new activity for most of us) they tend to combine lack of training with total arrogance that they know exactly what they are doing.  Within my company we have dubbed this "condescending incompetence", and we see it all the time.

In this case, Mr. Dutson points out that by bidding up the price in Google adwords of travel-related terms, they are actually hurting Maine travel businesses, both by driving up their advertising costs and by diverting clicks from an actual tourist business to a government site.  And how could any sensible cost-benefit analysis lead to paying over $15 to get one (1) viewer to the government tourist web site?  The answer is, it can't.  The only thing that can drive this behavior is ignorance combined with a skewed incentive system (e.g. some bureaucrat wanted a line in a performance review or PowerPoint chart that said their web site was top-ranked on every key Google search).  And he rightly points out some disturbing conflicts of interest at the advertising agency, as well as the total bonehead maneuver of putting an adult phone-sex number in the ad copy.

By the way, I despise state tourism agencies.  Most of the money they spend is a waste and the rest goes to directly benefit a few cronies.  Most of our local dollars go to high-profile expenditures that gets the governor some extra media buzz but does zero to get anyone new to the state.   And note that I run a business that depends 100% on tourism.  These state expenditures do nothing for me.  In some cases, my customers pay as high as 12% lodging taxes (e.g. tax and bureaucracy hell Mono County, California) to fund tourist boards who don't even advertise the types of operations I run (campgrounds and marinas).

Wow, was that a hassle.  I just finished moving my corporate office.  Hopefully, now that everything is hooked up again, blogging can resume.

Update: And per the comment, yes I did throw a bunch away, but it is still staggering how much waste paper we have to keep for the government for 3 to 5 to 7 years.  For example, I just got an audit from bureaucracy hell Mono County, California, which wants all my detailed customer campground check-in logs from three and a half years ago.