Coyote Blog

I am having a blast at the Change.gov transition site for Obama, now that I have satisfied myself it is not a fake.  Those who doubt that Obama has super-human powers should read this, from the Obama site:

The Obama-Biden plan provides affordable, accessible health care for all Americans, builds on the existing health care system, and uses existing providers, doctors and plans to implement the plan. Under the Obama-Biden plan, patients will be able to make health care decisions with their doctors, instead of being blocked by insurance company bureaucrats.

Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year.

If you don't have health insurance, you will have a choice of new, affordable health insurance options.

Wow - so now you can go out purchase any care you want - any tests, any procedures, whatever - and no one is going to tell you no.  Everything is paid for.  You have a blank check to go spend.  And, by granting you an infinite supply of care, your cost is going to go down.  Obama is really superman, because no one else in history has figured out how to invert the supply curve or make 2x cost less than x.

You see, it's all about insurers' margins.  If we can just cut down on those fat margins, everyone can have full health care and a pony for less money.  You doctors who are worried about health care, you will have it better too:

Prevent insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors.

All these years you thought malpractice insurance costs were high because of huge malpractice court settlements that usually bore little relationship to true malpractice, well, you were wrong.  Its because of the insurers and their margins.  We don't have to reform malpractice tort law (which is just as well since tort lawyers were so generous with donations to our campaign), we just have to get insurers to stop overcharging doctors.

To give you an idea of the absolutely huge amount of savings that can be extracted by just pounding on the insurers to give more coverage for less money, let's take a look at those outsized margins they are making.  These are net profit margins reported by Google Finance for 3Q2008 of the largest health care providers and insurers:

Cigna: 3.50%
United Health Group: 4.56%
Aetna: 3.64%
WellCare:  4.08%
Amerigroup: 3.51%
Humana 2.56%
WellPoint: 5.49%

Freaking robber barons!  Look at those outsized margins.  No wonder we have a health care crisis.  By cutting these guys margins in half, Obama expects to reduce the price of health care by 1-2%, which should be more than enough to pay for large increases in services and 30-50% price cuts.

Update: Oh, its magic.  That explains it.

Update #2: OK, the page has come down, as have most all the pages that had any kind of policy detail or promises in them.  I wish I had screen shots, but I can say everything above was cut and pasted directly form the web site.  Could I make that stuff up?  Too bad, there probably were another 10 blog posts in there somewhere.

Update:  Over the weekend, without comment, the Obama team pulled down the language below and put up new, vaguer language without the "required."  Discussion and a screen shot of the original is here.

How do you tax people with who have no money?  Why, you take their labor by force.  It worked when we dragged Africans over here against their will in the 19th century, and it can work today.  From the Obama transition site:

The Obama Administration will call on Americans to serve in order to meet the nation's challenges. President-Elect Obama will expand national service programs like AmeriCorps and Peace Corps and will create a new Classroom Corps to help teachers in underserved schools, as well as a new Health Corps, Clean Energy Corps, and Veterans Corps. Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year.

So what was that about no tax increase for people making under $250,000?  Because my guess is that most high school and college kids made close to zero, but here is Obama seeking to expropriate 50-100 hours of their labor.  Sure looks like a tax to me.  By law, high school kids, by DOL rules, can work up to 1200 hours per year.  For kid that works every hour she can, this is about a 4% tax.  Kids that work less pay a higher effective tax rate, up to infinite for kids not working at all  (hey, this tax is even regressive).  Also, richer kids trying to get into top colleges will be the least affected, as they are already volunteering at a level close to this, so most of the burden of this tax will fall on the poor.

I remember when I was slammed by Obama supporters during the election when I said that his call for "universal" community service meant that he was going to mandate it.  Carefully avoiding being clearer about what he meant before the election, Obama sure has not wasted any time making sure everyone understands he is talking about government coercion here, not volunteerism.

PS- I thought this site was fake, because it was amazing to me to see Obama's intentions stated so baldly after he so strenuously avoided clarifying his position during the election.  But the Huffpo and other sites link to this site as if it is real, so I will treat it as such.

PPS - Here is Obama's pledge on taxes from the same site:

Middle class families will see their taxes cut "“ and no family making less than $250,000 will see their taxes increase. The typical middle class family will receive well over $1,000 in tax relief under the Obama plan, and will pay tax rates that are 20% lower than they faced under President Reagan. According to the Tax Policy Center, the Obama plan provides three times as much tax relief for middle class families as the McCain plan.

OK, we are not going to take more money, we are just going to take your labor directly.

Update: Radley Balko adds the chilling speech implications of such a program:

So who gets to decide what constitutes "community service"?  Who gets to decide which causes and organizations will be credit-worthy, and which ones won't?

Something tells me that you'd be more likely to get one of Obama's vouchers by going door to door for one of ACORN's living wage campaigns than, say, volunteering for a libertarian nonprofit organization that advocates against things like government-mandated community service.

Obama supporters will say, no problem, we trust Obama.  Hmm.  The folks who wrote our Constitution designed our government assuming all politicians would be knaves.  Writing laws that depend on the good intentions, fairness, correct incentives, and intellectual capacity of the government folks who run it are doomed to failure.  Would Democrats have been happy to have GWB deciding what community service their kids were forced to endure?  I doubt it.  Well, we don't live in an autarky, and sooner or later GWB's party will be back and making exactly those decisions under such a program.

I predicted it here.  Now see it here:

House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit's Big Three automakers."We may need to make a statement of confidence in our auto industry," Pelosi told NPR this afternoon. "We're not saving those companies, we're saving an industry. We're saving an industrial technological and manufacturing base... It's about jobs in America."

I wrote why its better to let GM fail.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one.

Pelosi held a meeting Monday with Democratic leaders to consider a request from Detroit's Big Three automakers for another $25 billion in "bridge financing" to help them survive a huge downturn in auto industry.

I worked for several years for AlliedSignal engines, now Honeywell, here in Phoenix.  At our main engine plant here, we endured a couple of union organizing campaigns that both fell just shy of winning a position for the union.  A reasonable manager might expect that under the Democrat's proposed card-check system which replaces anonymous votes with open petitions, that enough hijinx could be brought to bear to put the union over the top.  I don't now if this is what they have in mind, but...

Phoenix-based Honeywell Aerospace plans to move 700 manufacturing jobs from Phoenix to Mexico and the Czech Republic.

Employees were notified Thursday of the cuts, which will begin in the second quarter of 2009 and continue for three years. Most of the job cuts are expected in the first year.

Workers who asked not to be identified said the news caught employees completely off-guard.

I think the timing just a day after election results in, and the level of surprise, are telling.  Time to get this done now, before the owners have to go cap in hand to their employees to ask permission to run their business as they see fit.  I thought this last bit they added brings a nice irony to the situation:

The announcement came two days after Barack Obama, who has promised to take a hard line with companies that move manufacturing jobs overseas, was elected the 44th U.S. president.

Whatever that means, but it does give yet another reason to get out fast.

I don't often pass on the cartoons that cross my desk, but I thought this was pretty good:

It's fascinating that our local paper, after months of positive Obama coverage, manages to express its first printed criticism of Obama on ... the day after the election.

With President-elect Barack Obama promising tougher government regulations on some sectors, including the financial markets, a handful of business leaders expressed concern Wednesday.

"The key thing is to not choke us to death with regulation," said Ioanna Morfessis, an economic-development consultant and Greater Phoenix Economic Council founding member.

With the faltering of the financial markets and a massive federal bailout this fall, Obama and congressional Democrats, who expanded their majorities with an upset electorate, have called for more federal oversight on Wall Street. Obama also has called for more regulation in the energy and health-care sectors, and Democrats could more strictly enforce environmental rules....

Morfessis said before lunch Wednesday, she received phone calls from 11 entrepreneurs concerned there would be a "higher premium for taking risks or entering new markets."

Incredibly, it looks like Proposition 1A in California is going to pass.  This act authorizes a $9 billion dollar bond issue to start a high-speed rail passenger line from the Bay Area to the LA Area. 

Why do I say "start."  Because even the line's supporters put the minimum cost at $40 billion, so the taxpayers have authorized 22% of the line.  And this is by supporters numbers.  By my numbers they have likely authorized less than 10% of the line. 

I wonder if voters knew they were authorizing either a) $40-$100 billion, in effect, rather than $9 billion; or b) a $9 billion white elephant of a rail line that ends up incomplete and going nowhere or c) something that is not really high speed rail and therefore not different from Amtrak service that already exists.  (What are you talking about Coyote, government transit people would never begin a project without full funding and leave an orphaned white elephant in place.)

The state that makes up a huge percentage of the current mortgage and
foreclosure problem seems to not have learned its lesson about
borrowing.

I am generally an optimistic guy, but I wonder if we have gotten to the point where there is a large subset of the population for whom voting is solely for the purposes of boosting self-esteem.  I feel good when I support public transit, so I vote for Prop 1A, despite the fact there is no possible way it will ever deliver any public transit.

I have updated my post on Disney World reviews and advice based on my October trip with my daughter.  Below is a picture from the trip.  I am the one in orange.

TJIC has the silver lining nailed for libertarians:

Let us not forget the good news from the election: one statist, speech limiting, freedom-agnostic candidate lost.

I'm kind of ambivalent this morning -  I knew in advance that freedom was going to lose again in this election, no matter what the outcome.

If I am depressed this morning, it is more about propositions and side issues than about the President and Congress.  Had this been a leftward shift in the county, I could have been satisfied that at least losses in freedom in one area might be substituted by gains in others  (though for me personally, changes in economic freedom tend to have far more direct and immediate impact than changes in social freedoms).

But the only pattern I could see yesterday was not leftward but government-ward.  In the same states where Democratic candidates won with economic interventionist messages, Constitutional bans on gay marriage also won by sizable majorities.   In Arizona, gay marriage was banned, an initiative to limit future tax increases was defeated, an initiative to protect health care choice was defeated, an initiative to soften last year's anti-immigrant legislation was defeated, and a payday loan ban was confirmed.  The voting in some way defies a traditional left-right explanation and is only consistent in that it was almost all the reverse of the libertarian position.  And to make the results even more irrational, nearly the biggest defeat of any ballot initiative in Arizona was for a pay increase for state legislators -- the voters seem to like government but don't trust or respect the individuals employed there.

After the last Bush election, a number of leftish folks claimed they were moving to Canada or France or wherever.  But that's the problem for libertarians in this country -- there is not place to run.  Those who want to run away to a country with a more controlling government have 180 or so choices.  Those of us who seek more freedom have approximately none.

Update: This slight paraphrase from the movie Zoolander encapsulates my thought on this election:

They're the same! Doesn't anybody notice this? I feel like I'm taking crazy pills!

I am actually less frightened by the candidates than by people who seem to get so excited by one or the other of them.

I have voted in a lot of different states, but the way we do it here in my current district seems to work well.  I got my ID checked against the voting record -- the lady may an explicit check to make sure the addresses matched.  Then I got a paper ballot and a black magic marker.  Next to each name is an arrow pointing to the name with a gap in it.  One fills in and completes the arrow pointing to the candidate one is voting for.  Then, when done, the voter takes the ballot to a machine that looks like a big shredder.  She/he feeds the ballot into the slot, and the ballot is automatically read and counted right there.  There is a LED readout on the front with a total ballot count that increments by one if the ballot is read correctly, providing a psychologically satisfying feeling that one's vote has been counted.  At the end of the day no further counting is required, and I presume they pull the vote counts out electronically or with some kind of summary report.  The ballots stay in a locked vault in the scanner and provide a paper trail if the count has to be checked later. 

By the way, no line at all.  Glad I didn't wait 2+ hours last weekend to vote early in order to avoid the lines.  One has to wonder at the decision-making ability of folks who waited hours to vote early to avoid lines that couldn't possibly be any longer on election day.  Good to see such folks out voting ;=)

Can't say this surprises me:

Seriously - couldn't you have predicted the last three in advance?

At least in economic policy, progressives like Barack Obama are deeply conservative.  They want industries, jobs, real earnings, and class positions to be stable and predictable.  No one ever believes me when I say this, but look at the policies.  Trade protectionism protects current industry incumbents and workers, at the cost of poorer future performance due to lack of competition.  Unions attempt to lock in current jobs through numerous controls on work rules, slow or stop changes in technology and work processes that have the effect of eventually castrating the company (think GM).  Socialized medicine tries to lock in the current standard of care for everyone, while reducing the possibility of future improvements.  Redistribution attempts to lock in the current standard of living for everyone while reducing the possibility of future improvements.  I discussed this more European model last week.

I like how Shannon Love summarized it in the context of Obama:

Obama has no concept of business as a creative and experimental endeavor. On some deep unconscious level, he assumes that material wealth is something akin to a natural phenomenon for which no group of humans can take credit. Therefore, he sees distribution as the only serious economic issue and ignores how politics interferes with the actual process of wealth creation.

Though to be fair, I am not sure McCain or GWB understand this either.     (or here in 2005)

I always laughed at Democrats that tried to woo me to their party.  Now I laugh at Republicans too.  MoveOn may get mileage out of attacking Bush, but he has done more for the left/liberal cause than Clinton.  Clinton had NAFTA, welfare reform, and (moderated by an aggresive Republican Congress) fiscal sanity.

Should I Vote?  Yes, probably.  Many libertarians refuse to vote.  They refuse to be party to a choice between Coke-brand statism and Pepsi-brand statism.  I sympathize, and respect their decision.  You won't hear rants form me about the beauty of the right to vote.  But I see two reasons for libertarians to vote.  One is to find ways to register our existence, to try to communicate that just because we don't riot at WTO meetings doesn't mean that a great well of dissatisfaction does not exist among us.  The second reason is ballot initiatives.  While candidate A and B may be equally bad on the freedom scale, there is often a right answer for protecting freedom in the ballot initiatives, and they need your vote.

President:  Libertarian Party Guy.  Yeah, I know his name is Bob Barr.  I don't even care.  I am casting the vote for the idea, not the guy, in hopes that the Republicans, as they rebuild themselves over the next 2 years, might notice there are some libertarians out there looking for a home.  It would be nice to be as excited about a politician as some folks are about Obama, but really, they are excited by their own vision, not his.  We really know little about him, but my sense is that his every instinct about government run counter to mine.  McCain is hardly better, perhaps going Obama one further by matching him on tax increases and economic nuttiness but also throwing in a dollop of conservative restrictions on non-economic civil liberties.  And I think many of us are exhausted by the prospect of another 4 years of foreign-policy-as-penis-extension that McCain promises.

US Congress:  John Shadegg.  If it weren't for Jeff Flake and Ron Paul, I would say Shadegg is about the best we libertarians can hope for of a major party candidate.  Not perfect (he was one of the ones who knuckled under on the second bailout vote) but pretty good.

County Sheriff and City Attorney:  Whoever is running against Joe Arpaio and Andrew Thomas.  Seriously.  I don't even know their names and I am voting for them.  I am sick and tired of Arpaio's schtick (index of articles here).  Anyone who can go on a crime sweep into the 99% all-anglo tony suburb of Fountain Hills and come out with arrestees who are 75% Hispanic is not even trying to be fair.  Andrew Thomas has had Arpaio's back for years, fighting many (losing) civil rights cases for him and prosecuting his critics in the media.

PROP. 100 Protect Our Homes:  Yes.  I am not sure this is even that relevant.  Prevents the imposition of taxes or fees on the sale of real estate  (e.g. no real estate sales tax).  Not sure if this is even a threat,  but I will usually vote to limit the power of government.

PROP. 101 Medical Choice for Arizona:  Yes.  This proposition would effectively prevent state health care laws like that in Massachusetts that require medical coverage and mandate certain types of medical coverage.  In Massachusetts, my current insurance plan (which I pay for and did a lot of research to uncover) is illegal (because it has a higher deductible that politicians want to allow).

PROP. 102 Marriage:  Big No.  I don't expect to change anyone's mind on this, but I am not in the least threatened by civil marriages of gays, and in fact have a number of friends and family members who have taken advantage of the brief window of opportunity in California to get married to their partner.  I am not sure how this can be a threat to me -- last I checked, my marriage is as strong today as it was before gay marriage was allowed.  This issue is sort of the conservative equivalent of the left's obsession with income inequality.  Conservatives tell folks (rightly) that they should be concerned with their own quality of life and not feel somehow worse if there are people who are wealthier.  But, then they tell us all our marriages are going to be worse because somebody over there who we never will meet is going to marry someone of the same sex.

PROP. 105 Majority Rules "” Let the People Decide:  Haven't Decided.  This is a weird one.  This would require propositions raising taxes to be passed only if the "yes" votes they receive equate to 50+% of the total registered voting population, not just of the people who voted that day.  Basically, it makes it impossible to have tax increases in propositions, which I like.  But it is a terrible precedent -- this is simply not how we count elections.  In particular, the "registered voter" number is almost meaningless.  Requiring a super-majority of those voting would be much better law.  I may well vote yes, because I suspect the next 2 years are going to be a heyday of taxation, but I will sort of feel guilty about it.

PROP. 200 Payday Loan Reform Act.  Yes.  Would un-ban payday loan companies in Arizona.  I have always supported choice, even for the poor and unsophisticated.  Payday loans are expensive, but as we have learned from subprime loans, maybe credit to borrowers with no income or assets should be expensive.  More here.

PROP. 201 Homeowner's Bill of Rights.  No.  Created by a pissed off union in a fit of pique as an FU to homebuilders.  Mandates decade-long warranties on homes, and offers a myriad of opportunities for trial lawyer hijinx.  And what problem is it solving?

PROP. 202 Stop Illegal Hiring Act.  Yes, I think.  Again, this is one of those confusingly worded initiates that like to use triple negatives.  But I believe it is a softening of the Immigration / hiring law that I have long opposed.  (related:  E-Verify reviewed here) 

PROP. 300 State Legislators' Salaries.  No.  Changed my mind on this.  At first, I thought current salaries were unreasonably low.  But now I think that they should all go out and get real jobs, and make the legislature part-time.  Maybe they'll meet less often.

Hostess Twinkies are becoming the latest product remade and repackaged into 100-calorie snack packs

No word on how small they will be.  This had to be one of the great marketing blinding glimpses of the obvious:

Hostess launched its 100 calorie cupcakes in 2007, but held off on making a version of the Twinkie because the product was a favorite overall, not just among those looking for low-cal options

Get out of town.  Who would have thought that Twinkies were not a favorite for those looking for low-cal options.

I am happy to see that Barack Obama is not entirely in reality-avoidance mode with his climate policy:

You know, when I was asked earlier about the issue of coal, uh, you know "” Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I'm capping greenhouse gases, coal power plants, you know, natural gas, you name it "” whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.

To folks with any kind of background in economics, this has to be the case.  Reducing the total output of current power plants, and thereby obsoleting all that investment and squeezing supply, at least in the medium term until new capacity of other types can be built, can only lead to a) rationing through blackouts or b) higher prices to ration the shorter supply.  The cost of option a is so high that price is going to have to be the rationing mechanism.  Skyrocket is actually pretty close to what would happen to rates if Obama sticks by his plan of limiting greenhouse gasses to 1990 or earlier levels.  (His explanation is actually pretty poor for the mechanism - pass-through of retrofit costs would likely be minor to the supply / demand balancing effect of shaving 20/30% off supply in a short period of time.

I think a frank discussion of the dangers of a "pollutant" vs. the cost of abatement is a fair one.  I personally think the threat of CO2 is wildly exaggerated, and the cost of doubling or tripling electricity costs will hurt Americans far worse than a few tenths of a degree of warming.

But don't get too excited.  Obama is still living in economic never-never land on other related issues:

yes, there is going to be some increase in electricity rates on the front end, but that over the long term, because of combinations of more efficient energy usage, changing lightbulbs and more efficient appliance, but also technology improving how we can produce clean energy, the economy would benefit.

Sorry, but this is way wrong.  Obsoleting perfectly good infrastructure and wholesale replacing it with trillions of dollars of new infrastructure does not help the economy any more than if a massive earthquake had destroyed the plants.  This is the broken windows fallacy on steroids.  The only benefit from all this cost will be whatever climate benefit we accrue from the CO2 reduction.  For there to be such a benefit, one must assume a) substantial future warming and b) that the current temperature happens to be the best possible temperature we could ever be at.  But that, as they say, is a whole other blog.

I am getting used to the new Typepad editor, but two issues still really cause me to question the sanity of the developers, particularly since this roll out has been going on since June:

• I cannot believe that a blogging engine -- not a generic text editor or HTML editor, but a purpose built blogging engine -- would eliminate the blockquote functionality from the editor.  Have these guys ever, you know, actually read a blog or two?  We bloggers live off block quotes.
• How long has the computing spelling checking been around?  A couple of decades?  About 10 minutes into that 20 year span, developers learned from users that in addition to a "skip" button, they probably needed a "skip all" button.  Because if you write a 5000 word post on the banking crisis and use the "Bernanke" in that post 100 times, it is going to be real boring hitting "skip" 100 times in the spell check rather than "skip all" or even better "add to dictionary."  But, the rocket scientists at Typepad did indeed only put in a "skip" option, a bit like Ford building a car in which the windows won't roll down.

The ethanol industry is struggling and a number of players are facing bankrupcy:

The ethanol industry built tremendous production and transportation infrastructure. It was a "if we build it, they will come" strategy.

Then, the world fell apart. Prices for gas at the pump are back down well below $3 instead of being headed toward $5 as they were in August.

Verasun says it will keep operating, but common shareholders have been crushed to death. The stock was at nearly $18 late last year. Now it is under $.40.

The only quibble I have is in the first sentence.  I would would have written the ethanol strategy as "If we seek rents, they will come."