Archive for June 2009

Drug War: Fail

Bravo for Nicholas Kristof's editorial in the Times:

Here in the United States, four decades of drug war have had three consequences:

First, we have vastly increased the proportion of our population in prisons. The United States now incarcerates people at a rate nearly five times the world average. In part, that's because the number of people in prison for drug offenses rose roughly from 41,000 in 1980 to 500,000 today. Until the war on drugs, our incarceration rate was roughly the same as that of other countries.

Second, we have empowered criminals at home and terrorists abroad. One reason many prominent economists have favored easing drug laws is that interdiction raises prices, which increases profit margins for everyone, from the Latin drug cartels to the Taliban. Former presidents of Mexico, Brazil and Colombia this year jointly implored the United States to adopt a new approach to narcotics, based on the public health campaign against tobacco.

Third, we have squandered resources. Jeffrey Miron, a Harvard economist, found that federal, state and local governments spend $44.1 billion annually enforcing drug prohibitions. We spend seven times as much on drug interdiction, policing and imprisonment as on treatment. (Of people with drug problems in state prisons, only 14 percent get treatment.)

I've seen lives destroyed by drugs, and many neighbors in my hometown of Yamhill, Oregon, have had their lives ripped apart by crystal meth. Yet I find people like Mr. Stamper persuasive when they argue that if our aim is to reduce the influence of harmful drugs, we can do better.

The current regime not only has failed, but is absolutely absurd in its assumptions.  The argument that something like marijuana should be illegal is always "to protect the kids."  But the solution is nuts.   I will put it very personally.  It replaces a mildly bad thing (my teenager is smoking rope) with a disasterous, ruin-one's-life thing (my teenager was arrested for possession and may go to jail).  Its just crazy to say it is better to send kids to jail than have them do drugs.  Drugs I can deal with and correct in my household, or at least I can try -- jail and an arrest record I can't fix.

Drug warriors worry about "the message" we send to kids with legalization, but no one is talking about legalizing drugs for kids, any more than we do with tobacco or alcohol.  Use of those are adult decisions and we require one to be an adult to make them.

To be honest, looking at the teens I see, I can't see much difference in teen's perception of smoking tobacco vs. other drugs, despite the fact that the former is legal for adults, and so by drug warrior logic we have sent the message that it is more OK somehow.  In fact, in use statistics, it is hard to see any difference, with teens using legal-for-adults drugs like tobacco at about the same rate as they use other illegal-for-everyone drugs.

Junk Science in the Courtroom

I used to write a lot about junk science in civil cases.  I have never really liked the idea of limitations on liability awards as a solution for nutty civil rulings -- after all, how can Congress know in advance exactly what real damages will arise, and why should my ability to recover real damages be capped?

I always have felt that such solutions were beside the point, that what tort law needed was:

  • Better immunization against junk science
  • A rollback of the flawed notion that deep pockets are automatically liable, regardless of their actions, combined with some acknowledgment of individual responsibility
  • Protection of dependents from nuisance suits and mass torts, both of which derive their power from the cost of defense rather than the facts of the case, forcing the innocent to settle just to avoid these defense costs.

I always had naively thought that the junk science issues were mainly limited to civil courts, and that criminal courts, with their much stronger protections against false convictions, did not really have these problems.

The more I read Radley Balko, though, the more depressed I get about innocent people sitting in jail as the result of really flawed evidence.  The most recent example:

Last weekend, we looked at the case of Bill Dillon, the Brevard County resident imprisoned for 27 years before DNA tests set him free...

At least two other men suffered the same fate "” and another shared link: a dog.

Not just any dog. A wonder dog helped convict all three men: a German shepherd named Harass II, who wowed juries with his amazing ability to place suspects at the scenes of crimes.

Harass could supposedly do things no other dog could: tracking scents months later and even across water, according to his handler, John Preston.

Why is This Called "Green" Rather than "Theft"

From (via Engadget) comes a technology that I have written about before to leech energy from cars to power buildings:


Now when you shop, your can be responsible to power the supermarket tills. As in with the weight of your vehicles that run over the road plates the counter tills can be given power. How? Well, at the Sainsbury's store in Gloucester, kinetic plates which were embedded in the road are pushed down every time a vehicle passes over them. Due to this a pumping action is initiated through a series of hydraulic pipes that drive a generator. These plates can make up to 30kw of green energy in one hour which is enough to power the store's checkouts.

The phrase "there is no such thing as a free lunch" applies quite well in physics.  If the system is extracting energy from the movement of the plates, then something has to be putting at least as much energy into moving the plates.  That source of energy is obviously the car, and it does not come free.  The car must expend extra energy to roll over the plates, and this energy has to be at least as great (and due to losses, greater) than the energy the building is extracting from the plates.  Either the car has to expend energy to roll up onto an elevated plate to push it down, or else if the plates begin flush, then it has to expend energy to pull itself out of the small depression where it has pushed down the plate.

Yes, the are small, almost unmeasurable amounts of energy for the car, but that does not change the fact that this system produces energy by stealing or leeching it from cars.  It reminds me of the scheme in the movie "Office Space" when they were going to steal money by rounding all transactions down to the nearest cent and taking the fractional penny for themselves.  In millions of transactions, you steal a lot but no one transaction really notices.

I have seen this idea so many times now portrayed totally uncritically that I am almost beginning to doubt my sanity.  Either a) the media and particular green advocates have no real understanding of science or b) I am missing something.  In the latter case, commenters are free to correct me.

By the way, if I am right, then this technology is a net loss on the things environmentalists seem to care about.  For example, car engines are small and much less efficient at converting combustion to usable energy than a large power station.  This fact, plus the energy losses in the system, guarantee that installation of this technology increases rather than decreases CO2 production.

Postscript: One of the commenters on my last post on this topic included a link to this glowing article about a "green family" that got rid of their refrigerator:

About a year ago, though, she decided to "go big" in her effort to be more environmentally responsible, she said. After mulling the idea over for several weeks, she and her husband, Scott Young, did something many would find unthinkable: they unplugged their refrigerator. For good.

How did they do it?  Here was one of their approaches:

Ms. Muston now uses a small freezer in the basement in tandem with a cooler upstairs; the cooler is kept cold by two-liter soda bottles full of frozen water, which are rotated to the freezer when they melt. (The fridge, meanwhile, sits empty in the kitchen.)

LOL.  We are going to save energy from not having a refrigerator by increasing the load on our freezer.  Good plan.  Here is how another woman achieved the same end:

Ms. Barnes decided to use a cooler, which she refilled daily during the summer with ice that she brought home from an ice machine at her office.

Now that's going green!  Don't using electricity at home to cool your groceries, steal it from work!

Update: The one place one might get net energy recovery is in a location where cars have to be breaking anyway, say at a stop sign or on a downhill ramp of a garage.  The plates would be extracting speed/energy from the car, but the car is already shedding this energy via heat from its brakes.  Of course, this is no longer true as we get more hybrids with dynamic breaking, since the cars themselves are recovering some of the braking energy.  Also, I have never seen mention in any glowing article about this technology that placement is critical to having the technology make any sense, so my guess is that they are not being very careful.

A Couple of Quick Thoughts on Tobacco Regulation

1.  I have observed before that many Nanny-state initiatives are driven by politician's own personal experience and weaknesses.  Mike Huckabee started a kids obesity program because he had trouble with his weight, and now Barack Obama regulates tobacco because he has had trouble quitting smoking:

Obama, who has spoken of his own struggle to quit smoking, praised the bill, saying it "will make history by giving the scientists and medical experts at the FDA the power to take sensible steps."

Couldn't politicians just focus on their own behavior without projecting their personal weaknesses on me?  Let's just be glad that we avoided whatever regulatory regime that would have occurred had these guys had a male enhancement issue.

2.  I know zero about smoking and cigarettes.  However, it is my understanding that while the nicotine is the addictive part, it is other components of combustion that cause the health risk.  If this is the case, then doesn't regulated reduction in nicotine content of cigarettes actually pose a health risk?  Won't folks suck on more cigarettes with reduced nicotine, trying to get back to their preferred nicotine dose, and thereby consume more rather than less cancer causing substances?

3.  There is nothing that regulators hate more than free market alternatives to themselves for solving problems.  It is clear they are going to mandate reduced tar and other components in cigarettes, but they want those mandates to come from them, not emerge on their own from the market.  Thus:

[the new FDA rules will] prohibit use of words such as "mild" or "light" that give the impression that the brand is safer

Yep -- wouldn't want private folks getting credit for exactly what the regulators intend to mandate.

4.  I have often observed that regulation tends to favor incumbent companies.   Regulations tend to raise barriers to new entrants, and it imposes costs that are more easily born by larger players in the market.  Further, incumbents often have the political muscle to influence regulation in their favor  (and in fact potential future new market entrants don't even exist today, so they certainly have no lobbying voice).  And, we see this same effect here:

Altria Group, parent company of Philip Morris USA, the nation's largest tobacco company, issued a statement Thursday supporting the legislation and saying it approved "tough but reasonable federal regulation of tobacco products" by the FDA. Rival companies have voiced opposition, saying FDA limits on new tobacco products could lock in market shares for Philip Morris, maker of Marlboro cigarettes.

No surprise there.  Despite all the fighting words about the evils of big Tobacco around the Tobacco settlement a decade or so ago, the result was big gains for the major tobacco companies.

Big tobacco was supposed to come under harsh punishment for decades of deception when it acceded to a tort settlement seven years ago. Philip Morris, R.J.Reynolds, Lorillard and Brown & Williamson agreed to pay 46 states $206 billion over 25 years. This was their punishment for burying evidence of cigarettes' health risks.

But the much-maligned tobacco giants have subtly and shrewdly turned their penance into a windfall. Using that tort settlement, the big brands have hampered tiny cut-rate rivals and raised prices with near impunity. Since the case was settled, the big four have nearly doubled wholesale cigarette prices from a national average of $1.25 a pack (not counting excise taxes) in 1998 to $2.10 now. And they have a potent partner in this scheme: state governments, which have become addicted to tort-settlement payments, now running at $6 billion a year. A key feature of the Big Tobacco-and-state-government cartel: rules that levy tort-settlement costs on upstart cigarette companies, companies that were not even in existence when the tort was being committed.

The Zero Effect

Ties occur at the end of regulation in NBA basketball games way more frequently than one might expect from a normal distribution of scores.    The distribution of point differential at the end of regulation looks really weird:


Why this is, and the role of strategy, is here (via the sports economist).

Handbag Patterns

My wife has more of her patterns she has designed for knitted handbags for sale, here or at her own site here.

More Indentured Servitude in San Francisco

Via the Thin Green Line:

Throwing orange peels, coffee grounds and grease-stained pizza boxes in the trash will be against the law in San Francisco, and could even lead to a fine.

The Board of Supervisors voted 9-2 Tuesday to approve Mayor Gavin Newsom's proposal for the most comprehensive mandatory composting and recycling law in the country. It's an aggressive push to cut greenhouse gas emissions and have the city sending nothing to landfills or incinerators by 2020.

"San Francisco has the best recycling and composting programs in the nation," Newsom said, praising the board's vote on a plan that some residents had decried as heavy-handed and impractical. "We can build on our success."

The ordinance is expected to take effect this fall.

The legislation calls for every residence and business in the city to have three separate color-coded bins for waste: blue for recycling, green for compost and black for trash.

Failing to properly sort your refuse could result in a fine after several warnings, but Newsom and other officials say fines will only be levied in the most egregious cases.

I think if I lived there I would save some really rank crap buried in the back yard, maybe a few animal carcasses, to throw in the trash when the inspector came by to dumpster dive.

But the whole concept confuses me.  There is this assumption that everything environmentalists always wanted us to do, like recycling, is automatically and without need for critical thought going to reduce CO2 emissions.  But will it?

Doesn't composting increase greenhouse gas emissions vs. land filling? I have always wondered about this with Christmas tree recycling programs. If the program was really about reducing greenhouse gasses, why are we chipping the trees and spreading the chips around so they can decompose faster?  Decomposition is basically just slow combustion, producing CO2 and some methane.  Shouldn't we instead be shrink-wrapping the trees and burying them deep in the name of carbon sequestration?

By the way, advocates will say that recycling saves money.  Well, it is not clear that it even saves the state any money but it certainly does not save you and I any.  In fact, the only way people can even fool themselves into believing there is any economic benefit is to assume that the value of your and my time is $0.  We are indentured servants, working for the state as trash sorters for no compensation.

Postscript: Assume there are 110 million households in the US, and each household has to spend 5 minutes a week sorting trash.  And assume that the value of folk's time is $20 per hour (and I can guarantee you the marginal value of my free time is a LOT higher).  This is $9.5 billion of stolen labor each year.

Another Example of Hosing Creditors in Bankruptcy?

I am not at all a bankruptcy expert, but I have watched the Administration's efforts to evade bankruptcy law in favor of the UAW and at the expense of secured creditors with great interest.

I am wondering now whether something similar might be going on in the Phoenix Coyote's hockey team bankruptcy.  The Coyotes are in bankruptcy, and the former owner (there is actually an interesting question as to whether he still is the owner) has solicited an offer of $212.5 million for the team from Jim Balsillie, contingent on Jim moving the team to Canada.   This amount would pay off some but not all the creditors and would not leave the stadium authority whole on their lease (though I have limited sympathy there, as I begged and pleaded for our local governments not to subsidize hockey in Arizona).

Now, the league is demanding an extra $100+ million to be paid to the other team owners by Balsillie as a relocation fee for the team as an adjunct to the sale.  There is some sense that this is a poison pill to kill the deal, because the league is mad that a) this sale is happening without its involvement and b) they sense the team has not done enough to keep the team in Arizona.

Nevertheless, if Balsillie were to agree to pay the extra $100 million, isn't this a total ripoff of creditors?  In effect, he will be paying $312.5 for the team, but structuring the transaction so NHL team owners, rather than Coyote's creditors, get $100 million of the transaction.  Am I missing something?

Disclosure:  Jim Balsillie and I were section-mates at HBS.

Don't We Already Know the Answer to this Question

Greg Mankiw writes about a Paul Krugman article on "the public option," a plan in Congress to provide a federal health insurance plan to compete with private plans and "keep them honest"**

It seems to me that [Krugman] leaves out the answer to the key question: Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what's the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company. The fundamental viability of the enterprise does not depend on whether the employees are called "nonprofit administrators" or "civil servants."  (via Q&O)

But I think we already know the answer to this question.   If Obama and the Democratic Congress is willing to pour a hundred billion dollars or more down the Chrysler and GM rat holes, they certainly are going to pony up far more to support a program so near and dear to their heart for so many years.

There is simply not some magic, easy to access pool of savings in health care available to government managers that will reduce costs 30% or pay for increases in benefits.  If there were, Medicare should have already captured them.

** This is always hilarious to see, as if health insurers make some kind of inordinate profits.  As shown before, the typical after-tax profit at health care companies and insurers is something like 3-4% of revenues.

Sorry Chevy

We own about 100 trucks as part of the business, many of them Chevy's.  We are going out right now to replace several, and I just can't bring myself to do business with Government Motors.  So its Ford trucks for now.

The Glad Corporation = Satan

I am totally pissed off at the Glad Corporation this evening.  For over a year, I have been advocating the Amazon Kindle book reader (I now have a Kindle 2)  in part because it actually is superior to regular books for reading in the bath tub.  Just zip the Kindle into a clear Ziploc bag, and it is waterproof and quite easy to read.  And it is easy to turn the pages, unlike trying to put a regular book in a bag.

That is, until today.  For some reason, I misplaced my usual Ziploc bag.  So I ran to the kitchen for a replacement, and found to my horror the new bag design is no longer clear.  There is some kind of pattern in the plastic that is still sort of transparent but is far less satisfactory for book reading.  I wonder if anyone is selling black market old-Ziploc bags on eBay?

The never-ending need of American corporations to tinker with designs usually helps make for a better world, but it has a dark side too.  First the Edsel, and now less-than-transparent Ziplocs.

Postscript: We also used to use Ziplocs for cheap underwater photography.  It actually works OK, if you pull the bag tight across the lens.

Update #1: The freezer bags are thicker -- I am hoping that they are still clear.  I will run to the store tomorrow to buy a box and let you know.

Great Point, Often Overlooked

Bill Whittle makes a great point in this video which is at the heart of the problems with this administration:  While Obama and his young policy wonks may be smarter (or at least think they are smarter) than other folks individually, they cannot possibly be smarter than the sum of 300 million well educated, realtively affluent Americans making decisions for themselves.  Every technocrat founders on these rocks, when they substitute their decision as command and control planners for individual decision making (example).   Everyone talks about a revival of interest in Ayn Rand, and that is great, but it is Hayek who has never been more relevent.

More on the failures of technocrats here.

Nothing To See Here, Move Along

Kevin Drum, echoing Paul Krugman, looks at rising interest rates on Treasuries and decides that there is nothing to see here, move along.   You will all be relieved to know that these rising interest rates have nothing to do with a couple of trillion dollars in new government borrowing, and the effect that this borrowing (and wild money printing) might have on

  • Inflation
  • Sovereign risk
  • Supply and demand for credit

Boy, do I feel better.

PS - And remember, if interest rates do start exceeding historical norms, Krugman will discover that it is Bush's fault.

Another Michael Moore Howler

I was listening to NPR in a cab a week ago Sunday and heard an interview with Michael Moore on the [then] impending bankruptcy of GM.  It is perfectly logical to interview Moore on such a topic, as he has been a long-time critic of GM's management, and I was curious to see what he would say.

In the interview, Moore was asked why GM failed.  I wish I had a transcript to ge the exact words, but in effect he said that 1) GM failed because it did not pay its workers enough and 2) GM failed because the US has not promoted enough mass transit.

Huh?  This is certainly a unique perspective, that GM with some of the highest manufacturing labor costs in the world, failed because its labor costs were not high enough.  His "logic" seems to have been that by not paying its workers enough, GM caused real middle class income to stagnate for decades which therefore reduced demand for its cars.   And don't even get me started on the proposition that GM was worse off because the government did not subsidize competitive transit modes enough.   I guess it does not really surprise me that Moore, who wants the US medical care system to emulate Cuba, would be so illogical.  But how does a seasoned journalist just let this stuff pass in an interview?  Incredible.

Fixing What Already Exists Before Adding More

Virginia Postrel has what seems to be a perfectly reasonable suggestion:

Think about this for a moment. Medicare is a huge, single-payer, government-run program. It ought to provide the perfect environment for experimentation. If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what "better management" looks like applied to Medicare before we roll it out to the rest of the country.

This is not a completely cynical suggestion. Medicare is, for instance, a logical place to start to design better electronic records systems and the incentives to use them. But you do have to wonder why a report that claims that Medicare is wasting 30 percent of its spending thinks it's making a case for making the rest of the health care system more like Medicare.

Of course, I think both Obama and Congress know that either 1) such savings are impossible and/or 2) such savings would require steps painful enough to have millions of users squealing.

The Portland Non-Example

The Anti-Planner, in a long post dissecting a speech by Ray LaHood, brings some good facts to the table about the lack of success of efforts in cities to get people out of cars.  Of particular interest is Portland, which is often held up by transit and in particular light rail supporters as the be-all-end-all city on the hill example of transit and growth planning.  OK, let's use it as an example:

The 2007 American Community Survey found that, since the 2000 census, the number of Portland-area residents who say they usually bicycle to work grew from about 6,800 to 15,900. But the number who say they take transit to work declined from 58,600 to 57,900. The number who go to work by car (not counting taxis) grew from 664,300 to 730,500. This means that Portland roads have about 60,000 more cars during rush hour, but the region has put most of its transportation dollars into light rail and streetcars that carry no more people.

A lot of blame for this can go to the city's focus on light rail, whose enormous costs have cannibalized bus service and thus reduced total transit service.  In particular, those who support transit as a god-send for the working poor should note that this substitution of large, inexpensive bus networks for more yuppie-friendly trains on narrow routes shifts transit away from the poor to white collar users.

...coerciveness is a fundamental part of the livability campaign, as shown by Portland, Oregon, whose official objective (see table 1.2) is to allow rush-hour traffic to grow to near-gridlock levels ("level of service F") on many major freeways and arterials. Besides diverting federal highway money into light rail instead of things that will actually relieve congestion, much of the money that Portland does spend on roads goes into "traffic calming," a euphemism for "congestion building" which consists of putting barriers in roads, speed humps, narrowing streets, and turning auto lanes into exclusive bike lanes.

Beyond the moral and constitutional question of whether government should have the right to intrude into people's lives is the more practical question of whether the benefits of such intrusions justify their costs. In the case of Portland, the costs include a nearly twelve-fold increase in the costs of congestion between 1982 and 2005, the more than $2 billion spent on light rail, and nearly $2 billion spent on subsidies to transit-oriented developments. Meanwhile, the benefits include a lot of New York Times articles making Portlanders feeling smug about themselves, but not much else except for the lucky (or politically connected) few getting the subsidies.

Why I Am Glad I Am Running A Private Company

Because in a public company, I might have to, out of fiduciary responsibility, accede to this:

China plans to require that all personal computers sold in the country as of July 1 be shipped with software that blocks access to certain Web sites, a move that could give government censors unprecedented control over how Chinese users access the Internet.

Running a private company, I can tell them to take a hike.  As I did last week, when I was offered a large piece of new business but refused it because it required that I drug test all my employees.

Health Care Trojan Horse (Episode 35)

Via Maggies Farm, Dr. Melissa Clouthier:

y biggest concern with Government Run health care is that the government will run it and run you. That is, your life will be controlled from cradle to grave. You will eat a certain way"¦or else. You will do certain things"¦or else. And the government will have every motivation to force you down a path.

Ultimately, this is a civil liberties issue. Some people say that not having health care for all is shameful in such a wealthy country. Shameful is the notion of a bureaucrat deciding whether you live or die based on the metrics of a chart. That's shameful. And that would be our future. It is a future I don't want to see.

Just look at the big government, totalitarian groups that are for this mess. It should give you an idea of what you'd have to look forward to in the future.

Yep.  It is still amazing to me that the National Organization for Women, who have built 80% of their history on "Keep the government out of my body" is a huge supporter of national health care.

TJIC described the problem well:

The art of socializing everything under the sun, in four steps:

  1. For no reason at all, have the taxpayers deal with situation X.
  2. Declare that people who create situation X are imposing a negative externality on others.
  3. Tax and spend even more on cleaning up mess X, and make it illegal to create situation X, or put high taxes on X.
  4. Create winners and losers. Winners (those collecting tax dollars to clean up mess X) donate to politicians to keep the gravy flowing. Losers (those paying taxes and getting penalized) donate to politicians to lighten the yoke.

One example of application of this approach:

Old school:

  1. Some people overeat and get fat. Some of these people have heart attacks. No problem.

New school:

  1. Decide that taxpayers will pay for socialized health care.
  2. Declare that people who overeat are enemies of the state.
  3. Tax affordable, healthy-in-moderation food that does not appeal to NPR listeners.
  4. Collect the campaign donations.

So Why Are We Even Bothering with Cap and Trade?

The whole point of a pollution control regime driven by a carbon tax or cap-and-trade is to acknowledge that 300 million people making trade-off and investment decisions can do a better job reducing pollution than 300 people in Washington commanding solutions.   Give individuals an emissions cap (or raise the price of emissions) and people will make their own decisions how best to handle the response.  One household in Arizona might put in solar, while the Seattle household would see solar as a waste and might get the same reductions via conservation.

So why does the current cap-and-trade bill have so much command and control embedded in it?

In fact, the bill also contains regulations on everything from light bulb standards to the specs on hot tubs, and it will reshape America's economy in dozens of ways that many don't realize.

Here is just one: The bill would give the federal government power over local building codes. It requires that by 2012 codes must require that new buildings be 30 percent more efficient than they would have been under current regulations. By 2016, that figure rises to 50 percent, with increases scheduled for years after that. With those targets in mind, the bill expects organizations that develop model codes for states and localities to fill in the details, creating a national code. If they don't, the bill commands the Energy Department to draft a national code itself.

States, meanwhile, would have to adopt the national code or one that achieves the same efficiency targets. Those that refuse will see their codes overwritten automatically, and they will be docked federal funds and carbon "allowances" -- valuable securities created elsewhere in the bill that give the holder the right to pollute and can be sold. The Energy Department also could enforce its code itself. Among other things, the policy would demonstrate the new leverage of allocation of allowances as a sort of carbon currency -- leverage this bill would be giving to Congress to direct state behavior.

The reason, of course, is that Congress may nominally support cap-and-trade (mainly because it is hip and trendy, not because they really understand it) but they most certainly do not buy into the philosophy behind it -- that millions of individuals can make better decisions collectively than a few planners in Washington.  Because Congress most certainly thinks they are smarter than everyone else and can make better decisions.

Of course, this is absurd.  Has anyone tested these mandates above and seen if they are a less costly way to reduce emissions than other steps?  Of course not, just as they did not for the new CAFE standards.  In fact, I can prove it -- Do making massive investments in insulation and air conditioning efficiency make any sense in San Diego?  Of course not -- in that mild climate, these are near useless investments.  Does making me buy a more fuel efficient car to drive my 1.5 mile commute make sense?  Of course not.  But this is exactly what is happening, because Congress can only regulate to the mean, and the result is that in many cases its commands make no sense.  Which is exactly why cap-and-trade was invented, ironically.

*Sigh* Something Else I Will Have to Subsidize


It took decades and, at times, antagonistic battles, but Harvard's gay community says it has finally cemented its academic legitimacy at the nation's oldest university. College officials will announce today that they will establish an endowed chair in lesbian, gay, bisexual, and transgender studies, in what is believed to be the first professorship of its kind in the country.

Can the adults among us agree that a degree in LGBT studies has about zero economic value?  Even a history degree has more economic value, as history studies tend to still be accompanied by some academic rigor.  But the pathetic scholarship standards and non-existant statistical rigor with which most social sciences, and various [fill in the blank with oppressed group] studies departments in particular, are taught make the economic value of such a degree at best zero and at worst a negative.

I have no problem with anyone studying whatever they wish using their own resources.  This is one place I diverge with Ayn Rand -- she might say that pursuing non-productive activity is inherently immoral.  I would say that pursuing your own goals, whatever they be and however valuable or valueless they might be to others, is just fine as long as you don't demand that everyone else to support you.

The problem is that a degree at Harvard probably requires a $200,000 investment to complete.  Given that, beyond a few career spots in academia, a LGBT studies degree is unlikely to ever recover enough (versus having no degree)  to pay for such an investment, problems are inevitable.  Either someone (read: taxpayers) will likely foot the bill, or else some student is going to find herself with tens of thousands of dollars of student debt and no realistic way to pay it back.

In fact, this latter situation is a common leitmotif of recent media stories, the college grad unable to handle his or her shocking debt load.  Somehow, stories all seem to blame the capitalist system as a failure point.  Michelle Obama, who similarly pursued [historically oppressed group] studies at Princeton, has expressed just this point of view.

Despite their Ivy League pedigrees and good salaries, Michelle Obama often says the fact that she and her husband are out of debt is due to sheer luck, because they could not have predicted that his two books would become bestsellers. "It was like, 'Let's put all our money on red!' " she told a crowd at Ohio State University on Friday. "It wasn't a financial plan! We were lucky! And it shouldn't have been based on luck, because we worked hard."

Is this problem really so hard to diagnose, or have we gotten so politically correct we cannot state a fact out loud that everyone understands -- that is, some degrees have more economic power than others.  LGBT studies degrees likely have very little economic utility.  So it is fine to pursue such a degree, but don't be surprised when you are not offered a six-figure income at graduation, and don't come to me expecting that I pay for your choice.

On Running GM

It strikes me GM has at least four problems that led to its bankruptcy:

  • Tendency to give too much away to the UAW, both in $ and work rules concessions
  • Uninspired design largely out of contact with consumers
  • Operational processes that produce way too many errors
  • Bloated, expensive, and slow bureaucracy

It is astoundingly hard to see how federal government ownership of GM will fix any of these.   The Obama intervention in the bankruptcy has been one long giveaway to the UAW, and it is already clear that any radical or painful restructuring steps will be muddled in the political process.  What we really needed were innovative radicals swooping in a picking up assets in bankruptcy, to be run in totally new ways.  What we get instead are 31-year-old grad students with no experience in automobiles or any other business enterprise calling the shots:

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry."¦

But now, according to those who joined him in the middle of his crash course about the automakers' downward spiral, he has emerged as one of the most influential voices in what may become President Obama's biggest experiment yet in federal economic intervention.

While far more prominent members of the administration are making the big decisions about Detroit, it is Mr. Deese who is often narrowing their options.

I can say this will end poorly with some confidence, as I too at 31 found myself to be a smart but inexperienced guy advising Fortune 50 CEOs for McKinsey & Co.  I am embarrassed to this day at the solutions we used to push that blinded us with their elegance but turned out to make no sense in the real world.

The Obama administration reminds me of nothing so much as a grad school policy seminar suddenly finding itself running a government.   All that naive technocratic hubris we once kept safely bottled away in Cambridge and New Haven has been released to wreck havok on the real world.

For more, read my previous work on why GM should fail, and try to see if anything proposed to day gets at the issues discussed.  At the end of the day, what those in the Obama Administration and their many supporters fail to understand is the very basic concept of how wealth and value get created, and how this relates to the deployment of assets.  I won't go into depth on this topic today, but suffice it to say that pumping a trillion dollars or so of government borrowing into the least well-managed institutions in the country is not a recipe for growth.

Update: George Will has more.

But one reason Amtrak runs on red ink is that legislators treat it as their toy train set, preventing it from cutting egregiously unprofitable routes. Will Congress passively accept auto plant-closing decisions? Rattner says that Washington's demure vow is: "No plant decisions, no dealer decisions, no color-of-the-car decisions." He is one-third right. Last week, under the headline "Senators Blast Automakers Over Dealer Closings," The Post reported, "Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions."

With the help of the California legislature, we can make it three out of three, as California is mulling legislation to ban certain car colors to stop global warming (lol).

Update #2:  More on the Chrysler shotgun wedding with Fiat.

It Is Getting Harder and Harder to Write Satire

A portion of my novel BMOC was satire of oddball lawsuits.  In that book, for example, I had a woman suing Disney because she found that the characters at Disney World were people in costumes rather than the actual animated characters she had expected.  I thought that was enough beyond reason and reality to constitute satire, but I guess I was wrong:

On May 21, a judge of the U.S. District Court for the Eastern District of California dismissed a complaint filed by a woman who said she had purchased "Cap'n Crunch with Crunchberries" because she believed "crunchberries" were real fruit. The plaintiff, Janine Sugawara, alleged that she had only recently learned to her dismay that said "berries" were in fact simply brightly-colored cereal balls, and that although the product did contain some strawberry fruit concentrate, it was not otherwise redeemed by fruit. She sued, on behalf of herself and all similarly situated consumers who also apparently believed that there are fields somewhere in our land thronged by crunchberry bushes.

Double Standard

When private companies in financial distress pay out employee bonuses that were contractually obligated:  bad.  When governments in financial distress pay out employee bonuses that are entirely discretionary: A-OK.

Amid the downturn in the economy, the city of Phoenix handed out more than $300,000 in cash bonuses, a CBS 5 News investigation found.

The bonuses, which ranged from $500 to $6,000 for a grand total of $354,800, were paid in October, according to public records...

Nevertheless, records show former Parks and Recreation Director Sara Hensley received a $3,500 cash award; the same month, she resigned to take a similar job in Texas.

Library Director Tony Garvey received a $4,000 cash award. Shortly after, libraries were forced to shorten hours and cut positions.

Notes from Touring Washington, DC

We just finished up 4-1/2 days in Washington, DC, and I wanted to share some thoughts of various attractions.  Unlike with Disney World, I am not a Washington expert, so others are welcome to comment with their thoughts.

Hotels: Right now, hotels are offering screaming deals.  I have become a Hotwire aficionado, in large part because I discovered this site which helps one break the secrecy at Hotwire and figure out in advance, with a fair bit of certainty, exactly what hotel for which one is signing up.  As a result, I got a $165 rate at the Willard, right next to the White House, which was less than my sister paid for a Residence Inn out at Dupont Circle.  And unlike many hotels who sometimes put Hotwire customers in the worst rooms, we got a huge room, really a suite.  And there is no better location for being a tourist in Washington than the Willard.

Restaurants: We had really bad luck with restaurants for dinner.  There are plenty of chains for predictable meals, but we tried several local favorites and were disappointed each time, even after checking them out at TripAdvisor (another favorite site of mine).  I don't know if this was bad luck or a statement on Washington dining.  We did have a good meal in Georgetown, where there are lots of choices.  It looked like there were some nice places with cafe-style outdoor dining on Wisconsin Ave near the center of Georgetown, but I can't remember any of their names.  We had ice cream in Georgetown at Thomas Sweets, a family favorite we knew because it is an institution at Princeton.

Lunches, on the other hand, were a pleasant surprise.  Both the National Gallery and the Natural History Museum had very nice cafes with lots of dining choices, good salad bars, etc.  We liked these better than the all-McDonald's fair at the Air and Space Museum.

Never, ever eat breakfast in a fancy hotel, unless you are very wealthy.  We tried the outdoor cafe one day at the Willard and ended up with the classic 5-star 4 croissant $100 breakfast.  We quickly found a bakery a block away by the Filene's Basement that was just fine for breakfast.

Transport: At the Willard, we were walking distance from nearly everything we wanted.  The Washington subway system is very good and cheap, and we used it several times (after all, my tax money pays for it so I might as well).  Cabs seem cheap but beware -- they add $1.50 for each extra person beyond one and some amount for each bag in the trunk.  We took the cab to National Airport when we got pinched for time (the subway goes right there) and found that we had an $11 charge before the wheels even started to roll.  Fortunately, National was so close the final bill was less than $25.  Cabs are therefore better for long trips than short ones.

Memorials: We walked around the Washington monument but did not go up  (we were way too late in the day to get tickets).  For various reasons related to the elevation and the buildings on the mall, the area at the base of the monument is windy as heck, even if the rest of DC is calm, so it is a nice place to relax with a good view on a hot day.  The Lincoln Memorial is far better seen at night than during the day.  The memorial is powerful, but the view from it at night is awesome.

The Vietnam War Memorial is simply awesome.  I have never yet found a war memorial that is more moving.  Unlike many memorials, it is truly dedicated to the individuals who fought and died.  In contrast, the WWII memorial is, to my mind, a complete loss as a memorial.  While dramatic architecturally and in a great location, it produces zero emotion.  It has monuments to states and places, not people.

Air and Space Museum: Always a winner.  I have never met a person who didn't enjoy it.  But expect crowds to be high -- this is by far the most popular spot on the mall.   The IMAX shows get most of the attention but I found the planetarium shows to actually be more interesting (though visually less stunning).

National Gallery: I struggle with large art galleries.  My favorites are places like the Frick in New York, which are easily digestible.  I floundered in the Louvre -- there is just too much.  I found the National Gallery to be a nice size -- large enough to have some great pieces, but small enough that one can get through several different eras in a single visit.  My wife likes the French impressionists, while I like the earlier Dutch, and there was good stuff for both of us to see.  I thought the modern art collection in the annex was pretty mediocre.  There is a fabulous huge Calder in the atrium, however, that is worth a quick peak inside.

Natural History Museum: This one is tough.  Either you have to see it for 5 minutes or 5 hours.  One can jam through and see the Hope diamond and the squid and a few other attractions, or one can really take time to learn from the exhibits, in which case one needs to be prepared to stay quite a while.  To the latter goal, I prefer the new reorganization of the Natural History museum in New York -- I think it is more logical and really helps one understand the evolution and relationship of species better.

Museum of American History: This museum has changed several times, looking to find its niche.  I think it used to be more of a technology museum.  I actually loved the old museum, full of old steam engines and machinery, but I think my kids liked the new version better, which is aimed more at being a history museum (there is still a technology portion, with some good machinery, cars, and trains, but it is smaller).  The military history section is good, and fills a niche that really hasn't existed before in this country, though it falls far short of, say, the Imperial War Museum in London.  My wife always likes to check out the first lady gowns.

International Spy Museum: I was kind of skeptical of this, thinking it might be like a Madame Tussuad's or some-such.  But this museum was fabulous.  It had great exhibits, and was very well organized.  Had the single best combination of any museum we went to of cool exhibits combined with teaching.  The kids loved it too, as there were some good kids activities and lots of interactive things.  In addition to the museum, we also did an interactive experience with a group of 12 folks for about an hour.  This was a simulated spy mission, complete with eavesdropping, breaking in and searching an office, interrogation, etc.  Maybe a bit campy for adults, it is very well done and the kids loved it.  Like Disney but much more interactive.  Note that both the museum and the experience require advanced reservations.

White House: Probably my biggest disappointment of the week.  Note that currently, the only way you can get a tour is through your Congressman -- you have to contact his or her office and get them to schedule you a time, and you have to submit some personal information in advance for security checks.  Having gone through this, I thought we might actually get, you know, a tour.  But instead all we got was the right to join an endless, really slow-moving line that allowed us to see about three rooms with no tour guide or interpretation.  Kids like being able to say they had been there, but that was about the only value.

Capitol: One can sign up for a public tour, in which case you will, from my observation, stand in some huge lines.  If you want to bypass this, and you are talking to your Congressperson already for the White House tour, see if you can get a staff-led private tour.  One of John Shadegg's aids showed about eight of us through the capital and into the House gallery.  She did a very good job (thanks Congressman Shadegg!) and we skipped most of the lines.  By the way, I did indeed see our new billion dollar visitor center.  It was enormously disappointing.  The public spaces were huge, but mostly filled with queues (apparently most of the space was appropriated by Congress for their own use as offices and meeting rooms).  We saw a film in a nice theater, but the propaganda meter was turned up pretty high  (They kept calling the capitol the "temple of liberty."  Really?  Someone must have forgotten to tell Congress).

Archives: You gotta go see the big documents.  The Bill of Rights, a copy of Magna Carta, the Constitution, and the Declaration of Independence are all there (though the Declaration has really faded).  If we have a "temple of liberty" in Washington, this is more rightly it.  Or maybe it is more rightly called the reliquary of liberty.  There can be a line, but this changes a lot through the day.  If it looks like a long wait, come back in a few hours and the line may be gone.  Also, they have opened up new galleries that are usually totally uncrowded with a lot of other cool documents.  I could have spent all day here but my family dragged me out.

Botanical Gardens: The surprise of the trip.  We tripped over this place by accident, as it seems to have few visitors.  I never even knew it existed, which is odd as it is cleverly hidden right on the mall next to the capitol.  The big glass conservatory has 8 or 9 zones with different plants from desert to tropical.  This is an outstanding place to decompress, and surprisingly my kids even liked it.  If you go, don't forget to go up the stairs to the catwalk in the jungle canopy, which includes a pretty unique view of the capitol building.

Places we missed but wanted to go:  Jefferson Memorial, Hershorn Gallery, Corcoran Gallery, Air and Space Museum Annex (near Dulles).

Many people seem to like the FBI tour, but I just couldn't stand the thought.

Politicians and Personality Cults

One of the things I had never noticed before was just how prevalent George Washington's image is around the capital.  The city is named after him, there are statues of him all over the place, the capital and the White House are full of paintings of him, and of course there's that big phallic symbol out on the mall.   I found it a bit off-putting, something I would expect more of Napoleon or a Roman Emperor than a US President.  The oddest site of all was the mural on the dome of the capital, which actually shows the deification of George Washington, a leitmotif taken from Roman emperors and tyrants like Julius Caesar, who were often deified by Senate proclamation after their deaths.


Which brings me to our current president.  The cult of personality around Obama as seen in the Washington area is just startling, and horribly troubling for those concerned about the power of the state and individual liberty.  Pictures of him and his family are seemingly on every wall, with whole souvenir shops dedicated to everything Obama.  Searching for some kind of analog, I actually found two:

  • Princess Diana -- Little of what Princess Diana said or did bore up under much scrutiny, but it didn't matter.  For some reason, huge numbers of people totally invested themselves in her personality cult.   In fact, the more screwed up she was, and the more mistakes and weakness she admitted to, the more people rushed to support her.   I was in London a few days after her funeral, and it was the only occasion I had ever seen as much merchandise sales for a government figure as I did this week for Obama.
  • Augustus Caesar.   Gaius Julius Caesar Octavianus, or Augustus, had the problem of wanting all the power of a tyrant, but he knew the dangers because his [adoptive] father Julius Caesar had been killed for being a tyrant.  So he brilliantly built over time a personal loyalty among those in the state to himself, and exercised power with good PR.  He was more powerful and more autocratic than Julius Caesar, but cleverly disguised the fact.  He gave the people the illusion of freedom without the reality, and they ate it up.