Dispatches from District 48
Archive for March 2014
Truncating the Y-axis scale on charts to exaggerate apparent trends makes me crazy. Example
By the way, while I am complaining, there is ZERO reason in this chart to show each bar in a different color. The color adds no value and only serves to distract.
1. Its all about having the right people. When I was in b-school, I honestly laughed at statements like this. I thought it was new age bullsh*t. I was totally enamored of quantitative analysis and business strategy. After running a business for 10 years, I now know that people are everything. Everything - our ability to grow, to handle difficult compliance issues, to work safely, to reduce costs - relies entirely on my finding the right people in the right spots. Everything else is a rounding error.
2. There is only a very limited number of things you can deploy to the field at any one time. It took me a really long time to realize that my mind - in fact, any manager's mind - likely works way faster than the bandwidth that exists to actually deploy new things to the field. Putting customer initiative X on hold because compliance issue Y needs to be deployed first is really frustrating, but trying to do too much means nothing gets done.
I would observe relative to #2 above that over the last few years the combination of the Feds + legislatures like in CA are generating new compliance issues faster than we can deploy solutions and train for them. In California, we have put most all new customer initiatives on hold because we are simply overwhelmed with management and employee training relative to various local government mandates.
By the way, there is a reason for this choice (from an article on why unions are worried about the PPACA)
The second problem is that the 40 percent excise tax on especially expensive plans — the so-called Cadillac tax — is going to hit union plans especially hard. Unlike most people negotiating compensation, union negotiators make an explicit trade-off between wages and other benefits, and the benefit that they seem most attached to is generous health plans. Union plans are made more expensive still because union membership is heavily skewed toward older workers. They are thus very likely to get hit by the Cadillac tax, which takes effect in 2018.
The preference for health benefits over cash compensation makes some sense for tax reasons (as it shifts taxable income to nontaxable income). And at some level it is typical of union thinking, which is often driven by seniority and by benefits for older workers over younger workers. But there is another reason for this that is almost never stated -- the unions themselves run many of these health plans. And because it is priced as a monopoly, the unions often earn monopoly rents on these plans, and use management of large health plans to justify much higher compensation levels for union leaders. In Wisconsin, ending public union strangleholds on health plan management immediately saved the state and various local school districts millions of dollars when they were allowed to competitively bid these functions for the first time.
The intelligence community can spy on millions of Americans and Dianne Feinstein yawns. But spy on Dianne Feinstein and you're in trouble.
I was not at all surprised to see that average SAT scores varied strongly by income bracket. What has surprised me is how quickly everyone has grabbed for the explanation that "its all due to test prep." It strikes me that the test prep explanation is a sham, meant to try to hide the real problem.
First, Alex Tabarrok says that most of the research out there is that test prep explains at most 20% of the variation by income, and probably less. This fits my experience with test prep. I have always felt that 90% of the advantage of test prep was just taking a few practice tests so when the actual test days come, the kids are comfortable they understand how each section of the test works and are not thrown by the types of problems they will face. My feeling is that most of what you can learn in fancy test prep courses is in those books they sell for about $40. We sent our kids to a course that cost a lot more than $40, but frankly I did not do it because I thought they would get any special knowledge they could not get in the book, but because I was outsourcing the effort to get them to do the work. Seriously, I think a parent with $40 and the willingness to make sure their kids actually goes through the book would get most of the benefit.
Which raises the question of whether test prep is correlated to income because of its cost, or whether it is correlated to income because high income folks are more likely to place value on their kids testing well and make them do the prep work. We will come back to this in a minute.
So if its not test prep, what does drive the difference? I don't know, because I have not studied the problem. But I can speak for our family. My kids do well on SAT-type tests because they go to a tough rigorous private school. Let's take one example. When my daughter was a sophomore in high school, she scored a perfect 80 (equivalent of the SAT 800) on the writing and grammar section of the PSAT. Now, my daughter is smart but no Ivy-bound savant. She took no prep course. My daughter aced the PSAT grammar because her freshman teacher drove those kids hard on grammar. I am talking about a pace and workload and set of expectations that kids in our junior high school start talking about and dreading two years before they even get to the class, and this at a school already known for a tough work load.
This teacher is legendarily fabulous, so obviously that is hard to replicate everywhere. But she is fabulous because my kids actually came away excited about Homer and other classics. This is what I pay private-school money for. But what she did in grammar, what got my daughter her perfect score, could be emulated by about any competent teacher...theoretically. But in fact it can't happen because such an approach could never survive in a public school. The work expectations are way too high -- parents and students would revolt. It only works for those who self-select.
Well, it only works today for those who self-select and can afford a private school. Unfortunately, we have an education system where everyone is forced to pay tuition to what is at-best a teach-to-the-mean school. If one wants more, they have to be wealthy enough to pay tuition to a second school. Which is why school choice makes so much sense. Why should only the wealthy have the ability to self-select into more intensive programs? BUt this is a conclusion most the education establishment is desperate for people not to reach. Thus, the hand-waving over test prep.
Of course, there are a million other wealth, genetic, and parental effects that come into this equation. For example, my kids read for fun, probably in large part because my wife and I read for fun. How many kids read 10+ books outside of school each year? They do this not because my kids are awesomer than other kids, but simply because that was the expectation they grew up with, that we spend free time reading books. Other families might spend their free time, say, doing home improvement projects such that their kids all grow up great woodworkers. I am not sure one set of activities is superior to another, but my kids end up testing well. Of course, I am not sure they can use a screwdriver. Seriously, over Christmas break I asked my 20-year-old son to pass me the Phillips head screwdriver and he had no idea which one that was.
I was thinking about the question above of how one separates out parental expectations from all the other effects (like parental DNA and income and quality of schools, etc.) I interview high schoolers for Princeton admissions, so I have come to learn that some public high schools have advanced programs, to allow kids some self-selection into a more rigorous program within the context of public schools (this is usually either an AP program, an honors program, or an IB program). By the way, the existence of these programs at public schools correlates pretty highly with the average income of that school's district.
Here would be an interesting study: Take high schools with some sort of honors program option. We want to look at the income demographics of the kids who chose the honors program vs. those who choose the standard program. We would therefore want to look only at high schools that take all comers into the honors program -- if they have some sort of admissions requirement, then this would screw up our study because we want to test solely for how demographics affect the choice to pursue a more rigorous, college-oriented program. I would love to see the results, but my hypothesis is that test-prep is a proxy for the same thing -- less about income per se and more about parental expectations.
This week's episode: Spending enormous resources on a program to reduce X, and then not tracking (or even putting in place a mechanism to track) whether X was reduced as promised. James Taranto quoting the National Journal quoting Administration officials:
The Congressional Budget Office estimates that the health care law will reduce the number of uninsured people by about 24 million over the next few years, and that about 6 million previously uninsured people will gain coverage through the law's exchanges this year. So, is enrollment on track to meet that goal? Overall enrollment is looking pretty decent, but how many of the people who have signed up were previously uninsured?
"That's not a data point that we are really collecting in any sort of systematic way," Cohen told the insurance-industry crowd on Thursday when asked how many of the roughly 4 million enrollees were previously uninsured.
Nicely done. The PPACA was passed first and foremost to bring insurance to the uninsured. I always thought that the Left misunderstood (accidentally or on purpose, I do not know) the nature of the uninsured and thus overestimated what impact the PPACA would have in this regard. But one way or another, you would track the impact, right? I can just imagine trying to explain to my old boss Chuck Knight why we spent billions to gain new customers for a product but didn't track how many new customers we gained.
Postscript: Here is my prediction -- The Administration will declare that no one had "real" insurance (as they define it) so everyone in the exchange was previously uninsured.
Sorry, this is one of those posts where I am still struggling to figure an issue out, so bear with me if we wander around a bit and the ideas are a bit unfinished.
Kevin Drum and other progressives have been bending over backwards to argue that the now three year delay in implementing PPACA standards for private insurance policies is no big deal.
Really? The PPACA is likely, for Progressives, to be the most important piece of legislation passed during this Administration. Hell, based on the discussion when it was passed, for many it is likely the most important piece of legislation passed in the last three or four decades. And when Republicans suggested delaying these same rules and mandates, e.g. during the government shutdown, they freaked, arguing that people should not have to go another day with their old crappy health care policies.
But now they just roll over and say, yeah, ho hum, this thing that everyone supposedly wanted is a political liability so its fine to delay it, no big deal.
If this were a signature piece of libertarian legislation (yeah, I know its hard to imagine such a thing) that was not being implemented by somebody I voted for and supported, I would be pissed. I would be raking the President over the coals.
This difference in outlook may be why the Republican leadership hates the Tea Party. The Tea Party gets pissed when folks they elect punt on the ideological goals they got elected to pursue. They have no tribal loyalty, only loyalty to a set of policy goals. The key marker in fact of many groups now disparagingly called "extremists" is that they do not blindly support "their guy" in office when "their guy" sells out on the things they want.
I have friends I like and respect -- smart and worldly people -- who are involved in a series of activities to promote political moderation. What I have written in this post is the core of my fear about moderation -- that in real life calls for moderation are actually calls for loyalty to maintaining our current two major parties (and keeping current incumbents in office) over ideas and principles.
Which leads me to an honest question that many of you may take as insulting -- can one be a principled moderate? I am honestly undecided on this. But note that by moderate I do not mean "someone who is neither Republican or Democrat," because I fit that description and most would call me pretty extreme. So "fiscally conservative and socially liberal" is not in my mind inherently "moderate". That is a non-moderate ideological position that is sometimes called "moderate" because it is a mix of Republican and Democrat positions. But I would argue that anyone striving to intellectual consistency cannot be a Republican or Democrat because neither have an internally consistent ideology, and in fact their ideology tends to flip back and forth on certain issues (look at how Republican and Democrat ideology on Presidential power, for example, or drone strikes changes depending on whose guy is in the Oval Office).
Moderates in my mind are folks willing to, or even believe it is superior to, take average positions, eg. "the PPACA just went too far and we should have had a less-far-reaching compromise" or "free trade agreements go too far we need a mix of free trade and protectionism". They value compromise and legislative action (ie passing lots of laws in a fluid and timely manner) over holding firm on particular ideological goals. I guess the most fair way to put it by this definition is they value consensus and projecting a sense of agreement and teamwork over any individual policy goal.
Postscript: One other potential definition of "moderate": One could argue that in actual use by politicians and pundits, "moderate" effectively means "one who agrees with me" and "extremist" means "people who disagree with me." The real solution here may be to accept that "moderate" is an inherently broken word and stop using it.
Update: There are areas where I suppose I am a moderate. For example, I think that making definitive statements about what "science" has been "settled" in the realm of complex systems is insane. This is particularly true in economics. Many findings in economics, if one were honest, are equivocal or boil down to "it depends." The Left is insanely disingenuous to claim that the science is settled that minimum wage increases don't affect employment. But it is equally wrong to say that minimum wage increases always have a large effect on unemployment. For one thing, almost no one (percentage wise) actually makes the minimum wage so we are talking about changes in the first place that affect only a couple of percent of the workforce, and may be mitigated (or exacerbated) by other simultaneous trends in the economy. So of course their impact may not be large (in the same way that regulations on left-handed Eskimo Fortran programmers might not have much of an impact on the larger economy).
We have gotten into this bizarre situation that the science is suddenly always settled about everything, where it would be safer to argue that given the complexity of the systems involved the science can't be settled. I liked this bit I read the other day in the Federalist
One of the more amusing threads that runs through the conversation among the online left is the viewpoint that the science is settled in every arena, and settled in their favor. The data backs the leftward view, and if it doesn’t, there must be a flaw in the data, or in the scientist, or secret Koch-backed dollars behind the research. This bit of hubris leads to saying obviously untrue things – like “every economist from the left and right†says the stimulus has created or saved at least two million jobs. Or that there’s “no solid evidence†that boosting the minimum wage harms jobs. Of course the media knows that these aren’t true, but they largely give these politicians a pass, because dealing in data and with academic research is their turf.
Folks on the Left who want to blame the Tea Party for the destruction of civil discourse need to look at themselves as well, declaring the science settled on everything and then painting their opponents as anti-science for disagreeing. As I have pointed out before, this sort of epistemology is not science but religion, the appeal to authority backed by charges of heresy for those who disagree.
If I were going to make a political plea, it would not be for moderation but for better more respectful practices in the public discourse.
Corruption is often blamed on the corruptible. But corruptible people will always exist (see: entire history of civilization) if the incentives for corruption are sufficient. Here is another example, from a vote-buying scandal in south Texas:
In the deeply Democratic Rio Grande Valley, the primary is the election that matters. And in local races like county commissioner and district attorney a sliver of votes can make a difference between winning and losing the election. Many times, paid campaign workers called “politiqueras” deliver the votes that put a candidate over the top.
Politiqueras—who are paid to turn out voters, especially in low-income neighborhoods and colonias—have been part of elections in the Rio Grande Valley for decades. But the recent suicide of a school board president in the small town of Donna and the indictment of three politiqueras for allegedly buying votes in a Donna school board election with beer, drugs and cash has rattled the Valley’s political world.
Politiqueras are typically older women with deep ties in the community. They meet with seniors at nursing homes and adult daycare centers and residents in colonias to advocate for their candidates. They come bearing barbecue plates or Mexican pastries and offer voters a ride to the polls, none of which is illegal. But over the decades intense competition in an impoverished region for a limited number of jobs and the power to decide who gets a government contract or a lucrative-paying job has pushed some candidates to cross the legal line and offer cash for votes. “The competition for access to [government] contracts has become intense,” says former Edinburg state Rep. Aaron Peña. “Politiqueras have been pushed further and further to perform in a system that has been corrupted.”
Inflation statistics are always kind of hard to read -- what is driving the rise? Is it across the board or a glitch in one sectors? The media tries to deal with it by presenting a second number which is the number without the more volatile food and energy number. The combination of the two gives a bit more information.
But this simple chart is way better. It shows inflation by component at the same time while showing how much that component is weighted in the overall metric. Via zero hedge.
I try to make it a habit to criticize bad analyses from "my side" of certain debates. I find this to be a good habit that keeps one from falling for poorly constructed but ideologically tempting arguments.
Here is my example this week, from climate skeptic Steven Goddard. I generally enjoy his work, and have quoted him before, but this is a bad chart (this is global temperatures as measured by satellite and aggregated by RSS).
He is trying to show that the last 17+ years has no temperature trend. Fine. But by trying to put a trend line on the earlier period, it results in a mess that understates warming in earlier years. He ends up with 17 years with a zero trend and 20 years with a 0.05 per decade trend. Add these up and one would expect 0.1C total warming. But in fact over this entire period there was, by this data set, 0.3C-0.4C of warming. He left most of the warming out in the the step between the two lines.
Now there are times this might be appropriate. For example, in the measurement of ocean heat content, there is a step change that occurs right at the point where the measurement approach changed from ship records to the ARGO floats. One might argue that it is wrong to make a trend through the transition point because the step change was an artifact of the measurement change. But in this case there was no such measurement change. And while there was a crazy El Nino year in 1998, I have heard no argument from any quarter as to why there might have been some fundamental change in the climate system around 1997.
So I call foul. Take the trend line off the blue portion and the graph is much better.
The Senate Majority Leader has decided to try to shame and silence a private citizen for daring to engage in political discourse. Here is Harry Reid:
I believe in an America where economic opportunity is open to all. And based on their actions and policies they promote, the Koch brothers seem to believe in an America where the system is rigged to benefit the very wealthy.
Remember that this is coming from the man who has somehow become a multi-multi-millionaire over a lifetime of only holding government jobs.
Contrast this with Charles Koch's actual words, parts of which could have come out of the mouth of an occupy Wall Street protester:
I think one of the biggest problems we have in the country is this rampant cronyism where all these large companies are into smash-and-grab, short-term profits, saying how do I get a regulation, or we don’t want to export natural gas because it’s one of our raw materials … Well, you say you believe in free markets, but by your actions you obviously don’t. You believe in cronyism.
And that’s true even at the local level. I mean, how does somebody get started if you have to pay $100,000 or $300,000 to get a medallion to drive a taxi cab? You have to go to school for two years to be a hairdresser. You name it, in every industry we have this. The successful companies try to keep the new entrants down. Now that’s great for a company like ours. We make more money that way because we have less competition and less innovation. But for the country as a whole, it’s horrible.
And for disadvantaged people trying to get started, it’s unconscionable in my view. I think it’s in our long-term interest, in every American’s long-term interest, to fight against this cronyism. As you all have heard me say, the role of business is to create products that make people’s lives better while using fewer resources to do it, and making more resources available to satisfy other needs.
When a company is not being guided by the products they make and what the customers need, but by how they can manipulate the system — getting regulations on their competitors, or mandates on using their products, or eliminating foreign competition — it just lowers the overall standard of living and hurts the disadvantaged the most.We end up with a two-tier system. Those that have, have welfare for the rich. The poor, OK, you have welfare, but you’ve condemned them to a lifetime of dependency and hopelessness.
Yeah, we want “hope and change,” but we want people to have the hope that they can advance on their own merits, rather than the hope that somebody gives them something. That’s better than starving to death, but that, I think, is going to wreck the country. Is it in our business interest? I think it’s in all our long-term interests. It’s not in our short-term interest. And it’s about making money honorably.
People should only profit to the extent they make other people’s lives better. You should profit because you created a better restaurant and people enjoyed going to it. You didn’t force them to go, you don’t have a mandate that you have to go to my restaurant on Tuesdays and Wednesdays or you go to prison. I mean, come on. You feel good about that?
Harry Reid's entire job is built on a foundation of cronyism. Most of his re-election money comes from outside his home state of Nevada, from companies hoping to score political favors from him and from the power he weilds in the Senate. If laws were proposed to thwart Congressional cronyism, say through reducing the power of Congress to pick winners and losers, who would fight such a law, Reid or Koch?
Now I know what I am going to be doing all weekend.
Business gets held liable for the unpaid wages of the previous tenant of the building they are using.
An employer that acquired the assets of a defunct bar and restaurant and continued to operate a restaurant on the same premises was liable for unpaid wages owed to the defunct restaurant’s former employees, the Oregon Supreme Court has ruled. Blachana LLC v. Bureau of Labor and Industries, No. S060789 (Ore. Jan. 16, 2014).
Reversing the Oregon Court of Appeals, the Court found that the Bureau of Labor and Industries (BOLI) did not err in deciding the employer was a successor for state wage liability purposes because it conducted “essentially the same business as conducted by the predecessor,” even though it did not employ any of the predecessor’s employees.
San Francisco has put deep restrictions employers' ability to check the criminal records of people they hire. Yesterday the Senate blocked the nomination of Debo Adegbile to run the Civil Rights division of the Justice Department. Senators were concerned about his actions as defense attorney for a man convicted of murdering a Philadelphia police officer. Honestly, I have no problem with defense attorneys going to extremes to defend their clients. I was more concerned with his historic support for ideas like this one in San Francisco:
Private sector employers in the City of San Francisco will have to comply with new “ban the box” legislation restricting questions about applicants’ criminal records on applications for employment and during job interviews.
The Fair Chance Ordinance, No. 17-14, prohibits employers with at least 20 employees from inquiring about a job applicant’s criminal history on an employment application, including “checking the box” to indicate criminal convictions or other criminal justice system involvement. It also prohibits covered employers from asking about criminal history during an initial interview. The law applies not only to regular employees, but also those performing contracted or contingent work, or working through a temporary agency. The Ordinance becomes operative on August 13, 2014.
After the initial interview, the Ordinance prohibits the employer from asking the applicant about the following:
- arrests that did not result in conviction, unless charges remain pending;
- completion of a diversion program;
- sealed or juvenile offenses;
- offense s that are more than seven years old from the date of sentencing; and
- offenses that are not misdemeanors or felonies, such as infractions.
The employer must provide the applicant with a written notice before making any inquiry into the applicant’s criminal history and display a poster in the workplace developed by the City’s Office of Labor Standards Enforcement (OLSE).
The Ordinance also restricts an employer’s ability to consider criminal history disclosed by an applicant. The information may be used in the selection process only if it has “a direct and specific negative bearing on that person’s ability to perform the duties or responsibilities necessarily related to the employment position.”
This is just stupid. First, I cannot tell you how many government forms (e.g. corporate registrations) require me to report my criminal background -- this is outright hypocrisy, holding private employers to a different standard than public agencies. If they really are consistent, truly believing that criminal background checks are discriminatory because they have disparate impact, then they should be pushing to remove them for things like gun ownership. Anyone really believe they will do this?
The bigger issue for businesses is that we don't make these checks because we are jerks, we make them for real financial reasons. Specifically, we are worried about the health and safety of our employees and customers. And for those that think that business owners are all evil and wouldn't care about such things, then we certainly care about getting sued for the actions of our employees. As a business owner I have been made, particularly in California, responsible for any dumbass thing my employees do. I will get sued if these employees do something wrong. And worse, can you just see the trial -- plaintiff's attorney is going to be in front of the jury and say things like "this employee has a long criminal record and defendant did not even check, he did not even care about my client's safety."
The PJ O'Rourke / Cato Supreme Court amicus brief that is making the rounds is well worth your time. A lot of it is funny, like this footnote:
While President Obama isn’t from Kenya, he is a Keynesian—so you can see where the confusion arises.
But my favorite is footnote 15 where they make fun of the Supreme Court
Driehaus voted for Obamacare, which the Susan B. Anthony List said was the equivalent of voting for taxpayer- funded abortion. Amici are unsure how true the allegation is given that the healthcare law seems to change daily, but it certainly isn’t as truthy as calling a mandate a tax.
This is an update of a post I wrote here.
One question that keeps coming up, both from libertarians as well as others, is why should government define marriage at all? Can't anyone get married in any kind of private ceremony?
My response is that yes, in some sort of libertarian small-government world, the state would be irrelevant -- what I used to call separation of marriage and state.
But it turns out that the state is already deeply involved in marriage. The explicit state licensing of marriage already exists, and our laws in Arizona for this licensing are unequal -- some couples get access to this state license, and some cannot.
What makes this important is that marriage is embedded in hundreds, even thousands, of laws. I searched the Arizona Revised Statutes for mentions of the words "spouse" or "spouses". These words are used 1133 times in 373 different statutes! The Our America team told me they counted over a thousand references in Federal code. In other words, our law codes give -- in thousands of instances -- specific rights, responsibilities, and privileges to married couples who have access to a state-granted marriage license. Those left out of the current unequal definition of marriage face any number of challenges imposed on them by these specifics of spousal rights and privileges embedded in our law code. I call this the non-marriage penalty.
There is no way to rip all these references to marriage out of the law and tax code. Likewise, there is no way to create an equable marriage alternative such as a civil union -- to do so, we would have to go through and rewrite 373 statutes to incorporate this terminology. The fairest solution -- the one that most respects individual freedoms -- is to accept that such government licensing of marriage exists and then make it as open and as equal and as fair and as accessible as we possibly can.
Despite the title, I should make it clear that I oppose the proposed legislation in Arizona to allow warrant-less searches of abortion clinics. The stated justification for the law is to ensure safety and healthy conditions at clinics, but the law is transparently about harassing a particular type of business.
However, I must admit I get some schadenfreude from this. Supporters of the bill say that they are only extending the current standards applied to many other businesses, such as restaurants and bars, to abortion clinics.
Regulators from OSHA to the health department have tremendous powers to barge into private businesses and conduct searches without a warrant, whatever the text of the Fourth Amendment might say. They justify this with licensing regimes that require these businesses to have state licenses, and then require businesses accept these extra-Constitutional searches as a prerequisite for the license.
I have opposed these licensing regimes for years, in part because the consumer protection justification is often a sham -- what they really want is to be able to exercise control of private businesses. In some cases, these laws are used to protect incumbents. In some cases (e.g. here) they are used to try to shut down the entire (legal) industry.
Statists on the Left have generally poo-pooed these concerns. Their typical response is that businesses are just whining, and that only those in violation of the law have something to fear. Now, they suddenly are recognizing that an unannounced search per se is threatening.
Update: I find abortion proponents on the Left to be among the worst examples of faux libertarians. They claim their issue is about choice regarding one's body, but then tend to simultaneously support all kinds of government interventions in personal medical decision-making. They are all for the sanctity of private property when there is an abortion clinic on the site; not so much otherwise.
I am simply exhausted with Paul Krugman calling people anti-science neanderthals for staking out fairly mainstream economic positions that he himself has held in the past. It would be one thing to say, "well, I used to believe the same thing but I changed my mind because x, y, z". That would be a statement to respect. Instead Krugman 1) pretends he never said any such thing and 2) acts like his opponent's position is so out of the mainstream that they are some sort of terrorist for even suggesting it.
I had an example just the other day.
Here is another, from Ben Domenech:
Yesterday, New York Times columnist and CUNY economics professor Paul Krugman had some very strong words about the position in Republican Congressman Paul Ryan’s new poverty report that American welfare programs discourage work and “actually reduce opportunity, creating a poverty trap.” In fact, after contrasting the Ryan report’s view on poverty traps with some data on inequality and welfare states, Krugman resoundingly concluded that Ryan’s ideas were a total sham:
So the whole poverty trap line is a falsehood wrapped in a fallacy; the alleged facts about incentive effects are mostly wrong, and in any case the entire premise that work effort = social mobility is wrong.
Despite Krugman’s strong conclusions, however, Ryan’s views about US welfare policies and poverty traps are actually pretty mainstream – cited by people across the political spectrum as a big reason to reform state federal poverty programs. In fact, a New York Times columnist and Princeton economics professor expressed these widely-held views on the Old Grey Lady’s pages a mere two months ago:
But our patchwork, uncoordinated system of antipoverty programs does have the effect of penalizing efforts by lower-income households to improve their position: the more they earn, the fewer benefits they can collect. In effect, these households face very high marginal tax rates. A large fraction, in some cases 80 cents or more, of each additional dollar they earn is clawed back by the government.”
Even more, the Ryan report’s “poverty trap” analysis is based on the work of the Urban Institute’s Gene Steuerle’s (see p. 7 of the Ryan report), on whom the very same Princeton professor once wrote:
[I]t’s actually a well-documented fact that effective marginal rates are highest, not on the superrich, but on workers toward the lower end of the scale. Why? Partly because of the payroll tax, but largely because of means-tested benefits that fade out as your income rises. Here’s a recent discussion by Eugene Steuerle…
That professor, if you haven’t already guessed, was none other than Paul Krugman.
By the way, can I say how happy the first sentance of this quote makes me, to no longer see my alma mater mentioned in the same breath as Krguman at every turn?
Update: If you want to understand how deep the fraud runs, make sure to watch the 60 second video below with the US environmentalists caught on tape plotting their fraud.
U.S. District Judge Lewis Kaplan in Manhattan said today that the second-largest U.S. oil company provided enough evidence that a 2011 judgment on behalf of rain forest dwellers in the country’s Lago Agrio area was secured by bribing a judge and ghostwriting court documents. Kaplan oversaw a seven-week nonjury trial over Chevron’s allegations.
“The decision in the Lago Agrio case was obtained by corrupt means,” Kaplan said in an opinion that gave Chevron a sweeping victory. “The defendants here may not be allowed to benefit from that in any way.”
Chevron, based in San Ramon, California, was ordered to pay $19 billion to a group of farmers and fishermen by the Ecuadorean court. The award was reduced to $9.5 billion on Nov. 12 by the Ecuadorean National Court of Justice, the nation’s highest tribunal. That's almost half of its 2013 profit.
The Ecuadorean villagers, and activists working on their behalf, argued the oil producer should be held financially responsible for pollution of the Amazon rainforest by Texaco Inc. from the 1960s through the early 1990s. Chevron, which bought Texaco in 2001, claims the company already paid $40 million to clean up its share of the drilling contamination....
In its racketeering case before Kaplan, Chevron alleged that a U.S. lawyer leading the Ecuadoreans, Steven Donziger, and members of his team engaged in “repeated acts of fraud, bribery, money laundering” and obstruction of justice in pursuit of a multibillion-dollar payout.
I don't think there is any doubt that Chevron owed the Ecuadorans some clean up, since even they have agreed to doing work there. And it is not unreasonable to be skeptical that Chevron's actions were perhaps incomplete. But the $19 billion judgement always has smelled, particularly when the judge in the Ecuadoran case publicly admitted he had been bribed.
There was deep corruption in this case from the start, corruption that never will be adequately covered in the media because it "was for a good cause." Similar levels of corruption by Chevron would have led the front page of the New York Times for weeks.
As a reminder, let me quote from an earlier story. Please watch the short video, it is amazing:
The clip below is an outtake from the environmentalist movie "Crude", which purported to document the environmentalist's case against Chevron in Ecuador. Apparently, between takes of earnest and un-selfinterested environmentalists saving the world from greedy corporations, these self-same environmentalists discussed lying about the science and duping the courts in order to score a big payday for themselves.
The video is doubly interesting because, as Anthony Watts explains, the woman in the video taking money to make up untrue findings was recently confirmed to the NAS, where there is a good bet that we will see her as the source for "evidence" that fracking is contaminating groundwater. These three folks are all the subject of a civil suit from Chevron but all three should be subject to criminal charges for fraud and conspiracy.
Several of the environmentalists involved, including Dr. Ann Maest, have since recanted their corruption, sort of. They claim they were "misled" in this New York Times story, but the clip above certainly belies that. Donziger did not mislead her, he is seen convincing her that in Ecuador they can get away with lying. All for a good cause, of course.
Dispatches from the echo chamber: Mother Jones was on this story full force for years. Then suddenly stopped reporting at all when it became clear that allegations of fraud were credible. Check out the articles.
Update: More here
Former Arizona State Parks director Ken Travous takes to the editorial page of our local paper to criticize current park management and the Arizona legislature for not sending enough money to parks"
Things were looking pretty good, and I guess that’s the problem. In some odd kind of way, employing some type of sideways logic, the Legislature deemed that if State Parks is getting along well, it must be out of our control. So, after 15 years of parks acting like a business, the Legislature decided to act like a government and take their money. A little bit here and there in the beginning, to test the public reaction, and then in breathtaking swaths.
Heritage Fund ... gone. Enhancement fund ... swiped. General fund? No way. A $250,000 bequest? Oops, they caught us; better put it back.
State Parks now has a mountainous backlog of maintenance projects all because the Legislature would rather wholly own a failure than share a success. We need to put people in the halls that care about those things that we want our children to enjoy, and a governor who will stand in the breach when the next onslaught appears.
I agree with Travous that our parks could use some more funds. But what Mr. Travous ignores is that the seeds of this problem were very much sown on his watch.
Travous points out that revenues in the parks expanded to nearly $10 million when he was in charge. But left unsaid is that at the same time agency expenses on his watch ballooned to a preposterous $33 million a year**. At every turn, Travous made decisions that increased the agency's costs. For example, park rangers were all given law enforcement certifications, substantially increasing their pay and putting them all into the much more expensive law enforcement pension fund. There is little evidence this was necessary -- Arizona parks generally are not hotbeds of crime -- but it did infuriate many customers as some rangers focused more on citation-writing than customer service. There is a reason McDonald's doesn't write citations in their own parking lot.
What Mr. Travous fails to mention is that the parks were falling apart on his watch - even with these huge budgets - because he tended to spend money on just about anything other than maintaining current infrastructure. Infrastructure maintenance is not sexy, and sexy projects like the Kartchner Caverns development (it is a gorgeous park) always seem to win out in government budgeting. You can see why in this editorial -- Kartcher is his legacy, whereas bathroom maintenance is next to invisible. I know deferred maintenance was accumulating during his tenure because Arizona State Parks itself used to say so. Way back in 2009 I saw a book Arizona State Parks used with legislators. It showed pictures of deteriorating parks, with notes that many of these locations had not been properly maintained for a decade. The current management inherited this problem from previous leaders like Travous, it did not create it.
So where were those huge budgets going, if not to maintenance? Well, for one, Travous oversaw a crazy expansion of the state parks headquarters staff. When he left, there were about 150 people (possibly more, it is hard to count) on the parks headquarters staff. This is almost the same number of full-time employees that were actually in the field maintaining parks. As a comparison, our company runs public parks and campgrounds very similar to those in Arizona State Parks and we serve about the same number of visitors -- but we have only 1.5 people in headquarters, allowing us to put our resources on the ground in parks serving customers and performing maintenance. None of the 100+ parks we operate have the same deferred maintenance problems that Arizona State Parks have, despite operating with less than a third of the budget that Travous had in his heyday.
I am not much of a political analyst, but my reading is that the legislature cut park funds because it lost confidence in the ability of Arizona State Parks to manage itself. Did they really need to cut, say, $250,000 from parks to close a billion dollar budget hole? Arizona State Parks had its budgets cut because the legislature did not think it was acting fiscally prudent, like cutting off a child's allowance after he has shown bad judgement.
I have met with current Director Bryan Martyn and much of the Arizona State Park staff. Ken Travous is not telling them anything they do not know. Of course they would like more funds to fix up their parks. But they understand that before they can expect any such largess, they need to prove that Arizona State Parks will use its funds in a fiscally sensible manner. And I get the impression that they are succeeding, that the legislature is gaining confidence in this agency. The irony is that Arizona State Parks will be able to grow and get more funds only when it has overcome the problems Travous left for them.
** Footnote: Getting an actual budget number for ASP is an arduous task. I once talked to a very smart local consultant named Grady Gammage who worked with parks and finally despaired of accurately laying out the budget and allocating it to tasks. What this achieves is that it allows insiders to criticize anyone they want as being "misinformed" because almost any number one picks is wrong. The $33 million figure comes from outside consulting reports. The headcount numbers come from numbers the ASP information officer gave me several years ago. Headcount numbers are different today but the ones above are relevant to the agency as it existed when Travous left.
The new Bank of America building near me has all kinds of plaques inside about how it is LEED certified. How? Well, I don't know the whole plan, but out front there are four reserved parking spaces for electric vehicles. There are not any charging stations mind you -- those might cost money -- just parking spots for electric vehicles, right next to the handicapped spots. LEED is a points based system and you can score a lot of points doing mindless, useless, zero-value stuff like this.
So I am not at all surprised to read this:
Washington, D.C. may have the highest number of certified green buildings in the country, but research by Environmental Policy Alliance suggests it might not be doing much good.
The free-market group analyzed the first round of energy usage data released by city officials Friday and found that large, privately-owned buildings that received the green energy certification Leadership in Energy Design (LEED) actually use more energy than buildings that didn’t receive this green stamp of approval.
LEED is the brainchild of the U.S. Green Building Council (USGBC), a private environmental group.
Washington, D.C.’s Department of Environment made the capital the first city in the nation to mandate LEED certifications in the construction of public buildings. The standards are now being phased in.
The results are measured in EUI’s, a unit that relates a building’s energy consumption to its size; the higher the number, the more energy is expended by a smaller building.
Take the Green Building Council’s Washington headquarters. Replete with the group’s top green-energy accolade, the platinum LEED certification, the USGBC’s main base comes in at 236 EUI. The average EUI for uncertified buildings in the capital? Just 199.
Certified buildings’ average comes in at 205 EUI, still less efficient than that didn’t take home the ultimate green trophy.
“LEED certification is little more than a fancy plaque displayed by these ‘green’ buildings,†charged Anastasia Swearingen, LEED Exposed’s lead researcher on the project. “Previous analyses of energy use by LEED-certified buildings have consistently shown that LEED ratings have no bearing on actual energy efficiency.â€
Hilariously, the problem cited with the certification program by government regulators is not that it is ineffective - after all, they can't admit that after requiring LEED certification in DC buildings. Their only problem is that it is a private program outside of government control. I am sure the folks who gave hundreds of millions to Solyndra would do much better managing the program.
The problem with LEED is the same problem that many ISO 9000 programs had -- it puts too much emphasis on process an inputs, and not enough on results.
Postscript: One wonders why if there is a perfectly good "output" metric like EUI why people even bother with input-based systems like LEED. If the government really wants to regulate here, the lightest touch would be to require architects and builders to estimate EUI of buildings for clients. Then the owners themselves can decide if they are comfortable with their potential energy bills or want so more design work.
The US Justice Department is using decades-old anti-discrimination law to stop poor black families from escaping crappy schools via a school choice program. The awesome Clint Bolick of Goldwater has the details:
Despite reports of compromise or capitulation, the U.S. Justice Department is continuing its legal assault on the Louisiana school-voucher program—wielding a 40-year-old court order against racial discrimination to stymie the aspirations of black parents to get their children the best education.
The Louisiana Scholarship Program began in 2012. It provides full-tuition scholarships to children from families with incomes below 250% of the poverty level, whose children were assigned to public schools rated C, D or F by the state, or who were enrolling in kindergarten. In the current year, 12,000 children applied for scholarships and nearly 5,000 are using them to attend private schools. Roughly 90% are used by black children.
Parental satisfaction is off the charts. A 2013 survey by the Louisiana chapter of the Black Alliance for Educational Options, a national school-choice organization, found that 93.6% of scholarship families are pleased with their children's academic progress and 99.3% believe the schools are safe—a far cry from the dismal public schools to which the children were previously consigned.
But last August, the Justice Department filed a motion to enjoin the program in dozens of school districts that still have desegregation orders from generations ago. It claimed that any change in racial composition would violate the orders. After a tremendous public backlash, Justice withdrew its motion for an injunction, insisting it did not intend to remove kids from the program....
In fact, the children are very much in danger of losing their opportunities. The Justice Department is demanding detailed annual information, including the racial composition of the public schools the voucher students are leaving and the private and parochial schools the students are selecting. If it objects to the award of individual vouchers based on those statistics, the department will challenge them.
If I had to make a list of the top 10 things we could do to actually help African-American families (as opposed to the garbage programs in place now to supposedly help them), #1 would be decriminalization of narcotics and in general stopping the incarceration of black youth for non-violent victim-less offenses. But #2 would be school choice programs like the one in Louisiana.
PS- I am thinking about what the rest of the top 10 list would be. #3 would likely be putting real teeth in police department accountability programs, as I think that police departments tend to be the last bastions of true institutionalized racial discrimination. #4 might be some sort of starter wage program that gives a lower minimum wage for long-term unemployed. If I weren't a pacifist and committed to free speech and association, I might say #5 was shutting down half the supposed advocacy groups that claim to be working for the benefit of African-Americans but instead merely lock them into dependency.
California is about to implement a new climate tax via a cap and trade system, where revenues from the tax are supposed to be dedicated to carbon reduction projects. Forget for a moment all my concerns with climate dangers being overhyped, or the practical problems (read cronyism) inherent in a cap-and-trade system vs. a straight carbon tax. There is one improvement California can and should make to this system.
Anyone who can remember the history of the tobacco settlement will know that the theory of that settlement was that the funds were needed to pay for additional medical expenses driven by smoking. Well, about zero of these funds actually went to health care or even to smoking reduction programs (smoking reduction programs turn out to be fiscally irresponsible for states, since they lead to reduced tax revenues from tobacco taxes). These funds just became a general slush fund for legislators. Some states (New York among them, if I remember correctly), spent the entire 20 year windfall in one year to close budget gaps.
If California is serious that these new taxes on energy should go to carbon reduction programs, then these programs need to be scored by a neutral body as to their cost per ton of CO2 reduction. I may think the program misguided, but given that it exists, it might as well be run in a scientific manner, right? I would really prefer that there be a legislated hurdle rate, e.g. all programs must have a cost per ton reduction of $45 of less -- or whatever. But even publishing scores in a transparent way would help.
This would, for example, likely highlight what a terrible investment this would be in reducing CO2.
