Coyote Blog

Free markets are governed and regulated by consumers.  If suppliers offer something, and consumers like it and like how that particular supplier provides it more than other choices they have, the supplier will likely prosper.  If suppliers attempt to offer consumers something they don't want or need, or already have enough of from acceptable sources, the supplier will likely wither and disappear.  That is how free markets work.  Scratch a Bernie Sanders supporter and you will find someone who does not understand this basic fact of consumer sovereignty.

Regulators generally are operating from a theory that says there is some sort of failure in the market, that consumers are not able to make the right choices or are not offered the choices they really want and only the use of force by regulators can fix this failure.  In practice, regulators have no way of mandating a product or service that producers cannot economically or technically provide (see: exit from Obamacare exchanges) and so all they actually do is limit choice by pruning products or services or individual features the regulators don't think consumers should be offered.   They substitute the judgement of a handful of people for the judgement of thousands, or millions, and ignore that there is not some single Platonic ideal of a product out there, but thousands or millions of ideals based on the varied preferences of millions of people.

A reader sends me a fabulous example of this from the Socialist Republic of Cambridge, Mass.

Month after month, in public meeting after public meeting, a trendy pizza mini-chain based in Washington, D.C., hacked its way through a thicket of bureaucratic crimson tape in the hopes of opening up shop in a vacant Harvard Square storefront. But when the chain, called &pizza, arrived at the Cambridge Board of Zoning Appeal in April, the thicket turned into a jungle.

Harvard Square already has plenty of pizza, board chairman Constantine Alexander declared, and though a majority of the board signed off on &pizza’s plans, approval required a four-vote supermajority. Citing the existence of five supposedly similar pizza joints in the area, as well as concerns about traffic congestion, a potential “change in established neighborhood character,” and even the color of the restaurant’s proposed signage, Alexander and cochair Brendan Sullivan dissented.

“A pizza is a pizza is a pizza,” Alexander said at one point during the April hearing, sounding suspiciously like someone who doesn’t eat much pizza or give much thought to the eating habits of the 22,000 or so college students who live in the city.

A city ordinance dictates that any new fast-food place should be approved only if it “fulfills a need for such a service in the neighborhood or in the city.” But the notion that an unelected city board should be conducting market research using some sort of inscrutable eye test to decide precisely what kind of cuisine is appropriate for Harvard Square stretches that to the point of absurdity.

About 30 years ago there was a Kevin Costner movie called "No Way Out".  If you never saw it and ever intend to, there is a major spoiler coming.  Anyway, Costner is a military officer having a fling with a woman played by Sean Young, who is also having a fling with Costner's superior officer.  Sean Young turns up dead (probably a fantasy for the director since every director who worked with her wanted to kill her).  There is some sense that Costner's superior officer may be guilty, and Costner is named by the officer to lead the investigation, but with a twist -- the officer is trying to get the girl's death blamed on a mysterious Russian spy, who may or may not even be real, to divert attention from his adultery and possibly from the fact that he was probably the killer.  Things evolve, and it appears that Costner is going to be framed not only for the girl's death but also as the probably mythical spy.  The movie is about Costner desperately trying to escape this frame, and in the end is successful.  But in the final scene, Costner is seen speaking in Russian to his controller.  He is the spy!  The original accusation was totally without evidence, almost random, meant to divert attention from his superior's likely crimes, but by accident they turned out to be correct.

I feel like that with the Russian election hacking story.  For months I have said the Russian election hacking story was a nothing.  It made little sense and there was pretty much zero evidence.  It was dreamed up within 24 hours of the election by a Clinton campaign trying to divert attention and blame for their stunning loss.  I have called it many times the Obama birth certificate story of this election.

But it turns out that pursuing any Trump connection whatsoever with Russia has turned up some pretty grubby stories.  In particular, seeing a Presidential campaign -- and the President's son -- fawning over unfriendly foreign governments to get their hands on oppo research is just plain ugly.  That the Clinton campaign may have done shady things to get oppo research of their own is irrelevant to the ethics here (and perhaps one good justification for electing Republicans, since the media seems to be more aggressive at holding Republicans to account for such things).

Sorry.  I fell victim to one of the classic blunders - the most famous of which is "never get involved in a land war in Asia" - but only slightly less well-known is this: "Never underestimate the stupidity and ethical flexibility of politicians."

Postscript:  In general, my enforced absence from both twitter and highly partisan blogs is going quite well.  I will write more about it soon, but I have to mention this:  I had a small break in my isolation yesterday when I was scanning around the radio on a business trip.  I landed on Rush Limbaugh, and would have moved on immediately but the first words I heard out of his mouth were "golden showers".  OK, I was intrigued.  He then used that term about 3 more times in the next 60 seconds (apparently he was going with the "everybody does it" defense of Trump by accusing the Clintons of getting oppo research from the Ukraine, or whatever).  Anyway, any issue that has a Conservative talk show host discussing golden showers from Russian hookers can't be all bad.

Australian man successfully checks single can of beer on his flight.

This Aussie checked his can of beer for his flight! ? #dedication https://t.co/TzPA6lpJIs pic.twitter.com/8WDlT1e2Wv

— Bottoms Up Beer (@BottomsUpBeer) July 10, 2017

Years ago I wrote about the Sheraton hotel the city built:

For some reason, it appears that building hotels next to city convention centers is a honey pot for politicians.  I am not sure why, but my guess is that they spend hundreds of millions or billions on a convention center based on some visitation promises.  When those promises don't pan out, politicians blame it on the lack of a hotel, and then use public money for a hotel.  When that does not pan out, I am not sure what is next.  Probably a sports stadium.  Then light rail.  Then, ?  It just keeps going and going....

When Phoenix leaders opened the Sheraton in 2008, they proclaimed it would be a cornerstone of downtown's comeback. They had one goal in mind: lure big conventions and tourism dollars. Officials argued the city needed the extra hotel beds to support its massive taxpayer-funded convention center a block away.

Finally, we may be at an end, though politicians are still hoping for some sort of solution that better hides what a sorry expenditure of tax money this really was

Phoenix has entered into exclusive negotiations to sell the city-owned Sheraton Grand Phoenix downtown hotel —the largest hotel in Arizona — for $255 million.

The city signed a letter of intent with TLG Phoenix LLC, an investment company based in Florida, to accept the offer and negotiate a purchase contract, city officials announced Tuesday evening.

But the deal faces criticism from some council members concerned about the loss to taxpayers. The city also attempted, unsuccessfully, to sell the hotel to the same buyer for a higher price last year.

If Phoenix ultimately takes the offer, the city's total losses on the taxpayer-funded Sheraton could exceed $100 million.

The city still owes $306 million on the hotel and likely would have to pay that off, even after a sale. That would come on top of about $47 million the city has sunk into the hotel, largely when bookings dropped due to the recession.

...

In addition to taking a loss on the building, Phoenix would give the buyer a property-tax break — the city hasn't released a potential value for that incentive — and transfer over a roughly $13 million reserve fund for hotel improvements.

By the way, the hotel -- after just 9 years under city ownership -- will require a $30 to $40 million face lift from the owner.  Why do I suspect that part of the sales price problem is that the government, like with every other asset it owns, did not keep up with its regular maintenance?

Update:  Phoenix is in the top ten US cities in terms of hotel room capacity, so city government of course detects that there is a market failure such that the city ... needs more hotel rooms, so it gets the government in the business of building more.  Good plan.

A while back I wrote "Why haven't we heard any of these concerns?  Because the freaking Left is no longer capable of making any public argument that is not based on race or gender."

A classic example of this is Nancy MacLean's new book Democracy in Chains.  She has apparently detected the great conspiracy behind the modern Right, which according do her is a racist backlash against the civil rights movement.  And the person at the heart of this conspiracy is... economist James Buchanan?

For those who don't know, which is probably most of the folks in this country, Buchanan won the Nobel Prize in economics for his development of public choice theory.  If you are unfamiliar with this body of work, I encourage you to investigate it, but in short it analyzes government officials as self-interested and subject to all the same incentives as ordinary people.   This is in contrast to highly idealized analyses that consider government agents as perfectly serving the public and judges proposed government actions by their stated goals, rather than their likely operations as run by real human beings.  It was developed in part as a reaction to  market critics who would cite real world issues in complex markets and compare them to idealized results of hypothetical government regulations.  It tends to explain things like special interest politics, regulatory capture, cronyism, and rent-seeking much better than traditional, rosier theories of government.  For example

So the Progressive Left tends to hate public choice theory.  They have nearly infinite faith in government action and don't like to hear about its limitations.  So it is not surprising that MacLean would write a thoughtful, scholarly critique of public choice theory, backed by a variety of economic evidence.  HAH!  Just kidding.  This is 2017.  Academics in the social sciences, mostly on the Left, don't operate that way.  The only approach they know to refuting such a theory is to link it with racism.  And so that is what she attempts.  This is part of the summary from Amazon:

“[A] vibrant intellectual history of the radical right . . .” – The Atlantic

“This sixty-year campaign to make libertarianism mainstream and eventually take the government itself is at the heart of Democracy in Chains. . . . If you're worried about what all this means for America's future, you should be” – NPR

“Riveting” – O, The Oprah Magazine (Top 20 Books to Read This Summer)

An explosive exposé of the right’s relentless campaign to eliminate unions, suppress voting, privatize public education, and change the Constitution.

Behind today’s headlines of billionaires taking over our government is a secretive political establishment with long, deep, and troubling roots. The capitalist radical right has been working not simply to change who rules, but to fundamentally alter the rules of democratic governance. But billionaires did not launch this movement; a white intellectual in the embattled Jim Crow South did. Democracy in Chains names its true architect—the Nobel Prize-winning political economist James McGill Buchanan—and dissects the operation he and his colleagues designed over six decades to alter every branch of government to disempower the majority.

In a brilliant and engrossing narrative, Nancy MacLean shows how Buchanan forged his ideas about government in a last gasp attempt to preserve the white elite’s power in the wake of Brown v. Board of Education. In response to the widening of American democracy, he developed a brilliant, if diabolical, plan to undermine the ability of the majority to use its numbers to level the playing field between the rich and powerful and the rest of us.

Corporate donors and their right-wing foundations were only too eager to support Buchanan’s work in teaching others how to divide America into “makers” and “takers.” And when a multibillionaire on a messianic mission to rewrite the social contract of the modern world, Charles Koch, discovered Buchanan, he created a vast, relentless, and multi-armed machine to carry out Buchanan’s strategy.

Hah, this is the Progressive Left, so you just knew the Kochs had to be implicated as well.  A couple of thoughts

• My first response is:  if only.  It would be fabulous if, say, the Republican Party was constructed on top of the work of Buchanan and public choice theory. Alas, it is not
• The links to racism the books rests on are simply a joke, but typical of the quality of public discourse today.  You see it all the time.  Coyote gave money to the Cato Institute.  Joe Racist and Jane Hatemonger also gave money to Cato.  So Coyote has been "linked" to these bad people, and therefor must believe everything they do.**
• Yet another in a long line of books about how libertarians are plotting to enslave you by devolving power to the individual and leaving you alone
• Don Boudreaux has been collecting a lot of links to critiques of the book.  Beyond the silly vast-right-wing-conspiracy level of scholarship, apparently MacLean edited a lot of the key quotes she uses in the book to essentially reverse their meaning.

** This is an aspect of Progressive thought today that I think is not discussed enough.  I used to make common cause with folks on the Left and the Right on individual issues.  This is becoming increasingly hard, particularly with the Progressive Left, because they tend to demand conformity with them on issues x, y, z before they will work with you on issue w.  I had to step down from a leadership role in an effort to legalize gay marriage in AZ because I did not agree with groups like HRC on things like climate change.  Progressives then assume everyone else is following this totalitarian principle, so if later I make common cause with the Right, say on school choice, I am branded as being anti-immigration.  That is silly, given what I have written, but to them actual words I have written are irrelevant -- what is important is that I did one thing one time on one issue with someone on the Right, so I am now branded with whatever political baggage the Right might have.

I can think of at least two ways goods are allocated when there are no prices

• By use of force.  In modern societies, use of force is generally limited to the government so in practice this means that goods without prices will tend to flow to those with government power or who are cronies of those in power.  A great example were the special stores in the Soviet Union for party officials, but examples great and small abound today.  Here is one small one.
• By queuing or time spent searching.  The examples of this are all around us, though they frequently are not strictly of things without prices but of things that have been priced far below their market clearing price.  I think back to my days queuing in physical lines (long before Ticketmaster and the Internet) for concert tickets that were not free but were priced so far below market clearing prices that one had to wait in long lines to get them.  The gasoline lines of the 1970's and the time spent driving around looking for a gas station that had gas is another example.  A more recent example would be long hospital emergency room lines created by people who get care "free" at emergency rooms.

It was in this context that I read this article on finding parking in New York City.  Residential street parking in NYC is an extremely valuable resource for which there is no monetary charge.  So there is a lot more demand than supply.  So people spend scores of hours a year searching and queuing for spaces.

To some extent, this time cost is sort of like a money cost -- when the cost gets too high in relation to the value people assign to having a car, people give up their cars and bring supply and demand in balance.  But while people may vary in the amount they value having a car, one perverse aspect of any queuing system is that it will tend to allocate goods to the people with the lowest marginal value for their time.   The lower the marginal value one assigns to one's time and labor, the more hours one might be willing to queue and search.

This is a large reason why I have always thought price controls during emergencies - e.g. the "no price gouging during hurricanes" sorts of laws - are particularly destructive.  In the aftermath of a disaster like a hurricane there will be those who are mainly just sitting at home waiting things out, wondering how many days they will get off work and school; and there will be those who have a ton to do - roof repairers, tree cutters, etc.  Think about gasoline, where there is often a temporary supply shortfall after a hurricane.  Prices should rise to bring things in balance but laws do not allow this, so queuing results.  Who is most able to afford to sit in these queues - the person who is just sitting around waiting for things to reopen or the person who is totally bombarded with work and needs to be 23 places at once?  Do we really want roof repairers sitting 2 hours in line for gas behind three teenagers** who had nothing else to do so their parents sent them to top of the tank "just in case"?

** Growing up in Houston through several hurricanes, I have been this teenager and assigned exactly this task.

For reasons I do not fully understand because I really must not fully grasp how CSS works, the white background of the site loads last.  Some of you found the site hard to read because there was a small bit of code, really ancient site meter sort of code from 15 years ago, that was broken and slowing the white background from loading.  I think it is fixed.  Thanks to the readers who let me know.

My wife and I watched a series from a couple of years ago called the White Queen, a drama following the Wars of the Roses based on a novel by Phillipa Gregory.  The series begins with the marriage of Elizabeth Woodville to King Edward and proceeds through the death of Richard III at Bosworth.  After the first episode I was ready to stop because I thought it was going to be yet another historical romance rather than satisfying drama about power and conflict.  But as a series, once is gets past the first episode, it really does become a pretty good watch (though it got only mediocre ratings so caveat emptor).  It has a lot of folks battling for power with the same Game of Thrones "you win or you die" vibe -- which is not surprising as apparently George R R Martin has said that Game of Thrones was partially inspired by the Wars of the Roses.

As one would expect from the author, there are lots of strong and interesting female characters but the whole show is well acted.   It generally followed pretty well with most of the history I learned in school though I would be careful answering any AP history test questions from the plot (Gregory takes some literary license with the disappearance of Edward's two sons in the Tower, but since that remains somewhat of a mystery anyway it felt OK to do so).  The series goes a bit off the rails historically in the second season (the White Princess) as the small license Gregory takes with the sons getting killed in the Tower takes control of the plot.

My company operates campgrounds on public lands under contract with various public agencies.  Over the past several years, there has been a lot of discussion about public accommodation (e.g. can a private photographer choose not to serve a gay wedding).  This has never really been a big issue for me in my business, both due to my personal tolerance of just about anyone and the fact that we operate on public lands, which gives us an extra responsibility for broad accommodation.

Yesterday a sheriff's deputy in Arizona comes by one of the campgrounds we operate and gave a flyer to our manager.  It says that so-and-so, we will call him Mr. Smith, is in the area and is registered as a level 3 high-risk sex offender ("level 3 is the highest level and considered the highest risk to reoffense").  The deputy lets my folks know that it would be better not to do business with this guy.

Now personally, I have a lot of skepticism for the sex offender registry.  These lists sweep up a lot of people whose crimes are trivial (e.g. teenagers who had sex together or texted pictures with their girlfriends).  They assume high risk of recidivism without evidence.  Their existence dates back to a variety of molestation panics that were grossly exaggerated, and play on what I think are irrational public fears.  They can act as a substantial extra punishment beyond what they might have been charged with in court.  And they can be harsh, making it nearly impossible for someone to try to live a normal life in any community.

So the dilemma arises because this gentleman was staying in our campground at the time we received the notice.  My female manager wanted him out, as did most of my employees.  My guess is that if I polled the guests, most of them would want this guy out.  Because many people in a campground are in tents without any door or lock, they can feel particularly vulnerable.  I had never really thought about this much until we added cabins with locking doors to a campground and the early customers were disproportionately single women and women on their own with their kids.  They liked the lock.

My most telling problem is one of liability.  The state of Arizona has officially notified me that in the state's opinion this person is high-risk (whatever I might suspect his true risk may be).  If some incident were to happen, this notification would be exhibit one in the trial suing me into bankruptcy, arguing that I callously and knowingly allowed this risk to remain when I had it in my power to remove it.  I suppose one could argue that I probably always have people on the sex offender list in one of our campgrounds almost every day since there is no reasonable way to check on such things.  But in this case I have been notified in writing by an agent of the state that this person is considered high risk -- this knowledge gives me added responsibility.

I made my decision already, because part of the joy of running a 24/7/365 service business with 2.5 million customers a year is that I have many decisions like this and I have to make a choice and move on.  But I am curious what your decision would be.  Discuss.

Update:  wow, the discussion here is just tremendously useful.   The commenter who observed that I could probably be sued either way successfully captured the flavor of my frustrations trying to run a business in the modern legal environment.

It struck me later that I might not even have a decision to make.   The Forest Service which owns the land may not even allow such folks to be excluded from public lands.  If this is the case, I can get that in writing and do what I prefer (ie not participate in the further punishment of this gentleman) but have some coverage against legal liability in the future.

I can hear the reaction now:  Finally a break from free speech controversies and economic policy so we can get on with Coyote's promised increased focus on the world's geekiest hobby(tm).  So here is what has been happening on the new model railroad (in my tiny, but dedicated, hobby space)

I finished the main body of the railroad.  The two lines that cross at a junction in this section will actually continue around the walls in a loop, but I will add those narrow shelves later.  I added 1/8-inch lauan plywood on the frame.  In the lower left on my desk I am finishing the double crossing which effectively acts as the keystone of the layout, both visually and in construction.  I will lay that first and work outwards.

I use 2" foam as a base.  This is a good approach for modeling rail in the Phoenix area, which is largely flat in the areas I am modelling, but allows some undulations, washes, and canals to be easily carved out.

I printed the skeleton of the track plan in 1:1 scale and laid it out where it is going to go.  You can see the junction in the distance.  I did not like some of the aesthetics and wall spacing and building locations, and altered the track plan some after this test.  The next step is to reprint the full track plan and transfer it to the foam.  I do this using an older (sewing) pounce wheel, which I can run over outlines in the plan and it leaves a series of dots in the foam.  I say an older pounce wheel because the one I have looks like a very pointy spur, but my wife's new ones are not nearly as pointy and don't really work for this application.

After that, I will be to start laying down homosote roadbed for the main lines and start laying track, working out in all four directions from the junction.  As I do so, I will mostly follow the plan but I tend to adjust exact locations of turnouts and sidings as I go.

It it were just Evergreen College, which was always a sort of Antioch / Hampshire College nuthouse anyway, I could write it off.  But this is going on at Yale and Wesleyan and Amherst and Middlebury and the Claremont colleges.  The list goes on and on.  Ken White, who has been on the front lines of free speech defense for years, has recently said there are many reasons to be optimistic.  In particular, the Supreme Court has been virtually absolutist in its defense of free speech over the past decades.  But someone said something to me that I have never forgotten -- the Supreme Court tends to reflect the values of college kids two generations earlier.  Without massive new medical interventions (which are unlikely under the coming Sanders-Warren socialized medicine regime) I don't expect to be around to see it.

Too bad Dante is not around because he might have written a nice circle of hell for Evergreen President George Sumner Bridges.  I can't tell if this guy is a complete idiot or if everything we hear from him is some sort of hostage video with him speaking under duress, perhaps with SJW's hiding in his office closet to enforce conformity.

Sent to me by a long-time reader.

Per the WSJ:

This is what happens when a major American state lets its bills stack up for two years.

Hospitals, doctors and dentists don’t get paid for hundreds of millions of dollars of patient care. Social-service agencies help fewer people. Public universities and the towns that surround them suffer. The state’s bond rating falls to near junk status. People move out.

A standoff in Illinois between Republican Governor Bruce Rauner and Democratic Speaker of the House Michael Madigan over spending and term limits has left Illinois without a budget for two years. State workers and some others are still getting paid because of court orders and other stopgap measures, but bills for many others are piling up.

...Susana Mendoza, the state’s Democratic comptroller, is in charge of doling out limited funds to organizations demanding payment—a job she likens to handing out crumbs to starving children. She predicted unpaid bills will soon top $16 billion. “It is almost hard to say those numbers out loud because they seem so insane, but that’s where we are right now,” she says.

For reference, the entire tax revenue of the state of Illinois is just $32 billion a year, so even if the government were to close tomorrow and fire everyone, it would still take 6 months of taxes to just catch up on the bills.  And you can bet this does not include the most common form of borrowing done by most government agencies -- deferred maintenance.  Pretty much every government agency in the country at every level of government does not fully fund the maintenance of its capital assets (from parks to school buildings) preferring instead to fund the maximum salaries and retirement benefits for the maximum number of headquarters staff.

By the way, you may notice at the budget link that the proposed budget still calls for $6 to $7 billion a year in deficit spending, and does not include any provision for catching up on Illinois's sky-high $130 billion in unfunded retirement benefits (a number that represents a full 4 years of tax revenues).  Illinois is functionally bankrupt, and the only good news is that Illinois favorite son Barack Obama is no longer in the White House to bail them out.

Via engadget:

The European Commission's long-running investigation into Google has finally come to an end, and it's not good news for the search giant. Commissioner Margrethe Vestager confirmed today that the company has been fined €2.42 billion ($2.72 billion) for unfairly directing users to its own products rather over those of its rivals. It's the biggest financial penalty the Commission has ever handed out, eclipsing the €1.06 billion ($1.4 billion) charge incurred by Intel back in 2014.

In a statement, Vestager said: "Google has come up with many innovative products and services that have made a difference to our lives. That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.

Via calls for "net neutrality"** in this country, Google has been arguing that ISPs must act as common carriers of its content and must ignore the fact that nearly half of all US ISP bandwidth investment is used without compensation to support the business model of just two content providers (Google and Netflix).  Google does not want ISP's to somehow favor other content providers over themselves, even though these others cost orders of magnitude less to serve than does Google's Youtube division.

Well, as I wrote before, the EU is bringing karmic justice to Google via this decision.

Hah!  I think this is a terrible decision that has nothing to do with economic sanity or even right and wrong -- it has to do with the EU's frequent historic use of anti-trust law as a way to bash foreign competition of its domestic providers, to the detriment of its consumers.  But it certainly is Karma for Google.  The EU is demanding that Google's search engine become a common carrier, showing content from shopping sites equally and without favor or preference.  The EU is demanding of Google exactly what Google is demanding of ISP's, and wouldn't you know it, I don't think they are going to like it.

** I put "net neutrality" in scare quotes because I think it is a term that means exactly the opposite of what it says.  Neutrality is what we had 2 years ago, with no regulation that favored either content providers or bandwidth providers in the typical negotiations and back-and-forth that occurs in every supply chain.  "Net neutrality" actually means tipping the scales and being non-neutral in favor of content providers over ISP's.

So Seattle made a public policy change that caused lower-skill, lower-wage employment to lag way behind employment of wealthier, higher-skill folks.

One would expect the Progressive Left to freak out in opposition to this policy.  But in fact this policy is their absolutely most cherished, favorite public policy intervention -- the minimum wage.  As reported earlier, the city of Seattle engaged an economic study of the minimum wage change using some of the best data ever made available for such a study.  This was the result (table 3, in which I removed low-wage employment from all employment to get low wage and all other employment)

The Seattle city government commissioned a study (pdf) to see what the actual effects were of their increasing the city minimum wage to $13 (bless their hearts, politicians actually tried to evaluate the actual effects of a controversial policy change).  The study authors had access to a uniquely rich data set.  Unlike folks like Card and Kruger, who had to use proxies for low-skill labor employment such as employment in the fast food industry, this study's authors had access to individual wage and hour data by person by location.   The result was one of the highest measured negative net effects of a minimum wage yet calculated:

This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

Note what this means -- the amount of pay raise some low-skill employees got was less than the pay lost by workers who had their hours reduced or eliminated.  This is against a backdrop of a huge boom in Seattle in total employment, meaning that the minimum wage greatly increased income inequality, reducing income to lower-skill workers at the same time higher-skill workers were making a lot more money.  This is not surprising given the data here, which shows the difference between low-income and middle class to be more than 80% due to hours worked, not wage rates.

To some extent, the severity of these results was influenced by the limited region to which the wage applied (making it easier for customers to run for the border, so to speak, to find lower-priced goods and services).  But it is telling that the study with by far the best data shows the biggest negative effects.  To this end, the authors actually evaluate the Card and Krueger approach of looking narrowly at fast food employment, and actually are able to replicate Card and Krueger's results (of limited employment effect of a minimum wage increase in the fast food industry) in Seattle.  This means that Card and Kruger, with their limited proxy, would have said Seattle had no negative employment effects while better more comprehensive data shows the opposite.

Thus, by using the imprecise proxy of all jobs in a stereotypically low-wage industry, prior literature may have substantially underestimated the impact of minimum wage increases on the target population. Finally, column 5 returns to evaluating effects on total hours, but now for all 34 jobs in NAICS 722. While the estimates continue to be insignificant, they are now more negative, averaging -3.3% in the last three quarters. This result is consistent with Neumark and Wascher’s (2000) critique of Card and Krueger (1994).

This was a letter from a pilot in answer to the question of why European airports ban flights from certain African airlines

One African airline I know of has the procedure that every landing must be a smooth one. That sounds okay to most people, but hopefully not to the pilots among us. They mandated that landing smoothly was more important than landing in the touchdown zone. They didn’t go around, they would simply touch down in the middle of the runway and slam on the brakes, close their eyes and pray that they didn’t go off the end of the runway. But the passengers never knew any of this, just feeling a smooth touchdown, so that was the most important factor for them.

The same airline would work out the maximum load they were able to safely lift in terms of passengers and freight, complete the load sheet and other paperwork to fit with this maximum, then do the real calculations in-flight, commonly landing more than five metric tonnes over the maximum landing weight.

The same airline made their pilots work 10 days on, one day off. They were not allowed to call in sick and any breach of this would necessitate armed men being sent to the pilots place of accommodation to physically force them onto the aircraft. I believe I know of two First Officers who got away with it — one because he had been arrested for murder, the other because he had been kidnapped. So I guess they weren’t totally unreasonable.

The SOP at my airline is to descend at 700 feet per minute for a three-degree approach and flare at about 20 feet. The SOP for this airline was to descend at 1500 feet per minute — thrust is idle so it saved them fuel — and flare at about 100 feet, floating down the runway to land dangerously, but smoothly, far far down the runway. Maintenance procedures were ignored and reports doctored. Licenses and check rides were given and passed based on bribes.

Eek.

By the way, if you are a frequent traveler interested in airline and credit card frequent flyer programs and benefits, the linked site is a good one.

Over the last several years, when the successes and failures of the PPACA/Obamacare/Health Care reform entirely accrued to Democrats, the Republicans fought against market stabilization funds as unwarranted subsidies for insurance companies.  My understanding is that the original PPACA included a market stabilization method, but it was written as being revenue neutral - ie funds from insurers who had healthier than average subscriber pools would be transferred to insurers who had sicker subscribers.  But soon, all insurers were losing money and premiums were rising and insurers were dropping out of the exchanges.  So President Obama transferred money from other sources to give extra market stabilization funds, e.g. subsidies, to insurers.  Republicans fought this action in the courts.  There was a principled position that Obama's actions were not legal, but Republicans were also happy to see the PPACA failing.  If Democrats in Congress could have made any one change to the PPACA last year, it likely would have been to increase these stabilization or subsidy funds, which I presume the Republicans would have fought.

Now, it is clear the public and the media is going to hang any future PPACA problems around Republican necks.  Whether this is fair or not is almost irrelevant -- one can see from Republican actions that they feel this to be true, at least in the Senate.  Because now Republicans are proposing market stabilization subsidies that are likely higher than Democrats would have even dreamed of asking for:

When the Congressional Budget Office (CBO) releases its estimate of Senate Republicans’ Obamacare discussion draft this week, it will undoubtedly state that the bill will lower health insurance premiums. A whopping $65 billion in payments to insurers over the next three years virtually guarantees this over the short-term.

Indeed, Senate Republican staff have reportedly been telling members of Congress that the bill is designed to lower premiums between now and the 2020 election—hence the massive amounts of money for plan years through 2021, whose premiums will be announced in the heat of the next presidential campaign....

Section 106 of the bill creates two separate “stability funds,” one giving payments directly to insurers to “stabilize” state insurance markets, and the second giving money to states to improve their insurance markets or health care systems. The insurer stability fund contains $50 billion—$15 billion for each of calendar years 2018 and 2019, and $10 billion for each of calendar years 2020 and 2021. The fund for state innovation contains $62 billion, covering calendar years 2019 through 2026.

This goes against pretty much all of the principled reasons Republicans opposed Obamacare in the first place, but given the choice of following principle or using our tax money to help buy another couple years in power, both parties will always make the second choice.  Of course, being given all that they would have wanted last year, the Democrats will likely not sign on for this as they don't want to bail Republicans out any more than Republicans wanted to bail Democrats out.

Decades ago, common carpentry practice (later set in stone by written regulations) specified that certain applications needed a 2 inch by 4 inch board.   The reason this board was chosen was not due to its size per se (in most cases, for cost and space issues, I am sure folks would love to have gotten away with something smaller).  This size board was chosen for a specific application by its load-carrying ability.   For example, two inch by four inch boards spaced every 16 inches apart created acceptably strong framing for a wall.

Anyway, after many years of making lumber, the timber and lumber industry found ways to make the 2 inch by 4 inch board much stronger.  Well, not always stronger, but more uniform in strength such that the weakest board in a batch was much closer to the average than before.  But for standards, this has about the same effect -- 2 inch by 4 inch boards could be considered to be much stronger since the expected value had to be set at the minimum that might be encountered.

So now, all the standard applications are over-designed.  We can get away with a smaller, cheaper board than a 2x4.  Or, for those of you less focused on capitalism and more focused on environmentalism, we can use fewer trees to build the same house.  But how do we switch an entire industry that is steeped from birth as to what a 2x4 should be used for?  How do we rewrite a myriad of regulations that all call for a 2x4?

Well, in the lumber industry, they redefined the 2x4 to actually be something like 1.5 x 3.5 actual inches, a board which under new production processes has the same predicted strength as the old 2" by 4" boards.  In effect, they decided that the essence of a 2x4 was not its dimensions, but its load-carrying ability.  Almost any engineer can understand this immediately.  This means we still frame walls with 2x4's spaced every 16 inches, but the lumber is smaller and less expensive than it was before.  Standards and training don't have to change.  Architects maybe had to adjust a bit because their wall widths changed slightly, but a 3.5 inch board width actually is a nice number because with sheets of 3/4 inch drywall on both sides it makes for a nice round number 6" thick wall.

All of this is background to this absurd story, is using this history to try to commit legal blackmail against a couple large home store chains (via Overlawyered):

Two home improvements stores are accused of deceiving the buyers of four-by-four boards, the big brother to the ubiquitous two-by-four.

The alleged deception: Menards and Home Depot (HD) market and sell the hefty lumber as four-by-fours without specifying that the boards actually measure 3½ inches by 3½ inches.

The lawsuits against the retailers would-be class actions, filed within five days of each other in federal court for the Northern District of Illinois. Attorneys from the same Chicago law firm represent the plaintiffs in both cases. Each suit seeks more than $5 million.

“Defendant has received significant profits from its false marketing and sale of its dimensional lumber products,” the action against Menards contends.

“Defendant’s representations as to the dimension of these products were false and misleading,” the suit against Home Depot alleges.

The retailers say the allegations are bogus. It is common knowledge and longstanding industry practice, they say, that names such as two-by-four or four-by-four do not describe the width and thickness of those pieces of lumber.

If one is curious why the public is economically illiterate, look no further than our media.  The AP's Paul Wiseman managed to write 1300 words on the loss of teenage summer jobs, and even lists a series of what he considers to be the causes, without ever once mentioning the minimum wage or the substantial restrictions on teen employment in place in many states.  I do not know Paul Wiseman and so I will not guess at his motivations - whether ignorance or intentional obfuscation - but it is impossible to believe that this trend isn't in part due to the minimum wage.  As I wrote in the comments on the AZ Republic:

How is it possible to write over 1300 words on the disapearance of teenage summer jobs without once mentioning the minimum wage?

Two of the most substantial criticisms of the minimum wage are 1. it prices low-skilled workers out of the market (and there is no one more unskilled than an inexperienced teenager) and 2. it put 100% emphasis on pay as the only reward for work, while giving no credit for things like gaining valuable experience and skills. We clearly see both at work here, and it is likely no coincidence that we are seeing this article in the same year minimum wages went up by 25% in AZ, as they have in many other states.

By the way, in addition to the minimum wage, AZ (as has many other states) has established all sorts of laws to "protect" underrage workers by adding all sorts of special work rules and tracking requirements. In our business, which is a summer recreation business, we used to hire a lot of teenagers. Now we have a policy banning the hiring of them -- they are too expensive, they create too much liability, and the rules for their employment are too restrictive.

Without evidence, he treats it entirely as a supply problem, ie that teens are busy and are not looking for work. But the data do not support this.  The teen unemployment rate, defined as employment by teens actively looking for work, is up.  The workforce participation rate for teens is down, but the author has nothing but anecdotal evidence that this is a supply rather than a demand issue.  It could be because teens are busier or buried in their cell phones or whatever or it could be because they have given up looking for work.

I saw this chart from Cato a while back (click to enlarge)

With the proviso that it is super dangerous to analyze this sort of data by eyeballing a scatter chart, it sure looks to me like the difference between Republicans and Democrats is mainly on economic rather than social issues.  This is surprising, I suppose, because Democrats and the media focus most of their criticism on Republicans for being social dinosaurs, but it looks like the social issues are not as much of a discriminator.  I also find it surprising given recent the Republican affinity for what strike me as liberal economic ideas, including Trump's protectionism and the strong vote for a minimum wage in red-state Arizona.

I will say however that Bryan Caplan has been on this for years.  As he reiterated the other day,

I regretfully invoke my Simplistic Theory of Left and Right.  The heart of the left isn't helping the poor, or reducing inequality, or even minority rights.  The heart of the left is being anti-market.... The second half of my Simplistic Theory says: The heart of the right is being anti-left.

I like the way he puts the last bit, because I SURE would struggle to call modern Republicans pro-market.

In this post, by the way, Caplan is skeptical about the feasibility of progressive-libertarian concerted action on certain issues.  I know my friend Brink Lindsey is working on a book to be released in the fall which will make a case for such areas of cooperation.

I will say from my personal experience that as a libertarian I was able for years to make common cause with the Left on certain issues and on the Right for other issues.  I found, starting a couple of years ago when I tried to participate in the leadership of a pro gay marriage effort, that it was increasingly hard for me to work with the progressive Left.  To work with me, they demanded not just that I agree with the issue at hand, but that I also had to pass any number of other litmus tests unrelated to the issue we were working on -- ie I could not be allowed to work for gay marriage given that I had expressed skeptical opinions on the minimum wage and catastrophic man-made climate change.

Apparently, European investment banks will have to start charging for research that, apparently, no one reads (emphasis added)

"The global investment research market is on the cusp of major disruption," said Benjamin Quinlan, CEO of Hong Kong-based Quinlan & Associates and author of a report on the challenges facing the research sector.

Forcing the change are new rules, known as Markets in Financial Instruments Directive, or MiFID II, due to take effect in January 2018 aiming to make European securities markets more transparent.

A key aspect of these rules is that investment banks must charge fund managers an explicit fee for research rather than bundling the cost into trading commissions charged to clients, as at present.

...For example, about 40,000 research reports are produced every week by the world's top 15 global investment banks, of which less than 1 percent are actually read by investors, according to Quinlan.

When I was there, an enormous number of Harvard Business School grads got their first post-b-school job as analysts writing just such reports.

From the WSJ today, this interesting bit:

In less than two decades, more than half of all publicly traded companies have disappeared. There were 7,355 U.S. stocks in November 1997, according to the Center for Research in Security Prices at the University of Chicago’s Booth School of Business. Nowadays, there are fewer than 3,600....

“Twenty years ago, there were over 4,000 stocks smaller” than the inclusion cutoff for the Russell 2000, says Lubos Pastor, a finance professor at the University of Chicago. “That number is down to less than 1,000 today.”

The article discusses the trend in the context of stock pickers having a smaller palette to work with, as it were, but obviously there are likely some economic implications here as well.  The first words the popped into my head were "Dodd-Frank" but for all the problems with that law, the chart makes clear that most of the decline occurred long before that law was passed.

Postscript:  The title of the article is "Stock Picking Is Dying Because There Are No More Stocks to Pick."  Maybe, but I would have been less charitable by saying that it was because as a group stock pickers have never been able to out-perform the market averages, even when there were twice as many stocks to choose from.

Update:  A reader writes:

Matt Levine, Bloomberg writer, has suggested recently that the reason this has happened is not that regulations on public companies have become especially onerous, it's that access to private money is easier now.

Public company regulations were always kind of onerous, but it was worth it to get access to the money only available in the public market. These days, when you can raise billions of dollars without ever going public, why bother?

In the context of stock-picking, I suppose all the good ones have moved to private equity firms.  As I suppose, have gone the good industry analysts

I find the WSJ to be more readable than most modern newspapers, but that does not mean it doesn't play exactly the same silly media games every other media outlet does.

This article is about a legitimately dangerous dam in California that is being rebuilt to accommodate new learning about how earthen dams behave in seismic events.  The authors attempt to extrapolate from this example to highlight a larger threat to the nation.  They use this chart:

A reader who is not careful and does not read the fine print, which means probably most all of them, will assume that "dangerous" and "hazardous" as used in this chart refers to dams that are somehow deficient.  But in fact, these terms in this chart refer only to the fact that IF a particular dam were to fail, people and property might be at risk.  The data here say nothing about whether these dams are somehow deficient.  Actually, if anything, I am surprised the number by this definition is as small as 30%.

The actual number of deficient dams that are dangerous to human life is actually an order of magnitude smaller than these numbers, as given in the text:

An estimated 27,380 or 30% of the 90,580 dams listed in the latest 2016 National Inventory of Dams are rated as posing a high or significant hazard. Of those, more than 2,170 are considered deficient and in need of upgrading, according to a report by the American Society of Civil Engineers. The inventory by the U.S. Army Corps of Engineers doesn’t break out which ones are deficient.

So if we accept the ASCE numbers as valid (and I am always skeptical of their numbers, they tend to exaggerate in order to try to generate business for their profession) the actual numbers of dams that are really hazardous is no more than 2,170.  That strikes me as a reasonably high number, and certainly a good enough reason to write a story, but the media simply cannot help themselves and insist on exaggerating every risk higher than it is.

As most of you know, my company operates public recreation facilities for a variety of public agencies under concession contracts.  These contracts are mostly similar to each other in their structure, but one key difference among them is the contract length -- we have both short-term contracts of say 5 years and long-term contracts up to 30 years.  When we have longer-term contracts, we are expected to do all the maintenance, even capital maintenance such as repaving roads and replacing roofs (more on that approach here).  The US Forest Service tends to prefer much shorter contracts where they retain responsibility for capital maintenance -- this tends to work out as we pay a higher concession fee on these (since we have fewer expenses) and the Forest Service has a process to use the concession fee to perform capital maintenance.  In fact, generally the FS asks us to do the maintenance because it is way easier for us to get it started (avoids the government contracting processes) and then we get credit for our costs against the fees we owe.

Anyway, I have a fair amount of experience with performing small to medium-sized infrastructure projects on public lands.  Here are a few examples, starting from the sublime and proceeding to the ridiculous, of projects we have not been able to proceed with and why.  In all these examples, my company was going to fund the project so availability of funds was not an issue.

• In TN, we had already begun an expansion to add more campsites to an existing campground, a project already approved by our government landlord.  A disgruntled ex-employee, on his way out, claimed we had disturbed a rock pile and he thought the rock pile was some sort of Native American artifact.  Despite the fact there was no evidence for this, and that the construction was no where near the rock pile, construction was halted and my contractor had to go home while an investigation was begun.  As we speak, scores of acres surrounding the campground have been put off-limits to development until the rock pile is thoroughly studied, but of course no funding currently exists to study the rock pile so it is not clear how long this will take.  I am proceeding internally on the assumption that we will never be given permission and am cutting losses on materials bought for the project.
• In AZ, we operated a snow play area in what was essentially a gravel pit.  The slopes we used were what was left from years of mining gravel, and essentially the whole area had been disturbed.  We wanted to add a real bathroom to replace scores of portable toilets and to bring power to the area rather than use generators.  All the work would be performed on already disturbed land in the gravel pit.  We were told we could not proceed without a NEPA (National Environmental Policy Act) study to assess environmental impacts of the work, which could easily take years or longer if its results got tied up in the courts, as they often do.  Since the government had no money or manpower to do the NEPA study, it was pointless to even try to proceed.  This year, without the ability to construct necessary facilities for visitors, we exited the concession contract and the Forest Service has not be successful yet in finding anyone else to reopen it.
• In CA, just this week, I was discussing two maintenance projects with the government in a series of campgrounds we run near the Owens Valley.  In one, we wanted to dig up a water line that runs under a dirt road to repair a leak.  In the second, we desperately needed to replace some leaky roofs on bathrooms.  Both projects are now delayed.  In the case of the water line, digging up the road was going to require an archaeological study - yes, any digging basically requires such a study, and there is no exception for utterly absurd situations like this.  We eventually decided to open the campground without water this year, to the detriment of campers.  In the other case, the replacement of roofs on some old 1950's campground pit toilet buildings (think bathrooms at a highway rest area but not as nice) have to first be evaluated to make sure they are not historic buildings that should be protected.  Since this is a safety issue, I used up my favors on this one to try to get it to proceed.  In my experience, once a building in a park or campground has been labelled historic, that is pretty much its death sentence.  It becomes impossible to do any work on them and they simply fall apart.  For example, years ago there were some really neat old travel cabins in Slide Rock State Park in AZ.  I tried to get permission to fix them up and reopen them, but was told they were historic and they had to wait for special permissions and procedures and materials.  Today, the cabins are basically kindling, having fallen apart completely.

Recognize that these are projects entirely without NIMBY, funding, permitting, licensing, or procurement issues.  But they still face barriers from government rules.