Coyote Blog

Public college creates segregated housing for African-Americans

A lot of folks have been asking for my thoughts on this conflict, where Delaware North, the departing concessionaire at the Yosemite Lodge, is claiming they own trademarks associated with the old, beloved lodges that must be bought out for lots of money, either by the government or the new concessionaire.

There are lots of versions of National Park Service (NPS) concession contracts floating around out there, and as I have had a few of these contracts, I am generally familiar with the terms and problems that arise (though I want to caution I am not privy to any insider details of this dispute).  But here are a few thoughts:

One of the hardest problems with government concession contracts is how does the government provide incentives for the private company to invest capital in the concession without giving the concessionaire a long-term contract that reduces the government's control.  Since any improvements made to the government land can't be removed and become the property of the government, it probably takes a 30-year contract to cause private companies to want to make such investments (as they would then have time to get a return from the assets, and most improvements tend to have a 20-30 year life anyway).  But the government does not want to lock themselves into one concessionaire for 30 years - 10 is as far as the NPS generally wants to go.

So the NPS has a process by which private companies can make permanent investments in the facilities, and the amount of these investments are added to an account (it used to be called Leasehold Surrender Interest, or LSI, so I will call it that -- I am not sure what it is called in current contracts).  At the end of the contract, there are some formulas for valuing the LSI in the account, and if the concessionaire loses the contract, the next concessionaire has to buy out the LSI.  If there is no next concessionaire, the Feds have to buy it out.

This provides good incentive for investment, because money you put in you basically get out at the end, plus any return in the middle.  Also, since there is a federal guarantee of repayment, this makes it possible to get a bank loan to finance the improvements (otherwise an investment in leasehold improvements on government land that the bank can't put a lien on is impossible to get bank financing for).  But this also creates problems.  Over the years, the LSI can grow so huge that it becomes impractical for anyone to buy out -- the LSI numbers at these large concessions can be in the hundreds of millions of dollars.  This is what happened at the Grand Canyon, when the US Government had to pay down the LSI by tens of millions of dollars to get companies to bid.  The other issue is that it creates a large, unfunded, off-the-books obligation for the government (because they ultimately back repayment of the LSI) in the billions of dollars.

Anyway, it is my understanding that it is not the LSI that is the problem here.  NPS contracts also for years had a provision that not only did one have to buy out the previous concessionaire's LSI (which represents investments in permanent facilities), but one also had to buy all the personal property he had associated with the concession (eg boats, trucks, inventory, shelves, coolers, etc).  While the LSI provision is generally sensible, though with some issues, this personal property buyout often led to disaster.  Because, unlike LSI, there is no agreed-upon value for the property (if the NPS is following its process, they can tell you at any point in time what the LSI is worth and everyone should be in agreement -- no similar process exists for valuing personal property of the concession).

So here is the situation.  The outgoing concessionaire has an asking price for his personal property, and the incoming concessionaire has an offer price likely well south of the seller's price.  In a normal transaction, there is some negotiation.   But a key part of the negotiation is that at some point the buyer can just walk away and refuse to buy.  This walk-away is not allowed in the NPS contract situation.  The incoming guy HAS to buy.  So outgoing concessionaires, particularly unscrupulous ones, will set a huge asking price and refuse to come off it.  Arbitration is possible, but mediators often split the baby in a way that sellers still get above-market rates for their stuff.  And all the while this takes time -- one is supposed to be opening the concession and we have not even secured rights to the assets we need to run it!  So the clock is ticking AND we can't walk away.  Incoming concessionaires often get hosed  (which is why I believe new contracts in the NPS do not include this personal property buy-out provision).

This happened to us at a NPS marina in Colorado.  The previous concessionaire ran a number of businesses in the area.  When they lost the concession, they stripped it of any good assets it had and then went around to all of its other businesses and gathered up all the junk and useless assets they could find and dumped them into the concession.   They then demanded a huge price for all this junk.   The NPS was absolutely no help -- they had no records of concession assets, and with turnover no one had even really visited the concession much.   We ended up taking a loss in the $200,000 range, buying a whole yard of stuff that we almost immediately had to pay to have carted to a junk yard.  Later we found that we were on the hook for almost a half million in facility repairs the previous company had never made -- the NPS had detailed notebooks of the failed inspections and required maintenance that was never performed, but never once disclosed any of this to us until we had signed the contract, and then demanded that we were on the hook for it all.  But that is another story, which goes to explain why I will never, ever work with the NPS again.

Anyway, my take is that Delaware North is doing the same thing that happened to me in Colorado, but on a larger scale -- writing up the price of a bunch of assets (in this case intellectual property) and using the terms of the bad NPS contract to extract above-market pricing for them from the next concessionaire.  All entirely legal, but at the cost of absolutely destroying their reputation with the NPS (I wonder if Delaware North is planning to exit the NPS concession business anyway such that they don't care).  Anyway, the new concessionaire, Aramark has certain advantages that I did not have as a small company.  In particular, they can simply refuse to buy the assets (which they have -- they have already renamed all the lodges and stores) and fight the issue in the courts later.

By the way, if you are wondering how the US Government can be so casual with trademarks and intellectual property, this tends to be, in my experience, a huge blind spot for them.  As an example, the US Forest Service uses a single national reservations company and all of us concessionaires in the Forest Service are required to use that company.  Years ago, the company who won the contract promised better information on the website about each campground.  So, for the hundred plus campgrounds we operate, at the request of the US Forest Service, we spent weeks measuring sites, taking pictures, and drawing campground maps for posting on the reservation system.  Several years later, when this reservation company lost the contract, it turns out the company had contract provisions from the government that the believed let them retain all the intellectual property.  The company then claimed all the maps, pictures, and site descriptions -- that we developed -- were theirs.  What a mess.  I can't totally remember how it came out but I think we got the rights to the pictures and descriptions back but all new maps had to be made.  The point is that the government has historically been myopic about the value of non-physical assets.

The world can't be that bad of a place if the money and nervous energy of several billionaires has been channeled into competing with each other at space travel.

“Scientists have solid experimental and theoretical evidence to support…the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution…by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….”
• Life Magazine, January 1970

Other prediction fails from the first Earth Day here.

I have written about the National Industrial Recovery Act many times, a love-note from FDR to Mussolini's fascist economic system that was thankfully overturned by the Supreme Court.  Its intent was to make the corporate-crony state the default economic system of the US.

Essentially, the NIRA cartelized the US economy, creating government-sponsored cartels in every industry that would set prices and wages as well as output and quality.  You can imagine exactly how well upstart competitors would have fared under this system.  I am pretty sure, for example, that the government mainframe cartel would never have let apply, or even DEC, see the light of day.

Now, a couple of academics have laid the blame for the long duration of the Great Depression at the NIRA's doorstep.

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.
In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Hmm.  Certainly wages and prices are going to be especially "sticky" if the government creates cartels to keep them that way.

Guess the Correlation

That's it.  They plot a distribution, you guess the correlation in the form of R.  If you are close, you keep going.  Too many misses and its game over.  Via Flowing Data.  Played around with it a bit, high score at 52 now.

In 2014, I published  an article based on Valley Metro's (our transit operator in Phoenix) very own ridership chart.  Here was the chart I showed:

My point was that the huge amount of money spent on light rail, which essentially constituted a single commuting route in this enormous and spread-out city, was cannibalizing bus service.   The cost and investment to carry a light rail passenger is at least an order of magnitude greater than that needed to carry a bus passenger, and no public system can long endure this sort of cost increase to shift passengers from a relatively cheap transit mode to an expensive one.  Inevitably, bus service (which mainly benefits the poor) is terminated to pay for the train (which benefits middle and upper class riders who would not be caught dead on a bus).  I am pretty sure the train would have been harder sell if they had been honest and said that they were going to have to cut bus service for the low-income working folks so that ASU students and Arizona Diamondbacks and Phoenix Suns fans could have a better way to get to the ballgame.

Anyway, Valley Metro has updated the chart for 2015 and it continues to look bad:

They were smart to cut off history on this one so you can't see how they killed the growth trend with the advent of light rail.  But you see that total transit ridership fell, with a small fall in light rail ridership and a huge fall in bus ridership.   Oops.  As an aside, they still have not fixed their terrible chart plotting.  You can see this years bar for light rail being longer than the one for 2013 despite the fact the number is lower.

The 2016 numbers will be interesting.  Since 2015 they will have opened several light rail extensions and got themselves a huge new tax increase approved (over my stern opposition).

Update:  In retrospect, the bus ridership fall was significant but "huge" probably is an exaggeration.  I was fooled by looking at the bar lengths, which again seem to have nothing to do with the actual data.  They are clearly drawing this manually -- no automatic charting program would get it this wrong.

Readers will know that this is one of my favorite topics on this blog, how huge investments in showy rail projects that amp up the prestige of government officials tend to cannibalize lower cost bus service and, at the end of the day, actually reduce total transit ridership.  The LA Times almost sortof recognizes this, and Randal O'Toole is on the case:

“Billions spent, but fewer people are using public transportation,” declares the Los Angeles Times. The headline might have been more accurate if it read, “Billions spent, so thereforefewer are using public transit,” as the billions were spent on the wrong things.

The L.A. Times article focuses on Los Angeles’ Metropolitan Transportation Authority (Metro), though the same story could be written for many other cities. In Los Angeles, ridership peaked in 1985, fell to 1995, then grew again, and now is falling again. Unmentioned in the story, 1985 is just before Los Angeles transit shifted emphasis from providing low-cost bus service to building expensive rail lines, while 1995 is just before an NAACP lawsuit led to a court order to restore bus service lost since 1985 for ten years.

...

Transit ridership is very sensitive to transit vehicle revenue miles. Metro’s predecessor, the Southern California Rapid Transit District, ran buses for 92.6 million revenue miles in 1985. By 1995, to help pay for rail cost overruns, this had fallen to 78.9 million. Thanks to the court order in the NAACP case, this climbed back up to 92.9 million in 2006. But after the court order lapsed, it declined to 75.7 million in 2014. The riders gained on the multi-billion-dollar rail lines don’t come close to making up for this loss in bus service.

...

Los Angeles ridership trends are not unusual: transit agencies building expensive rail infrastructure often can’t afford to keep running the buses that carry the bulk of their riders, so ridership declines.

• Ridership in Houston peaked at 102.5 million trips in 2006, falling to 85.9 million in 2014 thanks to cuts in bus service necessitated by the high cost of light rail;
• Despite huge job growth, Washington ridership peaked at 494.2 million in 2009 and has since fallen to 470.4 million due at least in part to Metro’s inability to maintain the rail lines;
• Atlanta ridership peaked at 170.0 million trips in 2000 and has since fallen nearly 20 percent to 137.5 million and per capita ridership has fallen by two thirds since 1985;
• San Francisco Bay Area ridership reached 490.9 million in 1982, but was only 457.0 million in 2014 as BART expansions forced cutbacks in bus service, a one-third decline in per capita ridership;
• Pittsburgh transit regularly carried more than 85 million riders per year in the 1980s but is now down to some 65 million;
• Austin transit carried 38 million riders in 2000, but after opening a rail line in 2010, ridership is now down to 34 million.

I will add that total transit ridership has been totally flat in Phoenix after construction of a major light rail project.  The project's total cost is approaching $2 billion as they slowly add on short extensions, but this amount did nothing but cannibalize bus ridership.  In fact, the situation is worse than this, since before light rail was built, Phoenix transit ridership was growing rapidly every single year, so in fact light rail actually likely reduced ridership by about 14 million.  The whole story is here.  (I will have an update in a moment but they have updated the chart from that article and ridership fell yet again in 2015).

(Cross-posted from Climate Skeptic)

I want to briefly revisit Hansen's 1998 Congressional forecast.  Yes, I and many others have churned over this ground many times, but I think I now have a better approach.   The typical approach has been to overlay some actual temperature data set on top of Hansen's forecast (e.g. here).  The problem is that with revisions to all of these data sets, particularly the GISS reset in 1999, none of these data sets match what Hansen was using at the time.  So we often get into arguments on where the forecast and actuals should be centered, etc.

This might be a better approach.  First, let's start with Hansen's forecast chart (click to enlarge).

Folks have argued for years over which CO2 scenario best matches history.  I would argue it is somewhere between A and B, but you will see in a moment that it almost does not matter.    It turns out that both A and B have nearly the same regressed slope.

The approach I took this time was not to worry about matching exact starting points or reconciling difference anomaly base periods.  I merely took the slope of the A and B forecasts and compared it to the slope over the last 30 years of a couple of different temeprature databases (Hadley CRUT4 and the UAH v6 satellite data).

The only real issue is the start year.  The analysis is not very sensitive to the year, but I tried to find a logical start.  Hansen's chart is frustrating because his forecasts never converge exactly, even 20 years in the past.  However, they are nearly identical in 1986, a logical base year if Hansen was giving the speech in 1988, so I started there.  I didn't do anything fancy on the trend lines, just let Excel calculate the least squares regression.  This is what we get (as usual, click to enlarge).

I think that tells the tale  pretty clearly.   Versus the gold standard surface temperature measurement (vs. Hansen's thumb-on-the-scale GISS) his forecast was 2x too high.  Versus the satellite measurements it was 3x too high.

The least squares regression approach probably under-estimates that A scenario growth rate, but that is OK, that just makes the conclusion more robust.

By the way, I owe someone a thanks for the digitized numbers behind Hansen's chart but it has been so many years since I downloaded them I honestly forgot who they came from.

If you listened to the media and political candidates, you would quickly come to the conclusion that the quickest way to prosperity and wealth is to have a worthless currency.  Every politician the world over argues for devaluing their own currency vs. other nations, with the logic that this helps domestic manufacturers by making imported competitors more expensive and making their own products less expensive to buy in other countries.  **

While the latter two statements are nominally true, the only way this actually helps an economy is if one ignores everyone except manufacturers in markets dominated by international trade.  What it ignores is that a falling currency makes purchases more expensive for everyone else.  Consumers and service industries and even manufacturers who depend on imported raw materials all suffer from a falling currency.  And this is not even to mention the effect on wealth -- if one's savings are all in assets denominated in the falling currency, one is clearly losing wealth as the currency falls.

Well, for the first time in a really long time, I actually saw an article this week that focuses on some of the problems of having a falling currency.  via zero hedge.

“I’ve never seen it that high. It’s usually $6.99, maybe $8 but that seems like quite a jump.”

Grapefruit isn’t the only produce to soar in price as fresh fruit has increased by 12.4 per cent since December 2014, and fresh vegetables are up 14.4 per cent, according to data from Statistics Canada released Friday. Led by those surging produce prices, Alberta’s annual inflation rate rose last month by 1.5 per cent, year over year.

The high prices are a direct result of adverse weather in the United States and the lower Canadian dollar since most produce is imported, said Jason Wiebe, president of Chongo’s Market at the Crossroads Farmers Market.

“Tomatoes trade the same as the TSX. It’s a commodity, too, and all produce is traded in U.S. dollars. In November, the retail cost of tomatoes on the vine was $1.99 a pound. Now I have to sell the same box at $3.99 pound.

“What’s going to be really interesting going forward is what happens to local growers come summer. With the dollar, they can make one and half or two times as much exporting than selling here.”

And that may only be the beginning of higher food costs, according to ATB chief economist Todd Hirsh.

“Going forward I think we’ll see even higher upward pressure on imported fruits and vegetables. If not for weather conditions, certainly that low Canadian dollar will affect it. Because the numbers we’re talking about today are from December and now in January we’re almost five to six per cent lower on that dollar….If people insist on eating fresh tomatoes and pineapple in January, they’ll be forced to pay for it.”

 

** To my eye, every government in the industrialized world is working as hard as they can to hammer down the value of their own currency.  As a result, a rising currency tends to mean only that the country in question has a central bank that is not working as hard and as fast as other countries to trash their currency.  All of which makes accusations that China is manipulating its currency an enormous joke.  Several trilling dollars in QE here and they are the ones manipulating their currency?

Using a helicopter and a large tank of heated water to deice a windmill so it can continue to reduce fossil fuel use and global warming.  (source)

From the people who brought you the DMV comes.... Postalcare

I will confess that there is much about advanced economics that I have trouble following, because I just don't have the background.  I suspect I am more comfortable with a mal-investment model of recessions because it is something I can see and understand as a business guy, whereas when talk gets into monetary policy I can quickly get lost.

For example, in this Arnold Kling review of Scott Sumner's book on the Great Depression, I totally get this:

Sumner's theoretical framework starts with a straightforward explanation for fluctuations in employment and output. Large shortfalls in output and employment occur when relatively flexible prices fall in relation to relatively sticky wages. When firms face high wages and low prices, they have to cut back on employment and output.

A business guy (outside of a commodity business) would probably say he sees a fall in demand for his product rather than a fall in prices, but I understand enough economics to know that these are essentially interchangeable -- the business is seeing a fall in demand at the old price but would likely see the same old demand if the price were lowered.

However, when I read stuff like this, I start to get lost.

If investors believe that the future path of monetary policy is expansionary, then they will immediately start to bid up prices for sensitive commodities. This means that if the central bank sends a credible signal today that it will maintain an expansionary stance going forward, this can quickly raise prices relative to wages, leading to a rapid expansion of employment and output.

I understand it intellectually, but I certainly don't go on a buying spree the moment the Fed announces more QE (though in retrospect looking a the rise in financial asset prices over the last few years, I should have).

But where I was going with all this is there are real-world effects that I am positive contribute to the depth of recessions that I seldom see in these economic theories.  For example, economic theories tend to assume firms are properly staffed heading into the downturn, such that layoffs are driven by the fall in prices/demand.

But that is not ever the case.  In my experience, it is an iron law of organizations that their staffing grows fat in the good times.  No matter how tough or attentive the management, firms will put on too much staff.

My personal theory is that organizations have a life of their own.  Almost literally.   In many ways the organization acts as a living entity with a mind of its own, trying to grow and feed itself.  It does not consider what size it should be, any more than a deer heard is concerned about its size vs. the available food supply.  It will keep growing until it is culled by an outside  force (lack of food or a predator).

I think of organizations the same way, and the only way to check its growth is with active management from the top.  Managers have to constantly stay on top of the organization's size and be pruning or culling it constantly (depending on the metaphor you want to latch on to).  However, because of scale economies, profits tend to grow faster than revenues at the top of the business cycle.  This creates a certain comfort level among management, and since pruning the organization is emotionally difficult -- at the least saying no to people's resource requests and at the most demanding layoffs --managers don't keep up with their job in this area in the good times.  No one notices that a 15% profit growth could have been 20% if they organization had properly been kept in check.

Then comes the downturn.  Demand and/or prices are falling, and profits are falling faster than revenues, and the crisis is now at hand.   Now that we have overcome whatever emotional starting friction there is to have layoffs, we might as well do the job right and cut not only what is required to keep up with falling prices, but we might as well take a look at the bloat we accumulated in the good times and right-size that away as well.  In fact, many businesses I have worked for or with as a consultant like to overshoot what they might have previously thought of as the right-size point, and cut even deeper, hoping that the limited resources will push the organization into finding new inefficiencies in how it does things.

And thus, in my view, the degree of layoffs in a recession will tend to be larger than that one might predict solely from sticky wages and declining  prices/demand.

By the way, for those of us who are skeptical about the government's ability ever mange a task efficiently, this organizational theory is one explanation.  Often commenters make the mistake of assuming that when I criticize tendencies in government organizations to look after themselves (rather than their mission) that I am singling government out as somehow operating differently from the private world.  That is not true.  Government is made up of the same human beings as businesses (though perhaps there is some negative self-selection) and government organizations are going to have the same tendencies as private organizations.

The difference is one of correction mechanisms and incentives.  Eventually, the private organization must clean out the bloat or else it will fail and go out of business entirely (unless of course the government bails it out, see: GM).  There is no such accountability with government organizations.   They just deficit spend or demand more taxes when they get bloated.   Making this worse are the incentives of  government agency leaders.   Lacking a profit metric or even a customer service metric, government agency managers typically get their pay and prestige set based on the budget and headcount of the organization they run, so cost and headcount cutting run directly counter to their incentives.  Combine this with higher barriers in government organizations to cleaning house (e.g. public union power and politicization of what should be efficiency decisions) and we get the dysfunctionality of government.  But again note, this is an issue of accountability mechanisms and incentives, not of having better or worse or smarter people.

For a long time I have hypothesized (and worried) that the average Republican / Conservative's support for free markets was merely tribal -- the team's official position was pro-free market, so individuals supported the team's position without actually, really understanding it.  I have developed this hypothesis after a lot of private discussions with Conservatives who have betrayed many of the same economic mis-conceptions and bits of ignorance that drive much bad interventionist government policy.

Now there is this, from the leading Republican candidate for President:

Speaking at Liberty University today, Trump escalated his rhetoric on Apple's overseas manufacturing, and claimed somehow the US would reclaim those jobs in the future. "We have such amazing people in this country: smart, sharp, energetic, they're amazing," Trump said. "I was saying make America great again, and I actually think we can say now, and I really believe this, we're gonna get things coming... we're gonna get Apple to start building their damn computers and things in this country, instead of in other countries."

So the Republican who is currently leading in the polls (among Republican voters, mind you) supports government intervention in a successful company's manufacturing and sourcing decisions.  Which just reinforces my view that we are dealing with the Coke and Pepsi party.  Heads we get statism, tails we get statism.

I don't want to give too much credence to Cruz's "New York values" dig on Trump.  First, it's silly -- New York is not at all monolithic.  Second, it doesn't really even apply to Trump, who often thumbs his nose at New York elite.

But I think that if you asked a lot of people in flyover country, the statement would still have resonance.  I think the reason is that while New York is not at all monolithic in its culture and values, its media exports do tend to be much more homogeneous and tend to reflect a Left-liberal coastal condescension.

I was thinking about this watching the Broadway show If/Then which was in Phoenix this weekend.  I thought this was a pretty forgettable musical, essentially a sort of remake of the movie "Sliding Doors", that was elevated by Idina Menzel in the lead.  We in flyover country seldom get stars of this caliber (at least after they are famous) in our roadshows and she (along with one other female lead who was quite good) made the show worth the ticket.

Anyway, a couple of observations about the show in the context of Cruz's statement:

• No character in the show (with 2 exceptions) had a productive job in the private sector.  Everyone worked in the city planning department or was a housing activist or a public school teacher.  I kid you not, there was actually a song about the joys of urban planning.   The two exceptions were:  1)  a private architect who thanked the city planning department for overruling his designs and 2) an investment banker who acted like a complete tool and was included for 10 seconds only to illustrate the worst possible imaginable male date.
• Accusing a character of being a Republican was used as a laugh-line twice.  Since the character was one the authors wanted to the audience to have sympathy for, the character quickly avowed he was an Independent.
• Living any place in flyover country (e.g. Nebraska, Arizona**) was used as a laugh line in the show and choosing to live in those places was offered up as an example of bad decision-making.  The only place deemed acceptable to live outside of New York was Oregon.

I got over getting too worked up about this sort of stuff years ago (or else I would spend all my time holed up in a cave listening to a few old Rush albums).   Cruz was wrong to criticize New York values but I think there is a .... call it an attitude that emanates from New York media that the rest of the country sometimes finds irritating.

** in the show we saw, the lead character had just escaped from a bad marriage in Phoenix.  My guess is that this was not the original location, but was switched for the show here (though I could be wrong, since such a switch would have meant adjusting a couple of songs too).  Anyone see it on Broadway and know what location was used there?

The media does not like people spending money to elect non-Democrats.   That is the only conclusion I can draw from the fact that all of their articles on "dark money" seem to focus almost exclusively on the Koch brothers (who to my eye are more libertarian than Republican).  One would get the impression that the Koch's are the #1 giver of money to election campaigns, but in fact according to OpenSecrets.org they were #14 in 2014 and #49 in all elections since 2002.  Why wouldn't the media illustrate election-spending articles with someone in the top 10?  It's as if the sports media spent all its time talking exclusively about quarterback Ryan Tannehill (14th in 2015 in NFL passing yards per game) without ever mentioning Tom Brady or Drew Brees.

If the Koch brothers deserve to be excoriated for their election spending, then the organizations that give more than they must really be evil, right?  If one were cynical, one might think that the media ignores the top 8 or 10 because they mostly all give to Democrats.   Well, here is the list from 2014 via OpenSecrets.org.

Update, from a reader and via Instapundit:

Consider this: in 2013, the left wing Center for Public Integrity reported that “Four foundations run by [the Koch brothers] hold a combined $310 million in assets…” By contrast, the Ford Foundation’s endowment is more than $12 billion — about 38x larger than the Koch Foundations.

On a list of the top 100 US Foundations (by asset size), the Ford Foundation is #2. The various Koch Foundations don’t make the list, nor do they make the list of top 100 Foundations by annual giving.

Yet, the news media and transparency groups constantly harp on the Koch’s massive organization and its “insidious,” “dark money” influence on American politics, while almost completely ignoring the far larger left-wing political Foundations.

In part, this is due to the perception in the media that money from conservative/libertarian/free market leaning organizations must be tainted, while funding from left-wing Foundations is free of such bias. It may also be due to the fact that the left wing Foundations fund many media organizations — I’m looking at you, NPR, PBS, Washington Post, LA Times and others — sometimes even funding them to cover “[other people's] money in politics.”

Postscript:  If you really want dark, check out the website for hedge fund Elliott Management.   There is not a single byte of information in the publicly accessible pages, only links to contact forms.

5 minutes ago the title of this post would have been "F*cking Cardinals" for giving up that hail mary pass to Green Bay -- didn't anyone watch the tape on the Detriot game, with the receiver backing into the end zone to make the catch?  This play was almost an exact duplicate.  I will, though, give credit to the Cardinals for blitzing the QB on that play -- I think that was smart and would have worked against most teams.  Only Aaron Rodgers could have gotten that throw off.

Anyway, Fitz was already beloved in Phoenix, not only as a great football player but as an awesome human being.  Now just more so.

via:  where else?

General Electric (GE) has complained for years about Connecticut's (its current corporate home) taxation and regulatory policies.  Recently, it said it was moving for greener pastures, and was leaving for... Massachusetts?

Seriously?  This is like moving from North Korea to China to get more freedom of speech.  Boston's top state income tax bracket is perhaps a point lower than CT's but Florida or Texas have rates of zero, and a much lower cost of living and real estate.

Granted that Boston has its attractions for a company trying to change its public perception to being a technology company.  But I can't shake the suspicion this has something to do with a relocation giveaway to GE from the city and state.  GE has become one of the biggest supporters and beneficiaries of crony capitalism in the country.   I have to believe they cut some sweetheart deal that will eventually funnel a bunch of Massachusetts taxpayer money into GE coffers.  After all, if cities will throw away a half billion dollars in taxpayer money to attract an NFL team that does business for just 24 hours a year in the city (8 games x 3 hours per game), how much will politicians pay of their citizens' money to be able to list "attracting GE" as a lead bullet in their re-election talking points?

For years I have been frustrated with the costs of trying to take my cell phone on international travel.  Yes, one can buy cheap sim cards locally, but you obviously lose access to your domestic phone number for the duration (leaving aside dual-sim phones and some tricky and expensive forwarding tricks).  If you wanted to keep your phone number so people can still reach you on the number they already know, you were in for some crazy roaming charges -- particularly on data.  I use Verizon (mainly because my business takes me to out of the way places where Verizon is the last available carrier) but until recently their international rates were awful, charging one 50 cents per text and $25 per 100mb of data in addition to a $25 a month international plan fee.

I use a lot of data when overseas and outside my hotel room, so I really wanted a cheaper data plan  (Google maps is a lifesaver when one is walking streets with signs all written in Thai).  My go-to solution in the past was to have a T-Mobile account I turned on and off on an unlocked phone (an old Nexus 5).  T-mobile has plans that allow unlimited text and data without roaming charges in most countries, and it is still a good international solution, though I met with a few technical irritants in some of the countries I have visited.

A while back, I accidentally killed my old Nexus 5 and bought a new Nexus 5x with the intention of swapping in my T-mobile sim card from the old phone.  However, I saw an article that said the Nexus 5x was one of the couple of phones that would work with the new Google Fi service, so I signed up to try that.  $20 a month unlimited domestic calls and text and unlimited international texts.  Pretty cheap international calling rates and the phone defaults to calling by wifi if possible to save any charges.  Data at $10 per 1GB anywhere in the world, with any unused data credited at the end of the month (so the $10 is pro rated if you use less, essentially).

I used the phone in Thailand, Singapore, and Hong Kong, and not just in large cities -- we got out in the smaller cities well away from the tourist areas of Thailand.   Service was flawless everywhere with one exception (discussed in a minute).  Wifi calling worked fine and I had a good signal everywhere, even in smaller towns.  Charges were exactly as promised.  It was a very impressive service.  It uses the T-mobile network in most places, so I am a little reluctant to make it my full-time service because when I tested T-mobile several years ago, it just didn't reach far enough to the out-of-the way domestic locations I visit, but I plan to try again.  I would really love to be on this service rather than Verizon and believe it would save me a lot of money.

I only had two problems with it.  The minor problem was that I had some issues with wifi calling disconnects in one hotel, though this could easily have been due to the notoriously low-bandwidth of many hotel wifi systems**.  Switching off wifi and making a regular cell call worked fine.  Google says that the service automatically chooses between wifi and cellular based on bandwidth and conditions, but it may be this algorithm needs more work.

The more irritating problem was that the phone would simply not get a cellular data connection in Hong Kong.  I contacted Google service (this was a great process that involved sending them a message and them calling me back immediately, a better process in my mind when travelling internationally).  After some fiddling around, the service agent checked came back to me to say, "known problem in Hong Kong with internet access.  You will need to buy a local sim card.  We know this is a hassle, so we just credited your bill $20 to offset the cost."  It would have been better to not have this hassle -- I was switching sim cards every night to see if I had any texts at my domestic number -- but I thought they dealt with it as well as possible, and they were a hell of a lot more helpful than T-mobile was when I had an international roaming issue with them.

Under the T-mobile and Google Fi pressure (which really means due to T-mobile, since Google Fi is largely possible because of T-mobile), I am starting to see cracks in the pricing of Verizon.   They seem to have a new plan that allows one to keep their domestic data, text, and voice pricing and allowances while roaming internationally for a $10 a day charge.  This is still more expensive than T-Mobile and Google Fi but literally an order of magnitude, and maybe two, cheaper than what they were offering for international travel a year ago.

**Footnote:  I have way more sympathy for hotels and their wifi systems.  We installed a wifi system in a 100 site campground in Alabama.  That system has become a data black hole -- no matter how much bandwidth I invest in, people use more.  Every night it seems like there are 300 people on 100 campsites all trying to stream a movie in HD.  I am not sure it will ever enough, and we get no end of speed complaints despite having an absurd T1 bandwidth into the system.  I can't see myself ever investing in such a system again.

Postscript:  It is a good habit to point out data that is inconsistent with one's hypotheses.  I am incredibly skeptical of US anti-trust law, particularly since it seems to have morphed into protecting politically-connected competitors (e.g. cases against Microsoft and Google) vs. protecting consumer choice.  I will say though that the killing of the acquisition of T-mobile by AT&T seems to be a godsend for consumers in the cell phone business, as T-mobile has become a hugely disruptive force generally benefiting consumers.

Let's start by saying that I have an imperfect layman's view of Keynes and Hayek.  This is my understanding and over-simplification of how these camps deal with economic downturns.

• Keynes:  Economic downturns result from some sort of failure of aggregate demand.  There are positive feedbacks in the system such that a small downturn can lead to a larger downturn if left unchecked (but on the flip side mean that a small stimulus can have a disproportionately large effect on demand).  The proper government response to a downturn is to create demand through government deficit spending.   Failure to emerge in a timely manner from a recession likely is the result of the government not being aggressive enough in its spending.
• Hayek:  Economic downturns result from mis-allocation of savings and investment capital, often due to government policy by not necessarily so (one can argue the housing bubble was driven by government policy, but the first Internet bubble likely was not).  The proper government response to a recession is to stop any distorting government policy that drove it and let the economy sort itself out by restructuring.  Failure to emerge in a timely manner from a recession is likely due to interventions that slow this necessary restructuring (e.g. bailouts, government-directed investment programs).

I will say that if my Hayek description is not correct for the Austrians, it is correct for me -- this is what I believe happens.

That said, I have long thought the Japanese lost decade(s) were pretty much final proof of the Hayek vs. Keynes explanation, and I am sort of amazed people still argue about it.  I remember in the 80's people in the US admired the Japanese MITI system of industrial management that carefully directed investment into government-preferred industries and, by the way, stomped on the Japanese consumer (including laws that kept both the retail and agricultural sectors backwards) in favor of promoting the export market.

In the 20+ years since Japan slid into a downturn, they have been the poster child for Keynesian stimulation.  They have deficit spent like crazy and have driven up -- by a longshot -- the largest government debt as a percent of GDP of any of the industrialized nations.  Yet still they flounder -- I would argue precisely because they had an Austrian recession, based on years and years of government-enforced mal-investment, but have refused the Austrian solution.  Watching it evolve over the years, I have thought it impossible to miss the point, but it appears that Krugman-Keynesians can always argue, not matter how much government debt was run up, that the problem was that they just didn't spend enough.

Well, in my view we have another such test coming, perhaps even more stark -- in China.  China, perhaps more than Japan, has filled their economy with investment distortions -- the huge empty cities that get shown on the Internet seem to be one example.

And over the past year or two, China has been deficit spending and stimulating like hell -- both at the central government level as well as with policies that have encouraged the accumulation of debt both locally and in industry.

This is why I think the crash is coming in China, and the longer they manage to delay it by artificial means, the worse and longer the crash will be.  There is probably a bet that could be had here, but I am not sure how it would be structured.

This is sort of an odd topic to have on my mind, but I was thinking about it today in the context of a bid package I have in my hands for concession management of a park in Georgia.

The RFP kept referring to "community workers" who do 60% of the labor in the park, and part of our responsibilities included managing these workers.  In my naivete, I thought these were volunteers, and sent a note telling them that while the government could legally use volunteers, it was very problematic under labor laws for a private company to benefit in any way from volunteer labor.

I was quickly informed that I had it all wrong, that this was a euphemism for "prisoners," and that I could take advantage of their close to fee labor to do much of the heavy lifting in the park maintenance.

I must confess this is a new one for me but my initial reaction is queasiness about it.  On the one hand, we are talking about unpaid labor from men in involuntary servitude -- do I really feel good about benefiting economically from this work?  On the other hand, I do understand that work programs can be beneficial for prisoners, though I am not sure the work we need is really going to be teaching many skills.  On the gripping hand, there is "Cool Hand Luke", which is impossible to get out of my head when considering prison labor in the deep south.

One other aspect of the RFP that struck me cold was the pages and pages of requirements, including an actual oath I have to take, that I will do everything possible not to hire an illegal immigrant.  Now, that sort of thing is likely required of them by state law, and is not that unusual (Arizona has similar provisions, I believe).  But juxtaposed with the prison labor, it leaves me cold.  Essentially, they won't allow me to accept the voluntary labor of a Mexican man paid at minimum wage, but they are encouraging me to accept the involuntary labor for free from a group of prisoners.

I just encountered this about 10 minutes ago so I am still thinking on it -- the basic opportunity is attractive.  But I have walked away from opportunities before over these sorts of ethical issues -- most recently, over a refusal to drug test employees when that was a state requirement.

I welcome thoughts in the comments (I know I mentioned immigration, but in this one post I would be thrilled if we could lay off my supposed naivete on immigration and focus on the ethics of profiting from free prison labor).

Actually, I am back, but here is me with two of my college roommates carrying .... something or other in a Thai wedding ceremony in Roi Et.

Some of you may be familiar with the groom, my friend Brink Lindsey of the Cato Institute.  The wedding was amazing and I will try to post some more pictures later.

Thailand was wonderful, and if there is a country that has friendlier people, I have never been to it.  I will post some thoughts on Thailand later, but a few top of head items:

• Business models can be really, really different in a country with lower-cost labor.  There were dudes in my hotel in Bangkok whose sole job seemed to be to time out my walk toward the elevator and hit the up button at the perfect moment.
• One sidebar to this is that in restaurants and bars, they have waiters who simply hover around constantly.   They keep the alcohol bottles on a nearby table and essentially every time you take a sip, they fill your beer or scotch back up to the top. It is like drinking from a glass with a transporter beam in the bottom keeping it full.  This makes it virtually impossible to regulate one's drinking.
• The whole country is like a gentrifying neighborhood in the US.  It is totally normal to see a teeth-achingly modern building right next to a total hovel.

Apparently, Denmark is considering a plan (WSJ, gated) to seize valuables from migrants to offset government costs.  I am sure this will work out just as fairly as do American asset forfeiture laws

Denmark’s minority government has secured cross-party backing for a plan to seize cash and valuables from asylum seekers to help meet the cost of their stay in the Nordic country despite criticism from the United Nations and some Danish lawmakers.

Details of how the plan, which could be adopted by parliament as early as next month, would be put into action remain scant.

Liberal Party lawmakers, who draw up the proposal, have provided few details other than to say that police won’t be taking people’s possessions as they enter the country. Police or other officials would appraise the value of people’s possessions as they check the identity of asylum seeks before deciding what, if anything, the new arrivals should pay.

A while back I wrote a controversial post saying that I don't see any moral difference between building a wall to keep people in a country vs. building a wall to keep them out.  **

For a period of time in the late 1930's, the German government was actually encouraging Jews to leave the country -- the one requirement, though, was that the government stripped them of all their property and valuables on the way out.  So I ask the same question slightly modified.  What is the moral difference between stripping refugees of their assets as the leave a country vs. as they enter a country?

** Several people argued the point by analogy, saying it is OK to lock people out of your house but not to lock them in your house.  Certainly, but this frequent use of exclusionary rights on private property as an analogy for an entire country is deeply flawed.  Essentially, for this to be a valid analogy, one would have to adopt Marxist definitions of state ownership of all property and totalitarian views on individual rights to argue that an entire country is just like a private house.

Back in 2009, the Baltic Dry Index seemed to be everyone's new favorite economic indicator, with recoveries in this metric of dry bulk shipping supposedly the harbinger of prosperity.  So now that it is hitting record lows, I don't see it in the news much.