Coyote Blog

In one of the most irresponsible suggestions I have seen in a while, Ezra Klein writes: (via Kevin Drum)

The Financial Times reports that there was record demand for 10-year Treasurys this week. “The $21 [billion] sale of 10-year paper sold at a yield of 1.459 per cent, the lowest ever in an auction.” William O’Donnell, a strategist at RBS Securities, told the FT that “we were expecting good auction results but this one has left me speechless.”...

But that 1.459 percent doesn’t account for inflation. And so when you do account for inflation, it’s not “almost nothing.” It’s “less than nothing.”...

The market will literally pay us a small premium to take their money and keep it safe for them for five, seven or 10 years. We could use that money to rebuild our roads and water filtration systems. We could use that money to cut taxes for any business that adds to its payrolls. We could use that to hire back the 600,000 state and local workers we’ve laid off in the last few years.

Or, as Larry Summers has written, we could simply accelerate payments we know we’ll need to make anyway. We could move up maintenance projects, replace our military equipment or buy space we’re currently leasing. All of that would leave the government in a better fiscal position going forward, not to mention help the economy.

The fact that we’re not doing any of this isn’t just a lost opportunity. It’s financial mismanagement on an epic scale.

This is wrong on so many levels that it makes my head spin.  However, I will begin with four:

1. The US never pays down debt.  Except for a short period in the 1990's when we paid a tiny chunk off, all we do is roll over the old debt and pile more on top.  We are still rolling over most of the debt we incurred in World War II.   So any new debt we take on will likely still be around fifty years from now.   As a result, taking on debt based on current low rates is exactly equivalent to a cash-strapped family taking on more debt because they got a low teaser rate on a new credit card.  Eventually the rates go back up on the debt.
2. Just because interest rates are low does not mean that somehow the spending is free.  In the private sector, companies take on debt in expectation of growing revenues enough to pay the debt back.  How is hiring 600,000 state bureaucrats going to help pay off the new debt in 10 years?
3. The implication here is that all current government spending is so awesome that when we drew the line to mark the budget, additional totally awesome spending got left out, so if we just had more money, there are still lots of great projects available to spend the money on.  Really?  Where was all the catch-up road maintenance and water filtration systems in the last trillion dollar stimulus debt-binge?   Seriously, the Left had their trillion dollar opportunity to prove out some value here and coughed up a hairball.  So now they want a do-over?   This is yet another great bait-and-switch:  They say its for water filtration and roads, but it ends up just being to maintain do-nothing government jobs with above market pay and benefits, largely in exchange for these folks voting Democrat.
4. Here is the ultimate irony -- certain countries are getting negative interest rates  (Switzerland comes to mind right now) in government bond auctions because they are considered safe in comparison to a number of countries that are floundering.  They are considered safe because investors think they are less likely to do fiscally stupid stuff like what is done in Greece in Spain -- say, for example, borrowing a bunch of money when the country is already deeply in debt to rehire at above market salaries 600,000 unneeded government workers.  Klein is saying, basically, since interest rates are low, lets go indulge ourselves in all the actions that tend to drive interest rates for government way up.

From CNN via Carpe Diem

A 24-year scandal was quietly acknowledged last week. On July 3 the U.S. Food and Drug Administration approved the first "rapid home" test for HIV—a test that people can take in the privacy of their own homes to determine whether they have the virus that causes AIDS.

The approval is an unambiguously good thing—or so you would think. The saliva test in question, made by OraSure Technologies and known as OraQuick, costs less than $60 and takes just 20 minutes to self-administer. According to statistics an FDA advisory committee presented at a hearing in May, it holds the potential to prevent the transmission of more than 4,000 new HIV infections in its first year of use alone. That would be about 8 percent of the roughly 50,000 new infections we currently see annually in the United States. (About 1.2 million people in the U.S. are now living with HIV, according to the Centers for Disease Control and Prevention, of whom about 20 percent don't realize they have it. Since the epidemic began in the early 1980s, about 1.1 million people have been diagnosed with AIDS, and more than 619,000 have died from it.)

The scandal is that the approval of a rapid home test for HIV did not occur until last week—about 24 years after the FDA received its first application seeking permission to market one.

Apparently, for years, even decades, only tests of clinical options were allowed to proceed, basically because the government considers Americans to be infants:

There was great concern that the patient receive proper counseling, both before and after the test. The patient needed to appreciate the possibility of false positives, so he wouldn't panic unnecessarily if he got one. He needed to appreciate the danger of false negatives, so he wouldn't become reckless, endangering sexual partners. And he needed to understand the options and support groups available in the event he received a true positive. (On top of all these concerns, many AIDS activists at the time were opposed to almost any form of HIV testing out of fear that results could be used to ostracize and persecute HIV-positive people—though one hopes that public health concerns were paramount to the FDA, rather than political pressure and hysteria.)

So, why do we have all these "dirty" coal plants?  Market failure?  Industry greed?  Nope -- Carter-era government policy.  For you younger folks, here is a law you may have never heard of:

The Powerplant and Industrial Fuel Use Act (FUA) was passed in 1978 in response to concerns over national energy security. The 1973 oil crisis and the natural gas curtailments of the mid 1970s contributed to concerns about U.S. supplies of oil and natural gas. The FUA restricted construction of power plants using oil or natural gas as a primary fuel and encouraged the use of coal, nuclear energy and other alternative fuels. It also restricted the industrial use of oil and natural gas in large boilers.**

In other words, all new fossil fuel-powered boilers had to be coal-fired (which in a year or so, after Three Mile Island, translated to all new boilers since nuclear was essentially eliminated as an option).  Yes, this may seem odd to us in an era of so much environmental concern over coal, but something coal opponents don't tell you is that many of the exact same left-liberal-government-top-down-energy-policy types that oppose coal today lobbied hard for the above law several decades ago.  Here is a simplified timeline:

1.  Government energy policy sets price controls that create artificial shortages of oil and gas

2.  Government-created shortages of oil and gas lead to this law, with government demanding that all new fossil fuel-powered electric plants and boilers be coal powered.

3.  Government mandates on coal use create environmental concerns, which lead to proposals for taxes and bans on coal power.

4.  The need for government action against coal is obviated by a resurgence of oil and gas supply once government controls were removed.  However, in response, government beings to consider strong controls on expansion in oil and gas production (e.g. fracking limits).

** I got involved with this because I worked in an oil refinery in the 1980's.  We had to get special exemptions to run our new boilers on various petroleum products (basically byproducts and waste products of the refining process).  Without these, the law would have required we bring in coal to run our oil refinery furnaces.

John Stossel has a great link-filled round up of failed and failing solar and green energy programs funded by the Obama Administration with our money.  Check out the extensive list.

Here, for laughs, is Ray Lane of Kleiner Perkins rhapsodizing about Obama as the greatest government venture capitalist ever, and using for his prime example ... Solyndra!

I suppose at one point Kleiner Perkins used to take private risks with private money, but it seems to have found out it can make higher returns leveraging its investments with taxpayer money, and then using political influence to mandate business for the companies in which it invests. Thus the hiring of Al Gore, among other moves, to the KP board. Lane, by the way, is Chairman of serial government trough-feeder Fisker automotive, which make admittedly very cool-looking cars that require a lot of taxpayer subsidies.

Certainly Mr. Lane knows something about marketing, including that age-old tactic the "bait and switch."  The taxpayer subsidies of Fisker were made on the theory that electric cars were somehow greener than gasoline cars because they use less energy.  But looking at the fuel at the power plant it takes to make the electricity that goes into a Fisker Karma, the car gets worse gas mileage than an SUV  (only an EPA equivalent MPG standard that breaks the second law of thermodynamics hides this fact).  Congratulations Mr. Lane, green subsidies for sub-SUV gas mileage.  All those checks KP partners wrote to Obama in the last election certainly got a good return.

My column is up at Forbes.com, and has a few quick thoughts on the decision.  A brief excerpt:

Second, though, I am really confused how financial penalties on states can be read as an effective mandate, and therefore un-Constitutional, but financial penalties on individuals do not constitute an effective mandate (if they did, this very ruling says that such a mandate would be illegal).   Using financial penalties to coerce action is either the equivalent of a mandate or it is not, but the decision seems to take two opposite stances on this question.

So this is how I read the PPACA/Obamacare decision today

• The mandate is not allowed under the commerce clause powers
• However, Congress is allowed to use its taxing power to issue financial threats to coerce individual activity it can't mandate
• However, Congress is not allowed to use financial threats to coerce state government activity that it can't mandate

Rolling Stone Magazine has an good story on the conviction of a number of banks and brokers on charges of bid-rigging, specifically on contracts for short-to-medium term management of municipal bond cash accounts.  Apparently brokers were paid by certain banks to be given a look at all the other bids before they made their final bid.  The article focuses mainly on the ability of winning bidders not to bid any higher than necessary, though I would suppose there were also times when, given this peek, the winning bidder actually raised its bid higher than it might have to ace out other bidders.

This is classic government contracting fraud and it's great to see this being rooted out.  I am not wildly confident it is going to go away, but any prosecutorial attention is welcome.

But I am left with a few questions:

• It seems that government contracting is more susceptible to this kind of manipulation.  Similar stories have existed for years in state highway contracting, and the municipal bond world has had accusations of kick-backs for years.  Is this a correct perception, or is the rate of fraud between public and private contracting the same but we just notice more with the government because the numbers are larger, the press coverage is greater, and the prosecutorial resources are more robust?
• If government contracting of this sort is more susceptible to fraud, why, and how do we fix it?

The latter is not an academic question for me.  I run a company that privately operates public recreation areas.  I bid on and manage government contracts.  Frequently, a major argument used against the expansion of such privatization initiatives is that past government outsourcing and contracting efforts have been characterized by fraud and mismanagement.  The argument boils down to "the government has so many management problems that it can't be trusted with contracting for certain services so it needs to operate those services itself."

The only way to reconcile this view is to assume that private actors are more likely to act fraudulently and be dishonest than public employees.  If this were true, then the public would be safer if a public management process of questionable ability were applied towards public employees rather than outside private contractors, because those who were being managed would be less likely to take advantage.  And certainly there are plenty of folks with deep skepticism of private enterprise that believe this.

However, I would offer that only by adopting an asymmetric view of what constitutes fraud would we get to this conclusion.  Clearly, banks colluding to shave a few basis points off municipal asset returns is fraud.     As the author of the Rolling Stone piece puts it several times, the crime here is that the public did not get the best market rate.  So why is, say, elected officials colluding with public employees unions to artificially raise wages, benefits, and staffing levels above market rates not fraud as well?  In both cases insiders are manipulating the government's procurement and political processes to pay more than the market rates for certain services.

This is Bastiat's "seen and unseen" of the privatization debate.   Yes, the world is unfortunately littered with examples of government procurement fraud.  This is often cited as a reason for maintaining the status quo of continued government management of a diverse range of services.  But what we miss, what is unseen, is that these government services are often run with staffing levels, work rules, productivity expectations, and pay rates that would constitute a scandal if uncovered in a division of a corporation, particularly if the workers were spending a lot of money to make sure the manager handing them this largess was able to keep his job.

Yes, the public lost several basis points on its investments when it did not get the market rate of return from cheating bankers.  But it loses as much as 50% of every tax dollar sent to many state agencies because it does not get market rates (and practices) for state labor.

I have been emailing the Florida Secretary of State today, trying to get information on an article I am writing on corporate minutes scams (something I have blogged about in the past).  The folks in Florida have been helpful, no complaint there, which is why I took the individual's name off the email below.

It is the footer in this email that bothers me, specifically the chart on the bottom left.   My guess is that this footer is appended to all emails from government employees, at least of the Secretary of State's office.  It strikes me the attached chart crosses the line from public information into the majority political party making a campaign point.  Here is an enlargement of the chart:

My guess is that many Democrats in the state would not necessarily agree this is "the right direction".  Certainly President Obama went on the record last week as saying that he thought that the decline in public sector workers was bad, not good.

I think readers know that I likely agree with the sentiments of the people who made this chart.  I think increasing private employment and decreasing public employment is the right direction.  But just as it is important to support free speech of people we disagree with or find objectionable, it is important to oppose government excesses even when we are in favor of its goals.

This is a great campaign chart.  It is not an appropriate attachment to official government business mail.

After years of apparently being OK with California's absurd restrictions on development and crazy environmental laws that tied most everything new up in the courts for years, Kevin Drum suddenly thinks they may be flawed now that they are slowing development he likes (wind, solar, high density housing around transit stations).  Drum is a classic technocrat, who is OK with absolute state authority as long as the state is doing what he wants it to do.  I am reminded of what I wrote technocrats 7(!) years ago:

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry “our only mistake was letting those other guys take control”.  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

I am reminded of all this because the technocrats that built our regulatory state are starting to see the danger of what they created.  A public school system was great as long as it was teaching the right things and its indoctrinational excesses were in a leftish direction.  Now, however, we can see the panic.  The left is freaked that some red state school districts may start teaching creationism or intelligent design.  And you can hear the lament – how did we let Bush and these conservative idiots take control of the beautiful machine we built?  My answer is that you shouldn’t have built the machine in the first place – it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.  And, knock me over with a feather, it appears that the decision was political, based on a conservative administration’s opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA’s politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left’s own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here).  Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn’t.  It was unjust to scheme to control other people’s lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy’s hands.

Breaking news via Zero Hedge

EU LAWMAKERS APPROVE AMENDMENT TO END USE OF CREDIT RATINGS

It is always amazing to me that so many people view the government as a reasonable fix for perceived failures in private accountability systems.  Government officials are the worst about avoiding accountability.

Update:  The point that Basel II/III has big discrete jumps in capital requirements for small shifts in bond ratings is a reasonable observations.  Smoothing this out makes sense, but there is more than this that needs to be fixed in the Basel requirements (particularly the now largely dated idea that any assets are "risk-free"), which played a huge but largely unsung role in inflating the demand in the last decade for AAA rated mortgage bonds.

New taxes are frequently sold as protecting police, fire, and education, though these together represent barely 25% of all US government spending.  Where does the rest go?  It's a giant bait and switch, made worse by the fact that even within these categories, new headcount is more likely to be added in administrative and overhead roles rather than in promised functions such as "teachers".  This is the subject of my Forbes column this week:

There is a way to reconcile this:   While increases in education spending are sold to the public as a way to improve results in the classroom, in reality most of the new money and headcount are going to anything but increasing the number of teachers.

Let’s start with an example from the city of Phoenix, New York.  Why this town?  Am I cherry-picking?  In fact, I was looking for data on my home town of Phoenix, Arizona.  But I have come to discover that while school districts are really good at getting tomorrow’s cafeteria menu on the web, they are a little less diligent in giving equal transparency to their budget and staffing data.  But it turns out that Phoenix, New York, which I discovered when I was looking for my home town data, publishes a lovely summary of its budget data, so I will use it as an example that helps make my point.

The city’s budget summary for 2012-2013 is here.  Overall, they are proposing a 0.4% increase in spending for next year, which initially seems lean until one understands that they are projecting a 4% decline in enrollment, such that this still represents an increase in spending per pupil faster than inflation.  But the interesting part is the mix.

What are the two things politicians are always claiming they need extra money for?  Classroom instruction and infrastructure.  As you can see in this budget, only two categories of spending go down:  classroom instruction and facility maintenance and cleaning.  Administrative expenses increase 4% (effectively 8% per pupil) and employee benefits expenses increase just under 1% despite a total decline in staffing.  Though I am not very familiar with the program, one irony here is that the fastest growing category is the 8.7% growth (nearly 13% per pupil) in spending with BOCES, a New York initiative that was supposed to reduce administrative costs in public schools.  In other words, spending increases are going to everything except the areas which politicians promise.

I don’t think these trends are isolated to this one admittedly random example.  The Arizona auditor-general recently did a study on trends in education spending in the state.  They found exactly the same tendency to reduce classroom spending to pay for increases in administrative headcounts.

Read it all, as they say.

If it's June, it must be time for me to mock Arizona budget games.  To save re-writing the old post over and over, here is what I wrote several years ago.

In May of this year I got a form from the Arizona Department of Revenue that said my company was now large enough to make estimated sales tax pre-payments.  Some states do this when you are large enough - they don't like you holding their sales tax money a whole month until the reporting deadline, they want their cash in hand.  Its a pain, so I sighed, but we did it.  We prepaid estimated full-month June sales tax in mid-June as required, rather than in mid-July when the payment would normally be due.  Note that we still have to fill out all the sales tax reports in July, so paperwork is doubled, not to mention the extra work to reconcile between the estimate and actual results.

So this month, I was looking for the July pre-payment form.  I figured the July pre-payment must be due soon, so I called the Department of Revenue and asked where my form was.  They said there was no form for July.  The pre-payment is only one time.  I said, "its only for June?" and they said yes.  You can see the blank form online is hard-coded for June.

Then it dawned on me:  Arizona is on a June 30 fiscal year.  The entire point of this exercise is to pull July revenues into June to artificially inflate the prior fiscal year financials.  Wow - all those pious government workers artificially manipulating results just like an evil old corporation.  Because there is absolutely no other reason to do this for just one month.  The time value of money gained is dwarfed by the costs of changing your payment processing approach for just one month, and is certainly dwarfed if you consider the extra taxpayer effort required (which of course the government never does).

But it's even worse!  Because, in effect, this only worked one time -- the first time.  The first time they did this, they helped the fiscal year.  But now, pulling forward July this year just offsets losing the July revenues from last year.  So politicians have saddled us with a tax process that costs the government more money and the taxpayer more time and has no benefit beyond generating a slightly more positive press release about the budget for some politician several years ago (whatever year this was first implemented).

Matt Curran has spot-on comments about the death penalty in a letter to the Tampa Bay Times

Robyn Blumner's column highlighting the wrongful executions of Carlos DeLuna and Cameron Todd Willingham was a very compelling argument against the death penalty. I am a Republican who rarely agrees with Blumner, but in this case she was spot on. While I believe that there are individuals who certainly deserve to lose their lives for the crimes they commit (John Couey comes to mind), I simply do not trust the government to administer such a process fairly or accurately. This is because the government is run by human beings, who like the rest of us are motivated by narrow self-interest and restrained by limited knowledge. Because those in government rarely face the consequences of their decisions, they often make the wrong ones, even if their intent is pure.

What I find puzzling is how Blumner can so effectively articulate these failings of government when it comes to civil liberties in one column, and in the next champion its abilities and competence in economic matters. A criminal trial is a grueling and exacting process that seeks to administer justice in a very narrow, specific instance. If government doesn't deserve our faith in doing that correctly, how can we trust it to control and coordinate the countless decisions that hundreds of millions of Americans make each day in our economic lives?

For more from Matt, his blog is here.

I wonder if its because companies have to beg for government permission, and then pay a hefty bribe, to get permission to hire more employees:

The city council in Menlo Park, Calif., is set to approve a deal that will let Facebook employ thousands more people at its headquarters there.

Mayor Kirsten Keith says officials are expected to green light the environmental impact report and the development agreement at a meeting Tuesday night. City staff has recommended the city approve the deal.

That means Facebook employees, currently numbering about 2,200 in Menlo Park, will soon be able to stretch out. If the deal is approved, Facebook will be able to employ about 6,600 workers in Menlo Park, up from its current limit of 3,600. That was the constraint on Sun Microsystems, which previously occupied the campus.

Facebook will pay Menlo Park an average of $850,000 a year over 10 years to compensate for the additional load on the city. It will also make a one-time payment of more than $1 million for capital improvements and set up community services such as high school internship and job training programs. Facebook is also creating a $500,000 local community fund that will dole out grants and charitable contributions to communities surrounding Facebook's campus.

Facebook is making the payments because Menlo Park can’t collect sales taxes from Facebook.

The last is a dodge - this is a protection racket, pure and simple.  Presumably Facebook pays property taxes on its corporate offices, as do its employees who live nearby.  Also, these new employees will all spend money in the local economy that will generate sales taxes.  Facebook presumably pays for water, sewer, trash and other utilities, and their employees are paying gas taxes as they drive that pay for the roads.  Facebook pays California income taxes, as do their employees.  What are these mystery costs that are not getting covered?  The community services bit is a hint that this is a stick-up, with Menlo Park demanding its cut of the recent IPO.

The truth is that cities and counties in California see business expansion plans the same way that Tony Soprano looks at the Museum of Science and Trucking -- as a way to maximize their skim.  I operate a campground in Ventura County that DOES pay sales taxes the County so far will not let me increase my live-in staff without making a big payment.  Even the remodeling of our store required 7 separate checks written to Ventura County agencies.

Update:  Minutes after I posted this, I see this at Reason about Ventura County's efforts to use zoning laws to shut down businesses.  Another Ventura story -- we tried to put a small trailer, really just a booth, in a large asphalt parking lot so my employee there could get out of the sun.  Putting a portable shed on a parking lot apparently required permits - lots of them.  At one point we were asked to get a soil sample, meaning they were asking us to cut through the paving and sample the dirt underneath.  Eventually we just gave up.

Mark Tapscott writes:

Legislators in the California Assembly have approved on a 68-0 vote a bill that would exempt multiple categories of state and local government employees from having their names disclosed in public property records, according to Steven Greenhut....

Greenhut, who is vice president of the Franklin Center for Government Public Integrity points out that such a measure has implications far beyond public safety concerns: "Public officials and their family members will be able to hide their identities, which will undermine the reliability of property transactions. Dirty officials will pull off real estate scams without scrutiny," he said.

As it turns out, Arizona has a prohibition from publishing the home addresses of government officials over the Internet.  Which Sheriff Joe Arpaio (who else) has used to try to thwart investigations of his real estate dealings

In 2004, during an election cycle, reporter John Dougherty found that Arpaio had over a million dollars of investments in commercial real estate parcels.  Dougherty asked the question, how does a lifetime public official making $78,000 a year have so much real estate?  Arpaio could have replied that his family was independently wealthy or that he had parlayed his real estate investment from rags to riches.  Instead, Arpaio used an obscure law aimed at protecting the home addresses of government officials to remove access to any public records of his commercial real estate transactions at the same time he removed his home address from these data bases.  Instead of explaining where the money came from, he used his power to cover his tracks.

If passed, this means that California officials can take bribes with impunity, as long as they take these bribes in the form of real estate.

There is an argument going around, mainly on the Left, that the Supreme Court cannot overturn the PPACA (aka Obamacare) because it is just too major and significant.  It's sort of OK to overturn minor legislation at the margins, but if Congress does something really big, it deserved the Court's respect and acquiescence.

But it strikes me that the larger and more comprehensive a piece of legislation is, the more likely it is to run afoul of Constitutional restrictions.  And this is the case no matter what theory one holds about the Constitution.

I am not a Constitutional scholar nor a lawyer, but I would describe two schools of thought on the Constitution.  The first is that the Constitution gives the Federal government certain enumerated, defined powers beyond which it may not stray.  The second is that the Constitution gives citizens a number of enumerated, defined rights (e.g.  First Amendment freedom of speech) such that the Federal government can do most anything it wants as long as it does not trample on these defined rights.   (I would argue that the first interpretation was the clear meaning of its authors, and the second interpretation is probably the majority view today of average Americans today).

But under either interpretation, larger, more sweeping legislation is more rather than less likely to cross a boundary that circumscribes Federal power.  Whether such a boundary has been crossed by this legislation is another matter, but the argument that large legislation per se should be exempt from the possibility of being overturned on Constitutional grounds does not hold water.

Veronique de Rugy is doing an awesome job debunking the myth that European countries have cut spending in any meaningful way, and that the "austerity" that Krugman et. al. keeping going on about mostly consists of raising taxes.  Perhaps because they so desperately want to raise taxes in the US, Krugman and company seem willfully blind in recognizing the tax increases in Europe and their negative consequences.

The Department of Labor called this morning, asking me to reconsider my refusal to participate in their monthly survey of employers.  One issue I had with the survey, of course, was that it was a time-consuming mess.  They called today to ask if I would respond monthly with just my employee counts.  I said no.  I gave them some variation of my answer that if I were a deer, I would not voluntarily provide my location and movement data to hunters.  So I suppose I can expect an audit sometime soon.

This is a long-time debate on this site, as I have argued against more intrusive government economic data gathering while the technocratic response has been to argue that if government is going to do certain functions, wouldn't it be better if its data were good.

I am happy to see that others feel the same way as me about government data gathering, as apparently there is a push back among Republicans in Congress on the Census Bureau gathering data beyond the Constitutional minimum.  I know on my Census response I filled in only my name, address, and number of family members at that residence and left everything else blank.

I can't confirm this by Randal O'Toole is usually pretty much on top of Portland transit issues:

Portland’s TriMet agreed to allow transit workers to retire at age 55 after as little as ten years on the job and gave them and their families free medical care (with a $5 co-pay, no deductible) for life (plus 16 years after the retiree’s death for their families). As a result, health-care costs have grown from $18 million in 2000 to $68 million next year and projected to rise to $153 million–40 percent of the agency’s 2010 operating budget–by 2020.

Well, it looks like the NHL may have a buyer for the Phoenix Coyotes.  I have not seen all the terms, but the problem in finding a buyer has been this:  based on comps from other recent sales (e.g. Atlanta) the price for sunbelt teams is something like $100 million max, but the NHL has promised its owners it would not sell it for less than $200 million.  The NHL has to find a sucker, and if billionaire buyers are not willing to be a sucker, then they have to find a third party sucker to just kick in $1oo million of present value to make the deal work.

Enter the city of Glendale.  It has tried very hard on multiple occasions to be that sucker, and only was stopped from doing so by efforts of the Goldwater Institute to enforce a state Constitutional injunction on corporate welfare.

Glendale has apparently found a new way to subsidize the transaction by promising to pay an above-market stadium management fee.  I have talked to some sports executives, including one very familiar with this stadium, and they have all said that in a free market, a third party might take the stadium management contract for free, because though it carries operational costs, it also yields offsetting revenues (like stadium rentals for concerts).

By paying an above-market rate for stadium management services, Glendale can provide a corporate subsidy but retain the fiction that this is a service contract rather than crony welfare.  Over the last two years, Glendale has paid the NHL $25 million a year in stadium management fees, a payment everyone understands to actually be a subsidy to keep the team in town.

I presume the new buyer has met the NHL's $200 million price tag.  But that is obvriously overpaying.  So Glendale is going to kick a bunch of money back to the buyer to make it work, in the form of $306 million in stadium management fees.  Via the Sporting News:

Longtime Glendale city councilor Phil Lieberman on Monday, in an interview with Sportsnet.ca, estimated that arena management fees paid by the city to Jamison under terms of the deal would total $306 million over the next 21 years, or an average of $14.6 million. A large chunk of that money, Lieberman says, is front-loaded, with Glendale on the hook for $92 million over the next five years. Nearby University of Phoenix Stadium, home to the Arizona Cardinals of the NFL, carries a $9.2-million management fee annually.

By the way, University of Phoenix Stadium is far larger and more expensive to operate, so one would expect the Coyotes arena management payment to be less than $9.2 million.   And the $9.2 million, since it comes from Glendale as well, likely has a subsidy built in.  But let's for a second assume something like $8 million a year is the high end for what a market rate for such a contract would be.  This would be $168 million over 21 years, implying $138 million minimum in subsidy built into the management contract.  There you go, there is the sucker payment to make up the difference between market value of the team and the NHL's price.

In fact, according to numbers at the WSJ, the city would have been better off leaving the stadium empty and just paying off the note  (and they certainly would have been better taking Jim Balsillie's offer to move the team but help them pay down their note).

The NHL has announced a tentative sale to a group headed by former San Jose Sharks executive Greg Jamison, under terms that would essentially institutionalize Glendale's commitments. Under the proposal that the NHL has laid out for city council members, the city would continue paying an arena-management fee that would average about $14.5 million a year.

On top of the city's average $12.6 million in debt service, that amounts to annual expenses of about $27.1 million—to be offset by anticipated Coyotes-related revenue of $14.2 million, according to projections by Glendale's city management department. That adds up to a projected annual loss for Glendale of $12.9 million.

Of course, Glendale wants to keep the team because it cut a crony deal with a few real estate developers to build a retail and condo complex around the stadium.  Of course, these ventures have also gone bankrupt.  So the city is trying to bail out and keep a bankrupt hockey team to sustain an already bankrupt retail developer.

The logic of course is that Glendale wants to attract retail businesses to Glendale from nearby Peoria and Phoenix.  But in the end, they are just messing up their own goal:

Some Glendale business owners may also oppose the deal, including David Kimmerle, owner of Sanderson Ford car dealership in Glendale. A longtime sponsor and fan of the Coyotes, Kimmerle felt betrayed when Glendale officials recently proposed raising the city's sale tax, in large part to support the cost of the team. The proposed increase would make a $30,000 car on Kimmerle's lot $330 more expensive than in the neighboring suburb of Peoria. "No one is going to pay a premium to shop in Glendale," Kimmerle said. "If it is choosing between the Coyotes or a business that is been in my family since 1955 and employs 500 people, I have to choose my business."

So, which would you bet on:  That retail buyers will choose a location based on prices and taxes, or based on its proximity to a hockey team?  Glendale is betting hundreds of millions of dollars its the latter.  Which is why they are idiots.

Oh, and those Goldwater folks.  Per the Sporting News article:

As for Goldwater Institution opposition to the deal, the league, Jamison and Glendale are aggressively striving to craft a sale that avoids Goldwater opposition and possible legal action.

And how are they doing this?

The NHL, city and Jamison are also not producing public documents on their deal so they can avoid records falling into Goldwater's hands.

Your transparent government at work.  Its not breaking the law if no one can prove it.

I have written a lot about government-provided health care as a Trojan Horse for government micro-management of individual behaviors.  The logic is that once the government is paying for your health care, your decisions that once only affected yourself now affect public costs.  Here is a great example:

Touting new recommendations from an Institute of Medicine panel on obesity on Tuesday's NBC Nightly News, science correspondent Robert Bazell proclaimed to viewers: "...a sea change in how we perceive obesity. No longer a question of individual responsibility, but a need to change what's called an 'obesity-promoting environment.' Calling on corporations, government and individuals to act."...

Bazell further pushed the findings: "With the cost of treating obesity-related illnesses approaching $200 billion a year, many on the panel say the nation is ready to act."

I wonder how many feminists who were pretended to be libertarian rather than just pro-abortion by arguing "keep government policy out of my body" are all-in on this type of food consumption regulation?  I would bet a lot.

Update:  Here is an idea -- let's deal with the perceived issue of people eating poorly by ... licensing nutritionists to make their advice scarcer and more expensive.  And here too.

Apparently, the fall of the Soviet Union is far enough in the rear view mirror that its time for another object lesson in the real effects of communism.   It's incredible to me that any country would want to actually emulate Greece, but France seems hell-bent to do so.  So all I can say is "way to go, France!  Better you guys than us."

Apparently Obama is already cozying up with Francois Hollande.   These two may be the socialist-corporatist answer to Reagan and Thatcher.  It is interesting that Europe seems to produce an analog to the American President in each generation (or vice versa).    Reagan-Thatcher, Clinton-Blair, now Obama-Hollande.

I have not had time to go through this in depth to see what the methodology looks like, but the Heritage Foundation tries to craft an index of government dependency.  I am not sure the Left can really refute the trend, especially since this is essentially what Obama is taking credit for in "Julia."  The difference, of course, is one's evaluation of whether this is good or bad.

This represents such an entirely different vision of the role of the state from mine that it is hard to believe we are even talking about the same thing.

Most of you likely remember the state settlements with tobacco companies.  The settlements were set up to pay states a percentage of future tobacco company earnings and sales.  But just like a profligate homeowner borrowing against his paper equity in his home after housing prices increased, governments wanted to spend the money NOW, not over 20 years.  So they borrowed against future settlement payments.  Except that now, given lower smoking rates (incentives work) the settlement payments are less than they were forecast, and states must find a way to make up the difference and pay their creditors.

The tobacco settlement has created funky incentives for state governments form the very beginning.  Formerly adversaries, the settlement effectively made large tobacco companies partners with state governments, and states have had substantial incentives to promote the business of large tobacco companies and sit on their rivals

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

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

I commented here:

The government has found over time that it is able to sell higher taxes to the voters on certain items if they can portray those items as representing some socially unwanted behavior. These are often called "sin" taxes. The justification for the tax in its beginning is as much about behavior control as revenue generation.  Taxes on cigarettes, alcoholic beverages and even gasoline and plastic grocery bags have all been justified in part by the logic that higher taxes will reduce consumption.

However, a funny thing happens on the way to the treasury.  Over time, government becomes dependent on the revenue from these taxes.  The government begins to suffer when the taxes have their original effect — ie reducing consumption — because then tax revenues drop.  The government ultimately finds itself in the odd position of resisting consumption drops or restructuring the tax so it no longer incentivizes reduced consumption so that it can protect its tax revenue collections.