Coyote Blog

Many of my Conservative friends often rail on liberals and liberal politics as being driven by envy.  I find that sort of assignment of motivation to be fairly unhelpful in most debates, though I do understand the case they are making.

In this context, though, I have to say that Kevin Drum gets the Chutzpah award of the week for claiming that Conservative politics are being driven by envy of government workers.  LOL.  I made a response in his comments section that was so obvious I hesitate to even repeat it here, but I will.  He made the point that government did not lay people off because it still had demand for its services

Kevin, you have it backwards because you confuse two terms. Private businesses did not lay people off because people stopped wanting their product, they laid people off because people stopped paying for their product. I am sure everyone still would like a Porche, just no one is paying for them right now. Ditto houses, etc.

Businesses reacted to the reality of less money coming in. They probably had many important things they could have continued doing in R&D or manufacturing streamlining, but the reality was that less money was coming in the door so they reduced their expenses to match.

The public sector issue is not different but identical. Sure, there are still lot of things they would like to be doing, but the fact is that less money is coming in the door. But rather than adjust to that fact, they arrogantly ignored it, running up debt in the taxpayers name so a bunch of deputy assistant principals could keep earning $80,000 a year. That is why folks are angry.

Kevin Drum is one of the few team politics blogs I read from either the Coke or the Pepsi side of the aisle because I think he often makes the leftish case more intelligently than most.  But I have been critical of him all week in his comments section for repeatedly defending public employees unions based on the benefits of private unions.  The two are very different, as pointed out by, well, about everybody who is not specifically beholden to the public employees unions.  Here is just the first one of many I found in my reader.

I am with Megan McArdle in confirming that the non-pay portions of the typical public employee compensation package is at least as important, and as potentially expensive, as the money itself.  In particular, two aspects of many public employee compensation packages would be intolerable in my service business:

• Inability to fire anyone in any reasonable amount of time
• Work rules and job classifications

From time to time I hire seemingly qualified people who are awful with customers.  They yell at customers, or are surly and impatient with them, or ruin their camping stay with nit-picky nagging on minor campground rules issues.  In my company, these people quickly become non-employees.  In the public sector they become... 30 year DMV veterans.  Only in a world of government monopoly services can bad performance or low productivity be tolerated, mainly because the customer has no other option.  In my world, the customer has near-infinite other options.  And don't even get me started on liability -- when liability laws have been restructured so that I am nearly infinitely liable for the actions of my least responsible employee, I have to be ruthless about culling bad performance.

The same is true of work rules.  Forget productivity for a moment.  Just in terms of customer service, every one of my employees has to be able to solve customer problems.  I can't automatically assume customers will approach the firewood-seller employee for firewood.  All my employees need to be able to sell firewood, or empty a trash can when it needs emptying, or clean a bathroom if the regular cleaner is sick, or whatever.

For those who really believe state workers in Wisconsin are underpaid, I would ask this question:  Which of you business people out there would hire the average Wisconsin state worker for their current salary, benefits package, lifetime employment, work rules, grievance process, etc?  If they are so underpaid, I would assume they would get snapped up, right?  Sure.

Bonus advice to young people:  Think long and hard before you take that government job right out of college.  It may offer lifetime employment, but the flip side is that you may need it.  Here is what I mean:

When people leave college, they generally don't have a very good idea how to work in an organization, how to work under authority, how to manage people, how to achieve goals in the context of an organization's goals, etc.   You may think you understand these things from group projects at school or internships, but you don't.  I certainly didn't.

The public and private sector have organizations that work very differently, with different kinds of goals and performance expectations.  Decision-making processes are also very different, as are criteria for individual success within the organization.  Attitudes about risk, an in particular the adherence to process vs. getting results, are entirely different.

I am trying hard to be as non-judgmental in these comparisons as I can for this particular post.  I know good people in government service, and have hired a few good people out of government.  But the culture and incentives they work within are foreign to those of us who work in the private world, and many of the things we might ascribe to bad people in government are really due to those bad incentives.

It is a fact you should understand that many private employers consider a prospective employee to have been "ruined" by years of government work, particularly in their formative years.  This is simply a fact you will need to deal with (it could well be the reverse is true of government hiring, but I have no experience with it).  That is why, for the question I asked above about hiring Wisconsin government workers, the answer for many employers would be "no" irregardless of pay.

Last week I showed the Obama-proposed cuts as an almost invisible, except under extreme magnification, portion of the total budget.  Unfortunately, proposed Republican cuts (which according to the NY Times and other voices of big government will lead to the end of the world as we know it) are not much better

via Tad DeHaven

Collective bargaining was adopted as a key tactic for labor out of the sense that, by banding together in labor negotiations, workers were able to offset a perceived power imbalance vis a vis employers.  But what happens if the management team on the other side of the table in labor negotiations is not actually an adversary?

We have seen in the last week that the Democratic Party is operating, right up to the US President, as a wholly owned subsidiary of the public employee's unions.  In such a case, where state governments are historically dominated by Democrats, is it any wonder that compensation packages for unions have skyrocketed?  They have been negotiating with themselves!

A great graphic putting them in perspective.

I was listening on the radio today the brouhaha that is occurring up in Wisconsin.  Basically the Democratic legislators have all left the state en mass (to deny a legislative quorum) and progressives are being bussed in from all other the Midwest to participate in increasingly confrontational protests.

All to protect benefits of government workers.  I understand that many progressives don't accept that taxes cannot be increased infinitely.  But to the extent there are really some reality-based (lol) progressives out there, who actually understand that there is a limit to how much can be spent in a given government budget, they are going to need to do some soul searching to decide how much education or Medicaid spending they are willing to give up to support the pay packages and fat retirements of government workers.

The National Journal tries to give real world equivilents to show how large federal spending is.  It's so large that editors can't reality check the numbers very well.  They write

You could cover 10,319 miles with $1 bills.

If you placed 3.73 trillion $1 bills end to end, length wise, it would stretch from Miami to Seattle 3.6 times, leaving you somewhere around Wyoming.

Actually, by my calculator (and that of a reader) if you assume each bill is 6 inches long, you could cover 353.2 MILLION miles.  This is not 3.6 times the distance from Miami to Seattle, but 3.8 times the distance from the Earth to the Sun!

We and our children will be paying for the recent spate of government fiscal incompetence for literally decades.  This letter I got from our payroll company provides a small but pointed reminder of this.  Here is the key graf:

Can you imagine getting a note in January from Amazon.com, saying their costs last year were higher than they expected and they were going to send you an additional bill?  Or how about BP sending all its customers a note saying that the cleanup costs in the Gulf cost it a lot of money and that they would all get an extra bill for X cents per gallon of fuel they purchased last year from BP?

Update: So in other words, I was hiring people in Florida in August of 2009, and will not find out until sometime in 2011 the true cost of this labor, because only now am I being told what taxes I have to pay on this labor.  And people wonder why businesses are reluctant to hire.  We may think we have a Constitutional ban on ex post facto law, but businessman know this is BS.

I return to an old favorite topic of mine this week, government subsidies for business relocation, in my column at Forbes.com.  An excerpt:

To see this clearer, lets take the example of Major League Baseball (MLB).  We all know that cities and states have for years been massively subsidizing new baseball stadiums for billionaire team owners.  Let’s for a minute say this never happened – that somehow, the mayors of the 50 largest cities got together in 1960 and made a no-stadium-subsidy pledge.  Would baseball still exist?  Sure!  Teams like the Giants have proven that baseball can work financially in a private park, and baseball thrived for years with private parks.  But would baseball be in the same cities?  Well, without subsidies, baseball would likely be in the largest cities, like New York and LA and Chicago, which is exactly where they are now.  The odd city here or there might be different, e.g. Tampa Bay might never have gotten a team, but that might in retrospect have been a good thing.

The net effect in baseball is the same as it is in every other industry:  Relocation subsidies, when everyone is playing the game, do nothing to substantially affect the location of jobs and businesses, but rather just transfer taxpayer money to business owners and workers.

I am in the process of completing a home mortgage.  The process has become awful again, not as bad as it was in the early 90's but harder and more frustrating than in the mid-2000's.  There is one set of rules, and if one's situation does not fit those rules, good freaking luck.  Right now, for example, getting a home mortgage when one is self-employed, even in a pretty large business with a decade of history, is really hard.

So I like this proposal

At the moment there is nobody doing conforming mortgages except Fannie and Freddie. Indeed there is almost nobody doing mortgages of any kind except Fannie and Freddie. If the free market wants the business they can have it. (They just don't want it at this sort of interest rate spread - and I don't blame them.)

All the government need to do is tell Frannie to raise their price a little each quarter. Currently they charge 20-25bps for guaranteeing mortgages. (The free market won't take credit risk at that price.) So it is entirely open to the FHFA (and hence the Treasury) to tell Fannie and Freddie to raise their prices by 5bps. The government will get paid better for the risk they are taking (and what free market ideologue will disagree with that) and the private sector can compete if they want to.

I doubt the free market will. But then in a quarter or two Frannie can raise their pricing by another 5 bps. And a quarter or two later Frannie can raise by another 5bps.

At some stage you will get to a level where the private sector chooses to compete. Frannie should not set its price competitively though. In another quarter they should raise the price another 5bps. And in another quarter they should raise again.

By the way, this is a classic example of not learning from your last mistake.  That spread is absurdly low.  I wouldn't guarantee my best friend's loan for 20bp.  Would you take on the default risk of a $100,000 mortgage for $200 a year?

The management of the Post Office is a joke, and it is hardly worth the electrons to write more about it.   But I did find this factoid in Tad DeHaven's commentary on the Post Office's hopeless efforts at cost reduction interesting.

Traditional post offices, which number about 27,000, cannot be closed “for solely operating at a deficit” and the closure process is burdensome.

Wow, that is a bad law (though no worse than 10,000 others like it).  This sounds similar to the military base problem, where every facility that needs closure has a Congressperson desperately trying to keep it open against all economic reality, merely as a jobs/welfare program once its true utility is over.   Apparently, the Post Office has an overcapacity problem that rivals the US Military's after the Cold War (and really to be honest after WWII)

Full post offices are more costly to operate than other means of serving customers. The average post office transaction cost 23 cents per dollar of revenue in 2009 while the average transaction at a contract postal unit cost just 13 cents. Post offices used to generate almost all postal retail revenue, but 29 percent is now generated online through usps.com and other alternative channels.

In 2009 post offices recorded 117 million fewer transactions than in 2008. Four out of five post offices are operating at a loss. However, the postal network’s overcapacity has drawn little corrective action from Congress. In fact, legislation introduced in the House with 102 cosponsors would apply the burdensome procedures for closing post offices to other postal outlets as well. Congress is actively working against the modernization of the U.S. postal system.

The amazing thing is that they have tons of extra capacity and still provide poor service.  Just compare the process of mailing a package UPS vs. USPS.  I have a UPS account, I can print my own labels, I get billed automatically, I get package tracking, and I can send the package from the drop box downstairs in my building.

It is almost impossible to do this with the USPS.  To mail anything larger than 13 ounces, to buy postage without an expensive meter, to get a greatly inferior sort of tracking -- all require a grim trek to the post office.

My guess is that just like Pemex is not longer really about producing oil, the USPS mission is no longer primarily about delivering mail, its a welfare program.

PS - my USPS delivery guy is great.  Nicest guy in the world.  The mistake for years in criticizing the USPS has always been about criticizing the people.  Not only is that wrong, but it distracts from the problem.  By implying the problem is bad, surly people, it implies the problem is fixable with new people.  But in fact, the problem, as with all government, is information and incentives .... and in this case Congressional meddling in their mission.

The recent naming of GE's Jeffrey Immelt to head a presidential commission on, err, something or other seems to have been an occasion for bipartisan gnashing of teeth about what I call the growth of the American corporate state.  I was encouraged by the bipartisan negative reaction from the left, right, and of course the libertarians, the latter of whom have always understood the difference between being pro-capitalism and pro-business.

But all it takes is a nomenclature change of this corporate welfare to "green jobs" or "investment in the future" or "bridge to the future" or similar bullsh*t and suddenly many of the exact same people, at least on the left, are swooning again.  Why is it not obvious that, for example, green energy subsidies are just the same old corporate welfare?

Here is one aggravating example

Despite millions in government grants and subsidies, the Manitowoc company President Barack Obama called a glimpse of the future lost $4.2 million last year and cannot promise shareholders it will be profitable in the foreseeable future....

“We may continue to incur further net losses and there can be no assurance that we will be able to increase our revenue, expand our customer base or be profitable,” the report indicates.

Investors have responded to the company’s volatility, and Orion stock has plummeted in the past four years.  It closed 2007 at $18.82 a share.  By the end of 2010 it was $3.34.

Regardless, President Obama is putting his, and the U.S. taxpayers’, money on companies like Orion.

“It’s important to remember that this plant, this company has also been supported over the years not just by the Department of Agriculture and the Small Business Administration, but by tax credits and awards we created to give a leg up to renewable energy companies,” Obama said at the Orion plant on Wednesday.

The State of Wisconsin has also given its share trying to help Orion to succeed.  Since 2005, the state has given the company $350,000 in community development zone tax credits, $506,000 in economic development funds, and $420,000 from the Wisconsin Energy Independence Fund.  Plus the company got another $260,000 in stimulus funds for a State Energy project.

In addition to direct aid, public policy has also helped the struggling company.  Wisconsin law requires that 10 percent of all electricity sold in the state come from renewable sources by 2015.  Orion knows that without government intervention like that, there would be little prospect for the green economy.

“The reduction, elimination or expiration of government mandates and subsidies or economic or tax rebates, credits and/or incentives for alternative renewable energy systems would likely substantially reduce the demand for, and economic feasibility of, any solar photovoltaic and/or wind electricity generating products, applications or services and could materially reduce any prospects for our successfully introducing any new products, applications or services using such technologies,” the SEC report states.

By the way, in 2010, while the government was pouring taxpayer money into Orion, its founder and CEO was pulling his out, selling (by my count of SEC filings) 130,000 shares, despite equity prices that were at a five year low.    It is dangerous to draw conclusions form insider sales (we don't know what personal financial issues may be driving their actions) but it is interesting that the president and founder is taking the exact opposite point of view on the company's prospects than is President Obama.

I know this is just a trivial example, but somehow it seems to be representative for me of a larger class of legislation - yield to the state!

In 2009, Colorado legislators passed the Yield to Bus Law to help transit agencies that were finding that the inability of buses to get quickly back into the traffic flow after a stop was hurting their on-time performance.

Steamboat Springs Transit helped push for the law after it had to add time to routes to stay on schedule because too often its buses were boxed in by traffic at stops, said Philo Shelton, director of Steamboat's public works department, which runs the 24-bus transit operation....

The hope is that motorists will get in the habit of yielding, thereby minimizing the need for enforcement of the law, officials say.  (via the antiplanner)

That does seem to be the point - produce citizens that are in the habit of yielding to the state.   Because we all know that having the state's bus full of empty seats stay on schedule is far more important than the schedule of all the little people around it.  When government schedules don't work, what do they do?  Change the schedules?  No!  Change the behavior of the citizenry so the schedules can be made to work.  Nothing wrong with the schedules - its all you folks who are broken.

There seems to be discussion in Washington about creating a legal framework for state bankruptcies.  My guess is that any law that might be passed will simply be a Trojan Horse.

A lot of people (including myself) would like the idea of the tough provisions applied to individuals who are bankrupt being applied to states.  Unfortunately, it is wildly unlikely that this is actually what we will get.  Any such law would likely just be a bailout program renamed "bankruptcy" to make it more palatable to the public, a transfer of obligations from state to federal taxpayers without any real imposition of discipline or cleanup of long-term obligations like pensions.  Heck, this is exactly what happened at GM, and that was just a private company.

Some might assume that a Republican House would be loathe to support bailout provisions for California, but two thoughts come to mind.

First, California, despite being a blue state, has plenty of red Congresspersons who will scream support for a bailout (for a parallel, think ethanol or farm subsidies, where grain state Republicans are among the first to break ranks with their brethren to support government interventionism).

Second, it is not clear that the Administration even needs the Congress any more to dish out money.  It has found so many extra-Constitutional ways to appropriate money without actually having to go to Congress (e.g. use of TARP funds for about anything, use of the Federal Reserve, etc.) that it should be no problem to do this without the House.  Take just one idea -- Imagine California issues a $100 billion in 0.0000005% 100-year bonds that the Fed then buys at face value with printed money (as they have been buying US securities).  Instant bailout, no Congress.

Not that it is really necessary to make this point (as many of us were making it even before the Stimulus bill was passed) but the man tasked with coordinating Vermont's various stimulus programs reports that the stimulus pretty much failed. I thought this was a particularly interesting bit:

Another part of the job was to help Vermont entities win a large share of the "competitive" stimulus money available nationally at the discretion of federal agencies. Our electric utilities jointly applied for money to build a statewide Smart Grid. Our telcos put together applications for broadband money. Vermont received the most money per capita of any state for both broadband and energy. The Green Mountain State will probably benefit from these programs"”yet almost none of this money has been spent, thanks to the many federal approvals required.

The broadband and energy programs, in other words, are hardly examples of successful counter-cyclical spending: The only money spent on them during the recession was for grant-writing. More troubling, private investment in these areas, which might have occurred even during the recession, dried up as companies waited to see if they could build with taxpayer money. Entrepreneurial effort turned from innovation to grant-grubbing.

Wow, someone should coin a name for that.

I find it simply amazing that so many experienced political actors could have been fooled by this:

The acceleration of government projects that had already run the approvals gauntlet"”primarily the paving of roads"”worked. But the building of new infrastructure failed. Due to the time required to apply for grants and receive permits, none of it was done during the recession, and only a little will be done in the next few years.Nothing is "shovel ready" in the U.S. We've created a wall of regulatory obstacles"”environmental, historical sites, etc."”that blocks doing any major project on a predictable or reasonable schedule. Not even all the king's men with all the people's money can build tunnels, railroads, wind turbines, nuclear plants or anything else significant without years or even decades of delay. If permitting were speedy, we wouldn't need government money to have a construction boom.

That's easy to recognize after the fact, but plenty of folks with zero political experience, like me, were saying this before the bill was even passed:

A year from now, any truly new incremental project in the stimulus bill will still be sitting on some planners desk with unfinished environmental impact assessments, the subject of arguments between multiple government agencies, tied up in court with environmental or NIMBY challenges, snarled in zoning fights, subject to conflicts between state, county, and city governments, or all of the above.  Most of the money will have been spent by planners, bureaucrats, and lawyers, with little to show for in actual facilities.

My new Forbes column is up, and it discusses an article by Michael Malone that said in part:

The recent quick fade of the Deficit Commission was the latest reminder that America no longer seems to have the stomach for big challenges.  There was a time "“ was it just a generation ago? "“ when Americans were legendary for doing vast, seemingly superhuman, projects:  the Interstate Highway System, the Apollo Missions, Hoover Dam, the Manhattan Project, the Normandy invasion, the Empire State Building, Social Security.

What happened?  Today we look at these achievements, much as Dark Age peasants looked on the mighty works of the Roman Era, feeling like some golden age has passed when giants walked the Earth.

My response includes the following:

The list he offers is a telling one "” all except the Empire State Building were government programs, just as were the "mighty works" of the ancient Romans.  And just like the Romans, these and other government projects have more to do with triumphalism than they do with adding real value.

It is interesting he should mention the Romans.  There were few grand buildings during the centuries when Rome was a republic.  Only in the later Imperial period, when Rome became an autarky, did rulers begin to build the monumental structures that Malone admires.  Emperors taxed their subjects and marshaled millions of slaves to build temples and great columns and triumphal arches and colosseums to celebrate"¦ themselves.  Twentieth Century politicians have done the same, putting their names on dams and bridges and airports and highways and buildings.  They still build coleseums too, though today they cost over a billion dollars and have retractable roofs.  Are these, as Malone suggests, monuments to the audacity of the greatest generation, or just to the ego of politicians?...

This is the same concern that drives Thomas Friedman to extol the virtues of the Chinese government, where a few men there can point their fingers and make billions of dollars flow from their citizens to the projects of their choice.  This is a nostalgia for coercion and government power, for Lincoln imposing martial law, for FDR threatening to pack the Supreme Court, for the Pharaohs getting those pyramids built.  It is a call for dis-empowerment of the masses, for re-concentrating power in a few smart visionary folks, presumably including Mr.  Malone.

I was absolutely astounded several years ago when the city of Glendale (a suburb NW of Phoenix) agreed to shell out $180 million to build an arena to try to keep a pro hockey team (the Coyotes) in town.   Now, they are considering doubling their investment:

Will the Glendale City Council vote to shell out nearly $200 million in a deal aimed at keeping the Coyotes in town for at least 30 years?

But there is nothing simple about the decision facing elected officials in the West Valley city that has yearned to build its reputation as a sports and entertainment hot spot.

The deal involves Glendale taxpayers giving $100 million to Matthew Hulsizer, a Chicago businessman poised to buy the Phoenix Coyotes from the National Hockey League.

And, the Arizona Republic's Rebekah Sanders reports that "Glendale would pay Hulsizer $97 million over the next 5 1/2 years to manage the arena, schedule concerts and other non-hockey events."

Unbelievable.  The value destruction here is amazing.  A few years ago, the Coyotes were only valued at $117 million.  So the government will have subsidized an entity worth just north of $100 million with $400 million in taxpayer dollars?  Nice investment.  Of course they have a BS study about net economic impact of the Coyotes, with a sure-to-be exaggerated figure of $24.5 million a year.  But even accepting this figure, they are spending $400 million for at most $24.5 million in economic impact, which at best maybe translates into $2-3 million a year in extra taxes.  That works, how?

Losing more than 40 major events, that is hockey games, per year at the arena would be a punch-in-the-gut to bars, restaurants and retail shops that also call Westgate home.

Here is a hint:  I pretty much guarantee the buyout value or moving cost of these businesses is less than $200 million.  But here are the most amazing "economics"

that would only further jam up Glendale, which counts on sales tax revenues those businesses generate to pay off the debt it has amassed in trying to build its sports empire.

So we are going to spend $200 million to make sure we can keep up the debt service on the previous $180 million?  So where does the $200 million come from.  I am increasingly buying into Radley Balko's theory that the media is not liberal or conservative, just consistently statist.  Here is the comment on the Goldwater Institute's legal challenge

City officials also may face a legal challenge from the Goldwater Institute over the conservative think-tank's belief that the deal Glendale has cooked up violates state laws that prohibit government subsidies to private entities.

That, of course, means that the city will rack up untold legal fees to defend their deal.

Waaaaa!  More legal fees.  Is that really their biggest concern?  How about the strong possibility that Goldwater is correct, or a mention that they have won in court recently in similar cases.  But we will end with this happy thought:

Now, if they say yes to the $200-million giveaway, they may keep the team in town but are only piling on to that massive debt.

And as their initial deal with the team and previous team owners has proven, there are no guarantees that the $200 million will be enough.

Postscript: Local papers have never seen a sports team subsidy or new stadium they did not love.  Given the quality of their news departments, local sports teams sell newspapers.

PS#2: Long ago I wrote a post on subsidies for business relocations and the prisoners dilemma.

Why is it that taxpayers seem to be the one group that never has standing?  No one wants the milch cow mouthing off, I suppose.  How about we change the law to say that any taxpayer has standing in court on any issue that affects government spending.  Too broad?  Well, I'll narrow that when they narrow their interpretation of the commerce clause.

This is a clever subtitle mashup criticizing public pensions in California which, incredibly, does not actually use the Hitler clip from Downfall.

Private companies can be jerks too, but they don't write the laws or control law enforcement.  That is why government is so dangerous, not because I necessarily trust it less, but because there is nothing acting to circumscribe its power.

Ian Cotterell got bad news Monday night when he learned that a city tow truck had plowed into a Roxbury apartment building he owns, blasting a hole in the brick facade and forcing his 17 tenants to vacate. Yesterday, he got more bad news: The city is ticketing him.

After building inspectors examined the building to assess damage from the crash, they cited Cotterell for "structural defects" including collapsed bricks, damaged windows, and other "unsafe and dangerous" conditions, according to an order issued by the city yesterday.

The order noted that a Boston Transportation Department truck "drove into building," but it also ordered Cotterell to fix the problems within 24 hours and appear in court."It's unfair; the code violations I have because the truck made them,"

TJIC has more at the link

Well, as usual, the progressives have the rights and roles of private individuals vs. government exactly backwards, from Kevin Drum:

As I said earlier, I'm on the fence a bit about whether an indiscriminate release of thousands of U.S. embassy cables is useful. After all, governments have a legitimate need for confidential diplomacy. But when I read about WikiLeaks' planned financial expose [release of private emails from a private corporation], I felt no such qualms. A huge release of internal documents from a big bank? Bring it on!

The government and public officials acting in a public capacity have no rights to privacy of their work and work products from the public that employs them (except to the extent that privacy pays some sort of large benefit, which I would define pretty narrowly).  While things like the recent Wikileak are certainly damaging to things like sources and foreign relations, I have sympathy for such a mass dump when the government so systematically defaults to too much secrecy and confidentiality for what should be public business, mainly to avoid accountability.  The public has the right to know just about whatever the government is doing, in detail.

In the private sector, ordinary citizens have no similar "right to know" the private business of private entities, the only exception being in criminal investigations where there are clear procedures for how confidential private information may be obtained, used, and protected.  Had the proposed email dump related to alleged misconduct, I would have been pretty relaxed about it.  But the proposed document dump is just voyeurism.  One may wish for more accountability processes vis a vis banks, but in a country supposedly still founded on the rule of law, we don't get to invent new ex post facto rules, such as "if your industry pisses off enough Americans, all the material that was previously legally private is retroactively made part of the public domain."

Drum may be gleeful now, but someday he just might be regretful of establishing a precedent for consequence-free theft and publication of private information.   Had, for example, the words "big bank" in the paragraph been replaced by, say, "Major newspaper," we would likely see Drum in a major-league freak out, though the New York Times corporation has exactly the same legal status as Citicorp.

Everyone thinks his own information is "different" and somehow on a higher plane than other people's information.  Drum likely thinks his communication by email with sources is special, while I would argue release of my confidential internal communication about new service offerings and pricing strategies would be particularly damaging.  The way we typically settle this is to say that private is private, and not legally more or less private based on subjective opinions by third parties about the value of the data.

One aspect of the TSA debate I find hilarious as a libertarian is that we get to see yet another example of partisans switching sides on an issues based on whose team is in the White House.  Since when have Republicans had this deeply held concern about liberty and privacy vs. security against terrorism.  And now leftie Kevin Drum steps up to say that all the extract screening makes sense (to my college roommate Brink Lindsey:  Sorry, but the whole liberaltarian thing is a myth.  When in power, they seem to act just as authoritarian on social and civil rights issues as Conservatives).

Anyway, Drum is certainly not full-bore backing the TSA, but he does write

I hate the TSA screening process. Everyone hates the TSA screening process. You'd be crazy not to. It's intrusive, annoying, and time-wasting. It treats us all like common criminals even though most of us are just ordinary schlubs trying to get on a plane and go somewhere.

But guess what? The fact that you personally are annoyed "” you! an educated white-collar professional! "” doesn't mean that the process is idiotic. I've heard it called "security theater" so many times I'd be rich if I had a nickel for each time it popped up in my browser, but although the anti-TSA rants are often cathartic and amusing, they've never made much sense to me. All the crap that TSA goes through actually seems pretty clearly directed at improving the security of air travel.

The point is not, as implied by Drum, that current TSA screening isn't protection against certain types of threats. Let's be generous and assume that the TSA's screening, generally concocted in a barn-door approach after someone tries a particular approach, is effective at catching the threats it is designed to catch.

The point is that nearly anyone with a room temperature IQ can think of 20 ways to attack an airplane that is not covered by the screening. If there are, say, a hundred imaginable threats, how much privacy do you want to give up to protect yourself from 35 of them?

For example, you know what is in the cargo hold below your seat? The US Mail. You know how much screening is performed on the US Mail? Zero. How hard would it be to wire up a package with a bomb and an altimeter, or perhaps just a noise sensor, and send it off airmail.  They screen the crap out of your bags and body and then throw them on the plane right next to a bunch of anonymous, unscrutinized cargo.  And that is just one example.

Yeah, I can see the Administration has its finger on the pulse of what all Americans feel to be the real, burning issue confronting the TSA.  Specifically:

"It is no secret that the morale of the TSO workforce is terrible as a result of favoritism, a lack of fair and respectful treatment from many managers, poor and unhealthy conditions in some airports, poor training and testing protocols and a poor pay system," said AFGE President John Gage. "The morale problems are documented by the government's own surveys. TSOs need a recognized union voice at work, and the important decision of the FLRA finally sets the process in motion to make that right a reality."

At every airport I have been to lately, there are probably two TSA workers standing around doing nothing for every one working.  Obviously this is a brutal productivity standard, and TSA workers long for the conditions that obtain, say, among municipal road workers where five or six workers stand around doing nothing for every one working.

I tell folks all the time that  99% of the time the problem with bad governance is not bad people in the government (or at least not bad before they entered government) but bad incentives and information.

Take the recent public reaction against the new TSA search procedures.  Its not that everyone in the TSA aspired for a job where they could grope stranger's nads.  Its that the incentives in government make risk management impossible.

Let's look first at the cost side.  How much do internal TSA evaluation and incentive systems value

• protection of individual rights and privacy
• stewardship of taxpayers money

Can we safely say close to zero?  I don't think anyone at the TSA is being denied promotion because they were insufficiently concerned with the fourth amendment.

So what is it that does matter in their incentive system?  I would argue that they have one single, overriding concern -- to avoid an incident for which they can be retroactively blamed as being insufficiently diligent.   If you are confused about how this incentive might arise, Conservatives need only look at themselves.  How many of you have pounded Janey Napolitano for being insufficiently diligent, for example in her "the system worked as it was supposed to" comments.

I spent a lot of time at HBS, in consulting at McKinsey, and in corporate life worrying about incentive systems.  And the absolute first rule, in my mind, is to ignore the official incentive system and explore what really drives behavior.  For example, a company might have a finely balanced set of published performance measures, but if the last three promotions all went to the person who sucked up the most to the boss, the latter will likely influence behavior much more than the published system.

The same is true at the TSA.  I have no idea what their official performance metrics are.  But to a large extent these metrics are irrelevant anyway in an environment where it's impossible to be fired and salaries and promotions have more to do with seniority than performance.   In this environment, unofficial incentives are going to be very powerful, and I am virtually positive the overriding such incentive is avoiding blame due to lack of diligence.

So we should not be surprised if the TSA runs out of control with its diligence in a way that is unchecked by any considerations of cost, privacy, or risk management.  This incentive is so powerful that the only way to override it is either through executive leadership or legislative action.  We'll see if we get either, but trashing privacy and the fourth amendment tend to be bipartisan hobbies so I am not wildly confident much will change.

Radley Balko tells his frustrating stories about dealing with the IRS.  These stories seemed totally familiar to me because in my business life, I deal with very similar problems nearly every day.  Doing business in 12 states, I don't just deal with the IRS but 12 sales tax agencies, 12 employment tax agencies, 12 unemployment insurance agencies... you get the idea.   Multiply this story times 100 and that is what I spend most of my time on running my business.

Just as one example, 8 years ago Florida switched our company from quarterly to monthly reporting  for sales taxes.  They did this in the middle of a quarter, so the reporting for that quarter was a funny mix of a partial quarter plus one monthly report.  The next year a letter was triggered automatically from their system saying I hadn't submitted two months of reports.  It took me several hours and multiple phone calls and two faxed letters to get them to understand the situation and promise to update their system.  Frustrating but case closed.  Or not.  Their system again triggered a threatening letter to me over the same issue in December 2004.  And then 2005.  And 2006.  2007.  2008.  2009.  This comes up again every dang year.  Every year after hours of work someone swears I have finally found the right person and I would never hear about it again.  But the next year it pops up yet again.  In 2009 they actually sent a sheriff to our Florida location to start attaching assets over the non-issue.