Coyote Blog

Michigan has  a huge problem with jobs and capital leaving the state for more favorable climates.  Which makes it incredible that the ruling Democrats in the state have this plan to improve things:

• Hiking the minimum wage to $10 an hour for all workers.
• Imposing a blanket moratorium on home foreclosures for 12 months.
• Cutting utility rates 20% across the board.
• Requiring all employers to provide health care to their employees.
• Hiking, by $100 a week, and extending, for six months, unemployment benefits.

Wow, that should really bring companies running to the state to invest their capital.  This is always a powerfully attractive package:

• Raise the price of unskilled labor and entry-level employees
• Reduce protections for lenders investing capital in the state
• Set the state up for power shortages
• Increase the price of labor by $12,000 or more per year
• Increase employment-related taxes  ( a sure outcome of raising unemplyment benefits)

NY Major Bloomberg:

We can't just say everybody can go everyplace and do anything they want.

To his final query, I do work in a building without security and I am fine, thank you.

For years in Arizona we have been told by the state government that we need to subsidize science.  I have never really figured out why my life would be better if scientists lived in Arizona instead of California, but apparently when governors get together and compare their states' penis lengths, this is one of the key topics that come up.  Why we need to subsidize, for example, bio-science in Arizona to keep up with California but folks in Kansas don't need to subsidize, say, awesome golf resorts to keep up with Arizona has always escaped me.  I have always felt that if we just keep taxes low and wait long enough, California is going to blow up and we will collect a lot of the best and brightest with no extra effort.

Well, I am starting to understand why we needed to subsidize bio-science with our Arizona taxes.  We apparently need to do so to ... attract large grants for Federal tax money.  So by subsidizing this sector locally, we built it up enough to attract Federal subsidies.  Great.  Actually we probably did not build up the sector per se, we just built a quality private bureaucracy that had the skills and incentives to write lots of successful grant applications.  Apparently there is still work left to do, though, as other states have invested in even larger grant-magnets:

States with strong science bases such as California, Massachusetts and New York, each landed more than 1,000 grants.

Twenty states secured fewer grants than Arizona's haul of 101 awards.

Arizona scientists will study things such as predicting asthma in babies, prostate cancer and the behavioral responses of kissing bugs, which are blood-sucking insects linked to a blood-borne disease that afflicts 11 million to 13 million people in Mexico and Latin America.

Arizona scientists say the batch of stimulus dollars through the NIH is a welcome change from years of stagnant federal funding for scientific research.

"There was no increase in federal funding for cancer research for five years - that was devastating," said Dr. David Alberts, director of the Arizona Cancer Center in Tucson. "Now, I'm encouraged."

Wow - thus we see why government spending grows so much faster than inflation.  Flat spending = devastating.

If I were in academia, the study I would like to do is to try to assess the total value destroyed by state and local governments merely in trying to move businesses and facilities from one part of the country to another.

Via Matt Welch, from the USA Today:

The measure contains funding for a new destroyer and 10 C-17 cargo planes that the Pentagon did not ask for. It also includes hundreds of smaller earmarks for projects of special interest to individual lawmakers, among them $25 million for a World War II museum in New Orleans and $20 million for the Edward M. Kennedy Institute for the United States Senate in Boston, a kind of think tank dedicated to the legacy of the late senator.

Maybe its not as bad as it sounds.  Maybe its just a driving school.

There always have been good, logical reasons to discuss the Community Reinvestment Act (CRA) as one contributor to the mortgage meltdown last year.  After all, the act is effectively a prod to banks to lend to people who would not normally meet their lending criteria, and to do so on terms (e.g. no money down) they might not usually offer.

The usual response from supporters is that the numbers are too small to matter.  I tended to agree with this -- until I saw this graph, from Peter Schweizer via Carpe Diem.

Unfortunately he does not have a source or methodology, so I have to retain some skepticism, but if true these numbers are far from trivial.  He writes:

According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous. Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that "fall outside typical credit, income or debt constraints," and was awarded the 2003 CRA Community Impact Award for its Community Access program. Four years later it was taken over by the Office of Thrift Supervision.

This effort was backed by a parallel effort at Fannie Mae and Freddie Mac to buy up these loans:

Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target "” 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.

For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60% of their area's median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of  billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down.

Fannie and Freddie also purchased hundreds of billions of subprime securities for their own portfolios to make money and to help satisfy HUD affordable housing goals. Fannie and Freddie were important contributors to the demand for subprime
securities.

Obama has a personal history with this effort, actually suing banks who would not provide the sub-prime lending that he later, as President, blamed them for undertaking

Obama's battle against banks has a long history. In 1994, freshly out of Harvard Law School, he joined two other attorneys in filing a lawsuit against Citibank, the giant mortgage lender. In Selma S. Buycks-Roberson v. Citibank, the plaintiffs claimed that although they had ostensibly been denied home loans "because of delinquent credit obligations and adverse credit," the real culprit was institutional racism. The suit alleged that Citibank had violated the Equal Credit Opportunity Act, the Fair Housing Act and, for good measure, the 13th Constitutional Amendment, which abolished slavery. The bank denied the charge, but after four years of legal wrangling and mounting legal bills, elected to settle. According to court documents, the three plaintiffs received a total of $60,000. Their lawyers received $950,000.

Now, Congress and Obama want to strengthen the CRA -- talk about not learning from mistakes.

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the "Community Reinvestment Modernization Act of 2009," who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency's core concerns would not be safety and soundness but, in the words of the Obama administration, "promoting access to financial services," which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls "a group of examiners specially trained and certified in community development" (otherwise called community activists). The administration says, in its literature about the reforms, that "rigorous application of the Community Reinvestment should be a core function of the CFPA."

Looks like there may be jobs available after all for all those folks who got fired from ACORN.

...because the US Fish and Wildlife service has a SWAT team and is not afraid to use it.   Yet another heavily armed government team making sure our nation does not teeter over the brink of anarchy.  Because if everyone were allowed to freely import orchids, our civil society would come to an end.  Fortunately at least one such miscreant was thrown in jail for a well-deserved two years for having the gall not to fill out his import paperwork correctly on otherwise legal orchids.  Thank god Fish and Game had a SWAT team -- who knows what kind of violence 66-year-old orchid terrorists are capable of.   I sure hope I filled out my clock importation paperwork correctly.

I found this story, from a Marketplace segment via Carpe Diem, especially irritating.  Our company has to pay for a lot of unemployment fraud, so seeing such fraud in action really annoys the hell out of me.

Quick background:  Employers pay unemployment taxes generally as a percentage of wages.  These taxes are based on a direct relationship with past claims from ex-employees.  The more of my ex-employees who make claims, the more premiums I pay.

Since I only have jobs for 6 months a year (it is a seasonable business), employees have the opportunity to file for unemployment the other 6 months.   BUT, the rule is generally that you have to be looking for work.

Unfortunately, I have numerous employees who work for me over the summer and take the winter off, but tell the unemployment office they are looking for work so they can collect unemployment anyway.  I have had employees call me from Mexico telling me about the great winter vacation they are having on the exact same day I see their names on the roles of those collecting unemployment (and thereby supposedly "looking for work").

In California, where such behavior is rampant (and where the state unemployment agency has established penalties for employers who even think about asking the state to investigate one of his ex-employees for fraud) I pay over 7% of wages in unemployment taxes, vs. less than 1% in states without such fraudulent behavior.

So, with this background, I am thrilled this guy is showing the initiative to find work but am frustrated he is still fraudulently taking my money:

Michael: I'm getting $272 a week [in unemployment benefits]. Which is just, bare bones. It's so bad that at one time I was going to the food bank. And, you know when you're really hungry and when you're facing eviction, you've got to do something.

Marketplace: So he started looking for work on the side. He found it pretty quickly.

Michael: So right now I have Craigslist open. And what I've done is I've opened three different tabs: I've opened free stuff, all gigs and all jobs.

Marketplace: He's found all sorts of work this way: software testing, landscaping, bouncing and lots of focus groups. All have paid cash. He says some weeks he's earned three times as much as his benefits check. Like everyone on unemployment, he's meant to report any earnings to his unemployment insurance office. Then they adjust his benefits down. So how does Michael answer the question, have you earned any money this week?

Michael: I opt to say, you know, no. I opt to say no, I have not. Because this is my own hard work, this is my own ingenuity, this is my own genius, and I am still looking for work every day.

You are absolutely right Michael, yours the same argument all productive folks make in the face of government expropriation.  In fact, I couldn't have said it better - "this is my own hard work, this is my own ingenuity, this is my own genius."  Brilliant.  But recognize that the unemployment money you are taking fraudulently was paid for with my hard work, my ingenuity, and my own genius.

As a small business owner, a huge portion of my time is spent feeding governments with all the paperwork they demand.  But this year has been twice as bad.  Every local authority we operate in has started mining for dollars.  What this has meant is a whole slew of property "reassessments" that have no basis in reality (e.g. values put on non-existent assets) that I have to spend a lot of my time fighting.  The general modus opperandi is to declare my company owes money for something fictitious, and then make us prove we don't.  Have you ever tried to prove you don't own an asset that doesn't exist?  Think about it.  How would you go about it, short of inviting the assessor out to your property to search for it.

Maricopa County, the county that includes Phoenix where my headquarters resides, has been the worst.  We buy assets for properties all over the country, and have the bill sent to our headquarters.  Often, if a registration is required, we will put our headquarters address on the government registration to make sure we get the renewal paperwork (long experience is that if anything gets sent out to an address in the field, it is lost).  The concept that an asset might be in location X but the paperwork should be sent to location Y is a really, really hard concept for a lot of state registration authorities to get their head around/

This year, Maricopa County has started sending us personal property tax notices for all kinds of assets that have never even existed in this county.  They were bought in state A, shipped to state B, with the bill sent to us here in Arizona.  But the County is in financial distress.  It probably understands that the asset does not exist in the County.  I am sure it knows that I don't, for example, have 24 cabins sitting on the fourth floor of this building, where they have them located.  But they need money.  If they send out enough fraudulent bills, and then tell taxpayers it is the taxpayer's responsibility to prove the bill is wrong, then they will likely get some money.   Yet again, the government is engaging in abusive practices that not private company could get away with for long.

I was pretty calm today on the phone with the assessor until this came up:

Me: Look, these are cabins I bought from a factory in Maricopa County but which were shipped immediately from the factory to California.

Assessor: I don't see where you filed for permission to move the cabins

Me: Excuse me?

Assessor: Your xxxyyy form [I forget the numbers].  You never filed for permission to relocate

WTF?  I know we have problems with declining tax roles, but do I really have to ask permission to move an asset out of the county or state.  What, did I violate directive 10-289?

So beware small businesses.  Your government is mining for dollars -- do not assume that tax bill is correct.

A question has been going around on legal blogs -- "Does a Federal Mandate Requiring the Purchase of Health Insurance Exceed Congress' Powers Under the Commerce Clause?"

My answer is:  Nowadays (not in the original intent) is there anything the Feds can do that exceeds current interpretations of the commerce clause?  In Raich, the Supreme Court decided that a product (marijuana) that was grown in state for personal consumption, like tomatoes in your own garden, and was used legally under state law, can still be regulated under the commerce clause.    As Clarence Thomas wrote in dissent:

Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything and the Federal Government is no longer one of limited and enumerated powers

No kidding.

Unfortunately the theory that this personal use in California could somehow affect marijuana pricing in other states (by growing their own, they reduced demand for out of state weed which might affect prices in Arizona -- again similar to an argument that growing your own tomatoes might affect prices in another state) won the day in the Court.   With the Supreme Court accempting this "butterfly effect" argument  (because truly the demand of one person in a national market is like a butterfly flapping its wings in China and affecting a hurricane in the Gulf of Mexico), anything falls under the commerce clause.

This year has been a frustrating year for my business.  As many of you know, I am in the business of privatizing public recreation.  We take over the management of public recreation facilities, and are generally able to run them to the same or better standards as the government for less money.  Whereas before we take over, the government typically loses money on a park, we often can run it at a profit AND pay the government rent for the concession rights.

This year, numerous state parks have been threatened with closure in states all across the country.  In many of these states, I have communicated with everyone I could think of, from the governor to state parks leaders, trying to say that companies like ours could probably keep many of these parks open. I told them I wasn't looking for a sweetheart deal - we weren't afraid to bid against other companies, but it was crazy to close parks that could easily remain open.   We have been told any number of times by numerous state leaders that they would prefer to close the park rather than put it under private concession management.

To some extent, this is due to the pressure of public employees unions, who have every incentive to play brinkmanship and force closure of parks rather than set the precedent of having them managed by a non-union private company.  This is unsurprising.

I also understand that there is a fear of private management of public recreation facilities.  I swear the first think I hear almost every time I present on what we do  is that they fear we would put a billboard or a McDonalds in front of Old Faithful.  I kid you not, this charge is as regular as clockwork.  Fortunately, we manage about 175 public recreation facilities to a pretty high standard, and not one billboard or McDonalds can be found at any of them.  A large part of the bid process for any facility management contract is not just the rate or the rent but also the detailed operating standards to which it will be managed.  So this is a normal, but surmountable hurdle.

But even taking into account these usual sources of resistance, I am always just amazed at how vociferous the opposition is to even experimenting with private management.  States like California are simply hell-bent on closing parks a company like ours could easily keep open for the public (to be fair, Ruth Coleman, head of California State Parks, is very open to new models but she gets absolutely no support either within her organization or in the legislature for such new ideas).

But I think I understand this phenomenon better now after reading Kevin Drum today. This is what Drum wrote in response to the DNC ad, which clearly stretched the truth, claiming that Republicans voted to end Medicare:

Why not just tell the truth: Republicans essentially voted in favor of turning Medicare over to private industry.  With only a few words of explanation, this could easily be more effective than the ad that actually ran.  Like so:

Republicans voted to turn Medicare over to private insurance companies!  You heard right: they want to hand Medicare over to the same companies that [insert two or three insurance company outrages here, maybe a Wall Street reference, something about profits over people, etc.].  Democrats will never do that.  Blah blah blah.

Would that really be any less scary than the ad that actually ran?

So for Drum, and I presume for much of the Left, the suggestion that a government service be managed privately is just as bad as the suggestion that the service be ended. In essence, Drum is saying he would almost rather have no Medicare than Medicare provided privately.

It certainly explains a lot, and puts the phenomenon I see in public recreation into a larger context.

Update: A couple of the comments hpothesize the problem is that many in government and on the left just hate profits and the profit motive in general.  One related story -- I was in a meeting with a large state parks organization where a senior person raised the idea of private park management.  Well, everyone hated the idea, but when it looked as if the leadership might still seriously consider the private option, one person in the room said "well could we at least mandate that they can't make a profit."  There was a lot of head nodding at this.

I didn't go off on this and kept a smile on my face.  But I did lose it in an earlier meeting with the head of some government parks we actually did run.  We were discussing park fee increases for the next year (the state had just raised minimum wages about 30% and we were scrambling to make ends meet).  He said he was uncomfortable with the level of profits we made.  I asked him, "Jim (not his real name) does this state pay you more than $25,000 a year to run this park?"  He nodded.  I said, "then you make more profit in this park than I do, and what is more, you didn't have to invest $100,000 in equipment to get your job, nor do you have to rebid for your job every 5 years, nor does you salary go down if for some reason park visitation decreases."

Sometimes I wish I had stood up in that state meeting and said something similar, as in "Why is the money I make in a park somehow tainted because it is the difference between my revenues and expenses and the result of substantial investments and subject to extraordinary risks, while the virtually guaranteed-for-life salary you make, paid for by the same visitors, is somehow pristine?"

Norman Borlaug, the founder and driving force behind the revolution in high-yield agriculture that Paul Ehrlich predicted was impossible, has died at the age of 98 95.  Like Radley Balko, I am struck by how uneventful his passing is likely to be in contrast to the homage paid to self-promoting seekers of power like Ted Kennedy who never accomplished a tiny fraction of what Borlaug achieved.  Reason has a good tribute here.  Some exceprts:

In the late 1960s, most experts were speaking of imminent global famines in which billions would perish. "The battle to feed all of humanity is over," biologist Paul Ehrlich famously wrote in his 1968 bestseller The Population Bomb. "In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now." Ehrlich also said, "I have yet to meet anyone familiar with the situation who thinks India will be self-sufficient in food by 1971." He insisted that "India couldn't possibly feed two hundred million more people by 1980."

But Borlaug and his team were already engaged in the kind of crash program that Ehrlich declared wouldn't work. Their dwarf wheat varieties resisted a wide spectrum of plant pests and diseases and produced two to three times more grain than the traditional varieties. In 1965, they had begun a massive campaign to ship the miracle wheat to Pakistan and India and teach local farmers how to cultivate it properly. By 1968, when Ehrlich's book appeared, the U.S. Agency for International Development had already hailed Borlaug's achievement as a "Green Revolution."

In Pakistan, wheat yields rose from 4.6 million tons in 1965 to 8.4 million in 1970. In India, they rose from 12.3 million tons to 20 million. And the yields continue to increase. Last year, India harvested a record 73.5 million tons of wheat, up 11.5 percent from 1998. Since Ehrlich's dire predictions in 1968, India's population has more than doubled, its wheat production has more than tripled, and its economy has grown nine-fold. Soon after Borlaug's success with wheat, his colleagues at the Consultative Group on International Agricultural Research developed high-yield rice varieties that quickly spread the Green Revolution through most of Asia.

The contrast to Paul Ehrlich is particularly stunning.  Most folks have heard of Ehrlich and his prophesies of doom.   But Ehrlich has been wrong in his prophesies more times than anyone can count.  Borlaug fed a billion people while Ehrlich was making money and fame selling books saying that the billion couldn't be fed -- but few have even heard of Borlaug.   Today, leftists in power in the US and most European nations continue to reject Borlaug's approaches, and continue to revere Ehrlich (just this year, Obama chose a disciple of Ehrlich, John Holdren, as his Science czar).

Continuing proof that the world moves forward in spite of, rather than because of, governments.

Update: More here.

Update #2: Penn and Teller on Borlaug

I found this a bit odd.  In Arizona, you can actually make a voluntary contribution to certain causes or political parties via your tax return.  This is not a checkoff, but an amount that is added to the amount you owe in taxes and then passed on by the state to a short list of approved organizations.  As a libertarian, I find it unsettling that the state acts as a collection or sales agent for certain political causes.  In particular, how can the state make fair and reasonable choices as to who is on and not on the list of eligible recipients?

I found this data for 2009 FY giving:

What was odd for me is that of all the political giving, libertarians had the highest average donation.  I find it weird that libertarians would want to financially support the libertarian cause but they want to do it via the mechanism of the state income tax return.

The good news here is that the combined $28 thousand or so in political donations was dwarfed by every other cause.

Under what theory of government is this a proper activity of government with our tax dollars?

Gov. Jan Brewer took the stage Thursday with rocker and restaurateur Alice Cooper to persuade Arizonans that dining out is good for the state. Announcing a three-month public-awareness campaign called Dine 4 AZ, they said going to restaurants supports businesses and helps preserve jobs. Brewer noted that restaurants generate 10 percent of Arizona's tax revenues.

"We are working hard to lead the Grand Canyon State forward and out of this recession, and Dine 4 AZ fits perfectly into our plan," she said. "Please treat your family to a meal and we'll get through this together."

It is just seriously freaking frustrating to see the government spend my money promoting other people's businesses.   And since when has dining out been a sign of patriotism?  Why is buying food from a restaurant more stimulative than buying food from a supermarket? On the plus side of all this is the spectacle of politicians taking the stage with Phoenix favorite son Alice Cooper to make a policy speech.  The only thing that would be better would be for the governor to appear with Phoenix-area resident Jenna Jamison to promote the, uh, stimulative effect of spending an evening at your local strip club.

Postscript - by the way, there is almost no point in challenging the numbers in such a stupid article, but I will bet anything I own that restaurants do not generate 10 percent of Arizona's tax revenues.  Update - In fact, based on this report, restaurants were 9.4% of sales tax collections which in turn are 61% of major state taxes, which makes restaurants and bars about 5.7% of state tax revenue, which I will admit is higher than I would have guessed but still well off the number in the article.

Update #2: OK, I am probably overworking this, but the same report referenced above showed Arizona individual income taxes dropping 32.4% in 2009, presumably due to large drops in income.  However, sales taxes only dropped 13.9% in that period.  And within sales taxes, restaurant and bar sales taxes only dropped 5.8%.  I say only, because except for some stable utility and telecom categories, this is the lowest drop of any business sector subject to sales taxes.   General retail down 12.2%.  Amusements down 8.1%.  Hotel/Motel down 11.9%.  So, in response to the down economy, the state government has thrown their weight behind shifting business to... the single retail category that has been least hurt by the recession.

Via Cafe Hayek:

American Postal Workers Union president William Burrus complains that "It is deeply troubling that Journal editors advocate ending the Postal Service's exclusive right to sort and deliver mail.  The Postal Service must remain a public service if we are to honor our nation's commitment to serve every American community "“ large or small, rich or poor, urban or rural "“ at affordable, uniform rates"

My family has  a ranch that is absolutely in the middle of nowhere in Wyoming - it is 30 minutes by dirt road from a town of 2,000.  The USPS delivers mail to a box 3 miles away from the ranch, and does it 3 days a week.  The USPS will not deliver overnight mail.   UPS delivers 6 days a week right to our door, including overnight mail.

The word "uniform" is the key -- what the USPS government protected monopoly buys us is a massive cross-subsidy, where city dwellers subsidize rural communities, Alaska, and Hawaii.   Further, because the USPS knows that these subsidized routes are cost black holes, they tend to cut back on service to try to save money.  The result is that no one is served well, as is often the case when a large cross-subsidy exists -- cities pay more for their mail, and everyone gets worse service.

Apparently, Massachusetts companies that have bought influence via Ted Kennedy are worried about their future.

Should we just change the name now from "Senate seat" to Duke of Massachusetts now?

With Massachusetts having paid its final respects to Senator Edward M. Kennedy, the politics of succession begins in earnest this week - candidates will emerge, a race will take shape, and the Kennedy clan will have to reveal whether it wants to keep the seat in the family....

"Joe Kennedy, as emotionally drained as he must be, cannot help but be moved by the outpouring of affection and respect that has come from people all over the country in the last several days,'' said Dan Payne, a longtime Democratic media consultant. "I'm not saying he is going to run, but he wouldn't be human and he wouldn't be a Kennedy if he didn't give serious thought to running for the so-called Kennedy seat.''

I am somehow reminded of this story about George Washington, who turned down power after his army had beaten the British in the Revolutionary War.  All of Europe expected him to claim power.  Instead:

Give the last word to Washington's great adversary, King George III. The king asked his American painter, Benjamin West, what Washington would do after winning independence. West replied, "They say he will return to his farm."

"If he does that," the incredulous monarch said, "he will be the greatest man in the world."

That is what was considered greatness in that age - the willingness NOT to pursue power, even when by military success or family name such power could easily be had.  Unfortunately we celebrate just the opposite today, singing eulogies for a man and a family that do nothing but seek power.

I have always wondered - when politicians do something like this, do they actually believe in their hearts they are doing the right thing or do they fully know that they are cynically trying to appear to take action while actually doing absolutely nothing useful. The former may almost be scarier than the latter

OBAMA ASKS FEDERAL WORKERS TO SACRIFICE "” By 0.4 percent! "Citing the current economic recession "” and the Sept. 11 terrorist attacks eight years ago "” President Obama says he will use emergency powers to cut the programmed across-the-board January increase in federal employees' pay from 2.4 percent to 2.0 percent, according to a letter he sent to House Speaker Nancy Pelosi"¦"

I have worked full time for 26 years.  Number of years I have had a programmed, guaranteed annual salary increase to be paid irregardless of my performance:  zero.

John Stossel has a story on errors found in new textbooks in Texas public schools  (the word "we," for example, was misspelled).

One high school textbook misspelled the word "we." When describing an actor's "role" in a play, the book spells it "r-o-l-l."

A 9th grade literature book refers to a poem as a piece of 21st century literature, even though it was written in 1911 and the author died in 1933.

How do you misspell the word "we"? They spelled it, "wee."

The publishing companies said the textbooks were just first drafts that would be "cleaned up" before they make it into classrooms. But that doesn't wash with the TV station:

(P)ublishers said the same thing about math books... in 2007 that were eventually found to contain more than 100,000 mistakes...

Those math books are now in classrooms, and teachers continue to find errors.

Stossel is usually pretty quick to the jugular, but I think he misses the true reason for the screw-up.  In a private market, suppliers must compete on price and performance because they know that companies will buy their product based on those criteria.  In the government market, however, suppliers often can sidestep that whole product quality hassle and shortcut the process via political lobbying.  Get a few key legislators or other government officials on your side, and that textbook order or military toilet seat contract is yours.  Get John Murtha on your side, for example, and you can make money selling the government just about anything, or even nothing.

I think it's pretty clear that like defense contractors, municipal bond underwriters, and other government suppliers, textbooks suppliers have shifted resources from the product to political lobbying.  Makes one pretty excited about prescription drug procurement under government health care, huh?  Do we really want to see arguments for Viagra vs. Cialis played out on the house floor, as we do today for political footballs like the V-22 Osprey?

Over 700 employees of San Francisco's BART transit agency make over $100,000 just in cash wages.  This does not include lucrative benefits that probably add $30,000 or more to total compensation for most employees.  (SF Chron, via Thin Green Line)

The AZ Republic is at it again, cheer-leading any program that spends more taxpayer money, even to the extent of blatant editorializing in a news article.  From an article on cash for clunkers (emphasis added):

The program leveraged $3 billion in clunker rebates into $20 billion-plus in new-car sales. That far exceeded the initial goals for what is arguably the most successful of the government's recent economic-stimulus programs.

Here are the sum total of the sources quoted to reach this conclusion:

• Scott Gruwell, general-sales manager of Courtesy Chevrolet in Phoenix
• U.S. Transportation Secretary Ray LaHood
• Bobbi Sparrow, president of the Arizona Automobile Dealers Association
• Arizona MVD spokesman

So lets see -- the article quoted three groups that receive money from the program plus the administrator of the program.  Can't get more balanced than that.  I am not really good with the pithy 200-word letter to the editor, but I sent this in today:

Max Jarman and Betty Beard wrote that the cash for clunkers program "is arguably the most successful of the government's recent economic-stimulus programs."  Admittedly this is a low bar, but what evidence do they have of "success?"

Car buyers, they argue, really like the program.  Edmunds.com estimates that the government has been paying $3500 to $4500 for vehicles that have a blue book value averaging just under $1500 each.  Of course participants are happy "“ the government is effectively buying dollar bills for three dollars each!  But is this really a reasonable way to spend taxpayer money?

Car dealers also seem to be ecstatic about the program.  I would be too if the government gave my customers $3 billion of other people's money to buy products from my business.  But why are auto dealers more worthy of such largess than appliance dealers, or home builders, or even massage therapists?

Not mentioned in the article are the other 99% of car owners and business that did not participate in the program.  Unseen and unspoken for are the businesses and individuals who are $3 billion poorer because the government has chosen to divert this money to a more politically-favored industry.

Via Chris Edwards at Cato, from recent government data:

From Edmunds:

Consumers who traded in their clunkers through the program also benefitted financially, generally speaking. Based on preliminary data, Edmunds.com estimates that the average cash value of the traded-in clunkers was $1,475. The owners of those vehicles earned rebates for either $3,500 or $4,500, depending on the replacements vehicles they chose. Edmunds.com Senior Analyst David Tompkins, PhD, points out that many will also save money on gas each month, thanks to their more efficient new purchases.

So the government is paying consumers $4500 for assets with a market value of $1,475.  Well of course it's a popular program with its participants -- Obama is buying up dollar bills for $3.

Left undetermined is whether consumers have been enticed into more expensive cars they cannot afford by this $3000 windfall.   It seems like just yesterday when the Obama administration was slamming credit card companies for enticing people into debt with low teaser rates or slamming mortgage companies for enticing people into mortgages they could not afford.

By the way, someone needs to explain the economics behind the theory that lining auto dealers pockets with taxpayer money is stimulative to the economy:

"Our analysts have determined that dealers are enjoying a 20 percent increase in gross profit per sale involving a clunker trade-in since the program launched."

Jesse Jackson, Jr. is freaking brilliant.   When Larry King challenged him (well, not really, King never challenges anyone, particularly on the left) that people see the public option as health care by the Post Office, Jackson replied:

Look at it this way: There's Federal Express, there's UPS, and there's DHL "¦ The public option is a stamp; it's email. And because of the email system, because of the post office, it keeps DHL from charging $100 for an overnight letter, or UPS from charging $100 for an overnight letter.

This is really a weird view of the world, particularly given the history of how Fedex started.  It's amazing, given this logic, that McDonald's doesn't charge $100 for a Big Mac, given that there is no government competitor in that market.

The reality of course is that the relationship works the other way around - Fedex and UPS keep the Post Office in check.  Many of the Post Office's most recent service offerings were copied from UPS and Fedex.  After decades of trying, the USPS still can't emulate these companies' most basic service offerings, such as offering door-to-door tracking of packages.

By the way, here is a graph of the USPS keeping a lid on the industry's costs (via Carpe Diem):

It should be noted that the Post Office is still losing money at the current stamp price.

Also from Carpe Diem is this little service parable

The stamp vending machine at the downtown Flint Post Office no longer sells stamps, it sits there empty. Right next to the dark, empty vending machine for stamps sit two fully operational, bright and shiny vending machines, one for soft drinks and one for snacks, presumably owned and operated by a private, for-profit vending machine company (see photo above).

The Kennedy's have never been shy about using the government as their own personal plaything:

Senator Ted Kennedy, who is gravely ill with brain cancer, has sent a letter to Massachusetts lawmakers requesting a change in the state law that determines how his Senate seat would be filled if it became vacant before his eighth full term ends in 2012. Current law mandates that a special election be held at least 145 days after the seat becomes available. Mr. Kennedy is concerned that such a delay could leave his fellow Democrats in the Senate one vote short of a filibuster-proof majority for months while a special election takes place...

What Mr. Kennedy doesn't volunteer is that he orchestrated the 2004 succession law revision that now requires a special election, and for similarly partisan reasons. John Kerry, the other Senator from the state, was running for President in 2004, and Mr. Kennedy wanted the law changed so the Republican Governor at the time, Mitt Romney, could not name Mr. Kerry's replacement.

"Prodded by a personal appeal from Senator Edward M. Kennedy," reported the Boston Globe in 2004, "Democratic legislative leaders have agreed to take up a stalled bill creating a special election process to replace U.S. Senator John F. Kerry if he wins the presidency."

One of the reasons GM entered bankrupcy was that its slow and ponderous beauracracy couldn't handle the pace of the modern marketplace.  But one thing even than beauracracy could do was produce dealer rebate checks in a timely manner.  When many of your dealers are running on only a thin cash flow margin, even GM knew it was important to get rebate checks to dealers quickly.

So it is a bad sign that the government, who wants to run the auto industry, the banking industry and soon the health care industry, can't seem to process checks in a timely manner:

Some New Mexico auto dealers have backed out of the cash-for-clunkers program and more may do so as the federal government takes its time providing cash reimbursements.

Dealers across the state are owed more than $3.6 million, according to a dealers' group which says that so far Uncle Sam has only written three checks totaling about $14,000....

Dealerships put up the cash for the rebates after being told by the Obama administration they would be paid back within 10 days of the sale.

And here:

Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid....

Schienberg said the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made so far.

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimburse

The problems cited in other analyses are two that I see all the time in dealing with the government:

1. Obsession with minute paperwork errors, and rejection of applications for the smallest errors.  For a variety of reasons, government clerks in this kind of program seldom have the knowledge, the incentives, or even the ability to parse between errors and omissions that matter and errors and omissions that are irrelevant.   In fact, if the same application comes back 5 times, that's just more job security.  I have discussed this a number of times, as state liquor license boards have rejected our applications repeatedly for ridiculously small, meaningless errors (here and here, for example)

   Here is my prediction:  You will soon see someone inside the government blaming the dealers, saying it is all because they are not following the 300-page process correctly or not filling out the forms correctly.

2. Absolute unwillingness to write a check.  Some of you know that I am in the odd position of being a libertarian who does a lot of business with the government, a result of my effort to privatize the operation of public recreation.  I am in the position of sometimes paying the government money (I typically don't get paid to operate a facility, I operate it for profit and pay the government a rent or concession fee) and sometime in the position of getting paid.  The government always demands all of its money owed to it well in advance (think of withholding, where you pay the government your taxes months before the true April 15 deadline).  The government only pays in arrears, and sometimes well in arrears.  Last winter, my funding troubles (when my bank holding my line of credit went bust) were aggravated by the fact that the government took 15 months to pay us $175,000 they owed us, at the same time it demanded an additional $500,000 in advance rent payments on the next year.

By the way, since every post related to the government this month must be related to health care in some way, what they government is doing on cash for clunkers is highly related to the difference in overhead costs between Medicare and private insurance companies.

The cash for clunkers processing is taking a long time in part because the government is worried about fraud and wants to make sure every car it pays out on was really qualifying and destroyed properly.  This takes time and manpower and overhead.  But this is exactly what private medical insurance companies spend their overhead on -- making sure that claims are real and justified and are not padded.  Medicare has lower overhead costs, in part because of government accounting hides some overhead, but in part because Medicare does not do any due diligence before it cuts a check.  It gets a form, it sends out a check.  It does little checking to see if the claim is real.