Coyote Blog

It is not uncommon for certain shady dealing to go on for years, with a small group of critics but never really breaking out into the media.  We skeptics have been criticizing climate scientists for years for various problems with their temperature indexes and historical temperature reconstructions, but never really got traction until the CRU emails were made public, and then there has been a real firestorm of media attention.  Criticisms that never got much traction before are now being actively investigated.

I am hoping that we have a similar situation with Sheriff Joe Arpaio and County Attorney Andrew Thomas.  The story is so wacky it simply defies easy description, but Arpaio and Thomas have been pursuing a number of corruption probes against their bosses in the County government.  All well and good, except for the funny fact that the targets of the probes all seem to be historic critics of Arpaio and Thomas, who have brought out their biggest guns for the one Democrat on the County Council (Arpaio and Thomas are both Republicans).

Both these men have  a history of indifference to civil liberties.   When Arpaio is not busy arresting folks for breathing while Mexican (he once managed to make a crime sweep through the 99% Anglo neighborhood of Fountain Hills and arrest 75% Mexicans), he likes to haul folks off to jail whose only crime is speaking out against the Sheriff .   He arrested (with Thomas's help) newspaper reporters and editors who wrote critically of him.  This is a man who in his paranoia invented an assassination plot (against himself, of course) and got the city to spend $500,000 protecting him.  If his deputies want to see a defense attorney's working papers, they just take them.  If he can't get a judge to release computer records, he has his posse storm into the County computer center and take it over at gunpoint.

Most recently, Thomas and Arpaio wanted a judge who has handed them a number of court losses removed from a certain case.  To make that happen, Arpaio and Thomas bizarrely charged the judge and numerous other county employees in a giant RICO case, a case attorneys are still laughing about because it was so transparent and shoddy.  When that didn't work, he charged the judge with felony bribery, apparently on the interesting theory that getting a new, updated court house building was effectively a bribe to the judges working there.

It gets much weirder even than this, with Arpaio's stealing documents from a defense counsel in court (caught on video) with this same judge holding Arpaio's deputy in contempt for the action and then the sheriff's deputies essentially going on strike at court, refusing to bring in prisoners.

But after years of fawning, positive publicity as "Americas Toughest Sheriff," the dam may finally be breaking.  When the AZ Republic finally covers it, you know the situation has to be bad:

Hundreds of attorneys gathered on the courthouse steps in downtown Phoenix to protest Thomas and Arpaio's public campaign against public corruption.

LOL, I have a picture of these guys with suits and holding placards.  Anyway, this was a real blow:

And, in a scathing letter to The Arizona Republic, the Yavapai County attorney

, who previously handled some of Thomas' cases against county officials, blasted the prosecutor and sheriff as "a threat to the entire criminal-justice system."

Oops, so much for the respect of your peers.  Shelia Polk, the Yavapai County attorney (that is a neighboring county) handled the investigations into some of Arpaio and Thomas's early charges against our County officials, so she knows the details of the story.  And she is a Republican, the same party as Arpaio and Thomas:

In her letter, Polk wrote that although Maricopa County isn't her jurisdiction, she can't sit by and watch the abuses from a distance anymore.

"I am conservative and passionately believe in limited government, not the totalitarianism that is spreading before my eyes," she wrote. "The actions of Arpaio and Thomas are a disservice to the hundreds of dedicated men and women who work in their offices and a threat to the entire criminal-justice system."

Polk had stayed out of the legal drama in Maricopa County, and her remarks offer the first insight from an outside law-enforcement official who has some knowledge of the cases Arpaio and Thomas have lodged against county officials.

Arpaio's response was predictable:

Hendershott spoke on behalf of Arpaio. Hendershott said that Polk's office repeatedly failed to issue subpoenas the Sheriff's Office needed.

"It seemed clear to us that this case was being deliberately stalled," he said. "We basically let her know that her work product was ineffective."

This is a constant refrain from the sheriff - anyone who seeks to impose any limit on his power is therefore evil and conspiring to thwart his will.  It comes up time and time again - he simply does not react well when denied a subpoena, or a search warrant, or access to certain information.  If they are not rubber stamping Sheriff Joe's requests, then they must be corrupt.  If he had been honest, his RICO charges would have simply read "they didn't give me what I want."  But there is a reason these third parties are part of the process, and you can see it in Polk's letter:

Polk said she worked with the Sheriff's Office on the cases for the next six months, then returned the cases to the Maricopa County Attorney's Office.

In Polk's letter, she wrote that she was "happy to remove myself from the cases and from contact with Sheriff Arpaio. My discomfort grew daily and my role in restraining potential abuses of power increasingly more difficult."

Certainly one driver of statism is arrogance -- the technocratic belief that one's intellectual capacity and decision-making ability is superior to that of the masses, and therefore should be substituted (via authoritarian control) for that of the masses.  This was clearly the driver of statism in the early to mid-century.  Its what caused FDR to be so enamored of Mussolini-stype fascism.  A few smart people making the trains run on time.

But I am starting to wonder if there isn't a second driver of statism that comes from the opposite direction -- projecting one's own weaknesses on the rest of humanity and, assuming they share these weaknesses, using this assumption as a reason for mommy-state controls.  This latter reasoning came through in this article summary in my feed reader from the Arizona Republic:

Lamenting his first teenage cigarette, President Barack Obama ruefully admitted on Monday that he's spent his adult life fighting the habit. Then he signed the nation's toughest anti-smoking law, aiming to keep thousands of other teens from getting hooked.

Via the Arizona Republic:

"Non-native turtles removed from zoo"

This story comes from the Arizona Republic as part of the general effort to maintain the ban on payday loan companies passed earlier this year (their is a proposition on the ballot in November to overturn the ban).

At least 5 percent of last year's freshmen at the University of Arizona obtained a payday loan, a figure the surveyor described as "very alarming."

Arizona's Norton School of Family and Consumer Sciences conducted
the survey, which measured the financial habits of 2,172 freshmen -
about a third of the class - who enrolled in fall 2007.

Student use of payday loans
more than doubled based on a survey taken a year ago that included
freshmen through seniors, said professor Soyeon Shim, the group's
director.

"As consumers, students shouldn't be using payday loans as a resort to deal with financial stress," Shim said.

I wouldn't really recommend that students use this expensive form of ready cash, but I can't say I am particularly alarmed.  How can any of us know what pressures they are under.  In most circumstances, paying a 30% interest rate seems too high.  But I know, from personal experience, there are times when short term liquidity is so valuable you might pay anything for it  (just look - the American taxpayers are paying about a trillion dollars this year just for short-term liquidity).

In fact, if students have a bad experience, it's probably better to learn a $100 life lesson in college rather than a $500,000 life lesson later flipping condos on interest-only loans.  I personally had my own caveat emptor eye-opener with Columbia House Records in college.  Nothing like getting stuck with a couple of over-priced America albums to teach financial horse sense.  Muskrat Love... aaaarrrggghhh!

Anyway, the effort to ban payday loans altogether is one of those elitist, snobby, holier-than-thou, we're smarter than you unwashed masses issues.  Middle class homeowners who are upside down in their mortgages are not calling for inexpensive mortgages to be banned, they just want a government bailout.  The government may spend a trillion dollars in the end supporting the mortgage market.  But if poor people pay a high fee for a $100 loan, we have to ban the whole industry. 

The fact is that there is always a demand for ready cash at high interest rates, and if you drive it under ground, people just go to Tony Soprano instead. 

Oh, but you are not for banning payday loans, you just think the interest rates are too high, and that what is needed is government regulation of the rates?  Uh, OK, I'm sure that will go well.  Past government efforts to reduce the interest rate premium for risk have worked out really well *cough* mortgages *cough*. 

But, if you are still thinking that you are much smarter in money management than people who go to payday loan stores and you really want to use the coercive power of government to force poor people to make the same decisions you would, here's this:

However, for those who think they are ever so much smarter than payday
loan customers, who are charged a lot of money for small liquidity
boosts, consider this:  Let's say you take out $40 each week from an
ATM to keep you liquid and that the ATM fee is $1.50.  You are
therefore spending $1.50 or 3.75% for a one week liquidity boost of
$40, which you must again refresh next week.  Annualized, you are
effectively paying 195% to get liquid with your own money.  For this kind of vig, at least payday loan customers are getting the use of someone else's money.

The Arizona Republic had another of its cheerleading articles on light rail this morning.  In it was a chart that, contrary to the intent of the article, summarized exactly why Phoenix light rail is doomed.  Below is a chart of the employment density (top chart) and population density (bottom chart) at each stop along the first rail route.  Note that this line goes through what passes for the central business district of Phoenix and the oldest parts of town, so it was chosen to run through the highest density areas - all future extensions will likely have lower numbers.  Unfortunately, they do not reproduce this chart online so here is a scan:

Take the population density chart.  As a benchmark, lets take Boston.  The average density for all of the city of Boston is 12,199 people per square mile.  Phoenix's light rail line cut through the highest density areas of town has only one stop where density reaches this level, and most stops are less than half this density.  And this is against Boston's average, not against the density along its rail routes which are likely much higher than the average.

Rail makes zero sense in a city like Phoenix.  All this will do is create a financial black hole into which we shift all of our bus money, so the city will inevitably end up with a worse transportation system, not a better one.  Cities that build light rail almost always experience a reduction in total transit use (even the great God of planners Portland) for just this reason - budgets are limited, so since rail costs so much more per passenger, other transit is cut back.   But the pictures of the train will look pretty in the visitor's guide.

Postscript: Phoenix's overall average density is around 2,500 per square mile.  Assuming that the 12,000 in the chart above is one of the densest areas of Phoenix, this gives a ratio of about 5:1 between peak and average density.  This same ratio in Boston would imply peak density areas of 60,000 per square mile.  This may be high, but indicates how much higher route densities on Boston rail should be.  Oh, and by the way, Boston rail is losing a ton of money.

Other city densities here from 1990.  People think of LA as spread out, but LA has a density over three times higher than Phoenix!

Our light rail cheerleader in chief, the Arizona Republic, laments that if Proposition 203 does not make it to the ballot this November, "light rail [in Phoenix & Maricopa County] will lose a chance to win hundreds of millions of dollars for the system's expansion".

Well, let's think about that.  The proposition would raise $42.6 billion statewide through a 1% point increase in the state sales tax rate.  But here's the rub:  Phoenix and Maricopa County constitute a huge part of the state's population, and presumably, retail spending.  In fact, checking the most recent Arizona state tax facts (for May, 2008), we find that Maricopa County pays about 64% of the state sales tax.  That means that approximately $27.3 Billion of that $42.6 billion in new taxes will be paid right here in the Phoenix metropolitan area. 

Good grief.  So, with a tax increase of $27.3 billion in Phoenix, we can get $0.6 billion back from the state for our light rail boondoggle.  Gee, thanks.  That hardly sounds like my definition of "winning" money.

By the way, this was hilarious:

Ziemba believes that Proposition 203 would have an "extremely significant" impact on light rail expansion if it becomes law.

"This would be the funding to really take our light rail system to
the next level, to expand it to more roots, to connect it to more of
the county," he said. "It will provide the resources to connect the
light rail system in a meaningful way throughout Maricopa County."

Why is that so funny?  Well, because the next $306 million in light rail spending is expected to get us 3.2 whole miles of track.  So at this rate, this $27.3 billion tax increase would net us $600 million which would, before inevitable cost overruns, get us at most 6.5 miles of track.  Wow, that sure sounds meaninful to me.

For a while, I have been writing that traditional silicon/germanium based solar-electric panels are not yet economic as an electricity source.

I have hopes for other technologies eventually making direct solar conversion to electricity.  However, there seems to be some activity in solar concentrating plants, where solar energy is reflected onto tubes to boil water and drive traditional steam turbines to generate electricity.  Fortune has an article on one such plant opening recently:

The completed solar arrays will be trucked to California where Ausra
is building a 177-megawatt solar power station for utility PG&E (PCG)  on 640 acres of agricultural land in San Luis Obispo County. (To see a video of the robots in action, click here.)
The arrays focus sunlight on water-filled tubes to create steam to
drive a turbine. Ausra manufacturing exec David McKay points to where
standard-issue boiler pipe will be fed into a machine and treated with
a proprietary coating that transforms it into a solar receiver.

I would love for this to work, but the article goes on to say that this approach still requires federal tax subsidies to compete with other electricity sources.  I am not very familiar with the economics of such plants.  Does anyone have a link or source that delves into the economics.  I am increasingly frustrated of late with alternate energy articles that fail to give any of the relevent economic info.  For example, I read an article in the Arizona Republic (sorry, lost the link) about Arizona's first wind project, but I could not get a sense from the article if the power was being purchased at market rates or some special inflated rate.

I thought this was kind of funny, from the false hysteria department.  The Arizona Republic begins ominously:

If you're already mad about gas prices, prepare to get madder.  Besides paying prices at the pump that were unthinkable a few months
ago, many consumers also are getting ripped off by the pump itself.

Uh, Oh.  I can see it coming.  The AZ Republic has smoked out more evil doings from the oil industry.  I shudder to think what horrors await.

About 9 percent, or about 2,000, of the 20,400 gas pumps inspected this
fiscal year by the Arizona Department of Weights and Measures since
July 1, 2007, failed to pass muster.

Oh my freaking God!  Every fill up, I have a one in 11 chance of my gas being measured wrong.  I just bet those oil companies are coming out in the night to tweak the pump so I get hosed. 

Half of those were malfunctioning to the detriment of customers.

See!  There you go!  Half are to the detriment of customers! 

Oh.  Wait a minute.  Doesn't that mean the other half are to the benefit of customers?  Why would those oil guys be doing that?  This sure isn't a bunch of very smart conspirators.  Could it be that this is just the result of random drift in a measurement device, with the direction of drift equally distributed between "reads high" and "reads low"?

As it turns out, I worked for a very large flow measurement instrument maker for several years.  For a variety of reasons, flow measurement devices can drift or can be mis-calibrated.  To fail the state standard, the meter has to be off about 2.5%, which is about 6 tablespoons to the gallon.  State governments have taken on the task of making sure commercial weights and measures are accurate, and though I think this could be done privately, I don't find it a terribly offensive government task.  Having taken this task on, it is reasonable to question whether it is doing its oversight job well.  But let's not try to turn this into a consumer nightmare by only discussing one half of the normal distribution of outcomes.

Post title stolen from an old Dilbert cartoon.

Frequent readers will know that I have little love for our self-aggrandizing, civil rights violating Sheriff Joe Arpaio.  A recent Arizona Republic article wrote:

A veteran Republican lawmaker wants to know why a high-level chief for
the Maricopa County Sheriff has made recent trips to China.

Because China is Sheriff Joe's role model!  It's telling that our sheriff sends his deputies on fact-finding missions to Latin American countries and China to learn new policing techniques.  Also, the article gets into some of the increasingly weird dealings in the Sheriff Joe's infatuation with facial recognition software.

The Arizona Republic has taken to embedding the code for their on-site advertising in the middle of sentences, sometimes in between two letters of a word.  This means that sometimes when I copy snippets from their web site, I end up with popups and spam on the blog, particularly since this stuff does not show up on the post preview, only when it goes to the site.  Sorry.

The Arizona Republic the other day had this headline which certainly caught me attention:

Report: 35% of Arizona jobs  'bad'

I can sympathize.  I have had jobs that were boring and unrewarding.  My last couple of Fortune 50 corporate jobs, while nominally cool on paper, were hugely frustrating.  But it seems this particular "report" had different criteria for "bad" jobs:

The new report calls 35 percent of jobs "bad" because they pay less
than $17 an hour, or $34,000 a year, and offer no insurance or
retirement plans. In a typical state, only 30 percent of the jobs are
considered "bad."

Here is the heart of these studies:  A bunch of middle class people sit around and try to decide what jobs they would be willing to accept and which ones they would not.  Any job that they would not accept is a "bad" job, despite the fact that $12 or $14 an hour might be very good pay for someone with no skills, despite the fact that it makes no consideration of a person's circumstances (e.g. single, married, 2nd job, teenager, etc), and despite the fact that $34,000 would probably put a person in the top 20th  percentile of global wages.  I made a similar point vis a vis jobs in the third world.

Just so I can't be accused of cherry-picking, I will use my own company as an example.  We have a about 80 employees in Arizona, about 70 of which are paid less than $10 an hour and none of whom have a retirement plan or insurance.  All of my jobs in Arizona are included in their count of "bad jobs."  And you know what?  We have a waiting list of over 200 names of people who would take another of these jobs tomorrow if I had one to offer.  That's because my employees are not middle-class academics.   Most are older people who already have a health plan, who don't need a retirement plan (because they have already retired) and who just want a fun job in a nice location where they can live in their RV. 

This has to be one of the most utterly pointless studies of all time.  Sure, $14 an hour would probably suck as a 45-year-old college grad with 2 kids.  But it would be a windfall to a 16-year-old new immigrant with few skills and no English.  The only thing that would be more pointless would be to try to compare states - which they also do:

About 22 percent of Arizona jobs are considered "good" because they pay
at least $17 and offer benefits. That is less than the typical state,
which has 25 percent "good" jobs. The rest of the jobs are in between
because they offer some benefits.

Since cost of living is totally comparable between Phoenix and Manhattan, then using a fixed wage rate to compare states makes complete sense.  By the way, by the study's definition, my job, which is usually awesome, is not "good" because I have no health plan.  In fact, in this study, a $40,000 job with a health plan is ranked as good while a $400,000 job with no health plan is not good.  Yeah, that makes sense.

Chad Graham of the Arizona Republic writes an article this week that begins with this headline:

Phoenix can learn economically from robust Seattle and Austin

Already, my BS antenna are deployed.  Why?  I don't know anything about Mr. Graham, but nearly every 20- or 30-something journalist would like all the world to be hip and freaky and trendy and cool like Seattle or Austin (or Boulder or San Francisco).  So they have a natural predisposition to writing a story and interpreting facts to say that Phoenix (or whatever uncool city they hail from) should do everything it can to emulate Seattle or Portland or whatever is the hip city of the moment. 

I have lived in Phoenix and Seattle and Boulder, and have done business in Portland and Austin.  And if you want to find a really great music club, Austin would be your place.  And if you are a really rich guy who wants a unique lake front home and a dock for his floatplane, Seattle would be the pick.  But if you were a middle class family trying to get the most home for your money, you would take Phoenix all the way.  And if you wanted to start a real business that makes stuff, you would be insane to do it in any of these cities except Phoenix (and perhaps Austin).  Portland and Seattle and Boulder and (more recently) Austin are what one might call rich snob - poor snob towns.  They appeal to the millionaire with the fractional ownership jet and the pierced and tattooed slacker club goer.  Which is fine, but does every city really need to be like them?

Unlike the Valley, some parts of the U.S. such as Seattle and Austin
have been only slightly affected by the national economic slowdown.

Neither area has experienced the Valley's level of falling home prices, increased foreclosure rates nor its slowed job growth.

Those regions are places that Phoenix could learn from as it charts
a future based less on housing and growth and more on competing in the
global economy.

OK, lets start with the home thing, since the article focuses A LOT on housing.  I am willing to concede that in some recent period Austin and Seattle had less of a home price drop than Phoenix.  Ignoring for a moment the absurdity of extrapolating 30 year trends from 6-12 months of data, we should look structurally at these housing markets.  It turns out that Seattle, for example, has MUCH higher median home prices than Phoenix, in large part due to structural regulatory factors that I would presume the author would like Phoenix to emulate. 

As a result, the median home price in Seattle is about $450,000 while the median in Phoenix is closer to $275,000.  In fact, the Seattle median is very close to the Phoenix 75th percentile.  [note figures do not match those in article - I could not find any two median home price numbers that were the same for a market] One comment on Seattle housing was this:

The pattern is very strong: In Seattle you have affluent, largely
single people chasing a small supply of urban housing. The result is
small household size, an exodus of families to the suburbs, and very
high housing prices in the city.

Is this really what Phoenix should emulate, just because our home prices dropped more over a 6 month period?

One year ago, the Valley's job growth ranked No. 7 among
metropolitan markets with more than 1 million workers, according to the
latest Blue Chip Job Growth Update released by the W.P. Carey School of
Business at Arizona State University.

It now ranks No. 20, while Seattle is  No. 2.

In job markets with less than 1 million workers, Austin ranks  No. 14.

So, until recently, Phoenix led both cities in job growth.  In the last year, we have fallen behind.  Can anyone on the planet tell me why the last year of data is more relevant than the previous five, or ten, when Phoenix dusted these markets?  One year of downturn and suddenly Phoenix's economy needs to be restructured by some massive government 5-year plan?

But here is the really funny part.  Let's take Seattle, the economic juggernaut with which the author is so enamored.  In 1960, Seattle had a population of about 550,000 people.  In 2000, Seattle had a population of about.... 550,000.  In the same time period Phoenix grew from 726,000 to 3.2 million.  Wow, that Seattle is a growth juggernaut.  But it is hard to get apples and oranges on MSA's and such, so here is data from a single source:  From 1990-2000, the Austin MSA added 400,000 people, Seattle MSA added 382,000 people and Phoenix added 1.01 million, more than the other two combined.  Presumably, most of these folks found work, so where are all the jobs being added?

In Phoenix, "housing-related employment is falling fast, and the
impact on the economy is extreme since the industry comprises over 15
percent of total employment . . . compared to 10 percent nationwide,"
an April Moody's Economy.com report said.

This is hilarious.  We happen to be in a housing market downturn, so Phoenix is doomed because it is overweighted towards home construction.  But did anyone visit Seattle or Austin in 2001/2002 after the tech bubble crash?  It was a bloodbath, far worse than what Phoenix is experiencing today.  This kind of analysis is so short-sighted as to be absurd. 

Maricopa County's average weekly wages increased 3.8 percent to $822
in the third quarter of 2007, according to the latest numbers available
from the U.S. Department of Labor.

Weekly wages in King County, home to Seattle, rose 8 percent to
$1,129. Wages in Travis County, home to Austin, rose to $911, a 2.7
percent jump.

Meanwhile, Arizona's average per person income ($33,029) grew by the
smallest percentage among states in 2007, according to the U.S. Bureau
of Economic Analysis.

One word for you:  immigration.  Arizona has gotten hundreds of thousands of new immigrants with relatively low skills, so they come in at the bottom of the income scale and drive median wages down.  Seattle and Austin immigration, to the extent they have it, are high-skilled and highly paid.  Does every city have to be a high-income yuppie white-Asian enclave like Seattle?  I like Arizona and its Hispanic influences, even if this immigration means the governor can't puff her chest out at the governors' conference over average wages.

The two cities have a greater percentage of employment in tech jobs,
with 9.2 percent in Austin and 8.8 in Seattle compared with 4.6 percent
in Phoenix.

Sorry, but I have never thought it a goal of government to subsidize and maximize "tech jobs."  The other 95.4% of us in Phoenix without a job statistically categorized by the government as a tech job are happy not to be subsidizing the other 4.6%.  This is the kind of effort that does nothing to help the average person, who will never have a tech job, but makes government officials feel really good about themselves.  Another way of putting it:  The author is suggesting the government single-mindedly focus on subsidizing a class of jobs that 90+% of the people in all three cities do not hold.

Postscript: For those of you who want to laugh yourself silly, you really need to read the "vision" in the sidebar of this article.  It is the most incredible collection of politically correct notions without any relationship to real value creation that I have ever seen.  I can't really do it justice, but here are some highlights:

2010

The latest housing bust finally convinces the Arizona Legislature to
fund an aggressive international-economic-development program that
invests in science, engineering, technology and higher education.

Incentives draw nutraceutical firms, which use food substances to make
products that provide health benefits, such as lycopene.
Green-technology firms partner with universities to launch companies
that turn a profit...

2035

High-paying technology jobs are clustered in three major areas from
Prescott to Phoenix to Tucson. The economy boasts an $800 billion
nutraceutical industry and the world's largest solar facility with
10,000 acres of sun power.

I bet they include no offset in their study for lost growth due to higher taxes to fund this.  And our city of 5-10 million people is going to build its economy on nutraceuticals?  We're going to have a vitamin water business that, at $800 billion, is 6% the current size of the entire US economy?  I sure hope some of the business school students who wrote this either wise up or go into academics, because if they try to walk in to a real corporate board room with this stuff they are going to get skewered.

From the Arizona Republic, presented without comment:

Phoenix fire vehicles, including some hazardous-materials units,
responded to a small mercury spill at Mountain Pointe High School
Tuesday afternoon. No one "complained of medical problems" or was
transported to a hospital, said Mark Faulkner, Phoenix Fire Department
division chief for the public affairs.

At about 1:30 p.m. a call came to the Fire Department about a
"dime-size spill of mercury" on the campus at 4201 E. Knox Road in
Ahwatukee Foothills, Faulkner said.

The mercury was in a science laboratory but how it spilled is unknown.
It could have been part of an experiment or possibly a thermometer
cracked, Faulkner said.

In this post, I called bullsh*t on this economic contribution number:

A study released today by the Arizona Super Bowl Host Committee
estimates professional football's championship game at University of
Phoenix Stadium in Glendale generated an economic impact of $500.6
million for the state.

I used some quick reality checks to show that the likelihood that this was a truly incremental economic contribution number was zero.  Now, Arizona has released its February sales tax numbers (the data I suggested was the best way to try to do this analysis).  As I suspected the numbers are not even close.  Let's start with this report from the Arizona Republic:

Sales-tax collections at hotels and motels showed the strongest gains
among tourism-related businesses as thousands of out-of-town visitors
booked rooms for the National Football League's Feb. 3 championship
game at University of Phoenix Stadium in Glendale.

The Arizona Department of Revenue said February sales-tax collections
jumped 12.4 percent at hotels and motels. It was the lodging industry's
best showing, as measured by sales-tax collections, since January 2007.

Bars and restaurants also rebounded from two consecutive monthly declines to post a 4 percent gain in tax collections.

Despite the improved showing in those tourism-related categories,
the state's overall collections continued a downward trend, punctuated
by slumping retail sales and the real-estate industry's decline.
Arizona's total tax collections for the month checked in at $444.1
million, a decline of nearly 1.2 percent from the month before.

Well, that sure doesn't sound like $500 millions worth.  Let's look at the hotel number.  From this Arizona DOR source document (Feb 2008 Tax Facts), the taxable hotel/motel sales in February were about $215 million.  A 12.4% jump, if you attributed it all to the Superbowl, would thus be $27 million.  Similarly, a 4% jump in restaurant would be $33 million.  As I predicted, these don't even add up to $50 million and it is unlikely all of this is due to the Superbowl. 

[The above is still substantially correct.  What follows is corrected in the update] But wait, there's more!  I then I started looking closer at the February tax report.  I don't know what copy the reporter was using [probably one "specially annotated" by the Sports Authority], but my copy shows hotel/motel revenues in Arizona going down by 9% in February 2008 vs. Feb 2007.  It shows restaurants and bars going down by 2%. I checked the Feb 2007 report, just to make sure, and sure enough the 2007 numbers were much higher, despite one more day in February in 2008!  One can find ZERO incremental impact from the Superbowl.

Now these are statewide numbers, and it is possible the author of the article mixed in Maricopa County numbers and that is where the increases were seen.  If true, though, this means the dollar increase was much less, because we are using a smaller base (ie just one county, though a very large one).  And it means that the County numbers may be misleading, because the Phoenix area just cannibalized sales from the rest of Arizona, which was way down.  Either way, it means the $500 million number the Republic keeps pushing is total BS  (incredibly, the author reprints the $500 million number in his article, as if it were consistent with the sales tax data he is quoting.)

Update:  OK, I was right and wrong.  Apparently, when the state of Arizona says "February 2008 Taxable Sales" they mean Taxable sales on reports that they receive in February.  Because reports come in after the tax month is closed, by February 2008 taxable sales they actually mean sales that occurred in January, 2008.  Many apologies to Arizona Republic writer Ken Alltucker who was kind enough to set me straight.  The Arizona DOR report for March 2008 sales, which we now know is actually February 2008 sales, has not been posted online but I am willing to take his word on it.  This is not the first time, alas, that I have been fooled by the fact that the government uses cash rather than accrual accounting.

The wasted effort I expended on the February report which is actually January is not wasted:  From it, we do know that from studying what is actually the sales for January, the Superbowl had no discernible effect on hotel or restaurant revenues in the weeks leading up to the game, since these numbers were down substantially.  I am sure that you will find a few people singing the praises of the Superbowl.  I have not doubt that a few exclusive Scottsdale clubs benefited from having a series of celebrity parties during the run-up to the Superbowl, but overall the impact is low for exactly the reason I already stated:  Superbowl week, due to the nice weather and the Phoenix Open golf tournament, is already a big one for Phoenix area hotels and restaurants.

The point still stands.  I got diverted off on the report discrepancy, but using what I now understand to be correct numbers in the article shows that the ASU B-school study seems to have exaggerated the Superbowl's financial impact by as much as an order of magnitude.

So maybe in the future I will show more respect for reporters who make dumb numerical errors.  Or maybe I won't, since I don't get paid to do this nor do I have 2 or 3 layers of editors looking over my shoulder.

Apparently, the Phoenix Lights may have returned last night:

Arizona Republic reporter Anne Ryman, who lives in Deer Valley,
reported seeing four lights in a square shape that eventually became a
triangular shape. The lights were moving to the east and they
disappeared one by one. She said the lights were visible for about 13
minutes at about 8 p.m...

Ian Gregor, a spokesman for the Federal Aviation Administration said
that air traffic controllers at Sky Harbor Airport also witnessed the
lights, but they do not know the cause.

The incident is similar to the "Phoenix Lights" seen on March 13, 1997.
Thousands of residents reported seeing a mile-wide, v-shaped formation
of lights over the Valley. In that case the lights appeared about 7:30
p.m. and lasted until 10:30 p.m.

My friend Brink helpfully sent me an email this morning saying, "The UFOnauts are coming.  Watch out for anal probes."   Always good advice, I guess.

Huge alarm bells are going off as I read this headline in the Arizona Republic, whose motto should be "Happy to credulously print any crazy number your lobbying group puts in a press release."  In this case, the headline reads:

Ariz. economy reaped $500M from Super Bowl

Uh, sure.  Right.  Bet that is a quality number.  Lets first vet the source.  Who provided the paper with this number?

A study released today by the Arizona Super Bowl Host Committee
estimates professional football's championship game at University of
Phoenix Stadium in Glendale generated an economic impact of $500.6
million for the state.

Oh, I see.  Certainly a disinterested party.  And how was this number arrived at?

Arizona State University's W.P. Carey School of Business
completed the economic-impact report based on surveys of more than
1,500 visitors who came to the Valley to attend the game or take part
in festivities.

The survey revealed that visitors stayed in Arizona for an average of
3.9 nights and spent an average of $617 each day on hotels, food,
alcohol, transportation, recreation, shopping and other categories. The
report also calculated the amount that organizations dropped during
Super Bowl week.

Well, its good to see the business school at America's #1 party college on the case.  I would have thought this would be a very challenging study to conduct.  In my naiveté, I might have assumed that these Superbowl visitors might have displaced other potential visitors who would have been there anyway.  I would have fixated on the fact that Superbowl week is also Phoenix Open week and, given the beautiful winter weather here, one of the prime tourist weeks of the year even without the Superbowl.  I might have wondered how hotel stays during a week when most local resort hotels are full anyway could have been credited to the Superbowl, particularly when many locals left town to avoid the scene.   I might have been worried that I was not counting truly incremental revenues, but the folks in the business school at the university with Americas hottest coeds must be smarter than I am.

So apparently, these geniuses have found a way to assume that 100% of this $617 per day times 3.9 days is incremental and that there is no substitution effect.  However, they have also managed to somehow assume that University of Phoenix Stadium is even larger than I thought.  Because using these numbers, the only way to get to $500 million is if there were nearly 210,000 visitors.  Wow.  This does not even include the thousands of us from Phoenix who were also in the stadium. 

Look, the way to do this study is simple.  You look at sales tax receipts in Maricopa county over the period of January 2007-February 2008.  You calculate an underlying growth rate.  Then you compare the sales tax receipts for the Superbowl months (Jan-Feb 2008) with the same months a year previously, and see how much growth there is, if any, above the underlying growth rate.  I will tell you the answer right now:  It ain't anywhere close to $500 million.  I will eat my hat if its over $50 million.

Here is a reality check:  In 2004 the entire retail trade, from restaurants to stores to hotels, was $16.4 billion for all of Arizona.  This is $315 million per week.  Basically the study is saying that the entire retail trade for the whole state of Arizona was more than doubled in Superbowl week. 

Bullshit.

Here is today's lament in the Arizona Republic:

Government plans to more than double the size of Petrified Forest
National Park appear to be in jeopardy because Congress has failed to
come up with the cash to buy surrounding properties.

The upshot: An irreplaceable treasure of dinosaur bones and Indian
ruins may be lost as ranchers sell off their properties for subdivision
and development.

And Petrified Forest is not alone. A study to be released April 8 by
the non-profit National Parks Conservation Association, says 56 federal
historic and recreation sites "could lose
land inside their borders to developers this year." Others on the list
range from Gettysburg National Military Park near Philadelphia to
Golden Gate National Recreation Area in San Francisco.

Here is an idea:  All you folks who are worried about these "treasures" can pool your money and buy the properties yourselves.  That way you can either take charge of the preservations or donate the land to the government to do so.  This is how many public parks came into being in the first place, from private donations.

Of course, this was back in the days when environmental groups actually spent their money on the environment.  Today, they spend their money instead on lobbying.  The more modern approach is not to spend your own money on the environment, but to lobby the government to force other people to spend their money on the environment.  That is why people have apparently donated $300 million dollars (!) to Al Gore to create an advertising campaign dedicated to trying to spur government action on CO2.  Rather than donating money to help solve the problem, people now donate money to push for government coercion.

Besides representing the modern approach to environmentalism  (ie don't work the problem, just lobby the government to force other people to work the problem), Gore's campaign also represents a new frontier in rent-seeking.  He has managed to get people to donate $300 million dollars to advocate government action that will likely have very little actual impact on the climate, but may have a huge impact on Al Gore's managed $5 billion investment fund.  Congrats, Al.  Even the kings of rent-seeking at ADM would not have had the cojones to ask folks to donate to a charitable advertising fund to support their subsidy requests.

From the Arizona Republic:

Three day laborers filed a lawsuit Tuesday that seeks to overturn a
suburb's law prohibiting people standing on public streets from
soliciting employment from occupants of cars.

The federal lawsuit alleges Cave Creek's law passed is unconstitutional
because it restricts the free speech rights of people trying to find
work as day laborers.

"Cave Creek does not have the right to pick and choose who has free
speech rights," said Monica Ramirez, an attorney for the American Civil
Liberties Union, one of the group's representing the day laborers. "The
town cannot bar people from peaceably standing in public areas and
expressing their availability to work."

The stated reason for the law is this, but don't believe it:

Mayor Vincent Francia said the law was a response to concerns raised by
residents over traffic being impeded by people congregating on street
corners.

If you followed the genesis of this law, it has less than zero to do with traffic.  It was crafted as a way to prevent people of Mexican birth, with or without the proper papers from the US government, from seeking work in Cave Creek.  Which explains why sheriff Joe Arpaio is so eager to help enforce the law, and why, by some statistical fluke, everyone arrested under the law seems to be of Mexican Latin descent  (the three laborers filing the suit are Mexican and Guatemalan and are in this country legally).

I am happy to see this suit get filed under whatever auspices that it can, and have in the past supported using the first amendment to protect free commerce.  Further, I am thrilled to see the ACLU, given its Stalinist origins, for once actively support the right to publicly advertise and conduct commerce.  However, it is sad to me that Thomas Jefferson and company did not think it necesary to enshrine the right to free commerce as an protected right up there with speech and association.

One might argue that the enumerated power concept and the 9th amendment should be protection enough, but obviously Jefferson did not think so or he would not have pushed for the Bill of Rights.   And saying the following may just prove that I am not a Constitutional expert, but it strikes me that another problem with the original Constitution that probably wasn't fixable at the time was the fact that the Bill of Rights did not originally restrain the states, only the Federal government.  Only with the beat-down of states rights concepts in the Civil War and the passage and later interpretation of the 14th amendment did the Supreme Court begin to apply the Bill of Rights to states and municipalities as well.  It is good that they have done so, but these protections enforced on states only tend to be the enumerated protections of the Bill of Rights.  In fact, in this context, the 9th is meaningless because it reserves unenumerated powers to the people or the states, so it contributes nothing to reigning in municipalities, only the Feds. 

All that being said, it should would have been nice to have three extra words such as "or conduct commerce" inserted after assembly:

Congress shall make no law respecting an establishment of
religion, or prohibiting the free exercise thereof; or abridging the
freedom of speech, or of the press; or the right of the people
peaceably to assemble [or conduct commerce], and to petition the Government for a redress of
grievances.

The Arizona Republic this morning had some goofy headline in their print edition that said something like "How should you spend your $800 tax rebate?"  Far be it for me to presume to tell people how to spend their own money (what do I look like, a Congressman?) but here is a bit of advice:  Save it.  Because this is not a grant, it is a loan.

All of these rebates will be paid for with additional deficit spending.  This means that everyone will eventually pay for their rebate in the form of a) higher future taxes; b) higher future prices due to inflation; or c) increased job insecurity and/or lower future earnings due to reduced output in the economy; or d) all of the above.

It HAS to be this way.  Unlike private wealth creation, the government can't get wealth from nowhere.

The Arizona Republic had a stealth hit piece on skeptics in the paper today and, unfortunately, I inadvertently helped.  My kids woke me up at 7:00 this morning (Yuk!) to tell me I was on the front page of the Arizona Republic.  I was quoted a couple of times in an article on climate change skeptics.   I have a couple of thoughts about an article that really has me depressed today.  If you want to know what I really think about climate, see my book and in my movie (both free online).

• After interviews, I am always surprised at what the writers chose to quote, and this article is no exception. 
• I spent most of the article trying to explain this simple data exercise, but I guess newspapers today are science-phobic and would rather write he-said-she-said articles than actually get into the numbers.  Unfortunately, the article leaves the impressions that we skeptics have problems with catastrophic global warming theory  "just because."
• The article is not about the skeptics' position, because it is not really stated.  In fact, more space is spent on refuting skeptics than is even given to skeptics themselves.  Here is the best test:  The skeptic's position would have been better served by not publishing this mess at all.
• Almost my entire discussion with the reporter was about the forecasts.  I said man is causing some warming, but there are simple tests to show it likely won't be catastrophic.  I even said that it was the catastrophists tactic not to argue this point, but to shift the debate to whether warming exists at all, where they have a much stronger argument. Despite this whole discussion with the reporter, the reporter allowed the catastrophists to shift the debate again.  They want to argue whether things are warmer, where they are on strong ground, and not about how much it will warming the future and whether this will justify massive government intervention, where they are on weak ground.

This article really frustrates me, and may pretty much spell the end for my ever giving an interview on the subject again (I will do a podcast on Monday, which I will link soon, but that is different because they can't edit me).  Despite it being an article about skeptics, the catastrophists are the only one that get any empirical evidence whatsoever into the article (however lame it may be).  This really ticked me off in particular:  I spent an hour giving specific empirical reasons why there were problems with forecasts and the theory.  The reporter then just printed a few quotes from me that made me look like an uninformed idiot, saying "just because."  Then they print this:

"There is clearly a group of thought that says because we're not seeing
debate now, it never happened in the scientific community," Huxman
said. "That is simply wrong. It did happen, and it's over. The debate
now is over the idiosyncrasies, the internal workings."

Incredibly, they also credulously reprint the absurd Newsweek ad hominem attacks on skeptics. 

What also got my attention was the companion article on an ASU professor who is a climate skeptic.  Incredibly, in the whole article, not one sentence is dedicated to explaining why the professor is a skeptic.  What is the empirical evidence he relies on, or the analysis he finds most compelling?  We never find out.  All we get is an article on dueling motivations.  For example, the Republic writes:

Despite his notoriety as a hero of the skeptic crowd, Balling's research and lifestyle contain some surprising contradictions.

He is in charge of climate studies at the Decision Center for a Desert
City, an ambitious ASU program that looks at how drought will affect
the Valley.

He's a registered independent and lives a lifestyle that the hardiest environmental activist would recognize as green....

If there was a competition for living green, "put the cards on the
table, and I'll beat 99 percent of the faculty here," Balling said.

He avoids driving and  doesn't own a cellphone.

He would even have liked to see Al Gore win the presidency in 2000.

So?  Why is this surprising?  Should we all naturally expect that skeptics all eat children for dinner?  And, of course, an article on a leading skeptic would not be complete without this:

Critics have assailed Balling's ties to industries.

Balling received more than $679,000 in research funding from
fossil-fuel-industry organizations between 1989 and 2002, according to
figures provided by ASU. He served as a scientific adviser to the
Greening Earth Society, a public-relations organization founded by the
Western Fuels Association to promote the benefits of global warming.

Uh, OK.  Here is a Coyote Blog challenge:  Find me one article in a mainstream newspaper or news weekly that even once checks the sources of funding for climate catastrophists.  This focus on funding and motivation and political affiliation for skeptics only is scandalously asymmetric.  But take a quick look at the article - 85% of it is related to motivation, either how good his green credentials are or how much money he gets from oil companies - and not any discussion of what he actually thinks. 

This final bit is especially funny.  Think of all the wacko professors out there that are warmly accepted by their universities and the academic community.  We're talking about folks all the way up to and including men who have gone to prison for torturing and murdering women.  But apparently having a climate skeptic on the faculty is just too much:

But his climate work has garnered the most national attention, which bothers some colleagues at ASU.

"For ASU, having Balling as such a prominent figure in the climate
debate has been awkward, not so much because of his positions but
because we have lacked scientists of similar stature whose work
supports more widely held, opposing views," Jonathan Fink, director of
ASU's Global Institute of Sustainability, wrote in an e-mail. "Hence we
have been viewed as somewhat of a fringe institution in the world of
climate-change research."

Wow, its terrible to see such ill-repute brought to America's #1 Party School.  And by the way, what the hell kind of strategy is this?  We want to make a name for ourselves in climate research, so to do so we think we should be just like all the other schools -- that's the way to differentiate ourselves!

I will post links to my podcast that is coming up Monday night.  After that, I am not sure.  I am pretty depressed about the state of the media on this issue.  I have a lot of interests and more than enough to do with my time that I may take a break from climate for a while.

Here in Phoenix we have a sheriff named Joe Arpaio.  Sheriff Joe, as sensitive to building his media image as he is to fighting crime, has built himself a reputation among the majority of voters that he is a tough-on-crime code-of-the-west kind of guy.  As the Phoenix New Times describes his image:

While voters lapped up the sheriff's harsh approach to inmates in his
jails "” from forcing them to wear pink underwear, to feeding them
oxidized, green bologna, to working them in chain gangs, to housing
inmates in tents "” New Times
writers pointed out that the cruelty and violence in Arpaio's lockups
prompted Amnesty International's first investigation in America.

I, however, see Sheriff Joe as a shameless self-promoter, uncaring about basic civil rights, and a serial abuser of government power.  A number of Phoenix New Times (our free alt-weekly) reporters have been on Arpaio's ass for years, dogging him in the best tradition of American media trying to hold public officials accountable.

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.

The cool thing about alt-weeklies is that they are feisty in a way that major newspapers used to be but are no longer.  The paper responded by publishing Arpaio's home address in an editorial.  Ill-considered?  Perhaps, but the paper pointed to several public web site where Arpaio's home address was already published, including several government sites.  Their point:  Arpaio's concern about his home address was a smokescreen to mask the fact he was really trying to remove the records of his real estate investments.  If he had really been concerned about his home address being public, he would have removed it from all the other sites it appeared on, not just the data base he wished to purge of his commercial investments.  [update:  the law apparently bars publishing the address on the Internet, but not in other media.  The New Times is legally OK for publishing it in their print edition, but technically broke the law by having that print edition also appear on the web]

Joe Arpaio is never one to just "move on."  In response to the paper's editorial, Joe Arpaio used the full force of his public office to form a grand jury to investigate the Phoenix New Times.  Via the grand jury, his prosecutor-buddy has slapped a really amazing subpoena on this small newspaper.  This first part is bad enough:

In a breathtaking abuse of the United States Constitution, Sheriff Joe
Arpaio, Maricopa County Attorney Andrew Thomas, and their increasingly
unhinged cat's paw, special prosecutor Dennis Wilenchik, used the grand
jury to subpoena "all documents related to articles and other content
published by Phoenix New Times newspaper in print and on the Phoenix
New Times website, regarding Sheriff Joe Arpaio from January 1, 2004 to
the present."

Pretty broad scope, huh?  If the case were really about whether the paper broke any laws by publishing his address, they would just subpoena that particular editorial.  But this case appears to be about a lot more, specifically a chance by Sheriff Joe to finally punish the New Times for years of critical reporting.  But the subpoena goes even further, into total la-la land:

The subpoena demands: "Any and all documents containing a compilation
of aggregate information about the Phoenix New Times Web site created
or prepared from January 1, 2004 to the present, including but not
limited to :

A) which pages visitors access or visit on the Phoenix New Times website;

                                       

B) the total number of visitors to the Phoenix New Times website;

                                       

C) information obtained from 'cookies,' including, but not limited to,
authentication, tracking, and maintaining specific information about
users (site preferences, contents of electronic shopping carts, etc.);

D) the Internet Protocol address of anyone that accesses the Phoenix New Times website from January 1, 2004 to the present;

                                       

E) the domain name of anyone that has accessed the Phoenix New Times website from January 1, 2004 to the present;

                                       

F) the website a user visited prior to coming to the Phoenix New Times website;

                                       

G) the date and time of a visit by a user to the Phoenix New Times website;

                                       

H) the type of browser used by each visitor (Internet Explorer,
Mozilla, Netscape Navigator, Firefox, etc.) to the Phoenix New Times
website; and

I) the type of operating system used by each visitor to the Phoenix New Times website."

I am sorry to do this to you, but if you clicked through to the Phoenix New Times site via the links in this story, any personal information that is recoverable about you is now subject to this subpoena. 

For years I have argued against special privileges like shield laws for the press.  My point has always been that we should not create a special class of citizen with more or less rights.  And this case does not change my mind, for this reason:  We all should have protection against this kind of abusive and intrusive probing by a public official, not just the press.  The Phoenix New Times should not have to divulge the details of its readership, but neither should my blog or Jane Doe's MySpace page.  This kind of prosecutorial fishing expedition against a critic of a government official is not wrong because it is directed at the press; it is wrong because it is directed at any American.

Update:  I didn't get into all the really weird stuff.  For example, Joe Arpaio argued that publication of his home address was damaging because groups were out to assassinate him:

A Mexican drug cartel acting on behalf of the Minutemen through the
intercession of a pro-immigration rights radio talk show host intended
to assassinate Arpaio, according to a sheriff's office investigation
detailed on the front page of the Sunday, October 7, edition of the Arizona Republic.

                                       

Now just think about this for a second. The Minutemen hate Mexicans
sneaking across the border. They are even less fond if the Mexicans are
smuggling drugs.

And we are supposed to believe that the Minutemen, seldom associated
with unexplained stashes of bling, agreed to a $3 million assassination
fee and put 50 percent down?

And that this was brokered by Elias Bermudez, a talk radio host, former
mayor of Mexican border town San Luis Rio Colorado in Sonora, and an
outspoken critic of Sheriff Arpaio "” and, obviously, no fan of the
Minutemen?

And a key linchpin in this comic book farce was a teenage girl in a
prep school in Hartford, Connecticut, who was an exchange student at
one point in San Luis. If the drug cartel needed to contact the
Minutemen "for any reason," they could use a particular e-mail address
. . . which, as the officers discovered, belonged to a kid in a private
school.

And from the Arizona Republic, our mainstream paper that usually fawns over Arpaio:

The Maricopa County Sheriff's Office spent an estimated $500,000
during the past six months protecting Joe Arpaio from an assassination
that supposedly was designed to cause a furor in the United States over
illegal immigration.

The convoluted plot, reported to police by a paid informant,
purportedly involved members of the Minuteman border group hiring a hit
squad from a Mexican drug cartel and using an outspoken
immigrant-rights advocate as their intermediary.

Sheriff's officials now acknowledge that virtually none of the information supplied by the source panned out.

I'm sorry, but the person who dreams this stuff up has a huge burden of proof to even argue that he is sane, much less should be our sheriff.  The Minutemen love Sheriff Joe -- they are peas in a pod.  They believe many of the same things.  The odds they would be trying to assassinate him are ZERO.  By the way, this is not the first time Arpaio dreamed up an assassination plot:

in 2003 ... prosecutors took hapless James Saville to trial for
"plotting" to kill Arpaio. Jurors wound up deciding that deputies set
up the assassin, coaxing and entrapping him. Saville was acquitted ("The Plot to Assassinate Arpaio," August 5, 1999).

                                     
Then there was the time Arpaio identified a threat upon his life that
turned out to be an art student's sculpture of a spider left upon his
lawn.

Update:  Joe Arpaio has arrested the owners of the Phoenix New Times paper for revealing the contents of the subpoena.

The Arizona Republic had this headline on the front of the business section this morning:

Arizona economy will get boost

Oh, is there some interesting structural change in the economy?  Did some local company get a big contract.  No, it turns out that the state government is going to reorganize some of its committees:

Gov. Janet Napolitano announced creation of a new non-profit on
Thursday aimed at improving the state's economy and reducing its
dependence on housing and construction.

The Arizona Economic Resources Organization, or AERO, will bring
together the state's "disorganized" business-recruiting efforts, she
said.

AERO's board of directors will include representatives of government
organizations such as the Commerce and Economic Development Commission,
private enterprise and the state's universities, the governor said.

Is there a single person who reads this and thinks to himself "Oh, that should help?"  Is this really what the Arizona Republic thinks boosts economies and creates value?  Some reorganization among the bureaucrats that run around doling out taxpayer money for relocations so the governor can claim to have boosted the economy, or God forbid, to have created jobs?  How about an income tax cut instead?

Just as an aside, I couldn't help but note this hilarious quote:

"The governor has taken some important and bold steps, probably steps
that we should have taken 20 if not 30 years ago," said Barry Broome,
president and chief executive of the Greater Phoenix Economic Council,
which he said has discussed representation on the AERO board with the
governor.

It's simultaneously "bold" and 30 years late.   Is that possible?

Update:  As to my last question, it probably is possible.  After all, actually limiting the Congress to the enumerated powers in the Constitution would be both bold and about a hundred years late.

Well, the Arizona Republic has done it again.  It has published yet another first-section front page water article (this makes about 50 in a row) discussing ways to make demand match supply without once discussing price.  This time, the reporting centers on a new online water supply and demand simulation model (here) introduced by Arizona State University.  With the model, the public gets to play dictator, implementing all kinds of policies and restrictions on individual consumers to see what effect these command and control steps have on water supply and demand.  And it is almost anti-climactic when I tell you that price does not enter in any way into the model. 

I probably don't have to remind readers that Phoenix has some of the cheapest water in the country, with prices less than half what they are in, say, water-logged Seattle.  Don't you think that might have a little to do with why supply and demand don't match?

Let's say there are about a 1000 key raw materials we use in modern society -- oil, natural gas, iron ore, uranium, bauxite, titanium, gold, silver, etc.  Of these, how do we match supply and demand?  Well, for 999 of the 1000, we use this thingie called the price mechanism.  The exception is water.  And it is incredible to me that not one but dozens of articles could be written by our newspaper about matching water supply and demand and not one of them could mention price, the mechanism we use to match supply and demand for 99.9% of commodities.  Remember when Hillary suggested a while back we need a special academy for government workers?  This is what they would teach -- that all problems can only be solved by government command and control.  As I wrote before:

In their general pandering and populism, politicians are afraid to
raise water prices, fearing the decision would be criticized.  So, they
keep prices artificially low, knowing that this low price is causing
reservoirs and aquifers to be pumped faster than their replacement
rate.  Then, as the reservoirs go dry, the politicians blame us, the
consumers, for being too profligate with water and call for ... wait
for it ... more power for themselves, the ones whose spinelessness is
the root cause of the problem, to allocate and ration water and
development

"Arizona Republic gave an unqualified endorsement of school choice today"

From Adam Shaeffer at Cato.  The AZ Republic editorial is here.  It is really rare to see a local paper break with the established monopoly education interests.  However, before we get too excited, I will observe that the Arizona school choice plan discussed falls pretty short of full school choice, but it is a step in the right direction.

No state shall ... deny to any person within its jurisdiction the
equal protection of the laws  - 14th Amendment

The Arizona Republic had an article in the lead position on the business page that really got me fuming.  Here is the headline:

Bioscience push paying off.  But analysis says Arizona must do more

Apparently the Arizona and Phoenix governments decided several years ago it was their job to preferentially invest in getting biotech companies to move to Arizona.  And this article was about a consulting study the government engaged to see how they were doing against this original plan. 

Arizona's lucrative bet on the biosciences is yielding more high-wage
jobs, federal research dollars and new buildings that are expected to
birth scientific breakthroughs for decades to come.

But the state needs to accomplish a lot more to establish a thriving
research-based economy, particularly providing enough money, lab space
and support that will allow small research companies to grow and
prosper.

The study can be summarized as "The government spent lots of money.  Biotech jobs increased in Arizona, though we can't establish a link between the government spending and the job growth.  The government needs to spend even more money in the future."  These conclusions are from Battelle, a technology consulting company whose fortunes depend almost entirely on government spending for technology projects, and, magically, they came to the conclusion that government needs to spend a lot on technology projects.

Equal Protection

I seldom hear this argument about corporate welfare, but what the hell ever happened to the equal protection clause?  From the perspective of an Arizona corporation, my government is taxing me and every other business and handing our money over to businesses that call themselves "biotech."  What suddenly gives these other businesses such favored status?  Why is biotech somehow more desirable such that they are more equal under the law?   Or, for those of you on the Left who don't think businesses have equal protection rights, what about Arizona workers?  Why are workers in every other industry taxed so biotech workers can have more secure, higher paying jobs? 

The Worst Investor

Government is the worst investor.  I won't go into how bad they are historically at picking winners, but will make a different point this time.  Consider this hypothetical: 

You have some money to invest in real estate, and engage a consultant to invest your money for you.  The consultant comes back and says that he chose to invest in the most sought-after single property in town, where hundreds of other people were bidding against you for the project, but eventually you outbid them all and got it. 

What would be your reaction?  Mine would be rage and horror.  Why the hell did my consultant choose the project with the most competition, so prices were bid up into the sky?  How am I ever going to get a good return from that?  (Ask yourself what return the Japanese got for their high-profile real estate purchases of the eighties and nineties).

But this is exactly what Arizona has done.  They picked the sector to subsidize and fight for corporate relocations - biotech - that every other state and municipality in the US has also chosen as their highest priority.  They even admit this in their report:

Battelle representatives said Arizona's challenge is that bioscience is
an ultracompetitive field, and states across the nation are pursuing
initiatives to bring the good-paying jobs that the sector promises.

In business school, I would get an "F" for this.  Choosing to subsidize biotech means that for every potential company relocation, Arizona and Phoenix are up against ten other cities and states also throwing subsidy and tax abatement packages out there.  Stupid.

Circle Jerk

It just symbolized for me how stupid all this is when I saw that the big payoff of this state government spending was to attract ... federal government spending:

National Institutes of Health grants issued to Arizona-based
institutions jumped 30 percent from 2002 through 2005. That funding
growth outpaced the nation's top 10 research states.

No Linkage of "Investment" to "Returns"

When private firms make investments, they carefully track the returns from this investment to see if it was worth it.  However, when government makes what it calls "investments", this is impossible.  The study claims that biotech jobs in Arizona have risen faster than the national average, but shows no link to the government spending that had taken place.  Probably because there was little relation.  The fact is that just about any job sector you can name in Phoenix -- from electronics to garbage sorting -- has grown faster than the national average because Phoenix as a whole has grown faster than the national average.  Taking credit for the rising tide is a classic politician behavior.  Companies and individuals are moving to Phoenix because they like the climate and relatively low taxes and regulation, of which the latter are only hurt by corporate welfare programs for favored few.

Prisoner's Dilemma

I have written before how much the government subsidization of corporate relocations looks like a prisoner's dilemma game. 

I hope you can see the parallel to subsidizing business relocations
(replace prisoner with "governor" and confess with "subsidize").  In a
libertarian world where politicians all just say no to subsidizing
businesses, then businesses would end up reasonably evenly distributed
across the country (due to labor markets, distribution requirements,
etc.) and taxpayers would not be paying any subsidies.  However,
because politicians fear that their community will lose if they don't
play the subsidy game like everyone else (the equivalent of staying
silent while your partner is ratting you out in prison) what we end up
with is still having businesses reasonably evenly distributed across
the country, but with massive subsidies in place.

The practice of state governments spending massive amounts of tax money to move a few jobs over the state line, and then having other state governments spend even more money to move the jobs back, is a war of escalation that leaves everyone worse off except a few players with political pull or who work in a fair-haired favored industry.

It's all About the Sex Appeal

Here is the bottom line:  Programs like this are for politicians.
Period.  They benefit politicians by giving them things they can say in
elections, like "I brought biotech jobs to Arizona,"  which sounds
better than "I brought garbage-sorting jobs to Arizona."  This in
effect answers the equal protection question of "why biotech?"  The
answer is that biotech is currently sexy, and politicians in their focus
groups have found that tbiotech resonates the best among voters.  All of
which makes for a really crappy approach to "investing."