Coyote Blog

On several occasions, I have wondered why progressives continue to be so supportive of paying too many government workers too much at the cost of reducing the government services they seem so passionate about.  This is something I seen in the public parks world all the time.  Arizona State Parks, for example, has about half of its employees in headquarters buildings rather out in the field serving the public while at the same time paying these headquarters staff very high salaries.  This is despite the fact that the agency has tens of millions of dollars of deferred maintenance it refuses to address.

I see this story repeated over and over in the public parks world -- when forced to choose, government agencies will cut back on maintenance and services to protect total staffing numbers, pay, and benefits.

The New York Times found something similar in the New York Subway:

An examination by The New York Times reveals in stark terms how the needs of the aging, overburdened system have grown while city and state politicians have consistently steered money away from addressing them.

Century-old tunnels and track routes are crumbling, but The Times found that the Metropolitan Transportation Authority’s budget for subway maintenance has barely changed, when adjusted for inflation, from what it was 25 years ago.

Signal problems and car equipment failures occur twice as frequently as a decade ago, but hundreds of mechanic positions have been cut because there is not enough money to pay them — even though the average total compensation for subway managers has grown to nearly $300,000 a year.

Later they go into more detail about payrolls:

Subway workers now make an average of $170,000 annually in salary, overtime and benefits, according to a Times analysis of data compiled by the federal Department of Transportation. That is far more than in any other American transit system; the average in cities like Boston, Chicago, Los Angeles and Washington is about $100,000 in total compensation annually.

The pay for managers is even more extraordinary. The nearly 2,500 people who work in New York subway administration make, on average, $280,000 in salary, overtime and benefits. The average elsewhere is $115,000....

Union rules also drive up costs, including by requiring two M.T.A. employees on every train — one to drive, and one to oversee boarding. Virtually every other subway in the world staffs trains with only one worker; if New York did that, it would save nearly $200 million a year, according to an internal M.T.A. analysis obtained by The Times.

Several M.T.A. officials involved in negotiating recent contracts said that there was one reason they accepted the union’s terms: Mr. Cuomo.

The governor, who is closely aligned with the union and has received $165,000 in campaign contributions from the labor group, once dispatched a top aide to deliver a message, they said.

Pay the union and worry about finding the money later, the aide said, according to two former M.T.A. officials who were in the room.

They do not mention pensions.  Who wants to be there is also a looming unfunded pension crisis here?

The whole point of cap-and-trade (or a carbon tax) is to set broad costs of emissions or broad tradeable limits, and then let millions of individual consumers and industries figure out the most effective way for each of them to meet these costs or limits.  For example, if I were to have a personal cap, changes in my car's MPG would be meaningless, because my work is 1.9 miles from my house.  I would probably start with putting the film coating on my windows of my house I have been considering.  They guy in New Jersey who drives 45 miles to work and has a small house might have a different solution.

But this whole philosophy of letting individuals drive the bus flies in the face of everything Congress believes in.  They believe they are smarter than you or I, and thus they should pick the solutions, not us.  And allowing for individual action doesn't generate campaign contributions like picking winners does.

So despite being a cap-and-trade bill, Waxman-Markey essentially picks winners.  One way is through targeted investments of taxpayer money in technologies whose owners have lobbied hard before Congress.  Another is this:

The legislation will drive up individual and commercial consumer's fuel prices because it inequitably distributes free emissions "allowances" to various sectors.  Electricity suppliers are responsible for about 40% of the emissions covered by the bill and receive approximately 44% of the allowances "“ specifically to protect power consumers from price increases.  However the bill holds refiners responsible for their own emissions plus the emissions from the use of petroleum products.  In total refiners are responsible for 44% of all covered emissions, yet the legislation grants them only 2% of the free allowances.

This means that Congress has decided to extract all of the CO2 reduction from transportation and other refined fuel users, rather than from electrical power generation.  Is this because they have some study in hand that shows the best bang for the buck in reducing CO2 comes from transportation?  Of course not, and even if they did, it would be hard to believe given the number of large coal plants in this country that generate far more CO2 than even a fleet of Escalades.

No, the reason for this is purely political -- every representative has an electric utility in their district lobbying and paying campaign contributions, but few have organized lobbies of automobile drivers.   And so, rather than pushing for fuel shifts from coal to gas or nuclear in power generation, this bill will primarily achieve its meager results from making it more expensive for people to drive.

I found out today, the hard way, that Arizona has a law specifying exactly how a pool contract is to be paid for a pool construction or renovation job.  Yes, we sure would not want to leave it to individual choice and negotiation to determine contract terms.  The craziest part is that I am required, by law, to pay 100% of the cost of the job to the pool contractor before the gunite or finish coat of the pool is shot.  In other words, I must pay all of the contracted price before the job is complete with no hold back.

This is absolutely crazy.  I have never in my life not had a hold-back in a construction contract.  Three times  (all with my company) I have had contractors go bankrupt or disappear before the job is complete, in at least two cases leaving so much work unfinished that even the hold-back was not enough to cover the loss.   Typically, contractors bolt before the punch list is complete, and only the hold-back keeps them focused at all on finishing the job to my satisfaction.  I am not happy, particularly since Phoenix pool contractors are going bankrupt right and left in this economy.

This is yet another example where "regulation" in fact means "in the tank for favored industries that make campaign contributions."

A lot of bad legislation has been passed to protect consumers from the "scourge" of monopoly.  The most common fear is that some company will lock up the market and then start raising prices.  This never happens in real life, because entry in most markets is far easier than most people imagine, particularly in modern America where there are so many accumulations of capital looking for a way to be spent.  In fact, the only time such price-gouging monopolies are ever sustainable is when they are backed by the coercive power of government.

The milk market, for decades one of the most egregious examples of government price-fixing for the benefit of producers over consumers, provides us with a perfect example of this phenomena:  A cartel charging too high of prices that is taken on by a maverick price-cutting outsider, who was on a path to success until the feds slapped him down.

In the summer of 2003, shoppers in Southern California began getting a break on the price of milk.

A
maverick dairyman named Hein Hettinga started bottling his own milk and
selling it for as much as 20 cents a gallon less than the competition,
exercising his right to work outside the rigid system that has
controlled U.S. milk production for almost 70 years. Soon the effects
were rippling through the state, helping to hold down retail prices at
supermarkets and warehouse stores.

That was when a coalition of giant milk companies and dairies, along
with their congressional allies, decided to crush Hettinga's
initiative. For three years, the milk lobby spent millions of dollars
on lobbying and campaign contributions and made deals with lawmakers,
including incoming Senate Majority Leader Harry M. Reid (D-Nev.).

Last
March, Congress passed a law reshaping the Western milk market and
essentially ending Hettinga's experiment -- all without a single
congressional hearing.

The most hilarious (or disgusting, depending on my mood) part is listening to the statements of other milk producers complaining about the new competition and price-cutting, something the rest of us in business face as a matter of routine, but from which the privileged few in the dairy business are shielded:

Hettinga's operation was "damaging to the marketplace," said Elvin
Hollon, director of economic analysis for Dairy Farmers of America.
"Nobody ever envisioned there would be such large handlers" outside the
pool.

"So," Hollon said, "the regulations had to change."

and this:

In an interview later, Nunes called the milk legislation a victory for
"every dairy farmer in America except those who were gaming the
system." He added, "People out there were making millions of dollars a
year off the backs of America's dairy farmers . . . that was a wrong
that was finally righted.

That last paragraph is so brazen you may not even get it ... he is referring to competitors that are charging lower prices.  They are "making millions of dollars off the backs of America's dairy farmers" the same way the Honda Civic made millions of dollars off the back of the Yugo.  Under the new law passed by the dairy industry's cronies, Hettinga can still operate like he has been, as long as he pays $400,000 each year to his competitors to make up for the fact that he is out-competing them.

I will say I probably would like this guy -- he is able to look on the bright side:

"I still think this is a great country," Hettinga said. "In Mexico, they would have just shot me."

Yeah, we're much better here.  The government only rapes rather than kills you.

Readers of this blog know that I consider most campaign finance laws to in fact be carefully crafted incumbent protection acts.  Incumbents in major political offices get millions and millions of dollars in free advertising just from their day-to-day ability to get on the evening news.  This free publicity combined with strong name recognition means that upstarts often have to seriously outspend the incumbent to have a chance of defeating them.  So campaign finance laws act as a powerful protection device for these incumbents, limiting the amount upstarts can spend while in no way limiting the incumbents's ability to use their office (and taxpayer money) to shamelessly promote and publicize themselves.

And there is no one better at using elected office to shamelessly publicize himself than new NY Governor Eliot Spitzer.  So absolutely no one should be surprised at this:

Moving swiftly in his efforts to change the culture of
Albany, Governor-elect Eliot Spitzer said Thursday that he would
unilaterally stop accepting campaign contributions greater than
$10,000, which is less than a fifth of the $50,100 in individual
donations currently allowed by state law.

Mr. Spitzer also said that from now on he would refuse to take
advantage of several notorious loopholes in the state's campaign
finance laws that allow corporations and limited liability companies to
circumvent donation limits by contributing through subsidiaries and
other related entities.

Note that he only took these steps just days after he was elected governor the first time.  Spitzer knows that no one can probably offset the PR advantage he wields, but to be on the safe side, this is the opening shot to make sure that no future challenger is going to have the cash to threaten his position in office.

Generally, Eliot Spitzer irritates the hell out of me.  But I will say for one brief period in college, Spitzer, as the butt of a huge campus-wide joke, brought be great mirth.

Leading "progressive" blogger Markos Moulitsas is trying to tempt libertarians to the progressive cause.  He tries to convince libertarians that growing corporate power should scare them more than government power.  Uh, no.  Hammer of Truth has a good rejoinder:

Moulitsas still cites corporate power over people as a problem, and
still fails to recognize that corporations gain their undue power from
government. Government is the enabler, empowering corporations to step
on individuals and small businesses through both regulations and
subsidies. It's only by restraining government that corporations can be
held in check, and it's unfortuate that Moulitsas hasn't figured this
out yet.

Nearly every government law, from anti-trust to trade law to licensing, generally is written to benefit incumbents who make campaign contributions against upstart competition.  Also, by the way, corporations can't send people with guns to your house if you don't cooperate with their will. 

I have in the past been at the executive level of several Fortune 50 companies, and this notion of corporate power is hilarious.  In each case, our situation seemed like that of a wounded, lumbering elephant, trying to stay just ahead of a back of small but swift predators.  Sure, our very size meant that sometimes we did damage from our thrashing around, but to somehow call this power is absurd.  We were constantly fighting against our own size to try to hold on to what market we had.

Finally, with corporations, including the current great Satan Wal-Mart, I can always choose not to shop or work there.  The IRS and the US Congress offer me no similar protection from their control.

More good stuff along the same lines from Catallarchy.

In this older post, I went into more depth on why progressives never will like capitalism, because they are too conservative (little-c).  At the end of the day, progressives like Kos want to reduce risk, variability, unpredictability and general "messiness".  These goals carry too high a price in terms of lost freedom and lost upside for humanity.