Coyote Blog

As predicted by skeptics of light rail, like myself, the Phoenix light rail system is starting to kill bus service.  This is a familiar pattern -- in most cities that have added rail, from LA to Portland, total transit ridership has fallen as light rail systems have been built.  That is because rail is so expensive, and its costs are mostly fixed (ie bond payments for construction costs) and absolutely inflexible (ie you can't shift routes).  Since rail costs far more, even orders of magnitude more, per rider than buses, this means that even with modest increases in total transit budgets, total ridership falls when capacity is being shifted to much higher cost rail.  Bus service is inevitably cut, because even if you close rail lines, the costs remain.

So here we are, in Phoenix.  The article is mainly about the regional transit coalition falling apart, which I have no opinion or interest in, but you can see what is going on anyway.

A bad economy has meant that building a regional bus system in the Valley is no longer a regional endeavor.

A half-cent sales tax was supposed to be the magic bullet that paid for transit and roads. But as tax revenues continue to shrink, cuts to the plan have become inevitable.

Avondale leaders say the toll includes the decimation of future West Valley bus routes and the end of the regionalism that Proposition 400 promised....

Paul Hodgins, capital-programming manager for Valley Metro, which operates the transit system,said every region took a 25 percent cut in transit dollars.

Here is what is going on, though the article only sort of alludes tangentially to this way down in the last 2 paragraphs.  Half of the transit dollars in the sales tax increase went to rail, and half to buses.  The rail money is almost all for debt service on capital spending which has already occurred.  This money has to be spent or the local authorities will default on their bonds.  The other half was for bus operations.

Now, there is a 25% cut in the sales tax dollars from this sales tax increase.  The half that went to rail can't be touched.  So the 25% cut results in a 0% cut in rail and a 50% cut in buses.  Further, since bus service carries a lot more passenger trips per dollar spent than rail, this 25% cut will end up affecting well over 50% of the total ridership that benefited from the sales tax funds.

It is clear from the article that folks probably understand this, but no one from the AZ Republic to the transit agencies are yet ready to admit it.  Expect the proposed solution to be in the form of more taxes rather than a rethinking of transit strategy.  Rail is an albatross, and I wonder how often it has to drive failures like this before people start recognizing it as such.

California state treasurer Bill Lockyer is urging public employee pension fund to divest itself of stocks of companies because of their support for a particular state ballot initiative.   Check that again - a sitting state official using his position in power to punish folks during an election campaign for their stand in that election.

"¦ state Treasurer Bill Lockyer, a former attorney general, urged the state's largest public employee investment funds to divest themselves of Valero and Tesoro stock.

Lockyer sent a letter to the public pension funds, known as CalPERS and CalSTRS, asking them to rid themselves of any stock connected to the refiners Valero and Tesoro. Lockyer charged the companies with attempting to constrain gasoline supplies in California to ensure profits for years to come "” and opposing the state's climate change law as a means to ensure that constraint.

"CalPERS and CalSTRS should not be investing in Texas oil companies that hurt the California economy, no more than they should invest in companies that spend millions of shareholder dollars to undermine California's environmental laws and the state's green energy industries and green tech jobs," Lockyer wrote.

Lockyer, a board member at CalPERS, is expected to ask the board tomorrow to divest Valero and Tesoro holdings during a meeting."

The Green Hell blog added:

It was also reported to this blog that Gov. Arnold Schwarzenegger, who views the global warming law as his signature accomplishment, kept Chevron out of the Proposition 23 battle by threatening the company with adverse tax measures.

Kevin Drum is, by my description (I don't know what he would call himself) a leftish technocrat.  My read on him is that he sees a beneficial role for government via smart people sitting at the top and optimizing systems (e.g. the economy, energy policy, climate, etc).  This is a consistent with a century-old branch of American progressivism, that distrusts chaotic outcomes of individual action and believes top-down optimization is called for.

The problem with this approach (discussed by Hayek and many others) is such top down optimization is impossible for a variety of reasons, from information to incentives.  There is simply a myriad of examples where supposedly smart government officials attempted such technocratic tinkering and only ended up with a mess.  I always supposed folks who argue for more of the same simply mentally ignored these examples.

But here is Kevin Drum lamenting the insanity of ethanol subsidies (for which he should be praised).  Ethanol subsidies are absolutely counter-productive, but have been central to our top down US energy policy for over a decade.

So what I can't understand is how he keeps these two ideas in his head simultaneously -- of this ideal of brilliant actors managing the economy from above and the reality of ethanol policy.  I suppose he could argue, as many technocrats do, that if only his guys were in power, everything would be different.  But his guys are in power, and in fact his guys have been the main drivers and supporters of ethanol subsidies.

I have written a number of times about why even smart guys fail to do smart things when plopped down in the government.

A European-style corporate state is typically ruled by a troika of large favored corporations, industrial and public employee unions, and long-time political insiders.  Most definitely excluded from power are consumers, entrepreneurs, small businesses, younger workers without seniority, and taxpayers.

I have argued that Obama is not a socialist, but is building a European-style corporate state.  Here is a great indicator, from my Princeton classmate Henry Payne:

For the first time in more than two years, SUV sales account for more than half of the U.S. auto market. ...

The trend comes even as Washington issued a new edict that vehicles average an absurd 62 mpg by 2025. The current absurd standard -- 35 mpg by 2015 -- has forced manufacturers to invest billions in new small-car development.

Today, manufacturers are in defiance of their own customers -- their marketing departments churning out small-car ads touting their new green products. This puts automakers in a tough spot: Continue to make cars for the government, or listen to their customers.

For now, manufacturers are sticking with the government, telling the Detroit News that "with a slew of new cars coming out, such as the Chevrolet Cruze, the Ford Fiesta and a new Ford Focus early next year, car sales are likely to outpace truck sales in the coming months."

If you want a deeper look at how legislation is made in the corporate state, read this fascinating (but very long) New Yorker report on the efforts to pass a climate bill this past year.  The author writes it in the spirit of lamenting lost opportunities, but I read it as a great inside view of the sausage factor.  Do we really want to give these guys more power?

In the same spirit, I commented thus on Kevin Drum's post discussing the growth of campaign spending this year, and lamenting that it is going to the nasty old Coke team instead of the Pepsi team:

There is a really simple solution to this -- reduce the coercive power of government to break individuals or corporations or to hand them windfalls, and all this spending goes away.

The spending has not gone up because the rules changed, because the Supreme Court rules did not substantially affect this kind of campaign spending (there is a ton of sloppiness in the media on this point).

The spending has gone up because Obama & the Democratic Congress has put more of the US economy in play in their attempts to form a European-style corporate state. When Obama and Pelosi engage in populist public speeches vilifying whole sectors of the economy, groups are going to try to defend themselves from the onslaught, either by throwing the current office holders out or buying the favor of those they can't unseat.

This week in Forbes, I argue that tallying up the taxpayer money that has been poured into GM actually under-estimates the price of the bailout.

So what if the U.S. government had let GM's bankruptcy proceed unhindered? Allowing the GMs of the world be liquidated, with their assets and employees taken up by more vital entities, is critical to the health of our economy and the wealth of our nation. Assuming GM's DNA has a multiplier below one, releasing GM's assets from GM's control actually increases value. New owners of the assets might take radically different approaches to the automobile market. Talented employees who lose their jobs in the transition, after some admittedly painful personal dislocation, can find jobs designing and building things people want and value. Their output has more value, which in the long run helps everyone, including themselves....

This is the real cost of the GM bailout--not just tens of billions of dollars of wasted taxpayer money, but continued unimaginative use of one of the largest aggregations of wealth and talent in the world.

I got a press purportedly from a group of Latino political groups that included this:

National Latino organizations representing over 2 million people have united for the first time to urge for the approval of clean energy and climate legislation. As part of the effort, the coalition delivered a letter to Senate Majority Leader Harry Reid, members of the US Senate and the White House calling on them to pass comprehensive clean energy and climate legislation this year.Citing the economic and health benefits such legislation would bring to the Latino community, the letter urged swift action.  Across the country Latino communities, organizations and businesses are raising their voices in support of clean energy and climate change legislation. The Latino coalition is also launching an ad campaign, titled "Estamos listos" or "We're Ready," to urge the federal Government and Congress to act.

Action on climate and clean energy this year is critical to the Latino community and the country as a whole.  Latinos face an unemployment rate higher than the national average at 13%, and a clean energy and climate bill could create thousands of new jobs in a green economy benefitting not only Latinos but the rest of the country, as well.

I was fairly amazed to see a group that represents a lot of low-skilled workers and poorer families support a new, quite regressive tax.  I wrote them

I'm curious if your organization honestly believes that Latinos would be helped by higher energy prices that are the inevitable result of the bill, or is support for this legislation a quid pro quo to get Democrats in Congress to support legislation that you care about more?  Even if a thousand of your members get a new job building windmills, and even assuming none of them are working in energy-intensive industries that might have layoffs due to higher electricity prices, I still count 1000 who have a better job and 1,999,000 who just have a higher electricity bill.  Given the tragic hostility of my state (Arizona) right now to the Latino community, I just can't believe you don't have something better to work on right now.

Over at my climate blog, I discuss the amazing similarity between Obama's claims for the effects of the stimulus and the IPCC's claims for the effects of CO2 on past temperatures.  Both seem to reach their results by assuming that all the other variables in a complex system (climate or the economy) can be isolated and assessed and coincidentally are exactly the value necessary to prove that the variable under study (CO2 or the stimulus) had exactly the effect the studies authors thought it would.

Tyler Cowen writes:

If aggregate demand is so low, why are profits so high?

TJIC responds

SmartFlix  [TJIC's company] has show paper losses every year it's been in existence "¦ but I expect that this year it will show it's first ever paper profit.

"¦which is not a sign of macroeconomic health, but is, in fact, a sign of my very poor expectations for the economy.

Ditto here. We will probably show our largest paper profit this year, but it is mainly because we have cut way back on investment in new projects.  And this has nothing to do with demand - we are experiencing a boom, as the recession pushes Americans towards lower cost recreation of the type we operate, at the same time it cuts state budgets and makes them more amenable to our business model of private operation of public parks.

So why are we cutting back investment?  I run a very low margin service business. Here is a simplified calculation: We make, say, 8% of revenues before taxes and accelerated depreciation. 50% of our costs are labor, and the new health care law may raise our labor costs by 8% or even more.  A four percentage point cut in margins is not a big deal to Microsoft, but it is to us.  Until we figure out how this all will play out, we are still investing but only in above-average opportunities.

When we invest in a new project, it hits that year's income in two ways.  First, we have accelerated depreciation on the new capital equipment.  And second, we typically have a startup loss in the first year.  In the last few years of rapid growth, we have had close to zero paper earnings because of these growth effects.  Once we take our foot off the pedal this year, though, we will show a large positive income.  For us, reduced growth and investment = higher short term reported profits.

My new column is up this week at Forbes.  This week it discusses the regulatory burden on small businesses.  Here is an excerpt:

Typically taxation issues get a lot more attention than these regulatory issues in discussions of government drags on the economy. But these small regulations, licenses, and approvals consume management time, the most valuable commodity in small businesses that typically are driven by the energy and leadership of just one or two people. If getting a certain license is a tremendous hassle in California, large corporations have specialized staff they throw at the problem. When a company like ours gets that dreaded call that the County wants a soil sample from under the parking lot, odds are that the owner has to deal with it personally.

So the ultimate cost of many of these silly little regulations is that they each act as a friction that wears away a bit more available time from entrepreneurs and small business owners. The entrepreneur who has to spend two hundred hours of her personal time getting all the licenses in place for a new restaurant is unlikely to have the time to start a second location any time soon. Since small businesses typically drive most new employment growth in the United States, can it be a surprise that new hiring has slowed?

Incredibly, after the column was in the can, I experienced another perfect example of this phenomenon.

In the camping business, July 4 is the busiest day of the year.  This year, on July 3, I got a call from one of my managers saying that the County health department had tested 20 ground squirrels in the area and found one with the plague.  I know this sounds frighteningly medieval, but for those of you who live out west, you may know that some percentage of all the cute little western rodents, from prairie dogs to chipmunks, carry the plague.  Its why its a bad idea for your kids and dogs to play with them.

Anyway, in the past, we have usually been required to post warnings in the area giving safety tips to campers to avoid these animals, what to do if one is bitten, etc.  At the same time, we then begin a program of poisoning all the lairs we can find.  It's about the only time any government body anywhere lets us kill anything, because only the hardest core PETA types will swoon over rubbing out a rodent carrying the black death.

But apparently, in the past when these mitigation approaches applied, the county health department was not in a budget crunch and in need of high-profile PR stories that would reinforce with taxpayers the need to fund their organization.  This time the health department marched out and closed the campground on July 4 weekend, kicking out campers from all 70 sites.  We spent the day dealing with angry customers, refunding money, and trying to find them new lodging on a weekend where most everything was booked up.  Fortunately we have a large overflow area at a nearby campground and offered everyone a special rate over there.

It is hard to imagine that, given the whole year to test, they just suddenly happened to find a problem at one of the busiest sites in the LA area on the busiest weekend of the year, particularly since they simultaneously changed their mitigation approach from notification to closure.   I have tried hard to find the original time stamp on the press release they sent out.  I can't prove it, but it sure seemed like a lot of media had the story before we (operating the campground) had been informed of a thing.  Incredibly, the health department was directing the campers to a nearby campground that was easily close enough to our campground to share the same rodent populations.  But that campground had not had a positive plague test.  Why?  Because that campground has not been tested recently, at least according to the official who brought us the news.  We're in very good hands.

When we gave government money targeted at single women with kids we got, incredibly, more single women with kids.  And when we give people money only when they are unemployed, we are going to get more unemployed.  The economics of this are pretty bullet-proof.  We may choose to do so because we have a humanitarian desire to cushion hardship, but we should accept that when we reduce the hardship of being unemployed, and actually give people money for not working, we are going to get more people unemployed for longer periods.

Apparently, Nancy Pelosi lives in a different world (no surprise there) there supply and demand curves slope the opposite direction.

Talking to reporters, the House speaker was defending a jobless benefits extension against those who say it gives recipients little incentive to work. By her reasoning, those checks are helping give somebody a job. "It injects demand into the economy," Pelosi said, arguing that when families have money to spend it keeps the economy churning. "It creates jobs faster than almost any other initiative you can name."

Pelosi said the aid has the "double benefit" of helping those who lost their jobs and acting as a "job creator" on the side.

I am rapidly approaching the point where I am ready to throw out the whole of macroeconomics as unprovable and unproductive, serving the purpose of allowing statists to do whatever they hell they want to do with some fig leaf from some goofball macro-economics theory  (and if the necessary theory is not  on the books, Paul Krugman, formerly a real economist, will be more than happy to whomp one up for his buddies on the Left.)

Wow, I am sure those in Arizona who are clambering for more border support from President Obama will back off now that they hear this:

U.S. Customs and Border Protection spokesman Rob Daniels says officers at the Douglas port of entry stopped a tractor-trailer coming from Mexico for further inspection on Friday.

Officers found the tractor-trailer was loaded with papier-mache items, including 108 piñatas in the likeness of Disney characters on their way to Thornton, Colo.

Officers seized the shipment for violation of intellectual property rights.

You will be happy that national security has been protected

Assistant port Director Eli Villareal says the piñatas may seem innocent, but shipments of illegal merchandise on a national scale can undermine the U.S. economy and "is a vital element in national security.

In the 1970's, during the Arab oil embargo, oil company presidents were dragged to Washington to defend themselves from charges that they were holding tankers offshore to drive up prices and all kinds of crazy BS.  Since that time, in every oil price spike, oil companies were vilified by the Left for destroying the American economy by driving up oil prices (artificially, I suppose).

Now, however, is seems that this was all wrong.  The fossil fuel price increases and artificial supply shortages needed to cut our CO2 emissions by 50% are enormous.  The Europeans have $9 gas and they are not near these targets, in fact in many countries their fossil fuel use has gone up.  We have been in a substantial economic slowdown, but even at these lower output and consumption levels we are far short of a 50% target.

But now the EPA says it has a computer model (stop me if you have heard that one before in the global warming debate) that says that proposed efforts to cut CO2 emissions by 50% in the next 20 years will have a negligible impact on the US economy over the next 20 years.

But there's another reason it was disappointing that Obama didn't mention carbon pricing: his own EPA had handed him a perfect excuse just one day before. In a detailed analysis of John Kerry's American Power Act, the EPA provided estimates of how it would affect carbon emissions and how much it would cost the average American. The results were remarkably reassuring.

On the emissions front, the APA would have a dramatic effect: US emissions would be cut nearly in half by 2030 compared to doing nothing. That's an enormous impact.

But how much would it cost? The answer is: almost nothing. According to EPA's models, if we do nothing, consumption of goods and services in the United States will increase 74.1% by 2030. If APA is passed, consumption will increase 73.4%.That's it. We can cut carbon emissions nearly in half, and the net cost will be a decrease in consumption of 0.7% in 2030. EPA figures this comes to an average annual cost of $146 per household. That's 40 cents a day per family.

And everyone on the Left is credulously lining up to say that this sounds about right to them.    Well, now you tell us.   And if this is true, why have you been hammering on the oil companies for 40 years if oil price increases are virtually irrelevant to the economy.

Look, the is is utter BS.  I have a wild optimism about the power of free minds to innovate and handle about anything if they are allowed, but even so there is no way that an energy price increase (or artificial shortage, take you pick of mechanisms) large enough to cut output by 50% in 20 years will have a negligible impact on the economy.  No way.

Update: I am skimming the EPA power point presentation.  I am looking at one chart that shows a shows coal with CO2 capture around 5% of US energy production about 12% of electricity production by 2030.  Absolutely no freaking way.  They are on drugs.  CO2 capture is never going to happen except when exorbitantly subsidized by the government.

And they show natural gas going way down.  Why?  Replacing coal-produced electricity with natural gas produced electricity is probably the most effective single CO2 reduction step that exists after certain conservation approaches.  But despite huge availability in the US, they show gas consumption going down by half.  If so, those are some pretty screwed up incentives in the bill.

Update #2: I found the price chart.  Apparently they project they will get all this fossil fuel reduction with an increase of electricity prices from 11 cents per Kwh in 2030 without the law to 14 cents with the law.  Gasoline prices with the law will be increased by about 25 cents a gallon in 2030 by the law.  So we are going to get a government imposed 50% reduction in CO2 output in 20 years with a price increase that is within the natural variation over a couple of months in the gasoline market?  Yeah, right.  We all will be riding unicorns to work instead.

Via Reason, from the man Obama personally appointed to lead the Deficit Commision

"America needs a 21st century economic plan because we now know the market-worshipping, privatizing, de-regulating, dehumanizing American financial plan has failed and should never be revived, worshipping the market again," Stern said in remarks at the annual conference of the liberal activist group Campaign for America's Future in Washington on Monday."It has failed America and everyone that works here," Stern said.

Stern said the changes that Obama and Democrats in Congress have made are nothing short of a "revolution" that will move the American economy from national to international.

"This not our father's or our grandfather's economy," Stern said. "We're as far today from the New Deal as the New Deal was from the Civil War. And we cannot drive into the future looking in the rear view mirror."

He said the progressive movement must build on the past and look to the future as the economy is transformed "from a manufacturing base, to a service, finance, knowledge, green, Internet, and bio-science economy."

"This revolution's going to only take 30 years," Stern said. "No single generation of people have ever witnessed this much change in a single lifetime. [...] And as we've witnessed now in the absence of a simple and realistic way forward, people "“ even us "“ sometimes resist the future or try to turn back the clock to days that are now long gone."

I am not sure I have ever heard anyone sound more like a scabby beauracrat in Atlas Shrugged.  Can you believe this dweeb along with Barrack and the gang who can't shoot straight taking credit for the transformatoin of the economy?  As if these guys have anything to do with the rise of new industries and technologies, except to make their birth and growth more difficult through strangling regulation and taxes.

The last paragraph about progressives and change is an interesting one in the context of this old post of mine, where I discuss how progressives most hate free markets for their constant change and unpredictability. Here is an excerpt:

Beyond just the concept of individual decision-making, progressives are hugely uncomfortable with capitalism.  Ironically, though progressives want to posture as being "dynamic", the fact is that capitalism is in fact too dynamic for them.  Industries rise and fall, jobs are won and lost, recessions give way to booms.  Progressives want comfort and certainty.  They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount. ...

Progressive elements in this country have always tried to freeze commerce, to lock this country's economy down in its then-current patterns.  Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry.  They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.  I, for one, am glad they failed, since for all of the soft glow we have in this country around our description of the family farmer, farming was and can still be a brutal, dawn to dusk endeavor that never really rewards the work people put into it.

This story of progressives trying to stop history has continued to repeat itself through the generations.  In the seventies and eighties, progressives tried to maintain the traditional dominance of heavy industry like steel and automotive, and to prevent the shift of these industries overseas in favor of more service-oriented industries.  Just like the passing of agriculture to industry a century ago inflamed progressives, so too does the current passing of heavy industry to services.

In fact, here is a sure fire test for a progressive.  If given a choice between two worlds:

1. A capitalist society where the overall levels of wealth and technology continue to increase, though in a pattern that is dynamic, chaotic, generally unpredictable, and whose rewards are unevenly distributed, or"¦
2. A "progressive" society where everyone is poorer, but income is generally more evenly distributed.  In this society, jobs and pay and industries change only very slowly, and people have good assurances that they will continue to have what they have today, with little downside but also with very little upside.

Progressives will choose #2.  Even if it means everyone is poorer.  Even if it cuts off any future improvements we might gain in technology or wealth or lifespan or whatever.  They want to take what we have today, divide it up more equally, and then live to eternity with just that.   Progressives want #2 today, and they wanted it just as much in 1900 (just think about if they had been successful "” as just one example, if you are over 44, you would have a 50/50 chance of being dead now).

Update: What does the line about shifting form a national to international economy mean?  It must be some kind of progressive code phrase that does not mean what it sounds like, since most progressives and this administration tend to be opposed to free trade and have a strong tendency towards protectionism.  After all, these are the same guys that sympathize with the anti-globalization rioters at various G8 conferences.

I have written a lot about the Cash for Clunkers law, and the fact that it was a hit with its beneficiaries because it bought cars that blue-booked for just under $1500 for two or three times that amount.  Other studies have shown that the program did abate some CO2, but at ridiculously high prices per ton.

But I have found a reason to love the Cash for Clunkers program:  it is a fabulous demonstration project for just how utterly pointless government stimulus programs can be.  Stimulus programs tend to be hard to evaluate in our complex economy -- sort of like trying to calculate the effect of a butterfly flapping its wings on world climate.  But since cash for clunkers only lasted a few weeks and hit only one industry, we can learn a lot about the effectiveness of government stimulus.

Here is the US Census data for auto dealer sales (source).  Thanks to my friend Scott who first pointed me to the analysis:

The dotted line simply averages the sales for the month of the clunkers program and the month after.  I think it is pretty clear that we spent a few billion dollars making some used car owners happy (by overpaying for their vehicles) but did absolutely nothing to move the trend line in auto sales, as the program appears to have just pulled forward purchases rather than stimulated new ones.

Update: Welcome Instapundit readers.  This is all in the family blogging day, as my son just started up his own blog with a post ranking baseball players.  Feel free to give him grief for being a Yankees homer.

Via the USAToday

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits "” from Social Security, unemployment insurance, food stamps and other programs "” rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

Buried in the ariticle is a quote that I have to cite as perhaps the worst analysis I have ever seen:

The shift in incomeshows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

"It's the system working as it should," Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says.

How does the income shift prove the stimulus worked?  The problem is, as usual, a difficult one of evaluating what the economy would have done without the stimulus.  The mere shift in income is a necesary outcome of the stimulus -- all it means is that we have succesfully robbed Peter to pay Paul -- it says nothing about whether Peter and Paul are more wealthy in aggregate had we not moved money around by force.  In fact, proponents of the stimulus never, ever address a very simple fact - someone was using the money to run a business or invest or buy things or employ people before the government took it for stimulus programs.  And it is really, really hard to look at the body of stimulus programs and come to the conclusion that the private sector was investing the money worse, which is the only way stimulus would occur.

I am a little late on this but want to link it none-the-less:

As predicted was inevitable, today the Spanish newspaper La Gaceta runs with a full-page article fessing up to the truth about Spain's "green jobs" boondoggle, which happens to be the one naively cited by President Obama no less than eight times as his model for the United States. It is now out there as a bust, a costly disaster that has come undone in Spain to the point that even the Socialists admit it, with the media now in full pursuit....

La Gaceta boldly exposes the failure of the Spanish renewable policy and how Obama has been following it. The headline screams: "Spain admits that the green economy as sold to Obama is a disaster."

This is a failure of every single number ever published by supporters of government stimulus programs.  They always fail to acknowledge that the money for these programs came from somewhere.  It was being employed by someone to buy something or to invest in something or to pay someone's wages.  Every private company in the world seems to understand this concept of opportunity cost, so it is amazing that it is so hard to grasp in the media which breathlessly reports every BS number Obama has spit out.

That's the headline from the Arizona Republic today.  Do editors realize this is becoming a national running joke?

The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The surge is evidence of how volatile the job market remains, even as the economy grows.

At least, that is, when the government is managing the ice supply:

Venezuela's economy is in trouble despite the country's huge oil reserves. Blackouts plague major cities. Its inflation rate is among the world's highest. Private enterprise has been so hammered, the World Bank says, that Venezuela is forced to import almost everything it needs.....

This is not the way it was supposed to be. Venezuela is one of the world's great energy powers. Its oil reserves are among the world's largest and its hydroelectric plants are among the most potent.

I never said my immigration opinions were widely held here in Arizona, but apparently they are not popular nationally either:

The new poll finds 61 percent of voters nationally think Arizona was right to take action instead of waiting for the federal government to do something on immigration. That's more than twice as many as the 27 percent who think securing the border is a federal responsibility and Arizona should have waited for Washington to act. . . . Significantly more voters think the Obama administration should wait and see how the new law works (64 percent) than think the administration should try to stop it (15 percent).

Oh well.  Its not like being in the minority is a new thing for me.

What I would really like to understand is:  what drives these folks?

I will take them at their word that it is not racism.

If its violent or property crime, the stats are pretty clear that immigrants don't really contribute to these crimes disproportionately.

If its gang violence at the border, I am wondering what people see in the law's rules that allow easier harassment of day laborers and brown-skinned people with broken turn signals that they think is going to deter gang members supposedly armed with AK47's.

If its competition for jobs, well, I encourage folks to learn how the economy actually works (hint:  it's dynamic, not static), and further, encourage them to figure out why they feel they can't compete with unskilled, uneducated laborers who don't speak the native language.

Finally, if it is, as many of my emailers claim, just a matter of the rule of law -- "THEY ARE ILLEGAL" as I get in many emails, inevitably all in caps, then why not just legalize their presence?  After all, I lament all the hardships associated with marijuana law enforcement but you don't see me advocating new rules to incrementally harass potential possessors -- I am grown up enough to know form history that such efforts are never going to work as long as their is an enthusiastic supply and demand.  I advocate legalization.

This is lifted from an email I got from America Outdoors

A little noticed provision in the recently passed health care reform bill will require every payment to corporations over $600 to be reported on a Form 1099 to the IRS, including payments for the purchase of merchandise and services. This provision takes effect in 2012.

The current law requires a Form 1099 to be submitted to the IRS when your business pays more than $600 for rent, interest, dividends, and non-employee services if the payments are made to entities other than corporations. Currently, payments made to a corporation and payments for merchandise are not required to be reported.

To file the required 1099, a business will have to obtain and keep track of a Taxpayer Information Number (TIN) from every vendor before submitting the 1099 to that business and the IRS. Under current tax law, one copy of the form is sent to the IRS, and another copy is sent to the person to whom the business made the payments.

Rep. Dan Lungren (CA-3) introduced "The Small Business Paperwork Mandate Elimination Act" (H.R. 5141). The legislation would repeal the expanded 1099 reporting requirement.  Lungren correctly asserts that the burdens placed on small businesses by this reporting requirement would be overwhelming.

Call your U.S. Representative today and ask them to cosponsor H.R. 5141. The House switchboard number is 202-225-3121.  Ask to be connected to your Representative's office.

My small business has over a thousand vendors.  I would have to hire someone full time for a month to do this.  And it would be to zero purpose.  The IRS would be so flooded with forms that there would be no way they could pull any useful information from the blizzard.  This is yet another example of legislators operating with absolutely no idea how commerce actually works.  We have coined a name for it within our firm -- we call it arrogant ignorance.

Chris Edwards at Cato had more on this a while back.

I'm stunned that there wasn't a broader debate before such a costly mandate was enacted. If it goes into effect, it will waste vast quantities of human effort in filling out forms, reworking computer systems, collecting and organizing data, and fighting the IRS. The struggling American economy can't afford anymore suffocating tax regulations. This mandate is a giant deadweight loss. It should be repealed.

My health insurance policy, which is an actual "insurance" policy that insures me against catastrophic medical costs but leaves me with responsibility for day to day expenses, just became illegal.   Over the last couple of years, I have documented my learning curve as, for the first time, I actually had an incentive to shop around for medical care, or to push back on doctors when I thought they are calling for too many tests and procedures.  I have learned a lot about saving money, but all of this education is now for naught, as I will now be required to buy a pre-paid medical policy that leaves very little of the decision-making to my family and provides zero incentives for me to be cost conscious.  Apparently, the operators of the US Postal Service and US military procurement felt they were better qualified to manage these cost/value trade-offs than I am.

Here, by the way, is my favorite quote from today, from Nancy Pelosi (who else):

House Speaker Nancy Pelosi praised the health care legislation for its ability to "unleash tremendous entrepreneurial power into our economy."

Only if one considers rent-seeking to be entrepreneurship.  There will certainly be a mad rush of special interests to Congress to get their pet procedure or drug included in national must-cover rules.  I discussed this rent-seeking process, which used to have to proceed inefficiently state by state but now can be achieved single-source, here.   Naturopath coverage, anyone? (already required under coverage rules in 4 states).   Already a lot of so-called medical research is really just thinly disguised pleas to have a certain procedure in must-cover rules.  For example, I wrote about one study:

In other words, the study surveyed a bunch of cosmetic surgeons.  They were asked "should an expensive procedure you provide be covered by insurance."  They all answered "Hell YES!"  Anyone want to bet whether the funding for the study came from the company that makes the laser equipment?

This is pretty scary.  From the Massachusetts state treasurer, the state health care system (essentially the model for the current version of Obamacare) is going bankrupt, and only huge cash infusions from the Federal government are hiding the full disaster.

"If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years," Cahill said in a press conference in his office.

Echoing criticism leveled by congressional Republicans in recent weeks, Cahill said, "It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country."

[T]he state's health insurance law"¦Cahill said, "has nearly bankrupted the state."

Cahill said the law is being sustained only with the help of federal aid, which he suggested that the Obama administration is funneling to Massachusetts to help the president make the case for a similar plan in Congress.

"The real problem is the sucking sound of money that has been going in to pay for this health care reform," Cahill said. "And I would argue that we're being propped up so that the federal government and the Obama administration can drive it through" Congress.

The Democrats have no good ideas for controlling Medicare costs after a government takeover.  If they did, they would have already implemented these ideas on Medicare or in Massachusetts.  Their only plan is price controls and rationing.  Here is an example of price controls hitting a wall in Medicare:

Walgreens drugstores across the state won't take any new Medicaid patients, saying that filling their prescriptions is a money-losing proposition "” the latest development in an ongoing dispute over Medicaid reimbursement....

In a news release, Walgreens said its decision to not take new Medicaid patients stemmed from a "continued reduction in reimbursement" under the state's Medicaid program, which reimburses it at less than the break-even point for 95 percent of brand-name medications dispensed to Medicaid patents....

Washington was reimbursing pharmacies 86 percent of a drug's average wholesale price until July, when it began paying them just 84 percent. While pharmacies weren't happy about the reimbursement reduction, the Department of Social and Health Services said that move was expected to save the state about $10 million.

Then in September came another blow. The average wholesale price is calculated by a private company, which was accused in a Massachusetts lawsuit of fraudulently inflating its figures. The company did not admit wrongdoing but agreed in a court settlement to ratchet its figures down by about 4 percent.

So the Government is reimbursing retailers at 80% of wholesale costs.  Even forgetting their overhead,  Walgreens was asked to sell dollar bills to the government for 80 cents.

What both stories have in common are government health plans that are subsidized from the outside:  The Feds are pouring money into Massachusetts and money is sucked out of the private medical side to subsidize Medicare.  But what happens when there is only one system, when there is nothing outside of it to subsidize it?  What are they counting on to save them?

Per Nancy Pelosi:

"Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance."

Yeah, its a world where only the suckers work hard and try to be productive.

The NY Times has a fairly ugly story, though hardly unique, of a project to restore water flow to the Everglades turning into a corporate welfare project for United States Sugar.   The short story is that in a time when United States Sugar was in desperate financial straights and when real estate prices in Florida were tumbling, the Florida government treated USS like it had all the power, rolling over to paying above-market prices and letting USS pick and choose the land parcels to be purchased.  The story did not mention much about it, but there is a second large sugar producer in the area who it strikes me could have been played off against USS to get the best deal.

Remember that the US Sugar operation likely exists only because of sugar tariffs and import quotas that raise the price of sugar in the US well above the world norm.  So consumers are paying extra, and drinking soft drinks with crappy HFCS, so that US Sugar can screw up the Everglades and get bailed out by taxpayers.   Readers will understand it is the purest coincidence that US Sugar's attorney is chief of staff to the state's governor.

From running my recreation privatization blog, I know that there are many folks who will ascribe this to a failure of private enterprise and an excess of corporate speech and money in politics.   But to my mind this is a great example of why election and speech limits don't have any utility.  This is all back room lobbying, cronyism, and quid pro quo politics that doesn't show up in any monetary ledger, and thus are not and have never been subject to any limits.  As I wrote here:

when the stakes of government are so high, money and influence never goes away.  Just as in any economy, when you ban money, a barter economy arises.  So if we ban large campaign spending, then the quid pro quo becomes grass roots efforts and voter mobilization.  Groups like the UAW become more powerful (we are seeing that already).  They are trading their member's votes for influence.  Connected companies like GE are doing the same thing, trading their support for legislation that is generally hostile to commerce for specific clauses in said legislation that exempts GE and/or makes the laws even more punishing on their competition.  The problem with all this activity is it is hard to see and totally unaccountable "” at least with advertisements we see people out in the open with their agendas.

The other obvious point is that no private entity would ever allow themselves to get rolled so badly by US Sugar.  They would have sense USS's weakness and broken its knees in the negotiation.  One US Sugar manager even says as much:

For its board members, Mr. Crist's overture was appealing in part because they figured a government purchase would be far more lucrative than a private deal.

"It wasn't another company coming in and bottom-fishing you," Mr. Wade said. "They knew it would be for fair-market appraisals."

Over at my privatization blog, I wrote about a deal in Chicago where the government made four or five huge mistakes in issuing a private contract that a private company (or at least one that is not going to go bankrupt) would never make.  So of course the problems are blamed on privatization.

I had a dinner conversation last night with my Massachusetts mother-in-law.  She is pretty interesting to talk to because she is a pretty good bellwether for Democratic talking points on most issues.  She was opposed to the recent Supreme Court speech decision removing limits on third party advertising near an election  (I think she misunderstood the scope of that decision but that is not surprising given the shoddy reporting on it, up to and including Obama getting it wrong in his State of the Union).   She advocated strict campaign spending restrictions (both in terms of amount of money and length of the campaign season) combined with term limits.

We could have gone a lot of places with the discussion, but we ended up (before we terminated the conversation in the name of civility) discussing whether restrictions on money were equivalent to restrictions on speech.  She of course said they were not, and said under strict monetary controls I still had freedom of speech - weren't we still talking in the car?

It is hard to reach common ground when one person is arguing from a strict rights-based point of view while the other is arguing from a utilitarian point-of-view.   Essentially she knows in her heart that she is restricting speech, but wishes to do so to reach a better outcome.  I made a couple of utilitarian arguments, including:

• I pointed out that when the stakes of government are so high, money and influence never goes away.  Just as in any economy, when you ban money, a barter economy arises.  So if we ban large campaign spending, then the quid pro quo becomes grass roots efforts and voter mobilization.  Groups like the UAW become more powerful (we are seeing that already).  They are trading their member's votes for influence.  Connected companies like GE are doing the same thing, trading their support for legislation that is generally hostile to commerce for specific clauses in said legislation that exempts GE and/or makes the laws even more punishing on their competition.  The problem with all this activity is it is hard to see and totally unaccountable -- at least with advertisements we see people out in the open with their agendas.
• I observed that it was smart to add term limits to her plan, as otherwise her recommendations would be the great incumbent protection act.  But by limiting money, immediate advantage is given to people who already have name recognition and celebrity.  Think we have too many actors and athletes running for office?   Well be prepared for a flood with stricter campaign finance restrictions

However, I tend to shy away form utilitarian arguments.  The best arguments I have against the notion that money can be restricted without restricting speech are:

• Her comment that I still had freedom of speech (ie I am talking freely in the car) with strict campaign cash restrictions ignores the actual wording of the First Amendment, which reads "Congress shall make no law ... abridging the freedom of speech."  Her test, which is "Am I still able to speak in some forum even if I can't in others" is not a valid test for conformance to the First Amendment.  Otherwise, speech could be restricted at will as long as there was some narrow safe harbor where one could express his opinion.    The better test is whether the proposed law, ie a restriction on how much and when a person can spend money advertising his or her opinions, abridges or reduces freedom of speech.  And I think it is hard to deny that everyone has less freedom, in the form of fewer options and reduced scope, after such legislation.
• One interesting test is to broaden the question -- Does restricting spending on something (in this case speech) constitute a restriction on one's underlying right to the activity (e.g. speaking freely).  I was tempted to ask her (she is a strong and vocal abortion rights supporter) whether she would therefore consider the right to abortion to be untouched by Congress if a law were passed to limit each person's spending on abortion to $5 a year.   Abortion would still be entirely legal  -- all government would be doing is putting on some spending restrictions.   Obviously one's scope and options to get an abortion would be limited -- only those who happened to have a doctor in the family could perhaps get an abortion -- just as under her speech plan only those who had a large newspaper in the family could speak fully and freely before an election.