Coyote Blog

Everybody is always trying to spend someone else's money.  This kind of thing would really make me sick, except it is a little funny to see the kind of class warfare and redistributionist economics preached by elite universities come back to bite them:

Dr. Gravelle points out that endowment wealth is concentrated in the
upper ranks, much of it at 62 institutions with endowments larger than
$1 billion. But just three years ago only 39 schools had billion-plus
endowments. That's a 38% increase in just a few years. In 2006, 125
schools had endowments over $500 million"”a third more than in 2002. The
number of schools that can count themselves as endowment-rich or
super-rich is growing rapidly....

What the data shows is that endowment wealth is everywhere"”except in
the hands of the students who need it today. Last year endowments
increased 17.7% on average"”those larger than a billion increased 18.4%.
Yet, despite double-digit increases stretching back a decade or more
"”endowment spending is at a nearly all-time low of 4.2%--down from 5.1%
in 1994, 6.5% in 1982, and 5.2% in 1975....

Tuition has been going up so rapidly for so long it has reached nearly
ungraspable levels. So let me put today's tuition cost in concrete
terms. Senators, what would your constituents say if gasoline cost
$9.15 a gallon? Or if the price of milk was over $15? That is how much
those items would cost if their price had gone up at the same rate that
tuition has since 1980.

I believe that skyrocketing tuition is
undoubtedly the biggest "access" problem in higher education. What can
possibly be more discouraging to a capable student whose parents are
not wealthy than a school with a $45,000 price tag on the door?...

Congress should not hesitate to consider a minimum payout
requirement"”and 5% should be considered a starting point. The 5% number
is a dated one"”even for private foundations. Many schools have been
rolling over so much money for so long that they should easily be able
to accommodate a higher rate of payout. Possibly the most significant
challenge for policymakers will be to make sure that any newly directed
monies actually go toward aid or tuition reduction and don't become
part of a shell game.

Seriously, is there no pocket of private money that socialists won't stick their hand into?  In effect, at the same time Americans get lambasted for saving too little, this guy is going after private universities for saving too much?  And note the implicit assumption about government intervention he holds and expects all of Congress to hold in the third paragraph above:  It is just assumed that if prices go up enough to upset the constituents, then it is Congress's job to act.

Far be it for facts to get in the way of good populism, but I do know what Princeton does with its 2nd or 3rd largest endowment:

• Every student who gets admitted gets a financial aid package from the University that will allow them to attend, no matter what their finances are.  Yes, the student may have to work his butt off, but if he really wants to go to Princeton he will be able to go.  Princeton's wealth also allows it to be much more friendly in these financial assessments.  For example, many assets like the parent's house are taken off the table when assessing ability to pay
• If a student graduates normally, then all of her debts are paid off at graduation.  Every student graduates debt-free, giving them far more flexibility in what jobs they choose our of college.  No longer must they eschew non-profit or low-paying jobs due to the burden of debt.
• Princeton has accepted that applying more money to increasing the educational intensity of its existing 4000 students by an additional 0.1% is not the best use of its investment.  It has committed (in too small of a way for my preferences, but that is another matter) to using its fortunes to increase its size and bring Ivy League education to more people.  This year, it increased its entry class size by 250, which may seem small to those of you from large universities but is about a 20% increase for Princeton.

Since all Princeton students get whatever aid they need and graduate debt-free.  So the tuition number is irrelevent.  And statements like "I believe that skyrocketing tuition is
undoubtedly the biggest "access" problem in higher education" are virtually meaningless. 

This is one of the most incredible videos I have ever seen.   It looks like a big wack-a-mole game.  The last half of pious analysis is kind of boring but the first half is incredible.

I don't have a problem with someone who has had a bankruptcy in the past.  Bankruptcy is not some Scarlet B that should ruin one for life.  Ideally, its bad enough that folks should want to avoid it but forgiving enough that people can move on and get a fresh start.  Via TJIC

"¦ moderator Tim Russert asked former senator Mike Gravel about Gravel's
somewhat troubled financial history. A condominium business started by
Gravel went bankrupt, and Gravel himself once declared personal
bankruptcy. "How can someone who did not take care of his business,
could not manage his personal finances, say that he is capable of
managing the country?" Russert asked.

Here would be my answer:  "Bankruptcy does not necessarily mean that one has managed finances poorly or that one is somehow guilty of malfeasance.  It can mean those things, but it can also mean that one took a risk on a business vision, did the best job possible, but the vision turned out to somehow be wrong.  Some of the greatest names in American business backed Internet ventures that went bankrupt.  Some were just poorly managed, but many just made poor bets as to what would and would not work over the internet.  When people look at Enron, they assume that there must have been malfeasance for the company to go bankrupt.  And while folks were indeed breaking some laws there, those actions had nothing to do with Enron's bankruptcy.  Enron died because they made some huge bets on things like broadband that didn't pan out."

Here, in contrast, is Gravel's response:

"Well, first off, if you want to make a judgment of who can be the
greediest people in the world when they get to public office, you can
just look at the people up here," Gravel said in a nod to his fellow
candidates.

"Now, you say the condo business," he continued. "I
will tell you, Donald Trump has been bankrupt 100 times. So I went
bankrupt once in business.

Doesn't this guy sound like some overweight guy wearing a wife-beater and sitting in his trailer with a cheap beer watching a baseball game on his old black and white TV, railing against all the rich guys that never gave him a chance?  But the best is yet to come:

who did I bankrupt? I stuck the credit card companies with $90,000 worth of bills, and they deserved it "“ "

People in the audience began to laugh.

"They
deserved it," Gravel repeated, "and I used the money to finance the
empowerment of the American people with a national initiative."

That sound you hear is the dying gasps of individual responsibility.  And what the hell is that last part about "empowerment of the American people?"  Sounds like Gravel is channeling Lee Hunsacker.

I don't have a problem with someone who has had a bankruptcy in the past.  Bankruptcy is not some Scarlet B that should ruin one for life.  Ideally, its bad enough that folks should want to avoid it but forgiving enough that people can move on and get a fresh start.  Via TJIC

"¦ moderator Tim Russert asked former senator Mike Gravel about Gravel's
somewhat troubled financial history. A condominium business started by
Gravel went bankrupt, and Gravel himself once declared personal
bankruptcy. "How can someone who did not take care of his business,
could not manage his personal finances, say that he is capable of
managing the country?" Russert asked.

Here would be my answer:  "Bankruptcy does not necessarily mean that one has managed finances poorly or that one is somehow guilty of malfeasance.  It can mean those things, but it can also mean that one took a risk on a business vision, did the best job possible, but the vision turned out to somehow be wrong.  Some of the greatest names in American business backed Internet ventures that went bankrupt.  Some were just poorly managed, but many just made poor bets as to what would and would not work over the internet.  When people look at Enron, they assume that there must have been malfeasance for the company to go bankrupt.  And while folks were indeed breaking some laws there, those actions had nothing to do with Enron's bankruptcy.  Enron died because they made some huge bets on things like broadband that didn't pan out."

Here, in contrast, is Gravel's response:

"Well, first off, if you want to make a judgment of who can be the
greediest people in the world when they get to public office, you can
just look at the people up here," Gravel said in a nod to his fellow
candidates.

"Now, you say the condo business," he continued. "I
will tell you, Donald Trump has been bankrupt 100 times. So I went
bankrupt once in business.

Doesn't this guy sound like some overweight guy wearing a wife-beater and sitting in his trailer with a cheap beer watching a baseball game on his old black and white TV, railing against all the rich guys that never gave him a chance?  But the best is yet to come:

who did I bankrupt? I stuck the credit card companies with $90,000 worth of bills, and they deserved it "“ "

People in the audience began to laugh.

"They
deserved it," Gravel repeated, "and I used the money to finance the
empowerment of the American people with a national initiative."

That sound you hear is the dying gasps of individual responsibility.  And what the hell is that last part about "empowerment of the American people?"  Sounds like Gravel is channeling Lee Hunsacker.

The most important college football poll of the year is out, and the top five are as follows  (rank, team, #1 votes record so far, total points):

The rest of the list is here.

Many of you might notice that all of these teams have a record of 0-0.  So you might ask, "Coyote, are you crazy, why did you call this the most important poll of the year?"  Well, since I answered that last year, I will go back a year ago and quote myself:

In theory, voters in the college football polls each week come up
with their current ranking of teams, which in theory could be very
different from how they ranked things the previous week.  In practice,
however, voters start with their rankings of the previous week and then
make adjustments up and down for individual teams based on that week's
game results....

In effect, the college football rankings are a bit like a tennis ladder. Each
week, losers drop down 3-8 spots and all the winners and no-plays move up to
fill in the vacated spots. Sometimes a team will leapfrog another, but that is
rare and it is extremely rare to leapfrog more than 1 or 2 spots. In this sense, the
initial football poll is the most critical, since only those in the top 10-15
have any chance of moving up the ladder to #1.

In
effect, the pre-season poll is the baseline off which all future polls
start.  I haven't done the research, but you could probably refine my
statement in the previous paragraph to a set of rules such as:

• A three-loss team can never win the championship
• A two-loss team can win but only if they start in the top 5 of the pre-season poll
• A one-loss team can win but only if they start in the top 15
• An undefeated team can win even if they were left out of the
  initial top 25, but only if they play in a major conference.  A minor
  conference team, even undefeated, will not ever end up #1 unless they
  started the season in the top 25.

Again, the numbers in these rules may not be exactly right, but I
think they are directionally correct.  This is what I call my theory of
College Football Calvinism (the religion, not the cartoon character)
since one's ultimate fate is in large part pre-ordained by the polls
even before the season is born.  So, if your alma mater has any shot at
the title, you should hope your AD is out there in the summer lobbying
the writers like hell to up their pre-season poll standings. Every spot
you gain in the pre-season poll is one you don't have to win on the
playing field.

I am still underwater here completing a few projects, but Brink Lindsey is blogging on the most recent study claiming that income growth and the American Dream are somehow dead for the average American. 

Seriously folks, if I had a betting market that would allow you to bet on either income mobility in the US or in France, which would you take?  Seriously?  Given that the US has higher economic growth, orders of magnitude lower barriers to entrepreneurship, and no history of bright-line class distinctions that carry down through history, as France does, where would you bet?

Well, actually, there is such a betting market, and it is called immigration.  Guess which way it is running for the most talented people for whom income mobility would pay the greatest benefits?  Have you heard the stories of the brilliant young technology minds moving from the US to France to start their new business?  Yeah, neither have I.

And don't make the mistake that "Oh, this is fine for smart college educated kids, but how about for poor people?"  Congress is currently tying itself into knots over the problem of about 12 million poorer people for whom America was such an economic attraction that they were willing to break the law to come here.  Which, coincidently, also goes a long way to explaining why US median income always seems stagnant in studies over the last 30 years.  It is because tens of millions of poor immigrants have come in at the bottom, bringing down the mean and median at the same time most individuals are climbing.  It is for this reason that the average individual can be doing better and better at the same time the mean is flat or even going down.

Postscript:  I was emailing back and forth with Brink and he made a great point, which you should look for him to embellish on his blog tomorrow, which I would summarize this way -- No number of dollars in 1970 would buy a laptop computer
loaded with a real-time strategy game that you can play with 64 of your
friends over the Internet or on which you could store a few thousands CD-quality (CD, what's a CD?) songs.

I am reading a fabulous book called "The Rise and Fall of Society" by Frank Chodorov.  It was apparently first published in 1959 and has been republished recently by the .  Here is an early bit I particularly liked:

One indication of how far the integration [between state and society] has gone is the disappearance of any discussion of the State qua State -- a discussion that engaged the best minds of the eighteenth and nineteenth centuries.  The inadequacies of a particular regime, or its personnel, are under constant attack, but there is no faultfinding with the institution itself.  The State is all right, by common agreement, and it would work perfectly well if the "right" people were at its helm.

His next line is clearly aimed at his conservative contemporaries

It does not occur to most critics of the New Deal that all its deficiencies are inherent in any State, under anybody's guidance, or that when the political establishment garners enough power a demagogue will sprout.

I offered up similar observations here, though aimed at the left, who at the time were the minority opposition party:

I am reminded of all this because the technocrats that built our
regulatory state are starting to see the danger of what they created.
A public school system was great as long as it was teaching the right
things and its indoctrinational excesses were in a leftish direction.
Now, however, we can see the panic.  The left is freaked that some red
state school districts may start teaching creationism or intelligent
design.  And you can hear the lament - how did we let Bush and these
conservative idiots take control of the beautiful machine we built?  My
answer is that you shouldn't have built the machine in the first place
- it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.
And, knock me over with a feather, it appears that the decision was
political, based on a conservative administration's opposition to
abortion.  And again the technocrats on the left are freaked.  Well,
what did you expect?  You applauded the Clinton FDA's politically
motivated ban on breast implants as a sop to NOW and the trial
lawyers.  In
establishing the FDA, it was you on the left that established the
principal, contradictory to the left's own stand on abortion, that the
government does indeed trump the individual on decision making for
their own body  (other thoughts here).
Again we hear the lament that the game was great until these
conservative yahoos took over.  No, it wasn't.  It was unjust to scheme
to control other people's lives, and just plain stupid to expect that
the machinery of control you created would never fall into your
political enemy's hands.

Via TJIC:

In his commencement speech at Southern New Hampshire University
this morning, Obama - like most commencement speakers - delivered a
call to public service; unlike many, however, he also warned against
the charms of doing what most college graduates set out to do: Make
money.

"In a few minutes, you can take your diploma, walk off this
stage and go chasing after the big house and the large salary and the
nice suits and all the other things that our money culture says you
should buy.

"But I hope you don't. Focusing your life solely on making a
buck shows a poverty of ambition. It asks too little of yourself. And
it will leave you unfulfilled," he told the crowd.

This statement would certainly be true in 18th century European monarchies, in Soviet Russia, in third world Kleptocracies, in Cuba, and in Chavez's Venezuela.  Because making money in these environments is a zero-sum game, and the only way to get rich is to loot it from some poor schmuck who is actually creating the value.

But here in America, we (mostly) have this cool system called capitalism.  In capitalism, all interactions are based on the voluntary self-interest of the parties involved.  This means that one only can "make a buck" by doing something or making something that is of value to another person.  And only by successfully serving the needs of a LOT of people does one get really rich. 

TJIC's conclusion is wonderful:

Far better that they spend their life

• majoring in political "science"
• working for a meaningless non-profit
• trying to register more people to vote so that the negative-sum game of politics can have more credibility
• helping political partisans redrawn electoral district boundaries in the same negative-sum game of politics
• being a senator, pushing for more regulations and tax increases

That, clearly, is a fulfilling life.

Let the suckers create value.

The best and brightest should just steal it, and move it around
(while taking some portion of it for themselves, and destroying another
portion of it).

Beware of people who try to demonstrate how much they "care" using other peoples' money.

Consider this situation:  You are a member of a four-person rock band.  Each member of the band has contributed somewhat equally over time, and band revenues have always been split evenly, 25% to each member, though its total earnings on an absolute basis have been small  However, the band has suddenly become the next U2.  It is likely the band will make tens of millions of dollars over the coming years.  Just as this is happening, the other three band members come to you and threaten to make you Pete Best.  They will allow you to stay with the band, but only if you accept a reduction in your share of the earnings to 10%.  You perceive this move as unfair given your equal contribution to the band to date.  However, even 10% of the band's new fortunes would be a LOT of money (and fame) and you honestly believe that even a 10% share is better than you could do with any other band or occupation.  What do you do -- take 10% or quit?  (assume you want to be famous and you have no legal recourse against the other members)

In an analytical vacuum, one might predict that any rational person would take the deal -- while it is less than might be hoped, it is certainly a better deal than one could get any place else.  A pure profit maximizing decision would be to stay with the band (and watch you back at night for more knives).

However, numerous studies and surveys have shown that in fact, a  large number of people would choose to give up the money rather than feel cheated.  Just look at the number of professional football players who have held out for a whole season to try to get a better contract.  In every case, the present value of the salary lost for that season is far greater than any increase in salary in the future from taking the tough stand.  But these players would rather be paid nothing than feel underpaid.

TJIC had a pointer to an interesting article on game theory.  In it, the author talks about this behavior in the context of a game that divides up pies, and summarizes:

Apparently, making money is not the players' only concern; participants have a sense of pride and care about how they are treated by others, economists have concluded. Thus, offers perceived to be "unfair" are rejected out of a desire for revenge.

In fact, revenge and/or envy has been tested in a number of games, where scientists gave players trailing in the game the ability to spend money solely to take away money from the leading players  (e.g. you can spend your last $10 to make $10 of your opponents money disappear).  There is something in human behavior that wants to bring down the winners, even when doing so makes one worse off himself.  (Question to Red Sox fans:  would you accept a lifetime bad of the Sox from the World Series if you were guaranteed the Yankees would never make the World Series either?)

I guess I don't really have a problem with such behavior in consensual transactions (though I personally work pretty hard to purge my ego from business decisions).  My problem comes when people motivated in this way vote in our society that has proven to have inadequate protections of the minority, at least when we refer to the minority of rich and successful. 

In Closing of the American Mind,  Allan Bloom tells the story of a question he used to ask his classes vis a vis income inequality.  He would ask something like "Would you vote for a law that reduced income inequality but at the same time reduced total wealth, such that the poor might get a larger slice of a smaller pie, and might even be worse off on an absolute basis afterwards."  Apparently, he would get solid majorities for "yes" and in fact I have been in classes where this same question was asked and at least 40% said "yes."  This is a situation a bit similar to the one above, but without it being personal.  In other words, no one has explicitly hosed you, they have just done better.

I hope you can see the parallel.  Large numbers of people are willing to pay (or equivalently make less money) to reduce the earnings of people who are wealthy and/or successful. They are even  more willing to do so if they think that they have been treated unfairly.  Which is why you see so many politicians and media outlets working so hard right now to convince the middle class that current income distribution patterns are somehow "unfair."  Politicians are pandering to this base human emotion, the desire to spitefully bring someone else down (in the case of income equality laws, someone the person has likely never even met or transacted with) even if it makes oneself worse off.   

I can understand why Pete Best might harbor a grudge against the Beatles.  But why do so many Americans harbor a grudge against people they have never met, just because they make more money?

The NYT reports on what looks like a well-reasoned study on officiating bias in the NBA.  I say well-reasoned mainly because Steven Levitt, who has become famous for applying tools of economics to such problems, seems to be comfortable with their approach.  The key finding is that white refs call fouls on black players at a rate .12-.20 fouls per 48 minutes playing time higher than they do on white players  [note that most players don't play a full 48 minutes per game, so the actual rate per player per game is less].  Black refs show the same tendency to call more fouls on whites, though the article omits this rate.

That's obviously a bummer -- we'd like to think that stuff never comes into play.  However, I would like to offer this bit of perspective:  Sixty years ago, black men were not allowed in the NBA.  Today, black men in the NBA, along with folks like Tiger Woods, are among the highest salaried people in the world.   In 60 years, we have gone from  total exclusion to a measurable difference of about 1 foul called every 10 or so games played.  That's pretty good progress. 

My sense is that we make snap decisions about other people based on a wide range of physical attributes, including height, attractiveness, clothing, tattoos, piercings as well as visible racial characteristics (e.g. skin color) and race-related appearance choices (e.g. cornrows).  It would be interesting to see where skin color falls against these other visible differentiators as a driver of third party decisions (e.g. whether to call a foul).   My sense is that 60 years ago, skin color would be factor #1 and all these others would be orders of magnitude behind.  Today?  I don't know.  While skin color hasn't gone away as an influencer, it may be falling into what we might call the "background level", less than or equal to some of these other effects.  It would be interesting, for example, to make the same study on level of visible tattooing and the effect on foul calls.  My sense is that this might be of the same order of magnitude today as skin color in affecting such snap decisions.

Last year, Alex Rodriguez was Mr. Choke, because he was perceived as batting less well when the game was on the line.  This year, he has hit a few walk-off homeruns, and he is the new Mr. Clutch.

Clutch hitting is one of those baseball notions that are constantly argued about.  A short summary of the ongoing argument is:  Inside baseball guys swear it is a true phenomena;  statisticians generally cannot find it.  I tend to believe that few if any players have consistently elevated their hitting in clutch situations, but you can find players whose hitting is worse, where the mental stress takes a toll.   Tom Kirkendall points to this great blog I have never visited before called "Fire Joe Morgon."  I am presuming the name is a reference to the fact that former player Joe Morgon has effectively staked himself out as the defender of baseball conventional wisdom against the assault of the Bill James / Billy Bean statistics guys.  He has a great long post showing the absurdity of some of the clutch hitting claims.  This one got him started:

It was a week ago today, fewer than 24
hours after the Pirates had put down a sizzling St. Louis rally in the
ninth inning, that catcher Ronny Paulino reflected upon it and offered
this surprising tidbit.

"You know what the key was to that whole inning?" he said. "When David Eckstein got hit by that pitch."

Say what?

Hitting Eckstein -- not intentionally -- loaded the bases and,
ultimately, forced closer Salomon Torres to pitch to Albert Pujols with
a one-run lead.

"Doesn't matter," Paulino said. "Eckstein's the guy you don't want to face there."

There's
a lot of stupid stuff in this article. I am happy to say -- since I get
bored of disparaging journalists only -- that most of it is said by
actual baseball players. That's new and fun!

David
Eckstein's career EqA is .260, which is exactly league average. Albert
Pujols's career EqA is .341, which is easy, don't-even-think-twice Hall
of Fame shoo-in. Anyone who ever wants to pitch to Albert Pujols over
David Eckstein in any situation, including pick-up whiffle ball games
at family barbecues when Pujols has dengue fever and Eckstein gets to
use one of those over-sized red bats while Pujols has to hit with a
live cobra, is a goddamn moron of the highest order.

Derek Jeter is generally considered the hands-down clutch playoff hitter in baseball today.  Everyone in baseball, almost to a man, will say that Jeter steps up in the playoffs, so we see this:

Derek Jeter's Career Splits: .317/.388/.463

Derek Jeter's Career Postseason splits: .314/.384/.479

Mr.
Clutch is actually Mr. Exactly the Same No Matter What Month You Are
Talking About. He is Mr. Equally Excellent Hitting SS Every Month from
April to November. He is Mr. Outrageously Similar Statistics Every 30
Days.

LOL

John Sugg at Reason has a review of corporate relocation subsidies down South, and the picture is not pretty:

Jurisdictions across the nation offer such inducements, which
include tax abatement, land acquisition, construction subsidies,
training subsidies, and outright cash grants. Nationally, relocation
incentives total about $50 billion a year, according to the WHR Group,
SIRVA, and other relo­cation consultants. (Such consultants often
collect as much as 30 percent of the grants they negotiate for the
businesses.)...

It's hard to get a precise total of the dollars
involved, but almost every major business relocation in the South is
accompanied by a cornucopia of publicly funded grants, despite ample
evidence that the subsidies have little impact on corporate site
selection. Other regions of the nation, especially ones experiencing
protracted economic downturns, are increasingly emulating the South.
The politicians involved rarely consider broader tax and regulatory
changes that would make their states more attractive to all businesses,
outside and homegrown....

Trendy businesses"”particularly technology firms"”have the greatest
leverage in demanding government subsidies. In February, for example,
biofuel manufacturer Range Fuels, based on lit­tle more than its word
that it could deliver a economically competitive product, was offered
$6 million in state cash, a 97-acre tract in central Georgia, and a set
of tax abatements. At best, the company will employ 70 people.

He's got tons of examples, so you should read it all, but this one sounded just like something out of Wisconsin in Atlas Shrugged:

One business that benefited from such subsidies was the Real Silk
Hosiery factory, which opened in Durant, Mississippi, in the late
1930s. Real Silk rented its factory from a state agency for $5 a year,
enjoyed tax incentives, and had public agencies train its employees and
even build their homes. The Durant plant was shuttered in the mid-'50s.
Like many other Southern industrial facilities abandoned by owners
seeking better deals elsewhere, it closed before the industrial revenue
bonds were paid off. Writing in Time in 1998, reporters Donald Bartlett
and James Steele noted that Mississippi "was the poorest state in the
nation when its corporate-welfare program began in 1936."¦62 years and
hundreds upon hundreds of millions of dollars in economic incentives
later, it remains dead last in per capita income."

In the past, I have observed that the "game" of competitive relocation subsidies between local authorities is very similar to a prisoner's dilemma game.  In the prisoner's dilemma, two prisoners are given a choice: To confess and rat out their partner or to stay silent.  If both stay silent, they get 10 years each in jail.  If one rats out the other, but the other stays silent, the talker gets 5 years and the silent one gets 30 years.  If they both talk, then they both get 20 years.  In this game, each person has the incentive to talk, since for any set of actions of their partner, they are better off talking than not talking.  The irony is that when they both inevitably talk, they end up worse off than if they had stayed silent.

I see the relocation subsidy game as very similar, replacing "state official" for prisoner and "subsidize" for "talk."  Quoting from myself:

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.

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

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

I conclude with this from Sugg's piece:

Holladay, who has headed state economic development agencies in
Georgia, Mississippi, and South Carolina, remembers a conversation with
Zell Miller, then governor of Georgia, at a National Governors
Conference in the '90s. "The topic of subsidies came up," he recalls.
"Zell asked me, "˜Is there any way to end this foolishness?' I answered,
"˜The only way I know is to not elect any more governors.'"‰"

From Glen Wishard:

Make no mistake, then - the Supreme Court is no longer the Supreme
Court of past fame. It is now the National Abortion Tribunal, and its
members are no longer jurists, they are the Keepers of the Abortion
Toggle Switch.

-----0-->0-----

Fig. 1A. Abortion Toggle Switch, closed.
Suction motors will engage.

As we can see from the schematic diagram above, the Abortion Toggle
Switch is currently in the closed (ON) position. The entire purpose of
the so-called Supreme Court, as current wisdom understands that
purpose, is to stare at this switch all day wondering whether they
should play with it or not.

Now this is a sad state for this once-great court to have fallen to,
and makes me wonder if we don't need another court to assume the
neglected responsibilities of the current one. Then the Abortion Toggle
Switch could be moved to some remote corner of the public's attention,
and the various abortion partisans could play their endless game of
Keep Away without buggering up the entire constitutional process.

Sometimes industries get nationalized, and they seem to do OK, at least for a while.  Sometimes when countries go socialist, and they appear to function well, at least at first (Sweden, for example, was held up as a model for a while).  I had a couple of thoughts on this topic as we seem to be at the precipice of nationalizing the health care industry in this country:

• Among some, the work ethic dies hard.  Medicine is a great example.  Because of how difficult it is to become a doctor in this country, the medical profession attracts very few people with poor work ethics.  One can see these folks continuing to work hard, even under socialized medicine where many of the incentives to do so have been taken away.  It can take a whole generation for socialism to kill the work ethic in an industry, but when it finally does so, the effect is dramatic.  For example, doctors in the US see 60% more patients in a day than doctors in countries with socialized medicine (ie everywhere else).  Eventually, though, the highest talent, most motivated people move on to other industries or occupations where their hard work is rewarded, and are replaced by a new generation of workers who are attracted to a job where only attendance (and sometimes not even that) is required.
• Incentives can work quickly, or they can take a while to operate.  Some incentives can work quickly -- for example, if on any given day, the government were to decide to cap gasoline prices twenty percent below the market level, we would see gasoline lines in less than a week.  On the other hand, the welfare program of the late 1960's provided incentives for out-of-wedlock births that took 20+ years to reach its peak.  Beyond the moral failures of socialism, one** of its practical failures revolves around incentives.  Customers get subsidized products or services, forgetting that that this will cause people to use more than is available.  Employees don't get rewarded for merit or hard work, but the system is constructed such that it won't work without these.
• Assets and capital equipment act like a storage battery.  Businesses that are purely human, like a restaurant, you can screw up in a week.  I think everyone has had the experience of going to a service business under new management and being really disappointed.  Capital-intensive businesses, particularly extractive ones, can be looted for decades by kleptocratic governments.   Even so, the game can't go on forever.

What drives me most crazy is when socialism's advocates answer criticisms about socialism's consistently dismal long-term results by saying "but it will work if only we can get the right people in charge" (usually this means the speaker and his/her cronies).  If you are a Star Trek fan, you will understand why I call this the "John Gill Fallacy."  As I wrote before:

Technocratic idealists ALWAYS lose control of the game.  It may feel
good at first when the trains start running on time, but the
technocrats are soon swept away by the thugs, and the patina of
idealism is swept away, and only fascism is left.  Interestingly, the
technocrats always cry "our only mistake was letting those other guys
take control".  No, the mistake was accepting the right to use force on
another man.  Everything after that was inevitable.

** Other failures of socialism include this.  And this:

You can't make better decisions for other people, even if you are
smarter, because every person has different wants, needs, values, etc.,
and thus make trade-offs differently.  Tedy Bruschi of the Patriots is willing to take post-stroke risks by playing pro football again I would never take, but that doesn't mean its a incorrect decision for him.

I am still getting the hard sell from cold-callers touting securities.  I am told this is because we small business owners are just behind dentists and doctors in terms of our capacity to make bonehead investments.

Before I proceed with this story, there are two things you need to know about me:

• I answer my own phone at the office
• I have never, ever listened to a sales pitch for an investment or security.  If I am in a good mood, I interrupt and say, "sorry, not iterested" before they can even name the stock.  If I am in a bad mood, I just hang up.

So the other day, I accidentally let one of them go further than I usually allow.  He said he was from Olympia Asset Management.  (There is an Olympia Asset Management web page, but I don't know if it is the same company and the web page has not been updated for several years.)  I let him run for a bit because a friend of mine runs a very well-respected financial planning firm with a different name but also with Olympia in the title, and for a moment I thought it might have been one of his folks.

Anyway, he proceeds to try to convince me that we have talked before and discussed a certain security.  "Remember me, we talked six months ago about ____".  Of course, I had never heard of the guy.  At this point I usually hang up, because I have heard this crap before -- it is a common pitch.  The best I can figure is that they are trying to give themselves more credibility by either:

1. Trying to imply that we have some kind of relationship we actually don't have.  Or worse...
2. Trying to convince me that he touted stock A six months ago, so now he can tell me stock A has gone up in price.  Many reputable brokers built their reputation by cold calling people and saying:  Watch these 3 stocks and see how they do and I will call you back in 6 months.  That way, you can evaluate their stock picking without risk.  The modern sleazy approach is to pick a stock that has gone up a lot in the last 6 months, and then call some harried business person and pretend you called them with that pick 6 months ago, hoping that they will give you the benefit of the doubt.

For some reason, maybe because I was bored, I decided to chat with him, and I had to admit that he was trained pretty well never to give up.  I interrupted him after the "do you remember" opening and said that we could not possible have spoken about a stock, because I always hang up on people within 5 seconds of knowing it is a stock pitch.  He said he had sent me a packet of information.  I said that he had not.  He insisted that we had talked, and that I had promised to write down the name of the stock on my calendar.  I told him I don't have a calendar  (which is actually true - I manage myself through a dysfunctional combination of memory and post-it notes).  Sensing weakness, I turned on him and said "gee, I was out of town a lot 6 months ago and am surprised you got hold of me.  What date did you call."  Then he starts getting all vague on me.  Anyway, I finally tired of the game and hung up but he never relented in his assertion that he and I had had a nice chat about some security.

Please, please.  Avoid these guys on the phone like the plague.  Several years ago I had a guy call me with some oil drilling "opportunity."  In that case, I also made an exception to my rule and listened to see just how bad this thing was going to be.  Finally I broke in and said "that's ridiculous, no one in their right mind would send you money for that."  He too was relentless, until I finally said "Look, I know Tony Soprano is standing behind you in the boiler room there and putting pressure on you, but I am not interested."  Then, without a pause, he starts telling me how he once threw a Molotov cocktail into the car of someone he didn't like.  I don't know if he was just having fun with me, but he was either wildly unprofessional or very creepy.  Beware, Beware, Beware.

We had a couple apply for a camp host job the other day, and try to get us to hire them as contractors rather than employees.  This is not that unusual, since there are a number of reasons someone might prefer this relationship, most of which involve evading taxes.  We, by policy, generally won't play this game, particularly for full time employees. 

What was different in this case was that the couple showed up with a ready-made contract.  What caught the eye of some of my managers was this clause of the contract:

Applicable Law: This
Agreement and Contract is governed by the Law of God, also known as Biblical
Law, Natural Law, and Christian Common Law, and, barring any conflict with
Natural Law, the Common Law Right of Contract.

Hmmm.  So who do we go to with disputes?  Moses?  Maybe King Solomon? 

I know Curt Schilling is kind of a love-him or hate-him kind of athlete, but I will say his current blogging effort is pretty impressive.  No big revelations in this post, but note the detailed observations he makes about a pre-season game that many pitchers of his experience and profile might not even think twice about.

A reader sends this one in, after reading my book BMOC.  One of the characters in the book is a business man who has a knack for monetizing wacky business models  (one example:  providing free fountains to malls in exchange for being able to harvest the coins out of them).  The book is named after his new company called BMOC, which specializes in making teens popular.

This caused a reader to send me this web site for FakeYourSpace.com.  They are selling popularity their own way, by providing you comments and visits from hot and cool friends on your MySpace pages.  Sort of sock puppetry for teens.

Welcome to Fake Your Space. You have found a new and
exciting service which offers help to all the men and women out there
who don't feel like they are popular enough on social networking sites
such as MySpace, Facebook, and Friendster.
If you are tired of seeing everyone else with the hottest friends and
want some hotties of your own, then this is the place for you.

LOL.  Wish I had thought of it for my book.  Below the fold is the business model for BMOC, which I thought was crazy enough:

Continue reading ‘Wacky Business Models’ »

As most people know, the NFL doesn't want you to use the word "Superbowl" when hosting a party, sale, event, etc, and they aggressively enforce their trademark on this term.  In response, since all the country does in fact have parties, sales, events, etc. associated with the Superbowl, folks have adopted the euphemism 'the big game" in their communications. 

I observed that this not only pointed out some of the silliness in our intellectual property laws, but also was counter-productive for the NFL -- shouldn't they want people talking about and holding events for the Superbowl?  I suggested a simple licensing program that would raise a little money and probably work better for everyone:

The NFL needs to offer a one time use license each year for a bar or
other establishment to hold a Superbowl party and actually use
Superbowl in the promotion.  The license would of course be
non-exclusive, and would carry a myriad of restrictions on how you use
the name, etc.   The license could be purchased for a price that would
be cheap for a business, maybe $200, and could be purchased right over
the web.  It would actually be easier, I think, to go after violators
because the NFL could point to the existence of a legal licensing
program the violator could easily have participated in.  I would think
they could easily bring in a couple of million dollars, not to mention
saving them enforcement money and PR headaches.

The NFL has decided to go in a different direction.  It is trying to trademark the term "the big game" so that term can't be used either (HT Overlawyered).  I particularly liked this from the application:

Disclaimer NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE "GAME" APART FROM THE MARK AS SHOWN

Jeez, why not?  Who at the NFL is sleeping on the job here?

Well, that's what I get as a libertarian for trying to work within the system to make things incrementally better rather than going on one of my usual idealistic rants.  So I officially withdraw my previous suggestion in favor of a new one:  Trademarks should, at most, only give one the protection from someone else labeling a similar product with the trademarked name.  By trademarking Jif, P&G gets protection from another company selling peanut butter under the same name in the US.  However, any other use of Jif in communication should be entirely legal.  If I communicate to people that I am having Jif party, that communication is protected under the first amendment and P&G can't shut down my party.  If I want to put out a poster and sell it with Jif peanut butter labels and how they have changed over the past 100 years, I should have the right to do so.   Ditto if I want to print bumper stickers that say "Jif sucks."

Similarly, the NFL can be legally protected from having another group host a football game (and if I am in a generous mood, maybe any type of sporting event) and calling it the Superbowl.  And that is it.  They should not be granted an exclusive government monopoly to use the word Superbowl, or more ludicrously, "the big game":

posters, calendars, trading cards, series
of non-fiction books relating to football; magazines relating to
football, newsletters relating to football,notepads, stickers, bumper
stickers, paper pennants; greeting cards; printed tickets to sports
games and events; pens and pencils, note paper, wrapping paper, paper
table cloths, paper napkins, printed paper party invitations, paper
gift cards; paper party decorations, collectible cards; collectible
card and memorabilia holders, souvenir programs for sports events,...toys and sporting goods, namely, plush toys, stuffed toy
animals, play figures, golf balls, footballs, sport balls, toy banks,
playing cards, Christmas tree ornaments...Men's, women's and children's apparel, namely T-shirts, fleece tops, caps, headwear

And don't even get me started on Pat Riley's "Threepeat."

A cool animated map showing the ebb and flow of empires in the Middle East.  Like watching a Civilization game replay at high speed.

Hat tip:  Mises

There was a lot of thanking God for the Colts victory today.  I would love to see the losing coach come on TV after such an interview and say "you heard it -- God was against us.  What chance did we have?"

Update:  I would love to see this on John Madden's etch-a-sketch.  "OK, here's Grossman dropping back for a pass, he throws it across here, and BOOM, God knocks it right out of the receiver's hands.  First down Colts, game over."

Every year about this time, the NFL earns itself some bad press for busting some small bar or local group for using the word "Superbowl" rather than that catchy phrase "the big game on the first Sunday in February down in Miami."  This year, the bad press honor goes to the NFL for shutting down a party at a church in Indianapolis for having a screen too large.  (Hey NFL!  I am breaking the law!  I have a 110" front projection TV, twice the "legal" 55-inch limit, and I am showing the game on it at my party.  HA HA HA!).  And by the way, what lapdog legislator wrote this law for them, and did he get Superbowl tickets for life?

Now, I understand the situation with copyrights - if you don't defend them vigorously and even-handedly, you can lose them.  I seem to remember Exxon or some other chemical company lost the rights tot he name Formica when they let it be used too generically for counter-top materials.  And the NFL PR people use this defense every year, saying "we really don't want to shut down these folks, but we have to." 

I don't agree that individual words should be copyrighted such that their use in a broad range of contexts should be illegal.  I am fine saying that I can't create another peanut butter and call it "Jif."  I will accept P&G has some sole right in this country to that use.  However, I don't think P&G can tell me that I can't advertise a "Jif party" feature their peanut butter.  In the same way, I am willing to grant the NFL exclusive use of "Superbowl" to describe a sporting event, but I don't think that should restrict me from advertising that people should come to my bar to watch the Superbowl.  And just to add one more example so I have a "threepeat," I don't think Pat Riley should have any ownership in that word.   However, since copyright law is not going to change tomorrow, I will offer up a more modest change.

So here is my suggestion.  The NFL needs to offer a one time use license each year for a bar or other establishment to hold a Superbowl party and actually use Superbowl in the promotion.  The license would of course be non-exclusive, and would carry a myriad of restrictions on how you use the name, etc.   The license could be purchased for a price that would be cheap for a business, maybe $200, and could be purchased right over the web.  It would actually be easier, I think, to go after violators because the NFL could point to the existence of a legal licensing program the violator could easily have participated in.  I would think they could easily bring in a couple of million dollars, not to mention saving them enforcement money and PR headaches.

PS-  Welcome to the NFL intellectual property department.  I presume I included enough verboten uses of "Superbowl" to catch your search engine's attention.

PPS-  My Firefox spell checker (which I love!) does not have "Superbowl" in it.  I wonder, would the NFL consider it a copyright violation for a program to use the word "Superbowl" in its dictionary?

The Cowboys are apparently looking pretty seriously at former Princeton Quarterback Jason Garrett to be their new offensive coordinator, and possibly even head coach.  Garrett is one of two Princetonians with a Super Bowl ring (quarterback Bob Holly being the other) as part of the mid-1990s Cowboys dynasty. Who will ever forget that great Thanksgiving game against the Packers when Garrett (15-26-311-2-1 for the day) outduelled Brett Favre for a spectacular win after trailing 14-3 at the half?   Well, at least I haven't forgotten.

Wow.  That game didn't suck.

Hugo Chavez has had himself declared dictator of Venezuela. 

Venezuela's National Assembly has given initial approval to a bill
granting the president the power to bypass congress and rule by decree
for 18 months.

President Hugo Chavez says he wants "revolutionary laws" to enact
sweeping political, economic and social changes. He has said he wants
to nationalise key sectors of the economy and scrap limits on the terms
a president can serve.

Mr Chavez began his third term in office last week after a landslide election victory in December.

The bill allowing him to enact laws by decree is expected to win
final approval easily in the assembly on its second reading on Tuesday.
Venezuela's political opposition has no representation in the National
Assembly since it boycotted elections in 2005.

Recognize that Chavez is the man, more than any other world leader, that progressives in this country have adopted as their hero.  Nowhere will you see a better illustration of what end-game progressives are really after.