Coyote Blog

The Peoria, IL mayor used the city police to raid and shut down the owners of a Twitter account that mocked the mayor.  The original twitter feed probably had about 12 followers when it was shut down.  I suggest that it is now past time for him to Google the "Streisand Effect"

Too bad she didn't have a police force.

Update:  Told you so.  Popehat has a go

For 20 years, before I liberated myself from corporate America, I spent a hell of a lot of time doing business and market analysis (e.g. why are profits declining in Division X).  I was pretty good at it.  If I had to boil down everything I learned in those years to one lesson, it would be this:  Pay attention to changes in the mix.

What do I mean by "changes in the mix"?  Here is an example.  A company has two products.  One has a 20% margin, and the other has a 30% margin, and both margins have been improving over time because of a series of cost reduction investments.  But overall, company margins are falling.  The likely reason:  the mix is shifting.  The company is selling a higher proportion of the lower margin product.

Here is a real world example:  When I was at AlliedSignal (now Honeywell) aviation, they had exactly this problem.  They were operating in a razor and blades business -- ie they practically gave the new parts away to Boeing and Airbus to put on their planes, because they made all their money selling aftermarket replacements at a premium (at the time, government rules made it almost impossible to buy anything but the original manufacturer's part, so they could charge almost anything for a replacement, especially given that an airline likely had a $50 million plane sitting dormant until the part was replaced).  I routinely would tell managers in the company that essentially our business made money from unreliability -- the less reliable our parts, the more money we made.  Because newer technology, competition, and pressure form airlines was forcing us to greatly improve our reliability (at the same time we were giving stuff to Boeing at ever greater losses), all our newer products on newer planes were less profitable than the old stuff.  As planes aged and dropped out of the fleet, our product mix was getting less and less profitable.

This same effect can be seen in many economic and political issues.  Take for example an argument my mother-in-law and I had years and years ago.  She said that Texas (where I was living at the time) had crap schools that were much worse that those in Massachusetts, her argument for the blue political model.  She observed that average educational outcomes were much better in MA than TX (which was and still is true).  I observed on the other hand that this was in part a result of mix.  Texas had better outcomes than MA when one looked at Hispanics alone, and better outcomes for non-Hispanics alone, but got killed on the mix given that Hispanics typically have lower educational outcomes than non-Hispanics everywhere in the US, and Texas had far more Hispanics than MA.

All of this is a long introduction to some thinking I have been doing on all the "Average is Over" discussion talking about the flattening of growth in median wages.  I begin with this chart:

There is a lot of interstate migration going on.  And much of it seems to be out of what I think of as higher cost states like CA, IL, and NY and into lower cost states like AZ, TX, FL, and NC.  One of the facts of life about the CPI and other inflation adjustments of income numbers is that the US essentially maintains one average CPI.  Further, median income numbers and poverty numbers tend to assume one single average cost of living number.  But everyone understands that the income required to maintain lifestyle X on the east side of Manhattan is very different than the income required to maintain lifestyle X in Dallas or Knoxville or Jackson, MS.

Could it be that even with a flat average median wage, that demographic shifts to lower cost-of-living states actually result in individuals being better off and living better?

For some items one buys, of course, there is no improvement by moving.  For example, my guess is that an iPhone with a monthly service plan costs about the same anywhere you go in the US.  But if you take something like housing, the differences can be enormous.

Let's compare San Francisco and Houston.  At first glance, San Francisco seems far wealthier.  The median income in San Francisco is $78,840 while the median income in Houston in $55,910.  Moving from a median wage job in San Francisco to a media wage job in Houston seems to represent a huge step down.  If you and a bunch of your friends made this move, the US median income number would drop.  It would look like people were worse off.

But something else happens when you take this nominal pay cut to move to Houston.  You also can suddenly afford a much nicer, larger house, even at the lower nominal pay.  In San Francisco, your admittedly higher nominal pay would only afford you the ability to buy only 14% of the homes on the market.  And the median home, which you could not afford, has only about 1000 square feet of space.  In Houston, on the other hand, your lower nominal pay would allow you to buy 56% of the homes.  And that median home, which you can now afford, will have on average 1858 square feet of space.

So while the national median income numbers dropped when you moved to Houston, you actually can afford a much nicer home with perhaps twice as much space.  Thus, it strikes me that there are important things happening in the mix that are not being taken into account when we say that the "average is over".

Of course, while this effect is certainly real, I have no idea how much it affects the overall numbers, ie is it a small effect or a large effect.  Fortunately my son is studying economics in college.  If he ever goes to grad school, I will add this to my list of research suggestions for him.

Postscript:  This exact same discussion could apply to US poverty statistics.  We have one poverty line income number whether you live in Manhattan or Tuscaloosa.  I have always wondered how much poverty statistics would change if you created some kind of purchasing power parity test rather than a fixed income test.

I am a bit late to this, having just gotten back in town, but this is extraordinarily good news:

In a stunning blow to the Bush Administration in its
war-on-terrorism policies, the Supreme Court ruled Thursday that
foreign nationals held at Guantanamo Bay have a right to pursue habeas
challenges to their detention. The Court, dividing 5-4, ruled that
Congress had not validly taken away habeas rights.  If Congress wishes
to suspend habeas, it must do so only as the Constitution allows "” when
the country faces rebellion or invasion.

The Court stressed that it was not ruling that the detainees are
entitled to be released "” that is, entitled to have writs issued to end
their confinement. That issue, it said, is left to the District Court
judges who will be hearing the challenges. The Court also said that "we
do not address whether the President has authority to detain"
individuals during the war on terrorism, and hold them at the U.S.
Naval base in Cuba; that, too, it said, is to be considered first by
the District judges.

The Court also declared that detainees do not have to go through the
special civilian court review process that Congress created in 2005,
since that is not an adequate substitute for habeas rights.

During the17th and 18th century, as various western countries began to reign in autarchs, habeas corpus rights were high on their list of protections they demanded.  There is just too much potential for abuse to allow the Executive Branch to hold people (of any nationality) indefinitely without any kind of judicial due process.  I refuse to discuss the detentions in the context of their effectiveness in fighting terrorism just as I refuse to discuss immigration in terms of who will pick the lettuce.  If there are valid and legal reasons for these guys to be in detention, then the President must allow the judicial branch to confirm them or the legislative branch to amend them.

Update:  Powerline writes:

Justice Scalia characterizes the decision this way:

Today, for the first time in our Nation's history, the
Court confers a constitutional right to habeas corpus on alien enemies
detained abroad by our military forces in the course of an ongoing war.

It strikes me as odd to confer such a right, but then I haven't read Justice Kennedy's opinion yet.

I don't have enough law background to know if this is truly unprecedented in this way, but what it if is?  One could easily argue that the nature of the "enemy" here, being that they don't have the courtesy to wear uniforms that indicate their combatant status and which side they are on, is fairly unprecedented as well.  As is the President's claim that he has unilateral power to declare that there is a war at all, who this war is against, and who is or is not a combatant.  I know from past posts on this topic that many of my readers disagree with me, but I think it is perfectly fine for the Supreme Court, encountering this new situation, sides with the individual over the government.

Update #2, via the Onion 9/11 issue:

Bush is acting with the full support of Congress, which on Sept. 14
authorized him to use any necessary force against the undetermined
attackers. According to House Speaker Dennis Hastert (R-IL), the
congressional move enables the president to declare war, "to the extent
that war can realistically be declared on, like, maybe three or four
Egyptian guys, an Algerian, and this other guy who kind of looks
Lebanese but could be Syrian. Or whoever else it might have been.
Because it might not have been them."...

U.S. Sen. John McCain (R-AZ), one of Congress' decorated war
veterans, tried to steel the nation for the possibility of a long and
confusing conflict.

"America faces a long road ahead," McCain said. "We do not yet know
the nature of 21st-century warfare. We do not yet know how to fight
this sort of fight. And I'll be damned if one of us has an inkling who
we will be fighting against. With any luck, they've got uniforms of
some sort."...

Secretary of Defense Donald Rumsfeld said the war against terrorism will be different from any previous model of modern warfare.

"We were lucky enough at Pearl Harbor to be the victim of a craven
sneak attack from an aggressor with the decency to attack military
targets, use their own damn planes, and clearly mark those planes with
their national insignia so that we knew who they were," Rumsfeld said.
"Since the 21st-century breed of coward is not affording us any such
luxury, we are forced to fritter away time searching hither and yon for
him in the manner of a global easter-egg hunt."

Few people in September, 2001 were willing to try to get us laughing again.  One notable exception was the Onion, which produced what was probably their greatest issue.  In particular, this is still dead-on five years later:

In a televised address to the American people Tuesday, a determined
President Bush vowed that the U.S. would defeat "whoever exactly it is
we're at war with here."...

Bush is acting with the full support of Congress, which on Sept. 14
authorized him to use any necessary force against the undetermined
attackers. According to House Speaker Dennis Hastert (R-IL), the
congressional move enables the president to declare war, "to the extent
that war can realistically be declared on, like, maybe three or four
Egyptian guys, an Algerian, and this other guy who kind of looks
Lebanese but could be Syrian. Or whoever else it might have been.
Because it might not have been them."...

Secretary of Defense Donald Rumsfeld said the war against terrorism will be different from any previous model of modern warfare.

"We were lucky enough at Pearl Harbor to be the victim of a craven
sneak attack from an aggressor with the decency to attack military
targets, use their own damn planes, and clearly mark those planes with
their national insignia so that we knew who they were," Rumsfeld said.
"Since the 21st-century breed of coward is not affording us any such
luxury, we are forced to fritter away time searching hither and yon for
him in the manner of a global easter-egg hunt."

"America is up to that challenge," Rumsfeld added....

Gramm said that the U.S. has already learned a great deal about the
details of the Sept. 11 terrorist attack on the World Trade Center and
Pentagon, and that a rough psychological profile of its mastermind has
been constructed.

"For example, we know that the mastermind has the approximate
personality of a terrorist," Gramm said. "Also, he is senseless. New
data is emerging all the time."

According to Overlawyered.com, notorious judicial hellhole Madison County, IL has elected a new set of judges much less likely to be in the pocket of the litigation bar.