Coyote Blog

Well, as promised, I wanted to post our race day picture from the half marathon.  This was done for my daughter's benefit, who set the goal to run a half marathon about 6 months ago and figured the promise of a Disney trip would be incentive to stay on top of her training.

She schlepped that tutu and that tiara for the whole 13.1, walking only at a couple of the last water stops.  This event was 95% women, and attracts a LOT of folks who really don't run the whole thing, so it was a great place for her to begin.  It's also pretty laid back, as there are actually character photo ops every mile, though we skipped those.  I have not seen our time, but we probably did about 2:45.  That's 20 minutes worse than my time five years ago -- it would be nice to say I was holding back to stay with my daughter but in fact she pulled me through the last mile.  Muscles and cardio were fine but the knees and ankles really can't take it any more.  But I proudly wore this bad boy all day.

If you are interested in this sort of thing, it was a great event, going through two of their parks.  The only problem is that it has to take place before the parks are open, so we had to set the wake-up call for 3:15 AM.  Uggh.  The butt-crack of dawn, as my sister calls it.

And yes, I did help make the tutu, with the aid of this video.  It is videos like that that remind me there are whole worlds of which I am virtually unaware.   Note the number of views - 1.4 million, on making a tutu.

I continue to like everything I see of Gary Johnson.  Unfortunately, I seldom see anything.  For reasons not entirely clear to me, Johnson is being left out of the next Republican debate, despite polling better than many of those invited (and that despite a LOT less pub than folks like Rick Santorum).

I understand why the major media ignores him -- their strategy seems to be to focus on the wackiest Republican candidate, whoever that might be at the time.  My only guess on Johnson is that he ticks off social conservatives who have a lot of power in the party.  This is exactly the type of thing that has me not only indifferent to, but hostile to politics, and why you will almost never see horserace-style reporting of political races here.

Anyway, here is more on Johnson and a Reason video so you can actually see the guy.

Update:  This is part 1.  Part 2 is here.

I sit here near Brookhaven on Long Island hiding in my hotel room as I don't want to make my son any more nervous in performing the skill evaluations at the baseball showcase camp he is attending.  Two hundred nervous kids and four hundred nervous parents is something I can avoid  (though for parental hyperactive competitive frenzy, nothing in my life has yet topped an elementary school chess tournament in Seattle).  Later today the format shifts to playing games and I will go over and watch that.

As I sit here, I might as well share with you some of the lessons we have learned in trying to land a spot playing college baseball.  I am not sure you should even listen to me, as I knew nothing about this 5 months ago and we still don't know if our son will be successful, though we are gaining confidence.

First, if your kid is a total stud, he may be scouted in high school, either on his school team or on summer and fall teams built for that purpose.  If so, great.   But just because your kid has never been seen by a college scout, or goes to a school that is not a traditional baseball powerhouse, he is not somehow doomed.  Our son certainly has never seen a scout and goes to a school that almost never produces college baseball players.  Worse, he plays varsity soccer and basketball so he can't even join a fall scouting team.  This probably rules him out for high-powered division 1 programs like ASU or Texas.  But there are a ton of schools out there who are likely not going to get even one scouted player.

My son is looking at small liberal arts colleges that tend to play division III (Williams, Amherst, Vassar, Pomona) and a few smart-school division I teams (e.g. Princeton).   He has a different equation than the top division 1 athletes.  They are hoping their skills will get them a scholarship and acceptance at a school that can offer them exposure to the pros.  My son is hoping his skills will put him over the top at a very selective school that is brutally hard to get accepted at, even with good grades.  And of course, he just loves to play baseball.

NCAA recruiting is a morass of sometimes non-intuitive rules.  And the rules are different for different size schools (e.g. div III vs. div I).  But the most important thing I can tell you is that your kid has to take the initiative to get in front of the schools.   You cannot rely on your coach or school or anyone else.   You can begin earlier, but we started around the middle of his Junior year:

2nd Semester Junior Year

Through much of his junior year, I video'd Nic's games, and then he spliced together a 5 minute highlight video.  We put that on YouTube, and sent coaches a letter and a copy of the video.

Most schools have an online prospect form they want you to fill out, and you need to do that.  You also need your kid to register with the NCAA clearing house -- it takes a few bucks and they want transcripts and test scores.

During spring break, when we visited schools, in addition to the admissions office tour, we tried also to either schedule a visit with or drop by the baseball coach.  Some said hi for 5 minutes, some gave him nearly an hour, but its important to show them you are interested.   In all of this, it is very important to have your son take the lead.  Yes, I know teenage boys and mine is no different than yours, so you may have to poke and prod in the background, but they need to make the contact.  In fact, whenever we meet a coach, I introduce myself, and then I leave my son alone with him.

If you take any message away, I would say this, and I have heard this from many people now:  The #1 mistake your kid can make is not being proactive enough in contacting coaches.  The #1 mistake you as a parent can make is being too involved with the coach -- they want to see what your kid will be like, at college, out from under your parental umbrella.  They do not want to deal with your hopes and fears and anxieties as the overbearing sports parent.

Summer between Junior and Senior year

By NCAA or conference rules, at least atthe div III schools we visited, the coaches cannot give your son a tryout at school.  We thought we might obtain something like this when we visited, but it is against the rules.  So you need to find a forum to play in front of the coach.  The best is if that school has a showcase camp.  A lot of schools do -- check their athletics web site.  The other great choice are camps held by third parties that have coaches from many schools attending.  Nic wrote the coaches at the schools he was interested in and asked them, by email, which camps they were attending so he could get in front of them.  If they don't answer, try emailing the assistant coaches (many times the head coach has delegated most of the summer scouting to the assistants).

There are a lot of camps nowadays, because certain groups have found they can be money makers.  In fact, I would say baseball camp folks fall into two categories -- there are ones run by baseball guys who really care about the kids and the game, but who can't organize their way out of a paper bag.  And there are the commercial ones, that may run well, but tend to have way too many boys for the number of coaches and don't seem to care much about the boys.  The exception I found was a group called  Headfirst, which runs a series of Honor Roll Camps, so named, I think, because they have coaches from a lot of "smart" schools.  These guys really care about the boys and run a fabulous camp.  If the schools you are interested attend these camps, I would highly recommend them.  Sign up early, they always sell out.

Here is how this camp runs, as an example.  In the first morning, the boys will do a number of skills workouts for the coaches (who are all on the field in folding chairs taking notes).  Outfielders will field four balls and make a few long throws to the plate.  Infielders will do the same from shortstop.  Catchers will be timed popping up and making the throw to second.  Everyone gets timed in the 60-yard dash.  Everyone gets to hit 9 balls in batting practice in front of all the coaches.  The rest of the two days the boys are organized into teams and play games, which are as much about pitcher evaluations as anything else. At this camp, all of the games are coached by the college coaches who are there recruiting. The coaches rotate so they see everyone.

These are weird events.  I have a ton of respect for all the kids.  Imagine hitting in a batting cage with one hundred coaches in folding chairs writing in notebooks all around the sides of the cage.  Or pitching when there is a net right behind the catcher, and right behind that are 50 guys taking notes, ten of whom are holding radar guns.

The kids get nervous, but one thing we have learned is that coaches are looking at something different than laymen might expect. What the kids may consider to be a screw-up may actually be a success.   You and I are impressed by the guy who lines a couple into the gap, vs. the guy who grounds out to the pitcher.   But the coaches are not even looking where the ball goes -- they are locked on the batter and his swing.  That is why they do the hitting showcase in the cage now instead of on the field like they used to -- the coaches just want to see the kid's form.  Ditto the other stuff.   In the last camp, my son put himself down as an outfielder rather than pitcher (though he plays both in high school) because he felt like his hitting was his best path to college.  But in one of the early drills they put a radar gun on him, saw he threw 88mph, and asked him to pitch.  And then the second day the head coach wanted to see him pitch again.

By the way, before each camp, My son looked at the list of coaches attending the camp and sent them emails, and called a favored few, to tell them that he would be at the camp, that he is really interested in their school, and could they please look out for him.  At the camp, the kids really need to take the lead in walking up to coaches (who are all wearing their school's gear) and introducing themselves.   No, your kid is not different from mine -- it is hard to get them to do this.  To their credit, the Headfirst camps actually work with the kids to encourage them in this. The camp leaders are constantly walking up to kids and saying "have you introduced yourself to a coach yet?"

The Fall of Senior Year

The rules vary by sport, but apparently the kids cannot be called at their home by baseball coaches until July 1 (again, this is in div III, rules may vary by sport).  This reinforces the need for kids to be proactive.  Most coaches will wait until the summer camps are over and develop their short list of kids to call and recruit.  That is all Div III schools can do.  Div I schools can bring a few kids in for a university-paid campus visit.  If you get one of those (they only have a few to give out) that is the best sign of all that the coach is truly interested and not just blowing smoke to be nice.

We expect this to be our fall challenge -- how do you figure out if the school is really interested?  In the common application era, it is absolutely critical to tell a college you are really interested and not just hitting the send button to the 29th school.  The best way to do this is by applying early admission, but you only get one of these.  We are hoping to match the school we pick for early admit with Nic's interests as well as baseball coaches' interest.  We'll see how it goes.

Mind of the Coach

The following could be completely wrong.  It is put together not by someone who has experience with baseball or who has been a coach and player, but as someone acting as sort of a baseball anthropologist trying to figure out what is going on.  The following applies mainly to smaller schools not in the top 20 or 30 national programs -- they have a completely different situation.

• The camps seem intimidating, because there are so many good kids playing.  Coaches seem like these Olympian figures deciding everyone's fate based on inscrutable criteria.  But never forget this -- coaches are just as desperate as you are.  As much as your son is desperately trying to land a spot, coaches are desperately trying to get good players.  Remember, someone probably needs your son.  And smaller school coaches have to sit back and wait for ASU and Texas to skim the cream before they can even get started with the task.
• They have to make decisions on very little data, or what you and I would consider little data.  Over and over again I hear that unless you are in a school or league with which they are familiar, your kid's ERA or batting average and stats means almost nothing to them.  They will make most of their evaluation from looking at him for what seems a really brief time.  If your son is being encouraged to rework his swing, but he is worried that his stats will drop for a while as he makes the changes, remember that his form, not his stats, will likely get him a spot at a school
• Most schools allow the baseball coach to send a list of kids -3,5, maybe 7 names - to the admission office for special consideration.  Most of these kids will get in.  Being on that list at a school like Princeton or Amherst that have 8% admit rates is therefore a huge boost.   But, having a limited number of spots, the coach is not going to put a kid's name on that list unless he is pretty sure that kid is going to come.  Getting five studs through admissions is useless if they all are headed to Duke or Stanford instead.  My son has picked a few schools and has really worked to make sure the coach understands he is likely to accept an admission.
• This is just a guess based on how organizations work, but my sense is that coaches have a certain "budget" as to how much they can ask the admissions office to bend their standards for their recruits.   This means that for selective schools, it still helps a LOT for your kid to have good academics and test scores.   The Headfirst camp we are at now actually asks for grades and scores in advance, and puts those on the cheat sheet every coach gets.   I can guarantee you that before a guy from Harvard falls in love with your kid's swing, he looks down at those academics to see if he can afford to.
• Most medium and small school coaches have no idea on June 1 who they will be recruiting for the next class.  So if it is June 1 and your son is a rising senior, it is not at all too late.

Don Boudreaux had these two rejoinders to the notion that the GM bailout is a success simply because GM is making a profit.

Economically literate opponents of the Detroit bailout never denied that pumping hundreds of millions of taxpayer dollars into Detroit automakers would restore those companies to health.  Instead, they argued, first, that bailing out Detroit takes resources from other valuable uses.  Because he doesn’t even recognize that other valuable uses were sacrificed by this bailout, Mr. Dionne offers no reason to think that the value of saving Detroit automakers exceeds the value of what was sacrificed to do so.  No legitimate declaration that the bailout is successful is possible, however, without evidence that the value of what was saved exceeds the value of what was sacrificed.

Economically literate bailout opponents argued also that it sets a bad precedent.  By signaling to big corporations that government stands ready to pay the tab for the consequences of their poor decisions, big corporations will more likely make poor decisions in the future.  It’s far too early for Mr. Dionne to conclude that this prediction is mistaken.

I would offer a third concern -- that the government has kept hundreds of thousands of skilled workers and billions of dollars of physical assets under the management of the same group that have decidedly underutilized these assets in the past.  A bankruptcy without Federal intervention would likely have shifted assets and skilled workers into new companies with different management teams and cultures pursuing different strategies with different information.

I always have trouble explaining this issue to people.   Think of a sports team with great players but a lousy coach and management team.  Having the government ensure that the lousy management stays in control of the great players is a waste for everyone.  I explained it more in depth in this post, where I concluded

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case – Just ask Ross Perot.  You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA...

So what if GM dies?  Letting the GM’s of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM’s DNA has a less than one multiplier, then releasing GM’s assets from GM’s control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe’s productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe’s most productive human and physical assets into organizations with DNA multipliers less than one.

OK, I saw the Spiderman musical (still in pre-production) on Broadway last week.  I thought I would share some thoughts about the show.  Note that I like musicals and have been to a bunch but I am by no means an expert.

The show began with an unforced error, which seemed really dumb given the bad press the show has been getting (mixed reviews combined with some very high-profile accidents).  I showed up 20 minutes early and found a line for the Will Call (not ticket purchase, but simply ticket pickup) that went down the entire long block.  It took me 40 minutes just to pick up my tickets.  The show started late, but I still missed the first number, and a LOT of people were behind me.

The show was sold out on a Wednesday night.  I don't know if this is a measure of its popularity or the new Nascar, waiting for an accident aspect of the show.  A friend of mine said he went the week before and the show had three long halts  (there is a lot of technical stuff going on in the flying -- the stops feel exactly like when the ride stops at DisneyWorld).  We had only two very short ones.

The staging is amazing.  Actors fly all around the stage, and more impressively, soar and fight above the audience, frequently landing on the railings of the balconies.  The stage itself is well done - they do a nice job creating the illusion of great height when scenes take place on the top of buildings.

The dancing is fun, in a high energy way.  Often it is more tumbling and gymnastics than dancing, but entertaining.

The plot in the first half is solid - the classic spiderman origin myth -- if you have seen the recent movie you have got it.

For me, the wheels really came off the bus in the second half.  The villain is Arachne -- not some super villain with an appropriate name, but the actual Arachne from greek mythology that Athena turned into a spider.  Arachne is a combination scorned lover, unkillable super-villain, and source of redemption and has these sort of spider minions around her.  This whole plot angle did not work at all for me.

Why the problem?  Well, they killed off the first villain in the first act.  So, without even being a sequel, they created the sequel problem in the second Act -- how do you top the first villain?  And like many sequels, it became over the top and incoherent.

OK, and now for the final problem:  The music was entirely forgettable.  There were no musical themes that helped unify the show (as someone like Andrew Lloyd Weber does).  There were just a bunch of unrelated songs  (I suppose there could have been a reprise, but the music being reprised was so forgettable that I forgot it).  The music established the right moods -- dark or heroic or romantic, but it was just wallpaper behind the actors.

I would not have had trouble with it if Bono and Edge had, being new to musical theater, tried to do something really different and failed.  But they simply cranked out a bunch of utterly bland show tunes.  A couple were OK at the time, but I sure wasn't whistling them on the way out.  In contrast, I saw Chorus Line 30 years ago and still can sing bits of several songs.

Weird Fact: Dr. Normon Osborn (who in the show is not only Green Goblin but also the creator of the mutant spider that gives Spiderman his powers) looks exactly like Madam Hooch in the Harry Potter movies.  As Green Goblin he looks more like a green Gene Simmons.

As can be expected, the media really did a poor job of covering the GM IPO, consistently underestimating the total public cost of the bailout (e.g. no one is mentioning the $45 billion in tax-loss carryforwards GM was allowed to keep, against all precedent).

But the real cost of the handling of the GM bankruptcy is in 1) the terrible precedents it set in hammering secured creditors to the benefit of favored political allies of the Administration and 2) the loss of the opportunity to get billions of dollars in production assets out of the hands of the people who have be sub-optimizing them.

It was this latter issue I have focused the most on, particularly in this post where I argued for letting GM die.  I said in part:

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA.  ...

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one"¦ for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

Changing your DNA is tough.  It is sometimes possible, with the right managers and a crisis mentality, to evolve DNA over a period of 20-30 years.  One could argue that GE did this, avoiding becoming an old-industry dinosaur.  GM has had a 30 year window (dating from the mid-seventies oil price rise and influx of imported cars) to make a change, and it has not been enough.  GM's DNA was programmed to make big, ugly (IMO) cars, and that is what it has continued to do.  If its leaders were not able or willing to change its DNA over the last 30 years, no one, no matter how brilliant, is going to do it in the next 2-3.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one.

Via the Dallas Morning News:

A last-minute change in the federal health care bill ditched a proposed 5 percent tax on cosmetic medical procedures and replaced it with a 10 percent tax on indoor tanning services.

Goodbye Botox tax. Hello tan tax.

This seems really random.  Why should either of these businesses foot a special, disproportionate share of my health care bill?  Well, things that seem random to most of us make perfect sense in Congress.

The tan tax popped up in the health care bill last weekend after powerful medical lobbies "“ including the American Academy of Dermatology Association, American Medical Association, American Society of Plastic Surgeons and Botox-maker Allergan "“ persuaded Congress to remove a tax on cosmetic medical procedures and replace it with a 10 percent surcharge on indoor tanning services.

Lobbyists are very good at punching political hot-buttons.  Since they couldn't argue that botox is "for the children," and since it is generally used by rich white people they could not place the race or class card, they played the only card they had:

"Since 90 percent of cosmetic surgery patients are women, this would have been a very discriminatory tax," said White, who opposed the cosmetic surgery tax.

Technocrats want to believe, and perhaps honestly believe themselves, that care guidelines in the new Federal health care system will be science-based.  What possible basis do they have for thinking that?  We have 50 state laboratories, where states specify must-carry rules on procedures, and not a single one of these lists are science based -- they are loaded with special interest handouts.   I even show in this post how special interests give money to academia to produce studies whose entire conclusion is that certain procedures (performed by the special interest group funding the study) need to be in the minimum coverage laws.   The very first time out, when confronted with a science-based care recommendation (that women not receive breast cancer screening until after 50), the Congress specifically overrode it in the bill under a firestorm of public outcry.

But maybe the dermatologist guys are really looking after us?  After all:

The American Academy of Dermatology warns of significant health risks caused by indoor tanning.

But, as it turns out, it only sees health risks in the use of ultra-violet light by practitioners who are not members of their trade group.  I have bolded the key passage that gives away the game.

Indoor tanning industry groups note that dermatologists use tanning equipment in their offices for cosmetic skin conditions, such as eczema and psoriasis, in phototherapy treatments that cost up to $100 per visit billed to health insurance companies. In contrast, indoor tanning salons cost as little as $6 to $20 per session.

The tan tax would exempt phototherapy services performed by a licensed medical professional.

"This is like Coke being allowed to lobby the government to tax Pepsi, but that Coke be allowed to sell the same product and not be taxed for it," International Smart Tan Network Vice President Joseph Levy said in a statement. "It's unbelievable."

The largest government medical insurance program, Medicare, is threatening to nearly bankrupt the federal government with its rising costs that no one in 30 years has figured out how to manage, short of attempts at price controls (controls which are driving doctors out of the business).  Treat with extreme skepticism mystery double-secret methodologies that the Obama administration promises will cut costs 30% when no such savings have ever been achieved in Medicare.

The largest government run medical care organization, the VA, apparently provides awful service and is rife with fraud and errors due to poor accountability.

So, despite 89% of Americans reporting themselves satisfied with their medical care (one of the highest approval ratings for ... anything I have seen out of a poll) we are going to replace our current system with one run by the government.

Outstanding.

Postscript: You will often get quoted enormous numbers (often as high as 47 million) for the uninsured.  This seems to be the driving force behind the felt need for health care change.  But when someone quotes this number to you, ask for the number excluding a) college students; b) people who make over $50,000 a year who could presumably pay for their own coverage; c) illegal immigrants;  d) people transitioning between jobs and e) people already eligible for Medicare/Medicaid but don't bother to sign up until they are actually sick.  You will get a number a LOT lower, closer to 10-15 million.

If we need to do something more to help 10 million or so poor people, then lets help 10 million or so poor people.  Let's not screw up what exists for the other 290 million or so people in this country.  As I wrote before

But health care is different.  The author above is probably correct that some crappy level of terribly run state health care will probably be an improvement for some of the poor.  But what is different about many of the health care proposals on the table is that everyone, not just the poor will get this same crappy level of treatment.  It would be like a public housing program where everyone's house is torn down and every single person must move into public housing. That is universal state-run health care. Ten percent of America gets pulled up, 90% of America gets pulled down, possibly way down.

Health care reform by hatchet, axe, and saw*.

Update: From Doug Ross

The Kaiser Family Foundation, a liberal non-profit frequently quoted by the media, puts the number of uninsured Americans who do not qualify for current government programs and make less than $50,000 a year between 13.9 million and 8.2 million. That is a much smaller figure than the media report and is also subject to "the 45% rule", wherein that percentage will transition to new jobs within a four-month time-frame.

I predicted it here.  Now see it here:

House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit's Big Three automakers."We may need to make a statement of confidence in our auto industry," Pelosi told NPR this afternoon. "We're not saving those companies, we're saving an industry. We're saving an industrial technological and manufacturing base... It's about jobs in America."

I wrote why its better to let GM fail.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one.

Pelosi held a meeting Monday with Democratic leaders to consider a request from Detroit's Big Three automakers for another $25 billion in "bridge financing" to help them survive a huge downturn in auto industry.

A few weeks ago, Kevin Drum had a post on shale oil development, quoting from a speech by Congressman Ken Salazar.  It is hard to really excerpt the piece well, but my take on their argument against shale oil leasing is:

• Shale oil technology is unproven
• The government is leasing the shale oil rights too cheap
• There is already plenty of shale oil land for development, so new leases won't increase development
• This is just being done by the Bush Administration to enrich the oil companies
• The administration is rushing so fast that Congress has not had the chance to put a regulatory regime in place

In many ways, the arguments are surprisingly similar to those against new offshore and Alaskan oil leasing.  Through it all, there is this sort of cognitive dissonance where half the arguments are that the oil won't be developed, and the other half seem to be based on an assumption that a lot of oil will be developed.  For example, how can the leases be "a fire sale" if shale oil technology is unproven and development is not likely to occur?  I would say that if these assumptions were true, then any money the government gets for a worthless lease is found money. 

Similarly, how are oil companies going to enrich themselves by paying for leases if the technology is not going to work and no development is going to occur?  This same bizarre argument became Nancy Pelosi's talking point on offshore oil leasing, by saying that oil companies were somehow already cheating us by not drilling in leases they already have.  Only the most twisted of logic could somehow come to the conclusion that oil companies were enriching themselves by paying for leases were they found no developable oil.

From the standpoint of Democratic Party goals, there is absolutely nothing bad that happens if the government leases land for oil shale or oil drilling and oil companies are unable to develop these leases  (there is some small danger of royalty loss if leases are not developed when they could be economically, but most private royalty agreements are written with sunset periods giving the lease-holder a fixed amount of time to develop the lease or lose it -- I don't know how the government does it).  The net result of "no drilling" or "oil shale technology turns out not to work" is that the government gets money for nothing. 

Here is the problem that smart Democrats like Drum face, and the reason behind this confusing logic:  They have adopted environmental goals, particularly the drastic reduction of CO2 in relatively short time frames, that they KNOW, like they know the sun rises in the east, will require fuel and energy prices substantially higher than they are today.  They know these goals require substantially increased pain and lifestyle dislocation from consumers who are already fed up with fuel-cost-related pain.  This is not because the Democrats are necessarily cruel, but because they are making the [faulty] assumption that the pain and dislocation some day from CO2-driven global warming outweighs the pain from higher priced, scarcer energy.

So, knowing that their policy goal is to have less oil at higher prices, and knowing that the average consumer would castrate them for espousing such a goal, smart Democrats like Drum find themselves twisted into pretzels when they oppose oil development.  They end up opposing oil development projects because in their hearts they want less oil around at higher prices, but (at least until their guy gets elected in November) they justify it with this bizarre logic that they oppose the plan because it would not get us oil fast enough.  The same folks who have criticized capitalism for years for being too short-term focused are now opposing plans that don't have a payoff for a decade or so.

At the end of the day, most Democrats do not want more oil developed, and they know that much higher prices will be necessary to meet their climate goals.  It sure would be refreshing to hear someone just say this. As I wrote at Climate Skeptic, the honest Democrat would say:

Yeah, I know that $4 gas is painful.  But do you know what?  Gas
prices are going to have to go a LOT higher for us to achieve the CO2
abatement targets I am proposing, so suck it up.  Just to give you a
sense of scale, the Europeans pay nearly twice as much as we do for
gas, and even at those levels, they are orders of magnitude short of
the CO2 abatement I have committed us to achieve.  Since late 2006, gas
prices in this country have doubled, and demand has fallen by perhaps
5%.  That will probably improve over time as people buy new cars and
change behaviors, but it may well require gasoline prices north of $20
a gallon before we meet the CO2 goal I have adopted.  So get ready.

Postscript:  By the way, oil companies have been trying to develop shale oil since the 1970s.  Their plans went on hold for several decades, with sustained lower oil prices, but the call by the industry to the government for a clarified regulatory regime has been there for thirty years.  The brief allusion in Salazar's speech to water availability is a valid one.  I saw some studies at Exxon 20+ years ago for their Labarge development that saw water availability as the #1 issue in making shale oil work.

PPS:  I mention above that the pain of fuel prices not only hits the wallet, but hits in term of painful lifestyle changes.  One of the things the media crows about as "good news" is the switch to mass transit from driving by a number of people due to higher oil prices.  This is kind of funny, since I would venture to guess that about zero of those people who actually switched and gave up their car for the bus consider it good news from their own personal life-perspective.  Further, most of the reduction in driving has been the elimination of trips altogether, and not via a switch to mass transit.  Yes, transit trips are up, but on a small base.  95%+ of reduced driving trips are just an elimination of the trip.  Which is another form of lifestyle pain, as presumably there was some good reason to make the trip before.

Update: Updated on Canadian Oil Sands production here.  Funny quote:

Fourth, and potentially most important, the U.S. "green" lobby is
pushing legislation that could limit purchases of oil sands products by
U.S. government agencies based on its GHG footprint.  It would be well
beyond stupid for Congress to prohibit our buying oil from Canada while
we increase buying it from countries that threaten our security.  But
just because something is stupid certainly does not mean Congress may
not do it.

A little while ago I wrote a post to say I was excited by the new generation of IPods.  I was ready to replace my 30GB v5.5 iPod classic with an 80GB that has the same form factor.  I am still hoping the iPod Touch (think iPhone without the phone) will turn out to be great, but there is a LOT of bitching out there about the new IPod classics.  Apparently, in a bid to make the interface prettier, it has become a lot slower (kindof like Vista).  Also, apparently some of the video functionality has been nerfed.  Research before you buy!  For example, check out the Amazon reviews.

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 second 12 hours were a LOT better.

I am not sure I find Nick Saban's $32 million contract with Alabama that surprising.  After all, Alabama considers itself a top-10 program but a series of rejections have made the job tainted goods.  When prestige won't sell, money is always the fall back.   And Saban has learned what most other college coaches have learned -- the NFL is a LOT of freaking work and stress compared to college.

My question is a different one.  My guess is that this makes Saban the highest paid state government employee in Alabama.  Is there any state where a college men's football or basketball coach is not the highest paid state official?