Coyote Blog

The other day, the New York Times published a story with data that demonstrates that gun permit holders in North Carolina are 20x less likely to commit a felony than the average American [not entirely sure the math is right here, but the crime rate among permit holders is certainly lower than the average].  Of course, the Times readership does not want to hear that, since it does not fit their world view.   So the Times, ever sensitive to its readership's needs, writes the article as a scare story about why we need tighter gun control.

This via Q&O:

Earlier today, New York Times columnist Nick Kristoff opined on Twitter about cuts in government services. It’s not every day that you see such stupidity displayed so confidently…except from the Left:

Imagine John Boehner home in OH, seeing an escaped tiger–and getting a msg that help is unavailable due to govt cutbacks.

Well, I don’t know about John Boehner. But I do know that if I received such a message, it’d be because I was trying to call up a government flunky to haul a tiger carcass away. And if I did get such a message, my very next call would be to a good taxidermist.

It’s an interesting glimpse into the worldview though. The unspoken assumption is that, without government tiger hunters, we’re all doomed to be mauled by wild beasts. Presumably, this is because we are all tiny, little children, utterly incapable of solving our problems without the intervention of our benevolent government overlords. It’s a worldview that operates on the assumption that the government is the only adult in the room.

A great example of this sort of mentality was the Bruce Willis action filmLive Free or Die Hard.  The movie was a decent thriller, falling into the unlikely-buddy-movie genre (including also 48 Hours and most of the Lethal Weapon movies).

Like most modern techno-thrillers, it required a lot of technical suspension of belief, but what really struck me was the premise -- that somehow, if terrorists were able to really shut down the government, people would go into a panic and be totally lost and forlorn.  Even the strong male hero buys into the premise.  Can you even imagine a Clint Eastwood movie where Clint laments how scared Americans will be if they were to call the FDA to inquire if a certain product is truly organic and no one answered the phone?   It makes for a sort of irony in the movie because in fact the government is completely useless in the face of the terrorists, who are brought down essentially by a few private individuals.

I find it absolutely unsurprising that Paul Krugman was enthralled by the vision of a science that can be used by a few people to control the actions and futures of all humanity.  He said “I want to be one of those guys!”  I was captivated by the vision in the book as well, but my thought was always "how do we avoid these guys?"  The second two books were about how government planners used mind control to deal with humanity whenever individuals had the gall to circumvent their plans.  Lovely.

If I remember right, Asimov wrote the Foundation after reading the Rise and Fall of the Roman Empire.  The notion of how much of history is inevitable due to large forces (e.g. economics) vs. how much is due to the actions of individuals and what historians now call contingency (e.g. luck) is an endlessly fascinating thing to debate, and I found the Foundation books to be interesting thought exercises along these lines.  But it certainly didn't inspire my life's goals, any more than Dune made me wish for a religious jihad.

I can see the secret Second Foundation scratching their heads now in their secret lair (which turns out to be in the New York Times building in the middle of New York City but that's a spoiler from the third book).  The equations show right here that a trillion dollar stimulus should have kept unemployment below 8%....

Well, it turns out that the laws of supply and demand do indeed apply in the health care field.  Obamacare and before it Romneycare combine government subsidies of demand with cost controls mainly consisting of price caps on suppliers.  The results are exactly what any college student could predict after even one week of microeconomics 101:  shortages.

First, from the WSJ

A new survey released yesterday by the Massachusetts Medical Society reveals that fewer than half of the state's primary care practices are accepting new patients, down from 70% in 2007, before former Governor Mitt Romney's health-care plan came online. The average wait time for a routine checkup with an internist is 48 days. It takes 43 days to secure an appointment with a gastroenterologist for chronic heartburn, up from 36 last year, and 41 days to see an OB/GYN, up from 34 last year....

Massachusetts health regulators also estimate that emergency room visits jumped 9% between 2004 and 2008, in part due to the lack of routine access to providers. The Romney-Obama theory was that if everyone is insured by the government, costs would fall by squeezing out uncompensated care. Yet emergency medicine accounts for only 2% of all national health spending.

The emergency room data is fascinating, as crowded emergency rooms supposedly overwhelmed by the uninsured was such an important image in the campaign to pass Obamacare.  More on this from Q&O:

Hospital emergency rooms, the theory goes, get overcrowded because people without health insurance have no place else to go.

But that’s not the view of the doctors who staff those emergency departments.
The real problem, according to a new survey from the American College of Emergency Physicians,isn’t caused by people who don’t have insurance — it’s caused by people who do, but still can’t find a doctor to treat them.

A full 97 percent of ER doctors who responded to the ACEP survey said they treated patients "daily" who have Medicaid (the federal-state health plan for the low-income), but who can’t find a doctors who will accept their insurance…."The results are significant," said ACEP President Sandra Schneider in prepared comments. "They confirm what we are witnessing in Massachusetts — that visits to emergency rooms are going to increase across the country, despite the advent of health care reform, and that health insurance coverage does not guarantee access to medical care."

As I have been saying for a long time, the Obama health care nuts do not have any secret, magical idea or plan for cutting health care costs.  In fact, as I have written here and here, we should expect Federalization to exacerbate the bad information and incentives that make health care more expensive.  The only idea they have, in fact, is the only one that anyone ever has in government for this kind of thing -- price controls

Over the weekend, The Washington Postpublished a Q&A-style explainer on the Independent Payment Advisory Board—the panel of federal health care technocrats charged with keeping down spending growth on Medicare.

The details are complicated, but the gist is simple: If spending on Medicare is projected to grow beyond certain yearly targets, then it’s IPAB to the rescue: The 15-member panel appointed by the president has to come up with a package of cuts that will hold Medicare’s growth in check. If Congress want to override that package, it only has two options: Vote to pass a different but equally large package of cuts or kill the package entirely with a three-fifths supermajority in the Senate.

The Post lays out the basic framework above. But what it doesn’t explain in any detail is exactly how those cuts will be achieved. And that, of course, is where the difficulty begins: Here’s how The Wall Street Journal’s editorial board explained it last month: “Since the board is not allowed by law to restrict treatments, ask seniors to pay more, or raise taxes or the retirement age, it can mean only one thing: arbitrarily paying less for the services seniors receive, via fiat pricing.” Medicare already centrally sets the prices it pays for the services of doctors and hospitals. Given the board's limitations, the most likely cuts we’ll see from IPAB, then, will be arbitrary, quality-blind reductions in these payments (though hospitals will be exempt from cuts for the first couple years).

We know what happens next: Providers stop taking on new Medicare patients, or drop out of the system entirely. In Medicaid, which pays far lower rates than Medicare (which pays somewhat lower rates than private insurance), this is already common: As one emergency physician recently told The New York Times, “Having a Medicaid card in no way assures access to care.” If IPAB cuts Medicare provider payments down to the bone, it could end up transforming Medicare into a seniors’-version of Medicaid.

In my Forbes columns over the past few weeks, I have been writing about information and incentive problems with any sort of Obamacare type system.  One of the points I made last week was this:

One of the key selling points of Obamacare was that it would reduce cost, in large part through smart public-spirited people making optimized decisions from the top in Washington.  Ignoring the fact that no other agency that has promised such angels of public service has ever delivered them, we discussed in the last few weeks how this task is impossible.  But we should have known that already through our past experience with the political process.  Political decisions are made politically, not by optimizing some public good equation.    Does anyone believe that come election time, Congress won’t vote to add mandates to procedures to placate powerful groups in their base, irrespective of the future costs this would incur?

Need an example?

In 2007 breast cancer was the third leading source of cancer mortality in the US, but it was by far the largest recipient of government cancer research dollars, nearly double that spent on any other type of cancer.    In 2009, out of hundreds of medical procedures, only two procedureswere on the mandated must-carry list of all fifty states – mammography and breast reconstruction.  It is no accident that both of these are related to breast cancer.  With its links to women’s groups and potent advocacy organizations, breast cancer is a disease that has a particularly powerful political lobby.    Similarly, we should expect that, at the end of the day, pricing and coverage decisions under Obamacare will be made politically.  Not because anyone in this Administration is particularly bad or good, but because that is what always happens.

This post from Q&O is a tad old but gets at just this point with a real-life Obamacare example

The opening line in a New York Times piece caught my attention.  It is typical of how government, once it gets control of something, then begins to expand it (and make it more costly for everyone) as it sees fit.  Note the key falsehood in the sentence:

The Obama administration is examining whether the new health care law can be used to require insurance plans to offer contraceptives and other family planning services to women free of charge.

Yup, you caught it – nothing involved in such a change would be “free of charge”.   Instead others would be taxed or charged in order for women to not have to pay at the point of service.  That’s it.  Those who don’t have any need of contraception will subsidize those who do.  And the argument, of course, will be the “common good”.   The other argument will be that many women can’t afford “family planning services” or “contraception”.

But the assumption is the rest of you can afford to part with a little more of your hard earned cash in order to subsidize this effort (it is similar to other mandated care coverage you pay for but don’t need).  Oh, and while reading that sentence, make sure you understand that the administration claims it has not taken over health care in this country.

The next sentence is just as offensive:

Such a requirement could remove cost as a barrier to birth control, a longtime goal of advocates for women’s rights and experts on women’s health.

So now “women’s rights” include access to subsidies from others who have no necessity or desire to pay for those services?  What right does anyone have to the earnings of another simply because government declares that necessary?

It is another example of a profound misunderstanding of what constitutes a “right” and how it has been perverted over the years to become a claim on “free” stuff paid for by others.

Administration officials said they expected the list to include contraception and family planning because a large body of scientific evidence showed the effectiveness of those services. But the officials said they preferred to have the panel of independent experts make the initial recommendations so the public would see them as based on science, not politics.

Really?  This is all about politics.  The fact that the services may be “effective” is irrelevant to the political questions and objections raised above.  This is science being used to justify taking from some to give to others – nothing more.

Well, as usual, the progressives have the rights and roles of private individuals vs. government exactly backwards, from Kevin Drum:

As I said earlier, I'm on the fence a bit about whether an indiscriminate release of thousands of U.S. embassy cables is useful. After all, governments have a legitimate need for confidential diplomacy. But when I read about WikiLeaks' planned financial expose [release of private emails from a private corporation], I felt no such qualms. A huge release of internal documents from a big bank? Bring it on!

The government and public officials acting in a public capacity have no rights to privacy of their work and work products from the public that employs them (except to the extent that privacy pays some sort of large benefit, which I would define pretty narrowly).  While things like the recent Wikileak are certainly damaging to things like sources and foreign relations, I have sympathy for such a mass dump when the government so systematically defaults to too much secrecy and confidentiality for what should be public business, mainly to avoid accountability.  The public has the right to know just about whatever the government is doing, in detail.

In the private sector, ordinary citizens have no similar "right to know" the private business of private entities, the only exception being in criminal investigations where there are clear procedures for how confidential private information may be obtained, used, and protected.  Had the proposed email dump related to alleged misconduct, I would have been pretty relaxed about it.  But the proposed document dump is just voyeurism.  One may wish for more accountability processes vis a vis banks, but in a country supposedly still founded on the rule of law, we don't get to invent new ex post facto rules, such as "if your industry pisses off enough Americans, all the material that was previously legally private is retroactively made part of the public domain."

Drum may be gleeful now, but someday he just might be regretful of establishing a precedent for consequence-free theft and publication of private information.   Had, for example, the words "big bank" in the paragraph been replaced by, say, "Major newspaper," we would likely see Drum in a major-league freak out, though the New York Times corporation has exactly the same legal status as Citicorp.

Everyone thinks his own information is "different" and somehow on a higher plane than other people's information.  Drum likely thinks his communication by email with sources is special, while I would argue release of my confidential internal communication about new service offerings and pricing strategies would be particularly damaging.  The way we typically settle this is to say that private is private, and not legally more or less private based on subjective opinions by third parties about the value of the data.

I must say I am feeling pretty good about my comments from Inauguration Day two years ago.  Here is an excerpt of what I wrote:

Folks are excited about Obama because, in essence, they don't know what he stands for, and thus can read into him anything they want.  Not since the breathless coverage of Geraldo Rivera opening Al Capone's vault has there been so much attention to something where we had no idea of what was inside.  My bet is that the result with Obama will be the same as with the vault.There is some sort of weird mass self-hypnosis going on, made even odder by the fact that a lot of people seem to know they are hypnotized, at least at some level.  I keep getting shushed as I make fun of friends' cult behavior watching the proceedings today, as if by jiggling someone's elbow too hard I might break the spell.  Never have I seen, in my lifetime, so much emotion invested in a politician we know nothing about.   I guess I am just missing some gene that makes the rest of humanity receptive to this kind of stuff, but just for a minute snap your fingers in front of your face and say "do I really expect a fundamentally different approach from a politician who won his spurs in "¦. Chicago?  Do I really think the ultimate political outsider is going to be the guy who bested everyone at their own game in the Chicago political machine?"

Well, the spell will probably take a while to break in the press, if it ever does "” Time Magazine is currently considering whether it would be possible to put Obama on the cover of all 52 issues this year "” but thoughtful people already on day 1 should have evidence that things are the same as they ever were, just with better PR.   For God sakes, as his first expenditure of political capital, Obama is pushing for a trillion dollar government spending bill that is basically one big pork-fest that might make even Ted Stevens blush, a hodge-podge of every wish-list of leftish lobbyists that has been building up for eight years.  I will be suitably thrilled if the Obama administration renounces some of the creeping executive power grabs of the last 16 years, but he has been oddly silent about this.  It seems that creeping executive power is a lot more worrisome when someone else is in power.

To this last point, the recent recommendations by the Center for American Progress to Obama are pretty chilling.

[The] Center for American Progress today is releasing a report, "Power of the President," proposing 30 executive actions the president can take to advance progressive change in the areas of energy, the economy, health care, education, foreign policy, and national security. "The following authorities can be used to ensure progress on key issues facing the country today: Executive orders, Rulemaking, Agency management, Convening and creating public-private partnerships , Commanding the armed forces, Diplomacy.

The New York Times fleshes out these proposals with some suggestions about policy changes across the board. The ideology of George Soros shines through the Center's report as it justifies this forceful approach to circumvent Congress when it states that:

[The] legislative battles that Mr. Obama waged during his first two years "“ notably on health care and financial regulatory reform "“ have created a weariness among the general public with the process of making laws. And it hints it has not helped Mr. Obama politically in the process.

In other words, when Congress passed a variety of laws Americans became dismayed by the horse-trading and bribes that were resorted to by Democrats to impose these policies on us. Instead of compromise and listening to the American people, Soros counsels that more forceful measures should be used to override the will of the American people.

Back in January, I wrote about both ethanol and the stimulus bill, observing:

I have decided there is something that is very predictable about the media:  they usually are very sympathetic to legislation expanding government powers or spending when the legislation is being discussed in Congress.  Then, after the legislation is passed, and there is nothing that can be done to get rid of it, the media gets really insightful all of a sudden, running thoughtful pieces about the hidden problems and unintended consequences of the legislation

My emerging theorem about the media is that they want to be on the record as having predicted problems with legislation, but that for leftish legislation they personally support, they defer their most insightful analysis until after the law has passed.  That way, their favored legislation gets on the books, but they are also on the record as having spotted potential problems and can make the argument later that they were not rubes or useful idiots.

We are seeing this yet again, as the New York Times questions some obvious flaws with the Dartmouth health savings data (ht Insty)

Of course, the article misses the most obvious point -- while the Dartmouth data was certainly used to try to sell Obamacare, nothing in the actual legislation does anything to capture these supposed potential savings.  The $700 billion in waste number is more of a sort of happy thought that lets politicians sign the ridiculously expensive bill while pretending that some mythical savings are somehow available in the future through unidentified mechanisms to pay for the program.

Via the Telegraph:

The American blogosphere is going increasingly "viral" about a proposal advanced at the recent meeting of the Davos Economic Forum by Craig Mundie, chief research and strategy officer for Microsoft, that an equivalent of a "driver's licence" should be introduced for access to the web. This totalitarian call has been backed by articles and blogs in Time magazine and the New York Times.

As bloggers have not been slow to point out, the system being proposed is very similar to one that the government of Red China reluctantly abandoned as too repressive. It was inevitable that, sooner or later, the usual unholy alliance of government totalitarians and big business would attempt to end the democratic free-for-all that is the blogosphere. The United Nations is showing similar interest in moving to eliminate free speech.

I called this one back in 2005.  This isn't the first attempt by the UN in particular to throttle free speech via licensing way back in 1985.

Steven Landsburg via Mark Perry

It's always impressive to see one person excel in two widely disparate activities: a first-rate mathematician who's also a world class mountaineer, or a titan of industry who conducts symphony orchestras on the side. But sometimes I think Paul Krugman is out to top them all, by excelling in two activities that are not just disparate but diametrically opposed: economics (for which he was awarded a well-deserved Nobel Prize) and obliviousness to the lessons of economics (for which he's been awarded a column at the New York Times).

It's a dazzling performance. Time after time, Krugman leaves me wide-eyed with wonder at how much economics he has to forget to write those columns.

In Europe, economies are run by a troika of politicians, leaders of large corporations, and major unions.  These groups run the economy to their benefit and against entrepeneurs, nwe competitors, foreign competition, low-skilled workers, upstart competitors, and (most of all) consumers.   Q&O discovered someone on the HuffPo of all places starting to see what is going on:

When I heard the word "corporatist" a couple of years ago, I laughed. I thought what a funny, made up, liberal word. I fancy myself a die-hard capitalist, so it seemed vaguely anti-business, so I was put off by it.

Well, as it turns out, it's a great word. It perfectly describes a great majority of our politicians and the infrastructure set up to support the current corporations in the country. It is not just inaccurate to call these people and these corporations capitalists; it is in fact the exact opposite of what they are.

Capitalists believe in choice, free markets and competition. Corporatists believe in the opposite. They don't want any competition at all. They want to eliminate the competition using their power, their entrenched position and usually the politicians they've purchased. They want to capture the system and use it only for their benefit.

This applies to workers as well as employers -- just replace capitalists with "free workers" and corporatists with "unions" in the above paragraph.  This helps to explain why Obama is not actually pro-labor, but pro-union.  Via TJIC:

Workers in Barack Obama's new economic order fall into two categories "” those who are worthy of the president's energies, and those who aren't. You may be surprised to learn where you rank.

Obama doesn't weigh the value of workers based on their paychecks, what they do or whether they slip their feet into wingtips or steel-toed boots in the morning. His sole interest is in whether they have a union card in their wallet.

If they do, the president is in their corner, working hard to make sure they don't get the short end of any stick. But if they are among the 88 percent of American workers who don't belong to a union? Ask Delphi's salaried employees what Obama thinks of them.

As part of Delphi's restructuring in bankruptcy court, the Troy-based auto parts maker dumped its pension plan onto the federal Pension Benefit Guarantee Corp.

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That usually means a continued pension check, but one that is much smaller. And for Delphi's salaried workers, that's what they can expect.

Delphi's union-represented workers, however, will dodge that bullet. The Obama administration swooped in and, in an extraordinary deal, is forcing General Motors to make the 46,000 union workers and retirees whole. GM used to own Delphi, and relies on the supplier for much of its parts.

"The U.S. government is taking care of a select group of people and tossing the rest of us under the bus," Peter Beiter, a retired financial manager for a Delphi plant in Rochester, N.Y., told the New York Times.

And it's doing so with the tax dollars of those like Beiter who aren't in the favored class of workers. GM is operating with more than $50 billion in government bailout money.

That gives Obama the freedom to force GM to subsidize the pensions of union workers it has no legal obligation to, and who are employed by an entirely different company.

If you want to see where we are going, read this (and this) about the National Industrial Recovery Act, which FDR modelled after Mussolin-style fascism, whose economic system he greatly admired.

Since the New York Times has pretty much become the official media outlet of this administration, I presume that this article represents a new trial balloon in selling government health care.  The pitch this time -- its good for small businesses!  (via Maggies Farm)

President Obama, in his Saturday radio address, said the Democrats' health insurance overhaul would help small businesses and stimulate the economy by providing relief from "the crushing costs of health care "” costs that have forced too many small businesses to cut benefits, shed jobs, or shut their doors for good."....

The House speaker, Nancy Pelosi of California, said the sharp rise in premiums for small businesses offered the latest evidence that Congress must act swiftly on health care legislation.

"This underlines the urgent need for health insurance reform, including a public option," she said in an interview. "We need to have competition for the insurance companies to keep premiums down."

I am only now getting through the 1500 pages of this bill (putting me ahead of Ms. Pelosi in reading it, I am sure), but the last House bill would have been a disaster for my company, increasing taxes on wages by up to 8% and imposing a record-keeping burden that was just horrific.

The NYT and the Democrats are apparently trying to set up a mini-class war within bussinesses, snidely saying these companies have more negotiating leverage.  Sure.  But what they have even more of is the leverage to shape federal legislation to their benefit.  However worse a deal my company may get in free insurance markets due to being small is nothing compared to how much worse of a deal we will get from Congress by being small.

If they really wanted to cut costs for small businesses, they would strip out all the national and state coverage mandates for things like aromatherapy that raise costs so much and let me shop for insurance across state lines.  That would be real competition.  Unfortunately, all Pelosi means by competition is throwing Amtrak into the mix to compete with the airlines.  Yeah, that will do the trick.

Strangely enough, it turns out that increased prices seem to induce market participants to seek out and invest in new sources of supply.   Someone should develop a theory around this.

From a good article in today's New York Times: 2009 is turning out to be a bumper year for new oil discoveries; new oil discoveries always occur, but this year has been unusually fruitful. This quote from the article illustrates the important dynamic intertemporal incentives that price signals provide:

These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose, and of new technologies that allow explorers to drill at greater depths and break tougher rocks.

"That's the wonderful thing about price signals in a free market "” it puts people in a better position to take more exploration risk," said James T. Hackett, chairman and chief executive of Anadarko Petroleum.

More than 200 discoveries have been reported so far this year in dozens of countries, including northern Iraq's Kurdish region, Australia, Israel, Iran, Brazil, Norway, Ghana and Russia. They have been made by international giants, like Exxon Mobil, but also by industry minnows, like Tullow Oil.

We all know the problem with oil companies:  They restrict supply to drive up prices to earn profit margins that are nearly a third of those earned by Microsoft while simultaneously keeping prices too low and promoting addiction to oil which produces a lot of CO2 and they never want to reinvest their profits in exploring for new oil so the government needs to restrict drilling in every major prospective US region so the oil companies will be stopped from greedily drilling everywhere and destroying the environment.

Barack Obama seems to be bringing this damned-if-you-do-damned-if-you-don't criticism to the medical industry, and particularly doctors.

On the one hand, he told doctors at the AMA convention yesterday that he was not a fan of tort reform and felt that limits on malpractice cases was a disservice to those who were truly injured.

On the other hand he made this case:

Not long ago, doctors' decisions were rarely questioned. Now they are being blamed for a big part of the wasteful spending in the nation's $2.5 trillion health care system. Studies have shown that as much as 30 cents of the U.S. health care dollar may be going for tests and procedures that are of little or no value to patients.

The Obama administration has cited such findings as evidence that the system is broken. Since doctors are the ones responsible for ordering tests and procedures, health care costs cannot be brought under control unless they change their decision-making habits.

On the third hand, doctors aren't spending enough to address preventable errors:

President Obama himself in his speech cited the "100,000 deaths a year" figure as if it's reliable and well established, as did yesterday's New York Times. And of course it's a figure eagerly spread by the Litigation Lobby. But as Zachary F. Meisel and Jesse M. Pines note in Slate, it's a really, really, really soft number:

...one of the biggest headlines of all was the 1999 Institute of Medicine report To Err Is Human, which announced that up to 98,000 preventable deaths occur each year in U.S. hospitals. Since then, health care improvement organizations such as Leapfrog Group have invested copious resources in reducing preventable errors. But a key issue has been overlooked in this movement: The original estimate -- the 98,000 deaths -- may have been way off. In fact, some of the researchers who conducted the original studies used in the IOM report re-evaluated their data in 2002 and reported that had they used a different calculation method, the number of estimated deaths would have been less than 10 percent of the original. Oops.

A government job can be a great deal.  Likely it pays more than a comparable private job, it's generally impossible to get fired from, and it has outrageously good medical and pension plans.  And, if you don't shy away from a bit of perjury, can be made to pay off spectacularly:

During the workweek, it is not uncommon to find retired L.I.R.R. [Long Island Railroad]
employees, sometimes dozens of them, golfing there. A few even walk the
course. Yet this is not your typical retiree outing.

These
golfers are considered disabled. At an age when most people still work,
they get a pension and tens of thousands of dollars in annual
disability payments "” a sum roughly equal to the base salary of their
old jobs. Even the golf is free, courtesy of New York State taxpayers.

With  incentives like these, occupational disabilities at the L.I.R.R. have become a full-blown epidemic.

Virtually
every career employee "” as many as 97 percent in one recent year "”
applies for and gets disability payments soon after retirement, a
computer analysis of federal records by The New York Times has found.
Since 2000, those records show, about a quarter of a billion dollars in
federal disability money has gone to former L.I.R.R. employees,
including about 2,000 who retired during that time.

97 percent?  Wow!  And just to demonstrate that year was not some kind of outlier:

In each year since 2000, between 93 percent and 97 percent of employees
over 50 who retired with 20 years of service also received disability
payments.

The article goes on to demonstrate that this is occurring at what appears, from the injury statistics, to be one of the safest railroads in the area.  Say what you will about the NY Times, but when they get their teeth into local corruption they can still do a masterful job, as evidenced by this long article discussing many apparently ridiculous payroll situations at the LIRR.

I can say from experience that there is a group of people in this country for whom getting a lifetime disability payment (e.g. from the Social Security Administration) is as good as hitting the lottery.  I remember one time I got a survey form from the SSA asking about a former employee.  I didn't pay much attention to the form's purpose as I filled it out -- I get all kinds of such government wastepaper with breathless admonishments about the urgency of my reply.  Anyway, about 2 weeks later I got a very threatening letter from the attorney for this former employee, threatening me with all kinds of dire consequences if I did not immediately retract my (honest) answers to the SSA inquiry.  Apparently, I was endangering a lifetime disability determination that this person had been working on obtaining for years. 

Every day, in fact, I get job applicants who try to cut deals with me of one sort or another (e.g. can you pay me under the table in cash?) because they say they are fully able to do outdoor maintenance work but they can't show any income because it might endanger their lifetime disability payments.  In a similar vein, I have three cases I know of in my company today where workers filed workman's compensation claims of injury several days after they were terminated.

I've said it before, but the reckoning is coming on state and local government pensions, which in most cases are unfunded, undisclosed liabilities of startling magnitude.  The disaster that is fast approaching in these state and local government finances will make Social Security's problems look pitiful by comparison.

Postscript:  Railroad labor law is just weird and a total mess.  Being the first major industry, and the first major industry that was regulated, a whole regulatory structure was put in place for railroads that (fortunately) has been applied to few other industries.  Whatever the problems we have with state workman's comp programs, they are models of governance compared to how things work in the railroad industry.

For example, I remember when I worked for a railroad in the 1990's, carpel tunnel claims were common.  By the nature of the comp system, workers got cash payments for injuries in addition to medical treatment (I recall a figure at the time of $7500 per wrist for carpel tunnel, but that may be off).  It was a common piece of advice among railroad workers that if one wanted to get the money together for a down-payment on a new pickup truck, one only had to go to Dr. X or Y and get a carpel tunnel diagnosis.

After digging a First Amendment hole for itself in the Plame affair, the New York Times seems to still be hell-bent on narrowing the very First Amendment protections that probably kept its employees out of jail in the early 70's.  Specifically, the Times frets that the US is out of step with Europe in having a much broader view of freedom of speech:

Six years later, a state court judge in New York dismissed
a libel case brought by several Puerto Rican groups against a business
executive who had called food stamps "basically a Puerto Rican
program." The First Amendment, Justice Eve M. Preminger wrote, does not
allow even false statements about racial or ethnic groups to be
suppressed or punished just because they may increase "the general
level of prejudice."

Some prominent legal scholars say the United States should reconsider its position on hate speech.

"It
is not clear to me that the Europeans are mistaken," Jeremy Waldron, a
legal philosopher, wrote in The New York Review of Books last month,
"when they say that a liberal democracy must take affirmative
responsibility for protecting the atmosphere of mutual respect against
certain forms of vicious attack."

In the 1970's, members of my family worked in the oil industry, and we received numerous death threats of varying believability, and several of our friends received letter bombs or had family members kidnapped.  Many of these attacks and threats were directly traceable to certain media shows that featured editorial attacks on the oil industry.  So is the Times suggesting that the media should hold off on its criticism of the oil industry because this criticism created an atmosphere of hate in which these attacks were conducted?

No freaking way, because these calls to limit criticism and "hate speech" always have an ideological filter.  There is never a suggestion that the speech bans be even-handed.  Criticism of African Americans is outlawed, but exactly parallel language about white folks is A-OK.  Criticising Islam is out, but Christianity is a fine target.  Death threats against Haitian activists must be avoided at all costs, but death threats against corporate executives are no reflection on free speech or the media.  The article is quite explicit that by their definition, hate speech only applies to "minorities," which you can translate to mean "groups the political class has decided to protect."  You may be assured that members of the political class will find a way to get themselves included in this definition, so they can be free of criticism,

Kudos to Harvey Silvergate, who even makes the exact same point I have made about Hitler a number of times:

"Free speech matters because it works," Mr. Silverglate continued.
Scrutiny and debate are more effective ways of combating hate speech
than censorship, he said, and all the more so in the post-Sept. 11 era.

"The world didn't suffer because too many people read "˜Mein Kampf,' " Mr. Silverglate said. "Sending Hitler on a speaking tour of the United States would have been quite a good idea."

I will add that I am also happy to be out of step with Europe in terms of any number of other policies, including American libel law, or laws that make it ever so much easier to start a business, and European tolerance for a cozy business-political elite that, whatever their party, focuses on keeping their elite wealthy and powerful.

After digging a First Amendment hole for itself in the Plame affair, the New York Times seems to still be hell-bent on narrowing the very First Amendment protections that probably kept its employees out of jail in the early 70's.  Specifically, the Times frets that the US is out of step with Europe in having a much broader view of freedom of speech:

Six years later, a state court judge in New York dismissed
a libel case brought by several Puerto Rican groups against a business
executive who had called food stamps "basically a Puerto Rican
program." The First Amendment, Justice Eve M. Preminger wrote, does not
allow even false statements about racial or ethnic groups to be
suppressed or punished just because they may increase "the general
level of prejudice."

Some prominent legal scholars say the United States should reconsider its position on hate speech.

"It
is not clear to me that the Europeans are mistaken," Jeremy Waldron, a
legal philosopher, wrote in The New York Review of Books last month,
"when they say that a liberal democracy must take affirmative
responsibility for protecting the atmosphere of mutual respect against
certain forms of vicious attack."

In the 1970's, members of my family worked in the oil industry, and we received numerous death threats of varying believability, and several of our friends received letter bombs or had family members kidnapped.  Many of these attacks and threats were directly traceable to certain media shows that featured editorial attacks on the oil industry.  So is the Times suggesting that the media should hold off on its criticism of the oil industry because this criticism created an atmosphere of hate in which these attacks were conducted?

No freaking way, because these calls to limit criticism and "hate speech" always have an ideological filter.  There is never a suggestion that the speech bans be even-handed.  Criticism of African Americans is outlawed, but exactly parallel language about white folks is A-OK.  Criticising Islam is out, but Christianity is a fine target.  Death threats against Haitian activists must be avoided at all costs, but death threats against corporate executives are no reflection on free speech or the media.  The article is quite explicit that by their definition, hate speech only applies to "minorities," which you can translate to mean "groups the political class has decided to protect."  You may be assured that members of the political class will find a way to get themselves included in this definition, so they can be free of criticism,

Kudos to Harvey Silvergate, who even makes the exact same point I have made about Hitler a number of times:

"Free speech matters because it works," Mr. Silverglate continued.
Scrutiny and debate are more effective ways of combating hate speech
than censorship, he said, and all the more so in the post-Sept. 11 era.

"The world didn't suffer because too many people read "˜Mein Kampf,' " Mr. Silverglate said. "Sending Hitler on a speaking tour of the United States would have been quite a good idea."

I will add that I am also happy to be out of step with Europe in terms of any number of other policies, including American libel law, or laws that make it ever so much easier to start a business, and European tolerance for a cozy business-political elite that, whatever their party, focuses on keeping their elite wealthy and powerful.

Andrew Coyne is live-blogging the Mark Steyn inquisition.  Check it out.

A few snippets:

10:16 AM
They're going to call, among others, Dr. Andrew Rippon,
professor of Islamic Studies at the University of Victoria, to show
that Steyn has misunderstood the relationship between the Koran and
Islamic society. Well, that's as may be. Would be a good subject for
debate. But why exactly does that require the state to adjudicate it?...

10:57 AM
Just coming back from a break. Lots of media interest, it seems: CBC, CTV (I'm told), the National Post, local media, and a guy from the New York Times,
who's doing a piece comparing how the two countries' legal systems deal
with speech cases. Needless to say, he can't believe what he's
witnessing"¦

11:04 AM
Under Section 7.1, he continues, innocent intent is not a defence, nor
is truth, nor is fair comment or the public interest, nor is good faith
or responsible journalism.

Or in other words, there is no defence.

Andrew Coyne is live-blogging the Mark Steyn inquisition.  Check it out.

A few snippets:

10:16 AM
They're going to call, among others, Dr. Andrew Rippon,
professor of Islamic Studies at the University of Victoria, to show
that Steyn has misunderstood the relationship between the Koran and
Islamic society. Well, that's as may be. Would be a good subject for
debate. But why exactly does that require the state to adjudicate it?...

10:57 AM
Just coming back from a break. Lots of media interest, it seems: CBC, CTV (I'm told), the National Post, local media, and a guy from the New York Times,
who's doing a piece comparing how the two countries' legal systems deal
with speech cases. Needless to say, he can't believe what he's
witnessing"¦

11:04 AM
Under Section 7.1, he continues, innocent intent is not a defence, nor
is truth, nor is fair comment or the public interest, nor is good faith
or responsible journalism.

Or in other words, there is no defence.

The New York Times editorial board had one of the most jaw-dropping pieces I have read in a long time.  In it, they are absolutely unapologetic in saying that they think the government can spend your money better than you can -- and the larger the government take, the happier we all will be.

The munificence of American corporate titans warms the heart, sort of.
The Chronicle of Philanthropy reports that the top 50 donors gave $7.3
billion to charity last year "” about $150 million per head....

Yet we'd be so much happier about all the good things America's
moneyed elite pay for if the government made needed public investments.

The flip side of American private largess is the stinginess of
the public sector. Philanthropic contributions in the United States "”
about $300 billion in 2006 "” probably exceed those of any other
country. By contrast, America's tax take is nearly the lowest in the
industrial world.

Oh my God, does anyone actually believe that Congress does a better job spending your money than you do?  Apparently they do:

Critics of government spending argue that America's private sector does
a better job making socially necessary investments. But it doesn't.
Public spending is allocated democratically among competing demands.
Rich benefactors can spend on anything they want, and they tend to
spend on projects close to their hearts.

LOLOLOL.  Has anyone looked at the last highway bill?  How many tens of thousands of politically motivated earmarks were there?   

Philanthropic contributions are usually tax-free. They directly reduce
the government's ability to engage in public spending. Perhaps the
government should demand a role in charities' allocation of resources
in exchange for the tax deduction. Or maybe the deduction should go
altogether. Experts estimate that tax breaks motivate 25 percent to 30
percent of contributions.

At the end of the day, this is not about a better prioritization process for spending -- this is about the NY Times getting a bigger say for itself in said spending.  They know that Warren Buffet couldn't give a rat's behind what the NY Times thinks about how he spends his money, but Congressmen trying to get reelected do care.  The NY Times wields a lot of political, but little private, influence, so they want to see as much spending as possible shift to political hands where the Times wields clout.

Postscript: Boy, here is some quality journalism:

Federal, state and local tax collections amount to just more than 25.5
percent of the nation's economic output. The Finnish government
collects 48.8 percent. As a result, the United States spends less on
social programs than virtually every other rich industrial country,
according to the Organization for Economic Cooperation and Development.
The Finnish government probably has money to build children's health
clinics.

"Probably has money?"  What does that mean?  Do they have government-funded children's health clinics or not?  The Times couldn't work up enough energy to fact-check that?  And by the way, who, other than the NY Times, declared that the best marginal use of additional public funds is for children's health clinics?

Postscript #2: Many of the very rich have been funding schools that are competitive with government-monopoly schools.  In this and many other cases, wealthy people fund programs that work better and cheaper than government alternatives.  I am sure that not only would the feds be happy to have this money to spend themselves (on some fat earmarks for key donors, most likely) but they would additionally be thrilled to get rid of the competition.

Update:  I must be going senile.  I missed the most obvious logical fallacy of all.  The NY Times says that our democratic government is the best possible mechanism for allocating funds.  But doesn't that also mean its the best possible mechanism for setting spending levels?  How can it complain that our democratic government is doing a bad job in setting total spending levels but does a great job in allocating that spending?

At a recent meeting of the National Associate of State Treasurers
(Yawn), John Podesta, after stating hilariously that what the world
really needed was continued leadership by state treasurers on the
global warming issue, argued: 

"Climate change is a threat to the long-term value of the economy and
failure to calculate its impacts or manage or reduce its harm mean that
our assets are being over valued, and the risks we face are being under
reported."

I have a lot of interest in global warming, which is why I created a second blog Climate Skeptic to deal with these issues.  There is a lot about anthropogenic warming we do not understand.  But what is nearly a total 100% lock is that, at least for the United States, the cost to our economy of regulations to limit CO2 will be far higher than the likely net-negative effects of warming (Al Gore's 20 foot sea level rises and other anti-rational claims notwithstanding).  At its heart, isn't the risk really of damage from government regulation, rather than the climate?

Via Michael Giberson of Knowledge Problem, the NY Attorney General is concerned that certain companies are not disclosing global warming-related risks, but he is at least more honest about what those risks are:

Last Friday, New York Attorney General Andrew Cuomo sent subpoenas
to five power generating companies seeking to find out if the companies
had properly disclosed financial risks associated with proposed new
coal-fired power plants.

All five of the letters accompanying the subpoenas are available from the NYAG's website.  Here is the opening paragraph of the letter to Dominion Resources, Inc.:

We are aware that Dominion Resources, Inc., ("Dominion")
has plans to build a coal-fired electric generating unit that would
generate 585 megawatts of electricity without current plans to capture
and sequester the resulting carbon dioxide (CO2) emissions. The
increase in CO2 emissions from the operating of this unit, in
combination with Dominion's other coal-fired plants, will subject
Dominion to increased financial, regulatory, and litigation risks. We
are concerned that Dominion has not adequately disclosed these risks to
its shareholders, including the New York State Common Retirement Fund,
which is a significant holder of Dominion stock. Pursuant to the
Attorney General's investigatory authority under New York General
Business Law § 352, and New York Executive Law § 63(12), accompanying
this letter is a subpoena seeking information regarding Dominion's
analysis of its climate risks and its disclosures of such risks to
investors.

A little later, the letter gets more specific: "For example, any one
of the several new or likely regulatory initiatives for CO2 emissions
from power plants "“ including state carbon controls, EPA's regulations
under the Clean Air Act, or the enactment of federal global warming
legislation "“ would add a significant cost to carbon-intensive coal
generation, such as the new coal plant planned by Dominion." In
addition to Dominion, the NYAG's office sent subpoenas to AES, Dynegy,
Peabody, and Xcel. Here is the story from the New York Times.

The letter doesn't say so explicitly, but I'm sure the message was
clear, that in addition to new or likely legislative actions and
substantive regulatory initiatives, the companies also faced the risks
and costs associated with being harassed by swarms of officers from the
NYAG's office.

You can see what is going on here -- following in the rich tradition established by the egregious Eliot Spitzer, the NY AG is again overreaching his office's authority and attempting to set regulatory policy rather than enforce it.  But at least he is honest in portraying the main risk to be a government regulatory backlash on these companies.

Thinking about this, couldn't every company put this in their boilerplate?  I mean, for most of us, the number one risk we face all the time is that the government will either do something to us specifically or the economy in general to hurt results.  Let's just have everyone add the line "the government poses a huge risk to our business plan" and be done with it.

Via the New York Times:

THE term "food miles" "” how far food has traveled before you buy it "” has entered the enlightened lexicon.

Which should tell you all you need to know about the "enlightened."

There are many good reasons for eating local "” freshness, purity,
taste, community cohesion and preserving open space "” but none of these
benefits compares to the much-touted claim that eating local reduces
fossil fuel consumption. In this respect eating local joins recycling,
biking to work and driving a hybrid as a realistic way that we can, as individuals, shrink our carbon footprint and be good stewards of the environment.

Actually, most recycling, with the exception of aluminum which takes tons of electricity to manufacture in the first place, does nothing to reduce our carbon footprint.  And I must say that I often enjoy buying from farmers markets and such.  But does "food miles" mean anything?  And should we really care?  Well, here is an early hint:  The ultimate reduction in food miles, the big winner on this enlightened metric, is subsistence farming.  Anyone ready to go there yet?  These are the economics Ghandi promoted in India, and it set that country back generations.

Well, lets go back to economics 101.  The reason we do not all grow our own food, make our own clothes, etc. is because the global division of labor allows food and clothing and everything else to be produced more efficiently by people who specialize and invest in those activities than by all of us alone in our homes.  So instead of each of us growing our own corn, in whatever quality soil we happen to have around our house, some guy in Iowa grows it for thousands of us, and because he specialized and grows a lot, he invests in equipment and knowledge to do it better every year.  The cost of fuel to move the corn or corn products to Phoenix from Iowa are trivial compared to the difference in efficiency that guy in Iowa has over me trying to grow corn in my back yard.  Back to the New York Times:

On its face, the connection between lowering food miles and decreasing greenhouse gas emissions is a no-brainer.

Sure, if you look at complex systems as single-variable linear equations.  Those of us who don't immediately treated the food mile concept as suspect.  It turns out, for good reason:

It all depends on how you wield the carbon calculator. Instead of
measuring a product's carbon footprint through food miles alone, the
Lincoln University scientists expanded their equations to include other
energy-consuming aspects of production "” what economists call "factor
inputs and externalities" "” like water use, harvesting techniques,
fertilizer outlays, renewable energy applications, means of
transportation (and the kind of fuel used), the amount of carbon
dioxide absorbed during photosynthesis, disposal of packaging, storage
procedures and dozens of other cultivation inputs.

Incorporating
these measurements into their assessments, scientists reached
surprising conclusions. Most notably, they found that lamb raised on
New Zealand's clover-choked pastures and shipped 11,000 miles by boat
to Britain produced 1,520 pounds of carbon dioxide emissions per ton
while British lamb produced 6,280 pounds of carbon dioxide per ton, in
part because poorer British pastures force farmers to use feed. In
other words, it is four times more energy-efficient for Londoners to
buy lamb imported from the other side of the world than to buy it from
a producer in their backyard. Similar figures were found for dairy
products and fruit.

All I can say is just how frightening it is that the paper of record could find this result "surprising."  The price mechanism does a pretty good job of sorting this stuff out.  If fuel prices rise a lot, then agriculture might move more local, but probably not by much.  The economies to scale and location just dwarf the price of fuel. 

By the way, one reason this food-mile thing is not going away, no matter how stupid it is, has to do with the history of the global warming movement.  Remember all those anti-globalization folks who rampaged in Seattle?  Where did they all go?  Well, they did not get sensible all of a sudden.  They joined the environmental movement.  One reason a core group of folks in the catastrophic man-made global warming camp react so poorly to any criticism of the science is that they need and want it to be true that man is causing catastrophic warming -- anti-corporate and anti-globalization activists jumped into the global warming environmental movement, seeing in it a vehicle to achieve their aims of rolling back economic growth, global trade, and capitalism in general.  Food miles appeals to their disdain for world trade, and global warming and carbon footprints are just a convenient excuse for trying to sell the concept to other people.

A little while back, I posted a similar finding in regards to packaging, that is worth repeating here for comparison.

Contrary to current wisdom, packaging can reduce total rubbish
produced. The average household in the United States generates one
third
less trash each year than does the average household in Mexico,
partly because packaging reduces breakage and food waste. Turning a
live chicken into a meal creates food waste. When chickens are
processed commercially, the waste goes into marketable products
(such as pet food), instead of into a landfill. Commercial processing
of 1,000 chickens requires about 17 pounds of packaging, but it also
recycles at least 2,000 pounds of by-products.

More victories for the worldwide division of labor.  So has the NY Times seen the light and accepted the benefits of capitalism?  Of course not.  With the New Zealand example in hand, the writer ... suggests we need more state action to compel similar situations.

Given these problems, wouldn't it make more sense to stop obsessing
over food miles and work to strengthen comparative geographical
advantages? And what if we did this while streamlining transportation
services according to fuel-efficient standards? Shouldn't we create
development incentives for regional nodes of food production that can
provide sustainable produce for the less sustainable parts of the
nation and the world as a whole? Might it be more logical to
conceptualize a hub-and-spoke system of food production and
distribution, with the hubs in a food system's naturally fertile hot
spots and the spokes, which travel through the arid zones, connecting
them while using hybrid engines and alternative sources of energy?

Does anyone even know what this crap means?  You gotta love technocratic statists -- they just never give up.  Every one of them thinks they are smarter than the the sum of billions of individual minds working together of their own free will to create our current world production patterns.

Postscript: There is one thing the government could do tomorrow to promote even more worldwide agricultural efficiency:  Drop subsidies and protections on agriculture.   You would immediately get more of this kind of activity, for example with Latin America and the Caribbean supplying more/all of the US's sugar and other parts of Asia providing more/all of Japan's rice.

So I guess the Democratic response to the Bush administration's 8-years of disrespect for the separation of powers is to one-up him?

On the op-ed page of the New York Times,
Jean Edward Smith argues that if the Roberts Court keeps on its current
path, a future Democratic President and Democratic Congress should
consider a court-packing plan and add Justices to ensure a liberal
majority on the Supreme Court. This might be necessary, Smith contends,
because the Roberts Court has "adopt[ed] a manifestly ideological
agenda," "plung[ing] the court into the vortex of American politics"
where it now decides political questions rather than the purely legal
decisions of the Warren Court.

And by the way, I would have said that the Roberts court has followed a distinctly non-ideological agenda.  In fact, I can't figure out how they are making decisions from one case to the next.  This court bears the hallmarks of one that is really evenly divided, with backroom negotiating going on to get a majority that reeks of compromise rather than anything either ideological or Constitutional.  Every major decision seems to have five or six written opinions.

Previously, I posted how my book BMOC foresaw a new business model in giving product placements to the most popular high school kids as opinion leaders who would drive adoption by their fellow teens.

This week, TJIC points out that the New York Times is starting to sniff around another business model in the book, that of fountain coin harvesting.  They are starting to see the market:

In all these babbling places, the story is the same: Coins pile up, Mr.
Mendez removes them and people's fascination with tossing pocket change
into water continues, unexplained"¦

But miss the real business model (from the book):

On
the basis of this market research and his quirky insight, Preston Marsh founded
3Coins, Inc, and began an intensive six month research and development
program. He hired engineers from several
hot tub and spa companies that had developed the modular spa, a design where
all the necessary pumps and plumbing were integrated with the tub into a single
portable unit. His designers worked long
weeks coming up with three modular fountain designs, driving down the estimated
manufacturing cost to just $350 per unit. 

Next,
Preston Marsh took these fountain designs to mall owners, architects, building
managers, landscapers and anyone who designed or owned public spaces. In every case, the deal was the same: Preston Marsh would give the client one or
more free fountains to adorn their public spaces, and would even provide the
labor to clean and treat the fountains once a week. In return, Preston Marsh literally "kept the
change". Preston Marsh paid local
entrepreneurs 25% of the change drop to clean the fountains and empty and
deposit the change. The rest was pure
profit.

The
resulting economics were startling. For
each installation, Preston Marsh had up-front investments of about $750,
including the $350 tub plus delivery and installation. In return, Preston Marsh gained about $50 a
week in revenue, or $37.50 after the servicing agent took his 25%. Over a year, the fountain would produce
$1,950 in revenue, with virtually no expenses or overhead. 

After
five years, 3Coins had nearly 10,000 fountains in place, generating almost $20
million in annual revenue, over half of which was profit. And Preston Marsh owned 100% of the company.

You can still buy BMOC at Amazon, which has had a bit of a sales resurgence of late after a couple of press mentions.   Servers are standing by.

Previously, I posted how my book BMOC foresaw a new business model in giving product placements to the most popular high school kids as opinion leaders who would drive adoption by their fellow teens.

This week, TJIC points out that the New York Times is starting to sniff around another business model in the book, that of fountain coin harvesting.  They are starting to see the market:

In all these babbling places, the story is the same: Coins pile up, Mr.
Mendez removes them and people's fascination with tossing pocket change
into water continues, unexplained"¦

But miss the real business model (from the book):

On
the basis of this market research and his quirky insight, Preston Marsh founded
3Coins, Inc, and began an intensive six month research and development
program. He hired engineers from several
hot tub and spa companies that had developed the modular spa, a design where
all the necessary pumps and plumbing were integrated with the tub into a single
portable unit. His designers worked long
weeks coming up with three modular fountain designs, driving down the estimated
manufacturing cost to just $350 per unit. 

Next,
Preston Marsh took these fountain designs to mall owners, architects, building
managers, landscapers and anyone who designed or owned public spaces. In every case, the deal was the same: Preston Marsh would give the client one or
more free fountains to adorn their public spaces, and would even provide the
labor to clean and treat the fountains once a week. In return, Preston Marsh literally "kept the
change". Preston Marsh paid local
entrepreneurs 25% of the change drop to clean the fountains and empty and
deposit the change. The rest was pure
profit.

The
resulting economics were startling. For
each installation, Preston Marsh had up-front investments of about $750,
including the $350 tub plus delivery and installation. In return, Preston Marsh gained about $50 a
week in revenue, or $37.50 after the servicing agent took his 25%. Over a year, the fountain would produce
$1,950 in revenue, with virtually no expenses or overhead. 

After
five years, 3Coins had nearly 10,000 fountains in place, generating almost $20
million in annual revenue, over half of which was profit. And Preston Marsh owned 100% of the company.

You can still buy BMOC at Amazon, which has had a bit of a sales resurgence of late after a couple of press mentions.   Servers are standing by.