Coyote Blog

I still think my first reaction to the Left's pushback on DOGE's probe of the spending of USAID and later other government departments was on target:

Which led to this meme (it's an old standby but under @boriquagato
influence I am dipping my toe into meme creation:

As an aside, I am fully supportive of addressing real privacy abuses found in the DOGE process, though having these concerns come from the party and the media complex that spent the last four years trying to leak Donald Trump's and other rich people's tax returns and whose first response to these privacy concerns was to dox members of Musk's analytical crew makes me skeptical this is the real concern. For government workers, "privacy" means keeping secret bad or stupid decisions. Remember this one (which was again about covering up spending)?

Some of the questionable redactions, by contrast, are charming efforts at bureaucratic butt-covering. Lisa Page, for example, was discussing with Peter Strzok the challenge of having an intimate meeting in Andrew McCabe’s conference room, given the size of his grand new conference table. “No way to change the room,” Page texts in the version provided by Justice. “The table alone was [REDACTED]. (You can’t repeat that!)” Hmmm, what classified, top-secret, national-security information could possibly have been redacted? The blacked out bit, it seems, was a simple “70k.” The DoJ—and can you blame them, really?—didn’t want Congress to know they were in the habit of spending $70,000 on a conference table.

Update 2-17: DOGE is seeking access to IRS systems with taxpayer data. As loath as I am to slow this effort down, I think we need to hear about some strong controls before this proceeds.

But having thought about this longer, I think this is about more than just money. It is also about class. Just listen to how the cool kids in the media talk about Musk's group of young weirdly-nicknamed geeks. This is fairly typical:

He was speaking specifically about a Trump executive order that decrees that the Department for Government Efficiency can force federal agencies into firing four people for every new hire. “Who the hell voted for Mr. Musk?” Begala raged. “Who the hell voted for—excuse the phrase—a guy who calls himself Big Balls? A 19-year-old kid going in there and trying to fire cancer researchers and scientists and teachers and agricultural specialists. It’s, it’s appalling.”

This is moderately hilarious from a) a party who still has not told us which unelected people really were making decisions behind the curtain for a senile Joe Biden; and b) an individual (Begala) who wielded immense power and influence across all departments of the Clinton Administration. The department staffs in DC are 99.99% people who are both unelected and unconfirmed by Congress. The issue is not that they are unelected, the issue is that they are "the wrong sort." I am reminded of the British aristocracy in the 19th century that would tolerate almost any sort of governmental incompetence or malfeasance as long as the people were "the right sort" -- meaning of their class.

The mention of Victorian England reminds me of another way that class is likely involved here. In the English aristocracy the oldest son inherited the title and often all the land and income (which was entailed to the title). This left little for any additional sons, so an income had to be found somewhere for them in a profession that did not require them to sully themselves with "trade" (daughters were handled a different way, through the marriage market). Reading for the law was an acceptable profession for a son with brains, and the army or navy were outlets for many. But most families needed a way for their sons without too much brains or ability and not militarily inclined to make a living. A position in the Church was often the solution.

Modern American blue-blood parents are no different -- they need a way to secure a living for their kids who won't or can't land a job in the modern elite career choices (law, consulting, investment banking, or a sexy startup). Unlike in Victorian times, the military or the Church are no longer preferred elite options? So what to do with your 22-year-old gender studies major? The parents need her to get an income and they need her to do it in a context that they can proudly report to their friends -- Paul Begala does not want to tell his friends that his son's job is maintaining distributor pricing lists ** (anyone who does not believe the latter criteria should have been at my Princeton or Harvard Business School 25th reunions).

The solution? Get them a job at a non-profit, the modern American version of going to the Church. As Arnold Kling noted once, non-profits tend to have much higher status than do for-profits. And without competition they don't have to carry the same performance standards as for-profits. And they are incredibly susceptible to trading a position for your kid in exchange for a nice donation.

The employment rosters of non-profits and NGO's are stuffed with the children of privilege. So much so that there are many non-profits that seem to do nothing EXCEPT employ and pay the travel expenses of 20-something kids from rich and/or influential families. I have been writing about the non-profit scam for years. As I wrote then:

From my direct experience, I would go further.  There is a tranche (I don't know how large) of non-profits that are close to outright scams, providing most of their benefits to their managers and employees rather to anyone outside the organization.  These benefits include 1) a salary with few performance expectations; 2) expense-paid parties and travel; 3) myriad virtue-signalling opportunities; 4) opportunities to build personal networks.  This isn't just criticizing theoretical institutions -- people I know are in such jobs in these organizations.

The spending that DOGE is going after at USAID and other departments likely threatens the income of a number of under-qualified elite kids. So I will update my meme:

**Footnote: I will proudly tell the world that my son's first job out of college was indeed maintaining distributor pricing lists for Ballast Point beer. Trying to optimize profits across the matrix 100+ sku's and scores of distributors is a great real world skill building entry-level job that so many of the change-the-world-before-I-am-25 college kids currently eschew.

Postscript: If you want the blank template for the Astronaut meme updated for DOGE, I share it here.

Arnold Kling writes on non-profits:

My general view on non-profits is that their status is too high relative to profit-seeking firms. In the for-profit sector, I think of the example of Elizabeth Holmes, the founder of Theranos. The company had a noble vision, and she made compelling presentations, but the product didn’t work. Because she claimed that the product worked better than it did, she got in trouble. She was ousted as CEO, and she faces a lot of legal jeopardy.

In the non-profit world, there are no end-users to hold you accountable if what you are doing doesn’t work. Just having the noble

From my direct experience, I would go further.  There is a tranche (I don't know how large) of non-profits that are close to outright scams, providing most of their benefits to their managers and employees rather to anyone outside the organization.  These benefits include 1) a salary with few performance expectations; 2) expense-paid parties and travel; 3) myriad virtue-signalling opportunities; 4) opportunities to build personal networks.  This isn't just criticizing theoretical institutions -- people I know are in such jobs in these organizations.

Advice to commenters -- please do not purposely misunderstand the point I am making.  Clearly great non-profits doing good work exist, but their existence does not invalidate the point I am making.  And I think their ability to continue to survive without creating value beyond that they provide for their employees is closely related to the point that Kling makes.

This may be the last message you expected from me, but Obama should pardon Hillary.  If Obama does not, Trump should.

Look, I am a FOIA absolutist.  Long before it came out that Clinton may have had top secret emails on her home server, I wanted to see her punished for her flouting of public accountability laws.  Her whole home-brewed email system was a transparent attempt to evade FOIA, and consistent with her history of attempting to duck transparency (going all the way back to her abortive health care initiative she ran as First Lady).  In addition, I have had it up to here with bogus non-profits that pretend to do charity work, but are in fact merely lifestyle and influence maintenance devices for their principals.  I would love to see the Clinton Foundation investigated (though market forces may take care of that institution on their own, as it is unlikely donors will be sending much money their way now that the Clintons have no prospect of returning to power).

But the optics, and precedents involved, with a winning candidate's administration criminally prosecuting the election's loser are just terrible.  Even if entirely justified, the prosecution smacks of banana republic politics.  And even if it were justified, half the country would not see it that way and next time, when the parties are reversed, as sure as the sun rises in the East there will be folks looking to duplicate the prosecution in the other direction.

The rule of law is seldom helped by ignoring wrong-doing, but in this case I will make an exception.

Postscript:  By the way, what could be a better political FU than having Trump pardon her?   An attempted prosecution could last for years and could lead nowhere.  But nothing leaves the impression of "your guilty" like a preemptive pardon (see Richard Nixon).  From a political point of view Obama should pardon her just to prevent Trump from doing so and getting credit for being a healer.

I operate recreation areas in the US Forest Service and from time to time get criticized that my profit adds cost to the management of the facilities, and that the government would clearly be better off with a non-profit running the parks since they don't take a profit.  What they miss is that non-profits historically do a terrible job at what I do.  They begin in a burst of enthusiasm but then taper off into disorder.    Think about any non-profit you have ever been a part of.  Could they consistently run a 24/7/365 service operation to high standards?

Don Boudreaux has a great quote today that touches on this very issue

from page 114 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

While capitalism has a visible cost – profit – that does not exist under socialism, socialism has an invisible cost – inefficiency – that gets weeded out by losses and bankruptcy under capitalism.  The fact that most goods are more widely affordable in a capitalist economy implies that profit is less costly than inefficiency.  Put differently, profit is a price paid for efficiency.

It is also the "price" paid for innovation.

As readers will know, I am frustrated that the Feds continue to fuel a huge financial asset bubble.  While I was wrong, so far, that the Feds would create consumer and industrial price inflation from their massive money printing operation, they have created an enormous price inflation in financial assets.   Every week they pour more newly printed dollars into the hands of financial asset holders, and corporations have joined in the fun by taking advantage of low borrowing rates to buy back record amounts of their own shares.   With both the Fed and publicly-traded corporations taking so many financial assets off the market at the same time investors have new cash to invest, someone has to create some new assets to buy.

Enter:  The $500 million spec home.  I kid you not.

LOL, I am betting the neighbors are not happy

As an upside, I suppose they are creating a future tourist attraction.  Many of the great Gold Coast and Newport mansions of the late 19th century were too expensive for later generations to operate and ended up in the hands of non-profits and governments.

The other day I wrote about non-monetary job benefits.  Here is an example:

A small-time vintner's use of volunteer workers has put him out of business after the state squeezed him like a late-summer grape for $115,000 in fines -- and sent a chill through the wine industry.

The volunteers, some of them learning to make wine while helping out, were illegally unpaid laborers, and Westover Winery should have been paying them and paying worker taxes, the state Department of Industrial Relations said.

"I didn't know it was illegal to use volunteers at a winery; it's a common practice," said winery owner Bill Smyth.

State law prohibits for-profit businesses from using volunteers.

Before the fine, volunteer labor was common at wineries in the nearby Livermore Valley, said Fenestra Winery owner Lanny Replogle.

...

About half the people the state considered Westover employees were taking a free class at the Palomares Canyon Road winery. Students learned about growing vines, harvesting and blending grapes and marketing the finished product.

"This was an incredible opportunity for me," said Peter Goodwin, a home winemaker from Walnut Creek who said he dreams of opening a winery with some friends. "I got to learn from someone who knows the business."

The winery sometimes asked Goodwin if he wanted to assist in different tasks.

"That's what I wanted, to be as involved as much as possible -- it was all about learning," he said. "I don't understand the state's action. It was my time, and I volunteered."

I have mixed feelings on this.  On the one hand, this demonstrates the appalling violation of individual freedom that minimum wage laws create -- not just for the employer, but for the employee as well.  Minimum wage laws mean that you are not allowed to perform labor for less than that minimum, even if you choose to and get non-monetary benefits that you feel fully compensate you for the time.

On the other hand, you have to be particularly clueless, especially in California, to claim ignorance on this.  I work in an industry that 10 years ago routinely accepted volunteer labor (illegally) and I was never lulled by the "everyone else is doing it in the industry" excuse.  I will say that it is irritating to try to run a business in compliance with the law and to find yourself undercut by folks who are avoiding the more expensive parts of the law.  Years ago there used to be a couple of non-profits who competed against me running campgrounds.  They were really for profit - they just paid their president a large salary rather than dividends - but used the non-profit status** as a dodge to try to accept volunteer labor.  Eventually, they were stopped by several courts from doing so.

Yes, I know this is kind of odd.  You might ask yourself, why are there so many people willing to take their volunteer position when you are offering paid jobs?  It turns out here are a lot of non-monetary benefits to this job such that people will do it for free.  In fact, that huge fountain of hypocrisy that is the Federal Government exempts itself from paying minimum wage and accepts volunteers to run its campgrounds where I must pay them.

** the non-profit status helped them in one other way.  We take over operation of recreation areas under concession contract from the government.  Many government employees hate this sort of outsourcing partnership, and really find it - for the lack of a better word - dirty to sully themselves interacting with a profit-making entity.  The non-profit status helped my competitors seem friendlier -- ie less capitalistic -- than I.  California recently passed a law allowing lower cost third party operation of certain parks functions but only if this was performed by a non-profit.   I had a US Forest Service District Ranger in Kentucky tell me once that he was offended that I made money on public lands, providing services in the National Forest.  I answered, "Oh, and you work for free?"  I said that I did not know how much he made but I guessed $80-100 thousand a year.  I said that would be over double what my company made in profit in the same forest operating and paying for hundreds of camp sites.  Why was I dirty for making money in the Forest but he thought he as "clean"?

Just a few days ago I wrote about proposals for government subsidies / bailouts / partial control of print media. Already, it seems that bills are popping up in Congress. I guess this is not surprising -- as Congress loves to throw pork at particular industries in exchange for help getting elected, the temptation to make the newspaper industry, with its unique political muscle, beholden to the political class must be overwhelming.

But I must say this makes zero sense to me:

With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.

"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.

I don't see how allowing organizations (whose problem is that they are making no profits) to avoid income taxes on their non-existent profits is really going to solve much. Is the thought that donations will save the day? Are we to endure endless pledge drives in print media?  Or maybe Democrats are hoping ACORN will use its stimulus funds to start buying up local papers?

This is classic government in the corporate state.  Economics and new technologies are driving huge changes in an influential business.  These changes will force survivors to adopt new business models, and will force formerly dominant competitors who refuse to change out of business.  Rather than face these changes and deal with risks to their leading positions, powerful incumbents run to government to try to get the state to lock in historic business models and prevent new entrants for poaching on what they consider their protected market preserves.