Coyote Blog

It is not often that the NY Times will question the long-term consequences of any Democratic program ostensibly aimed at mitigating a short-term need.  So I don't want to fail to highlight this:

The Obama administration's $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

"The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."

Via Flowing Data, a cool chart in the NY Times with every batter faced by Rivera in the playoffs.

I couldn't really get up enough energy to post about the whole Van Jones kerfuffle.  Apparently, as one of Obama's 129 czars, this guy whose job it is to redistribute billions of dollars from one group of individuals to another and issue diktats to be followed by private citizens and businesses, is *gasp* a communist.  Well, no sh*t.  All of these various czars have communist roles so why is it surprising Obama might have picked a communist to hold one of them.  The only surprise was that Van Jones was dumb enough to admit it in print rather than hiding it in leftish double-speak like most of the rest of the administration.

Anyway, all that aside, you gotta love the NY Post, which has no problem dropping any pretense of statesmanship and is perfectly willing to skewer its cross town rival.  This editorial is pretty dang funny.  An excerpt:

Newspaper of record? The Times isn't so much a newspaper as a clique of high school girls sending IMs to like-minded friends about their feuds and faves and raves and rants. OMFG you guys! It's no more objective than Beck is....

The Times continues to treat communism as a cute campus peccadillo like pot smoking or nude streaking. A Times think piece (Sept. 9) worried that Jones' fall was "swift and personal." Being a communist is personal but being the pregnant teen daughter of a vice presidential candidate is public business?

In a quasi-related post, Virginia Postrel says the Washington Post lost $1.10 per copy of their newspaper last quarter.  Wow!

I have to disagree with Ed Driscoll, though.  He like many conservatives argues that this economic problem of newspapers is somehow because the Times has dropped its objectivity.  I am not sure anyone has evidence that is true.  One could make, I think, an equally strong case that the Times should be less objective and go openly partisan.  After all, this notion of politically neutral newspapers is a pretty recent phenomenon in the US.

I actually think the problem with newspapers like the Washington Post is the "Washington" part.  Local business models dominated for decades in fields where technology made national distribution difficult or where technology did not allow for anything but a very local economy of scale.  Newspapers, delivery of television programming, auto sales, beverage bottling and distribution, book selling, etc. were all mainly local businesses.  But you can see with this list that technology is changing everything.  TV can now be delivered via sattelite and does not require local re-distribution via line of sight broadcast towers or cable systems.  Amazon dominated book selling via the Internet.  Many of these businesses (e.g. liquor, auto dealers, TV broadcasting) would have de-localized faster if it had not been for politicians in the pocket of a few powerful companies passing laws to lock in outdated business or technological models.

Newspapers are ripe for a restructuring.  How can one support a great Science page or Book Review section or International Bureau on local circulation?  How much effort do the NY Times, Washington Post, LA Times, SF Chronicle, etc. duplicate every day?  People tell me, "that's what the wire services are for."  Bah.  The AP is 160 years old!  It is a pre-Civil War solution to this problem.  Can it really be that technology and changing markets have not facilitated a better solution?

The future is almost certainly a number of national papers (ala the WSJ and USA Today) printed locally with perhaps local offices to provide some local customization or special local section.  Paradoxically, such a massive consolidation from hundreds of local papers to a few national papers would actually increase competition.  While we might get a few less stories about cats being saved from trees in the local paper, we could well end up not with one paper selection (as we have today in most cities) but five or six different papers to choose from  (just look at Britain).  Some of these papers might choose to sell political neutrality while some might compete on political affiliation.

If I were running the Washington Post, I would think very seriously about creating a national news offering, a USA Today with substance.   If you offered me a Washington Post re-branded as a national paper, with some strong side offerings like the NY Times Science section and a good local sports section and a local news section, I'd toss my Arizona Republic in a second.  Its going to take some good thought as to how to weave together the national offering with locally customized content and to manage local vs. national advertising accounts, but with technology this is doable -- Clear Channel does something similar in radio.

I wonder, in fact, why no one has done this yet -- when you look at the circulation numbers, only the USA Today and WSJ, the two papers pursuing this path, are seeing growth.  My only thought is that news is one of those businesses dominated by passionate people who are tied deeply, emotionally into the industry in a way that makes it impossible to envision or consider new models (aviation is another such business, in my opinion, and the US auto business is probably another).  What we need is for the Post and a few other major papers to fail and then let some really bright, right people from outside the business come and shake it up.  This is, by the way, one of the unsung benefits of bankruptcy, is that it takes assets out of the hands of the people who got the company in the mess to begin with -- a benefit we short-circuited when we spent billions of taxpayer dollars in the auto industry to keep GM and Chrysler assets out of new and potentially more innovative hands.

I thought this Kenneth Chang column in the NY Times was pretty interesting.  Much like we can sometimes spot plagiarism by spotting where spelling errors have been reproduced, apparently errors in our DNA give clear pointers to our evolution from other species.

All my complaints about the NY Times not-withstanding, I think if the Times were to disappear, I would miss their science reporting the most.

Krispy Kreme in the Harrod's food court.

What's next?  Page 3 girls at the NY Times?  Well, it couldn't hurt...

I am sure I could rattle off a myriad of problems at newspapers - changing lifestyles, the explosion of free content over the Internet, competition from cable TV, etc.  Built into these trends are some structural problems that newspapers probably cannot overcome.  At some point, there comes a time of survival when you have to stop fighting trends and start figuring out how to make money in the new regime.

Here is one thing I can say with certainty:  Every single newspaper in this country, with the possible exceptions of the WSJ and USAToday, but including the NY Times, are under-scale.

How do I know?  Just listen to the situation.  If they cut costs, they fear the quality of the product will fall and they will lose readership.  But the readership is already not covering costs and is in fact already falling.  This is a classic death-spiral of an under-scale entity.  It almost does not matter what caused the company to suddenly be under-scale when it previously was fairing OK -- technology change, new competition, shifts in customer expectations in habits, or all of the above.

There is no tweaking one can do in an underscale business.  One either needs to get much bigger, or find a defensible niche.  The latter is hard in the newspaper business, since these publications have essentially focused on just one metropolitan area or city, its hard to find a tighter niche that both has a customer following and would allow massive cost cutting.   Community newspapers are one example.  The only forward-looking idea I can come up with is a metropolitan sports-only daily.  Could such a thing sell in New York?  Possibly -- one can argue that is what the Dallas Morning News is, a sports daily with some news sections attached.

This scale problem should not be a particularly surprising finding.  The local newspaper business has always known it had a scale problem.   With thousands of newspapers across the country all reporting many of the same stories, there has always been a huge issue of duplication of effort.  Newspapers took a swipe at this problem with the formation of the Associated Press, which effectively acts as a shared reporting resource.

But it has been decades since this model has even been tweaked.  In that time, sophisticated new readers expect more than just bland 5-paragraph AP stories, and newspapers who rely on such content find most of their stories online for free, if not in their own paper, then in others.  And most large papers have been progressively tempted, for a variety of reasons, to have their own writers on national stories.  Ever seen the press pool for a Superbowl game?  The staff and talent they have built that could serve a whole country is only serving one city.

Many other local distribution models are dying or dead.  Local TV network affiliates were created when local re-broadcast was the only technologically feasible approach to getting TV signals to homes.  They survive today only through constant lobbying which has produced must-carry rules on cable and TV operators, or most of us would be just fine getting the network feed without local content (after all, how many folks watch CNN and FOX and MSNBC?).  Local auto distributorships and beverage wholesalers similarly fight rear-guard actions in the legislature against new national channels.

I think the time has come for publications like the NY Times to give up its city-centric model and go to full-bore national distribution.  My Arizona Republic has 4-5 standard sections plus an additional section (e.g. "Scottsdale") customized to my neighborhood.  I don't see why such a model would not work nationally  (the WSJ does something a bit similar but it is only customized regionally).  I would love a Washington Post delivered here that had an Arizona/Phoenix section and possibly a local sports section.

I can hear the cries now - but what about competition?  We will see thousands of newspapers collapse to 7 or 8 national brands.  But this is a false view of competition here.  Right now I have one newspaper choice.  Even having two or three national offerings with an Arizona section would increase my choice substantially.

The NY Times has an alternative web interface they are testing.  I kind of like it.  Find it here.

You certainly don't have to spend very long convincing me that a significant government action can be distortive of markets, so I won't argue too much with Kevin Drum that the capital gains tax changes maybe played a contributing factor to the housing bubble  (though it is hilarious that the left considers tax reductions as the only distortive government actions).

However, thinking back on events, its a little hard for me to ascribe the lion's share of the bubble to capital gains tax changes, as opposed to, say, the mortgage interest deduction or Federal Reserve interest rate policies or local zoning controls.

I probably wouldn't have bothered blogging on this, but I found the chart Drum uses from the NY Times to be hilarious:

Do you see the problem?  I will help by simplifying the chart:

Its a pretty heroic assumption to say that Event B caused Trend A.

Update:  Russel Roberts thinks the Times is right, but that they are using the wrong data to prove it.  1997 looks much more like the critical inflection point if you look at prices rather than sales  (chart via Roberts, from a different NY Times article, click to enlarge)

What better way to inaugurate the new blog site than to rant about a Kevin Drum post?  Drum posts this chart today from the NY Times showing a drop-off in the effective total tax rate (income+social security+other stuff) at very high income levels.

Well, no freaking duh.    I suspect that this has been true practically forever.  Why?  Because this is NOT an income tax chart, it is a total tax chart.  And as such, it includes social security and medicare taxes (collectively, with a couple of other minor things, called "payroll taxes".  These taxes, about 8% of total income, are a flat tax with a cap around $100,000.  This means that everyone with income under $100,000 pays 8% of all income.  Someone at $5,500,000 (midpoint of the $1 million to $10 million band) pays only 8%  of the first $100,000 or an effective rate of 0.146% of total income on payroll taxes.  For someone in the top 400 taxpayers, the rate is close to zero.   So you really have to add 8 percentage points or so to the higher rates to make them comparable ex-Social Security to rates for earners under $100,000.

Now, we can argue about the regressive structure of Social Security.  But many on the left have opposed making it more progressive.  They want Social Security to perceived as an insurance program, not a welfare/transfer program.   To be insurance rather than welfare, effectively the same income that is used as the basis for benefits must also be the income basis for taxation.  Income over $100,000 is not used to calculate benefits, so it is not taxed.

Here is one person on the left making this point in 2005:

...when his aides presented him with their initial Social Security proposals 70 years ago, FDR balked: "No dole," he said, "mustn't have a dole" "” because he knew instinctively that welfare programs are both fundamentally unpopular as well as corrosive to the human spirit. Conservatives understand this better than liberals, and know perfectly well that the best way to kill something is to convince the public that it's actually a welfare program.

But that's not what Social Security is. It's a modestly progressive social insurance program that's paid for by everyone and that benefits everyone. If it ever stops being that, if it ever stops being universal, it will eventually cease to exist. Don't let anyone fool you into thinking otherwise.

The person who wrote this was ... Kevin Drum.  It is wildly disingenuous to look at income taxes and payroll taxes mixed together.  It is even more so given Drum fully understands why payroll taxes are structured as they are.

Which is all not to say that there is not a really halide point in the article that people in the 100,000-200,000 range are getting hosed.  But I would submit this hosing is more due to work by Drum's intellectual allies than the reverse.  Phase-outs of deductions  occur mostly in this range in the tax code, as does phase-in of the AMT.  Both are leftish creations.

Also, there has clearly been something regressive in the tax code for the top 1% of earners over the last 10+ years.  I am not sure what it is, because it certainly is not in the base rate schedule.  My guess is that they just spend a hell of a lot more on managing their tax bill than you or I do.  I am sure if I spent a million dollars on tax advice, I would cut my bill by 3 percentage points.  Of course, that is a losing proposition for me, but a winning proposition for someone who makes $100 million a year.  But hasn't this always been the case?  And won't it always be the case, at least until we decide to radically simplify the tax code?

I wrote more about Drum's 2005 post here.  I demonstrated how Social Security is promising me a negative rate of return on my money here.  I showed despite Drum's protestations that Social Security is in fact mostly a transfer program here, if one defines a transfer as the difference in the return I get from SS and the return I would get on the private market.

Activists are always making exaggerated statements on current problems and extrapolate these into forecasts of doom.  One thing activists really, really hate is when people come back later and hold them accountable for these forecasts.  You can see it as NASA officials squirm and fire off condescension at skeptics who have the temerity to actually check their global warming forecasts against actual temperatures.

If I had a newspaper, I'd have a special regular feature where I dig back 10-20 years in my archives to find such forecasts of doom and check them against reality  (actually, if I had a paper, I would not allow activist's press releases to show up virtually unedited as "news" stories, but that is another matter).  Heck, I could have a regular feature just reality-checking old Paul Ehrlich forecasts.

Well, I don't have a newspaper, but I do have a blog, and this is a new feature I am working on.  I am still trying to play with various search engines and news libraries (such as the NY Times) to see if I can come up with some kind of query format that efficiently digs up such predictions that are at least 10 years old.  I am still a little stumped on this, but I am working on it.

But, as a sort of beta-test of the feature, one such comparison fell into my lap today.  I remember my feminist wife reading a book published in 1994 called "Failing at Fairness."  This work was a big, big deal at the time.  Media such as the NY Times fawned on it.  I will let a 1994 review on the Society for Women Engineers' site summarize the book:

Failing at Fairness: How American Schools Cheat Girls eloquently describes the results of years of research into sexism in schools. The study began as an examination of gender bias in textbooks, and evolved into a decade of painstaking classroom observation uncovering a "hidden curriculum" in classroom interaction.   Authors Myra and David Sadker present a compelling tale of gender bias in education at all levels.

Taken at face value, the book more than proves the point of the subtitle: our schools cheat girls out of an education equal to that received by boys. The authors do an excellent job of pointing out some of the more subtle ways of favoring boys over girls. However, so many descriptions of incidents of sexism -- blatant, subtle, by old teachers, young teachers, male teachers, female teachers, and even by one of the Sadkers' own "trained" researchers -- are included that it can seem like overkill at
times. In addition, the wealth of statistics can be overwhelming, and yes, even slightly depressing.

One of the more horrifying aspects of Failing at Fairness is the discussion about standardized tests, their historical deliberate design as culturally biased for exclusionary purposes, and the dive in the scores received by girls as they progress through their education.

Current standardized test administrators claim to be more sensitive to cultural prejudices in today's tests, although minority students still score less than white students (at least on the SAT). Also, the book states quite plainly, "Regardless of ethnic or racial background, all American girls share a common bond: a gender gap in test performance that leaves them behind the boys." The prevailing opinion of the discussion group is that the tests are still exclusionary; they are not measuring achievement, but are rather reflecting the way students are taught.

I don't doubt that they found their share of anecdotal issues.  I am sure I could find them today.  But their overall premise that girls were getting hosed by primary education and that standardized tests were structured to exclude girls from college education made no sense even at the time the book was published:

The chart is from Mark Perry, and he shows a similar picture for bachelor's degrees, where women blew past men in 1981, and in PHDs, where women passed men in 2006.  People would laugh at this book today, as most discussion is about under-performance of boys.

I don't know the authors, but I would interpret this as the classic inability of activists to declare victory.  I am fairly certain that their hypothesis was far more correct in 1969 than in 1994.  But society really went through a step-change in the 1970s vis a vis attitudes about females.  The previous generation of women's activists did great work to make these issues plain and help lead change in societal attitudes.

But activists have a really hard time declaring victory.  From a quite personal standpoint, declaring victory as an activist is exactly the same as walking into your boss and telling him that the company really doesn't need your job position.  Money, prestige, academic advancement, and attention, and (self-esteem, for certain types of people) are all tied to there being a major problem.  If there is no longer a big problem, then all this stuff goes away.

Recent circulation numbers showing continued, substantial declines of traditional newspapers give me an excuse to make a point I have wanted to make for some time. 

I am a frequent critic of newspapers.  I think they have lost focus on the hard-hitting investigative journalism which used to be their highest and best calling, instead considering reiteration of an activist's press release sufficient to check the journalism box on some particular issue.  When investigative reporting does occur, it almost always is focused to support the dominant or politically correct outcome, rather than to really challenge conventional wisdom.   Media coverage of any technical issue involving science or statistics or economics is often awful, in large part because journalism is too often the default educational path of folks who want to avoid numbers.  Any time I have been on the inside of some issue receiving coverage, I have generally been astounded by how little the print descriptions matched reality.  Now that I am interviewed more as a source for articles, I never think my views are well-quoted (though that may be my fault for not talking in sound bites).  And, like many, I get irritated that the media's arrogance and self-referential reporting seems to increase in direct proportion to their drop in circulation.

All that being said, the world without healthy newspapers is a bad thing. 

First, we bloggers can blather on all day about being the new media, but with the exception of a few folks like Radley Balko, we're all editorial writers, not reporters  (I consider my role at Climate-Skeptic.com to be more like journalism, but only because there is such a glaring hole on that topic in traditional media).  I couldn't do what I do here, at least on this particular blog, without the New York Times and the Washington Post.  I'm a remora feeding on their scraps.  I can't bring down the big fish by myself, I can only feed on the bits they miss.

Second, and perhaps more important in this world of proposed reinstatement of the Fairness Doctrine, print media is the mode of speech best protected by the First Ammendment.  This isn't the way it should be -- all speech should be equal -- but in reality goofy regulatory regimes for radio, TV, and even the Internet all offer the government leverage points for speech control they don't have with the print media.  It's why half the dystopic sci fi novels out there have a world dominated by TV -- because that is where government has the most control of speech.

So here's hoping you guys at the NY Times get your act together.

Yeah, I think the title is worded awkwardly, but I am trying to curb my enthusiasm for ending sentences with prepositions  (I will continue to boldly split infinitives that no man has split before).

Anyway, in the spirit of this post and this one, I try from time to time to reinforce my support for free speech as an absolute right by publicly supporting the speech rights of those with whom I disagree.  Today's case is the public University of Nebraska-Lincoln deciding to un-invite former terrorist William Ayers to speak on campus.  The reason given was the current weak-ass excuse often used to reverse the invitation of controversial speakers, "we can't gaurantee security." 

Though I would never have hired the guy, Ayers is a professor at a real public university, and what he has to say is particularly relevant given his ties to Barack Obama.  I find the behavior of Nebraska's conservative politicians to be especially absurd here -- after months of calling for more discussion and disclusore of Ayers and his ties to Obama, they want to prevent Ayers from speaking publicly?

Update:  In an odd coincidence, at about the same time I was writing this post, the NY Times blog was posting on split infinitives.

The media is really bending over backwards to find ways to twist earnings data for average Americans to try to make the point that real income for many folks has stagnated or dropped.  They are doing this to support a two-pronged legislative strategy in the next Obama administration:

1. Use the power of the government to further tilt the balance towards unions and against employers in wage negotiations  (this strategy having worked out so well to create prosperity in the automobile and airline industries)
2. Further modify the income and Social Security tax structures to make them even more regressive than they are today.

They are firing on all cylinders behind this strategy.  They are even mobilizing the neo-Keynesians to make the pitch that the Great Depression and the current financial crisis were caused by a shift in wealth from laborers to the capital classes, and that the only way to prevent future crises and depressions is to, wait for it, increase the power of unions and institute more wealth redistribution  (Example here, via Kevin Drum).

I was going to do a post fisking the James Livingston article linked above on Kevin Drum's site, but Livingston's hypothesis was such a mess that it was just going to take too much of my day.  But in doing some research, I found this chart from a couple of years ago in the NY Times that really caught my attention:

Talk about chutzpuh -- look at the lede on the chart and then look at the chart itself.  Yes, the lede is correct, but only if you choose the totally meaningless number of "cash wages" rather than total compensation.  If one looks at total compensation (or what they call "overall" compensation), the entire argument falls apart.   Workers have maintained about their same "share" of the economy.

Sure, a large percentage of that is now in health care benefits, but that's a choice workers have made (and the government has encouraged through tax policy).  In fact, this compensation mix has been driven in large part by the Left's beloved unions, so on what basis can folks say that these other benefits somehow "don't count?"  Certainly, they cost their employers equally, whether it is cash or health care.  Corporate profits are up a bit, but in line with their normal historical levels in the 1950s and 1960s, the golden age of the US economy, according to the Left.  (By the way, the pattern of falling wage shares and rising profit shares after recessions is a well-documented one.  Wage-earners do best at the end of an economic cycle, employers more towards the beginning.  The chart cut off after 1997 would look about the same as the last several years).

I will tell you right now that every time you hear someone bemoaning the stagnation of wages, they will never, ever, ever be talking about total compensation per individual.  Having, through government policy and union activity pushed the compensation mix to non-cash elements, they then play a heads-I-win-tails-you-lose game of not giving any credit for those compensation elements.

Other games that are played to try to make the case that real earnings have stagnated include:

• Time frame selection. Everyone making this argument will choose 2000 as a starting point.  They justify it by saying it is the beginning of the Bush years, but 2000 is really selected because it is a pre-recession peak, and they have to measure peak-to-trough of the economic cycle to try to make their point.  Just as an example, if you look at the household income numbers below, you can see there is very typically a 5-year drop after a recession followed by net gains.  If we chose, say, the first Clinton term we could play the same game, showing a peak-to-trough drop in real incomes.
• Household income game. The household income numbers are fraught with peril, because companies don't pay households, they pay individuals.  And household makeups are changing simultaneous to income changes.  For example, imagine the economy was just my household.  If my wife were to get fed up with my shtick and divorce me tomorrow, average household income would drop by 50% in one day (as our total income stays the same but we go from one to two households).  If my wife were to go back to her high-paying pre-kids job tomorrow (if only it were so!) our household income would go way up, in part because the labor department does not capture the value of the labor she provides at home.Mark Perry has a lot more on the household income numbers here, but he shows that the household size number has been changing a lot, causing the metric to understate income changes per individual:

• Individuals matter. Median income looks at the middle person on the ranked list of US incomes.  So, for example, if there are 100 million income earners, the median income is the income of number 50 million on this list.  But whoever the person is at spot 50 million is almost certainly not the same person who was at spot 50 million last year.  They might have fallen on the list, but the odds are they moved up.  As folks age and gain experience and/or seniority, they tend to increase income faster than inflation.  Most minimum wage earners, for example, tend to be under 25.  The number of families supporting three kids on minimum wage (at least of the primary bread-winner) at the age of 45 is really, really low, despite the anecdotes we are bombarded with in the media.

• Immigration has a huge effect. The total number of foreign born people in the labor force is estimated around 21 million, of which perhaps 6.3 million are illegal immigrants.  Positing that at least 10 million of these arrived in the last two decades, and that many of these folks began at relatively low, below-median incomes, means that median incomes are hugely affected by immigration.  Leaving immigrants out so the comparison is close to apples and apples, to find the true median income gain over the last 20 years one would have to count up 10 million or so spots on the list.  Again, as in the previous point, most individuals can be better off even if the median stagnates  (presumably immigrants coming in at the bottom are also better off, even at the bottom, than where they were before, or they would not have come.  We often forget that much of our bottom quartile of income in this country would be upper middle class in many other nations).  This is a classic mix problem that most people, and the media, almost always get wrong.  In a situation with a changing mix of multiple groups, each of the groups can be improving on some metric, but the overall metric can go down.  You can see the income stats by race here.  Every race group has increasing median income, but since the Hispanic group has grown 8x faster than the anglo population in the US, the total results are mixed downwards.Here is a quick example.  Group A has values of 5,6,6,7.  Group B has values of 1,2,3.  Ten years later Group A is the same size and has values of 6,7,7,8.  Group B has doubled in size, and now has values of 2,3,4,2,3,4.  In these examples, every single individual has a higher value.  Also, Group A's median has increased from 6 to 7, and Group B's has increased from 2 to 3.  But the median for the whole combined group A+B has dropped from 5 to 4.  Both medians (and averages) can do funny things when mix is shifting.
• Even the NY Times. The NY Times actually makes two of these points for me in another article, arguing that historic median income drops were concentrated in areas of high immigration, and reported drops were due to the choice of the economic peak as a starting point.  WOW?  Is this the same NY Times I began this post criticizing.  Yes it is, the only difference is that this article ran in 2001, when they were reporting on the economy during a Democratic administration.
  
• Income taxes are already wildly progressive.  While I would love to be in that top 1% group, I don't really begrudge them their success.  Besides, who can look at the chart below, again from Mark Perry, and come to the conclusion that the top 1% are being treated unfairly generously.

• Every country that has implemented this plan (government-backed unions and wildly progressive tax policy), including most of Western Europe, is demonstrable worse off than the US on absolute measures.  This is both the median, but also in every quintile, including the poorest.  While it is true the poorest quintile has a bigger gap from the riches in the US vs. France for example, on an absolute basis our poorest are at least as well off  (particularly when differences in immigration policy are taken into account).

Saul Hansell at the NY Times has an interesting article about why risk assessment programs in investment banks were not sounding the alarm coming into the recent turmoil.  The article contains this gem:

Ms. Rahl said that it was now clear that the computers needed to
assume extra risk in owning a newfangled security that had never been
seen before.

"New products, by definition, carry more risk," she said. The models
should penalize investments that are complex, hard to understand and
infrequently traded, she said. They didn't.

I continue to see parallels between recent problems and the meltdown at Enron.  In fact, in many ways events in the natural gas trading market were a dry run for events in the mortgage market.   One filmmaker coined the phrase "Smartest Guys in the Room" to describe the hubris of the guys who ran Enron.  To some extent the phrase was absolutely true - I knew Jeff Skilling at McKinsey and he was indeed the smartest guy in the room.  But everyone can be wrong, and sometimes the smartest guys can be spectacularly wrong as they overestimate their ability to predict and control complex events.  I think this is a fair description of what went on in Wall Street over the past several years.

Via Carpe Diem, comes this September 30, 1999 NY Times story:

In a move that could help increase home ownership rates among
minorities and low-income consumers, the Fannie Mae Corporation is
easing the credit requirements on loans that it will purchase from
banks and other lenders.

The action, which will begin as a
pilot program involving 24 banks in 15 markets -- including the New
York metropolitan region -- will encourage those banks to extend home
mortgages to individuals whose credit is generally not good enough to
qualify for conventional loans. Fannie Mae officials say they hope to
make it a nationwide program by next spring.

Fannie Mae, the
nation's biggest underwriter of home mortgages, has been under
increasing pressure from the Clinton Administration to expand mortgage
loans among low and moderate income people and felt pressure from stock
holders to maintain its phenomenal growth in profits.

In
addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings
are not good enough to qualify for conventional loans, can only get
loans from finance companies that charge much higher interest rates --
anywhere from three to four percentage points higher than conventional
loans.

''Fannie Mae has expanded home ownership for millions of
families in the 1990's by reducing down payment requirements,'' said
Franklin D. Raines, Fannie Mae's chairman and chief executive officer.
''Yet there remain too many borrowers whose credit is just a notch
below what our underwriting has required who have been relegated to
paying significantly higher mortgage rates in the so-called subprime
market.''

Demographic information on these borrowers is
sketchy. But at least one study indicates that 18 percent of the loans
in the subprime market went to black borrowers, compared to 5 per cent
of loans in the conventional loan market.

In moving, even
tentatively, into this new area of lending, Fannie Mae is taking on
significantly more risk, which may not pose any difficulties during
flush economic times. But the government-subsidized corporation may run
into trouble in an economic downturn, prompting a government rescue
similar to that of the savings and loan industry in the 1980's.

''From
the perspective of many people, including me, this is another thrift
industry growing up around us,'' said Peter Wallison a resident fellow
at the American Enterprise Institute. ''If they fail, the government
will have to step up and bail them out the way it stepped up and bailed
out the thrift industry.''

Those heartless free marketing guys at the AEI -- always predicting doom every time we open our hearts to poor people.  Bailout?  What ridiculous scare-mongering.

From my point of view, the NY Times buried the lede in this story about installation of parking sensors on San Francisco streets.  The article focuses mainly on the ability of drivers at some time in the future to get locations of empty parking spots on the streets via smartphone or possibly their GPS.  But I thought the pricing changes they were facilitating were more interesting:

SFpark, part of a nearly two-year $95.5 million program intended to
clear the city's arteries, will also make it possible for the city to
adjust parking times and prices. For example, parking times could be
lengthened in the evening to allow for longer visits to restaurants.

The
city's planners want to ensure that at any time, on-street parking is
no more than 85 percent occupied. This strategy is based on research by
Mr. Shoup, who has estimated that drivers searching for curbside
parking are responsible for as much of 30 percent of the traffic in
central business districts.

In one small Los Angeles business
district that he studied over the course of a year, cars cruising for
parking created the equivalent of 38 trips around the world, burning
47,000 gallons of gasoline and producing 730 tons of carbon dioxide.

To
install the market-priced parking system, San Francisco has used a
system devised by Streetline, a small technology company that has
adapted a wireless sensor technology known as "smart dust" that was
pioneered by researchers at the University of California, Berkeley.

It
gives city parking officials up-to-date information on whether parking
spots are occupied or vacant. The embedded sensors will also be used to
relay congestion information to city planners by monitoring the speed
of traffic flowing on city streets. The heart of the system is a
wirelessly connected sensor embedded in a 4-inch-by-4-inch piece of
plastic glued to the pavement adjacent to each parking space.

The
device, called a "bump," is battery operated and intended to last for
five and 10 years without service. From the street the bumps form a
mesh of wireless Internet signals that funnel data to parking meters on
to a central management office near the San Francisco city hall.

This is actually really cool, but my guess is that politicians will not have the will to charge the level of peak prices the system may demand.

Postscript:  As many of you know, there is a new wave of urban planners who want to impose dense urban living on all of us, whether we like it or not.  I have no problem with folks who want to fight the masses and live in downtown SF or Manhattan, but the world should also have a place for the majority of us who like to have an acre of land and a bit less congestion. 

Anyway, in singing the praises of the urban lifestyle (which often is as much an aesthetic preference vs. suburbia as anything else), you seldom hear much about this type of thing:

Solving the parking mess takes on special significance in San Francisco
because two years ago a 19-year-old, Boris Albinder, was stabbed to
death during a fight over a parking space....

The study also said that drivers searching for metered parking in just
a 15-block area of Columbus Avenue on Manhattan's Upper West Side drove
366,000 miles[!!] a year.

And here we suburbanites are complaining when we have to park more than 5 spaces from the door of the supermarket.

The NY Times reports, via Hit and Run, that judicial review of Gitmo detainees, which the Administration has steadfastly resisted, may be quite justified:

In the first case to review the government's secret
evidence for holding a detainee at Guantánamo Bay, Cuba, a federal
appeals court found that accusations against a Muslim from western
China held for more than six years were based on bare and unverifiable
claims. The unclassified parts of the decision were released on Monday.

With some derision for the Bush administration's arguments, a
three-judge panel said the government contended that its accusations
against the detainee should be accepted as true because they had been
repeated in at least three secret documents.

The court compared
that to the absurd declaration of a character in the Lewis Carroll poem
"The Hunting of the Snark": "I have said it thrice: What I tell you
three times is true."

"This comes perilously close to suggesting
that whatever the government says must be treated as true," said the
panel of the Court of Appeals for the District of Columbia Circuit.

The
unanimous panel overturned as invalid a Pentagon determination that the
detainee, Huzaifa Parhat, a member of the ethnic Uighur Muslim minority
in western China, was properly held as an enemy combatant.

The panel included one of the court's most conservative members, the chief judge, David B. Sentelle....

Pentagon officials have claimed that the Uighurs at Guantánamo were
"affiliated" with a Uighur resistance group, the East Turkestan Islamic
Movement, and that it, in turn, was "associated" with Al Qaeda and the Taliban.

Next up, the detainee whose mother's gynecologist's dog's veterinarian's great uncle once was friends with a Muslim guy.

The Administration now complains that there is nowhere that this man can be sent back to, and somehow this is supposed to validate his detainment?  He wouldn't have had to be sent back anywhere if he hadn't been snatched up in the first place.  I am willing to believe that this guy may be a bad buy, but we let lots of people we are pretty sure are bad guys walk the street, because for good and valid reasons we rank false detainment of the innocent as a greater harm than non-detainment of the guilty.  Anyone seen OJ lately?

I love Arizona and the Phoenix area.  However, I thought the NY Times listing of Scottsdale as one of the #9 place to visit this summer to be a bit odd.  Next up will be the suggestion to visit Buffalo in February.  Yes, there are a lot of screaming deals at luxury hotels with great spas, so if want two days of spa treatments and proximity to lots of good restaurants, go for it.  But expect to find something like Paris in August (but with better attitudes).  You may be here but we'll all be gone, if we can afford it.  Typical summer temperatures every day are 108-112F, with occasional excursions higher into territory that is stupid-hot.  Yeah, its dry heat, and that is exactly what we tell our turkey every Thanksgiving.  And yeah, the wind blows a bit -- feels just like a hair dryer. 

Most all local governments have extensive programs in place for government inspection of elevators because, you know, private businesses can't be trusted to operate safe equipment.  But it turns out the least safe elevators are operated by the government itself:

New York City Transit
has spent close to $1 billion to install more than 200 new elevators
and escalators in the subway system since the early 1990s, and it plans
to spend almost that much again for dozens more machines through the
end of the next decade. It is an investment of historic dimensions,
aimed at better serving millions of riders and opening more of the
subway to the disabled.

These are the results:

¶One of every six elevators and
escalators in the subway system was out of service for more than a
month last year, according to the transit agency's data.

¶The
169 escalators in the subway averaged 68 breakdowns or repair calls
each last year, with the worst machines logging more than double that
number. And some of the least reliable escalators in the system are
also some of the newest, accumulating thousands of hours out of service
for what officials described as a litany of mechanical flaws.

¶Two-thirds of the subway elevators "” many of which travel all of 15
feet "” had at least one breakdown last year in which passengers were
trapped inside.

The whole thing is pretty depressing.  But perhaps just as depressing is the fact that the NY Times, in a quite lengthy article, never once questions why the government is in the elevator maintenance business at all.  You see, the New York City Transit system hires all of its own maintenance people, presumably because, though the article never mentions it, the public employees union insists that these functions remain in house.  OK, here is a quiz:  How many private elevator owners in New York City have their own staff repair elevators?  My guess is the answer is close to zero.  Everyone uses third party elevator equipment repair companies or operate under long-term service contracts with the manufacturer.  Why?  Well, lets see what problems NY Transit faces:

"They don't have enough competent people with the proper training,"
said Michele O'Toole, the president of J. Martin Associates, which the
transit agency hired in 2006 to evaluate its elevator operations. "It
all reflects back to qualifications, training, capabilities."...

Elevators and escalators are spread out over a far-flung system,
requiring more mechanics and slowing responses to breakdowns. There has
been little standardization of parts, so mechanics must cope with a
bewildering hodgepodge of machinery. And the machines, which operate 24
hours a day, are subject to all sorts of abuse: Elevators become
makeshift bathrooms, and escalator steps are pounded by heavily loaded
hand trucks.

Guess what?  These are all classic reasons for outsourcing.  Manhattan elevator maintenance companies are set up to handle a far-flung elevator inventory, and can more efficiently stock parts, buy special equipment, and provide specialized training than can any individual operator.   Shared external capacity can also be sized and used much more efficiently to deal with random failures -- the more elevators in a region one maintains, the better staff can be utilized across a stochastic system.

But of course, the NY Times is never going to go against any public employee union, so it takes the line that this is a good governance issue, rather than a structural issue where an individual elevator owner is always going to be less efficient than outsourcing to a large regional third party company.  It compares NY Transit to other public transit agencies, but not to other private owners of elevators.  My guess is Donald Trump owns more elevators than NY Transit - how does he handle elevator maintenance?

By the way, the article says that there are 167 elevators and 169 escalators in the system.  They also say there are 200 full-time maintenance people.  So, on average, one person spends 60% of their year on a single elevator or escalator.  Think about the elevators and escalators you ride every day.  Can you imagine someone working on it for 1200 hours a year?

And what is this in the quotes above about slow responses to breakdowns in the far-flung empire?  With 200 people for 336 devices, they could practically assign an individual repair person to each one.   I can see him now, with his toolbox, sitting on a folding chair in the back of the elevator with a box of Krispy Kremes, waiting to spring into action at the moment of failure.

Last week I tried to explain why the choice of plant, whether it be a food plant or a non-food plant, that is used to make ethanol is mostly irrelevant to whether ethanol mandates raise fuel prices, at least with current technologies.  I wrote:

Food prices rise not because food is converted to ethanol per se, but
because the amount of grains going into the food supply decreases.  The
issue is the use of farmer's time and resources and the use of prime
cropland to grow plants for fuel rather than food for consumption.  The
actual crop used to make the fuel, whether corn or switchgrass, does
not matter to food prices -- it is the removal of farmers and cropland
from food production that matters.  The only way cellulosic ethanol is
likely to improve food prices in substitution for corn is by being more
efficient per acre in fuel yields than corn  (which may turn out to be
the case, but has not yet been proven in this country).  But even so,
incremental improvements in yield don't help much, because we are
talking about enormous (40-50% or more) amounts of US cropland that
would have to be dedicated to fuel, whatever the plant technology, to
meet the current ethanol mandates.

I almost didn't post this the first time around, because I thought it was so obvious.  But on Sunday the NY Times blundered right into the same silly assertion:

This does not mean that Congress should give up on biofuels as an
important part of the effort to reduce the country's dependency on
imported oil and reduce greenhouse gas emissions. What it does mean is
that some biofuels are (or are likely to be) better than others, and
that Congress should realign its tax and subsidy programs to encourage
the good ones. Unlike corn ethanol, those biofuels will not compete for
the world's food supply and will deliver significant reductions in
greenhouse gases.

Of course, the ability to produce such biofuels with these magic powers has never actually been demonstrated, but I am all for them when and if someone invents them.  Efficient conversion, for example, of corn stalks, rather than corn itself, to fuel would be great and would solve this trade-off.  This technology does not exist today -- and only a lot of hand-waving can translate cellulosic ethanol successes in switchgrass to corn stalks.  Also recognize that even this has costs hidden to us non farmers, because corn stalks are used for a variety of purposes today.  My guess is that cellulosic ethanol from corn may be economically feasible, but only after some genetic modifications of the plant itself.

As a libertarian, I don't really have a horse in the race, but what is it with the NY Times editorial page?  Apparently, the right doesn't like the conservative writers, and Kevin Drum makes it clear that the left can be embarrassed by the liberal writers there:

I generally try not to read Maureen Dowd's columns because, you
know, they just don't pay me enough for that kind of hazard duty. But
today's column about Hillary Clinton was a train wreck of epic
proportions. I couldn't avert my eyes. Here's the final sentence:

As
she makes a last frenzied and likely futile attempt to crush the
butterfly [i.e., Barack Obama], it's as though she's crushing the
remnants of her own girlish innocence.

This would be
embarrassing coming from a 12-year-old. Shouldn't Dowd have an obscure
blog, not a biweekly column in the greatest newspaper in the world?

The NY Times has finally published a comprehensive take-down on the insanity of biofuel subsidies here.  All well and good, but this is at least five years too late.  For years, while this and other blogs have tried to point out that the biofuel emporer's has no clothes, the NY Times has been publishing breathless articles in support of biofuel subsidies and mandates, in fact criticizing the Bush administration and Congress for not moving faster on them. 

So is this what we must expect from the NY Times and the rest of the media?  Shameless pandering to politically correct policy goals that make no scientific sense until it is virtually too late to halt their momentum?  If so, everyone should read the Times' coverage on climate with a jaded eye, because it would not surprise me in the least to see the Times publish the definitive article on why the global warming alarmists are full of hot air only after Congress has gutted our economy with new climate taxes and mandates. 

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?

From the NY Times:

Bowing to American pressure on the eve of high-level talks to reduce
economic tensions, China agreed Thursday to terminate a dozen different
subsidies and tax rebates that promote its own exports and discourage
imports of steel, wood products, information technology and other goods.

Thanks a lot.  The Bush Administration crows that:

This outcome represents a victory for U.S. manufacturers and their workers

Um, not if they are consumers too, as they all are.  And not if their company buys any inputs from Chinese manufacturers.

Napoleon said to never interrupt an enemy when he was making a mistake.   I don't consider China an enemy, but it just flabbergasts me that the Chinese taxpayers and consumers see fit to subsidize lower prices for our consumers, and we feel the need to stop them.   More here and here.

From the NY Times via Maggies Farm:

The rescue of the
Florida Everglades, the largest and most expensive environmental
restoration project on the planet, is faltering.

Seven years into
what was supposed to be a four-decade, $8 billion effort to reverse
generations of destruction, federal financing has slowed to a trickle.
Projects are already years behind schedule. Thousands of acres of
wetlands and wildlife habitat continue to disappear, paved by
developers or blasted by rock miners to feed the hungry construction
industry.

The idea that the federal government could summon the
will and money to restore the subtle, sodden grandeur of the so-called
River of Grass is disappearing, too.

If, forty years ago, individuals who cared about the Everglades had banded together with private money, they could have bought up and preserved huge tracts of land around the current National Park.  Instead, as so many activists do today, rather than trying to rally private action they lobbied the government to do something about it.  Once the ball was thrown into the Feds' court, all incentive for private action disappeared, and as is so often the case, the Feds bungled their way $8 billion to little effect.