Coyote Blog

From my own state of Arizona (emphasis added)

A group of small-business proponents is asking the Legislature to guarantee startup money for Arizona enterprises.

The backers of a so-called Arizona Fund of Funds made their pitch to a handful of lawmakers Monday, saying businesses need government help to start hiring again.

That help should come in the form of tax credits, said John Kowalski, who is promoting the idea through the Arizona Growth Foundation, a group of venture capitalists working to bring more investment to the state.

The credits would be a safety net to encourage venture capitalists to invest in a pool of money that would be distributed to emerging businesses, said Kowalski, a former executive with the Arizona Small Business Association....

The government's role is to serve as a guarantor, through the tax credits, in case the investments don't yield the projected results.

While this is being sold as something for small business, what it looks like to me is just more of the same socialization of bankers' losses that helped get us into this financial mess.  I suppose this "profits are mine if it makes money, losses are the governments if it loses money" never grows old for investment bankers and VC's, but why is anyone taking this seriously anymore?

I get grief in hard core libertarian circles for supporting a basic, no-frills government safety net.  However, in watching Europe right now, I may change my opinion.  Folks in this country use the European rioting as a sort of threat to warn us that we need to continue to be profligate in government spending or else face the same kind of riots here.  I come to the opposite conclusion -- if people are going to riot when the charity they receive has to be reduced, isn't that a reason not to get them hooked on the charity in the first place?

Private actors are often accused of collusion to restrain trade and decrease competition, and certainly there are a number of examples of this in history.  However, all such private arrangements are usually doomed, in part because the incentive for certain parties to cheat are high in such arrangements.  And the parties to such agreements have no control over new or outside competitors entering the fray.

The only stable restraints of trade and competition are therefore enforced by the government, who can use police and prisons to enforce such rules.  That is why successful businesses who are tired of fighting off upstart competitors run to the government for help.

But the government does not like competition with its own services (e.g. Federal bans on intracity mail delivery competition). Here is a good example:

"Drivers attending the Indiana State Fair or a major sporting event downtown may sometimes opt to grab a parking spot in someone's yard rather than pay higher prices in a parking lot, but some city officials think people who provide parking spots should get a permit first. City leaders are proposing that residents pay a $75 fee (per event) if they want to turn their yards into parking lots."

Does anyone think there is a burning safety issue here?  The goal is to kill competition with publicly operated parking garages.  My guess is that someone figured out the average revenue of a private home offering front lawn parking, added $5, and made that the registration fee.

Here is a portion of Kevin Drum's argument against lowering the minimum wage to stimulate employment

Is this really what we've come to? That we should provide a (probably very small) boost to the job market by allowing businesses to hire people for $9,500 per year instead of $14,500? Seriously? I mean, this is the ultimate safety net program, aimed squarely at working people at the very bottom of the income ladder. If we're willing to throw them under the bus, who aren't we willing to throw under the bus?

Part of the problem is that Drum is absolutely convinced that our intuition (and, oh, 200 years of experience) that demand curves slope downward is flawed in the case of low-skill labor.  He has read the two studies out of a zillion that, contrary to all the others, suggests that minimum wage increases may not affect employment and has convinced himself that these are the last word in the science.    As an employer who has laid people off and made larger and larger investments in automation with each successive minimum wage increase, I will continue to trust my intuition that higher minimum wages makes hiring less desirable.

I will say, though, that there are a number of reasons why a change in the minimum wage may have a smaller overall effect nowadays than one might expect.  That is because the minimum wage vastly understates the cost of taking on an unskilled worker.  Even with a lower minimum wage, these government costs will remain:

• Soon, the employer will have to pay for the employees health care, a very expensive proposition
• Workers comp and other labor taxes add as much as 20% to the cost of labor
• In states like California, bad employees have an increasing number of avenues to prevent employers from firing them, from appeal to an ADA law stretched out of recognition to any number of other legal presumptions that employers have to just live with hiring mistakes

Hiring employees used to be a joyous occasion.  Now I cringe and wonder what kind of liabilities I am taking on.

But back to Drum's statement, how sick is it that allowing people off the dole to actually get a job is called "throwing them under the bus?" Drum, for someone so fired up to make decisions based on academic work, sure is willing to put on blinders to all the academic work that actually characterizes who works for minimum wage and how long they stay on it.  He who argues against making policy based on flawed intuition is operating here entirely from a flawed perception of who minimum wage workers are.  He seems to want to picture families of eight supported for decades by someone trapped in the same minimum wage job, for whom a raise only comes when Congress grants it, but that is simply not the reality.

Just as one metric, for example, the percentage of all wage and salaried workers making minimum wage or less fell from 8.8% in 1980 to 1.7% in 2008.  In fact, the actual absolute number of people making the minimum wage fell by over 2/3 during these years.    I would argue that this number is probably too low.  A dynamic labor market needs to bring people in at the bottom, and raising the minimum wage makes this harder, and so traps people into unemployment.  In fact, the number of unemployed in this country is at least 6 times larger than the number of minimum wage workers.

If we dropped the minimum wage, only a fraction of the 2 million or so who make the minimum wage would see their wages go down, but lets assume a quarter of them would.  We are therefore trying to prop up wages for 500,000 but at the same time creating barriers for 13.9 million people who are unemployed and are looking for work.  And it is low-skilled workers who we are most particularly throwing under the bus by keeping minimum wages high.

SB7 has some good observations about risk:

I was listening to the WSJ radio podcast while getting some dinner ready, and one of their reporters said, in the context of discussing Fukushima, that some of the engineers at the plant "knew there was a risk" in the plant's older design and could conceivably face charges for not doing something about said risk.

This kind of talk really grinds my gears.  In any engineering situation there is always some risk.  You can have less risk, or more risk, but risk is not something you either have or do not have.

I will go one step further.  This ex post facto witch hunt aimed at folks who discussed risks  (an pogrom that occurs in nearly every product liability lawsuit with fishing expeditions through company memos) is the WORST possible thing for consumers concerned about the safety of their products and environment.  Engineers have to feel free to express safety concerns within organizations no matter how hypothetical these suppositions may be.

Some concerns will turn out to be unfounded.  Some suggested risks will be deemed too small to economically overcome.  And some will turn out to be substantial and require action.  And sometimes well-intentioned people will make what is, in retrospect, the wrong trade-offs with risks.   These witch hunts only tend to suppress this very valuable and necessary internal dialog within organizations.  Nothing is going to turn the brains of engineers off faster than an incentive system that punishes them retroactively for well-intentioned discussions about risk.

I have always enjoyed Michael Crichton's books, but sometimes turn up my nose at his science.  I must say though that the chain of seemingly stupid errors that led to the park crashing in Jurassic Park bear an amazing resemblance to what is going on with the Japanese nuclear plans.  I don't buy his application of chaos theory to the chain of events, but its hard not to see parallels to this:

Engineers had begun using fire hoses to pump seawater into the reactor — the third reactor at the Fukushima No. 1 complex to receive the last-ditch treatment — after the plant's emergency cooling system failed. Company officials said workers were not paying sufficient attention to the process, however, and let the pump run out of fuel, allowing the fuel rods to become partially exposed to the air.

Once the pump was restarted and water flow was restored, another worker inadvertently closed a valve that was designed to vent steam from the containment vessel. As pressure built up inside the vessel, the pumps could no longer force water into it and the fuel rods were once more exposed.

The other line I am reminded of comes from the docu-drama "From the Earth to the Moon."  In the episode after the fire on Apollo 1, they have Frank Borman testifying to a hostile Congressional committee about the fire.  When asked to explain the root cause, he said "a failure of imagination."  I don't know if this is a true quote of his or purely fiction, but it resonates with me from my past troubleshooting work.  Almost every fire or major failure we looked at in the refinery resulted from a chain of events that no one had even anticipated or thought possible, generally in combination with a series of stupid human screwups.  I would describe the Japanese nuclear plant problems in the same light.

Update: Failure of Imagination from Wikipedia

From IMDB, how the line was quoted in the mini-series

Clinton Anderson: [at the senate inquiry following the Apollo 1 fire] Colonel, what caused the fire? I'm not talking about wires and oxygen. It seems that some people think that NASA pressured North American to meet unrealistic and arbitrary deadlines and that in turn North American allowed safety to be compromised.
Frank Borman: I won't deny there's been pressure to meet deadlines, but safety has never been intentionally compromised.
Clinton Anderson: Then what caused the fire?
Frank Borman: A failure of imagination. We've always known there was the possibility of fire in a spacecraft. But the fear was that it would happen in space, when you're 180 miles from terra firma and the nearest fire station. That was the worry. No one ever imagined it could happen on the ground. If anyone had thought of it, the test would've been classified as hazardous. But it wasn't. We just didn't think of it. Now who's fault is that? Well, it's North American's fault. It's NASA's fault. It's the fault of every person who ever worked on Apollo. It's my fault. I didn't think the test was hazardous. No one did. I wish to God we had.

Via the NY Times, no flaws found with Toyota accelerators

The Obama administration's investigation intoToyota safety problems found no electronic flaws to account for reports of sudden, unintentional acceleration and other safety problems. Government investigators said Tuesday the only known cause of the problems are mechanical defects that were fixed in previous recalls.

The Transportation Department, assisted by engineers withNASA, said its 10-month study of Toyota vehicles concluded there was no electronic cause of unintended high-speed acceleration in Toyotas. The study, which was launched at the request of Congress, responded to consumer complaints that flawed electronics could be the culprit behind Toyota's spate of recalls.

"We feel that Toyota vehicles are safe to drive," said Transportation Secretary Ray LaHood.

Officials with the National Highway Traffic Safety Administration said they reviewed consumer complaints and warranty data in detail and found that many of the complaints involved cases in which the vehicle accelerated after it was stationary or at very low speeds.

NHTSA Deputy Administrator Ron Medford said that in many cases when a driver complained that the brakes were ineffective, the most likely cause was "pedal misapplication," in which the driver stepped on the accelerator instead of the brakes.

As Walter Olson writes of the original overblown brouhaha

Did it make a difference that the federal government has taken a proprietor's interest in major Toyota competitors GM and Chrysler, or that a former trial lawyer lobbyist heads the National Highway Traffic Safety Administration?

I had more back in July (and here, where I observe that scientific data on breast implant safety did nothing to stop the torts, and is unlikely to do so in this case).  I questioned the US Government's conflict of interest in this matter way back in January of 2010.

By the way, anyone want to reopen the case on that guy in LA with the runaway Prius -- I thought it was concocted at the time (I called him balloon boy in a Prius) and am doubly sure now.  How is what he did, in retrospect, and different from leading the police on a high-speed chase?

Via Overlawyered:

As part of the Consumer Product Safety Improvement Act of 2008 (CPSIA), Congress mandated that the CPSC create a "publicly available consumer product safety information database" compiling consumer complaints about the safety of products. Last week, by a 3-2 majority, the commission voted to adopt regulations that have dismayed many in the business community by ensuring that the database will needlessly include a wide range of secondhand, false, unfounded or tactical reports. The Washington Times editorializes:

"¦[Under the regulations as adopted last week] anybody who wants to trash a product, for whatever reason, can do so. The commission can leave a complaint on the database indefinitely without investigating its merits "even if a manufacturer has already provided evidence the claim is inaccurate," as noted by Carter Wood of the National Association of Manufacturers' "Shopfloor" blog"¦.

Trial lawyers pushing class-action suits could gin up hundreds of anonymous complaints, then point the jurors to those complaints at the "official" CPSC website as [support for] their theories that a product in question caused vast harm. "The agency does not appear to be concerned about fairness and does not care that unfounded complaints could damage the reputation of a company," said [Commissioner Nancy] Nord.

Commissioners Nord and Anne Northup introduced an alternative proposal (PDF) aimed at making the contents of the database more reliable and accurate but were outvoted by the Democratic commission majority led by Chairman Inez Tenenbaum. Nord: "under the majority's approach, the database will not differentiate between complaints entered by lawyers, competitors, labor unions and advocacy groups who may have their own reasons to "˜salt' the database, from those of actual consumers with firsthand experience with a product."

Any number of private actors have already tackled this problem. Amazon.com has probably the most comprehensive set of product reviews, and has taken a number of steps (e.g. real name reviews) to increase trust in their system.  Reviewers who are shills (either for or against a product) are quickly outed by other reviewers.   Another site whose reviews I rely on a lot is TripAdvisor, which has hotel and other travel reviews.   TripAdvisor allows the reviewed hotels to respond to individual reviews in a way that the consumer can see to get both sides of the story.

Apparently, none of this back and forth will be allowed in the CPSC data base.  The Democrats who wrote the process only want bad stuff in the data base, so it will not allow manufacturer responses or even positive reviews to appear.  The only possible justification for the government to run this database would be for the government to take a role in investigating and confirming or overturning claims and complaints, but it is clear it won't be doing this either.   This will just be a location for disgruntled people to drop turds on various manufacturers, all with the imprimatur of the government.  I can't see consumers finding much value here compared to the alternatives, but I can see the value in a courtroom to be able to stuff a government site with unsubstantiated claims and then use that site to say that the "official" government site is full of criticisms of the product.

The new food-safety bill, soon to be law, features all the usual suspects of the regulatory state

• Strong support from large corporations, who know the regulations will kill off their smaller rivals and make it harder for new entrants to compete with them
• Regulations nominally aimed at fixing a recent "crisis" (e.g. last year's salmonella outbreak) with no actual logic of how the new regulations would have prevented the past crisis.  In fact, they very likely would not have  (just as TSA new x-ray machines sold as a way to stop future underwear bombers likely would not have detected the original underwear bomber)
• Numerous special exemptions, subsidies, etc. for narrow, favored constituencies
• Pious statements from the priests of statism, who define small government per se as a problem.  Example from Tom Harkin, "It's shocking to think that the last comprehensive overhaul of the food-safety system was in 1938."  Why is the lack of new legislation a better indicator of a problem than, say, incidence or death rates which have fallen consistently for years.

For an extra bonus, those who most vocally support the law are also politically among those who most support the local food movement, which one can pretty much write off unless they get exemptions from this law.  And if they do, what's the point?  Do I really fear the operating safety of Nestle more than Joe who has a farm 30 miles away?  Remember the toy safety law -- it was spurred by a series of recall of mostly Matel toys, but in the actual law Matel became exempt from Federal inspection while the regulations have become a crushing burden for small toy makers.

More here.

I have warned many times:

When health care is paid for by public funds, politicians only need to argue that some behavior affects health, and therefore increases the state's health care costs, to justify regulating the crap out of that behavior.

So, don't be surprised to see a lot more of this:

"Too many lives are lost in motorcycle accidents," Christopher A. Hart, NTSB vice chairman, said in announcing that helmets had been added to the board's annual "most-wanted list" of safety improvements. "It's a public health issue."

I have absolutely no confidence that we will get 25% more work from our city employees on Mon-Thur to make up for a Friday day off.

Thursday could become the new Friday for thousands of Phoenix city employees in an effort to save money and keep workers happy.

Phoenix officials are considering mandatory Fridays off for administrative employees but would exempt those who support functions that can't be shut down such as water-plant employees, aviation workers and public-safety staff.

If approved, Phoenix would become the largest municipality in the state and the country on a mandatory four-day schedule, where employees typically work 10-hour days with Fridays off.

I am not sure we currently get 8 hours of work from many of them, and having been programmed for years or decades to an 8 hour day, I don't see them changing their behavior.  My alternate plan would be to cut everyone back to 32 hours a week, cut their pay by 20%, AND save energy on Friday.  By "alternate" I mean alternate to my base case of sending them all home permanently and waiting to see how long it takes for anyone to notice.

... the other auto-makers are not going to be treated very fairly.

Senior officials at the U.S. Department of Transportation have at least temporarily blocked the release of findings by auto-safety regulators that could favor Toyota Motor Corp. in some crashes related to unintended acceleration, according to a recently retired agency official.George Person, who retired July 3 after 27 years at the National Highway Traffic Safety Administration, said in an interview that the decision to not go public with the data for now was made over the objections of some officials at NHTSA.

"The information was compiled. The report was finished and submitted," Mr. Person said. "When I asked why it hadn't been published, I was told that the secretary's office didn't want to release it," he added, referring to Transportation Secretary Ray LaHood.

Welcome to the corporate state, Obama-style.   Not to mention some old-fashioned bureaucratic CYA:

Since March, the agency has examined 40 Toyota vehicles where unintended acceleration was cited as the cause of an accident, Mr. Person said. NHTSA determined 23 of the vehicles had accelerated suddenly, Mr. Person said.

In all 23, he added, the vehicles' electronic data recorders or black boxes showed the car's throttle was wide open and the brake was not depressed at the moment of impact, suggesting the drivers mistakenly stepped on the gas pedal instead of the brake, Mr. Person said.

"The agency has for too long ignored what I believe is the root cause of these unintended acceleration cases," he said. "It's driver error. It's pedal misapplication and that's what this data shows."

Mr. Person said he believes Transportation Department officials are "sitting on" this data because it could revive criticism that NHTSA is too close to the auto maker and has not looked hard enough for electrical flaws in Toyota vehicles.

"It has become very political. There is a lot of anger towards Toyota," Mr. Person said. Transportation officials "are hoping against hope that they find something that points back to a flaw in Toyota vehicles."

The existence of this report is one reason, suggests Walter Olson, why the Democrats in Congress (abetted by the NY Times) seem in an enormous hurry to pass a new auto regulatory bill.  After all, automobiles have been sold in this country for only about 100 years, so every day counts in getting new regulatory infrastructure in place

The recall of millions of Toyota cars and trucks because of persistent problems of uncontrolled acceleration has exposed unacceptable weaknesses in the regulatory system. These weaknesses are allowing potentially fatal flaws to remain undetected. Democrats in Congress are pushing legislation to improve regulation and oversight of auto safety. It should be passed into law without delay.

As Olson points out, the NY Times has bent over backwards to ignore recent NHTSA findings in its reporting. This in particular is the enormously flawed logic of the regulator:

N.H.T.S.A. could fine Toyota only $16.4 million for delays in revealing problems with defective accelerator pedals that left the throttle open after being released. That's pocket change for a company of its size.

Pay no attention to that free market behind the curtain.  The billions of dollars this acceleration problem has cost Toyota in recalls, repairs, lost sales, and damage to reputation are irrelevant -- only fines imposed by the Administration (and torts by its allies in the litigation industry) matter.  And if the same problem beset government-owned GM, anyone want to bet what the penalty would be?  They would probably get a new bailout from Obama to pay for the recall costs.   In fact, even without the NHTSA findings, this Toyota problem is really no worse in terms of incidence rates or costs than any number of other recalls by US manufacturers.  The only difference is the media attention lavished on the problem.

From New York Magazine

The wrinkly old men that we elect to Congress are so horny and gross that the American taxpayer shells out on average $1 million a year in settlements to sexually harassed Hill staffers, according to the Office of Compliance. The level of perviness fluctuates from year to year "” in 2007, 25 staffers were paid a total of $4 million.

Kids Prefer Cheese comments

Wouldn't such settlements possibly be of interest to voters, the media, and opponents of the crotch-grabbing perv-boys? It sure would! And that is why Congress passed a law saying that no one can obtain this information!

Via the South Bend Seven.  The New York article also makes this observation:

According to the same Office of Compliance, which is on a roll today, "the Capitol and other congressional buildings are rife with fire traps and other pervasive problems of age and dangerous design, with an estimated 6,300 safety hazards lurking on Capitol Hill this Congress." Congress has exempted itself from federal workplace safety regulations, so it isn't legally obligated to repair any of these hazards, many of which will be expensive. It's the kind of short-sightedness we've all come to expect from our lawmakers.

It is irritating that they exempt themselves from the same laws everyone else has to follow, though I can't say I am too worked up at the thought of some Senator slamming his or her head on a low doorway.

Based on past studies of sudden acceleration problems  (e.g. that the vast majority of sudden acceleration problems mysteriously happen to senior citizens) I predicted that many of the Toyota failures would come down to operator error.  The incentives for operators are substantial, even before tort action, both from a psychological and monetary standpoint to blame their own errors on Toyota.

The U.S. Department of Transportation has analyzed dozens of data recorders from Toyota Motor Corp. vehicles involved in accidents blamed on sudden acceleration and found that at the time of the crashes, throttles were wide open and the brakes were not engaged, people familiar with the findings said.

The results suggest that some drivers who said their Toyota and Lexus vehicles surged out of control were mistakenly flooring the accelerator when they intended to jam on the brakes. But the findings don't exonerate Toyota from two known issues blamed for sudden acceleration in its vehicles: sticky accelerator pedals and floor mats that can trap accelerator pedals to the floor.

The findings by the National Highway Traffic Safety Administration involve a sample of reports in which a driver of a Toyota vehicle said the brakes were depressed but failed to stop the car from accelerating and ultimately crashing.

The data recorders analyzed by NHTSA were selected by the agency, not Toyota, based on complaints the drivers had filed with the government.

The findings are consistent with a 1989 government-sponsored study that blamed similar driver mistakes for a rash of sudden-acceleration reports involving Audi 5000 sedans.

The Toyota findings, which haven't been released by NHTSA, support Toyota's position that sudden-acceleration reports involving its vehicles weren't caused by electronic glitches in computer-controlled throttle systems, as some safety advocates and plaintiffs' attorneys have alleged. More than 100 people have sued the auto maker claiming crashes were the result of faulty electronics.

Of course breast implants pretty clearly never caused immune disorders, but that did not stop tort lawyers from bankrupting an entire industry on that theory.  So it is nice that Toyota has the facts on its side, but that may or may not help in court, and almost certainly will not help in Congress or the Administration, whose agendas were always driven more by the desire to help domestic auto companies against a powerful foreign rival.

My new column is up this week at Forbes.  This week it discusses the regulatory burden on small businesses.  Here is an excerpt:

Typically taxation issues get a lot more attention than these regulatory issues in discussions of government drags on the economy. But these small regulations, licenses, and approvals consume management time, the most valuable commodity in small businesses that typically are driven by the energy and leadership of just one or two people. If getting a certain license is a tremendous hassle in California, large corporations have specialized staff they throw at the problem. When a company like ours gets that dreaded call that the County wants a soil sample from under the parking lot, odds are that the owner has to deal with it personally.

So the ultimate cost of many of these silly little regulations is that they each act as a friction that wears away a bit more available time from entrepreneurs and small business owners. The entrepreneur who has to spend two hundred hours of her personal time getting all the licenses in place for a new restaurant is unlikely to have the time to start a second location any time soon. Since small businesses typically drive most new employment growth in the United States, can it be a surprise that new hiring has slowed?

Incredibly, after the column was in the can, I experienced another perfect example of this phenomenon.

In the camping business, July 4 is the busiest day of the year.  This year, on July 3, I got a call from one of my managers saying that the County health department had tested 20 ground squirrels in the area and found one with the plague.  I know this sounds frighteningly medieval, but for those of you who live out west, you may know that some percentage of all the cute little western rodents, from prairie dogs to chipmunks, carry the plague.  Its why its a bad idea for your kids and dogs to play with them.

Anyway, in the past, we have usually been required to post warnings in the area giving safety tips to campers to avoid these animals, what to do if one is bitten, etc.  At the same time, we then begin a program of poisoning all the lairs we can find.  It's about the only time any government body anywhere lets us kill anything, because only the hardest core PETA types will swoon over rubbing out a rodent carrying the black death.

But apparently, in the past when these mitigation approaches applied, the county health department was not in a budget crunch and in need of high-profile PR stories that would reinforce with taxpayers the need to fund their organization.  This time the health department marched out and closed the campground on July 4 weekend, kicking out campers from all 70 sites.  We spent the day dealing with angry customers, refunding money, and trying to find them new lodging on a weekend where most everything was booked up.  Fortunately we have a large overflow area at a nearby campground and offered everyone a special rate over there.

It is hard to imagine that, given the whole year to test, they just suddenly happened to find a problem at one of the busiest sites in the LA area on the busiest weekend of the year, particularly since they simultaneously changed their mitigation approach from notification to closure.   I have tried hard to find the original time stamp on the press release they sent out.  I can't prove it, but it sure seemed like a lot of media had the story before we (operating the campground) had been informed of a thing.  Incredibly, the health department was directing the campers to a nearby campground that was easily close enough to our campground to share the same rodent populations.  But that campground had not had a positive plague test.  Why?  Because that campground has not been tested recently, at least according to the official who brought us the news.  We're in very good hands.

I was thinking today, what must the families of the 11 people killed on the Deepwater Horizon be thinking?  Their losses are never mentioned in any news reports I see.  Its all about getting oil on the ducks.

Sure, I am pissed off about the enormous damage to the Gulf Coast as well.  But I got to thinking, were I the engineer that made the wrong risk/safety decisions here, what would I feel most guilty about?  I was put in that position for years in a refinery, constantly asked, "is this safe" or "can we keep running" or "do we need to shut down" or "is that vibration a problem?"  These are difficult, because in the real-world of engineering, things are not ever perfectly safe.  But never-the-less, if I had made the wrong call here, I think I would be feeling a lot worse about the 11 dead people than a number of dead fish and birds.  Perhaps my priorities are out of whack with the times.

By the way, TJIC has a great post on risk and cost in the real world of engineering.  I agree with his thoughts 100% from my experience as a troubleshooter / engineer in the field making just these decisions.

Look, we all trade off safety in order to save time and expense.

Do you put on your seat belt when moving your car from one point in the driveway to another?

Do you buy the car that costs twice as much, because it's got a 1% increase in crash survivability?

Did you pay $40k to get industrial fire sprinklers installed in your house?

Do you have a home defibrillation machine?

There is nothing wrong, in the abstract, with trading off safety in order to save time and expense.

The question is whether BP did this to a level that constitutes "gross negligence".

John Stossel has this chart to clearly define the power that is OSHA regulation:

Wow, that sure makes a big difference.  Which confirms my experience as a business owner.  Financial incentives like workers comp rates are a FAR more powerful force, at least in my business, to root our safety issues than the arcane and bureaucratic mandates that flow out of OSHA.

In the movie Wag the Dog, and American president and a movie producer faked a war in Albania to divert political attention form a domestic scandal.  They created fake but riveting film of desperate Albanians caught up in the war.  I always wondered how confused the people of Albania, sitting in their peaceful homes, were by these images if they saw them on CNN.

I live in Arizona, not Albania, but I am just as confused.  I have lived in Phoenix for 10 years.  I run a public contact business all over the state, including at least one location in sight of the Mexican border. And I am confused as can be when I read stuff like this:

Nevertheless, here it goes from a supporter of legal immigration: how are we to make sense of the current Arizona debate? One should show concern about some elements of the law, but only in the context of the desperation of the citizens of Arizona. And one should show some skepticism concerning mounting liberal anguish, so often expressed by those whose daily lives are completely unaffected by the revolutionary demographic, cultural, and legal transformations occurring in the American Southwest.

WTF?  I read this all the time.  I am told there is a war going on around me and people are being devastated, but I never see it.  And nobody I know ever sees it directly.  It is always a "someone else"  (maybe, as I suggested in an earlier post, it is all happening to that lady who put her cat in the microwave to dry.")

I won't spend all day with VDH's post, but there are a couple of other things he writes that seem nuts, given his reputation for being pretty smart

Why Wave the Flag of the Country I Don't Wish to Return To?

Have you ever been to a Saint Patrick's Day parade in Boston or Chicago? To Columbus Day parade in New York?  So its OK for Europeans to show some affinity for the mother country even as they reside in the US, but not Mexicans?

Look, I get irritated to no end by people who come here for freedom and prosperity and then immediately start advocating for and voting for steps that undermine both.   But that's not an immigrant issue, its a Constitutional one, where we have allowed courts to rewrite protections against government encroachment.

Substitute New York in 1860 for Arizona in 2010 and Irish for Mexican, and you would see the exact same dynamics at work, except that Arizona in 2010 is a lot more peaceful than New York in 1860.

California's meltdown is instructive. If about half the nation's illegal aliens reside in the state, and its problems are in at least in some part attributable to soaring costs in educating hundreds of thousands of non-English-speaking students, a growing number of aliens in prison and the criminal justice system, real problems of collecting off-the-books income and payroll taxes, expanding entitlements, and unsustainable social services, do we wish to avoid its model?

Really?  One word:  Texas.  Texas has the same immigration issues and a MUCH longer border than California.  California's problems are its profligate and anti-business government, something that Conservatives tend to point out a lot in about a million comparisons with Texas, except of course when they want to blame it all on immigration instead.

First, there is the simplicity of the argument. One either wishes or does not wish existing law to be enforced. If the answer is no, and citizens can pick and chose which laws they would like to obey, in theory why should we have to pay taxes or respect the speed limit? Note that liberal Democrats do not suggest that we overturn immigration law and de jure open the border "” only that we continue to do that de facto.

This is hilarious in the context of Arizona.  While the AZ legislature has been passing this law, it has been passing a series of other laws to give the big FU to federal law.  These bills include not enforcing federal insurance mandates in AZ, not enforcing EPA CO2 regulations in AZ, ignoring federal law on commercialization of rest areas, ignoring the REAL ID act etc.  For God sakes this is the state whose Republican governor in the 1990's sent the national guard to take over the Grand Canyon from the feds.  To piously assert this is all about enforcing federal law and that it is wrong to ignore some laws but enforce others is absurd.  This country has a long history of popular nullification of bad laws -- the 55-mile an hour speed limit was nullified by rampant non-compliance long before it was repealed.

I understand there are complexities in immigration, the most important of which is the conflict between a generous safety net and open immigration.  But note that while many Conservatives will say this, none of them are proposing any changes to safety net eligibility vis a vis immigrants.  When all they ask for is for the borders to be locked down, then all these arguments just seem like window dressing to the true desire to say "my family got in, now its time to lock the door."

I have written any number of times about how the justification for licensing is usually consumer protection or safety but the actual purpose is to protect larger, entrenched incumbents against competition.  However, most of those stories have been about caskets or hair braiding or other businesses that don't really affect me.  This time, its personal.

Sometime last October we needed a boat moved across the country from one of our marinas to another.  We found a local guy who was going in the right direction anyway and paid him a couple hundred bucks to haul the boat on a trailer behind his pickup.  Note that this is a perfectly ordinary pickup truck and a perfectly normal pontoon boat, the kind of car-trailer rig you can see thousands of people driving to the lake every Saturday morning.

The driver was stopped at a checkpoint in Wyoming.  And was busted there, at least long enough until he could give them my name and number and escape.

Why was he busted?  Because a) the truck/boat combination apparently weighed a tad more than 10,000 pounds and b) the boat was being moved for a commercial purpose  (i.e. it was a business asset).  Unknown to me, the combination of these two takes this transport event to the realm of "commercial carrier," which requires a Department of Transportation (DOT) license and a slew of regulatory responses.   Technically, the contractor we paid was at fault, but he escaped any legal problems because 1) he claimed he was our employee (untrue) and 2) he claimed he was driving our truck (untrue).  This led to Wyoming and later the DOT calling me asking for my DOT number (which I didn't have), my employment records (for a person who is not my employee) and my vehicle records (for a truck I have never owned).

Months later, I am still going back and forth with the cops in Wyoming.  But in the mean time I decided that since I was likely to move my stuff across state lines again, I might as well get my DOT number.  So I started that process.

As it turns out, there is absolutely no difference in regulation and compliance requirements between driving my own boat across state lines once a year and running United Van Lines.   The regulations one has to know are hundreds of pages long.  The user-friendly summary is 162 pages long! And it is careful to state, "Please do not use this guide as a substitute for the Federal Motor Carrier Safety Regulations."  There are driver and vehicle files that have to be maintained, special driver certifications, driver medical tests and certifications, etc.

In other words, there is absolutely no accommodation for a company like ours that is doing nothing different than you are driving you boat to the lake, but we have to set up a compliance and record-keeping system that trucking companies have whole departments for.  Which, of course, is the point.  Compliance costs for regulations can always be born easier by large companies and by incumbents.  The idea is to make it so onerous for individual companies to move their own boats that they are willing to pay over-priced Teamster-friendly trucking corporations to do it for them.  The point is not to make us safer - the average individual unregulated boater hauls boats more miles a year than we do - the point is to make sure we don't compete, even in the smallest way, with established trucking firms.

By the way, the issue that is likely to kill the deal totally on our getting a DOT number is the government mandate that I drug test my employees.  The relationship I wish to have with my employees is not one that encompasses my demanding samples of their bodily fluids on a regular basis.  I have turned down at least two potentially lucrative management contracts because both had drug-testing requirements and I am not going to do it.

In 2003, my company was in some serious financial problems.  Post 9/11 commercial insurance premiums had just risen substantially, so much so that my premiums went up more than my total annual profits.  At the same time I found out that a number of operations I had just acquired were profitable only because they were not in compliance with labor law, and my crash program to bring them into compliance was going to put me deeply in the red for that year.

I did a whole bunch of things to right the ship, but the two most important were 1)  I eliminated a whole layer of management, slashing 5 vice-presidents and having all the front line managers report directly to me; and 2)  I eliminated the smallest and worst performing business units.

Now, contrast this to what governments do in the same situation.  Their first response, of course, is to do something I could not do - compel more revenue for themselves by increasing taxes.  Those of us who make our living by the free decision making of others don't have this dictatorial option.

The second thing that governments do is cut their MOST important, MOST valuable operations.  In Seattle, it was always fire and ambulance services that would be cut.  Because the whole game was to find the cuts that would most upset the public to try to avoid the necessity of having to make cuts at all.  Its an incredibly disingenuous process.  Any staffer of a private company that made cost savings prioritization decisions like government officials would be fired in about 2 minutes.

The third thing that governments do if forced to actually, really cut costs (meaning that every other stalling tactic, taxation method, and accounting trick has been exhausted) is to cut field staff who actually do the work rather than high-paid, bloated administrative staffs.  This means teachers get cut but not vice-principals.  And it means that preventative maintenance gets cut and not transit staffers:

Having removed a mere 25 employees so far, and having just suffered its deadliest year ever, Metro officials now want to raid $10 million from the agency's preventive maintenance fund in order to cover operating expenses, including salaries and benefits. Metro managers would rather skimp on passenger safety and reliability than clear out the system's deadwood and force serious concessions by the transit union.

Moreover, even as it asks riders to sacrifice, Metro is fattening itself up, hiring two new "senior planners," one to a newly created position. According to Metro's official job description, they will be "responsible for participation in the development of an annual business plan ... identifying opportunities for future growth and development" and "defining future strategies."

from Times Online via Overlawyered

Shoppers stared in bemusement at the mysterious object that landed in a shopping precinct in Poole, Dorset, this week. Some compared it to a giant traffic cone, a witch's hat or a cheap special effect from an early episode of Doctor Who.

The 33ft structure turned out to be their Christmas tree, designed according to the principles of health and safety, circa 2009.

Thus it has no trunk so it won't blow over, no branches to break off and land on someone's head, no pine needles to poke a passer-by in the eye, no decorations for drunken teenagers to steal and no angel, presumably because it would need a dangerously long ladder to place it at the top....

The tree was commissioned by the Poole Town Centre Management Board because of fears that a real one would pose a hazard to shoppers.

... but I am increasingly convinced it is real.  Somehow I got on the mailing list of the "Environmental New Network" and got this press release:

Eco-Friendly Snow Thrower Is Alternative To Belching Snow Blowers

Sno Wovel Quietly Outperforms Snow Blowers Without Emissions, Noise, Strain

New Canaan, CT. November  9, 2009 -- Structured Solutions II LLC announced the launch of their newly-designed wheeled snow shovel this fall. The Sno Wovelâ„¢ is the only non-combustion alternative snow removal device performing equal to or better than a snow blower. The all new folding frame Sno Wovelâ„¢ debuts in a new category of hybrid tools, combining safety for the user, protection of the environment and high-performance. No fuel, fumes and deafening noise to harm the environment or the operator "“ no electric cords to tangle with. The Sno Wovel is 2-3 times faster than shoveling and comes with a folding frame design for easy and portable storage.

This seems like a fairly unsatisfying alternative to a big honkin' snow blower, but I live in Phoenix so what do I know?

Don Boudreaux has a nice summary of the problems with a lot of product safety problems.

You write as if "safe" is an objectively determinable and unique fact, such as whether or not your newspaper's paid circulation exceeds 500,000 or whether or not your sister is pregnant.  But "safe" is not objective in this way.  Because no product is 100 percent certain never to cause even the slightest harm (or 100 percent certain to cause harm), the question "Is this product safe?" has no correct single answer.  It has correct answers as varied as the number of that product's potential users.  No product is "safe" or "unsafe" in the abstract.

Perhaps your tolerance for risk is higher than mine.  Perhaps the pleasure I get from using a product is less than yours.  If so, should I be permitted to prevent you from using that product because, for me, the product is insufficiently safe?  My evaluation of the product's safety is correct only for me, not for you.  And matters don't change if I'm a government official.

There always have been good, logical reasons to discuss the Community Reinvestment Act (CRA) as one contributor to the mortgage meltdown last year.  After all, the act is effectively a prod to banks to lend to people who would not normally meet their lending criteria, and to do so on terms (e.g. no money down) they might not usually offer.

The usual response from supporters is that the numbers are too small to matter.  I tended to agree with this -- until I saw this graph, from Peter Schweizer via Carpe Diem.

Unfortunately he does not have a source or methodology, so I have to retain some skepticism, but if true these numbers are far from trivial.  He writes:

According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous. Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that "fall outside typical credit, income or debt constraints," and was awarded the 2003 CRA Community Impact Award for its Community Access program. Four years later it was taken over by the Office of Thrift Supervision.

This effort was backed by a parallel effort at Fannie Mae and Freddie Mac to buy up these loans:

Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target "” 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.

For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60% of their area's median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of  billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down.

Fannie and Freddie also purchased hundreds of billions of subprime securities for their own portfolios to make money and to help satisfy HUD affordable housing goals. Fannie and Freddie were important contributors to the demand for subprime
securities.

Obama has a personal history with this effort, actually suing banks who would not provide the sub-prime lending that he later, as President, blamed them for undertaking

Obama's battle against banks has a long history. In 1994, freshly out of Harvard Law School, he joined two other attorneys in filing a lawsuit against Citibank, the giant mortgage lender. In Selma S. Buycks-Roberson v. Citibank, the plaintiffs claimed that although they had ostensibly been denied home loans "because of delinquent credit obligations and adverse credit," the real culprit was institutional racism. The suit alleged that Citibank had violated the Equal Credit Opportunity Act, the Fair Housing Act and, for good measure, the 13th Constitutional Amendment, which abolished slavery. The bank denied the charge, but after four years of legal wrangling and mounting legal bills, elected to settle. According to court documents, the three plaintiffs received a total of $60,000. Their lawyers received $950,000.

Now, Congress and Obama want to strengthen the CRA -- talk about not learning from mistakes.

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the "Community Reinvestment Modernization Act of 2009," who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency's core concerns would not be safety and soundness but, in the words of the Obama administration, "promoting access to financial services," which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls "a group of examiners specially trained and certified in community development" (otherwise called community activists). The administration says, in its literature about the reforms, that "rigorous application of the Community Reinvestment should be a core function of the CFPA."

Looks like there may be jobs available after all for all those folks who got fired from ACORN.

Kevin Drum says:

The Consumer Product Safety Improvement Act makes it illegal to sell toys that haven't been tested for lead content.  In general, I think that's a perfectly fine idea.

He can't understand, though, why its effects seem so perverse and Draconian when its core is such a "perfectly fine idea."  It is amazing to me that the law of unintended consequences is so hard even for seasoned political observers to grasp.

A sensible restriction might be that a child cannot by any reasonable use of the product ingest more than X concentration of lead.  But of course that is not what the government does.  The government requires that every toy undergo expensive testing and batch tracking (almost like that of an aircraft part).  This is not by any means the same as simply requiring products to limit lead exposure.  It is a one-size-fits-all regulation of process, rather than true safety.  It imposes huge testing and tracking expenses on products that can't possibly have any lead in them.

And, like many laws of this kind, it imposes a huge penalty on small competitors and new entrants and rewards larger toy makers who both have the scale to pay for the testing and the political clout to shape the law in their favor.  In fact, the big winner from the legislation has actually been Matel, the company whose recalls actually led to the law in the first place.

The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child's use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat.

"¦

So while most small toymakers had no idea this law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a little provision to be included in the CPSIA permitting companies to test their own toys in "firewalled" labs that have won Consumer Product Safety Commission approval.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above"”just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

Update: Brad Warbiany has similar thoughts.