Coyote Blog

I am increasingly convinced that John McCain believes in nothing, or at least believes in nothing strong enough that he can't turn a 180 on the issue if the polling numbers move the meter hard enough. 

The plan would retire old
loans that homeowners no longer can pay and replace them with less
expensive, 30-year, fixed-rate mortgages that are federally guaranteed.
McCain said families would gain "the opportunity to trade a burdensome
mortgage for a manageable loan that reflects the market value of their
home."

In line with
his concern about bailing out speculators, McCain's proposal would
apply only to homeowners who took out sub-prime mortgages after 2005
for homes that are their main residence. They would need to have proved
they were credit-worthy at the time of the loan.

I hope everyone else is enjoying the notion of "sub-prime mortgages" where the borrowers were "credit-worthy at the time of the loan." 

From the Washington Post, via Tom Nelson, comes a nice summary of the consequences of Congress's addiction to ethanol mandates and subsidies.  The last sentence in particular is one I have warned about for a while on this issue.

To be sure, some farmers in these countries benefit from higher prices.
But many poor countries -- including most in sub-Saharan Africa -- are
net grain importers, says the International Food Policy Research
Institute, a Washington-based think tank. In some of these countries, the poorest of the poor spend 70 percent or more of their budgets on food.
About a third of the population of sub-Saharan Africa is
undernourished, according to the Food and Agriculture Organization of
the United Nations. That proportion has barely changed since the early
1990s. High food prices make gains harder.
...
It's
the extra demand for grains to make biofuels, spurred heavily in the
United States by government tax subsidies and fuel mandates, that has
pushed prices dramatically higher. The Economist rightly calls
these U.S. government subsidies "reckless." Since 2000, the share of
the U.S. corn crop devoted to ethanol production has increased from
about 6 percent to about 25 percent -- and is still headed up.
...
This
is not a case of unintended consequences. A new generation of
"cellulosic" fuels (made from grasses, crop residue or wood chips)
might deliver benefits, but the adverse effects of corn-based ethanol
were widely anticipated. Government subsidies reflect the careless and
cynical manipulation of worthy public goals for selfish ends. That the
new farm bill may expand the ethanol mandates confirms an old lesson:
Having embraced a giveaway, politicians cannot stop it, no matter how
dubious.

The current failures in the subprime mortgage market, both of borrowers and lenders, has become one of those classic Rorschach tests where people self-identify by what description they apply to the market fallout.  Views on capitalism, free interchange, and individual responsibility are all tied up in the choice between:

1. Businesses recognized an opportunity to expand the mortgage market by offering mortgages to poorer, riskier borrowers and managing the risk by securitizing these loans and reselling them in the increasingly robust institutional market for such loan packages.  While certainly in it for the profit, this move was consistent with the long-term trend in the US to wider home ownership.  It turned out, however, that almost everyone involved were working off some poor assumptions.  Borrowers over-estimated their ability to pay and counted too much on the continued upward trajectory of real estate values.  Lenders made a number of bad credit decisions, something not wholly surprising in a new market.  And institutions and other investors under-estimated the risk in these packages, particularly the systematic risk associated with falling housing prices.   The sub-prime market will likely re-emerge, but with everyone smarter the next time around.  Huge losses give lenders and institutions all the incentive they need to change their behavior in the future.
   -- OR --
2. Unscrupulous lenders created the sub-prime market as a way to make a quick buck off of naive and inexperienced borrowers.  They tricked these borrowers into taking on more debt than they could handle in order to get large up-front fees.  Institutions were not arms-length investors, but were explicitly knowledgeable and "in on" this con.  Their goal was to sell worthless bonds to unsuspecting investors.  The fact that the lenders and institutions are taking the biggest losses in the market collapse is not a sign that they are innocent, but that the market fell apart faster than they expected, so they had not had the chance to unload the securities on duped individual investors.  Without regulation, lenders and institutions will continue committing these same crimes and poor people have proven that they need outside help to make good decisions with their money.  Congress needs to step in and prevent poorer borrowers from being offered mortgages in the future, and institutional investors need to be held financially accountable when borrowers take on more debt than they can handle.

Update:  There are several comments that say "can't it be both?"  Surely there can be simultaneous examples of both in the same market, but, as an example, proponents of #2 talk as if theirs is the dominant explanation, and are proposing legislation on that basis. 

Recognize that you have to really believe #2 all the way to even consider some of the draconian measures that Congress is entertaining.  There is legislation that is being seriously considered at this moment
that will fundamentally change the entire mortgage market, not just the
sub-prime piece, for the worse.  In particular, Congress is considering making financial institutions that invest in securitized batches of mortgages liable for any illegal lending practices of the originator.  This will effectively kill the securitization process.  Many of you younger folks won't know what that means, but in effect it will send us back to the mortgage process of the 1970's, which I promise you really, really sucked.  This will make it much harder for everyone to get mortgages.  Since securitization, there are an order of magnitude more mortgage competitors, the mortgage approval and application process take about 1% of the time it used to, rates are lower, and there is much more flexibility in mortgage design. 

With the northern victory in the Civil War, and the subsequent passage of the 13th amendment, slavery was formally ended in this country.  Specifically, the 13th amendment stated:

Neither slavery nor involuntary servitude, except as a punishment for
crime whereof the party shall have been duly convicted, shall exist
within the United States, or any place subject to their jurisdiction.

Unfortunately, over a century later, slavery has returned to the United States.  Today, through the exercise of political power and the redistribution of wealth that should never have been Constitutional, 55% of Americans hold the other 45% in bondage, living off the product of their efforts just as surely as the white plantation owners of the Old South lived off the sweat of their African slaves.  The basis for this new servitude, however,  is not race, or religion, or national origin, but productivity. (via TJIC)

From the Christian Science Monitor:

Slightly over half of all Americans - 52.6 percent - now receive
significant income from government programs, according to an analysis
by Gary Shilling, an economist in Springfield, N.J. That's up from 49.4
percent in 2000 and far above the 28.3 percent of Americans in 1950. If
the trend continues, the percentage could rise within ten years to pass
55 percent, where it stood in 1980 on the eve of President's Reagan's
move to scale back the size of government.

Meanwhile, Ari Fleischer writes in today's WSJ (sub req) that the
top 1% of income earners pay 37% of total income taxes, the top 10% of
income earners pay 71% of total income taxes, and the top 40% of income
earners pay 99% of total income taxes.

The latter analysis is a bit off because it does not include payroll taxes, but if you include these taxes you still have under 50% of Americans paying virtually all the taxes (table at top of this page includes payroll taxes) 

The second greatest failing of the Constitution as originally drafted (the first being legality of slavery) is the lack of clear protections for property and commerce.  As a result, the only protection we have against full confiscation of everything we own is the whim of the electorate.  Now that a clear majority of voters are on the receiving end of money confiscated from a minority of voters, how good is this last protection? 

We have become a nation of slaveholders, with the majority holding the productive minority in bondage.  Inserting government in the middle of this process as an agent, so the recipients of this slave labor don't have to get their own hands dirty, does not change the nature of the relationship one bit.  It just pretties things up for our conscience.

Update:  Is the word "slavery" over the top?  Maybe, and I guess I could be accused of trivializing the true horrors of African slavery in the 19th century.  So substitute the word "serfdom" for "slavery". 

A few years ago I coined the term "Intellectual Welfare."  I originally devised he term to describe Social Security, where it was arguable that most people in the program were not receiving a transfer payment, but they were instead receiving for-your-own-good government restriction of individual choice.  In the case of Social Security, government takes over the management of some of our retirement savings (at an appalling cost) because we lunkheads can't be trusted to manage our own savings for ourselves.

I was going to prepare a similar post about cries for regulation in the sub-prime credit market, but Alex Tabarrok did it already:

Roubini and others generating hysteria about defaults in the
mortgage market are credit snobs - they think credit is something that
only the rich can handle.  Just look at the language that Roubini uses
to analogize borrowers - they are "reckless patients" who "spent the last few years on a diet of booze, drugs and artery clogging junk food."  Similarly, the Washington Post tells us that it's the end of the "borrowing binge."

Yeah, we get it.  Credit is ok for us, the "sober" borrowers but poor people can't
handle credit.  Too much credit among the poor generates decay and
social pathology.  Credit must be regulated.  We can't, for example,
have credit stores in poor neighborhoods.  Don't you know that credit is bad for people without self-discipline?   Let the poor buy on installment credit?  That's unconscionable.  Today's furor over sub-prime mortgages is the same old story.

Update: This really ticks me off:

Representative Barney Frank, the Massachusetts Democrat who heads
the House Financial Services Committee, said in an interview on Friday
that he intended to move legislation in the coming weeks. He said the
measure he was preparing would discourage abusive loans by imposing
legal liability "up the chain." It would give borrowers and others the
ability to sue the Wall Street firms that package those mortgages and
then sell them as mortgage-backed securities, as well as the purchasers
of those securities in the secondary market.

"Anybody, including the original borrower, can make a claim, and the
liability would go up the chain," he said. "People say it may
discourage certain kinds of lending. But that's precisely what we want
to do. We will pass a bill that won't allow companies to loan people
more money than they can pay back or loans for more than the value of
the house."

GRRRR.  Does no one remember what it was like to get a mortgage before they were so easily securitized?  The paperwork in the credit application was horrendous, as was the time it took to complete the mortgage.  Today they check two or three numbers, and if these numbers match the requirements of the Wall Street companies that package the loans, the loan is approved.  This legislation, which is aimed at slamming the securitization process, will hurt everyone.  All of our lives will be made worse so a few politicians can demagogue an issue that will be forgotten in 12 months. 

George Reisman at Mises:

When it comes to matters such as the theory of evolution and
stem-cell research, so-called liberals"”i.e., socialists who have stolen
the name that once meant an advocate of individual freedom"”ridicule
religious conservatives for their desire to replace science with the
dictates of an alleged divine power. Yet when it comes to matters of
economic theory and economic policy"”for example, minimum-wage
legislation"”these same liberals themselves invoke the dictates of an
alleged divine power. Their divine power, of course, is not the God of
traditional religion, but rather a historically much more recent deity:
namely, the great god State.

Traditional religionists believe that an omnipotent God came before
all natural law and was not bound or limited by any such law, but
rather created such natural laws as suited him, as he went along. Just
so, today's liberals believe, at least in the realm of economics, that
the State is not bound or limited by any pre-existing natural laws. In
the case in hand, the State, today's liberals believe, is free to
decree wage rates above the level that would exist without its
interference and no ill-effects, such as unemployment, will arise.

Where have I heard that before?  Oh yeah, I remember:

So here is this week's message for the Left:  Economics is a
science.  Willful ignorance or emotional rejection of the well-known
precepts of this science is at least as bad as a fundamentalist
Christian's willful ignorance of evolution science (for which the Left
so often criticizes their opposition).  In fact, economic
ignorance is much worse, since most people can come to perfectly valid
conclusions about most public policy issues with a flawed knowledge of
the origin of the species but no one can with a flawed understanding of
economics....

In fact, the more I think about it, the more economics and evolution are very similar.  Both are sciences that are trying to describe the operation of very complex, bottom-up, self-organizing systems.  And,
in both cases, there exist many people who refuse to believe such
complex and beautiful systems can really operate without top-down
control.

By the way, the author partially addresses the Card and Krueger study on New Jersey fast food that purportedly showed that employment goes up as minimum wage goes up.  Unfortunately, the author does not get into the now fairly well-known problem with this study.  For those who don't know, here it is:

Card and Krueger looked at the employment in fast food restaurants in New Jersey both before and after the minimum wage went up.  Here is the key process fact you need to know -- they did not look at every restaurant, just at some branches of national chains (e.g. McDonalds).  They did not include, say, Joe's sub shop.  The restaurants they studied shared a couple of traits in common:

• They were all far more professionally managed than the average small restaurant
• They all had higher labor productivity than the average restaurant
• They all had far more capital equipment (e.g. automation of labor) than the average restaurant

In other words, they studied the restaurants that were able to incur a wage increase with the least impact on their total costs (and eventually prices).  Follow-up studies have shown that there was probably a real reduction in total restaurant employment in New Jersey in the studied period, but the differences in productivity cited above caused the impact to disproportionately hit small ma and pa operations as opposed to large capital intensive nation chains.  In fact, during this period, the national chains experienced a gain in market share vis a vis smaller shops, as the higher minimum wage made it harder for local shops to compete with the national chains.  So, in fact, what Card and Krueger observed was not an economic miracle on the order of seeing the virgin Mary in your pancakes, but a predictable shift of market share from low capital to high capital competitors in response to higher wage rates.

This theme of regulation, including the minimum wage, advantaging larger competitors is an old one.  I discussed it a while back in the context of Wal-Mart's support for a higher minimum wage:

Apparently, though I can't dig up a link right this second, Wal-mart
is putting its support behind a higher minimum wage.  One way to look
at this is a fairly cynical ploy to get the left off its back.  After
all, if Wal-mart's starting salary is $6.50 an hour (for example) it
costs them nothing to ask for a minimum wage of $6.50.

A different, and perhaps more realistic way to look at this Wal-mart
initiative is as a bald move to get government to sit on their
competition.  After all, as its wage rates creep up, as is typical in
more established companies, they are vulnerable to competitors gaining
advantage over them by paying lower wages.  If Wal-mart gets the
government to set the minimum wage closer to the wage rates it pays, it
eliminates the possibility of this competitor strategy. 

It would be tough for me to single out my single least favorite member of my alma mater Princeton's faculty.  However, Peter Singer would certainly be in the running.  TJIC fisks some of Singers recent writing in the NY Times.  I will leave you to read his thoughts, except I wanted to comment on this paragraph of Singer's:

"¦The rich must - or so some of us with less money like to assume -
suffer sleepless nights because of their ruthlessness in squeezing out
competitors, firing workers, shutting down plants or whatever else they
have to do to acquire their wealth"¦

I could probably write a book just from this quote, but let me just focus on two responses:

• It helps prove my long-time observation that politicians, artists, and academics of a socialist bent who frequently criticize business have absolutely no idea what they do day to day or how they make money or create value.  Most have been an artist/academic/politician since the day they left school, and if they have held a real job in the value-creation part of the world, it is seldom as any type of manager or supervisor.  Singer knows no more about wealth creation than I do about sub-atomic particles.  The amazing thing, though, is that the NY Times would never quote me on sub-atomic particles but frequently gives Singer a platform to hold forth about wealth creation.  Economics is a science too, just as much as physics.  As I said in that linked post:

Economics is a science.  Willful ignorance or emotional
rejection of the well-known precepts of this science is at least as bad
as a fundamentalist Christian's willful ignorance of evolution science
(for which the Left so often criticizes their opposition).  In
fact, economic ignorance is much worse, since most people can come to
perfectly valid conclusions about most public policy issues with a
flawed knowledge of the origin of the species but no one can with a
flawed understanding of economics.

• Read the statement, and really think about what he says, remembering that he really believes these exact words.  Forget about the squeezing out competitors part -- presumably we capitalists are just bashing each other so this is likely the least of his arguments (not to mention how many people Singer likely "squeezed out" in the competition for scarce tenure and professor positions at Princeton).  Think about his statement that the way wealth is created is by "firing workers" and "shutting down plants."  So the logical implication is that the corporation who ends up with no workers and not assets will be the richest?  And here all this time I have been stupidly growing my company by trying to hire more good people and add on productive assets. 

Singer is as qualified to write about business practices as I am to write about South East Asian mating rituals.  Each of us is equally experienced and knowlegeable about these topics.  Somehow, though, the NY Times sees fit to publish Singer and my beloved University pays him to teach.  Unbelievable.

I am a bit late on this one, but a California judge has determined that giving kids tests that have consequences is unconstitutional:

A judge in Oakland struck down California's
controversial high school exit exam Monday, issuing a tentative ruling
suggesting the test is unfair to some students who are shortchanged by
substandard schools.

If finalized, the unexpected ruling
would block the state from carrying out its plan to deny diplomas for
the first time to tens of thousands of seniors who have been unable to
pass the exit exam.

Note that this standard essentially means that no tests with real consequences (e.g. denial of grade advancement or diploma) can ever be given, because with 1129 high schools in California, some schools will always be below par.  So his argument will always apply -- there will always be kids who can claim their school is on the low end of the normal distribution.  And even if every school were exactly the same, kids within these schools could, I presume, similarly argue to this judge that they had sub-par teachers or sub-par parents or a sub-par reading light or a sub-par dog that ate their homework.

By the way, doesn't this also imply that California can no longer name state champions among high schools in various sports?  After all, isn't that unfair to schools with lesser sports programs?  And couldn't I extend this ruling to say that California state run colleges shouldn't be using high school grades or SAT scores or any other test-based metric in selecting entrants since some of these folks came from low-performing schools?

This confusion of equal protection with equal outcomes is so absurd its not really even worth commenting on further.  I won't even bother, then, asking how the judge expects sub-par schools to be made to improve without testing-with-teeth, or even what objective standards the judge used to determine that any schools were "substandard" in the first place.

For those who support this ruling, and agree with the plaintiff attorney's language that sounds like students have a right to a diploma that can't be denied without due process, here is a question:  What is a diploma?  Obviously, you don't want it to mean that a student has demonstrated basic knowledge and abilities against an agreed upon standard.  Are we reduced to a diploma being a certificate of attendance, indicating that a student grimly sat through 4 years of classes and nothing else?

This same week, the Florida Senate was unable to rescue the very successful state voucher program in the face of last year's insane Florida Supreme Court ruling that vouchers were unconstitutional because the Florida Constitution's uniformity clause:

the Florida Supreme Court ruled 5-2 that the voucher program violated
the "uniformity clause" of the state constitution guaranteeing a
high-quality system of public schools. Because the performance of the
voucher kids was superior to those in public schools, the court ruled that education was not uniform -- or in this case not uniformly miserable.

The program in question that was struck down by the court awarded vouchers to students of schools that failed to pass state standards. 

The program at issue is Governor Jeb Bush's
seven-year-old "Florida A+ School Accountability and Choice Program."
For the first time, schools have been graded on the reading, writing
and math progress made by the children they are supposed to be
teaching. (Imagine that.) Any school that received an F in two of four
years is deemed a failure, and the kids then get a voucher to attend
another school, public or private.

One immediate impact -- according to researchers at
Harvard, Florida State, and the James Madison Institute -- has been
that the mere threat of competition caused many inner-city school
districts to improve. The percentage of African Americans who are now
performing at or above grade level surged to 66% last year, from 23% in
1999.

What is amazing about the court's decision is that every kid who got a voucher, 90% of whom are minorities, came from a school demonstrated by objective standards to be far below average.  But, according to the court, it is constitutional for these kids to be in schools that are far below average, but becomes unconstitutional when kids are moved to above average schools?  Does this make any sense?  I'ts sort of a reverse Lake Wobegone effect -- the system is constitutional as long as all the schools are below average but once any are above average then its unconstitutional.  LOL.

Here is the reason that the court's logic doesn't make sense:  The real thing they are concerned about with the uniformity clause is not uniform quality, but whether the schools are uniformly controlled by the government and uniformly populated with union rather than non-union teachers.

Note that both these decisions use the existence of flaws within the two states' educational systems (e.g. low-performing schools) combined with a "uniformity" or "equal protection" standard to strike down reforms aimed at fixing these very flaws.  Both are saying that you can't reform the schools until all the schools are equally good,  but of course the schools will never improve without reform. 

Update:  But good news in Newark.  It's depressing but not surprising to see my alma mater's own Cornell West out there fighting against school choice for African-Americans.

Update #2:  Walter Olson comments:

It would appear that from now on a high school diploma is meant to
signify not a student's actual mastery of a certain body of material,
but rather the mastery he or she would have attained had the breaks of
life been fairer. Employers, and all others who rely on California high
school diplomas in evaluating talent, would be well advised to adjust
their expectations accordingly.

Reason has a good article on helping Africa.  To some extent, their arguments echo the ones I made in my previous post:

Despite political pressures, increasing the U.S. foreign aid budget would be a
mistake. The true cause of Africa's poverty is the continent's long history of
crippling misgovernance"”a problem that is exacerbated by rich countries' trade
protectionism, particularly with respect to agriculture....

The aid is ineffective because of the appalling way in which Africa is
governed. In recent decades, of each dollar given to Africa in aid, 80 cents
were stolen by corrupt leaders and transferred back into Western bank accounts.
In total, Nigerian President Olusegun Obasanjo estimated, "corrupt African
leaders have stolen at least $140 billion from their people in the [four]
decades since independence." All that is left when these regimes eventually
collapse is a massive public debt.

The article discusses how US and European agricultural subsidies really hurt the poorest nations:

While advocates of current market-distorting agricultural policies do not
intend to harm developing nations, the collective effect of U.S. farm policies
is devastating for producers of agricultural goods worldwide. American farm
policies might provide short-term benefits for agricultural producers in the
U.S., but those benefits are more than offset by the cost to American consumers
who pay higher taxes to support the U.S. farmers and higher prices for
agricultural products. Meanwhile, U.S. tariffs, quotas, and export subsidies
exacerbate poverty in regions like sub-Saharan Africa where people are heavily
dependent upon agriculture....

U.S. agriculture policy undermines U.S. efforts to alleviate poverty because
it drives down global agricultural prices, which in turn cost developing
countries hundreds of millions of dollars in lost export earnings. The losses
associated with cotton subsidies alone exceed the value of U.S. aid programs to
the countries concerned. The British aid organization Oxfam charges that U.S.
subsidies directly led to losses of more than $300 million in potential revenue
in sub-Saharan Africa during the 2001/02 season. More than 12 million people in
this region depend directly on the crop, with a typical small-scale producer
making less than $400 on an annual cotton harvest. By damaging the livelihoods
of people already on the edge of subsistence, U.S. agricultural policies take
away with the right hand what the left hand gives in aid and development
assistance.

I'm blogging here at about 300 baud so I will have to, for once, keep it brief.  There appears to be a fair amount of momentum building to do "something" about conditions in sub-Saharan Africa, which have sucked, still suck, and will probably continue to suck without some help. 

Unfortunately, many of the usual suspects are pushing the "US does not send enough aid" line as the main failure mode for Africa.  A full fisking of this will have to wait for a better connection, but suffice it to say that we have already dropped billions in direct aid and billions more in loans and loan forgiveness, without much benefit.

Who do you give the aid to?  The vast majority of sub-Saharan governments are full of corrupt looters, who will always find ways to put most of the aid money in their own pocket and those of their cronies.  Just look at what happened to oil for food money in Iraq, and that money had MUCH better oversight than the money that goes to Africa. 

Even when the aid does not come in easily looted currency, but rather in food or vaccines distributed by NGO's, the aid can help support totalitarianism and even genocide in disturbing ways.  The problem in Africa are the same that financial aid faces anywhere,
ie:  NGO's can only go where the dictator allows.  Dictators only allow
NGO's to go to towns or regions that support him, limiting access and
starving out other areas of the country.  Food aid also hurts local
farmers by depressing local prices.  To some extent, well-meaning NGO's
fulfill the role of Carmella Soprano, helping the brutal criminal she
is married to maintain a facade of stability and normality to the
outside world.

Zimbabwe is a classic example.  People are clearly suffering there, but it is just as clear that any aid given to the people there just give comfort and additional power to Robert Mugabe, who has single-handedly engineered the current disaster.

The first thing we need to do in Africa is drop our trade barriers with them.  More than ephemeral aid, they need the chance to build real businesses and real markets, and the US is the only real candidate (the EU certainly won't do it unilaterally).  Its insane to me that a few Carolina-based Senators are so terrified of competition from these nations, and have to date blocked this obvious move.

The second thing we need to do is to find a country and make an example of it.  Lets find a single country that has a reasonably freedom-oriented government with (for Africa) moderate levels of corruption and lets focus our aid and effort at them -- lowered tariffs, aid, pressure for more liberalization, loans, vaccines, the works.  African countries have had negative reinforcement for bad government for years - lets try positive reinforcement, making it clear that democracy and good government can provide an entre to prosperity and to participation in the world community.

OK, it seems the everyone is a movie critic this week.  If you ever doubt that most bloggers are geeks at heart, just look at all the Star Wars III coverage in blogs this week.  Anyway, not to be outdone, here is my review.  I will give a general review up front, with more thoughts that include spoilers in the extended post.

Overall, the movie was visually stunning, with lots of eye candy.  The last third of the movie was emotionally engaging, though many of the actors' performances were sub-par.  The movie was better than the last two (duh) and tied the story arc together fairly well.

However, my impressions of the movie really differed front to back, so for review purposes I divide the movie into three parts:

1. Initial action / rescue sequence  C+:  The effects are nice, but the mission itself doesn't make a lot of sense, at least from Palpatine's eyes, who clearly must have orchestrated it.  Movie-wise, it has two purposes.  First, it is supposed to be the last gasp of the Obi-Wan and Anakin ongoing buddy movie, but the dialog for this sucks.  They should have hired someone from the Lethal Weapon movies to do this right.  Second, and perhaps the most effective part, it really sets up a scene in Return of the Jedi, making more meaningful a contrast between Luke and Anakin.  Without this one sub-scene, this section of the movie would have just been an overly long action intro into the movie, kind of like the warm-up band to get everyone excited or the first 5 minutes before the credits in a James Bond movie.
2. Dialog / exposition / Anakin turns  D:  Some people seem to like this section.  I found it PAINFUL.  The Anakin/Padme romance is never, ever very realistic.  I don't know if it is the acting or the script or just lack of spark between the actors, but I thought there was more sexual tension between Luke and his sister, for god sakes, than Anakin and Padme.  I will say the fear that drives Anakin to the dark side is a fairly good one.  It was set up well in the previous movies.  However, the execution sucked.  Under the right direction, this could have been really powerful, given the dark irony at the end of the movie of what was really behind this fear.  The final conversion seems to happen way too fast - he goes from "wait this is wrong" to "You are my master" in like 30 seconds. 
3. Destruction of the Jedi / Putting everyone in place for Episode IV  B+:  There is nothing wrong with Lucas's ability to direct epic action and special effects and to use music and editing to build tension and emotion.  I thought it was well done.  The final fight scene takes place in amazing environment.  They do a good, but not perfect job, of establishing continuity with Episode IV.  Once everyone shuts up, the movie gets good.  Hayden Christianson really looks the part of dark Jedi at the end

Overall, I will give it a B but non-Star Wars fans would probably grade it lower.  My episode ranking now is V - IV - [III or VI] - II - I.  I will have to see it again and give it a bit of time to put it ahead or behind VI, but right now I have it ahead because its emotional impact walking out of it the first time was much higher than that of VI.

Continue reading ‘My Star Wars III Review’ »

First, I must confess that I have been to opening day of every Star Wars movie, and I have tickets for opening day of this last one.  Yes, I am kindof a geek, but no, I am not a total geek:  I did not sit up all night in line or anything for these movies. 

This is actually a bit of an accomplishment, because I don't think many people saw the original Star Wars movie on the first day.  One thing that I think a lot of people don't remember, given all the Star Wars hype and success, is that the original movie opened without much hype or expectations.  I was with my family visiting LA, where we were staying in some hotel in Century City  (maybe the Century Plaza - I remember it seemed pretty nice).  Anyway, my dad was on business and my mom and sisters were shopping so I walked over that morning to see what was playing at the Century City movie theater.  It was in that way I accidently saw the first showing on the first day of the original Star Wars.  It was me and about 7 other people in that huge theater.   I was so blown away that I stayed for a second showing.

Anyway, time passes.  Empire Strikes Back was great.  I thought at the time that Return of the Jedi was pretty mediocre, but that was before I saw Clone Wars which I thought was visibly stunning but really bad.  I cringed every time there was any substantial dialogue, particularly  when Padme was on the screen.

Anyway, I take this review pretty seriously, because they seem to have had the same reactions I had to the previous movies.  The Good news:  visually even more stunning, cool fight scenes, and a better all around movie than the other prequels.  The Bad news:  the Padme dialog still sucks, maybe even worse.

I really enjoyed watching Revenge of the Sith. And yes, it is quite a good film.
However, the scenes with Padmé alone are enough to give you flashbacks of the
worst parts of the first 2 sequels, and thus lower your overall enjoyment ofthe
movie.

Still... it is a strong film with a strong story, great effects and much
improved dialog (with the exception of anything with Padmé in it). Star Wars
fans should be quite happy... and non-Star Wars fans will enjoy as well.

Overall... I give Revenge of the Sith a solid 7 out of
10 (would have been a 9 if they just totally took out Padmé or
re-wrote all her pathetic dialog).

It gets much worse treatment in other venues, but for roughly the same reasons.

UPDATE:  Here is my review

By the way, Darth Vader has a blog now.  We learn a lot from it about the daily trial and tribulations of being a dark jedi master (thanks to VodkaPundit for the link):

Due to the haste with which we are proceding through the
latter phases of this battle-station's construction we have been forced to
employ scores of civilian contractors from across the galaxy in addition to our
own Imperial Corps of Engineers. This had led to a certain clash of working
cultures.

For instance, this morning I critiqued a tragically sub-par
piece of workmanship on a tractor-beam repulsolift inversion assembly by
snapping the neck of the site supervisor and throwing his limp corpse down a
disused elevator shaft.

Imperial engineers would have snapped to crisp
attention, of course, but all these civilian contractors did was give me was
grief. "Oy, you do that again and I'll have the union on you!" barked one
red-faced buffoon.

"It is vital that you enhance the inter-departmental
syngergies of your operation," I said. And then I killed him.

I can relate.

Update 6/23: Property rights lost 5-4.  More on Kelo decision here and here.  The arguments below are still valid, even if the SCOTUS did not agree.

As I have written before, there is a disgusting and increasingly popular trend among city governments to seize private property from one owner and give it to a developer who will build something that will generate more property taxes (e.g. seize house to build a new Home Depot).  This theory of eminent domain is being tested in arguments in front of the Supreme Court around actions of New London, CT to seize private houses and handing them over to a developer so he can build a private marina.  New London argues that it is economically depressed, and it needs to substitute some higher tax paying businesses for lower tax paying homeowners.  Dahlia Lithwick in Slate brings us this telling exchange yesterday between the Court and New London attorney Horton:

Justice Antonin Scalia asks what difference it makes that New London is depressed. What if a city acknowledged that it wasn't doing badly, but just wanted to condemn land to attract new industry? He describes Horton's position as: "You can always take from A and give to B, so long as B is richer." And O'Connor offers this concrete example: What if there's a Motel 6 but the city thinks a Ritz-Carlton will generate more taxes? Is that OK?

Yes, says Horton.

"So you can always take from A and give to B if B pays more taxes?" asks Scalia.

"If they are significantly more taxes," says Horton

"But that will always happen. Unless it's a firehouse or a school," protests Kennedy.

The Court even gave New London's attorney a bit of a lesson on how free exchange of goods requires consent of both parties:

"We're paying for it!" Horton exclaims, noting that no one is taking anything from these minorities.

"But you're taking it from someone who doesn't want to sell. She doesn't want your money," retorts Scalia.

Professor Bainbridge points out why Mr. Horton's payment will also be inadequate:

First, it fails to take into account the subjective valuations placed on the property by people whose families have lived on the land, in at least one case, for a 100 years. In other words, if the Supreme Court rules for the city, the government will be able to seize land at a price considerably below the reservation price of the owners. Second, unlike the prototypical eminent domain case, in which the land is seized to build, say, a school or road, in this case the city is using eminent domain to seize property that will then be turned over to a private developer. If this new development increases the value of the property, all of that value will be captured by the new owner, rather than the forced sellers. As a result, the city will have made itself richer (through higher taxes), and the developer richer, while leaving the forced sellers poorer in both subjective and objective senses

Read the whole thing, its depressing, all the more so since commentators seem to feel that New London will prevail.  To my eye, Mr Horton and New London look no different than Stalin-era Soviet planners.  The Economist (sub. req'd)agrees:

Put simply, cities cannot take someone's house just because they think they can make better use of it. Otherwise, argues Scott Bullock, Mrs Kelo's lawyer, you end up destroying private property rights altogether. For if the sole yardstick is economic benefit, any house can be replaced at any time by a business or shop (because they usually produce more tax revenues). Moreover, if city governments can seize private property by claiming a public benefit which they themselves determine, where do they stop? If they decide it is in the public interest to encourage locally-owned shops, what would prevent them compulsorily closing megastores, or vice versa? This is central planning.

Plenty more commentary at Professor Bainbridge (here and here), Volokh (here and here), Cafe Hayek,  and the Knowlege Problem.  The Institute for Justice is defending the property owners and is at the forefront of this fight - win or lose, they deserve props for their efforts.

Postscript:  I generally don't like the arguments I see in some blogs that go like "why aren't the ___________ [fill in  with liberal or conservative] blogs addressing such-and-such issue?"  Blogs are intensely personal, and since most of us write them as a hobby, there are always going to be issues that just don't really get us fired up.  For example, though many libertarian bloggers expend numerous electrons on gun rights, the topic is generally a yawner for me so I seldom go there.

With that said, it is interesting to speculate where the "progressives" are on this case.  When you see a story of a city making a virtue of taking from poorer people to give to rich developers, one would expect the left to go nuts.  As reason describes it (here and here and here):

... a growing number of governments are using eminent domain to circumvent the conventional real estate market. Eminent domain forces property owners to sell their property to the city while the city then turns around and sells the property to developers. Private developers can reap significant financial gains through this process. Reason finds these decisions are increasingly driven by local politics, not respect for property rights, and give well-connected property developers significant advantages over homeowners and small businesses.

Little guy vs. big guy -- where is the Left?  Well, the problem is that progressives generally support the erosion of private property rights.  They like cases that reinforce the ability of government and politicians to take, redirect, or otherwise control private property for their own goals.  In this case, I presume that they are willing to sacrifice a few little guys in Connecticut for the larger goal of increasing statism.

UPDATE:  Apparently the New London attorney ended on a note of mystery, according to SCOTUSBlog:

The moment of the day came in Kelo when the city's counsel attempted to close by saying, "I want to leave you with just four words," then his time expired. (Although he did say -- using more words, "I see my time has expired so I won't be able to tell you them.") Justice Kennedy then asked the plaintiff's lawyer on rebuttal, "You don't happen to know what the four words were?" Regrettably, he didn't.

Here is my guess for New London's last four words: "Everything belongs to us".  Of course "All your base are belong to us" would have been better, but that is seven words.

It is not that often I get the opportunity to find something about taxes and markets in Kevin Drum's column that I agree with, but his guest blogger Paul Glastris has a good series of posts on state and local tax breaks, and even direct subsidies, for relocating businesses (first post here).  Glastris argues for the elimination of these tax breaks and subsidies, and I agree 100% with this conclusion, though not necesarily his legal justification for doing so (more on that later).

I have written a number of times about my frustration with a particular type of these subsidies - the public financing of stadiums for private sports teams (here, here, and here).  This stadium construction is usually undertaken as a result of corporate blackmail, where sports teams threaten to move unless they get a new stadium.  The dynamics of other tax breaks and subsidies to relocating businesses referred to by Glastris are usually similar, though these companies don't tend to have the monopsony power of sports franchises so they often get a smaller payout.

Why do local governments pay out huge incentive to corporations who after all have to put their business somewhere?  The answer is that they are caught in a classic prisoner's dilemma.  Basically, in this "game", each participant has individual incentives that seem to point to a certain set of actions.  Unfortunately, when players follow these incentives, the result is sub-optimized for everyone.

In this example, local authorities see a business that may move to town, and decide it is better to have it in their city with tax concessions than to have it in another city.  Since cities lose some of these battles and win some, and since cities that lose one battle tend to pay more to win the next one, the end result is that businesses end up being distributed fairly evenly, but cities have all given up huge tax concessions.  Clearly the ideal state, at least for city governments, is to not give any tax concessions at all.  In this case, businesses would likely still end up being distributed fairly evenly, but cities would not have given out tax breaks.

The only way to get to this end state is 1) have a philosophic change, with local citizens rejecting the use of government to affect relocation decisions (ie become libertarians!); 2) collude - have the council of mayors get together and sign a no new subsidy pledge or 3) have some higher authority police the local governments (that is the option explored in the Glastris article - can the US Government or courts constitutionally stop this). 

The Washington Monthly, in opposing these tax breaks, has a problem, though.  As good technocrats and liberal interventionists, they wholeheartedly support the government's right to regulate the hell out of business and commercial decision-making.  They can't, therefore, take the much cleaner libertarian argument I do, that the government should not be interfering in free, arms-length commercial decision-making at all. 

They are stuck with narrowly opposing just one kind of government interventionism (tax breaks to business) and this leads to a couple of problems in Galstris's argument.  The first is a consistency problem, which you can see in the attorney's letter Glastris quotes.  He argues in the first paragraph of his letter that these tax breaks violate the commerce clause because they unduly influence interstate commerce, then argues in his second paragraph that these tax breaks have no discernible influence on corporate decision making.  Well, if the second part is true, then their logic in the first part can't be true.

The other problem with their argument is that liberals want a commerce clause, as redefined by courts in the 1930's, as enabling massive government intervention, but in this case Glastris is trying to use it in its pre-1930's use, which was restrictive.  If the Glastris wants to take the position that the commerce clause limits state and local businesses from trying to change the decision-making and cost structure of businesses engaged in interstate commerce, wouldn't this same logic extend to making unconstitutional state-based business regulations?  If you can't give a local tax break to a certain industry, doesn't that mean you can't give a higher tax (say on lodging) to another industry?  The specific words of the Ohio decision referenced says:

... the tax scheme discriminates against interstate commerce by granting preferential treatment to in-state investment and activity.

I might ask, if you take this argument, wouldn't laws that make in-state investment and activity less attractive than other states also be unconstitutional? 

One final note.  As a libertarian, I have gone through phases on targeted tax breaks.  There have been times in my life when I have supported tax breaks of any kind to any person for any reason, by the logic that any reduction in taxation is a good thing.  I know there are many libertarians that take this position.  Over time, I have changed my mind.  First, targeted tax breaks seldom in practice reduce the overall tax burden - they tend to be made up somewhere else.  Second, these tax breaks tend to be gross examples of the kind of government coercive technocratic meddling in commerce and individual decision-making that I despise.  Almost always, they are trying to get individuals to do something they would not otherwise do, so in practice they tend to be distorting and carry all kinds of unintended consequences (as well as being philosophically repugnant).