Coyote Blog

I am working on some posts on income inequality, especially as compared between nations.  One thing I have been thinking about is whether the US GINI (a measure of income inequality) is overstated because the US has a tiered retail system that gives lower income people access to lower prices (though for sometimes lower quality goods).  We have Wal-Mart and Family Dollar, discount retail concepts that are rare, and often illegal (due to limitations on retail discounting) in European countries.

On a sort of purchasing power parity basis, I wonder if this has any impact in narrowing the US effective GINI.  Of course, this mitigating factor is somewhat mitigated itself by the fact that a number of urban areas with some of the poorest families (e.g. Washington DC) restrict entry of these low-cost retail establishments.

Kevin Drum argues our minimum wage in the US is really low

A few quick thoughts:

• I have a constant frustration that we never see these comparisons just on a straight purchasing power parity absolute dollar number.  Numbers related to income distribution are always indexed to a number that is really high in the US, thus making our ratio low.  I seriously doubt Turkey has a higher minimum wage in the US, it just has a much lower median wage.  Does that really make things better there?  I have this problem all the time with poverty numbers.  The one thing I would like to see is, on a PPP basis, a comparison of post-government-transfer income of the US bottom decile or quintile vs. other countries.  Sure, we are more unequal.  But are our poor better or worse off?  The fact that no one on the Left ever shows this number makes me suspect that the US doesn't look bad on it.    This chart, from a Leftish group, implies our income distribution is due to the rich being richer, not the poor being poorer.

  

• Drum or whoever is his source for the chart conveniently leaves off countries like Germany, where the minimum wage is zero.  Sort of seems like data cherry-picking to me (though to be fair Germany deals with the issue through a sort of forced unionization law that kind of achieves the same end, but never-the-less their minimum wage is zero).
• All these European countries may have a higher minimum wage, but they also have something else that is higher:  teen unemployment (and I would guess low-skill unemployment).

Admittedly this only has a subset of countries, but I borrowed it as-is from Zero Hedge.  By the way, by some bizarre coincidence, the one country -- Germany -- we previously mentioned has no minimum wage is the by far the lowest line on this chart.

As much fun as it is to mock the US Postal Service, their inability to restructure their costs is not all their fault. Every time they try to close a facility, they get met by opposition from about everywhere.  Here is an example where Berkely, CA is doing all it can to prevent the USPS from selling a post office building.

The Postal Service over the summer began moving ahead with a plan to sell its 1914 Beaux-Arts post office in the heart of Berkeley near the old city hall and a park named after Martin Luther King Jr. The move drew howls from residents worried that the building would turn into condominiums or office space, even drawing dissidents to camp out for days by the columned building entrance.

Now, opponents are gaining traction with an unorthodox zoning restriction: that the mustard-colored building must remain open to the public

The Berkeley Planning Commission last month approved a measure that would restrict the use of the post office and adjacent government buildings to government agencies or public uses like a theater. Residential use and many other private functions would be banned by the action, which requires City Council approval.

This is simply bizarre.  What, do residents have so many fond memories of their time spent in the line at the post office that they want these golden memories preserved?    The assumptions made by local opponents are just bizarre -- they seem OK if the building is used for offices of the Social Security Administration but not if it is used for private offices.  Why would anyone possibly care.   From my experience, private urban office buildings tend to be cleaner and better maintained than government offices.

Kevin Drum thinks it is an insight to his readers that the insurance companies are a source of support for President Obama in keeping Obamacare alive.  And perhaps it is a surprise.  After all, most of the anti-insurance company rhetoric was for the progressives, who are always fired up for any endeavor they think will punish a private corporation.

The rest of us understand that of course the health insurance industry is all for Obamacare. For them, this is the greatest bit of crony legislation in history. For all the Administration rhetoric, essentially the US government has required that every citizen buy their product, and subsidizes many of these purchases with taxpayer money. Corporatism is rampant nowadays, a bipartisan affliction, but ethanol is that only other industry I can think of that has been granted this ultimate crony grail of subsidies combined with a requirement to purchase  (though maybe ethanol wins because, at least for cellulosic ethanol, there is actually a mandate to purchase a product that does not even exist).

Hospitals are required to treat everyone who shows up at the door, which results in a substantial amount of uncompensated care that hospitals must spread into their rate structure for other patients (and which also gives the lie to the syllogism that being uninsured means one does not have access to health care).

Supposedly, the PPACA was going to eliminate all these costs.  Actually, it does not eliminate these costs, it just changes who subsidizes them.  Currently, other hospital patients (and their insurers) subsidize this care.  In the PPACA medicaid expansion, some of this subsidy would shift to taxpayers  (whether the actual amount of costs subsidized would go up or down depends on your assumptions as to whether the Feds or the hospitals are better at managing them).

But hospitals think they might have found a third approach.  By law, insurance companies cannot legally turn down any applicants, particularly through the exchanges, based on their health condition.  So why not have the hospital (or its non-profit Foundation) buy policies for its perennially most expensive uncompensated patients?

US hospitals are exploring ways to buy “Obamacare” insurance plans for their sickest and poorest patients as they strain under the weight of tens of billions of dollars in uncompensated costs from the uninsured.

...The controversy is another reminder of the complexity of the US healthcare system, where hospitals are forced to pay about $40bn a year in so-called “uncompensated care”. People who are not insured go to emergency rooms because they cannot legally be turned away, and often hospitals bear the brunt of the costs.

“Hospitals are considering it,” says Mindy Hatton, general counsel of the American Hospital Association, the hospital lobby group. “Hospitals shouldn’t be on the front lines delivering preventive care that patients should be receiving in a clinic or doctor’s office. That doesn’t make sense for anyone.”

This is insurance companies' worst nightmare, of course.  It would not take very much of this sort of thing to trash the whole insurance market.

The Administration response to all this has been typical of its behavior through the whole PPACA implementation.  In general their approach to all new problems has been to:

1. Make it clear that it hadn't really thought very deeply or completely about important implementation issues
2. Make snap implementation decisions to tactically deal with one problem only to find they had created new problems
3. When everything gets really messy, claim broad dictat-by-press-release powers it is not clear the law actually gives them

In this case, the Administration was faced with questions from Representative Jim McDermott.  He asked if exchange-sold health plans were considered Federal Qualified Health Plans (QHP) under the law.  If so, he pointed out that several of the things the Administration had discussed (e.g. allowing insurers to offer monetary inducements to customers who maintained good health habits) could be illegal under anti-kickback provisions.

As usual, it was pretty clear the Administration had no answer.  Or more accurately, had five different answers from five different people and agencies.  Kathleen Sebelius wrote back to McDermott that no, exchange sold plans were not QHP's and so the anti-kickback law did not apply.  This tactically solved McDermott's issue.  But it created large new issues, since it is the anti-kickback law that would have prevented hospitals from buying exchange plans for their most expensive patients.  If exchange plans are not QHP's, then hospitals considered that buying such plans was now legal.

All Sebelius has been able to do to temporarily quiet this mess has been to claim vague and unlimited powers to regulate virtually any behavior related to the exchanges.  Like Obama, she believes her press releases have force of law.  But in fact, even if she does have the claimed regulatory power, she actually has to go through a rules-writing process before any such rules can take effect.   These are structured, drawn out affairs with long delays for public comment.  This is the type of thing she needed to be doing 18 months ago.

Got this from some Republican group (the "virtue" of being a libertarian is that I get bipartisan spam).

Tim Bishop = ObamaCare 

Bishop Has Been a Co-Conspirator in the Disaster That is ObamaCare; It’s Time for Him to Apologize For This Colossal and Expensive Mistake 

WASHINGTON – Today, in a rambling press conference, President Obama admitted he “fumbled” the ObamaCare rollout. And the president even warned of more problems to come.

Tim Bishop has been a vocal ObamaCare supporter from the beginning—voting for the bill in 2010 and giving the president a blank check on ObamaCare time and time again. Now that the law is becoming more of a disaster every day, Bishop needs to answer for the higher premiums and canceled plans facing families in his district.

Didn't even know who this dude was until I checked (US Representative from NY, apparently).  I expect to see a lot of this.  At least for now.  Things can change quickly.  After all, just 30 days ago the Republicans were supposedly on the ropes from self-inflicted wounds vis a vis the shutdown.  Now, no one even remembers it.

I was reading about the DOJ push back on the proposed American-US Airways merger.  It strikes me that you never want to be the last merger in an industry consolidation.  When the consolidation begins, say with 8 players, a merger -- even if it results in a very big company -- reduces the number of competitors from 8 to 7.  After a while, though, the later mergers are proposing to reduce the players from, say, 4 to 3.  This will look worse to the DOJ, who by this point in a consolidation may be feeling remorseful, in retrospect, that it let some of the earlier deals go unchallenged.  So the last deal gets to catch up / payback from the earlier deals.

I think this is in part what is happening with the American merger.  I don't have the data, but my sense is that earlier mergers (e.g. United and Continental) were far more problematic from an anti-trust standpoint.

Disclosure:  living in Phoenix, whose US Airways hub will likely get downsized or eliminated in the merger, my life will be worse likely if the merger is approved.   Executives swear Phoenix will remain a major hub but most residents here consider this a "If you like your hub you can keep it" type promise.

It turns out that the US is one of the few industrialized nations to meet the terms of the Kyoto protocols (reduce CO2 emissions to 1997 levels) despite the fact we never signed it or did anything to try to meet the goals.

Thank the recession and probably more importantly the natural gas and fracking revolution.  Fracking will do more to reduce CO2 than the entire sum of government and renewable energy projects (since a BTU from natural gas produces about half the CO2 as a BTU form coal).  Of course, environmentalists oppose fracking.  They would rather carpet the desert with taxpayer-funded solar panels and windmills than allow the private sector to solve the problem using 50-year-old technology.

On September 26 of this year, President Obama said this of the new Obamacare exchanges:

“If you’ve ever tried to buy insurance on your own,” he said, “I promise you this is a lot easier.”

Well, let's see.  Here are some notes on my previous health insurance buying decision

• I was able to price shop policies online without creating an account, without giving up my social security number.  The websites to do so worked and operated quickly

• A broker who had decades of experience in health care (rather than being a former Obama campaign worker with a few hours of training) walked me through the options and how they worked.

• Once we chose a policy, the application process online was quick and easy

Here is one thing that was likely worse

• I had to provide medical history information, which probably is not required under Obamacare because of community rating (though I am not sure)

And here is one thing that was better for me but I guess must be worse for the Left since they complain about it so much

• There was a lot more choice.  If the process was "harder" in any way before, it was because there were far more choices.  It was harder in the same way that it is generally harder to shop in the US than, say, in the old Soviet Union.  Obamacare circumscribes policies such that a large package of benefits are mandated, not optional (I have to pay for mental health coverage and probably aromatherapy) and the size of one's deductible is capped.

It is also this latter difference that will make my next policy substantially more expensive.  In standardizing options, the Congress standardized on the most expensive options (broadest possible benefits, smallest possible deductible).

By the way, this is not proven yet but there is probably one other way my Obamacare policy will be worse than my last one:  the doctor network in my policy will very likely be a LOT smaller.  We could almost be sure this would happen precisely because Obama promised it wouldn't  (his promises on health care are pretty good "tells" that the opposite will happen).

For 20 years, before I liberated myself from corporate America, I spent a hell of a lot of time doing business and market analysis (e.g. why are profits declining in Division X).  I was pretty good at it.  If I had to boil down everything I learned in those years to one lesson, it would be this:  Pay attention to changes in the mix.

What do I mean by "changes in the mix"?  Here is an example.  A company has two products.  One has a 20% margin, and the other has a 30% margin, and both margins have been improving over time because of a series of cost reduction investments.  But overall, company margins are falling.  The likely reason:  the mix is shifting.  The company is selling a higher proportion of the lower margin product.

Here is a real world example:  When I was at AlliedSignal (now Honeywell) aviation, they had exactly this problem.  They were operating in a razor and blades business -- ie they practically gave the new parts away to Boeing and Airbus to put on their planes, because they made all their money selling aftermarket replacements at a premium (at the time, government rules made it almost impossible to buy anything but the original manufacturer's part, so they could charge almost anything for a replacement, especially given that an airline likely had a $50 million plane sitting dormant until the part was replaced).  I routinely would tell managers in the company that essentially our business made money from unreliability -- the less reliable our parts, the more money we made.  Because newer technology, competition, and pressure form airlines was forcing us to greatly improve our reliability (at the same time we were giving stuff to Boeing at ever greater losses), all our newer products on newer planes were less profitable than the old stuff.  As planes aged and dropped out of the fleet, our product mix was getting less and less profitable.

This same effect can be seen in many economic and political issues.  Take for example an argument my mother-in-law and I had years and years ago.  She said that Texas (where I was living at the time) had crap schools that were much worse that those in Massachusetts, her argument for the blue political model.  She observed that average educational outcomes were much better in MA than TX (which was and still is true).  I observed on the other hand that this was in part a result of mix.  Texas had better outcomes than MA when one looked at Hispanics alone, and better outcomes for non-Hispanics alone, but got killed on the mix given that Hispanics typically have lower educational outcomes than non-Hispanics everywhere in the US, and Texas had far more Hispanics than MA.

All of this is a long introduction to some thinking I have been doing on all the "Average is Over" discussion talking about the flattening of growth in median wages.  I begin with this chart:

There is a lot of interstate migration going on.  And much of it seems to be out of what I think of as higher cost states like CA, IL, and NY and into lower cost states like AZ, TX, FL, and NC.  One of the facts of life about the CPI and other inflation adjustments of income numbers is that the US essentially maintains one average CPI.  Further, median income numbers and poverty numbers tend to assume one single average cost of living number.  But everyone understands that the income required to maintain lifestyle X on the east side of Manhattan is very different than the income required to maintain lifestyle X in Dallas or Knoxville or Jackson, MS.

Could it be that even with a flat average median wage, that demographic shifts to lower cost-of-living states actually result in individuals being better off and living better?

For some items one buys, of course, there is no improvement by moving.  For example, my guess is that an iPhone with a monthly service plan costs about the same anywhere you go in the US.  But if you take something like housing, the differences can be enormous.

Let's compare San Francisco and Houston.  At first glance, San Francisco seems far wealthier.  The median income in San Francisco is $78,840 while the median income in Houston in $55,910.  Moving from a median wage job in San Francisco to a media wage job in Houston seems to represent a huge step down.  If you and a bunch of your friends made this move, the US median income number would drop.  It would look like people were worse off.

But something else happens when you take this nominal pay cut to move to Houston.  You also can suddenly afford a much nicer, larger house, even at the lower nominal pay.  In San Francisco, your admittedly higher nominal pay would only afford you the ability to buy only 14% of the homes on the market.  And the median home, which you could not afford, has only about 1000 square feet of space.  In Houston, on the other hand, your lower nominal pay would allow you to buy 56% of the homes.  And that median home, which you can now afford, will have on average 1858 square feet of space.

So while the national median income numbers dropped when you moved to Houston, you actually can afford a much nicer home with perhaps twice as much space.  Thus, it strikes me that there are important things happening in the mix that are not being taken into account when we say that the "average is over".

Of course, while this effect is certainly real, I have no idea how much it affects the overall numbers, ie is it a small effect or a large effect.  Fortunately my son is studying economics in college.  If he ever goes to grad school, I will add this to my list of research suggestions for him.

Postscript:  This exact same discussion could apply to US poverty statistics.  We have one poverty line income number whether you live in Manhattan or Tuscaloosa.  I have always wondered how much poverty statistics would change if you created some kind of purchasing power parity test rather than a fixed income test.

You may be wondering under what authority the government is taking actions during the government shutdown.  We had a meeting with the Chief of the US Forest Service on Friday.  This is the specific text the Administration is using to justify all of its shutdown actions

(a)(1) An officer or employee of the United States Government or of the District of Columbia government may not—

(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation;

(B) involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law;

(C) make or authorize an expenditure or obligation of funds required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985; or

(D) involve either government in a contract or obligation for the payment of money required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985.

I will leave it as an extra credit exercise for the reader to explain how this text justifies either a) spending extra money to barricade war memorials on the Washington Mall or b) closing privately-funded parks that take not a single dime of government money.    All these tests have everything to do with limiting government expenditures, not limiting citizen access to public lands.

We had some delays (in part because the government is taking a holiday from the shutdown today, so everything is REALLY closed) but we file our lawsuit seeking a temporary restraining order on the US Forest Service in the morning.

This was posted by the US Forest Service outside of a privately-funded, privately-operated campground:

All the maintenance at this site, as well as all cleaning, utilities, security monitoring, staffing, customer service, etc. are provided and paid for by a private concessionaire that does not take one dime of government money.   The "our ability to perform maintenance" is incredibly disingenuous, because over the course of a year likely no US Forest Service maintenance person even steps on the property.   The last half of the message therefore has absolutely nothing to do with the first half.  The campground is closed and not being maintained because the US Forest Service has arbitrarily suspended the concessionaires contract in an apparent attempt to make the shutdown more painful for the public.

I have been playing around with this DVD, which is a collection of high resolution situation maps from the European theater of war after D-Day in WWII.  The maps are really interesting, though the interface is awful.  Like something from the AOL era.  I would play with this much more but it is just too kludgy.

This is probably my favorite map (click to enlarge)

Of course, on the very next day, the last great German attack on the Western Front came right out of that empty red circle.

In the software, one can zoom very deep into these maps, deeper than these images allow.  So it's a shame that the interface is so bad.

PS - The Bulge is deservedly a part of American military mythology but we should remember that in many ways it was a small battle compared to any number in the East.  This is one of those facts that always perplexes this libertarian, because there is no way the Western Democracies could have ever defeated Germany IMO.  Only Stalin's willingness to soak up astounding losses really defeated Germany.  German army casualties on the Eastern Front were nearly three times their combined casualties in Africa, Italy, France, and Benelux.

The flip side of this is that no one else other than the US could have defeated the Japanese, though again the Soviets would have given them real troubles in Manchuria.  That war was more about projecting power across great distances than pure numbers.  We did bravely soak up absurd casualties in short bursts.  But again, the Russians were soaking up Bettio-level casualties every few hours, and sustained it day in and day out for years.

By now, readers will know that our company operates public parks and campgrounds in the National Forest without taking one dime of Federal money.  We pay for the cleaning, maintenance, utilities, and staffing of the facilities entirely from the user fees paid by visitors at the gate.  Because we take no government money(we actually make lease payments to the government) we have never been closed in past shutdowns, but we were closed last week as the White House overruled an early Forest Service decision and ordered us closed.

Well, here is a photo from yesterday of the parking lot of one of the recreation areas we operate and were forced to closed.  Doesn't look very closed, does it?

As it turns out, yesterday the local Sheriff was concerned with traffic jams on the highway near here as people tried to park and walk in.  It is a danger I warned the US Forest Service about way back on October 2 in a letter to Cal Joyner, the Regional Forester for Arizona and New Mexico (and was promptly ignored).  The Sheriff forced the gate open and let everyone in.

The amazing thing I found out today, and confirmed through pictures and news reports, is that the Sheriff was accompanied by US Forest Service personnel who apparently accepted this action.  This means in effect that the US Forest Service believes this site is safe to occupy by visitors without our company present to clean the bathrooms, take out the trash, monitor security, watch for fires, stop vandalism, etc.  but is not safe, somehow, with us present and actively staffing the site.  This obviously makes no sense and just points out how arbitrary the decision-making has been.

Starting yesterday morning I begged the US Forest Service to let us return to staffing the site (which should be an easy decision since, unlike opening National Parks, this would require zero dollars from the government) but I got no response.

We have also found numerous other sites operated by third parties like ourselves on US Forest Service land in Arizona still open.  For example, the Oak Flats campground in the Tonto National Forest is still open for business.  In addition, we know of at least three Arizona State Parks, including Slide Rock SP, that operate on US Forest Service land just as we do but who have not been ordered to close.  I know that Fool Hollow SP operates with a special use permit very similar to ours, but unlike us, its permit has not been temporarily suspended and it is open for business.

In fact, I cannot find a single third party who operates on the National Forests in Arizona who have had their operations suspended except for the private campground concessionaires.   The powerful ski associations got their operations on Forest Service lands exempted from the get-go, probably because they have a full-time lobbying staff in DC and I do not.  The same goes true for BLM lands, where the BLM has not closed its campgrounds or parks to the public.  And the same goes true now for the Grand Canyon NP, which has been reopened by the state of Arizona.  In fact, we may be the only recreation operations on Federal land in this state that are still required to close.

Update:  The Forest Service made us cease operations at the Locket Meadow campground near Flagstaff.  After kicking us out, they have reopened the campground to the public (without any staff or services on site).  It is absolutely outrageous that the US Forest Service believes that the campground is fine for public visitation but that our company must be banned from operating it.  Clearly, the resource and the visitors are safer and better protected and better served with us there, so this can only mean that the Forest Service is for some reason arbitrarily targeting our business, rather than use of the land, for shutdown.  I cannot think of any possible justification for this action.  If the campground is safe for public visitation during the shutdown, it is safer for us to operate and keep clean and protected.

PS-  I should say targeting private SMALL companies.  Large companies with political pull seem to be getting the National Parks open where they have operations.  Just like with Obamacare and nearly everything else in modern government, restrictions are passed on private enterprises but exceptions are granted to those large enough to have staff lawyers, full-time lobbyists, and who can bundle a lot of donations.

As you know (and am sure are tired of hearing about) the US Forest Service has closed all our privately-funded and operated parks on their land.  These include a number of very popular campgrounds and parks in the Sedona area.

Today we got a call from the County Sheriff saying that visitors were parked all over the highway and walking into our (closed) concession areas.  He said they were creating a serious public safety problem, particularly at Call of the Canyon** (also known as West Fork) and Crescent Moon Ranch (also known as Red Rock Crossing).  I told him that I had specifically raised this issue about these specific sites all the way up to Cal Joyner, Regional head of the USFS in Arizona, New Mexico and parts of Oklahoma and Texas.  And the US Forest Service had closed us anyway.  The Sheriff begged us to reopen the facilities and I told him I would love nothing more but my contracts were suspended and I had no legal basis for doing so.

So, apparently, the sheriff cut the cable on the facilities and is letting cars into the facilities, creating even more chaos.  There is no one there to monitor safety, provide security, clean the bathrooms, pick up trash, etc. -- all the things we do every day without taking one dollar of Federal money, if only the US Forest Service would let us.  I am actually happy the Sheriff is giving visitors access.  These facilities are particularly lovely in the Autumn.  But the US Forest Service needs to send 15 or 20 people to help manage them, but that would cost them money they do not have.  Or they could just let us get back to operating the sites, which does not cost them one dime.

** The West Fork of Oak Creek Canyon is so beautiful in the fall that Zane Grey immortalized it in a novel called "Call of the Canyon."  The trailhead and parking area are cramped and require a lot of active management even when staffed to keep them operating safely.

The last remaining justification that anyone has given me for the need to close privately-funded concession-run parks in the US Forest Service is that the Forest Service must close to all uses on its lands.  But this justification is now in total tatters, making it all the more clear that closure of private concessionaires was an arbitrary and unjustified action.  Here is why:

• As reported earlier, the US Forest Service is still allowing many recreation uses on its lands.  Individuals can still camp and hike in non-developed areas.  Many US Forest Service campgrounds till seem to be open (example Oak Flats near Globe, AZ).  And many state parks, such as Fool Hollow and Slide Rock in AZ and Burney Falls in CA that operate on US Forest Service land have been allowed to remain open and still use Forest Service land for recreation.  In fact, the only groups that seem to be closed in the US Forest Service are private concessionaires, which increasingly appear to have been singled out for rough treatment by the Administration.
• We have received emails from the US Forest Service that these closures are required to be consistent with the NPS, but the NPS is allowing its parks to be reopened if they are funded by outside agencies.  Both Arizona and Utah have reached agreements to reopen National Parks in their states through use of state funding.  So why can't private parks on Federal lands be reopened through the use of private funding, which is how we operate anyway?  Its almost as if this Administration has some sort of bias against private activity.

I received a copy of this letter on Friday.  It is a letter from the House Natural Resources Committee to the head of the US Forest Service Tom Tidwell, threatening investigations and hearings over closures of privately-funded, concession-operate parks in the Forest Service.  Click to enlarge either page.

I have gotten a lot of mail with moral support from readers as we try to deal with the fact that the White House has ordered privately-funded parks in the National Forest to close, flying in the face of all precedent and budget logic.

Many, many emails have encouraged me to disobey the order and keep the parks open for the public.  There are three reasons why I have chosen not to do so.

1.  Respect for Contract:  In my 25 or so lease contracts with the US Forest Service (the USFS insists on calling them "special use permits" but legally they are essentially commercial leases), the contract language gives the Forest Supervisor of each Forest the right to suspend or terminate the contract for virtually any reason.  Yeah, I know, this is a crappy lop-sided contract provision, but welcome to the world of working with the Federal government.  So each Forest Supervisor has the right to suspend our lease.  BUT....

The real question here is whether they have proper justification for doing so, or whether their suspension is arbitrary.  In another post I discuss why this action is arbitrary and unjustified:

Historically, the USFS has only rarely used this contract power, and its use has generally been in one of two situations:  a) an emergency, such as a forest fire, that threatens a particular recreation area or b) a situation where the recreation area cannot physically be used, such as when it has been destroyed by fire or when it is being refurbished.  Never, to my knowledge, has the USFS used this power to simultaneously close all concession operations, and in fact in past shutdowns like 1995 and 1996 most all concessionaires stayed open.

Budget considerations alone cannot justify the closure order, as USFS concessionaires do not use Federal funds and in fact pay money to the Treasury.  Closing us actually reduces the income to the Treasury as we pay our concession fees as a percentage of revenues.  Further, the USFS does not have any day-to-day administration responsibilities for these parks.  The only semi-regular duty is sometimes to provide law enforcement backup, but USFS law enforcement officers are still at work (we know this because they showed up to post our operations as closed).

The Administrative Procedure Act makes it illegal for a government agency to make a decision that is arbitrary, capricious or an abuse of discretion.  To this end, the USFS has not actually closed the Forests and still allows camping in the Forests.  Thus, the USFS considers it safe for people to be camping in the Forests and that doing so during the shutdown creates no risk of resource or property damage.  In contrast, the USFS has made the decision that it is not safe to allow camping in developed campsites run by private concessionaires.  The decision that developed campgrounds run by private companies must close, but undeveloped camping can continue, makes no sense and is arbitrary, capricious and an abuse of discretion.  If anything, closing developed areas but allowing dispersed camping increases risks to public safety and for resource damage as developed concession areas are staffed and trained to mitigate such risks (that's the whole point of having developed recreation in the first place).

While we feel good we have a winning argument, this is a complicated point that does not lend itself well to civil disobedience, but we are taking it to court and seeking an injunction to the closure.

2.  The wrong people would go to jail.  Civil disobedience has a long and honorable history in this country.  But the honor of such an act would quickly go out the window if I were to commit an act of defiance but others would have to go to jail.  We run over a hundred sites.  Telling my people to remain open would simply lead to getting my employees thrown in jail for trusting me and following my instructions.  That would be awful.  Just as bad, we can see from examples in the National Park Service that such disobedience would potentially subject my customers to legal harassment.  It's not brave or honorable for me to be defiant but to have others pay the cost.

3.  I could lose everything.  I don't want to seem weak-kneed here, but I would be dishonest not to also raise the small but critical point that I have almost every dollar I own tied up in this company, which does over half its business in the National Forest**.  My retirement and all my savings are in this one basket.   I would likely risk an arrest and a few hours in jail plus the price of bail and months of court appearances to make a point here.  I am not ready to go all-in with everything I own, not when there are other legal avenues still available.  If that makes me a wimp, so be it.

** you can be assured that the moment I have one minute of extra time we are going to be working on diversifying away from the US Forest Service as much as possible.

We are preparing to go to court to reopen privately-funded parks in the US Forest service that take no Federal money, yet have recently been closed due to budget shortfalls.

Our USFS contracts give the local Forest Supervisor the right to suspend the contract.  However, historically, the USFS has only rarely used this contract power, and its use has generally been in one of two situations:  a) an emergency, such as a forest fire, that threatens a particular recreation area or b) a situation where the recreation area cannot physically be used, such as when it has been destroyed by fire or when it is being refurbished.  Never, to my knowledge, has the USFS used this power to simultaneously close all concession operations, and in fact in past shutdowns like 1995 and 1996 most all concessionaires stayed open.

Budget considerations alone cannot justify the closure order, as USFS concessionaires do not use Federal funds and in fact pay money to the Treasury.  Closing us actually reduces the income to the Treasury as we pay our concession fees as a percentage of revenues.  Further, the USFS does not have any day-to-day administration responsibilities for these parks.  The only semi-regular duty is sometimes to provide law enforcement backup, but USFS law enforcement officers are still at work (we know this because they showed up to post our operations as closed).

The Administrative Procedure Act makes it illegal for a government agency to make a decision that is arbitrary, capricious or an abuse of discretion.  To this end, the USFS has not actually closed the Forests and still allows camping in the Forests.  Thus, the USFS considers it safe for people to be camping in the Forests and that doing so during the shutdown creates no risk of resource or property damage.  In contrast, the USFS has made the decision that it is not safe to allow camping in developed campsites run by private concessionaires.  The decision that developed campgrounds run by private companies must close, but undeveloped camping can continue, makes no sense and is arbitrary, capricious and an abuse of discretion.  If anything, closing developed areas but allowing dispersed camping increases risks to public safety and for resource damage as developed concession areas are staffed and trained to mitigate such risks (that's the whole point of having developed recreation in the first place).

I thought this was interesting.  I guess I never realized that poverty rate excludes anti-poverty programs, nor that frequent comparisons made by the Left that our poverty rates compare unfavorably to those in Europe are essentially completely disingenuous as they are comparing apples and oranges.

the only way anyone’s ever really found to reduce the number living in poverty is to give the poor money n’stuff so that they’re no longer living in poverty. But if we don’t count the money n’stuff that is being given to the poor then we’re not going to be able to show that giving the poor money n’stuff alleviates poverty, are we?

And that’s the point at the heart of this necessary correction to the US poverty numbers. The 15% number is not the number living in poverty. It is the number who would be living in poverty if it weren’t for all the money n’stuff we give to the poor. For when we calculate the poverty number we ignore almost all of what is done to alleviate poverty. We leave out all four of the largest anti-poverty programs in fact. We don’t count the money spent on Medicaid, we don’t count the EITC, we ignore the costs of SNAP and we completely overlook Section 8 housing vouchers. That’s hundreds of billions of dollars worth of spending on poverty alleviation right there and all of it is entirely ignored when calculating the poverty numbers. What’s worse, we could double the amount of money we spend to alleviate poverty and the number under the poverty line wouldn’t change by one single digit.

These alternative measures are explained in WAY more depth here (pdf) by Bruce Meyer and James Sullivan

As readers will know, the US Forest Service has issued and unprecedented and unnecessary order to close over a thousand privately-funded campgrounds that don't take one dime of Federal money (example here).  All the 100+ parks we operate in the US Forest Service have been ordered closed.

But there appears to be more to this story.  There are several groups that operate parks on National Forest lands under agreements nearly identical to ours who appear to have been exempted from the closure order.

• Large corporations that run ski resorts and certain other large resort properties on National Forest lands have been exempted.  It should be noted that ski resorts operators, unlike campground operators, have full-time lobbyists stationed in Washington and can afford in-house staff lawyers to fight these kinds of orders.  My guess is that knowing they would immediately get sued if they ordered larger private firms to close, the USFS focused only on smaller and more helpless private firms.
• Many state parks, including at least 3 in Arizona and many in California, are actually on US Forest Service land and operate through special use permits almost identical to those we have with the USFS, yet none of these parks have been asked to close  (Slide Rock and Fool Hollow State Park in Arizona and Burney Falls SP in California are just a few examples of state parks that operate on US Forest Service land).

In other words, the US Forest Service seems to be issuing closure orders inconsistently, targeting only private operators who are too small to fight back.  The USFS has not been especially clear how they are justifying this order (perhaps since it can't be justified) but they have hinted that it is either because a) they can no longer "administer" these contracts, whatever that means since they have no day-to-day administration responsibilities or b) they are removing everyone from Federal lands.  Note, though, that both explanation "a" or "b" would apply equally to ski resorts and state parks operating on Federal land leases which are not being closed.

I will also add that the USFS is continuing to allow individuals to hike and camp in non-developed areas of the forests.  I have no problem with this -- there is no reason for the USFS to halt public access to public land just because their employees are getting a paid vacation.  But this just highlights how crazy and inconsistent their policies are.  People can camp in the National Forest everywhere except in developed campgrounds where private companies who take no Federal money normally have employees on site to clean up trash and provide security and prevent fires.  Many campers take good care of the land but some do not, and driving these campers out of privately-operated developed sites into dispersed areas where their impact cannot be mitigated is just another way these actions increase rather than decrease costs.

The US Forest Service, under pressure apparently from the White House, has reversed both its historical precedent as well as its position yesterday and will close over 1000 public parks and campgrounds that are operated by private companies without using one dime of public money.  Why does the fact that our landlord the US Forest Service is going on an unpaid vacation mean that tenants of theirs have to close up shop too?  We have no idea.

This is how I explained it in my letter to my senators:

My company, based in North Phoenix, operates over 100 US Forest Service campgrounds and day use areas under concession contract. Yesterday, as in all past government shutdowns, the Department of Agriculture and US Forest Service confirmed we would stay open during the government shutdown. This makes total sense, since our operations are self-sufficient (we are fully funded by user fees at the gate), we get no federal funds, we employ no government workers on these sites, and we actually pay rent into the Treasury.

However, today, we have been told by senior member of the US Forest Service and Department of Agriculture that people “above the department”, which I presume means the White House, plan to order the Forest Service to needlessly and illegally close all private operations. I can only assume their intention is to artificially increase the cost of the shutdown as some sort of political ploy.

The point of the shutdown is to close non-essential operations that require Federal money and manpower to stay open. So why is the White House closing private operations that require no government money to keep open and actually pay a percentage of their gate revenues back to the Treasury? We are a tenant of the US Forest Service, and a tenant does not have to close his business just because his landlord goes on a vacation.

Here is my letter to my Congresspersons:

Senator John McCain

Senator Jeff Flake

Representative David Schweikert

 

Help! Administration Orders Shut Down of Privately-Operated Parks in National Forest

Parks that require no Federal money, and actually pay rent to the Treasury, are being required to close

 

Sirs:

My company, based in North Phoenix, operates over 100 US Forest Service campgrounds and day use areas under concession contract. Yesterday, as in all past government shutdowns, the Department of Agriculture and US Forest Service confirmed we would stay open during the government shutdown. This makes total sense, since our operations are self-sufficient (we are fully funded by user fees at the gate), we get no federal funds, we employ no government workers on these sites, and we actually pay rent into the Treasury.

However, today, we have been told by senior member of the US Forest Service and Department of Agriculture that people “above the department”, which I presume means the White House, plan to order the Forest Service to needlessly and illegally close all private operations. I can only assume their intention is to artificially increase the cost of the shutdown as some sort of political ploy.

The point of the shutdown is to close non-essential operations that require Federal money and manpower to stay open. So why is the White House closing private operations that require no government money to keep open and actually pay a percentage of their gate revenues back to the Treasury? We are a tenant of the US Forest Service, and a tenant does not have to close his business just because his landlord goes on a vacation.

I urge you to help stop the Administration from lawlessly taking arbitrary and illegal actions to artificially worsen the shutdown by hurting innocent hikers and campers. I am not asking you to restore any funding, because no funding is required to keep these operations open. I am asking that the Administration be required to only close government services that actually require budget resources.

 

Sincerely,

Warren Meyer

 

I mentioned in an earlier article that the Administration is threatening to close US Forest Service parks it does not even fund or run, privately operated parks that happen to have the Federal government as a landlord.  In fact, in our case, we pay the US Forest Service between 8 and 22 percent of revenues as a concession fee, so by threatening to close us it is costing them, not saving them extra money.

Apparently, the NPS is already doing this:

National Park Officials closed down the educational Claude Moore Colonial Farm near the CIA in McLean, Va., even though the federal government doesn't fund or staff the park popular with children and schools. Just because the privately-operated park is on Park Service land, making the federal government simply its landlord, the agency decided to close it.

A Claude Moore Colonial Farm official said that the privately-funded staff is on the job Wednesday, but barred from letting anybody visit the historically accurate buildings or animals. Anna Eberly, the managing director, sent out an email decrying the decision and rude National Park Service staff handling the closure.

Pointing to Park Service claims that parks have to be closed because the agency can’t afford staff during the government closure, Eberly wrote: “What utter crap. We have operated the Farm successfully for 32 years after the NPS cut the Farm from its budget in 1980 and are fully staffed and prepared to open today. But there are barricades at the Pavilions and entrance to the Farm. And if you were to park on the grass and visit on your own, you run the risk of being arrested. Of course, that will cost the NPS staff salaries to police the Farm against intruders while leaving it open will cost them nothing.”

She added: “In all the years I have worked with the National Park Service, first as a volunteer for six years in Richmond where I grew up, then as an NPS employee at the for eight very long years and now enjoyably as managing director for the last 32 years — I have never worked with a more arrogant, arbitrary and vindictive group representing the NPS. I deeply apologize that we have to disappoint you today by being closed but know that we are working while the National Park Service is not — as usual.”

This is purely political -- it costs rather than saves the government money.

For several days now I have been highlighting article after article (here and here) where the only service downside of the government shutdown anyone can come up with is the closure of parks.  Here is another example, from the AP entitled "Lawmakers feeling heat from Government Shutdown".  Its all parks:

Some 800,000 federal workers deemed nonessential were staying home again Wednesday in the first partial shutdown since the winter of 1995-96.

Across the nation, America roped off its most hallowed symbols: the Liberty Bell in Philadelphia, the Statue of Liberty in New York, Mount Rushmore in South Dakota, the Washington Monument.

Its natural wonders — the Grand Canyon, Yosemite, the Smoky Mountains and more — put up “Closed” signs and shooed campers away.

Democratic Sen. Tim Kaine of Virginia said he was getting pleas from businesses that rely on tourists. “The restaurants, the hotels, the grocery stores, the gasoline stations, they’re all very devastated with the closing of the parks,” he said.

The far-flung effects reached France, where tourists were barred from the U.S. cemetery overlooking the D-Day beaches at Normandy. Twenty-four military cemeteries abroad have been closed.

Only 22,000 of those 800,000 run parks.  Apparently none of the others do anything we will miss.  Oh, they come up with one new one:

Even fall football is in jeopardy. The Defense Department said it wasn’t clear that service academies would be able to participate in sports, putting Saturday’s Army vs. Boston College and Air Force vs. Navy football games on hold, with a decision to be made Thursday.

Eek!  I joke about this but I fear that today this is going to bite me right in the butt.  Our company operates campgrounds on land we lease from the US Forest Service.  Since we pay all expenses of the operation, take no government money, and employ no government workers, we have never closed in a shutdown and the US Forest Service confirmed at noon yesterday we would not have to close this time.  But apparently someone above the US Forest Service somewhere in the Administration is proposing to reverse this, and illegally close us.  My guess is that they realize parks are the only thing the public misses, and so the Administration trying to see if it can close more of them, even ones that are operated privately and off the government budget.

Update:  This is very similar to what is happening in DC.  By trying to close us, the USFS is actually costing themselves more money (since we pay rent to them based on our revenues) with the only goal being to make the closure worse.  The Administration has ordered the same thing to occur in DC parks, where they are spending far more money "closing" monuments than they do just having them open all the time

Yesterday, the sight of a group of World War II veterans storming the barricaded monument built in their honor in Washington, D.C., became the buzzworthy moment from the first day of our federal shutdown.  The open-air, unmanned outdoor memorial had been barricaded to keep people from "visiting" due to the government shutdown, though there was no real (as in “non-political”) reason to have done so. Barricades certainly wouldn’t prevent vandals from busting in there at night if they wanted to. It was an absurd, petty move.

This morning, Charlie Spiering of the Washington Examiner returned to the memorial to find a gaggle of “essential” government workers there to barricade it once again. He tweeted that the employees fled after cameras started filming them working, but then came back to attach “closed” signs. A couple of them appear to be talking to the media. The barricades are apparently there, but have not been tied together and are therefore easily removed.