via here, which has a lot of good data on California job losses.
If you have a service business, I can understand the desire to get access to the large and wealthy populations in these areas. I even started a service operation in the LA area about 4 years ago, though I regret it intensely (other operations we have in rural CA are difficult but much easier than in LA). But even so, why would anyone ever, ever start a manufacturing or any other business in these locations if it could be located anywhere else?
I was at a cocktail party the other night lamenting to a number of business owners (more successful folks than I) about problems I am having in CA. Usually I get sympathy, but there was none to be had. They looked at me like I was a moron, like I was the guy who went $30,000 in debt for a puppetry degree. They said they had gotten out of CA years ago, would never go back, and (essentially) if I was stupid enough to be there, it was my own damn fault.
Unfortunately, a lot of the recreation is there, and for better or for worse, we have found that we are better and more efficient at dealing with a lot of the CA-induced mess than other companies. But I often wonder if I am crazy to be there.
PS- as an example, it took us 4-1/2 years to get a permit for a 1000 gallon double wall gas tank at a marina in Ventura County. We just got it approved last month, so at last we can stop hauling truckloads of 5-gallon fuel tanks from the gas station. We are in the third year of trying to get permitting approval to replace (in kind, same size and features) a bathroom building in a campground.
Update: All the job gains are in industries, like health care and construction, where the jobs have to be near the population served. Compare that to manufacturing and tech.
Note sure why the video just went private. Check out their web site here: http://www.neverwet.com/. See the second video on the video page, never wet on shoes.
I thought this was an interesting hypothesis, that the inability of coporations to use aptitude tests on potential hires (something that has been effectively killed by civil rights suits) has led to the increased reliance on college credentials as a screening mechanism.
I think there is an element of truth to this, but I suspect this would have happened anyway as the presure to cut costs caused companies to push their candidate evaluation and screening onto other institutions. As I wrote a while back
There is some rationality in this approach [to hiring mainly from the Ivies] – it is not all mindless snobbism. Take Princeton. It screens something like 25,000 already exceptional applicants down to just 1500, and then further carefully monitors their performance through intensive contact over a four year period. This is WAY more work and resources than a private firm could ever apply to the hiring process. In effect, by limiting their hiring to just a few top schools, they are outsourcing a lot of their performance evaluation work to those schools.
I don't know if these percentages are entirely correct - I would argue the education / skills component of my mechanical engineering degree was higher than 10%, but that may be just my personal bias - but the basic approach seems sound
Peter Thiel describes higher education as a "giant selection mechanism" and estimates that only 10% of the value of a college degree comes from actual learning, and 50% of the value comes from selection (getting into a selective university) and 40% comes from signalling (graduating from a selective college becomes known to employers). If employers could use intelligence tests instead of college degrees as measures of aptitude, it might be a lot more efficient and more cost-effective than the current practice of using very expensive four-year college degrees that add very little in terms of educational value (at least according to Thiel).
“Secretary Chu is a wonderful and brilliant man, but he is not perfect for the other critical DOE mission: deploying existing technologies at scale and creating jobs,”
This Newsweek article reviews the amazing coincidence that so many Obama DOE loans and subsidies benefited heavy-duty Obama campaign supporters. The author seems surprised:
...these were highly competitive grant and loan programs—not usually a hallmark of cronyism. Often fewer than 10 percent of applicants were deemed worthy.
Nevertheless, a large proportion of the winners were companies with Obama-campaign connections. Indeed, at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money.
But his first sentence misses an important aspect. Sure, competitive contracts for, say, building a bridge may not be fraught with cronyism. If so, it is likely because these contracts have pretty clear decision criteria - ie we will take the lowest bid by anyone with minimum qualifications.
But the DOE loans were all to companies with sketchy prospects -- if they had actual profits or even a reasonable hope of profits, someone would have funded them privately. So these are all wild longshots no one in the private sphere would touch. Given that, what objective criteria can possibly exist? And even if one can imagine such a criteria - e.g. least dollars invested per ton of Co2 mitigation - it is clear that no such criteria existed or were applied. So of course it was going to be a crony-fest.
But my point is this - even without fraud or cronyism. Even if every choice were made by the best and the brightest in a politically color-blind fashion, the program would still be failing. Because by definition the program's success would require a few folks in Washington to be smarter than, and to have more and better information than, the entire rest of the country which turned down the opportunity to invest in these companies.
I think you are leaving an important portion out of the value proposition kids are hearing. Its not just "work hard and get an education and you will do well." The actual proposition they think they are buying into is "work hard and get an education and work at whatever pleases you and you will do well."
I am reminded of Michelle Obama's plea to graduating college students to not go work in for-profit businesses, but to work for government or NGO's. The problem is that workers, particularly young workers, don't get to define what is productive labor and what is not. You can't go out in the world expecting to work really really hard at puppeteering or for the cause of Mayan feminism and necessarily expect to get paid a lot. In any job, how much you make is determined by how valuable others see that work.
Particularly when you are 22, the work the world needs done and is valuable may very well not be what you want to do. As you get older and more skilled, you often gain more possibilities of monetizing your true interests. I was never really able to work at what I wanted until I was about 40. That does not mean you can't do whatever the hell floats your boat when you are 22. It just means don't expect the world to pay you whatever you want or need for doing it.
For something like 9 months in the Civil War, the Union and Confederate armies engaged in a stalemated trench warfare that was a preview of the western front in WWI (a preview that no one learned from). Only Grant's ability to keep flanking the Confederate line and stretching it out until Lee faced thinning his troops too much eventually broke the stalemate.
One interesting parallel with WWI-- the Union in the Civil War had miners dig tunnels under the Confederate lines and packed them with explosives. When they blew, it created a great gap in the line and an opportunity for the Union, an opportunity that was lost when Union soldiers went racing into the crater rather than around it. Trapped in the crater, they were slaughtered by the Confederates. The mistake was apparently the result of a last minute change of plans. A group of black soldiers was supposed to lead the attack and had been trained to not go into the hole, but they were replaced at the last minute with white soldiers who had not been similarly briefed.
Anyway, it is odd how history repeats itself. In WWI, the British tried the same trick, blowing a huge hole in German lines and eventually making a little headway against the German army, though the advantage was, as so many such things were on the Western front, short-lived.
Its amazing how many people can shake their heads in despair at the European debt crisis and then continue urging the US to do exactly the same things that got the Europeans into this mess.
I have tried to write this post several times but we are having some kind of Internet problem and I keep losing the post just before I get it finished. Anyway, let's try again.
Yesterday my daughter was reading after school. Like many freshman English classes, they are doing Greek mythology. I was asking her questions about her day when she yelled at me, "dad, I have one more paragraph left in Sisyphus, just let me finish. Every time you interrupt me I have to start over". So of course I had to wait about ten seconds, just when I estimated she was about done, and I interrupted her again. I kept doing this for a while, thinking it was simply hilariously apt. Unfortunately, I don't think she
Some of the reviews are classic, though I am disappointed many of them are "please remove this book." Why should we let this jerk hide? The book up with its amazing irony and spate of scathing review comments is much better than being disappeared.
Robert and Patricia Haynes live in Michigan with their two adult children, who have cerebral palsy. The state government provides the family with insurance through Medicaid, but also treats them as caregivers. For the SEIU, this makes them public employees and thus members of the union, which receives $30 out of the family's monthly Medicaid subsidy. The Michigan Quality Community Care Council (MQC3) deducts union dues on behalf of SEIU.
Michigan Department of Community Health Director Olga Dazzo explained the process in to her members of her staff. "MQC3 basically runs the program for SEIU and passes the union dues from the state to the union," she wrote in an emailobtained by the Mackinac Center. Initiated in 2006 under then-Gov. Jennifer Granholm, D-Mich., the plan reportedly provides the SEIU with $6 million annually in union dues deducted from those Medicaid subsidies.
“We're not even home health care workers. We're just parents taking care of our kids,” Robert Haynes, a retired Detroit police officer, told the Mackinac Center for Public Policy. “Our daughter is 34 and our son is 30. They have cerebral palsy. They are basically like 6-month-olds in adult bodies. They need to be fed and they wear diapers. We could sure use that $30 a month that's being sent to the union.”
This is a microcosm of the typical liberal fail -- a group or agency does initial good work (private unions in the early 2oth century, civil rights groups in the 60's and 70's, the EPA in the early 70's) but refuse to go away and declare victory, instead morphing into self-sustaining parasites whose only concern is their own survival.
The theme from all these failures is distorted signals and corrupted communication. People, no matter how savvy, cannot possibly research every nook and cranny of the economy before making an investment. They make decisions, therefore, based on signals – prices, interest rates, perceived risks, and the profit history of other similar investments. If these signals are artificially altered or corrupted, bad decisions that destroy wealth and growth will result.
Which brings me back to education. I will tell you something almost every business owner knows: We business owners may whine from time to time that banks won’t lend us money, but what really is in short support are great people. Nothing has more long-term impact on an economy than amount and types of skills that are sought by future workers. That is why everyone accepts as a truism that education is critical to economic health.
Unfortunately, there is good evidence that our education policies have already done long-term harm. The signals we send to kids making their higher education plans have disconnected them from reality in a number of fundamental ways, causing them to make bad decisions for themselves and the broader economy.
I got a call this morning from Homeland Security about their e-verify immigration tracking system (which we are required by law to use in Arizona). The caller said that Homeland Security was interested in the satisfaction of their customers. I told her that I am not her customer. I am a subject of the state who is forced by law against my will to use their system. A customer is someone who is in a voluntary relationship.
The call ended soon after that. I supposed I have just asked for some sort of audit, but at this point I don't care.
Yes, its stupid, but perhaps for a different reason than has been mentioned. The tax is on producers, and is meant to fund a promotion and marketing campaign. Really. Because Christian families in the US might forget to buy a tree this year if the government did not remind them. Seriously, do any of these folks have kids. "Dad, can we get the tree today, can we, can we, please?"
By the way, this kind of taxation authority that bypasses Congress is actually fairly often used by the Department of Agriculture. If you see random TV ads for avocados or almonds, you probably are seeing one of these government marketing forced-cooperatives.
I propose two lessons learned from the last five years:
There is no such thing as a risk-free return
There is no such thing as a perfect hedge
We are very, very close to seeing much of the financial system blow up because banks, particularly in Europe, have bought sovereign debt and leveraged it 30x to 40x. The theory was that sovereign debt denominated in Euros, yen, or dollars was essentially risk-free. Once that theory was proved to be bankrupt, financial institutions are now claiming all their sovereign debt is perfectly hedged. I think we will find that untrue as well. Hedging mechanisms don't work when the whole of the market is tanking -- its a similar problem to why earthquake insurance does not work. No insurance company or counter-party can pay off when every single policy has a claim.
Ran Duchin and Denis Sosyura of the University of Michigan looked at the U.S.’ Capital Purchase Program. You may recall that this became the centerpiece of TARP once Hank Paulson decided that the money would be better spent directly buying into the banks as opposed to overpaying them for dodgy asset-backed bonds. (Mind you, other parts of TARP were spent overpaying for dodgy asset-backed bonds.)
The CPP lasted a little more than a year and invested $205 billion of taxpayer funds into various qualifying institutions. Not every bank that filled out the 2-page application was successful in gaining access. Others were approved but ultimately decided not to take the funds (probably because of the attached restrictions on pay and on paying out dividends.) In the end, 707 financial institutions received the funds.
Duchin and Sosyua looked at a sample of 529 public firms that were eligible for CPP and slotted them into categories based on whether they applied, whether they were approved and whether they ultimately took the money. They controlled for non-random selection (via measures of the banks’ financial condition, performance, size and crisis exposure); for changes in national and regional economic conditions; and finally for potential distinctions in credit demand.
They then viewed the banks’ CPP participation status in comparison with their subsequent risk appetite as demonstrated by (1) their consumer mortgage credit approvals or denials (viewed on a risk-profile controlled, application-by-application basis); (2) their participation in syndicated corporate loans for riskier credits and; (3) the risk profile of their investment asset portfolios. What did they find?
They found more risk, across the board. There is a lot of detail, so I will leave it to you to go to the source for more, but Zero Hedge concludes:
The bail-out itself increased our chances of having the bail the banks out all over again. Moral hazard is no longer in the realm of the abstract
A few months ago I went through an unbelievable hassle refinancing my loan. Based on current appraisals, my loan to value was less than 50%, but I still ended up coming to the table with more equity to reduce the new loan size. I was staggered at how hard it was to close what should have been a dead-safe loan, given the LTV and my income and credit history. The study actually has a finding related to that:
For mortgages the bailed-out banks increased their risk–
“after CPP capital infusions, program participants tilted their credit origination toward higher-risk loans by tightening credit standards for the relatively safer borrowers and slightly loosening them for riskier borrowers.”
–while at the same time ensuring that they didn’t trip off any alarms
“This pattern would be consistent with a strategy aimed at originating high-yield assets, while improving bank capitalization ratios, since the key capitalization ratios do not distinguish between prime and subprime mortgages.”
This is a fascinating sort of metric manipulation. Having my loan go from 45% to 40% LTV does nothing, really, for the overall safety of the bank, but it improves their averages and makes them look safer, while all the way they are actually engaging in more risky behavior.
I have been reading a lot of the data flying around of late about income inequality and mobility. And it struck me that income mobility may be a large part of what is driving many OWS protesters.
Despite assumptions to the contrary on the Left, wealth is not a zero-sum game. Steven Jobs got richer by making me better off. But the one thing that is zero-sum is presence in the top 1%. When someone joins the club, someone, by operation of basic math, drops out.
That does not mean that the other person who drops out is poorer, it just means that they are no longer as rich relative to their peers. This same effect works int he top 10% and 20%, etc.
Looking at OWS protectors, they seem to be disproportionately children of the upper middle class or even of the rich. They have expensive college educations, live in nice homes, and have gobs of stuff (OWS must be the most iPhoned event in history). My guess is that they are of the upper two quintiles, or at least their parents were.
I am wondering if the problem is not income inequality but too much income mobility. After all, a third of the top two quartiles in 2001 had dropped into the bottom three in 2007 (while an equal number moved up). Are these the angry proletariat, or are they children of the well-off who are upset their college degree in puppetteering did not automatically keep them up with the Joneses? Are they, in other words, Philip Rearden?
I don't have time today to link all the evidence, but the combination of crashing real estate markets and the Chinese government jamming liquidity into its banks tells me the China bubble is bursting as we speak.
This is an interesting test of the Austrian view of depressions vs. the Keynesian / Krugman / Thomas Friedman / MITI view of government-orchestrated prosperity. If the latter are right, then China is doing more right to keep their economy going than any country in history and you should go invest all your money in Chinese real estate.
However, if one believes the Austrian model about government-enforced mis-allocation of capital and labor leading to bubbles and crashes; if one believes that the technocrat-beloved MITI was largely responsible for the Japanese lost decade; if one believes that the US govenrment through articially low interest rates and government-directed reductions in underwriting quality helped create the housing bubble -- then the mother of all crashes is looming in China. Because no country has done more to reallocate resources and capital based on the whims of a few technocrats and well-connected industrialists than has China. After all, this is why Thomas Friedman loves China, that it does not rely on the judgement of millions of individuals to allocate capital, but instead on the finger pointing of a few at the top.
The Associated Press purchased an advanced copy of the book. It is set for release on Nov. 15.
Let's start with the second paragraph. It's a lie, pure and simple--and the papers that reprinted the stories know it. Giffords didn't sell any "advanced copy" of the book. The book is strictly embargoed so that she can control the timing of the media stories that surround it. Bookstores, however, have copies locked up in storage rooms so the copies can all be put on the shelves at the same time. Someone stole one of those copies...or perhaps stole a proof text from the publisher...and then sold it to the Associated Press.
Rather than admit that they illegally purchased and then printed excerpts from a stolen copy, the Associated Press lied and said that they "purchased an advanced copy of the book." That would be a big story by itself, but the newspapers that have contracts with the AP didn't want to blow a good story, so that meekly reprinted the lie.
What's worse is that the AP not only stole Giffords' book and disrupted the timing of her planned roll out...they botched the story and made Giffords issue a denial. ...
...faced with an ambiguous quote in a stolen book and no chance to verify it, the AP did just what they teach you in the ethics classes in Journalism school...they ran with the most tantalizing, headline grabbing interpretation and then made Gabby deny it. Nice.
This is a fascinating tale, from Occupy Wall Street, demonstrating how a group with assumptions including
Its OK for one group to exercise power over another group
Its OK to redistribute money on some basis other than earning it through voluntary commerce
can quickly devolve into emergent disorder.
There is no great brotherhood once you adopt the assumption that people may use coercion to achieve their goals - there is only victory by those most capable in the raw exercise of power.
