Coyote Blog

Here is an amazing example of how far the state will go to protect entrenched competitors from new competition.  Because it is far more important to make absolutely, 100% sure (precautionary principle, you know) that no one is competing in the Minneapolis market without a license than it is to encourage volunteer-ism in the wake of a natural disaster.

Tree trimmers who work in Minneapolis need to be licensed with the city. It’s a regulation in place throughout many cities, and something Haege knows all about. He’s licensed in Hastings and several area cities. Since he doesn’t work in Minneapolis, he isn’t licensed there.

All that was moot, of course. He was just going to volunteer and was not charging residents for his services.

He had brought a bucket truck to get high if needed, and he brought a wood chipper to dispose of fallen trees. He and the volunteers got to work on homes where the resident didn’t have insurance.

“We were removing stuff so people could get out of their driveways and out of their doors,” he said. “The place was a pretty big disaster.”

What happened next shocked Haege.

A city inspector arrived at the scene. She told Haege he had to leave. Immediately.

“You have to leave right now,” the inspector told Haege. “You’re not licensed to be here.”

“I said, ‘I’m just a volunteer,’ and she didn’t believe me.”

Haege went back to his truck and got his volunteer paperwork. Still, that did little to get the inspector off his back.

“I don’t want to see you up here,” she told him.

“She just didn’t believe me,” he said.

A volunteer from the Urban Homeworks, who had been with Haege since he signed up to volunteer that morning, did his best to convince the inspector that Haege wasn’t charging for his services.

Residents then came out of their doors in his defense, telling the inspector that he had just performed work at their house and hadn’t charged them a dime. Still, the defense fell on deaf ears.

The inspector told him to get out of the city, so Haege left with the volunteer. As they were on their way back to the volunteer area, residents waved down Haege, pleading for help. He pulled over and helped get a tree out of the way for them.

Haege had no idea police officers were behind him in a sort of unofficial escort out of town. He said they stopped traffic for about two hours while they figured out what to do with him. At one point, officers threatened to throw him in jail, he said.

All the while, residents continued defending him, screaming in his defense.

Officers told him to leave. They told him he was going to receive a “hefty fine” in the mail, and that if he stopped on the way out, the fine would be doubled.

The other day I was reading an article on the crash of Air France flight 447, discussing recovery of the black box (two years after the crash).  It was suspected that the air speed measurement devices may have failed, thus impairing the automatic pilot, but it was not understood why the pilots were unable to fly the plane manually.  Was something else going wrong?  Did automatic systems, operating off bad data, override manual controls somehow?

The article said that the black box showed the plane went into a stall, and the pilots spent much of the fall pulling back on the yoke to regain altitude.  This made zero sense to me.  A stall occurs when the wing is angled to steeply.  The wing generates lift because the air on top of the wing must follow a longer curve than the air on the bottom of the wing, and thus must move at higher velocity.  This higher velocity results in lower pressures.  In effect, the plane is sucked up.  When the wing is too steeply angled, the air on the top of the wing breaks away from the surface, and lift is lost.

It is therefore absolutely fundamental in stall situations to drop the nose.  This does two things -- it decreases the wing angle out of stall territory, and it increases speed, which also increases lift.

Apparently, the experts are just as befuddled as I was reading the data.  Dropping the nose in a stall is on the first page of pilot 101.  This is not some arcane fact buried on page 876 of the textbook.  This is so basic I know it and I don't have a pilots license.  But apparently the pilots of 447 were yanking up on the nose through the whole long fall to Earth.

Megan McArdle responds to yet another call for government-enforced unbundling (or a la carte pricing) for cable TV.  I think she does a pretty good job in response, but I wanted to go in depth on a couple of issues.

First, it is interesting to me that the exact same people, typically on the Left, who want to unbundle cable TV are the same ones who angle for net neutrality, which in effect is government rules to enforce bundling of Internet services.  Which leads me to think this has less to do with consumer protection and more to do with the raw exercise of power to overturn free market solutions to problems.

Second, I think that unbundling would be a terrible solution for customers, particularly for those whose interests are focused and esoteric (e.g, they like the GLBT channel or whatever).  These folks think unblundling will get them cheaper rates for the one channel they want.  What it more likely will get them is fewer of those niche, esoteric channels.  I will simply repeat an earlier article I wrote four years ago on this topic:

I see that the drive to force cable companies to offer their basic cable package a la carte rather than as a bundle is gaining steam again.  This is the dumbest regulatory step imaginable, and will reduce the number of interesting niche choices on cable.

For some reason, it is terribly hard to convince people of this.  In fact, supporters of this regulation argue just the opposite.  They argue that this is a better plan for folks who only are passionate about, say, the kite-flying channel, because they only have to pay for the channel they want rather than all of basic cable to get this one station.   This is a fine theory, but it only works if the kite-flying channel still exists in the new regulatory regime.  Let me explain.

Clearly the kite-flying channel serves a niche market.  Not that many people are going to be interested enough in kite flying alone to pay $5 a month for it.  But despite this niche status, it may well make sense for the cable companies to add it to their basic package.  Remember that the basic package already attracts the heart of the market.  Between CNN and ESPN and the Discovery Channel and the History Channel, etc., the majority of the market already sees enough value in the package to sign on.

Let’s say the cable company wants to add a channel to their basic package, and they have two choices.  They have a sports channel they could add (let’s say there are already 5 other sports channels in the package) or they can add the Kite-flying channel.  Far more people are likely to watch the sports channel than the kite flying channel.  But in the current pricing regime, this is not necessarily what matters to the cable company.  Their concern is to get more people to sign up for the cable TV.  And it may be that everyone who could possibly be attracted to sports is already a subscriber, and a sixth sports channel would not attract any new subscribers.  It is entirely possible that a niche channel like the kite-flying channel will actually bring more incremental subscribers to the basic package than another sports channel, and thus be a more attractive addition to the basic package for the cable company.

But now let’s look at the situation if a la carte pricing was required.  In this situation, individual channels don’t support the package, but must stand on their own and earn revenue.  The cable company’s decision-making on adding an extra channel is going to be very different in this world.  In this scenario, they are going to compare the new sports channel with the Kite-flying channel based on how many people will sign up and pay for that standalone channel.  And in this case, a sixth (and probably seventh and eighth and ninth) sports channel is going to look better to them than the Kite-flying channel.   Niche channels that were added to bring greater reach to their basic cable package are going to be dropped in favor of more of what appeals to the majority.

I think about this all the time when I scan the dial on Sirius radio, which sells its services as one package rather than a la carte.  There are several stations that I always wonder, "does anyone listen to that?"  But Sirius doesn’t need another channel for the majority out at #300 — they need channels that will bring new niche audiences to the package.  So an Egyptian reggae channel may be more valuable as the 301st offering than a 20th sports channel.  This is what we may very likely be giving up if we continue down this road of regulating away cable package pricing.  Yeah, in a la carte pricing people who want just the kite-flying channel will pay less for it, but will it still be available?

Living in Phoenix I know a number of people who work for Apollo (University of Phoenix).  They have obviously been appalled by the Obama war on for-profit colleges and the egregiously-flawed report that came out last year.  Several have told me they have complained for a while that certain hedge funds were pushing this initiative in order to make money off of short positions on their stock.  I thought this was a bit paranoid, but now the accusation is coming from third parties, even those on the Left:

A proposed regulation from the Education Department threatens to devastate for-profit career or trade schools, but one thing is even more controversial than the regulation -- how it was crafted.

Education Department officials were encouraged and advised about the content of the regulation by a man who stood to make millions if it were issued.

"Wall Street investors were manipulating the regulatory process and Department of Education officials were letting them," charged Melanie Sloan of a liberal-leaning ethics watchdog called Citizens For Responsibility and Ethics in Washington....

Among others, Sloan is referring to Steven Eisman, a hedge fund manager and a figure in the book "The Big Short," who testified in the Senate against for-profit career or trade schools, attacking them as "fundamentally unsound."

At the same time, he was betting that the stocks of those companies would fall, a practice known as short selling. "Making sure that they were going to be defamed and that their value was going to be depressed," said Harry Alford, head of the National Black Chamber of Commerce, who worries about the schools because they serve many minority students.

Simultaneously, through emails and conference calls, Eisman was advising Education Department officials -- and one White House adviser -- in detail on how best to write the new regulation, which he estimated would reduce the schools' earnings by as much as 75 percent.

The proposed regulation from the administration is aimed at what are known as career or vocational schools. The rule would cut federal aid to programs where student debt levels are deemed to be too high and where students are struggling to repay their loans.

In other news, everyone seems A-OK with kids in not-for-profit universities running up $200,000 debts to get such lucrative, workplace-ready degrees as women's studies, comp. lit. and poetry.

I am trying to remember the name of a science fiction novel that came probably between 5 and 10 years ago.  The novel centers around a man who is strongly OCD (or Aspergers maybe), who tries to closely adhere to a very set process and schedule for his life, else reality will "unravel," bringing both small and large changes in his life (ie he finds his home somewhere else).  It turns out that what is in fact happening is that he can jump between parallel universes, and eventually he is called on to use this skill to save all the universes from some catastrophe.  Does that ring any bells with anyone?  I know a couple of kids who are old enough to understand they have similar traits that might appreciate them at the center of a novel.

By the way, I seem to remember Orson Scott Card (?)  has a novel where the main character was OCD, where folks who had certain compulsions were treated as prophets.  Can't remember the name of that one either.  I remember the protagonist would trace cracks on the floor when she got upset.

Update: Found it:  Resonance.  Thanks to commenter Joe Martin.  He has a link to it in the Baen free library.

Well, I hesitate to recommend this movie, because the first three people I told about this as if it was some kind of clever discovery of mine said "Oh, yeah, loved it, saw it years ago."  So maybe everyone else saw this movie a decade ago and I just missed it.  But I really enjoyed an older Christopher Nolan (Inception) directed movie called Memento.    It stars Guy Pierce (LA Confidential, one of my favorite movies) and Carrie-Anne Moss (Matrix).

The movie is about a man trying to get revenge on his wife's murderer.  The only problem is that somehow, from roughly the point in time his wife died, he lost all of his short term memory.  So he can never remember things more than a few minutes.  He has to trust notes he has written (including tattoos on his body) for clues that he pursues.

The clever part of the movie is that it is shot backwards.  Well, I don't mean everyone walks backwards.  It is shot in a series of 3-10 minute clips with normal forward action, but then the clips are reassembled in the film in reverse order.  The end of each scene is therefore usually the beginning of the previous one  (though there is a second thread in black and white that moves through the movie in a slightly different way).

This seems crazy and confusing, until you realize that at any point in the movie, you are in exactly the same place as the protagonist - you know nothing about the past, or even, in the start of the clip, how you got there.  Its not a casual movie that you can watch while you are doing something else, it requires some concentration, but it worked well for me.   The most incredible thing is that despite the fact you know how it all comes out, the movie is incredibly tense and exciting -- you don't know why it came out that way, and the movie is full of twists and turns.

Postscript: There was a movie last year of completely different style -  straight forward plot line, uneven acting, more of an action movie - that had a sortof kindof similar plot.  The movie was called Vengence, and it was about a man who was losing his memory and slowly degenerating trying to find his daughter's killer.  It is a totally different movie, but cribs some of the Memento plot devices, such as labelled Polaroid pictures as a memory device.  It is pretty good, particularly for fans of Asian-style action movies, and is directed by Johnnie To.

Kevin Drum doesn't buy the regime uncertainty argument as a partial explanation of the slow recovery.

Here's what's remarkable: Carter, a law professor at Yale, apparently never once bothered to ask this guy just what regulations he's talking about. Is he concerned with general stuff like the healthcare law? Or something highly specific to his industry? Or what?

Regardless, I've heard this kind of blowhard conversation too often to take it seriously. Sure, it's possible this guy manufactures canisters for nuclear waste or something, and there's a big regulatory change for nuclear waste storage that's been in the works for years and has been causing everyone in the industry heartburn for as long as they can remember. But the simple fact is that regulatory uncertainty is no greater today than it's ever been. Financialuncertainty is high, but the Obama adminstration just hasn't been overhauling regs that affect the cost of new workers any more than usual. The only substantial exception is the new healthcare law, and if you oppose it that's fine. But it was passed over a year ago and its effects are pretty easy to project.

First, the costs of the health care law are NOT easy to project, and are made even harder when your company might or might not get waivers from certain provisions.    Second, he seems to forget cap and trade, first by law and then by executive fiat; the NLRB's new veto power over corporate relocations it exercised with Boeing; the absurdly turbulent tax/regulatory/permitting regime in the energy field, and particularly oil and gas.  How about trillion dollar stimulus projects, that until very recently Obama was still talking about replicating (and Krugman begs for to this day).  I could go on and on.  This is spoke just like a person who never had to run a business.

Further, I wrote this in the comments section:

I think you are both right and wrong.  I am sure the discussion about this is to some extent overblown.  But you are thinking about business and hiring much too narrowly.

You seem to have a mental model of business showing up at the door, and someone turning that business down because they don't want to hire an employee to serve it (or out of sheer petulance because Fox News told them to sit on their hands, lol).  You find it unlikely anyone would refuse the business, and so do I.

But I run a small to medium size business, and a lot of hiring decisions don't work that way.    I do have some situations that fit your model - I have a campground that is really busy this year, so we hired more people to serve the volume.   No problem.

But most of my hiring decisions are effectively investments.  I am going to create a new position, pay money to train that person, and pay their wage for a while in advance of demand.  Or I am going to open a new site or department or location and make a lot of investment, and the return on investment may be very sensitive to small changes in labor or regulatory costs.

For our business, with labor costs over 50% of costs, the issue is definitely labor costs.  Our pre-tax margins are in the 6-7% range.  So if labor costs are 60% of revenues, then a 10% change in labor costs might wipe out the margin entirely, and a much smaller change in costs might flip the investment from making sense to not making sense.

We run a seasonal business with part-time workers who are older and on Medicare.  Regulations about exactly how much we will have to pay under Obamacare have not been written, so we have no idea how much our employment costs will go up in 2014, so we sit and wait.  I have cancelled two planned campground construction projects in the last 6 months because we have no freaking idea if they will make money.

If I am having trouble with just this one law figuring out whether to make investments, what are, say, oil companies doing in evaluating investments when they have absolutely no idea what their taxes will be, whether they will be permitted or not to drill, or whether they will be subject to cap and trade?

One other thought, it strikes me that there is a lot of good scholarship that suggests that the Great Depression was extended by just this kind of regime uncertainty.  Now, of course, the proposed structural changes to the economy being proposed at the time were more radical than anything on the table today.  The National Industrial Recovery Act was essentially an experiment in Mussolini-style economic corporatism, until most of it was struck down by the Supreme Court.   Nothing so radical is being proposed (unless you work in health care).

Look, I know the Left has convinced itself that only consumer demand matters in an economy, but business investment has simply got to matter in a recovery.   If the returns on future investments are harder to predict, and therefore riskier, businesses are going to apply a higher hurdle rate to new investments, meaning they don't stop entirely, but do invest less.

One interesting may to confirm this some day would be to look back and see if larger corporations with political access invested more than smaller ones or ones with less access.  Did GE, who clearly can get whatever it wants right now from the government, invest more than a small company or even than Exxon, which is on the political outs?  If so, this in my mind would confirm the regime uncertainty hypothesis, because it means that the companies doing most of the investing were the ones confident that they could shape the mandates coming out of the government in their favor.

Beyond regime uncertainty, if you want to talk about Obama and the recovery, you have to mention that a trillion dollars was diverted from private hands to public hands.  Does anyone believe that taking a trillion dollars out of whatever investments private actors would have used the money for and diverting most of it to help maintain government payrolls is really the way to increase the strength and productivity of the economy?

My column this week in Forbes is about the declining rate of entrepreneurship and startups in the US.

A recent study by the Beauru of Labor Statistics confirmed a potentially disturbing trend — that the number of new startup businesses in the United States has declined since 2006, and the number of jobs created by those startups has been in decline for over a decade.

This is not just a result of the recent recession.  These declines pre-date the current recession, and besides, startup activity has always held up well in past recessions as unemployed workers try entrepreneurship as a path back to prosperity.

There are likely a myriad of economic and demographic reasons for this decline, but certainly the growth of government power in the economy must be seen as a major contributor.  Government intervention in commerce nearly always favors large companies over small, even if that was not its specific intent, for a couple of reasons:

1. Increasingly complex and pervasive regulations on everything from labor practices to salt content tend to add a compliance cost burden that is more easily born by larger companies
2. Large, entrenched competitors are becoming more facile at manipulating government to create barriers to competition from upstart companies with different business models.

The role of government in throttling entrepreneurship has been evident for years, in the enormous differentials between US and European business startup rates.  Historically, the US has had entrepeneurship rates 3-4 times higher than in the large European industrial countries, due in large part to the barriers these latter countries place in the way of business creation.  But the US, with its current bi-partisan drive towards a corporate state, may soon be engaged in a race to the bottom with these other countries.

I go on to discuss each of these two points in more depth.

I read this article three times to see if it made any sense, and it still does not, except as an incredibly ballsy attempt by a member in good standing of the corporate state to get more revenues out of its customers by government fiat.

A major shift in business is occurring at Arizona Public Service Co. and other regulated utilities in the state.

APS, Southwest Gas and other utilities are beginning to ask regulators to "decouple" their prices from the volume of their sales, which proponents said will encourage conservation.

If approved by the five-member Arizona Corporation Commission, decoupling would allow APS to collect a certain amount of revenue per customer regardless of how much energy was sold.

It would wipe out utilities' incentive to sell more power and be akin to a fast-food restaurant paying loyal customers to go on a diet.

Wow, what a fabulous business concept!   It's obviously a holdover from some horrible past wherein we pay for services based on, you know, actually getting those services.  End the tyranny of giving consumers something in return for their money!  In the modern corporate state, everyone knows a corporation earns revenue in proportion to how much influence it has with the government, and how much that government can be cajoled to let the company take by fiat from consumers.  Silly old me, actually charging people in my business for camping when they actually camp.  I should have been running to the government to get them to let me charge everyone in the country whether they camp or not.  By all means, let's let McDonald's decouple taking your money from actually giving you a Big Mac in return.

Seriously, beyond the fact that this concept is obscene, it makes zero sense even against its stated goal of conservation.   They are basically talking about shifting the consumer's marginal cost for electricity to zero.  How in the hell is that going to spur conservation?  Charge me the same amount each month for gas whether I drive or not, and that is going to cause me to drive less??

Apparently, in the weird mental world of utilities, conservation only results form utility subsidies of  efficient appliances.  So the big benefit here is utilities can somehow better afford their subsidies for more efficient appliances.  Left unexplained is why anyone would want to buy even a subsidized such device once their marginal cost for electricity goes to zero.  This is such a typical government-think, assigning much more value to government intervention and choice of winners in balancing supply and demand than they do to the operation of markets and prices.

Here is an idea -- just freaking stop subsidizing this stuff.  See, problem solved.   We now no longer need a new pricing model.  Either a conservation makes sense for the end user to invest in or it doesn't.  Here is an example they cite

An example of how APS promotes efficiency is found at the 250-student Metropolitan Arts Institute in Phoenix, which replaced $23,000 in lights last year. APS contributed $20,000 to the project.

The school said it saves about $2,000 a month in energy costs with the new lights and recovered its costs for the project in two months.

The new lights use less energy and produce less heat, reducing the air-conditioning needed.

Why the hell is our utility using my money to subsidize this particular institution?  If the numbers are right, the investment, without a subsidy has a 12-month payback.   Very respectable.  So why does this even need to be subsidized in the first place? Why is my money needed to give the Arts Institute a 1.5 month payback instead of a 12-month payback?

This is a total ripoff.  I can't possibly believe they are even considering giving this to these guys.

Doublethink reviews a collection of dystopic short stories, and picks their favorites.

on this blog of how Glendale, Arizona has been throwing wads of taxpayer money at the Phoenix Coyotes hockey team and at any rich person who might be willing to buy the team.  The city of 225,000 citizens spent nearly $200 million on a stadium, promised to hand a buyer of the team $100 million to help with the purchase, plus hand the new buyer a stadium contract worth about $100 million over five years.  While this all plays out, Glendale paid the NHL $25 million last year to help cover the team's losses and has agreed to pay another $25 million this year.

Wow.  This is just amazing, written all in one place.  But its not just hockey that the small corporate-state suburb on Phoenix wants to subsidize.  Here is the latest recipient of largess:

Bechtel Corp., one of Glendale's largest employers, has agreed to stay until 2018 after city officials offered the company about $1 million in incentives.

By next year, the global engineering and construction company, with the city's financial help, will move from north Glendale to a new, vacant building not far from the city's sports district called the Glendale Corporate Center....

Under the agreement, Glendale would give $576,000 over the next two years to Bechtel for its costs to outfit the building shell for offices.

The incentive package also includes a waiver of $50,000 in city permit fees and a job-retention incentive of $1,250 per employee, up to $400,000. Each eligible employee must earn a salary of at least $50,000 per year.

Glendale offered a sports perk as well.

Bechtel can use the city's suites, both at Camelback Ranch Glendale and Jobing.com Arena, for free twice.

LOL, Jobing.com arena is the hockey rink the city built, so it is giving tickets from its subsidized hockey club to its subsidized engineering firm.  The article includes the usual consultant figures who reliably take money from cities to report on all the indirect benefits and revenues and economic activity that result from their subsidies.

However, these are not the first subsidies paid to Bechtel by Glendale

The corporation first came to Glendale in 2002. Bechtel moved to Talavi Corporate Center from Phoenix after Glendale promised $1 million in incentives. The staff at the time was expected to grow to 500 from 300.

Bechtel's staffing is only at 320 today, not 500, but this failure to actually grow jobs after getting subsidies for job growth is pretty typical of these deals.    My interpretation of this is that this is yet another move to get more tenants around its sports complex, to raise the stakes and apparent costs if the hockey team moves.  Glendale will cry that they can't lost the hockey team, think of all the tenants in the surrounding real estate, when it was the city itself that spent money to put all its eggs in this one basket.

The only funny part of the article is the Talavi real estate folks.  They were thrilled to gain a new tenant in 2002 due to the city's relocation subsidies, but now suddenly think such subsidies are unfair.

Bechtel's landlords at Talavi aren't happy about the move.

"We were actually a little surprised to hear Glendale was offering incentives," said Damon Elder, spokesman for Daymark Realty Advisers, which was negotiating a lease extension with Bechtel for Talavi's owners.

"We would think the city would be fair-minded with all of their corporate citizens. . . . I don't know why the city would be pitting one location against another."

For those of us who simply think of ourselves as residents of the Phoenix metropolitan area, or even broader just as Americans, we are surprised about the earlier subsidy as well, wondering why taxpayers of a small suburb are paying big bucks to move businesses back and forth a few miles across the town line.

But of course, this is not the worst example. A few years ago, Phoenix tried to spend $100 million in subsidies to move a Nordstrom and a Bloomingdales one mile and one freeway exit (out of Scottsdale).

By the way, Glendale's economic development director has made it official, we live in a corporate state:

"[government relocation incentives are] just a modern, Fortune 100 corporate expectation," Friedman said. "If you have a top-notch, world-class company in your community, your absolute goal should be to make sure they are successful and are content in your community and want to remain."

Yeah, I know, this is volume one hundred and something in a series, but it is such a crystal clear example of government licensing working primarily to protect incumbent competitors in an industry I have to share it.

Suppose you’re the owner of a taxicab company in a largish metropolitan area. One day you notice some taxis tooling around town—and they’re not yours. They belong to an upstart competitor. His cars are newer, his drivers are nicer, and his fares are lower. Pretty soon your profits start shrinking. What are you going to do about it?

You have a couple of choices. Option A: Invest a lot of money in new vehicles, customer-service training for your drivers, GPS systems to map faster routes and so on. A lot of expense. A lot of effort.

So you go for Option B: Invest a little money in a few politicians, who adopt a medallion law: Only licensed operators with city-issued taxi medallions may operate cabs. The oldest cab companies get first dibs on the medallions, at the lowest rates. Only a few medallions are left over for the new guy, and he can’t afford them anyway. Bingo—your competition problem is solved. The customers might not like it, but what are they going to do—walk?

Apparently this is exactly what is happening in DC

Now it’s the District of Columbia’s turn. Four members of the D.C. City Council have introduced a bill that would create a medallion system for the nation’s capital. Medallion prices would start at $250 for the most established taxi companies and, for the newer entrants, run as high as $10,000. At least initially. As time wore on, it’s likely that the price of a medallion would go up for everyone. That’s what has happened in places such as New York, where a government permission slip to drive a cab costs about $600,000. In Boston, which initially capped medallions at 1,525 in the 1930s—and more than a half-century later had added only 250 more—a medallion will cost you $400,000.

At present the District has more than 10,000 licensed taxi drivers; the proposed legislation would establish only 4,000 medallions. Needless to say, such artificially imposed scarcity also drives up prices. A study by Natwar Gandhi, the District’s chief financial officer, found that fares in cities with medallion systems are 25 percent higher than in cities with open taxi markets.

By the way, for extra points, here is a lawsuit right out of Atlas Shrugged

That story has played out in many cities across the United States, with sometimes amusing variations. A decade or so ago, Minneapolis (population 300,000-plus) allowed a grand total of 343 taxis to operate until Luis Paucar, an immigrant, filed suit. The city council decided to allow another 45 cabs. Then the existing cab companies sued, using the creative legal theory that they had a constitutional right not to face competition. (They lost.)

Folks in other parts of the country hypothesize that their politicians may or may not have enemies lists, but these are all, frankly, wimpy initiatives when compared to our famous Sheriff Joe Arpaio and his treatment of enemies.  You see, if Sheriff Joe sees you as a political enemy, he brings you up on charges.  When he came in conflict with his bosses, he and his buddy former County attorney Andrew Thomas brought them up on racketeering charges.  When a judge failed to deliver the rulings he wanted in that case, he brought the judge up on bribery charges that fell apart even before the ink was dry (read about some of the hijinx here).

Now there is an ongoing investigation of Sheriff Joe and his department around Arpaio's attempts to get a political opponent, one of his bosses on the Board of Supervisors Joe Stapely, brought up on charges.  Or at least, be seen in the media as brought up on charges, because it is fairly clear that Arpaio was less interested with the strength of the case (which like many of his other political attacks fell apart nearly immediatley) as casting negative media attention on a political opponent.  Money quote highlighted in bold, from the Phoenix New Times which has a great history of staying on Arpaio's case but does not write very well organized articles.

About a month after the indictment, MACE [a division within Arpaio's organization] raided the offices of an associate of Stapley's, developer Conley Wolfswinkel. The claimed justification was that the Sheriff's Office was looking for evidence of additional crimes that detectives had uncovered in the disclosure-form case.

Knight [leader of MACE] had reviewed the search warrant before a raid on January 22, 2009, and believed that he had enough evidence based on testimony from Stapley's bookkeeper, Joan Stoops, to carry out the raid. Stoops told detectives that it appeared Wolfswinkel had inked an agreement to pay Stapley hundreds of thousands of dollars in a land deal when Wolfswinkel had business before the Board of Supervisors.

Knight said Sheriff Arpaio reviewed the search warrant personally — and asked Knight why he hadn't included more details about the case in the warrant. Knight, according to the report, told Arpaio that the details weren't necessary to establish probable cause, the legal term for the level of evidence needed to persuade a judge to sign a search warrant.

The report doesn't specify which details Arpaio wanted Knight to add, but it does describe how Arpaio pressed him on the issue, saying he wanted to make sure the warrant would hold up. Knight didn't buy what Arpaio was saying, believing that the sheriff only wanted the extra information so he could sensationalize the case.

"Are we writing a press release or are we writing a search warrant?" Knight said he asked the sheriff. "I just need to be clear on what we're trying to produce here."

The sheriff stared at him and said sternly: "Get the information in there," the report states. Arpaio then got up and walked out.

Knight did as he was told and included the superfluous information. He had the warrant signed and prepared his deputies for the raid on Wolfswinkel's Tempe business office. He recalled that Arpaio's right-hand man, then-Chief Deputy David Hendershott, called Knight numerous times, asking: "Are we in yet?"

Hendershott, Knight stated, told him that as soon as the search warrant was signed, Knight was to go to the nearest Kinko's and fax a copy to sheriff's headquarters.

"So we get in; we secure the place," Knight said to investigators. "I run over to the nearest Kinko's, which is three or four miles away, [and] fax the document over to him.

"By the time I get back to Conley's business, I've already got a news helicopter flying overhead."

Knight found out later that the search warrant had been handed to the media in conjunction with a press release.

A news conference was under way before Knight got back to his office.

Arpaio also tailored his public statement to emphasize the shocking revelation that Stapley and Wolfswinkel were being investigated in an alleged "bribery" scheme.

The bribery story fell apart within days, by the way, as the officers realized they had the dates wrong on the land deal such that the deal and the supposed political payoff could not be related.

Arpaio faces a myriad of charges.  His defense was that it all happened without his knowledge, which is laughable given the way he is known to run the department.   He is claiming in his PR that the whole department is created in his image but that he has no responsibility for what it does.  Like any good mobster, he apparently had a consigliere named Hendershott who he is attempting to claim now was a loan wolf rather than Arpaio's right hand man, in order to deflect accountability.

The entire article is worth  a read for Arpaio-philes and phobes alike.  It serves as a good summary of some of the worst excesses of Arpaio's reign.

Update:  By the way, does anyone feel comfortable with a police department (much less sheriff Joe) having the weapon shown in this picture.   Can one imagine any legitimate use, short of perhaps a full-blow zombie invasion?   (source)

Per Julian Sanchez several days ago:

They'll let these provisions lapse right after they pass the Puppy Strangulation Act of 2011. Nobody wants to be accused of 'weakening' Patriot if another attack happens, even though there's little evidence added safeguards would seriously hamper intel gathering.

And, of course, they just did.  Increasingly the fourth amendment is joining the 2nd and the 10th in the "just kidding" category of Constitutional provisions not taken seriously.    From Al Franken to Barack Obama, Democrats who once opposed the most egregious portions of the Patriot Act now voted for its rushed renewal without even a floor debate or possibility of amendment.

Here is some analysis of these reports. A few things I found interesting

• I have always understood the "trust funds" for these programs were a crock, that we had spent the money in these funds years ago.  But the accounting fiction is important for a reason I did not know - when the trust fund is used up from an accounting standpoint  (vs. a cash standpoint, where it is not only already used up but never existed) in 2036 or whenever, statutory authority for spending is capped at annual tax collections, which at that point will be way, way below programmed spending levels.
• Medicare alone is projected to grow to 6% of GDP.  wow.
• The reality of Obamacare's promises of cost reductions is starting to appear, as already these supposed cost reductions are being discounted by folks who have accountability for getting the numbers right.

One thing to note -- Social Security actually has some shot at being repaired, because benefits are a fixed, predictable amount (as long as your actuarial tables are right).  Medicare and Medicaid are far harder, because the benefits are open ended, and every recent "fix" has tended to shift incentives to encourage rather than discourage more spending.  Note, for an example, the political pressure to eliminate the part D donut hole that actually is there to provide incentives to camp drug spending and prices.

Stephen Carter via Glenn Reynolds

The man in the aisle seat is trying to tell me why he refuses to hire anybody. His business is successful, he says, as the 737 cruises smoothly eastward. Demand for his product is up. But he still won’t hire.

“Why not?”

“Because I don’t know how much it will cost,” he explains. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?”

He’s referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.

I have to take this with a grain of salt, because it is coming from GE, the current American poster-child for rent-seeking, particularly in attempting to be a magnet for green energy subsidies.   But since the statement can be seen as under-cutting the subsidy argument, I have to take it more seriously:

Solar power may be cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations, said Mark M. Little, the global research director for General Electric Co.

“If we can get solar at 15 cents a kilowatt-hour or lower, which I’m hopeful that we will do, you’re going to have a lot of people that are going to want to have solar at home,” Little said yesterday in an interview in Bloomberg’s Washington office.

....GE, based in Fairfield, Connecticut, announced in April that it had boosted the efficiency of thin-film solar panels to a record 12.8 percent....The cost of solar cells, the main component in standard panels, has fallen 21 percent so far this year, and the cost of solar power is now about the same as the rate utilities charge for conventional power in the sunniest parts of California, Italy and Turkey.

I am all for that.  I have always had faith that solar would make sense someday, and that we would be ranking out cheap solar conversion surfaces like carpet out of Dalton, Georgia, but every time I have priced it to date on my house, even with huge government subsidies, it has not made sense.    In Europe, it requires 50-60 cent feed in tariffs (basically a subsidy in the form of above-market electricity prices paid by the utility for solar-sourced electricity) to get solar capacity installed, so 15-cents would be great and is approaching the cost of electricity in some high cost areas.

Here in Phoenix, FirstSolar does a ton of thin film.  I have always had mixed feelings about FirstSolar.  On the one hand, they live off subsidies and would basically not be in business if it were not for huge European subsidies of various forms.  On the other, though, they have been one of the few solar companies that actively have talked for years of a development path to a cost position that does not require subsidies.

I have read most of Stephen King's novels, and like many of them.  But some of my favorites were the four novels he wrote as Richard Bachman, in part because they were actually, you know, novel length rather than thousand-page monstrosities.

I have discussed in other posts that the Bachman book "the Running Man" is one of the movies I would most love to remake.  The movie was a silly farce where the lead actor (the governator) was out-acted by Richard Dawson, for God sakes.

This week while my daughter was sick I reread "the Long Walk."  Its one of those love it or hate it things -- the Amazon reviews are split between 5 star reviews and 1 star reviews.

I would love to make a movie of "the Long Walk."  It would not be that expensive to make -- the whole book takes place with a hundred teenage boys walking a couple hundred miles down a road.   Seriously, 10-12 unknown teenaged actors, 90 or so other extras, a couple of steadicams on a flatbed truck.  The crowd scenes at the end would take a lot of extras, don't know how expensive that would be, but I think a really interesting movie could be made.  I picture something ala Kirosawa, maybe even in black and white.  The concept also seems to suggest Tarantino, which reminds me of a movie called Battle Royale that is a sort of similar, but much more violent concept, which Tarantino once listed among his ten favorites.

PS-  This would also be a really cool play.  Picture a big moving conveyor belt from front to back of the stage, so the actors walk a steady pace through the whole show.

There used to be two Americas -- the small portion who were criminals and the large majority of law-abiding citizens.  Now there is just one America, since with the proliferation of regulations, we all are guilty of something.  If we fall out of favor, we can all be rung up on charges.

Local Conservative pundit Greg Patterson makes this observation about the looming Jon Edwards prosecution, and observes that as much as he may dislike Edwards, his prosecution is downright scary

It looks like former Presidential candidate John Edwards is about to get indicted. Edwards is an awful person who embodies the characteristics that most of us despise.  His hypocrisy and hubris together with his unbelievably boorish behavior while his wife was dying of cancer are the stuff of Greek tragedy.

However, Edwards' downfall is also a great example of how the US has so criminalized the political process that the Government can indict anyone who falls out of favor. Once it was clear that Edwards no longer enjoyed any personal political authority, prosecutors combed through his entire political history and found this charge:

Much of the investigation, however, focused on money that eventually went to keep mistress Rielle Hunter in hiding along with former campaign aide Andrew Young, who claimed paternity of Hunter's child in 2007 so that Edwards could continue his White House campaign without the affair tarnishing his reputation. Investigators have been looking at whether those funds should have been considered campaign donations since they arguably aided his presidential bid.

Really?  Someone gave Edwards a bunch of money so that he could hide his mistress...and those funds "arguably aided" his presidential bid? That means that every dime that any candidate has ever received could later be classified as a political contribution because it "arguably aided" his candidacy.

How many millions has Edwards spent defending himself from this charge?  How much time is he going to spend in jail?  How many other candidates--or contributors--can be indicted for falling out of favor?

By the way, kudos to Patterson for bringing up this point in the context of his political opposition.  All too often groups seek to establish terrible precedents in the name of counting coup on political opponents.  For example, I have been depressed at how hard certain of my fellow climate skeptics have labored to try to bring warmist Michael Mann up on criminal charges.

By the way, I disagree with the second half of Patterson's post, wherein he tries to draw a parallel between the Edwards affair and shenanigans and political payoffs around the Fiesta Bowl.  Patterson describes politicians as having been "victimized" by the Fiesta Bowl, such victimization taking the form of the politicians accepting luxurious trips to college football games and failing to do all the necessary reporting for these boondoggles.

I have a hard time seeing this as victimization.  It would take a really, really, really naive and stupid politician to credibly argue that these trips were purely fact-finding trips and that they had no idea these expenditures represented an effort of the Fiesta Bowl to woo them in return for various quid pro quo's.  Politicians should not even be considering public subsidies of college football games, particularly ones that are so incredibly lucrative to the schools and bowl organizations.  Politicians could have avoided being "victimized" by such lobbying by simply saying that their city/county/state was not going to be handing out taxpayer-funded goodies to sports teams and games.  I don't necessarily want to send these guys to jail, but calling them victims is a joke.

It is interesting to see this attitude from a Conservative.  My mother-in-law the Boston Liberal takes the same line, that the evils that result from lobbying and outright bribery are entirely the fault of private enterprises and not of the politicians themselves.  Of course, the libertarian position on this is simple -- the fault is not any particular person, but the changes in government power that have put so many chips on the table.   If the government has the power to give or take billions, to make or kill whole industries, then it is worth a lot of money for individuals to harness this power or at least to protect themselves from being gutted by those who do manipulate the power.  To this end, 19th century corruption arguments are almost quaint, where the biggest concern was politician's ability to appoint their friends as postmaster.  Reduce government's power to give and take arbitrarily, and the amount of money spent on lobbying, elections, and outright bribery will fall precipitously.

In the spirit of 99-cent books on Kindle, I found an author on Kindle named John Locke, who has written about 6 books about his assassin-protagonist Donovan Creed (he also wrote a western, of all things, which was also very good).  He seems to be a Kindle-only sensation.  I have not seen him other places but a while back he had all his books in the top 100 at the same time.

The books are short and an easy read.  This is not Hemingway, these are classic summer beach books, but I found him pretty enjoyable.

Apparently, certain religious prognosticators are forecasting sunny weather with a chance of rapture this Saturday.  I have decided to enjoy the beginning of the end with my daughter at DisneyWorld.  My hope is that once all the good Christians ascend in to Heaven, the lines will be a lot shorter for those of us left behind.  Besides, perhaps there will be a post-apocalyptic opportunity to play out Down and Out in the Magic Kingdom.

For a variety of reasons related in part to my dad's company's sponsorship of certain things Disney, I have been to DisneyWorld a ridiculous number of times.  My Disney reviews are here.

I don't write about the Middle East much because its a big muddle that requires a lot more knowledge than I have to comment on seriously.

I will say this about Israel, though:  I too would love to see better civil rights performance at times (just as I would like to see better performance from our own damn country) but it's interesting to hypothesize what the US would do in similar circumstances.  After watching our post-9/11 Constitutional rollback, I wonder what other extreme steps we would be taking if, say, Mexican rockets routinely landed in San Diego or Nogales or El Paso.  One does not have to go too far out on a limb to call the Israeli response "restrained," at least in comparison to what the US would do in parallel circumstances.  Not to mention our reaction if a major foreign leader came to our country and urged us to give back the Gadsden Purchase as a solution.

... people can seek out some pretty amazing spaces to do business.  Not sure OSHA would be hip to this.

Via Carpe Diem
Update: Substituted a video I thought was better.

I can't go anywhere without analyzing operations and workflow -- there used to be a bagel store near my house whose work flow was so awful and inefficient it almost caused me physical pain just to be in the store.  In large part I owe my marriage to operations analysis, as I started going out with my wife when I was tutoring her on cycle times and other basic concepts.

So beyond the obvious privacy and invidual rights problems, TSA screening areas have always driven me nuts because they are so inefficient.  Yesterday I was putting on my shoes and belt after another run-in with the visible hand of the state, and it gave me time to watch the full body x-ray scanners for a while.  They had been bought in sufficient quantity to replace the metal detectors one for one, but there seemed to be a problem.

While people flowed through the metal detectors, at a rate of at least 15-20 per minute, the full body scanner seemed really slow.  In fact, I sat down and timed it for a while.  The scanner was working at a rate of 3 people per minute. This was with a queue at the front end so there was no waiting time for a new person to enter when the scanner was ready.  A couple of times it did 3.5 per minute, but never did it do 4 in a minute.    This seems like a real problem -- that capacity per lane has been reduced by a factor of 5 or so from the metal detectors.  Of course, it is a bit more complicated than that, because a parallel process of scanning the luggage in the x-ray machine has to complete simultaneously, and before the new scanners the x-ray was definitely the bottleneck.  But each time I went through this week my luggage sat complete on the x-ray machine before I finished being scanned, which suggests to me that the bottleneck has shifted, and we have spent a lot of money to slow down an already time consuming process.   That is why most airports have kept their metal detectors --they need them for overflow capacity.

Here is a second issue with the scanners -- they appear to take 3 times as much manpower.  The old metal detectors required one person.  The new machines appear to require 3 -- one person is at the machine, giving instructions; a second person watches you in a sort of holding area downstream of the machine as you wait for the scan results; and third person is somewhere out of site, on a radio, presumably looking at monitors and calling in results to the second person.  No wonder the TSA loves this technology - 3 times more staffing!

This is a crass request but could two of you hit the facebook like button on the right side of my home page so I can get a better URL (it takes 25). Thanks.

Blogging from the road with my ipad2, which is perhaps the greatest piece of gear ever, especially now with my portable Bluetooth keyboard. And I don't really even like apple OS that much, but this is one awesome device. As a better kindle replacement alone it Is worth the price.