Coyote Blog

Kevin Drum is concerned that projected drops in Mexican oil production are a leading indicator that the "Peak Oil" theory is coming true.  I would argue that, in fact, it is a trailing indicator of what happens when you let governments run producing assets.  Drum says:

The issue here isn't that Cantarell is declining. That began a couple
of years ago and had been widely anticipated. What's news is that, just
as many peak oil theorists have been warning, when big fields start to
decline they decline faster than anyone expects. So far, Cantarell
appears to be evidence that they're right.

Actually, fields in the US do not tend to decline "all of a sudden" like that.  Why?  Because unlike about any other place in the world, oil fields in the US are owned by private companies with capital to make long-term investments that are not subject to the vagaries of political opportunism and populism.  There are a lot of things you can do to an aging oil field, particularly with $60 prices to justify the effort, to increase or maintain production.  In accordance with the laws of diminishing returns, all of them require increasing amounts of capital and intelligent management.

Unfortunately, state owned oil companies like Pemex (whose assets, by the way, were stolen years ago from US owners) are run terribly, like every other state-owned company in the world.  And, when politicians in Mexico are faced with a choice between making capital available for long-term investment in the fields or dropping it into yet another silly government program or transfer payment scheme, they do the latter.  And when politicians have a choice between running an employment meritocracy or creating a huge bureaucracy of jobs for life for their cronies they choose the latter. 

I am not arguing that US politicians are any different from their Mexican counterparts, because they are not -- they make these same stupid choices in the same stupid ways.  The only difference is that we have been smart enough, Mr. Drum's and Nancy Pelosi's heartfelt wishes notwithstanding, not to put politicians in charge of the oil fields.

By the way, I wrote on Peak Oil here.  A while back I dug into the 1870 archives of our predecesor publication, the Coyote Broadsheet, to find an article on the "Peak Whale" theory:

[April 17, 1870]  As the US Population reaches toward the astronomical
total of 40 million persons, we are reaching the limits of the number
of people this earth can support.    If one were to extrapolate current
population growth rates, this country in a hundred years could have
over 250 million people in it!  Now of course, that figure is
impossible - the farmland of this country couldn't possibly support
even half this number.  But it is interesting to consider the
environmental consequences.

Take the issue of transportation.  Currently there are over 11
million horses in this country, the feeding and care of which
constitute a significant part of our economy.  A population of 250
million would imply the need for nearly 70 million horses in this
country, and this is even before one considers the fact that "horse
intensity", or the average number of horses per family, has been
increasing steadily over the last several decades.  It is not
unreasonable, therefore, to assume that so many people might need 100
million horses to fulfill all their transportation needs.  There is
just no way this admittedly bountiful nation could support 100 million
horses.  The disposal of their manure alone would create an
environmental problem of unprecedented magnitude.

Or, take the case of illuminant.  As the population grows, the
demand for illuminant should grow at least as quickly.  However, whale
catches and therefore whale oil supply has leveled off of late, such
that many are talking about the "peak whale" phenomena, which refers to
the theory that whale oil production may have already passed its peak.
250 million people would use up the entire supply of the world's whales
four or five times over, leaving none for poorer nations of the world.

I really hate voice mail.  It's like reverting back to the bad old days when data was stored on tapes and you had to spool through the whole thing to get what you want.  If you have 8 or 10 voice mails, there is no way to scan them to find the most important, you have to listen to them in order.  And how many times have you listened for five minutes to someone rambling on, waiting forever for them to get to the point or just give you their freaking phone number so you can call back.

So I am excited to try this service called SimulScribe.  Right now, it appears set up mostly for mobile phones, but I have an email into them about land lines.  Basically, you forward you phone to them when you don't pick up, and they record the message from the caller and then transcribe the message and send it to you by email or text messaging.  According to PC Magazine, it works pretty well.

Here is one reason that my regard for the police has fallen over the years:  Since I was about 25, I have had about an equal number of traffic tickets and robberies.  I have had my car broken into on four separate occasions, and have had my garage burgled once, and have had my company's property broken into and robbed seven or eight times.  Over that same period I have probably had 8 or 10 tickets (though unfortunately four of them were in the same year, causing me to face losing my license).  Can you guess which category the police spent the most time on?

Let's take the most recent example of each.  On the ticket side, I was cited for not getting all the way into the right-hand turn lane before making my right turn (really).  It was about six in the morning.  The cop had obviously invested substantial time waiting at that corner, hoping to catch a miscreant.  Then, once citing me, he went through the trouble of making notes on the incident and then showing up on my court date and testifying from his notes to make sure I was punished for my crime.

OK, now the burglary side.  My car was broken into in a parking lot at night, and my golf clubs were stolen, ironically at the exact same corner where I was busted for making a sloppy right-hand turn.  I called the police.  I'll bet anyone who has experienced such a theft already knows what happened.  I begged and pleaded to get a police officer out to the scene of the crime.  Nope, sorry, too busy.  No one would even bother to show up.  I begged them, saying that there was a security camera and the crime probably was on tape -- nope, sorry.  To even get a police report in the system (which my insurance company needed) I had to go to the police station myself and fill out all the paperwork.  When I turned in the paperwork, I asked who would be working on the crime, and they just looked at me pityingly, like a small naive child.  Because, of course, no one was going to spend one second on the crime.  Just like no one had ever spent a single second investigating any other of the thefts of my property.

So do you see my reason for resentment?  I naively used to think that breaking and entering and theft were far worse crimes than making a poor right turn.  But, conservatively, America's combined police forces probably spent over thirty man hours making sure I was punished for my traffic violations, while they invested zero time solving a series of thefts.

So it was with dumb shock that I got the news that the Coconino County Sheriff's department had actually solved a petty theft case against my property in the Flagstaff area, had apprehended the criminals, and had recovered some of the stolen property.  Now granted, these thiefs were dumb as a post, left what was essentially a calling card on the site, and were convicted felons who were well known to the local police.  But still, credit where credit is due.  Thanks.  Finally.   

Frequent readers will remember that licensing is one of my big pet peaves, so it will not surpise anyone that I enjoyed TJIC's article on the licensing "cycle of suck"

Here's the cycle of suck:

1. a guild of professionals decides to drive up their wages by limiting the supply through accreditation
2. to put teeth in the accreditation, they complain to the politicians
3. politicians see a chance to scratch a back (and get theirs
   scratched in turn) and pass regulations limiting the practice of the
   profession by the non-accredited
4. the price rises and the supply drops
5. marginal consumers can't afford the price
6. politicians see a chance to scratch a back (and get theirs
   scratched in turn) and use taxpayer dollars to increase the supply of a
   service"¦but just to a target consumer group

Hair braiding or delivering cows, its all the same phenomena.  As usual, I can't make a post on licensing without a quote from Milton Friedman:

The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.

More of my posts on this topic indexed here.

While we all argue about man's impact on the climate (my most recent take here), why isn't anyone checking the thermostat?

The New
Scientist report, along with other scientific assessments warning of
global cooling, also come as a blow to the campaign -- led by David
Suzuki and one of the directors of his foundation -- to portray all who
raise doubts about climate change theory -- so-called skeptics -- as
pawns of corporate PR thugs manipulating opinion. If the Suzuki claim
is true, then the tentacles of Exxon-Mobil reach deeper into science
than anyone has so far imagined.

Dramatic global temperature fluctuations, as New Scientist
reports, are the norm. A Little Ice Age struck Europe in the 17th
century. New Yorkers once walked from Manhattan to Staten Island across
a frozen harbour. About 200 years earlier, New Scientist reminds us, a
sharp downturn in temperatures turned fertile Greenland into Arctic
wasteland.

These and other temperature swings corresponded with changing
solar activity. "It's a boom-bust system, and I expect a crash soon,"
says Nigel Weiss, a solar physicist at the University of Cambridge.
Scientists cannot say precisely how big the coming cooling will be, but
it could at minimum be enough to offset the current theoretical impact
of man-made global warming. Sam Solanki, of the Max Planck Institute
for Solar System Research in Germany, says declining solar activity
could drop global temperatures by 0.2 degrees Celsius. "It might not
sound like much," says New Scientist writer Stuart Clark, "but this
temperature reversal would be as big as the most optimistic estimate of
the results of restricting greenhouse-gas emissions until 2050 in line
with the Kyoto protocol."

It turns out that while we may be encountering some of the highest temperatures in a couple of centuries, the sun's output is also at its highest point in centuries:

For the last couple of years, much of the debate about detention at Gitmo has focused  on silly arguments about torture.  Flushing a Koran -- Torture!  Showing a picture of a naked girl -- Torture!  The comfy chair  -- Torture!  As I wrote in this post,

Here is my fervent hope:  If I ever find myself imprisoned by hostile
forces, I pray that they will torture me by sitting me in a chair and
having me watch them flush books down the toilet.

If I bought into the theory of Rovian infallibility, I might argue that this was all a clever trick to distract the country with the left hand while the right was really doing the damage.  Whether planned or not, the media certainly fixated on the left hand, while the right was doing this:

In a series of probing and sometimes testy exchanges with a government
lawyer, two of three judges on a federal appeals court panel here
indicated Thursday that they might not be prepared to accept the Bush
administration's claim that it has the unilateral power to detain
people it calls enemy combatants....

"What would prevent you from plucking up anyone and saying, "˜You are
an enemy combatant?' " Judge Roger L. Gregory of the United States
Court of Appeals for the Fourth Circuit asked the administration's
lawyer, David B. Salmons.

Mr. Salmons said the executive branch
was entitled to make that judgment in wartime without interference from
the courts. "A citizen, no less than an alien, can be an enemy
combatant," he added.

The real threat to freedom and the American way here was always the Bush administration's incredible theory that it had a right to name anyone a combatant and then detain them forever, without any sort of independent review or appeal.  Particularly in a "war" with no defined enemy.  It's incredible to me that the Congress and courts have let this slide as long as they have, and good to see some scrutiny may finally be applied.  Hat tip: Reason.  More here, here, here.  Looking back through my archives, I seem to have made this same point months ago:

One of the problems I have making common cause with many of the
civil rights critics of the Bush administration is that they tend to
hurt legitimate civil rights by exaggerating their claims into the
ridiculous. 

A good example is detentions at Gitmo.  I believe strongly that the
Bush administration's invented concept of unlimited-length detentions
without trial or judicial review is obscene and needed to be halted.
But critics of Bush quickly shifted the focus to "torture" at Gitmo, a
charge that in light of the facts appears ridiculous
to most rational people, including me.  As a result, the
administration's desire to hold people indefinitely without due process
has been aided by Bush's critics, who have shifted the focus to a
subject that is much more easily defended on the facts.

A few days ago, I did the calculations on my Social Security statement and discovered the government was paying me a -0.8% a year return (yes that is negative) on the taxes paid into the system on my behalf.  But rest assured, government workers, who know they are sticking it to us with Social Security, would never allow such a thing to happen with their own pensions:

In New York and Oregon, public employees who contribute their own money
to retirement plans get a guaranteed rate of return that is often far
beyond what the market provides, and taxpayers must make up the
difference. In Oregon, the return is 8 percent annually"”about double
what safe investments like treasury bonds provide today.

Part of a great article by Steven Malanga on the growing power of public sector unions.

I propose that we waive the normal waiting period and induct Eliot Spitzer right away into the statist hall of fame.  Few men in modern government have been able to demonstrate such a lack of respect for the rule of law and individual rights vs. their own power than Mr. Spitzer:

New York Gov. Eliot Spitzer was unabashed on Wednesday
about declaring himself a "steamroller" and the most accomplished
governor in the history of the state after three weeks on the job.

"I
am a fucking steamroller and I'll roll over you or anybody else," the
Democratic governor told Republican Assemblyman James Tedisco in a
private conversation last week, the New York Post reported on Wednesday.

"I've done more in three weeks than any governor has done in the history of the state," Spitzer also said, the Post reported. 

Asked at a news conference if the comments were inappropriately boastful, Spitzer replied tersely, "No. Next question."

Twenty-five years ago at Princeton, Mr. Spitzer's uniquely irritating ruling style inspired the normally silent and apathetic majority to rise up in an incredibly humorous coup, let by the Antarctic Liberation Front.

As a strong libertarian, I have all kinds of problems with the government in this country.  However, I always scratch my head when people try to make the case that certain European countries are more free and open than the US.  The facts just don't bear this out.  First, the US at least has a written Constitution that make some attempt to define government's purpose as the protection of individual rights.  Now, our government fails at this all the time, but at least there is something there in writing we can try to hang on to;  European countries have nothing like it.

In particular, Europe has never had the strong tradition of free speech that we have in the US.  Often folks in the US, particularly on the left, confuse Europe's receptiveness to leftish comments by Americans with general openness to free speech.  In fact, just the opposite is true:

People who question the official history of recent
conflicts in Africa and the Balkans could be jailed for up to three
years for "genocide denial", under proposed EU legislation.

Germany,
current holder of the EU's rotating presidency, will table new
legislation to outlaw "racism and xenophobia" this spring.

Included in the draft EU directive are plans to outlaw Holocaust denial, creating an offence that does not exist in British law.

But
the proposals, seen by The Daily Telegraph, go much further and would
criminalise those who question the extent of war crimes that have taken
place in the past 20 years.

For years, I and most free speech advocates in this country have criticized the holocaust-denial laws as the mother of all slippery slopes.  Holocaust deniers should have the same speech rights as any other moonbat out there.  Now, you can see the EU starting to slide down this slope, as more speech is criminalized.  The article goes on:

If agreed by EU member states, the legislation is likely to declare
open season for human rights activists and organisations seeking to
establish a body of genocide denial law in Europe's courts.

Who needs jackbooted government dictators when we have "human rights activists" available to muzzle our speech. 

There was a lot of thanking God for the Colts victory today.  I would love to see the losing coach come on TV after such an interview and say "you heard it -- God was against us.  What chance did we have?"

Update:  I would love to see this on John Madden's etch-a-sketch.  "OK, here's Grossman dropping back for a pass, he throws it across here, and BOOM, God knocks it right out of the receiver's hands.  First down Colts, game over."

At the risk of being way to geeky here, I would like to ask the computer world if they could find some way for me to have a RAID disk drive array on my custom built PC's without having to also buy and install a floppy disk drive that I only use once.  For those who don't know, a RAID is an array of multiple, usually identical, hard drives that can be combined together for redundancy.  For example, two 250GB hard drives can be combined in a RAID such that they appear to be one 250GB drive to the system, but all data is mirrored on both drives, so if one fails, you still have everything, even without making backups.  I usually build RAIDs into my computers, either for redundancy or, if that is not needed, at least to combine multiple drives into one drive letter.  You can even build a raid where all files are split between the two drives, which is a reliability problem but makes for wicked fast drive access (kind of like splitting calculations between two CPUs)

Unfortunately, on most motherboards, the only way to install the RAID drivers if I want to install Windows onto the RAID is to load them with an old 3-1/2 inch floppy.  Which means I usually install a floppy drive on every build -- OK, its only $20 or so, but it still seems like a waste.   On my own computers, I just have one redundant floppy I pass around, but when I build for others, I don't want to leave them hanging if they have to reinstall the OS. 

I would think that this should be doable via a USB key, but I have never tried it.  Anyone out there know a better way?

</geekiness>  OK, I will now return to economics and business.

Every year about this time, the NFL earns itself some bad press for busting some small bar or local group for using the word "Superbowl" rather than that catchy phrase "the big game on the first Sunday in February down in Miami."  This year, the bad press honor goes to the NFL for shutting down a party at a church in Indianapolis for having a screen too large.  (Hey NFL!  I am breaking the law!  I have a 110" front projection TV, twice the "legal" 55-inch limit, and I am showing the game on it at my party.  HA HA HA!).  And by the way, what lapdog legislator wrote this law for them, and did he get Superbowl tickets for life?

Now, I understand the situation with copyrights - if you don't defend them vigorously and even-handedly, you can lose them.  I seem to remember Exxon or some other chemical company lost the rights tot he name Formica when they let it be used too generically for counter-top materials.  And the NFL PR people use this defense every year, saying "we really don't want to shut down these folks, but we have to." 

I don't agree that individual words should be copyrighted such that their use in a broad range of contexts should be illegal.  I am fine saying that I can't create another peanut butter and call it "Jif."  I will accept P&G has some sole right in this country to that use.  However, I don't think P&G can tell me that I can't advertise a "Jif party" feature their peanut butter.  In the same way, I am willing to grant the NFL exclusive use of "Superbowl" to describe a sporting event, but I don't think that should restrict me from advertising that people should come to my bar to watch the Superbowl.  And just to add one more example so I have a "threepeat," I don't think Pat Riley should have any ownership in that word.   However, since copyright law is not going to change tomorrow, I will offer up a more modest change.

So here is my suggestion.  The NFL needs to offer a one time use license each year for a bar or other establishment to hold a Superbowl party and actually use Superbowl in the promotion.  The license would of course be non-exclusive, and would carry a myriad of restrictions on how you use the name, etc.   The license could be purchased for a price that would be cheap for a business, maybe $200, and could be purchased right over the web.  It would actually be easier, I think, to go after violators because the NFL could point to the existence of a legal licensing program the violator could easily have participated in.  I would think they could easily bring in a couple of million dollars, not to mention saving them enforcement money and PR headaches.

PS-  Welcome to the NFL intellectual property department.  I presume I included enough verboten uses of "Superbowl" to catch your search engine's attention.

PPS-  My Firefox spell checker (which I love!) does not have "Superbowl" in it.  I wonder, would the NFL consider it a copyright violation for a program to use the word "Superbowl" in its dictionary?

TJIC has a great link to a new law blog called CopyOwner focused no free speech issues.  CopyOwner observes that Culver City, California appears to be emulating the Chinese Internet model, providing access for free, but only if you accept state censoring:

First, they offer Internet access, but you must agree to "limited"
Internet access. And they don't mean limited hours of the day, limited
locations, or a limited amount of time you can be on. No, when they say
"limited," they mean that they will censor access to parts of the
Internet. ("By using this free wireless network you are agreeing and
acknowledging you have read and accepted these terms and conditions of
use, and this wireless network provides only limited access to the
Internet.") In other words, they do not offer Internet access at all....

Second, in order to gain the right to enjoy
this free, public, non-Internet access, no matter what you read in the
Bill of Rights (and the First Amendment, in particular) you must agree
that the government may abridge your freedom of speech and you further
agree that when it does so (as it promises to do), you will not
exercise your right to sue for the violation of your First Amendment
rights!

I'm not making this up. Here's the fine print:
"Further, [by using it] you are agreeing to waive any claims,
including, but not limited to First Amendment claims, that may arise
from the City and Agency's decision to block access to "¦ matter and
websites [of its choosing] through this free wireless network "¦."

From
a legal standpoint, it is the same as if the Culver City public library
were offering you free access to newspapers, but was first clipping out
the articles it didn't like and making you agree not to sue for
censorship if you wanted to read what was left.

My thought at first was that this was a liability response, but my sense is that the courts have been pretty consistent in protecting ISPs when plaintiff lawyers try to drag them in as deep pockets into lawsuits  (e.g. trying to sue Earthlink because it was the medium for delivering a MySpace page which in turn allegedly facilitated some action someone is suing over).  I am left with the sense that this is just politicians trying to protect themselves from criticism.  I am almost tempted to see how this thing plays out - censorship really gets ugly in a democratic environment.  You end up with a million interest groups all lobbying that they know best what should be censored.  You would have people in the town office arguing for censorship of pornography, religion (both pro and con), evolution (pro and con), nazis, Israel, global warming skepticism.  Whatever.  (By the way, I have seen people arguing in some context for censoring every item in the preceding list)

A while ago, I ranted a bit about a stupid census for our business had to fill out.  We get a lot of government data requests that go beyond the numbers required for things like taxes, that are generally being collected by the Census Bureau or the Depart of Labor or some such agency.  I throw out unanswered all but the ones that say my response is required by law, but that still leaves quite a few. 

A commenter on this post asked why I get so worked up  -- wouldn't you rather the government have good data than bad?  And I finally figured out what really irritates me about these forms.  It is this thought, that is always in the back of my head, and which if there was any justice would be put on the forms themselves:

"Information on these forms will be used by the government to justify taking more tax money from you and/or to justify further restricting your freedoms."

From the department of absolutely predictable unintended consequences, "Eco-friendly" fuels are destroying the rain forest.  TJIC has a great post that I can't improve on, so I will send you there.

Mitt Romney promised his state a health care free lunch, and everyone believed him.  So much so that other states are copying his plan.  Well, the charade is ending:

Last year, then-Gov. Mitt Romney made headlines by signing legislation
to cover all the state's uninsured. . . Romney suggested that annual
premiums for a single worker might total $2,400. But when insurance
companies recently provided real estimates, the cost was much higher:
$4,560.

Arnold Kling cries "I told you so."    And, I did too.

Low-deductible health care insurance (Massachusetts does not allow, by law, any other kind) is nuts, but it is what everyone is used to.  For some reason, people have a huge aversion to paying for medical costs directly, even if it is demonstrably cheaper.  Samuelson gets at this in his article when he says:

For decades, Americans have treated health care as if it exists in a
separate economic and political world: When people need care, they
should get it; costs should remain out of sight

Let us take a quick example.  Let's say that the average family generates $1000 in medical costs in a normal year, that is, without any major hospitalizations.  This would mean that if I got an insurance policy with a $1000 deductible, my coverage should be (relatively) cheap, since I am only really insurance against catastrophes -- I am effectively paying my normal annual costs out of pocket.

Now let's say I switch to a zero deductible. The premiums are going to have to be at least a thousand dollars higher a year.  And, in fact, they are likely to be more, given markups and administrative costs.  And that extra $1000+ will now be unavoidable to me, whereas I might have managed my own out of pocket spending lower if I am paying the bills.  Paying for a health care plan that covers one's normal annual medical costs is a dead loss.  There is no free lunch  (except for tax -- historically, medical costs payed by the employer were tax deductible, whereas costs paid out of your own pocket were not, which is one reason our health care market is structured in such a silly manner).

A while back, I switched from a $500 deductible plan to a $3500 deductible plan (I pay for my own health care).  You know how much I save in annual premiums?  $3000!  Talk about the biggest no-brainer ever.  Even if my annual health care spending was $3500, this would still be a break-even decision.  But since my actual spending in a normal year is probably $1000-$1500  (depending mainly on whether my wife or I get sent for some weird test) this was a huge financial gain.  And remember, this decision would not have been available to me in Massachusetts, because they do not allow high-deductible health insurance.  For some reason we are all caught up in this paradigm that health care expenses remain out of sight.  Even my wife, the Harvard MBA  (but from Massachusetts!) took some time to get comfortable with the concept of paying medical expenses out of pocket -- you're not supposed to do that, that's what insurance is for!

Apparently, the Democratic Congress is trying to "take on" high executive pay with some kind of punitive taxation plan.  This fits well into a class of legislation I would describe as "useless at best, probably counter-productive, but of high symbolic value to our base," something to which both parties are unbelievably susceptible.

I'm confused, by the way, about why exactly I should care how much CEOs are paid, particularly for executives that don't work for companies in which I own stock?  I don't think Paris Hilton, George Clooney, or the CEO of Home Depot are worth what they are paid, but I don't know how it affects me except perhaps for some simmering envy.  Does anyone with above a 5th grade education really believe that they will pay one cent less for gas or a refinery worker will make one dollar more if the CEO of Shell is paid less?

I do understand why the shareholders of Home Depot might be pissed off about what they were paying their CEO, or more accurately, what they paid him to go away.  I am sure the Arizona Cardinals felt the same way about Dennis Green.  Now, if Democrats wanted to suggest that shareholder voting and corporate governance rules needed to be amended to make it easier for shareholders to hold managers accountable for bad decisions and to overrule sweetheart deals between buddies on the board, I am very open to listening.

Most of you know I tend to avoid the topic of religion like the plague on this blog, but suffice it so say that I am a secular guy.  But that doesn't stop me from being scared of this guy (Chris Hedges at the Nation Institute):

This is the awful paradox of tolerance. There arise moments when
those who would destroy the tolerance that makes an open society
possible should no longer be tolerated. They must be held accountable
by institutions that maintain the free exchange of ideas and liberty.

The radical Christian Right must be forced to include other points
of view to counter their hate talk in their own broadcasts, watched by
tens of millions of Americans. They must be denied the right to
demonize whole segments of American society, saying they are
manipulated by Satan and worthy only of conversion or eradication. They
must be made to treat their opponents with respect and acknowledge the
right of a fair hearing even as they exercise their own freedom to
disagree with their opponents.

Passivity in the face of the rise of the Christian Right threatens
the democratic state. And the movement has targeted the last remaining
obstacles to its systems of indoctrination, mounting a fierce campaign
to defeat hate-crime legislation, fearing the courts could apply it to
them as they spew hate talk over the radio, television and Internet.

Whoa, Nellie.  The "forced to be free" thing never really works out very well, I promise.  I find the outright socialism preached by much of academia to be scary as hell and an incredible threat to me personally as a business owner, but you won't catch me trying to get the government to muzzle them.  Hedges attitude is consistent with opposition to school choice discussed here by Neal McCluskey of Cato:

Another frequent objection to letting parents choose their kids'
schools is that American children need to be steeped in a shared
worldview, lest they be in constant combat as adults. This arose as a
major line of argument in a Free Republic discussion about Why We Fight,
and is very similar to the "Americanization" mission given to
industrial-era public schools, where immigrant students were taught to
reject the customs and values of their parents' lands "” and often their
parents themselves "” and adopt the values political elites deemed
proper.

Now, if one were willing to accept a system that would, by
definition, quash any thoughts not officially sanctioned, then in
theory one would be okay with a public schooling system intended to
force uniform thought. In the context of an otherwise free society,
however, getting such a system to work is impossible, because
it would require that incredibly diverse and constantly combative
adults create and run an education system that somehow produces uniform
and placid graduates. It's no more realistic than hoping a tornado will
drop houses in a more perfect line than it found them.

The practical result of our trying to make uniformity out of diversity has, of course, been constant conflict, as Why We Fight
makes clear. Moreover, there is another by-product of this process that
no one mentions when they weave scenarios about choice producing
schools steeped in ignorance: our schools right now teach very little, especially in the most contentious areas like evolution and history, because they want to avoid conflict.

It all kind of makes a mockery of the left's favorite word "diversity."  One suspects what they want is for people of all color and backgrounds to come together and... think just like they do.  This seems to be part of the same strategy here to bring back the fairness doctrine.

PS- Remember, before you flame me, I am a secularist here defending the right of everyone to speak.  I am not defending Pat Robertson per se, because I almost never agree with the guy, but I am defending his right to say whatever he wants on TV.

In my post earlier today, I analyzed my recent social security statement and found that the government was giving me a -0.8% (yes, that is negative) rate of return on my forced savings.  You can read that post for the methodology, which I admit was simplistic (I have a day job, after all) but I still think is pretty accurate.  There is not getting around the fact that the government is forcing
a retirement program on you that is such a ripoff that a private company would likely get
prosecuted for offering it.

One of the arguments I have seen go back and forth, and that I refer to in that post, is whether Social Security is a retirement plan or a welfare program (its a floor wax and a desert topping!)  One of the reasons this argument comes up so much is that its defenders take both sides of the question, depending on whom they are arguing against.  If you argue that as a welfare program, Social Security is terribly inefficient and pays too many benefits to richer workers, they argue it is a retirement program with premiums and you can't cut benefits to anyone who has paid in.  Argue as I did in this post that it is the worst retirement program in all of America, and its defenders say that you can't analyze it that way because there are welfare benefits embedded.

So I wondered, could I solve this with numbers?  I stared at my belly button for a moment, and decided that 6.5% was a good conservative private return number that I would be willing to plan my retirement around.  I plugged this number into my spreadsheet (Download socialsecurity4.xls) and found that my social security premiums, invested privately, would yield an annuity at 67 of $11,699 per month, or an amount 5.89 times larger than social security is currently promising me for the same inputs.  This tells me that only about 17% (1/5.89) of my taxes in social security are going to my own retirement.  The other 83% are going to a huge welfare program, either directly, as payments for someone else's retirement, or indirectly, through the inherent government inefficiency you accept when you provide intellectual welfare  (I define "intellectual welfare" as the government doing something for you because it doesn't trust you not to screw the task up if you did it yourself -- in this case, the task is saving for retirement).

Postscript:  As pointed out in my postscripts and the comments to the original post, taxes, inflation, spouse survival, etc.  all complicate the analysis, but most of the effects work both ways.   For example, Social Security provides some benefits to surviving spouses I don't include.  That potentially understates the value of the SS package.  However, as pointed out in the comments, private savings would be inheritable by my family in the case of my early death, and would dwarf SS survivor benefits in most cases.  Ditto for disability benefits.

I thought this was pretty funny, via TJIC.  The Fed apologizes for the Great Depression:

Ben Shalom Bernanke (born December 13, 1953)"¦ is an American
macroeconomist who is the current Chairman of the Board of Governors of
the United States Federal Reserve ("the Fed")"¦

On Milton Friedman's Ninetieth Birthday, Nov. 8, 2002 he
stated: "Let me end my talk by abusing slightly my status as an
official representative of the Federal Reserve. I would like to say to
Milton and Rose: Regarding the Great Depression. You're right, we did
it. We're very sorry. But thanks to you, we won't do it again.""¦

The quote is from Wikipedia, so I take it with a huge grain of salt.  Anyone have a link to another source, because the quote is pretty funny.  Good to see the government take responsibility for the economic messes it creates, even if 75 years late.  Of course, 75 years after the Hawley-Smoot tariffs helped throw a recession into the Great Depression, Congress is about to launch us down the same protectionist path, so don't give the feds too much credit.

A few weeks ago I got my annual "Your Social Security Statement" from the government.  This is a statement carefully crafted to look like it's telling you a lot while at the same time covering up Social Security's dirty little secret.  But with a spreadsheet and 5 minutes of work, one can figure out what is really going on.

The statement shows the total of my social security taxes paid into the system, including the employer share.  It also shows my taxed earnings per year, and my "benefits."  The main benefit is the monthly annuity payment Social Security will make to me after I retire.  My statement shows that $140,139 total taxes have been paid into the system on my behalf over the last 25 years.  Based on these taxes and (this is important) the assumption I and my employer will continue to pay in at least $7440 per year until I retire, I can expect an annuity at retirement age of 67 (under current law, which the statement makes clear can be changed at any time) of $1,985 per month.

So I built a spreadsheet (click to download excel file), going back to my first year of employment.  Each year, I added the social security taxes to savings, and grew the accumulated balance by some interest rate.  For past years I used actuals from the report, for future years I used the $7440 tax number the report uses to calculate the social security payout. 

This allowed me to answer a question:  If I had been able to take these social security taxes and instead put them in a savings plan, and then took the accumulated balance out at age 67 and bought an annuity (at current rates), what would be my monthly payment?  Well, assuming a very conservative after-tax rate of return of 5%, I would have $1,077,790 at age 67 to buy an annuity, which at current rates quoted on the Vanguard site, would give me $7,789 a month until I die.  This return is just about four times the amount I get from having the Social Security Administration manage the money for me instead. Ugh.  Also note that I did not assume "risky" equity investments or whatever straw man anti-reformers are using nowadays.    If I assume a higher return of 8%  (the stock market in the 90's returned something like 18%) then my annuity will be $17,860 per month, or 9 times the Social Security payout.  Double ugh.

In fact, this all opens up the obvious question, what actual rate of return is Social Security paying out on your "premiums?"  Well, in fact we can calculate this with the same spreadsheet.  I plugged in 2% for the interest rate.  No go -- resulting annuity is to high.  Then I plugged in 1%.  Still too high.  Could the government be paying you 0% on your money?  I plugged that in.  Still too high.  In fact, the implied rate of return on my money in the Social Security system is -0.8% a year.  In other words, not only is the government not paying me any interest, they are charging me to hold my money.

Social Security defenders insist that it is not a welfare program.  For example, Kevin Drum quotes this with approval:

The men in my family of my father's generation returned home after serving
their country and got jobs in the local steel mills, as had their fathers and
their grandfathers. In exchange for their brawn, sweat, and expertise, the steel
mills promised these men certain benefits. In exchange for Social Security taxes
withheld from their already modest paychecks, the government promised these men
certain benefits as well.

....These were church-attending, flag-waving, football-loving, honest family
men. They are rightfully proud of providing homes and educations for their
children and instilling the sorts of values and manners that serve them well as
adults. And if I have to move heaven and earth, now that they've retired, the
Republican party is NOT going to redefine them as welfare
recipients.

Fine, let's call it a retirement program.  Well, as a retirement program, it is a really, really big RIPOFF.  Ever worker in this country is being raped by this retirement plan.  In fact, it is the worst retirement program in the whole country:

• As we see above, it pays a negative rate of return
• It is not optional - you go to prison if you choose not to participate
• Unlike a private annuity contract, the government can rewrite your benefits level any time, and you have to take it.  In fact, my statement says "Your estimated benefits are based on current law.  Congress has made changes to the law in the past and can do so at any time.  The law governing benefit amounts may change because, by 2040, the payroll taxes collected will be enough to pay only about 74 percent of scheduled benefits."
• There are no assets backing this annuity!!  An insurance company that wrote annuities without any invested assets backing them would be thrown in jail faster than Jeff Skilling.  The government has been doing it for decades.

A couple of months ago, news-hog Eliot Spitzer had a well-publicized (what else?) suit against H&R Block for not providing high enough returns in its low-income retirement savings accounts.

New York Attorney General Elliot Spitzer [official website] Wednesday launched a $250 million lawsuit [complaint, PDF] against H&R Block
[corporate website], the largest tax preparation service in the US, for
fraudulently coaxing its customers into a retirement account plan that
lost them money. Spitzer said that money in the retirement accounts
decreased over time because the low interest rate did not cover the
fees associated with the account.

Doesn't this exactly match the situation in my social security spreadsheet?  At least H&R Block's customers had a choice whether or not to sign up.

Postscript: As is usual with retirement issues, tax is a messy topic, so I mostly left it out.  My spreadsheet is correct if you call it an "after-tax" rate of return.  This may mean the nominal rate is higher, but it got taxed, or it could posit some tax-free savings alternative to social security.  Note also that we pay income taxes on the amount that gets taxed by Social Security (at least our employee portion).  This means an IRA type replacement for social security would actually have higher returns and dollars at retirement than those in my spreadsheet, because it would eliminate or at least defer income taxes on the premium.

Also note that the analysis is all in nominal dollars, because that is the way the dollars are on my SS statement - there are not inflation escalators in the program.

Postscript #2:  When last social security was a national topic, opponents of reform got a lot of mileage out of the 2001-2002 bear market in stocks.  They would ask, what if people had invested in stocks, they would have lost their money.  Well, as of today, if you had invested every dollar of your retirement savings on the worst possible day, the 2000 peak in the Dow, you would still be up 5% today.  This is a disappointing  return of less than 1% annually, but is STILL higher than the negative return in social security.  And remember, we are using nearly the worst five year before and after dates in this generation.  A real-world steady investment in stocks over the last 20 years, with equal amounts each year, would be way up  (anyone with an exact number is welcome to post it in the comments).

Postscript #3:  In an earlier post, I took on Social Security as intellectual welfare:

Advocates for keeping forced savings programs like Social Security in
place as-is by necesity argue that the average American is too stupid,
too short-sighted, and/or too lazy to save for retirement without the
government forcing them.  Basically the argument is that we
are smarter than you, and we are going to take control of aspects of
your life that we think we can manage better than you can.  You are
too stupid to save for retirement, too stupid to stop eating fatty
foods, too stupid to wear a seat belt, and/or too stupid to accept
employment on the right terms -- so we will take control of these
decisions for you, whether you like it or not.  For lack of a better
word, I call this intellectual welfare.

Update #1:  In response to some comments, the spreadsheet does work right, it is just labeled wrong.  The column that is labeled "investment income" is actually the saved balance to date plus the investment income.  The "End of Year" column is the correct balance at the end of year after investment income and new contributions.

Update #2:  A commenter reasonably points out that investment at the top of the market in the Nasdaq would still be way underwater.  However, I took this point investment on the worst day as an extreme example.  Even in the Nasdaq, which is still off 50% from its peaks, a steady monthly investment from 1997 or 1998 to date would be above water in total.  Leftists do a lot of bad things for the country, but trying to scare average workers away from equity investments for the long-term is certainly on of the most hypocritical.  I guarantee that every liberal politician has a big fat chunk of their savings in equities, because they know that is the way to create wealth over the long haul.

Update #3:  In a follow-up post, using this same spreadsheet, I conclude that only 17% of my Social Security taxes are going to my retirement while 83% are welfare for someone else.

Every time I write that government funded health care and health nannyism are becoming a Trojan horse for fascism, I get several emails telling me I am being a paranoid flake.  So I will have to just keep posting this kind of thing (from England), via Overlawyered:

SOCIAL workers are placing obese children on the child protection
register alongside victims thought to be at risk of sexual or physical
abuse.

In extreme cases children have been placed in foster care because
their parents have contributed to the health problems of their
offspring by failing to respond to medical advice.

The
intervention of social services in what was previously regarded as a
private matter is likely to raise concerns about the emergence of the
"fat police".

Some doctors even advocate taking legal action against parents for
illtreating their children by feeding them so much that they develop
health problems.

Dr Russell Viner, a consultant paediatrician at Great Ormond Street
and University College London hospitals, said: "In my practice, I can
think of about 10 or 15 cases in which child protection action has been
taken because of obesity. We now constantly get letters from social
workers about child protection due to childhood obesity."

Back in the stone age (say, about 20 years ago) we used to have this quaint concept for media we purchased called "fair use."  I won't get into the legal definitions, but it meant in practice that if I had a book, I could read it at home, or I could take it into work and read it there.  In college, I would read novels in the back of boring lectures, and soon hit on the tactic of xeroxing 20-30 pages of my book and putting the copies in a folder to disguise what I was doing.  Fortunately, fair use let me do so without penalty.  Sometimes a friend would read an article in a magazine he thought was cool, and he would xerox a copy of the article (a sample of the magazine, so to speak) and share it with me.

Increasingly, in the digital age, none of the behaviors are allowed anymore.  For years I used to install my copy of turbo tax on both my home and office computers, and carry my tax file back and forth on a floppy to work on it.  Then, a couple of years ago, Turbo Tax installed a form of rights management that required that I buy a second copy of the same software for my own personal use for my office.  In effect, I could no longer carry my novel to work -- I had to buy a second copy if I wanted to read it at the office.  The same situation has prevailed with digital music files - increasingly recording companies are taking the position that if you want a digital file on both your iPod and your home system, you need to buy two copies.  And the sampling and sharing we used to do all the time with magazine and newspaper articles are not longer permitted for digital media.

Having firmly established the principle that multiple uses by the same individual of the same digital media should require multiple purchases, where do we go next?  Well, I think that we will look back on the release of Windows Vista as the next great milestone in killing fair use.  Microsoft may have left out nearly every product enhancement they originally promised for Vista, particularly the revamped file system, and tried to hide the fact with some pretty desktop eye candy, but they found plenty of time to add numerous DRM and copy protection schemes to the OS. 

Because, having killed fair use for multiple copies, believe it or not, the media companies are attempting to kill fair use even for the original media by the original buyer!  I know this sounds crazy, but in Windows Vista, media companies are given the opportunity to, in software, study your system, and if they feel that your system is not secure enough, they can downgrade the quality of the media you purchased or simply refuse to have it play.  In other words, you may buy an HD DVD and find that the media refuses to play on your system, not because you tried to copy it, but because it feels like your system *might* be too open.  The burden of proof is effect on the user to prove to the media companies that their system is piracy-proof before the media they paid for will play (emphasis added). 

PVP [a new Vista DRM component] eliminates these security gaps, enabling a series of DRM measures that keep
a high-resolution content stream encrypted, and in theory completely protected,
from its source media all the way to the display used to watch it. If the system
detects a high-resolution output path on a user's PC (i.e., a system capable of
moving high-res content all the way to a user's display), it will check to make
sure that every component that touches a protected content stream adheres to the
specification. If it finds a noncompliant device, it can downgrade the content
stream to deliver a lower-quality picture -- or it can even refuse to play the
content at all, depending on the rights holder's preferences.

So you see the next step.  First, they prevented fair use of copies.  Now, they are going to prevent fair use of the original.  Back to the book analogy, its as if the book will not open and let itself be read unless you can prove to the publisher that you are keeping the book in a locked room so no one else will ever read it.  And it is Microsoft who has enabled this, by providing the the tools to do so in their operating system.  Remember the fallout from Sony putting spyware, err copy protection, in their CD's -- turns out that that event was just a dress rehearsal for Windows Vista.

As Rosoff's statement implies, many of Vista's DRM technologies exist not
because Microsoft wanted them there; rather, they were developed at the behest
of movie studios, record labels and other high-powered intellectual property
owners.

"Microsoft was dealing here with a group of companies that simply don't trust
the hardware [industry]," Rosoff said. "They wanted more control and more
security than they had in the past" -- and if Microsoft failed to accommodate
them, "they were prepared to walk away from Vista" by withholding support for
next-generation DVD formats and other high-value content.

Microsoft's official position is that Vista's DRM capabilities serve users by
providing access to high-quality content that rights holders would otherwise
serve only at degraded quality levels, if they chose to serve them at all. "In
order to achieve that content flow, appropriate content-protection measures must
be in place that create incentives for content owners while providing consumers
the experiences they want and have grown to expect,"

Nope, no arrogance here.

Matt Rosoff, lead analyst at research firm Directions On Microsoft, asserts that
this process does not bode well for new content formats such as Blu-ray and
HD-DVD, neither of which are likely to survive their association with DRM
technology. "I could not be more skeptical about the viability of the DRM
included with Vista, from either a technical or a business standpoint," Rosoff
stated. "It's so consumer-unfriendly that I think it's bound to fail -- and when
it fails, it will sink whatever new formats content owners are trying to
impose."

More links on Vista DRM issues here

Update:  OpenOffice 2.1 is out.  We love OpenOffice at our company.  We stopped buying MS Office a couple of years ago and have been thrilled with the decision.  The version 1 release was weak but since version 2.0 it has been a very strong offering.  It is nice to see Sun getting its Microsoft hatred out in a more productive manner than suing them all over the place.

Nick Gillespie at Reason asks folks for their favorite business novels.  I vote for Noble House by James Clavell.   Ayn Rand's Atlas Shrugged has a great deal of influence on me, but that book is ultimately about government making business impossible, not about the conduct of business per se.  Noble House is a sympathetic and hugely entertaining depiction of business people being business people in as close to a libertarian environment as we might find (1960s Hong Kong) in the modern world.  Sure its not real business -- too much deal making, not enough productive investment, but it is a novel for god sakes, and not a seminar on the capital asset pricing model.

PS - Is there anyone out there who has read both novels and would rather hang out in a bar with Hank Reardon than Ian Dunross?  I didn't think so.

PPS- Personally, I think this business novel is good too.

I am way behind on posting some of these reviews, but Market Power has a review of BMOC here.

There is also at least one new (5-star!) review up at Amazon.  It makes a great, uh... President's Day gift!