Coyote Blog

No state shall ... deny to any person within its jurisdiction the
equal protection of the laws  - 14th Amendment

The Arizona Republic had an article in the lead position on the business page that really got me fuming.  Here is the headline:

Bioscience push paying off.  But analysis says Arizona must do more

Apparently the Arizona and Phoenix governments decided several years ago it was their job to preferentially invest in getting biotech companies to move to Arizona.  And this article was about a consulting study the government engaged to see how they were doing against this original plan. 

Arizona's lucrative bet on the biosciences is yielding more high-wage
jobs, federal research dollars and new buildings that are expected to
birth scientific breakthroughs for decades to come.

But the state needs to accomplish a lot more to establish a thriving
research-based economy, particularly providing enough money, lab space
and support that will allow small research companies to grow and
prosper.

The study can be summarized as "The government spent lots of money.  Biotech jobs increased in Arizona, though we can't establish a link between the government spending and the job growth.  The government needs to spend even more money in the future."  These conclusions are from Battelle, a technology consulting company whose fortunes depend almost entirely on government spending for technology projects, and, magically, they came to the conclusion that government needs to spend a lot on technology projects.

Equal Protection

I seldom hear this argument about corporate welfare, but what the hell ever happened to the equal protection clause?  From the perspective of an Arizona corporation, my government is taxing me and every other business and handing our money over to businesses that call themselves "biotech."  What suddenly gives these other businesses such favored status?  Why is biotech somehow more desirable such that they are more equal under the law?   Or, for those of you on the Left who don't think businesses have equal protection rights, what about Arizona workers?  Why are workers in every other industry taxed so biotech workers can have more secure, higher paying jobs? 

The Worst Investor

Government is the worst investor.  I won't go into how bad they are historically at picking winners, but will make a different point this time.  Consider this hypothetical: 

You have some money to invest in real estate, and engage a consultant to invest your money for you.  The consultant comes back and says that he chose to invest in the most sought-after single property in town, where hundreds of other people were bidding against you for the project, but eventually you outbid them all and got it. 

What would be your reaction?  Mine would be rage and horror.  Why the hell did my consultant choose the project with the most competition, so prices were bid up into the sky?  How am I ever going to get a good return from that?  (Ask yourself what return the Japanese got for their high-profile real estate purchases of the eighties and nineties).

But this is exactly what Arizona has done.  They picked the sector to subsidize and fight for corporate relocations - biotech - that every other state and municipality in the US has also chosen as their highest priority.  They even admit this in their report:

Battelle representatives said Arizona's challenge is that bioscience is
an ultracompetitive field, and states across the nation are pursuing
initiatives to bring the good-paying jobs that the sector promises.

In business school, I would get an "F" for this.  Choosing to subsidize biotech means that for every potential company relocation, Arizona and Phoenix are up against ten other cities and states also throwing subsidy and tax abatement packages out there.  Stupid.

Circle Jerk

It just symbolized for me how stupid all this is when I saw that the big payoff of this state government spending was to attract ... federal government spending:

National Institutes of Health grants issued to Arizona-based
institutions jumped 30 percent from 2002 through 2005. That funding
growth outpaced the nation's top 10 research states.

No Linkage of "Investment" to "Returns"

When private firms make investments, they carefully track the returns from this investment to see if it was worth it.  However, when government makes what it calls "investments", this is impossible.  The study claims that biotech jobs in Arizona have risen faster than the national average, but shows no link to the government spending that had taken place.  Probably because there was little relation.  The fact is that just about any job sector you can name in Phoenix -- from electronics to garbage sorting -- has grown faster than the national average because Phoenix as a whole has grown faster than the national average.  Taking credit for the rising tide is a classic politician behavior.  Companies and individuals are moving to Phoenix because they like the climate and relatively low taxes and regulation, of which the latter are only hurt by corporate welfare programs for favored few.

Prisoner's Dilemma

I have written before how much the government subsidization of corporate relocations looks like a prisoner's dilemma game. 

I hope you can see the parallel to subsidizing business relocations
(replace prisoner with "governor" and confess with "subsidize").  In a
libertarian world where politicians all just say no to subsidizing
businesses, then businesses would end up reasonably evenly distributed
across the country (due to labor markets, distribution requirements,
etc.) and taxpayers would not be paying any subsidies.  However,
because politicians fear that their community will lose if they don't
play the subsidy game like everyone else (the equivalent of staying
silent while your partner is ratting you out in prison) what we end up
with is still having businesses reasonably evenly distributed across
the country, but with massive subsidies in place.

The practice of state governments spending massive amounts of tax money to move a few jobs over the state line, and then having other state governments spend even more money to move the jobs back, is a war of escalation that leaves everyone worse off except a few players with political pull or who work in a fair-haired favored industry.

It's all About the Sex Appeal

Here is the bottom line:  Programs like this are for politicians.
Period.  They benefit politicians by giving them things they can say in
elections, like "I brought biotech jobs to Arizona,"  which sounds
better than "I brought garbage-sorting jobs to Arizona."  This in
effect answers the equal protection question of "why biotech?"  The
answer is that biotech is currently sexy, and politicians in their focus
groups have found that tbiotech resonates the best among voters.  All of
which makes for a really crappy approach to "investing."

I am not a big fan of Arizona's John McCain.  I beyond my problems with the McCain-Feingold disaster, I have always suspected him of being a big-government populist, willing to intervene on any issue in the boardroom or the bedroom.  Matt Welch has taken the time to try to decode McCain, and comes to a similar conclusion.

Readers of this blog know that I consider most campaign finance laws to in fact be carefully crafted incumbent protection acts.  Incumbents in major political offices get millions and millions of dollars in free advertising just from their day-to-day ability to get on the evening news.  This free publicity combined with strong name recognition means that upstarts often have to seriously outspend the incumbent to have a chance of defeating them.  So campaign finance laws act as a powerful protection device for these incumbents, limiting the amount upstarts can spend while in no way limiting the incumbents's ability to use their office (and taxpayer money) to shamelessly promote and publicize themselves.

And there is no one better at using elected office to shamelessly publicize himself than new NY Governor Eliot Spitzer.  So absolutely no one should be surprised at this:

Moving swiftly in his efforts to change the culture of
Albany, Governor-elect Eliot Spitzer said Thursday that he would
unilaterally stop accepting campaign contributions greater than
$10,000, which is less than a fifth of the $50,100 in individual
donations currently allowed by state law.

Mr. Spitzer also said that from now on he would refuse to take
advantage of several notorious loopholes in the state's campaign
finance laws that allow corporations and limited liability companies to
circumvent donation limits by contributing through subsidiaries and
other related entities.

Note that he only took these steps just days after he was elected governor the first time.  Spitzer knows that no one can probably offset the PR advantage he wields, but to be on the safe side, this is the opening shot to make sure that no future challenger is going to have the cash to threaten his position in office.

Generally, Eliot Spitzer irritates the hell out of me.  But I will say for one brief period in college, Spitzer, as the butt of a huge campus-wide joke, brought be great mirth.

The word "censorship" is used all-too-often in this country.  I take a much more narrow definition of censorship.  In my mind, only the government can be guilty of true censorship, which I define as using the coercive power of government to prevent certain forms of speech.  By even this narrow definition, the recent threats against Exxon by Senators Jay Rockefeller and Olympia Snowe come awfully close to censorship:

We reprint the full text of the letter here,
so readers can see for themselves. But its essential point is that the
two Senators believe global warming is a fact, and therefore all debate
about the issue must stop and ExxonMobil should "end its dangerous
support of the [global warming] 'deniers.' " Not only that, the company
"should repudiate its climate change denial campaign and make public
its funding history." And in extra penance for being "one of the
world's largest carbon emitters," Exxon should spend that money on
"global remediation efforts."

The
Senators aren't dumb enough to risk an ethics inquiry by threatening
specific consequences if Mr. Tillerson declines this offer he can't
refuse. But in case the CEO doesn't understand his company's jeopardy,
they add that "ExxonMobil and its partners in denial have manufactured
controversy, sown doubt, and impeded progress with strategies all-too
reminiscent of those used by the tobacco industry for so many years." (Our emphasis.) The Senators also graciously copied the Exxon board on their missive.

This
is amazing stuff. On the one hand, the Senators say that everyone
agrees on the facts and consequences of climate change. But at the same
time they are so afraid of debate that they want Exxon to stop
financing a doughty band of dissenters who can barely get their name in
the paper. We respect the folks at the Competitive Enterprise
Institute, but we didn't know until reading the Rockefeller-Snowe
letter that they ran U.S. climate policy and led the mainstream media
around by the nose, too.

While I tend to believe that the warming camp is correct that manmade CO2 is creating or will create some global warming, there are a lot of very very good reasons to be skeptical of the magnitude of their warming estimates and their hysterical calls for massive government intervention in the world economy.  I call this the skeptical middle ground on climate.  (Update: more reasons to be skeptical of current "consensus" models here).  A skeptics guide to An Inconvenient Truth is here.

I finally saw Casino Royale this weekend, and though it has been said in many other reviews, I will repeat it:  This is the best Bond ever.  More than just changing Bond actors, the movie represents a retooling of a Bond franchise gone way, way astray in the Roger Moore years.  Pierce Brosnan did a good job bringing Bond back to reality, but he was still too pretty-boy to really portray the ice-cold, very serious Bond of the books.  The double-0's are supposed to be hired as assassins (license to kill, remember) and not because they look good in a tux.  Bond in the book Casino Royale, for example, doesn't even want Vesper Lynd around because he refuses to be distracted by women on duty.  The Bond of recent movies seems to do nothing but get distracted by women on duty.

Casino Royale was always my favorite of the Bond books, and I am pleased that it was this book that brought the franchise into a new era.  Yes, Q and the gadgets are gone, and even some of the classic lines are mostly absent (though shaken not stirred draws a funny joke).  In their place is much sharper and more interesting dialog.  Judie Dench finally gets a role as M that does justice to some of her acting talents.  And  Daniel Craig is fabulous.   

This is also by far the closest any Bond movie has stuck to it's namesake book.  The book was a bit light on action, so rather than try to work it in where it does not belong, they grafted the action onto the front of the movie, which is essentially a prequel to the action in the book.  The book begins about where Bond gets approval to go after LeChiffre in a card game, and from that point forward it follows the book almost exactly, with some minor updating.  The only small amount of pain was seeing Bond playing Texas hold'em rather than Baccarat, but after seeing the movie, poker works much better than Baccarat did in the book - the element of bluffing adds to the tension.

Don't worry, the action is still there.  The opening chase scene is fabulous, all the more so because it is mostly free of gadgets and aircraft and missiles and... you get the idea.  Instead, you get Bond at his most ruthless as well as the improvisational Bond we haven't seen since Sean Connery.  First movie in a while I immediately wanted to see again.  And first action movie in forever where the plot made any sense and the writing was sharp.

Thanks to all those who have bought my new novel BMOC and sent such nice comments.  While the rank fluctuates up and down, we were doing pretty well late on Friday.

It's still not too late to buy a copy of BMOC for Christmas! 

For a while now, I have meant to publish a guide to Walt Disney World (WDW).  For a variety of reasons related to a recurring family reunion, I have spent at least 50 days at WDW in 10 trips over 25 years.  Over those years, I have learned a fair amount about surviving WDW.  Since we may not be going back for a while (the crowds are just too crazy, see below) I thought I would
share some of my experience.  My thoughts, review, and tips on Disney World are below the fold.

Note:  I have made updates in blue from my October, 2008 trip.

Continue reading ‘Disney World Reviews and Advice’ »

I still get a lot of email and
commentary on my posts explaining why a trade deficit does not
necessarily result in a build up of debt.  Its a mistake that
protectionists like Lou Dobbs make, either accidentally or on
purpose, to confuse the trade deficit with a debt (Dobbs, in the linked article, claimed that we had $5 Trillion in accumulated trade debt).  In another
attempt to explain this, I want to present a thought experiment.

In our hypothetical, a regular old
American guy named Joe walks into a Wal-Mart to buy new Plasma TV.
Lets assume that Joe is presented with two choices, a Chinese-made TV
and an American-made TV.  The American TV is $2000 and carries a
brand Joe recognizes;  the Chinese TV is $1800 and is a brand Joe
does not recognize.  As far as he can tell, both are featured
similarly.

Joe may choose to take a chance with an
unknown brand to save $200, or he may not.  Let's see what happens
either way.  If Joe picks the Chinese TV over the American TV, the US
trade deficit will likely be worse, by whatever Wal-Mart has to pay
to restock the shelves.  But, while the trade deficit may be worse if
Joe buys Chinese, is there any additional debt created by buying
Chinese rather than American?

Well, Joe doesn't have more or less
personal debt either way.  Whether he is paying with cash or
financing the TV, this decision is unaffected by whether he buys
Chinese or American.  He may happen to buy Chinese and take on debt
to purchase the TV, but the decision to take on debt has nothing to
do with the fact that it is an import.  If he had bought the American
TV, he presumably would have taken on debt for that purchase as well.
In fact, if anything, since the Chinese TV is cheaper, Joe's
personal debt is reduced by buying Chinese over American.

In fact, the only way in which Joe's
personal debt could be said to be increased by Chinese imports is if
the $200 price differential was enough to change his mind from
not-buying a TV to buying one, and he then financed the purchase.
But this is only going to occur in a small percentage of
transactions, and besides, it would be unfair to call something so
empowering "“ ie giving Joe the power to get something he really
wants that he would otherwise been unable to "“ as a negative.
(Update: I do think this is sortof the logic trade opponents
use.  They argue that "rampant consumerism"is causing an increase
in consumer debt which is kindof sortof tied up in some way with this
whole cheap Chinese goods at Wal-Mart thing, so therefore trade
causes debt.  This may sound good rhetorically at an
anti-globalization rally but makes no sense scientifically).

Now let's take Wal-mart.  Assuming they
know how to price items, they will make a gross margin on either the
Chinese or the American TV.  How, then, can having to restock the TV
Joe bought by buying one from an American factory for say $1400
affect Wal-Mart any differently than paying the same (or less) money
to a Chinese company?  The answer is that it has no effect.  Buying
Chinese vs. American has no effect on Wal-Mart's debt.

So let's say Joe bought the Chinese TV,
and the Chinese end up with $1400 (the factory price) in US currency
courtesy of Wal-Mart.  If they don't need anything in the US, they
will trade this currency for yuan to someone in China who does want
to buy something in the US.  Let's assume that these dollars are all
incremental, so none go to buying exports from the US or goods to be
consumed in the US.  Let's assume that it all gets invested as
profits, and further, let's assume that it gets invested 100% in US
debt securities.

Aha!  People want to say to me.  There
is the debt!  Chinese are buying up US bonds.  And so they are.  But
trade did not cause or create the debt.  Just because Chinese trade
dollars are reinvested in debt securities does not mean trade cause
the debt.  In fact, the US government debt would exist with or
without Chinese trade, courtesy of the tax and spend whores of both
parties in the US Congress.  If the Chinese had not bought the debt,
someone else would have, and the debt still would have existed.  In
fact, the US debt would likely have just been a bit larger and a bit
costlier without Chinese buyers to bring down interest rates.

So, to review, an average American
makes an incremental decision to buy Chinese rather than American,
the trade deficit gets worse, but no debt is created.  So I renew my
challenge to Lou Dobbs, who claims America has $5 trillion in trade
debt by asking a simple question:  Where?

A reader sent me this article on the new proposition F passed in San Francisco. 

Under the Sick Leave Ordinance, employers must provide one hour of paid
sick leave to an employee for every 30 hours worked. The Ordinance
limits the amount of paid leave to a maximum of 40 hours of paid leave
for "small businesses," defined as employers who employ fewer than 10
employees, and of 72 hours of paid leave for larger employers.

Note that this applies to everyone -- part time workers, day laborers, housekeepers, nannies, you name it.  Everyone gets an extra paid hour vacation for every thirty they work.

But Coyote!  How can you say its vacation - the law says sick leave.  Yes, I know, and I am sure supporters can fill any number of 30-second TV ads with heart-rending stories of people who got sick and needed paid time off.  But all of us who have actually worked in real jobs and real companies know how most sick days get used - they become extra vacation days.  Here is a guide to getting the most vacation possible out of your sick days.  For this reason, many companies have done away with the distinction of sick and vacation days and just call them "personal days."

But the law makes sure that employers can't ask any of those nagging questions like "you don't sound sick on the phone."  Because you don't actually have to be sick to take paid sick leave in San Francisco. 

Proposition F, the "Sick Leave Ordinance," also expands existing state
law "kin care" requirements so that covered employees must be permitted
to use paid sick leave to care for siblings, grandparents,
grandchildren and a "designated person" of the employee's choice.
Employees must be permitted to use any or all accrued paid sick leave for such kin care.

"Yep, old Uncle Ed is sick again.  I won't be coming in today but you still have to pay me."  And who's to say "care" for uncle Ed shouldn't include companionship in the form of some fishing.  After all, California recognizes a service animal designation for companionship only.

But just to make sure that the employer does not ask any nagging question when Uncle Ed needs care on nine Fridays in a row, the law includes this:

In addition, Proposition F prohibits an employer from taking any
adverse action against an employee who exercises his or her rights
under the Ordinance. An employee's mistaken but good faith complaints
of employer violations of this Ordinance are protected. Any adverse
action by an employer against an employee within 90 days of the
employee's exercise of a right under the Ordinance creates a rebuttable
presumption of employer retaliation....

The Office of Labor Standards Enforcement has authority to
investigate alleged violations of the Ordinance. If the Office
determines that a violation has occurred following an investigation and
hearing, it may order relief including reinstatement, back pay, the
payment of any sick leave unlawfully withheld and various
administrative penalties.

The Ordinance also permits civil actions by the Office of Labor
Standards Enforcement, the City Attorney, "any person aggrieved by a
violation" (the term could encompass affected employees but also any
person for whom the employee sought to care or aid), and "any other
person or entity acting on behalf of the public as provided for under
applicable state law." The prevailing party may recover all "legal or
equitable relief as may be appropriate to remedy the violation"
including, but not limited to, reinstatement, back pay, the payment of
any sick leave unlawfully withheld, liquidated damages, injunctive
relief; reasonable attorneys' fees and costs. Employees and plaintiffs'
attorneys who sue employers on behalf of similarly-effected employees
and the general public may be entitled to equitable and injunctive
relief, restitution, and reasonable attorneys' fees and costs.

So, any violations by employees will be called "good faith" mistakes and are protected from any punishment.  Employers, on the other hand, are liable for penalties and lawsuits should they make even a good faith mistake.  Attempting to determine if an employee is cheating on his sick day designations will be treated as "retaliation" and punished.  Note that while the office of labor standards have investigation abilities, all the investigative actions listed in their purview are employer violations.  For example, there is language about employers reimbursing employees for sick days they should have paid, but where is the language about employees reimbursing employers for sick days taken fraudulently?

This is exactly how the unemployment system works.  There is a heavy state enforcement arm, but only aimed at fraud by employers, not employees. Pick any state unemployment office at random and look at their web site.  They will probably have a link for filing complaints.  When you click on it, you will quickly see that the complaints they accept are only for employer fraud or impostor fraud, not employee cheating.  In fact, as I wrote here about people taking vacation on unemployment, I was threatened with a lawsuit by an employee and with fines by the state agency in California for even suggesting that an employee was lying when he said he was "looking for work" (when I knew for a fact he was on a winter-long vacation in Mexico).

From the USA Today:

The City Council here voted late Tuesday to
ban certain giant retail stores, dealing a blow to Wal-Mart's potential
to expand in the nation's eighth-largest city.

The measure, approved on a 5-3 vote, prohibits
stores of more than 90,000 square feet that use 10% of space to sell
groceries and other merchandise that is not subject to sales tax. It
takes aim at Wal-Mart (WMT) Supercenter stores, which average 185,000 square feet and sell groceries....

Supporters of the ban argued that Wal-Mart puts
smaller competitors out of business, pays workers poorly, and
contributes to traffic congestion and pollution. Opponents said the
mega-retailer provides jobs and low prices and that a ban would limit
consumer choice.

Certainly such a ban represents a total disdain for consumers and a populist political stunt to cash in on fashionable Wal-mart bashing.  But what is really behind the ban?

A Wal-Mart Super Center differs from a large Wal-Mart mainly in that is sells groceries.  And in fact the legislation does not ban all super-large stores, just ones that sell groceries (Wal-Mart could still build a super-honkin large store in San Diego as long as it didn't sell food).  Well, this should give us a clue.  It tells us that the politicos are not against large stores, just against large new stores that compete with existing grocery stores.

And this puts the lie to supporters statements that their concern is that Wal-Mart "puts smaller competitors out of business."  There aren't any "smaller competitors" in California grocery stores, they are all large chains run by corporations.  And if there are any local fresh produce shops out there, I don't think their customer base is one to run off to Wal-Mart.  This is about protecting grocery retailers from competition.  Why?  Well, there is one other thing we need to know, and that is that California grocers all have extremely powerful and politically connected unions.  This is a story from the LA Times way back in 2003:

Inglewood seemed to offer the perfect home for a new Wal-Mart
Supercenter, with low-income residents hungry for bargains and a mayor
craving the sales-tax revenue that flows from big-box stores.

But nearly two years after deciding to build on a 60-acre lot near
the Hollywood Park racetrack, Wal-Mart is nowhere near pouring
concrete. Instead, the world's biggest company is at war with a
determined opposition, led by organized labor.

"A line has been drawn in the sand," said Donald H. Eiesland,
president of Inglewood Park Cemetery and the head of Partners for
Progress, a local pro-business group. "It's the union against Wal-Mart.
This has nothing to do with Inglewood."

Indeed, similar battles are breaking out across California, and
both sides are digging in hard. Wal-Mart Stores Inc. wants to move into
the grocery business throughout the state by opening 40 Supercenters,
each a 200,000-square-foot behemoth that combines a fully stocked food
market with a discount mega-store "” entirely staffed by non-union
employees. The United Food and Commercial Workers and the Teamsters are
trying to thwart that effort, hoping to save relatively high-paying
union jobs.

The unions have amassed a seven-figure war chest and are calling
in political chits to fight Wal-Mart. The giant retailer is
aggressively countering every move, and some analysts believe that
Wal-Mart's share of grocery sales in the state could eventually reach
20%. The state's first Supercenter is set to open in March in La
Quinta, near Palm Springs....

Yet the Supercenters also threaten the 250,000 members of the UFCW
and Teamsters who work in the supermarket business in California.

For decades, the unions have been a major force in the state
grocery industry and have negotiated generous labor contracts. Wal-Mart
pays its grocery workers an estimated $10 less per hour in wages and
benefits than do the big supermarkets nationwide "” $19 versus $9. As
California grocery chains brace for the competition, their workers face
severe cutbacks in compensation.

"We're going to end up just like the Wal-Mart workers," said Rick
Middleton, a Teamsters official in Carson who eagerly hands out copies
of a paperback called "How Wal-Mart Is Destroying America." "If we
don't as labor officials address this issue now, the future for our
membership is dismal, very dismal."

The push for concessions has already started, prompting the
longest supermarket strike in Southern California's history. About
70,000 grocery workers employed by Albertsons Inc., Kroger Co.'s Ralphs
and Safeway Inc.'s Vons and Pavilions have been walking the picket
lines since Oct. 11, largely to protest proposed reductions in health
benefits. The supermarkets say they need these cuts to hold their own
against Wal-Mart, already the nation's largest grocer.

Rick Icaza, president of one of seven UFCW locals in Southern
California, has taken issue with much of the supermarkets' rhetoric
since the labor dispute began. But he doesn't doubt that Wal-Mart is
the biggest threat ever posed to the grocery chains "” and, in turn, his
own members.

"The No. 1 enemy has still got to be Wal-Mart," he said.

The unions and their community allies have stopped Wal-Mart in
some places and slowed it down in others. They have persuaded officials
in at least a dozen cities and counties to adopt zoning laws to keep
out Supercenters and stores like them.

Hat tip to the Mises blog, which has more here.  In 2004 I wrote how the California grocery unions were using the state pension fund (Calpers) to support their strike.

One of the main salients in the war against free speech is the notion that people somehow have the right not to be offended;  in other words, that authorities may legitimately limit speech that gives offense to anyone.

I could site a zillion examples, particularly on campuses, but this one is at the top of my inbox (emphasis added):

Sparks flew during question period at a Nov. 21 Carleton University
Students' Association (CUSA) council meeting after a motion that would
prevent pro-life groups from assembling on CUSA space was tabled.

The motion -"” moved by Katy McIntyre, CUSA vice-president (student
services), on behalf of the Womyn's Centre -"” would amend the campus
discrimination policy to state that "no CUSA resources, space,
recognition or funding be allocated for anti-choice purposes." ...

According to McIntyre, anti-choice groups are gender-discriminatory and violate CUSA's safe space practices.

The motion focuses on anti-choice groups because they aim to abolish
freedom of choice by criminalizing abortion. McIntyre said this
discriminates against women, and that it violates the Canadian
Constitution by removing a woman's right to "life, liberty and
security" of person....

McIntyre said she received complaints after Lifeline organized an
academic debate on whether or not elective abortion should be made
illegal.

"[These women] were upset the debate was happening on campus in a
space that they thought they were safe and protected, and that
respected their rights and freedoms," said McIntyre....

Julien de Bellefeuille, Student Federation of the University of
Ottawa vice-president (university affairs), said that although his
student association does not currently have any policies regulating
anti-choice groups, he said the motion is a good idea and something
that his school should adopt as well.

Note that the debate is not over whether abortion should be illegal, but whether advocates of abortion bans can even discuss their position publicly.  Ms. McIntyre is arguing straight out, with no possibility of confusion of motives, that she thinks that women who believe as she does should be protected from being anywhere in the vicinity of an opponent of her position (presumably she could protect herself without this motion simply by not listening to such speech, so the purpose most be to eliminate opposing speech altogether.

I have a couple of thoughts.  First, there is no right not to be offended.  Trying to define any such right will be the end of free speech.  Second, its funny how the offense is only treated as one-way.  While I am OK with abortion, I have many friends who vociferously oppose it.  I am positive they are in turn offended by supporters of abortion, but I don't see any motion here to protect them from offense or provide them a "safe zone" free of opposing views.  Third, it strikes me that a better word for the "safe zone" she wants is "echo chamber,"  where like-minded people as her can be free from having to hear any opposing opinion.

Update:  The next item in my inbox happened to be on the same topic, and is from FIRE:

A professor at the University of Idaho has asked students to sign a
"statement of understanding" acknowledging that some of the films he
shows may have content that is offensive to some students. Inside Higher Ed brings us the story.

In a university culture where the avoidance of offense is considered a
sacred principle on many campuses, it's not surprising that Professor
Dennis West would hit on a method already commonly used when engaging
in nearly any activity that comes with even a minimal amount of risk.
It's sad that showing films to students can now be considered a risky
activity, but it's not surprising. Episodes like the University of New
Hampshire's reaction to a joking flyer, or Gonzaga's classification of
a flyer as hate speech simply because the flyer contained the word
"hate," make it clear that film professors"”who sometimes show graphic,
violent, or even merely political films"”do indeed have something to
worry about. This is a sad commentary on today's academic culture.

He warned "that immigration to this country is increasing and"¦is making its greatest relative increase from races most alien to the body of the American people and from the lowest and most illiterate classes among those races....half of whom have no occupation and most of whom represent the rudest form of labor," are "people whom
it is very difficult to assimilate and do not promise well for the standard
of civilization in the United States."

[He] complained that many of them "have no money at all.  They land in this country without a cent in their pockets." ...He objected that many "stay but a short time in the United States" in order to "then return to their native country with such money
as they have been able to save here." He warned that these sorts of
immigrants, "who come to the United States, reduce the rate of wages
by ruinous competition, and then take their savings out of the country, are not desirable. They are mere birds of passage. They form an element
in the population which regards home as a foreign country, instead of
that in which they live and earn money. They have no interest or stake in the country, and they never become American citizens."

Whoa, who is that?  J.D Hayworth?  Tom Tancredo?  Surely its someone bashing on Mexican immigration -- the mantra is so familiar.

Well, no.  Actually, it is Henry Cabot Lodge, in 1891, most likely referring to your grandparents.  In these words, he was speaking mainly of Italians, but they are the same charges made against the Irish in the mid-19th century or Eastern Europeans in the early 20th century or, of course, against Mexicans today.  Do you really want to stake out the position that yes, this argument was wrong every time it has been used in the last 200 years but it's suddenly right today?

There have been a number of articles of late about college admissions and Asians.  For example, my alma mater Princeton is getting sued by a young man who says the school's admissions standards are discriminatory against Asians  (he was forced to go to Yale instead, which in my mind represents substantial pain and suffering).  David Bernstein at Volokh also had this:

Liming Luo is a high school senior who is both a math prodigy and received a perfect 2,400 score on her SATs.  New York Magazine
asked Katherine Cohen, CEO and founder of IvyWise, a school-admissions
consulting company, about her [and other students'] prospects for
admission to MIT, the college of her choice. The answer:

Her perfect SAT score is truly outstanding but not a free ticket.
She is applying to many technical colleges, so she will be competing
against a lot of other high-achieving math/science kids (and a lot of other Asian students in particular). While she may be admitted to MIT early, I am not convinced she's a shoo-in"”I'd want to see more evidence that she's giving back to the community.

I don't know enough to comment on the Asian issues, but I wanted to make a couple of other points.  First, Bernstein is probably correct in wondering why there is such a focus on "giving back to the community" for an 18-year old girl who appears to be a math genius.  But his question is naive.  I can say from experience that everything on an application for college may be negotiable (e.g. good athletics allows for lower SAT scores) except for community service.  That has become inviolable.  Every college prep school I know have elaborate programs nowadays to make sure their kids get lots of community service hours.  My son, at the age of eleven, missed on his first shot at National Junior Honor Society because he only had about 20 hours of community service.  I can tell you that for college-bound high school kids, community service is longer about volunteering and giving back but about grimly checking off one of the most important boxes for college applications.

My other thought is that you don't have to be Asian to worry nowadays that near-perfect SAT's and grades are not enough to get one into the Ivy League.  As you can see here, placing in the 99th percentile on SAT's only gives one a 1 in 5 shot at getting in to Princeton.  The other thing you can see is that top Ivy's are being honest when they say they want more than just good grades -- you can see at Princeton and Harvard that moving from 91st to 99th percentile on SAT's does little to improve a person's prospect of getting in.  (On the Asian discrimination issue, that means that more than half of the kids in the top 1 percentile of SAT's will get turned down by Princeton, and some of these will be Asians.  Whether that is discrimination or just brutally tough admissions is hard to say).

Which leads me to my main point -- the Ivy League needs to find a way to increase capacity.  The number of kids that are "ivy-ready" has exploded over the last decades, but the class sizes at Ivy schools have remained flat.    For years I have been campaigning at Princeton for this, and I am happy to see they are increasing the class size, but only by a small amount.  Princeton has an endowment larger than the GNP of most countries.  To date, it has spent that money both well and poorly.  Well, because Princeton is one of just a handful of schools that guarantee that if you get in, they will make sure you can pay for it, and they do it with grants, leaving every student debt free at graduation.  Poorly, because they have been overly focused on increasingly what I call the "educational intensity" or the amount of physical plant and equipment and stuff per student.  In this latter case, we have got to be near the limit of spending an incremental $10 million to increase the education quality by .01%.  We should instead be looking for ways to offer this very high quality of education to more people, since so many more are qualified today.

By the way, one of the reasons Ivy League schools don't take my advice is because of the faculty.  The very first thing that the faculty wants is more endowed chairs, more equipment, more office space, etc.  The very last thing most faculty wants is more students that would force them to actually teach more rather than publish and do research.

Postscript:  OK, I will make one comment about the Asian kids thing.  I don't know if what Ivy admissions offices are doing is discriminatory or not.  But I do know that among the white parents of college-bound high school students that I know, there is real undercurrent of anti-Asian resentment.  I can't tell you how often I hear stuff like "Oh of course he does well, he's Asian" or "I don't know if my kid can get into X, all the Asian kids get the spots."  Its a strange, resentful sort of racism I see all the time from parents who would never be caught dead uttering anything untoward about blacks.  There is this funny feeling I get in some of these conversations that it's OK to dislike Asians in a way that would never be perceived as OK for blacks.

Under both state and federal law, it is illegal for me to hire anyone without documenting that they are in fact a legal US resident and have the right to work in the US.  Those of you who read this blog know that this irritates me, given my support for open immigration, but I do it.  It is also illegal for me not to make all the relevant state and federal social security and income tax withholdings for each employee, as well as pay premiums into state and federal unemployment funds, all of which require that I have an accurate social security number from each employee.  No valid social security number, no job.

All this mess is hard enough to comply with, and it takes a lot of my managers time, a full-time HR person, and thousands of dollars sent to ADP to stay legal.

And then I see this:

A Mississippi Democrat in line to become chairman of the House Homeland
Security Committee has warned the nation's largest uniform supplier it
faces criminal charges if it follows a White House proposal to recheck
workers with mismatched Social Security numbers and fire those who
cannot resolve the discrepancy in 60 days.

Rep. Bennie Thompson said in a letter to Cintas Corp. it could be
charged with "illegal activities in violation of state and federal law"
if any of its 32,000 employees are terminated because they gave
incorrect Social Security numbers to be hired.

Great.  Now I can go to jail both for employing folks without a valid social security number and for not employing folks without a valid social security number.

Unemployment insurance is a disaster for a seasonal business like mine.  As background, most of my employees are retired, and don't really need to work.  They work for me in the summer, and then frequently take the winter off.  Unfortunately, some of the more unscrupulous ones will file for unemployment over the winter, telling the state office they are looking for work (usually a requirement) when in fact they have no intention of working.  I had two employees last year for whom I received a notice of their unemployment filing the very same day they called me to tell me what a great time they are having over the winter fishing in Mexico.

For those who don't know how it works, if I get a lot of unemployment claims I am punished with a higher rate the next year, despite the fact that by the nature of the business I have absolutely no work I can offer people in the winter.  Not surprisingly, I guess, my worst problems with such behavior are in the three Pacific coast states (CA, OR, WA) where the prevalent culture of big government benefits and limited individual responsibility combine to make people feel totally OK about such malfeasance  (this behavior is 20 times more prevalent for me in these three states vs. the other ten we operate in).  In fact, I have challenged several people who I knew were not looking for work and cheating me and the unemployment system and, rather than deny the charges, they threatened me with a lawsuit if I either reported them to the state or disciplined them in any way.

I'm not really going anywhere with this -- this is just my annual rant I post every year when I get my unemployment insurance rates for CA and OR.  I pay over 6% of wages as premiums in CA, and there is not a thing I can do about the fact that all the facilities we run are under 10-20 feet of snow in the winter and don't need employees.

I have long suspected, but can't prove, that most of the recycling we do is worthless.  I look in my recycling bin and think -- it's got to be cheaper to start with the raw material than what's in this bin.  The problem is hidden system costs.  For example, everyone thinks they are saving energy by recycling.  But in my town, as in most towns, recycling basically doubles the vehicle miles driven by the sanitation trucks to get all the waste out, because we get a visit from the "trash" truck and later in the week get a visit from the "recycling" truck.  Plus there is all that extra labor in the pickup and the sorting.  And that is all before the processing costs.  And all this is without even considering the staggering amount of "free" labor the recycling system gets from you and I as individuals.**

The Mises Blog has a link to the online video of a Penn & Teller Bullshit! show that takes on this very issue.  Since its Penn & Teller, its both funny and smart, and comes to the conclusion that only aluminum can recycling really makes sense.  All the rest is a big feel-good circle jerk that really saves no money or energy.  Its particularly funny when they put about 15 different colored cans in front of one guys home and tells him each is for a different type of material.  The one addition I would make is that reusing an object for its original use almost always saves money -- for example, we save Amazon boxes to use when we ship things out.

Along the same lines of hidden costs, this study sent to me by a reader looks at the total lifetime energy costs of automobiles, including their manufacturing and transportation as well as their fuel use.  I can't vouch for it's accuracy, but the results are somewhat surprising -- for example, most hybrids have lifetime energy costs higher than average for vehicles.

** But recycling is easy!  It hardly takes any time!  Well, let's say it takes only an incremental 1 minute a week from each individual in the country to recycle (a number that is lower than the actual, I think).  That translates to 260 million man-hours a year or the equivalent of 130,000 full time jobs.

For some reason, probably because no one there has actually read my blog, the Minutemen Project has me on their email list for press releases.  This one caught my eye:

Judge John H. Wilson has stepped out of his judicial robes to write a children's book. Hot House Flowers is aimed at entertaining and educating children, but adults will find the story an informative and useful object lesson in politics and current events and a cautionary tale to share with family and friends.

Judge Wilson tackles the topic of illegal immigration in an imaginative manner, and the publisher adds a colorful assortment of illustrations to the Judge's metaphorical story of cartoon "hothouse flowers" which must resist the intrusion of weeds from outside the borders of the protected house.

On first reading this, I wanted to barf.  Comparing immigrants to weeds that attack us lovely (Caucasian) flowers is really insulting.  However, on second thought, I thought this analogy was somewhat apt. 

A hothouse flower is one that can't compete or survive outside of the limited confines of its greenhouse.  Rather than being able to survive on its own, a hothouse flower takes a ton of outside care and feeding.  The very term "hothouse flower" when applied to a person tends to mean someone who can't really function in the real world.  And in some sense this is what our citizens and businesses will become in a Lou-Dobbsian world of limited immigration and trade protectionism, each of us hot house flowers or Marie Antoinette's who have no ability to function in the larger world.  We all need healthy interchange and competition with the world at large to stay vital and growing as a country and as individuals.

By the way, a lot of those weeds turn into flowers:

"Over the past 15 years, immigrants have started 25 percent
of U.S. public companies that were venture-backed." These businesses
employ some 220,000 people in the U.S. and have a current market
capitalization that "exceeds $500 billion, adding significant value to
the American economy."

All your bsae are belong to us.  (Explanation of pop culture reference here)

From Yahoo news.  Cindy Sheehan gets the award this week for being a worse speller than I am.  By the way, I believe the issue at hand is actually a base relocation rather than an expansion, but I may be behind on the story.

Via Overlawyered, this is the hilarious account from a Doctor Hebert about finding out that he was suing Cisco.  He was a little non-plussed by this:

Did I want to sign up for the largesse, it inquired. It politely
offered me the option of declining, saying, "IF YOU DO NOT WISH TO BE
INCLUDED IN THE CLASS AND YOU DO NOT WISH TO PARTICIPATE IN THE
PROPOSED SETTLEMENT DESCRIBED IN THIS NOTICE, YOU MAY REQUEST TO BE
EXCLUDED." (The capitalization is theirs. I am not usually that
annoying.) Well, THANK GOD, I said. I can opt out of a lawsuit that was
filed in my name without my approval if I should have, well, you know,
scruples.

Except, as lawyers like to say, don't neglect to
read the next sentence. And the next, and the next, and the next, and
the next. Somewhere in there is the  gotcha. "TO DO SO, YOU MUST SUBMIT
A WRITTEN REQUEST FOR EXCLUSION THAT MUST BE RECEIVED ON OR BEFORE
OCTOBER 31, 2006."

All right, now. I got the letter on
November 13, 2006. Admittedly the U.S. Post Office is slow, but I'll
give them credit for getting a letter from the West Coast to
Mississippi in less than 14 days. Unfortunately, the letter was mass
mailed and thus bypassed the local post office. It bore no postmark. In
other words, I got the letter two weeks too late to opt out of the
lawsuit, and I had no postmark to prove it was intentionally mailed out
late to prevent me from refusing to participate. The old expiration
date trick. That was slick, Mssrs. Lerach, Coughlin, Stoia, Geller,
Rudman, Robbins, Levin, Papantonio, Thomas, Mitchell, Echsner, &
Proctor -- real slick.

He is even more non-plussed to learn that he is in line for a check for $0.90, while the lawyers are in for $23.9 million.  I feel his pain.  I, for example, have been informed on several occasions that Visa and Mastercard, among others, are being sued in my name, though I never engaged anyone to do so.

Update:  Another huge fee for the attorneys, 50-cent coupons for customers class action is in the midst of an ugly fight over attorney billing rates - ironically in a cosmetics lawsuit alleging overpricing.

Among the alleged abuses were
bills of $195 an hour for work by paralegals who were paid just $30,
claims that attorneys and paralegals worked 24-hour or even 72-hour
days, and charges of $90 an hour or more for cleaning desks and
filing....

                           
                           
                              

According
to records filed with the federal court, individuals at one legal group
representing the class, the Law Offices of John Burris in Oakland,
billed as much as 72 hours in a single day for document review and, in
dozens of instances, billed for 24-hour days.

Of course the attorneys had a strong rebuttal to these revelations:

The lawyers accused of overstating their hours and expenses responded
by strenuously objecting to Judge Armstrong about the public disclosure
of their billing records, which the attorneys said were confidential.

Sorry posting has been light this week.  A reader was nice enough to point to the latest rant by Lou Dobbs here.  Apparently, he has decided to take the position that free traders are now elitists, while folks like him who want the government to pick and choose winners among American businesses and industries as "populist."  The obvious response of course is that beneficiaries of American protectionist legislation tend to read as the who's who of politically connected elitists.  It is also hilarious to equate free trade, whose benefits are backed by 100 out of 100 economists, with some irrational faith-based belief system.  But I will leave that aside to point to this line:

He and others completely disregard the $5 trillion in trade debt that
the United States has built up through 30 consecutive years of trade
deficits. That trade debt is rising faster than our national debt and
is simply economically unsustainable, no matter what any faith-based
economist would argue. Our political, business and media elites
continue to disregard reality.

Here is my very, very simple challenge for Lou Dobbs to help those of us who obviously don't get it:  Point to where this $5 Trillion of Debt is.   What private individuals or corporations owe it to whom?  That should be simple.  With the national debt, we can just go out and count all those government bonds.  But where is this trade "debt"?

Answer:  IT DOESN'T EXIST.  What he means is that over some time span of several decades, American has a cumulative trade deficit of $5 trillion.  But trade deficit does not mean debt.  I showed this in great detail here.  Calling it a "trade debt" is not a sloppy mistake on Dobbs part but an outright lie, meant to make the point that running deficits every year is unsustainable.  But America has become the wealthiest country in the world running trade deficits for the majority of the last 100 years.   In fact, one can argue that the trade deficit itself only exists as a phantom of the awkward and limited way in which we measure trade. 

Postscript: I constantly get people who write me that the fact the Chinese are buying up a lot of US government bonds or corporate bonds with their trade profits is proof of a "trade debt."  No such thing.  The US Government bonds are evidence of a fiscal deficit of the federal government, also called the national debt, and exists not because of trade but because Congress has no fiscal discipline.  Corporate debt is growing to buy back stock, make corporate acquisitions, and to buy new plants and facilities.  The fact the Chinese help to fund these debts does not mean that trade caused this debt.  In fact, foreigners buying US debt securities depresses interest rates and actually keeps the national debt lower.

Here is a thought experiment:  Wal-Mart runs a multi-billion dollar trade deficit every year with China.  Why isn't it building up lot's of debt to the Chinese?

Kevin at Truck and Barter has a great article where he fact checks a statistic he found in a "non-fiction" book.  And what do you know, it was not only wrong, but way off.  And, to make matters worse, changing the statistic to its correct value undermines much of the premise of the book:

What an utter refusal to check sources and validate simple statistics!
THIS IS NOT MY JOB, nor the job of any of Ms. Robbins' readers. It's
the job of the author and editors. I don't know if I should even bother
continuing to read the book at all, as I've spent 1/2 hour tracking
down just one horrendously wrong data point. How many more will be this
wrong???

My hypothesis is that this happens all the time, especially in media reports about various social ills.  We have all suspected that if you add up all the people in articles that suffer from X or Y, it would include everyone in the country, probably three times over.  Part of this is the very poor scientific and statistical background of most writers and editors.  However, I think it also is a problem of skepticism.  Editors and reporters don't necessarily have the time to fact-check everything, so they do a kind of triage using their own personal skepticism as a guide.  And I think most reporters and editors are more than willing to believe that nearly every social ill discussed -- homelessness, teen suicide, drug abuse, hunger, etc. etc. -- are prevalent and getting worse, so they seldom really push back on relevant numbers for these issues.  Most publishers and media outlets have pushed hard for diversity of skin color, but these groups remain pretty uniform in their outlook and basic assumptions about society, and so their failures of skepticism are pretty predictable.

Milton Friedman kept alive both the economic and philosophical basis for free markets and classical liberalism through the 60's and 70's when few others stood willing to carry the torch.  Like only a handful of other economists, he successfully went beyond pure economics to champion the link between economic liberty and all other freedoms.  But he was perhaps unique in taking this perspective to the masses, in ways that connected with the average person.  He will be missed.  In tribute, I guess I need to go out and pay for lunch today.

Update:  Tom Kirkendall, one of the best bloggers you may have never read, has a great roundup of Friedman quotes.  Also, Alex Tabarrok reminds us of this great Friedman quote:

President Kennedy said, "Ask not what your country can do for you - ask
what you can do for your country."... Neither half of that statement
expresses a relation between the citizen and his government that is
worthy of the ideals of a free society.

I have been thinking about this previous post on trade and wanted to improve my answer to Jon Talton, our free-markets-hating business columnist in the Arizona Republic.  In his recent column advocating that we finally give up on all this free trade stuff, he said:

Americans were assured that new trade accords and China's membership in
the World Trade Organization would mean better living standards for
American workers. That's because China and other countries supposedly
would buy American exports.

I thought my answer was OK, but I want to take another shot at it, because I hear the argument all the time that "trade only benefits the US if other countries buy our exports."  This is wrong, but this misconception drives many people's thinking on trade.

If we are importing more from other countries but they are not "buying more of our exports," such that we have a large trade deficit, there are two possibilities to explain this:

• The definition of exports is too narrow
• Someone is throwing away value by building up a big pile of US dollars

The first is the most likely explanation.  A dollar is valueless in China, and the UK, and France except to the extent someone thinks they can eventually use it to buy something in the US.  Dollars that aren't or can't be used to buy dollar-denominated assets of some sort have no value.  The money a Chinese exporter accepts from Wal-mart is only valuable if they can recycle it and buy something in the US with it (or trade the dollars to someone else in China who wants to buy something in the US). 

So the dollars we send overseas for imports are going to come back.  But the  reason our trade accounts are out of balance is that the trade deficit numbers they quote on TV define our exports narrowly.  In short, "exports" as commonly measured don't include all the things we sell to foreigners for dollars.

One example of this is if a Chinese company takes the $10 million dollars it earns from exporting to the US and then invests $10 million in US materials to build a factory in the US.  That sounds OK, right?  That seems to be in balance.  But in the way we calculate the trade deficit, that would show as a $10 million trade deficit, because goods (and services) that foreigners buy in the US and consume in the US (rather than back in their home countries) are not considered an "export."  In fact, I would consider this "better" than an export, since both the dollars and the goods stay in the US.  But to trade deficit hawks, this is worse, mainly because their measurement is flawed.

A second example is if a Chinese company take the $10 million dollars it earns from exporting to the US and invests the money in US mortgage bonds.  Again, this would show as a trade deficit, but the US economy benefits from lower interest rates.  In this case, we are again selling foreigners a product, in this case wealth protection, which the US is very good at since we have a more stable economy and stronger rule of law than any other country in the world.  And again, the way we measure "export" does not encompass this product, since our trade measurement has a strong manufacturing bias that does not match the more diverse nature of our economy today.  (For those that lament forefingers helping to fund the enormous government debt, I share your pain, but that is a government spending problem and not a trade problem).

But what if the foreigners are totally perverse.  What if they ignore their own best interests and refuse to buy our exports and just sit on the dollars they get from trade without recycling them in any way to the US?  What if they do this even if by doing so, they would be throwing away billions, even trillions of dollars in value?  As absurd as this sounds, this is exactly the concern Talton and other trade-skeptics raise.

Well, the US in this case would STILL be better off.  First, the US would be getting whatever goods we are buying overseas cheaper or better (or else people would not be buying them).  This would reduce the costs of inputs to other products, and increase money consumers have to spend on other things.  The labor that would have gone into making these products domestically would be redeployed to making other things, increasing our net wealth. 

By the way, it is this last sentence I think Talton and his peers would not accept.  They tend to view employment as zero-sum, ie there are a fixed number of jobs in the world, and if we import, that creates jobs overseas which must reduce jobs in the US.  But labor markets have never worked that way.  As I wrote before:

I have taken on this zero-sum mentality before,
but it is particularly wrong-headed in this case.  Historically, the
argument makes no sense.  For example, the automation of the farm
sector wiped out 80 or 90% of the farm jobs in the US over the last
century.  By the zero-summers logic, we should be impoverished.
Instead, these people were redeployed to manufacturing and service jobs
that create far more wealth than the old 19th century farm employment.
But while people can sort of accept this historically, they can never
accept this in real-time.  But the fact is that when we lose, say, a
textile job to foreign competition, we not only gain because everyone
pays less for textiles and thus has more money to spend on other
things, but that worker gets redeployed over time to higher-value
functions.  Look at the old textile belt in North Carolina - what's
there now?  Electronics and Bio-tech.

By the way, the other thing that would occur if foreigners just buried dollars in the sand without recycling them is that the value of the dollar would rise to levels higher than it would be at if these countries recycled their dollars, thus further lowering the price of inputs for the US.  Talton laments this very effect:

Now, the populists will get a chance to make their arguments,
especially over what the American response should be to Chinese
currency manipulation, tariffs and subsidized exports.

The currency manipulation and subsidized exports have one thing in common:  They are both ways that the Chinese destroy value for their own citizens in order to lower prices for American consumers.  And Talton claims that the populist argument should be to end these practices?  Why?  I think its great that the Chinese want to hold billions in dollars just to keep the dollar high and prices low in the US.  I think its great that their taxpayers want to subsidize lower prices in the US.   I can understand why a Chinese citizen might want this to stop, but why should we, who are the beneficiaries?

Update: By the way, another common misconception is that a trade deficit implies someone is building up a debt.  This is not (not not not) at all true.  We can run a trade deficit indefinitely without building up a debt.  Yes, foreigners are currently investing some of their trade profits in US government bonds necessitated by the federal government's deficit spending, but the two are only weakly related - a trade deficit does not cause government debt.  A great way to see if a columnist has any idea what they are talking about is to see if they confuse the federal budget deficit with the trade deficit.  It is almost funny how often I see this confusion appears in print.  Anyway, this confusion is why people like Talton call the trade deficit "unsustainable".  See my posts on why the trade deficit is not a debt (and here).

Am I the only one who gets ethical qualms about frequent flier programs?  If your job was to buy supplies for the company you work for, and a printer company offered to give you and your family a Hawaiian vacation if only you would have your company buy their printers instead of the competition's, could we all agree that would be a kickback or bribe?  And that it would be, if not illegal, certainly unethical?

So why don't the same rules apply to airline travel?  When buying an airline flight for business, you are acting as a purchasing agent for your company.  And the airlines, in the form of frequent flier miles, are offering you [not the company] something of value to steer your corporate purchasing decisions to their product.  Frequent flier miles are a blatant kickback.  Informal poll:  How many of you have purchased flights that are a worse deal for your company but a better deal for your frequent flier account?

A further rant: OK, if you are not turned off by that rant, here is a related one about Visa cards that give out frequent flier miles.  As mentioned earlier, these are hugely profitable for credit card companies, so much so that they create much of the value in modern airlines.  Credit card companies, perhaps the only stable monopoly I have seen in my lifetime, have perfected the art of forcing retailers to subsidize their credit card users. 

Now, a fairly rational person would expect that a cash transaction is cheaper than doing one on credit.  However, due to the very strong position of MC and Visa processors, credit card customers actually get a lower price than cash customers.  Here is why:  Credit card companies have taken to giving their users a rebate on their purchases, either in cash or frequent flier miles or some other compensation.  These rebates are funded by charging higher interchange fees to merchants (basically a percentage of credit card transactions cleared).  The magic occurs because merchants, in their processing agreements, are generally banned from giving discounts to customers for using cash.  As a result, the higher credit card interchange fees are spread among all customers, cash or credit card, equally.   The result is that credit card customers pay lower net prices than cash customers, when the rebates are factored in.

Though our trade association tries to seek government action of some sort, I am neither confident that this will help or philosophically inclined to ask for such help.  Right now, I am working within the association to try to build support for some sort of one day boycott against accepting credit cards as a starting point to trying to build up some group negotiating power vs. the credit card processors.