Coyote Blog

I am not sure I am able to continue blogging in the current environment.  When I began blogging over 12 years ago, it was to report on my various adventures in trying to run a small business.  It soon morphed into a platform for me to think out loud about various policy issues.  For example, while I didn't really understand this when I started, it became a platform for me to think through mistakes I made in my initial enthusiasm for the Iraq War.  You can see me in the early years evolve from a kind of knee-jerk global warming absolute denier to a lukewarmer with much more understanding of the underlying science.  I think of myself as an intellectual (though one who cannot spell or proof-read) who likes to discuss policy.

But I am not sure this is the time for that.  The world seems to be moving away from intellectualism.  I say this not because Trump voters were somehow rejecting intellectualism, but because intellectuals themselves seem to be rejecting it.  They act like children, they are turning universities into totalitarian monoculters, and they compete with each other to craft mindless 140-character "gotchas" on Twitter.  I challenge you to even find a forum today for intellectual exchange between people who disagree with one another.  In politics, Trump clearly rejects intellectualism but for whatever reasons, the Democratic opposition has as well.

We have a tribal war going on in this country that has officially gone beyond any real policy issues.  While the US and the Soviet Union had real differences in philosophy and approach, most of their confrontations were in proxy wars which bore little resemblance to these values.  That is what politics are now -- a series of proxy wars.  We spend several days focusing attention on Jeff Sessions, but spend pretty much zero time talking about real issues like approaches to the drug war, and police accountability, and sentencing reform.  Instead all we can focus on is the political proxy war of this stupid Russia hacking story.   Obama's birth certificate and Hillary's servers and Russian hacking and Trump's real estate sales -- all we fight are proxy wars.

And like most tribal warfare, the two tribes are incredibly similar.  I have called them the Coke and Pepsi party for years.  Go talk to the the rank and file and sure, one group may like Nascar and barbecue while the other likes Phish concerts and kale, but you will see them asking for the same sorts of things out of government.   Take the minimum wage, a traditional blue tribe issue.  In Arizona, a heavily red state (we have a super-majority in the legislature of the red team), a $10 minimum wage referendum passed by nearly 60% of the vote last year.  The members of the two tribes absolutely hate each other, but they support the same laws.  I guess I should be happy they don't get together, since as a libertarian I think many of these things they want are bad ideas.

People tell me I need to just deal with the adversity.  But I don't mind opposition per se.  I love when I get a chance to respond to real criticism.  Hell, I wrote 5000 words or so here in response to such criticism.  It's fun.  But more likely nowadays I will write a couple thousand words on school choice and the response will be, in total, "Your a Trump cuckservative."  Several years ago I wrote a long article on rail in response to a Joel Epstein piece.  Epstein had argued the US rail rail system was inferior to those in Europe and Asia because we don't have enough passenger rail.  I argued with a series of charts and analysis that the US rail system was superior because it focused on freight over passengers, and that shifting freight to rail had far more environmental benefits than shifting passengers to rail.  Epstein's entire response to my article was, "You should get out of the country more often."  This is the classic intellectual argument of our day.  It was smug.  It implied my article was based on being part of the wrong tribe, the narrow-minded denizens of flyover country rather than the coastal set that have been to Gstaad but not Tulsa.  At it did not even bother addressing the issues raised.

Or look at Black Lives Matter.  BLM actually had what looked to me to be the outlines of a pretty good plan.  To really achieve their goals, though, was going to take a lot of work jurisdiction by jurisdiction, establishing some model legislation and best practices and bringing it to various municipalities.  It didn't even try.  It abandoned this plan in favor of just disrupting sh*t and shaming the unwoke for saying that "all lives matter."  Today, invocations of BLM consist pretty much 100% of virtue signalling for one's own tribe or shaming of the other tribe.  Its the equivalent of dueling fans at a game yelling "Yankees suck!" "No, Red Sox suck!"

People also tell me to just deal with it, that if I love the policy stuff I should ignore these problems.  But let me give you an analogy.  Let's say you absolutely love English Premier League football, but every time you try to go to a game, you miss most of what happens on the field because hooligans are fighting around you in the stands.  Do you keep going for your love of football or at some point is the mess that surrounds it just too much?

Anyway, I am highly tempted just to say "screw it" for a while and focus on something else entirely.  I am trying a different approach as a change of pace, trying to write a more formal policy piece for a think tank, but I am having a surprising amount of trouble doing it well.  Writing such pieces was not really my forte at McKinsey when I was a consultant and I am not sure it is now.  Not disciplined enough in my writing, I think.

Anyway, on a positive front, I now have a dedicated (though very small) room for my model railroad and I installed the first bit of benchwork.  This is sort of like laying the keel for a new ship.  Coyoteblog readers, I know, will be hanging on the edges of their seats for further updates.

From Parks and Recreation:

Jean-Ralphio: Why don’t you use that time to go after one of your passions? Like model trains, or toy Gandalfs or something.

Ben: I don’t know why you jumped straight to model trains. I mean, it’s accurate…

I thought this Megan McArdle interview of Yuval Levin explained a lot about how the Congressional budgeting process has gone off the rails.   It does not blame anyone as somehow guilty of being bad actors, but merely looks at shifting incentives for parties and legislators and how these have gotten us where we are.  One example:

The process began to decay in the mid-1990s, when something very important changed in Congress. After 40 years of Congress understanding itself as an institution run by Democrats, with Republicans exercising power by putting pressure on internal Democratic divisions (and making demands in return for giving votes to measures that couldn’t quite get enough Democrats), Republicans took control.

When Republicans took control, Congress didn’t settle into a new partisan pattern, but instead settled into a sense that control could switch with the next election -- always.

So it's not that Republicans failed to run the budget process, but that both parties started thinking very differently about Congress. Now, the minority party tends to think the imperative is to keep the majority from getting anything it wants, instead of making trades in order to get something from its own to-do list, because that list would be much easier to achieve after the next election if control changes hands. And the 1974 process is a poor fit for that set of incentives.

Given that this blog is a net financial loss to me, I do other things to put food on the table.  My actual day job, as some of you know, is running a company that privately operates public recreation areas.  I presented at a conference on new ideas for public recreation a couple weeks back in Washington.  This was my presentation:

All the presentations are grouped here.

You are likely aware that the US, and many other countries, are spending billions and billions of dollars on climate research.  After drug development, it probably has become the single most lucrative academic sector.

Let me ask a question.  If you were concerned (as you should be) about lead in soil and drinking water and how it might or might not be getting into the bloodstream of children, what would you spend money on?  Sure, better treatments and new technologies for filtering and cleaning up lead.  But wouldn't the number one investment be in more and better measurement of environmental and human lead concentrations, and how they might be changing over time?

So I suppose if one were worried about the global rise in temperatures, one would look at better and more complete measurement of these temperatures.  Hah!  You would be wrong.

There are three main global temperature histories: the combined CRU-Hadley record (HADCRU), the NASA-GISS (GISTEMP) record, and the NOAA record. All three global averages depend on the same underlying land data archive, the Global Historical Climatology Network (GHCN). Because of this reliance on GHCN, its quality deficiencies will constrain the quality of all derived products.

The number of weather stations providing data to GHCN plunged in 1990 and again in 2005. The sample size has fallen by over 75% from its peak in the early 1970s, and is now smaller than at any time since 1919.

Well, perhaps they have focused on culling a large poor quality network into fewer, higher quality locations?  If they have been doing this, there is little or no record of that being the case.  To outsiders, it looks like stations just keep turning off.   And in fact, by certain metrics, the quality of the network is falling:

The collapse in sample size has increased the relative fraction of data coming from airports to about 50 percent (up from about 30 percent in the 1970s). It has also reduced the average latitude of source data and removed relatively more high-altitude monitoring sites.

Airports, located in the middle of urban centers by and large, are terrible temperature measurement points, subject to a variety of biases such as the urban heat island effect.  My son and I measured over 10 degrees Fahrenheit different between the Phoenix airport and the outlying countryside in an old school project.  Folks who compile the measurements claim that they have corrected for these biases, but many of us have reasons to doubt that (consider this example, where an obviously biased station was still showing in the corrected data as the #1 warming site in the country).  I understand why we have spent 30 years correcting screwed up biased stations because we need some stations with long histories and these are what we have (though many long lived stations have been allowed to expire), but why haven't we been building a new, better-sited network?

Ironically, there has been one major investment effort to improve temperature measurement, and that is through satellite measurements.  We now use satellites for official measures of cloud cover, sea ice extent, and sea level, but the global warming establishment has largely ignored satellite measurement of temperatures.  For example, James Hansen (Al Gore's mentor and often called the father of global warming) strongly defended 100+ year old surface temperature measurement technology over satellites.  Ironically, Hansen was head, for years, of NASA's Goddard Institute of Space Studies (GISS), so one wonders why he resisted space technology in this one particular area.  Cynics among us would argue that it is because satellites give the "wrong" answer, showing a slower warming rate than the heavily manually adjusted surface records.

This is from a couple of years ago, so the numbers will only be larger:

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he's built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

"He definitely goes where there is government money," said Dan Dolev, an analyst at Jefferies Equity Research. "That's a great strategy, but the government will cut you off one day."

The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars.

Back in November of 2015 I wrote:

I would be stunned if the Volkswagen emissions cheating is limited to Volkswagen.  Volkswagen is not unique -- Cat and I think Cummins were busted a while back for the same thing.  US automakers don't have a lot of exposure to diesels (except for pickup trucks) but my guess is that something similar was ubiquitous.

My thinking was that the Cat, Cummins, and VW cheating incidents all demonstrated that automakers had hit a wall on diesel emissions compliance -- the regulations had gone beyond what automakers could comply with and still provide consumers with an acceptable level of performance.

Since then Fiat-Chrysler has been accused of the same behavior, and now GM is accused as well, though only in  a civil suit.

A class-action lawsuit accuses General Motors of rigging emission-control systems on 2011–2016 Chevrolet Silverado HD and GMC Sierra HD pickups with GM’s Duramax turbo-diesel 6.6-liter V-8 engine. If the allegations are proved true, the environmental damage from these 705,000 trucks, which the lawsuit said emit two to five times the legal limit of nitrogen oxides (NOx) in typical driving conditions, could easily exceed that of Volkswagen’s emission-test-cheating TDI engines.

Of course, people can say any thing they want in a civil suit, so this needs to be proved, but I think it probably is true.

A while back a reader with some inside knowledge explained what was going on.

Buzzfeed obtained some internal admissions documents from Princeton, and I find them eye-opening, but perhaps not for the reasons others have.   The documents were part of an investigation triggered by several Asian-American students who accused the University of discriminating against them -- a claim I find credible from my own experience interviewing candidates.

There is nothing in the released material than convinces me I was wrong about Asian-American recruiting, but I want to leave that question aside for today and highlight something I have not heard anyone mention about the documents.  I am not sure if they are evidence of discrimination or not, or even if that discrimination really is or should be legal if it existed in a private institution.  But what is very clear is that the admissions department has very particular attitudes about race and ethnicity: it appears that race does not "count" if the student involved hasn't done something to highlight their race.  Or put another way, the admissions folks seem to be penalizing minority candidates for not obsessing about their race.  Here are a few examples:

Of a Hispanic applicant, an admissions officer wrote, “Tough to see putting her ahead of others. No cultural flavor in app.”

“Were there a touch more cultural flavor I'd be more enthusiastic,” one officer wrote of a native Hawaiian/Pacific Islander.

officers candidly discussed the race of black, Latino, and Native American applicants, often seemingly searching for those who highlighted their racial backgrounds rather than checking off boxes on their Common Applications.

"Nice essays, sweet personality," one admissions officer said of a multiracial applicant. "Bi-racial but not [National Hispanic Recognition Program] and no recognition of her [background] in app by anyone."

When one reader called an applicant's Native American heritage "appealing," the other noted that the only place the boy had mentioned the heritage was in a checkbox on his Common Application. He called himself "a white boy," the admissions officer noted.

I am guessing these are all code words for, "we don't see any race-based activism in this person's past."  So we only want kids who obsess about their race and ethnicity, and perhaps act really angry about it.  We don't want African-Americans or Hispanics or Native Americans who just seem like normal, reasonably happy, well-adjusted smart kids.

I have always been conceptually OK with ethnicity and some element of affirmative action being part of Princeton admissions, but this looks ugly to me.  I also wonder about how this will filter back to high schools.  Already, behaviors in private schools that send a lot of kids to top colleges has been changed over the years by perceptions of college admissions expectations.  There was a wave of thinking years ago that admissions departments liked kids who played musical instruments, so freaking every kid that graduates from elite private schools can play an instrument, though today it probably has no differentiating power (you will still see a few clever kids who find relatively unique instruments like the xylophone or the harpsichord).  Then there was a belief that you needed some sort of unique activity to stand out, and there was a wave of kids who clogged or practiced falconry.  Then the word got out that it was de rigueur to do community service, so everyone checks that box.  I wonder if we are not going to see a wave of private high schools riven with racial strife and activism because kids will feel like the only way their ethnicity will "count" at an Ivy League school is if they take over the headmasters office.  Well, it worked at Princeton, I guess.

Hat tip to Maggie's Farm, who from their link I think noticed the same thing.

This is pretty much a re-enactment of every discussion I ever have with my wife about our social calendar, with me as the dude on the right.

Third time in a row I have had an Uber drive stuck at 5 minutes away from me for 20 minutes, with their car sitting right on top of the nearest gas station.

It is hard for me to parse the news on Trump.  I made it clear I thought he was an egregious and unsuitable candidate in advance of the election, but I would like to evaluate what is going on in the Administration based on actual facts rather than my preconceived notions.

What makes this hard is that the whole Russia thing the media is obsessed over is almost certainly total BS.  It is, to my eyes, the Obama birth certificate of this election (sort of Karmic given Trump was about the last man standing after Joe Arpaio in publicly supporting the whole birth certificate thing).  It is not just me who thinks the Russia thing is absurd, Glenn Greenwald, certainly no friend of Republicans, agrees.

So given that the #1 story about Trump is probably completely bogus, is all the rest?  Is Russia representative of a general trend in poorly sourced attack stories on the Administration, or is it a distraction from substantial and real problems that are getting less play.  I have been suspicious that the answer is the latter and Megan McArdle has reinforced this opinion with this devastating wake-up call to Conservatives:

But for connected conservatives in DC, the media isn’t the only source of information about this administration. I’d venture to say that most of them have by now heard at least one or two amazing stories attesting to the emerging conventional wisdom: that the president either can’t, or refuses to, follow any kind of policy discussion for more than a few minutes; that the president will not be told no, or corrected about anything, forcing his staff to take their concerns to the media if they want to get his attention; that the infighting within the West Wing is unprecedentedly vicious, and that those sort of failures always stem from the top; and that his own hand-picked staffers “have no respect for him, indeed they seem to palpitate with contempt for him.” They hear these things from conservatives, including people who were Trump supporters or at least, Trump-neutral. They know these folks. They know, to their sorrow, that these people are telling the truth.

They can also compare what they’re hearing to what they heard, both on and off the record, during the last Republican administration. Even in Bush’s final days, when the financial crisis was in full swing and his approval ratings hovered around 25 percent, there was nothing like this level of dysfunction inside the White House, this frenzy of backbiting leakage.

So even though they agree with conservative outsiders that the media skews very liberal, and take all its pronouncements about Republicans with a heavy sprinkling of salt, they know that the reports of this administration’s dysfunction aren’t all media hype. They have seen the media report on their own work, and that of their friends; they know what sort of things that bias distorts, and what it doesn’t. Washington conservatives know that reporters are not making up these incredible quotes, or relying only on Democratic holdovers, or getting bits of gossip from the janitor. They know that the Trump administration is in fact leaking like a rusty sieve -- from the top on down -- and that this is a sign of a president who has, in just four short months, completely lost control over his own hand-picked staff. Which is why the entire city, left to right, is watching the unfolding drama with mouth agape and heads shaking....

So what conservatives here know is that the freakout in Washington, which looks from afar like a battle between Trump and “the establishment,” is actually one side screaming in amazement as the other side turn their weapons on each other.

Read the whole thing, as they say.  During the campaign, I took an analogy from WWI in which the Germans were being dragged down by an Austro-Hungarian Empire that could never seem to win a battle even against small or dysfunctional armies like Serbia, Russia, and Italy.  The Germans joked in black humor that they were shackled to a dead man.  Similarly, I wrote last year that in nominating Trump, the Republicans had shackled themselves to a suicide bomber.  I actually underestimated the problem -- I thought he would just lose the election big, but now he is blowing up the Republican agenda in a much more thorough way.

I have made this same point before -- immigration restrictions on who can and can't work in the US is effectively a Federal work permit requirement, one that could easily be expanded over time:

E-Verify, if implemented nationwide, would be a system of work permits. If you started a new job, you would need the federal government to verify that you are legally allowed to have that job. How long would it be before the government started making judgements about who should be allowed to work? Convicted sexual predators, even those who were, say 19, and sleeping with a consensual 16-year-old, have to register for life and are told that they can't live in certain parts of a city. Is it entirely inconceivable that some would ultimately be told that they can't work?

I can imagine far worse than that in today's society.   One must complete a certain number of hours of training and pass a series of tests to get a driver's licence.  How long before someone suggestions mandatory diversity testing and a woke-ness test before being allowed to work?

I hate to quibble about a paper that supports my preconceived notions, but I am bothered by this as linked by Tyler Cowen

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.

Isn’t it possible that cause and effect are being reversed here? I accept that zoning in places like SF make it more expensive. I would have concluded that this higher cost of living allows only the most productive to live there — less productive folks can’t afford it. So the high average productivity of these cities might partially be a result of their higher costs, not because the zoning somehow increases productivity, but because the zoning creates a sorting process where only the most productive may enter, which brings up the averages.  So a reduction in zoning and living costs would cause the productivity numbers for the city to average down as lower-productivity earners can move in.

I loved Kling's book on the three languages of politics.  While I find this a bit depressing, I mostly agree

I think that I would have preferred that the elite stay “on top” as long as they acquired a higher regard for markets and lower regard for technocratic policies. What has been transpired is closer to the opposite. There was a seemingly successful revolt against the elite (although the elite is fighting back pretty hard), and meanwhile the elite has doubled down on its contempt for markets and its faith in technocracy.

I am disturbed about the news from college campuses. A view that capitalism is better than socialism, which I think belongs in the mainstream, seems to be on the fringe. Meanwhile, the intense, deranged focus on race and gender, which I think belongs on the fringe, seems to be mainstream.

The media environment is awful. Outrage is what sells. Moderation has fallen by the wayside.

 

A reader sends me this (I never can remember which folks say its OK to use names -- if you want me to credit you, please say its OK in your email).

"The politician creates a powerful, huge, heavy, and unstoppable Monster Truck of a government," P.J. O'Rourke writes in his new book, How the Hell Did This Happen? (Atlantic Monthly Press). "Then supporters of that politician become shocked and weepy when another politician, whom they detest, gets behind the wheel, turns the truck around, and runs them over."

Which sounds like what I have written for years, eg here

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

The minimum wage of a laborer who places and picks up orange cones around a Federal highway project in California is set at $43.97 an hour (and yes, the wage rules are that detailed).  This is set by the Davis-Bacon Act and the wage determination is here (wage determination CA29, LABORER TRAFFIC CONTROL/LANE CLOSURE, Traffic Control Person II, wage plus fringe).

Here is your essay question:  Given that this equates to nearly $88,000 a year, how many truly unskilled workers would you expect to be hired by Federal stimulus projects, vs. other workers with more skills who are taking jobs below their skills and experience)?

Restrict supply, subsidize demand, and then declare a market failure.  That is how the government has jacked prices through the ceiling in higher education, health care, and housing:

Oregon is responding to its housing affordability crisis by doing all the wrong things. The crisis is due to a shortage in supply which in turn is due to urban-growth boundaries.

So the legislature legalized inclusionary zoning ordinances and Portland passed one. Such ordinances require developers to provide a certain percent of the homes they build to low-income people at below-market rates. In response, developers are building fewer homes, exacerbating the supply problem. City officials “hope the slowdown is temporary,” but that hasn’t proven to be the case in other cities that passed inclusionary zoning ordinances.

Now the state legislature is considering a bill to provide $5 million to help first-time home buyers make down payments on homes. This will have the effect of increasing demand, which will only drive up prices even more.

Some Conservatives are miffed that Trump is apparently not going to move the US Embassy in Israel to Tel Aviv

In March 2016, addressing the American Israel Public Affairs Committee conference, Donald Trump said that, as president, he would move the U.S. embassy in Israel to Jerusalem. Trump called that city “the eternal capital of the Jewish people.”

Now, however, President Trump has decided to keep our embassy in Tel Aviv. A senior White House official explained: “We don’t think it would be wise to [move] it at this time” because “we’re not looking to provoke anyone when everyone’s playing really nice.”

This promise to move the US Embassy in Israel is evergreen, and is always broken.  A similar promise by candidates such as Barack Obama to declare the Ottoman treatment of the Armenians to be genocide is another promise of symbolic action that is never actually implemented in office.  These mostly symbolic gestures are really powerful in campaigns, because they will tend to energize certain groups and make them more likely to vote for you.  But it turns out that each of these actions would tend to tick off unpredictable, scary, violent parties, the negative consequences of which might well outweigh the benefits of the gesture.  Even ignoring violence and irrationality, these actions impose an opportunity cost, likely limiting progress on other diplomatic fronts with these same parties.

This is why the vast majority of actual government actions reside in the lower left square in the framework below -- don't believe me?  Look at the legislative output from any particular session of Congress.  The vast majority of the actions taken are to declare some special day, a low-cost symbolic action meant to make some group feel warm towards some politician.

I often have to explain to folks that email addresses are not case sensitive.  But I confess I never knew this (applicable only to Gmail I think, other systems are different)

I recently discovered some little-known ways to use your Gmail address that can give you greater control over your inbox and save you some time and headache. When you choose a Gmail address, you actually get more than just "yourusername@gmail.com." Here are two different ways you can modify your Gmail address and still get your mail:

• Append a plus ("+") sign and any combination of words or numbers after your email address. For example, if your name was hikingfan@gmail.com, you could send mail to hikingfan+friends@gmail.com or hikingfan+mailinglists@gmail.com.
• Insert one or several dots (".") anywhere in your email address. Gmail doesn't recognize periods as characters in addresses -- we just ignore them. For example, you could tell people your address was hikingfan@gmail.com, hiking.fan@gmail.com or hi.kin.g.fan@gmail.com. (We understand that there has been some confusion about this in the past, but to settle it once and for all, you can indeed receive mail at all the variations with dots.)

For me, the real value in being able to manipulate your email address is that it makes it really easy to filter on those variants. For example you could use hikingfan+bank@gmail.com when you sign up for online banking and then set up a filter to automatically star, archive or label emails addressed to hikingfan+bank. You can also use this when you register for a service and think they might share your information. For example, I added "+donation" when I gave money to a political organization once, and now when I see emails from other groups to that address, I know how they got it. Solution: filtered to auto-delete.

The gender #paygap myth has certainly been tenacious.  Years ago someone threw out the figure that women earn 77% as much as men, and have since successfully been able to portray this as women not getting equal pay for equal work, despite the fact that the 77% is not at all corrected for equal work (when so corrected, for things like actual hours worked and differences between industries, the gap typically narrows to 5% or less).

The other day, however, the New York Post let a fact slip by that demolishes this whole gender pay gap meme.  The only explanation I can come up with is that it was in an article headlined "Childish men are to blame for women having kids late in life" so I suppose the powers-that-be assumed that the article must be OK if it was bashing men.  But in it we get this:

Women want an equal partner, but there are increasingly fewer candidates to choose from. The census reports that “the average adult woman in the US is more likely to be a college graduate than the average adult man.” Moreover, today’s young, childless female city-dwellers with college degrees are out-earning their male counterparts by 8 cents on the dollar. Their higher incomes may be why they are less likely (29 percent) to be living with their parents than single men (35 percent).

OOPS!  In the eagerness to beat men up for being under-performing, lazy, uneducated slobs still living with mommy, a meme was destroyed.  In fact, serious scholars (ie those who are not activists) have pointed out for years that unmarried childless women have no pay gap with men of similar ages, it is only after marriage and babies and other such events that some women make life and career choices that reduce their pay.

I think the table I built for our new hobby room came out pretty well.  Having only really done woodwork on speakers, I am most comfortable working with mdf so this is mdf with an alder veneer to match the cabinets in the room.  Because I knew the slab of marble (a scrap we found at the stone store on discount) was going to be super heavy (something like 400 pounds) the table is built super solid.  I will say that modern design is much easier to build than something antique-looking - really this is only rectangular boxes and frames so it was pretty easy.

Taking in account the over-designed pedestals that are 3/4 inch mdf with interior baffles, this whole things weighs almost 500 pounds.  I observed to my wife, who wants to use it as a cutting table, that it would make an awesome beer pong table.  Perhaps when she is out of town we will have a coyoteblog get-together to try it out in that mode.

Next up, I finally have  small room to do my model railroading in so I will be boring you with updates on that particularly geeky hobby.

Postscript:  Yes, I run parks and I like model trains, like Ben in Parks and Rec:

• Ben is a fan of model trains, Game of Thrones (his eBay username is "Tall Tyrion Lannister",a reference to a character from the franchise), Batman (he purchased a Batman suit when he joined Donna and Tom for Treat Yo Self), Star Trek (he writes Star Trek fanfiction, and had expressed a preference for Captain Picard over Captain Kirk), Fringe, Harrison Ford, Twin Peaks, Homeland, and Star Wars (among other things).
• Ben is a "nationally ranked" player of Settlers of Catan

I am comfortable with all of this except perhaps for the preference for Picard over Kirk.

I liked this term from Bleeding Heart Libertarians.  Perhaps it is common but I have not heard it before.  It seems apt:

Moral Princesses. In “The Princess and the Pea,” the prince believes that real princesses are so sensitive that a single pea place under 25 feet of bedding will disrupt their sleep. The general idea is that real princesses are sensitive to irritations that wouldn’t bother crude commoners.

Expanding on this idea, some people wish to signal that they are, for lack of a better phrase, moral princesses. They are so sensitive to moral concerns that they are enraged by things the rest of us crude commoners do not even notice. By frequently expressing their sensitivity, they thereby prove they are better than everyone else. (See this paper on moral grandstanding for more.)

Regular person: “Mmm, chicken tikka masala is delicious.”
Activist: “I can’t eat that, as doing so makes me complicit in the British colonialist legacy.”

From the terrorists-have-won department:  Apparently, the current in-cabin ban on laptops and tablets the applies to flights originating in certain Middle Eastern countries will soon be extended to flights from Europe.  I am pretty sure that if the US bans laptops on flights from Europe, the EU will ban them in the opposite direction, if nothing else as tit for tat retaliation.  This will make long distance flight a LOT worse, at least for me.  Unlike most folks, apparently, I have no interest in onboard entertainment systems and spend most of my time on these long flights getting work done on my PC or reading books on my iPad.  This will make me a lot less likely to schedule a vacation in Europe, and frankly I am relieved we decided at the last minute not to go there this summer.

I have written before about the absurdity of folks who demand cultural apartheid by hoping to ban what they call "Cultural Appropriation."  Of all the stupid sh*t the is circulated around a deeply broken academia nowadays, this is probably the stupidest.

Take note of this entirely reasonable editorial from an author in Canada.  I think he actually has a great idea:

Hal Niedzviecki, editor of Write — a publication for the union’s members — published an opinion piece in the spring 2017 issue titled “Writer’s Prompt.” In the article, in an issue dedicated to indigenous writing, Niedzviecki wrote: “In my opinion, anyone, anywhere, should be encouraged to imagine other peoples, other cultures, other identities.

“I’d go so far as to say there should even be an award for doing so — the Appropriation Prize for best book by an author who writes about people who aren’t even remotely like her or him.”

He went on to argue that Canadian literature remains “exhaustingly white and middle class” because writers are discouraged from writing about people and places they don’t know.

A sociological term, cultural appropriation is used to describe the adoption of elements or practices of one cultural group by members of another.

This is really a good idea.  I find it amazing that ethnic minorities simultaneously want sympathy for their various victimizations while at the same time don't want anyone imagining what it is like to be them.  So of course the response was to run him out of town on a rail

On Wednesday, the Writer’s Union of Canada issued an apology for the piece, announcing Niedzviecki’s resignation and pledging to review the magazine’s policies.

“The Writer’s Prompt piece offended and hurt readers, contributors to the magazine and members of the editorial board,” said the statement. “We apologize unequivocally. We are in the process of contacting all contributors individually.

Most of us who took Econ 101 would expect that an increase in the minimum wage would increase unemployment, at least among low-skilled and younger workers.  After all, demand curves slope downards so that an increase in price of labor should result in a decrease in demand for that labor.

Supporters of the minimum wage, however, argue that employers have monopsony power when hiring low-skill workers. What they mean by this is that due to a bargaining power imbalance, employers can hire workers for less than they would be willing to pay in a truly competitive market.  As the theory goes, this in turn creates an additional consumer surplus for employers, which manifests itself as higher profits.  A minimum wage increase would thus reduce this surplus but not effect employment because companies before the new minimum wage were paying less than they were willing to pay.  Thus minimum wage supporters argue that higher wages mandated by minimum wage laws will be paid out of these excess profits, and not result in higher prices or less employment.

My understanding (and I am not an economist) is that the evidence for monopsony power in hiring low-skill workers is weak or at best limited to niche circumstances.  However, I am going to argue that it does not matter. Even if companies are able to pay workers less than they might via such monopsony power, whatever gains they reap from workers ends up in consumer hands.  As a result, minimum wage increases still must result either in employment reductions or consumer price increases or more likely both.

Why Monopsony Power May Not Matter

Why? Well, we need to back up and do a bit of business theory.  Just as macroeconomics (all the way back to Adam Smith) spends a lot of time thinking about why some countries are rich and some are poor, business theory spends a lot of time trying to figure out why some firms are profitable and some are not.  One of the seminal works in this area was Michael Porter's Five Forces model, where he outlines five characteristics of markets and firms that tend to drive profitability.  We won't go into them all, but the most important for us (and likely for Porter) is the threat of new entrants -- how easy or hard is it for new firms to enter the marketplace and begin competing against an incumbent firm.  If new companies can enter into competition easily, a profitable firm will simply attract new competitors, and keep attracting them until the returns in that market are competed down.

So let's consider a company paying minimum wage to most of its employees.  At least at current minimum wage levels, minimum wage employees will likely be in low-skill positions, ones that require little beyond a high school education.  Almost by definition, firms that depend on low-skill workers to deliver their product or service have difficulty establishing barriers to competition. One can’t be doing anything particularly tricky or hard to copy relying on workers with limited skills. As soon as one firm demonstrates there is money to be made using low-skill workers in a certain way, it is far too easy to copy that model.  As a result, most businesses that hire low-skill workers will have had their margins competed down to the lowest tolerable level.  Firms that rely mainly on low-skill workers almost all have single digit profit margins (net income divided by revenues) -- for comparison, last year Microsoft had a pre-tax net income margin of over 23%.

As a result, the least likely response to increasing labor costs due to regulation is that such costs will be offset out of profits, because for most of these firms profits have already been competed down to the minimum necessary to cover capital investment and the minimum returns to keep owners invested in the business. The much more likely responses will be

1. Raising prices to cover the increased costs. This approach may be viable competitively, as most competitors will be facing the same legislated cost pressures, but may not be acceptable to consumers
2. Reducing employment. This may take the form of stealth price increases (e.g. reduction in service levels for the same price) or be due to a reduction in volumes caused by price increases. It may also be due to targeted technology investments, as increases in labor costs also increase the returns to capital equipment that substitutes for labor
3. Exiting one or more businesses and laying everyone off. This may take the form of targeted exits from low-margin lines of business, or liquidation of the entire company if the business Is no longer viable with the higher labor costs.

An Example

When I discuss this with folks, they will say that the increase could still come out of profitability -- a 5% margin could be reduced to 3% say.  When I get comments like this, it makes me realize that people don't understand the basic economics of a service firm, so a concrete example should help. Imagine a service business that relies mainly on minimum wage employees in which wages and other labor related costs (payroll taxes, workers compensation, etc) constitute about 50% of the company’s revenues. Imagine another 45% of company revenues going towards covering fixed costs, leaving 5% of revenues as profit.  This is a very typical cost breakdown, and in fact is close to that of my own business.  The 5% profit margin is likely the minimum required to support capital spending and to keep the owners of the company interested in retaining their investment in this business.

Now, imagine that the required minimum wage rises from $10 to $15 (exactly the increase we are in the middle of in California).  This will, all things equal, increase our example company's total wage bill by 50%. With the higher minimum wage, the company will be paying not 50% but 75% of its revenues to wages. Fixed costs will still be 45% of revenues, so now profits have shifted from 5% of revenues to a loss of 20% of revenues. This is why I tell folks the math of absorbing the wage increase in profits is often not even close.  Even if the company were to choose to become a non-profit charity outfit and work for no profit, barely a fifth of this minimum wage increase in this case could be absorbed.  Something else has to give -- it is simply math.

The absolute best case scenario for the business is that it can raise its prices 25% without any loss in volume. With this price increase, it will return to the same, minimum acceptable profit it was making before the regulation changed (profit in this case in absolute dollars -- the actual profit margin will be lowered to 4%). But note that this is a huge price increase. It is likely that some customers will stop buying, or buy less, at the new higher prices. If we assume the company loses 1% of unit volume for every 2% price increase, we find that the company now will have to raise prices 36% to stay even both of the minimum wage increase and lost volume. Under this scenario, the company would lose 18% of its unit sales and is assumed to reduce employee hours by the same amount.  In the short term, just for the company to survive, this minimum wage increase leads to a substantial price increase and a layoff of nearly 20% of the workers.   Of course, in real life there are other choices.  For example, rather than raise prices this much, companies may execute stealth price increases by laying off workers and reducing service levels for the same price (e.g. cleaning the bathroom less frequently in a restaurant).  In the long-term, a 50% increase in wage rates will suddenly make a lot of labor-saving capital investments more viable, and companies will likely substitute capital for labor, reducing employment even further but keeping prices more stable for consumers.

As you can see, in our example we don’t need to know anything about bargaining power and the fairness of wages. Simple math tells us that the typical low-margin service business that employs low-skill workers is going to have to respond with a combination of price increases and job reductions.

How My Company Has Responded

Just to put a bit more flesh on this, I will give a real example from my own company.  My company operates public recreation facilities, mainly campgrounds, under bid contracts.  To understand our response to rising minimum wage, you need to understand some background:

• In bidding these, we bid both the camping fee we will charge to customers as well as the rent we will pay to the government for the concession.  Given the weights the government uses in the bid process, keeping customer price low is more important than the rent we pay, so in most cases the prices we charge customers are well below the private market rate for similar campgrounds.
• We have limited ability to further increase productivity, in part because our ability to invest in these campgrounds in limited.
• Because we have many contracts across the country, our reputation is important and so we seldom will entertain reductions in service, such as cleaning frequency
• Labor and labor-related costs are about 50% of revenues, and most employees are paid minimum wage.  Profit margins hover around 5% of revenues

One of the states we operate in is California.  We are in the midst of a minimum wage increase there from $8 an hour several years ago to $15 several years hence, or an increase of 87.5%.  Basically we have had two responses:

• In places where we are under the market price, we have been able to raise prices without a lot of drop in volume.  But this means that our camping rates in some locations have risen from $18 to a future $26 a night, an enormous increase in just a few years.
• In places where we did not think the market would bear such a rate increase, or where our contract did not allow such a rate increase, we closed our operation.  In fact, we have exited about half our business in California (while simultaneously growing it aggressively in states like Tennessee).  In all cases this has resulted in a loss of employment -- either the location was never reopened by anyone else, or else it was reopened by a competitor with different reputational concerns who staffed the location with far fewer employees.

I use the term "publication bias" to describe how easy it is to confuse the frequency with which the media reports on a phenomena with the underlying frequency of the phenomena itself.  A great example is Summer of the Shark:

...let's take a step back to 2001 and the "Summer of the Shark." The media hysteria began in early July, when a young boy was bitten by a shark on a beach in Florida. Subsequent attacks received breathless media coverage, up to and including near-nightly footage from TV helicopters of swimming sharks. Until the 9/11 attacks, sharks were the third biggest story of the year as measured by the time dedicated to it on the three major broadcast networks' news shows.

Through this coverage, Americans were left with a strong impression that something unusual was happening -- that an unprecedented number of shark attacks were occurring in that year, and the media dedicated endless coverage to speculation by various "experts" as to the cause of this sharp increase in attacks.

Except there was one problem -- there was no sharp increase in attacks. In the year 2001, five people died in 76 shark attacks. However, just a year earlier, 12 people had died in 85 attacks. The data showed that 2001 actually was a down year for shark attacks.

A lot of folks are now commenting on the apparent "spate" of airline incidents.  This "spate" began with United dragging Dr. David Dao, a man who would not give up his seat for a United employee, off an aircraft.  Seemingly every day sees a new story.  This headline about "yet another airline incident" is typical.

I have no data on the underlying phenomenon here, but I would be willing to bet there is no upward trend in airline incidents of this sort.  My guess is that the combination of increasingly ubiquitous cell phone cameras, publication platforms like Instagram and Facebook, and most importantly a focus by the media on looking for this sort of story after the United incident are causing an uptick in coverage rather than an uptick in actual incidents.