Coyote Blog

I have been in the English countryside this week, right on the border between England and Wales.  In fact, the house I am staying in has one of those great Welsh names that don't have enough vowels, something like Cwmmau or such.  Anyway, Internet access has turned out to be nearly impossible -- I finally found a library across from the Hereford Cathedral that lets me have access in 30 minute increments.  Hopefully I can blog more from London next week.

ABCNews is asking viewers to submit stories of evidence they have found for Global Warming in their back yard.

Witnessing the impact of global warming in your life?

ABC News wants to hear from you. We're currently producing a report on the increasing changes in our physical environment, and are looking for interesting examples of people coping with the differences in their daily lives. Has your life been directly affected by global warming?

We want to hear and see your stories. Have you noticed changes in your own backyard or hometown? The differences can be large or small--altered blooming schedules, unusual animals that have arrived in your community, higher water levels encroaching on your property.

Show us what you've seen.

So I submitted my story:

I can remember that just five years ago, the summers at my house used to be relatively cool and very wet.  Our summer temperatures never got much above 80 degrees, and it would rain every few days, at least.

The last couple of summers, temperatures have soared as high as 112 degrees at my house, and we have at times gone whole months without rain.

I am terrified at these effects of global warming.  Several of my "friends" have said they think this change has more to do with my move from Seattle to Phoenix, but they are clearly in the pay of the oil companies.

I have explained to them that ABC News and their climate reporting have educated me that small anecdotal blips in the local weather are scientifically valid proof of long-term global climate changes.

For example, my Exxon-butt-kissing friends tried to claim that for over a century, hurricane activity has followed a 20-40 year cycle, and that the recent upsurge in hurricane activity is due to the return of the "busy" end of the cycle.  I know from ABC that in fact our two-hundred years of burning fossil fuels have cause CO2 to build up and lurk in the atmosphere, ready to jump out and increase hurricane activity suddenly in 2005.

Its great to see that ABC has adopted the same lofty levels of scientific proof that are used by the rest of the environmental community.

For a while now I have meant to write a post on immigration and terrorism, specifically to refute the argument made by anti-immigration folks that cracking down on immigration is an important part of the war on terror.  Now, I tend to agree that we are too slow in kicking out visitors who commit crimes.  I've always thought in fact that if Mexico found itself send millions of productive workers to the US only to get back a stream of the small percentage who were thugs and criminals they might finally address the root causes of why their own country can't offer productive people any opportunity.

But the guard-the-border folks go further than this, arguing we must stop all immigration with troops and "minutemen" at the border as part of the effort to defend ourselves from terrorism.  I've always thought that this was a fabricated argument, since its so easy to prove that fear of terrorism is not their real motive for troops at the border (if it were, then why are all the troops going to the Mexican border - shouldn't the long stretches of empty land on the Canadian border be just as vulnerable to terrorists?  In fact, it is Canada and not Mexico where Islamic terrorist cells have been found in the last month).

Open and legal immigration would make finding illegal entry of terrorists much easier.  Right now, by pushing Mexican immigrants out into desert, rather than marked border crossings, one gives terrorists a very large haystack to hide in.  Terrorists with violent intent must somehow be sorted out from millions of perfectly peaceful immigrants looking for work.  Arizona Watch quotes James Valliant:

If every person who wanted into America in order to find work was legally
permitted into America, I'll bet they'd be happy to stop by the front gate, show
some i.d., get checked against a terrorist watch-list, etc. Only those with
criminal records, or reasons to flee justice, those with contagious diseases,
and, well"¦ terrorists would have any reason to "jump the gate" at all.

This would concentrate our resources on those who actually posed a threat to
the country. Thousands of border patrol agents would, then, not be going after
thousands "“ ultimately, accumulated millions "“ of people everyday, but just a
few hundred "“ ultimately, a few thousands. I, personally, prefer those odds when
it comes to catching terrorists and mass-murders.

I have written before about the silliness of the liquor licensing process.  A regulatory procedure perhaps necessary when the government was trying to drive organized crime out of liquor in the 1930's, its insanely useless today.

For example, last winter we replaced a store building at the same address with a brand new building.  It did not even occur to me that I might have to make any changes to my liquor license.  Surprise!  Here is the paperwork required to activate my existing, already paid-for license at the exact same address, only in a newer building:

Its hard to tell from the picture, but we are talking lots and lots of detail, much of it repeated several times through the application.  And most every page has to be notarized.  How much of this is new and not already on file with my current license?  Just one-half of one page, down in the lower right where I draw the floor plan of the new building.  Everything else is a total repeat of the information on file.

My favorite question I had to answer to move my liquor license to a new building?  They require I give them the date and location of my wedding.

Update: Oh, and it has to be approved by the County planning department, who for several days now have not returned my calls.  And it may have to go in front of the county commisioners.  And I am pretty sure it will have to be publicly posted on the new building for a 30-day comment period, and I will have to pay for an announcement for three weeks running in the local paper.  And then it will probably be approved, just about when it will be time to close for the season.  For those who have not been there, though, McArthur-Burney Falls State Park is gorgeous, and, if I can brag, I think our new building is a big improvement as well.

By now, most will have heard that the young star quarterback for the Pittsburgh Steelers, Ben Rothlesburger, crashed his motorcycle and sustained head injuries in part because he was not wearing a helmet.  You can bet that someone in the legislature will introduce a helmet law in the next week, since most nanny-state legislation of this type usually gets passed in reaction to one high-profile incident where some legislator can grab some press.

Here is what really upset me yesterday:  Listening to a sports-talk radio station yesterday talking about this accident, I heard a number of people call in and say the following:

"I don't blame Ben for riding without a helmet -- that's legal in Pennsylvania.  I blame the state for not having a helmet law"

Wow - you don't see the death of individual responsibility highlighted any more starkly than that.  Much more on the topic here.

By the way, helmet laws are a particularly interesting bit of nanny-statism, since motorcyclers are such a small percentage of the population.  In most states where this law gets passed, the votes of people who will never ride a motorcycle and for whom the law will always be irrelevant generally overwhelms the wishes of motorcyclers themselves.  I wonder how many women who piously preach that the government can't tell us what to do with our bodies typically vote for helmet laws that tell people, uh, what they can do with their bodies.

Increasingly, you hear people justify helmet laws by saying "well, taxpayers have to pay the medical bill if someone gets hurt riding without a helmet."  I addressed this argument that public health care justifies total control of our lives in this post on health care as a Trojan horse for fascism.  (and here)

A while back, I observed that liberal statists and technocrats were upset that conservative statists were using the machinery of big government they created for the "wrong" ends:

I am reminded of all this because the technocrats that built our
regulatory state are starting to see the danger of what they created.
A public school system was great as long as it was teaching the right
things and its indoctrinational excesses were in a leftish direction.
Now, however, we can see the panic.  The left is freaked that some red
state school districts may start teaching creationism or intelligent
design.  And you can hear the lament - how did we let Bush and these
conservative idiots take control of the beautiful machine we built?  My
answer is that you shouldn't have built the machine in the first place
- it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.
And, knock me over with a feather, it appears that the decision was
political, based on a conservative administration's opposition to
abortion.  And again the technocrats on the left are freaked.  Well,
what did you expect?  You applauded the Clinton FDA's politically
motivated ban on breast implants as a sop to NOW and the trial
lawyers.  In
establishing the FDA, it was you on the left that established the
principal, contradictory to the left's own stand on abortion, that the
government does indeed trump the individual on decision making for
their own body  (other thoughts here).
Again we hear the lament that the game was great until these
conservative yahoos took over.  No, it wasn't.  It was unjust to scheme
to control other people's lives, and just plain stupid to expect that
the machinery of control you created would never fall into your
political enemy's hands.

Suprisingly, James Taranto in Best of the Web, who I sometimes find too partisan and socially conservative for my tastes, makes a similar point:

Liberal Democrats take credit for creating an enormous government, which, according to them, doesn't work--but would work just fine if only the populace were smart enough to elect liberal Democrats.

In sum: Republicans favor small government but embrace big government when they have the power to control it. Democrats favor big government but insist that it can work only when they have the power to control it. Politicians in both parties, then, seem to see government as a means to the same end: their own political power. Little wonder that voters are suspicious of government.

Our brave city of Scottsdale has come up with this pioneering idea:

Scottsdale's Historic Preservation Commission wants city staff to look
into designating '50s-era garden apartments as an entire historic
district

For those who have not struggled with this, being named a historic building or site can be the kiss of death - basically it means that the government has restricted your ability to do anything with your property.  You certainly can't tear the sucker down and put something more modern on your own land and you have to go through mind-numbing approvals and use special super-high-cost contractors even to do the smallest amount of work on the structure.  In some of the public parks we run, I know of several historic buildings that are falling apart because they have been named historic buildings and the bureaucratic headaches to even stabilize the roof and stop leaks is insurmountable.  (A few years ago I nearly got arrested for putting some tar paper on the roof of a historic cabin to try to stop the rain from getting in and ruining the building.  I was told that they would rather the building crumble to dust than let any non-authentic work be done on it).

Can you imagine having your dated 50's-era ugly home or condo designated so that you can't tear it down?  Does this mean that you can't even update it, to get rid of the avocado appliances? Apparently so:

Valarie Hartzell of Park Paradise, 6936 E. Fourth St., said condo
owners there also are making improvements, but city-approved
contractors balk at installing authentic, and perhaps hard-to-get,
fixtures

The woman driving this effort reveals the thinking so typical of these efforts:

Preservation Commissioner Nancy Dallett said the rare configuration of
the apartments in a single neighborhood may qualify them for a
geographic designation.

"The strength of our district is in the clustering of the apartments,"
Dallett said at Thursday's commission meeting. "I wouldn't want to let
go of any of these within the boundaries."

Don't you love that last line?  Look Nancy, if you want something specific done with this property, buy it yourself.  But don't try to manage property you don't own at costs you don't bear for an outcome you desire.

In a nutshell, such efforts result in the effective taking of the private property to meet some public good, without any compensation.  This is eminent domain without any payment at all, thereby taking Kelo even one step further.

By the way, this means you have about 20 years before your 1970's style house is declared a landmark, and you will be stuck forever with the orange deep shag carpet and mirrored walls, so move quickly on that renovation.

Via Liz Lightfoot in the Telegraph:

Nearly 60 per cent of girls aged 12 to 15 described themselves as
overweight when only 15 per cent met the medical criteria for excess
body fat.

The findings prompted the Schools Health Education Unit, which carries
out the annual survey, to issue an appeal for an end to the "obsession"
with skeletal body shapes in the media and fashion industry.

Yeah, I know this is the UK, but I bet you would get similar results in the states.  While the article points the finger at the media and fashion industry, how about government and academic know-it-alls who with their recent obsession on teenage obesity are reinforcing this message?  For example, remember this previous post about the Arkansas governor's new program:

I get email and comments from time to time that my language deriding
government's intervention into every aspect of our lives is overblown
and exaggerated.  My answer:  Oh yeah, well how about this:

Mike Huckabee, the Governor of Arkansas, now
requires annual fat reports. These are sent to the parents of every
single child aged between 5 and 17; a response, he says, to "an
absolutely epidemic issue that we could not ignore" in the 1,139
schools for which he is responsible.

I
just cannot craft any reasonable theory of government where this is the
state's job.   The "obesity" crisis in this country just amazes me.
"Experts" every few years broaden the definition of who is overweight
or obese, and suddenly (surprise!) there are more people defined as
overweight.  Even presuming it is the state's job to optimize our body
weights, is it really the right approach to tell everyone they are too
fat?  Having known several people who were anorexic, including at least
one young woman who died of its complications, is it really a net
benefit to get young people more obsessed with looks and body style?
And what about the kids that are genetically programmed to be
overweight?  Does this mean that years of taunting and bullying by
their peers is not enough, that the state's governor wants to pile on
now?

It is interesting to note that governor Huckabee apparently started
this initiative after his own personal battle with weight loss:

[Huckabee] lost 110lb after being warned that his
weight, more than 280lb after a life of southern fried food, was a
death sentence. A chair even collapsed under him as he was about to
preside over a meeting of state officials in Little Rock.

We
all have friends who have lost weight or gotten into homeopathy or
became a vegan and simply cannot stop trying to convert their friends
now that they see the light.  Now we have the spectacle of elected
officials doing the same thing, but on a broader scale and with the
force of law, rather than  just mere irritation, on their side.  One
can only imagine what report cards kids would be carrying home if
Huckabee had instead had a successful experience with penis
enlargement.  What's next, negative reports for kids with bad acne?
For women whose breasts are too small?  For kids who are unattractive?

Apparently Google is about to announce a new online spreadsheet product.  My first reaction was - that's stupid, who would want to have their spreadsheet app. online -- its slower and probably less secure.  Online applications strike me as a step back to the bad old days of mainframe-terminal applications.

But then I thought about my 30 managers who send me excel spreadsheets each week with their revenue data, and it occurred to me that this might be exactly what we need.  Its a constant headache keeping everyone on the right version and managing all these submissions.  Also, it would be nice if we can eliminate buying 40 copies of MS Office.  Currently we are implementing OpenOffice 2.0 to eliminate the MS Office expense, but a real online collaborative spreadsheet solution at Google type pricing (e.g. zero) might be cool.

I don't see it up on their site yet, but they have a lot of cool stuff in Beta I had never played with before.  Check out Google Labs here.

Per the NY Times:

As he left the soccer field after a club match in the eastern German
city of Halle on March 25, the Nigerian forward Adebowale Ogungbure was
spit upon, jeered with racial remarks and mocked with monkey noises. In
rebuke, he placed two fingers under his nose to simulate a Hitler mustache and thrust  his arm in a Nazi salute.

In April, the American defender Oguchi Onyewu, playing for his
professional club team in Belgium, dismissively gestured toward fans
who were making simian chants at him. Then, as he went to throw the
ball inbounds, Onyewu said a fan of the opposing team reached over a
barrier and punched him in the face....

Players and antiracism experts said they expected offensive behavior
during the tournament, including monkey-like chanting; derisive
singing; the hanging of banners that reflect neofascist and racist
beliefs; and perhaps the tossing of bananas or banana peels, all
familiar occurrences during matches in Spain, Italy, eastern Germany
and eastern Europe.

I am sure many American black athletes still have stories to tell about encountering racism, but didn't we at least climb out of this kind of pit of overt racism forty years ago or so?  While European sophisticates have looked down their noses at US racial problems, European monocultures seem now not to be ahead of us but behind us in dealing with ethnic diversity.  Though there do seem to be plenty of Americans who long to take our country back to being a monoculture.

A few days ago, I posted that people seem to make strange tradeoffs between the cost of gasoline and the value of their personal time.  Don Boudreaux at Cafe Hayek makes a similar observation about recent calls to reinstate the 55 MPH speed limit, pointing out that slower speed limits may save gas but they cost people time, and time is one resource that is truly finite:

In short, for every 75-miles covered on a highway, reducing the speed limit from
75 MPH to 55 MPH will save a driver $2.58 in fuel cost -- and this assuming that
the increase in fuel efficiency of the average car caused by the lower speed
limit is a whopping 10 mpg.  But the resulting greater time on the road will
cost a driver earning the average non-supervisory wage $5.82 worth of his or her
time per 75-miles driven.

By the way, it is no surprise that this always seems to be proposed by Easterners who have no conception of the travel distances out west.

After the Supreme Court in Kelo gave its imprimatur to local authorities using eminent domain for economic development (which is a fancy way of saying the government can take your home and give it to real estate developers) many states have passed limitations on such activity. 

Apparently, the Iowa legislature passed just such limitations, but governor Tom Vilsack has chosen to veto it (via State 29).  Apparently the governor echoed this pro-Kelo thinking:

Cities, chambers of commerce and other development agencies argued [the legislation]
would shut off opportunities to develop businesses and create jobs.

Aaarrgghh.  Can anyone imagine their local city councilman actually creating a viable business?  In point of fact, most of these cases are not job creation but job transfers, from a less-preferred person to a more-preferred person.  Preferred on what standard?  By the standard of campaign support, of course!  Many other related posts here.

But its dry heat.

As a public service, Arizona is taking onto itself all the worldwide effects of global warming, thereby saving polar bears in Greenland and archipelago-living indigenous peoples.  Once it gets over about 108 you don't really notice the difference anyway.  Picture taken at 4:50PM MST today in the inappropriately-named (at least for today) Paradise Valley, AZ.  For all those who want to compare this to hell, I would remind you that the core of Dante's hell was frozen and cold, not hot.  Dante knew what he was talking about.  It may be hot but there is nothing to shovel off my driveway.

By the way, when people laugh at Arizona for not observing Daylight Savings Time, this is why we don't.  At nearly 5:00, we are hitting our peak temperature.  If we observed DST, we would not be hitting this peak until 6:00.  Temperatures here will cool over the next two hours by 20 degrees  (its already fallen nearly 3 degrees in the 20 minutes since I took the picture, and the sun is not down yet).  With this fast temperature drop typical of the desert combined with evening shade, it will be nice enough to be outside, eating or relaxing or watching a little league game by 7:00.  If I had my druthers, I would observe reverse daylight time, going back rather than forward an hour in the spring.  More observations on DST from myself and Virginia Postrel here.

States all require that you register your corporation to do business in that state.  Most all states require that you have a registered agent in that state.  Sometimes this can be an employee, but since we are a seasonal business we have no full-time employees in many states to nominate.  This means that we have to pay an outsider a fee every year just to be this named agent.

And in my experience this person does ... NOTHING.  Zero.  Nada.  Bupkis.  But it is worse than that.  In many states like Minnesota, the secretary of state (who generally manages corporate registrations) absolutely insists that they will send no mail to your corporate headquarters, they will only send mail to your in-state registered agent.  Its like they don't have mail service or phone service that goes out of state in Minnesota.  Unfortunately, many of my agents repeatedly fail to forward this mail to me.  I just paid a $300 fine to Minnesota because I did not respond to an annual renewal notice that was sent to my local agent and never forwarded.

I have asked this question of my readers before but never gotten an answer.  My question is simple:

In this day of modern communications, what is the justification for requiring a corporation to have a registered agent in that state?

Is there any justification?  Or is this just a holdover from some past era when communication was by horse and telegraph.

Via the Consumerist:

When Greenpeace mobilized to protest nuclear energy at a recent appearance by
President Bush to promote his nuclear energy policy, they forgot to fill in all
the boiler-plate.

From the Greenpeace anti-nuclear-armageddon flier. Capitals and brackets are
theirs:

In the twenty years since the Chernobyl tragedy, the world's worst nuclear
accident, there have been nearly [FILL IN ALARMIST AND ARMAGEDDONIST FACTOID
HERE]."

LOL.  By the way, I am not sure why those paranoid about global warming would refuse to reconsider nuclear power.   In that article, i pointed out that a different regulatory regimed would greatly reduce costs and actually enhance safety:

If aircraft construction was regulated like nuclear power plants,
there would be no aviation industry.  In the aircraft industry,
aircraft makers go through an extensive approval and testing process to
get a basic design (e.g. the 737-300) approved by the government as
safe.  Then, as long as they keep producing to this design, they can
keep making copies with minimal additional design scrutiny.  Instead,
the manufacturing process is carefully checked to make sure that it is
reliably producing aircraft to the design already deemed safe.  If
aircraft makers want to make a change to the aircraft, that change must
be approved with a fairly in-depth process.

Beyond the reduction in design cost for the 2nd airplane of a series
(and 3rd, etc.), this approach also yields strong regulatory benefits.
For example, if the
in a particular aircraft, then the government can issue a bulletin to
require a new approved design be retrofitted in all other aircraft of
this series.  This happens all the time in commercial aviation.

One can see how this might make nuclear power plant construction
viable again.  Urging major construction companies to come up with a
design that could be reused would greatly reduce the cost of design and
construction of plants.  There might still be several designs, since
competing companies would likely have their own designs, but this same
is true in aerospace with Boeing, Airbus and smaller jet manufacturers
Embraer and Bombardier.

And a while back I linked to a story on how the ultimate fallout from Chernobyl was not nearly as bad as was feared.  That article said in part:

Over the next four years, a massive cleanup operation
involving 240,000 workers ensued, and there were fears that many of
these workers, called "liquidators," would suffer in subsequent years.
But most emergency workers and people living in contaminated areas
"received relatively low whole radiation doses, comparable to natural
background levels," a report summary noted. "No evidence or likelihood
of decreased fertility among the affected population has been found,
nor has there been any evidence of congenital malformations."

In
fact, the report said, apart from radiation-induced deaths, the
"largest public health problem created by the accident" was its effect
on the mental health of residents who were traumatized by their rapid
relocation and the fear, still lingering, that they would almost
certainly contract terminal cancer. The report said that lifestyle
diseases, such as alcoholism, among affected residents posed a much
greater threat than radiation exposure.

Today, Microsoft came under fire from a number of activists:

Activists today accused Microsoft of spending all of its time focusing on software.  "All they want to do is write code for operating systems and applications".  Activists were complaining that Microsoft does not invest any of its huge profits into alternatives to software and operating systems.  "They have not invested one dime in trying to come up with computing technologies that don't require operating systems or business applications."  Activists also accused Microsoft of not investing in any alternative computational approaches, such as abacus research or mechanical calculators.

Makes no sense, right?  Well, that's because I made it up.  But I did not make this up, which is essentially the exact same charge, just against a different target:

Unlike
other major oil companies that essentially acknowledge the very real
threat of global warming and the need to transition to renewable energy
and off of a finite, non-renewable resource such as oil, ExxonMobil is
using its profits and its power to continue to keep this country
addicted to oil, as President Bush has noted," Hoover said.

ExxonMobil cares only about drilling for more oil, Hoover alleged

You hear this stuff all the time.  But why are the major oil companies responsible for investing to obsolete their own business?  Why are they obligated to invest in things like wind farms or whatever that they know nothing about?   Did we demand that railroads invest in aircraft research?  Do we require cable companies to invest in DirectTV?  For all of its size, ExxonMobil represents a tiny fraction of World GDP -- if all these alternative energy ideas are such great opportunities, let the other 99.99% of the world economy take it on.  Besides, do these guys who think that XOM is evil incarnate really want them controlling the next generation of energy production?

By the way, I thought this was hilarious:

"We
believe that ExxonMobil -- primarily through its former president and
CEO, Lee Raymond -- has been involved in conceiving of and then
promoting the invasion and occupation of Iraq," Reed said. "When the
Iraq war was being cooked up, we think ExxonMobil was in the kitchen."

I love the "we believe" part.  I am sure that half these folks also "believe" that aliens are alive and well in Area 51 and that George Bush was behind the 9/11 attacks.  Would it be too much to ask to bring some facts to the table?  Or how about even a motive?  I could maybe come up with a motive if the US invaded Nigeria, since Exxon has assets at risk there that are threatened by rebels and general chaos, but Iraq?  Since Iraq's output was limited before the invasion, invading Iraq only served to put more oil on world markets, which would depress rather than raise prices and profits.  In fact, if there was really an evil genius oil company pulling the strings of government to maximize their own profits, UN-sanctioned Iraq would be just about the last oil producing country in the world you would want your government puppets to invade.

Today XOM has its annual shareholder meeting, and if you ever want to see a great parade of barking moonbats, buy yourself a share of XOM and attend.  Lee Raymond caught a lot of grief for his compensation package, and it did seem overly generous to me, but I am not an XOM shareholder right now so its not my concern.  I will say that having seen one of the XOM shareholder meetings and the ridiculous grief the CEO must endure for a day, my guess is that the XOM CEO would likely knock several million dollars off his comp. package if he could call in sick today.

Marginal Revolution links to a list of the most corrupt states, measured by the number of government corruption convictions per capita.  I bet you can come pretty close to the top three without even looking.  Here they are:

1. Alaska.  For all those who want to believe that pork is unrelated to corruption, look no further than the king of pork itself, Alaska, which also turns out to be the king of government corruption.  Kudos to Arizona Congressman Jeff Flake, who is about the only one brave enough in that lost and floundering body to connect the dots between Abramoff, cash-filled tuperware, corruption and pork.
2. Mississippi.  Who would have ever thought the state best known for being the #1 home of jackpot torts and the home state of the Senator who claims to be above the law would be a hotbed of corruption? 
3. Louisiana.  Probably the only surprise on the list, since one would expect the home state of Huey Long to be in first rather than third.  Heck, in 1991 the state got to choose between a wanna-be Nazi Klansman and a serially corrupt felon for Governor.  And God only knows where the money that should have been spent on building levees actually went.

Julian Sanchez revisits Smith vs. Maryland, the Supreme Court case currently used to justify letting the government take about any data they want on your life without a warrant.  Sanchez questions the logic of the case, particularly in light of sweeping technology changes since the early 70's:

Part of the problem here is that since the late '70s, we've gone a long way
toward a world in which a huge amount of our most private information is held by
third parties. A huge chunk of my e-mails from the last couple years are stored
on some server owned by Google, where ad-generating software sifts through my
private communications looking for keywords that will allow the company to
display personally-tailored advertisements for me. Now, maybe I'm naive to have
any expectation of privacy in the e-mails sitting on that server, but I do
pretty much expect that nobody at Google is actually looking through my
correspondence and passing it around to their friends. And I at least
didn't expect until recently that some government program would be
sifting through those e-mails to see whether I used the word "jihad" some
suspicious number of times in letters to people in Saudi Arabia.

I had similar concerns about Smith v. Marlyand here.  One of my arguments was:

This exact same logic [used in this case] seemingly applies to any piece of data submitted
to any private third party unless the data is specifically protected
(e.g. medical records).  Sorry, but this is wrong.  I should be able to
have commercial transactions with third parties without the expectation
that the government can take the records for its own use without any
kind of a warrant....

The implication is that by giving a company data for use in a
transaction, we are giving them an unwritten license to do whatever
they want with the data.  Do you believe you are granting this?  Is it
true that you "entertain no expectation of privacy" in such
transactions?  If you agree with this ability, then I assume you also
agree that the government should be able to see all your:

• Credit card bills
• Records of who you have emailed
• Records of which Internet sites you have visited
• Records of what searches you made in search engines

I also pointed out that since many people spend a lot of money to keep information private (e.g. anonymous surfing software), the market has demonstrated clearly that people, unlike the SCOTUS asserted,  do have an expectation of privacy with such data.

Reason's Hit and Run points to this article by Chirstopher Hayes that helps connect the dots.  The founder of the Federation for American Immigration Reform (FAIR) and NumbersUSA, both prominent conservative anti-immigration groups, is John Tanton.  Apparently, Tanton's roots are in Ehrlich style population bomb limits-to-growth zero-sum fearmongering.

In 1968, a Stanford biologist named Paul Ehrlich made these ideas mainstream
with his book, The Population Bomb. With terrifying certainty, Ehrlich
argued that the exponential growth in population and the incremental growth in
food could only mean one thing: mass famine. "The battle to feed all of humanity
is over," the book begins. "In the 1970s "¦ hundreds of millions of people are
going to starve to death."

It was an instant sensation, turning "overpopulation" into a hot topic and
landing Ehrlich repeatedly on "The Tonight Show." Tanton had been ahead of the
curve. As early as the '50s, he avidly read reports from the Population
Reference Bureau, and by the time Ehrlich's book was published, he and Mary Lou
had already started work on the first Northern Michigan chapter of Planned
Parenthood. "I believed in the multiplication tables," says Tanton. "Since I was
a physician and could do something about birth control, it struck me that this
was where I could make my contribution to the conservation movement."...

Tanton, whose worldview was forged in this intellectual milieu, is haunted by
the spectre of an apocalypse just over the horizon, and the thought that he is
one of a select few who see it coming. Sitting at his desk during one of our
interviews, he reaches into a drawer, withdraws an electric metronome and flicks
it on. As the device pulses at 135 beats per minute, he explains that each beat
is a new birth (at the 1969 rate), and each new birth requires resources: food,
clothing, education. It's a trick he used when he gave talks on population in
the '70s, and it's effective. His voice barely rises over the percussive
onslaught, and after just 30 seconds you want to yell: "Make it stop!"

I never really realized this connection or Tanton's roots (for reasons outlined below, his public message has moved on from environmentalism and overpopulation).  Tanton's real reason for being anti-immigration is this:

He explains that reducing immigration will force countries like Mexico to
confront their own population growth rates. "Each country," he says, "ought to
try to match its population to its resource base."

Whatever the hell that means*, since the amount of population the
world's "resource base" is able to support has grown exponentially over
the last 100 years.  But the really, really nutty part, the part that
separates him from the just-plain-wrong Ehrlich types, is the fact the
he thinks this resource matching has to proceed country by country.  No
global markets for this guy, I guess.  Somehow people crossing an
immaginary line in the Sonoran desert makes the population less
sustainable?  On the south side, things are OK, but move 100 miles
north and suddenly the world is doomed? 

In fact, the reality is just the opposite, for the same reasons that
Ehrlich's population bomb theory went bust -- which is that increasing
wealth and technology always tend to lower birth rates.  So I would
argue that immigration from Mexico to the US, with the wealth creation
potential that provides the immigrants, is  likely to result in a net
reduction of world birth rates.

Of course, Tanton has moved on, because the immigration movement could
not get excited about his environmental message and environmental
groups couldn't make heads or tails of his immigration message.

Crisscrossing the country, Tanton found little interest in his
conservation-based arguments for reduced immigration, but kept hearing the same
complaint. ""ËœI tell you what pisses me off,'" Tanton recalls people saying.
""ËœIt's going into a ballot box and finding a ballot in a language I can't read.'
So it became clear that the language question had a lot more emotional power
than the immigration question."

Tanton tried to persuade FAIR to harness this "emotional power," but the
board declined. So in 1983, Tanton sent out a fundraising letter on behalf of a
new group he created called U.S. English. Typically, Tanton says, direct mail
garners a contribution from around 1 percent of recipients. "The very first
mailing we ever did for U.S. English got almost a 10 percent return," he says.
"That's unheard of." John Tanton had discovered the power of the culture
war.

The success of U.S. English taught Tanton a crucial lesson. If the
immigration restriction movement was to succeed, it would have to be rooted in
an emotional appeal to those who felt that their country, their language, their
very identity was under assault. "Feelings," Tanton says in a tone reminiscent
of Spock sharing some hard-won insight on human behavior, "trump facts."

I have never, ever understood why Americans get so unbelievably bent out of shape when they encounter a language other than English, but unfortunately this bizarre brand of xenophobia is fairly prevalent in this country, and Tanton has taken to tapping into it.  The article continues on to describe how Tanton has been very successful in making common cause with a broad range of people, from liberal activists to outright racists.

I found the article interesting as much for the descriptions of all the tactics and campaigns that failed to motivate the anti-immigration base in the past.  My sense from the article is that Tanton understands full-well that if the illegal immigrants were actually 12 million Canadian English-speaking Anglos, he would not be having near the success in getting people riled up about immigration.

* its amazing how many people talk about the world approaching some resource limit, but in fact no one has ever offered any shred of evidence as to where the world's population is vis-a-vis some mythical "carrying capacity".  Every prediction that we are approaching the limits of growth have been wrong.  Julian Simon pointed out that the only resource that matters is the human mind, and it never runs short.  He used commodities prices to prove his point, and beat Ehrlich in his famous bet. 

As a preface, I am not a socialist planner, so I do not presume to make other people's economic trade-offs for them.  If someone out there chooses to collect Pinto station wagons or pay $10 million to go on a Russian space launch, power to them.

That being said, I will observe that gas price concerns seem to drive people to do things that they would not normally do in other contexts.  Market Power quoted this statement from the Washington Post:

"When prices go up, you're going to see some interesting things," said Tom
Kloza, chief analyst for the Oil Price Information Service in New Jersey.
"Saving money on gas is something that's just magical in this country. Rational
thought just doesn't apply to gas."

Market Power was skeptical that such irrationality exists, but I think it may be correct.  Here are a few examples:

1.  Waiting for hours:  A couple of years ago when I lived in Seattle, a local Costco put in a gas station and sold gas for 10-15 cents or so below most of the other local stations.  Every time I went there, there was a huge line -- perhaps half an hour long -- to get gas.  For a fifteen gallon fill-up saving 15 cents and waiting 30 minutes, that equates to $4.50 an hour savings for their efforts, not to mention the extra driving time (and gas!) spent getting to this one spot rather than their local station.  How many people in the line would have driven an extra 10 miles to take a job at $4.50 an hour? 

Lately, I witnessed a free gas promotion where people lined up and waited at least 3 hours for 10 gallons for free gas (people apparently had lined up starting at 4AM for the promotion that began at 8AM.  This is a bit better deal at $10 per hour, but I wonder how many people in the line would have participated in any other endeavor for $10 an hour?  Market Power points to a similar promotion in Sioux Falls, where the value of police time providing security was probably higher than the value of the gas given away.

2.  Save a dollar, pay three extra.  One of the reasons I am unconcerned with gas price gouging is that many gas stations today use gas as a loss leader, hoping to pull motorists into their store or restaurant.  In the language of gouging, what this means is that typically you are getting a great price on gas (given what the dealer's costs are) and are getting gouged on coffee and Twinkies.  Its amazing to me that people who check the Internet to find the place with 5 cents a gallon cheaper gas will then walk into the convenience store and pay whatever for Cokes and water and cigarettes and beer and coffee.  It seems crazy, but the best way to explain it is that for a number of people, a dollar saved on gas gives them far more satisfaction than say a dollar save on soft drinks.

3.  Wagering with the rental car company.  Every rental car company offers you a wager nowadays.  They give you the chance to buy the whole tank of gas in advance for something like 20 cents less than the local market rate.  Assume the local market rate is $3.20, the rental car advance rate is $3.00, and the tank is 15 gallons.  All you have to do to win this bet as the renter is to return the car with less than 1 gallon left.  If you do, you win, otherwise you lose.  Is this a bet you want to take?

But I left something out - the value of your time.  Let's say you value your marginal time at $30, and it take 15 minutes to fill up the rent car yourself.  By taking the fuel option, you save $7.50 of time.  This means to win the bet, including the value of your time, you have to turn it in with less than 3.5 gallons left, or less than 1/4 full.  The other alternative is to not stop and turn it in at the rent car place and let them fill it up at their $6.00 rate.  But even this ridiculously inflated rate for turning the car in part-full is still a better option than the pre-paid fuel as long as you don't use more than half a tank.   And I bet that the vast, vast majority of people who rent cars, particularly on business trips, don't use a half tank (a half tank at 20mpg is about 150 miles).

One of the best tests of my proposition is to see how many businesses
today act as if this gas-price-overfocus is a real phenomenon:  Car
dealerships give away free gas rather than rebates;  many many
companies are having free gas promotions;  gas stations continue to
sell gas at cost to get you in their store.  Basically, businesses
everywhere are betting that their customers will find $30 of gas more
appealing than any other $30 giveaway. 

None of the above bothers me particularly -- people are different and interesting in how they act.  That's why government planning tends to chafe everyone.  In fact, the only part of this supposed irrationality about gas prices that does bother me is the fact that so many people run to the government for price controls and gouging investigations whenever gas prices go up, and so many Congressmen of both parties see value to pandering to these instincts.  This despite the fact that gas prices are still effectively far lower as a percentage of income than they were 25 years ago.  I wish they would all go back to sipping their $8 Starbucks coffees and just deal with it.

Update:  Was on Snopes.com checking out an email that seemed like an urban legend (it was) and saw a sidebar listing gas wars as the #1 urban legend email of the moment.  ExxonMobil seems to be the bad-guy target-of-choice, I guess just because they are the largest.  The "idea" in the email is that if everyone would boycott ExxonMobil and shop at other gas stations, the price of gas would fall.  LOL.  As Snopes points out:

A boycott of a couple of brands of gasoline won't result in lower
overall prices. Prices at all the non-boycotted outlets would rise due
to the temporarily limited supply and increased demand, making the
original prices look cheap by comparison. The shunned outlets could
then make a killing by offering gasoline at its "normal" (i.e.,
pre-boycott) price or by selling off their output to the non-boycotted
companies, who will need the extra supply to meet demand. The only
person who really gets hurt in this proposed scheme is the service
station operator, who has almost no control over the price of gasoline.

In many states like California, auto insurance rates have been subject to state price controls for years.  A recent debate over a bill called AB 2840 helps shed some light on the total idiocy of trying to have government set prices.

I have to give you a paragraph of background.  Warning -- the next paragraph is mind-numbingly dull.  Please don't give up.

Apparently, auto insurance rates are higher in California cities in part because claims rates (theft, accidents) are higher in the cities.  The cities, which have a lot of political power, argued that this was unfair that their rates were so much higher than rural folks paid.  State-approved insurance rates were discriminating against cities, they claimed.  I don't know if they made the argument, but they could also have argued that infrastructure costs (sales, claims service) was likely lower in cities per capita because of the concentrated customer base.  So the state insurance board proposed to raise rural rates and cut city rates to make prices to all Californians more even.  Rural folks then freaked, and their legislators have proposed AB 2840 to put things back the way they were before.

So who is right?  How the hell am I supposed to know?  How the hell is anyone supposed to know?  There is absolutely no objective way to settle this argument.  I read the attached article and my eyes just started to blur.  That is why in practice, for all the talk of studies and analysis, issues like this are settled in favor of whoever has more political clout or votes.  Price controls, besides wreaking havoc on supply and demand, always - yes always - result in a transfer of wealth from those without political power to groups that have the power.   That's why politicians love them -- its a great way to raise campaign donations, as groups bid to be on the receiving end of such largess rather than being the sacrificial lamb.  And it's why in a free and just society we use this thing called "markets" to determine prices in most other such complex situations.

I have already read several commenters who have wondered how Skilling could be convicted of fraud (in the form of obscuring Enron's true financial health) but acquitted of most charges of insider trading.  Larry Ribstein (via Professor Bainbridge) asks

"Does this mean that the jury thought he didn't know enough about what
was happening to bar him from trading, but that he did know enough to
go to jail for fraud?"

Here is how I reconcile it:  The jury decided that Skilling committed fraud, but that it was not for personal gain in his stock.  How can that be?  What other incentive might he have?  Here is my explanation, based on some personal knowledge of Skilling and the Enron business model.

Enron's business model was Skilling's brainchild.  It was nearly 100% his baby.  He invented it at McKinsey and then moved to Enron to make it reality.  The trading model Enron adopted reflected Skilling's ability to handle a lot of complexity and his facility for numbers.  The failure of Enron would be a direct personal failure of Skilling's, perhaps the first and certainly the largest of his life.  Even without holding a single share of stock, Skilling had every incentive to want Enron to survive and in fact thrive.  Enron's failure would be a repudiation of his vision, a forceful proof that maybe he was not as smart as everyone thought he was.

Like nearly every new financial trading business, Enron at first enjoyed large margins on their trading deals.  This has happened throughout history, as the first traders who discover an arbitrage opportunity make lots of money.  However, over time, competition and general knowledge of the arbitrage opportunity tends to erode margins.  Eroding margins are a problem in every business, but particularly in trading.  Here's why:

Trading businesses typically make their money by executing huge transactions at thin margins.  These transactions require a lot of capital, and since margins are narrow, trading companies need to maintain a very low cost of capital.  For a company like Enron, this means maintaining a high stock price and platinum level credit to minimize borrowing costs.

The trap Enron fell into was not a new one.  As trading margins inevitably eroded (as described above) the company had to do more and more volume to maintain profits (it takes twice the volume of transactions when margins are halved to maintain profits at an even level).  But remember, Enron needed a high and growing stock price to keep its cost of capital as low as possible.  So it needed to show ever growing profits, which means in an environment of falling margins, trading volumes had to go up almost exponentially.  But, increasing trading volumes means more capital, much of it in the form of debt.  Borrowing more increased cash demands and put pressure on ratings agencies to downgrade their debt, which would have disastrously increased borrowing costs.  At the same time, falling margins and rising debt meant falling coverage ratios.    Old line trading firms like Goldman Sachs and Soloman Brothers have mostly avoided this trap by carefully husbanding and building their capital over decades.  But Enron tried to build the trading business too fast.

So you see the tiger Enron management was riding.  Any blip in their cost of capital, whether it be a fall in stock price or a downgrading of their debt, would crash the whole company.  But falling margins and a growing need for debt nearly guaranteed that their cost of capital was going to go up.  At first, management sought new growth avenues (e.g. broadband) or windfalls (e.g. California energy crisis) to make ends meet.  Eventually, management appears to have fibbed to bond and equity markets, in the form of false statements and burying the bad stuff in SPE's, trying to keep things from crashing.  Eventually, outsiders figured out what was going on, the commercial paper market dried up, and Enron faced a liquidity crisis that brought the whole thing down rapidly.

In this context, Lay and Skilling's obfuscation of the underlying financial health of the company makes sense.  Enron had reached a point where bad news about the business would do more than just depress the stock price - it could start a chain reaction that would bring the whole company to bankruptcy.  Knowing this, Lay and Skilling apparently sought to hide the true condition of the company, to try to buy time to find some way out.  Skilling, much much smarter than Lay, at some point probably realized that the crash could not be avoided and that's why he suddenly quit.  The tragedy (self-induced, of course) for these men is that nothing was going to prevent the eventual crisis, and Lay and Skilling bought a few months delay in Enron's downfall at the cost of what will probably be their freedom for the next several decades.

So, was Skilling a robber baron intent on nothing more than enriching himself at the expense of shareholders?  Or was he a visionary entrepreneur, who just couldn't accept that his dream and creation of over a decade's work was dying?  I don't really know, even having known the man personally, but the jury's verdict seems to point as much to the latter than the former.  And if it is the latter, has there ever been a visionary who was not the last person to admit his vision was a failure?  I can't tell you how many entrepreneurs I knew in the Internet bubble who were convinced their company was going to be successful almost right up to the day of bankruptcy.  Are we really better off as a society putting all these failed visionaries in jail?

I guess I end up with mixed feelings about the legacy of the case.  I certainly am worried about the prosecutorial abuse.  And cooking the books of a public company is bad and should result in jail time. Having worked once long ago with Skilling, I know for a fact that the man is brilliant and totally detail oriented.  There was no way he could not know about the SPE shenanigans, and for that alone he should face jail time.  My concern is that the other message, beyond just accounting fraud, of this case will be that we are criminalizing CEO's being overly optimistic about their company. And that strikes me as nuts.

Update:  Tom Kirkendall, who has been all over this case, has more here.  Larry Ribstein, whose question started this post, observed:

Many people think that there was so much loss associated Enron that the
guys at the center of it must have been villains. But they weren't
villains. The jury is saying they weren't even insider traders, as if
that would have made a difference. They lost as much as anybody, and
that's what drove them to lie, if they did lie. This doesn't make them
saints, but it should make even the most hardcore antibusiness types
queasy with the denouement of this tragedy. Locking these guys up for
pretty much the rest of their adult lives for being unable to face the
fact that their dream had ended is not the way a civilized society
would deal with this case.

Technorati Tags:  Enron, Skilling

Ken Lay and Jeff Skilling were convicted on numerous counts of fraud but were acquitted on most counts of insider training.  Professor Bainbridge has some quickie analysis.

I worked for Jeff Skilling for a brief period of time at McKinsey & Co.  Jeff was easily one of the smartest men I ever met, as well as the most detail-oriented.  It was this latter quality that forced me to concede that he was probably lying to Congress back when he said "I didn't know any of this stuff was going on in my organization."  Whatever else they did, Lay and Skilling will never be forgiven by my family for sucking in a couple of our family friends who were not business people (doctors and such) onto the Enron board, perhaps as dupes who had no hope of crying foul at the complex business machinations that were taken place.  Whatever the reason, our friends will spend the rest of their lives dealing with Enron lawsuits.

My only regret in this case is that I hate seeing some pretty scary prosecution practices get rewarded.  The guilt of Lay and Skilling does not change the fact that we need to start reigning in heavy-handed prosecutors, and disavowing the Thompson memo would be a good start. Update: Tom Kirkendall has much more on prosecutorial abuse in this case and possible appeal points.

Hawaii has given up on its gasoline price control experiment, even as Congress ponders similar actions at the federal level.  I criticized the Hawaiian program here.