Coyote Blog

One of my company's primary businesses is to operate National Forest campgrounds.  We have been told that starting immediately, and for an unspecified period of time, many of the campgrounds in the US Forest Service in East Texas, Louisiana, and Mississippi will be waiving camping fees for the foreseeable future.  We have been told that anyone can camp for free, and that they do not need to prove they are a hurricane refugee, nor do they even have to be from one of the affected states, to get the free camping.  The Texas Campgrounds we operate are now free to campers, but we have been instructed to still charge fees for day use and for purchases (such as for firewood).  The number of states affected may be larger than just these three, but so far the campgrounds we operate in Kentucky, Florida, and New Mexico are still charging fees.  Update:  campgrounds in Alabama, Arkansas and Oklahoma are also included, see below.

Subsidizing camping for refugees makes sense, though I am not sure why the Feds are subsidizing camping for everyone, but I guess they despaired of coming up with a fair way to separate homeless refugees from regular campers, so they made it free to everyone.  I have not been instructed whether the usual 14-day stay limit enforced by the Forest Service is still in effect, but I will assume it is until informed otherwise.  The 14-day stay limit has also been waived.

Update:  OK, here is the release:

FOREST SERVICE WAIVES CAMPGROUND FEES FOR HURRICANE KATRINA SURVIVORS

Washington, Sept.3, 2005 - The USDA Forest Service is taking another
step to assist survivors of Hurricane Katrina by temporarily rescinding
the fee requirement for campgrounds and the 14-day stay limit for
camping on some National Forest System lands in the Southern Region.
The normal fee range is $4.00 to $25.00 depending on the location.

The forests offering free camping include the Kisatchie National Forest
in Louisiana, the National Forests of Alabama, the Ozark-St. Francis
National Forest in Arkansas, the Ouachita National Forest in Arkansas
and Oklahoma and the National Forests and Grasslands of Texas. In all,
106 campgrounds are open without charge to victims of Hurricane Katrina
as they transition through these first weeks of the disaster.

Per comment below, an update on free camping opportunities here.

Technorati Tags:  Katrina, Camping, Recreation

Preface:  Over the years, technocrats have always had a distaste for capitalism.  Their desire has always been the curb to bottom-up disorder and inherent chaos of succesful capitalism with top-down order and control.  In the early half of the 20th centruy, the leading economic argument against capitalism was technocratic-fascist:  That capitalism and competition were wasteful and disorderly and should be replaced with a more orderly state control.  The ultimate legislative result of this thinking was FDR's National Industrial Recovery Act, his emulation of Mussolini-style corporate fascism which was fortunately struck down by the Supreme Court.

While numerous large-scale failures of state economic control have mostly beaten back the technocratic argument, we can still see the fundamental failure of this approach in the last few weeks with the government's handling of the Katrina recovery:

A few days ago I had thoughts on top-down vs. bottom-up approaches to hurricane relief.  After watching the relief effort over the last couple of days, I am more convinced than ever that part of the problem (but certainly not all of it) with the relief effort is the technocratic top-down "stay-in-control" focus of its leadership.  Take stories like this:

Lots of
people including yours truly have volunteered to bring (including food,
generators, food, etc., to be self sufficient for a week or so) the most
important thing which is a boat but have been told NO under no uncertain terms.
"My" town is under water, people are in critical condition, and I have skill
sets and assets - including a boat which will come out of the hole in 14 inches
of water - and we are being denied the opportunity to help. And quite frankly,
that REALLY PISSES ME OFF.

And this:

A visibly angry Mayor Daley said the city had offered emergency,
medical and technical help to the federal government as early as Sunday
to assist people in the areas stricken by Hurricane Katrina, but as of
Friday, the only things the feds said they wanted was a single tank
truck.
[...]
Daley said the city offered 36 members of the firefighters' technical
rescue teams, eight emergency medical technicians, search-and-rescue
equipment, more than 100 police officers as well as police vehicles and
two boats, 29 clinical and 117 non-clinical health workers, a mobile
clinic and eight trained personnel, 140 Streets and Sanitation workers
and 29 trucks, plus other supplies. City personnel are willing to
operate self-sufficiently and would not depend on local authorities for
food, water, shelter and other supplies, he said.

While turning down offers to help, when everyone agrees not enough is being done, may seem unthinkable, these are actually predictable outcomes from a bureaucracy of technocrats.  Technocrats value process over results, order and predictability over achievement.  More important than having problems fixed is having an ordered process, having everything and everyone under control.  In this context, you can imagine their revulsion at the thought of having private citizens running around on their own in the disaster area trying to help people.  We don't know where they are!  We don't know what they are doing!  They are not part of our process!  Its too chaotic! Its not under control!

Nearly everyone who is in government has a technocratic impulse - after all, if they believed that bottom up efforts by private citizens working on their own was the way to get things done, they would not be in government trying to override those efforts.  But most emergency organizations are off the scale in this regard.  99% of their time, they don't actually have an emergency to deal with - they are planning.  They are creating elaborate logistics plans and procedures and deployment plans.  Planners, rather than people of action, gravitate to these organizations.  So, once a disaster really hits, the planners run around in circles, hit by the dual problem of 1) their beautiful plans are now obsolete, since any good general can tell you that no plan ever survives first contact with the enemy and 2) they are by nature still planners, trying to get order and process underway and create a new updated plan, rather than just getting every possible resource out there fixing the dang problem.

The army has had to deal with this conundrum for years.  How do you have soldiers who are good planners before a battle, but men of action and initiative once the battle is underway?  How do you run a fundamentally top-down organization such that when it matters, individuals will take the initiative to do what needs to be done?  Its a really hard problem.

Unfortunately, I fear that the lessons from this hurricane and its aftermath will be that we need more top-down rules and authority rather than less.  It is the technocrats on the sidelines who are most appalled by the screw-ups, and will demand more of whatever next time.

Here is an example of what I think we should do instead.  Let's accept that we can't plan for everything, can't have every resource stockpiled for an emergency, and that our biggest resource is our private citizenry.  Let's provide rules of engagement for 3rd parties to come into the disaster area and help with minimum supervision.  There might be different rules for trained rescue people and untrained private citizens.  Here is an example of the type of thing that might work better:

Every private citizen with a boat larger than X and a draft less than Y who would like to help can bring their boat and three days food and clothing to such and such boat ramp.  All municipal firefighters and rescue teams that want to help, come to such and such building, check in, and we will assign you a sector.  Rescue crews need to bring their own food, equipment, and waterproof paint to mark the buildings you have searched.  Then, go out to the boat ramp, find a boat and driver in the pool there, and go.  FEMA will bring in a fuel truck to refuel boats and will indemnify all boat owners for damages.  All survivors found should be brought back to the dock, and ambulances will be standing by.

Update: OK, I know some of you don't believe that this is a control issue for the bureaucrats.  Well, here is more evidence, from the Red Cross web site, via Instapundit.

Hurricane Katrina: Why is the Red Cross not in New Orleans?

• Access
  to New Orleans is controlled by the National Guard and local
  authorities and while we are in constant contact with them, we simply
  cannot enter New Orleans against their orders.
• The state Homeland Security Department had requested--and
  continues to request--that the American Red Cross not come back into
  New Orleans following the hurricane. Our presence would keep people
  from evacuating and encourage others to come into the city.

Update #2:  Still reluctant to believe that control over the process is more prized by bureaucrats than results?  Try this, from CNN and via Instapundit:

Volunteer physicians are pouring in to
care for the sick, but red tape is keeping hundreds of others from
caring for Hurricane Katrina survivors while health problems rise.

Among
the doctors stymied from helping out are 100 surgeons and paramedics in
a state-of-the-art mobile hospital, developed with millions of tax
dollars for just such emergencies, marooned in rural Mississippi.

"The
bell was rung, the e-mails were sent off. ...We all got off work and
deployed," said one of the frustrated surgeons, Dr. Preston "Chip" Rich
of the University of North Carolina at Chapel Hill.

"We have
tried so hard to do the right thing. It took us 30 hours to get here,"
he said. That government officials can't straighten out the mess and
get them assigned to a relief effort now that they're just a few miles
away "is just mind-boggling," he said....

It travels in a convoy that includes
two 53-foot trailers, which as of Sunday afternoon was parked on a
gravel lot 70 miles north of New Orleans because Louisiana officials
for several days would not let them deploy to the flooded city, Rich
said....

As they talked with
Mississippi officials about prospects of helping out there, other
doctors complained that their offers of help also were turned away.

A
primary care physician from Ohio called and e-mailed the U.S.
Department of Health and Human Services after seeing a notice on the
American Medical Association's Web site about volunteer doctors being
needed.

An e-mail reply told him to watch CNN that night, where
U.S. Health and Human Services Secretary Michael Leavitt was to
announce a Web address for doctors to enter their names in a database.

"How crazy is that?" he complained in an e-mail to his daughter.

Dr.
Jeffrey Guy, a trauma surgeon at Vanderbilt University who has been in
contact with the mobile hospital doctors, told The Associated Press in
a telephone interview, "There are entire hospitals that are contacting
me, saying, 'We need to take on patients," ' but they can't get through
the bureaucracy.

"The crime of this story is, you've got millions
of dollars in assets and it's not deployed," he said. "We mount a
better response in a Third World country."

Update #3:  Yes, there's more.  The Salvation Army has also been blocked, and the reason?  Their efforts did not fit snugly into the technocrats plans (via Cafe Hayek):

As federal officials tried to get some control over the deteriorating
situation in New Orleans, chaos was being replaced with bureaucratic rules that
inhibited private relief organizations' efforts.

"We've tried desperately to rescue 250 people trapped in a Salvation Army
facility. They've been trapped in there since the flood came in. Many are on
dialysis machines," said Maj. George Hood, national communications secretary for
the relief organization.

"Yesterday we rented big fan boats to pull them out and the National Guard
would not let us enter the city," he said. The reason: a new plan to evacuate
the embattled city grid by grid - and the Salvation Army's facility didn't fall
in the right grid that day, Hood said in a telephone interview from Jackson,
Miss.

"No, it doesn't make sense," he said.

Update #4:  I can't help myself.  Here is another:

The Fox News Channel's Major Garrett was just on my show extending the
story he had just reported on Brit Hume's show: The Red Cross is
confirming to Garrett that it had prepositioned water, food, blankets
and hygiene products for delivery to the Superdome and the Convention
Center in the immediate aftermath of the hurricane, but were blocked from delivering those supplies by orders of the Louisiana state government, which did not want to attract people to the Superdome and/or Convention Center.

Update #whatever-I-am-up-to: Welcome Instapundit readers!  I have posted a follow-up on big government and disaster preparedness here.

Technorati Tags:  Katrina, Economics

I don't want to be too much of a Monday morning QB, but this sure is a missed opportunity:

The city declared a mandatory evacuation.  Why then did it stick tens of thousands in the Superdome, right in the middle of town, rather than evacuate them with the assets they already owned in quantity?

Some critics are calling it a racist plot.  If we rely on Coyote's Law, the most likely answer is incompetence and stupidity.

Update:  Junk Yard Blog has extensive reports on unused busses, including more sattelite imagery, local evac plans, reports from locals, etc.  Just keep scrolling down the page

Thanks to Big Cat Chronicles for the banner images.

Marginal Revolution has an incredible roundup of FEMA and disaster-preparedness articles, many from a libertarian point of view.

Government bureaucrats tend to resist bottom-up solutions to problems -- after all,their jobs depend on the primacy of central planning and solving problems top-down.  It is interesting to read this email posted at Vodka Pundit in this light:

Fed is dropping the ball on basic necessities such as water, portolets, you
name it. Woefully unprepared and nobody seems to be in charge or have the
gumption to get it done.

Louisiana politicians should be absolutely raising hell right now. Lots of
people including yours truly have volunteered to bring (including food,
generators, food, etc., to be self sufficient for a week or so) the most
important thing which is a boat but have been told NO under no uncertain terms.
"My" town is under water, people are in critical condition, and I have skill
sets and assets - including a boat which will come out of the hole in 14 incles
of water - and we are being denied the opportunity to help. And quite frankly,
that REALLY PISSES ME OFF.

Military is stepping up and bringing considerable skills and assets to the
table. Had they been listened to earlier, lots of logistical issues would have
been resolved. IOW's, the bureaucrats are getting moved to the sidelines but
"turf issues" are not going quietly into the night.

You can see the bureaucratic mindset at work hear:  An emphasis on being in control vs. solving the damn problem.  Don't want a lot of citizens running around on their own bringing in supplies of helping people, do we?

If we are going to insist on a 100% top-down approach, then its good the military is coming in to take over.   Only the military has the large-scale logistical experience and resources to take-on something of this scope top-down  (and even they have struggled with what may be a smaller rebuilding task in Iraq).  The US military did more good than any single organization during the Asian Tsunami, so I hope for the same here.  I would hope there are a few aircraft carriers heading to the area.

Postscript:  I know everyone is having fun blaming the feds, but what about the locals here?  If my town was below sea level with only a single dike between me and being 30 feet under a lake, I might insist that my local politicians have a contingency plan for breaches.  I have wondered why a few ships couldn't have been scuttled in the breach early in the crisis.

Update:  Much more on top-down vs. bottom-up response to Katrina here.

Technorati Tags:  Katrina

Very funny from Scrappleface.  Here is an excerpt:

Fears increased today among hundreds of thousands of refugees from the
hurricane-ravaged gulf coast as they faced a Labor Day weekend with little hope
of an eloquent speech from President George Bush....

One New Orleans man, currently living in the 'Plaza End Zone' section of the
Superdome as he awaits news of his missing family members, said, "I can survive
for some time with little water, no food and highly unsanitary conditions...but
if I don't hear some poetic words of comfort and stirring verbal imagery from
the president pretty soon, I'm a goner."

Read it all.

Technorati Tags:  Katrina, Humor

When you first see the comparison of Katrina before and after photos, you will think the "after" photos seem underexposed.  Examining the larger images, you will find that they are not underexposed, just everything is now covered in dark green water.  What a mess.  Here are downloadable versions of many of the same photos.

Update:  These photos of the Mississippi Gulf Coast don't have the flooding, but very dramatically show the type of damage sustained.  The USGS has a gallery of before and after Katrina photos here. This site shows the levee breaks in New Orleans from space.

Other Katrina-Related Topics:
Technocrats and the Katrina Response  **Popular**
Bottom-up vs. Top-down Solutions
Hurricanes and Big Government
In Defense of Price Gouging
Fallout of Federal Control and (here too)

Technorati Tags:  Katrina

I am constantly frustrated with the media's inability to reality check the numbers they publish.  In many cases, just a few seconds thought would tell them that the numbers make no sense.

Today's example actually comes from a "meth-is-death" web site which is run by the Tennessee state attorneys-general association and is linked prominently from the Federal Government's anti-drug web site  (Hat tip to Reason).  Here are their numbers, copied right from the site:

• 1 in 7 high school students will try meth.
• 99 percent of first-time meth users are hooked after just the first try.
• Only 5 percent of meth addicts are able to kick it and stay away.
• From the first hit to the last breath, the life expectancy of a habitual
  meth user is only 5 years.

So 14.3% (1 in 7) try meth, 99% of those who try are hooked, and 95% of those hooked stay hooked, and all of those hooked die in five years.  So .143 x .99 x .95  or 13.45% of all kids are dying on average by the age of 23.  Wow.  There must be a really huge conspiracy out there to cover up all these deaths. Given that there are about 17,000,000 high school age kids, that means that in the next 5 years or so nearly 2.3 million of them are going to die.   And adults who run anti-drug programs wonder why kids don't take their warnings seriously. 

This morning, as I drove to work and stopped to get gas, I noticed that they were sold out of two of their three grades (only premium was left).  The manager told me that several folks had come in today saying that this was the fourth or fifth place they looked for gas, though I will say the next two stations down the street seemed to have gas and I did not see lines anywhere.

Phoenix is one of those funny gas markets, where due to government regulations, we have a unique gas blend that can only be made in one place by left handed Eskimos, or whatever.  Several companies have tried for years to get a refinery permitted to serve this market, but the Arizona state government has consistently blocked it.  As a result, we get some strange ups and downs here, including gas lines last year when the only pipeline into town from the only refinery that makes gas that can be sold here broke.

Its a bit too early for Katrina to be actually affecting wholesale gasoline supplies (update:  or maybe not), but it is not too early for Katrina-led expectations to be draining gasoline inventories.  I explained previously about how an expectation among consumers that gas will be short can become a self-fulfilling prophecy:

Take
the example of 1972, and we will use typical numbers of that era.  Lets
say there were 100 million cars each with an average 20 gallon tank.
Lets say normally, people refill their tank when it is ¼ full, so on
average their tank is 5/8 full.  Doing the math, there are 5/8 times 20
times 100 million gallons actually in cars or about 1,250 million
gallons.  That's right - one of the largest single inventories of gas
in this country is in people's tanks.

Now,
lets say due to supply panic, everyone suddenly refills at ¾ full. No
one wants to be caught short (I remember in the 1970's, people would
wait in line to put a gallon or two in their tanks -- it was nuts).  In
this case, on average they are 7/8 full or there are a total of 1750
Million gallons in cars' tanks.  So, in the space of what might be two
or three days, people suddenly demand 500 million gallons above and
beyond their normal usage to increase their tank's inventory.  Boom,
stations are out of gas, which causes people to feel even less secure
without a full tank, so they inventory more (many in spare gas cans)
and the problem gets worse.

Here is my previous post on why I am hoping for gas price gouging.

Katrina News at Technorati

A pretty cynical bit of racial profiling going on here.  White people are borrowing needed food, black people are looting (though there is an interesting contrast here in how each person goes about their carbohydrate intake, lol)

Katrina comes at a very bad time for US gasoline markets.  Supplies are already tight, and now a substantial amount of US oil production and refining capacity are shut in, for an unknown period of time.  Long ago, I worked as an engineer in a refinery and it can take days to get everything restarted from a cold start.  The result will almost certainly be near-term gas shortages.

There are two ways this can play out:  1)  a short term spike in prices, as much as a dollar or more a gallon or 2) long and irritating gas lines.  Lets hope that prices are allowed to reach their level and gas lines can be avoided, but who knows what political stupidities (ala Hawaii) will be proposed. 

I really, really hate gas lines.  I hate the uncertainty of whether or not I can find a station open.  I hate refilling my tank every day to make sure I am not caught short.  And for those of you who say I am arrogant since I can afford higher prices but the poor cannot, I assure you that folks who are paid by the hour are hurt much worse waiting around for hours in gas lines than the mere irritation I encounter.  More on gas line expectations as a semi-self-fulfilling prophecy here.

PS-  Expect to see news of a refinery fire or explosion over the next week.  The risk of accidents is very high when these complex plants have to start up -- they weren't really meant to be turned on and off.

Update:  First signs of a gas shortage?
Update #2:  The Mises Blog has a roundup of economics posts supporting price spikes during spot shortages (popularly known as gouging).
Update #3:  Jane Galt has more in praise of price gouging

Katrina News at Technorati

Having grown up in Texas, I love this:  Their city underwater and possibly joining Atlantis for eternity, the Superdome looking like the Kingdome, the newspapers flooded out of their offices, with no power and no printing presses, probably operating out of a Motel 6 somewhere, the New Orleans Times-Picayune still has time to address life's essentials -- How ARE the Saints going to stop the run this year? (posted at 8:50 PM Tuesday)

One of the major on-field concerns for the Saints is to figure out how
to stop the run. Off the field reports of major flooding back home
occupied the thoughts of many of the Saints players Tuesday in the
second day of practice at San Jose State.

Going into Thursday's preseason finale against the Oakland Raiders, the
Saints have allowed a whopping 535 yards on the ground in the first
three exhibitions with a staggering 6.7 yards per carry for opponents.

You may have to scroll down a few posts, I am not sure their permalinks are working right.

OK, I warned you, editorials are already blaming the damage in New Orleans on Global Warming in general and George Bush in specific.  Here is what you need to know about this meme:

• New Orleans is built in a big below-sea-level hole in the ground and is surrounded on all sides by water.  Their dikes have been breached and the city flooded with great regularity in the 20th century. Pumps run full time to keep the city dry even during fair weather.  Even without this hurricane, some have been worried that the city was about to sink into the ground.

• Katrina is the 5th category four or five hurricane to hit within 100 miles of New Orleans since 1899.  This includes the hurricanes in 1948, 1965, and Camille in 1969.  Camille was the real whopper up to this point, one of only 3 class 5 hurricanes to ever hit the US before Katrina.  Note however, after three major (class 4 or 5) hurricanes in 21 years in the area from 1948-1969, there has not been another one to hit this area for 36 years.   It is difficult to figure out how you get an increasing frequency argument from this data.

A more detailed study of hurricane frequency is here and nice graphs here.  It turns out that increasing $ damages from hurricanes have more to do with expensive houses near the coast than increasing hurricane severity.  More on cycles of hurricane activity here. 

If there is a government failing here, it has more to do with local infrastructure than CO2.  This blog blames the lack of infrastructure on Bush (of course).  I have no particular problem bash Bush for anything, but my question is,if the locals knew this, as the blog implies, why didn't the locals spend their own damn money on their own infrastructure to protect their own selves.  If New Orleans chooses to build their city below sea level, why should the rest of us bear the cost of their higher-than-average infrastructure costs?

Katrina News at Technorati

California is one of the toughest states in the country to do business in.  Bill Leonard, a member of the California BOE*, takes a refreshingly free market approach for a left-coast politician.  From looking at his site, he and I may not see eye-to-eye on immigration, but he has been a lone voice of sanity on tax and regulatory policy in California for several years.  If you are interested, his email newsletter is generally filled with news and commentary on how California tax and regulatory law is changing and how these changes may affect local businesses.  You can sign up for his newsletter here.

*  You know your state is in trouble when the department of taxation and revenue calls itself the "Board of Equalization", though I am told this originally referred to equalization of tax policy across counties rather than having the redistributive overtones it has today.

Here is my update on Iraq:  We are still there, and will be there for a while.  And we are still spending nearly every available financial and human resource, not to mention all of our national attention and available goodwill, on the effort to make Iraq a prosperous and successful free and independent nation, to the exclusion of being able to bring much change about anywhere else in the world.

I can't tell you whether the effort in Iraq is going well or poorly.  Certainly if I pay attention to the major media alone I would assume it's a disaster, but we all know the media has a bias toward negativity that trumps any political biases it might have (after all, your local news station learned long ago that "your kids are happy and healthy, story at 11" is not a very good way to tease the evening news).  Being familiar with alternate sources on the Internet, I know that there are successes as well as failures on the ground.  In fact, you can even sort of deduce the successes from the major media coverage.  When the NY Times stops writing about blackouts in Iraq, you know that the electrical system is fixed.  When the WaPo stops writing stories about shortfalls in re-enlistment rates, you can infer that the rates are back up.

But to me, all this back and forth over success and failure in Iraq is only peripheral to my main problem with the war.  Let's for the sake of argument posit that things are going swimmingly, and we are able to start removing assets and support from Iraq next year.  That will mean that for four or five years, the entire attention and resources of the only country in the world that is able to substantially influence the behavior of other countries will be focused on just one country. 

During the Iraq war and occupation, we have not had the "bandwidth", either in attention or moral authority or resources, to help stave off Sudanese genocide, to steer Zimbabwe off its destructive path, to influence the course of events in Iran or North Korea, to change the behavior of terrorist sponsors like Saudi Arabia, or even to head off Russia's apparent slide back toward totalitarianism. 

Now, one could easily argue that its not our job to fix these things.  And I go through phases of agreeing with this.  However, our invasion of Iraq is predicated on the assumption that it should be our foreign policy to try to fix the worst of these problems.  And if it is, does it really make sense to invest everything we have and more on one country for four or five years (or more?)  From the first days of the war, I have called this my "cleaning of the Augean stables argument".  There are just too many messes in the world to head them all off by military invasion.  Afghanistan probably justified such a military effort, given its direct connections to 9/11, but I am still confused as to why Iraq justified this attention more than 20 or so other nations I could name.  Afghanistan  convinced the world that the US was ready to use the military if it had to, and helped to reverse the perception of weakness left by Carter's response to the Iranian hostage takers, Reagan's bailing out of Lebanon, and Clinton's running form Somalia and refusing to respond to the Cole attacks.  9/11, for all its horors, gave us a certain moral authority in the world to try to clean things up.  This credibility and authority could have given new life to non-military efforts, but we chose not to use them.

Now that we are there in Iraq, I tend to be in the stay the course camp.  There are too many recent examples, such as those cited above, where bailing out has created a perception of weakness that have encouraged our enemies to more boldness.  The situation we are in with the Iraqi people is much like the obligation the police have to a mafia informant that the police have convinced to turn state's evidence with the promise of protection against retribution.  If you suddenly throw the guy back out on the street to be killed publicly, its going to be really hard to get anyone else to trust you in the future.

I will confess that there are two things that from time to time cause me to have some doubts about my  stance.

The first was the seeming cascade of good news from surrounding countries in the middle east last January, as a successful Iraqi election emboldened opposition forces in a number of countries, including Lebanon, Egypt, and Iran.  If the neocons are right, and successful democracy in Iraq leads to a cascade effect in the surrounding nations, then my argument about spending too much time and effort on one country loses some of its power.

The second and perhaps more powerful input that sometimes causes me to rethink my opposition to the Iraq war is the insanity that tends to emerge from others who are anti-war, and with whom I do not want to be associated.  Take Cindy Sheehan and her beliefs, since she seems to have been adopted as a spokesperson and mascot by much of the vocal anti-war left. (I promised myself I would never mention Cindy Sheehan in this blog, but if she can meet with the president once and later claim that the president won't meet with her, then I guess I can write about her once and then claim I won't ever mention her).

Ms Sheehan has stated, as have many others in the anti-war movement including Michael Moore, at least five reasons for their being anti-war that drive me nuts:

Insurgents are Freedom Fighters:  Sorry, but no.  Most of the insurgents are ex-Baathists or Muslim extremists who want to reinstate a fascist state in the mold either of Saddam's more secular version or Iran's more fundamentalist version.  The insurgency is the equivalent of what Germany would have been like had the SS followed through on its promise to continue fighting a guerrilla war from the Bavarian Alps.  The world is a better place without the Baathists in power, and the insurgents do not have good aims for the Iraqi people.  Period.

Its all a Jewish plot:  Everything old is new again, and this particular brand of anti-Semitism, seeing Jewish cabals everywhere pulling strings of the government, seems to be back in vogue.  However, is there any particular reason Israel would want to shake the tree in Iraq?  After all, the last and only time they were attacked by Iraq directly was the last time the US went to war with Saddam.  Israel is still surrounded by enemies, with or without Saddam in power in Iraq.  In fact, one could argue that what Israel should really want is for Iraq and Iran go back to beating the crap out of each other in war after war.

It was all for oil:  How?  People always say this, but they can never explain to me the mechanism.  If it was to put US companies into ownership positions over Iraqi oil, we did a damn bad job since the Iraqi's seem to still own all their own oil (though we did head off the French from grabbing the oil).

War is never justified:  I don't think war was justified in this case, but never?  If you make this statement, then it means you have to be willing to live with anything, from genocide to totalitarianism, up to and including in your home country.  As long as there are people who only know how to live by force and wish to rule me, war always has to be an option.

Iraqis were better off under fascism when they had security:  I am not an Iraqi, so I won't try to make this trade-off for them.  However, I would like to point out a huge irony about the folks, mainly on the left, who make this argument.  The very same folks who make this argument for the Iraqis have been faced with the same choice themselves over the last few years:  Would you rather an increased risk of domestic terrorist attack, or greater security at the cost of reduced freedoms via the Patriot Act, more random searches, profiling, surveillance, etc. etc.  Most on the anti-war left have shouted that they will take the extra risk of violent attack in order to retain their individual liberties.  I agree with them.  The difference is that I don't project exactly the opposite choice onto the Iraqi people.

Update:  Professor Bainbridge seems to be in roughly the same boat.

Advocates of the statist web of regulation in California argue that this mass of government control makes California a more desirable place to live.  Andy Roth asks, does it?

Some high income earners are
leaving California because of its punitive tax rates. Could low- and
middle-income workers be leaving as well? One crude measure is to examine the
one-way rental rates for U-Haul vans. Using U-Haul's website, I queried a one-way rental for a 10-foot van
for October 1st, 2005.

   
   
   
   
   
   

One-Way Trip	Price
Los Angeles to Las Vegas	$454.00
Las Vegas to Los Angeles	$119.00

This is pretty cool, from Charles C. Mann's new book, and quoted by Marginal Revolution:

...the modern species [of maize] had to have been consciously developed by a
small group of breeders who hunted through teosinte strands for plants with
desired traits.  Geneticists from Rutgers University...estimated in 1998 that
determined, aggressive, plan breeders -- which Indians certainly were -- might
have been able to breed maize in as little as a decade...modern maize was the
outcome of a bold act of conscious biological manipulation -- "arguably man's
first, and perhaps his greatest, feat of genetic engineering," [Nina
Federoff]..."To get corn out of teosinte is so -- you couldn't get a grant to do
that now, because it would sound so crazy...Somebody who did that today would
get a Nobel Prize!  If their lab didn't get shut down by Greenpeace, I mean."

I wrote about the Vioxx decision here as another defeat for personal choice. Marginal Revolution has a good post on gaps in the anti-Vioxx science.  Here is a taste:

...[E]ven if there actually is an elevated risk of the magnitude the studies
suggest but can't prove, the question is whether I might want to accept a 1 in 4,000 risk of dying
from a heart attack in order to get the only medication timt
makes my pain bearable and a mobile life livable.  And if I say no to the
Vioxx, I may end up taking something that is less effective for my pain but has
risks of its own.

.... How did we arrive at a system in which 12 random Texans are assigned
responsibility for evaluating the scientific merits of statistical evidence of
this type, weighing the costs and benefits, and potentially
sending a productive blue-chip American company into bankruptcy protection?

Those on the left and the right often try to laugh off libertarians, ascribing to "paranoia" our fear of the power of government. 

Well, I could argue that if this is paranoia, I share a similar phobia with men like Thomas Jefferson and James Madison, whose fear of government power permeate all their writings, as well as the Constitution they helped to produce.  They believed that even good men could be corrupted by the government, and they were proven correct in an incredibly short time by John Adams.  Adams is by all accounts a good man, dedicated to freedom and democracy, and one of the chief intellectual architects both of the Revolution and the Constitution.  But it was Adams that signed into law the Alien and Sedition Act, perhaps the worst piece of illiberal and unconstitutional legislation in the history of this country.

Or, if I didn't want to make the founding father's / original intent argument, I could just point to this (hat tip Marginal Revolution):

A federal judge in Texas, calling the Federal Deposit Insurance Corp. a "corrupt
agency with corrupt influences on it," awarded a Houston financier $72 million
to cover his legal fees in a decade-long suit involving a failed savings and
loan and the government's efforts to take control of a stand of endangered
California redwood trees in the 1990s.

The FDIC, a regulatory agency that insures deposits at banks and
savings and loans, filed suit against Charles E. Hurwitz in 1995, seeking to
collect more than $800 million because Hurwitz indirectly controlled a Texas
S&L that failed in 1988. The FDIC, after a series of legal setbacks, dropped
its suit against Hurwitz in 2002....

On Tuesday evening, Hughes issued a scathing, 131-page ruling. In it, he cited
evidence that the FDIC brought the case largely because of pressure from
environmental groups, members of Congress and the Clinton administration. The
reason: Hurwitz's Pacific Lumber Co. owned 3,500 acres of endangered redwoods in
Northern California. Hughes found that the FDIC, in close concert with
environmental groups, sued Hurwitz to pressure him into a "debt-for-nature"
swap, in effect giving the government his trees in exchange for his supposed
liability in the failure of the United Savings Association of Texas....

Hughes said FDIC officials and lawyers, in depositions, "ranged from
manipulative evasiveness to plain perjury." He cited records of two years of
communications, including extensive discussions of legal strategy and political
matters, between the FDIC and environmentalists over the proposal to use a
banking-practices lawsuit as pressure on Hurwitz to give up the
redwoods.

Hughes said FDIC officials "discarded the mantle of the American
Republic for the cloak of a secret society of extortionists. If the vice
president called, they responded. If a congressman called, they responded. If a
lobbyist called, they responded. They heeded every call but that of duty and
honor."

Wow.  I know many people are paranoid about the lack of accountability of major corporations, and felt vindicated by the Enron case, over which the press spilled acres of ink.  However, Enron is nothing compared to this.  While fraud is bad, Enron at least was never able to use the coercive regulatory and police power that the government has to seek its ends.

Now that Hurricane Katrina has moved inland, it's time for the next stage of preparation - preparing for the onslaught of global warming activists ready to use New Orleans' devastation to justify government intervention in the economy.  Heck, some global warming activists tried to blame the earthquake induced SE Asian Tsunami on global warming.

For the last couple of years, the meme has circulated that hurricanes are getting worse, and that this is a predictable result of global warming.  More destructive hurricanes may or may not be a result of global warming -- I don't know, and I challenge any climatologist who thinks they can make a definitive prediction on hurricane forces based on a half degree change in global temperatures. 

What is fairly clear is that hurricanes are not actually getting worse.  Damage from them is getting worse, but that is more of a function of building a lot of expensive structures close to the water over the last 30 years.  And it is particularly true in New Orleans, which relies on massive pumps operating 24 hours a day to keep the city above water on a good day.  Patrick Michaels has more on the hurricane meme here, including a disturbing tale of the religion of global warming trumping good science.  Where I am on global warming here.  More on global warming activism overcoming the scientific method here.  I will never forget this quote from Steve Schneider of the NOAA:

We have to offer up scary scenarios, make simplified, dramatic
statements, and make little mention of any doubts we have. Each of us
has to decide what the right balance is between being effective and
being honest.

Note that this article is one in a series of articles on small business how-to's.  Past series have covered how to buy a business, labor audits, sales taxes, and workers comp.

I recently went through the process of obtaining an SBA (Small Business Administration) loan.  These are loans that are what I call "cash flow" loans, secured more by the companies earnings rather than collateral (though collateral may be required, see below).  SBA loans are written by private banks to standards set by the government.  If these standards are met, then bank loans under this program get a partial guarantee from the US government.

Before I go on to describe the process, I feel compelled to note that as a libertarian who does not believe the SBA should even exist and who believes that such loan guarantees are a subsidy program that should be eliminated, I was obviously conflicted by whether to seek out such a loan.  What finally made the decision for me is that this government program has crowded out all other private options.  Banks get about the same rate for an SBA loan as they would for a commercial loan without the guarantee.  Since the guarantee is out there and doesn't cost the bank anything, the bank has no reason not to insist on it?  Therefore, as a small company in the SBA size range, there just are not any banks willing to lend without the SBA guarantee.  This does not mean that in a free market without the SBA there would be no loans - it just means that when such a free subsidy program exists, banks are going to take it.

Types of Loans

The following is a gross simplification, but for a small company, there are basically two types of loans: secured loans and cash flow loans.  Secured loans are by far the most common for small businesses.  I, like nearly every entrepreneur I know, have had to pledge my house at various times as collateral for loans.  While it is fairly easy in today's market for a small company to get an equipment loan (typically lease-finance of a purchase) secured by hard assets, few lenders will provide loans for general business and working capital needs unless they are secured by something tangible -- homes, vehicles, receivables, etc. 

However, most businesses need capital for more things than just to buy hard goods.  Seasonal businesses may need loans to pay the rent in off-seasons, retail businesses need money to grow inventory and pre-pay for new leases, while opening new divisions may require paying salaries well in advance of first revenues.  Unfortunately, most businesses that claim to be business banks have no desire or talent to understand a business well enough to make a cash flow loan.  I am not talking about just Ethyl's Bank, but large banks like Bank of America and Wells Fargo who were stumped when I wanted to discuss some unique financing needs in my business.  I know people with a half million dollars a year in free cash flow out of their business who have trouble getting bankers to make unsecured cash flow loans.  And, as mentioned above, those who do make cash flow loans typically insist on having the SBA guarantee.

How an SBA Loan Works

I will not pretend to be an expert on all the intricacies and rules.  The SBA has a number of programs, offering loans of different lengths of time and for different purposes.  The SBA has programs for both revolving lines of credit as well as standard 10-15 year loans.  Each of these programs has different under-writing criteria, fees, and limitations, which your banker will have to explain to you.  Most SBA loans, including mine, fall under the section 7(a) program.  The SBA site tries to explain some of this.

As stated in the intro, an SBA 7(a) loan actually is issued by a bank, but to SBA underwriting criteria and with an SBA guarantee.  The SBA only guarantees a portion of the loan, something like 50-75% depending on the exact loan type, with the bank taking the rest of the risk.  These loans are issued at a floating rate of prime plus a percentage, and the SBA has rules that caps the rates as well as fees the bank can charge.  The SBA charges a substantial fee, in the 2-3% of total loan value, up front to the borrower for the guarantee.

Banks participate in the program in one of two ways.  Most any bank can originate an SBA loan, collecting all the (very substantial) paperwork needed by the SBA and forwarding it to the SBA for approval.  In addition to the underwriting time at the bank, the SBA can take many weeks to complete this analysis.   A smaller subset of banks have been pre-approved by the SBA to act as their underwriting agent - called a preferred lender or PLP.  This means that they can do the SBA's analysis for them.  This often greatly accelerates the process.  My total time form the bank's first data request to the final loan closing was less than a month, which is very fast.

Choosing the Bank is Critical

From the section above, it should be obvious that you should strongly consider working through a bank that has the preferred lender status with the SBA.  Note that having  or not having this status does not necessarily correlate with bank size.  The "expert" I was hooked up with at Bank of America (my main bank) was useless, and told me in so many words that it would be impossible for me to ever get an SBA loan.  I ended up working with Silver State Bank, a relatively new business bank out of Nevada.  They had the whole process automated, and when combined with a very knowledgeable banker on the front end named Jerry Woods here in Phoenix, the process was as smooth as silk and very, very fast.  In fact, I got the whole loan done in less time than it took BofA two years ago to do my line of credit.

Costs and Other Considerations

SBA loans are not cheap, and I would strongly urge you to pursue secured asset-backed loans as far as you can.  My total fees, including the cost of the guarantee, ran to about 3% of the total loan value.  In addition, I STILL had to put up collateral to back the non-guaranteed portion of the loan.  In retrospect, I think I did a bad job of negotiating with my banker on this.  No matter how good they are, bankers are still bankers and are going to attach every asset that can sit still for collateral whether they really need it or not.  I should have pushed back harder on this issue.  Overall, though, I am excited that I now have the capital to continue to grow my business.

PS-  If you want to enjoy some of this capital at work, come to Lake Havasu and rent a jet ski for a day!  All those other entrepreneurs out there are investing money in dead-end stuff like microchips and improved manufacturing --  Ha!  There is nothing like being able to tear around a big lake on 110HP to really make America competitive!

Lately I have been playing with Google Earth - I love flying from outer-space right down to my house.  However, this caught my eye yesterday.  As the risk of being the last person who has seen it, A9 (owned by Amazon) has a mapping program that shows pictures of the ground level view wherever you put the cursor.  Not all roads, by any means, are covered, so turn on the "mark streets containing images" box to see with blue lines where they have pictures.  I found the user interface for scrolling the maps around and zooming pretty counter-intuitive, so its kind of immature, but it is an interesting idea to be able to know what your destination looks like and maybe look at landmarks for key intersections.  A9's original product was a yellow pages that showed what your search results looked like and plotted them on a map.

You know how when you grew up, your parents and grand-parents always said stuff like "I remember when I was a kid, we didn't even have X", where X was airplanes, or TV's or ice or whatever.  I actually found myself having one of those moments in the OfficeMax store today.  I remember when I got my first hard drive for my IBM PC in the very early 80's.  It was 10MB, cost about $500, and my one thought at the time was "I'll never be able to fill up this thing".

Today at the office supply store at the register I made an impulse purchase for a new USB memory key.  My son stole mine to use to take stuff back and forth to school, and I wanted a larger capacity drive anyway.  So here I was buying a 1GB key, with 100x the storage of that first hard drive in a package about 1/100 of the size of that hard drive, and I was buying it at the cash register from a rack next to the gum.  Pretty cool.

However, I am not going to let scientists totally off the hook.  I am still waiting for my hover car, my jet pack, and my vacation on the moon, which I expected to have long before now.

I played with this tool this weekend, and it makes some pretty cool web relationship maps.  I am not sure it is authoritative, but it is fun.  It maps relationships between sites and pages based on Google forward and back link data.