Coyote Blog

The FTC is looking into the Apple music service:

the FTC has begun looking into Cupertino's "treatment of rival streaming music apps" to make sure it's not violating any antitrust law. See, iTunes also offers those competitor apps for download, and Apple gets a 30 percent cut per subscription paid through the program. That forces the companies to choose between charging extra on top of their $9.99 per month service (making the total $12.99) and accepting the loss to match Apple Music's pricing.

In addition, the FTC's reportedly looking into the App Store's numerous restrictions, as well. These include prohibiting companies from mentioning that their apps are also available on other platforms and from pointing customers to their websites to purchase goods and services. That's the reason why Spotify recently decided to send an email blast to subscribers with instructions on how to sign up directly on its website instead of paying $3 more through iTunes.

Good lord.  What is next -- does Whole Foods have to post a notice next to the tomatoes that you can buy them cheaper at Kroger?  Clearly Spotify has found a workaround without any help from Big Brother at all.

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded—here and there, now and then—are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

“This is known as ‘bad luck’.”

– Robert A. Heinlein

I cannot recommend Matt Ridley's new article strongly enough.  It covers a lot of ground be here are a few highlights.

Ridley argues that science generally works (in a manner entirely parallel to how well-functioning commercial markets work) because there are generally incentives to challenge hypotheses.  I would add that if anything, the incentives tend to be balanced more towards challenging conventional wisdom.  If someone puts a stake in the ground and says that A is true, then there is a lot more money and prestige awarded to someone who can prove A is not true than for the thirteenth person to confirm that A is indeed true.

This process breaks, however when political pressures undermine this natural market of ideas and switch the incentives for challenging hypotheses into punishment.

Lysenkoism, a pseudo-biological theory that plants (and people) could be trained to change their heritable natures, helped starve millions and yet persisted for decades in the Soviet Union, reaching its zenith under Nikita Khrushchev. The theory that dietary fat causes obesity and heart disease, based on a couple of terrible studies in the 1950s, became unchallenged orthodoxy and is only now fading slowly.

What these two ideas have in common is that they had political support, which enabled them to monopolise debate. Scientists are just as prone as anybody else to “confirmation bias”, the tendency we all have to seek evidence that supports our favoured hypothesis and dismiss evidence that contradicts it—as if we were counsel for the defence. It’s tosh that scientists always try to disprove their own theories, as they sometimes claim, and nor should they. But they do try to disprove each other’s. Science has always been decentralised, so Professor Smith challenges Professor Jones’s claims, and that’s what keeps science honest.

What went wrong with Lysenko and dietary fat was that in each case a monopoly was established. Lysenko’s opponents were imprisoned or killed. Nina Teicholz’s book  The Big Fat Surprise shows in devastating detail how opponents of Ancel Keys’s dietary fat hypothesis were starved of grants and frozen out of the debate by an intolerant consensus backed by vested interests, echoed and amplified by a docile press....

This is precisely what has happened with the climate debate and it is at risk of damaging the whole reputation of science.

This is one example of the consequences

Look what happened to a butterfly ecologist named Camille Parmesan when she published a paper on “ Climate and Species Range” that blamed climate change for threatening the Edith checkerspot butterfly with extinction in California by driving its range northward. The paper was cited more than 500 times, she was invited to speak at the White House and she was asked to contribute to the IPCC’s third assessment report.

Unfortunately, a distinguished ecologist called Jim Steele found fault with her conclusion: there had been more local extinctions in the southern part of the butterfly’s range due to urban development than in the north, so only the statistical averages moved north, not the butterflies. There was no correlated local change in temperature anyway, and the butterflies have since recovered throughout their range.  When Steele asked Parmesan for her data, she refused. Parmesan’s paper continues to be cited as evidence of climate change. Steele meanwhile is derided as a “denier”. No wonder a highly sceptical ecologist I know is very reluctant to break cover.

He also goes on to lament something that is very familiar to me -- there is a strong argument for the lukewarmer position, but the media will not even achnowledge it exists.  Either you are a full-on believer or you are a denier.

The IPCC actually admits the possibility of lukewarming within its consensus, because it gives a range of possible future temperatures: it thinks the world will be between about 1.5 and four degrees warmer on average by the end of the century. That’s a huge range, from marginally beneficial to terrifyingly harmful, so it is hardly a consensus of danger, and if you look at the “probability density functions” of climate sensitivity, they always cluster towards the lower end.

What is more, in the small print describing the assumptions of the “representative concentration pathways”, it admits that the top of the range will only be reached if sensitivity to carbon dioxide is high (which is doubtful); if world population growth re-accelerates (which is unlikely); if carbon dioxide absorption by the oceans slows down (which is improbable); and if the world economy goes in a very odd direction, giving up gas but increasing coal use tenfold (which is implausible).

But the commentators ignore all these caveats and babble on about warming of “up to” four degrees (or even more), then castigate as a “denier” anybody who says, as I do, the lower end of the scale looks much more likely given the actual data. This is a deliberate tactic. Following what the psychologist Philip Tetlock called the “psychology of taboo”, there has been a systematic and thorough campaign to rule out the middle ground as heretical: not just wrong, but mistaken, immoral and beyond the pale. That’s what the word denier with its deliberate connotations of Holocaust denial is intended to do. For reasons I do not fully understand, journalists have been shamefully happy to go along with this fundamentally religious project.

The whole thing reads like a lukewarmer manifesto.  Honestly, Ridley writes about 1000% better than I do, so rather than my trying to summarize it, go read it.

A reader sent me a link to this Vox article on streetcars.  What I thought was interesting is just how weak the case for streetcars is, even when made by folks are are presumably sympathetic to them.  This page is entitled "Why do cities want streeetcars."  The arguments are:

• Tourists like them, because you can't get lost like you can on buses.  My response is, "so what."  Unless you are one of a very few unique cities, tourists are a trivial percentage of transit riders anyway.  Why build a huge system just to serve out-of-town visitors?  I would add that many of these same cities (e.g. Las Vegas) considering streetcars are the same ones banning Uber, which tourists REALLY love.
• Developers like them.  Ahh, now we are getting somewhere.  So they are corporate welfare?  But not so fast, they are not even very good corporate welfare.  Because most of the studies they cite are total BS, of the same quality as studies that say sports stadium construction spurs all sorts of business.  In fact, most cities have linked huge tax abatement and subsidy programs to their streetcars, such that the development you get with the subsidy and the streetcar is about what you would expect from the subsidies alone.  Reminds me of the old joke that mimicked cereal commercials: "As part of a breakfast with juice, toast, and milk, Trix cereal has all the nutrition of juice, toast, and milk."
• Good for the environment.  But even Vox asks, "as compared to what."  Since they are generally an alternative buses, as compared to buses that have little environmental advantage and often are worse (they have a lot more weight to drag around when empty).
• The Obama Administration likes them.  LOL, that's a recommendation?  When you read the text, what they actually say is that mayors like the fact that the Obama Administration likes them, for it means the Feds will throw lots of Federal money at these projects to help mayors look good using other peoples' money
• Jobs.  This is hilarious Keynesianism, trying to make the fact that streetcars are 10-100x more expensive than buses some sort of positive.  Because they are more inefficient, they employ more people!  One could make the exact same argument for banning mechanical harvesters and going back to scythes.   Left unquestioned, as Bastiat would tell us, is how many people that money would have employed if it had not been seized by the government for streetcar use.
• Je ne sais quoi.  I kid you not, that is their final argument, that streetcars add that special something to a neighborhood.  In my mind, this is Vox's way of saying the same thing I did the other day -- that the streetcar's appeal is primarily based on class, in that middle and upper class folks don't want to ride on a bus with the masses.   The streetcar feels more upscale than buses.   The poor of course, for whom public transit is most vital, don't want to pay 10 times more for sexiness.  Oh, and watch this video of Washington streetcars blocking traffic and crunching parked cars and tell me what it is adding to the neighborhood.

Every argument I have ever been in on streetcars always boils down to something like "well, all the cool kids like them."  Once, after defending the US approach to rail (vs. Europe and Japan) as (correctly) focusing on productivity vs. sexiness, having gone into a lot of detail on the economics of freight vs. passengers, I got a one sentence answer from Joel Epstein of the HuffPo:  “You should get out of the country more often.”  That was it -- the cool cosmopolitan kids who vacation in Gstaad but never would be caught dead driving across Nebraska were all against me.

One of my critiques of global warming alarmists is that they are trying to use a type of observation bias to leave folks with the impression that weather is becoming more severe.  By hyping on every tail-of-the-distribution weather event in the media, they leave the impression that such events are becoming more frequent, when in fact they are just being reported more loudly and more frequently.  I dealt with this phenomenon in depth in an older Fortune article, where I made an analogy to the famous "summer of the shark"

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

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

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

Yesterday I was stuck on a stationary bike in my health club with some Fox News show on the TV.  Not sure I know whose show it was (O'Reilly?  Hannity?) but the gist of the segment seemed to be that a recent murder by an illegal immigrant in San Francisco should be taken as proof positive of the Trump contention that such immigrants are all murderers and rapists.  The show then proceeded to show a couple of other nominally parallel cases.

Yawn.   It would be intriguing to flood an hour-long episode with stories of legal American citizens committing heinous crimes.  One wonders if folks would walk away wondering if there was something wrong with those Americans.

One could pick any group of human beings and do a thirty-minute segment showing all the bad things members of that group had done.  What this does not prove in the least is whether that group has any particular predilection towards doing bad things, or specifically in the case of Mexican immigrants, whether they commit crimes at a higher rate than any other group in this country.  In fact, everything I read says that they do not, which likely explains why immigration opponents use this technique, just as climate alarmists try to flood the airwaves with bad weather stories because the actual trend data for temperatures does not tell the story they want to tell.

The Federal Reserve Bank of NY has a study on the effect of increasing student loan availability on tuition.  The key sentence is in bold:

When students fund their education through loans, changes in student borrowing and tuition are interlinked. Higher tuition costs raise loan demand, but loan supply also affects equilibrium tuition costs—for example, by relaxing students’ funding constraints. To resolve this simultaneity problem, we exploit detailed student-level financial data and changes in federal student aid programs to identify the impact of increased student loan funding on tuition. We find that institutions more exposed to changes in the subsidized federal loan program increased their tuition disproportionately around these policy changes, with a sizable pass-through effect on tuition of about 65 percent. We also find that Pell Grant aid and the unsubsidized federal loan program have pass-through effects on tuition, although these are economically and statistically not as strong. The subsidized loan effect on tuition is most pronounced for expensive, private institutions that are somewhat, but not among the most, selective.

If I understand this correctly, they are saying that policy change that result in $3 of additional subsidized borrowing capability by students leads to $2 in tuition increases.   Talk about running in place!

Hat tip to Neal McCluskey of Cato, who has links to many more studies with similar results.

People keep talking about reducing Greek debt to a sustainable level, but part of the problem is that there is not such level.  Even at zero.  The problem is that Greece is running a government deficit even before any debt service, so if creditors were to waive all of its debt, it would still need to be borrowing new money tomorrow.  Debt forgiveness is not enough -- what the Greeks need is for Europe to write off all its debt, and then (having lost all their money on the old debt) start lending new money immediately.  Note also that any bailout agreement reached this month will just put everyone back in the exact same place a few months from now.

This situation cannot be expected to change any time soon, for a variety of reasons from demographics (Greece has the oldest population in Europe, and a relatively rich pension system) to ideology (the current pseudo-Marxist government will never implement the reforms needed to turn the economy around, even if they promise to do so under duress).

With structural solutions unlikely, Greece has only the options of charity and inflation. Greece still seems to be hoping for charity, which they make harder by spewing derision at the same folks whom they are begging for alms.  Europe, certainly Germany, is in no mood to be charitable any longer, but may still do so depending on their calculation about which action -- bailout or exit -- has the worse long-term consequences for keeping Portugal, Spain, and Italy both in the Euro and continuing to pay their debts.

Lacking charity, the only thing left is inflation.  Some folks think I am advocating that option.  I am not.  The best possible hope for Greece is to slash its economic regulation, privatize business, and cut back on the public sector -- but that is not going to happen with the current government.  Or maybe any government.

I say inflation is the only option because that is what balances the budget and "solves" debt problems when politicians are unable or unwilling to make any hard choices.  It is sort of the default.  If they can't balance the budget or figure out how to pay off debt, then inflation does it for them by reducing the value of pensions and outstanding debts**.  This is what will happen with a Grexit -- a massive bout of devaluation and inflation what will greatly reduce the value of any IOU, whether it be a pension or a bank deposit.

Eventually, the one good thing that comes from inflation and devaluation is that the country becomes really cheap to outsiders.  Tourists will flock in and olive oil will sell well internationally as the new drachma loses its value, creating value for people holding stronger currencies and potentially forming the basis for some sort of economic revival.  My wife and I decided a few months back to postpone the Greek vacation we wanted this year -- too much turmoil is still possible -- and wait for it to be a bargain in 2016 or 2017.

**Postscript:  This is exactly why the Euro is both immensely seductive and a dangerous trap for countries like Greece.  Seductive, because it could pursue any sort of destructive banana republic fiscal policy it wished and still have a strong currency.  A trap because it can no longer print money and inflate away its debt problems.

This Georgetown Law Journal critique of the criminal justice system, and in particular proprietorial abuse, is terrific (though I am only about half way through).  If you don't have time to read it all (and it is much shorter than it looks because half or more of each page is footnotes) then you might check out these highlights by Alex Tabarrok.  I expect Ken White of Popehat to have something to say here, and look forward to his reactions.

As background, I live in a town called Paradise Valley, Arizona.  This town is perhaps most famous recently for installing surveillance cameras all over town hidden in fake cacti.  Here is the one on my block.  There are at least two others within walking distance of my house.
    

These cameras apparently have license plate reading ability and perhaps the ability to do facial recognition, and likely are funded by Homeland Security for the purposes of feeding data into a national tracking database.  I say "likely" because the town of Paradise Valley under Mayor Michael Collins somehow appropriated these things secretly without any public discussion or debate.

So in this context, it was hilarious to see none other than Mayor Michael Collins piously intoning about the importance of privacy in the town of Paradise Valley:

Paradise Valley is considering an ordinance that would make it illegal to fly drones in town without a permit. Backyard hobbyists and law-enforcement agencies that may need to use drones during emergencies would be excluded from the proposed ban.

"Our residents move to Paradise Valley because they like the privacy," said Mayor Michael Collins, who presides over a community that counts celebrities, sports stars and Discount Tire founder Bruce Halle, the richest person in Arizona, among its residents.

What Mr. Collins apparently means is that he wants the government to maintain a monopoly on surveillance technologies.  Libertarians like myself cringe at the notion that a monopoly on privacy-invasion should be granted to the government, the only institution in the country that can legally jail you, take your money, and even shoot you. Conservatives, who dominate this community, tend to be blind to this danger, saying that "if you aren't doing anything illegal, you have nothing to fear from surveillance."  I will say, though, that some Conservatives have woken up a bit over the last several years on this with the IRS non-profit harassment and the Wisconsin John Doe investigations.

By the way, extra credit to the Arizona Republic for gratuitously publishing where a wealthy citizen lives in a sentence about privacy.

From Shawn Regan at PERC, via Arnold Kling

Last year, riding the buzz over dying bees, the Obama administration announced the creation of a pollinator-health task force to develop a “federal strategy” to promote honeybees and other pollinators. Last month the task force unveiled its long-awaited plan, the National Strategy to Promote the Health of Honey Bees and Other Pollinators. The plan aims to reduce honeybee-colony losses to “sustainable” levels and create 7 million acres of pollinator-friendly habitat. It also calls for more than $82 million in federal funding to address pollinator health.

But here’s something you probably haven’t heard: There are more honeybee colonies in the United States today than there were when colony collapse disorder began in 2006. In fact, according to data released in March by the Department of Agriculture, U.S. honeybee-colony numbers are now at a 20-year high. And those colonies are producing plenty of honey. U.S. honey production is also at a 10-year high.

The White House downplays these extensive markets for pollination services. The task force makes no mention of the remarkable resilience of beekeepers. Instead, we’re told the government will address the crisis with an “all hands on deck” approach, by planting pollinator-friendly landscaping, expanding public education and outreach, and supporting more research on bee disease and potential environmental stressors.

I am sure the government, once they have had some bureaucrats running around filing reports and plans for a few years will soon claim credit for the improvement.  My prediction:  This agency will still be here 50 years from now.  You can never kill these things once created.  This is only slightly less irritating than politicians who claim that they "created X million jobs" when in office, but only slightly.

Update:  Another very similar example:  transfats.

The Food and Drug Administration recently moved to eliminate trans fats from the American diet, and food activists and the public-health lobby are claiming a historic victory. Yet this is a rare case of the Obama Administration regulating from behind. Markets had as much to do with the fall of trans fats as government did with their rise.

The FDA’s first restrictions on the use of partially hydrogenated oils as a major source of trans fats in processed foods—think Crisco shortening—give food makers three years to phase out the substance. Evidence began to accumulate in the early 2000s that trans fats were connected to bad cholesterol and cardiovascular diseases. Shoppers and diners concerned about health risks soon started to revolt against the fried and baked goods and the fast-food fare where they were prevalent.

Lo and behold, the food industry responded by changing their recipes and eliminating the oils from some 86% of their products. Trans fat consumption plunged by 78% over a decade, according to the FDA’s estimates, and is now well below the two grams per day that the American Heart Association says is the safe upper limit. The rare survivors of this purge are niche foods like microwave popcorn, frozen pizza and chocolate sprinkles, where trans fats are useful for improving taste and texture.

China's island bases for expanding its borders.

I am increasingly convinced that the appeal of streetcars and light rail has everything to do with class.  From any rational perspective, these systems make no sense -- they are 10-100x more expensive than buses and lack the flexibility that buses have to adjust to shifting demand patterns over time.  A single extra lane of highway adds more capacity than any light rail line.

Streetcar's single, solitary advantage is that middle and upper class whites who would not be caught dead on a bus seem to be willing to ride streetcars.   I don't know if this is because of some feature of the streetcars (they are shiny and painted pretty) or if it is some sort of self-segregation (the upper classes want to ride on something that is not filled with "riffraff").

Anyway, Reason has a really good video on streetcars, which covers a lot of topics from cronyism to the class issues I mention.  And the film of the incredibly poor design of the DC streetcar has to be seen to be believed.  (via Maggies Farm and their great daily links page)

We are excited that one of our campgrounds, the Double Lake Recreation Area, was named the highest customer-rated campground in Texas by this camping site.

The hefty sales tax that funds Phoenix light rail deficits is about to expire, and as is usual, politicians not only don't want it to expire but they want to double it so they can build more over-priced rail lines.

One of the reasons that stuff like this is so hard to fight is a phenomenon called "concentrated benefits but dispersed costs."  This means that, particularly for certain crony handouts, the benefits accrue to just a few actors who, due to the size of these giveaways, have a lot of financial incentive to promote and defend them.  The costs, on the other hand, are dispersed such that the final bill might only be a few dollars per taxpayer, such that no individual has much incentive to really pay up to support the fight.

A great example of this is sugar tariffs.  These raise the price of sugar (as well as reducing our choices and effectively promoting imperfect substitutes like HFCS) so we as consumers should all fight them.  But the higher cost of sugar might only cost us, say, $20 each a year individually.   Are you really going to donate $100 in a political cause to save $20?  On the other side, these tariffs create millions and millions of dollars in profit for a few sugar producers, such that they have a lot of money and incentive to spend big on lobbying to keep the tariffs in place.

The new Phoenix light rail tax increase gives us a yet another sad example of the phenomenon:

Construction companies, engineering firms and transit service providers are the biggest early supporters of the Proposition 104 campaign to expand Phoenix transportation, while the group fighting the proposed tax increase still seeks major funding.

The MovePHX campaign, supporting the bus, light rail and street improvement plan going before city voters in August, raised $382,900 from March through the end of May, according to finance reports filed Monday.

Opposition group Taken for A Ride — No on Prop 104 received just under $417 from individuals over the same period. A second campaign committee opposed to the proposition formed after the contribution reporting period ended....

More than half of the contributions to the MovePHX campaign during the reporting period came from engineering, design and construction firms, including many that were hired for design and consultation on the Valley's first stretch of light rail.

The largest single donation came from We Build Arizona, a group of engineering, contracting and transit organizations that donated $125,000 to the campaign. TransDev and Alternate Concepts, Inc., which hold bus and light rail service contracts, contributed more than $35,000 combined.

A combined $30,000 came from police, firefighter and food and commercial worker union political action committees.

$382,900 to $417.  That is why cronyism is so prevalent.

From Reason:

A judge of the Foreign Intelligence Surveillance Court has ruled that in light of the USA Freedom Act's passage, the National Security Agency (NSA) may resume bulk collection of American's telephone records. In May, the 2nd U.S. Circuit Court of Appeals had halted the process after finding that the Patriot Act never authorized such activity.

So "in light of" a law that basically ended authorization for the practice, and despite a court ruling that the original law never authorized the practice, the NSA is going to continue the practice.

Apparently John Roberts does all the FISA court judge appointments.  It may be that we can never prevent this court from being captured by the NSA, but it is at least time to try a different approach to choosing these up-to-now rubber stamp judges.  My memory may be off, but I don't think the FISA court has ever turned down a data hoovering request.

Here are some numbers from the DOL draft rule.

They think there are 21.4 million salaried workers subject to the wage test.  Since the new number was set at the 40th percentile of these workers, presumably about 8.6 million will fall below the new number.  But of these, only 4.6 million would be have to be shifted to hourly/overtime rules (not sure why the difference, I guess other tests must still apply as well).

Those 4.6 million are expected to cost employers an additional $1.2 billion in wages, which seems like a lot but equates to an additional $261 per person per year extra.   In other words, a pittance for all this disruption.

The Left is already saying that companies won't adjust and all these folks will get raises.  But the DOL obviously thinks differently.  Either it thinks these folks are only working maybe an hour each of overtime per week, such that the overtime rules will only cost a few bucks a week, or the DOL thinks that a lot of work and wage rates are going to be pared back leaving folks about where they are today, except now as timeclock punchers rather than trusted salaried professionals.

I am still going through all the tables in the back where they generate this stuff, but there are a couple of admissions there you WILL NOT find on liberal blogs today

1. The DOL expects that base wage rate for regular work hours to fall for the affected workers with this new law.  You heard that right.   See table 21.  The fall from $18.38 to $18.21 after this rule in DOL projections
2. You will see folks (like Kevin Drum linked above) saying that this ends 60 hour work weeks.  In fact, in table 22 the DOL says the average work week of those affected by the rule is 41.6 hours, which will go down to 41.5 hours by this rule.  In fact, the 60 hour folks are a minority of go-getters who are trying to prove themselves out for upper management.  These are the folks hamstrung by this law, hammering precisely the upwardly mobile folks one would hope to encourage.

I have only skimmed the new DOL overtime rules, but this bit really hit a nerve:

The Department has long recognized the salary level test as “the best single test” of exempt status. If left at the same amount over time, however, the effectiveness of the salary level test as a means of determining exempt status diminishes as the wages of employees entitled to overtime increase and the real value of the salary threshold falls. In order to maintain the effectiveness of the salary level test, the Department proposes to set the standard salary level equal to the 40th percentile of earnings for full-time salaried workers ($921 per week, or $47,892 annually for a full-year worker, in 2013).

This is exactly the kind of thing that will look scientific to you average journalism major.  See, $921 is not arbitrary, it is set at the 40th percentile of salary earnings.

WTF?  Where did the 40th percentile come from?  Out of someone's butt, that is where.  The Administration started with a number they wanted, between $47K and $50K and then obviously went looking for some round-number metric that landed in this zone to justify their number as somehow analytically based.

Think about it.  The 40% number is meaningless.  In fact it is worse than meaningless, it is astoundingly arrogant.  Basically they are saying arbitrarily that 40% of people earning a salary should not be earning a salary.  What do these people do?  What are their alternatives?  What are the other circumstances of the job that might affect them?  What is the value of their benefits?  None of this stuff is considered.  Some arrogant jerk just drew a line and said, below this line all those folks are paid wrong.

Well, they did it.  The Obama Administration has proposed a new rule that everyone has to punch a time clock unless they are paid at least $921 a week.  Here is the proposed rule.  Of course, everyone on the Left is patting themselves on the back for giving everyone under that number a raise.  In fact what has happened is that everyone under that number just got a demotion, from trusted junior manager to 40-hour-a-week timeclock puncher.

Here is another way to put it:  The only people who now have the right to work more than the minimum to demonstrate one's readiness for more responsibility are those paid over $48,000 a year.  McKinsey consultants and lawyers and investment bankers can choose to work extra hours in order to gain promotions.  McDonald's shift managers no longer have that same right.  This is a law written by salaried professionals telling younger and lower-paid workers that they have no right to be ... salaried professionals.    This is a law propounded by a President who pays many of the young professional interns in his campaign and non-profit $0.00 an hour.

More here.

Update:  By the DOL's own reckoning, 40% of salaried employees fall below this number and thus are affected.  Some will get a small raise over the bar, but an enormous part of the workforce will find themselves dumped into the ranks of work-just-the-minimum timecard punchers.  This has the potential to hit far more people than any minimum wage increase.

From the Telegraph

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank for International Settlements has warned.

The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates....

“Rather than just reflecting the current weakness, [lower rates] may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.

"In short, low rates beget lower rates."

The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises.

The vast majority of so-called consumer or employee protection laws in California appear to be written with one purpose in mind -- to create more rent-seeking opportunity for lawyers.  While more expensive to comply with than laws in any other state, most of these laws do little to actually make the life of consumers or employers easier.  Are consumers really better off for the myriad of carcinogen warnings one sees in California, or is it just white noise?  Are employees better off because they can sue over having to work through lunch?  In most cases, the answer is "no" or only trivially at best.

But what all these laws have in common is that they give attorneys incredible power to extract money from businesses via any number of extortion techniques.  For example, my company has never lost an employee lawsuit in California, but I have spent hundreds of thousands of dollars of my money to successfully defend such claims (no insurer will cover you for such employee suits without a deductible of at least $25-50 thousand per claim in CA).  How can anyone call this justice?

The only defense we have is to try to take claims to arbitration.  I have no problem paying a thousand dollars of back wages if we made a mistake, but I don't want to pay $50,000 in legal fees reaching that conclusion.  That is the point of arbitration, to pay off employee claims without the long hassle of litigation.  It offers the bonus of paying employees quickly, rather than forcing them to wait through years of legal procedures.

The only folks hurt by arbitration are the attorneys, and of course since they virtually control the California State Legislature, CA attorneys are urging their government lapdogs to ban arbitration of employment issues

When you take a job, should you be required to waive your right to have a future employment dispute adjudicated by the state labor commissioner or in civil court?

That has increasingly become the case for job applicants. Forty-three percent of companies nationwide now require employees to sign arbitration clauses precluding class-action suits, according to the Wall Street Journal. That’s an increase from 16 percent of companies in 2012. It’s paid off for businesses – employee class-action lawsuits have declined 5 percentage points since 2011, saving employers $136 million.

Assemblyman Roger Hernández, D-West Covina, believes mandatory employee arbitration agreements provide California businesses with an unfair advantage in employee disputes. He authored Assembly Bill 465, which would make it illegal to require such agreements as a condition of employment.

The bill passed the Senate Labor and Industrial Relations Committee along party lines on June 10 after a debate over the pros and cons of arbitration.

It is telling that even the supporters cannot point to any study or evidence that employees do worse with their claims in arbitration vs. in the court system.   The only real claim they make is this one, which is hilarious:

“The harm from these kinds of agreements goes beyond the impact on the individual worker. Obviously, no workers should be required to give up such core protections when it’s not knowing or voluntary. But beyond that, this takes away the ability to the state labor commissioner to even know what is happening in these work sites. These arbitration agreements are private, they are individual.

“They do not provide a forum for the state labor commissioner or anyone else to know what is happening and try to find a more systemic solution or to say, ‘Wow, there’s a lot of violation coming out of this one site or employer. Maybe we should consider a more efficient enforcement plan than just each individual worker having to take their claim separately to an arbitrator.’

This is stupid.  First, there is nothing in an arbitration agreement that prevents an employee from reporting his or her issue to the state labor commissioner.  Second, if this really were an issue, a simple reporting requirement of the basic facts of arbitration cases to the state labor commissioner would suffice to solve the problem.

Here is how you should think about this proposed law:  Attorneys are the taxi cartels, and arbitration is Uber.  And the incumbents want their competitor banned.

A few years ago I had a woman file a discrimination case against me, saying her supervisor discriminated against her.  This person did not even attempt to lay out a factual basis for the claim, just said essentially she was dissed.  What made the case a total joke is that the person who was her supervisor was her sister (no more making exceptions to nepotism rules after that one).  The claim went nowhere, but it still cost be $20,000 to make go away.  And the real kicker was the employee's attorney.  This person came to me (actually my attorney) and he said he would drop the case with no payment to the plaintiff if we agreed to give him $X thousand dollars personally.  Basically, the attorney said that if he got paid, but his client did not, he would be satisfied and get her to drop the suit.  This is the racket attorneys have created for themselves in California.

Paul Krugman and a surprisingly large portion of Leftish economists have staked out a position that labor does not act like any other commodity, such that higher minimum wages have no effect on demand.  I have had people on the Left tell me that this absurd, common-sense-offending position is actually "settled".  So explain Puerto Rico:

Another problem is that just 40 percent of the population [of Puerto Rico] has a job—or is even looking for one. That figure has plummeted in recent years. In the United States as a whole, it is 62.9 percent....

The report cites one surprising problem: the federal minimum wage, which is at the same level in Puerto Rico as in the rest of the country, even though the economy there is so much weaker. There are probably some people who would like to work, but because of the sickly economy, businesses can't afford to pay them the minimum wage.

Someone working full time for the minimum wage earns $15,080 a year, which isn't that much less than the median income in Puerto Rico of $19,624.

The report also cites regulations and restrictions that make it difficult to set up new businesses and hire workers, although it's difficult to know just how large an effect these rules might or might not have on the labor market.

By the way, the fact that the author thinks this is "surprising" just goes to show how far this anti-factual meme of a non-sloping labor demand curve has penetrated.

As pointed out in several places today, Puerto Rico has a surprising number of parallels to Greece.   It seems to have zero fiscal restraint, it has structural and regulatory issues in its economy that suppress growth, and has its currency pegged to that of a larger, much richer nation.  It is apparently facing a huge $70+ billion potential debt default.

I have been predicting for years that the only solution for the Greece problem is for it to exit the Euro, go through a horrible economic crisis and deal with substantial devaluation, and then hopefully move on with a cheaper currency that makes its tourist industry look better and plugs the hole between taxing and spending with inflation.  It appears we are closer than ever to this actually happening.  The Greeks would likely be moving forward now, like Iceland, if they had taken their medicine years ago rather than try to kick the can.  Now it is just going to be worse.

I have been enamored off and on with the idea of a gold standard but Megan McArdle made some powerful points today about how the Greek situation teaches us that a gold standard doesn't necessarily impose discipline on governments.

It's easy to moralize Greece's feckless borrowing, weak tax collection and long history of default, and hey, go ahead; I won't stop you. But whatever the nation's moral failures, what we're witnessing now shows the dangers of trying to cure the problems of weak fiscal discipline with some sort of externally imposed currency regime. Greek creditors and Brussels were not the only people to joyously embrace the belief that the euro would finally force Greece to keep its financial house in order; you hear the same arguments right here at home from American gold bugs. During the ardent height of Ron Paul's popularity, I tried to explain why this doesn't work: "You don't get anything out of a gold standard that you didn't bring with you. If your government is a credible steward of the money supply, you don't need it; and if it isn't, it won't be able to stay on it long anyway."

This goes double for fiscal discipline. Moving to a fixed exchange rate protects bond-holders from one specific sort of risk: the possibility that inflation will erode the real value of your bonds. But that doesn't remove the risk. It just transforms it. Now that the government can't inflate away its debt, you instead face the risk that they are going to run out of money to pay their bills and suddenly default. That's exactly what happened to Argentina, and many other nations on various other currency regimes, from the gold standard to a currency peg. The ability to inflate the currency had gone away, but the currency regime didn't fix any of the underlying institutional problems that previous governments had solved with inflation. So bondholders protected themselves from inflation, and instead took a catastrophic haircut.

Postscript #1:  I had one issue with McArdle's piece when she writes

The only people this will be good for is people who long to vacation on the Greek Islands. If Grexit actually happens, book those plane tickets now, but hold off on the hotel. It will be cheaper in six months. Then try to enjoy it as you remember that those fabulous savings are someone else's whole life evaporating.

Hey, if Grexit occurs, you have no reason to feel guilty about taking advantage of the weak currency and low prices for a Greek vacation.  There is nothing the Greeks need more than for you to do exactly that.   It is the single best thing you could do for the Greek people.

Postscript#2:  Here is why exiting the Euro, devalutation, and inflation are the only way out for Greece at this point. Creditors allow countries to run long-term deficits and keep lending despite rising debt (see: Japan) because of a combination of a) the country can always just print the money they need; b) the country can raise taxes and take the money it needs or c) the country can keep spending flat and grow their way out from the debt.

None of these are available to Greece. They can't print money, at least without running up new debts (excess printing of Euros is automatically added to Greece's debt to the ECB).  They can't raise taxes because their citizens don't pay the taxes that already exist.  And they can't grow their way out because there is zero support for austerity or market-based reforms that would be necessary, and besides a huge portion of Greek deficit spending is for inherently unproductive activities.  At this point Greece's only option is charity, that the other countries of the EU will forgive debt or write them new debt, either to be nice or to avoid bad precedents with other PIGS countries.  But  the EU seems at the end of its charity rope, and besides given zero prospects of any sort of Greek recovery, even after a major write-off of debt the EU would be in the position of still having to send Greece new money for its new debts.

I see a lot of folks wanting to poo-poo the notion that Uber's flexibility in terms of hours driven and such is good for drivers.  Folks on the Left have in their head that any job that does not punch in and punch out at fixed hours with a defined lunch break and actually rewards working more than the minimum is somehow exploitive.

This got be thinking about a Kickstarter update I received a while back (for a computer game project).  The entrepreneur wrote:

Looking back, most of the year was spent trying to recover from the 2013 Robotoki saga which delayed development by almost an entire year, left me financially devastated, and almost sunk this project beyond recovery. We’ve had our ups and downs and I’ve always found a way through, but man, these were not fun times. I was actually living out of my car when I signed the private investment contract a few months ago, so it’s been a little bit of a rough year.

This project and I are currently surviving on that private loan, my personal credit cards, and whatever I can make driving for Uber, but at least we’re getting close to launch now. I hope this doesn’t come off as a “whoa is me” kinda thing. I only mention all of this because I want to put the project into perspective and give some deserved answers about what has been going on. I know it sucks that the game is severely late and I hope you know that I’ve done everything in my power to not give up.

This entrepreneur is trying to fund his game development effort in part by working during the day on the game and driving for Uber in his spare hours.  There is no way he could work really anywhere else because he would have to be an official employee and keep a regular schedule -- you can't imagine someone just showing up at McDonald's to cook whenever they feel like it.  But that is what he can do for Uber.  And now California is trying to kill that flexibility.

A reader and frequent contributor sent me this:

When 120,000 people head to downtown Orlando for the big July 4 fireworks show at Lake Eola, none will be getting on SunRail.

It’s not running.

Central Florida’s $1 billion commuter-rail line usually only operates Monday through Friday, and while a few special weekend events in recent months have booked the train, one of the biggest gatherings of the year won’t.

Fireworks at the Fountain, in addition to the sky show, will feature more than 25 vendors, live music and children’s activities.

But Orlando city staff researched the addition of SunRail service, but found it wouldn’t work, said Cassandra Lafser, the city’s public information officer.

“Several factors contributed to this decision, including safety, availability and costs,” Lafser said in a prepared statement.

“The city’s concerns included: total train capacity, safety and security, hours of operation, pedestrian wayfinding and transport operations between the downtown stations and Lake Eola, and funding availability.”

Rocochet asks this question over the weekend:  What are your top 5 causes of the fall of the Roman Empire.  OK, I will take a shot at this from my decidedly amateur perspective:

1. Demographic collapse, caused by a series of plagues (perhaps even an Ur version of the black death) and possibly climate change (colder) that depopulated the western half of the empire
2. A variety of policies (e.g. grain dole) that shifted population from productive farms to the cities.  In the 19th century, this shift was to be growth-inducing as farm labor was moving into growing factories, but no such productivity revolution existed in Roman cities.  The combination of #2 with #1 left huge swaths of farmland abandoned, and the Romans dependent on grain ships from North Africa to feed the unproductive mouths in large Italian cities.  It also gutted the traditional Roman military model, which depended strongly on these local farmers for the backbone of the army.
3. The Romans lost their ability to be innovative in including new peoples in their Empire.  The Romans had a bewildering array of citizenship and tax statuses for different peoples who joined or were conquered by the empire.  For hundreds of years, this innovation was hugely successful.   But by the 4th and 5th centuries they seemed to have lost the trick.  The evidence for this is that they could have solved multiple problems -- the barbarians at the gates and the abandonment of farm land and the need for more soldiers -- by finding a way to settle barbarians on empty farm land.  This is in fact exactly what the barbarians wanted.  That is why I do not include the barbarian invasions as one of my five, because it did not have to be barbarian invasions, it could have been barbarian immigration.  Gibson's thesis was that Christianity killed the Roman Empire by making it "soft".  I don't buy that, but it may have been that substituting the Romans' earlier incredible tolerance for other religions in their Pagan period with a more intolerant version of Christianity contributed to this loss of flexibility.
4. Hand in hand with #3, the Roman economy became sclerotic.  This was the legacy of Diocletian and Constantine, who restructured the empire to survive several centuries more but at the cost of at least an order of magnitude more state control in every aspect of society.  Diocletian's edict of maximum prices is the best known such regulation, but in fact he fixed most every family into their then-current trades and insisted the family perform the same economic functions in all future generations.  Essentially, it was Ayn Rand's directive 10-289 for the ancient world, and the only reason these laws were not more destructive is that the information and communication technologies of the time did not allow for very careful enforcement.
5. Splits in the governance of the empire between west and east (again going back to Diocletian) reduced the ability to fund priorities on one side of the empire with resources from the other side.  More specifically, the wealthy eastern empire had always subsidized defense of the west, and that subsidy became much harder, and effectively ended, in the century after Diocletian.

I will add, as a reminder, that to some extent this is all a trick question, because the Roman Empire really did not totally fall until the capture of Constantinople in 1453.  So I should have stated at the outset that all of the above refers to the fall of the western empire in the late 5th century, which in part explains why #5 is there in the list.

And, if you were in a room of historians of this era, you could quickly get into an argument over whether the western Roman empire really fell in the late 5th century.  For example, the Visigothic Kingdom in the area of modern southern France and Spain retained a lot of Roman practices and law.  But I have gone with tradition here and dated the "fall" of the empire to 476 when the Roman Emperor was deposed and not replaced.