Coyote Blog

My daughter is in Tanzania this summer for a secular service project.  Her first Swahili:  Jina langu ni Amelia, Ninatoka jimbo la Arizona which I hope means "my name is Amelia, I am from Arizona."

Frequent readers will know that I have been predicting for over a year that the economic story of 2013 would be the end of full time work in the retail service sector due to the PPACA, or Obamacare (example).   QED, from the most recent economic report:

In June, the household survey reported that part-time jobs soared by 360,000 to 28,059,000 – an all time record high. Full time jobs? Down 240,000.  And looking back at the entire year, so far in 2013, just 130K Full-Time Jobs have been added, offset by a whopping 557K Part-Time jobs.

It is unclear how the 1-year delay in the employer mandate implementation will affect this.  Probably not a lot -- based on the way Obamacare was being implemented, companies needed to be switching workers to part-time now (really, early this year) so that they would qualify as part-time for next year  (a company needed 6-12 months of records from this year to prove the employee was part-time).  In other words, most companies have already switched, and having done so, will not likely switch back just for one year.

Besides, as I have written before, it is actually cheaper and easier for many retail establishments to stitch together full coverage of their business hours from part-time workers.   Making jobs full-time is a hassle, and was done by most of us mainly for competition reasons, ie to be able to attract the best employees.  Other laws like California's absurd lunch-break mandate (which has caused me to make working through lunch a firing offense at our company) just add to the cost of offering full-time work.   If everyone is only offering part-time, and the labor market is weak with plenty of workers available, there is no reason to go back to offering full time employment.

I grew up in Texas and I am not sure the concept of tailgating I was weaned on was flexible enough to encompass the opera.  But it's good to try new things.  Here are a couple of photos from my first trip to the Santa Fe Opera

Didn't see any cornhole games though.

The other day, the City of Glendale approved a deal which has the city subsidizing (more in a second) the buyers of the Phoenix Coyotes hockey team to get them to actually stay in town rather than move to Seattle.  The deal is arguably better than deals it was offered in the past (it gets shares of parking and naming rights it did not have before) and may even be a rational deal given where it is today.

But that is the catch -- the phrase "where it is today."  At some level it is insane for a city of 250,000 people to pony up even more subsidies for a team that has the lowest attendance in the league.  The problem is that the city built the stadium in the first place -- a $300 million dollar palace for a metropolitan area that already had a major arena downtown and which was built (no disrespect to Glendale) on the ass-end of the metropolitan area, a good 90 minute round trip drive for the affluent Scottsdale and east-side corporate patrons who typically keep a sports franchise afloat.

Building this stadium was a terrible decision, and I and many others said so at the time.  But once the decision was made, it drove all the future decisions.  Because the hockey team is the only viable tenant to pay the rent in that building, the city rationally will kick back subsidies to the team to keep it in place to protect its rent payments and sales taxes from businesses supported by the team and the arena.  The original decision to build that stadium has handcuffed Glendale's fiscal situation for decades to come.  One can only hope that cities considering major stadium projects will look to Glendale's and Miami's recent experiences and think twice about building taxpayer funded facilities for billionaires.

The deal the other night to keep the team went down in the only way it could have.  As I had written, the NHL was insisting on selling the team for its costs when it took it over in bankruptcy, which were about $200 million, which was well north of the $100 million the team was worth, creating a bid-ask gap.  Several years ago, the city tried to just hand $100 million to a buyer to make up the gap, but failed when challenged by the Goldwater Institute.  The only real avenue it had left was to pass the value over to the buyers in the form of an above-market-rate stadium management contract.

And that is what happened, and I guess I will say at least it was all moderately transparent.  The NHL came down to a price of $175 million, still $75 million or so above what the team is worth.   The City had already sought arms-length bids for the stadium management contract, and knew that a fair market price for that contract would be $6 million per year.  It ended up paying the buying group $15 million per year for the 15-year contract, representing a subsidy of $9 million a year for 15 years.  By the way, the present value of $9 million over 15 years at 8% is... $75 million, exactly what was needed to make up the bid-ask gap.  Again, I think the city almost had to do it, because the revenue stream it was protecting is likely higher than $9 million.  But this is the kind of bad choices they saddled themselves with by building the stadium in the first place.

I get a lot of bizarre stuff but this one made me laugh:

The Turkish renewables market is set to grow rapidly and the Turkish International Renewable Energy Congress (TIREC) is your access point. Once again 500+ attendees, serious about playing their part in the growth of the market will attend to do business for two days of discussion, contact making, and lead generation.

Well, it certainly comes as happy news to this correspondent that the Administration announced this week it will delay health insurance mandates on businesses.  Our company has spent a ton of time since last November trying to minimize the expected cost of the mandates -- the initial cost estimates of which for our business came in at three times our annual net income.  Our preparation has been hampered by the fact that the IRS still has not finalized rules for how these mandates will be applied to a seasonal work force.  Like many retail service businesses, we have studied a number of models for converting most of our work force to part time, thus making the mandates irrelevant for us.

I know this last statement has earned me a fair share of crap in the comments section as a heartless capitalist swine, but the vitriol is just absurd.   Many of the folks criticizing me can't or don't want to imagine themselves running a business, so let's say you have an annual salary of $40,000.  Now, on top of all your other expenses, the government just mandated that you have to pay an extra $120,000 a year for something.  That is the situation my business is in.  Are you just going to sit there and allow your savings to become a smoking hole in the ground, or are you going to do something to avoid it?  Unlike the government, I cannot run a permanent deficit and I cannot create new revenues by fiat.  Congress allowed business owners a legal way to avoid the health insurance mandate, and I am going to grab that option rather than be bankrupted.  So are every other service business I know of, which is why I have predicted that full-time jobs are on the verge of disappearing in the retail service sector.

Anyway, it appears that the IRS and the Administration could not get their act together fast enough to make this happen.  Not a surprise, I suppose.  You and I have both been in committee meetings, and have seen groups devolve into arguments aver useless minutia.  This is not a monopoly of the government, it happens in the private sector as well.  But in the private sector, in good companies, a leader steps in and says "I have heard enough, it is going to be done X way, now go do it."  In government, the incentives work against leaders cutting through the Gordian knot in this way, so the muddle can carry on forever.

There are at least two more shoes that are going to drop, one bad, one good:

1. On the bad side, while companies like mine complain about the cost of the PPACA, they are going to freak when they see the paperwork.  My sense is that we are going to be required to know in great detail what kind of health insurance policy every one of our employees have, even if it was not obtained through our company, and will have to report that regularly to the government.  In addition, there are gong to be new reporting requirements to new agencies for wages and hours.  It is going to be a big mess, and my uneducated guess is that someone in the last week or so looked at that mess and decided to hold off announcing it.

   But readers can expect a Coyote freak out whenever it is announced, because it is going to be bad.  Wal-mart will be fine, it has the money to build systems to do that stuff, but companies like mine with 500 employees but only 2 staff people are going to get slammed.  There is a reason government agencies, even government schools, have more staff than line personnel -- they live and breath and think in terms of complex reporting and paperwork.  They love it because for many it is their job security.  Swimming every day in that water, it is no surprise they impose it without thought on the private sector.  This makes it hard for companies like ours that try to have 99% of our employees actually serving customers rather than pushing paper.

2. The individual mandate is toast for next year.  No way it happens.  If the Administration cannot get the corporate piece done on time, there is no way in hell it is going to get the exchanges up and running.  And even if they do, some prominent states with political influence with this President, like Illinois and California, likely will not get their exchanges done in time and will beg for a delay.

Don't know if you have seen these, but many cellular networks activated the capability to broadcast government "emergency" messages in the last week.  Mine has gone off twice in 3 days.  I get a tone like the old emergency broadcast network test on the radio and then a text like this one.  Not sure why dust storms that are routine features of summer here in Phoenix warrant having the NWS spam my phone, but there it is.  Tornado and tsunami warnings certainly make sense.  Wonder when the first conspiracy theory / scandal hits, such as the election day alert that warns people to avoid travel.

PS, gotta love "til" rather than "until".   Can't wait for the "Tornado Warning - FML" message.

I just read about a project dedicated to local celebrities, people who are very famous in their own backyard but not known at all beyond a small region.

The one person in this category I could think of (beyond local TV and radio personalities) is Johnny Barnes in Bermuda.   I encountered him around the year 2000 when I went to Bermuda for a job interview -- I was running Internet companies at the time and a group in Bermuda had an idea to combine an Internet B2B model with offshore banking and tax havens.  Transfer pricing games seemed to be prominent in the model.

Anyway, there he was, at a busy traffic circle almost everyone on the island passed when going to work in the morning.  He just stood there saying hello and good morning to everyone.  I found out later he was a Bermuda icon -- if he missed a day the radio stations and government offices would be flooded with calls from people asking if he was OK.  Searching the Internet, I found that someone has made a film about him.

One item that was part of the (thankfully) deceased farm bill that got little attention was a levy on live Christmas trees.

Apparently, live Christmas tree producers are upset at competition from artificial trees.  And there is nothing to which Congress is more sympathetic than using government coercion to help industry incumbents fight off new competition.

Readers may or may not know that the government often steps into certain agricultural commodities and, at the behest of the largest producers, creates mandatory advertising regimes.  In these regimes, a tax is levied on everyone's product and the money is used to fund advertising campaigns (e.g like the ones for milk and beef).

The most recent farm bill was to create a similar regime for live Christmas trees, requiring all tree producers to pay the per-tree tax whether they wanted or needed the advertising campaign or not.  So, for now, we have escaped holiday government-funded ads like "Pining for Christmas" and "Live Trees:  They are What's Fir Christmas."

The egg industry was silent on whether they would consider a similar step to battle plastic Easter eggs.

There is some chance this may be apocryphal (I don't see any evidence the reporters confirmed this with the FDA), but as someone who has had government inspectors show up on our property demanding to see our license to sell eggs, it wouldn't surprise me if true.  I am bombarded with government insanity of this genre every day.

Apparently, a children's magician who was forced to obtain a government license for his stage rabbit is claiming

My USDA rabbit license requirement has taken another ridiculous twist. I just received an 8 page letter from the USDA, telling me that by July 29 I need to have in place a written disaster plan, detailing all the steps I would take to help get my rabbit through a disaster, such as a tornado, fire, flood, etc. They not only want to know how I will protect my rabbit during a disaster, but also what I will do after the disaster, to make sure my rabbit gets cared for properly.  I am not kidding–before the end of July I need to have this written rabbit disaster plan in place, or I am breaking the law.

The bizarre government requests like this one at least give us a laugh around here.  Less funny are the zillions of other pieces of waste paper that must be supplied to various agencies every month -- for example the 9 different permits which took 3 years to accumulate from Ventura County just to remove a dangerous and rotting deck  (not coincidentally, we are closing all our business in Ventura County at the end of this year).  Just in the last several days the Department of Labor asked for new, more onerous monthly reporting of headcounts and payroll by state (I declined) and the census bureau asked for quarterly rather than annual detailed reports of our lodging business (I declined).

One piece of advice I would give to harried small business people is to say "no" as often as possible to these data requests.  Obviously, you will need to turn in your monthly sales tax reports or you will be going to jail, but do you really need to feed the census?  The department of Commerce?  The Department of Agriculture?  The Labor Department?  Much of this data they gather is used either 1) to craft regulations that will just make your life as a business owner harder in the future or 2) to subsidize academics and economists in the form of free data.  As I told the Labor Department the other day, I am happy to fill out their survey if they want to pay me, say, $100 a month to compensate me for my time.  Otherwise they are just stealing free labor and proprietary data from me to help some grad student write her PHD or help some Wall Street hedge fund manager better call the market.

Reverend Charlotte was the first signer on our petition for ballot qualification.  She was incredible, telling the TV audience that she wants the ability to marry gay couples in her church, but doesn't want to force her brothers and sisters in other parishes to conduct marriages that are against their beliefs.

It was a big day for her on a personal level as well.  She was married to her same-sex partner in New York a couple of years ago, and as of yesterday the Feds recognized that marriage.   We still have not done so in AZ, but she was thrilled to help us get started repairing that as well.

Some of you may know that I blog in part because I am incredibly introverted and have trouble with public interactions with strangers.  Yesterday I did 2 live TV feeds, one live in-studio TV appearance, and 4 taped TV interviews plus any number of radio and print interviews.  Today I think I am suffering from some form of PTSD.   But that is why we hurried to get our petition filed -- we wanted to be part of the story when the Supreme Court ruled, and we were.

If you are in AZ, check out our web site at equalmarriageaz.com to see how you can help.  If you are out of state, you can still help financially, or just check out our Facebook page and lend us your moral support there.

Since I am part of a group working to pass a ballot initiative in Arizona to allow same sex marriage in this state, I was obviously pleased with the decision to strike down DOMA yesterday.

However, the decision not to rule based on lack of standing on the Prop 8 suit creates a real mess above and beyond any implications for same-sex marriage.

Proposition 8, a California initiative to ban same-sex marriage that likely would not pass today, was introduced and passed five years ago because the authors of the initiative knew it was a step legislators would never take but that they thought (correctly at the time) that the voters would support.  In fact, in a nutshell, this is exactly what the initiative process was meant to achieve.  If citizens think the legislative process is broken on a particular issue (e.g. taxes, where legislators have entirely different incentives vis a vis raising taxes than do taxpayers), they can do an end-run.  In a sense, this is exactly what we are doing in Arizona with our Equal Marriage initiative, though of course with the opposite desired end result from Prop 8.  But just as in that case, we do not have high hopes of the current legislator passing such a Constitutional Amendment, so we are doing it through citizens initiative.

The problem in the Prop 8 case was that when the law was challenged in court, neither the governor nor the legislature was willing to defend it in court (remember, that it was passed over their opposition).  Given the very nature of ballot propositions and the reasons for them discussed above, this is likely a common occurrence.  But the Supreme Court refused to rule on the case because, as I understand their argument, only the administrative or legislative branch of the state government has standing to bring the appeal (ie defend the original law that was overturned by a local Federal court).

This is a really bad precedent.  It means that any initiative passed by citizens that is opposed by the current state government is enormously vulnerable to attack in courts.  If the government officials are the only ones who have standing, and they refuse to defend the law, then it will lose in court almost by summary judgement.

There has got to be some process where courts can grant citizens groups who filed and passed such initiatives standing to defend it in court.  Certainly there could be some judicial process for this, almost like the process for certifying a class and its official representative in a class action suit.  Without this, citizens initiatives are going to lose a lot of their power.

Update:  Scott Shackford at Reason writes

So should we be worried? Could the reverse – voters approve gay marriage recognition only to have the state refuse to back it – happen? What if the voters approved term limits for state legislators and they just ignored it?

The majority decision was not unsympathetic to the argument (incidentally, it’s interesting to see how polite these arguments are when you end up with such an unusual combination of justices on each side) but firm in that: 1) Getting a ballot initiative passed does not make you an agent of the state with standing; and 2) If you aren’t an agent of the state who is expected to defend the law, then you have to have proof of a personal harm and the proponents do not. Arguably, if the situation were reversed (the state refusing to defend an initiative recognizing gay marriage), it’s easy to see how they could allow standing and the outcry that would cause. A person denied a marriage license from a same-sex ballot initiative may be able to prove harms from discriminatory policies and earn standing.

I had not thought of it that way, but it is interesting that the Court could not find any demonstrated harm to straight petitioners from the legality of same-sex marriage.  I suppose that is a good sign.

Uses huge greenhouses combined with a very tall column to generate convection currents that drive turbines.    Apparently can still generate power at night taking advantage of the difference between soil and ambient air temperatures.  I have no idea if this makes a lick of sense financially (without subsidies).

I was down at the Arizona capitol first thing  this morning to do some live TV interviews on reaction to the Supreme Court DOMA decision  (as Chair of Equal Marriage Arizona, which has a ballot initiative in the works to allow same-sex marriage, we wanted to get our initiative close tied to the story today).

Once the decision came down around 7:10 AM local time, the networks wanted an immediate reaction.  I told them I needed to read for 5 minutes to make sure the decisions were what we expected (they were).  So I leaned up against a palm tree to stay in the shade and read my iPad.  Well, it turns out the tree trunk was crawling with ants.  So as I began my live TV interviews, I could feel them crawling all over my back and starting to bite.  I am not sure how coherent I was in the interviews.  I am pretty sure the reporters were confused about my ripping off my jacket and shirt once the interviews were over.  Maybe they thought it was some sort of Brandi Chastain celebration.

On a related note, having tangentially been involved now in the media rush around a Supreme Court decision, I found this analysis of the running of the interns quite entertaining.

Walter Olson has an article on three recent 5-4 decisions where we narrowly avoided Supreme Court rulings that would have further separated liability as a business owner from actual bad actions.  This one in particular resonates with me:

Vance raised the question of who counts as a “supervisor” for purposes of harassment liability. Under existing Court precedent, employers are more or less automatically liable when a “supervisor” engages in harassment. When it’s a co-worker, they are still frequently liable – e.g., if they have received a complaint about it but not fixed things, or if they have negligently allowed the situation to develop – but liability isn’t as close to automatic. As all Justices recognized, however, the old model of a workplace with a military-like chain of command is fast giving way to newer models in which it is extremely hard to tell who is supervising whom, and in particular work orders (“Here, do this for me.”) can issue in multiple directions, not just from “up” to “down.” The four liberal justices were happy to blur the lines by saying that the more people are doing supervisor-like things, the more employees’ misconduct will be imputed automatically to the employer with no chance for it to raise counterarguments that it had acted properly. The majority led by Justice Alito more reasonably recognized that the ability to take tangible employment actions against a co-worker is a better test of “supervisor” than the ability to ask them to undertake some work responsibility.

Last year I got sucked into a lawsuit where an ex-employee, after her termination, sued our company for allegedly racist remarks another employee made about her husband.  The lawsuit was the first we ever heard about the alleged incident -- it was never reported to me or any other manager or employee, it was behavior that was banned by our policies and training, and we never (obviously) had a chance to make any corrections.  The litigant tried to argue that the person who made the alleged remarks was "supervisory" because she had sometimes been asked to draft a shift schedule for the manager.

We eventually had this dismissed, but it cost us $25,000 in legal fees to make it go away.   It was particularly frustrating given that if this had ever been raised as an issue to me, it would have been investigated and heads would have rolled if necessary.  This whole notion of having liability even when operating to the highest standards is just terrifying.  And four Supreme Court justices tried to make all this irrelevant, essentially linking my liability to the standards and intelligence of whoever is my weakest employee.

The NSA is claiming that the data that they grabbed in essentially warrant-less Hoovering up of telephone and Internet metadata has helped in certain investigations.

I have no doubt that is probably true.

But that is not the right way to frame the problem.  The real issue is:  Did being able to data mine metadata for all Americans help solve the case better and faster than had they been required to seek specific probable cause warrants for data from specific people?

To make clear the distinction, let's suppose I were trying to justify stealing a copy of every book in Barnes & Noble.  I might be able to accurately say that those books helped me writing a good Napoleon paper for school.   But could I have achieved the same goal - writing a paper on Napoleon - by purchasing individual books as needed via legal shopping processes?  The answer is probably "yes."  Having all the books pre-stolen only contributed in that it saved me the hassle of going down to the store and finding a specific book I needed.

In the same way, I suspect that having this data base merely saved FBI and others the hassle of filling out some paperwork in each case.  I am not sure incremental success rates in a few cases is enough justification to rip up the Constitution, but I am sure that laziness is not.

First, I am interviewed today at Reason on our Equal Marriage Arizona initiative.

One question that keeps coming up, both from libertarians as well as others, is why should government define marriage at all?  Can't anyone get married in any kind of private ceremony?

My response is that yes, in some sort of libertarian small-government world, the state would be irrelevant -- what I used to call separation of marriage and state.

But it turns out that the state is already deeply involved in marriage.  The explicit state licensing of marriage already exists, and our laws in Arizona for this licensing are unequal -- some couples get access to this state license, and some cannot.

What makes this important is that marriage is embedded in hundreds, even thousands, of laws.   I searched the Arizona Revised Statutes for mentions of the words "spouse" or "spouses".  These words are used 1133 times in 373 different statutes!  The Our America team told me they counted over a thousand references in Federal code.  In other words, our law codes give -- in thousands of instances -- specific rights, responsibilities, and privileges to married couples who have access to a state-granted marriage license.  Those left out of the current unequal definition of marriage face any number of challenges imposed on them by these specifics of spousal rights and privileges embedded in our law code.  I call this the non-marriage penalty.

There is no way to rip all these references to marriage out of the law and tax code.  The fairest solution -- the one that most respects individual freedoms -- is to accept that such government licensing of marriage exists and then make it as open and as equal and as fair and as accessible as we possibly can.  That is what we are trying to achieve with Equal Marriage Arizona.

Today I have registered as the chair of Equal Marriage Arizona.  We are seeking to place a proposition on the ballot in Arizona in 2014 to broaden the definition of marriage from "a man and a woman" to "two persons".  We are also adding language to protect religious freedom, specifically

“a religious organization, religious association, or religious society shall not be required to solemnize or officiate any particular marriage or religious rite of marriage in violation of its Constitutional right to free exercise of religion."

Our press release is here.  Gary Johnson's Our America organization has been kind enough to sponsor us, as have the Log Cabin Republican's national organization.  My co-chair in Arizona is also chair of the Arizona chapter of Log Cabin Republicans.

I suppose in an ideal libertarian world, marriage would not even be subject to state administration.  But the fact is that there are scores of provisions, from inheritance laws to financial and medical privacy laws, that give special privileges to couples who are officially married, such that it is a real equity issue that some couples are denied the ability to marry.  Perhaps there was a time when some hoped that contracts or civil unions might be an adequate substitute, but I know too many single-sex couples struggling with the deficiencies in these alternate, and deficient, marriage substitutes.

We are not seeking a referendum on sexual choices or lifestyles.  We are seeking a initiative expanding liberty by providing for equal marriage, for what could be more fundamental to personal freedom than choosing who one will marry?

More to follow.

PS -- I am turning off comments on this for a while, as it likely will get some media attention today.  Y'all know I traditionally have the most open comments policy on the web, moderating for spam only.  However, many people, including some in the media, still do not understand the difference between blog posts and comments, and tend to try to count political coup over the more outrageous comments.  As a minimum, since most bloggers moderate, they assume that I do as well (no matter how many times I say I don't) so that any obscene or deeply insensitive statements are assumed to be tacitly approved by me, since I did not moderate them.  Rather than moderate comments for content, I would prefer just to turn them off.

Mayor Bloomberg in New York seems to think he has his own personal army he can order to do whatever he wishes, irregardless of Constitutional protections.  Case in point is the egregiously unconstitutional stop and frisk program.  The only way this program survives is that it is generally applied only to the powerless.  I would love to see the policy applied randomly, rather than just to poor blacks, with officers tomorrow performing random stop and frisk at, say, the intersection of Fifth Avenue and Fiftieth Street.  The outcry from the not-so-powerless would be so incredible that the program likely would not survive another 24 hours.

The wireless electric vehicle charger.  Sure it's cool.  And convenient.   But as I understand it, the main selling point of electric vehicles is their energy efficiency (I personally like the driving feel of a torque-y electric motor, but that does not seem to be the advertised selling point).  If this is the case, then why the hell would one accept a 30% energy loss (wireless charging is generally considered to be about 70% efficient) because they were too lazy to plug in a cable?

This is against the backdrop of most electric vehicle owners having no freaking clue if they are actually saving energy and money or not (all they know is that they see the costs to fill their gas tank but don't see little numbers spinning when they fill their electric car).  As I have written before, they likely are not saving energy vs. a similar size gasoline engine car but may be saving some money due to the lower cost of fuels like natural gas and coal (vs. gasoline) used in electricity production.

Our government's plan to make sure that all young people are unemployed and have no ability to develop vital job skills continues to proceed:

Unpaid internships have long been a path of opportunity for students and recent grads looking to get a foot in the door in the entertainment, publishing and other prominent industries, even if it takes a generous subsidy from Mom and Dad. But those days of working for free could be numbered after a federal judge in New York ruled this week that Fox Searchlight Pictures violated minimum wage and overtime laws by not paying interns who worked on production of the 2010 movie "Black Swan."

A few thoughts:

• It has always amazed me that Progressives, who are the most likely to argue that money isn't everything, simply insist on ignoring non-monetary benefits of jobs.  Jobs offer money, yes, but can also teach vital skills and benefits which can dwarf the monetary component for some.   The skills taught in an internship can be sophisticated -- e.g. how to produce a radio broadcast -- or prosaic -- e.g. how to show up on time and work with others, but they have real value to young people.  I know there are jobs my 19-year-old would take for free to gain experience and/or break into a particular industry.   Jobs can also offer people of all ages intellectual or physical challenges.  I have many people in the 70's who work for me merely to stay active, meet new people, and enjoy the outdoors.
• There will still be one place to still get unpaid internships -- Congress, since they exempt themselves from these laws.
• I am always simply amazed at people who accept an employment deal -- in this case exchanging their labor for experience but no money -- and then go to court because the deal was, err, exactly what they were led to expect.  This reminds me of people who buy a home next to the airport because it is cheap and then sue over the noise.

The other day I posted a graph from Roy Spencer comparing climate model predictions to actual measurements in the tropical mid-troposphere (the zone on Earth where climate models predict the most warming due to large assumed water vapor positive feedbacks).  The graph is a powerful indictment of the accuracy of climate models.

Spencer has an article (or perhaps a blog post) in the Financial Post with the same results, and includes a graph that does a pretty good job of simplifying the messy spaghetti graph in the original version.  Except for one problem.  Nowhere is it correctly labelled.  One would assume looking at it that it is a graph of global surface temperatures, which is what most folks are used to seeing in global warming articles. But in fact it is a graph of temperatures in the mid-troposphere, between 20 degrees North and 20 degrees South latitude.  He mentions that it is for tropical troposphere in the text of the article, but it is not labelled as such on the graph.  There is a very good reason for that narrow focus, but now the graph will end up on Google image search, and people will start crying "bullsh*t" because they will compare the numbers to global surface temperature data and it won't match.

I respect Spencer's work but he did not do a good job with this.

Let me bring you up to speed:  The NHL owns the Phoenix Coyotes hockey team, having taken them over in bankruptcy.  It needs to sell the team and is demanding $200 million for the team, having promised the league owners it would not accept anything less (so they will not take a loss in the investment).  The team is worth, however, something like $100 million, at least if it stays in Arizona.

The team plays in a stadium built by the relatively small city (250,000 people) of Glendale, which put something like $300 million of taxpayer money into the stadium and has provided operating subsidies to the team the last several years that probably total another $100 million, at least.  The city has a bad hand, but keeps doubling down on its bet to try to retain the team.

The problem, of course, is the $100 million difference in the bid-ask for the team.  Glendale first tried to fix this by agreeing in a previous deal couple of years ago to basically give the buyer $100 million of taxpayer money to bridge the bid-ask gap.  The Goldwater Institute sued, saying that the Arizona Constitution pretty clearly states the government can't directly subsidize commercial interests.  They prevailed (before it ever reached court) and the deal died.

The only way left for Glendale to make the deal happen was to give a buyer $100 million in taxpayer money but to do so in a more disguised manner.  The one option they had was in the stadium management contract.  If they agreed, say, to pay the buyer $10 million a year over market rates for the stadium management contract, over 15 years that has about a $100 million present value.  They can get away with this because there is no objective valuation of what a management contract would cost on the open market.

But their ability to do this is, thankfully, about to die.  Under intense pressure, and in a fit of good government that I am sure Glendale regrets, it actually went out and sought arms-length contracts for stadium management from third parties.  It is enormously unlikely the city will accept any of these bids, because it needs the stadium contract as a carrot for someone to buy the Coyotes at the NHL's inflated price.  Besides, I bid on large contracts a lot and I have often been presented with bid packages from an entity that had no intention of awarding, but wanted me to go through all the bid effort just to establish an internal price benchmark or to keep their preferred provider honest.  I can smell these from a mile away now.

The problem Glendale will have, though, is that when these 3rd party bids become public (which they inevitably will), it will then be impossible to hide the implicit subsidy in the management contract.  Presumably, taxpayers then will push back on any future deals using this dodge, though Glendale citizens seem pretty supine so one never knows.  Also, the city can also tweak the responsibilities of the stadium contract, thereby allowing them to claim that comparisons against these past bids are apples and oranges (though this will be hard as I expect arms-length bids around $5 million a year vs. $15 million they propose to pay the team buyer).

PS-  It is hilarious to see worried comments from Gary Bettman (NHL Commissioner) about how hard on Glendale it will be if the Coyotes leave town.  Merely lowering his asking price to something less than 2x the market price would solve the problem in an instant.