Miscellany: 1/31/13

Quote of the Day
There are no mistakes, no coincidences.
All events are blessings given to us to learn from.
Elisabeth Kübler-Ross

Obama's Quote of the Day

"You cannot sleep well when you think it’s all paid by the government."

 Japan’s finance minister Taro Aso

Not at all a problem for Barry, whom gets his fair share of sleep despite spending $5.8T  he doesn't have: Obama cannot sleep well when he thinks it's not being spent by the government.

These ARE the Good Old Days

I think John Stossel is pointing out a valid point. (We're not talking about the punch-drunk economy, but crime statistics.) My mom will say about some evil things in the headlines (say, e.g., the pedophilia scandals) that these things didn't happen when she was young. (They did; they just didn't get publicized.) In a nation of 310 million, the press exaggerates events (e.g., the Newtown Massacre). I'm not arguing the tragedy, but consider, for instance, 500 people were murdered last year in Chicago--more than American fatalities in Afghanistan or Newtown victims. But even with the Chicago death toll, across the country as a whole, violence has not been eliminated but is tapering off.



Reason's Nanny of the Month

I've never smoked ANYTHING. (I'm too cheap; I have had other vices like not enough diet and exercise.) I don't go around and get into people's faces about their vices. My maternal grandfather and uncle used to smoke cigars on Sunday afternoon, and to be honest, I liked the smell, and what kid didn't want a cigar band? My Dad used to smoke cigarettes, a bad habit he picked up in the military overseas with his buddies. Fr. Lonergan at OLL used to smoke his pipe in his office; he had Bernstein playing on the phonograph--and that's the moment I decided I wanted to be a college professor. My baby brother had a thing for chewing tobacco, which to be honest I find a little gross. But jail sentences for using a legal product?



Grayson's Legacy

To  provide context, a significant amount (about  a third) of overall health care costs occur in the last year of life. Senior entitlements (retirement pension and healthcare) are a serious problem for most of the advanced democracies. As Addison and Bonner note: "All citizens of Western industrial democracies (including Japan) have ‘pay-as-you-go’ funding for their government-guaranteed retirement and medical insurance systems. Yet every Western nation has a birth rate lower than 2.1 children per family. The number of workers coming into the economy is not enough to fund the old-age systems".

Fitch elaborates:

Whilst a successful resolution of the current fiscal crisis remains the most important driver for many advanced-economy ratings, without further reform to address the impact of long-term ageing these economies face a second, longer-term fiscal shock. Without reforms to boost labour productivity and/or participation rates in many other advanced economies, population ageing will cause potential GDP growth to decline over the long-term, exacerbating the fiscal challenge,

Japan has a mandatory participation universal health care system (business/government) with means-tested cost sharing of medical fees and capped out-of-pocket costs. Medical costs amount to about a half of what the US pays (about 17% of GDP and climbing). I'm not going to go into an apple and oranges comparison here (for one thing, there is a quality/cost trade-off, there are differences in medical approaches (say, medical treatment of preborn babies with health challenges vs. eugenic abortion), subjective ideological rating  factors, exogenous factors (cultural, dietary, etc.), and so on: Cato Institute's Michael Tanner does a good job outlining some of the salient factors here.

Now I don't want to renew the death panel debate, but the Aso quote really puts Grayson's point on its head. Grayson is implying for-profit plans would put profits over the expense of a loved one.It's not profits but  cost containment. Japan has already designed profit out of the situation (e,g,, hospital).  In defense of Aso, he is also saying, I don't want the government extending my life artificially with a low quality. For example, I may choose to spend my last days in a hospice versus the government and doctors extending my life for a few more painful days.

This is Rep. Alan Grayson (2009) discussing the GOP plan for health care. Part one, don't get sick. Part two, if you do get sick... Part three, die quickly.

The outspoken Mr. Aso did not win many votes among Japan’s swelling elderly with his remarks at a meeting of the national council on social security reforms. They should “hurry up and die” to relieve pressure on the government to pay their medical bills, he said. “Heaven forbid if you are forced to live on when you want to die. I would wake up feeling increasingly bad knowing that [treatment] was all being paid for by the government.”

Don't Know About the Economy

The video is a little dated; I do have some  bones to pick with the economist in the video and Stossel as well, regarding the "normal" employment for college graduates. The "official" employment number he's referencing includes overqualified and/or part-time workers and excludes discouraged/long-term unemployed people. I can speak in terms of my own experience because I've been in the market during the Great Recession. Yet on paper an 18-year DBA, a former IT professor whom has worked for companies like Oracle and IBM, has been willing to travel or relocate or negotiate compensation, often finds himself filtered out by arbitrary criteria (e.g., x years with a specific version of Oracle software), I don't hold a DoD clearance, etc. Most employers or clients won't consider out of area applicants, expect them to pick up travel or relocation costs, and routinely reject "overqualified" candidates.

What organization tried the hardest to recruit me during the recession--an IT services company, a university? No, a well-known supplemental insurance company--not for my technical skills but for p position as a commissioned sales agent. It was like being stalked--unsolicited, multiple phone calls, emails, even employment ads on my cable. No joke--over the past week, I actually got an email with the heading "Are you ready to quack yet?" No, but I wonder if it's too late for me to take up duck hunting...

Another pet peeve is when John Stossel or Mark Perry of Carpe Diem start bringing up the classified ad counts. Let me point out a couple of methodological problems. For example. suppose one of the GSE's recruits a DBA subcontractor. (I know this from personal experience.) They'll make the posting available to local agencies, all of them posting Internet ads--for the same position. I will sometimes get a half dozen calls about the same position within 24 hours. (They usually don't identify the client but will reveal the location. And there are enough distinctive requirements for me to realize the duplication.) Second, a lot of times they are shopping glorified wish lists and certain in-demand skills

Let me give a brief example. You can think of a database instance as a set of processes on a database server which enables user actions against a database. A database is normally connected or mounted exclusively on a single database server. However, if there is a problem with the database server (or some maintenance is being done), users can't access the database. If you are running a store on the Internet, that's not good; you can lose sales if the database isn't available.  Oracle has a different, twice-the-cost license called RAC--Real Application Clusters. In essence RAC enables multiple instances (say, on different database servers) to access the same database. From a practical standpoint, there are ways to shuttle users to other instances in the event of a database server outage, some protocols if users connected to different instances try to act on the same data--but it essentially guarantees 24x7 operation, e.g., for an Internet shop.

I have modest exposure to RAC and a relevant prior technology, Oracle Parallel Server, but none of my government clients used RAC--it was overkill and too expensive. Even for National Archives, if I needed, say, to install a database security patch, my colleagues would put up something like "we'll be back in an hour" on the web server.  RAC  is somewhat more nuanced in terms of setups and patching, but not a big deal for an experienced DBA. But especially when you are interfacing with nontechnical recruiters whom treat a job wishlist like a fast food order. It makes perfect sense to filter out an 18-year DBA in favor of a 4-year junior DBA whom started out in a RAC shop. Dealing with recruiters can be comical. For example, I once saw a job description asked for 5 years of 10G version experience, and 10G had been in release 2 years.

I mentioned a similar problem when my academic career  stalled out in the early 1990's. On paper I was an obvious choice: degree in hand, good publication record, and several courses taught over 8 years, 5 as a full-time professor. But what happened was, schools that used to get 12 candidates, would offer campus visits to their top 3 candidates and hope one would accept an offer suddenly got 80-100 resumes. And you saw filtering strategies, often clustering on a hot area, say networking. Another popular criterion was adding a female MIS faculty member. There's not much I could do about the latter, but I could easily teach other courses. I never programmed in COBOL professionally, but I taught COBOL 5 semesters.



Musical Interlude: My Favorite Groups

Steely Dan, "Deacon Blues"

Miscellany: 1/30/13

Quote of the Day
The road to perdition has ever been accompanied by lip service to an ideal.
Albert Einstein

Clap for the O Man: He's Going To Take Your  Economy High

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the third quarter, real GDP increased 3.1 percent. The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending...

Real GDP is inflation-adjusted. A few quick points here: first, these are preliminary numbers: it's possible they could be adjusted upward. Second, economists were caught by surprise, and their models included allowances for the known factors listed in the last sentence. Third, liberals, as I have often predicted, are seizing on "government austerity". Although I also see this delusional progressive economic spin: "Best-Looking Contraction in U.S. GDP You'll Ever See."

Let us be clear: a lot of federal spending does not come from current taxpayers. We have spent nearly 6 trillion dollars under the Obama Administration future taxpayers are on the hook for--money that won't be available to sustain future growth. Government is very labor-intensive; if we lay off surplus government workers and/or ask government employees to share in necessary sacrifice to attain  a more sustainable economy, remember about 5 in 6 workers are in the private sector, which not only has paid the preponderant price in layoffs but basically pays the cost of government which spends one in 4 dollars. Here's an interesting factoid in  from the Gray Lady 3 years  ago:

For the first time in American history, the majority of the nation’s union members are government workers, rather than private-sector workers, according to a Bureau of Labor Statistics report released today. This is despite the fact that there are five times more wage and salary workers in the private sector.

There is something intrinsically wrong here--government workers get benefits (including much higher job security) wildly out of step with the private sector: there are waiting lists to get into government sector: 4 members of my own birth family of 9 have spent most of their work history in the public or quasi public (e.g., USPS) sector and in the cases I know, all of them had to wait months or years to get on the payroll. Tell me, if government people are so "underpaid", why are so many people waiting to be "exploited" and so few existing professionals willing to jump at all these better, higher-paying jobs in the private sector? Oh, but you see, public sector workers are more noble and self-sacrificing  than private sector. PLEASE. I've worked extensively in the private sector and as a public sector contractor (at the city, county, state, and federal levels). In my experience the real work was done by contractors, we are often abused and exploited by government personnel (I've given several examples from personal experience in past posts), and there are few government workers or managers I would ever hire in the private sector.

Just in case the reader thinks I'm spouting sour grapes, let me give a new example to explain my point. In the late 1990's, the City of Oakland had a homegrown set of applications. It was notoriously ill-maintained, and only a couple of city people knew the in's and out's of, say, the HR/payroll applications. Oracle and Peoplesoft (at the time an independent vendor, much later eventually acquired by Oracle) were rival vendors for a replacement state-of-the-art ERP system desired by city management. The HR people preferred Peoplesoft, but the city management decides on Oracle's "one-stop-shop" ERP functionality, including its own HR/payroll function.  I worked to deploy the technical infrastructure of Oracle Applications (e-Business Suite). I worked with a number of functional consultants, whom effectively worked with with city personnel on doing application setups for transitioning a migration to our system. I recall a very lovely, sweet Oracle Consulting HR consultant (I had a bit of a crush on her, but she had a boyfriend). Over a number of weeks, she was trying to debrief those two internal personnel, but they were engaging in passive aggressive fashion (you also encounter people who see their knowledge of the status quo as a form of job security) and avoided meeting her. My colleague's deliverables were falling behind schedule. The city had auditors reviewing the project, my colleague was fingered in the process for falling behind, and Oracle responded by rolling her off the project (being rolled off a project is not good for one's career: in many cases, especially if there isn't another assignment immediately available, the employee is fired at will). After she left, I actually inherited her vacated corporate apartment in Emeryville; one day I overheard some city personnel badmouthing my departed colleague--a total lack of class on their part, talking behind the back of a sweetheart whom had to pay the price because of 2 rogue city employees whom put their personal objections to the Oracle software award above city policy. This was a city management problem, not a vendor issue. I sorely wanted to defend the lady's honor, not unlike the knights of old.

I'm sure there are literally thousands of stories. One of my favorite "war stories" was when I was administering the National Archives eMilRecs application. The government geniuses signed off on the server installation, not noticing one of the redundant power supplies wasn't functional (in essence, one of the electric plugs was in a wrong socket)--and it had literally gone for years unnoticed. I wanted to do it but management insisted on doing it by an electrician, the electricians were gone for the day (and the manager wasn't about to call one in to accommodate our maintenance window starting at 7PM; it was okay, however, for me to work extra hours not on the government's dime), and so the earliest it could be scheduled was around 4 AM.  I show up and nobody's there (and the network room personnel think it's hilarious, openly laughing at me). I go down to the electrician's section; they knew nothing about it and refused to help me without authorization. I go to the front desk, which refuses to call the manager in question. I fire out an email to my civil service manager in St. Louis and leave about 4:30am (I have to be back at the 7am hour, not much sleep). The manager ends up lying, telling my manager the electrician got tied up in a traffic jam (at 4am!) and got there a little after 4am, but I had already left! Seriously, folks; this was like some sort of passive aggressive high school prank pulled by a civil servant north of 50! I don't think I ever got a personal apology, maybe a pseudo-apology over my feeling upset over the incident. (The contract allowed me only to book 8 hours for a day--I couldn't charge extra  and I still had to stay until 7PM when the Missouri workers were done for the day.)




A Media Hero: John Stossel

This is a Q & A celebrating John Stossel's new book No, They Can't: Why Government Fails-But Individuals Succeed. John briefly explains how he managed to overcome the progressivism of his alma mater, Princeton, home to Keynesian economist, Paul Krugman, on his way to libertarianism.  I haven't read his new book yet, but I own copies of the last two.

I don't know if John would phrase things this way, but I see his criticism of government as a logical extension of his journalistic beginning, uncovering consumer fraud. Progressives saw his report as rationalizing yet another extension of government empire building, notably led these days by Senator "Cherokee Lizzie" Warren. What John found was fraud persisted, despite the government's "best efforts." Human nature being what it is, we probably can't eliminate evil or reform dishonest people, but we can empower people with information they can use to make better decisions.

John'a experience did lead him to discover a new, even worse type of fraud: government. Ineffective, high-cost government that makes promises it can't keep, notoriously can't balance its books, etc. It's one thing if an auto mechanic rips you off; there are other mechanics. If there is a problem with government services, it's not like you have an alternative local/federal government.

A side discussion: John Stossel in the first video mentions in passing that many social conservatives had issues with 'live-and-let live" philosophy about gay relationships. One day my religious mom was upset about my blog. I get one of these classical female  "you know what you did" reactions (no, guys usually don't have a clue). Somehow she got the wrong impression  I was promoting "gay marriage". I will say I ran across the fact that homosexual behavior had been observed in nature while taking a psychology class at OLL. This profoundly disturbed me to the point I wrote a letter to a well known Catholic media conservative (and, to my surprise, got a personal reply). I didn't see the design, functional purpose of such behavior--it didn't sustain the species.  Other things, too--like an animal in the wild accidentally crushing its offspring. But I didn't deny the natural basis of the orientation or relationships between those that share it. That's different from trying to change the definitions of traditional marriage and family.





Musical Interlude: My Favorite Groups

Steely Dan,"Peg"

Miscellany: 1/29/13

Quote of the Day
Nothing but heaven itself is better than a friend who is really a friend.
Plautus

Obama's Quote of the Day
“ It is easy to be generous with other people's money. ”
 Latin proverb

First Nominee for Shyster of the Year:
Federal Attorney Carmen Ortiz

I've been flirting with the idea of expanding my annual tongue-in-cheek blog awards to include lawyers and Republicans behaving badly  (as well as my JOTY for Democrats: I've flirted with the idea of using 'White Elephant' for Republican). Ortiz is the 2011 Bostonian of the Year  federal attorney whose bullying prosecution of Internet activist Aaron Shwartz resulted in his suicide, which I briefly reviewed recently, and more recently she was fighting to seize the hotel owned by the Caswell couple because dug transactions took place on the property without their knowledge or consent and lost.

It's bad enough this abuse of power took place at all, but do you think Ortiz was chastened by her loss? Think again:

“This case was strictly a law-enforcement effort to crack down on what was seen as a pattern of using the motel to further the commission of drug crimes for nearly three decades,” Ortiz said in a statement. “We are weighing our options with respect to appeal.”

Federal prosecutors first sought to seize Caswell’s property in 2009, citing multiple drug arrests on the property. But Caswell’s legal team found there was actually more drug activity at surrounding addresses and suspected the government was going after Caswell, who has no criminal record, because his mortgage-free property is worth more than $1 million.

How Cheap is Shale-Source Natural Gas?

Look at Bakken flare-off visible from space
Courtesy of the Financial Times via CNBC

The volume of unwanted gas being flared off in North Dakota, the state leading the shale revolution transforming the outlook for US energy, rose about 50 per cent last year. The volume of gas flared in the US has tripled in just five years, according to World Bank estimates and is now fifth highest in the world, behind Russia, Nigeria, Iran and Iraq. The flaring is a result, in large part, of the low price of natural gas in North America, which can make it uneconomic to build pipelines and tanks to handle the gas released by oil production. Flaring is often the safest way to dispose of it.

Mark Perry of Carpe Diem likes to cite how much C02 reduction is due to the shale gas revolution. But we don't need to email Richard Windsor to figure out that the Obama Administration is concerned. The Financial Times continues:

Flaring has been attracting attention from environmental campaigners because of  its consequences for greenhouse gas emissions, local air pollution and disturbance to nearby communities

Voting and Cost-Benefit Analysis

Take a highly informed libertarian/conservative blogger whom lives and votes in a blue state. Heaven knows how much my blog costs if I factor in my own billing rate...Or my own readers if they calculate their time in reading me...



Do You know "Cato" of "Cato Institute"?

One can easily understand why a fierce defender of small-r republican ideals, an utterly incorruptible  public official, a principled stoic, might fit a libertarian standpoint. But I've found it peculiar because of the circumstances of Catiline's conspiracy. This incident is briefly discussed in the video in explaining the start of the divide between Julius Caesar and Cato. Roman law required the due process of a trial before execution. (Hence, for example, why Jesus Christ went through a trial before His crucifixion.) Rebel forces were planning to overthrow Rome. The consul Cicero got evidence but at first Roman citizens accused him of fear-mongering and fabricating evidence. Additional evidence became available and some conspirators caught. Caesar basically argued for lesser punishments of property seizure and life imprisonment. The tribune Cato argued immediate executions were necessary to send a demoralizing message and warning to treasonous conspirators and the delay of trials risked an interim, perhaps fatal assault on Rome. In fact, Cato Institute has been critical of Obama Administration kill lists, especially of American citizens abroad without due process of a trial and conviction.



Musical Interlude: My Favorite Groups

Steely Dan, Reelin' in the Years

Miscellany: 1/28/13

Quote of the Day
I never expect to see a perfect work from imperfect man.
Alexander Hamilton

Chuckle of the Day:
Gary North Has Registered HillaryHoover.com

Rothkopf, author of Superclass, has written a gushing piece on Hillary Clinton, effusive with praise that borders on the delusional. This blogger is not a fan of Ms. Clinton, and I never had  Hillary Derangement Syndrome. Let's pretend to ignore if she had never been married to Bill Clinton, New York would never have elected a carpetbagger, unaccomplished novice politician to the Senate. She has little administrative experience (beyond the State Department, and the Benghazi  scandal alone raises serious questions about her leadership style). Her domestic policies are left-of-center in a right-center country, she lacks Bill Clinton's or Obama's charisma and likability (remember the paranoid "vast right conspiracy" nonsense)? Her attempt to nationalize health care crashed and burned without a showdown vote and was a key factor in the 1994 elections putting the GOP in control of Congress for the first time in decades. For crying out loud, despite her husband's having been the most successful Democratic President since FDR and with half the voters women, the first serious female candidate got outmaneuvered by an unaccomplished first-term senator whom had all the gravitas of being an overrated motivational speaker!

At best, she is merely a competent, pedestrian progressive politician. Her 8 years in the US Senate didn't demonstrate any distinct leadership or yield any significant legislation, e.g., on immigration, electoral reform, fiscal balance, etc.

Is Rothkopf right? Is the Democratic nod Clinton's for the taking? First, I do think Hillary Clinton would be a serious contender and certainly dominate her likely competition (especially governors) on foreign policy. But I think that Clinton's chances are largely dependent on what happens in the remainder of Obama's term. I think if we have a double dip recession  and unemployment starts rising, it probably doesn't matter who the Democrats run--the GOP nominee will win in a landslide. Hillary Clinton probably doesn't want her political career to end that way. (But never underestimate the irresistible urge for progressives to be the first anything, to "break the glass ceiling", i.e., be the first female nominee to head a ticket.)

Second, Clinton may find it difficult to distance herself from any international crisis, say, if  "the pivot" to Asia results in a military conflict between China and the US, if currency or trade wars spiral into a global recession, if the Iraq/Syria alliance sparks another regional war, etc.

Third, I disagree that Clinton did well in the Benghazi hearing. By any objective standpoint she was given softball questions by Dems, and her responses to Johnson and Paul were evasive. (It's not like these questions were new; the points had been on the record for weeks, and she had plenty of time to rehearse a viable response .) If Ms. Clinton did not know Benghazi was dangerous, that 9/11 was a symbolic date for hostile powers, etc.,  then she's less informed than I was.  This rehearsed line thing about what difference it made how personnel died but the fact there were dead Americans was grossly offensive to me. Surely Ms. Clinton knows the difference between a random act of violence and a terrorist action, one that would likely never have happened if the ambassador spent 9/11 at the more secure embassy or if Clinton had managed the situation more proactively and prudently.

Fourth, it's not surprising Clinton now has favorable numbers. I don't hold her fully responsible for Obama's convoluted foreign policy. I don't have a problem with her work ethic. She is getting  public sympathy over her recent health issues. But there's a big difference between being Secretary of State and President. A lot of people don't know her very liberal voting record, and 2016 will be a change election year.

I've heard some governors/former governors in red/purple states like Montana and Virginia may enter the race (Maybe a former Indiana governor/senator? Just starting a rumor...)  I could very easily see a Montana governor positioning himself as a centrist running an anti-Washington insider campaign and promoting  his ability to win red/purple states.

North is suggesting our profligate ways will probably catch up to the Dems in the nest Presidential term. I say, never underestimate Obama. If anyone  had suggested to me he would run up an almost $6T debt in one term, I  would have considered it far-fetched.

Just before publishing this post, I saw a link on Drudge Report saying a Hillary SuperPac has formed. Heaven help us all.

Things That Make You Shriek in the Middle of the Night

For my fellow non-economists, the discussion gets a little arcane, especially in discussing strengths and weaknesses of various business cycle models and the functionality of paying interest on reserves. (A good explanation of the latter is here. In essence, manipulating interest on reserves affects the amount or lending between banks at or near desired  interest rates by effectively setting an interest rate floor. Obviously a free market person doesn't like how crony bankers obfuscate the market.) So much is kept off the official debt like the unfunded senior entitlements, the GSE-guaranteed obligations, etc.

We know the Democrats are either incompetently or intentionally misleading people about the viability of senior entitlements, the unsustainable pay-go system. Many current seniors will get far more than they ever pay into the system (including premiums) in one or both programs. In the case of Medicare, costs are already being subsidized given below-market reimbursements. Programs are already running pay-go deficits and drawing on reserves. Today's workers need to face up to the need for radical reforms sooner rather than later because a delay simply forces the bills on the next generation of taxpayers. A smaller generation of taxpayers not only going to have to pay their own taxes, but they'll inherit the unpaid for share of their elders'.  The GOP, fearing with good reason political attacks over necessary reforms to reform program benefits and/or increase taxes, premiums or deductible, also attempts to delay the pain.

Who are we kidding? We are looking at over $20T in debt by the end of Obama's Presidency. The last time a Democratic Congress ran a surplus was FY1969 ($3B). [This source holds GW Bush responsible for FY2009, although the Democrats controlled Congress, did NOT pass Bush's budget but continuing resolutions]. The biggest surplus? About a quarter trillion in FY2000 when Clinton was on the GOP spending diet (and the Treasury was collecting unsustainable capital gains during the Internet bubble). Obama has already more than doubled the publicly held debt, and I fully expect that Obama Care will blow way past budgets just like federal health programs always have.

Just like the domestic auto took on unsustainable union pacts, which eventually had to be shed in bankruptcy, I expect that the federal government will eventually have to default on its obligations in order to shed its unsustainable  entitlements and make necessary reforms.

"At some point, holders of Treasury securities are going to recognize that these unfunded liabilities are going to affect the fiscal capabilities of the government and then you're going to have the same situation that happened in Greece happening in the U.S.," says Jeffrey Rogers Hummel, who is a professor of economics at San Jose State University and the author of a recent paper on the consequences of a U.S. government default. "In the short run it's going to be painful, but in the long run it'll be a good thing."

Follow-Up Odds and Ends

Yesterday I mentioned Boudreaux/Perry's recent WSJ column taking on progressive economists like Krugman and Reich whom hype statistics about median income flat since the 1970's. Don does an excellent job getting several points across I've discussed in past blog posts; let me single out a few for comment here:

• A relevant statistic is total compensation--not just wages. Depending on the employer, employer-paid benefits can amount to a significant percentage on top of wages (a major portion, if not all, of health insurance, life, disability or other insurance, defined benefit or contribution retirement plans, federal payroll taxes (social security/Medicare): all of these are fungible costs in addition to wages. Plus, there are security benefits more difficult to quantify--like tenure. Government debt, for instance, usually pays lower interest, because the investor is guaranteed repayment; businesses normally have to pay a premium because they take on greater risk. Similarly, one would expect wages under long contracts or for tenured positions to be somewhat less because workers are less exposed to risks of layoffs. Yes, I know some public sector job cuts occurred during the recession, but they were more modest and delayed relative to the private sector. This happens to me all the time: my asking hourly rate is higher for a shorter-term gig (like days vs. weeks vs. months vs. years).
• A growing economy increases the supply of lower-skill/lower paid positions. A growing business can add shifts or locations with modest cost (if any) to overhead/senior-level personnel. This leads to the point of discussing misguided minimum wage policies. Employers usually raise wages to retain trained, more productive/experienced workers. Statutory wage floors artificially limit the number of starter jobs.
• The demographics have changed. Take, for instance, women. My mom raised 7 kids and started working outside the home while my 2 youngest siblings were still in school and I had graduated. One of my sisters got married just before earning a college degree in education and took a library job after her youngest children were in school. Another sister, a registered nurse,  took a break before my nieces started school. Other women may choose to take part-time roles or take, say, a job with lower-paying responsibilities not involving heavy travel or extended working hours.  I have a brother-in-law whose employer had merged and was consolidating operations and did not want to relocate for an alternative job assignment. I've lost more than one job opportunity for being "overqualified": in fact in a study reported in USA Today, nearly half are overqualified for their jobs:

Vedder, whose study is based on 2010 Labor Department data, says the problem is the stock of college graduates in the workforce (41.7 million) in 2010 was larger than the number of jobs requiring a college degree (28.6 million).

That, he says, helps explain why 15% of taxi drivers in 2010 had bachelor's degrees vs. 1% in 1970. Among retail sales clerks, 25% had a bachelor's degree in 2010. Less than 5% did in 1970.

"There are going to be an awful lot of disappointed people because a lot of them are going to end up as janitors," Vedder says. In 2010, 5% of janitors, 115,520 workers, had bachelor's degrees, his data show.

Oh, yes! Obama wants to "invest" in the world's highest educated janitors, waiters, and cabbies! And what do you think happens to wages when the supply of qualified workers exceeds their demand?



Musical Interlude: My Favorite Groups

Steely Dan, "Do It Again"

Miscellany: 1/27/13

Quote of the Day
A wise man will make more opportunities than he finds.
Sir Francis Bacon

Political Potpourri

• Sarah Palin Back in the News. This blog has been a critic of Ms. Palin since the infamous botched media interviews in the 2008 campaign. I'm not interested in the various defensive responses, e.g., the interviews were heavily edited. The one on media sources she reads to keep current is the one that really stuck with me; she basically sidestepped the question. As I recall, she later explained that she was offended by the questions, inferring the interviewer was motivated by a stereotype that Alaskans don't read.  (I think Fox New later predictably gave her a do-over.) In job or project  interviews, say, for instance, if I haven't done a certain type gig for a while, it's not unusual for them to ask what I've done in the interim, i.e., to keep up with the technology. In this context, the interviewer was simply asking how she managed to remain current on national issues. I thought she might reference a local newspaper, maybe a news magazine like Time, an Internet news portal, etc. (I can't imagine any governor not being aware of what media were saying about her, especially since she once worked for media.) What disturbed me was her choosing this battle: don't sweat the small stuff.

What's odd is that Sarah Palin is both charismatic and politically savvy. She defeated an incumbent governor, a popular former US senator, as an underfunded political maverick and managed to beat a former Democratic governor in an election cycle that saw the Democrats take back both chambers of Congress. She had sky-high approval ratings (Democrats loved her going after the GOP establishment)--until McCain nominated her. Her decision to give birth to a Down Syndrome baby rather than abort him met with approval from pro-life groups and families with disabled children. Unlike McCain, who had spent almost 3 decades in Washington and was deeply distrusted by conservatives on the early Bush tax cut votes and his leadership on campaign finance reform and immigration, Palin was a fresh face, colorful and likable--and she drew bigger crowds.  She took to the VP attack dog/red meat political  role like a duck to water; she realized, of course,  that her bipartisan coalition and approval ratings would be badly damaged. One news account during the campaign said she was fixated on her Alaska approval ratings during the campaign--for good reason. McCain/Palin has held a lead in early September before the full brunt of the economic tsunami hit, making economic security (and traditional Democratic program relief support) the de facto real issue. I knew the race was over then . The Dems had momentum from the 2006 campaign, McCain had painted himself into the corner by emphasizing his support for Bush policies during the tough nomination battle, and his campaign had a fraction of Obama's war chest. Palin sounded detached from reality during the VP debate pushing energy reform just as oil prices were dropping in recognition of the deepening recession. Palin was right, of course, from a longer term perspective but she didn't respond, for example, to Biden's false charge that McCain was an ideological deregulator.

Returning to Alaska, Palin found her coalition had collapsed. State Democrats did not like her campaign performance, her relations with the GOP legislative leadership  were never good because of her anti-establishment rise to the governor's mansion, and state revenues were dropping along with world oil prices: one is always more popular spending money than cutting spending. On the other hand, she was now a political phenomenon outside Alaska; she took none of the blame for the loss, and she was automatically a contender in 2012. I'm not a fan of David Letterman's one-sided political humor, and delivering a sex joke about Palin's eldest daughter, an unwed mother, was offensive. (To be honest, the jokes had started, including other comedians, during the campaign.) Palin seized on the fact the joke writer had identified the wrong daughter (the middle preteen) at the baseball game and went after Letterman. I understand why the populist conservative base, which always resented the vicious partisan personal attacks against the Palin family in the aftermath of her VP selection, went after Letterman's job. To this day, I dislike the way she handled the situation: from hearing an alleged conservative lapse into ideological feminist rhetoric to giving publicity to a bad joke (and trying to make the joke seem worse than intended). It set off red flags: I had a vision of Nixon's enemies list, this one consisting of media personalities.

The Palin resignation surprised me; I know she was trying to deal with a flood of questionable complaints, but that was an issue the legislature should have dealt with. I think it's clear she had limited shelf life as a celebrity: lucrative book and appearance fees. I had predicted a Fox deal  before it happened. But the resignation also killed her 2012 ambition: i.e., could she face the much greater responsibilities of being President?

I see her role since then as merging her anti-establishment rise to power in Alaska with populist conservatism. Whereas she had some success in 2010 promoting certain candidates for party nominations, one 2011 poll had her approval ratings in Alaska in the upper 20's, nearly half of what they were in leaving office. Ironically, Palin, who was offered  former Gov. Murkowski's old Senate seat and turned it down, could potentially run for Begich's seat next year, but the only thing I've heard is Miller, who lost to Lisa Mutkowski in 2010, is considering a second campaign. The Wikipedia post on the 2014 race doesn't mention Palin. It's difficult to see how Palin can otherwise sustain a national impact, especially now she's giving up a role at Fox News. (I have no doubt she could land a gig with another network.)

I think Palin lost a lot of her maverick and kingmaker reputation by backing Gingrich (about as ultimate an establishment insider as you could get) whom had no shot of beating Obama. She's blaming "Romney, the Moderate" for losing to Obama, but the fact is that Romney won every state McCain won, plus North Carolina and Indiana. He lost several states by 5 points or less, and Obama got several million fewer votes, with a much narrower margin of victory. The fact is that it's very difficult to beat an incumbent, especially if there is any hint of growth in the economy, never mind a $1B war chest and no viable partisan challengers.

What I heard was that Fox News did offer a renewal contract but with considerably lower terms--Palin hasn't brought in the viewers to justify sustaining the original terms. Some of that is not her fault; I would have used her differently--but FNC has never contacted me for advice. For example, I could easily see Palin doing  a variation of Charles Kuralt's "On the Road" segments, say, as a regular feature on 60 Minutes. Or a reality series based on her stumping for candidates.

• Senate Races Next Year. Retiring Jay Rockefeller's and Tom Harkin's seats open up very winnable seats. A recent poll suggests that Brown would easily win Kerry's seat over Markey; the downside is that Brown would have to run for the fourth time in 5 years next year against a likely tougher candidate. Of course, Brown could run for Senate now and Governor next year. I wonder if Pawlenty would consider going after Franken's seat? Quite a few red or purple states with Dem incumbents are doable--Louisiana, Alaska, South Dakota, Colorado, Arkansas, Montana, North Carolina, New Hampshire.. On the GOP side, Chambliss of Georgia's retirement opens a vulnerable seat. With two former Presidential candidates from Georgia, Cain and Gingrich, it could be interesting. Five GOP Congressmen, including Price, have near perfect ACU ratings and one should coast to victory.

NO Birthday Cake For You!
Cato Institute,  "The Federal Reserve Turns 100"

Germany recently raised eyebrows by asking for the return of its gold held in the US. Let's be clear: gold is money (although it also has functional commodity uses, e.g., jewelry). As long as the US Treasury churns out trillions of dollars in bonds and the Fed keeps printing money--tripling its reserves over the recent past, we can't expect the rest of the world to rely on our currency. China and India have been building large gold reserves, and although this excerpt is several months old, it makes a valid general point: "The central banks of the following countries are showing increasing gold purchase this year: South Korea, The Philippines, Kazakhstan. Russia, Mexico, Turkey, Argentina, Ukraine, along with several others. The central banks are buying gold to reduce their reliance on the US dollar as a reserve asset. The purchases made by the central banks of developing countries have been increasing in recent years, as those nations diversify holdings, partly because of rising foreign-exchange reserves through export-led growth, but also, more recently, as a reaction to the sovereign-debt crises affecting traditional reserve currencies, like the U.S. dollar. The fact that so many central banks are increasing their gold holdings shows that they believe that considering its actual price, gold is a good investment, which will preserve its value."



Boudreaux/Perry, "The Myth of a Stagnant Middle Class" 
(WSJ): THUMBS UP

I believe I mentioned this in a prior post: my late OLL curriculum adviser, the math department chair, mentioned buying a minimally functional calculator for $150 a few years earlier; of course, even years ago you could get a solar-powered more functional one as a perk for a magazine subscription or renewal. I've bought maybe a half dozen laptops over the past 15 years and it seems each purchase has been about the same or lower in price (general trend lower price) with faster and/or multiple CPU's, more RAM, a bigger hard drive and more integrated functionality (e.g., a webcam). So even if my income has not gone up that much over the Bush/Obama era, I've been  able to buy more from my discretionary income. A related concept is behind this article: "Household spending on food, housing, utilities, etc. has fallen from 53% of disposable income in 1950 to 32% today."

Progressive economists like to talk about "stagnant wages" but we are really talking about apples and oranges. Before going further, the column is written by two of my favorite bloggers and free market economists, Don Boudreaux of Cafe Hayek and Mark Perry of Carpe Diem. Boudreaux has some interesting followup posts where he points out there is a price/quality trade-off, particularly in discussing health care. I'll give a minor example: I was near-sighted and required glasses or contact lens through my academic career. I had Lasik done while I was in California; my quality of life has improved in ways people with regular eyesight can't understand.  I've had contact lens pop out--or refuse to pop out at night; and it can be painful putting them onto irritated or tired eyes (never mind an eye infection). And, of course, you have to maintain your lens, buy expensive solution, etc.  Or you break or misplace your glasses. The major part of the operation takes seconds; and your life changes. I don't need to put on my glasses to check the time on my alarm clock. I don't have to worry about where I put my glasses when I go for a swim.

There are other things. For example, I have wide feet and have clothing sizes that are hard to find. Many stores have websites which will let me know if a desired item is in stock, saving me a trip.  Is everything like that? No. There are purchasing power implications to the the Federal Reserve's money printing.

Musical Interlude: My Favorite Groups

Steely Dan, "Rikki, Don't Lost That Number". One of the best crafted pop songs ever: the musical hook is irresistible, the arrangement  sparkling, the vocals spot on.

Miscellany: 1/26/13

Quote of the Day
Success seems to be largely a matter of hanging on 
after others have let go.
William Feather

Earlier One-Off Post

Earlier I explained my investigation of a great quote often attributed to de Tocqueville. I think the essay is more interesting than it might sound. Along the way I found an indignant post by a progressive political scientist whom really doesn't like the quote's purported characterization of public spending. What do you think are my views of somebody arguing the General Welfare clause is essentially a blank check for Democratic Congressional spending?

Obama's Recess Appointment Abuse Overruled: 
Thumbs UP!

Wow, a President who taught constitutional law in Chicago got 4 recess appointments (3 to the NLRB) invalidated because the Senate technically was in session. Obama has been pushing the envelope with executive discretion. I don't care whether Bush used recess appointments. With the Senate clearly in Dem control, this was an unnecessary confrontation. Will the WH appeal to the full court or SCOTUS? I wouldn't. I don't see the facts leading to a reversal, and a more definitive ruling would be counterproductive from his perspective.

Grandstanding Vs. the First Amendment

A lot of this is dated; many if not most of these politicians have or will retire. Of course, for my generation it was George Carlin or Andrew Dice Clay using words you heard all the time in high school gym classes. I found their bits boring and forgettable. I didn't buy their records or show tickets--why should I pay for something I can hear on the streets for free?  Just ignore bad language, and don't give them free publicity to hype their sales. The most successful music artists don't rely on bad language to sell records.

By the way, is anyone else annoyed by the ubiquitous "that's so gay" TV commercials? It's obvious I'm out of touch with young people because I had never heard or used the phrase. Talk about not sweating the small stuff; it's bad enough we have to deal with obnoxious, condescending, self-appointed language police in real life; they are now spending money or otherwise obtaining valuable ad time to lecture/nag people, most of whom have never used the phrase?  By the way, personally ridiculing people using the phrase as in the ads is unduly provocative and potentially dangerous.



Fracking: Some Basic Talking Points

It seems every other day I'm getting approached (unsolicited) by natural gas vendors. Natural gas prices have dropped to a mere fraction of what they were less than a decade ago-as Mark Perry of Carpe Diem frequently points out, we now have the lowest C02 emissions in a generation.



Musical Interlude: My Favorite Groups

The Cars, "Drive". This is the end of my Cars series. Next up: Steely Dan.

De Tocqueville, a Quote, and the "General Welfare"

Any regular blog reader knows that I love quotes: I start my signature miscellany format posts with one, and I maintain an abridged original collection of blog quotes in a webpage (see a link just below my profile on the right side of the blog).

I have, at times, come across misattributed quotes on occasion. I scrupulously check sources, within practical constraints of writing a blog and Internet-accessible resources. For example, my favorite attributed Bastiat quote is: "Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.", which is certainly consistent with Bastiat's other writings. I first came across the quote in a (Mark Perry) Carpe Diem post. Perry didn't link a source to a source in that post; I was baffled why I couldn't find that great quote on Bastiat webpages or websites.. I emailed Perry, and I think he referenced another blogger (Perry sometimes republishes the quote and in one of those posts he mentions a blogger while suggesting Bastiat wrote it while ill during the final days of his life.) I then emailed that blogger whom wrote, as I recall, that it is from a letter excerpt published in the foreword of a Bastiat volume he had purchased years earlier.

So I saw a great attributed de Tocqueville quote and found it and others at, e.g., BrainyQuote and here;

• The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.
• A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it. 
• A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.  Alexis de Tocqueville, also here, here, and as quoted by Maine's GOP governor

Of particular controversy is the last one; the same or a very  similar quotation, attributed in print since 1951 to the eighteenth century Scottish judge Alexander Fraser Tytler:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

The first paragraph is referred to as "Why Democracies Fail" (WDF) and the second the "Fatal Sequence". The latter  is now  attributed to a mid-1940's speech by a company executive Henning Prentis. WDF has not been traced to a known Tytler work; Collins mentioned other than the obscure 1951 Oklahoma newspaper reference (NOTE: goodreads attributes it to Elmer T. Peterson, whose op-ed appeared in the Daily Oklahoman).  There was an unanswered "who wrote this?" to WDF in the Gray Lady in 1959. In 1961 John Swearington attributes this version of WDF to de Tocqueville: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largess out of the public treasury." It really isn't until Reagan in a 1964 speech uses the quote, attributing it to Tytler, that we see it hit the mainstream.

I've seen a number of posts critical of the de Tocqueville attribution. Christopher Falle, who notes the high number of Internet search hits on 'Tocqueville' , 'Congress', 'bribe' (around 200K at my count),  intriguingly quotes Macauley's 1857 letter to Randall (Macauley is paraphrased in influential Russell Kirk's 1953  The Conservative Mind):

I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty, or civilisation, or both. In Europe, where the population is dense, the effect of such institutions would be almost instantaneous. What happened lately in France is an example. In 1848 a pure democracy was established there. During a short time there was reason to expect a general spoliation, a national bankruptcy, a new partition of the soil, a maximum of prices, a ruinous load of taxation laid on the rich for the purpose of supporting the poor in idleness. Such a system would, in twenty years, have made France as poor and barbarous as the France of the Carlovingians. Happily the danger was averted, and now there is a despotism, a silent tribune, an enslaved press. Liberty is gone: but civilisation has been saved. I have not the smallest doubt that, if we had a purely democratic government here, the effect would be the same. Either the poor would plunder the rich, and civilisation would perish; or order and property would be saved by a strong military government, and liberty would perish. 

Amy Fried, who teaches American political thought and has presented scholarly papers on de Tocqueville, is incensed by the quote, which she seems to be inconsistent with de Tocqueville's 2-volume masterpiece. Democracy in America. Luckily for the interested reader, the University of Virginia has the work online. She then goes on to mount a vigorous defense of the federal government's expansion through the general welfare clause. Not surprisingly, I completely disagree and will return to the topic. I have not reviewed Ms. Fried's work, but if her post is representative, her self-cited 2000  New England political science award for her work on de Tocqueville and $5 will buy a cup of joe at Starbucks. But before continuing, I want to note that de Tocqueville devoted much thought in the second volume focusing on the dangers of democracy. Consider this excerpt from Chapter 4, What Sort of Despotism Democratic Nations Have to Fear:

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?

Thus it every day renders the exercise of the free agency of man less useful and less frequent; it circumscribes the will within a narrower range and gradually robs a man of all the uses of himself. The principle of equality has prepared men for these things; it has predisposed men to endure them and often to look on them as benefits.

After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

In fact, morally hazardous progressive government undermines the very foundation of our independence from Britain.

But the reader might wonder, what inspired this essay? A relative seems to forward a copy of every email hoax out there. I have discussed websites debunking urban legends (e.g., Snopes). One I received this week is the McCain/Obama version of  WDF email attributing "Tyler" (vs."Tytler") debunked by Snopes here. Whereas I'm sympathetic with the underlying philosophic views, I would never have posted the item in question  (that's why I discussed checking on the Bastiat quote). I thought the quote was  from de Tocqueville and researched  the topic. But whether the quote came from some unidentified work by Elmer T. Peterson, Macauley, Tytler or de Tocqueville or was written by an anonymous conservative author last century, it's still a great quote. [I've found two attributions in past posts I've corrected: here and here.]

Now let me return to the progressive delusion about using the 'general welfare' clause as a constitutional loophole.  According to the dictionary welfare refers to 'health, happiness, and good fortune; well-being; prosperity". The Constitution doesn't say 'welfare', but 'general welfare'. The states also retain powers to promote health, safety, and welfare of the community. In theory, the states retain powers (not violating individual rights). Let me give a small example to make the point. State/local officials should be empowered to contain a contagious health condition. The federal government retains control over immigration. Hence, the federal government has a responsibility to ensure immigrants do not pose a relevant health risk.

I see the federal role more as facilitating travel, residency and commerce across state and national borders. It should be reinforcing free markets among states,  insurance pooling across state lines. eliminating barriers to entry and exit (e.g., local residency requirements).

The federal government is one of enumerated and limited powers. We have all sorts of checks and balances to guard against majoritarian abuses: multiple chambers of Congress; veto override thresholds, Senate minority (filibuster) protections, judicial reviews, etc. I wrote a rant against progressive tax rates earlier this week, explicitly noting that the double standard in taxation, a violation of equal protection. Madison in Federalist #10 warned against volatile/unsteady factional government:

Complaints are everywhere heard from our most considerate and virtuous citizens, equally the friends of public and private faith, and of public and personal liberty, that our governments are too unstable, that the public good is disregarded in the conflicts of rival parties, and that measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority... the most common and durable source of factions has been the various and unequal distribution of property... Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths

Obama has deliberately been playing with fire with his divisive, morally hazardous policies. We have such weighty, convoluted, unknowable laws that liberty is all but eviscerated; we have use of discretion (vs. rules advocated by monetarists) by the Fed's monetary policy, Barack Obama's use of discretion in executive orders (to bypass political opposition and compromise) and military operations (Libya) which intrinsically violate the rule of law.

For a slightly different view of general welfare, Reagan2020, sponsored by PatriotPost, presents what they call the "quintessential conservative" New Federalist platform, they present their view here. Faithful reader know I've coined the term "Free Federalist" to characterize my political views.  (There are some nuanced differences which I may elaborate in future posts: e.g., I winced in reading the discussions of trade embargoes and infrastructure construction; I prefer discussions of more principled free trade and privatization efforts. But they are closer to my views than the Dems or the GOP.)

Miscellany: 1/25/13

Quote of the Day
The key to successful leadership today is influence, not authority.
Kenneth Blanchard

End Civil Forfeiture NOW: A Case Win/Update

I know several weeks back I posted a video (second below) from the Institute for Justice, about the Caswells, a Massachusetts retirement-age motel-owner couple, whom found their business seized because people violated drug laws on their property without their knowledge or consent. I'll post a case update after the second video below:





In a major victory against government predators:

A federal court in Massachusetts dismissed a civil forfeiture action against the Motel Caswell. Magistrate Judge Judith G. Dein of the U.S. District Court for the District of Massachusetts concluded, based on a week-long bench trial in November 2012, that the motel was not subject to forfeiture under federal law and that its owners were wholly innocent of any wrongdoing.The government had sought to take the Motel Caswell from the Caswell family under the theory that the motel allegedly facilitated drug crimes.  But the court found that Mr. Caswell “did not know the guests involved in the drug crimes, did not know of their anticipated criminal behavior at the time they registered as guests, and did not know of the drug crimes while they were occurring.”

Factoids of the Day:
The Obama Recovery

According to Hoisington Investment (my edits):

• The one complete decade of the 21st century (2000 through 2009) ranks as the 21st slowest growth in real GDP of the entire 22 decades since 1790
• The Highest Marginal Tax Rates in 27 Years:

• A 4.6% increase in the top marginal tax rate to 39.6%;

• A phase-out of itemized deductions (mortgage interest expense, various state taxes - income, property and sales - and charitable gifts) for high-earners;

• A phase-out and elimination of personal exemptions for high-earners;

• An increase in the tax rate to 20% for capital gains and dividends for high earners;

• A 3.8% surtax on capital gains, dividends and other investment-type incomes for high-earners;

• A 0.9% surtax added to the Medicare tax for high-earners;

• The current tax hike is on par with the one in 1937, which imposed the first FICA tax, boosted the marginal tax rate from 56% to 62% and imposed an excess corporate profits tax.  The economy, which had made some recovery from 1934-36, fell back sharply in 1937 and 1938.  While other factors, such as retaliatory currency devaluations and monetary policy mistakes, were also occurring, the 1937 tax increase served to prolong the Great Depression.  The marginal tax rates are now above 50% in the high tax states such as California, Illinois, New York and New Jersey

• Consistent with the academic research, we could not find historical precedent for the proposition that prolonged deficit spending achieved prosperity.  Numerous examples of great empires like the Mesopotamian, Roman and the Bourbons of France collapsed under the weight of high government debt. 
• As high debt levels diminish economic performance, interest rates remain low for protracted periods of time.  Ultimately, however, the marketplace may lose confidence in the government’s ability to sustain the debt levels, and a country will reach Reinhardt and Rogoff’s “bang point” or Cochrane’s “condition”, causing interest rates to rise.  
• Median household income is at its lowest level since 1995
• The percentage of people aged 25-34 living with their parents is at an all-time high
• One out of every 6.5 Americans receives food stamps
• The employment-to-population ratio stands near its lowest levels in three decades.

Political Correctness of Tax Complaints
in the People's Republic of California

I wasn't aware of  superstar pro golfer Phil Mickelson''s apology over a tax comment kerfuffle:

Mickelson said after Sunday's PGA event in La Quinta he might have to take "drastic measures" that could include leaving the state because of the increased financial burden he has incurred due to recent changes in California's tax laws. [Apparently the golfer's comments caused a firestorm, and he subsequently apologized.] "My apology is for talking about it publicly...I think it was insensitive to talk about it publicly to those people who are not able to find a job, that are struggling paycheck to paycheck."

You know, Phil, you are not responsible for California's Democrats' corrupt union deals resulting in cushy up to 6-figure annual  retirement pensions as early as their 50's and mismanagement  of the state. Unlike state income tax-free Texas and Florida, California did not gain any Congressional seats in the last census, and many businesses have moved or are moving headquarters to more business-friendly states like Texas.

It's hypocritical that politically liberal/progressive celebrities like investor Warren Buffett are free to express their opinions, so long as they support discriminatory legalized plunder. It reminds me of the famous anecdote  about the greatest baseball player/slugger ever, Babe Ruth, being asked about whether it was right for Ruth to make more than the President. (Ruth responded that he had had a better year.) Well, of course, Phil Mickelson has had a far better last 4 years than Obama....(I realize that's not saying much...)

I realize that some people might be jealous of an athlete making a good living playing a game most people have to pay (greens fees) to play. But Mickelson, a class act, draws fans to tournaments and television, which translates to good money.  He's not an economics-illiterate President, governor or legislator taxing, spending and interfering with the free markets with burdensome, meddlesome policies and sucking up resources from the real economy to fund grossly ineffective, inefficient, incompetent government.

Phil, go east, young man, to Texas.  Grab a chicken-fried steak, homemade mashed potatoes, all slathered with  creamy gravy, made-from-scratch, warm-from-the-oven rolls, and a thick slice of pecan pie, washing it all down with sweet tea or a long neck, while  listening to some great Texas country music. (I just described a cross between a Texas diner and Goode Company BBQ--maybe not chicken-fried steak, but great brisket, sausage or chicken. I miss Houston!)

Nice friendly folks, not judgmental elitist snobs whom didn't have to nail a 30-foot putt with a tournament on the line to get the green in your pocket and whose idea of golf is limited to what Obama did during the BP oil spill crisis.

Isn't It Time We Stop Meddling 
In the Internal Affairs of Other Countries?

Is Obama a "jerk" or an "idiot"? People are entitled to their opinions, hut I don't think he's an idiot--he's merely incompetent, totally ignorant of the law of unintended consequences. His Egyptian policy is an incoherent,  ill-advised, meddlesome, convoluted, seat-of-the-pants mess. Of course, Obama shares some responsibility for the status quo, including insufficient protections for basic liberties in a perversely factional form of democracy.

Courtesy of Twitchy

John Kerry Was Against Unauthorized Intervention
Before He Was For It....

Sen. Rand Paul continues to impress. John Kerry, of course, is not going to undermine Obama's Middle East policy. Kerry is making an unsustainable argument: does the US intervene in all cases involving human rights or just politically convenient and arbitrary ones? Where in the US Constitution is Obama allowed to bomb the territories of countries like Libya, Yemen and Pakistan which have not attacked us?

I understand the President felt that foreign civilians were in imminent danger, but this did not involve American interests and as such I consider his actions unconstitutional. In fact, John Kerry is misrepresenting the facts: the Libya action was not simply a tactical response that Kerry is describing: Congress declared war in a matter of hours after Pearl Harbor. Whether or not Kerry personally approved of US intervention in Grenada, Yugoslavia, or Panama  is beside the point; they certainly were not defensive military actions, and he was one of 535: Obama could have and should have referred the matter to Congress.. I suspect that the Congress would have ultimately gone along with reluctant neo-con support; although I, the Pauls, a few Tea Partiers and possibly some antiwar Dems would have opposed the action. The fact that Obama refused to cooperate was a gift to neo-con critics: one of the Bush war rationalizations was the spread of democracy, and there's no way they want to appear soft on terrorism.



Musical Interlude: My Favorite Groups

The Cars, "Magic"

Miscellany: 1/24/13

Quote of the Day
Nearly all men can stand adversity, 
but if you want to test a man's character, 
give him power.
Abraham Lincoln

Want To Generate Your Own Fake US EPA Identity?

Lisa "Richard Windsor" Jackson
courtesy of EPA Fake Identity Creator

Not to get picky, but I think the email address for Ralph Vincent should be Vincent.Ralph@epa.gov.... I envision Ralph with a prominent red tape dispenser at his desk with the standard issue "An Inconvenient Truth" screensaver on his PC Monitor...

It appears the Justice Department's version of redaction and transparency is to produce 2100 of 3000 emails, none of which show Richard Windsor's comments, just Internet-copied content.

PS I think I remember Ralph Vincent from my 1993 Oracle DBA subcontractor days at the Chicago regional EPA labs. I believe I mentioned that the network team physically doing backups of the database never tested their backup tests but relied on software feedback verifying the backup. I repeatedly asked the group to do test restores, to no avail. An EPA lab software vendor came in to do an upgrade and ran into technical problems; he asked me to revert to the pre-install database, which is when the network group discovered their backup copies were unusable. Expletive deleted; welcome to my world...No doubt Ralph advanced in his EPA career (in accordance with the Peter Principle) to the position of backing up Richard Windsor's email...

Factoid of the Day:
Who Owns the Most US Debt?
Us, the Chinese, the Crony Bankers

From CNS:

• The Fed's holdings of U.S. government debt have increased by 257 percent since President Barack Obama was first inaugurated on Jan. 20, 2009, and the Fed is currently the single largest holder of U.S. government debt: $1,696,691,000,000 as of the close of business on Wednesda. The Fed has purchased during Obama's presidency 23 percent of all the new publicly held [vs. government-held, e.g., entitlement and pension reserves] debt the Treasury has issued during that time.
• As of the end of November, according to the U.S. Treasury, entities in Mainland China owned about $1,170,100,000,000 in U.S. government debt, making China the largest foreign holder of U.S. government debt. 

Don Boudreaux of Cafe Hayek has written several posts on the fiction "we owe it to ourselves" and multiple op-ed's in his Pittsburgh Trib column (e.g., here). Paul Krugman got caught pooh-pooing the notion that the national debt is a serious problem.

We have seen the Japanese whom have basically have financed their own debt. This comes from the depth of the global recession in 2009, but it makes the general point:

From 1985 to the end of 1989, the chart for the Nikkei 225 really went parabolic, trading from around 10,000 to an unbelievable 38,915.87 in just a few short years. 20 years later, the Nikkei 225 is currently trading at 8,755.26. This is around 22% of what the index was trading at in the late 1980s.

The point I'm trying to make here is opportunity costs: instead of yen being invested in the real economy, they were vested in wild Keynesian spending binges (e.g., high speed rail). The "new" Japanese PM, Shinzo Abe is resorting to the fiat currency printing presses by jawboning the BOJ; the idea is to devalue the yen, helping Japanese exports. (The US has no moral authority to complain since the Fed fired the opening shots of the currency wars.) I will simply point out there is a real cost to crony bank manipulations--holders of debt and savers are affected, not to mention imported resources.

Don's argument is more of a reductio ad absurdum, pretty much the broken window fallacy: if government spending is a free lunch, why stop at any level? Why not simply match private sector income, for instance? There is a cost--on higher debt service costs to future generations.They have to service the debt, and that can crowd out funding for operational programs.

The Feds: Changing the Rules in the Middle of the Game
Time for Bottom-Up Government



Tomato Protectionism

Whenever you hear allegations of dumping, you will find a protectionist/mercantilist behind it. You name it--tires, steel, tomatoes. Bottom line: imports increase supplies of a good, which generally translates into lower prices--good for the consumer, not for domestic producers whom  lose profit/margin. The producers don't want to admit they're worried about profits at the expense of consumers. The best defense is a good offense; and so they attack free trade by arguing foreigners aren't playing by the rules.

One of the biggest canards is dumping, i.e., the trader is selling his goods below cost  to capture a foreign market.

Flash forward (HT Carpe Diem). The US  in the past negotiated a price floor agreement on tomatoes in an agreement with Mexico, which exempts Mexico from adverse trade sanctions. Florida growers are upset that consumers prefer the better-tasting Mexican produce, increasing Mexican market share. The crony growers have the sympathetic ear of the Obama Administration; they want the agreement to be set aside and for the Feds to slap a punitive tariff on Mexican produce (which, of course, would spark a trade war on American food exports to Mexico).

Let me make myself clear: I do think we should do away with price floors. I have no problem with Mexican growers being able to offer their produce for as low a price as they wish. It makes no business sense to sell at a loss on a sustained basis. But if Florida grower ripening techniques yield a blander tomato, they should market a better tasting tomato. Higher tariffs? HELL, NO! Remember my favorite Bastiat quote (acting in the best interests of the consumer).

Musical Interlude: My Favorite Group

The Cars, "You Might Think"