Diogenes' Travels

Tetanus

2011-03-27T11:37:00.000-07:00

Ashley contracted tetanus. Tetanus in dogs is so rare that they are not immunized for it, but once contracted, it is often fatal without treatment. Luckly, in this modern era of antibiotics, antitoxins, and advanced medical care, if caught early enough, tetanus is survivable, and complete recovery is common. It is easy to forget that only sixty years ago, tetanus was a death sentence for most people or animals that contracted it.

Ashley's saga started four weeks ago, when she got up on Sunday with a noticable limp. She visited the vet on Monday, but they were unable to determine the cause of the limp, other than a soreness in her toe. She left with a prescription for a pain-killer/anti-inflammatory.

On Thursday she was no better, so she went back to vet, where X-rays of her paw showed no broken bones, and other than trimming her toenails to releive pressure on that foot, she went back home with a tentative diagnosis of a jammed or sprained toe.

By Saturday she was feeling ill, and by Sunday she wasn't eating at all. Monday night she again returned to the vet with lethargy and dehydration, having lost 10% of her weight. This time she stayed there, hospitalized for IV fluids, and so that the source of her ailment could be determined.

On Wednesday, a week and a half after she first started limping, her vets diagnoised tetanus. It was actually a very good call on their part, because tetanus is so rare in dogs that many vets never see a case, and the classic symptoms of rigidity are often the first, and only, indication of the disease. In Ashley's case, her vets diagnoised tetanus within a day of her presenting the symptoms.

Her treatment consisted of antibiotics to fight the tetanus bacteria, and antitoxin to counter the tetanus toxin produced by the bacteria. While the antitoxin helps neutralize toxin in the blood stream, it can do nothing about the toxin already bound to nerve receptors, where it produces the muscle rigidity that gives tetanus its name. Intensive support is all that can be done for muscle spasms that affect critical muscles. For Ashley, this support necessitated a feeding tube, since she was unable to take food or water by mouth. After five days of hospitalization, I would estimate that Ashley was stabilized well into Group II symptoms, and possibly starting Group III symptoms, as described on the Mar Vista Animal Medical Center description of tetanus symptoms:

Group I: The dog was able to walk but also demonstrated constricted pupils, risus sardonicus, erect ears, inability to open its jaws, sunken eyes, and/or sensitivity to light.

Group II: All of the above plus erect tail, sawhorse stance, difficulty swallowing, walking stiffly with difficulty.

Group III: All of the above plus muscle tremors or spasms, inability to walk, and seizures.

Group IV: All of the above plus any of the following: heart rate below 60 beats per minute, heart rate above 140 beats per minute, high blood pressure, low blood pressure or respiratory arrest.

At the end of her first week of hospitalization, her vets recommended amputation of the toe that led off this experience, on the basis of new X-rays that showed changes since the previous X-rays, indicative of a continuing infection. By this time Ashley was responding well to treatment, and while her prognosis was still "guarded", it seemed to me that as long as she wasn't getting worse, then she was going to get better.

Finally, that Friday, after ten days of hospitalization, almost three weeks after her initial visit for her toe, Ashley was discharged to home care, with eight different medications, an hour's worth of home care instructions, and the necessity for feeding her a dog food "smoothy" via tube about every six hours. Her feet were wrapped and taped to prevent pressure sores from the muscle contractions, which made it almost impossible for her to get traction.

(The diapers, by the way, were a bad idea, because they contributed to a type of vulvar infection that only cleared up after Ashley's vet cleaned her up and recommended against their use.)

The first week of care was pretty brutal, similar to one experiences with a new born, with interrupted sleep, and frequent cleanings and feedings. Thankfully, her human mother returned from spring break to assist with her care, which also contributed greatly to improving Ashley's attitude. Ashley's progress has been steady, as she has regained mobility in her facial muscles, was able to open her mouth, and began to walk again. Now, at the start of her fifth week, she is walking even better, and although she still has the "turtle walk", she is showing her old levels of enthusiasm and energy. Hopefully she will soon be able to resume eating by mouth.

(Ashley's change of outfit courtesy of the nursing staff at PCVH.)

I'd like to finish by thanking Ashley's many great doctors and the nurses and staff at Pet Care Veterinary Hospital in Santa Rosa, who most assuredly saved her life, among them Doctor Freya Kruger, Doctor Nicholas Davainis, and Doctor Benita von Dehn. I know there are many others I missed, and all I can say is our thanks and appreciation go out to you as well.

A Night In the Bridgeport Jail

2010-03-04T15:47:00.001-08:00

How did it get to this point?

In May, 2009, my fishing buddy and I attempted the great Eastern Basin Fishing Trip, in which we set out to fish the West Walker from a base of operations in Walker, Ca. Staying in a motel to avoid the anticipated cool weather, we thought to fish the river early, before it warmed up and dried up. Unfortunately, a combination of early warming and late rains resulted in the West Walker becoming a rushing, opaque, chocolate brown, unfishable, torrent. So too for the East Walker below Bridgeport Reservoir, where the river’s height meant the prospective angler stepped from entangling brush directly into a chest deep flood. River fishing was definitely out.

Scouting for fishable streams took us up the Sonora Pass to attempt Leavitt Creek, back down along the Little Walker, and then south along 395 to visit Summers Creek, Green Creek, and Virginia Creek to its source at Virginia Lakes. The high Sierras around Bridgeport host some of the most beautiful alpine territory in the world, and the lack of fishable water was tempered by the almost reverential feelings engendered by the scenery.

The second day brought us back up Green Creek Rd, where in a spectacular lapse of judgment, acting out of a desire to close with the creek, we decided to drive down a small spur road just below Dynamo Pond. We knew from the previous day that driving back up the spur would be difficult, if not impossible, but deduced from the map that the spur was a loop that would return us to the main road about a mile or so further on. What we hadn’t counted on was that out of sight, the spur was littered with boulders that impeded the progress of any but high clearance four wheel drive vehicles.

Did I mention that we were in a 2003 Honda Civic, with front wheel drive and about five inches of ground clearance? It mattered, very much so. Unable to drive over the boulders, we attempted to drive back up the spur, where the soft sand and embedded rocks repulsed our ascent. We tried flotsam under the tires, and digging out the most objectionable rocks, but ultimately came to rest with the front wheels fully dug in and the rear bumper wedged against a rock. We could neither advance, not retreat. We were well and truly stuck.

While my buddy stayed with the car, I walked about seven miles back towards Bridgeport, and hitched the last mile into town, arriving at the Sheriff’s office about nine at night, well after the highway patrol office had closed. Bridgeport’s only tow truck operator was in Carson City for the night, and the tow company in Lee Vining had closed hours earlier. Since the town was booked solid for Memorial Day weekend, the Mono County Sheriff’s deputies kindly put us up for the night, driving me back up to the car to pick up my fishing buddy, and letting us sleep in the Prisoner Interview rooms on a couple of pads borrowed from the jail.

About eight the next morning the young tow truck driver from Lee Vining tow arrived at the jail in an ancient but serviceable 4x4 Dodge Power Wagon, and cheerfully drove us back to our abandoned car. Using the lowest geared winch that I have ever encountered, the tow operator slowly hauled us back up to the main road, and sent us on our way. We were mobile once again.

Chagrined by our misadventure, and unsure of any damage we may have done to the car, we decided to forego fishing, and return home while the car was still drivable. We crossed over Sonora Pass, down through Kennedy Meadows along the Stanislaus, and turned north on Highway 49 to San Andreas, where Highway 12 is born to head west towards Sonoma.

It was well we left early, because as night fell around Fairfield and we turned on the Civic’s headlights, the charging light illuminated as well. Apparently digging into the soft road had blown enough dirt into the alternator to kill it, and we limped into town on the battery, with headlights failing and warning lights popping up, to finally die about five miles from home. Our second tow of the day finally brought us home about midnight, where we put the battery on a charger, and called it a day.

The Civic got a new alternator the next day, and eventually, new motor mounts, to repair the damage caused by out off road excursion. And I reluctantly accepted that a Civic isn’t the best choice for off road fishing, and began the search for a four wheel drive to take us to the places fish reside, like the End of the World, the Hole in the Ground, and the Gates of the Antipodes.

Deer Creek

2009-09-21T18:15:00.000-07:00

Brent caught thirty-eight fish on Saturday - 18 in the morning, and another 20 that afternoon. I think I caught eight, maybe, with another half-dozen or so on-and-offs - hooked fish that I didn't get to land. While his largest was only 8 or 9 inches, my smallest was probably a two inch fry that my fly gaffed for all practical purposes, for which I suffer sincere regrets.

While Deer Creek is apparently heavily stocked (according to "Tony", the affable resident of the campground who had been there for about a week, and who showed us some nice 16" rainbows on ice), everything we caught was strictly naitive. They were in some out of the way locations. I also learned the utility of the Elk Hair Caddis, the fly on which Brent took most of his fish, and which sadly, I didn't try until late in the afternoon.

On the way out, we swung by Hat Creek, where some people were sitting in lawn chairs and fishing the irrigation canal! What a difference.

Stanislaus

2009-08-10T22:41:00.000-07:00

Thur, drive to Pigeon Flat, by Dardanelles. Fished Fri, Sat, drive home Sun with detour to look at the Clavey. Fri, AM, not so well in upper river above campground. Can't remember count or type. I think the first one I caught was a medium sized brown. Not exactly sure.

Fri PM climb up and into the slot, and did great. Hooked and lost a monster (20" or so?), and took three more for dinner. One caught and lost, taking my nymph. Re-caught, and fought into shallows, and got back my first nymph. Brent and Alan both caught 4. 11 fish for dinner. All rainbows.

Sat AM took Alan and Brent back to same spot. Brent kept catching large fish, but loosing them to broken tippet. Using 7x. Don't remember my count, (at least three decent fish) but wasn't exceptionally productive. Seem to remember loosing one fly per fish caught. Hooked nymph deep on tree. Lost black nymph recovered from previous night upstream (taken or snagged?). Fell through hole and hurt my leg. Sat PM fished lower river, and took three, one decent, two small right as we were leaving, while Brent caught and lost his monster (another broken tippet). Lost my entire rig (indicator and nymph) up a tree. Somewhere or another on the trip I took a nice medium sized brown. Can't remember exactly where.

Sun packed and left early enough to look at Clavey, have lunch at campe ground near Clavey. Phenomenal geology in the Clavy, visible from the bridges, looking down into the water. Alan was great a cook entire for the enire trip. I washed dishes.

Carson River

2009-08-10T22:17:00.000-07:00

Over Ebbetts pass at night. Fri. night slept at the Carson / High Trail trailhead off Wolf Creek. Coyotes howling in the morning. Most unusal. Bright moonlight washes out the stars. Cold. Sat 10 til 2, first on the East Carson, then Wolf Creek. One big (16"-18"?), maybe cutthroat, on a Prince nymph in a deep bend of the Carson, who took the nymph and indicator (pigtailed), and nothing else in the Carson. One baby rainbow and a medium brown (maybe 7" or 8") in Wolf Creek on a winged ant. Late lunch in Markleeville, and back to Wolf Creek for evening fishing. Maybe a few small ones on a parachute ant again (can't remember exact number, maybe 4), and a skinned knee. Sat night at the Crystal Springs campground off Hwy 88 by Woodfords. Cold again, bright moonlight. Nice campground.

Sun drove up to look at Blue Lakes and the West Carson through Hope Valley. Blue Lakes are artificial (dams), but very pretty, if crowded. Need 4WD to continue up past upper lake campground. Started on West Carson just downstream on the Hwy 89 junction at just after noon, fishing up. Fished til 6:30. First couple hours caught three nymphing in large pools (Indicator with prince nymph). A decent (8"-9") brown, and two rainbows. Too many people. Restarted at large pool with waterfall, and saw surface feeding. Switched to drys. Started with #12 mosquito - took two - one small, one large. #12 Dark cahill, two more. #12 BWO, none. #18 Parachute Adams with indicator, three more. Elk hair caddis, jackpot - 4 more. Stopped to check on Brent. 11 total. 2 large (handle length, 11" or so), 5 medium (6"-8"), 4 babys (3"-5"). One brown baby, rest rainbows. Lots of missed strikes, lots of refusals. Mostly one per hole. Kept moving. Fishing the tail water, slots, eddys, etc. All but one on the drift. Beautiful water, great character, heavily fished. Trails were like a highway. Camera battery dead. Drove home on Hwy 88 to 12.

Tractor Racing

2009-06-03T21:52:00.000-07:00

Its a saying of mine that a developer has to know their use cases, and I give an example that you don't plow fields with a race car, and you don't race a tractor in the Indy 500. Well, its things like this that make me wonder ... (Click on the picture to see a larger version, and look at the grill for the manufacturer.)

Canoe Rowing

2009-05-09T18:46:00.000-07:00

When I started college at the age of 17, I barely weighed 110 pounds, a prime candidate for a coxswain. Not knowing any better, I joined the crew, and coxed eight oared shells for two years until I grew out of competitive weight. The experience taught me a lot: about responsibility, about teamwork, swimming (a safety requirement), and a love of rowing that has persisted to this day. I tried joining a rowing center, but it was always too far, and didn't allow me to to take it with me. I always wanted my own boat, but could never justify the expense. Until I had a better idea.

A number of years ago I bought a canoe to satisfy my desire to be on the water. I chose a 16-1/2' Bell Northstar in a 46 pound Kevlar and carbon fiber layup Bell calls blackgold. Light enough to be handled by one person, fast and maneuverable, the Northstar is one of the premier canoes currently made by one of the best canoe manufacturers around. The idea to set up the Northstar for rowing came to me while surfing the Piantedosi website. Piantedosi is primarily known for making drop-in rowing rigs for kit built shells, like the Annapolis Wherry or Oxford Shell from Chesapeake Light Craft. As the Piantedosi site expains, Row Wings can be used in a canoe almost as easily as a shell, with the advantage that one can take passengers in a canoe. I added a search for Piantedosi to my e-Bay favorites, and sat back to wait.

Eventually I found a Row Wing, with oars, and bought them all for about half the price of new. Now I had to figure out how to mount the Wing to the canoe. I wanted a configuration that would allow me to easily install and remove the Wing so that I could continue to use the canoe for paddling trips, and eventually set it up for sailing. My final decision was to epoxy a pair of 7' T-tracks to the bottom of the canoe. The long mating surface would spread the load of any addition, and allow flexible positioning along the length of the canoe.

The aluminium feet that came with the Row Wing didn't fit my canoe, so the next step was to fabricate a pair of supports that would position the Wing at the right height. Needing some practice with laminating, I decided to laminate them from oak veneers. I used a Woodslicer blade on my 14" bandsaw to slice 3/4"x3-1/2" oak flooring into 1/8" thin veneers, and cut a mold from 4"x12" header stock. My first attempt to laminate the support showed 1/8" to be too thick to take the curve without breaking, so I cut more veneer at a little over 1/16" thick and tried again. It is important that the forms fit snugly to the final shape to prevent gaps from opening between the veneers. It is also important to wrap the piece in wax paper or plastic wrap to prevent epoxying the piece permanently into the form. The final products were trimmed, drilled, and epoxy coated to make the final supports. The supports are attached to the T-track with stainless steel bolts and knobs to allow repositioning as needed. I had to "invert" the kneeling thwart to project above the rail instead of drop below it, in order to gain enough clearance for my legs and feet.

"Sea trials" were held on the Russian River above Steelhead Beach. The 9' oars give amazing leverage and allow one oarsman to easily navigate the current, even with passengers. Taking my daughter along for ballast and possible first aid (she is EMT qualified), we rowed upstream until we were blocked by a weir just downstream of Wohler Bridge. The only difficulties encountered where the necessity to watch out for streamside vegetation (because of the 18' span of the canoe, with oars), and the shallowness of the river. In a number of places the water was barely deep enough to float the canoe, but fast enough to make progress difficult as the oars kept striking bottom without catching water. I finally came on the solution of getting out, and walking the canoe upstream through these sections. After our excursion I found that the lower edges of the oar blades had been badly chewed by the rocks.

River access is as important for me as open water rowing, so I needed to repair the oars in manner that would protect them from future damage. I sanded the edges smooth, and decided to laminate 3" wide Kevlar tape along the blade edges to give them additional strength and protect from them from nicks and splits. Working with Kevlar is similar to working with fiberglass fabric, except that it can't be cut with scissors or a hot knife. Rough cuts can be made with sharp and close fitting tin-snips, but final trimming is easiest done with a sharp razor after it has been impregnated with epoxy and has hardened. Sanding (after lamination) will only fray the edges of the fabric. I'm considering painting the blades to disguise the Kevlar additions, with gloss black lowers and yellow-gold uppers.

The next improvement is the addition of rear-view mirrors on 12" stalks (motorcycle type) so that I can see where I'm going when I'm by myself. After the success of this modification I'm working on the design for my next: a lateen sailing rig for the canoe, complete with leeboards. I'll be sure to let you know how that one goes.

Tortured Logic

2009-05-02T10:48:00.000-07:00

Democrats are on the hunt. A witch hunt to be precise. President Obama, the Democrats in Congress, and the far left punditocracy, have stated unequivocally that the Bush administration tortured detainees:

At his primetime news conference at the White House Wednesday night, Obama repeated that “waterboarding violates our ideals and our values. I do believe that it is torture. I don't think that's just my opinion; that's the opinion of many who've examined the topic. And that's why I put an end to these practices.”

Obama Says Bush Tortured Detainees - Fred Lucas, CNSNews, and Obama Says Waterboarding Detainees Was Torture - Miami Herald

As Congressional Democrats and the far left agitate for a criminal investigation of the lawyers whose legal opinions supported "enhanced interrogation techniques", President Obama punts the question, and by referring the question to his subordinate Attorney General, gives his tacit approval for yet another partisan witch hunt with criminal consequences.

Judge Jay Bybee, who as head of the Office of Legal Council signed the legal opinions, and Professor John Yoo, who contributed to the legal opinions, have been subject to an intense campaign among leftist media, Democrat politicians, and left wing zealots, to impeach the former and dismiss the later. Obama's tacit invitation has encouraged Spanish inquisitor Judge Baltasar Garzón to proffer war crimes charges against them. For writing legal opinions!

Public reaction has been polarized, and contradictory. USA Today reports most want inquiry into anti-terror tactics (62% in favor, with 38% calling for a criminal investigation, and 24% for an independent panel), while a new Rasmussen poll reports the opposite, with only 28% calling for "further investigating of how the Bush administration treated terrorism suspects", and 58% opposed (58% Say Release of CIA Memos Endangers National Security).

A cursory glance might convince some that investigations are warranted, or at the least, innocuous. But a deeper view reveals that investigations of the type proposed are nothing less that the ex post facto criminalization of policy disagreements.

To prosecute Bybee, Yoo, or others, for criminal acts, they must have known that the techniques they were proposing were criminal, and that the opinions they proffered were intended to subvert the law. But the fact is that no clear definitions of torture existed. The UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment defines torture as:

any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions.

The International Red Cross summarizes it as "existence of a specific purpose plus intentional infliction of severe suffering or pain". US law is similar:

"torture" means an act committed by a person acting under the color of law specifically intended to inflict severe physical or mental pain or suffering (other than pain or suffering incidental to lawful sanctions) upon another person within his custody or physical control

but at least somewhat clarifies things by providing a definition of:

“severe mental pain or suffering” means the prolonged mental harm caused by or resulting from—
(A) the intentional infliction or threatened infliction of severe physical pain or suffering
(B) the administration or application, or threatened administration or application, of mind-altering substances or other procedures calculated to disrupt profoundly the senses or the personality;
(C) the threat of imminent death; or
(D) the threat that another person will imminently be subjected to death, severe physical pain or suffering, or the administration or application of mind-altering substances or other procedures calculated to disrupt profoundly the senses or personality;

Well, maybe not so clear, since we still return to the undefined meaning of severe. What is "severe" to one person may not be "severe" to another.

My purpose is not to advocate for one definition of severe versus another, one definition of torture versus another, nor to argue that some techniques are appropriate and justified, or others illegal and prosecutable. It is to show that significant uncertainly existed in the legal world and in the minds of the people who needed to know just what was legal and what was not. "Torture" is in many people's minds, like pornography was to Justice Potter Stewart: "hard to define", but "I know it when I see it." The problem with that, of course, is that different people see differently.

Even allowing that different people interpret the meaning of "torture" differently, might not prosecution still be appropriate, on the grounds that it is for the courts are to decide what is criminal and what is not? Our system often uses the courts to decide the fine points of the law. But the law must be clear, and the actions of the Congress show unequivocally that Congress knew the law was unclear. In 2008 the Congress passed a law limiting the CIA to the interrogation tactics outlined in a U.S. Army Field Manual. That such a law was deemed necessary proves that Congress knew that the law prior to 2008 was insufficient to prevent the techniques in use before! (See also Congress' Phony War on Torture.)

Clifford May, writing in National Review Online, (Torture TV) makes the critical point that the entire purpose of the advice given by Bybee and Yoo was not to justify torture, but to come up with a definition of torture detailed enough to make sure that those people conducting the interrogations would not slip over the line and commit torture. Their purpose was to prevent torture. This good faith effort to avoid torturing is also evident in the U.S. Meeting With U.N. Committee Against Torture.

People can in good faith disagree with what the definition of torture should have been. Bybee and Yoo can be faulted for some of their legal reasoning, or for drawing the line too wide and encompassing acts that some people find shocks their conscience. But no one can in good faith declare that the line was there to be seen by everyone, and the Bybee and Yoo deliberately and knowingly stepped over it. Exacerbating the evidence or the lack of good faith is that many of today's most vociferous critics were silent at a time when it was politically convenient to do so. We have a word for such people: hypocrites.

"Cumulative" Torture?

How much agreement is there that the "enhanced interrogation techniques" constituted torture? Another official, widely quoted on the left, convinced that detainees were tortured, is retired judge Susan J. Crawford, convening authority of military commissions:

Crawford, 61, said the combination of the interrogation techniques, their duration and the impact on Qahtani's health led to her conclusion. "The techniques they used were all authorized, but the manner in which they applied them was overly aggressive and too persistent. . . . You think of torture, you think of some horrendous physical act done to an individual. This was not any one particular act; this was just a combination of things that had a medical impact on him, that hurt his health. It was abusive and uncalled for. And coercive. Clearly coercive. It was that medical impact that pushed me over the edge" to call it torture, she said.

Detainee Tortured, Says U.S. Official - Bob Woodward, Washington Post

What does Ms. Crawford think interrogation is, if it is not coercive? That is the entire purpose of enhanced interrogation! To make people give up information that they are not otherwise inclined to provide.

More puzzling to me is Ms. Crawford's standard that acts not otherwise considered to be torture, rise to the level of torture when considered in aggregate. Yet, torture is defined as "acts that shock the conscience". If an act is not shocking in and of itself, how does if become shocking if performed repetitivly?

Justice, or Vengeance?

Those calling for the prosecution of Bybee and Yoo frequently claim it is mandated by the precedent of the American prosecution of defeated Japanese and Germans. It is useful to note that even those prosecutions had their critics, who felt that reflected the pursuit of vengeance, not justice.

Robert A Taft ... strongly opposed the Nuremberg War Crimes Trials that were just ending. The defendants were the architects of the Nazi regime who had been found guilty of waging a war of aggression and had been sentenced to death. To Taft, the defendants were being tried under ex post facto laws (laws that apply retroactively, especially those which criminalize an action that was legal when it was committed). These laws are expressly forbidden in the U.S. Constitution (Article I, section 9 and section 10). Taft viewed the Constitution as the foundation of the American system of justice and felt that discarding its principles in order to punish a defeated enemy out of vengeance was a grave wrong. ... Many years later, William O. Douglas of the Supreme Court agreed with Taft’s view that the Nuremberg Trials were an unconstitutional use of ex post facto laws.

From John F. Kennedy's Profiles In Courage

"We Executed Japanese for Waterboarding"

Well, actually not. The only Japanese convicted for waterboaridng was sentenced to 15 years hard labor (Waterboarding Historically Controversial). Other Japanese soldiers who were executed committed worse crimes. And their victims, US soldiers, were to have had the protections of Prisoners of War.

Those equating "enhanced interrogation techniques", especially "waterboarding", with torture, often cite as evidence the US prosecution of some Japanese for what they claim is the same procedure. Without acknowledging that the procedure is the same (which I dispute), these critics fail to acknowledge the special protections that Prisoners or War are awarded under the Geneva Conventions. Simply put, soldiers are entitled to protections that terrorists are not.

There are two different bodies of law that are frequently confused. One is International Humanitarian Law, or what is frequently called the "Law of War". It deals with the obligations of and treatment of legitimate combatants, civilians in war zones, and even the parties to a civil war. (Details here.) The second body of law is International Human Rights Law, a weaker set of protections which (supposedly) applies to all people. Most non-democratic countries, while giving lip service, routinely violate its provisions.

The principle behind the protections offered in the Law of War is the state stands surety for the actions of its soldiers. So long as the soldier obeys of the laws of war, he (or she) is not a criminal, but acting on the orders of the state, and it is the state itself that answers to the final charges on the legitimacy of its actions. The individual soldier cannot be punished for the decisions of the state. However, if the soldier strays from the behavior of a legitimate combatant (such as engaging in rape, or pillage, or abuse of the civilian population), the solider now is engaged in criminal acts, and may be treated as and prosecuted as a criminal.

Being treated as a criminal does not entitle them to civilian proceeding. Criminals on the battlefield may be treated under military law, in which case justice is mostly swift and harsh. Summary execution for crimes on the field of war is both legal, and common.

Terrorists, by their very nature, have no state to answer for their actions. They are not acting on the legitimate orders of their government, and thus have no means of being constrained by the state. Subsequently, only threats against their person may constrain their behavior. They, like pirates, traditionally stand outside the law. They are entitled to no protections other than those that might apply under general human rights law - such as the right to a speedy execution without cruel and unusual punishment.

In short, analogies from the field of military law do not apply to terrorists, because they are entirely outside the law.

The Consequences of Criminalizing Policy Differences

A lot is being made lately of Obama's decision to pursue the possibility of criminal charges against Bush administration lawyers who wrote legal opinions with which Obama disagrees. Possible consequences of Obama's actions that have been mentioned are increased polarization of the political climate, or the initiation of a "tit-for-tat" mentality that would see the next Republican administration investigating Obama's for criminal misconduct.

However, it would seem to me that there is a more immediate danger: when people are criminalized for previously benign behavior, some of them decide to act like criminals. Once the line between legal and criminal behavior is crossed, either by the direct action or by retroactively redrawing the line, some of those who find themselves on the wrong side of the line just decide that it they are going to be treated as criminals, they might as well act as criminals. While the prospect of Office of Legal Counsel lawyers behaving criminally may not frighten anyone, it was precisely the prospect of being treated as a criminal that led to Timothy McVeigh bombing the Oklahoma City Federal Building. In McVeigh's view, if the Clinton administration could incinerate women and children for the crime of non-conformity, it could happen to people like him, and in his mind, the best defense was a strong offense.

I have no doubt that some opponents of Obama's administration will perceive criminal prosecution of Bush administration staff as beginning the criminal persecution of all his opponents, and will, like Timothy McVeigh, decide to strike preemptively. But unlike McVeigh, who had a limited choice of targets, a successor has a wide range of high profile antagonists to chose from: people like Markos Moulitsas (Daily Kos), Matthew Yglesias, or Glenn Greenwald who are vocal proponents of dispensing retribution amongst the Bushies. And any successor may decide that to demonstrate that in the final analysis, the gun is mightier than the pen.

How ironic that in an atmosphere where the Department of Homeland Security openly worries that the simple election of a black man will inflame conservative passions to the point of violence, Barack Obama douses the presumptive pyre with proverbial gasoline by doing the exact thing to most likely give substance to his opponent's fears - criminalizing the expression of their views.

Update: The Senate Intelligence Committee report on OLC OPINIONS ON THE CIA DETENTION AND INTERROGATION PROGRAM.

A Teachable Moment

2009-05-01T23:04:00.000-07:00

In The Quiet Coup by Simon Johnson in The Atlantic magazine,

[A] former chief economist of the International Monetary Fund, [argues] that the finance industry has effectively captured our government [and our] recovery will fail unless we break the financial oligarchy that is blocking essential reform.

The idea that Wall Street controls Washington is not a new one, and is attractive to conspiracists on both the right and the left, albeit for different reasons. Johnson has some valid points, especially as regards the "group think" that arises from having the same people interchangeably running both realms. Nowhere is that more apparent than in the bank bailouts engineered in Washington by the same people who ran the banks to the brink of failure. Where Johnson goes seriously astray, in my considered opinion, is in thinking that the solution lies in more of the same. Among the policy recommendations he makes are nationalization of the banks and executive pay caps.

[W]e face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support. ... [T]here is no doubt what old IMF hands would say:

[T]he Federal Reserve has taken on a major role in providing credit to the economy—the function that the private banking sector is supposed to be performing, but isn’t. ... [C]onsumers and businesses are still dependent on banks that lack the balance sheets and the incentives to make the loans the economy needs, and the government has no real control over who runs the banks, or over what they do.

Caps on executive compensation, while redolent of populism, might help restore the political balance of power and deter the emergence of a new oligarchy. Wall Street’s main attraction—to the people who work there and to the government officials who were only too happy to bask in its reflected glory—has been the astounding amount of money that could be made. Limiting that money would reduce the allure of the financial sector and make it more like any other industry. ... Regulation and taxation should be part of the solution. Over time, though, the largest part may involve more transparency and competition, which would bring financial-industry fees down. To those who say this would drive financial activities to other countries, we can now safely say: fine.

At root issue is that banks (along with most other US industries) are engaging in rent seeking: that is they are using to power of government to seek an economic advantage. In this case, the Wall Street insiders that Johnson deplores are using their positions and influence in Washington to craft policies that use the government funds to prop up the banks, or promote policies that shield them from the consequences of their follies. Giving Washington more power over the banking sector only means giving the same insiders more legal methods to enact their agenda. The problem isn't that Washington has too little authority over the financial industry - it is that it has too much responsibility. If financial entities are left on their own, without recourse to government aid, they will adopt more prudent behavior, or fail. Government intervention only serves to reinforce unhealthy behavior. (This is obvious to anyone who has dealt with addiction behavior).

Especially frightening is Johnson's assertion that "[banks lack] the incentives to make the loans the economy needs, and the government has no real control over who runs the banks." Banks have all the incentives they need - the incentive to make money. Loans are supposed to be made on the basis of the borrower's ability to secure and repay the debt. The bubble in housing prices that underlay the financial crisis originated exactly because government distorted the loan market by subsidizing unsafe lending practices.

The idea that government needs more control over who runs the banks is straight out of socialist theory. The only people who need to run the banks are those whose money is invested in the bank, and therefore who are at risk. The capitalist system is predicated on large numbers of people making independent decisions. Some will decide correctly, and succeed, Some will decide poorly, and fail. The strong go forward, and the weak pass away. Putting the government in control simply insures that when the government decides poorly, the entire economy fails. Just ask the Russians.

Furthermore, Johnson's comment about banks not lending just isn't true. Banks are actually lending more. The problem is that before the crash, over half of US borrowing was by means of securitized debt, outside of banks, and that part of lending hasn't returned, and won't so long as the Obama administration keeps changing the rules to scare investors away. (For example, subordinating the interests of the secured bondholders to the UAW in the proposed Chrysler fiasco).

Johnson's suggestion for limiting executive compensation suffers from a similar ideological preference for government oversight. Compensation on Wall Street was strictly "pay for performance". People made millions for themselves because they made billions for their companies (when the times were good). Wall Street institutions certainly failed in some of their salary practices, such as in not tying pay to long term performance, or in investors not exercising sufficient control over their executives. But those that failed to protect their money have paid the price for their shortsightedness and exuberance. One can well imagine that the next generation of investors will keep a better eye on the behavior of their boards and executives.

As with lending practices, the free market itself is the best regulator of salaries. Salaries, as with prices, are the feedback signals of the economy that differentiate success from failure and indicate what more is needed, and what less is needed. Salaries (as in total compensation) should reflect company profitability. To cap salaries is to cap profitability - to tell the employees, "this is sufficient profit - take a break because there is no more to be earned." Take away salaries, and you take away performance, Take away performance, and you take away the signals that tell investors where to invest their money, and where not. Take away investment incentives, and investing in a pet rock becomes as remunerative as investing in the next energy breakthrough. Break one part of the system, and you break it all.

Ultimately, what Simon Johnson is arguing for is the security of stasis. An economy that is safe enough to prevent loses is too safe to generate innovation. Life itself is unpredictable, uncertain, and chaotic. It only ceases to be when we are dead. Is that what Simon Johnson wants for our economy?

Survival for the Squeamish

2009-04-30T19:56:00.000-07:00

Moral exhibitionism is beneath contempt, when it sacrifices the safety of those who live within the law for the sake of self-satisfied preening, whether in editorial offices or in the White House.

Thomas Sowell, writing in National Review Online. Read the rest here.

Obama Has Problems With The Truth

2009-04-30T08:39:00.000-07:00

I admit upfront that I don't like Barack Obama. I didn't vote for him (I didn't vote for McCain, either), and I don't support him. He is arrogant, preening, sanctimonious, and above all, has an inordinate sense of his own superiority that far exceeds the worse that was attributed to George Bush. Even with my low expectations for his behavior, he continues to surprise me with the unbridled chutzpah (or hubris, if you will) with which he continually distorts the truth. Particular to Barack Obama is his predilection for distorting (to be charitable) and lying about (to be honest) the positions of his opponents. This observation isn't a new one (Karl Rove commented on it within a month of his inauguration: "Mr. Obama ... routinely ascribes to others views they don't espouse and says opposition to his policies is grounded in views no one really advocates."), but rather one that Obama continually reinforces. His latest calumny (a misrepresentation or false charge maliciously calculated to harm another's reputation) occurred this morning in his comments on the Chrysler bankruptcy:

Now, this partnership was only possible because of unprecedented sacrifices on the part of Chrysler's stakeholders, who are willing to give something up so that this company — and all of the men and women whose livelihoods depend on it — might see a better day. Chrysler's management, and in particular, its CEO, Robert Nardelli, have played a positive and constructive role throughout this process. The United Auto Workers, who had already made painful concessions, agreed to further cuts in wages and benefits; cuts that will help Chrysler survive, making it possible for so many workers to keep their jobs and about 170,000 retirees and their families to keep their health care.

Several major financial institutions, led by J.P. Morgan, agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations. The German automaker, Daimler, agreed to give up its stake in Chrysler and contribute to the company's pension plan, further easing Chrysler's financial burden. And countless Americans across our country will be making major sacrifices, as well, as a result of plans to consolidate dealers, brands, and product lines.

While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them.

Obama: Chrysler Has 'Strong Chance Of Success' - NPR

Is this true? Did greedy Wall Street types really hold out a "taxpayer-funded bailout" with "twice the return that other lenders were getting", "hoping that everyone else would make sacrifices, and they would have to make none"? Well, no, yes, and no. Let's look at the proposed deal that these investors rejected:

Chrysler owes its [retiree health-care] fund $8.8 billion.

Ford Gets UAW Concessions Ahead of Rivals - Wall Street Journal

the UAW will own 55% of Chrysler ... where only the government will have a larger ownership interest.

The UAW in the Driver's Seat - Wall Street Journal

At Chrysler, the U.S. wants banks and investors who control its bank debt to give up about 85% of the nearly $7 billion they are owed. In bankruptcies, such senior secured lenders typically get most of their money back.

It is the value of Chrysler in liquidation that prompted some of the secured lenders to buy the company's debt. These lenders are distressed-asset buyers and hedge funds that haven't received federal assistance.

But the largest portion of the company's debt is held by banks that have received federal aid, including J.P. Morgan, Citigroup, Goldman Sachs and Morgan Stanley.

U.S. Squeezes Auto Creditors - Wall Street Journal

[I]n a normal bankruptcy ... the billions of dollars of government debt and the UAW retiree health-care obligation should be wiped out before the secured lenders lose anything on their $6.8 billion.

Big Banks Resist Call to Aid Chrysler - Wall Street Journal

There is no evidence that the holdouts wanted a bailout, taxpayer funded or otherwise, unjustified or not. They simply wanted equal status in bankruptcy court - a right promised to every American. Obama attacked them for asking for no more than their rights under the Constitution. Obama's second statement, that they hoped to make no sacrifices, is also demonstrably false. The investors objected to a deal that gave them less than 1/0th the return promised to Obama's favored stakeholder's: the unions and the taxpayers. The last statement, that some investors wanted double what other investors were willing to accept, is true, but only after a fashion.. What Obama left unsaid was that those investors willing to accept pennies on the dollar are his captive government owned banks: J.P. Morgan Chase & Co, Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley, TARP recipient banks that Democrat leaders have suggested "should have to write off their debt to ensure the future of Chrysler." (Chrysler, Banks Far Apart in Talks - Wall Street Journal). It has been widely reported that Treasury (under Bush) blackmailed BankOfAmerica into accepting TARP money. Obama's lowball Chrysler proposal was bad for the banks and bad for their investors. So why accept it? With the four banks already deeply in debt to the government, and dependent on the government for further money and for their own compensations, isn't coercion the only explanation?

Viewed in its totality, the Chrysler deal (as with the the GM deal) is a government seizure of wealth from one class (investors) to give to a favored political class (unions). Even taxpayers are no more than tools in the game, since in retrospect the bailout loans to the automakers were for the sole purpose of giving the government enough control over the companies to force its desired outcome. Obama has combined the tactics of fascism (government control over private companies) to accomplish the goals of socialism (worker ownership of private companies). Fascist or socialist, the underlying truth is that Obama is lurching into totalitarianism.

Whatever the outcome, everyday investors and bondholders have strong incentives to sue their respective companies (be they the banks or the auto makers) for violating their fiduciary responsibilities to their stockholders. And the administration's cavalier attribute to expropriating stockholder and bondholder interests makes future investment in the American economy a fool's game.

Update: For a better understanding of some of the issues encountered in a Chrysler bankruptcy, I recommend reading A Chrysler Bankruptcy Won't Be Quick - Mark Roe, Wall Street Journal. For the other side of the argument (than Obama's), I recommend reading Chrysler lender group plans objection to sale - Emily Chasan, Reuters.

Update Again: The first version of the post incorrectly referenced the terms of the administration's preferred General Motors bailout - which although similar to the Chrysler bailout, has different numbers for the UAW fund, bailout funds, and creditor holdings. While the numbers are different, the basic premise remains the same - that Obama seeks to put the financial interests of the unsecured debt holders (the UAW) ahead of the the secured debt holders. I regret the error, and have updated the post with numbers from the Chrysler bankruptcy.

Spring Comes to My Backyard

2009-04-20T23:28:00.001-07:00

One of my readers asked for an update on my Vernal Agoraphilia (springtime love of the outdoors), so here is the current state of my backyard. Things are definitely looking up. My azaleas are in bloom, and surprisingly for me, my roses are as well. What is shown in these pictures is the second phase of blooming in my garden. I missed getting pictures of the first blooming in my garden - the blooming of the fruitless Pear (pyrus betulifolia), dwarf peach (prunus persica), or Lady Banks roses (rosa banksiae).

Later the star jasmine (jasminum multiflorum) and lilac (unknown species) will bloom, both of which have very nice, if different fragrances. Eventually I plan to build a trellis/arbor against the wall above the standard roses, and train a wisteria (most likely wisteria sinensis) along it. And although not shown in any of the pictures, I also have growing in pots a couple of pelargonium and a gardenia (exact species unknown), which should be blooming soon.

I wish I could spend more time at home in my garden, but work keeps me away from home throughout the week. At least my roommates get to enjoy it, including, literally, the fruits of my labor. Both the dwarf peach and a dwarf orange tree (unknown species) produce fruit. The peach won't have fruit until later, but for some strange reason the orange tree always seems to have some fruit ready to pick. (Which is strange, since I have no clear memories of it blooming.) Later in the summer there will also be a few strawberries (which I have been neglecting).

The Plastic Air Force

2009-04-20T22:52:00.000-07:00

I recently found out that one of my co-workers likes building model airplanes. The type that are assembled from preformed plastic pieces, and can be painted and have decals to look relatively realistic. (As opposed to the vastly more expensive flying models, with engines and radio controls, but that is a different matter). My co-worker received some kidding about his hobby, so I decided to come to his defense, and admit that model building is not only for children or adolescents. I too build model airplanes.

I had built models as a child, but fell out of the habit until about twenty years ago when I received a partially finished kit of an SR-71 Blackbird. More out of interest in the plane (the most incredible plane ever built, in my opinion), I finished the kit. At around the same time, the first Gulf War was getting underway, and I saw images of many planes on the nightly news: Tornados, A-10 "Warthogs", F-15's, F-18's, F-117's, and B-52's, among others. I became interested in the history of (primarily American) aircraft, and started building models as a way of learning about the planes. I think my first purchase was the F-8 Crusader (Vietnam era), then the A-6 Intruder, F-14 Tomcat, and the pair of F-18 Hornets. Along the way I added a F-104 Starfighter, a UH-1 Huey, a U-2, and most lately, a B-17 Flying Fortress (with a gap of a number of years). The pseudo-F-117 Stealth Fighter is what Revell thought it might look like before pictures were available. Eleven models in seventeen years doesn't seem too obsessive to me.

I find model building relaxing, and enjoy the sense of finishing something tangible, as opposed to the things I do at work where I might never know the final results of my efforts. And when it is cold and wet in the winter, when outside projects are impractical, and garage projects too chilly, model building gives me something to do in the evenings.

The problem is that building time far outstrips my interest. I have a stack of uncompleted models in the closet that I hope to get to working on some day. I think the Flying Wing interests me most at this time. Maybe that will be next.

A Lockable Musket Rack

2009-04-20T21:55:00.001-07:00

Careful viewers of this blog may have noticed in prior posts, a musket hanging above my fireplace - a replica of an 1863 Springfield rifled musket. I recently added a companion to my fledgling collection, this one a replica of a 1795 Springfield musket. Since there wasn't enough room to hang both muskets above my fireplace, I resolved to build a rack to hold them, that would also provide some small measure of security. I don't really worry about them being used in a crime, and being replicas they aren't really worth anything to collectors, but I did want to keep them out of irresponsible hands, without being obtrusive about it. I am rather proud of my design, if I do say so myself.

I had decided on making a rack large enough to hold three muskets, in case I acquire another one at a later time. My design was for two pieces, each to be mounted to wall studs, one to hold the barrels, and the other to hold the stocks at the wrist. The musket barrels would be slipped into the barrel rest, but the stock support had to be able to be opened and closed to hold the wrists securely. I decided to use a variation of "keyhole mounts" to hold the closing piece, and a desk lock (available from Rockler hardware) to secure the closure.

I first glued up a number of red oak flooring scraps into a board 4-1/2" wide, 1-1/2" thick, and about 4' long, being careful to keep any of the joints from lining up in a either direction. Once cured, a few passes through the thickness planer yielded two pieces, 1-1/4" thick, 4" wide, and 24" long - one for the barrel support, and one for the stock support. After cutting the stock support lengthwise, I routed a shallow channel in the thinner piece for the locking plates. I laid out the position for the stock holes, and then cut the locking plates to avoid the marked holes. Each locking plate was then drilled for mounting screws, and then the plates were screwed into the channel. The two pieces were reassembled, and clamped, and then I drilled the holes for the locking screws, drilling from the rear, through the locking plates, and about 1/4" into the closure piece. Disassembling the entire mess, I was able to enlarge the through holes in the locking plates into the "keyhole" shape, to route for screw head clearance in the closure piece, and to recess for the keeper nuts in main piece and then mount the screws that form the locking heads. At this point I also cut the recess for the desk lock and the cross hole for the lock's key. Once the lock was installed I could mark the position of the lock bolt on the opposite lock plate, and cut the slot to accept the lock bolt.

After reassembling all the pieces, I could slide the closure onto the screw heads, turn the key, and lock the closure slide in place. I had a solid piece of wood with a removable edge, ready to be shaped into the rack. Using the drill press I drilled out the three openings in each rack, rounded the edges on the band-saw, and then used the router with a round-over bit to soften the exposed edges. It is at that point that the accompanying picture was taken. Final finishing required filling any exposed joints, sanding, and three coats of Varathane.

Once screwed to the studs the rack pieces are rigid enough to resist casual attempts to remove the muskets. The locking piece cannot be forced, since the lock bolt resists transverse force in its strongest direction. The only telltale sign that there even is a lock is the keyhole, which offers few clues to the method of unlocking or opening the rack. While a power saw could make short work of the rack, it would run the risk of damaging the muskets, and defeating the entire purpose of stealing them (I hope). Another method would be to disassemble the muskets, in the hope of sliding the stripped stocks out through the rack holes. I'm not sure that would even work, and in any case, would hopefully take longer than the casual thief would consider. I only point out these drawbacks so that anyone using my design to secure modern firearms would take such deficiencies into consideration, and compensate accordingly. (For example, a piece of steel inserted lengthwise through the closure piece would make it more difficult to cut the rack apart.)

In the final analysis, I feel my rack performs its function with simplicity and elegance, and complements my decor. I'm happy with it.

The Religion of Anthropogenic Global Warming

2009-03-05T06:55:00.000-08:00

Throughout human history there are have arisen various groups who for one reason or another believe that the end of the world is near. (c.f., Longing for the End: A History of Millennialism in Western Civilization). In modern Christianity, this belief is known as millennialism, from the notion that the end of the world will usher in a 1000 year reign of Christ on Earth. For the purposes of this post, the most significant feature of millennialism is the persistence of the belief no matter how often they are proven wrong! From the Heaven's Gate group who believed the Hale-Bopp comet signified the end of the Earth to the nut on the street corner with the sign that "Jesus is Coming", no matter how often their prophecies fail to come to pass, these believers simply pick a new date, and begin again to wait for the end.

The belief in Anthropogenic Global Warming has now achieved the status of a millennial cult. Observations confirm that the earth is in a cooling phase (Warming Might Be On Hold, Study Finds):.

Following a 30-year trend of warming, global temperatures have flatlined since 2001 despite rising greenhouse gas concentrations, and a heat surplus that should have cranked up the planetary thermostat. ... [Study authors] think a series of climate processes have aligned, conspiring to chill the climate. [T]he overall trend is flat, even though temperatures should have gone up by 0.2 degrees Centigrade (0.36 degrees Fahrenheit) during that time.

This study confirms the effects last year's observation of a change in global ocean circulation (Ocean Cooling to Briefly Halt Global Warming, Researchers Say):

Parts of North America and Europe may cool naturally over the next decade, as shifting ocean currents temporarily blunt the global-warming effect caused by mankind ... Average temperatures in areas such as California and France may drop over the next 10 years, influenced by colder flows in the North Atlantic, said a report today by the institution based in Kiel, Germany. Temperatures worldwide may stabilize in the period.

The remarkable thing is that both announcements go on to caution readers not to believe the empirical evidence:

[I]t's just a hiccup, and ... humans' penchant for spewing greenhouse gases will certainly come back to haunt us. ... "When the climate kicks back out of this state, we'll have explosive warming. Thirty years of greenhouse gas radiative forcing will still be there and then bang, the warming will return and be very aggressive."

... and ...

Without knowing that [natural climate variations could be stronger than the global-warming trend over the next 10-year period], you might erroneously think there's no global warming going on.

If we don't experience warming over the next 10 years, it doesn't mean that greenhouse-gas warming is not with us.

So observations and empirical evidence that the earth's climate is being controlled by natural cycles, which may or may not be part of an overall gradual warming trend, are to be discounted because of a belief in anthropogenic global warming, whose central premise of CO2 based climate forcing depends on a positive feedback loop that has been invalidated at every occurrence. When the warming predicted by the AGW models fails to occur, and fails not only in magnitude but even so far that cooling occurs instead, the adherents of AGW have the audacity to tell us that their premise is still operative, and that warming will still occur, later, and with larger effect. (The only similar phenomena known to man is President Obama's insistence that the trillion dollar deficits he proposes in the near years will result in a smaller deficit at the end of four years.)

When people believe in a thing that cannot be proven by science, and must be taken as an article of faith, we call that thing a religion. And when that religion makes predictions of doom which serially fail to occur, we call that religion a millennial cult. The belief in Anthropogenic Global Warming has now reached that status. Remember this when energy costs double because of President Obama's carbon-cap-and-trade scheme. When gas returns to $4 a gallon because of President Obama's restrictions on oil exploration and attacks on the oil companies. When the American and global economies continue their downward spiral because abundant wealth requires abundant energy, and President Obama's policies intend to deliver neither.

Update: Mario Lewis, writing in National Review Online, describes new reticence among AGW fanatics that he attributes to the fear of invoking a Political Backlash if their CO2 cap-and-trade policies cause further destruction in the economy. Another, perhaps simpler, explanation, is that the leaders of the AGW movement knew all along that their predictions were overwrought and their prescriptions infeasible, and that having successfully employed their eco-propaganda solely for the purpose of bashing business and the Bush administration, they are now hypocritically prepared to tone down their rhetoric to give political cover to their Simian Messiah.

The Pain of Principles

2009-02-20T22:04:00.000-08:00

I signed papers today to refinance my mortgage, for the purpose of improving my cash flow so as to be more financially agile in case the unexpected should occur. In an exchange of views, the title agent, an extremely nice and competent lady, encouraged me to consider the plight of homeowners like her husband and herself: They purchased six years ago, and have a thirty year mortgage at 5.75%, but currently owe $100,000 more on their mortgage than their property is worth in this market. They have been responsible borrowers, and always paid on time, but now find themselves, through no fault of their own, unable to sell their home or refinance at today's lower rates. What do I say to her?

The accompanying graphs from zillow.com illustrate the decline in home values in my metropolitan area over the last ten years. I suspect the actual decline is somewhat larger, as the latest appraisal from my own home erases a decade's worth of appreciation (the horizontal line in the bottom image). The significant information is the bar graph in the top-left image that shows the negative equity that burdens people who bought in the middle years. Again, based on my own home, I think the negative bars should be larger, and occur in more years. Is it unreasonable to deny help to honest people caught in these circumstances?

This is not a matter of personal responsibility in that many of these people were not irresponsible. These people were just unfortunate. Does it make sense for the government to assist them, in offering loans with over 100% loan-to-value ratios, in subsidizing lower interest rates, in subsidizing mortgage payments? Charity dictates that we help, but our constitution denies us the ability to use the coercive power of government to force us to help:

I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.
President James Madison, 1794

I cannot find any authority in the Constitution for public charity. [To approve the measure] would be contrary to the letter and the spirit of the Constitution and subversive to the whole theory upon which the Union of these States is founded.
President Franklin Pierce, 1854

I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit.
President Grover Cleveland

It is difficult to disappoint people. Especially good people whose approval we desire. But people in this situation cannot be made whole without the crude redistribution of wealth. The most efficient remedy is still to encourage a rebound of the economy, which will naturally reestablish the demand for homes, and raise home prices. Direct aid of the type proposed by the Obama administration creates an undeniable moral hazard, which only encourages repetition of the behavior that caused this problem, and which will only make the problem worse.

It is easy to have principles when they cause us no pain. It is much more difficult when we also feel the pain they require.

Update: Business Week makes an argument to assist "upside down" homeowners in The Risk from Underwater Homeowners, saying:

Many homeowners owe more on their mortgages than their homes are worth, and—rightly or wrongly—increasing numbers of them may decide to give up and mail in the keys.

The most effective way to keep underwater homeowners from walking away en masse would be a big writedown of the principal they owe.

Writing down mortgage debt on houses that are underwater could total $1 trillion or more. The value of underwater homes could be as much as $700 billion below the mortgage values, according to financial analysts and informal government estimates.

"If your house is worth much less than the loan, you're pretty sure you'll never really own it. You'll just go rent somewhere. The only bad thing is the mark on your credit rating, which for these people wasn't too good in the first place."

The default rate is about nine times as high for people who are way underwater as for people with substantial equity in their homes...

The argument seems to hinge on the notion that if homeowners are going to default anyway, lowering their principle as a way to keep them in their homes keeps the house from going vacant and losing even more value. But it seems undeniable to me that this creates both an immense moral hazard by inviting homeowners to threaten abandonment to receive substantial writedowns, and creates such a disincentive to lend that lenders will substantially raise interest rates to cover their losses from all the writedowns. If the government steps in to prevent interest rate hikes, lenders will sit on their money, and if the government funds mortgages directly without compensating rate hikes, it exposes the taxpayers to paying the full cost of both past and future defaults.

If government is flirting with the idea of re-writing contracts to solve the "crisis", how about re-writing the contracts to make them recourse loans - so that lenders can seek to recover their losses from homeowners who voluntarily decide to walk away from mortgages they can afford to pay? In return, the borrower would receive a partial writedown. If we, as taxpayers, are being asked to share the pain of "underwater" homeowners, it doesn't seem fair that the solution should relieved them of all of their pain. They should pay a price for our assistance, and remain "on the hook" for some of their losses. After all, they are the ones who signed those loans.

Update: And yet another rejoinder, this one from Francis Cianfrocca in the New Ledger: Winners & Losers in Obama’s Mortgage Fix. Here are the money lines:

I think the proposal is intended to directly supplement mortgage payments for millions of people (using the 31%-of-pretax-income benchmark for mortgage affordability). There are reports that the plan will somehow facilitate refinancings at lower interest rates, which is somewhat similar in effect. If I’m right, this is effectively the same as reducing people’s mortgage payments (but not their mortgage principal amounts) to a level that reflects current market reality.

But at the same time, it keeps lenders from having to suffer the effects of that reality. This proposal sharply increases the value of existing mortgage-backed securities by sharply reducing their implied default risk. It directly transfers value from taxpayers to the owners of mortgage-backed securities.

The net effect is that we’re PERPETUATING the housing bubble by disallowing the market to clear at lower price levels. (The economic counterargument, which is not unmeritorious, is that allowing the market to clear will precipitate a deflationary spiral and a replay of the Great Depression.)

$75 billion is ordinarily a lot of money. But in this silly season, it actually isn’t a lot of money to throw into an economic imbalance that affects the whole country. If that’s all we’re going to spend on this, it’s not bad. It will allow a few unscrupulous homeowners to screw the taxpayers, and it will make Obama look good, but it won’t seriously change the economic situation. This all by itself is positive for bankers, because they’ve been uncertain whether they were the ones the Administration would try to screw.

If the program proves popular, however, look for it to expand. And if that happens, look for the fortunes of the homebuilding industry to recover.

This sounds good, but it’s very evil. We have far too much housing already in this country, the residue of the last housing bubble. If we get another one now due to government deliberately overvaluing mortgages, we’ve set the stage for yet another nasty crash in some future year.

And next time, it won’t be homeowners who will be overextended. It will be the taxpayers.

"Creative Destruction"

2009-02-20T07:02:00.000-08:00

Economist Joseph Schumpeter is credited with coining the phrase, creative destruction, which:

illustrate[s] the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.

The concept that in failure, capitalism puts old resources to work in new ways, was wonderfully illustrated for me in the article, Stress Testing Is What Got Us Here, by James Keller. Not because of its insights into "legions of quantitative analysts at the big banks" attempting to quantify risk, and failing. (Which is worth reading in its own right). But because of this, the closing byline:

Mr. Keller, former head of structured products at UBS, now runs a micro-finance enterprise in Peru.

Putting old capital - in this case intellectual capital - to work in new ways. Indeed. Bravo for My. Keller, and how wonderful for the Peruvians, who may use his knowledge to build their own share of global wealth.

Cui Bono?

2009-02-18T22:24:00.000-08:00

Cui bono? is a Latin term that means, "Who benefits?" Normally it is heard in legal context to inquire, "who had the most to gain?", i.e., "who had a motive?" It can also be applied to the recently burst residential real-estate bubble to ask, "Who got the money?"

There seems to be quite a bit of populist anger right now, directed against financial executives on Wall Street and others who are perceived as being the primary beneficiaries of the housing bubble, and are now to be punished. Spillover anger leads President Obama to warn against taxpayer funded trips to Las Vegas (does that include business conventions as well?), and for Congressmen to chastise auto executives for their private flights to Washington (but Congress' use of Air Force jets for their travel is legitimate?). Amongst all this vituperation it is useful to ask, exactly who got all that money from the real-estate bubble?

In point of fact, the primary beneficiaries are those homeowners and investors who sold their properties at the height of the bubble, and those homeowners who took out loans against property that has now devalued below the amount owed on the loan. In the first case - those who sold at the height - they received money for an asset that turned out to be worth far less than its purchase price. They did nothing illegal, and are frequently lauded for their shrewdness. Yet they hold the vast majority of the weath that was gained from the bubble. Secondary beneficiaries are the various real estate and loan agents who facillitated the sales. Real estate agents earned 6% of the selling price on each transaction, pocketing tens of thousands of dollars per sale. Loan agents might earn $1000 or so at most per sale. Again, nothing illegal was done.

What about the people who purchased homes that are now worth far less than they paid? If they purchased their homes as a residence, do they not still gain the benefit of living in the house? They will have difficulty selling their home without taking a loss, but eventually their homes will appreciate. They have been financially punished for no fault except that of poor judgement. However, they also have an option of walking away from their loan. If they default on their loans they will not recover the money overpaid from the original sellers, but will rather have stolen it (even if legally) from the parties who hold their loans (many in the form of mortgage backed securities, or MBSs).

Those who took out loans against property that no longer backs their loan are in the situation of owing more than their collateral supports. If they continue to pay their debts, no harm, no foul. If they default, they will also have stolen from their creditors, no matter how legally it is done.

The creditors who will be hurt by defaults are predominately not the banks and Wall Street firms, although they do hold large amounts of MBSs. The largest group of victims are the investors who purchased MBSs: among them U.S. pension funds, mutual funds, hedge funds and insurance companies, and overseas investors.(source Wall Street Journal).

The banking and Wall Street types who made money made it by facilitating the sale of MBSs, but in so doing they only married up those who had money to lend at a profit with those who wished to borrow money (many with the intent to make a profit in real-estate). By making large amounts of foreign capital available for prospective American homeowners they were providing a useful social service. It is not directly their fault that the American borrowers would prove so untrustworthy. If they were aware of the substandard nature of their product they are complicit, but even then they are not the most complicit.

The most complicit are those who advocated and participated in the issuing of loans to people who were unqualified to repay them: those borrowers who lied on their applications about their ability to repay or their intent to reside in the property, those realtors, brokers, and loan agents who assisted the lies, and the enablers in government (Barney Frank, Chris Dodd, Franklin Raines, etc.) and business (Angelo Mozilo, Michael Perry, etc.) who opened the floodgates by lowering lending standards beyond the point of foolishness to the point of criminality.

At the price of being simplistic, it is possible to triage the participants: Who are the good, the bad, and the ugly?

The Good: Investors who put up money (perhaps foolishly) for MBSs and other securitized debt. If the U.S. economy is to ever resume growth, or the U.S. government to ever be able to sell its bonds, it is imperative that the beneficence of investors be recognized and encouraged. Investors were guilty of underestimating the risk of defaults in MBSs, and if the private markets are going to resume lending for consumer credit or mortgages, they must be able to price the real risk into new loans. But that is precisely what they are currently prevented from doing by the government's actions to keep mortgage rates low. The government only exacerbates the situation when it increases the risk to the lender by promoting unilateral mortgage modifications (called "cramdowns") or other programs designed to transfer loss from the borrower to the creditor.

The Bad: Borrowers who accepted money to purchase property that subsequently declined in value, and who now seek to transfer that loss from themselves to their creditors. Default on debt is not a victimless crime. Banks do not lend their own money - they loan their depositors' money. When debtors default they harm either investors, who lose their principle, or taxpayers, who must make up the loss for insured deposits. As more money must be put aside to cover the loss from defaults, lenders must charge higher interest rates and depositors and investors must accept lower returns. The entire economy suffers. This is why default and bankruptcy must be painful - to discourage their occurrence except for the most dire circumstances.

The Ugly: The politicians, regulators, financial executives, bankers, realtors, loan agents, and brokers who knowingly facilitated the lending of money to unqualified borrowers, by lowering lending standards to the point where borrowers had nothing at stake in the loan.

Anger directed exclusively at Wall Street executives is misplaced (unless you happen to be an investor). The real culprits are those who invested in a volatile commodity - residential housing - hoping to make private profits, and having judged the market wrongly, now seek to socialize their losses by passing them onto society at large, through either defaults without consequence or government bailouts.

Intermezzo: The vast majority of home loans in the United States are either de jure or de facto "no recourse" loans:

This means that the debtor cannot be held personally liable for the mortgage even if, after a foreclosure, the bank receives only a fraction of the total mortgage outstanding from the sale of the house.

This gives the debtor the ability to walk away from their loan obligation with little detrimental effect. It also places the lender in the situation of being completely dependent on the collateral value of the property in case of default. It is also necessary to remember that each sale of residential property pays the real estate agents 6% of the property value, and without rising property values the owner will lose money when the property is sold. It is for these reasons that lenders traditionally would lend only 80% or at most 90% of the property value (requiring that borrowers put up 10% or 20% down). These requirements served to limit the potential loses of the lender. Unfortunately, these prudent measures, along with verification of the borrowers ability to repay, were abandoned in the frenzy of the rising market (with considerable pressure from liberal Democrat congressmen Barney Frank, Chris Dodd, and Maxine Waters). (A short and informative chronicle of the political intrigue that led to the deliberate subversion of lending standards appears here: Feds Impose Loan Standards They Helped Undermine)

What Now? It is important to properly assign blame so that efforts to "remedy" the "problem" may be properly assigned. The problem is that reduced and declining home values place both investors and homeowners at risk. The money that was lost is in other hands from which it can never be recovered. At this time the only question is how to divide up the loses, or possibly, to reassign them to a third party, the taxpayers.

There is another option, albeit unwise and impossible: to reinflate property values. The government sometimes acts as if it is pursuing this option, despite its impossibility. Home prices are a function of supply and demand, and there is currently not enough demand at current market prices, and absent the government buying up property to take it off the market (which it cannot afford), the supply cannot be instantly reduced. Instead, the government is attempting to increase demand by lowering the cost of borrowing.

There is a saying on Wall Street, "Never try to catch a falling knife". Buying in a declining market is risky business, and purchasing property is an exercise in confidence, which is completely lacking at the moment. People with the means and credit to afford buying property have the circumspection to wait for the bottom. Instead, the government considers encouraging unqualified borrowers with sub-market interest rates and zero down, and even cash back financing. Wasn't it these very same policies that caused the problem in the first place?

It has hopefully been established that both investors and homeowners assumed inordinate risk: the investors that they would be repaid, and the homeowners that their investments would appreciate. Had these investments been in the stock market, instead of in property, there would be no question of attempting to remedy their loses. Neither deserves to be made good, and especially not at the cost of taxpayers. The United States has a system of bankruptcy, with laws and courts, designed to handle the problems of failed businesses and insolvent individuals. Through this system, people who bet unwisely and lost money may be entitled to a new start, but they are not entitled to have their loses made good.

The Obama administration proposes five actions (The Obama Housing Fix: 5 Things to Know - Luke Mullins, U.S.News) to address the problem:

Allow Fannie Mae and Freddie Mac to guarantee mortgages between 80% and 105% of the value of the home.
Pay delinquent borrowers $1,000 a year for up to five years for paying their mortgage on time. And pay mortgage servicers $1,000 to adjust mortgage terms, and an additional $1,000 a year for up to three years if the borrower stays current on the loan.
Standardize rules for modifying mortgages to limit mortgage payments to 38% of gross income, and have the government subsidize further interest-rate reductions to 31% of pretax income.
Treasury Department would double, to $400 billion, its funding commitments to Fannie Mae and Freddie Mac, so Fannie and Freddie will increase the size of their retained mortgage portfolios by $50 billion to $900 billion.
Allow judges to alter the terms of mortgages on primary residences during bankruptcy proceedings (the "cramdown", again).

These activities will (a) cost taxpayers billions of dollars, (b) continue or worsen the disastrous lending practices that caused this mess in the first place, (c) panic private investment from the mortgage market, and (d) reward the most irresponsible borrowers the most. With the Obama plan:

Some will pay more in taxes so that others can pay less for housing. This is redistribution based on debt rather than income. ... Subsidizing select mortgages poses a fundamental rationing problem: ... there may have to be stern but arbitrary "means testing" to decide who is most deserving of a taxpayer-supported mortgage. And that will likely provoke resentment about how winners and losers are picked. ... The third part of the plan is to get Fannie and Freddie to buy more mortgages with the hope of keeping mortgage rates down. Never mind that both organizations were considered insolvent last fall, when they held far fewer dubious IOUs than they do now. ... Any plan that compels mortgage holders to reduce the amount of money they are owed must in turn reduce the value of mortgage-backed securities held by banks, insurance companies, pension funds, Fannie and Freddie, and the Fed. By injuring the balance sheets of potential lenders, a cramdown would also injure potential borrowers.

Assessing the President's Mortgage Plan - Wall Street Journal

What will be the benefit of all this effort for government to subsidize the cost of the riskiest mortgages? If history is a guide, not much:

The recent history of mortgage modifications isn't encouraging. According to the December report by the Comptroller of the Currency and the Office of Thrift Supervision, "The number of loans modified in the first quarter that were 30 or more days delinquent was 37 percent after three months and 55 percent after six months. The number of loans modified in the first quarter that were 60 or more days delinquent was 19 percent at three months and nearly 37 percent after six months."

Said Comptroller John Dugan, "One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months."

Research at Credit Suisse suggests that borrowers without equity are not a good bet to stay current.

Dukes Of Moral Hazard - Wall Street Journal

Neither the markets nor the public think very much of the plan. As one wag quipped, "Obama Speaks, Market Listens, Sells Off." Polls indicate 45% Oppose Government Mortgage Help for Troubled Homeowners, with only 38% supporting the plan. Of course, those 38% are Obama's core constituency, and most of the 45% probably didn't vote for him anyway. And that is the only math that matters.

Update: Larry Kudlow, NRO's financial analyst, points out in Subsidize Bad Behavior? that the markets are already working to fix the problem. He states that "while California home prices dropped 41 percent in 2008, home sales in the state jumped 85 percent." The markets will clear this up, if only Obama would stop doing what got us into this mess: stop pumping up Fannie Mae and Freddie Mac and stop pushing mortgages to the unqualified and the irresponsible.

Last Update: Froma Harrop arguing in favor of Let[ting] Bankruptcy Courts Change Mortgages, addresses some of the concerns previously raised:

Foes of such changes warn that they would unleash a new wave of bankruptcies and reward the irresponsible .... the cost of mortgages would rise to compensate lenders for the risk of having a bankruptcy court possibly change the terms.

Some or all of the above may happen, but let's discard the notion that bankruptcy is a neat way for the indebted to save a few bucks. A bankruptcy seriously impairs one's ability to borrow for 12 or more years. Bankruptcy is a particularly irrational choice for high-income people who can afford their monthly payments. They'd still have to repay the written-down part of the mortgage balance out of income earned for up to five years, to the extent possible, after paying back secured debt.

As for banks, the prospect of a court-ordered change in mortgage terms -- inelegantly called a "cram-down" -- would prompt them to focus on loan applicants' ability to repay their debt. They would check a borrower's income and require a reasonable down payment -- like they used to.

A bill to allow mortgage modifications does offer protections to lenders, setting many limits on what judges may do. And if someone still in bankruptcy sells a house that has appreciated in value, the law guarantees lenders a piece of the gain for the first four years.

Empowering courts to change the terms of a mortgage may indeed mean higher mortgage interest rates and fees for everyone, but I see the tradeoff as follows: Borrowing costs may go higher, but future housing markets won't crash, taking our jobs and 401(k)s with it.

Requiring bankrupt borrowers to repay all or part of the written down balance addresses some of the moral hazard concerns, which may at least discourage irresponsible borrowing in the future. The argument for "cram downs" then becomes one of the tradeoff between higher mortgage rates and a potentially stabilizing influence on home prices. There is still the issue of breaking the "sanctity" of contracts, but I read that this is already possible in bankruptcy, so maybe "cram downs" are worth considering after all. In any case, it is a choice between the lesser of two evils.

"The Paradox of Thrift"

2009-02-16T21:42:00.000-08:00

Yet another product from the fertile mind of John Maynard Keynes is the "Paradox of Thrift". In its most simple form, it says that if people save more and spend less, then the people who make and sell goods will receive less income, and having less, will be able to save less, while simultaneously beggaring the economy. This idea is readily embraced by liberals (Matthew Yglesias, Paul Krugman), because as the flip side of Keynesian stimulus (the idea that if people spend more then there will be more money to spend and the economy will improve), it justifies two concepts dear to the liberal mind: deficit spending (spending money one doesn't have), and forced spending (taking money from people who have it to spend it on other things, more commonly known as "theft").

Paul Krugman, the Nobel prize winning Democrat economist who is so factually challenged as to have his own watch site (www.krugmanwatch.com) and his own paper's public editor chastise him, takes the "paradox of thrift" so far as to attribute the recession to decreased consumerism:

Consumers are pulling back because they’ve realized that they’re too far in debt. The economy is shrinking in large part because consumers are pulling back. And the result, almost surely, is to leave household balance sheets worse than ever. I can’t do this accurately until the Federal Reserve’s flow of funds data have been updated, but almost without question the ratio of household debt to personal income has been rising, not falling, as consumers try to save more.

In point of fact, the "paradox of thrift" had fallen out of fashion well before today's resurrection (The Paradox of Thrift:RIP - Cato Journal), because it was recognized as false. Keynes' "paradox" ignored two important forces: that saved money is not "idle" money, and that investment, not consumption, is the engine of growth.

[When Keynes] wrote in 1936 that “practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist,” [he] surely did not have himself in mind. But, in times of trouble, Americans still cling to Keynes, or at least to the caricature of him as the economist who said you could spend your way out of a recession. His big idea was that, left to its own devices, an economy can fall into a slump and just stay there. Self-corrective mechanisms will not necessarily work on their own; they will need help.

Prosperity depends on investment, on businesses building new plants, buying new machines, and employing more workers. In a typical case, when an economy slows, businesses reduce their demand for credit. At the same time, worried consumers save their earnings in banks, and by doing so, add to the store of money available for lending. These two forces—as well as actions taken by the Federal Reserve Board—combine to push interest rates to levels so attractive that businesses start borrowing again, and the economy picks up. The Great Depression, however, was atypical. The economy slowed and interest rates fell, but businesses were so frightened about the future that they refused to invest; instead, they did the opposite, shutting plants and firing workers. As for consumers, while they may have wanted to save, they lacked the cash to put away. Because they were out of work, they depleted what savings they had.

Stimulus: A History of Folly - James K. Glassman, Commentary

I can best illustrate the theory, and the reality with a little parable. First, Keynesian "paradox":

Imagine 100 workers in a town, each earning $100 a week. Their weekly expenses are $90, leaving $10 each to spend as they wish. Under the "paradox of thrift", if they each save $1, then the reduced consumption will lead to less demand, and one of the workers will have to be laid off, or their wages will have to be reduced. If they spend that extra $1, all is well, and if they each borrow some money, and spend that too, then because of increased demand another worker will be hired, or their wages will raised.

Now, for the supply side example:

Imagine the same workers in the same town, with the same wages and same expenses, but now, when they each save $1, an entrepreneur has come to town to borrow the $100 they have all saved in aggregate, and to begin a business. The entrepreneur will also spend $99, and save only $1, so there will be a slight reduction in aggregate demand of 1/100th of 1%, but in return there is an increase in productivity of 1%. The overall economy has improved far in excess of what was possible solely through consumption.

Note that it is not strictly necessary that the new production be a consumable commodity. It is an accepted truism for business that downturns are when you position your company for the resurgence. Companies may invest in knowledge or expertise. During their start-up phases, venture financed companies sell nothing, and supply no consumption, yet they consume savings and employ workers while building intellectual capital. Keynes' "paradox" allows no room for these activities.

I saw a bumper sticker a while back that read, Consume Less, Share More. In a way, that is what supply side economics advises. By consuming less, and saving some of our income, we make that income available to others who would put it to work in new ways, hiring people, buying equipment, and generally enriching society. By saving, we are also sharing, through the intermediaries of our banking and investment system.

Saving is a method for delayed gratification. One reason may be that we are saving for a large purchase - a car or a home. Another may be that we are saving for retirement. Investing in new enterprises that produce some future good is yet another example of delayed gratification. In all these cases we defer instant gratification for a future good - a car, a secure retirement, a new technology that makes our life longer, or better.

Yet another benefit of using the banking and investment system is that professionals are supposed to be better at determining risk and deciding who should receive the use of our savings. Lending to your friends or relatives can be an easy way to ruin a relationship. Unfortunately, in the lead up to this current recession savers were let down by the professionals, who had lent money to some questionable ventures. In consequence, savers are reluctant to trust their money to any but the most guaranteed investments. Money is not being made available to the entrepreneurs who create businesses and opportunities. Is it not far more likely that rather than being caused by a lack of consumption, our economic downturn has been caused by a lack of confidence in investment? Rather than chastising savings, would not our economic future be better served by encouraging renewed savings, and taking steps to increase investor confidence? But that is a topic for another post.

Lazy Portfolio

2009-02-08T13:20:00.000-08:00

With all of the attention the stock markets have been receiving because of the recession, I decided to become more involved in my retirement investments. Soliciting advice from my financially literate friends, I was informed of an investment strategy named Lazy Portfolio

A Lazy Portfolio is a diversified portfolio of passively managed mutual funds or (exchange traded funds). The most common example of passively managed funds are index funds, which are automatically managed to duplicate the composition (and thus performance) of common market indices.

The portfolio is diversified by investing in funds in different markets, such as the S&P 500, Small Caps, Mid-Caps, International Markets, Emerging Markets, Real Estate, and Bonds. Setting the asset allocation ratios and rebalancing are the responsibility of the individual investor.

Why invest in a lazy portfolio rather than an actively managed mutual fund? Because the index funds that comprise lazy portfolios have much lower overhead (expressed as the fund's expense ratio), and because most actively managed funds perform no better than the overall market. If two funds are going to earn the same rate of return, it makes more sense to invest in the fund that charges the least in management fees.

Index funds are the brainchild of Vanguard founder and ex-CEO, John Bogle, and Vanguard leads in the number of diversity of available index funds. Bogel is also widely admired for efforts to make investing more accessible to the average person, through the writing of numerous books, such as The Little Book of Common Sense Investing. (One of my "financially literate friends" read, and blogged a synopsis of Bogel's The Little Book of Common Sense Investing). The popularity of index funds has led to their availability from other financial services companies, such as Fidelity, the leader in actively managed funds. This is a great boon to people who may have multiple retirement accounts with separate providers.

Disclaimer: The following information is presented as a courtesy, and is not to be taken as definitive, authoritative, comprehensive, or as investment advice. Do your own research, and anyone investing on the basis of my advice is an idiot.

The following tables list those "mainstream" index funds from both Vanguard and Fidelity that I have been considering for my own portfolio.

Vanguard Index Funds

Symbol	Name	Expense Ratio	Category
VTSMX	Vanguard Total Stock Market Index	0.10%	US mrkt
VFINX	Vanguard 500 Index	0.10%	US mrkt
VIPSX	Vanguard Inflation Protected Securities Index	0.20%	US mrkt
VIVAX	Vanguard Value Index	0.20%	US mrkt
VIMSX	Vanguard Mid Cap Index	0.20%	mid cap
NAESX	Vanguard Small Cap Index	0.20%	sml cap
VISVX	Vanguard Small Cap Value Index	0.22%	sml cap
VISGX	Vanguard Small Cap Growth Index	0.22%	sml cap
VGTSX	Vanguard STAR Total International Stock Index	0.27%	intrntl
VDMIX	Vanguard Developed Marker Index	0.22%	intrntl
VTRIX	Vanguard International Value Index	0.43%	intrntl
VEIEX	Vanguard Emerging Market Index	0.40%	intrntl
VBMFX	Vanguard Total Bond Market Index	0.20%	bond
VBISX	Vanguard Short Term Bond Index	0.20%	bond
VUSTX	Vanguard Long Term Treasury Index	0.26%	bond
VFISX	Vanguard Short Term Treasury Index	0.22%	bond
VGSIX	Vanguard REIT Index	0.20%	real estate

Investing in Vanguard funds from a Fidelity account may incur a nominal fee. A Fidelity customer can frequently obtain the same investment without the fee by investing in an equivalent Fidelity fund. Some popular Fidelity index funds are:

Fidelity Index Funds

Symbol	Name	Expense Ratio	Category	Comments
FSTMX	Fidelity Spartan Total Market Index	0.10%	US mrkt	10K min
FSMKX	Fidelity Spartan 500 Index	0.10%	US mrkt	10K min
FNCMX	Fidelity NASDAQ Composite Index	0.35%	US mrkt
FSEMX	Fidelity Spartan Extended Market Index	0.10%	mid cap blend	10K min more volatile
FSLCX	Fidelity Small Cap Index	0.99%	sml cap	closed
FCPEX	Fidelity Small Cap Enhanced Index	0.67%	sml cap	10K min
FCPGX	Fidelity Small Cap Growth Fund	1.10%	sml cap
FCPVX	Fidelity Small Cap Value Fund	1.14%	sml cap
FLPSX	Fidelity Low Priced Stock Index	0.98%	sml cap
FSIIX	Fidelity Spartan International Stock Index	0.20%	intrntl	10K min
FIEUX	Fidelity European Stock Index	0.95%	intrntl	FSIIX performs similar, less overhead
FIENX	Fidelity International Enhanced Index	0.62%	intrntl	10K min
FIVFX	Fidelity International Capital Appreciation Fund	0.85%	intrntl
FOSFX	Fidelity Overseas Fund	0.95%	intrntl
FEMKX	Fidelity Emerging Market Index	1.02%	intrntl
FBIDX	Fidelity U.S. Bond Index	0.48%	bond
FINPX	Fidelity Inflation Protected Bond Index	0.45%	bond
FSTGX	Fidelity Intermediate Government Income Fund	0.45%	bond
FSHBX	Fidelity Short Term Bond Fund	0.45%	bond

Note that Fidelity offers the same indices in a number of grades. The Advantage class offers the lowest overhead, but requires a minimum investment of $100,000. The same index in Investor class carries a 0.03% higher overhead, but is open to investors with a few thousands. Most Spartan Funds are in between, with a $10,000 minimum investment. Some Spartan funds, like the Fidelity US Equity Index (FUSEX), are Investor class funds, with the $100,000 minimum. These funds exemplify a general rule of funds: the lower the expense ratio, the higher the initial investment.

Fidelity investors who'd rather not worry about asset allocation may select mutual funds with pre-selected mixes (for a slightly higher expense ratio):

Fidelity Managed Mutual Funds

Symbol	Name	Expense Ratio	Category	Comments
FFNOX	Fidelity Four-In-One Index	0.23%	mutual	S&P500, Ext Mrkt, Intrntl, Bond
FBALX	Fidelity Balanced Fund	0.61%	mutual	currently 40% bonds
FFTWX	Fidelity Freedom Fund 2025	0.73%	mutual	30% bonds
FFFHX	Fidelity Freedom Fund 2050	0.80%	mutual	10% bonds

Fund categories, and to a lesser extent, the funds within them, vary in terms of their returns, volatility, and risk. An "average" portfolio typically consists of U.S. equities, in a mix of large companies and small companies, some international investment, some bond investments, and possibly some "boutique" investments such as real-estate. A number of experienced investors offer their own mixes of funds for consideration or emulation. Some of these may be found in the following articles:

'Lazy portfolios' outrun S&P 500 - Paul B. Farrell, MarketWatch - Page 2 lists the allocation mixes for four popular "lazy portfolios".

New Fidelity 'Lazy Portfolios' are winners - Paul B. Farrell, MarketWatch - Lists two "Lazy Portfolios" of four funds for both Vanguard and Fidelity fund families.

Money 70: The best mutual funds you can buy - As the title implies, this article lists the top performing index funds of 2008.

Lazy Portfolio Creators See Winning Times In 2009 - Paul B. Farrell, MarketWatch - Some prognostication for "lazy Portfolios" in 2009.

In my opinion, 2009 presents a unique opportunity for investors in that the most significant question that most investors face is, "In, or Out?" Get into the market (or certain sectors of the market), or seek the security of lesser, but less risky, returns? There are only a few times when it is simplicity itself to predict the market, and we are lucky to be in one of them. Having dropped about 50% of its value, in the long term (two years and out) the market has no where to go but up! It is my belief that there may still be momentary declines, but they will be quickly erased by the significant gains that will occur once the economy recovers. In consequence, it is my belief that now is a good time to get into those growth stocks that once might have been considered too volatile, on the reasoning that they are already experienced their decline and will assuredly recover.

My personal preference for asset mix at this time is 2/3rds domestic, 1/3rd international, with no bond allocation at this time. Having already taken the "hit", I don't feel this is a time for timidity. In detail, I'm leaning towards:

Fund Type	Allocation	Fidelity
S&P 500	1/6th	FSTMX or ?????
U.S. Extended Market	1/6th	FSEMX or ?????
Small Caps	1/6th	FSLCX or FCPGX
Low Priced / Value Stocks	1/6th	FLPSX
Extended International	2/9th	FSIIX or FIVFX
Emerging Markets	1/9th	FEMKX

All that being said, I feel no urgency to make these allocations, so I'm going to sleep on it for a while, just to see how things are going.

Observations on Keynesian Stimulus

2009-02-07T23:00:00.000-08:00

For the last six months there has been a surfeit of commentary to the effect that we are in the worst economic crisis since the Great Depression, with the implicit insinuation that if we do not act now we will soon be as bad off or worse than the Great Depression. The action most loudly recommended is a stimulus. These statements are false in all their particulars. Our crisis has been financial, not economic. So far, the recession has been commonplace as measured by common metrics, such as stock market decline, unemployment, and others.

(Graphs courtesy of http://recession.org/.)

When people call for a stimulus, they are referring to the specific economic stimulus effect first proposed by economist John Maynard Keynes (1883-1946). Keynes was an member of the English Liberal party (see A Biography of John Maynard Keynes) who in 1936 published The General Theory of Employment, Interest and Money. In it he suggested that governments could and should manage the economy to eliminate unemployment, especially by running budget deficits. Specifically, he suggested that:

Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.

Keynesian Economics

For reasons that should be obvious, politicians have readily embraced the theory of Keynesian stimulus. Some have carried it to the point so as to use it to justify any government spending:

(Spending cuts) have been tested and they have failed," Obama said. "They've brought our economy to a halt.

(H)e mocked critics who say the bill has too much spending. "What do you think stimulus is?" an irritated Obama told a gathering of House Democrats. "That's the point."

Obama Fires Back At Critics - New York Daily News

I've supported many tax cuts over the years, and there are tax cuts in this proposal. But a tax cut is non-targeted. If you put a tax cut into the hands of a business or family, there's no guarantee that they're going to invest that or invest it in America. They're free to go invest anywhere that they want if they choose to invest.

Sen. John Kerry, quoted in The Weekly Standard

Do Keynesian stimuli work? Is all spending stimulating? Is government spending better than private sector spending?

Keynesian stimuli have come under criticism since the theory was first proposed. Two prominent critics of which I am aware were Ludwig von Mises and Friedrich Hayek, of the Austrian School of economics. (More recent critics were Milton Friedman and Murray Rothbard). Much of my own thinking and many of the quotes following are taken from the followers of this school. For each step of the analysis, I will attempt to summarize my understanding, followed with some of the quotes that have informed it.

In order to understand the efficacy of and support for stimulus plans, it is necessary to understand the environment in which they occur. People turn to stimulus plans to protect against recessions. Recessions happen for a variety of reasons. Some, like the crash of 1973-1974, can be started by a sudden scarcity or reallocation of resources. The oil embargo of 1973 quadrupled energy prices, redirecting money from other purposes. Some happen because the some portion of the economy has become overextended, and when people wake up to the degree of risk they have assumed, there is a sudden retreat as people attempt to solidify their economic positions before the general downturn. (Thus explaining the hastiness of the retreat). Examples of this type are the bursting of the "dot com" bubble of 2001 - a correction in the over-valuation of technology stocks. Not all recessions occur because of "bubbles". Some analysis implies that the famous stock market crash of 1929 was caused by monetary policy and not an overvalued market. Although the market was overvalued in 1987, it not considered a definitive cause of the crash. (What Caused the Stock Market Crash of 1987?) But the current downturn is most assuredly the result of the bursting of a bubble in residential real-estate, fueled by low interest rates, restrictive land-use policies, and government tax incentives.

Austrian business-cycle theory tells us (that) a sudden drop in employers' demand for labor ... is a reflection of the sudden revelation ... that businessmen have been led by inflationary credit expansion, and the consequent drop in interest rates below the free-market level, to make unsound malinvestments.

The Misesian Case against Keynes

Recessions that result from the revaluation of overpriced assets pose a special problem, in that they present the almost irresistible temptation for government (acting at the behest of aggrieved parties and powerful interests) to attempt to re-inflate the bubble. The pain may be particularly severe in the case of a credit bubble, when a period of excessive borrowing comes to an end, and people must suddenly live within their means.

Because Americans lived beyond their means for so many years, they now need to live below their means, consuming less while they rebuild their checking accounts and portfolios.
An Austrian Recommendation - Robert P. Murphy, Ludwig von Mises Institute

Because of the pain incurred in adjusting to a new economic reality, many (if not most) people will seek any means to avoid the pain, no matter how outlandish the escape. There is a built in bias to believe in any theory that promises to bypass the work of readjustment and rebuilding.

(Addiction) is the compulsive avoidance of immediate pain that paradoxically leads to ever-increasing pain. (S)obriety is about "learning to live life on life's terms."

Addiction is the polar opposite of maturity. Addicts base decisions on short-term impulse for immediate gratification or immediate avoidance of pain rather than long-term best interest. Mature individuals base decisions on long-term best interest rather than short-term impulse for immediate gratification or immediate avoidance of pain.

Addiction: Compulsive Avoidance of Immediate Pain

While average people want to believe in Keynesian stimulus because it promises to ease their economic pain (at least in the short run), politicians have their own reasons to support the expansion of government spending. Bluntly, for the political class, money is power, and a stimulus program puts politicians in the position of awarding benefits to the favored and withholding resources from the disfavored.

Public Choice Theory holds that stimulus packages pretend to be about growth but, in reality, simply feed the government monster. Public choicers, many of whom come out of Virginia’s George Mason University, deem the phrase “reform government” an oxymoron. To them, government isn’t better than the private sector. Public and private are opponents in a perpetual power struggle, like two kindergartners battling it out on a mat.

Public choicers warn that politicians will always exploit an emergency to further unrelated goals. Rahm Emanuel’s statement of last fall -- that “you never want a serious crisis to go to waste” -- validated their nightmares.

Obama’s Gift to GOP Is Challenge to Supply Siders - Amity Shlaes, Bloomberg

A father of public choice economics, Nobel laureate James Buchanan, argues that the great flaw in Keynesianism is that it ignores the obvious, self-interested incentives of government actors implementing fiscal policy and creates intellectual cover for what would otherwise be viewed as self-serving and irresponsible behavior by politicians. It is also very difficult to turn off the spigot in better economic times, and Keynes blithely ignored the long-term effects of financing an expanded deficit.

If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. If the government raises taxes to pay for the stimulus, it will, in effect, be robbing Peter to pay Paul. If the government prints the money, it will increase inflation, which will decrease the value of the dollar. That would, in effect, rob Paul to pay Paul back with devalued currency.

"The real question," according to Hayek, "is not whether man is, or ought to be, guided by selfish motives but whether we can allow him to be guided in his actions by those immediate consequences which we can know and care for or whether he ought to be made to do what seems appropriate to somebody else who is supposed to possess a fuller comprehension of the significance of these actions to society as a whole."

Washington Could Use Less Keynes and More Hayek - Dick Armey, Wall Street Journal

Keynesian spending could be justified if either of two propositions are true. The first is if government can inject money that is currently "idle" into the system. The second is if the money that government spends yields a greater return to the economy than that spent by the private sector (the famed "multiplier"). Let us consider these propositions in turn.

Whatever money the government spends comes from one of three source:

Taxes: The money spent comes from the private sector, which reduces the amount of money available for private consumption or investment.

Borrowing: The money spent comes from credit markets, which reduces the amount of money available for lending to consumers, businesses, or for investment.

Printing: Increasing the supply of money without a corresponding increase in production is inflationary, and leads directly to devaluation of the currency.

The only way that government can put money into the system without first taking it out is if there is money cached away somewhere. But people in this day and age no longer store their assets in their mattresses or in cookie jars. People keep their money in savings or checking accounts, or in investments such as stocks or bonds. In all these cases the funds are available for lending to consumers, home buyers, small businesses, or investing in new enterprises.

Since there is no "idle" money for government to spend, if Keynesian stimulus is to be effective, it must be because the government can spend more wisely than its citizens. This proposition may be decomposed into two aspects: that the efficiency results from the choice of on what the government spends, and that the efficiency results from the choice of on who the government spends.

I will postpone the question of "what" money is spent on (or more properly, "how" money is spent), until we dispense with the question of "who". Since Keynesian stimulus is so closely associated with "progressive" politics, it should come as no surprise that other aspects of the progressive agenda have been incorporated into the theory of stimulus. It is a common claim of its supporters that government assistance to the lower paid, underemployed, or unemployed, is more stimulative than tax cuts or other programs that benefit higher paid, or the "rich". The justification for this is that low income recipients will spend the money (consumption) while high income recipients will simply "save" the money - which as we just showed is another means of investment. Which brings up the question of whether consumption is superior to investment when it comes to stimulus.

As an aside, note that the progressive preference for low income stimulus already contradicts their claim that all spending is (equally) stimulating. Also note that this argument between consumption and investment mirrors the argument between "demand side" (i.e., consumption) and "supply side" (i.e., production, which results from investment) economics.

There are three reasons to doubt the government's choices in spending priorities. (Actually, four, if you count the general untrustworthiness of the government process for prioritization and allocation of funds). These are:

All government spending entails loss due to overhead (known as "friction" loss) resulting from it having to pass through so many additional hands between source and destination. (Not including the increased opportunity for misdirection and malfeasance). Government must be able to allocate resources significantly better than the private market just to make up for the wealth lost during the moneys' travels through the system.

The classical economics observation is that no centralized entity can possibly know, anticipate, or replicate the needs of the market. Only the collective actions of the unfettered market can accurately indicate the demands and desires of consumers. Lacking any means of knowing the choices of its millions of citizens, government will always misallocate some resources, and produce the unwanted or build the undesirable.

Lastly, and most importantly, just as with the parable of the ant and the grasshopper, assets devoted to investment, which leads to increased production, lead to increased future wealth, while assets devoted to consumption are at most distributive.

At the lowest level, assets that are devoted to "make work" projects may actually destroy wealth, in so far as they consume assets without producing any new assets of value. A similar argument can be made against consumption fueled by credit, because the purchaser has taken value from the pool of goods without returning anything of value, and because the amount borrowed could have otherwise gone into increased productivity.

The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.

(A) rise in government purchases requires an equal fall in the total of other parts of GDP -- consumption, investment and net exports. In other words, the social cost of one unit of additional government purchases is one.

The usual Keynesian view is that the World War II fiscal expansion provided the stimulus that finally got us out of the Great Depression. ... I have estimated that World War II raised U.S. defense expenditures by $540 billion (1996 dollars) per year at the peak in 1943-44, amounting to 44% of real GDP. I also estimated that the war raised real GDP by $430 billion per year in 1943-44. Thus, the multiplier was 0.8 (430/540). The other way to put this is that the war lowered components of GDP aside from military purchases. The main declines were in private investment, nonmilitary parts of government purchases, and net exports -- personal consumer expenditure changed little. Wartime production siphoned off resources from other economic uses -- there was a dampener, rather than a multiplier. ... There are reasons to believe that the war-based multiplier of 0.8 substantially overstates the multiplier that applies to peacetime government purchases.

Government Spending is No Free Lunch - Robert J. Barro, Wall Street Journal

A 2002 study of U.S. data by Roberto Perotti of Università Bocconi did find that the effect of debt-financed spending increases was somewhat positive, but the multiplier effect was much less than one. A 2004 IMF study of recessions in advanced economies likewise found that "multipliers are unlikely to exceed unity." A 2006 study of U.S. data by IMF economist Magda Kandil found the effect of "fiscal expansion appears insignificant on aggregate demand and economic activity."

In December 2008, the National Bureau of Economic Research published "What are the Effects of Fiscal Policy Shocks?" by Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago, which reports "government spending shocks crowd out both residential and non-residential investment," while "the [positive] response of consumption is small and only significantly different from zero on impact" (i.e., temporarily).

In short, a growing body of evidence suggests that a dollar of extra spending is likely to lift nominal income by less than a dollar, arguably much less. Several studies suggest the multiplier may be less than zero after a couple of years, because private investment (including housing) eventually falls by more than government spending rises.

$646,214 Per Government Job - Alan Reynolds, WSJ

There are several reasons to be skeptical about Keynesian stimulus. The key shortcoming is that it only looks at one-half of the equation. If the government sends a check to Person A, that person may run out and spend the money. And if the government spends money on Program B, that may result in an immediate outlay. But this type of analysis overlooks the fact that the government first has to borrow the money from Person C. In other words, any money in the pocket of Person A or any money spent on Program B is necessarily offset by less money in the pocket of Person C. There is no increase in the amount of income in the economy — unless the government monetizes the debt, and even that doesn't work since inflation simply reduces the value of existing money.

Some Keynesians admit that the money given to Person A or spent on Program B results in less money in the hands of Person C, but they then argue that the goal is to transfer money from people who are more likely to save and give it to people who are more likely to consume. Indeed, this is why there often is a focus on redistributing the money to those with less income. In theory, poor people will rush out and spend the money right away.

Once again, though, the theory ignores the real-world economy. When Person C saves money, those funds don't disappear. Through the process of financial intermediation, the funds are allocated to borrowers. Those borrowers either use the money to purchase consumptions goods or investment goods. In other words, government borrowing to finance so-called stimulus programs merely "crowds out" private sector borrowing and private sector spending. There is no increase in economy-wide spending.

To summarize, Keynesian stimulus plans do not work because they do nothing to increase national income. All that happens is that existing national income gets redistributed from one person to another. Another key point to understand is that consumer spending is a consequence of economic growth, not the cause of economic growth.

Economic Stimulus: Budget Policy for a Strong Economy Over the Short- and Long-Term - Cato

The heart of the Keynesian philosophy is that what drives the economy is the demand for and not the production of goods. Economic recessions are predominantly the result of insufficient demand. In the Keynesian framework an increase in demand not only lifts the overall output but that output increases by a multiple of the initial rise in demand. Within this framework something can be created out of nothing.

Reality, however, shows that all the attempts to create something out of nothing lead to economic impoverishment and more misery. In the real world, an artificial boost in demand that is not supported by production leads to the dilution of the pool of real savings and, contrary to the Keynesian view, to a shrinking in the flow of real wealth.

In the Keynesian multiplier story the initial consumer expenditure creates new income for the next person, who in turn creates income for another person and so on. However, to have income for consumption one must first produce something useful that can be exchanged in the market.

If some of the saved production is exchanged for better tools and machinery, once these tools and machinery are built it enables an increase in the production of consumer goods. As the flow of production expands this gives rise to more savings, which in turn gives rise to more production and to more purchasing power in the economy. So contrary to popular thinking, more savings actually expands and not contracts the flow of consumer goods.

There is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens' spending and investment to the full extent of its quantity.

The Myth of the Magical Multiplier - Frank Shostak, Ludwig von Mises Institute

John Stuart Mill's Forth Fundamental Proposition captures (one of the most fundamental differences between Austrian theory and Keynesian theory) in a cryptic aphorism: "Demand for commodities is not demand for labor."

In all modern macroeconomic models, Keynesian or otherwise, the level of consumption spending and the level of investment spending—and hence the level of spending on labor services—move in the same direction. The demand for factors of production is strictly a derived demand. There is no objection to the concept of derived demand, of course, so long as it is confined to the microeconomic context of partial equilibrium analysis. But to extrapolate from the firm or industry to the economy as a whole and claim that the economy's demand for labor is derived—in Marshallian fashion—from the demand for consumption goods is to commit the fallacy of composition.

Thinking in a macroeconomic context, we conceive of the entire economy as consisting of consumption activities and investment activities. By construction, then, an increase in one of these two components of economic activities must be accompanied by a decrease in the other. For the economy as a whole, the level of consumption spending and the level of investment spending must move in opposite directions. Hayek's early theorizing, which is built upon a clear recognition of this relationship (1932a, p. 142 and p. 157, n6), was to become the basis for his critique of Keynes, whose theorizing relegated Mill's Fourth to what, in Keynes's view, was the special and unlikely case of a fully employed economy.

In retrospect we see that, methodologically speaking, Keynes was dealing with the special case of resource idleness. Consumption activity and investment activity can move in the same direction only because the level of resource idleness moves in the opposite direction. There are no opportunity costs (forgone idleness is not a cost) associated with having more of both components of economic activities. In effect, it was Keynes's flouting of Mill's Fourth that caused Hayek to refer to Keynesian economics as the "economics of abundance."

In the 1928 essay Hayek shows how the market's relative-price mechanisms shift resources away from consumption activities toward investment activities in response to changes in the intertemporal preferences of consumers. He shows how a decrease in the demand for commodities (i.e., current consumption) can be associated with an increase in the demand for labor and other inputs, thereby enabling an increase in the level of future consumption. These are the market mechanisms whose existence is either denied or ignored by Keynes.

On John Stuart Mill's Fourth Fundamental Proposition

So what is the outlook? The stimulus package is rolling through Congress like an express train packed with goodies, so an enormous deficit seems to be a given. Entitlements will go up instead of being brought under better control, auguring big future deficits. Where will the Treasury find all those trillions in a depressed world economy?

There is only one answer. The Obama administration and Congress will call on Ben Bernanke at the Fed to demand that he create more dollars -- lots and lots of them. The Fed already is talking of buying longer-term Treasurys to support the market, so it will be more of the same -- much more.

And what will be the result? Well, the product of this sort of thing is called inflation. The Fed's outpouring of dollar liquidity after the September crash replaced the liquidity lost by the financial sector and has so far caused no significant uptick in consumer prices. But the worry lies in what will happen next.

Even when the economy and the securities markets are sluggish, the Fed's financing of big federal deficits can be inflationary. We learned that in the late 1970s, when the Fed's deficit financing sent the CPI up to an annual rate of almost 15%. That confounded the Keynesian theorists who believed then, as now, that federal spending "stimulus" would restore economic health.

Inflation is the product of the demand for money as well as of the supply. And if the Fed finances federal deficits in a moribund economy, it can create more money than the economy can use. The result is "stagflation," a term coined to describe the 1970s experience. As the global economy slows and Congress relies more on the Fed to finance a huge deficit, there is a very real danger of a return of stagflation. I wonder why no one in Congress or the Obama administration has thought of that as a potential consequence of their stimulus package.

Why 'Stimulus' Will Mean Inflation - George Melloan, Wall Street Journal

We need not depend solely upon theory to refute the idea of Keynesian stimulus. We may look to the empirical evidence of to inform us.

The dominance of Keynesianism ended in the 1970s. Government spending and deficits ballooned, but the result was higher inflation, not lower unemployment. These events, and the rise in monetarism led by Milton Friedman, ended the belief in an unemployment-inflation trade-off. Keynesianism was flawed and its prescription of active fiscal intervention was misguided. Indeed, Friedman's research showed that the Great Depression was caused by a failure of government monetary policy, not a failure of private markets, as Keynes had claimed.

Barack Obama's Keynesian Mistake - Ike Brannon and Chris Edwards, National Post

Roosevelt's ... first goal was to reduce unemployment. Of his own great stimulus package, the National Industrial Recovery Act, he said: "The law I have just signed was passed to put people back to work." Here, FDR failed abysmally. In the 1920s, unemployment had averaged below 5 percent. Blundering when they knew better, Herbert Hoover, his Treasury, the Federal Reserve and Congress drove that rate up to 25 percent. Roosevelt pulled unemployment down, but nowhere near enough to claim sustained recovery. From 1933 to 1940, FDR's first two terms, it averaged in the high teens. Even if you add in all the work relief jobs, as some economists do, Roosevelt-era unemployment averages well above 10 percent.

The second goal of the New Deal was to stimulate the private sector. Instead, it supplanted it. To justify their own work, New Dealers attacked not merely those guilty of white-collar crimes but the entire business community -- the "princes of property," FDR called them. Washington's policy evolved into a lethal combo of spending and retribution. Never did either U.S. investors or foreigners get a sense that the United States was now open for business. As a result, the Depression lasted half a decade longer than it had to, from 1929 to 1940 rather than, say, 1929 to 1936. The Dow Jones industrial average didn't return to its summer 1929 high until 1954. The monetary shock of the first years of the Depression was immense, but it was this duration that made the Depression Great.

(T)he stock indexes told the real story. Instead of matching or outperforming the industrial average, the Dow Jones utilities average lagged behind. The great "stimulator," government, had emerged as an opponent. The effect, beyond the tragic unemployment, was to slow down the creation of new companies. Even the New Dealers despaired. "We have tried spending money," Treasury Secretary Henry Morgenthau said to the House Ways and Means Committee in the late 1930s. "We are spending more than we have ever spent before and it does not work. . . . I say, after eight years of this administration, we have just as much unemployment as when we started . . . and an enormous debt to boot."

The Depression tells us that public works are probably less effective than improving the environment for entrepreneurs and new companies.

FDR's ... Economic Plan Isn't One to Follow - Amity Shlaes, Washington Post

More recently, we may look to the experience of deficit spending in Japan to see the failure of Keynesian stimulus:

Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

Among ordinary Japanese, the spending is widely disparaged for having turned the nation into a public-works-based welfare state and making regional economies dependent on Tokyo for jobs.

Most Japanese economists have tended to take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.

Japan’s Big-Works Stimulus Is Lesson - New York Times

In a phenomenal display of hope over experience, the New York Times concludes that the Japanese problem was that they didn't spend enough, concluding that their massive deficits saved them from complete depression - an unlikely event and impossible change to prove.

Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy. ... One lesson ... is that spending must come in quick, massive doses, and be continued until recovery takes firm root.

But some Western economists who have studied Japan’s experience say the stimulus accomplished more than it is now given credit for. At a minimum, they argue, it saved the economy from an outright, 1930s-style collapse.

Additional comparisons may be found in Economics, Evidence and Enlightenment in the American Thinker.

And now, a word from the Keynesian side:

(T)he economy tends to be forward-looking and emotional. So if businesses and households can see immediate benefits from a program while knowing that a bit more stimulus is on the way, they are likely to feel more confident that the recovery will be sustained. That confidence, in turn, will make them more likely to take the risk of buying big-ticket items now and investing in stocks or future ventures.

Moreover, much of the money that can't be spent right away is for capital improvements such as building and maintaining schools, roads, bridges and sewer systems, or replacing equipment -- stuff we'd have to do eventually. So another way to think of this kind of spending is that we've simply moved it up to a time, to a point when doing it has important economic benefits and when the price will be less.

Even if the entire sum were to be stolen by federal employees and spent entirely on fast cars, fancy homes, gambling junkets and fancy clothes, it would still be an $800 billion increase in the demand for goods and services -- a pretty good working definition for economic stimulus

Maybe (opponents) could ... explain why a dollar spent by the government, or government contractor, to hire doctors, statisticians and software programmers is less stimulative than a dollar spent on hiring civil engineers and bulldozer operators and guys waving orange flags to build highways.

(T)ax credits make for great sound-bites and are music to the ears of politically active car salesmen and real estate brokers. Most economists, however, have warned that such credits will have limited impact at a time when house prices are still falling sharply and consumers are worried about their jobs and their shrinking retirement accounts. Even worse, they wind up wasting a lot of money because they give windfalls to millions of people who would have bought cars and houses anyway.

What adds insults to injury, however, is that many of the senators who supported these tax breaks then turned around and opposed as "boondoggles" much more cost-effective proposals to stimulate auto and housing sales, such as having the government replace its current fleet of cars with hybrids or giving money to local housing authorities to buy up foreclosed properties for use as low-income rental housing.

Spending is stimulus, no matter what it's for and who does it. The best spending is that which creates jobs and economic activity now, has big payoffs later and disappears from future budgets.

Wanted: Personal Economic Trainers. Apply at Capitol - Steven Pearlstein, Washington Post

Pearlstein is correct that the economy in general, and the markets in particular, are foward looking, and react to expecations about their long term prospects. This is why tax-rate changes are effective. But for spending to be stimulative it must be perceived as long term. The perception of longevity is contradicted by promises that a stimulus only temporary, and thus provides significant reason to doubt the sincerity of those who claim it is both efective and temporary.

Pearlstein ignores the both the opportunity cost of money and the real interest paid on borrowed money when he suggests that stimulative spending is simply "moved ... up to a time ...when the price will be less." Such a statement would only be true in a time of high inflation, which while encouraged by stimulus spending, is not guarenteed, and is in any case undesireable.

Pearlstein's claim that tax cuts for higher income earners are "wasting a lot of money because they give windfalls to millions of people who would have bought cars and houses anyway" was proven false by the government engineered destruction of the yacht and private airplane businesses.

Internal Revenue Service filings (1993) show that the resulting job losses alone have cost the government $2.40 for every $1 of revenue. The airplane tax is the most amazing of all. In fiscal 1991, it brought in a mere $53,000 in revenues but cost $5.1 million in unemployment outlays.

Fantasy That Taxes Won't Affect Behavior

Pearlstein's final errors are his twin conclusions that (a) government can spend money more effectively than the private sector, and (b) that "spending is stimulus, no matter what it's for and who does it", both of which were earlier shown to be erroneous.

A little hypocrisy goes a long way:

The (new theater ticket tax) proposal could increase ticket prices by about 8 percent, which could dim Broadway’s lights as tourists start thinking twice about that vacation in Manhattan. If tourism slumps in the city, the state’s budget problems would surely worsen along with it. Rocco Landesman, the president of Jujamcyn Theaters, summarizes his latest pleas to lawmakers this way: “Please, don’t kill your golden goose.”

An entertainment tax should certainly stay in that mix, especially when it comes to thriving businesses like movies, sports events, concerts and dog shows. When it comes to Broadway, only a smaller levy makes sense — and even that should be short term.

Showbiz does cost a bundle, but live theater gets little support from the city or the state — even to subsidize the price of tickets so that less-wealthy theater lovers could afford to go.

Thirteen Broadway shows have closed within the last month, including spectacles like “Spamalot,” “Hairspray,” “Spring Awakening” and “Young Frankenstein.” The last thing New York City needs is for ticket prices to go higher and more of the Great White Way to go dark.

The Taxing of Broadway

The New York Times' editorial makes it clear that for liberals, tax policy is all about rewarding favored causes, and impoverishing the disesteemed. Maybe they should lobby for a live-theater item in the stimulus bill. Oh, wait, there is one. A $50 million increase for the National Endowment for the Arts, bringing their total welfare tab to $172 million.

Hat Tip to James Taranto at the Wall Street Journal's Best Of The Web

It is clear that politicians have a vested interest in pushing stimulus theories, no matter how ineffective. But, if Keynesian stimulus does not work, why do some economists (such as Paul Krugman of the New York Times) continue to support it?

When the facts are on our side, we pound the facts; when theory is on our side, we pound theory; and when neither the facts nor theory are on our side, we pound Keynes – and to great effect.

(Keynes) famous quip that “In the long run we are all dead” is a profoundly satisfying justification for borrowing a trillion dollars, right now, never mind that it contradicts an essential insight of our discipline: in the words of Frédéric Bastiat from 1848: “The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen” – in other words, the long run.

I am curious where the “idle” money will come from. Will he sell stocks? Bonds? Withdraw funds from the banking system? If it is not to come from a cash box, it is not idle, and Mr Krugman can only fall back on the hope that the government will use his funds more productively than businesses can.

Keynes and the triumph of hope over economics - Ben Steil, Financial Times

Update:A concise version of the contents of this post: Stimulus: A History of Folly - James K. Glassman ,Commentary

Whither Israel?

2009-02-07T09:37:00.000-08:00

Israel goes to the polls Tuesday to elect a new government, and it appears likely that Likud candidate Binyamin Netanyahu will win, in no small measure to the feeling Israel stands alone (Israel's Fateful Elections - Caroline Glick). Ms. Glick cites an Aviation Week story that the U.S. Navy allowed an Iranian arms vessel unmolested transit of the Suez canal because "it lacked the authority to seize the cargo". If true, the Navy's inaction only fuels the conception that the Obama administration has abandoned Israel, as it pursues "rapprochement" with Iran.

We have read frequently in the past how foreign governments responded to American provocations: how Pres. Bush's NATO expansion and missile defense initiative offended Russia; how the "axis of evil" appellation angered North Korea and Syria; how his bellicosity emboldened Saakashvili or empowered Ahmadinejad. Should Likud come to power, will we read that Pres. B. Husain Obama's timidity and ambiguity have propelled Israel into their arms? Will we read that the result is the natural consequence of Israelis living in existential fear of Hamas and Iran? Or will we read that Israelis have chosen aggression over peace; empire over accommodation? (I make no statement on the nature of the choice, only that it will be a choice).

My cynical expectation is that Israelis share with Americans the attribute of responsibility, and whatever the outcome they will be judged to have decided it by themselves. If only others were held to the same standard.

Ugly Trends

2009-02-04T23:11:00.000-08:00

Preparing for work one day this week, I caught an advertisement on the Fox morning news for the Coalition for the Future American Worker, at www.americanworker.org. Their position is that:

More than 11 million Americans are looking for work. Yet our government allows more than 1.5 million foreign workers a year to legally enter the U.S. for jobs. That doesn't include millions of illegal foreign workers.

While I am sympathetic to enforcing restrictions on illegal aliens, I am disturbed and disappointed by arguments against legal immigrants, and by the conflation of legal and illegal immigration. The position of the Coalition plays to stereotypes of nativist conservatives, such as those exemplified by Pat Buchanan and Lou Dobbs.

So who are the Coalition members? They are:

Californians for Population Stabilization

Federation for American Immigration Reform

NumbersUSA Education & Research Foundation

American Immigration Control Foundation

American Engineering Association

The Programmer's Guild

American Council on Immigration Reform

American Jobs Coalition

ZaZona.com

No More H-1B

Fight Back America United Steel Workers

The Communications Workers of America, Local 4250

BrainSavers.org

There seems to be considerable overlap. For example, the members of the American Jobs Coalition are mostly the same as this group. Perhaps the multiple listings are designed to make their movement appear larger than it is?

A strong argument can be made against illegal immigration on the grounds that illegals tend towards unskilled employment, pushing down wages in those domestic populations most at risk, and increasing government expenditures for social services that they are unable to pay for by themselves. Efforts to control the influx of unskilled labor help raise wages for unskilled Americans, and cyclical or sporadic labor shortages can be addressed with guest worker programs, such as the Bracero program, that operated from 1942 through 1964.

The same argument cannot be made against skilled employment. Wages are high in sectors employing H-1B visa holders, and these workers pay for their own health care and contribute more in taxes to social service funding than they consume. Their wages are predominantly spent in country, and not remitted to their country of origin, as common with unskilled laborers. Many legal immigrants go on to gain permenent status, and eventually become citizens.

Industries that employ H-1B immigrants must certify a shortage of domestic labor. Many H-1B holders have specialized skills in the sciences, engineering, education, and health care. Not coincidentally, these skills are in fields that require substantial investment in schooling and dedication. To be frankly honest, I do not believe native born Americans to possess an appetite for study and hard work in sufficient numbers to satisfy employer needs. I do not know if it is a sense of entitlement, lack of appreciation for the benefits of education, or ignorance of the conditions that exist without effort and opportunity, but for whatever reason, too many American youths are unwilling to do what it takes to fulfill the economy's labor requirements. Our economy demands skilled workers, and if American youth will not fill the need, we must look elsewhere.

The people that come to America through legal immigration bring with them ambition, education, and appreciation of the American freedoms that make their success possible. They pass these traits onto their children, who continue to lead American industry and society. Rather than place barriers in the path of foreign workers willing to upend their lives and come live in America, we should be thankful for their sacrifice. And refuse to support organizations that belittle their contributions and try to block their entry.

Water Wars

2009-02-04T22:22:00.000-08:00

Why are so many of the callers to NPR, specifically Forum, preening, sanctimonious, nitwits? But, I digress. This morning I listened to a discussion of water shortage in California, i.e., the drought.

Nearly all the panelists and callers focused on the need for conservation and lifestyle changes necessary to reduce water use in the state. One caller did ask why the state was simultaneously promoting water conservation while allowing population growth, but his question was quickly sidetracked back into an answer about conservation, and the need to be a "welcoming" society. Frankly, the problem creates a Gordian knot for liberals. Consider that 4/5th of California's water goes to agriculture, (in this case, treated as a subset of the evil class, business). California is semi-desert, naturally arid. So, would better use of resources imply importing produce from wetter climates, like Chile, and diverting more water to urban users? But, wait, what about localvorism, the movement to buy local? If we can't grow and we can't import I guess we could be reduced to eating grass, just like in North Korea, but lawns are verboten as well. Maybe we'll just have to eat dirt cookies, like in Haiti. (Anyone notice a pattern in government, yet?)

Or, could we do something useful, like nuclear desalinization? The topic never even came up. I complained once before about a regulated monopoly advocating for reduced demand for its product rather than increasing the supply. Its becoming a depressing trend in California, where liberal government is more concerned with dictating our lives than in meeting our needs. In the case of water, given choices between market pricing, increasing the supply, or regulating demand, the legislature has given us mandatory "ultra-low-flow" toilets (previously known as "outhouses") and lawn bans. I am not the first to notice the problems of California's Government-Produced Water Shortage. Centralized planning, a rigid monopoly, and politically determined "fees" have all contributed to a system that refuses to consider the most important component of any solution - finding sources of more water!

The Rangel Rule

2009-02-02T22:21:00.000-08:00

According to U.S. Rep Charlie Rangel, "cultural and language barriers" led to his failure to pay taxes on $75,000 in rental income from his villa in the Dominican Republic. Treasury Secretary Timothy Geithner said that it was an "honest mistake" that he forgot to pay $34,023 in taxes on four years of income from the International Monetary Fund (even though he requested and received reimbursement from the IMF for paying them). Former Senator Tom Daschle remains "deeply embarrassed and disappointed" by his "mistake" to "recognize that the use of a car was income", and no doubt, the $83,333 he forgot to declare as income.

Now Texas Rep. John Carter has proposed the Rangle Rule, under which "any US citizen who owes back taxes can pay them and automatically waive all interest and penalties by writing "Rangel Rule" on their return." While some may say that these examples simply show that Democrats are only in favor of raising taxes because they don't intend to pay them, I am of a more generous nature, and inclined to extend to them the benefit of doubt. My beneficence results party from my belief that there is a larger lesson to be learned here.

If Treasury Secretary Geithner, ex-Senator Tom Daschle and Representative Charlie Rangel, three people intimately connected to the creation of the tax code, can't figure out their taxes, it seems unreasonable to expect the rest of us to figure out our taxes. The U.S. tax code is a behemoth:

If you go to the US Government Printing Office ( www.gpo.gov ), you can order a complete set of Title 26 of the US Code of Federal Regulations (that's the part written by the IRS), all twenty volumes of it, at the bargain price of $974, shipping included.

According to the US Government Printing Office, it's 13,458 pages in total. The full text of Title 26 of the United States Code (the part written by Congress--available for an additional $179) is a mere 3,387 printed pages, bringing the adjusted gross page count to 16,845.

How Long Is The Tax Code - Trygve.com, March 12th, 2006

The tax code has long been used by politicians of all stripes to perform social engineering of all kinds, from encouraging home ownership to discouraging drinking and smoking. More egregiously, politicians also use the tax code to reward their supporters and punish their opponents, crafting narrowly tailored loopholes targeting specific constituencies. It is most likely this ability to wield the tax code as a weapon that keeps legislators from seriously considering reforms to simplify it. Nonetheless, any alternative - flat tax, VAT, whatever - is an improvement over the current opaque code. Something better and simpler is badly needed.

While we're at it, they should stop using tax code as a subterfuge for income redistribution. Welfare should be visible as welfare, not hidden as a rebate of taxes that weren't paid in the first place, or as the Earned Income Credit. And, borrowing against Social Security should be fully visible in the deficit, which is actually $56 trillion, and not the $10 trillion commonly pawned off on the public.

Oh, and one last thing. Doesn't the IRS symbol look more like a vulture than an eagle?

Update: Add Nancy Killefer to the list of living examples of the impossibility of the tax code. Ms. Killefer, who "served as assistant secretary for management and chief financial officer and chief operating officer at the Treasury Department" from 1997 to 2000, was unable to correctly determine the taxes she needed to pay for her hired help. She has consequently withdrawn from consideration for the post of "chief performance officer" in the Obama administration.

Equal Proetction Under The Law?

2009-02-01T20:38:00.000-08:00

California recently passed Proposition 8, an amendment to the state constitution to restrict marriage to a union of two people, one from each primary biological sex. (It is still amazing to me that the statement "each sex" has to qualified, to exclude the other three of the biological "five sexes", or the numerous other "social" or "constructed" sexes, such as gay, lesbian, transgender, or who knows what.) Adherents of same-sex marriage reacted to the decision much more negatively than polygamists, polyandrists, or polyamorists, who were likewise affected.

As a libertarian, I believe the government has no business in the private affairs of consenting adults, but also think darkly of government sponsorship of private contracts, like marriage. Same-sex couples can avail themselves of legal contracts as readily as contra-sex couples, and I think that sufficient without the need to desecrate the sacraments of the religious. If same sex couples want to get "married" they should start their own churches to perform the ceremony. I don't feel strongly enough about the issue to become incensed about it one way or the other, except to take extreme umbrage against those who pronounce some moral failing in me for failing to adhere to their parochial point of view.

The aforementioned losers of the Prop 8 debate have taken to boycotting and picketing the supporters of the Prop 8 campaign. Beyond withholding their patronage, supporters of "same-sex" marriage (does that disallow the marriage of a homosexual and a bisexual?) have taken to targeting the employment of the proposition's supporters, forcing the ousters of a film festival director, a theater director, and possible others. Besides lending credence to the meme of gays dominating the arts (what, no fashion designers forced out?), these occurrences do more to illustrate the spinelessness of the "intelligentsia" which so quickly prostrates itself to political correctness. However, in a rare occurrence, I actually agree with the Los Angeles Time that there is nothing particularly illegal or evil about boycotts or pickets, although there certainly is something reprehensible and possibly illegal in succumbing to such pressure and firing one's employees. But still no equal protection violation.

Where I do see government sanctioned discrimination is that the supporters of Proposition 8 have no recourse to the same tactic. Should people decide to boycott and picket supporters of "same-sex" marriage they would almost undoubtedly be vulnerable to prosecution under California's prohibition against "discrimination on the basis of sexual orientation". To make a distinction between the proponents and the practitioners of a position, and allow discrimination against the former but not the latter seems incoherent, (but that describes most legislation emanating from Sacramento these days). Allowing persecution of people for holding anti-same-sex-marriage views, while protecting the status of those who hold pro-same-sex-marriage views (if only by a proxy attribute) creates an obvious violation of equal protection. Since the end result of pursuing the state's approach will be an inability to protest anything for fear of offending someone, the correct approach to protect individual liberty would be to repeal all state sanctioned punishment, and depend upon social opprobrium and moral suasion to accomplish the task of changing peoples attitudes. But, I wouldn't hold my breath waiting for it.

Honesty Begins At School?

2009-01-28T22:25:00.000-08:00

My daughter recently received an email from her school, Sonoma State University, explaining the effects of the California State budget crisis on university funding, and consequently, student fees. Most was unsurprising, with either flat funding or cuts reflecting the state's new found status as a pauper. But, buried in the email was this gem:

A new report recently published by the California Faculty Association titled, “California at the Edge of a Cliff: The Failure to Invest in Public Higher Education Crushing the Economy and Crippling out Kids’ Future,” http://www.calfac.org/CalAtTheEdge.html reports that higher education funding has been cut by 40% since 1980. It is clear cuts will significantly affect the long-term economic health of California. The state’s need for college-educated workers is outpacing the state’s ability to produce them and this gap will only get wider.

That 40% cut figure didn't sound right to me, so I Googled a bit, and found the Analysis of the 2002-03 Budget Bill from the California Legislative Analyst's Office, which contains the graph above. I was unable to find an equivalent graph for 2008-09, but unless there were massive cuts in education funding (which are not possible under Proposition 98's minimum funding requirements), there is no way that higher education was cut 40%. So, how did the California Faculty Association come up with a cut of 40%? In Part 3: "California’s Higher Education Investment", Section A: "State Tax Fund Investment Effort", it is explained:

For FY2008 California appropriated about $11.1 billion for the operations of higher education in California. On a state personal income tax base of $1.4 trillion, this produces a state tax fund investment effort of $7.71 per $1000 of state personal income. California ranked 21st among the states in state tax investment effort in higher education. As recently as FY1980 California ranked 11th among the states on this measure, and in FY1994 the state ranked 40th on this same measure.

The FY2008 state investment in higher education is 40.0% below the peak of $12.86 per $1000 of state personal income reached in FY1980. If California had maintained its FY1980 investment effort in FY2008 then instead of appropriating $11.1 billion it would have appropriated $14.2 billion for the operations of higher education, or about $3.2 billion more than it did.

The California Faculty Association calculated school funding as a percentage of income, and not in constant dollars per pupil (the way almost every other analysis calculates school funding). Consider the implications. Do your personal expenditures increase when you got a raise, or do you direct the additional income towards new interests as you gain discretionary income? (Note this is not necessarily the same as what happens when you get a pay cut, when you may be required to make cuts across the board, simply to make ends meet). Such a formula for determining school funding ignores changes in demand as the size and distribution of school populations change over time. Who would come up with such a method of determining school funding?

Unions. The goal of unions is to maintain the wages and positions of their members, independent of the demand for their products or the availability of workers. Consider some of the following, taken from the Edsource website:

Per-Pupil Expenditures California has consistently fallen below the national average in per-pupil expenditures (unadjusted for regional cost differences), ranking 24th in 2006–07, according to the National Education Association's (NEA) Rankings and Estimates 2008–09. At $9,124 per pupil, California was at 95% of the national average of $9,565. The District of Columbia, which ranked at the top of all states, spent $16,540. Arizona, ranked last, spent $5,255.

Teachers' Salaries The average teacher salary in California was $63,640 in 2006–07, according to the NEA, higher than any other state. The U.S. average was $50,758. However, the relatively higher cost of living in California is a significant factor. When comparing teacher salaries among states, both the cost of living in each state and the seniority of the workforce play a role. The American Federation of Teachers looked at average teacher salaries in 2000–01 and determined that when cost-of-living factors were taken into account, California ranked 16th in the nation.

Teacher Salary and Expenditure Comparisons for 2006-07

	California Rank in U.S.	California Average	U.S. Average	Top	Bottom
Teachers' salaries (2006-07)	1	$63,640	$50,758	$63,640 (California)	$35,378 (South Dakota)
Expenditures per pupil (2006-07)	24	$9,124	$9,565	$16,540 (District of Columbia)	$5,255 (Arizona)
Public school revenue (2005-06) per $1,000 personal income in 2006	28	$45	$46	$62 (Vermont)	$26 (District of Columbia)
Per capita personal income (2006)	11	$39,358	$36,629	$57,358 (District of Columbia)	$26,908 (Mississippi)

To be sure, the extraordinarily high cost of living in metropolitan areas like San Francisco and Los Angeles depress the effective wages of teachers in those areas, but that is true for non-educational workers as well. The other effect of high teacher salaries in California is to restrict the number of support staff that can be hired, with California ranking near last in the numbers of administrators, counselors, libraries, and other staff, per student.

It should be clear at this point that contrary to the pronouncements of the California Faculty Association, California's schools did not undergo a 40% decline in funding in any meaningful sense, California's schools are not "underfunded" and California's teachers are notunderpaid.

I am not criticizing California's teachers. I am criticizing California's teacher's unions. Most teachers are compassionate and honest people who care deeply about their students and the success of their students in learning. But California's teacher's unions care only about maximizing their own power and position, by working to increase teacher salaries and job security. Like unions in the automotive industry and elsewhere, they have lost sight of the higher goal of delivering a quality product and insuring the success of their industry. Teacher's unions have opposed quality metrics and compensation structures designed to improve student and teacher performance. Teacher's unions have done little to advocate for workplace rules that preserve and enhance the productivity of teachers, other than agitating for smaller class sizes (which translate into more teacher, i.e., more union members). Teacher's unions have abdicated responsibility for maintaining the authority of teachers in the classroom, and have done little to enlist the cooperation of parents, preferring instead to cast almost every problem into one of money and seniority. It is past time for parents and voters to recognize that teachers unions are not advocates for students or parents, but simply collective bargaining organizations determined to maximize member remuneration. This does not make them bad, or evil, but neither does it confer on them the respectability of instructor or mentor seeking the best outcome for their students. That honor belongs to teachers as individuals, and not to their union.

Update: Investing In What Doesn't Work shows that increased spending on education is not giving us better educational outcomes. Maybe its time to start looking for other solutions.

The Economics of Unions

2009-01-27T21:07:00.000-08:00

That Clinton era Secretary of Labor Robert Reich should advocate in support of the Employee Free Choice Act, more popularly known as card check, is unsurprising. Mr. Reich is a known as a partisan Democrat and strong supporter of labor. What is surprising is that Mr. Reich should advance the justification that unions are good for the economy:

Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages.

Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

The Union Way Up in the Los Angles Times.

Mr. Reich's hypothesis is defensible only if one presumes that "capital" has taken a disproportionate share of the value created by industry. In Mr. Reich's view, unions then enable workers to reclaim their rightful share from the rich. But this is essentially a zero-sum view, where value created neither increases nor decreases, immune to outside influences. In the real world the value of industry is a relative measure that is constantly changing based on supply and demand. Competition pressures industry to lower its prices, while labor and capital expenses create upward pressure on prices. Equilibrium is reached when the upward and downward pressures balance, and workers will produce goods that can be sold for the price consumers are willing to pay, with sufficient residual to provide a return to the investors to entice them to lend their capital. This is the basic law of supply and demand acknowledged by all economics.

Unions originated in an era of abundant labor when competition for employment drove wages to such low levels that they created serious social disruption. Unions addressed these problems by restricting the supply of labor, by creating a cartel. However, this restriction of available labor is not without its costs:

Unions, which are in effect a CARTEL of workers, probably make UNEMPLOYMENT higher than it would be without them, as collective bargaining often pushes wages above the level that would bring LABOUR SUPPLY and DEMAND into EQUILIBRIUM. These higher wages increase supply and reduce demand, with the result that there are more jobless people. Unions thus deepen a conflict between those in the labour market who are insiders, that is, union members, and those who are outsiders, typically non-unionised, poorly paid or jobless people. However, unions can combat the excessive market power of some FIRMS, particularly when the firms (or a GOVERNMENT) dominate a particular job market. They can support workers who are badly treated by management.

From The Economist Glossary Entry for "Union"

Aside from the increase in unemployment created by unionization (by creating barriers to worker entry), is it possible that unionization strengthens the economy? Do Unions Help The Economy? (pdf) The answer is no. Workplace rules imposed by unions, which result in lost productivity, produce a "deadweight" of lost productivity that has been measured at between 0.4% to 0.9% of GDP, proportional to the level unionization. Although this does not seem too large, compounded over the last century it represents a loss of 40% of current GDP! Unions also impede economic growth through their obstruction of technology and innovation. Evidence has shown that unions are more concerned with protecting the wages of their current members rather than their jobs. More concerned with worrying about the future of the union than worrying about the future of the industries in which they work. Overall, the findings are:

Unions are associated with lower rates of growth in income and jobs. On balance, people move away from union-intensive areas to areas with relatively low rates of union density. Occupations and industries with high rates of union density have had less vibrant job growth in recent decades. Widespread unionization of an industry is often associated with initial sharp declines in employment... The more strident and intense union involvement in industry, the bigger that industry's decline...

Particularly noticeable is that even union workers, who initially benefit from higher wages, are ultimately hurt by the decline in overall economic productivity which overtakes their wage advantage. This is not to say that unions are necessarily an evil in aggregate, but only that their justification must be found elsewhere than economic development or even wage advantage. While unions undoubtedly contributed to significant gains in worker safety and working conditions, these benefits are now dictated and enforced by government agencies, and unions may no longer be necessary to maintain them.

While Mr. Reich's claims of union contribution to economic health proved risible, what of his claims that labor was left behind by the economic growth of the Bush years?

It's no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn't share in the prosperity.

Almost all claims of this type fail to account for the increased competition to which American workers have been exposed. American prosperity skyrocketed in the post-WWII era, first because of the massive capital advantage (while the rest of the world lay in ruins), and later in the human advantage due to American education. Both of these advantages had ebbed by the end of the century, where America borrows extensively from China, Japan, and the Gulf states to finance its spending binge, and American students regularly underperform their foreign competition. Declines in transportation costs, and the rise in knowledge based industries (which are eminently portable) have further contributed to erode the American advantage. So, instead of increases in productivity going into the pocketbook of American workers, their additional output has been necessary to maintain the status quo against an increasingly aggressive and able competition. That Americans are not working for the same wage as Bangalore or Beijing is a credit to increases in technology and innovation, often made possible by the very people we are competing against.

Labor is like water. Absent significant barriers it seeks its own level. Eventually, everyone in the world will have the same standard of living. And that is as it should be. Americans have no right to deny others the benefits we enjoy. If we do not wish to share their poverty it behooves us to do everything necessary to assist their climb to prosperity. And as we can no longer enjoy the protection of unnatural advantages, we cannot let ourselves become lazy or succumb to the siren song of entitlement.

Lastly, Mr. Reich's claim that tax cuts do not have the permanent effect of higher wages and benefits is disproved by the evidence.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Purchasing ability is dictated by take home pay, which is affected by both gross income and the tax rate. And while wage increases have larger affects for low paid employees, tax rates significantly affect the incentives of wage increases for higher paid employees (which includes many union workers). If Mr. Reich fears that tax cuts will be temporary, perhaps he should use his influence with Mr. Obama to commit to the lower rates, and forgo his planned increases.

Additional reference material may be found at:Labor Unions from the Library of Economics and Liberty and The Economics of Labor Markets and Labor Unions (pdf)

Is Congress Economically Literate?

2009-01-24T21:06:00.000-08:00

Not too long ago, I heard Barney Frank on NPR, speaking in support of more government regulation.

NPR: Once this bailout package does get approved, if your negotiations with the Obama administration work out, you've got lots else on your plate. No. 1 that comes to my mind is regulating the financial industry. What can we look for there out of your committee?

FRANK: Well that's going to be a very high priority for us. There are a couple of things. First of all, we will put in moves that will keep you from making loans to people who shouldn't have gotten the loans and who can't repay them. Secondly, we have this problem that there's a whole new set of unregulated activities that grew up -- collateralized debt obligation derivatives and credit default swaps. So the No. 1 priority here is to pass rules that don't allow anybody in the economy to make the kind of loans and to get to indebted that they can't pay back and they can cause systemic failure. So, we need to create a risk regulator in the federal government that covers hedge funds and private equity and investment houses and everybody else, so that we don't have Bear Stearns or we don't have a Lehman Brothers coming up again.

NPR: Who should that be? Should it be somebody brand new or should it be, say, the chairman of the Fed?

FRANK: I think it should be the Federal Reserve. This isn't easy stuff. It's not automatic, there are complexities. There's a degree of expertise, I think, available at the New York branch of the Federal Reserve in particular, that it would be hard to duplicate elsewhere in the federal government. So we are inclined to believe, I think, those of us here in the House, that the Federal Reserve should be the systemic regulator. Now there are other factors that we'll need to do. For instance, it's now clear from the Madoff thing that the Security Exchange Commission has not been nearly as effective as it should be in protecting investors. And so, while we create a systemic risk capacity, we also want to beef up the role of the SEC and protect the investors from fraud.

So, Barney Frank thinks we need:

stricter loan standards to prevent loans to people who can't repay them

regulation of CDOs, CDS, and other derivatives

increased SEC overview with a goal of preventing scams such as Madoff's ponzi scheme

a grand scheme for federal risk management

This is all from the congressman who said on Sept. 25, 2003:

I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

Frank's recommendations for the current crises are no better than his suggestion for dealing with the incipient meltdown of Fannie Mae and Freddie Mac. Despite his criticism of loans to people who are poor credit risks, the continues to push for a bailout of "underwater" mortgage holders (people who owe more than the value of their house), who are the very definition of poor credit risks. Congress increasingly treats TARP aid as a means of buying votes and aiding friends.

The worst idea Frank floats is that of a federal risk assessor. As explained in summary, (The Myth of the Risk-O-Meter), risk cannot be objectively quantified. The financial crash is the direct result of systemic errors in risk analysis, which bread complacency about the poor lending practices at Fannie Mae and Freedie Mac, and encouraged severe over leveraging among those holding mortgage backed securities. (A New York Times debunking of Risk Management exposes the pitfalls of VaR, or Value At Risk, which has been compared to “an airbag that works all the time, except when you have a car accident.”) Risk is inherently subjective, and what is acceptable in one context may not be acceptable in another. Even the smartest people can be hoodwinked, and depending on the government to protect people from their own cupidity is a dubious proposition at best. (See, for example, "The Empty Case For More Regulation"). Bernie Madoff's scheme flourished precisely because he operated outside normal investment channels.)

Yet another of Barney Frank's complaints, echoed by Senator Dodd, is that "banks aren't lending" the TARP money that they were "given." But this complaint demonstrates a profound ignorance of banking. As Bert Ely explains in Bank's don't need to be forced to lend, the TARP money was used to make capital investments (i.e., equity purchases) in banks:

First, even well-managed banks are suffering loan losses as collateral values shrink and the recession deepens. In normal times, a bank would raise new capital to offset those losses. However, the capital markets are not functioning normally, with many sound banks now unable to raise fresh capital.

TARP investments, which increase a bank's capital, therefore serve as a bridge to when normality returns to the capital markets. Because of restrictions accompanying TARP investments, and a jump in the TARP dividend rate after five years to 9% from 5%, banks will have an incentive to raise private capital to finance a buyback of their TARP preferred stock. Taxpayers will profit from these TARP investments because of the dividends paid by the banks on the preferred shares the Treasury purchased.

The theory is that without the TARP money, banks would be forced to sell off depreciated assets, further weakening their capital positions, leading to a downward spiral and eventual bankruptcy and financial meltdown. Further explanation is provided in Business Week's story, Why Banks Still Won't Lend:

Banking chiefs defend their position. They argue that the government funds are designed to shore up capital and support lending, but that they have no obligation to make new loans. "It's not a one-to-one relationship," says BofA CEO Kenneth D. Lewis. "We don't write $15 billion in loans because we got $15 billion from the government."

Right now there's little financial incentive to make fresh loans. In the current unease, new corporate loans are immediately marked down to between 60¢ and 80¢ on the dollar, forcing banks to take a hit on the debt. It's more lucrative, then, for them to buy old loans that are discounted already.

At the same time, some banks no longer have the appetite to use leverage, borrowing money to amplify returns. Others say they would like to use leverage but can't easily find willing lenders who offer attractive terms. Leverage has long been a critical factor in profitable lending.

The case for defending banks for continuing tight credit are: banks are fearful of continued losses that may push them into insolvency, banks are having trouble borrowing money to lend, and most importantly, many borrowers are poor credit risks. Forcing banks to make bad loans, and incur further loses, will only weaken their capital positions, and negate the entire purpose of TARP in the first place. Not everyone agrees, with some saying there is no excuse for banks not using TARP funds to buy Fannie Mae and Freddie Mac debt. But the banks that have swallowed TARP money are having a hard time digesting it. As Bank Of America has learned, no good deed goes unpunished. As a result of participating in TARP and stepping in to purchase and save both Countrywide Financial and Merrill Lynch, BofA finds it self paying 8% interest on $35 billion of government money, and allowed to pay only 1 penny a share in dividends for common stock. With its stock price dropping, and unable to pay dividends, BofA has no means of attracting private capital, almost guaranteeing that it must return to beg for government funds. Banks need capitalization, not micromanagement of their compensation structure.

The root problem is not that Barney Frank, Chris Dodd, and Charles Schumer are corrupt and economically illiterate (which they are). The root problem is that politics is incapable of performing the job of the market. Even if Congress were honest and had some knowledge of economics, they would still be inferior to market mechanisms in deciding the proper value of assets, or in allocating resources. The market is the most efficient means of punishing the foolish and rewarding the perspicacious. Congress should do the minimum necessary to fix obvious problems, and let the market work on the rest. In the current financial crises, Congress can limit itself to providing assistance to those who genuinely need it, instead of attempting to reinflate the housing bubble or encourage profligate borrowing by those who are already over leveraged. This crisis originated in excessive borrowing, and even if Congress should succeed in resuscitating easy credit, it will only result in the next crash being even worse.

Cody Firearms Museum

2009-01-21T23:39:00.000-08:00

If you are true devote of firearms, old and new, there are a handful of museums that are on your "must see" list. The Imperial War Museum in London, the Musee de l'Armee in Paris, the National Firearms Museum in Fairfax, Virginia, and the Springfield Armory, in Springfield, Massachusetts. (To its shame, the Smithsonian's firearms collection, with over 7000 items of historical significance and which should be world class, is kept in a locked room with no provision for public viewing.) On the same list must be be included the Cody Firearms Museum, part of the Buffalo Bill Historical Center, located in Cody Wyoming, to which I recently travelled.

The collections in the Cody Firearms Museum cover the history of firearms from the earliest hand cannons to the positively futuristic Gyrojet. The museum visually documents multiple threads in the development and use of firearms in the United States, including the history of U.S. military firearms, the evolution of firearms in the Western United States, and the changing product lines of a myriad of manufacturers. Among the manufacturers represented by specific collections within the museum are: Colt, Smith & Wesson, Winchester, Remington, Savage, Ruger, Sharps, Maynard, Mossberg, Parker, Browning, Weatherby, Spencer, Hotchkiss, and more that I cannot remember.

The U.S. military collection begins with European muskets used during the Revolution, including French 1763 Charleville muskets and English Brown Bess muskets with Tower markings. Domestic manufacture starts with contract muskets, before the establishment of the Springfield Armory in 1794 and Harper's Ferry Armory in 1796. The collection well represents the muskets and rifles of the Early Republic, including all three variants of the Springfield 1795 musket (shown). The collection continues with the first Hall breach-loading flintlock rifles, and an example of a screw-breach loader almost identical to the famous Ferguson. The collection documents the transition to percussion, with an entire case of Civil War rifled muskets, and the subsequent introduction of metallic cartridges with Spencers and Allin conversions, evolving into the Springfield Trapdoor. There is even a 1870 Springfield manufactured rolling block on the Remington design. Krags, '03s, Garands, rotary magazine Johnsons - they are all here, culminating in the Armalite AR-15 design (in cutaway form) that introduces the M-16 rifle and M-4 carbine. Military pistols are here as well, from flintlocks to Civil War Colts, Remingtons, and LeMats, a plethora of 1873 Colts (more commonly known as "cowboy" guns), the Colt 1911 ACP, and ultimately the 9mm Beretta M9 (FS92). If the U.S. military used it, there is certain to an example in the museum's collection.

Although the museum primarily documents the American experience, it includes significant firearms of foreign manufacturer. The earliest are the matchlocks and wheellocks brought to America by the colonists, and some examples of North African flintlocks that I think date to the days of the Barbary pirates. Then as now, Americans imported fine firearms from Europe, even after they started making their own. Contemporary with the Pennsylvania long rifles are such gems as this matched set of dueling pistols, imported from France. A four-shot revolving flintlock pistol of Italian make is notable, as are the various "pepperbox" pistols.

This incredibly well preserved Volcanic repeating pistol represents a nexus of Smith & Wesson with metallic cartridges, and the genesis of what will become the Winchester Repeating Arms Company. Horace Smith and Daniel Wesson will take their patent on the bored through cylinder and build on Samuel Colt's revolver design to become what is arguably the world's premier designer of revolvers. Their partner in the Volcanic company, Oliver Winchester, will work with foreman B. Tyler Henry to develop first the Henry Rifle (the Civil War rifle that confederates claimed Yankees would "loaded on Sunday and fire all week"), and then the long line of Winchesters starting with the 1866 "Yellowboy" and 1873 of cowboy fame.

The Winchester collection is probably the most comprehensive of all, with multiple examples and variants of all Winchester's famous rifles. But, beyond the well known, the museum also houses such rare finds as this display of Winchester's abortive foray into pistol manufacturer. Smith & Wesson rifles, Remington pistols, Colt revolving rifles - all the oddities resulting from manufacturers' excursions into unfamiliar territory are here.

Winchester's prolific manufacture and unparallelled popularity means that their rifles were frequent companions of the famous, like this 1895 in .405 Winchester that accompanied Teddy Roosevelt on his hunting trip to Africa in 1909. Other famous rifles are Jimmy Stewart's Winchester '73, from the movie of the same name, and a number of presentation rifles whose previous owners' names escape me at the moment.

Another designer to have their development work documented at the museum is John Browning, American's most prolific and and talented creator of firearms. Many of the designs are familiar to Browning's fans as either intermediate or final versions of his well known rifles. There are also surprises, such as this .44 caliber "slide action" rifle (right), reminiscent of the Colt "Lightning" slide action rifle, of which I am particularly enamored.The details (right) of the Colt rifles show remarkable similarity to the Browning design. The Colt was offered in three models: the large frame (two rifles at left, with longer receivers) was chambered in heavy cartridges like the .38-56, .40-60, .45-65, or .50-95. The medium frame (center two rifles) was available in .32-20, .38-40, or .44-40 (compatible with common chamberings of the 1873 Colt Single Action Army), the small frame (right, with brass magazine gate) in .22 Long. Finicky, and difficult to maintain, the Colts are nonetheless one of the fastest manual loader rifles to shoot. With a little practice it is simplicity itself to cycle the action without changing the grip or stance and without loosing acquisition of the target. Beyond their utility, I find their simplicity of line and delicacy make them one of the most elegant of rifles every made.

Another design which I find overwhelmingly elegant is Smith&Wesson's "perfected" target pistol. Built on a revolver frame, and used for Olympic and match competition, the "perfected" pistol is one of the most eminently pointable pistols ever made. Its top break design returns the barrel to the exact same position with the frame every time, reducing variances that might affect accuracy. These pistols are surely the pinnacle of an outstanding production in the Golden Age of revolver manufacturer.

The last image presented is that of the two airguns (similar to those?) that accompanied the Lewis & Clark Expedition of 1803 to 1806. The left hand gun has a metal butt that serves as the air reservoir. The guns are capable of repeated shots between fillings, and have more than enough velocity to take game. Just another example of the unexpected in American history.

I spent all afternoon in the Cody Firearms Museum, and never did see any of the other four museums in the complex. Even so, I hurried through the exhibits, and did not have time to study each presentation in detail. I took about 250 pictures to document my tour, but still missed entire topics. The size and scope of the collection is simply astounding, and a must see for any fan of firearms.

"I Pledge"

2009-01-21T20:32:00.000-08:00

You either get this one, or you don't. If you watch the following video, and you're ready to join the pledge to "be of service to our president", you should probably stop reading this blog, because eventually it is going to cause you heartburn.On the other hand, if you barely finished the video because of incipient nausea, or if the words that sprang to mind are "puerile", "preening", "sanctimonious", or "meathead", then by all means click on this link to read the (almost) transcript. But don't do it where bursts of laughter might endanger your job or relationship.

What Is A Right?

2009-01-19T22:39:00.000-08:00

Not too long ago, I heard some Limey on NPR opine that, "Health Care is a right". This refrain has also been heard from domestic lunatics as well as foreigners whose brains have been broiled by the noon-day sun. Obviously, a lot of people slept through civics class, so let's review, what is a right?.

Let us first note that there are two types of rights - negative rights and positive rights, which are closely associated with negative liberties and positive liberties. Generally, negative rights or liberties derive from prosciption, the prevention of an action, and positive rights or liberties are prescription, the coercement of an action. Examples of negative rights are the right to life, liberty, and the pursuit of happiness. Why are these negative? Because these are rights that you already possess, unless some other party should try to deny them to you. Similarly, the right to free speech (unless you are a mute) or freedom of religion is a negative right, because it takes an external act to deny you those rights. These rights are protected by banning activities that would take them from you.

Examples of rights people consider positive rights are freedom from hunger, the right to housing, the right to health care, or my all time favorite, freedom from fear. These are rights to a state or activity that one does not have automatically, but must be provided by an outside force. They are considered positive because something must be done to satisfy them.

So, what's wrong with that? Shouldn't everyone be entitled to food, shelter, health care, and a stress free life? Well, the problem is, who is going to be doing the providing? Unless one believes in divine providence (e.g., mana from heaven, or miraculous fish and bread), those items necessary to satisfy positive rights must be provided by human labor. We can demand it of the government, big agriculture, or big pharmaceuticals, but ultimately, those agencies just pass on the demand until at some point it trickles down to a person who must labor to create the items demanded as a right. At that point, the person demanding the right is demanding that the person producing the item must work to produce it, and that, we call slavery.

Doesn't this make government welfare programs or Medical or Social Security a form of slavery? Although some have characterized these programs that way, the answer is no, not necessarily. As compassionate people we may decide to pool our resources, and take some of the excess and give it to those less fortunate than ourselves. This is called charity, or good works. It continues to be charity even if we institutionalize it by means of our laws. (I include Islamic charity, zakat, because although it is obligatory on all Muslims, the decision to embrace Islam is at least nominally voluntary, and so the practitioner has made a choice to tithe.) But it is important to note that the decision to provide aid voluntarily does not create a right to such aid in the recipient, else we should create a form of slavery when one party is forced to work for the benefit of another.

It can thus be seen that a right to health care is an oxymoron, since it cannot be satisfied without violating the even more fundamental right of individuals to order their own lives as they see fit so long as they do not violate the self-same rights of others. In the simplest case, unless we accept forcing doctors to treat us, at the point of a gun, we have no "right" to the fruits of their labor.

P.S.I consider "freedom from fear" to be the most egregious example of this case, because fear is a state of mind that exists completely within an individual. What standards are there to judge what causes fear in one person and what causes fear in another? Do I have a right to a spouse of my choosing (regardless of their wishes) because I have a fear of being alone? Only the intellectually lazy could even suggest such a concept.

Further Thoughts on the Palestinian Conflict

2009-01-17T01:14:00.000-08:00

Reading this article, Hamas Rejects Truce Conditions, made concrete an impression that had been forming in my mind: that a resolution of the conflict is precluded by the asymmetry of terms each side uses in defining its position.

These thoughts were triggered by the following exchange quoted in the article:

(Hamas leader Khaled) Mashaal said Hamas refused to renew a six-month-old truce with Israel that ran out in December because the period of relative calm had not led to an end of the Gaza blockade.
"Did we do wrong, by rejecting a truce that let the blockade continue?" Mashaal said. "Don't the people of Gaza deserve to live free? ... They want to live free without blockade or occupation, just like all the Palestinian people do."
"Please listen to the voice of the resistance," he said. "Don't think that Hamas wants an open war. We are defending our people."

For Hamas, a "truce" is a period of relative calm, during which some 361 rockets and 303 mortar shells can be launched at the enemy. (Rockets and mortar shells continued to be fired during the "humanitarian truces" designed to allow food and medicine into Gaza). Hamas justifies these attacks as a "defense", required by the Israeli quarantine of Gaza (or "blockade", as Hamas terms it).

Consider the equivalence of "aggression". Israel defines aggression as the firing of missiles. Hamas defines aggression as the quarantine of Gaza and the presence of Israeli troops on "Palestinian" land.

Even "war" is defined differently. Israel defines war by the modern understanding as a conflict between states, fought by proxy forces (soldiers). Hamas defines war according to the far older definition as a conflict between people, fought by any means available, against any and all members of the opposition.

Far more troubling is how each side defines "peace". Israel (mistakenly, in my belief), defines peace as the absence of war, the absence of armed conflict. Hamas defines peace (also, mistakenly, in my belief) as the extension of the Dar al-Islam over the Islamic Waqf of Palestine (See Hamas' charter).

I do not see how an agreement can ever be forged between two peoples who cannot agree of what the terms of an agreement would mean. No treaty that each side interprets so differently can ever survive. In the past, such irreconcilable differences were only settled by partition and an exchange of populations. (See, for example, the partition of India and subsequent creation of Pakistan, or the resolution to the Greco-Turkish War.) But that solution was already tried, in 1948, and failed, primarily because one side refused to abide by the solution.

Throughout this, the terms "intransigent" and "disingenuous" come to mind in describing the behaviour of the Palestinians. Whatever grievances the Palestinians have, (and they have valid ones, although mostly, at this date, against the egregious treatment they have received at the hands of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), for the deliberate perpetuation of their misery), their continual extremism, escalation, and duplicity put diplomatic resolution of the conflict out of reach. They are not, and never have been, a "partner for peace", since they (a) reject modern civilizational norms, (b) refuse to abide by their prior agreements, and (c) ultimately define peace only as victory for their side. In this they are uncannily similar to the North Korean government, another world pariah whose excesses can only be contained by the eventual eradication of the regime (although in the case of North Korea, there is significant doubt that the people share the pathological beliefs of their "leaders").

I am becoming more convinced that the Palestinians require rehabilitation through being part of a larger civil institution, such as Egypt for Gaza and Jordan for the West Bank. Left as they are they are too small a group to have balance, and have thus become vulnerable to and then dominated by a nihilistic philosophy. Yet another has opined in support of the "no-state" solution, so it may yet come to pass.

Consequences of Sharia Law

2009-01-16T23:31:00.000-08:00

Western, secularist, society, admits to very few absolutes. The U.S. Declaration of Independence acknowledges "life, liberty, and the pursuit of happiness." The French Droits de l'Homme enumerates "liberty, property, security, and resistance to oppression". The importance of narrowly defined absolutes is that such declarations open the space for discussion, disagreement, negotiation, and reconciliation. Issues not specifically addressed may be resolved by constitutions, legislation, conventions, or customs. As people's understandings change, so the regulations may change.

Sharia, or Islamic Law, derives, in order of importance, from the Qur'an (the religious text of Islam), the hadith (sayings and doings of Muhammad and his companions), Ijma (consensus), and Qiyas (reasoning by analogy). The Qur'an and Hadith are static - unalterable - and any discussion or the prescriptions and proscriptions contained within are solely within the context of exegesis - understanding what has already been determined. Sharia Law does not allow for the deletion or contradiction of those laws derived from the Qur'an or Hadith. Consequently, the space for discussion, disagreement, negotiation, and reconciliation, is severely restricted, leaving little to no room for the peaceful resolution of conflicting ideas.

Among the most egregious examples is that of freedom of religion. Western thought allows for individual freedom of conscience and for people to make, and remake, their personal views of a Higher Power. But for adherents of Sharia Law, apostasy from Islam is a capital offense - the apostate must be executed. One is either a good Muslim, and follows the rule, or one is not a good Muslim. There is no leeway, no method of mitigating the sentence, no method of rescinding the law, no method of discussion or disagreement without risking apostasy oneself, and subsequent death.

Expanding the discussion to the political realm, consider the consequences of adopting Sharia Law as the basis of political rule (as is its native intent). Hamas' founding charter has adopted Sharia Law in Article 7:

But even if the links have become distant from each other, and even if the obstacles erected by those who revolve in the Zionist orbit, aiming at obstructing the road before the Jihad fighters, have rendered the pursuance of Jihad impossible; nevertheless, the Hamas has been looking forward to implement Allah’s promise whatever time it might take. The prophet, prayer and peace be upon him, has said:
"The Day of Judgement will not come about until Muslims fight the Jews (killing the Jews), when the Jew will hide behind stones and trees. The stones and trees will say O Muslims, O Abdulla, there is a Jew behind me, come and kill him. Only the Gharkad tree, would not do that because it is one of the trees of the Jews." (Sahih 4:52.176)

Apologists may object that the Bible contains objectionable verses as well, but no legitimate western society proposes to use the Bible as the literal text of its laws. Christians of different stripes may disagree over the translation, interpretation, and application of the Bible in civil society, but they have already forsworn (by the civil covenant) the use of coercive force to promote their particular views. Sharia Law offers no such out, as it is indivisible, and practitioners may not "agree to disagree" within its framework. Civil and religious domains are one and the same, and to disagree with one is to violate the other. Women's rights is but one example where it is impossible to "work within the system" of Sharia to improve the status of minorities.

Although this conflict has been popularly called a Clash of Civilizations, it is more properly a clash of cultures, a difference of zeitgeist, i.e. "worldviews". The westerner exists in a cultural framework that allows for differences of opinion, rhetorical flourishes, relativism, negotiation, accommodation, and eventual reconciliation. The devout Muslim practitioner of Sharia Law inhabits a cultural framework based on strict conformance to a 1400 year old standard.

It is difficult for westerners to grasp that the rhetorical excesses of prominent Muslim leaders are not starting points for negotiating positions offered up to be whittled back to a final, mutually acceptable, meeting place. They are rather the expression of deeply held convictions reflecting their proponents' final outcomes. As former Hezbollah leader, Hussein Massawi has said, "We are not fighting so the enemy will offer us something. We are fighting to wipe out the enemy". Arguments that these extreme statements are simply pro forma rhetoric, are themselves more likely to be simply pro forma apologia, intended to obscure the fanatical ideology underlying such opinions. Sometimes, these statements of intolerance and aggression need to be taken at face value.

As Bret Stephens perspicaciously observes, rigid adherence to Islamic Sharia Law is incompatible not only with Western concepts of tollerence, but with the very concept of the Western nation state. Sharia views the world primarily as separated into the ummah of Muslim peoples (also known as the Dar al-Islam, or House of Islam), and the Dar al-Harb (or House of War). Emphasizing primary alegiance to the ummah, and not to the nation states, makes for unreliable partners, since such followers refuse to be bound by the commitments of the state, going so far as to repudiate any prior agreements that might serve to limit the power or growth of the ummah. It is difficult to forge lasting agreements with parties that categorically deny the legitimacy or rights of any other peoples.

This explanation of mine is most emphatically not a condemnation of Arabs (who may or may not be religious), nor of Muslims (who may or not may conform to the strict dictates of Sharia Law), nor even of proponents of Sharia Law (who may or may not agree with the individual prescriptions or proscriptions of the Qur'an and Hadith). It is rather a exposition why Sharia Law should never be allowed in western democracies, because it establishes a framework antithetical to Western concepts of a limited public sphere of control, and a generous private sphere of choice. Christianity once included the doctrine of infallibility, of subordination of the civic sphere to clerical rule, and the belief that religious texts had the force of law. Such positions have now become passe, and no longer define Christian identify. Many practitioners of Islam currently do not consider the Qur'an or Muhammad as infallible, nor do they wish to exchange their civic institutions for Sharia law, but they are contested by more extreme elements who call them kafir, and prevent acceptance of a more amenable form of Islam. Conflict between the cultures will persist until the profession of a Muslim is seen as unremarkable as that of a Christian. This requires the evolution and transformation of the concept of Muslim to exclude those whose ideologies are incompatible with global society. James Taranto, writing in the Wall Street Journal suggests differentiating the later as Islamic Supremacists, similar to the way we marginalize others who claim superior or privileged status for their community. The problem is that the label of Islamic Supremacist fits too many Muslims. I disagree with Mr Taranto's belief that "reconciling Islam with religious pluralism is a task for Muslims," and recommend instead that people who wish to hasten the transformation of Islam and demise of Islamic Supremacy should not be reticent in rejecting those intolerant interpretations that do not allow for universal enjoyment of life, liberty, and the pursuit of happiness.

Yellowstone

2009-01-15T23:02:00.000-08:00

In the last week of October, 2008, my friend Gary and I took a week off to visit Yellowstone National Park (pdf map), located in the North-West corner of Wyoming. We planned for two days driving in each direction, with a five day stay at the West Yellowstone Worldmark, located just outside the west entrance, in Montana. Unbeknown to us when I made the plans was that Yellowstone park closes to most vehicular traffic from the first Sunday in November until late December, when it reopens for guided snowmobile traffic. The effect is that many businesses in West Yellowstone close during this time, and visitor traffic in the park is almost non-existent. Of course, so close to closing, many of the park's facilities had already shuttered for the season, but none that we were particularly desperate to see. On the up side, without the crowds, visitors like us soon come to feel like privileged guests of the hardy few who remain for the advent of winter.

The weather in Yellowstone on most days was in the mid 60's, with a high overcast, frequent sun, and occasional showers, dropping below freezing during the night. Long sleeve shirts and a vest were sufficient for most days, with a wind breaker in case of rain. Since our accommodations were adjacent to the Grizzly & Wolf Discovery Center, (a kind of "Bears' Town" for delinquent bears that might otherwise be euthanized), many nights we were "serenaded" by the howling of the wolves residing at the center. The bears at the center earned their keep by testing prototype "bear resistant" food containers and trash cans. Judging from the residue on display, the bears had a better track record than the inventors. The center has about eight bears (I think), and two wolf packs living at the center. The bears are rotated through the outdoor area, spending a few hours at a time in groups or two or three. I guess not all of the bears get along with each other. The wolves are in two separate enclosures, one forested and one with a creek, with about 4 or 5 wolves in each group. I noticed one dominant wolf in the creek group, and when I asked if it was an alpha male I was informed that wolf was Akela, the head bitch. Wouldn't you know it.

As your may know, Yellowstone Park is the site of one of the largest supervolcanoes in the world. The park sits on top of caldera, the remains of a massive eruption approximately 640,000 years ago that wiped out most life in middle America. Since then, successive lava flows, the most recent 70,000 years ago, have filled in much of the caldrea and raised new peaks. The geysers and hot springs that populate the park are evidence of continuing volcanic activity, and geologists are able to detect changes in ground elevation as the magma chamber under the park slowly re inflates. The effects of the previous eruptions are continually exposed in the erosion patterns created by the juxtaposition of hard basalt and rhyolite with softer surrounding rocks, and are supposedly responsible for the many waterfalls in the park where rivers leaving the harder lava plains suddenly cut deeply into the softer surrounding rock.

The second most visible aspect of Yellowstone is the effect of the massive fires of 1988. Vast areas of the park are level plains of young trees, all the same size. Many areas burned in 1988 appear to be about Christmas tree height, maybe 8' to 12' tall. Trees do appear to grow particularly fast in Yellowstone, perhaps because of the harsh winter conditions. The after effects of forest fires are visible for many years following, particularly because the park service takes no action to manage or clean up afterwards. The uniformity of tree height only enhances the impression of flat plain marked by deep cut rivers. There have been some fires since, and some of the areas we drove though had many very small trees, maybe 2' to 4', growing amongst the few charred remains. For someone used to the ubiquitous towering trees of the Sierra, it was noticeable change. Another arboreal difference is that where the California Sierras host myriad varieties of pine, fir, cedar, and redwoods, Yellowstone's conifers are most Lodgepole Pine, and the uniformity increases the feel of a Christmas tree farm.

Yellowstone is probably best known for Old Faithful geyser, (which actually isn't all that regular). While it is certainly worth seeing (my camera battery died just before its eruption peaked, forming a vivid rainbow from the geyser's boiling spray and the flat light of the setting sun), the park contains many other wonders just as breathtaking, if not more so.

Yellowstone is home to the Grand Canyon of the Yellowstone, formed where the Yellowstone River flows off the edge of the hard, volcanic, plateau that remains of the ancient caldera, into the softer, rotted stone and rock of the surrounding country. The result is the spectacular 400 foot drop of Yellowstone Falls, and the even more spectacular canyon of the river, its depth accentuated by the regularity and flatness of the surrounding terrain. The road north along the canyon was closed, and we were unable to get a glimpse of what lay beyond the picture. Unusual for a westerner like myself, the Yellowstone flows north and east, before joining with the Missouri River, itself a tributary of the Mississippi. It took a bit of getting used to to anticipate the direction of river flow on the opposite side of the Continental Divide.

Large areas of Yellowstone are open meadows, populated with elk, deer, and bison. Protected from hunting, the animals readily approach tourists and allow their pictures to be taken. We saw bison repeatedly in various areas of the park, and elk twice, once by the Madison River (pictured) and again by Yellowstone Lake. Twice I saw coyotes at the side of the road, but although we looked, we never did see any bears or wolves roaming free in the park. Except for the roads and the few visitor's centers, the park is unimproved for the most part, and when combined with winter's solitude, it can be down right spooky sometimes. More than once, as I hiked away from the road for a look or a picture, the thought went through my head, "I hope there aren't any bears around." The most common bird we saw were ravens, In West Yellowstone, at Old Faithful, in the Tetons, and elsewhere. We also spotted a few hawks. Yellowstone is home to large cats as well, but we didn't see any.

Early in our stay we took a day to drive east through the park to Cody Wyoming, home of the Buffalo Bill Cody Historical Center, a collection of five museums, including the world famous Cody Firearms Museum. (More about that in another post.) From West Yellowstone to the park's east entrance is just under a two hour drive, with another hour's drive to Cody. From Yellowstone Lake in the center of the park, the road rises to cross through Sylvan Pass, above Sylvan Lake (shown left), and then drops to follow the Shoshone River as it flows down into Buffalo Bill Reservoir, outside of Cody, Wyoming. Along the way the scenery transitions from steep wooded stream, to canyon, to ranches populating the river valley, to the wide open plains around Cody. The area east of Yellowstone Lake on the way to Sylvan Pass appeared to have burned recently, and the grassy regrowth attracted dear and elk that we saw.

Towards the end of the week we drove down to see the Grand Tetons (or, "big tittes", in English) in Grand Teton National Park (pdf map). Driving south from Yellowstone Lake, we recrossed the continental divide, and passing Lewis Lake, paralleled the Lewis River on its drop to join the Snake River at the park's south entrance. Where the Lewis drops off the edge of Yellowstone caldera into the softer rock of the Rockies, it forms an amazing series of stepped benches as it cuts deeper and deeper into Lewis Canyon. Had we not been on a mission to see the Tetons, I would have dearly loved to stop and descend into the canyon to check the quality of the fishing. By the time easy access to the river is resumed, the traveler will have exited the park, and reached the Snake River, where the water once again meanders placidly through grassy meadows on its way to Jackson Lake.

Mid week, I took a day off to fish the Firehole River. With the large number of thermal springs feeding the Firehole, including the outflow of Old Faithful, the Firehole stays warm enough to keep its resident trout active when other streams have become moribund. With few exceptions, Yellowstone is catch-and-release country, with barbless hooks only, and the fishing season closes with the park in November. After much reading I decided to fish a nymph dropper under a dry indicator. After some experimentation to adjust drift depths and speed, it began to pay off. I hooked sixteen fish, landed eight, and missed at least another dozen or so hits. I even caught two at once, with one jumping on the Stimulator indicator while I was playing the fish that had already taken my nymph! (I have pictures to prove it.)

The Firehole in the stretch that I fished is broad, running from ankle to waist deep, with a constant fair drop. The combination creates quite a bit of subsurface topology, but with few boulders showing. Finding fish requires careful reading of the water, scanning for clues in the slicks, pillows, and riffles visible on the surface. Wearing thigh-high waders, I was forced to exercise extreme caution to avoid stepping into a hole or other deep spot. The current is swift, dictating use of a "shuffle step" in moving, and limiting direction of travel. The force of the water made me anxious in anything over knee depth, so I tried to stand on higher rocks when actively fishing. Even so, I once found myself far out in mid stream, surrounded by fast moving waist and chest deep water, and only extricated myself after a good half-hour of carefully retracing my steps back along the tongue of rock which I inadvertently followed. I was happy to have a wading staff with me, and used it frequently.

The Firehole River cuts along the soft rock at the edge of an ancient lava flow, and the stream bed is a strange mixture of rigid igneous basalt formations and the residue of the softer sedimentary rock that forms the west bank. At the point shown here, the river runs in a narrow churning slot cut in the softer rock (at the left of the picture), spilling out onto a series of shallow shelves only inches deep that spans most of the east bank (at the left of the picture). It was an eerie feeling, standing in the middle of the river in ankle deep water, looking down into turbid depths just beyond my feet.

I tried fishing again the day before we left, starting on the upper Madison, where I thought some trees and large boulders would provide cover for fish. After about three hours of unproductive fishing, without a single rise, I moved further up to try the lower Firehole just above the confluence with the Madison. Where the Madison had been dangerously deep for wading, the Firehole was frustratingly shallow, often hanging my fly in rocks as I attempted to drift it in the swift flow. Towards the end of the day, after enduring a cold afternoon drizzle, I finally managed to hook one rainbow, about 6" or 7" long. At least I hadn't been skunked.

Among the gustatory delights of Yellowstone were Elk burgers at Bullwinkle's restaurant, artichoke soup at Sydney’s Mountain Bistro, and Moose Drool, a great dark ale, on tap at Bullwinkle's Saloon. (If you want to try some, Moose Drool can be found at BevMo.) But, since the Worldmark's have full kitchen's, most days we cooked and ate at our suite. Another recommended dining experience was Idaho Joe's, in Twin Falls, Idaho, on the Snake River (picture right) where we ate both coming (a great Sunday brunch), and going (Saturday's Haystack burgers). Also noteworthy was Cassie's Supper Club, in Cody, Wyoming, where we treated ourselves to a couple of steaks after our trip to the Cody Firearms Museum.

Peace in "Palestine"

2009-01-11T00:04:00.000-08:00

If ever a people have made a case in favor of genocide, it is the Palestinians. Despite every effort of the civilized West (and without any assistance from their Arab brethren) the Palestinians repeatedly prove unable to create a functioning society, and are unable to produce even the seed of a society worthy of respect. Each time they are given the resources and opportunity to improve their lives, the Palestinians squander the wealth and goodwill offered them in an orgy of hatred and killing. As Abba Eban said, "The Arabs never miss an opportunity to miss an opportunity." While Israel produces scientific and cultural discoveries, technological advances, educated citizens (of all religions and races), and a cornucopia of life wrestled from the desert, the Palestinians sole gift to the world is the suicide bomber, and their people are among the most bigoted and ignorant to inhabit today's world. Their status is surely reflective of their dominant meme, which seems to be, in the words of Chief Palestinian Authority cleric Mufti Sheikh Ikrimeh, "In as much as you love life, the Muslim loves death and martyrdom." Desiring death, they are unable to produce a life worth living. If the Palestinians have proffered a quandary on the world, it is that despite the undoubted benefit to be gained from their eradication, no one has the stomach for the deed. Despite their intransigence and provocations, no one can be found to shoot the rabid dog.

I am not unsympathetic to the aspirations of an Arab or Muslim minority within Israel, and I respect and admire the contributions of greater Arab culture to the world as a whole. But the Palestinians are not the same as the Israeli Arabs, the Egyptians, Jordanians, Saudis, or Iraqis, all of which strive to improve their situations (mostly) without descending into the depths of depravity and barbarity. The Gazans are uniquely immature, irresponsible, and vicious. This may not be entirely their fault, confined to grow up in squalid "refugee" camps by the deliberate mismanagement of the United Nations and the callous calculations of the adjacent Arab governments. But the cause is now irrelevant - they are ungovernable by Israel, unwilling or unable to accept the responsibility to govern themselves, and the world (and most particularly Israel) is too civilized to exterminate them. Yet, an Israeli nurse, injured by a Gazan rocket that struck her home, says

she constantly tells her four-year-old son, who was also injured, that “there are so many good people in Gaza who are not trying to kill us”.

The Lord was willing to spare Sodom if Lot could find 50 honest men, and I suppose that there are probably at least that many innocent and honest in Gaza. Common decency demands we do no less. Even if they do not value their own lives, the standards to which we hold ourselves dictate a more humane solution.

As I despaired of every seeing an end to the violence, suddenly two solons recommend the same eminently workable solution: give Gaza back to Egypt and the West Bank back to Jordan! In separate commentaries, both John Bolton and Daniel Pipes recommend the return of the fractious "Palestinian territories" to the countries from which they were originally lost in the 1967 war. Such a solution is only hampered by the fact that neither country particularly wants them back, but hopefully sufficient inducements can be found to make it palatable. (Would the U.S. take back Detroit if Canada had somehow conquered it? Would Mexico ask for the return of Tijuana? It is instructive that India and Pakistan were willing to contest ownership of the uninhabitable Siachen Glacier, at a cost to India of over $800,000 a day, and yet Gaza, with all its potential, remains indigestible and undesirable to Egypt). But, with Western aid and inducements, Jordan and Egypt could resume sovereignty of their lost lands, and with time and patience, reeducate the Palestinians sufficiently to return them to civilization. Both Egypt and Jordan are not particularly gentle, but the firmness and structure they could offer seem the best way to control the Palestinians' homicidal impulses until the older generations pass away, and a new, untainted, generation grows up to accept the responsibilities of civilized behavior. Its something to think about.

In the vain hope of forestalling the usual criticism that my opinions are somehow racist or religiously intolerant, the "Palestinians" are not genetically unique, nor are they the only practitioners of Islam, but insofar that their culture may represent something quintessentially "Palestinian", something not shared by any other people on earth, its "culture of death" is, as far as I can tell, an obscenity and an abomination, utterly without any socially redeeming value.

I majored in Islamic history in college, because of my admiration and respect for Arab culture, and so I am of course aware of the history of the region, including to the current time. I am also aware of the Palestinian narrative, and the various arguments being made in condemnation of Israel and in defense of the Gazans. (Although, how Gazan incompetence at killing Israelis makes Israel's response "disproportionate" is never well explained). The bottom line is that it is Hamas and the Gazans themselves who persist in phrasing their choice as one between the eradication of Israel or their own death. They are being bombed in response to the thousands of rockets they fired at Israel. They shot rockets to protest an embargo that resulted from the hundreds of attacks and suicide bombers they sent into Israel. They sent suicide bombers into Israel to protest the loss of territory resulting from their own war of aggression against Israel. And they launched a war of aggression because they could not abide a Jewish presence in their midst. Each step resulted from an escalation that was their choice to make. Israel made bad choices as well, but with the exception of a few individuals, deciding to exterminate another people was not one of them. The instransigence appears one-sided, and many argue Hamas must be destroyed for any progress to be made. (Here and here).

Of the Palestinians, Golda Meir supposedly said, "“We can forgive you for killing our children but we can never forgive you for making us kill your children.” I can never forgive the Palestinians for killing the opinions I once held of an ancient and honorable people living in the Middle East. They have betrayed all those who once supported their struggle for self determination, and brought me to look with cynicism and suspicion on claims that the drive for peace and freedom is universal. I am today far more likely to believe the Hobbesian view that left to nature, people are nasty and brutish. And I curse the Gazans for making the case.

Back in the Saddle Again

2009-01-09T21:22:00.000-08:00

I haven't been blogging lately, not out of depression over the results of the Presidential election (which I anticipated), but because my main computer, an HP nx7400 laptop, had serious problems. It wouldn't charge, and wouldn't run on DC. Neither the plug-in adapter, nor the docking station worked.

So, I took it to Geek Squad, at Best Buy. They opined it was probably the motherboard, and tried to talk me into buying another laptop, but I like the HP, and said I wanted an estimate. They said it would cost $35. A week later I got a call: $950 !! - to replace the motherboard. I did some quick Googling, and found that there were other companies that quoted $150 for power jack replacements, and $500 for swapping the motherboard with a used board. So, I told Geek Squad to just return the laptop.

After some more searching on HP's web site I was able to find a new motherboard, from HP, for only $350. (It's actually $500, with a $150 refundable "core charge" if you return the old board). So, I ordered it on-line, and it arrived last Friday. Finally, last night I sat down with a hardcopy of the disassembly instructions printed from HP's on-line service manual, my trusty magnetic multi-bit mini-screwdriver, and a damp towel to act as an anti-static mat. Two hours later, the deed was done. With some trepidation, I plugged in the power connector, and voila, the charging light came on. A little tweaking to make sure the bios setting were correct, and setting the clock from nist.time.gov, and my HP nx7400 is back in business!

The CPU is ZIF (zero-insertion-force) socketed, so getting it in and out is no problem (You keep your old CPU, and move it to the new board). The instructions from HP are clear and complete. Nearly everything can be handled by the edges to keep fingers off of sensitive componentry. I'm not a hardware tech, and I was able to complete the job in two hours. Even if the Geek Squad people are as unskilled as myself, that comes out to $300 an hour, for what they were willing to charge me. That seems somewhat excessive. One can't help but wonder that the Geek Squad has a serious conflict of interest in pushing people to purchase new computers when their old ones can be easily and more cheaply repaired.

Full disclosure: This isn't the first time I've had problems dealing with Geek Squad. The last time, their manager threatened to call the police to have me removed from the store, because I was being "disruptive". It was only because I told him (rather loudly) that I didn't believe him when he told me someone would call me back, because it hadn't happened any of the five previous times someone there had made that particular promise. Anyway, I (perhaps, stupidly) gave them another chance, and they flubbed it. Score: HP - 1 (for reasonable parts costs, and clear instructions), Geek Squad - 0.

Anyway, now that my laptop is once again tip-top, I hope to catch up on my commentary. Stay tuned for more posts.

Libertarianism In One Lesson

2008-12-23T11:06:00.000-08:00

A favorite plot device of Hollywood action movies involves a race between the hero and the villain to acquire some artifact that allows the possessor to control the world. At the movie's climax, the hero is tempted to claim the item for their own, with the promise of all the benefits that could be bestowed if only the power were to be used in the service of the good guy. But ultimately, the hero decides that the power is too dangerous to be trusted to mere mortals, and destroys the object, often with the villain following close behind.

Replace the miraculous object with the power of government, replace the hero and villain with the political parties, and alas, the Hollywood ending turns to film noir - the hero is too weak to resist the allure, accepts the power, and is ultimately corrupted by the very impulse that once ennobled them. Something similar is occurring today, with the Obama team reevaluating and embracing the same instruments of power which they were excoriating short weeks ago. It appears that many people are willing to accept an intrusive and powerful government, so long as their guy is running the show. But, just like in the movies, inevitable, the power corrodes people's morals and ethics, until they become willing to trample them in the pursuit and retention of the power.

The phenomena is not limited to any particular party. George Bush (supposedly) started office as a "Conservative" (albeit a "Compassionate" one), and one of the core tenets of conservatism is a belief in smaller government. Yet it is George Bush who has presided over the largest expansion of the Federal government since the days of FDR, complete with new entitlements (Prescription Drugs), new mandates (SCHIP and No Child Left Behind), and now, the incipient socialization of the banking and auto industries. I am sure that President Bush intends well, but once released from the bottle it will be very difficult to get the genie of government back into its place.

In more dispassionate terms, once government extends control - over a people, over a place, over a business sector, or over a responsibility - interested parties will immediately fall to fighting and squabbling for their control over the government's control. This is because the government's control represents a privilege, and many people will now compete for that privilege because of all the benefits it can bestow on them. This process is called Rent-Seeking in economic terms, and it extracts a cost, Corruption's Cost, when it is applied to the government.

Libertarianism is the political philosophy that says that when power is taken from the government, and returned to the people, it disperses, so that every person may exercise that portion of the power that belongs to them self. Individuals are benefited by the choices - restored to them - that they may exercise over their own lives, and society as a whole is benefited by the elimination of the conflict engendered by competing for privilege, by the redirection of resources into more productive activities than bidding for privilege, and by the increase of goods and services that result from genuine competition when no party has a privilege previously granted by government.

So that's it. Libertarianism is the decision to toss the magical object (centralized power) into the volcano, rather than see the world enslaved. Temptation is nothing new. It's been with us since the dawn of time. Maybe its time to take a lesson from how others have answered its seductive call:

4:5 And the devil, taking him up into an high mountain, shewed unto him all the kingdoms of the world in a moment of time. 4:6 And the devil said unto him, All this power will I give thee, and the glory of them: for that is delivered unto me; and to whomsoever I will I give it. 4:7 If thou therefore wilt worship me, all shall be thine. 4:8 And Jesus answered and said unto him, Get thee behind me, Satan: for it is written, Thou shalt worship the Lord thy God, and him only shalt thou serve.

Lassen National Forest

2008-10-07T23:17:00.000-07:00

Titling this post was difficult. The trip has been variously named The Feather River Trip, The Lassen Trip, and The Mill Creek Trip. We originally set out to fish Butte Creek and the West Branch of the North Fork of the Feather River in the south-western corner of Lassen National Forest. Neither stream lived up to our expectations. However, I'm getting ahead of myself.

We left Friday evening, heading for Butte Meadows, north of Chico. Two hours later we rolled through Chico on Highway 32, on our way to Butte Meadows. I can understand why so many guys love Chico State. Never in my life have I seen so many nubile young coeds in such a compact setting. It was truly a "target rich" environment for young men looking for feminine companionship. Alas, neither of us was a young man, and we had miles to go before bedding down, so we cruised on out of Chico, heading up into the southernmost foothills of the Cascade Mountain Range.

Thirty minutes and 30 miles further on, we passed through Butte Meadows, looking for a place to camp for the night. Up the road a little way, at the crossing of Butte Creek, we came upon the Cherry Hill campground. To our amazement, the place was packed with RVs, campers, lifted pickup trucks, and ATVs on trailers. We looked at each other and realized it was opening weekend of the hunting season. Damn! We decided instead to try the West Branch campground, about 10 miles away.

I suppose the reasonable speed limit on rutted, unlighted, dirt and gravel roads, in the middle of a forest, is somewhere between 15 and 20 miles an hour. Let us just say that I wasn't reasonable. Driving by night is actually easier, since the shadows from the headlights make it simple to tell the height and depth of the rocks, bumps, ruts, and gullies one encounters, and the darkness makes it trivial to detect oncoming traffic long before the inevitable collision that would result from over-driving one's sight-lines. Much sooner than was prudent, we arrived at the West Branch campground, a primitive affair with no sign of toilets, no water, humongous ruts, and only one other (rather taciturn) party in occupancy. Solitude, and sleep!

Starting to pull items from the trunk to setup camp for the night, I realized a number of them were sodden. The 2-1/2 gallon collapsible water jug I'd bought from REI had leaked about a gallon of water into the trunk. Further investigation in the morning would reveal a pin hole in the side, that we would patch with a piece of Beef Jerky wrapper and head cement. As I unloaded the trunk further I kept thinking, "I hope my sleeping bag isn't wet." And as I neared completion of unloading the trunk, that thought turned to, "Where is my sleeping bag?"

When packing, I somehow managed to mistake my waders (in a stuff-sack) for my sleeping bag - a feat made more difficult by the fact that my sleeping bag is bright purple, and was hanging full length from my bedroom door. But, I managed to do it. So here we were, miles (and hours) from the nearest stores, at 11:00 o'clock at night, or so, with ground cloth, Thermarest, a forecast of about 39 degrees F, and me with no sleeping bag! I decided to tough it out, zipping up in my down jacket, with sweats under my pants, and my legs wrapped in a couple of light car blankets that were in the trunk. I didn't sleep much (if at all), but I didn't freeze, and at least I was up early for the fishing. Waiting for my fishing buddy to awaken, I strung up my rod, and fished for about an hour on the West Branch. One or two rises, but no strikes, and no fish caught.

Once breakfast was finished, we decided to head back into Chico to find a sporting goods store so that I could purchase a sleeping bag. I wasn't going to suffer another night without adequate insulation. Along the way we scouted a number of access points along the West Branch, passing through the nominative burgs of Inskip (population: 2), Stirling City (population: 400), Magalia (population: 10,569), and Paradise (population: 26,408). (Anyone notice a trend?) Eventually, we reached Chico, found a Big 5, and I bought a sleeping bag for $29 (marked down from $69). We were now ready to go find some fish!

Crossing Butte Creek at Cherry Hill the previous night, both of us had been impressed with the sound and the brief glimpses of water flowing past. Leaving Chico (again) we retraced our route of the prior night, and returned to Butte Creek at the Cherry Hill campground, this time to finally get around to fishing.

Butte Creek is a beautiful stream with easy access, mixed water, and open banks. Unfortunately, it is also adjacent to a popular campground. My fishing partner wasn't impressed, but I imposed on him to try it out. We rigged our rods, and started casting. Neither of us got so much as a single hit. It may have been the time of day (around noon), the fishing pressure from the campground, or a host of other explanations, but for whatever reasons, Butte Creek was as dead to us as the Upper Sacramento after the Dunsmuir spill. It really was a shame, because the creek meanders through one of the most picturesque landscapes I have fished. But the depression of not getting a single encouraging sign of fish eventually overcame us, and we returned to the car, broke down our rods, and left for another site.

State Highway 32 parallels Deer Creek for about 12 miles, with three campgrounds along that stretch, and delineates the eastern boundary of a State Game Refuge. Located at the bottom of a steep valley, few roads or trails depart from it along that length. Reasoning that these attributes would make it unattractive to dear hunters, we selected it as our next stop.

Our anticipation built as we descended into Deer Creek valley, and crossed the bridge at the lower crossing, only to be dashed when we say the first of many signs that read:

No camping, no hunting, no fishing, no hiking, no stopping.

No stopping?!?! Neither of us had ever seen the like before. As we would come to learn, the entire length of Deer Creek is closed to all public use for its entire length along Highway 32 until at least the end of year. Apparently, the Forest Service considers the area a "hazard to public safety" because of the possibility of tree fall, rock fall, and ash pits resulting from the summer fires. To say we were disappointed is putting it mildly. Unwilling to risk the fines (whatever they might have been), I refrained from stopping, and we continued up Highway 32 looking for another likely place to fish.

We pulled in at the Gurnsey Creek campground on Highway 36/89 to have a bite to eat and plan our next stop. We had passed over Mill Creek, a rather anemic looking stretch of meadow stream, on our way into Gurnsey Creek, but thought that it might have sufficient water for fishing in its lower reaches. The Forest Service Map revealed an access point at Black Rock, sandwiched between the State Game Refuge and the Ishi Wilderness. At least there wouldn't be any dear hunters with which to compete for camping spots. As we cleaned up after our late lunch, and folded the map, my fishing partner suggested at the last moment that we take a quick look into Hole-In-The-Ground, a small campground on Mill Creek not far from our current location. Seeing as it was only five miles or so off our planned route, I acquiesced, and we set out. (My buddy's reasoning was that we had been to End of the World on a prior trip, so we might as well see the Hole-In-The-Ground. It turned out to be a fortuitous impulse.)

Hole-In-The-Ground is an old, small campground stretched alongside Mill Creek. Only a third of the twelve sites were occupied, as it is more popular with locals who have been going there for years than with the carriage trade from Sacramento or the Bay Area. The creek itself is not stocked with fish, and has restrictions of zero-limit (i.e., "catch and release") with artificial lures and barbless hooks only (discouraging presence of "bait bombers"). We liked the looks enough to try fishing it, although the brushy banks necessitated continuous wading. It was late in the afternoon when we rigged up, and the initial poor response began to heat up as dusk approached. I think we each took five or six fish before dark forced us from the creek, so we decided to forgo the trip to Black Rock, stay the night at Hole-In-The-Ground, and fish Mill Creek again in the morning. I laid out my brand-new sleeping bag, and was soon in it and fast asleep.

The next morning we walked about mile down the road, and then hiked along the path of old lava flow down to the creek. Mount Lassen last erupted from 1914 to 1921, and there are signs of vulcanism to found all around the area, such as the lava shelf shown next to the creek in the adjacent picture. We saw extensive wildlife tracks on our hike down to Mill Creek, and while fishing our way back to Hole-In-The-Ground campground. The area is on the edge of a wildlife refuge, and the deep gorge discourages casual hunters, so we were unmolested during our hike. Along with the numerous deer, raccoon, and bear tracks, we also found the carcass of a yard long salmon, evidence that even this small creek supports a spawning population.

Despite the incredible beauty of the stream, and most the promising water, the fishing was not good. I caught nothing, and my fishing partner caught only one - but he said it was the largest trout he had caught in his entire life. Nevertheless, the scenery and solitude made it a very enjoyable day on the stream. Later in the evening, we returned for another try adjacent to the campground, and did a little better. Some trips are productive fishing, and some are journeys of discovery. This one definitely belongs in the later category. But we visited some beautiful water, and its definitely someplace to which I'd like to return.

Prepare For the Worst

2008-10-07T21:06:00.000-07:00

I listened to about 30 or 40 minutes of the presidential debate between Barack Obama and John McCain. It is a choice between the incoherence of McCain and, well, the words escape me to describe just how wrong I find Obama. Both candidates persist in pounding square pegs into round holes. They each have a narrative and persist in describing everything in terms of their narratives, even when the facts don't fit. We have a saying to describe their type, "When all you have is a hammer, the whole world looks like a nail."

McCain rambled, said ,"My Friend" way to frequently, and seemed incapable to responding intelligently to the questions of Tom Brokow or the inanities of Barack Obama. One of my greatest frustrations with George Bush has been that there are good arguments in favor of some of his policy choices, and he never articulates those arguments! I don't want to have to suffer four years of the same from a McCain who can't seem to articulate a coherent political philosophy beyond the one I find unacceptable - "country first". That may be a fine choice for him, but the government exists to serve the people, not the other way around.

Obama, on the other hand, has a well defined political philosophy. John McCain is wrong to call Obama naive. Naivete implies a lack of experience, that can be overcome with time and the acquisition of experience. Obama has the experience to establish his beliefs - he has just come to conclusions that I find unacceptable. Obama and I do not share common values. The things that are important to me - individual freedom, independence, and opportunity - are not as important to him. He has a vision of the world as he wants it to be, and I don't think he cares about who or what has to be broken in his attempt to remake the world. He reminds me of Jimmy Carter - an ideologue, willing to ignore any facts or sacrifice anything in the service of his abstract vision.

I have a few examples from the debate. When asked to prioritize energy, health care and entitlement reform, McCain said do them all (a "cop-out"?), but Obama ranked them as renewable energy, health-care, and education. He was unable to acknowledge the incontrovertible that our entitlement system is broken and unsustainable, because to do so would undercut the very foundation of his welfare state philosophy of the parental government.

When asked about the economy both of them resorted to populist rhetoric, and espoused policies that would harm American competitiveness, prosperity, and our economy. Obama doesn't understand (or won't admit) that investors assume some risk in return for the opportunity to make money. The idea of "making sure that investors get their money back" is an oxymoron. In a dynamic economy, "no pain, no gain." The only way to guarantee return is to eliminate risk, and the only way to do that is to never change the way anything is done. It's a recipe for death by stagnation. Both retreated to their mendacious talking points: McCain blaming Wall Street "greed" and Obama blaming "deregulation." Neither one was willing to confront the misregulation of Washington (and by extension, their own roles in creating the crisis), dooming all their future efforts to failure by refusing to admit an uncomfortable reality. They are both morally bankrupt in that sense. And anyone who thinks either Meg Whitman or Warren Buffett is qualified to be Secretary of the Treasury is a certifiable idiot. If I blame Obama more than McCain on the economy (and let me be clear that I find both candidates unacceptable) it is because he is more egregious in his demagoguery. His necessity of blaming George Bush for everything leaves him unable to admit to any other causes of the downturn. He is captive to his narrative, and a moral coward for dishonestly refuting inconvenient facts rather than acknowledge the inadequacy of his narrative. If McCain appears to get higher marks (in receiving less criticism from me), it is only because he seems mentally incapable of staying on message long enough to clearly articulate his narrative. You have to have a coherent program to be able to criticize it. Not a very promising recommendation.

Neither one is either willing or able to say how they plan to finance their various proposals. They are both either idiots or lying on the subject of the federal budget. And their tax proposals are insane. The U.S. already has the second-highest combined federal-state corporate tax rate among industrialized countries at 39.3 percent. Businesses that can are fleeing the U.S. for more hospitable climates. Both candidates antipathy to free markets almost insures the recession will be longer and deeper than it need be.

The full effects of their economic policies, but particularly Obama's, are described in a book review of The End of Prosperity, written by economist Art Laffer and others. (I'll have more to say on this in a later post.)

The section on foreign policy was the most frightening part of the debate for me. McCain, once again, couldn't reconcile his split personality of aggressive intervention - "never again to Rwanda" - and passive isolationism - "I stood up to President Reagan, ... and said, we shouldn't (send the Marines into Lebanon)." Such a statement demands the articulation of a rationale for making the distinction - something McCain has never got around to doing. Obama, on the other hand, is clearly lying when he speaks in favor of American intervention. He has campaigned on the basis of the evils of American foreign policy for so long that there is no way he can back track with credibility. His supporters don't care, because they know he's only lying to get votes, and his opponents don't believe him anyway. But that still doesn't put him below McCain, because they both are guilty of prismatic vision - an inability to see the world except through their ideological prisms. Their persistence in misrepresenting the situation in Afghanistan to fit their narratives was further proof of their inflexibility and inability to integrate the changing world into their perspective. Afghanistan is not Iraq, and can't be won by an Iraq type surge. And contrary to Obama's specious claims, neither is it (and bordering Pakistan) the center of the "war on terror", and the "war on terror" will not be won when Afghanistan and the tribal areas of Pakistan are pacified. Neither place is the beating heart of Wahhabism (salafism, if you prefer). Obama came closest to channeling the ghost of Jimmy Carter (yes, I know he isn't dead, yet, but one can hope), in his critique of American support for Musharraf -"We were supporting a dictator ...he had suspended civil liberties. We were not promoting democracy." Such facile sentiments ignore the reality that we had no real alternative to Musharraf (remember how Carter's betrayal of the Shah turned out), and that supporting Musharraf and promoting democracy are not necessarily mutually exclusive. One can work with a dictator to create democratic rule. Those clamoring for the short course should look at how our support for "democracy" in Palestine turned out.

How can I trust the leadership of the country to people who are unwilling or unable to admit inconvenient facts or erroneous beliefs? The only decision I was able to reach from listening to the debate is that they are both unqualified, incompetent, and of dubious moral character. No matter which one gets elected the country is in for one rough ride. I haven't decided which one I fear more. I most often think that an Obama presidency would be best in the long term, because his inevitable mismanagement and failure will discredit his political philosophy (which I abhor) for generations to follow.

The bottom line is that United States of America has endured worse, and we will survive either an Obama Presidency or a McCain Presidency, much as one survives a particularly bad case of influenza. One may vomit continuously, have liquid diarrhea, and wish one were dead, but eventually one recovers. I look forward to next four years with the same feeling as one who is coming down with the flu, and has no alternative but to let the sickness run its course. I'm pretty sure that four years from now people will look back and reminisce about the good old days of George Bush, and wonder why they didn't nominate Hillary.

Transcript of Second McCain, Obama Debate - CNN

Thoughts on Wages

2008-10-06T22:26:00.000-07:00

CEO Compensation

On Monday, October 7th, ex-Lehman Brother's CEO Richard Fuld testified before Congress, and was universally condemned by the Senators for earning $300 million over eight years from a company that is now bankrupt: Lehman Brothers Boss Defends $484 Million in Salary, Bonus - ABC News No one would come to his defense. I watched some of his testimony, and he is indeed arrogant and unlikeable, but I was unable to detect any crime or impropriety in his behavior. In one defense of Lehman's "severance" payments that went unreported in the media, Fuld explained that a $16.2 million payment to a Lehman executive Benoit Svoret was a pre-arranged "contractual obligation" - an explanation that failed to mollify the Senators.

If being paid large sums of money to participate in a failed enterprise is a crime, there are hundreds of sports stars, movie stars, and entertainment figures who should likewise be facing criminal charges or opprobrium. A star athlete or movie actor can earn millions of dollars for their employers, but a star financial manager can add hundreds of millions of dollars in profit by outperforming their competition by just a fraction of a percent in returns. Financial firms pay exorbitant salaries in order to attract and retain the superstar performers of the financial world. The question of whether these people are worth the salaries they command is one that is best answered by the shareholders and board members of their individual firms - not by the members of Congress. Indeed, if Congress were held to the same standard, can many of them claim to justify their salaries given their execrable performance in governing the country?

Ultimately, it is up to the public to either invest in these firms or not. If investors feel that too much of a company's expenses are being paid in executive compensation, they will shun the company's stock. I can see no good of Congress imposing an arbitrary limit. Indeed there are apocryphal accounts of top financial managers fleeing to the less restrictive worlds of London and Dubai. Our populist sentiment may serve no future purpose but to saddle our economy with second rate managers.

American Wages

It has long been a complaint of Lou Dobbs and other populists that U.S. wages have been stagnant (in inflation adjusted, "real" dollars) while corporate profits have increased. The premise behind the argument is that "corporations" (that is to say, shareholders) are taking a larger share of additional profits created by increased worker productivity, while "screwing" the worker. The fallacy that I see in their argument is that labor is a cost like any other, and businesses pay the going rate to attract and retain labor. Like any other globally available commodity, U.S. labor costs must remain competitive with other labor supplies, or be priced out of the market. It may very well be that increases in U.S. productivity have been necessary to maintain parity of per-unit labor costs with lower paid foreign labor. In other words, as it becomes easier for foreign labor to compete with American labor, American per-unit labor costs must decrease to keep competitive, and the way that they have decreased is for U.S. labor to increase the units produced per labor cost (i.e., increased "productivity").

Business must compete for capital as well as labor, and they compete by offering higher returns on investment, also known as "profit". If a business were to share more of its "profits" with its labor force than its competitors, it would do so at the expense of its shareholders. Its stock price could decline, or it might find it difficult to raise capital for production or expansion. Corporate management must balance the demands of its various suppliers, be they labor, materials, or capital. When labor demands a fixed size piece of the pie, it risks becoming uncompetitive, such as happened in to U.S. auto workers.

The only way I see to prevent labor costs from being "squeezed" by competition is to prevent competition itself, through either artificial import restrictions (tariffs) or artificial wage or price controls or a combination thereof. However, besides triggering trade wars, tariffs or price controls impose a "tax" on the consumer, preventing them from purchasing cheaper products, and transferring the "tax" to the protected workers. Beyond the ethics of forced income redistribution, such artificial markets are doomed to decline. Lacking competitive pressure, the protected workers have no incentive to improve or even maintain their productivity, quality, or a host of other metrics. Eventually their customers will find a way around the controls or seek other means of satisfying their needs.

The modern world has made capital, raw materials, goods, services, and labor all fluid. They all may flow from one location to another. If local policies or conditions make one location more inhospitable than another, they will flow away from one towards the other. Artificial barriers may be considered, but most barriers (such as those on capital flow) end up imposing more cost than their benefits. I plan to follow up on this theme in a future post.

Greed

2008-09-17T00:30:00.000-07:00

Or, Kevin Explains It All ...

Between 2004 and 2007, Lehman swelled its balance sheet by almost $300 billion through the purchase of securities often backed by residential and commercial real estate loans. But in the same period, the firm added a minuscule $6 billion in equity. As a result, assets jumped from an already high level of 24 times capital, to 31 times. So if the total value of the portfolio declined by 3% or so, shareholders' equity would be erased. -The End of Wall Street Fortune

The collapse of Lehman Brothers, the government bailout of Fannie Mae, Freddie Mac, and AIG, the drop in the DOW, and all the attendant chaos and turmoil have prompted a cacophony of charges about a financial system run amok, the failure of the free-market system, and the need for greater government oversight, control, and ultimately, ownership of financial institutions. Is there any truth to these charges? Has the free market failed? Was lack of oversight the problem? Is more government regulation the answer?

Briefly, no. The financial world is not ending. What happened is that major Wall Street investors got caught up in the euphoria of the real-estate bubble, and bet borrowed money on the continued rise of real-estate prices. When the prices stopped going up, they couldn't keep the bubble inflated, and it popped. The losers are:

People who borrowed (i.e., mortgages) the full price of real-estate at its peak price.
Holders of those mortgages (i.e., mortgage backed securities, or MBS).
Those who borrowed extensively to buy MBS (i.e., Fannie Mae, Freddie Mac, Bear Stearns, Leahman, and others).
Those who insured (by means of Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDO)) the loans to those who bought MBS extensively (i.e., the counterparties to the loans, like AIG).
Governments (i.e., taxpayers) who may have to foot the bill for bailouts, and who will see a substantial reduction in both property tax revenues, and income tax revenues from workers in the financial industry.

All of these losers took risks that, in retrospect, they should not have taken.

People took mortgages at 100% of value (i.e., zero equity) with low teaser rates, knowing they couldn't afford the payments when the rates eventually adjusted upwards. They depended on continuing inflation of real-estate prices to grow equity that they would then be able to cash out when rates got too high to afford. In the hopes of making easy money, they gambled that either there would be buyers for their property when they could no longer afford it, or that credit would still be easy and they could refinance at a lower rate. Anyone with a memory of the 20% down and 13% interest rates of the 1980's knew that either proposition wasn't a sure thing, and that these borrowers were in a highly risky situation that could cost them everything.
The financial services industry was making immense abouts of money through loan origination fees, commissions, and through the repackaging of the loans into MBS, and the sale of those MBS to investors. MBS returns looked so attractive that demand exceeded the supply, incentivizing lenders to loosen the standards and generate more loans. The quality of MBS began to decline, as a higher percentage of loans went to sub-prime (i.e., unworthy) borrowers. Dazzled by the high returns, investors weren't paying attention to the degradation in quality.
People in the financial services industry became envious of the money being made by the investors in MBS. Wanting a larger share of the profits, investment houses starting buying and holding MBS, borrowing extensively against their holdings to do so. As MBS came to dominate their holdings, they became vulnerable to any decline in the real-estate values that underlay their investments. They were so highly leveraged that any dip in value would result in them not having the liquid assets necessary to cover their obligations.
And lastly, through the novel invention of credit default swaps MBS investors were selling off their risk (so they thought). Others bought up the risk (essentially offering insurance against default of the MBS) because they evaluated the risk of failure as non-existent, and saw the CDS as "easy money". But as MBS came to dominate the market, those holding CDS were themselves depending on the value of their own MBS to backstop their promises to pay on default. The entire industry came to rely on the value of their MBS, because of the ubiquity of MBS, and because the industry was so highly leveraged that there was no margin for a decline.
Government was making big money off the boom, both from increased property tax revenue (due to both higher prices, and that sales brought property values out from under protections like the Prop 13 exception), and from corporate and income taxes on the financial services sector. Both Democrats and Republicans were pushing the "home ownership" society, and Congress was pressuring lending institutions to lend more to sub-prime borrowers through the Community Reinvestment Act (CRA). Under quasi-government control, Fannie Mae and Freddie Mac expanded (to maximize their own value, and with generous donations to politicians to ensure their complicity), pressuring private lenders to find new lending markets as well, often by lowering their lending standards to broaden their client pool.

Eventually, this high-wire act without a net had to fail. Real-estate prices couldn't keep rising forever. (The basic rule of supply and demand is that as prices rise, demand slows until prices stop rising). It wasn't a matter of if the market would fail, it was when. But despite knowing that the bubble couldn't keep growing forever, investors couldn't bring themselves to limit themselves. They were addicts.

Where do we go from here? First, the vast majority of the players were motivated by greed, pure and simple. They voluntarily took risks in the pursuit of greater riches, and while that isn't a crime, it is neither an entitlement to either the sympathy or the wallets of those who wisely stayed out of it. If borrowers are foreclosed, if lenders fail, if mortgage holders go bankrupt, if insurers face heavy loses, it isn't the public's fault nor the public's responsibility. The only reason that the public should lift a finger to help any of them is if it is in the public's own narrow interest.

Next Steps

America's entire approach to regulation is a relic of the New Deal, when optimistic Keynesians still believed that they might tame the economy by getting bright technocrats to run it. - The Blame Game The Atlantic

From the prior synopsis it should be evident that far from being "asleep at the switch" or powerless to prevent the meltdown, government was an enthusiastic and willing participant in the circumstances that created the bubble. Republicans point at the Community Reinvestment Act, Democrats at Gramm-Leach-Bliley Act, and so it goes. Both sides have a point, but that point also includes the fact that government control contributed to the problem, and the implication is that more government control probably isn't the answer. But, because it now seems evident that some institutions are considered "too big to fail", government can't simply wash its hands of the problem. Like it or not, government is stuck with the bill, and thus has an obligation to limit its exposure. So, once again, government must set the rules.

Investors and business people, from Wall Street and elsewhere, have more time, money, and incentive to "game the system" than regulators can possibly keep up with. There are also a lot more people on the "regulatee" side than the "regulator" side, so a system that depends on the active oversight of government entities is doomed to failure (as indeed, it failed in this last crisis). (Not surprisingly, some liberals continue to push regulation, not admitting that what are sins in hindsight are often indistinguishable from boons when first encountered. The dangers of basing current regulation on the prior crisis are illustrated in the story of how Bad Accounting Rules Helped Sink AIG.) Instead, government controls must set the limits of the system so that they become self-enforcing. They must serve the best interests of the majority of market participants, so that the markets will embrace and follow them, rather than trying to get around them. So, what can be done?

Since being "too big to be allowed to fail" doesn't guarantee that an entity will be "to big to be able to fail", and since regulatory oversight is no guarantee of not failing, it would imply to me that regulations should limit the exposure of any individual failure. Companies cannot be allowed to dominate a sector in the way that Fannie Mae and Freddie Mac dominate the secondary mortgage market, or that AIG dominates the commercial and industrial insurance market. Anti-monopoly rules need to be taken seriously, if only to insulate the public from the risks of catastrophic failure. In pursuit of this goal, Fannie Mae and Freddie Mac are supposed to downsize their portfolios, and AIG will most likely be forced to shrink. Competition is the best medicine for healthy markets.
Public non-banking institutions which serve a public trust (investment banks, insurance companies, etc). must follow capital requirement guidelines that preserve their ability to meet their obligations when their assets suffer a drop in value. In addition, the use of "off balance sheet" liabilities should be severely curtailed, to prevent companies from concealing their true situation from their investors and counter-parties.
Combined companies, of the sort that are currently being created by merger of commercial banks and investment banks, must not be allowed to gamble government insured funds in unregulated markets. What the public conceives of as "banking" has to be kept at arms length from the riskier business of "investing".

Despite all the "gloom and doom" of what is clearly a financial crises, it must be kept in mind that this was not an unmitigated failure. Recent data suggest that subprime mortgages - the chief culprit of the meltdown - account for only 8% of mortgages, and that of those, at most 25% are in default, with an even lower percentage actually subject to foreclosure. (In comparison, less than 2% of prime mortgages are in default). The flip side is that the majority of subprime mortgages are not in default - that millions of homeowners now live in houses that they otherwise would not have been able to afford. It may be that the current financial crisis is an unacceptable price to pay for this increase in home ownership, and the means by which home ownership was grown certainly didn't have to be that way, but it wasn't evident before the fact, and there was time (although not the will) to engineer a soft landing before the crash. I cite these facts to forestall those who would condemn the entire mortgage-banking-financial system. The degree that Wall Street embraced CDO and CDS is frightening in retrospect, but it is undeniable that their use freed up the capital that fueled the growth. Few of us are purists enough to demand the poverty of millions to satisfy the dictates of our ideology.

A staggering amount of wealth was generated for a lot of people who went on to enjoy higher standards of living as a result. The lamentable fact that some unworthy or unscrupulous people made obscene amounts of money at the same time should not cause us to indict the entire system. That would truly be cutting off our nose to spite our face.

Addendum

It cannot be stressed heavily enough that this crisis was not caused by a lack of government regulation. The mortgage lending business is highly regulated, and Fannie Mae and Freddie Mac, government sponsored entities, dominated the secondary mortgage market, and were doing the bidding of Congress when they created the market for repackaged subprime mortgages. As long as Fannie and Freddie were doing good things for their congressional sponsors (Chris Dodd (D-CT) and Barney Frank (D-MA)) most people in Congress (with the surprising exception of John McCain (R-AZ)) were content to let things go on the way they were. Congress was a complicit co-conspirator in pushing subprime mortgages. The Federal Reserve was an accessory in keeping interest rates below the rate of real-estate appreciation, so that people were enticed to borrow money to put into the housing market.

This isn't an argument for government indifference. It is an argument that government's role is not that of a micromanaging overseer, since such a role is readily corrupted into that of willing accomplice. Instead, government's role should be that of establishing transparent rules with metrics and standards which the participants themselves and the public at large will enforce. If the rules are obvious, and the information is available, few would risk the penalties of disregarding them.

Second Addendum

I needed to fix a few typos, so I thought I'd also add this link to a recent explanation that covers some of the relationships I've described in more detail: Worst Crises in Decades, With No End in Sight

Sex, In The City (and Country, and Suburbs...)

2008-09-02T23:56:00.000-07:00

Of all the signs of political incivility, none is so obnoxious as the disparagement of a politician's family members, particularly their children. Although this phenomenon is neither recent nor uniquely American, we have supposedly outgrown the days of calling a candidate's mother a prostitute. Unfortunately, such restraint is a compact honored more in the breech than the observance. From Al Gore's son, to the Bush's daughters, partisans have used the behavior of politicians' offspring to castigate their parents for their supposed lack of parental skills, on the basis that their inability to raise their children properly implies their inability to take care of the people. (An implication that rests on the implicit proposition that government's role is essentially paternal - or maternal, as the case may be). Aside from the wisdom (or lack thereof) of choosing a representative for their parenting ability, such a selection criteria suffers from the fallacy of predicting aggregate behavior from a single event. No scientifically literate person would accept a single outcome as proof of the success or failure of a social proposition. Yet as soon as the single outcome is that of a politician's progeny, particularly if the politician is an opponent and the outcome is to be disparaged, then suddenly the circumstances are worth discussing. Thus we have Sarah Palin's daughter's pregnancy in the news.

In an encouraging display of leadership and civility, Obama said:

(Bristol Palin's pregnancy) has no relevance to Governor Palin’s performance as a governor or her potential performance as a vice president. ... My mother had me when she was 18. How a family deals with issues and teen-age children – that shouldn’t be the topic of our politics. So, I would strongly urge people to back off these kinds of stories.

While I applaud and commend Senator Obama's comments, I wish to go beyond them to point out that even if "how a family deals with issues and teen-age children" shouldn't be a topic, more to the point, the behavior of a single child cannot be taken as a reliable indicator of "how a family deals with issues and teen-age children". Relationships between parenting strategies and child behavior which may be evident in the aggregate cannot be deduced in the individual. And especially not from the sensational.

There are two dominate reasons for rejecting the deduction of a politician's character from their children's behavior. The first is that our children, especially our older children, are most emphatically not reflections upon ourselves. To see our children as our creations is narcissistic, controlling, and dismissive of the role in shaping their characters performed by society at large and their personal experiences of the world beyond our reach. Our school age children spend more awake time in the grips of our national indoctrination centers (which increasingly stray from the education of facts into the inculcation of attitudes), than at home with their own parents, and the influence of their peers is well noted.

The second reason to refuse judgement of both the child and the parent, is that in salacious matters most garnering of public attention, the child's behavior may not even reflect their own values, much less that of their parents. In matters of "moral" behavior, especially those related to sex or substance use (alcohol or drugs), momentary lapses can have painfully visible and long lasting repercussions. Even children who sat through the full course of sex education, received the "talk" from their parents, and had free and convenient access to all the paraphernalia of contraception, can "slip" and become party to a pregnancy. And it is especially difficult when their bodies are full of hormones racing around like Italian sports cars. I can understand those who would declare such behavior inevitable, and counsel mitigation (e.g., distribution of contraception), but I can also understand those who think that "giving in" only increases the probability of its occurrence. (To those who are so dismissive of abstinence, I urge consideration of all the other behaviors for which we counsel absolute abstinence, such as giving in to anger and violence.)

Lastly, I wish to refute the supposed hypocrisy of accepting the pregnancy of Bristol Palin while denouncing the rampant unplanned pregnancy rate of (primarily disadvantaged) inner city and minority teenagers. Ms. Palin's boyfriend intends to participate as a partner and father. Too many of the serial impregnators of disadvantaged young women are no more than sperm donors, disappearing at the first signs of commitment or responsibility. And too many of their partners, the young women, lack the judgement or discretion to select men who will stay around, and support them and their children. If these women are to be encouraged to "just say no", it is not "no to sex", but "no to sex with predatory deadbeats" that I would advise them. Providing these abandoned young women with easy access to abortions, with its attendant recriminations and emotional burden, is a poor alternative to having the supportive partners they deserve. At one time we rightly condemned the men who got a woman pregnant, then hustled her off to have an abortion, as exploitative and uncaring. How ironic that men in the same role now wrap themselves in the mantle of empowering feminist choice. I am not arguing for a ban on abortion, but for a ban via moral suasion on the behavior that makes these abortions necessary, or results in not only unplanned but unwanted children brought into the world.

Disclaimer: Both the Guttmacher Institute and the Urban Institute dispute my assertions regarding older fathers and younger mothers. I will note that their statistics as presented lack the specificity to address the issue of teen pregnancies within the most at-risk disadvantaged demographics.

Identity Politics

2008-09-02T21:20:00.000-07:00

Four days since the announcement of Sarah Palin as the Republican nominee for Vice-President, and the hypocrisy of identity politics is already noticeable. According to Democrat pundits, (such as Sean "P.Diddy" Combs, among others) Ms. Palin is unsuitable for national office because she is "someone with fringe views who is unrepresentative of US society". Specifically, Alaska's supposed racial monotony is cited as evidence of her inability to represent anyone other than white Republicans. However, there are two barriers to this interpretation. First, Alaska is anything but homogeneous, as the following table shows (taken from Wikipedia entries on demographics):

	White	Black	Asian	Native American
Alaska	74.7%	4.7%	5.9%	18.8%
U.S.	74.0%	12.4%	4.4%	0.8%
Hawaii	41.3%	3.3%	57.5%	2.0%

Second, the critique rests upon the notion that only people of the same identity group (racial, ethnic, religious, sexual, or otherwise) are able to empathize and accurately represent a niche constituency. But this concept is anathema to the very concept of the United States, as evidenced in the motto of the Great Seal, E Pluribus Unum - Out of Many, One. If the American ideal can be expressed succinctly, it is that we are all Americans first, each equal before the law, judged only on the content of our character and the accomplishments of our hands. We are each what we make of ourselves, no one better than another by accident of birth or benefit of wealth. It is our national experience as Americans that bind us together, as we all more related by our shared experiences than divided by our identity classification. The American ideal is a classless society of achievement, open to all, where the son of Punjabi immigrants can be elected Governor of one state, an Austrian bodybuilder can be elected governor of another state, and the middle class daughter of middle America become a candidate for Vice President.

It is also incumbent upon Republicans and conservatives to stop making an issue of the circumstances of Barack Obama's birth and upbringing. Hawaii is no less representative of the country than Alaska, and a multicultural upbringing, whether at home or abroad, should be no barrier to advancement. If people want to criticize Obama, stick to his policies and philosophy, but leave his family out of it. It reflects ill upon us to impugn his identity - we who claim to be above the politics of identity.

Fishing the North Fork of the Yuba River

2008-09-01T21:49:00.000-07:00

Saturday was my fishing partner's birthday, so we resurrected a long-ago tradition of fishing on his birthday. Acting on a spur-of-the-moment impulse, we packed light (sleeping bags and pads, sandwich fixings, and no stove or tent) on Saturday afternoon for a overnight trip to a new destination for us - the North Fork of the Yuba River.

Our last trip on the American River hadn't turned out so well, from a fishing standpoint. We had heard good things about the North Fork of the Yuba from a fly fisherman we met on our previous trip to Hell Hole reservoir, and some research confirmed that for approximately thirty miles State Highway 49 runs alongside the North Fork, granting relatively easy access. The reviews we could find on the web looked good. We worried if the flow would be adequate, but one review mentioned October fishing, so we set off to check it out.

The North Fork of the Yuba drops about 4500 feet over the thirty miles of Highway 49, giving it a profile beloved by both white water kayakers and freestone fishermen. With such a profile, it was inevitable that the canyon would be deep in places, with the river a hundred feet or more below the level of the road. In some places, ropes would be required to reach the river, and swimming would be needed to traverse the shut-ins. We needed to find a place that was both accessible, and held the pocket water we had come to fish.

A concern of ours was that this was Labor Day weekend - the biggest camping weekend of the year - and we were uncertain of finding a spot. The North Yuba lies at the northern edge of Tahoe National Forest and has seventeen Forest Service campgrounds spread along its length, but still, this was Labor Day. As we wound our way up the river, campground after campground seemed full. Our backup plan - sleeping at the side of the road - was wrecked by the signs along the way warning, "No Camping Except in Designated Areas". We passed Downieville and Sierra City, but still no space.

(Downieville was rockin', by the way. Apparently Labor Day marks their Septemberfest Donkey Race, whatever that is, but it involves blocking off the main street, and people wandering around the night, drinking, laughing, and generally having a good time. But we on a mission to fish, and couldn't stop to party.)

There are five campgrounds clustered around Bassetts, high on the river, but we found only one space at the relatively primitive, and spooky, Berger campground. An unsuccessful search for fried chicken led us to continue over the pass to Sierraville (which was closed up tight by a little after nine o'clock), but on the return trip, a check at the easternmost, and highest, campground, at the Yuba pass itself showed abundant space. It was windy, and cold. Assured of at least someplace to sleep, we tried a little further west, and found a few open spaces at the lower, and warmer, Chapman Creek campground. We chose the most remote space, paid the $20 fee for the night, and went to sleep planning our next day's fishing.

At first light we packed up the car, fed Ashley (my daughter's Pitbull - our fishing mascot), and scouted the river across from the campground. Unimpressed by the weak flow this far up, we drove downstream checking the water level periodically as we went. Just past Bassetts, where Salmon Creek joins the Yuba, we turned off and decided to try our luck.

It was a little before eight when we lined up, and cold enough to wear hooded sweats and avoid wading, if possible. Most unusually, there was an early morning breeze. I went downstream a few stretches (maybe a quarter or half mile), while my buddy went upstream. As I fished my way back up, the fish were hitting my fly (a Royal Wolff), but weren't taking it. I could see the activity, but there was no tell-tale tug to indicate the fish had actually taken the fly. One was on, and then off. Eventually I hooked about a seven inch rainbow (and released it), and later another about three or four inches. All this time the wind was steadily increasing, until it reached the point where the gusts were riffling the surface to the point where the water resembled corrugated sheet metal. Although the wind was at my back, it made backcasting risky, and about every four or five casts I would have to stop and untangle the fly and leader from the line. (Gratefully, I wasn't using a nymph dropper off of my dry fly this time, since my experience with double flies is that they are even more prone to tangles). Side casting to avoid the wind only led to more tangles with streamside vegetation. And as the wind picked up, the fishing dropped off. I changed flies a number of times, but the fish seemed increasingly spooked. Finally, I reached the river by the car about noon, and decided that was it for fishing. The wind had me beat.

Continuing up the river to find my fishing buddy would be difficult for Ashley, as the narrower river above the confluence with Salmon Creek would necessitate more wading (swimming for her) or brush popping. I couldn't see my fishing buddy, so Ashley and I took a walk about a mile or two up the road to admire the scenery, and see if we could spot anyone on the river.

From Salmon Creek to Bassetts the river arcs away beyond the visibility of the road. The area is about 5400 feet above sea level, with a mixture of manzanita and pine, with the occasional cedar. At the furthest extent of our hike I found this lonely chimney, completely surrounded by dense manzanita, and "No Trespassing" signs. On my return to the car there was still no sign of my fishing partner. Finally, at three o'clock, just when I was getting ready to set out to find him and brave the river, wading and all, he showed up. He had been gone seven hours, but thought it was only noon. When I asked how he had done he said he had caught sixteen fish, and had another eight on-and-off the hook. Apparently, once around the bend of the river, the wind dropped off almost completely, and he had one of the better fishing days of his life. Well, at least he had a great birthday.

We made lunch at Wild Plum equestrian trailhead on Haypress Creek, and scouted the river. Many of the places we saw held great water, but required a scramble down to the river level, with a grueling climb back to the road. With only a few hours of fishing left, we kept going looking for some place with easier access. The section from Sierra City to Ladies Creek is a wild trout stream, requiring barbless hooks - something neither of us wanted to do. We passed Goodyear's Bar, and finally, running out of river, decided to fish the section just west of the Ramshorn campground. This was especially frustrating for me, as with dusk approaching the fish openly fed on the surface, including quite a number of spectacular leaps. But despite rolling over my fly, slapping it, and other visible signs of interest, none of them would actually take the thing. I ended the evening with quite a bit of casting practice, but no fish in hand. We broke down our rods, stowed our gear, changed to dry shoes, and heading for home. Still, it was a delightful trip, and I'm happy my fishing partner had such a successful day to mark his birthday.

I'll close with a picture of another stretch of the North Fork of the Yuba River that we hope someday to return to fish.

"Cheap Demagoguery"

2008-08-28T20:57:00.000-07:00

I caught part of Obama's speech on the radio while driving home Thursday. (Excerpts here, full speech here.) I found it full of platitudes, lofty phrases without substance, contradictions, and hubris. At the end, Obama challenged America to elect him President not because of any qualifications he might possess, but to fulfill the "promise" of Martin Luther King's dream. In doing so, he claims the role of the messianic presence - the redeemer. But for Obama's raison d'etre as savior to succeed - America must be in dire straits. Obama's vision of America as it is is an America of victims - an America of grievances. He offers nothing to those who aren't unemployed, aren't homeless or in foreclosure, aren't without health care, aren't ashamed of their country, aren't without hope.

But Obama's America only fits a small percentage of the population. (See here, for example). More importantly, what is his standard for America, and what are his proposals? If his standard is Bill Clinton's America of 2000, America was riding an unsustainable bubble just about to pop. In the tech-driven economy, in energy, and in foreign policy, the days of the Clinton administration mirrored the Parable of the Ant and the Grasshopper. We partied as the storm clouds gathered.

What of Obama's litany of ills? The unemployment rate is about a point higher than when Clinton left office, but with one in twenty workers an illegal alien, they alone account for the total number of displaced jobs. Get rid of the illegals and we would have full employment in America. Neither party wants to do anything about it, so score that one a draw.

Obama complains that we have "credit card bills you can't afford to pay", yet he chooses as his running mate Joe Biden, "Mr. Credit Card", the person most responsible for the 2005 bankruptcy overhaul that increased the power of credit card issuers against borrowers.

Obama decries that "home prices plummet", but plans to "measure progress by how many people can find a job that pays the mortgage". Well which one is it? Affordable housing, or higher equity? The housing bubble was created by government (i.e., Congress) pushing easy money for unqualified lenders while simultaneously embracing the low-growth and no-growth policies of the NIMBY and environmental lobby. Government interference lit the fuse to the real-estate meltdown. I doubt they can find a solution.

Obama's entire speech is filled with unmeasurable metrics.

The fundamentals we use to measure economic strength are whether we are living up to that fundamental promise that has made this country great.

Exactly how does one go about measuring that? As I told a friend from India, at least Indian politicians have an economic background - ours are all lawyers. Anyone with any real world experience would have seen how vapid is such a measure.

Unmeasurable metrics aren't the only promises Obama will be unable to keep:

He promises to "finish the fight against al Qaeda and the Taliban in Afghanistan." Oh, yeah, how? By invading Pakistan and starting a war with the Islamic world's only nuclear power (at the moment).
Obama promises to "renew the tough, direct diplomacy that can prevent Iran from obtaining nuclear weapons." Well, at least he said can, and not will. We've been talking to the mullah's until Condi is blue in the face, and there is nothing they respond to, except force. "Tough, direct, diplomacy" hasn't exactly worked with Syria or North Korea, either. Another unfulfillable promise.
Obama promises to set a goal to "in ten years, ... finally end our dependence on oil from the Middle East." That's an easy one, both because its only a goal, and because we already only get about 10% of our oil from the Middle East (In 2007, the U.S. consumed 20,680K barrels a day, importing 13,468K of them, but only 2,163K from the Persian Gulf area.) But, oil is fungible. Dependence is dependence, not matter who the source. And ending our "dependence" on oil just isn't going to happen.
He claims he will fulfil the "promise of affordable health care". I must have missed that promise in my reading of the Constitution. Unless we want rationed, government controlled, health care, people should be leery of turning their lives over to an unaccountable government bureaucracy.
Obama promises to "go through the federal budget, line by line, eliminating programs that no longer work and making the ones we do need work better and cost less." Unless Obama can't get a line-item veto amendment to the U.S. Constitution, that isn't going to happen, since the line-item veto was declared unconstitutional in 1998 by the IS Supreme Court. Good luck with that, Obama.

Obama's bottom line is that he isn't George Bush, but that McCain will be. Obama hasn't faced the challenges of George Bush, and can't say that his choices would have worked out any better. In fact, there's ample evidence that he would have done worse. As others have pointed out, Obama has inflated his resume of legislative accomplishments. He has no track record of creating consensus around difficult issues, no history of leadership. He could govern only by virtue of a filibuster proof majority, which could fracture the American compact beyond redemption.

If Obama can claim any skill or property that would convince voters to elect him, it is his claim to be post-partisan - a different kind of politician above the mudslinging and willing to speak "truth to power". Yet, his speech shows just the opposite. He attacks McCain for:

"propose hundreds of billions in tax breaks for big corporations and oil companies but not one penny of tax relief to more than one hundred million Americans". That characterization only flies by dishonestly limited McCain's tax breaks to only "big corporations and oil companies", and defining tax relief to include government welfare payments to people who currently pay no taxes.
"privatize Social Security and gamble your retirement." Obama cleverly conceals the fact that the choice isn't between assured retirement payments and private "gambling", but between private management of your own retirement plan and politicians profligately wasting your Social Security payments plugging the spending gaps engendered by their blatant vote buying and spending binges.
believing "the market will fix it". I only wish McCain were that market friendly. It is fundamental that the market is choice, and believing in the market is believing in the power of free choice. Anyone who doesn't believe in market solutions by definition believes in government managed solutions - coercively enforced with the power of law - the opposite of free choice.

Beyond his speech tonight, Obama has been dishonest. Dishonest about his position on gun laws. (He supported the D.C. gun ban, yet claims to support an individual right). Dishonest on his position on abortion. (He lied about his opposition to the "born alive" law). Dishonest in his attacks on McCain. (He blamed McCain for ads that he knew were the product of unaffiliated third parties, and as shown above, has mischaracterized McCain's positions repeatedly). It is not his positions for which I fault Obama (though I disagree with them). It is his fundamental - blatant - lack of honestly.

I started this election cycle with a strong dislike for John McCain - both the man for his arrogance, and his candidacy for his policies. And I have always despised and detested Hilary Clinton. I haven't changed my opinions of either. But Barack Obama is a new low in presidential politics, and I would take either Clinton or McCain over Obama. He is the ultimate Elmer Gantry, the FlimFlam man. His willingness to say anything and nothing betrays an attraction for power the same way that a pit viper is drawn to heat. I fear him because he has no principles but power, no judgement but expediency. I pray to God that he does not become our next president. When Obama speaks, remember this quote:

Government powerful enough to give you anything you want, is government powerful enough to take everything you have.

Choices

2008-08-27T00:44:00.000-07:00

Culture Wars

In the opening scene of The Last Boy Scout (3:20 to 4:17), in the final minutes of a professional football game, offensive player Billy Cole (played by Billy Blanks), pulls out a gun and shoots his way into the endzone, before scoring, and ending his own life. I sometimes think it a fitting metaphor for what I am witnessing in what passes for current political debate. Left and right, Republicans and Democrats, liberals and conservatives, it's War, and people are doing whatever it takes to win, frequently going so far beyond the bounds of rational discussion and reasoned choice that truth and logic aren't even in sight anymore.

Tuesday, on my way to work, I was listening to Bay Area blowhard Ronn Owens interview a Democrat PUMA member (Party Unity My Ass, a pro-Hillary, anti-Obama, organization that sometimes seems to support McCain over Obama) from the Democrat party convention. What was so remarkable was the vehemence of the listeners who called in to oppose the PUMAs, and support Obama. I heard people say that a McCain victory would "set women's rights back 100 years", that PUMA members would "have the blood of thousands of women and young people on their hands", presumably from the botched back alley abortions and numerous imperial wars that would result from a McCain presidency. And these people weren't the exceptions. They were the average voice of the (Bay Area) Democrat party, tacitly endorsed by lick-spittle liberal Ronn Owens.

Most impressive is the length to which die-hard Democrats will go to mangle reason and deny reality in order to shore up their often absurd positions. Republicans and Conservatives aren't above this type of fear mongering either, but right-wing nut-jobs get called on their attempts to claim a vote for Obama is a vote for terrorists, or that the Democrat position on abortion guarantees sex education and free condoms for kindergartners. Which brings up the 800 lb. gorilla - abortion.

Abortion

Let's get one thing straight - life begins at conception. It may not be a human being yet, strictly speaking, but its self-evidently life, and to pretend otherwise is simply dishonest. Anti-abortion advocates may go overboard in their zealousness to limit contraception and abortion options, but they have the better of the argument about what is or is not life. Listening to pro-abortion advocates is to listen to people in the grip of a deep delusion. They are determined to preserve the right to a government funded abortion, so they end up denying any facts or arguments that may offer a reason to place restrictions on abortions or abortion funding.

I think the vast majority of people recognize the following:

Life begins at conception.
A four cell zygote is not the same thing as as a baby.
A fetus does not become a baby only when it is outside the womb.
Along with the rights of the mother come the responsibilities of motherhood.
The government shouldn't be dictating the morality of contraception or early abortion.
Seven, eight, or nine months is a little late to be deciding you don't want to deliver a baby.
Children, even teens, who are legally too immature to make medical decisions regarding their teeth or general health are not suddenly mature enough to make reproductive choices without parental involvement.
For most women, abortion, even in the most justified or necessary of cases, is a wrenching and emotional event, with life-long repercussions, deserving of careful consideration and thoughtful contemplation before performing.
Tragically, there are some pregnancies which it would be better had they never occurred.

The only claims that are even closely controversial to most people are those that would allow early abortion. People who believe all human life deserves protection will necessarily oppose all abortion. (Human life being defined as life based on human DNA). At least those who oppose any abortion on moral grounds have a consistent argument. However, our government isn't supposed to be in the business of legislating morality, so I don't see an obvious answer to the question. (Personally, I accept that some human life is going to be extinguished, in some cases. I'm even a big believer in postpartum abortions for some people). But those who justify late term abortions by denying the life of the fetus, or teen abortions on demand without parental consent by denying parental responsibility, are stretching credulity past the breaking point. I'm sure they believe what they say, but that only demonstrates the degree of their captivity to the principle of abortion on demand that they ignore all contrary evidence. To the vast majority of people, abortion zealots come across just as deranged as people who think the Earth is 4000 years old and the fossil record was created retroactively.

The effect of listening to some pro-abortion zealot deny the obvious issues of abortion, or repeat the mantra that "women's rights" trumps all other considerations, is to characterize the speaker as either disingenuous or delusional. Maybe abortion is a necessary evil that has to be made available in a modern society, but to deny that it is at best morally ambiguous is just unreasonable. And if someone is disingenuous, delusional, or unreasonable, why would I trust their judgement or promises on any issue of importance. (A big reason why I don't trust Democrat politicians, with the exception of Sam Nunn).

Prisms

I recently linked to a piece on Political Prisms. Readers may disagree with the characterization of prisms as primarily afflicting liberals, but the premise that people with "prism vision" seem incapable of recognizing any opposing argument holds true. In the ideological wars people have adopted the attitude that it is anathema to even consider an opponents point of view. If an opponent's argument rests on two plus two equaling four, why then, partisans feel obligated to argue the fallacy of such an ethnocentric or parochial viewpoint.

I confess to possessing a primarily economic prism. I tend to view to world as the result of "natural" forces resulting from people's "enlightened self interest" and benign competition. I try to elicit the rules that govern the natural world and human behavior, and determine how to work with them to obtain desired results. This view is an extension of my Al-Anon experiences, which taught me to live life on life's terms, and is reflected in one of my most pervasive sayings, "It is what it is."

Michelle Obama says that she was attracted to Barack's commitment to reject the "world as it is", and "fight for the world as it should be". Perhaps this view is more prevalent among liberals, but if so, it may help to explain why liberals and I tend to disagree about almost everything. My world view is not about changing the world, but about living with the world. For me, the natural world has a "woof and warp", and life is more harmonious when lived in accordance with its grain. Trying to change human nature makes as little sense to me as trying to change the rules of physics. We work with what we have.

Living with Reality

As I've blogged before, there are some things that are just incontrovertible, but which are regularly contested. Among them:

On aggregate, free trade builds wealth and benefits people. Protecting one group with trade barriers harms many more than it helps.
Energy is the lifeblood of wealth. Nations without energy are poor. Trying to do away with energy "dependence" is trying to do away with prosperity.
We cannot use 100% renewable energy within 10 years. It is technically impossible, economically impossible, and politically impossible. Those who claim we can are delusional or dishonest. In either case, they are not to be trusted any more than a charlatan who asks his followers to drink strychnine or play with vipers to demonstrate their faith.
Offering limited resources for free is unsustainable. Eventually they will have to be rationed. The only question is by whom, and by what means. Personally, I prefer the free market as a way of allocating resources.

You may not like the realities I've listed, but they are as real as gravity. Live with it.

Disclaimer

I've given up on the political parties accepting reality. I find neither candidate appealing, and both of them frightening in their determination to forcibly impose their ideologies on me. They seem to be in a race to the bottom in their use of cheap demagoguery. But I will not be lied to or accept their inane logic without objection. If you detect a bias towards one party or the other, it is simply the result of which one is the more egregious in their assault on reason at the moment.

Stingers and Javlins

2008-08-26T19:00:00.000-07:00

Stingers and Javelins may soon become the most popular items in Georgia. But what are they? Are they mixed drinks? Sporting equipment? How about the best way to help the Georgians regain their independence, and punish the Russians for their barbarism. The consensus seems to be that Georgians need Stingers and Javelins:

"Specifically, the Georgian military should be given the antiaircraft and antiarmor systems necessary to deter any renewed Russian aggression."

"Georgians ... are in desperate need of two things: weapons to kill tanks, and weapons to kill or deter aircraft and helicopters. We can supply both."

The Stinger missile, the bane of Russian Frontal Aviation in Afghanistan, is still the most potent shoulder-fired weapon around. It will cause Russian close support aircraft to keep their distance, or to attack from higher altitude.

Our best anti-tank guided missile, the FGM-148 Javelin (is a) "fire and forget" weapon: once the operator lines up the target in his sights and locks on, he can fire the missile and get away, while the missile will fly autonomously to the target. With a range of about two kilometers, the Javelin also uses a "top attack" profile, diving down onto the roof of the tank where the armor is thinnest. In action in Operation Iraqi Freedom, javelins were devastating against Russian-designed tanks. Knocking out a few tanks or other armored vehicles on a narrow mountain road creates a barrier to movement behind which all traffic piles up, immobile and vulnerable to attack.

Most of that traffic will consist of trucks and other "soft" vehicles. It's a waste to go after them with expensive missiles, but cheap mortars work pretty well. Even better would be long-range, highly accurate heavy sniper rifles, such as the 12.7mm (.50-caliber) Barrett, much favored by U.S. special forces. Georgian special forces are reputed to be well trained and highly motivated.

In the heyday of the Afghan-Russian war, I seem to recall an article in Soldier of Fortune magazine recounting the exploits of the Mujaheddin against the Russian invaders. In the best traditions of SOF's style of "active journalism", the editor / author (Galen Geer?) assisted the Afghans in their resistance, to the extent of one photograph picturing the smoke-wreathed author perched behind the handles of a mounted .50 cal, merrily blasting away at Russian soldiers. The Afghan resistance was enabled by Stinger missiles, whose use degraded Russian air-support, and allowed the fighters to close with and destroy Russian tanks, which in turn left the Russian infantry vulnerable. It's a recipe that could work in Georgia. Here's to hoping that Georgia, Ukraine, Poland, and the Baltic states join the list of countries fielding these top defensive systems.

Fishing the American River

2008-08-25T23:52:00.001-07:00

After a month of work, my fishing partner and I finally made it away for a four-day return trip to the High Sierras. Our destination this time was the Talbot campground, six miles NNE of French Meadows reservoir at the confluence of Talbot Creek and the Middle Fork of the American River. Talbot sits at the edge of the Granite Chief wilderness, and has only five sites, but with no water and only vault toilets it is frequently deserted. Which was just what we were looking for. We were taking Ashley, my daughter's four year old Pitbull, and although she is a great with people, she isn't exactly a "dog park" dog. We hoped for solitude.

We were late getting to the camp, on account of having to wait two and half hours for the Fairfield Costco tire shop to replace a punctured tire. We still managed to reach Talbot campground and set up camp by about 4:00 P.M. As expected, the place was deserted (as were the other French Meadows campgrounds). Leaving our fly rods behind, we took off on a hike to get the lay of the land. Equiped with both the Forest Service map of Tahoe National Forest and the National Geographic map of Tahoe National Forest - Yuba / American River, you would think that we would be able to figure out where we were. But you would be wrong. Not only did the maps disagree with each other, they disagreed with the physical reality we encountered. Both maps placed the symbols for the campground and trailhead directly over the area of our greatest interest - the confluence of Talbot Creek and the Middle Fork of the American River. We were having trouble determining which was which, exacerbated by the low flows which made each seem little more than a damp seep. We finally determined that for our next day's fishing, we would hike about a mile down the road to where a collapsed timber bridge crossed the American River, and fish back upstream to our camp.

Low Flows

The left picture was taken from the bridge in June, when I visited French Meadows with my daughter over Father's Day. The right picture was taken from the same spot this past weekend. A comparison shows the difference in flow two months can make, made worse by the reduced snow pack this year. While the left photo shows an eminently fishable river with countless holes and riffles, the right shows warm, shallow, "gin clear" waters that have few places for trout to survive. The few pools we encountered are hopefully enough to enable the native fish populations to survive for another year. We contented ourselves with studying the vegetation, examining the patterns of age and species to learn how forests evolve over time and respond to the influences of fire, drought, sun, shade, and high water. The higher altitudes exhibit mixes of pines, firs, and incense cedars, with undergrowth varying from ferns to manzanita. By the end of the day we had each hooked only a few juvenile fish, and while the scenery and open access was all we could ask for, we were fishing after all, and had hoped for more action.

"Rock Snot"

The next day we set off to fish the Middle Fork of the American River downstream of French Meadows reservoir, where we hoped higher flows would yield better fishing. We chose the Middle Fork power station at the Interbay reservoir, where the access road winds down four and a half steep miles into the canyon, to a dead end at the power station and dam. Here, at a place named "End of the World", the diversion tunnel from Hell-Hole reservoir spills water into the Middle Fork though the power station turbines - water that was originally diverted from the Middle Fork through the tunnel from French Meadows to Hell-Hole reservoir. (A PDF schematic chart of the multitude of diversions on the Middle Fork American and Rubicon Rivers can be found here.)

Even with the road, accessing the river requires scrambling a hundred feet or so down the embankment, where the steepness and loose shale require the use of ropes for both descent and ascent. Ashley's short, powerful, legs enabled her to make it most of the way on her own, but a few sections were so steep as to require assistance. Once down, Ashley proved to be an excellent scrambler, finding her own path over, around, and under the rocks and boulders that bordered or spotted the river. We also learned in crossing the river that she is a strong, if reluctant, swimmer. She stayed close to us, and was a welcome companion the entire day.

Our experience on the river, however, was most decidedly unpleasant. From about a hundred feet downstream of our access point (at the remains of an old concrete weir), to the downstream extent of our fishing, about a half mile down the river, we found the entire streambed coated in a thick - 1" to 3" - layer of brown "algae". Neither of us had ever encountered anything like this before, despite of years of fishing some unpromising waters with other types of green algae and mosses. We tried to avoid contact with the stuff, but when wading, it seemed to disintegrate on contact, leaving large clouds of silt-like debris. However, unlike our previous encounters with algae, which accumulates in still waters, this stuff covered everything, including the surfaces of rocks directly in the scouring action of falls and channels, with globular masses (walnut sized) in the quieter waters. Also unlike our previous encounters with algae, this stuff existed right to the waterline, with no evidence of dried algae material above the water, and no clear surface below the water. The growth continued into any wet areas, such as the splash zones. Either it is a recent occurrence, and grows very quickly, or the Placer County Water Agency (operators of the dam and powerhouse) is maintaining a very regular flow.

We fished our way back upstream, but had no trout activity at all until we returned to the remains of the weir, where there seemed to be more green algae and less of the brown stuff. Eventually we each landed a number of trout, whose markings identified them as Rainbow trout, but with the darkest of background coloration that either of us had ever seen. We dubbed them "Black Rainbows". A Brown trout that my buddy landed had normal coloration, for a Brown.

We both agreed that the Middle Fork was one sick river, and once I returned home I Googled for some explanation for the encompassing mess we had observed. What I came up with is called Didymosphenia geminata, commonly known as Didymo or "rock snot". The effects of Didymo on trout habitat are addressed in Dealing with 'Didymo', by Leah Ewell. The most important thing for anglers to know is that didymo is invasive, and infectious, and that once encountered, steps should be taken to disinfect your gear to avoid transferring didymo to new streams. Disinfection can be accomplished by any of the following means:

Scrub and rinse in a 2% bleach solution.
Scrub and rinse in a 5% salt solution, or dishwasher soap.
Completely dry for at least 48 hours.

Anglers already have to be aware of the invasive New Zealand Mudsnail, and take appropriate steps to avoid spreading the infection. Now we have another invasive species to guard against.

Suction Dredging

For our last day of fishing, we decided to fish the North Fork of the American River, where Mosquito Ridge Road crossed the river. This not only gave us easier access than at Interbay reservoir, but placed us closer to Foresthill, and our eventual trip home. The river looked most promising on our arrival. A decent flow, clean rocks in the swift channels, and minimal algae in the shallows. Pools, falls, and riffles offered good holding water. We descended to the river, hiked about a half mile downstream, and proceed to fish up the river. And found virtually no fish.

It was only after we returned to the bridge, and turned the corner into the next stretch of upstream river, that one possible explanation for our poor fishing became evident. The river was being mined, for gold, using suction dredging equipment that sucks up the gravel and small rocks from the bottom of the river, sifts it for gold, and dumps it back into the river, in a different place. Although miners discount their effect on trout populations, this report suggests otherwise: Effects of Suction Dredging on Streams: a Review and an Evaluation Strategy

Last year, fishing groups and Indian tribes collaborated to sponsor AB 1032, to restrict the use of this mining technique in sensitive fisheries, but for some reason Governor Schwarzenegger vetoed it. (More proof one shouldn't elect Austrian bodybuilders to high office.)

So, in conclusion, our fishing trip was a bust when it came to fishing, although we did experience the joy of being outdoors, and learned some of the things to avoid in the pursuit of fish. Better luck, next time, we hope.

The Incorrigible Sierra Club

2008-07-31T08:22:00.000-07:00

I used to be a Sierra Club member. Really. I joined in 1972 or 1973, when I was a teenager. I joined because I wanted to go on their outings, particularly the rock climbing excursions. I was a member of the RCS (Rock Climbing Section) in the days before they disbanded the RCS out of liability concerns. As time went on I also saw that I shared many of the same principles and concerns about the outdoors and the environment.

Birth of a Conservationist

I read Aldo Leopold's A Sand County Almanac, and realized I was a conservationist - someone interested in:

The protection, preservation, management, or restoration of wildlife and of natural resources such as forests, soil, and water.

The definition is somewhat misleading, in that conservationists are not identical to preservationists. From my point of view, preservationists wish to preserve an environment - not only from all human effects (including those that may result from just visiting), but from what may be the natural evolution of an environment. They wish to freeze it, isolate it from human or natural effects. If someone is upset about non-native species, odds are they are an preservationist.

According to some, conservation differs from preservation or environmentalism in that "it aims to preserve natural resources expressly for their continued sustainable use by humans." I would argue that the goal of conservation is not expressly for use by humans, but inclusive of their use by humans, and that furthermore, that the goal of preservationists and radical environmentalists is expressly exclusive of the use of nature by humans. To put it more succinctly, conservationists see humans as part of nature and the environment, and see a role for human interaction in nature, whereas preservationists see humans as standing apart from nature, with no role except that of despoiler.

When I was active in the Sierra Club, these differing views were ascribed to the Peak Baggers (i.e., mountaineers) and the Bird Watchers. It shouldn't be hard to figure out which was which, or to which faction I belonged. And so began my gradual alienation from the Sierra Club, which I came to see as increasingly dominated by preservationists and radical environmentalists.

Breakup

My first big break with the Sierra Club came in the early 1980's, when President Regan was seeking to deploy Pershing missiles in Europe to counter the buildup of Soviet SS-20 missiles facing Western Europe. (Both Pershings and SS-20s carry nuclear warheads). The Sierra Club took an active position opposing Reagan and the Pershings, and sought to justify its stance as an "environmental" issue by portraying its opponents as basically pro-nuclear war. (In that nuclear explosions destroy the environment, therefore anyone supporting the deployment of nuclear missiles is pro nuclear war, and wants to destroy the environment). As a believer in the deterrent value of a strong defense in preventing war, I naturally took umbrage at the Sierra Club's insinuation. I wrote a few letters to the Club in objection, but ultimately, this was more than I could bear, coming on the heels of their earlier reversal and subsequent demonization of nuclear power. (And look where that has led us, thirty years later, with America significantly trailing the rest of the world in the generation of clean electricity from nuclear power). I cancelled my membership. About the same time, I got married, had a child, and with no time for rock climbing anyway, I didn't miss the club, much.

As the years passed, I pretty much ignored the Club, writing it off as just another elitist left-wing fringe group more interested in telling other people how to live and desirous of spending others people's money. To my mind, the real work of conservation and protecting the environment was being done by sportsman's groups like Ducks Unlimited (the "World Leader in Wetlands & Waterfowl Conservation"), Trout Unlimited, and the Safari Club, which spent member dues and member effort on the ground, purchasing land to place in conservation, and working to improve wetlands, streams, and hatcheries. The "bird watchers" had their own advocacy list: Nature Conservancy, World Wildlife Fund, Natural Resources Defense Council, Wilderness Society, and the Sierra Club, but those organizations came more and more to reflect an anti-business, anti-progress, one might even say, anti-human point of view. Their "conservation work" increasingly came to consist of lobbying and supporting political candidates. They came to be seen by me as partisan supporters of an increasingly socialist Democrat party, and antagonistic to my individualistic, libertarian world view. They weren't helping me preserve an active and outdoor lifestyle - they were threatening it!

Mendacity

As the AGW (Anthropogenic Global Warming) craze took hold, I continued to ignore the Club. The facts argued against them and Al Gore, and even if AGW were happening, their solutions would return us to the stone age without any noticeable decline in global temperature. The Sierra Club briefly garnered my attention in 2004, when they experienced an internal battle over whether to recognize illegal immigration and population growth as a threat to the environment. True to their by now total captivity to the liberal left, they were unable to acknowledge that that immigration driven, rapid U.S. population growth causes massive environmental problems. (There were some nasty rumors that mega-donor David Gelbaum had essentially bought and paid for the anti-anti-immigration position.)

I would have continued my indifference (and this post would not exist), but for a radio advertisement that the Sierra Club has seen fit to produce (and to which I was unfortunately subjected):

All this week, you'll be hearing about the billions of dollars in record high profits the Big Oil companies are making. They're raking it in while we're feeling the pain of four dollar a gallon gas. Let's face it -- big oil has our economy, our energy policies and our politics in a strangle-hold. But Congress still has a chance to break that hold, to pass legislation that provides price relief and helps hard working families instead of the oil industry. Call [insert reliable Democrat hack pol here]. Thank him for standing up to the oil companies. Ask him to keep voting to end the billions in government giveaways to Big Oil, to crack down on the price gouging that's keeping gas prices so high, and to invest in renewable energy and give consumers more, cleaner energy choices. Paid for by the Sierra Club

This is just lying. Its probably slander as well, but big businesses usually don't try to fight slander. As Freedom Watch responded,

I don't know what's more remarkable - that the Sierra Club is actually defending high gas prices, or that the politicians responsible for today's record gas prices have finally found a constituency happy about it.

The facts as acknowledged by anyone who isn't either a drooling idiot or lying sociopath are that gasoline prices are high because oil prices are high, and that oil prices are high primarily because of a weak dollar and narrow margins between supply and demand. That's it. Its not price gouging by "Big Oil" or evil speculators. Its not government "giveaways" or "oilmen in the White House". If anything, tax breaks for oil producers lead to lower oil prices, and U.S. oil policy is set mainly by Congress, which hasn't had a Republican majority for two years, and hasn't ever had a functional Republican majority. (Hell, they couldn't even keep the Senate in 2001). Every year Congress investigates "price gouging", and every year they come up empty. Anyone who didn't sleep through Freshman Economics could have told them that, but I guess there are enough illiterates (or innumerates) out there to create a constituency for class warfare spouting demagogues. (Oh, did I mention the Democrat party?)

Global investment in renewable energy was $30 billion in 2004, $38 billion in 2005, $90 billion in 2006, and a record $148 billion in 2007! Anyone spot a trend? As the price of fossil fuel increases, the market favors investment in alternatives. This is known as the free market! (Another reminder for those who flunked Econ 101). Investment in renewable energy doesn't need anymore government stimulus, especially since government has a execrable track record in picking winners and losers. (As ethanol subsides have shown, by having minimal impact on the energy market, while significantly impacting food prices). It also deserves to be pointed out that if drilling for new oil won't have any immediate impact on oil prices (as its opponents claim, but which isn't strictly true, since a decision to drill sends a signal about larger future supplies that will tend to lower prices), a decision to invest in renewable energy will have even less of an short-term impact on oil prices, since much of renewable energy is still in the research phase, and isn't even a proven alternative.

The Sierra Club exhorts Congress to pass "legislation that provides price relief", but doesn't specify what that might be. Perhaps they are referring to H.R. 6495, the "The Transportation and Housing Options for Gas Price Relief Act of 2008", a bill sponsored by the very Democrats the Sierra Club is exhorting you to call and support. Its proponents describe its effect as:

Expand public transportation.
Encourage ... auto insurance policies that discourage driving.
Provide incentives to employers and employees to take transit, bicycle, carpool, walk, or telecommute to work.
Create walkable, bikeable communities well-served by transit.
Help Americans make smart transportation and housing choices by educating them about their options.
Spur availability of "Location Efficient Mortgages
Make sure the Federal Government leads by example by (1) Upgrading key websites for easier access to services without having to leave home and work; and (2) Encouraging federal agencies and offices to participate in local Transportation Management Agencies, which provide transportation options.

Have you got that? The bill is called the "Gas Price Relief Act", but not a single proposal will do anything to produce a single drop of gasoline. The Democrat proposal is for people to drive less, either by enticement or enforcement, not to expand their driving choices or fuel availability. If there is a proposal that exemplifies the Democrats, this is it. They are anti-choice; desirous of forcing the public into the behavior that they want them to follow, and thoughtless of providing the public with what it wants.

Lest anyone misinterpret this post as an endorsement of the Republicans, let me point out that they have been complicit in the lack of sensible energy planning, in abandoning nuclear energy, in allowing the slide of the dollar, and in supporting bans on domestic oil exploration. If I single out the Democrats, it is only because their mendacity and stupidity have risen to truly Olympian levels.

Chihuly at the de Young

2008-07-30T23:18:00.000-07:00

This past weekend I finally made it to see the Dale Chihuly glass exhibit on display at San Francisco's deYoung museum, Chihuly at the deYoung. I went with my mother, daughter, and neighbor. My mother is a member of FAMSF (Fine Arts Museums of San Francisco), having donated to the reconstruction of the deYoung in my grandparents' name. (My grandparents' and mother's names appear on the list of contributors on the wall in the entrance to the deYoung.) The members have their own line, so we were able to get tickets quickly, and she got two free tickets to the exhibit.

It is somewhat amusing how I came to appreciate the exhibit. I was listening to NPR one morning on my way to work, and heard an interview with Marissa Mayer, Google's Vice President of Search Product and User Experience. I mentioned the interview to a friend and co-worker of mine (who has "contacts" at Google), and somehow ended up viewing a journal of the installation of Ms. Mayer's commissioned Chihuly ceiling of Persian glass. It made enough of an impression on me that when I saw the banners along San Francisco's 19th Avenue announcing Chihuly at the deYoung, I took notice and make a note to go.

Chihuly

The exhibit is somewhat overwhelming. A "surfeit of riches" is the expression, I believe. Each piece is such a stunning work on its own, and there are almost a dozen rooms to the exhibit! The displayed works (previewed here) are:

Glass Forest #3
Venetians
Persians
Tabac Baskets
Macchia Forest
Reeds
Boats
Five Chandeliers
Black
Persian Ceiling
Mille Fiori: 56-foot garden

Most the the works are such that if you had one in your living room, you could spend hours admiring it, in all its fascinating detail and exquisite workmanship. With so many pieces to look at, it is easy to lose sense of just how beautiful is each individual piece. Some pieces, like Boats, Persian Ceiling, and Mille Fiori, are themselves so overwhelming that I'm sure I wasn't able to fully appreciate each of the individual components that make up the total piece. But then, maybe that was the artist's intent - to relate to the total piece and not its parts.

It's difficult to pick a favorite, and if I were lucky enough to have a Chihuly at home, I would prefer a single piece the better to appreciate it. (You can buy a small one in the museum store for $6000). But if I were forced to pick, I think I would pick the Tabac Baskets, for the strong unity and sense of continuity that exists between the glass works, the wood display base, and the woven baskets. I like the way the entire work "relates". For me, by working in blown glass, Chihuly's glass works are more "organic" than those produced by casting, carving, or more "deterministic" methods. That's not to say they are better - I love glass art is almost all its forms. But for me, Chihuly seems able to infuse his works with a sense of the randomness and unpredictability that exists in nature. For me, again, his Tabac Baskets especially embody those attributes, mirroring the same sense of order from nature that woven baskets convey.

Tad's Broiled Steaks

After the show we went out to dinner at Tad's Steakhouse on Powell. (Image clipped from Google street view). Both my neighbor and I grew up in San Francisco, and both of us have memories of going to Tad's with our families. Tad's says they have been there for over 45 years (since 1963?), so I guess that I would have been pretty young when I started going. The red flocked wall paper with the big "T" that we both remember is no longer there (a framed remnant hangs on the wall, which can be seen here), and Tad's no longer has the distinctive aura of a steakhouse. As I child, the only question asked on entry was how you wanted your steak cooked, and waiting times were short since there was always a batch of steaks on the grill. Now their menu has chicken, fish, and even sandwiches. The steaks may come with mushrooms now, but there are no garbanzo beans added to the salads.

Tad's has fallen somewhat from the storied steakhouse of my youth, but the steaks were still a good deal for the price, and my daughter seemed to enjoy Gary and I reminiscences of the San Francisco of our youth.

Malbec

2008-07-25T01:39:00.000-07:00

A while back, as a reward for a job well done, my co-workers and I were treated to dinner at Seven, a trendy South Bay restaurant. The food was good, if a trifle overpriced (in my humble opinion), but the dinner did contribute to a notable discovery of mine. A co-worker ordered some wine - an adequate if somewhat bland French wine, if I recall. For the next bottle, I inquired about their less expensive ($35 or so) Cabernets, since I wanted a wine with a little more "bite". I particularly like the "chalkiness", (or as I learned, minerality), of Cabs. The waiter responded that he thought they had something I would really like, and brought out an Argentinian Malbec. He was right. I really liked it. And now, I've been pursuing Malbecs when I can.

In California, Malbec grapes are used almost exclusively as a blending grape, and the number of local wineries offering Malbec varietals can almost be counted on one hand. For some unknown reason many of these wineries are clustered close to my home in the Valley of the Moon: Mayo, Arrowood, Chateau St. Jean, Imagery, and Blackstone. Unfortunately, most of these local wines are priced beyond daily consumption, and I remain tied to imported Argentinian Malbecs.

On the advice of a friend and co-worker I went to a discount wine store, Beverages & More, in search of the recommended Terrazas de Los Andes Malbec Reserva. (I had already tried the imported Norton Malbec available from the grocery store, and was less than impressed). I also found BevMo selling wines from Tapiz, another Argentinian winery that was once part of the Kendall-Jackson winery business, as part of their "Buy One, Get Another for 5 Cents" promotion. Tapiz makes Chardonnays, Merlots, Cabernets, and yes, Malbecs, and at the offered prices I scooped up a few bottles for tasting. Although not as good as the restaurant Malbec that originally quickened my interest, the Tapiz Malbec was good enough that I eventually bought a case and now open one of the Malbecs whenever I have some nice beef for dinner.

Since then I have kept an eye open for Malbecs, and have purchased a few more (imported Malbecs) from Costco, yet to be opened. As a measure of growing interest in this relatively unknown varietal, there's even a blog named El Malbec, by an Argentinian. From my own experience, I can say that if you are partial to dark, full bodied, reds like Cabernet Sauvignon, you stand a good chance of liking Malbecs, and should give one a try if you see it on the wine list the next time you are out at dinner. Bon Appetit!