Thursday, December 29, 2005

One dilemma of modern life

My wife and I were talking about what to do with our grandson tomorrow. She would like to go to school for a couple of hours and I said, I could probably take him to a movie. We looked at the G rated movies - Cheaper by the Dozen, Chicken Little, Pride and Prejudice, Chronicles of Narnia, Legend of Zorro and Yours, Mine and Ours. Some of those would not be appropriate for a three year old even without the gore and sex. Mason is three, smart and verbal - but we debated whether Narnia (which I really enjoyed) would be appropriate for him.

So I looked up Cheaper by the Dozen - which we saw when my wife and daughter sat through the interminable King Kong - and which we thought was mildly entertaining. The "critics" gave it a D. Then I read the people's critics reviews. I found two things interesting about their reviews. First, some were as well written as the professionals. But second, their general rating was a B. My own rating was a bit lower. The movie was formulaic. It had the required percentage of slapstick gags. It had the love interest (or several) between the two competing families. It had some pet tricks. It had some mildly off color humor. But in the end it told a story that all ages could enjoy.

I am not sure I understand the ratings system. And, at least for me, a PG and a G are about the same. But it seems to me that people who understand the business would do a bit of market research. The critics and the film companies seem to want to push stuff at us that does well critically. Were I in the same business I think I would try for a different marker.

Wednesday, December 28, 2005

A Tax on Celebrities

In the mid-1930s when California adopted the personal income tax - the celebrities ran a campaign against the new personal income tax. When I was doing my dissertation I found a political brochure by something called the "Committee to Save California Jobs" - in it the claim was made that the then new income tax would lose key jobs in the state - like those for "cooks, butlers and chauffers." Were the tax not eliminated - the celebrities would leave California for less taxed locations. That convinced me that celebrity political types were mostly daffy. Not all, but most. The initiative actually lost in 1936 (with arguments like that it is indeed a surprise).

Think of the salutory effects if celebrities were made to live by their own expressed principles. Then in the Weekly Standard, about six months ago, P.J. O'Rourke made for a new tax policy --

"The greatest pleasure of running a country (although no politician will admit it) is getting to tax people. We Republicans decry exactions and imposts and espouse minimal outlay by the sovereign power. But we control all three branches of government. This won't last forever. Let's have some fun while we can. Moreover, the federal deficit is -- contrary to all Republican principles --huge. Even the most spending-averse among us wouldn't mind additional revenue.

America's media and entertainment industry has a gross (as it were) revenue of $316.8 billion a year. If we subtract the income derived from worthy journalism and the publishing of serious books, that leaves $316.8 billion. Surely this money can be put to a more socially useful purpose than reportage on the going forth and multiplying of Britney Spears....

I suggest, therefore, a Celebrity Tax with a low-end base rate of, mmm, 100 percent. Furthermore, let's make the tax progressive to get some Democrats on board. (Probably not including Hillary, Ted, and Barney Frank. They'll be working nights and weekends to pay up.) Given the modest talent of current celebrities and the immodest example they set for impressionable youth, we'll call it a "Value Subtracted Tax," or, better, a "Family Value Subtracted Tax." And it will be calculated on the celebrity's net worth."

What a concept!

The World is flat.

A couple of months ago I began a post on Tom Friedman's wonderful book The World is Flat) and I never got around to finishing the post. There were a couple of things that prevented me, besides procrastination. The first was a genuine desire not to just regurgitate the substance. Friedman ties together some important ideas that link the fast process of technology with globalization of commerce. Those that understand the trends will prosper and those that do not will not. Second, I was a bit bothered that Friedman does not seem to clearly recognize the forebearers including writers like Kenichi Ohmae (a whole bunch of great books on the then increasing borderless economies) and Kevin Kelly (his original writing on New Rules for the New Economy gave many of us a first look at the possibilities of technology - in a speculative manner that now are realities in Friedman's book).

But the book is one of the most important business books in a long time. I gave it to my daughter's boy friend today as a Christmas present. It reminded me of how important the ideas are and what a great contribution that Freidman offered us all. In November I heard Friedman give his summary of his book. It was really quite good. He is good at explaining the ten trends he thinks are changing the way we interact - including things like WIFI and just in time practices. He is planning to go to business school in the Fall. This would be a good place to begin thinking about the themes that will occupy him for the next couple of years wherever he is accepted.

Tuesday, December 27, 2005

Hitchcock Presents

I've had a bad cold for the last couple of days and so have been mostly consigned to bed. One of the gifts I got for Christmas was a set of the first season of Hitchcock's show that ran for about a decade. There are 39 episodes, sans commercials. I was surprised by how good some of them are. They seem to have picked out some big stars of the day as well as some people who would be stars later. John Casavettes was very young when he played an escaped con. Each of the stories ends with a twist. For example, in the Casavettes story, he breaks into a house with a woman alone after breaking out of prison. At one point he forces her to answer the phone and she speaks to her mother. Unfortunately for Casavettes, who is feeding her the responses, she is deaf. So as he is leaving he is caught.

Barry Fitzgerald is also the star of their Christmas story. He gets out of prison as a hard core crimminal but the only job his social worker can get for him is as a santa. He meets a tought kid who covets a toy airplane. Barry has words with the kid - who said he intends to steal it. Barry instead, in a senseless act of kindness, and in an attempt to convert the kid off his own path, steals the plane and delivers it on Christmas eve - only to be caught immediately. But his social worker comes down and covers his tracks for him and gets him out. A nice story.

The best one so far has been the one on Lizzie Borden. Every child knows the song about Lizzie Borden but this one speculates that Emma Borden, Lizzie's sister, actually did the crimes. That led me to a web search to find out about the crime. It seems that the story on Hitchcock, included many of the important details of the case. The story became sort of a Doctorowed history. It includes a pushy female reporter who discovers where Lizzie hid the axe. (In the real case the axe seems to have been burned). There is an interesting twist because the reporter is from the Sacramento Record. (Not a paper in Sacramento but one in Stockton).

The series in total is an interesting melange of very good plays with a twist and run of the mill 1950s drama. But what is also interesting is that they get better as you go through the year - they seem to have learned how to work thourgh a thirty minute format. If you like Hitch, the introductions and conclusions are worth seeing on their own. They have a consistently wry sense of irony. One other thing strikes me about the series. As a bonus feature, they have a short presentation on how the series was developed. It seems to have worked on a very small staff. Seems very different from what I understand about today in television.

Monday, December 26, 2005

Why is it so complicated to get simple taxes?

At the end of each year, I go through a ritual where I pay property taxes and estimated federal and state income taxes. Property taxes in the state are pretty simple - based on a formula - 1% of market value and then 2% a year. Income taxes are not. We tried in 1986 to simplify the income tax and did a reasonable job of it but it now seems obvious that the time has come to cut away part of the thicket.

So where is all the thicket? In my view the most likely is the Alternative Minimum Tax or the AMT. The AMT was created to assure that some very small portion of the taxpayers paid their fair share. So, after you have done all of your calculations on deductions and credits you then do a second calculation to discover whether you paid your share. If not, then you get to add in this extra amount. What has happened in the last several years is the AMT has begun to bite with a vengeance capturing more and more people in its net.

Adam Smith warned about the potential perils of an income tax in the Wealth of Nations. But because it worked well as a revenue source in the 20th century there is strong support for keeping it. There is a tension here between fairness and simplicity. If you take into account the manifold variations in lifestyle and circumstance you will have a fair system but it won't be simple. On the other hand if you want something simple - perhaps a straight percentage tax on all income - it can be simple but does it stay fair?

So how do you solve this question? In my mind, the President's commission on tax reform came pretty close. They zapped the AMT in exchange for lowered rates and for other changes in the code which some people think are hallowed ground. The proposal would suggest that you can only deduct mortgage interest for something like the median house price in your area. Thus, the code would become neutral on housing. If you wanted the 40 room neo-gothic mansion - and had to borrow tons of dough for it you would not get subsidized. You would get a credit for the mortgage only to the extent that it does not exceed the regional average cost of housing. The proposal also takes a whack at charitable contributions by putting a floor on them and then move the item above the line so that all taxpayers could take advantage of that provision. Both of those changes are likely to get a lot of traditional interest groups very grumpy. And the "law of the few" could make this fight a very tough one. When a benefit is provided to society that is diffuse at the expense of a benefit that is concentrated - the concentrated one often wins. That is based on the notion that most people will not see or think about a diffuse benefit but those who hold the concentrated one will scream at any variation in the way they are compensated. Unfortunately, as we learned in 1986 real tax reform depends on a good mix of leadership and commitment. Which Jeff Birnbaum and Alan Murray so brilliantly demonstrated in Showdown at Gucci Gulch. In this era, although the changes would help us all, there may not be the same level of either leadership or commitment.

Thursday, December 22, 2005


An old joke said - what is the opposite of progress? The answer is congress. The Senate has voted to eliminate the Byrd amendment. You may remember that this amendment by former KKK member Sheets Byrd "protects" companies from "foreign dumping" - in reality what it does is set up protectionist walls by collecting tariffs that are then sent directly to the companies claiming the dumping. Somehow in the logic of Senator Sheets this kind of legilsating makes sense - even though it makes us less competitive and rewards industries who whine to the government instead of trying to compete. The amendment would take effect in two years - that is way to long - but if that is the price to get rid of the monster porkbarrel then so be it.

Wednesday, December 21, 2005

The difference between fishing and catching

Today I went out with some friends on the San Joaquin delta to do some bass fishing. Need to be sure to tell you that this was a day of fishing not catching.

One of the best things about days like this is that the difference between a day of catching and fishing is mitigated by the scenery. Today we saw a couple of fish, a sea otter, some herons, a red hawk, and lots of sight like the above. The rain came a couple of times - at the end of the day quite hard. Oh, by the way, we did not even get a bite. It was cold - so no one was getting much action but ours was zero.

It was cold, I was pleased to have some long johns. But it was also quite relaxing. The subtleties of color and water and wind presented a canvas that was worth the look even without the fish. (although I can say, that days with catching are also nice.

Tuesday, December 20, 2005

The True Spirit of Christmas

Mason and the Tree, originally uploaded by drtaxsacto.

When we got our Christmas tree this year, Mason spent a good deal of time, while his dad was cutting down our especially wonderful and monster sized tree, just being a kid. He played in the dirt. He actively went through the farm looking for trees his size and for the one we actually chose. The actual tree we got this year was about 15' with a huge trunk and with lots of wonderful branches. But after we had made the selection he looked around for things to fascinate him. As all boys his age he was interested in the pebbles on the gravel road. He was interested in the other people. He was interested in the vast varieties of dirt samples - the size and color and muddiness which are often lost on adults. But he did not miss all those things. And what is more he brought us into his explorations. Showing us all those things with the wonder that they should be due.

The State of Capital in the US

Over the Thanksgiving weekend I had a discussion with one brother about the current economic situation. He commented that he was concerned about the twin deficits of trade (current fund) and government. I told him I was less concerned. Over the next couple of weeks we have had a lot of email exchanges about the issue.

His concern is that we seem to be "buying more than we sell" abroad and seem to be giving up some key industries. He is also concerned that the federal deficit is, if anything, understated. On that I agree. However, the situation is a bit more complex.

On the trade deficit, we do have a continuing problem with buying lots of stuff from other people in the world. A lot of the democrat critics seem to think that somehow it would be better to get shirts made in the US instead of where they are made now. And that we would be much better off as a result of keeping a lot on industries in our midst and our country. I think that is wrong for a number of reasons. First, is measurement. I am not sure we actually have an accurate count of the whereget and wheregone of trade. About a third of the total current fund balance is intercompany transfers. When GM makes a Suburban in Leon that shows up as a deficit. At the same time I am not sure that the numbers we collect accurately count the number of idea moves and their value. A recent book from the World Bank makes that point - and I will deal with that in a later post - but we are quickly moving from the physical production (which we are not as good at) to the intellectual production of goods. Those, at this point, have a much higher return. A second broad issue in my thinking relates to demographics. The US has been a huge importer of people. More than Europe. More than Asia. That has done a couple of things for us - it has created some new complexities of life through languages and customs that seem out of place. But at the same time it has lowered our demographic profile at a time when places like most of Europe and China are experience demographic imbalances. Europe has an aging population and a welfare system run amok. China has an aging population and an imbalance of males to females. In the long term neither trend is helpful to economic growth. Thus, I think the net gains from trade are significant - we are transitioning into an economy (if not already there) where mobility of capital is real and consistent. In the long term that can mean some greater variability but the net benefit outweighs the net potential risks. It seems silly to me to think about trying to get back the auto or steel jobs or other industries that have moved to off shore. At the same time we need to be energetic in promoting better educational opportunities to assure that we continue to be at the forefront of new areas of economic growth. Both of us agree that we have not been as good at that in the last couple of years as we should have been.

On the federal deficit, there are two trends. I do not think we have properly accounted for some potential liabilities including the new Medicare program and Social Security (curiously my brother thinks with "minor" changes the Social Security problem will go away). But at the same time, I think some of the contributors to the deficit are justified - the efforts in Iraq - if successful - will pay some significant dividends. (I realize that is an if). I liked Bush's emphasis on creating an "ownership" society although wish he would have put a bit more political muscle into his proposals. I am also worried, as I have commented before, that this president has been a bit too willing to allow new types of federal spending to be created on his watch.

On the whole I am less worried about the trade deficit and concerned about the federal budget deficit than my brother. He speculates that the long term problems will increase interest rates significantly and could produce a round of pretty agressive inflation. I think we have positioned ourselves a bit better than he does. There are risks ahead but I believe they are managable. The World Bank book makes some interesting comments including one that capital is not simply a set of physical assets but it is also (economic) climate and the intangibles that are created when people have the opportunity to be creative.

Monday, December 19, 2005


The controversy about the Bush administration's use of monitoring of phone conversations in the US seems to have created quite a storm. One wonders what the real issues are here. Last Thursday the NYT published a long story on the program which, by all press accounts, goes back to 2002. In that year the Administration captured a top Al Qaeda operatives computers and cell phones and ran traces on all of the numbers on both. They began to do two things with that information. First, they did some surveilance of phone calls and other communications that took place on foreign soil. Second, and this is where the controversy started, they also did some surveilance of people on American soil. It is unclear whether this involves a lot of US citizens or merely people who are on American soil.

As I understand it, the government has the power under something called the Foreign Intelligence Surveilence Court to ask for warrants to review cell phones and emails - and that, based on the public record, these proceedings are a) secret and b) almost overwhelmingly in favor of the government position. Thus, it is puzzling why the administration chose not to use this process. The FSIC uses a lower level of proof for a crimminal warrant than a traditional crimminal court. But for some reason the administration chose not to use that procedure.

In 2003 the ranking Senate democrat on the intelligence committee questioned whether this new procedure was a good idea. One of the interesting things is that Rockefeller has declined to comment on the story but the usual suspects like Senator Levin has chosen to yap about this.

I am worried about massive extensions of powers by the government and it seems odd to me that the adminstration chose to use this new authority without going through the FSIC process - which seems to be quite accommodating. However, at the same time many of the loudest critics seem to have little regard for the very real peril that Americans face as a result of a worldwide terrorist network. On balance, while I am skeptical of the procedure, I think a lot of the yapping about it seems based more on the commenter's hatred of the president than on some sound policy basis.

The president did a good job last night and today in making his case. We do live in dangerous times. While we should be cautious about massive extensions of governmental power, we need to be able to keep up with the technologies of the terrorists. They have shown a real willingness to use all sorts of new technologies to chase down their looney goals. All of the weltschmerzing about the Patriot Act have been mostly silly. The perils of the Act have been more perceived than real. Librarians are not being jailed or victimized. For the most part, except for the constant presence of the TSA in airports, most people don't realize any negative effects of the Patriot Act. We did find out that FEMA is no better prepared than before as a result of Katrina. But that is another longer and more complex story. (The MSM did an abysmal job of reporting the basic facts about the disaster including the fact of who was really hurt in the tragedy.) But all of the baloney about how terrible the Patriot Act could have been have been classic chicken little exaggerations.

The Congress should extend the Patriot Act before they go home for Christmas. They should also lower the level of rhetoric a bit. The terrorists are bad guys. We should take them seriously. They are not a single regime - but neither have they been provoked by our intervention in Iraq. If the insurgents in Iraq are not successful and if the Iraquis are successful in creating a democratic state in the Middle East, it will send a powerful message to the other beacons of terrorism. We need to lower the rhetoric a lot on this but I think the President is mostly right here. I am not worried about my phone calls and emails and if I did send something to Abdul or call him - it might not be a bad idea to monitor it.

The last issue to discuss is whether this is a Nixon redux issue. People like Senator Levin seem to think it is. Bush (Nixon) is being portrayed as doing stuff in the clandestine arena without regard for the law. Some in the press also seem to see this scenario. But his press conference today belies that setting. I thought the President's defense of his tactics was quite strong and his ultimate argument that announcing the program widely would allow the terrorists the ability to shift tactics is true. But some on the left want to think about reliving Nixon forever.

Friday, December 16, 2005

Another Reason for Optimism

The first post in this blog was about the first round of voting in Iraq. At the time, it was a remarkable event. Yesterday's voting seemed quite usual. The Iraqui people for the third time in less than a year went to the polls in very heavy numbers and chose a set of representatives. Are the people who were chosen going to be all American supporters? Of course not. But has this important area of the world taken another step toward something important? Yes. One of the best comments I heard from one person there yesterday was the remark "Every voter took a shot in the heart at the insurgents."

Wednesday, December 14, 2005

WAMU Baloney

I've recently begun an exercise in replacing my bank. I've used WAMU for the past 15 years but they seem to have become infected with businospeak. For example, in a letter that was completely unresponsive to my question they said

I appreciate you letting us know your feedback so that we may work to
improve our service and operations. To ensure this situation is
addressed, I've forwarded your comments appropriately.

There are many choices in banking today, and Washington Mutual is glad
to have you as a customer. Since we strive to provide premier customer
service during every interaction, we believe acting on your feedback is
critical to our success. I hope you find your future interactions with
us, whether by phone, via email, in person, or at an ATM, reflect that
commitment to service.

Does some business consultant actually think that will elicit a positive response from customers? Or is this really a high end joke?

Tuesday, December 13, 2005

Hooray for the Big Box Stores (Jib Jab's sorry attempt at misinformation)

Jib Jab became famous in the last election as a site to do parities. There most recent post is silly but in a negative way. It is called Big Box Mart - the premise is that a) big box stores exploit overseas labor and b) big box stores somehow encourage people to overconsume, c) that big box stores ultimately take American jobs and thus reduce the standard of living in the country. Normally, with something like this I would post a link to the site - but this one is so false - if you want to find the nonsense, simply Google it.

Do places like Walmart exploit foreign labor? Ultimately, Walmart and other big box retailers are examples of a good division of labor. We move jobs that we can no longer compete on out of the country for jobs that pay a lot more. Textiles moved from the US, where the domestic industries failed on two points - to keep up with technology and to regulate wages compared to what other countries were offering for the same work. The jobs went first to Mexico and then to Asia (mostly China). But if you look at my home state - the remaining jobs in the field are higher paying - LA is a design center - designs are created and then shipped somewhere else for production. The workers in the other location are better off because they have jobs that are higher paying by local standards- but ultimately so are the workers here. The American workers can purchase key items (and even some discretionary ones) for better prices. That sounds like a win-win. Sure, there are transition costs. The American workers in the industries that did not keep up are displaced. But how would the logic of the song have us solve the problem? Over pay American workers? Have American consumers over pay for their goods - when they can get them on the world market much cheaper?

Then the question of overconsumption comes in. Many of the big box stores have larger quantities of goods they sell - the Costco 40 pound can of chili is legendary. One of the assumptions originally about these stores was that bulk reduced price. What has been happening recently is a more subtle set of markets being created. The volume still produces reductions in price for many goods but the industrial sizes are no longer necessary. Would the writers on Jib Jab want to substitute their consumer preferences for those of the consumers at a big box store? Who is to say that the old distribution system - where choices were limited and prices were higher was better?

A good deal of this argument comes from the most inefficient producers or stores. I can go into my local Barnes and Noble or Borders and find almost any book. I can find a sales clerk who knows a lot about the wide range of books in the store. I can do the same thing on line at Amazon (an electronic big box). Would I be better off if I could only buy books at the small local store? Near my office 20 years ago there was a great bookstore called Levinsons - for years I would buy books from them - they did a great job at searching books out for me (obscure economics titles for example). But now I can go on Amazon and get the same level of service for a cheaper price. What is wrong with that?

Finally, there are the questions - if we continue to overpay for some types of work is the economy richer or will this movement of jobs ultimately reduce the standard of living in the country? By allowing freer trade are we worse off? The key to success in any country, in this globalized environment, rests not on the inherent kinds of protectionism advocated in the song but on the pillars of education (assuring that your population is educated), tax policy (and other governmental policy) that encourages investment in new enterprises, and open markets (that allow us to sell our goods overseas and us to find the best price for goods anywhere in the world). That is a pretty simple paradigm. If we do not follow it we will be worse off.

Ultimately, the economies where high paying jobs will be the standard, will follow those rules - not some silly notion that it is possible to hold on to a single set of economic conditions that do not apply to today.


Yesterday I was in LA with some colleagues from Spain. About five years ago, in Rome, I met a guy from a Catholic university in Madrid named Universidad Francisco de Vittoria. A few months ago he wrote and said they would like to visit California and several institutions they could possibly work with on exchanges. We put together a set of meetings in LA and the Bay Area that had strong programs in areas they were interested in. They ranged in size from USC to Cogswell Polytechnic College (a couple of hundred students). UFV has large programs in communications and film and so we also are having them visit Mount Saint Marys and the Art Center College of Design and Menlo.

The first two visits were very good, everyone was cordial. But what struck me was the unexpected. We were on the Loyola Marymount campus (a wonderful film school and also a great communications school) and were walking around the campus. We went into the film school and popped in on the dean - who was temporarily out of the office and so simply walked throught the building to look at the labs. We found two professors in their offices and they were kind enough to spend about a half an hour showing our guests both the animation labs and the sound stages and to talk about the program at LMU. We talk often about the personal nature of independent higher education - and that extra care that the two professors showed our group reinforced that principle quite well.

All the people here are frauds

Tonight California executed Tookie Williams. The Governor, earlier in the day, refused clemency in a detailed statement that was actually pretty good and very thorough. I was in LA tonight with some colleagues from Spain. After I dropped them at dinner, I had to circle back to the airport to pick up a college president who had flown down to meet them. What struck me the most was how three radio hosts made a mockery of this event. John and Ken(the afternoon hosts) and then John Ziegler (From 640 KFI) were almost gleeful in their commentary about the pending execution. At one point they commented that all the people there were frauds. Indeed that was true. The three were gleeful at being able to point out that luminaries like Jesse Jackson could not name any of the victims of this quadruple murderer. Jackson is a fraud and a buffoon. But the irony of saying that all the people there were frauds was seemingly lost on them. Because they were (are) frauds too.

Sunday, December 11, 2005

Eugene McCarthy

In a post at DailyPundit DailyPundit Bill Quick does a short rememberance titled Ave Atque Vale (Hale and Farewell) on the Senator from Minnesota who brought down a president.

I have a slightly different take. In 1964, I was a county youth chairman for Goldwater. But in 1968 I worked hard for McCarthy in the same county. Johnson, and McNamara and Rostow - were the precipitating events for both decisions. I thought, and actually still think, that they eased us into a war with hubris and deception, and then refused to make a real commitment to the outcome. It seemed (and seems now) such a horrible waste. I thought BMG was actually a pretty good guy. During the campaign he came to San Joaquin county twice and I met him both times. He was down to earth and really quite a figure. Reagan also came to the county and gave "the speech" - which I was impressed with at the time that is what began his race for national office. -When he died I reread it and was not as impressed. Goldwater had an easy laugh and a western manner. By 1970 I was working in the US Senate and ran into Goldwater in the halls. BMG had just come back into the Senate- where he stayed for another three terms. I saw him about the time he retired and he was really frail. His writing and speaking were a lot the same.

In 1968, as we continued to get deeper into the war - without admitting it - McCarthy came on strong. He came to the county in the late spring and I helped organize a rally for him. I had the chance to shake his hand and actually speak with him for a couple of minutes. He was thoughtful and very pleasant with a wry sense of humor.

Both campaigns were blessed with a lot of energy - different types of people - the Goldwater included a lot of libertarians but also a lot of silver haired old righties. The McCarthy included a lot of counter culture people but also a lot of libertarians. When the RFK campaign came into town it was clear that the raggle taggle group that had been involved in McCarthy's campaign would not be able to hold on to the state. Kennedy came to Stockton and literally sucked the wind out of the McCarthy campaign.

That is not bad nor good. What McCarthy did was to energize (or at least give us who were against the policy in Vietnam a vehicle). I wrote my senior thesis on a theory by James MacGregor Burns on presidential power. My professor liked my research - but because I criticized Burns theory (that a president can get anything he really wants) he wrote a long criticism of it. On March 31 when LBJ gave his speech, I actually drove over to the professor's house and when he opened the door - he said with a grin, I know why you are here and I am not going to change your mark.

Both BMG and McCarthy were from an era before handlers. The brief time I met both gave me a pretty good idea of who they were as people. They were both independents. Remember that BMG was one of the delegation that asked Nixon to resign and was turned off after he left the Senate by the rise of the Christian right. McCarthy was often a surprise. In 1980 he endorsed Reagan over Carter. I think both had a sense of themselves. That is certainly lacking in many of today's elected officials.

Friday, December 09, 2005

Workforce development

There is a big push toward workforce development in California - whatever that means. A number of the political players in Sacramento are trying to develop new ways to get people into the workforce. In the old days that was called vocational training. I met one of those people on the street yesterday and had a discussion with him about the issues - being someone who represents colleges, I guess I am supposed to have an opinion.

Indeed, I do have an opinion. Beginning with the Steiger Act in 1978, I have seen a lot of federal money get poured into the policy dejour in this area. For the most part they have shown little effect. I remember in the early 1970s going to one of the finest vocational training schools in the country (in Oklahoma) and watching a group of students working on NCR key punch machines. I asked the director, why? (I had recently worked in the White House and had installed something revolutionary called the MTST (Magnetic Tape Selectric Typewriter) which was a first generation of a word processor - and thought that punch cards would soon be converted into electronic information on a tape. So I thought the way of the key punch was soon out.) The director replied - we use these because NCR gave them to us.

So how do you get a prepared workforce? The responses are pretty simple. First, create a tax system that incentivizes capital - a low capital gains rate (and even low or no taxation on savings) is the first step. Create the energy for entrepreneurs to invest. Second, provide some funding for basic research. The engines of NASA and the NSF and NIH are pretty strong. Third, encourage all students to learn some basic skills including algebra. But it certainly is not by training people for this generation's jobs. We simply don't need a lot more key punch operators even if the vendors are giving us free stuff.

The AP on Corruption in Politics

The AP released a poll this morning on corruption in politics. It suggests that the American people are pretty skeptical that ethics and politics exist together in the current environment. Just over 50% of the responses think corruption in politics is a very serious question (88% think it is somewhat or more serious). Almost half believe that either a moderate number of politicians or everyone is involved in corruption. And by about equal numbers (36% to 33%) think one side or the other (democrats or republicans) have greater ethics. The story goes on to recount the Abramahoff, Delay, and Frist allegations and the Cunningham evidence (since he has admitted his crimes).

I think the poll mixes rotten apples and oranges. There is plenty of evidence that there are some serious bad apples in the current mix. But the corruptions are more subtle than a little influence peddling or bribe taking. Had the question been asked about the American perception on the increasing role of set asides - you would have seen significant revulsion against that process. Yet most of the political class would not see that as an ethical question. Ditto for the pervasive role of some lobbyists - a permanent class of allies or enemies. The American people would say we did not hire you guys to go to Washington or Sacramento and buddy up to a single group. I also suspect that were the same set of questions to be asked about the ethics of journalists or other professions that you might get similar high responses.

Tuesday, December 06, 2005

Responsible Talk Radio

Last night as I was driving home I switched to KFBK which is one of two or three talk radio stations on the Sacramento dial. The host, Marc Williams, was blabbering about the Tookie Williams case. He made two claims that seemed totally outrageous. The first, that Mr. Williams, whose case is being considered by the Governor for clemency, continues to direct killings by the Crips - the gang he helped to found. And second, the Williams (the one on death row) met the Governor and has established some kind of relationship that will eventually result in his pardon (the issue here is clemency not pardon). Neither charge has any basis in fact - but evidently the Williams on the radio is so against the Williams in prison (who seems to have had at least some positive effect on kids and gang members and who probably deserves clemency) that he will say anything.

Today, the pot and pan bangers in LA on KFI made some outrageous claims about the 48 CD race in which an American Independent Party candidate is running against a GOP candidate. John Campbell, who is currently a state senator and running for congress and favored to win, is running against a guy who left the GOP a couple of years ago to join the permanently minority party of the AIP. His single issue is immigration. The pot and panners - John and Ken - have made increasingly silly comments about immigration over the last six months - evidently in a desparate attempt to gain the entire share of xenophobes to their listening audience. Again, claims which are demonstratably false.

Then there comes John Kerry who makes the silly claim that US soldiers are doing "terrorist" activities in Iraq as part of their efforts in the country to find and get insurgents.

I guess we have come to an era where the limits of responsible commentary - based on any standards of decency - are simply ignored.

Blog Awards

The Weblog Awards are up at What is amazing to me about the effort is not that there is a formal awards process - good thing, American thing (awards and all) but that as I looked through the categories I find most useful - I knew only a few of the nominees. That shows a very dynamic marketplace for all kinds of ideas. You may want to check it out for two purposes. First, it would be good to vote for a favorite (I like Taxprof blog for best law blog). But second, look through the categories and the links to find some new sources.

Monday, December 05, 2005

It is not just the military

Secretary Rumsfield, in his remarks to John Hopkins students commented today -

We have arrived at a strange time in this country where the worst about America and our military seems to be so quickly taken as truth by the press and reported and spread around the world -- with little or no context or scrutiny -- let alone correction or accountability -- even after the fact. Speed it appears is often the first goal, not accuracy, not context.

Unfortunately, while his commentary on the military coverage and the misreporting in the Middle East, his remarks were true for most of what the MSM calls news.

Backbone in Intelligent Design (of the tax code)

No, I do not want to get into the discussion on intelligent design in relation to evolution. But it seems that another area where intelligent design could be helpful would be in the tax code. Since the last major overhaul of the federal code (1986) we have allowed the code to be brought back to complexity. That is especially true for something called the Alternative Minimum Tax (or AMT). The AMT is one of those idiotic ideas that could only be thought of in Washington. The "logic" goes like this. We will create two tax codes - the first is the basic structure but if we think you do not pay enough tax under that one then we will create a second code with slightly higher rates and you will be taxed under that one. Instead of having the integrity to create a tax code with all the provisions in the right place - our lawmakers created a sort of code. The theory behind this provision was that if your use of many of the most popular provisions in the code was too vigorous - then we will tax you more. But of course, that is not the way the thing has worked. It was originally designed for the mythical taxpayer who is agressive in using "tax preferences" but as the code has continued it increasingly is attacking more and more taxpayers.

The president's tax reform panel looked at the AMT and declared it was bad. So they set out to solve the problem by eliminating it. If the proposal is adopted, it will require some adjustments. For example, the deduction of state and local taxes will go away. So will part of the deduction for mortgage interest (based on a calculation of what most people pay for housing). In both cases the panel is using some of the language of many tax theorists - why should we subsidize local government taxes or huge purchases of housing? The panel also establishes a 1% floor on charitable giving but moves it above the line. Thus, in order to qualify your charitable giving, you have to give at least 1% of your income to charitable causes but then the provision applies to all taxpayers. All of those changes yield some slight changes in rates (including some further reductions in the rate for capital income) and the elimination of the AMT. In my mind, that is a pretty good tradeoff. Sure there will be some people who whine about a lot of the provisions but that is a pretty fair balance.

The president's staff announced today however that they would take a year to build support for the ideas in the plan before trying to advance it. One wonders whether this will be the same team that has done such a good job of building support for the policy in Iraq and the same team that did such a wonderful job of building support for privitization of social security accounts. The president, at the beginning of this term, aruged that he had built up some political capital and that it was his intention to spend it to achieve his goals. But in the cases of Iraq and Social Security he has let the other side define the terms of the debate. Based on the first year of his second term, he seems to have been very good at spending that capital without any real or even apparent investment. That makes his announcement on the tax reform panel this morning look like a strategic retreat. That is a real disappointment.

Sunday, December 04, 2005

When Reality Resembles Film

One of the pleasures of the last six months has been Netflix - a really great service. It does not have every movie but a pretty good selection of them - and it allows you to have three out at a time - no time limit. Send one back and get the next one on your list.

Last night I saw a movie about Terry Gilliam trying to make the film of Don Quixote. Orson Welles tried it long ago and failed but as you watch this documentary (called Lost in LaMancha) you see an allegory for what Cervantes was writing about 500 years ago. Gilliam is a very talented director. But between some odd plans and some very bad luck - he looked like he was tilting at windmills on this project. He started without a clear plan - chose a face that looked absolutely perfect for Don Quixote and Johnny Depp for Sancho Pancha. But between an inadequate financing, poorly organized plans and lousy luck - the film was never made. Or was it? Was this a documentary of the type like Spinal Tap? Were we spoofed?

Consultant Roles in Disasters

This morning's NYT had an interesting article about the role of consultants in addressing Hurricane Katrina. The story started like this

It was Thursday, Sept. 1, three days after Hurricane Katrina had ripped across the Gulf Coast. As New Orleans descended into horror, the top aides to Gov. Kathleen Babineaux Blanco of Louisiana were certain the White House was trying to blame their boss, and they were becoming increasingly furious.

"Bush's numbers are low, and they are getting pummeled by the media for their inept response to Katrina and are actively working to make us the scapegoats," Bob Mann, Ms. Blanco's communications director, wrote in an e-mail message that afternoon, outlining plans by Washington Democrats to help turn the blame back onto President Bush.

With so much criticism being directed toward the governor, the time had come, her aides told her, to rework her performance. She had to figure out a way not only to lead the state through the most costly natural disaster in United States history, but also to emerge on top somehow in the nasty public relations war.

Blanco released a ton of information over the weekend which included the exchanges above and others. Interestingly they released this mound of information only to the traditional media.

I had a couple of questions when I read the story. #1 - Why should any public official spend so much time trying to "win a PR war"? Bush's people were doing the same thing. But wouldn't it have been better to just do the job of responding to the disaster? #2 - Why should the Governor of LA think this was a complete disclosure if she only puts this stuff out to the media? Is there some idea about getting them to do the right story? Or is there an assumption that the average citizen does not have the same right to know as the media?

These consultants are always fighting the wrong war (concentrating on image not substance) - but always at our expense. Seems like an extremely bad bargain. But then we knew that.