Cap and Trade - Adam Smith was Right ,Again

The House recently passed a "cap and trade" bill to regulate the emission of greenhouse gasses. Supposedly, if you buy the logic, it will help us become more energy independent and reduce our consumption of fossil fuels by setting limits for use of these things and then gradually reducing them.

But as with all proposals in Congress, it is good to read the fine print. The bill also includes a new tariff which would, beginning in 2020 impose new tariffs on trade with countries that don't follow the same standards that we do. Sponsors of this nonsense argue that American industry needs "protection" through a tariff from having to compete with countries who don't follow the standards. Specifically mentioned were steel, cement and a couple of other industries that are always at the government trough trumping up reasons why they don't need to compete. One year is it "we are a vital industry." Another is "our competitors are subsidized." Another it is "they don't follow our higher standards." In all years it is a way to impose costs on the American consumer that are concentrated in the industries that are seeking the help.

In the Wealth of Nations (Volume 1, part XI, p. 10) Smith comments "The proposal of any new law or regulation which comes from [businessmen], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

Nonsense

By all accounts Lt. Don Choi, a West Point graduate and Iraq veteran is a model soldier. He is well spoken and skilled in Arabic language. But he has a failing that makes the Army want to dismiss him. He is honest. Choi will face a disciplinary hearing because he has announced, in contravention of the Don't Ask, Don't Tell policy of the armed services, that he is gay.

The policy of the armed services states - "Sexual orientation will not be a bar to service unless manifested by homosexual conduct. The military will discharge members who engage in homosexual conduct, which is defined as a homosexual act, a statement that the member is homosexual or bisexual, or a marriage or attempted marriage to someone of the same gender."

Don't Ask, Don't Tell is a legacy of the Clinton Administration who thought that the American people were not ready to have gays serve in the military. The Clinton people wanted to score points with the gay community and yet not anger conservatives and so came up with this policy. One problem with the policy is that it seems to be not very popular with the public. By huge margins public opinion polls have no problem with openly gay people serving in the military. But the armed services cannot figure out how to deal with this. The policy quoted above seems to allow for a differentiation between status and behavior but the current policy makes no such distinction.

Barry Goldwater, before he died, was a strong voice against the policy. He knew a lot about individual rights and about military policy.

I've heard Lt. Choi interviewed several times and am proud someone of his character is willing to serve. I am pretty sure I would not agree with many of his political views but that is not what he is being asked to serve us on. From all that I have heard he is a talented soldier. It is a shame the military cannot just look at his qualifications.

CNNidiocy

This morning I was forced to watch CNN while working out. In between rumors about MJ and Billy Mays one news dude (reporter is not a term that would work for CNN people) came up with the following about the sentencing of Fraudvestor Bernie Madoff - "Based on his age, if Madoff receives the maximum sentence (of 150 years), he is likely to die in prison.

I guess that is called Cnnsight.

Three games not to remember

The last three nights of the Cats have not been impressive. In the last ten games we have gone seven and three but the last three were the problem. On Wednesday and Thursday we were shut out twice in a row. Last night we finally got back on to the board and actually made a game of it. (We lost in the bottom of the ninth.) Any baseball team goes through peaks and valleys. The good news is we are still way ahead of the rest of the league and even the division. Fresno is now six games back. The video is from the new 3GS. I think that is pretty good quality.

Michael Jackson

I must admit that I was not a MIchael Jackson fan. I was not hostile to his music, I just was not a fan. But as I have thought about his life since his untimely passing, I can come to only one conclusion - he lived a very tragic life.

The NYT had a long article about his business dealings. Based on that and other coverage, he was a very shrewd businessman. He bought the Beatles catalogue for a song. He was able to develop a number of projects that reflected not only creative talent but also a knack for promotion.

In his music career he seems to have been an innovator. Again, I was not impressed with those innovations, but as a friend reminded me this week, he evolved in both his dance and his music. From all accounts he was passionate about his performance and a perfectionist.

But then there were the hangers on, starting with his father. Jackson began very young and for the rest of his life there were a large number of people who wanted to "protect" him but also to extract their piece. All those exploiters may have prevented a real human being from evolving. In the last decade an increasingly bizarre figure evolved.

At the front of the exploiters were people like Al Sharpton, who seemed to be instantly available to show his face the minute that Jackson had died. I am not sure I understand Jackson's kind of creative genius. But I do understand con men - and Jackson seemed to attract them by the dozens.

A response on ungovernability

One of my regular readers just commented "I reject the thought the process isn't working. How did they find ways to grow government by so much in the past 20+ years? " Good question. Government is ultimately about choices. In the last couple of decades the state has made a number of choices about where to spend the money that we offer to the public sector. There is considerable evidence that most Californians would disagree with the way that dough has been allocated. But if you start with the notion, as I do, that it should be hard to make decisions to spend public money, then the question is a very good one.

Some of the growth has come from non-elected sources. For example, the federal judge that has tried to dictate spending in state prisons, is but one example of a judiciary mad with power. But as the literature of public choice economics suggests, in democratic assemblies the propensity is to too easily accede to the wishes of a minority that has concentrated interests and disburse the costs through the general public who feel the effects of those changes in much less concentrated ways. That is the fundamental theory behind things like the two thirds requirement for taxes and spending decisions. Even with that constraint the rent seeking capabilities of public officials seems to be pretty large.

Skyboxes

Last night I went to the Cats game in a skybox as the guest of a group that I spoke to in the morning. I have never been much of a fan of skyboxes. They take you away from the action of the game. The food and the company was great but the game was a distant vision. Not that anything in Raley field is far away but I could as well been at home as at the game.

One of the highlights of the day for me was the gift of a University of the Pacific baseball jersey. They also gave me a cap but I favor one that I also use for fishing which is well used. In the Suite there was a caricaturist. This is what he came up with for me. I thought it makes me look a lot younger and more angular than I am (for a comparison look at the photo on my profile).

One other highlight of the game was the opportunity to throw out the first pitch. I have never done that and what I came up with can best be described as a sinker. For Raley Field the guests are not allowed on the mound so you actually pitch from in front of it - or a good eight feet closer. So instead of 60'6" I got to throw about 52' - my pitch made it most of the way. A good friend was kind enough to take some photos of the event - and even got my pitch in the air.

The Cats got shut out for the second time in a row. We're now 19 games over .500 and 7 games ahead of the Grizzlies.

CalBuzz and the Ungovernability of California

Two former news people (Phil Troustine and Jerry Roberts) publish a blog called Calbuzz. In yesterday's post they argued that California was ungovernable as a result of a series of policy decisions made over the last couple of decades. They claimed that Proposition 13, budget initiatives(presumably things like Proposition 98 and 99), Gerrymandering, Term Limits, Boom or Bust Taxation, and the two thirds vote requirement have caused this condition.

The argument is Gibbonesque in its focus. Edward Gibbon wrote The Decline and Fall of the Roman Empire which argued that a series of events caused the Roman Empire to fail. I've always thought that this kind of deterministic historiography is wrong in part because it helps to obscure the real complexities of trying to understand significant events. I've also thought that the concept of ungovernability, while satisfying in one sense, is also flawed for many of the same reasons.

Clearly, Troustine and Roberts do not like most of the events on the list. So even if California's governmental system were humming along they would still be railing against most of them. Some of the things are creations of their political philosophy. For example, California's boom and bust tax system has been caused in part by the flawed notion that increasing the progressivity of the tax system will improve social equity. (When you rely too much on one source of revenue - particularly capital gains and options - you suffer consequences.)

In this particular budget meltdown a lot of commentators have argued that the two thirds requirement for raising taxes and for adopting a budget is an impediment to "majority" rule. Indeed, it is. Budgets make commitments. So do taxes. Those of us who think the two thirds requirement is a good idea would argue that it requires the majority to work harder to build consensus.

An old friend, Jane Wellman (who is now a first rate researcher on higher education issues) once coined the phrase Legislative Kabuki to describe the condition that the California process suffers under. In part because of the 24 hour news cycle and gerrymandered districts, few members of the legislature actually speak to each other. They put on their masks in committee hearings and in press conferences and never actually get down to a serious philosophical discussion about this or that policy.

One could argue that a simple solution to the problem would be to repeal Proposition 9 (the political "reform" initiative that swept Jerry Brown into office in the Watergate tinged time of 1974). Prior to that time lobbyists and legislators had a frat club atmosphere where they went out and socialized together. That made many members of the legislature into alcoholics. But the members actually knew each other and could, when necessary, speak to each other. Of course, reverting back to those days is impossible and also undesirable.

But the notion that current conditions make the state ungovernable and that all we need to do is to make a couple of tweaks to the system to get rid of faulty policies is naive and harmful. Ultimately, any organization depends on leaders. We've taken away the possibility that leaders can emerge, at least for the most part. Until that condition is solved, Gibbonesque analysis will continue to be the rage and we will be no closer to raising the approval ratings for the Governor and the Legislature.

A bizarre CNET post

CNET today posted a list of all the parts in the new iPhone 3GS, suggesting that the parts cost, including assembly is a bit under $180 for the 16 GIG phone. I find these kinds of stories counterproductive. A truism of any piece of technology, especially with the reality of Moore's Law, suggests that the value added of the device is fundamentally founded on the intellectual property of the phone not the components.

A key part of the argument by some on the left is the loss of manufacturing jobs in the US and the substitution of "service" jobs is fundamentally negative for the US economy. That is pure nonsense. Which has a better long term trend - manufacturing or service sector jobs that drive the manufacturing of products? Obviously, the brains that go into the phone are more important than the chips and other materials that come out to $180. Ultimately, the value of the intellectual property in the phone is conditioned in part on how long the model will last over how many phones are sold. In this case, the property spreads nicely over both models of the phone (32 and 16) and there is probably a lot of carryover for the next generation of phone. Indeed, the implementation of the better camera in the new phone probably took very little intellectual work to integrate it into the new model.

Rivercats win 7 in a row

The Cats had a wonderful game last night. As they have in several recent games they went behind early and then came back to win the game. Tommy Everidge hit his third home run in the sixth. After a very nervous start in AAA ball he seems to have hit his stride. Henry Rodriguez pitched in relief to three batters and struck them all out. Dana Eveland pitched the opening seven innings giving up only one hit. Jeff Gray closed out the Sky Sox in the ninth. The Cats are 31-10 in their last 41 games and now 21 games over .500.

Clear Lanes Close

(PHOTO FROM GUY KAWASAKI)
Soon after 9/11 a company started up to offer frequent travelers a quicker way through the airport. It was called Clear Lanes. For about $100 a year they would take some biometrics (iris scan and finger prints) and then rush you through the security lanes. In the first year I bought the pass. But I soon found it really was not worth it. So in the second year, I dropped my membership. Two problems came about for me. First, it was not available in many of the airports that I regularly fly out of. Sacramento decided not to use the system but so did a lot of other airports. Second, the TSA began offering experienced traveler lines at many airports. For example in Denver, if you are either a frequent flyer (with status on an airline) or flying first, you go to a special line which normally runs a bit faster.

When the TSA was created the Bush administration opted immediately for a government run screening system. I thought at the time and continue to believe that was an error in judgment. But from last night's post on the President's thoughts on health plans, I guess this is an example of a tool for discipline offered by a government run plan. In this case the tool was so efficient that it disciplined the private alternative right out of existence.

"A(n) important tool to discipline insurance companies..."

In the President's news conference today he used the phrase to justify the government run aspect of his health proposal. The fractured syntax is no match for the even worse fractured logic.

Let me see, Mr. President, the US Postal Service serves as an important tool to discipline companies like Federal Express. Hmmm. In reality, to the extent that the USPS is any better than it once was is a result of the market based competition offered by the non-governmentally run delivery services. The USPS even with a government monopoly on some deliveries is failing to be able to compete because of the dynamic nature of the competition for sending and receiving information. Did markets become more or less efficient when the Civil Aeronautics Board was abolished (an agency to discipline airline companies)? Of course not.

A good part of the research on health care has concluded that part of the escalation in costs has been brought about by the administrative structures like Medicaid and Medicare. Government run programs run best when there is little variation in the expected results. The problem with asking government to take over another seventh of the GDP is that they are unlikely to be any more successful in bringing discipline to an uneven market than they have been in other areas. The variation in treatment options and desired results are simply so large in health care that it is absurd to believe that government will be able to bring order. There are two kinds of discipline which the president could be speaking about - market discipline and regulatory discipline. Regulatory discipline can help in some areas but there is not a high chance that health care will be one of them.

More Sales Data on the 3GS

Apple Insider had a post today about the weekend's sales on the 3GS - which according to other published reports came in the range of 1 million units sold. They highlighted that 12% of the purchasers were ditching their iPhones. I think equally important is that 56% of the buyers were already iPhone users and 72% were already AT&T customers. That shows a very loyal customer base.

The other data of interest is the number of people buying the larger model (32 GIG) phone. The Piper Jaffrey data suggests that more than half stayed with the smaller phone suggesting that people would use an alternative device for listening to music - yet only a small number over half said they will use an iPod too. In my own much less scientific data almost everyone in the line that I spoke with was there for the 32GIG model. It will be interesting to figure out what percentage of the buys on the iPhone will be the 3G versus the 3GS.

NPR Take on the Administration's Attempt at Financial Reform

This morning on Weekend Edition there was an odd discussion about the proposed new agency supposedly designed to protect consumers. The Obama Administration contends that there needs to be a new federal office like the Consumer Product Safety Commission to protect consumers in financial transactions. It is arguable whether the CPSC has actually aided consumers. But for a moment assume that it has been a useful activity. (For me, that is a huge assumption.) The rationale for the financial equivalent of the CPSC is on even more shaky ground. Financial transactions require some reasonable levels of disclosure (transparency) - which are already mandated under existing law. The problem this agency would be trying to solve is that they can be complicated.

The NPR correspondent was obviously in the tank for this idea. She made the bizarre differentiation between the drive for "transparency" and "simplicity" and then went on to argue that the Administration's proposal would strive toward the latter. In her mind transparency is disclosure, simplicity is disclosure so simple that anyone can understand it. Unfortunately, the proposal works in the opposite direction of both. As the proposal has been explained it would set up a national agency but still allow individual states to add new regulatory burdens to financial instruments.

The intent of the bill is clearly to reduce risk. It could be argued that government has a function to encourage safe products (although again I am a skeptic about that). But the extension of the logic to financial instruments is absurd. Financial markets are global in nature. The new financial instruments that emerged, in part, because of governmental policies did have some role in destabilizing the housing market. The emergence of "teaser rates" and "zero down" mortgages did create issues for consumers. But like the junk bonds of the 1970s and 1980s they also created some consumer benefits that are likely to be lost in the creation of a new bureaucracy to oversee the operations of thousands of financial institutions.

Dick Durbin (D-ILL) a cosponsor of the measure characterized the proposal in the following manner "In America, we don't say 'buyer beware' when people are buying prescription drugs or when they're concerned about lead paint in toys." Evidently Senator Durbin believes that a governmental agency can remove risk from financial instruments. Charles Schumer seems to have caught the moment when he argued "Disclosure is no longer enough," said Schumer. "Just as you wouldn't just have disclosure on drugs, you can't simply have disclosure on financial products. Consumers have been trapped in a business model that's designed to induce mistakes and jack up fees." Congressman Bill Delahunt (D-MASS) has argued that this proposal is "fundamentally a game changer." Truer words have never been spoken.

Cats win their fifth in a row

The Rivercats won an improbable game tonight. I took my grandson and we were late - so we missed the first inning. Although Patterson hit a homer in the bottom of the first, we started the game down 2. Then in the third the Bees added two more to give us a three run deficit. In the fourth we came back - four runs. We added one in the fifth. The icing on the cake came in the bottom of the seventh when we loaded up the bases and Bee pitchers walked across two additional runs. We are now 19 games over .500.

In the bottom of the second Tony D got tossed because he beefed a lousy call. He should have beefed it.

My grandson had a grandslam night. A big claw, cotton candy, a pizza, a new hat, a ball and about two innings in the fun zone.
(This is an iPhone Video)

3GS Sales today

I spoke with both AT&T and Apple people today about sales of the new phone. The AT&T store I went to was out of phones by about 1 PM. The Apple store was still doing a brisk business at 4 PM. As in the previous two years, the biggest model (32 GIG) seems to be very popular. The 8 GIG was also selling well.

Both companies did something smart this year by allowing customers to pre-order the phone and get it delivered today. That seemed to work very well. The line at the Apple store at 4 PM was about 15 people. I spoke with a couple of people and they said they had not been waiting long. The glitches they had in the fulfillment last year seem also to have been cleared up.

Of the dozen or so customers I spoke with today about a third were buying their first iPhone while one was buying his third. There seemed to be more women in lines today - but this was a very small sample. Each of the people I spoke with had done a lot of research on the Internet and seemed to be able to quote one or more of the reviews.

The photo is from Guy Kawasaki in the store he bought his phone - 15 minutes in and out.

Speed on the 3GS

One of the features on the 3Gs is supposed to be speed. Speed in loading websites. Speed in switching. One thing I did not expect was speed in typing. The keyboard is significantly more responsive. That is a wonderful addition.

Photos on the 3GS

Photos on the new 3GS are pretty good. I thought it would be interesting to take a photo using both phones. The top photo is by the 3G phone, the bottom is with the 3Gs. Notice the increased sharpness in the second photo. I did not buy a phone to take photos. I have a lot of investment in both digital SLRs and point and shoot cameras. (Canon, of course!) But because of the upgrade and the ability to focus, I might use the camera more.

The focusing ability is quite simple and in my initial tests is almost fool proof. It is a range focus but the ability to have more control on photos is much appreciated. There is a toggle switch on the video feature so that you can move between still and video and the quality of the video is good for a point and shoot video. I suspect this feature will be used a lot for things like Youtube. Were I a politician I might ask to ban iPhones when I am meeting with constituents - the ability to fabricate a response - long a staple of some politicians - is a thing of the past.

Tracking my 3Gs Phone

WEST SACRAMENTO, CA, US 06/19/2009 7:05 A.M. OUT FOR DELIVERY
06/19/2009 6:00 A.M. ARRIVAL SCAN
MATHER,CA, US 06/19/2009 5:40 A.M. DEPARTURE SCAN 06/19/2009 5:11 A.M.
ARRIVAL SCAN LOUISVILLE, KY, US 06/19/2009 3:52 A.M.
DEPARTURE SCAN LOUISVILLE, KY, US 06/18/2009 11:38 P.M.
IMPORT SCAN ANCHORAGE, AK, US 06/17/2009 1:50 P.M.
ARRIVAL SCAN CHEK LAP KOK, HK 06/17/2009 7:46 P.M.
DEPARTURE SCAN SHENZHEN, CN 06/17/2009 4:40 P.M.
DEPARTURE SCAN 06/17/2009 6:27 A.M. ORIGIN SCAN

So on June 17 it started its trip from the Assembly factory and flew to one intermediate stop but because of the international dateline arrived in Anchorage on the same day. It then went to Louisville (a UPS logistics point) and then to Mather arriving early this morning for transfer to West Sacramento - which is our UPS distribution center for our area. The entire package is about half a kilo. I am amazed at the logistics even as much as I am sure I will be amazed at the technology.

Run derby

Last night against the Fresno Grizzlies the Cats scored 19 runs including 7 in the fifth and 4 each in the fourth and sixth. Tonight at the end of eight we are up 9-0 with 4 each in the seventh and eighth. Wow.

More comments on iPhone 3.0

One of the understated features of the new software relates to hooking into internet sites. If a site has a password setup the phone redirects you to a login page, which is then saved in the phone, reducing the time to get back into frequently traveled sites. That is a big advantage.

The spotlight search works like the Mac OS - which means that anything has a name will come up - documents, pictures, contacts, etc.

Both of those features are spiffy.

Is history continuous or episodic?

My wife and I joined a new parish a bit more than a year ago. We joined a prayer group which has been working our way through the New Testament. Last night we had a discussion about the book of Jude. One member of the group, in discussing her perception of the current state of the world, brought up the theory (I think originally from Edward Gibbon in the Decline and Fall of the Roman Empire) that all civilizations go through an inevitable cycle of growth and decline.

From my perspective that look at the world is both unduly pessimistic and wrong. At every point in history there are indicators of advance and decline. As we evolve we need to make good choices but I guess I concluded that I am fundamentally a Hayekian Christian. Hayek had an inherently positive understanding of individual decision making. He did not argue that all individual decisions would be correct, rather he thought that the unique blend of "knowledge of time and place" that each individual carries would help to guide us as a society. Hayek of course wrote about the "Fatal Conceit" of centralized decision making but I think inherent even in that book, he understood that ultimately the individual could prevail over those kinds of errors.

I would add one thing which Hayek did not. Technology ultimately adds two dimensions which reinforce the basic notion. First, technology can help to defeat centralized authority - not immediately but over the long term. The role of Twitter in Iran right now is a good example. Second, technology, as it seems to be evolving, allows some kinds of positive social organizing (including things as diverse as Facebook and open source software) which all new types of interaction.

The New iPhone Software

I downloaded the new software for my phone today and have some initial comments.

My two favorites so far are the cut and paste function which is simple and very functional; and the Find my Phone, which seems to be a bit less than completely ready.

I am not sure whether I will use the voice memo feature, which allows you to take voice notes and then send them to people.

The find my phone requires a MobileMe account. It has two features. Both require you to change some settings on your phone and then to establish an initial location. The first is a geo-locator which will find your phone based on signal tracking. I have had uneven experience with the Geo-locator. The site is not consistently available. Thus, when I rung in early in the afternoon - it searched for my phone but was not successful in finding it. A few minutes later I was not able to get into the system. But a second feature allows you to create a text message which can be followed by a prolonged (2 minutes) sound.

The second is an ap to help you locate your phone. I am constantly setting my phone down at home and then forgetting where I laid it. With the second feature you can write yourself a note and ask the phone to play a sound. If the phone is on and even if it is on silent mode it will create a sound to find it. Even when the first locator did not work the messaging did and it worked well.

The stocks application is also much enhanced. It can now work in Landscape mode and the charts display dynamically - so for example if you want to know the price of a stock on a particular day you can move the pointer and it will display it.

There are two features that are not included in the US release. The first is tethering - which would allow you to use your phone as a cellular modem. AT&T has said that will be released later in the year. At the same time you are unable to use the MMS feature with photos (my current phone a 3G does not have video).

I am supposed to be one of the first with the 3Gs and then can review the new phone - but based on a light amount of use - the new software is dandy.

The Work of the California Tax Commission

Today was one of the last meetings of the California Commission on the 21st Century Economy - a special group established to examine the California tax system. In recent years the state has been blessed with the odd circumstance of having a tax system with confiscatory rates and uneven revenues. For both sales and income taxes we have one of the highest rate structures among all the states yet because of the structure we have wild swings in revenues. Some casual observers blame our tax problems on the initiative process. That is nonsense. The rates and the structure of the personal income tax came from legislative enactments. It could be argued that the two thirds requirement for raising taxes, which was the product of an initiative, is the only thing that has kept state rates from going even higher.

The easiest way to understand any tax system is with this simple equation - Rates X Base = Revenue. Rates can either be flat or progressive (under the modern definition when income increases so do rates). Base includes all those things that are taxed. For example, in the sales tax, if you buy a steak in a market to take home it is not taxed. But if you buy a steak in a restaurant, it is. The base includes prepared food and not food which will be prepared at home.

Around the turn of the Twentieth Century the state had a couple of tax commissions to think about how revenues should come to local and state government. At the time a UC Professor named Carl Plehn staffed a number of commissions to think about the tax system. The current commission, chaired by Gerald Parsky, is reminiscent of the Plehn Commissions.

The Commission is looking at some fairly significant changes in California's taxes. Each includes, as a central feature, a business net receipts tax - which is similar to a value added tax (VAT). At each stage of production, the manufacturer adds elements of the product and is then taxed for those additions.

All three of the broad proposals have a BNRT. That addition allows some interesting possible changes in the overall system. Depending on what is covered in the BNRT and the rate, it could yield substantial revenue. Thus one model would a a 6% personal income tax with no credits or deductions and also be able to eliminate the sales and corporation tax. Another would simplify the current rate structure of personal income taxes and lower the top rate to 7% while allowing an investment tax credit, a reduction in the current corporate tax top rate to 7% and all of the current credits and deductions. A third alternative would reduce both the number of deductions and credits in the personal income tax (to the homeowner's deduction and charitable deductions), eliminate the sales tax on business investment decisions, reduce the corporate tax rate to 7% and lower the sales tax rate by 1¢.

A variation of the Business Net Receipts Tax is something that was used a lot in the 1930s. Opponents of it claimed it was complicated, and depending on how unitary the calculation is (how much of it is applied to non-California purchases) it can be. But the tradeoffs of revenue stabilization and lowered rates may be a very good deal for long term growth in the state.

Policy Redux

Last fall the Obama campaign excoriated the McCain people about their proposal to finance part of health care reform with a tax on employer paid health insurance. A WP story this morning suggests that the administration is facing pressures to reconsider that point of view.

Some in the administration like David Axelrod argue that the best way to finance a new national health system is to tinker with taxes on the rich. For example, while one part of the administration is talking up reforming the Alternative Minimum Tax (ATM) - a God awful abomination of tax policy created several decades ago people like Axelrod suggest that the way to finance this new policy is to finagle with how "rich" people get to use deductions. "He believes this is the most equitable way to do this. It places the burden on people who can most afford it." That is what passes for logic in Axelrod's mind.

The Post suggests that there are some more thoughtful responses. For example, Senate Finance Committee Chair Max Baucus is about to propose a bill that would tax employer paid health plans. Baucus would tax benefits above $15,000 per year. That would include one in five workers. Many on the left argue that taxing benefits would be unpopular. They trot out survey research which suggests that people might get grumpy if their benefits were taxed. The survey results sound like so much noise.

Gordon Tullock, in a classic journal article called The Transitional Gains Trap argued that programs enacted have a sticking power even if all indicators suggest that alternatives would work better for even the class affected by the program. The original policy of excluding health benefits from income came about as a way to evade WWII wage and price controls. But groups like unions want to hold on to it - even if the new system will serve society better.

In the long term the key element of the McCain plan (taxing benefits as a financing mechanism) made a lot of sense. It still does. Let's hope it stays on the table.

Wisdom

NPR had an interview with Elvis Costello this morning which had a simple piece of wisdom. He argued that if you chase after fame you will often be disappointed but if you chase after things that actually motivate you (in his case music) you will be constantly rewarded and positively surprised. Sounds like wisdom to me.

A visual of E-Commerce

At the Worldwide Developers Conference Apple posted a display of 20,000 applications which pulsed each time a sale was made on a particular application.



It is a rare glimpse of the long tail in action.

Two game highlights

#1 Tom Everidge got his first AAA hit tonight. In this game he also seems to have lost his move up jitters.
#2 Leaving the game tonight I walked next to a guy and his young son who had a lot of questions. When I picked them up the dad was explaining what would have happened if they ended the ninth inning with the score tied.

Then the dad asked the son - "Do you know where the other team was from?" The kid replied no and so the dad told him "Tacoma." The dad asked the son who else lived in Tacoma - to which the son replied "the players?"

Forrester Research on iPhone users

Here are two charts on a recent report on iPhone users - they show iPhone users to be more attached to the internet, better educated and more affluent than other smartphone users. They also show them to be younger. Well, in my case two out of three is not bad.

Some thoughts about the Loretto Suit

The Bishop of Sacramento and several prominent donors to Loretto High School have instituted a suit against the order that ran Loretto High School in Sacramento (Institute of the Blessed Virgin Mary).

Loretto high school has been a Catholic girl's high school in Sacramento for several decades. About 10 years ago the school did a significant fund raising campaign to expand the campus. The Campaign for Loretto, according to the high school's site, raised $8.5 million to double the size of the campus. The money to develop the school came from the Sacramento community or at least the community that once was in Sacramento (undoubtedly some of it came from alums who no longer live in the city). But in recent years enrollment has been falling off.

The IBVM, like many other religious orders has some long term problems. Many orders have a shortage of women who want to take the vows. So their population is aging, in the case of the IBVM relatively rapidly. As the community ages they need additional resources to care for the sisters who are retired. The order maintains a mother house in Wheaton, Illinois.

As the school declined in enrollment and the order needed more support, the order made the decision to close the school and to transfer the funds from selling the campus to the support of these aging sisters. The IBVM example is not a singlular one. The tension between serving the public needs of an order and the private ones of the religious congregation that have offered their lives to the purpose of the religious community is increasing.

But today we find out that the Bishop of Sacramento and a group of prominent donors to the school have sued the order to prevent the order from taking all of the proceeds from the sale of the campus and converting the resources to another purpose (caring for the aging nuns)- regardless of whether the purpose is legitimate.

I happen to agree with the suit. But I hope the Bishop and the supporters consider the dimensions of the arguments they are raising. The Plaintiffs argue that by transferring the funds raised in Sacramento to another legitimate charitable purpose that the order is a) violating the intent of the donors (by not continuing the funds in education) and b) moving them from the local source from which they were donated to a different venue.

If you carry the logic established in their complaint, then the efforts by the mainline protestant denominations to take back resources from dissident congregations would also be brought into question. The mainline protestant denominations have made expansive claims about the relationships between local congregations and the central denominational office. Those should fall by the wayside if the Loretto suit is successful. I expect that any reasonable judge would allocate some portion of the proceeds to the IBVM and another to the plaintiffs based on a standard calculation about contributions to equity.

Something of a metaphor

The LA Times carried a story this morning on the abandoned house of US Rep Laura Richardson. The Congresswoman was elected to the Assembly but when a congressional seat came open quickly switched jobs to Washington.

Even during her brief time in Sacramento neighbors said she neglected to keep her house up. The house in question is in a neighborhood called Curtis Park. We lived in the neighborhood when our kids were small. It is an eclectic neighborhood that includes a lot of political types as well as a wide variety of other professions. For example, when the neighborhood wanted to revamp a deactivated school into a community center (my wife was a board member in that effort) the neighborhood could supply everything from talented carpenters to lawyers to negotiate leases.

Neighbors helped Rep Richardson out by mowing her lawn and doing other maintenance and Rep Richardson returned the favor by allowing her (now) abandoned house to become a breeding ground for a colony of rats.

Richarson's home page tells a lot about her. "At the age of six, living through the civil rights movement and having picked her first profession of public service." She served in the California Assembly for nine months. (Wow what dedication) "Speaker Pelosi has referred to Representative Richardson as bright, energetic, intelligent, and an asset to the committee chairs, caucuses and her constituents." (Evidently there is a big difference in Pelosi and Richardson's mind between constituents and neighbors.)

Perhaps a fitting compliment to Richardson's Marie Antoinette like community spirit would be to finance a brochure for Rep Richardson's next run for office which shows pictures of the house. Part of the public business should be the maintenance of the fabric of community - evidently Rep Richardson did not get that as part of her job as a citizen; she was just too busy bolstering her resume as a political job hopper.

A fascinating game - but we lost

Tonight's opener of a four game series against the Rainiers had some highlights. It certainly wasn't the Rivercats hitting - we had 5, they had 11. Tom Everidge, the Cats new first baseman, did not break into a hit yet. Everidge who had a hot bat in Stockton and MIdland has gotten into a significant slump. His first couple of games have also been marked by a couple of errors. That sometimes happens when a player moves a division. But he scored a spectacular double play - where he caught two runners at first - one coming from home and one who had anticipated something at second and was trying to get back.

Travis Buck hit an odd home run which bounced off the wire fence above center field. Evidently the mesh fencing is there to keep the fans out, not to raise the difficulty in hitting homers. Before tonight's game we were 26-1 on games where we are ahead going into the seventh. We scored one in the first, two in the fourth and one in the sixth - but they came back from a three run deficit with three in the eighth and two in the ninth. At 36 and 24 we are still the best in the league but to paraphrase Satchell Paige - the Fresno Grizzlies are catching up on us - only two games behind.

The New iPhone

I've been absent on the blog for several days because of the press of other business. In the intervening time, Apple announced the next generation of the iPhone. It has a lot of nice features. The interesting ones are cut and paste, video, advanced geolocation, voice controls and a compass. The most interesting is a new feature on Mobile Me which allows me to Find My Phone - or if it is stolen to wipe it clean electronically.

One other feature is wonderful. You can now order your phone for delivery on the first day of the phone - no more waiting in line - which was fun (I wrote about it last year) but not something I wanted to do again.

The New Government Motors

This afternoon on Hugh Hewitt there was a GM dealer from Minnesota who tried (IMHO quite unsuccessfully) to make the case for the government sponsored bankruptcy of the car company formerly known as General Motors. It is a hard case to make.

At its height GM had more than 400,000 employees - after this round it should settle, if it actually survives at fewer than 40,000.

One of the odd justifications that this guy made was that Toyotas or Hondas that are made in the US are made up of Japanese parts. Even if that is true, does he allow for the GM vehicles that carry the label that are actually made outside the US in Canada or Mexico? Go to Leon, in the state of Guanajuato if you want to see where your suburban was made.

We have a GM vehicle now which is about 7 or 8 years old. With the government support for GM, I will not consider another GM vehicle. Ditto for Chrysler. One of the obvious disparities of this type of intervention is with the one company that has lived without bailouts. Ford, will operate without the "largess" of the federal government but will probably have to endure their other kinds of interventions. The consolation that Ford has is the record of state run car companies.

The picture is of the last production model of the most successful line of state run racing cars, the Trabant. In East Germany it was said that the way to double the value of the car was to fill it half full with gas.