Sunday, February 28, 2010

How can you do something new with an old standard?

Verdi's La Traviata is so familiar to even casual opera fans that it would be hard to do something innovative with it. But the Sacramento Opera Company did just that. I will admit I am a sap for Verdi. Oddly or not, I cannot stand most of Puccini. But among the 30-40 operas I have seen in my lifetime, Traviata is one of my favorites. The three leads are a soprano who works nights, a man about town who falls for the soprano (a tenor) and his dad (a baritone) who tries to break it up. The three pictures are of the tenor (Alexander Boyer), the baritone (Ken Overton) and the Soprano (Karen Slack).

When I was growing up my families called these kinds of operas "floppers" because the female lead is always dying of a disease (usually consumption - mostly because 19th Century sensibilities would not let her die of a social disease) and in the last act is able to belt out a couple of arias before she succumbs.

Two things were noticeable about this production. I got the distinct impression that Timm Rolek, the conductor, slowed the pace of the overture down just a bit. That made it a lot more anticipatory of the rest of the opera. I thought his leadership was able to exploit the absolutely wonderful arias throughout the performance. Second, the three leads were great on their own and worked well together. Everybody has a favorite aria from this opera ( I have a bias toward Baritones)- mine is Di Provenza il mar il suol in which the older Germond demands that Violetta stop seeing his son for the sake of Germond's daughter. The Sacramento Opera site has a recording of Italian baritone Tito Gobbi singing the aria. For my money, although Gobbi and Robert Merrill and possibly Leonard Warren often get the billing for this aria - I think Cornell MacNeil did it best. The point of the Sacramento production is that Overton ranks with the best of them.

On Sunday, Slack was a bit rocky in the first act, but she quickly warmed up. Her performance in the second and third acts was superb. Overton and Boyer had a good mix of stage presence and voice to carry their roles out with style and finesse. The show will run one more time on Tuesday - it is well worth seeing if you can get tickets.

Saturday, February 27, 2010

The Evolution of Hard Drives and the Four Laws that govern this...

Pingdom a site that presents data about technology did an interesting post on the evolution of hard drives. I am constantly amazed about the rapid rise in hard disk capacity. The photo at the right is one of an early IBM hard drive array which held five megabytes of information. Now it is easy to purchase a terabyte drive (1012 trillion bytes of information) for under $500 that will fit in a brief case.
The graphic compares both size and capacity of hard disks 30 years apart. In 1980 the computer store that I used went out of business and they had a sale on hard drives for $1 per megabyte. I bought 10 of those drives for $200 - linked them together and had what I thought would be reasonable storage capacity for my office for a long time. When I bought my first computer only a couple of years before the thing used 5 1/4" floppies which I think were in the range of $200 per box - those disks were in the range of 5 kilo bits (1 kilobit = 0.0001220703125 megabyte or 1.16415321826935e-10 terabyte).

Put another way, when I started on email the university that I had my account on had a network storage capacity that was less than one third of the total capacity in my home network. All those bits and bytes are really not important (and increasingly so) but they portend the ubiquity of information of all types. The economic lessons here are more important than the technological one. First as Moore's Law (the processing power of a microchip doubles every 18 months; corollary, computers become faster and the price of a given level of computing power halves every 18 months) and Gilder's law (the total bandwidth of communication systems triples every twelve months) and Metcalf's law (the value of a network is proportional to the square of the number of nodes; so, as a network grows, the value of being connected to it grows exponentially, while the cost per user remains the same or even reduces) continue to operate a new law comes into play. That is Linder's law. Stephan Linder was a Swedish economist who argued in the early 1980s that as wealth increased (and his idea could be extended to the wealth of information) the value of time increased. Thus, the rationing method does not become dollars but time.

Thursday, February 25, 2010

The Summit

Three commentaries about the summit caught my eye as being particularly on point - (with highlights added) I have added my own thoughts at the end of this post.

Slate - Obama debated Republicans vigorously and with precision—but it looked like a debate among people with actual philosophical differences, which in part it was. After an in-the-weeds debate about how the Congressional Budget Office accounted for premium increases, it became clear that the debate was between Democrats who want to set minimum standards for coverage and Republicans who want the market and individual choice to rule. The Democratic plan is more expensive but covers more people. The Republican plan is cheaper and doesn't.
As it played out, the event didn't look like one reasonable person aligned against a company of hooting morons. As Obama said during the lunch break: "The argument Republicans are making really isn't that this is a government takeover of health care, but rather that we're insuring the—or we're regulating the insurance market too much. And that's a legitimate philosophical disagreement." Obama continued to affirm this view by saying things like this: "Neither of these proposals is radical. The question is which one works best."

Peggy Noonan in the WSJ - The way the meeting was arranged, the president was the teacher, the lecturer. Arrayed before him were the bright if occasionally unruly students. He was keen to establish that it was his meeting—he decides who speaks next and who should wrap up, he decides what is and is not "a legitimate point." Pelosi's remarks were "dull and witless"

The Editorial in the NYT the next day - The main lesson to draw from Thursday’s health care forum is that differences between Democrats and Republicans are too profound to be bridged. That means that it is up to the Democrats to fix the country’s dysfunctional and hugely costly health care system.

From my perspective the NYT editorial (like much of what they write) seems to have been concocted well before the summit actually took place. I am not sure what the President was trying to achieve, but from my perspective, whatever it was, he was unsuccessful. I suspect that if the democrats, as they seem to being urged on by the "dull and witless" Speaker of the House, attempt to make these changes in reconciliation that the number of democratic seats in play will increase by at least 50%. Pelosi at this point seems a lot like Stalin during the purges - "we might have a lot fewer communists after the purges but they will be better communists." If the president buys that "logic" he is likely to have a very frustrating second half of his initial and possibly final term in office. The American people, based on a number of polls, are clear on one issue - they are increasingly concerned about the scope of government. A massive increase in that scope without some bipartisanship is likely to leave voters even grumpier than they are today.

The Health Care Summit

Unfortunately I did not get to hear or see much of the summit today. Fortunately two commentators did live blogs on the discussions. Commentary had a couple of people commenting and did a series of great posts. The New Republic's Jonathan Chait presented his live blog perspective from the left. At times during the day they even engaged in a colloquy.

From a quick read of all the posts I am not sure that anyone's mind was changed. The President got caught in a couple of misstatements and from my perspective he was a bit condescending to the GOP members. But I think the session highlighted the major difference on this issue. The Democrats seem to think that the imperative of passing something is critical. All day the President seems to have bounced between the appearance of soliciting ideas and rejecting any significant changes to his proposal. I do not think that posture will be helpful to building support for his position. But the dye may have already been cast on positions and because I think most Americans were not able to listen for most of the day, I am not sure what effect this event will have.

I am convinced that if the President tries to use reconciliation to pass this bill that the American people will react very negatively.

Senator Alexander and the President on Health Care Numbers

A key issue in the discussion about health care "reform" is what effect the inclusion of those not covered by a current plan will have on premium costs for all of the rest of us. The President has claimed that by adding more demand to the system that costs will not rise. Senator Alexander seems to have read the CBO report on the issue a bit more closely than the President. It is a very important point. The President said soon after this exchange “Insuring those 30 million, that’s gonna take some money.” Well duh!

Another reason not to use reconciliation.

Part of the reason that the democrats should be cautious on moving health care with reconciliation can be found in this picture - a vast majority of the American people disagree with the proposal. Here are the major polls on health care - none even approach positive status much less a consensus.

Nine Polls on Health Care (Support/Oppose)
Rasmussen: 41/56
Newsweek: 40/49
Public Policy Polling: 39/50
Pew: 38/50
Quinnipiac: 35/54
Ipsos/McClatchy: 37/51
NBC/WSJ: 31/46
CNN: 38/58
NPR: 39/55

One other point about using reconciliation for passing health care

A reader asked where the video of GOP members advocating for using the 51 vote rule in the Senate. If you go back to 2005 I am sure you could find at least one member discussing the use of the so-called "nuclear option" to get some stalled judges passed. That probably was not on the Senate floor because at the time, when the GOP majority was considering the procedure it would not have been discussed by them on the floor.

In that case, several democrats had put "holds" on various nominations and the GOP argued that the decision by one member of the Senate was holding up a vote where the nominee would pass. Ultimately, a bi-partisan group of 14 Senate members forced a compromise where some of the nominees were allowed to go through. That was one of the first times when the epithet RINO (Republican in name only) was used.

There is a body of literature in economics that deals with voting theory. The 1986 winner of the Nobel, James Buchanan, and his scholarly partner Gordon Tullock, have written extensively on the issue. Buchanan credits his thinking as coming from an article he read as a postdoctoral student by Swedish economist Knut WIcksell. The literature describes the benefits of using various voting procedures in different situations to balance competing interests, as several of the commentators on the video presented earlier argued for. The founders of our system, especially Madison, recognized the key importance of creating a system which emphasized differences. We are not a democracy but a republic. Thus, the electoral terms and constituencies of members of the two houses were intentionally made different. House members can be elected at 25 and have a constituency that is very local. Senators can be elected at 30 and have a statewide constituency which is not based on population. Harry Reid's vote counts the same as Diane Feinstein's regardless of the size of the state. In the House all members represent the same sized constituency.

The use of a supermajority for important votes was something that grew out of Senate practice which has a long tradition in British derivative legislatures (and actually goes well before that to Rome). According to the rules of the Senate the leader can require those opposing something to continuously maintain the floor but it is evident that the current Majority Leader does not want to exercise his power.

The extraordinary use of reconciliation to pass such a major bill as the health care reform would be unprecedented. The procedure was authorized in the Budget Act of 1974 specifically to deal with passing a budget. Obviously with the germaneness rules in the Senate, the rule could be stretched to allow such a measure. But my point in the original post was that there are good reasons why for such a major issue as health care reform is inappropriate for this kind of expediency. In 2005 the Democrats argued against using a lowered majority. My point was they should listen to their earlier speeches.

Wednesday, February 24, 2010

The Hypocrisy of Using Reconciliation for Healthcare

This video is from Naked Emperor News - but it is a great highlight film of the Current President, VP, Senate Majority Leader, Senior Senator from California, Chair of the Finance Committee and Senior Senator from Connecticut talking about how bad it would be to use the 51 vote rule in the Senate for making a major decision (in this case clearing holds on judicial nominations).

Execerpts from Obama's Speech to the Business Roundtable

I have taken some key parts of the president's speech to the Roundtable and added some commentary - this is not the entire speech:

#1 Instead, we need an economy where we borrow less and produce more. We need an economy where we generate more jobs here at home and send more products overseas. We need to invest and nurture the industries of the future, and we need to train our workers to compete for those jobs. I guess this does not apply to government where in the last year we have begun to borrow in unprecedented amounts.

#2 A thriving, competitive America is within our reach — but only if we move forward as one nation; only if we move past the old debates and the crippling divides between left and right, between business and labor, between private enterprise and the public sector. Whatever differences we have in this country, all of us have a stake in meeting the same goal, which is an America in which a growing prosperity is shared widely by its people.

Now, contrary to the claims of some of my critics and some of the editorial pages, I am an ardent believer in the free market. I believe businesses like yours are the engines of economic growth in this country. You create jobs. You develop new products and cutting-edge technologies. And you create the supply chains that make it possible for small businesses to open their doors. So I want everyone in this room to succeed. I want your shareholders to do well, I want your workers to do well, I want you to do well — because I firmly believe that America’s success in large part depends on your success internationally. I just do not believe in the market for health care

#3 Now, I also believe this: Government has a vital, if limited, role to play in fostering sustained economic growth and creating the foundations for you to succeed. Throughout our history, government has done so in three ways.

First, government has set up basic rules of the marketplace –- from the enforcement of contracts and managing the money supply, to maintaining airline safety standards and creating federal deposit insurance. And on balance, these rules have been good for business, not bad, for they ensure honest competition and fair dealing and a level playing field.

Second, only government can make those investments in common goods that serve the general welfare but are too expensive for any individual or firm to purchase on their own. Our Armed Forces is the most obvious example. But government has also built infrastructure – from roads and ports to railways and highways that enabled commerce and spurred entire industries. Government has invested in basic research that led to new crop yields for farmers and the Internet. Government has invested in our people, through land grant colleges and the GI Bill.

And finally, government has also provided a social safety net to guarantee a basic level of security for all our citizens. Now, this last role has been obviously a source of great controversy over the last several decades. But I think most Americans and most business leaders would agree that programs like Social Security and Medicare and Medicaid and unemployment insurance haven’t just saved millions from poverty, they’ve helped secure broad-based consensus that is so critical to a functioning market economy. There is a debate in economics about what constitutes public goods. Public goods are indivisible - in essence my consumption does not diminish your ability to consume - defense is a great example. But the President extends this logic to what are called Merit Goods - those are things that some people believe should be provided in the public sector because some people think we do not produce enough of them in the private sector. That is a very slippery slope.

#4 Now, the Business Roundtable has always understood that in each of these instances, government hasn’t stepped in to supplant private enterprise, but to catalyze it, to create the conditions for entrepreneurs and new businesses to adapt and to thrive.

But I take the time to make these points because we’ve arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of “government takeover” or even “socialism.” Because indeed imprecision of definition and a huge increase in the amount of GDP going to the federal government looks a lot like a takeover.

If we don’t pass financial reform, we can expect more crises in the future of the sort that we just saw. On the other hand, if we design the new rules carelessly, they could choke off the supply of capital to businesses and families. If we allow our safety net to be weakened, or lose a sense of fairness in our tax code, then we can expect more anger and frustration from citizens across the political spectrum. And at the same time, if an exploding entitlement state is gobbling up more and more of our tax dollars, there’s no way we’ll retain our competitive edge. There may be a good reason to suggest that we should change the rules on regulation of financial entities but the President should first address why a major cause of the financial meltdown was caused by government sponsored enterprises like Fannie Mae and Freddie Mac.

#5 Now, our first and most immediate task is to complete the economic recovery by taking additional steps to bolster demand and keep credit flowing. Along with our efforts to unfreeze credit and stabilize the housing market, the Recovery Act helped to do this, and it’s one of the main reasons our economy has gone from shrinking by 6 percent to growing by nearly 6 percent.

But we need to do more. We should make it easier for small businesses to get loans, and give them a tax credit for hiring new workers or raising wages. We should invest in infrastructure projects that lead to new jobs in the construction industry and other hard-hit businesses. And we should provide a tax incentive for large businesses like yours to invest in new plants and equipment. That would make a difference now. Right now the excess liquidity in the banks is more than $1 trillion. That has been caused in part by the Administration's efforts a changing the rules in financial markets.

#6 And we need businesses to support these efforts. The Business Roundtable supported the Recovery Act, and for that I’m grateful. But I think one of the reasons businesses haven’t been as vocal about their support is a belief that extraordinary measures like the Recovery Act or our financial stability plan somehow represent a lasting increase in government intervention. So let me assure you, let me be clear, they do not. The evidence is to the contrary - federal spending now takes up the largest share of GDP since the end of WWII.

#7 One year ago, we were looking at the possible end of General Motors. Today, GM has increased production, is paying us back ahead of schedule. Yesterday, we learned they’re hiring 1,200 more workers in their Lordstown, Ohio plant. One year ago, there was a chance we would lose most of the $700 billion we were given to rescue the financial system. Today, most of that money has been repaid. The financial fee we’ve proposed would recover the rest and close the books on government’s involvement.

And let me say a word about compensation here. Most Americans — including myself — do not begrudge reasonable rewards for a job well done. What’s outraged people are outsized bonuses at firms that so recently required massive public assistance. Once that money is fully repaid, I don’t believe it’s appropriate for the government to be in the business of setting compensation levels. I do believe that shareholders should have a say in compensation packages given to top executives, and that those packages should be based on long-term performance instead of short-term profits. And I think that’s particularly important in the financial industry, where reckless risks in pursuit of short-term gain helped create a crisis that engulfed the world economy.

But here’s the larger point that I’m trying to make. The steps we took last year were about saving the economy from collapse, not about expanding government’s reach into the economy. The jobs bill working through Congress right now are similarly designed to be targeted and temporary. And I’m pleased that a few hours ago the Senate just passed a series of tax cuts for small businesses that hire more workers. This is an important step forward in putting more Americans back to work as soon as possible. The premises here are absurd. As Bastiat pointed out we always need to look at what would have happened with the seen (which Obama describes somewhat accurately) and the unseen. Would we have been closer to recovery if we had simply let the market take care of GM - which was and continues to be a horribly run company.

# 8 Now, the larger question is this: Beyond the immediate requirements of recovery, how do we lay the foundation for a more competitive America? How do we help you succeed? Now, I believe it starts with investments in innovation, in education, and a 21st century infrastructure. To build the infrastructure of tomorrow, we’re investing in expanded broadband access and health information technology, clean energy facilities and the first high-speed rail network in America.

To spur the discovery of services and products and industries we have yet to imagine, we’re devoting more than 3 percent of our GDP to research and development -– an amount that exceeds the level achieved at the height of the space race. We’ve also proposed making the research and experimentation tax credit permanent –- a tax credit that helps companies like yours afford the high costs of developing new technologies and new products. How about just lowering rates which most of the rest of the G8 have done in the last couple of years.

To train our workers for the jobs of tomorrow, we’ve made education reform a top priority in this administration. We are not interested in just putting more money into our schools; we want that money moving toward reform. And last year we launched a national competition to improve our schools based on a simple idea: Instead of funding the status quo, we will only invest in reform –- reform that raises student achievement and inspires students to excel in math and science, and turns around failing schools that steal the future of too many young Americans. The Administration has done some interesting initiatives in this area.

I just met this week with the nation’s governors, and education reform is one of those rare issues where both Democrats and Republicans are enthusiastic.

And to achieve my goal of ensuring America again has the highest proportion of college graduates in the world by 2020, I’m urging the Senate to pass a bill that will make college more affordable by ending the unnecessary taxpayer subsidies that go to financial intermediaries for student loans. It’s a bill that will also revitalize our community colleges, which this organization has recognized are a career pathway to the children of so many working families.

And just as government needs to support young people eager to learn, I’m very pleased to see that the business community has already begun to bet on the next generation of American talent. Just yesterday, 17 high-tech companies announced plans to hire over 10,000 college graduates this year. That’s good news. That’s the kind of partnership that we need.

Finally, we’re investing in innovation that will lead to a more efficient, affordable and consumer-friendly federal government. Almost all of you have harnessed new technologies to build thriving businesses and provide better services to your customers. There’s no reason government shouldn’t do the same, and give taxpayers a better bang for their buck. Government is rarely the locus of innovation.

#9 That’s why, in the State of the Union, I set a goal of doubling our exports over the next five years, an increase that will support 2 million jobs. And to help me meet this goal, Gary Locke recently announced that we’re launching a National Export Initiative where the federal government will significantly ramp up its advocacy on behalf of U.S. exporters. We’re substantially expanding the trade financing available to exporters, including small and medium-sized companies. And while always keeping our security needs in mind, we’re going to reform our export controls to eliminate unnecessary barriers. So some of the sectors where we have a huge competitive advantage in high-tech areas, we’re going to be able to send more of those products to markets overseas. And we’re going to pursue a more strategic and aggressive effort to open up new markets for our goods.

Now, I know that trade policy has been one of those longstanding divides between business and labor, between Democrats and Republicans. To those who would reflexively support every and any trade deal, I would say that our competitors have to play fair and our agreements have to be enforced. We can’t simply cede more jobs or markets to unfair trade practices. At the same time, to those who would reflexively oppose every trade agreement, they need to know that if America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. In other countries, whether China or Germany or Brazil, they’ve been able to align the interests of business, workers, and government around trade agreements that open up new markets for them and create new jobs for them. We must do the same. And I’m committed to making that happen. Fair trade often becomes a stalking horse for allowing labor to run roughshod over other countries regulations. Ultimately what do we lose by doing less with trying to make regulations uniform regardless of a country's economic circumstance?

#10 What we can’t do is stand still. The only certainty of the status quo is that the price and supply of oil will become increasingly volatile; that the use of fossil fuels will wreak havoc on weather patterns and air quality. But if we decide now that we’re putting a price on this pollution in a few years, it will give businesses the certainty of knowing they have the time to plan for the transition. This country has to move towards a clean energy economy. That’s where the world is going. And that’s how America will remain competitive and strong in the 21st century.

We will also be more competitive if we address those costs and risks that are preventing our economy from reaching its full potential. I’ll list three critical areas: outdated financial regulations, crushing health care costs, and a growing deficit. Which stands still more often the government which is still using outdated technologies or firms which have to compete?

Right now we have a financial system with the same vulnerabilities that it had before this crisis began. And as I said in the State of the Union, my goal is not to punish Wall Street. I believe that most individuals in the financial sector are looking to make money in an honest and transparent way. But if there aren’t rules in place to guard against the recklessness of a few, and they’re allowed to exploit consumers and take on excessive risk, it starts a race to the bottom that results in all of us losing.

And that’s what we need to change. We can’t repeat the mistakes of the past. We can’t allow another AIG or another Lehman to happen again.(Or fannie or freddie?) We can’t allow financial institutions, including those that take your deposits, to make gambles that threaten the whole economy. What does that mean? It means we’ve got to ensure consolidated supervision of all institutions that could pose a risk to the system. It means we have to close loopholes that allow financial firms to evade oversight and circumvent rules of the road. It means that we need more robust consumer and investor protections.

#11 We’ve also incorporated almost every serious idea from across the political spectrum about how to contain the rising costs of health care. As a result, our proposal would reduce the deficit by as much as a trillion dollars over the next decades, and would directly affect your bottom lines — each and every one of you who are already providing insurance to your employees — by a significant amount. The term "almost every serious idea" is in the eyes of the beholder.

#12 I walked into office facing a massive deficit,(and increased it to unbelievably new heights) most of which was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. Keep in mind the budget was balanced; in fact, we were running a surplus in 2000. When we walked in, we had a deficit of $1.3 trillion (that is simply not true) and projected debt over the course of a decade of $8 trillion. (scheduled to exceed even that amount)The lost revenue from this recession put us in an even deeper hole. And the steps we took to save the economy from depression last year have necessarily added to the deficit — about $1 trillion, compared to the $8 trillion that we inherited.

Bastiat and the Stimulus

One of the biggest questions in Washington at this point revolves around what the effects all that spending has had for the economy. When a dollar is spent many analysts argue that it creates velocity - i.e. a person who spends a dollar in society that eventually gets recycled through various hands. That in brief is the multiplier effect. The Congressional Budget Office used some calculations (presented above) which estimate the effects of the Stimulus bill on the economy. I have always been skeptical of the concept because I am pretty sure there is a no uniform velocity for any degree of spending. I am not saying that CBO did something dishonest, merely that conventional wisdom here is mostly wrong.

The CBO estimates suggest that government spending is highly efficient in inducing velocity. That assumption is wrong. There is some efficiency loss in governmental spending whether it is for a commodity, income assistance or an infrastructure project. There are a lot of different estimates of the magnitude but the CBO methodology seems to ignore those effects. At the same time when the government precommits future taxes or inflation by borrowing there is an additional limitation on the positive effects of government spending. In both cases this is an example of what Bastiat called the "seen" and the "unseen." While it is fairly simple to estimate the direct effects of building a bridge or filling in someone's income, it is less possible to compare the effects of what would have happened in an alternative scenario where the government did not take the dough to give it away.

A response to my post from the Bee about the Episcopal Church

I received one comment on my post on the Episcopal Church from the editor of a publication called the Grapevine. You can read it below. It argues that the Bishop of San Joaquin was not a good shepherd. I cannot comment on that. What I do know is how the ECUSA and the Diocese of N. California has acted on this set of issues.

I went to the site of the Grapevine and was impressed by one of their operating principles which reads "We do have a few rules… No rude crude offensive remarks about anyone and no political agendas. This is a place of understanding and reconciliation, a place of do unto others as you would have them do unto you. This is a place where we do what Jesus would do!"

There are some deep seated differences in the Episcopal Church. I would be pleased to be in a location where those differences could be talked out without political agendas and with a knowledge that all of us should be willing to work on understanding and reconciliation.

Tuesday, February 23, 2010

Speed and Phones

For the past couple of months Verizon has been making a claim that their network has better coverage. PC World does periodic studies of all the networks for their upload and download speeds as well as their reliability. The most recent results (from Apple Insider) show that at this point, Verizon's claims are a bit hollow - except perhaps in San Francisco.

I am not sure how PC World chooses cities - LA is not included but it sure looks like AT&T looked at similar results of last Spring and did a good job of increasing capacity and reliability. Here is what PC World concluded "Our most recent tests showed that the connection speeds delivered by AT&T's network -- both downloads and uploads -- increased considerably in every one of our test cities, compared with the speeds it registered in identical tests we conducted last spring."

Interestingly T-Mobile, which has slower uploads and downloads does pretty well on reliability.

Declining membership hurts Episcopal churches in Northern California - Sacramento Bee

Declining membership hurts Episcopal churches in Northern California - Sacramento Living - Sacramento Food and Wine, Home, Health | Sacramento Bee

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From the perspective of an Episcopalian I think this leaves a lot out. A good deal of the reason that the Episcopal Church has suffered declines in membership and that the Diocese of Northern California has also suffered declines is based on a dichotomy between words and actions. The last Bishop of Northern California (Jerry Lamb), who is now presiding over legal efforts to regain property of the San Joaquin diocese, and the current one have done little or nothing to encourage diversity of belief.

When the National Convention adopted provisions to allow Gene Robinson to serve in New Hampshire, many in congregations disagreed with the decision. Several churches decided to remove themselves, including one entire diocese, San Joaquin. (Others across the country also took those actions.) The conservatives in this fight argued that the decisions by the convention violated scripture and more importantly violated the way the Church is supposed to make decisions. A report (called the Windsor Report) by the Anglican Church (of which the Episcopal Church of North America was a part) as much as said that and urged the American church to go slow on making the changes. The "leadership" of the American Church decided that the political point was more important than working the issue through and so they forged ahead.

The smarter decision would have been to sit down with those who disagreed with the decision and try to come to a reasonable solution. That discussion might well have meant some loss of property - which is what Lamb is trying to recover. But it also would have encouraged all Episcopalians to think about the larger principles that bind them together. Some church leaders have claimed that they are compelled to recover the property of the parishes that dissent. From my perspective the compulsion looks like unabated greed.

As long as the leadership mixes a dogmatic affiliation with a set of beliefs that are in conflict with a large minority of the flock and simultaneously aggressively attempts to deepen the wound by suing to recover property - even those who chose to stay in the Episcopal Church will be less inclined to offer support for the greater church.

Monday, February 22, 2010

Job Creation from the Stimulus Bill

The National Review's Veronique de Rugy posted a chart on relative unemployment by sector which should be self explanatory. The growth in unemployment in a relative fashion has grown across each of the sectors in an almost proportional sense - but if you look at starting and ending unemployment for the governmental sector over the period you can reach only one conclusion.

Historian Burton Folsom makes a distinction between political and normal entrepreneurs. Political entrepreneurs make their money by working the political system. A great example of the first kind are the big four who developed the railroads. They applied to the government and got land distributed in right of ways as they built their lines. The alternatives were people who actually made their money by developing new ideas with private sector funding. The growth of public sector unions are a modern example of political entrepreneurs.

Based on the Thatcher principle (“The problem with socialism is that you eventually, run out of other people's money.”) the long term trend for this kind of "stimulus" is not good.

Sense and Nonsense

CNET did a story about a Millward Brown survey on the most trusted brand in a number of countries. Topping the list in many countries were Colgate, Pampers, Toyota and in the US, Amazon. But the list by itself is just silly.

I am a big fan of Amazon. I think they do great things for selling both products and content. I do not like their MP3 product. I also have never trusted them for products like cookies and beer (an essential element for Santa's Christmas Eve plate at our house when the kids were young). Ultimately, trust in brands is product specific. Perhaps the most interesting result from this research is that among all of the countries - only one Brazil - had a product which was not easily recognized as an international brand.

Mushroom Hunt

Over the weekend we went to the Carmel Valley to celebrate a friend's 65th birthday and to hunt for mushrooms. This year has had a good mix of conditions - with consistent rains followed by sun - so the crop was in abundance. We had two guys with us (one a ranger and one a PhD in Chemistry) who know mushrooms. And there seem to be three arts here. First, is the art of finding them. The top picture is of mushrooms in the wild. Differentiating between mushrooms, earth and leaves on the ground is pretty tough. The identification of some types, like the second one pictured, is complex. On the ground this one looked a lot like animal scat.

The second challenge is to avoid the poison oak all around. I have a monster aversion to poison oak based on a lot of experience and even with the new treatments I try to avoid contact.

The third challenge is not getting the poison ones. The third picture is of a bunch of the wrong kind of mushrooms we found. There are evidently two types of poisonous mushrooms - ones that make you sick - and those seem to act pretty quickly and ones that can kill you and the effects of those may 24 hours to be recognized and by then the damage has been done.

Saturday, February 20, 2010

Alexander Haig

I do not know what kind of general Alexander Haig was but in my opinion his political roles were close to incompetent. That is a harsh judgment but I believe it is correct.

Kissinger argued in his memoirs that "“By sheer willpower, dedication and self-discipline, he held the government together,” during the end days of the Nixon administration. I believe Kissinger's assessment is totally off the mark. He may have helped to bring down Nixon a bit quicker. He was also credited as being a key force when President Reagan was shot. In both instances he evidenced a tin ear on the essential negotiating skills that the best presidents exercise.

Haig was fired by Reagan as Secretary of State and he lashed back at the president as being a "cipher" - but Reagan understood something that Haig never could - that the president has very few instances where he can command. Haig was a West Point graduate who was below the middle of his class. He never seemed to have understood nuance in political life.

Thursday, February 18, 2010

Technology Joys

This morning I was reminded of the joys of connectivity, which the local Catholic bishop urged all of his flock to somewhat disconnect from during lent. For the past two years I have been working on an innovative way to distribute student loans which would increase the transparency to students and (presumably) would also lower costs. One of our partners is on the East Coast. So the three principals decided to do a conference call, using Go to Meeting, to put the final touches on a document which explains how this program complies with some new federal regulations. Like many regulatory frameworks - the writers worry little about how the rules will actually work and more about finding seeming precision in their directives (which of course are not precise at all but curiously are overly prescriptive). One of the benefits of this new program is that the responsibilities will be clarified so that institutions will not have to understand the difference between precision and prescription. For the best of intentions we scheduled it at 9 AM Eastern. I live on the West Coast so that started the call at 6 AM - which meant getting up even earlier because I had to review the draft documents. (I am not complaining, just commenting.)

One positive thought came to mind as I was jumping out of bed at o'dark thirty, in the late 1980s I worked on the development of a specialized insurance company that was housed in Bermuda. There the 9 AM conference calls started on the West Coast at 5 AM.

Wednesday, February 17, 2010

Fascist interpretations of the First Amendment

Last week at UC Irvine, Michael Oren, the Israeli ambassador to the US, was repeatedly interrupted by students trying to shout his speech down because they disagreed with policies of Israel. The Council on American Islamic Relations released a letter applauding this thuggery which said ""The students voiced political views to shame the representative of a foreign government embroiled in controversy for its outrageous violations of international humanitarian and human rights law. Delivering this message in a loud and shocking manner expressed the gravity of the charges leveled against Israeli policies, and falls within the purview of protected speech." These thugs should learn something about free speech on campus. Their predecessors are many and they all use the same kinds of specious justifications for their disruptive behavior. Unfortunately, the Orange County DA refused to prosecute the disrupters. If any of them were students they should be disciplined on campus.

Tuesday, February 16, 2010

Evan Bayh's Announcement

The decision by Evan Bayh to decline to run for re-election says a lot of things about the state of American politics. I took it for what he said. Based on his standing in Indiana I do not think he was in any real jeopardy even if former Senator Dan Coats did announce. His father was swept out in the 1980 election by Dan Quayle but from all that I read Senator Bayh was not facing a real challenge. So his comment about the climate in Washington was on target.

Some commentators have tried to put a partisan spin on the announcement blaming either the President or the GOP. I do not think that is what he was saying.

On Facebook there were lots of comments about how do we make this right. One commentator suggested we get back to some core values (she specifically said not religious ones). That got me to think about what those core values would be, and indeed because we our values spring from Judeo-Christian I think they are fundamentally religious although not tied to a particular religion (remember the First Amendment has two parts - free exercise of religion and no establishment of a state religion).

As I thought about it there are two core values which neither party seems to think about. The first is the Golden Rule. The second is self-reliance. A good part of the political debates of the last decade from my view have ignored both rules. Do unto others as you would have them do unto you is extended by many on the left to suggest that we should do for. That is not the point. But the principle of self-reliance is often mis-interpreted on the right by saying that governmental assistance is never justified.

If you take those two principles - the size and shape of government would be a lot smaller but it would also in those core functions encourage individual initiative.

Friday, February 12, 2010

Why does this not happen in the US?

This is the head of the IPCC being confronted by a Spanish journalist. I wonder why this does not happen in the US. There are obvious errors which Mr. Pachuri does not want to acknowledge. But our press are patsies for the Global Warming Juggernaut.

Thursday, February 11, 2010

Limousine Liberals

The true definition of a limousine liberal comes down to this. The photo is of the Speaker of the House's jet. During the W. Bush Administration the speaker of the House was given personal use of a jet for "official" business on the grounds that as third in line for the presidency we would not want any nasty terrorists trying to get to them. The last speaker used something akin to a Gulfstream to get to Indiana. When Pelosi became Speaker she argued that she needed a larger jet to get to California because it was a long way away.

There is an alternative explanation of the jet which is much more credible. Compensation for public officials is limited. Thus, they figure out ways to increase their perks. The number of limos in Washington is way in excess of what any logical need would be. Indeed, the President needs to be afforded security and convenience of having his own transportation. By the extension of logic, so should the Vice President. But the way government logic extends that trail ends when the Deputy Assistant Secretary of Aircraft and Sewage is offered a limo too. After all one can never be too careful about the critical nature of that job.

When I worked in the Congress members drove themselves to work. NY Senator Jacob Javits' banged up Mustang was legendary. After I left DC I flew with many members of congress coming home via commercial airlines. They got the opportunity to sit with their fellow citizens and occasionally hear their complaints and compliments.

The perks principle quickly extends to the absurd. The last mayor of Sacramento demanded and got a police driver to scoot her around town because of "security." At the time I thought the better alternative would be to give her a bus pass and a concealed weapons permit. The same principle should apply to the Speaker's jet. Let her learn the joys of commercial transportation. If the Speaker needs security, put an air marshal on the plane. The reductions in limos and jets will not save the government a lot of money (Pelosi argued at one point that it only costs about $60,000 per trip - when you work for a group that spends billions on earmarks 100 times the normal airfare does not seem like a lot.) But it will change the climate in DC, and might even reduce some of those greenhouse gasses.

Tuesday, February 09, 2010

Understanding the difference on prompts

Here are two recent pictures of political figures using crib notes. The President in a sixth grade classroom and Sarah Palin at the Tea Party Convention. Both seemed to need crib notes to be able to deliver something intelligent. Based on the photos of Palin's hand, which the NYT and others have written a lot about, her notes are less extensive than the President's. What I do not understand is why Palin's notes have been so uniformly criticized and the President's constant use of teleprompters at almost every venue is not. One would hope that our political leaders have some spontaneity but then that might be wishing for too much.

The last photo is of Press Secretary Robert GIbb's hand in his daily press briefing. Gibbs does not double as a stand up comedian.

Update on Professor Fader at Wharton

In June of 2007, I wrote about a podcast I had heard from Wharton from a Marketing Professor who claimed the iPhone was not going to sell well. He argued that the price was too high - most consumers would avoid it based on price. He argued also that iTunes was not a model that would continue for music distribution - he thought subscription models would be the wave of the future - renting music instead of buying it.

When the 3G model came out I became a minor celeb in the line to purchase the new phone because a kid in front of me had bought the original iPhone based on my review of the professor's remarks. The guy in front of me had changed his mind and bought an iPhone after reading my post.

We're now just under three years into the product cycle. It might be time for an update. iPhones are now about a quarter of the smartphone market. (For Wharton professors that is one phone in four in a very competitive market.) And that smartphone market in terms of total cellular sales is a growing percentage. Oh, as a result of the ap market and the continuing expansion of other parts of iTunes, the percentage of revenue going to Apple from that division continues to build.

California and the Euro

The WSJ had an interesting comment this morning comparing the bond spread on California bonds versus bonds from Greece. They concluded that the widening spread on bonds from Greece suggests that California is in better shape. The market measures these things in an instrument called a "credit default swap" where the market insures against a default by selling a risk instrument. California has four of those contracts out on its bonds today, Greece has 3136.

Currently the bond markets are charging a premium for California to issue debt - about 2% above the yield on Treasury bills (considered the safest bond investment). Greek bonds now are about 4.4% above the comparable German bond (which in the case of the Euro is the safe bond).

That should not give Californians much solace. As America piles on deficits (not to the heights of Greece but close) - Greece is now at 12.7% of GDP. (The US at this point is above 10%.) What is interesting to me about this exercise is the relative value of the Euro. Greece is a small part of the Euro zone monetary regime. But it is not the only example of fiscal irresponsibility. For example the Spanish deficit, under the mismanagement of the Zapatero regime is at about 11.4%. Portugal is close to 9%. Italy's debt also puts it in the stratosphere. The group in trouble is sometimes referred to as the PIIGS (Portugal, Italy, Ireland, Greece and Spain). The Euro Zone was supposed to keep all its members below 3% deficits. Given the condition of many of its members one would think that the value of the Euro would be dropping like a stone. What seems to be saving it is the performance of the rest of us including the US.

Monday, February 08, 2010

The President in Responding to Katie Couric

One response to Katie Couric caught my eye -

The President is quoted as saying....."They frustrate me. But, you know, this is a democracy. Look, I would have loved nothing better than to simply come up with some very elegant, you know, academically approved approach to health care. And didn't have any kinds of legislative fingerprints on it. And just go ahead and have that passed. But that's not how it works in our democracy. Unfortunately what we end up having to do is to do a lot of negotiations with a lot of different people. Many of whom have their constituents' best interests at heart." (COLOR HIGHLIGHTS ADDED)

I think that is interesting. The policy process involved in the US system is supposed to test ideas - to mix them up. In this case I am not sure what an "academically approved approach" to any public policy issue should be. Sure people who study stuff have good ideas but their good ideas need to be tempered. Isn't that what was meant by the pursuit of happiness? At this point the best ideas are pulled apart because we don't let the system work enough - so we are forced to get into the kinds of deals like the Nelson amendment to get votes.

Where the President is Right

There are many things where I disagree with the President. But the major thrust of his education proposals make a lot of sense. A good part of the money we spend on education from the federal level is allocated like a menu in a Chinese restaurant - pick one from column a and one from column b. Education funding looks a lot like the tax code - it is complicated and not very effective.

But the Obama administration has made some changes in funding which encourage states to think creatively about how education should develop. Some of their critics have criticized the encouragements in programs to reduce limits on charter schools and to establish new requirements to set up rigorous evaluations for teachers. But compared to the Bush policies established in No Child Left Behind, the locals are given a lot of flexibility to get to the result.

Sunday, February 07, 2010


On This Week with ABC this morning in discussing the controversy whether the Christmas bomber should have been Mirandized John Podesta of the Center for American Progress asked somewhat derisively "Who would you rather trust - the experts or Sarah Palin?"

That really was not the question here. Whether or not to offer a Miranda warning to a terrorist is a matter of judgement not expertise. What is interesting to me is the dismissive way Podesta tried to square the circle. His attempt was to equate someone who the left hates (as ill-informed) with a position he disagrees with. In Podesta's view anyone who disagrees with the political judgment to apply Miranda rules to the Christmas bomber lacks expertise. That is the arrogance of Washington. I don't think Palin has a lot of expertise in this area but I also believe that Podesta has a similar limit on expertise. With what he said on ABC he also seems to lack judgment. An article about Daniel Patrick Moynihan summed up this problem pretty well "Experts” who think too highly of their own opinions and too little of what the rest of us think are a big part of the problem."

Saturday, February 06, 2010

Paul Krugman and Reality

In an editorial in the Bee this morning Paul Krugman commented "The long-run budget outlook is problematic, but short-term deficits aren't – and even the long-term outlook is much less frightening than the public is being led to believe." He refers to those who have raised larger concerns about our deficits as engaging in "deficit hysteria." He goes on to suggest "Now, as then, politicians and the media have bought into the notion that we must take drastic action quickly, even though there hasn't been any new information to justify this sudden urgency. "

Yet, when deficits were a quarter of their current size at about $400 billion, it was Krugman who made all sorts of claims about their evil consequences. When they were under 5% of GDP they were "destructive." Krugman claims that more than half of the current deficit was caused by the economic downturn. That still means that half was not.

True some economists argue, in Keynesian terms, that deficits don't matter in times of economic downturn. But look at the trend lines - the last deficit under Bush was about a third of the current level of deficit and about a quarter of the projected year's level. That half of a deficit that was not caused by the downturn is still twice the level of the prior unacceptable deficit. The percentage of the federal budget that is taken up in debt service, while unacceptably high in Bush's era has gone to stratospheric levels. The long term trends are accelerating and that is a bad sign. The amount of debt held by Americans has continued to decline - thus people and institutions outside the US will have an increasing role in determining how we may act in the future. Note discretionary spending during this cycle has increased by 84% - by any measure, even taking account for the countercyclical spending that is a pretty large jump.

Krugman's answer as to why there is more commentary on the deficit at this point (which he categorizes as hysteria) is politics. Well, if the commentary by a diverse set of economists about the problems of current state of the federal budget are politics then Krugman's differential response on deficits is hypocrisy.

Friday, February 05, 2010

The ADA at its best

The Americans with Disabilities Act was created to assure that all Americans have access to public accommodations. That is a noble goal. But I was struck with this sign in a Red Carpet room about the absurdity of implementation. As noted the sign is in letters and braille. I was wondering just how a blind gentleman would find his way to the Men's room and to the sign and then be able to guess the right height for being able to assure himself he was not going into the wrong place.

A sign of the times....

On my recent trip to Mexico I was struck by a many things. But this sign in the airport was most interesting. When I began to go to Mexico, the currency traders were able to do dollars and Canadian dollars in a fairly efficient manner. But as you can see from the sign they now have efficient trading spreads in a number of near and far currencies. What also struck me was the willingness to trade Rubles and Yuan. By the sign that seems to be a developing market - the spreads between buy and sell are huge - but they would not put it up unless there was some volume. Notice also that a number of currencies with artificial values like the Venezuelan Bolivar and the Cuban Peso have a fairly high premium on their spread.

Thursday, February 04, 2010

Where we are in this election cycle...

Last week when I was in DC I had the chance to hear Charlie Cook, one of the best analysts of the political scene. He was not ready to call the 2010 election cycle but he did say the President's numbers do not look good. He talked most specifically about the defections of the independents who voted heavily for Obama in 2008 and seem to be deserting him in 2010. Then there is the WMUR Granite State Poll among independent voters in New Hampshire, he now stands at 39%, a 28 percentage point drop since October, or about 2 percentage points per week.

Cook commented that the President's polling on personal characteristics are still pretty high. That is confirmed in the WMUR poll. There his favorability ratings are also down, though slightly less so although the numbers are also down - 52% still feel favorable toward the president and 41% don't.

There are two explanations about the drop in favorability. The first put forth by some of Obama's supporters is that the (to use the words of Hillary Clinton during the Clinton Administration) "a vast right wing conspiracy" has constantly yammered the president's numbers down. A slight variation of the argument is that the President tried to do too much in the first year and because he was too ambitious voters have turned on him.

The alternative is much simpler. The American people do not like his policies. There is a perception that this administration has tried to bring too much under the control of the federal government. Its' view is too expansive for our current tastes. We're worried about the deficits whatever their cause and not happy about the projected costs of things like health care reform.

From my view, the second explanation is a lot more credible. The consequences of acting on the first explanation is that it does nothing to bring back the all important independents. Cook did not make any final projections, the American people seem pretty grumpy about the GOP too, but he did argue that it was possible that both houses of congress could be in play in November. From what has developed thus far in polling, in retirements of members and in primary results that change could become inevitable unless the President makes some adjustments.
The Fraser Institute does an annual student video contest. This year's winners were from George Mason University. Very well done, and funny!

Wednesday, February 03, 2010

The value of a college education

For about the last decade, partially as a result of a set of studies by the College Board, college leaders have argued that a college degree is worth about a million dollars more than a high school diploma over a life time.

There is some data that makes that credible. On average college graduates do make more money than high school graduates. Especially when you add in people above a BA. But the College Board model is crude.

Were I to build a model here are some considerations I would take into account.

#1 - What is the discount rate of the value of foregone income during the time the student is in college? That has to be averaged over a lifetime.
#2 - Is there an anomaly in the data for the last couple of decades? As we increased the number of college graduates their marginal incremental value should have decreased. That might well be mitigated by the number of expected retirements of all the boomers who will begin to retire in large numbers in the next couple of years.
#3 - What is the net present value and change in buying habits caused by students who take out loans to finance their educations? Many students come out of college with $20,000 in debt or more. That needs to be factored in. Student loans may delay things like housing purchases which could well change the value of certain other inputs in the economy.
#4 - Do various degree programs offer a higher or lower premium? Engineers and nurses have a higher starting salary but there is at least some evidence that liberal arts graduates may have a longer term advantage - that may also be related to where you go rather than what you study.
#5 - What are the long term effects of delayed graduations? We know that students in community colleges, state colleges and lower selectivity independent colleges take longer to get a degree. Ditto for part time students of all types. What are the effects on the shape of the economy for those delays? What are the economic effects of having a fairly large number of students who enter but do not graduate from college?

There are clearly some huge societal benefits for having more students graduate from college. But the simple minded calculation based simply on income is increasingly silly.

Public Employee Unions

Organized labor lost 10% of its members in the private sector last year. But now more union members are government employees than in the private sector (51.3%). One commentator in the WSJ has suggested that the decline in industrial union membership, which in recent years has dropped with drops in the economy and not recovered when the economy recovered, will lessen their influence in elections. I think that is not true. Remember that the public employee unions are the ones that are there moving budgets at the state and federal levels every day. Talk about entitlements. Ever wonder why California's prison costs are several times the national average? Wonder no more the prison guard's union. Wonder why it is so hard to make meaningful changes in the schools? Ditto, except this time it is the teacher's association. The list goes on.

We need to treat public employees reasonably. But there is a lot of evidence that because of the inordinate influence of these groups in the political process we are doing that and more.

Tuesday, February 02, 2010

The Kaufman Survey

The Kaufman Economic Outlook asked 80 of the top economics bloggers and asked two sets of questions. What types taxes should be increased and decreased. The survey says that the bloggers suggest we should drop payroll, foreign import, corporate income and individual taxes and raise consumption, gasoline and carbon taxes. The carbon and gasoline suggestions may be based more on social policy but clearly the proposed drops are based on making the tax system work a bit better.

What is more interesting is the pie chart. There is a strong propensity to make federal tax systems flatter. That is quite different from the President's agenda.