Wednesday, March 31, 2010

Is Greenpeace a publicity hound, just stupid, or both?

The folks at Greenpeace issued a report this week which was actually one day early, it should have been issued tomorrow.  The Greenpeace Publicity Grab argues that cloud computing devices like the iPad are troubling because their increased use  "could come with a huge jump in greenhouse gas emissions."  I ask the question again are they publicity hounds or just stupid?

Cloud computing does a couple of things.  First, it helps to reduce the amount of air travel.  By being able to collaborate over the net the need to jump on all those airplanes is reduced.  Second, presumably, the environmental awareness of the cloud computing companies is probably better than the average individual user in terms of recycling and other environmental disciplines.   Third, the component parts of the iPad - according to industry experts are among the greenest in history - thus if a user dumps a PC for an iPad the environmental footprint is likely to be reduced. Finally, there is the power requirement for this device which is less than a normal computer - all those things reduce the environmental footprint for computing.  There are undoubtedly more hole in their report - certainly more than have been proven in the ozone layer.

What this looks like is a chance for Greenpeace to grab some of the excitement surrounding the release of the first iPads on Saturday.  If this is an example of the quality of their work, the rest of their rants should also be called into question.

Tuesday, March 30, 2010

First Rule - Don't improve a bad proposal - Scrap High Speed Rail

In today's Sacramento Bee - Lisa Schweitzer an assistant professor in the USC School of Policy, Planning and Development, tried to make the case that the current proposal to build a high speed rail link between Northern and Southern California will hurt the poor.  She argued the new wonder train  "could leave the state's working poor and most transit-dependent residents with fewer travel options than they now have, while the affluent travel on a gold-plated, luxury high-speed rail system."  Well duh.  But her point misses the point of this boondoggle.  Improve high speed rail and it is still hugely expensive and does not meet the needs of most Californians.

Professor Schweitzer suggests that the original bid for the new system could double to an awesome $18 billion.  And that in order to recoup costs the prices charged for a ride on this system would be very expensive.   For example, the professor suggests that a ticket from San Francisco to LA would be in the range of $500 - quite a premium for what it costs to drive or to fly. I think her estimates are nothing if not conservative. The professor offers a lot of dos and don'ts to make this turkey less regressive.  But had she thought a bit more carefully, she might have suggested that we scrap this albatross and look to alternatives which would a) be cheaper and b) better meet the needs of all Californians.

The problem with high speed rail is like a lot of other big expense governmental expenditures - the initial estimates for these projects are always way under the final costs AND they actually limit the choices for individuals.  A high speed rail system is good only for people who want to go from one terminal to another at the times that the train wants to go.

A few weeks ago Randall O'Toole had a superb article in the WSJ Saturday edition. He suggested that it would be much smarter to work on "robocars" which for about $2000 per vehicle could be released to allow drivers to get into their cars - choose a destination and not have to drive there.  Because roads of the future would be controlled by computers - transit speeds would actually improve.  Plus, those who wanted to have the extra capabilities of these robocars would be able to pay for them and those who did not want the new technology would be able to choose other forms of transportation.

Coming to Terms with the Fallout of Health Care

A  friend and I have been having a discussion about the health care bill.  He thinks that the entitlement features and the goodies which come first will benefit Obama.  I think the bill is wildly unpopular.  Turns out, according to a USA Today poll that the numbers seem to support my position.  65% of the respondents believe the recently passed bill is too expensive and to intrusive.  That mirrors a poll taken by the WP yesterday.

My logic on this bill is simple.  The American people are grumpy about their current state - in the WP more than two thirds think the country is headed in the wrong direction.  A lot of the grumpiness stems from the perception that Washington is a place of special deals.   The American people did not like the bailouts.  They did not like all the deals that made the health care bill possible.  That is regardless of whether that is the way public policy is made in this era.

My conclusion is that the President will have a mighty hard time in convincing the American people that the proposal will ultimately do all the things that he says it will - including reducing the deficit.  The deficit by the way is a proxy for the bailouts - people don't like all this debt and the rapid increase in debt.

The whistling in the dark response from many of health care's supporters is that if the GOP takes over in November they will not be able to repeal the entitlement.  I am not so sure.  Part of the strategy would be to fail to fund the implementing parts of the bill (like the 18,000 new IRS agents).

All of this depends in part on the GOP coming up with a reasonable set of ideas to move the country forward.  We cannot get back to the thrilling days of 2008.  If they have learned their lessons (and that is a big if) they will be victorious in 2010.  If not, get ready for continued grumpiness.

Monday, March 29, 2010

The President according to the WP poll

The WP has a new poll out and the numbers should not be encouraging to the President.  The best way to look at these snapshots of opinion is to array the Strongly Approve against the Strongly Disapprove.  On the following questions the President's ratings are in the tank.  Health care - negative 10%; handling of the economy - negative 17%; budget deficit - negative 16%.  The good news for the President is that his numbers have not deteriorated since January.  The bad news is that a) they have not improved and more importantly b) the expected bounce on health care seems not to have materialized.  The right direction/wrong direction poll is against the President by 22% (38-60).  While there is still time for the Administration to recover - the numbers are pretty strongly against his policies.  26% of the responses were angry about the health care changes.  (Admittedly the skew on GOP is heavy but the independents are grumpy too.)   According to the Post "More people see the changes as making things worse, rather than better, for the country's health-care system, for the quality of their care and, among the insured, for their coverage. Majorities in the new poll also see the changes as resulting in higher costs for themselves and for the country."  And "About half of all poll respondents said the plan creates "too much government involvement" in the health-care system, a concern that is especially pronounced among Republicans."

Celebrity Apprentice

When the Apprentice came on as a series it had some interesting scenarios. A group of disparate individuals were brought together to become hire for a job to become an apprentice to Donald Trump. Each week they would form into teams and then do a business task. At the end one would be fired by the Donald.  The original format had some interesting elements.

After a few seasons the show was changed to be a celebrity gig. Last night's episode had all the elements that I have come to dislike about the show.  The task last night was to create an "advertorial" for a product to protect your computer and your identity.   One of Trump's elements of genius (but also in my opinion a failing) is the concentration on something that he touts as being as being current.  What is an advertorial?  In Trump's definition it is an ad that has some extra content.  (i.e. an ad)   This season the teams are divided between men and women.  Last night's episode the women did a clean but uninformative ad and the men did an informative but wordy ad.  While Trump and his toadies threw the concept around of an advertorial they never got to specificity about what they were trying to achieve.

The second element which I have increasingly come to dislike is the key "dramatic" element in the show - where one person from the losing team is fired. For the last couple of weeks it has been clear that there are some players without a great deal of talent and some who have a flair for the business tasks.  Former Governor of Illinois Rod Blagojevich is clearly the weakest link.  Watching him on the show one sees two capabilities.  First, he seems to have no visible talents.  But second, he is a first rate toady, he will suck up to anybody.

Last night, as it has been for the last couple of weeks Blagojevich showed his limited talents again.  Eventually the person to be "fired", actually quit.  Darryl Strawberry decided to take one for the team.  It was clear he was fed up with the drama that Trump tries to create.   

I realize that part of the show is to dramatize business decisions.  But in the real world a manager like Trump who made personnel decisions with so little basis would be bankrupt.  Say, maybe this is a reality show.

Friday, March 26, 2010

A new definition of Public Servant

We once had the idea that public servants went into their jobs because of a notion of something which Jerry Brown called "psychic income" - they did it for the great feeling they got out of helping others.  It turns out that these civic minded individuals also do pretty well too.

The shills for the public employee unions argue that because of the high skills needed for government jobs that pay would naturally be higher.  Balderdash!  If you actually do a side by side comparison - most government employees do better than their private sector counterparts.

What intrigues me now is the definition of "public servant" I guess the meaning here is those people who pay for the lifestyles of the rich and not so famous - i.e. the taxpayers are the real public servants.   At some point we will wake up to this idiocy and put some more sanity into the compensation schemes which we have allowed to be created for the people we serve. (i.e. the Government Employees) - this story is worthy of something that Frederic Bastiat would have written about.

How is that again?

I was going to the airport this morning at 0'dark thirty and heard one of NPR's reporters (David Folkenflick) make the following statement about the Corporation for Public Broadcasting - "CPB is a non-profit corporation that is funded entirely from public money." Indeed, on the CPB site it explains the entity as "The Corporation for Public Broadcasting is a private, non-profit corporation that was created by Congress in 1967."

What puzzles me is the question about whether, under that definition the US Department of Defense, which is also funded entirely from public dollars, could also be a non-profit corporation. What is the point here? CPB promotes public radio and TV - that is a goal that Congress thought was important - but why is it necessary to make this artificial distinction on status? The mind reels.

I guess a non-profit corporation funded entirely by the government is like a government trust fund. This week the Social Security Administration announced that our largest trust fund was running an excess of payments over receipts a half dozen years before their actuaries said they would. That sure builds trust.

Thursday, March 25, 2010

We don't do commercials

On February 3, I did a post on the Value of a College Degree, arguing that traditional measures offered by places like the College Board, had some flaws. Yesterday I got a request to post the following comment from "accelerated-degree" which said the following:

This seems to be a great site for XXXXXXXXXX and XXXXXXXX by comparing top universities with quality education.I have got sufficient information about online college degrees from XXXXXXXXXX. (The deletions were references to the website.)

If these programs offered through the site are such high quality, the writer would not make silly errors in grammar. But more importantly, the requested site is a move to send one to a group of proprietary and unaccredited institutions. At some point I may do a post on the differences between proprietary institutions and non-profits. Ultimately, I believe the proprietary model often puts the interests of students in direct opposition to the interests of shareholders. The mark of quality that my proposed commenter suggests has a group of institutions whose default rate on student loans exceeds 20% (by the most liberal of measures) - from my perspective that is not the indication of a "quality education." So while I normally publish any comment offered by my readers - this one is rejected.

Monday, March 22, 2010

Two Issues from Sunday's Vote

The Hyperbole in Sunday's vote on the Obama Care proposal was amazing. From my perspective, and I watched a good bit of the debate, neither side did itself proud. However, two issues (both presented in the visuals for this post) made me think. First, I wanted to look at the cost curve for the two government run medical care programs - If you actually think that the bill that passed is likely to reduce the curve of government funded healthcare (which is a substantial portion of the bill) - even with the projected $500 billion in Medicare cuts, then you are making a tremendous leap of faith. The rate of growth in both programs is based on excessive cost growth not on the aging of the population. The chart by the way is from the CBO.

Second, the vote (where no GOP member crossed the line to vote for the bill) made me go back and look at two other major legislative achievements that members like Hoyer touted. Hoyer made the charge that in issues like this the GOP was always on the "wrong side" of the issue. Here are the actual votes on the passage of the Civil Rights Act of 1964 and the original passage of Medicare. Both were hard fought battles. But in both, the minority party voted heavily in favor of the final measure. In the Civil Rights Act, most historians credit the leadership of Everett Dirksen as a key role in final passage. Hoyer was either mis-informed or simply using the BS that prevailed throughout most of the entire debate.

Saturday, March 20, 2010

Crazy Heart

Crazy Heart is what the Wrestler would have been had that movie had a plot line and an actor. Jeff Bridges plays Bad Blake who is a musician not a wrestler, who once was famous. When the Wrestler came out with Mickey Rourke, a lot of reviewers commented about how wonderful Rourke had been in playing a down and out entertainer. I saw the movie and thought Rourke's performance was one dimensional.

Bridges may well be playing someone close to himself but the character in Crazy Heart is one who has the same problems that Rourke's did but in this movie I actually cared about what happened to him. Rourke's character ends as he started, down and out and self absorbed. Bridge's character has some redeeming characteristics throughout the movie. If you have not seen this movie, you should.

Who writes this CRAP? A Comcast customer service note (with annotations)

I recently wrote my cable, internet and phone provider a note.

Dear Comcast,

I signed up for E-Billing unfortunately for the last several months you have not sent me a bill or notification that I had a bill. On the website, it encourages your customers to use e-billing. I like that, it is handy not to receive all that mail and to get notifications in my email - that way I can pay my bill wherever I am in the world. Good for me and it saves you all those expenses of billing. But this system cannot work unless you send me periodic notifications of my bill. Every other company that has electronic bills does that. Your site claims that is what will happen with Comcast. But it did not. I've rechecked my email and also my Comcast email box and have received no electronic notifications. Until Comcast can assure me that I will receive the electronic bills or notifications I will go back to paper billing. Is there a way to fix this problem?



I got the following response (I've added annotations because I cannot resist):

Dear Drtaxsacto -

Thank you for contacting Comcast Digital Voice. My name is XXXXXX and I certainly understand it is frustrating not to receive your monthly statement electronically when you had chosen to receive your bill electronically. I know this matter is important to you. Gee, XXXXXX, I am so happy that you feel my pain, could you give me an idea of how many courses in psychobabble you have to take to be a customer service representative?

First of all, I apologize for the unpleasant experience you had recently with our E-billing system and thank you for bringing this matter to our attention. We appreciate hearing about any unsatisfactory situations so corrective action can be taken, thus increasing our level of customer satisfaction. That does not mean we are going to do anything about it but we want to make sure you know even if we don't act we do care. I have forwarded your comments to the appropriate members of our development and management teams for further review and action. Actually the role of a customer service representative is quite powerless. I just am supposed to string together a bunch of canned phrases which are not directly responsive to your question.

I understand you did not receive notifications in your email that your monthly statements were already available online and we apologize for the inconvenience this has caused you. Dear XXXXXX, I really don't want your understanding or even your sympathy, what I do want is the electronic copies of the bills. If you would like to change your preference in receiving your monthly bill, you may do so by visiting your online account. I am providing below some general information about our online billing system. I did change it back to paper billing because you cannot seem to send me electronic bills, as you promised to do. I said that in my original note.

With Comcast's Online Bill Pay site, you can view your current statement, your bill summary for up to the past six months, and up to the past year of full statements. For your convenience you can also print your statements for your records. Whoopdie frickin doo, any company worth its salt has online access to bills - what I want is an email copy of the bill you once sent by mail.

Note: When you first enroll in online billing, it will take a full billing cycle (up to thirty days) before your statement will be
available for viewing. Statements will not be available online that were issued prior to your enrollment. Actually XXXXXX, you can see your bill online whether you sign up for online billing or not.

To access online billing to view your statement, visit the following link and login, or follow the instructions for first time users: Gee, if I already signed up for online billing - which caused the problem - don't you think I have an idea about how to see my statement?

Once you are logged in, click the Go button under View My Bill. To view your previous statements, click the View Paper Statement link on the View My Bill screen.

To Print a statement, click Printable Version from your current statement, or navigate to the statement you wish to print and select the print option from the statement pop-up.

To change your paper statement selection (opt to receive/not receive a paper statement), click the "statement delivery" link from the View My Bill section.

For more assistance in the future, you may contact us by simply replying to this email. You may also contact us through Live Chat by logging on to

For future reference, please take note of this case number: 20661393. Please refer to this number should you contact us regarding this same issue.

Thank you for choosing Comcast, Drtaxsacto. We value your business At this point we are simply not willing or able to answer your question directly. and have a great day. I guess having a great day is not a part of solving the problem I originally raised.


Comcast Online Customer Support

Note, this is more an object lesson about the idiotic heights that some companies go to look like they are providing customer service. Real responses not psychobabble which says "I understand" and "we appreciate your business" and "have a nice day" are simply no excuse for real responses. The length of a response does not correlate to its responsiveness.

Greg Mankiw's Caution on CBO Scoring

Greg Mankiw is a bright young Harvard economist who writes an economics blog. Today's post explains why the CBO budget estimates are suspect. The CBO uses static analysis for the GDP, thus any changes in a bill that would raise or lower economic activity are ignored. This is not a conspiracy, simply a convention that makes the analysis possible to do. But the analytical results are thus limited in their utility. In the current health care bill taxes on investment income are increased. Most economists argue that the taxes will produce some effect on investment in the country which will reduce the the growth rate of GDP. To the extent that the bill's provisions for covering more Americans with health care will have positive GDP effects, some or all of that could be offset. So be very cautious in using either deficit reduction estimate in the CBO analysis.

On the other hand the cost estimates in the bill are less subject to these kinds of dynamic effects (although by opening up a new entitlement utilization is likely to exceed any estimate and thus costs are likely to be higher). Thus, the CBO analysis is interesting but not very useful.

Wednesday, March 17, 2010

Does F.A. Hayek belong in High School Economics?

Justin Wolfers of Freakonomics Fame wrote a post on his blog that the recent Texas Board of Education to include Hayek among the featured economics writers in their curriculum was wrong. I disagree. Wolfers argues that using a standard social science search engine (J-Stor) that Hayek comes up about the same number of times in citations that Larry Summers does (and no one would rate him as an essential economist).

I would argue that a) Hayek does belong and b) the statistic of J-Stor citations is phony/funny. Hayek's influence came in two ways - first he was a first rate academic economist. He won the first Nobel. But more importantly the exchanges he had with Keynes in the Bloomsbury group (where most people think he demolished Lord Keynes) are legendary. So while he may not be cited as much his influence as a scholar is important not just in economics but in social thought. Second, some of his most important writing was not for other academics. The Road to Serfdom is not a great book but it was/is influential in pointing out the folly of social engineering. Between those two contributions to inside the profession and outside - he belongs there.

Intrade and Obamacare

Several years ago a group of political and investment junkies got together and formed a political futures market which would work like the futures markets for financial products like commodities. The idea was based on the notion first presented in the Wisdom of Crowds James Suroweicki's book on the impressive behavior of groups of people over experts.

The first two charts are of a current market on whether Obamacare will pass by June 10. The top chart is one of the market since it was first activated, the bottom one on the market in the last month. There are two things to notice on both charts. First, the positive market (i.e. Obamacare will be enacted) has an over all rating of almost 67% (you can buy a futures contract for $6.69. But yesterday the positive market took a big drop. Second, when the market drops (against passage) volume goes up.

The final chart is the current one on whether the GOP will control the House after the 2010 elections. Notice that since the beginning of this market it has grown steadily up so that it now stands at 45.8 and the directionality of the market is consistent. One wonders whether people like Speaker Pelosi have thought at all about both charts and tried to understand why one has begun to falter (although the directionality of the health care market is still barely positive) and the other has continued to advance.

Tuesday, March 16, 2010

A second post in honor of the Constitutional Dad

Two issues were left out of the earlier post about Madison. First, although Madison thought it unnecessary, he eventually supported the creation of the Bill of Rights. George Mason is generally credited with at least being the spark force behind the Bill of Rights - but Madison's change in view helped to create the document. His argument against the addition to the Constitution was simple in initially opposing amendments. He thought that the inherent protections offered by the Constitution were sufficient to protect the rights of citizens and to prevent an extension of power. His role in the Constitutional Convention was almost as an expert scholarly witness (brought about in part because of his intense study of political systems before the convention). But he was also a key political player in the discussions. In one sense his opposition to a Bill of Rights is a bit odd, based on his commentary in Federalist #51. When the Anti-Federalists pressed the case for the Bill of Rights, he eventually relented. Good thing, although some of the most important parts of the Bill of Rights have been largely ignored.

Second, the best way to understand Madison is to divide his life into three parts - the time before he became president (in which he became the leading scholar and proponent of the Constitution), his presidency, and the two decades after he retired back to Montpelier (his home) and his death in 1836. During that time he continued his life as a scholar and wrote extensively about issues important to him from the first period. Thus, it is easy to conclude that his important contributions to American life came outside of the middle period of his life, when he was president.

The picture is of the former president at age 82. Madison was the shortest president. A lot of the commentary both from his own writings and from other's descriptions describes how slight he actually was. So it is amazing to have him continue well into his eighties.

Like some of the other founders, Madison left the presidency less well off than when he entered. His final years were burdened with some significant financial challenges brought about primarily by two forces - the neglect that he had paid to his estate during his public service and at the same time the profligate behavior of one of Dolley's sons, Payne Todd. Madison was forced on more than one occasion to bail out the affairs of his stepson.

Finally one personal story. When my daughter was looking at colleges we were in Virginia to look at a couple of places and I asked her to join me in going to Montpelier, which is in Orange County,Virginia. We spent a couple of hours at the place. The site had been owned by the DuPont family before it was deeded to the National Trust. One of the original stipulations for the transfer was that part of the house, which did not fit into the architectural integrity of the original Georgian style be preserved as a remembrance of the linkage of Marion duPont Scott had with horses. The room was a gaudy sort of art deco arcade that in spite of the history of the owners was quite out of place with the house that Madison owned. My daughter, as we were leaving the grounds, said to me (in only the way that she can) "Gee, dad, thank you for taking me to Montpelier. I think I now understand the real attraction that you have always felt to Madison and his role in creating our system. I also enjoyed learning about President duPont."

Happy Birthday Constitutional Dad

Today is the 259th birthday of James Madison - our fourth president but also generally credited to be the father of our Constitution. Among the founders Madison gets the least coverage. Among presidents he is not rated near the top. But I am a fan none-the-less.

Madison went to what is now called Princeton and studied with the president (in what might be called the University's first graduate school and he being the first graduate student), John Witherspoon, who was a Scottish enlightenment figure who had been lured to Princeton and influenced at least a generation of students.

His influence on the Constitution is undeniable. With John Jay and Alexander Hamilton he co-wrote the Federalist - which was a set of 85 broadsides designed to influence the ratification of the proposed Constitution in New York but has become the best short statement on constitutional principles. I have always been amazed that these three writers got the essays done without word processors or faxes in about six months and produced something that has stood the test of time.

Clinton Rossiter, the Cornell scholar, did some great work on figuring out who wrote what. Madison is credited with several of the best essays. He had done an additional period of independent study in Jefferson's library before the Constitutional Convention, so the early essays on the history of political systems are clearly his. But then he also added - #10 (on Factions), #14 (on Separation of Powers), #37 (on Energy in political systems), #39 (on Federal versus National systems) and #51 (On Checks and Balances in political systems). #51 is especially timely in today's climate - there Madison (or Publius which was the pseudonym used by all three authors) argued that "ambition must be made to counteract ambition." He then suggests (in my opinion some of the most powerful language ever written about constitutional systems) "It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions." In the current debates about Slaughter rules and the appropriateness of reconciliation the proponents would do well to re-read(presuming that they ever did read in the first place) federalist #51.

Monday, March 15, 2010

More on iPad Sales

Orders for the device seem to have slowed a bit. Based on numbers from AppleSanity sales have gone to a weekly basis of about 180,000 (30,000 per weekday and half that on weekends). The WI-FI model is outselling the 3G by a 2:1 margin and the 64 GIG model is gaining about 35% of sales.

A couple of thoughts. First, I expect 3G sales to grow significantly after April 3. The price point for 3G service is very attractive and so is the plan. I expect a large number of people said " why rush in on the first day of sales when the 3G will not be available until late April?" Second, even with the decline from the big burst in demand on the first day, unit sales look like this will be a big success. Third, if the iPad does not meet expectations (and I do not expect that) for performance sales would drop significantly in the coming months. The initial expectations of 1 million units in sales from Wall Street look like they will be blown out of the water.

Sunday, March 14, 2010

Wired Rates E-Readers

The electronic edition of Wired has an article called "IPad, SchmiPad: 10 E-Readers and Tablets You Can Get Right Now" The most interesting thing about the reviews of the ten readers covered was where some of the current products were ranked. The top four ranked readers (from 6-10) were the Sony (which was called sluggish and sometimes unintuitive); and then the two Kindles (DX and 2) rated 8 and 10 - the 2 was rated the best. But in position #9 was the iPhone - the rap on it was "the iPhone actually makes an excellent, if diminutive, e-reader." Note the iPhone will have a bigger brother on April 3 (solving the "diminutive" problem).

Saturday, March 13, 2010

About as clear a statement as there could be...

This is Senator Scott Brown talking about health care, from CNN - it is worth your time.

Friday, March 12, 2010

I guess I was not the only one

The newswires on the first day sales of the iPad suggest two things. First, in the first two hours they did 50,000 units. An alternative estimate was that they did 20,000 an hour all day. A third said that Apple was beginning by mid-day to suggest that it would not be a good idea to switch to an in-store delivery for the first day. All of those are pretty good indicators that first day sales were pretty good.

OK so I was late

This morning at 8:30 Eastern, Apple began accepting pre-orders for both types of iPads. I did not get up until 6:30 Pacific, so ordered mine about an hour late.

Here is what I ordered. I ordered the biggest (64 gig) iPad without 3G. That will not be available until late April so I will get one of the first models and if it is as good as it looks, I will do the 3G model later and pass this one along. I added a dock, a wireless keyboard and the case and the VGA adapter along with Apple Care. The whole thing cost about $1000 with tax.

When you are at the bleeding edge of technology you do things like that.

A couple of developments came out. First, Barnes and Noble announced they will offer an e-reader ap for their books on the iPad that is a pretty good indication of what B&N thinks of the possibilities for this device as an e-reader. Second, the Ap Store does not have the possibility of ordering the iWork aps yet. I will keep checking - those three are critical to making this device useful to road warriors.

Wednesday, March 10, 2010

How does your government grow - Wars or Demons?

There is a lot of economics literature which argues that growth of government happens during wars. A good illustration of that is to the right from the Cato Institute - which charts government expenditures in constant 1990 dollars. Note the big spike during the early 1940s.

But there are some other explanations. I began to think about the White House Chief of Staff's comment “You never want a serious crisis to go to waste.” and whether an alternative could be constructed based on the desires of expansionist politicians. (Note the NYT's Jack Rosenthal actually did a column on the origins of Emmanuel's statement in his On Language - turns out Emmanuel was not even original in his thoughts.)

Amity Shlaes covers the expansion of government under FDR in her excellent book - The Forgotten Man. One of the stories she lays out is the FDR's determined campaign against private power in the south. Wendell Wilkie was the CEO of Commonwealth and Southern which was a large utility holding company. He was a delegate to the democratic convention in 1932. During that time he proposed a significant expansion of capacity in the south. But he soon found that FDR would use him and his company as a demon to propose expansion of public power in the same region. The extension of electric power across the country is a long story. As initial companies began to expand their services their capital requirements increased and they naturally began to consolidate. That process took from around the turn of the century to the mid-1930s. But then came the depression. Solving the economic downturn that began in the late 1920s could have been accomplished without any public expansion of power generation. But FDR recognized the opportunity presented by a) the complexity of the industry and the ability to portray its leaders in a negative light and b) the opportunity to make the case that solving the problem against these "demons" would somehow improve our overall economic situation. In his 1935 State of the Union FDR called the holding companies "evil."

As FDR's campaign increased Wilkie and some of his counterparts tried to negotiate with the administration. But FDR saw the benefit from identifying a demon. Wilkie did not recognize that he was a symbol. As I began to think about that episode, I thought there were many parallels with the current administration and the health care industry. I thought what a novel thought. But as I did some research on the subject I found a couple of interesting predecessors who had handled the issue pretty well. For example Diane McWhorter in a February USA Today Blog gives a good summary of the parallels and strategies used by FDR against the power companies and Obama against the health insurers.

The points here are two. First, there is a pretty good case to be made that in addition to the expansions that happen as a result of war powers can be increased by a demon theory of expansions. But second, it is often hard to tell where ideas come from - at the beginning of the week I thought I had come up with an idea that was a slight improvement in my understanding of the question of government expansion ( I ultimately subscribe to Margaret Thatcher's quote about the problem with socialism ("The problem with socialism is that eventually you run out of other people's money.") - but as I did a little more research I found there were a lot of others who came to the same conclusion earlier.

Tuesday, March 09, 2010

Frank Vaughters, MD

In my sophomore year in high school we got a new kid named Frank Vaughters. He quickly ran for sophomore class president and won. Then he got down to the work of high school and ultimately went to Pomona and to medical school. He moved back to the midwest and began a practice in Kansas City. He started a clinic to help kids in need called Turner House. He then began working in Haiti to help poorest kids there.

From what I have read Frank was a pretty remarkable doctor. He went door to door when he started the clinic to find out what people needed. According to the Kansas City Star he treated 450 patients the first year and about 4,000 this year. “It’s safe to say that, because of Frank Vaughters, literally tens of thousands of children in this area have received medical treatment they otherwise may not have gotten.” said the Star.

Frank and I were in Key Club together and for at least the sophomore year we did a lot of stuff together. He tried to talk me into going out for football and I tried to talk him into going out for wrestling. But after our sophomore year, we really never did anything together again.

I began to read about Frank after the Haitian earthquake and last week they identified that he had been killed in the hotel he was staying in. USA Today quoted his sister as saying she was glad to have some finality - "It's as if I was walking through waist-deep water every day," says Lucy Vaughters, the sister of Frank Vaughters, a Kansas City pediatrician whose remains were found at the Hotel Montana on Feb. 26. "It's like an unfinished feeling. … After a while, you want it to be finished."

In a sense when the story broke I was pleased to have known Frank. As noted above I was not close to him after that one year in high school. But it is great to see when a contemporary lives a life fulfilled that is of service to others.

Sunday, March 07, 2010

When does a tax system become expropriation?

Over the last two decades through various changes in the Internal Revenue Code an increasing number of Americans have been excluded from paying any income tax. According to the Tax Foundation about a third of all citizens pay no income tax (either zero or negative tax liability). On first blush that sounds like a very equitable policy. But as you think about it more the policy becomes foolish. As we have seen in California, the fate of revenues increasingly depends on a fewer and fewer number of taxpayers. In California estimates suggest that 140,000 taxpayers make or break the system - based on the number of individual taxpayers that is probably less than one tenth of one percent of total taxpayers. If those people decide to delay income (which they can) or to leave the state (which they have) revenues become even more volatile. The second problem is even more important, if you have a third or more of our citizens not paying into the income tax system, then there is a good chance that a good portion of the non-taxpayers will be less capable of understanding the dynamic effects of tax changes. Who cares if rates are raised - it is on someone else.

Tuesday, March 02, 2010

The difference between "Yes We Can" and "Should We?"

There is a lot of discussion about whether the democrats in congress can muster the votes to get reconciliation done on the health care proposal. A lot of this is like a horse race. But the real question should be "Should we?" The polling on any of the three bills is pretty clear - the American people are not in support of a massive expansion of government that either the House or Senate bills do (and presumably the final proposal by the Administration). They are concerned about costs and intrusion.

Most independent observers agree with Warren Buffett that none of the extant proposals do anything realistic about costs - which is the fundamental problem facing our health care system. There are legitimate concerns about the open ended nature of the new entitlements regardless of whether there might be momentary or continuing reductions in some costs in the system.

The Administration seems to either not be able to listen or not care. Some supporters of the president have argued that the tide will begin to turn on support for the health care plan - but those are people who have not bothered to ask should we?


On today's Supreme Court calendar is a case from Chicago which deals with an extension of the Second Amendment to state and local government. The case was brought by Otis McDonald, who argues that the Chicago hand gun ban prevents him from protecting his home. The mayor of Chicago argues that it is appropriate for state and local governments to not extend gun rights to their citizens.

Richard Daley has argued that protecting the health and welfare of Chicagoans is not a job of the federal government and thus the court should uphold the Chicago statute. Wait wasn't that the same mayor who supports the massive extension of a federal role in health care?

Our leaders at work...

On CNN's Sunday Morning the Speaker of the House said the following:

"Bipartisanship is a two-way street. A bill can be bipartisan without bipartisan votes. Republicans have left their imprint."

Is she really that stupid or has the botox affected her brain? This would be laughable but Pelosi is actually in the succession line for the presidency.

Pelosi was also asked (on another show) what her grade as Speaker should be for the first year - she said "I think I get an A for effort." I guess that is based on grading on a curve where there is only one student. Even then she is much too generous.

Monday, March 01, 2010

The Market for E-Books

Be prepared to have the traditional publishers make the claim that it is really not that less expensive to produce an E-Book as opposed to producing a hard bound. Be prepared but don't believe the claims. This chart is from the NYT and tries to make the suggestion that the cost structures between regular and E-books are similar. One need only look at the economics of inventory to understand the folly of the notion.

In every market that has moved from traditional atoms to bits, the cost structures have changed. But so have the reward structures. That will happen too in this market. It is beginning and will accelerate as new capabilities come to market. Just be prepared.