Tuesday, June 29, 2010

There are three other charts from the CBO on tax incidence that are of interest.  The top chart shows a line for the percentiles of income including the top 1%. It has risen rather swiftly for those making the most dough.  The second chart is income tax rates by quintile. The third chart shows the rates by quintile which shows the extreme progressivity of the current system. 

So let's review the bidding here.  Our current system is supposed to be progressive to help redistribute income.  (That is to give money from rich folks to poor ones.) Yet over the last couple of decades the income share of the richest people has gone up.  That dipped a bit when rates were lowered a bit.  So the best thing to build social equity in the system is to increase the rate of progressivity even more?  Huh?

Political Interviews - should candidates expose themselves to the Mainstream Media?

The New York Times has an interesting article on Nevada Senate candidate Sharon Angle.  Ms. Angle has been around Nevada politics for a while.  She is opposing Harry Reid.  But she is refusing to talk to the "mainstream" media (MSM).   A local TV news person grumbles that they are having a lot of problems getting interviews from candidates. (She cannot remember when it has been so tough.)  Boo Hoo.

The Times story refers to Angle as a "tea party darling" I wonder how many times they have referred to her opponent as a "pimp for organized labor" of "the darling of the trial lawyers."   But the point of the story is the inability of the MSM to get into discussions and the highlighting of alternative proposals which the MSM regularly savages.

The Times suggests that Rand Paul's refusal to be interviewed on "Meet the Press" which the Times asserts is the "gold standard of political interviews" is indicative of something.  What is the market share of Meet the Press - why in the world should it be considered the Gold Standard of anything?   Meet the press, as a national show, gets something just over 2.5 million viewers a week.  That is hardly gold - especially for a candidate from Nevada where the market share is undoubtedly lower.

A couple of the reporters interviewed for the story freely admit that Harry Reid, who does meet them, is freely able to dodge a question.  Somehow his dodging is considered an art.

The story asserts that Ms. Angle has said in the past that the Environmental Protection Agency should be eliminated and that Social Security should be transitioned out.  Perhaps if some of those ideas were explored with objectivity it might liven the political debate.  But we hear from the MSM that such ideas are "third rails" in American politics.  No wonder candidates with different ideas flee from reporters.

There are plenty of alternative avenues to get an idea out into the public discourse.  Until the media understands its role is not to try to determine the acceptable levels of political discourse, they are likely to be less and less critical in national political debates.

CBO Tax Study - Three charts

The Congressional Budget Office released some charts on tax incidence for the tax year 2007. They show several very interesting things.  Some are surprising, some are not.    The first chart shows share of pretax income and share of taxes paid.  The highest income quintile has the largest share of income and the highest share of taxes paid.  

The second chart shows incidence by tax source.  Not surprisingly, as income grows the share of taxes paid from social security, which includes for the non-medicare part of social security and income cap and for both parts a flat rate, declines as income increases.  
The third chart shows tax incidence by situation by tax source.  That sounds complicated, it is not.  The chart shows among other things the effect of the marriage penalty in start terms.  Tax rates for non-elderly couples (i.e. those not on social security) pay a slightly higher proportion of their incomes than couples with children or the elderly or the average for all households.
The CBO does not make conclusions about the efficacy of the tax system we have in these graphs.  The combination of extreme progressivity and its complicated nature would suggest to most observers that we are not being well served by the current system.  But it does not take an economist to understand that issue.  Evidently, the majority in congress are not up to making that conclusion.

Monday, June 28, 2010

Kinky Al

The Washington Examiner detailed the charges against former VP Al Gore.  It goes into great detail about his clumsy attempts to harass a masseuse called to his hotel room.  The best line in the story is about how this woman's liberal friends tried to talk her out of making charges against Gore.  One even advised that she should not file charges lest the "world be destroyed by global warming."   One wonders about whether her friends made any suggestions about the Internet "going down."  I am also wondering whether the Nobel prize he got was spelled wrong.  The jokes could go on for ever but the point is that this pompous ass has finally gotten his come-uppance.

Robert C. Byrd

Robert C. ByrdSenator Robert Byrd's service in the Congress which stretched for almost 60 years represents the best and worst of congress.  Byrd was mostly an autodidact.  He grew up very poor in West Virginia, actually losing his mother when he was less than one year old (on Armistice Day in 1918) and was farmed out to an aunt.  His early history included a lot of jobs including a welder, meat cutter and salesman.  He got into politics early and represented his area effectively.  He was a member of the Klu Klux Klan (although later in life he regretted the decision).  In one biography he said he got into politics at the recommendation of the Grand Klaxon of his Klan unit.

He had a profound respect for the Constitution and for the Senate as a body.  He studied the rules of the body carefully.   At times that served him well.  When the Clinton impeachment proceeding was gathering steam he crafted the notion of a censure which recognized that a) Clinton's offenses were indeed serious but b) did not rise to the level of "high crimes and misdemeanors."  When some democrats tried to condemn Nixon's first Supreme Court nominee (Clement Haynsworth, who was a distinguished jurist) Byrd voted for the nominee, knowing that the democrat's charges were bunk.

He voted against the creation of the Department of Homeland Security.  And often took the floor to lecture the Senate and the country on the wisdom of the separation of powers.   As his service extended he became a more traditional liberal.  Yet, every once in a while he would lapse into that historic figure of the 1940s with some outrageous remark suggesting he had not adjusted.

And yet, during his tenure as Appropriations Chair he moved tons of pork to West Virginia. By one count he was responsible for bringing $2.6 billion to West Virginia between 2002 and 2008 - that amounts to just under $1500 per person. He was a member of the club who used his club privileges for good and questionable purposes.   He could be imperious and pedantic.

What intrigued me the most was that he was a pretty good Bluegrass fiddler. This is a clip from when he played on the Grand Old Opry.  He released an album in 1978 which I think is no longer available.

Sales numbers on the iPhone 4

Apple announced this morning that they have sold 1.7 million units of the iPhone 4 in the first three days.  That compares to 1 million units in the first three days of launch for the 3G and 3GS.  The original version of the iPhone took 74 days to sell one million units.  The numbers below show sales estimates from the Gartner Group in 2005 (based on millions of units).

Sunday, June 27, 2010

Comparing Video on 3Gs to iPhone 4

The two videos are from the 3GS and the iPhone 4.   Both are fine for a small handheld but the improvements in the 4 are clearly evident.  These were both shot indoors at night under less than perfect conditions.  But the 4 offers a lot more detail.

Kevin Youkilis and his batting stance

I was at a Giants game yesterday where the Giants played the Red Sox.  Boston's First Baseman Kevin Youkilis, had some outstanding plays including bagging all three batters in one innning.  But his batting stance generated a lot of talk.  What struck me about him was a couple of things.  First, the stance is something he has worked on.  As he was standing in the on deck circle and even in the dugout, he worked on his stance.  Second, I am not sure what he thinks he gains from the stance. He loosens up and then puts the bat over his head with his hands almost parallel to the ground. At the point that the pitcher sets he lowers and and delivers a fairly normal swing.   There are a couple of sites on the net that either discuss or mock the stance. (Taken with an iPhone 4)

I am sure there is a pretty simple explanation - I am not sure what it is.  That is what makes baseball interesting.

iPhone Photos - Comparing the 3GS and the 4

Here are some comparisons of photos using the 3Gs phone and the iPhone 4.  The 3GS photos are on the right in each instance.   While the 4 has a larger negative, the results from the 3GS are not bad for a camera phone.  All photos are unretouched. As with all small phones, there is one caution.  These are small cameras,  while they are handy they are also subject to motion.  When you use them for photos you need to hold them very still.  I will post a comparison of video in a later post.  The results there are a bit more dramatic.  The first two iPhones were adequate as cameras, the last two have been good enough to use in a lot of settings.

Friday, June 25, 2010

Two surveys on the iPhone 4

Piper Jaffrey's Gene Munster and Oppenheimer's Yair Reiner did some in line research yesterday.  Their work is summarized in the charts to the right. Three quarters of the buyers interviewed by both were repeat buyers.  In my discussions with buyers at one store (Apple Roseville) that number was about the same.   Reiner also looked at what the alternative phone was for buyers.  He found two very interesting trends.  First, the popularity of RIM devices as an alternative is declining quickly.  Second, the popularity of Palm devices now seems to be almost zero.  Both devices have been replaced by Android alternatives.   In line yesterday the buyers who were not upgrading an iPhone were upgrading something in the 3G range although I did speak with one mom whose munchkin was holding her old phone as a teething ring.  Perhaps that is the fate of the old devices.

Comparing iPhones

This morning I thought it would be interesting to show the four models of the iPhone next to each other. They are left to right - the first model to the fourth.   A couple of things are apparent.  First, Apple's design keeps working, just as it did with the iPod.   More importantly, and this will post later.  The cameras keep getting better.  I did some test shots of the new video feature last night and think the 4 video is vastly superior.   Ditto for the camera.  I will post some comparisons in the next few days.

A couple of other anomalies showed up.  Note the clock,  the first generation clock is a bit off because it has not updated to the network.   The fourth generation is a bit off - although based on the Apple clock on my desktop - 7:13 was the correct time.

Thursday, June 24, 2010

Update on the Apple Store Experience

Note the comment on the earlier post.   My commenter did what I ended up doing.  I came back about 6:30 PM and the line was considerably shorter.  I got in line and went through it and was out by about 8 PM.  The commenter's suggestion is equally sound - schedule a time to do the pick-up and give people a limited time to exercise it.

I am an inveterate researcher on things like this so while in line I asked a bunch of my fellow waiters to tell me about their experience.  They all said they were a bit bummed out by the wait for a supposed reservation.  Two people in the line did what I did - came out, left and then came back.

I also spoke with two sales associates and got some additional insight.  First, the number of reservations far exceeded estimates according to one sales associate.   That would suggest even more attention to improving the customer experience.  Apple's technology often exceeds customer expectations.  On this case the purchase experience was well below my expectations.  In this case I also agree with my commenter - this is the last time I will go into the store to purchase a new device but I also agree that the product is pretty slick - more on that later.

A Horrible Experience at the Apple Store

This morning I joined a number of my techno-buddies to pick up what I thought was a reserved new version of the iPhone - dubbed 4.   Based on the way it was described on the website, I could pick up my new phone on the opening day at the Apple Store in Roseville (although I expect the experience in other Apple stores was the same).   I expected that I could do that in a reasonable amount of time.   I got there mid-morning and found a long long - which was slightly shorter than the line for the people who had not "reserved" a phone.   But the way the system worked, although the line was longer for the non-reserved, they seemed to be moving people through it one side then the other.  Thus, people who took the time to reserve a product in high demand were being treated the same as people who decided to join the fray.  

The line in Roseville was long enough so that at about two and a half hours, I simply dropped out.

If Apple were smart about this, they could have taken a much more proactive response.  For example, they could have done the same level of pre-authorization for customers who chose to have the device delivered.  Then the simple task would have been to go into the store, sign in (electronically would have been good) and pick up the phone.  They could have pre-booked the revenue, encouraged the thrill of getting the phone on the first day, and lessened the grumpiness of the patrons who had thought that by reserving the phone they would have been able to get the phone in a reasonable amount of time.   It would have made for better utilization of sales people because they would not have had to go through all the qualification process for people who reserved.  At the same time it would have served the impulse buyers better.   Each store would have been able to work through customers much more efficiently.

I found out after I got there, although the Email I got warned that the "reservation" was only good until 9 pm tonight, that there was no way to move my reservation to another day or to get the phone without waiting in line.  When I left the line at 1:30 I asked the first person in the line when he had come to the Apple Store - he replied 7:30 AM.  Thus, the wait for the process for some of the earliest customers was six hours.  That was for people who had taken the time to "reserve" a phone.

I understand the excitement of getting a new product on the day it is released.  But at this point I believe Apple made a huge error in judgement which will leave a lot of very grumpy customers.

Wednesday, June 23, 2010

Speculation on the Kindle/Nook Price Reductions

The actions earlier in the week by Amazon and Barnes and Noble to reduce the price of their e-readers could have been caused by two factors.  When the news first broke some speculated that the Amazon was readying a new version of the Kindle that would do a lot more than the current version.  It would become, as one commentator suggested "an e-reader on steroids."  Amazon may well be preparing a new version ofthe Kindle.   But a more plausible explanation of the price cuts relates to the change brought about by the 3 million new devices that came into the e-reader market in the first 80 days of the iPad.

Getting a read on Kindle sales is a bit tough.  According to Jeff Bezos, Amazon sells six books for ten physical books they sell.  In a story on Information Week the CEO said the ratio would even be higher if they counted free books. The best estimates one can find on Kindle suggested about a year ago that sales of the device would reach $750 million by 2010.  The best estimate of sales is that first year was 189,000 units growing to 2.2 million units.  The Q4 financial disclosures of Amazon for 2009 do not break out Kindle numbers but total revenues increased significantly, depending on accounting issues by between 28% and 42%. Their Q1 estimate was for growth of between 32% and 43%.  In March, Barnes and Noble claimed that sales of the Nook exceeded those of Kindle.  (I find that hard to believe as I fly I look for which devices people are using.  In the last six months, I have seen about a dozen Kindles, one Nook and four of five iPads.)  Whatever the numbers, the Kindle is contributing to Amazon's position as a retailer.  I suspect the same thing is happening to B&N with the Nook.

The Kindle remains a superbly good e-reader.  The price point for the device would be secondary if the Bezos claim is correct.   Like sales of cellular phones, the price of a Kindle, if it induces more book sales, is virtually irrelevant.   It is very possible that if iPad sales continue to boom that we will see further reductions in price.   As I wrote when the iPad came out, I believe that there will remain a very strong market for mostly single purpose e-readers like the Nook and the Kindle.   The linkage that both of these companies have to publishers will continue to put them in a strong competitive position compared to devices like the Sony.   It seems to me that those devices will be increasingly squeezed between the wider use tablets and the focused e-readers.

There is income and then there is income - Margins in the App Store of Apple

John Paczkowski in All Things Digital published an estimate of the net revenue from the App Store to Apple's bottom line.  The result on first glance is not that impressive about $189 million on almost $34 billion of revenue over the same period.  The estimates came from Piper Jaffrey analyst Gene Munster.  But Munster points out that the paltry direct revenue is only part of the story.   The App store has two purposes. First, as Munster points out, it drives hardware sales.  With all those applications on the site, the iPad or iPhone buy becomes a lot more compelling.  The joke "there is an App for that" is really a statement about the utility of the devices sold by Apple.  Munster points out that energy creates a "virtuous  circle" which aids developers and ultimately Apple. From my perspective there is a second benefit to the App store.  It might be called the "7-11 effect."  I find that when I am on the Application Store site I will often drift into music, or books or movies even though I entered the site to look for an App.   In some of the other categories Apple is making a higher margin and at the same time boosting its stickiness.   There is also a third benefit from the App store to the bottom line.  Once a person has used an iPhone they are more likely to consider an iPad. (or vice versa)  I understand the utility of being able to have all my digital devices synch - and even though it is possible to do that with different devices, it is just easier to consider Apple first.   Ultimately all three functions contribute to the bottom line.

Monday, June 21, 2010

Beginning the Fall Campaign

On the talk shows yesterday Rahm Emmanuel opened a line of attack for the fall campaign.  He said “There is a choice that Joe Barton has offered the American people, a philosophy for the Republican Party, which is that BP is the aggrieved party,” Emanuel said. “In the coming weeks, you'll see the president speak to the country about these competing different philosophies. That is, do you have only the energy executives in the room, or do you have energy executives, environmentalists, and other people from the venture capital community to come to a consensus on energy policy? Do you think that BP is the aggrieved party here? Do you think that Wall Street should be left alone and not have any reforms? Elections are about choices. Those are what is fundamental. There is a difference in our philosophies. And not only in our philosophies, (but) how we make sure that America strengthens its economy.” (As quoted in Politico)

But this may be too smart by a half.   So far the Administration's response on the BP spill has looked Katrina-esque.  One could make the case that the involvement of the AG and the President in pressuring BP to cough up $20 billion was short sighted.  If claims are settled quickly and there is enough money then the strategy may turn out to be a good one.  But if they are not it will look like what Barton called it to be a "shakedown" which did not help solve the problem.  If the oil is still flowing - that is the image people will see on TV.  And if the civil and criminal actions are hampered by the "safe harbor" created by the fund demanded by the Administration, then the Administration looks like bumblers.  

The counter attack is pretty simple.  This administration wants to be too deeply involved in the private sector - why don't they focus on the jobs that government is assigned to do.   The level of anger in the region and across the country may not fall for a populist line - when most people understand that the president is far from being a populist.  The GOP would be wise to recover all of the president's statements about guns and religion.  One of the errors of many people in Washington is that they talk to each other a bit too much.  

Sunday, June 20, 2010

IS this really something the federal government should do?

Fatherhood.gov is a new site to tell us all how to be better fathers.  In my humble opinion - why should my taxpayer dollars be wasted on this project.  Indeed, it is a good thing to improve the responsibility of fathers.  Indeed, the civil society should take up this responsibility.  But why the government?

I am offended that the President would suggest that it is the government's role to offer us the following -  "To help show fathers the unique and irreplaceable role they play in their children’s lives, the National Responsible Fatherhood Clearinghouse encourages dads to Take Time to Be a Dad Today. The NRFC Media Campaign PSAs highlight how the smallest moments can have the biggest impact on a child’s life." What expertise does the federal government have in this role?  More importantly which of the enumerated powers does this fall under?  The site tells us "how to change a diaper"  or "how to change a bike tire"  do the feds actually think this will not be available without this being funded by tax dollars? But more importantly the site suggests that part of this crock is a new grant system to lay down a little boodle to compliant left wing groups who are actually trying to reduce the role of families.  There is even a link to college loans - including one for Sallie Mae which the President virtually shut down with his new law passed as a part of the health care bill.

Arguably, federal policy has done a lot to break up families by the way we distribute subsidies to the poor - establishing a marginal tax rate that is higher than that paid by the highest income earners.  Charles Murray argued that in his groundbreaking book "Losing Ground."   

Want to cut the federal deficit?  This is one of many examples of over step by the federal government.

.500 Ball

 Last night against the Salt Lake Bees and 70 games into the season the Rivercats came back to .500 ball.  It was not easy.  Unlike Friday's 16-6 rout, the Cats stumbled a bit in this one.  In the eighth, leading 7-1, they replaced Clay Mortenson with Jamey Wright.  In one and two thirds innings Wright gave up 6 runs, including a 3 run homerun off Mark Trumbo.  That left Wright with an ERA that is almost 15.  He's new but this was not a good outing.

Michael Benacka came in and stopped the bleeding but we came into the bottom of the ninth tied.  We quickly filled up the bases and the Bees began to play in.  They left only two in the outfield - it looked like a lineup around the bases.  We filled the bases and then Corey Wimberly came up to bat and you can see the results for yourself.

The Cats are 10.5 games out of first in their division.  In order for them to have a chance to get to the playoffs two things have to happen.  First, they need to continue to play strong ball (obviously).  But second, the Fresno Grizzlies, who are currently 45-24, need to fall off their pace a bit.   In the last 10 games the Rivercats have come up to their potential going 8-2.  And games like the last two certainly give the fans some hope.

Friday, June 18, 2010

Daily Show makes a point on Energy Independence

The Daily Show With Jon StewartMon - Thurs 11p / 10c
An Energy-Independent Future
Daily Show Full EpisodesPolitical HumorTea Party

Jon Daily has a remarkable ability to poke fun at politicians but this segment is especially biting.  He goes through eight presidents' rhetoric about "energy independence."   The segment raises a question that we should think about more carefully.   The American economy has benefitted increasing integration into the global economy.  No one but some labor activists actually believe that we need to have steel or cherry independence.   It is about what Ricardo called comparative advantage.   A lot of products we once produced are done somewhere else now because they can be produced more easily somewhere else.  We ultimately benefit from being able to consume raspberries in the winter which come from Chile.

One argument that is raised about oil - with presidents like Bush 43 - is the security issue.  But what is the difference between the argument in favor of domestic steel production (we need it in case of a war) and oil?  Free flowing trade will ultimately trump the security issues.  Unless we let the nativists and the mercantilists determine our policies.   From my perspective, and the Daily piece points this out, part of the hangup is balancing environmental policy with energy policy.   

A second argument used, mostly by democrats, is the finite nature of oil.  Here basic economics comes into play.  When the price of energy goes up people change their behavior.   That is called elasticity of demand and oil is a pretty elastic product.  In 1973, in my last stint in the federal government, we had a heated debate about whether Americans would change their consuming habits as the price of oil went from 25¢ to about a $1.50 in a short few months.   We found very quickly that Americans began demanding smaller more fuel efficient cars.   In a relatively short period of time the auto makers adjusted and they were being produced.  Oil is finite, but as was found in the first oil crisis (Whale Oil) in the middle of the 19th Century when the price of a commodity goes up sufficiently ingenuity takes over and something else (in this case petroleum) replaces the higher priced product.   There is no reason why as supplies of oil become less available we won't develop new fuels.   But we won't develop them until price dictates.

One final note, when the first president in the string began to talk about energy independence our figure was about a third of our oil - it is now about seventy percent.  So much for successful policy.

Thursday, June 17, 2010

Joe Barton and BP

In a congressional hearing Joe Barton called the meeting the President had with the CEO of BP a "shakedown" as a result of the promise that the President extracted to escrow $20 billion to pay claims.  In the hearing Barton was careful to make several disclaimers before he offered up the term - primarily he said he was speaking for himself.   From my perspective there are two questions here.

First, did Barton use excessive rhetoric?  Shakedown might not be appropriate in the current over-heated environment (not globally warmed environment, by the way) of DC.  Courtesy begins by being a bit more respectful of the players in the process.

But Second, should someone point out that a looks a wee bit inappropriate for the President of the US and the chief legal officer of the country (who is currently pursuing civil and criminal charges against BP) to invite the CEO into the office for a chat and deposit.   This, is awfully close to the standard of a bill of attainder, which after all is prohibited by the Constitution.  (At least for the Congress.)  Ultimately a competent AG might point out that there are some conflicts of interest in doing these kinds of interventions.

The President would argue that he was just trying to protect the people who have been hurt.  In a governmental system were powers are limited, these kinds of justifications are off base.  There are always right and wrong ways to do things.  And in this case the President and his AG did not do it correctly.    Barton recognized his excess, I am not sure the President recognizes the perils of his approach for our economic system.

My Son in Law - the Tech Guru

My son in law also got an iPad -  from work.  So since he got his we have traded ideas about how to use the new device.   His company, Disney, has begun to integrate iPads into their workflow.  He has taught me a couple of things.  First, he figured out quickly that this is a consumption device - to allow him to a) read all sorts of stuff like newspapers and blogs and b) to access tons of stuff that is on other computers.  But second, this morning he explained how he is using an application to assure he has just in time documents.

One of my goals in this is to reduce the amount of paper I need to carry around. I have tons of things I have created - from presentations, to spreadsheets and documents, to photos.  Many of them are on disparate servers in who knows where.  I put a lot of my key documents on my iDisk.  But also want to get into Google Docs and places like iWork - where I keep a lot of my Keynote presentations.

My son in law told me this morning about Good Reader.  It is a 99¢ app that allows you to do all those things and more.  In an earlier review I explained that some alternatives for this same purpose did not work and were poorly documented.  Good Reader does not have that problem.  It is simple and intuitive.  What a useful tool!

Tuesday, June 15, 2010

Why Americans Hate the Media

The Sacramento Bee carried a story this morning titled "eBay sources say Whitman settled claim of shoving" written by a New York Times reporter.   The story goes on to describe an incident where a media relations employee, Young Mi Kim, was shoved and possibly sworn at by Whitman because she felt unprepared for an upcoming interview that Kim was preparing her for with Reuters.   The long story details the incident and a settlement that Whitman paid to Kim.  But in paragraph 9 Kim is quoted as saying "Yes, we had an unfortunate incident, but we resolved it in a way that speaks well for her and for eBay."Then several paragraphs later the reporter says that no one else witnessed the incident.

Although the story was carried below the fold, it merited, at least according to the editors of the Bee - page 1 treatment and continuation on the last page.  That gives the story huge prominence.  Gee, I wonder who the Bee will endorse in the fall for Governor.

BP and the President - A fantasy

The President is going to the Gulf again this morning for some purpose.  Perhaps he believes that if he goes to the Gulf he will rally the population to his efforts.  Based on his rhetoric, he might be going to command BP to solve the problem now.

But how about another way for him to respond?   Perhaps this is what he could say in his speech to the nation tonight, "My fellow Americans, up to now, my administration has looked like a bunch of idiots.  Our responses to this crisis have been dimwitted.  Let's understand that we need the oil and in the last three decades federal policy has created conditions where our dependency on foreign oil has increased from about a third of our total consumption to more than two thirds.  At the same time federal policy has made it harder and harder to drill for oil within our shores.   Perhaps if we had some sounder policy we might not encourage oil companies to drill in such dangerous places.

This is a mess created in part by government policy but we should not underestimate that a significant part of the blame comes from sloppy corporate behavior.  Neither has served this region well.   Therefore, here is what I am going to do.   1) We are going to act with all deliberate speed to cap the well.  I'm going to quit coming down here for photo ops and I am going to empower the Coast Guard to have all the necessary resources to get that done.  It will not be quick, this is a very deep well.  But be assured that the Admiral in charge will have all the resources he needs.  What we do not need is more politicians flapping their gums about how to cap the well - that is beyond their expertise.  It certainly is above mine and no matter how many times I have a photo op on the beach picking up tar balls, I haven't a clue how to solve this problem - but our federal agencies have some talented professionals who do have the technical knowledge.  2)The next step we need to take is to rethink our federal policy - and here is where I can actually do something.   I am going to convene a balanced group of experts to look at the policies of the federal government as they relate to drilling for oil.   That group will include some environmental advocates but it will also include some people who know something about geology and engineering.   It will be a more balanced group than I have proposed so far.  I can make one promise here, when the group comes up with a policy report, I will use my resources to get a sound public discussion about the issues.  That should not include showboat legislative hearings but the sound kind of policy discussions that balance the expertise of the people on the task force with the political realities of our current environment.   Make no mistake, when any politician makes an attempt to grandstand this issue, I will call him out on it.  This issue is too important to allow yammering politicians to distort our understanding of what needs to be done. 3) I am going to give up on trying to look macho.  I have no clue how to run a complex corporation.  I've never had any business experience.   But I do understand something about the law.  I will work out with BP how they can assure the residents of the Gulf that they will be fairly compensated for this problem, that might also include TransOcean who built the rig. The bully pulpit of my office will help me do that - but you won't hear about my discussions.  This is a delicate matter that needs to be done outside of the 24 hour news cycle.  When we get an agreement, and I do have an understanding of how to negotiate (they teach that in law school), we will announce it.   4) (And most important) The American people deserve honesty in this situation.  Human effort is imperfect.  Even the best of us will make mistakes.  What is important here is not to enlarge the political rhetoric but to focus on an appropriate role for government.  I know this is an election year, but responding appropriately to this problem (which my administration has not done well up to this point) is more important than trying to win votes."

Sunday, June 13, 2010

Some additional thoughts about the Long Tail

In the Long Tail Chris Anderson proposed an interesting and provocative theory.  Traditionally products and services fall into something called the 80-20%.  That is 80% of the value of sales come from 20% of the products.  

Anderson made the novel argument that by digitizing something you could establish value out of things which previously were simply too expensive to carry in inventory.  Here is a good example, I like old time string music.  One of the early players of this genre was a banjo player named Charlie Poole.   Poole died in 1931 and only recorded music for perhaps a decade.   I first encountered him on a trip to see family in North Carolina.  I found an old album (vinyl) in a record store in Winston Salem.  But it was absurd to expect that all of Poole's recordings would become available.   The first banjo I owned was originally owned by a performer named Uncle Dave Macon who was from Tennessee (as opposed to North Carolina).  Macon had been fairly famous in old time music but since he died in 1952, the chances of finding all of his recordings was also small.

Anderson makes two points in his book.  First, with digitization it is now possible to carry a much wider catalogue of music or books or other products.  And, with that the payoff for those in the 20% becomes a bit higher.  So while a prominent singer in an earlier era, because the true sound of his talent could not be recreated precisely, made a reasonable salary, in these times the payoff for highly prominent performers is much greater.

We learned in a class yesterday that operatic performers who work in smaller companies are making less money than they did a generation ago.  Thus one question could be asked is whether the Long Tail results in a redistribution of income between, the middle people (right below the 20% in number) who at least according to the market for opera singers seem to make less money than they once did.   And the new market in the long tail.

One would expect that the total market increases (the pie gets bigger) but to the extent it does not, the the middle becomes less well off and the long tail becomes better off.

Thursday, June 10, 2010

They can't take that away from me

The NCAA today adopted sanctions against USC for violations of their standards for aiding athletes.  Among those sanctions were the relinquishing of the National Championship in Football that the Trojans won against Oklahoma.

Athletic scholarships became a part of college sports with Amos Alonzo Stagg when he coached at the University of Chicago.  Stagg could not compete against the public universities in the area for students so he established a program to aid needy students who also played football.   As those programs began to grow, colleges and universities established the National Collegiate Athletic Conference to set rules for the appropriate way to recruit and retain student athletes.   SC was accused of violating rules with three sets of student athletes.   I have no doubt that the charges were proved beyond a reasonable doubt.

But from my perspective there are two things wrong with the result today.  First, college graduation rates for student athletes are still abysmal.   The goal of many student athletes is to play professional ball not to graduate from college.  The system which started out simple has become entirely too complex.   This year, I had a student athlete who was coached by my son who graduated and is going to attend college in the fall.  A year ago I sat down with this kid and talked to him about college opportunities.  I gave him some advice about how to choose a college and characterized his decision as an economic one - ultimately he needed to think about the place that would give him the best chance to graduate not the one that promised him the best shot at the pros.  The vast majority of college athletes with aspirations for professional sports are disappointed.  When he graduated from high school, my wife and I gave him a gift of cash, because he was going to a college where he would live in an apartment.   Technically, because at one point I was on the Alumni Board, I could have been guilty of illegal recruiting tactics - even though the amount of money in the gift was small and even though I actually discouraged him from considering SC (he is small for a college player at his position).

Second, my son and I went to the National Championship game in 2004.   SC had an impressive record that year.  They played a tough schedule and won convincingly against Oklahoma.    We had a great time at the game.  I will guarantee you that one of more of the Oklahoma fans violated some aspect of the NCAA rules that year.  That is not to excuse the SC violations, but it is to suggest that violating the rules is more widespread than these sanctions suggest.   The NCAA can take away the championship.  But I was there.  The memories of that evening and trip will not be erased.

Wednesday, June 09, 2010

Setting up for the Fall (Pun intended)

The election results from one of the bigger days in primaries across the country were interesting but probably not dispositive.  Blanche Lincoln survived a strong challenge from Arkansas' Lieutenant Governor but looks like she will not be as successful against her GOP challenger in the Fall.   Most pundits argue that the GOP nominated the weaker of two candidates against the Majority Leader of the Senate, Harry Reid.  Sharon Angle defeated a more establishment candidate.  But I believe, as I do in Kentucky, that we will have to wait and see about whether GOP voters made the right choice.

In California, money talked in some areas and did not in others.  The GOP candidate for Governor, Meg Whitman, spent a bundle of cash against her opponent - who spent a smaller bundle.  In the Senate campaign, Carly Fiorina spent a bundle of cash against a candidate that I personally favored but who ran a relatively ineffective campaign.   But in the propositions money seems to have failed.  Two measures, both of which I favored, but which were sponsored by PG&E and Mercury Insurance went down to defeat.  At the same time an absurd proposal to create a limited experiment for public funding of campaigns by taxing lobbyists (which I opposed) went down in flames.  When will the lefties understand that Californians don't like public financing even if it is financed by taxes on a group they don't like?

In the Governor's race, to the extent that the Lieutenant Governor is an aid to the campaign - both parties put up strong candidates.   But the democrat's candidate may actually reinforce the very image that their candidate for Governor wants to avoid.   Gavin Newsome is a polarizing figure.   I also think he is a light weight.   But the real campaign for Governor will come down to whether Meg Whitman is up to the challenge.  Money clearly talked in the GOP primary but so did her campaign.   Brown will have all the resources he needs, including a boatload of support from the unions.   As I suggested a few days ago, from my perspective, Whitman would do well in the short lull after the primary to study the Chris Christie playbook.

Tuesday, June 08, 2010

Some additional thoughts about global warming

\Last night I had dinner with my daughter and son in law and some friends.  We began to discuss the issue of global warming.  I'm a skeptic.

My son in law made an argument that the over-whelming consensus on the issue is in favor of the climate change theories that most closely relate to those offered by Al Gore.   An interesting argument that made me think a bit.  But I wondered what would be his argument had he been born at the time of Gallileo.   Stephen Hawking, one of the brilliant minds of our time said about him "Galileo, perhaps more than any other single person, was responsible for the birth of modern science."   Among his other insights was that our universe was not geocentric - rather it was heliocentric.   

Indeed, at the time, the scientific community and even the Catholic church argued that their existing understandings about the order of the universe made more sense.   My caution on this issue is borne by two concerns.   I look at the increasing political nature of scientific inquiry - which is in part driven by funding from government.  At the beginning of the AIDS epidemic a group of scientists used projections to argue that heterosexual AIDS would be a significant part of the epidemic.  I am not a biologist but I noticed that a number of prominent thinkers in the field argued passionately that the risks of extending risks of the epidemic to populations not at risk would slow progress on finding solutions to the disease.  In the end the incidence of heterosexual AIDS was only related to the presence of other risk factors.

In this case in the last few weeks some notable dissidents have begun to surface urging caution.  They include the Royal Academy of Science in the United Kingdom.  So while his conclusion remains correct - there is good reason for having a little humility on the dire predictions.  As one who is constantly concerned about the abuses of governmental power - when all the solutions impose more governmental regulations - I become skeptical.  Most supporters of global warming theory argue the only way to solve the problem is to establish significant new levels of government regulation.

Thomas Kuhn wrote an influential book (referenced above) called the Structure of Scientific Revolutions in which he argued that inquiry goes through a series of waves - when new ideas are first proposed the existing scientific establishment tries to defend the current theory base - but increasingly new thinkers offer challenges to those ideas and structures eventually causing a revolution in scientific thinking.    

There is a second concern that I have about the discussions on global warming.  California will vote on whether we should continue the implementation of one of the most drastic laws in the country relating to the use of carbon based fuels.   AB 32 would be delayed until the unemployment rate drops below 5%.   For the past decade California has been a laggard in economic growth.  Our unemployment rate is among the highest in the country.  Our state budget has been in perpetual deficit.  

The proponents of AB 32 make two arguments - the first is the one of inevitability of the science - and from my perspective that argument is simply wrong.  The Royal Academy's decision to step back from the brink on climate change is but one example.  But the second argument that they make is that we cannot afford to wait on responding - even if the model is a bit off.  From my perspective the risk is that the state will continue in the very unenviable position we have been in for the last decade and could likely diminish the ability of our state to continue to prosper.  Ultimately, writers like the Swedish environmentalist Bjorn Lomborg make a more reasoned argument.   Lomborg, in Cool It, makes two arguments.  First, he suggests as he did in his earlier book that the hockey stick hypothesis is simply bunk.  At the same time however he argues that we should not ignore the long term benefits of thinking about alternative fuels and in taking other efforts that will help to preserve and sustain the environment.

The extreme supporters of the Global Warming hypothesis make no room for more moderated responses.  In the end, if their science is right (and I believe it is not) the potential costs of adhering to their prescriptions may simply be too high a price.

Kuhn's book is an excellent opportunity to renew the natural skepticism about any observed truth - the best scientists, like Gallileo, are in a state of constant discovery.   Lomborg's is a great opportunity to think about an issue where the overwhelming consensus may want to impose too great a cost on the rest of us.

Saturday, June 05, 2010

The Last Trials of Clarence Darrow

From the time I first saw Inherit the Wind, I admired Clarence Darrow.  The tensions created by the play between Darrow and William Jennings Bryan made me think for a couple of years about becoming a lawyer. (In the end I did not!)   My brother met Darrow's son on the beaches of LA, near the end of my time in high school.  So my interest in Darrow has always been high.

This new biography focuses on several of his most visible cases.   It weaves a narrative between his role in the McNamara bombing cases, where Darrow does not come off well, to his defenses in Leopold and Loeb through the Scopes trial.  Donald Mcrae has a wonderful sense of telling the story of these long ago events in a way that gives you an understanding of many of Darrow's engagements were called "the trial of the century."

I read this in the Kindle edition.  I use the Kindle Ap on my iPad when I am flying somewhere.   One complaint about the book - I found that I simply did not want to put it down.  Mcrae is so skillful at bringing back these long ago cases that I simply did not want to stop.

Friday, June 04, 2010

The Dos Equis Governor

Dos Equis has a commercial today about "the most interesting man in the world" - the new Governor of New Jersey may be the equivalent in the political class.   He seems to be unintimidated by the teacher's unions at a time when most politicians, even republicans, tiptoe through their encounters with the group.   If  he is successful in separating a public employee union from its members he could quickly be vaulted into national status for 2012.