This is a map of the US from TaxProf Blog which is a graphic representation of what lawyers earn compiled by each county.  The greens are the lowest average wage ($40,820 to $65,000 and $65k-85k) and the blues and reds are the highest ($125-145K and $145-192).  

What interests me about the numbers are two things.  First, the general wage for lawyers in most of the country is not huge.  But second, look at the concentration of blues and reds in California.   There is an old joke about that - "California has more lawyers and New Jersey has more toxic waste dumps; explain why."   New Jersey got first choice.

One more thing about Mexico

On Monday I had lunch in a small restaurant in Progresso which is a seaside town near Merida.   Progresso is becoming a resort.  When I first visited there it was a sleepy town next to the gulf but there looks to be a lot of building going on in the area.

The restaurant had excellent fresh fish - I am a big fan of mojo de ajo - a simple grilled fish with lots of garlic - and theirs was excellent.

But if you look in the right you will see a kid selling candies.  To his immediate left is a sign on the door which says "Prohíben a los vendedores de entrar en este restaurante"

Carbonite

After hearing ads for it for about a year, I signed up for Carbonite - which is a web based back up service. For $55 per year you get (according to their ad) simple, secure, unlimited and automatic back-up.   In the three months I have had the service it has not lived up to its ads.

I have a big desktop machine at home that has 2 Terabytes of hard disk space.  (Admittedly, all that is not filled.)  I began the back up in mid-december.  Based on my own tests of speed, a 35 MB video file should take about 2 minutes.   Based on a reasonable conversion the entire back up should have taken about 41 days.   We are now 70 days into the process of back up and the remaining files to be backed up are more than half the contents of the computer (which is less than half of the total capacity).    They say, after you have signed up, that the backups are slowed for big files.

A second problem is their technical support.  After about 45 days I called and asked why the system was not even close to finishing.  I got a support guy who could barely speak English.  His answers were mechanical and not helpful.

I finally went out and bought a 2 Terabyte Western for $85.  On my mac, I was asked if I wanted to use this as a Time Capsule device.   The initial backup took overnight.   The drive will continuously back up versions as long as I have it attached.  From my perspective that is simple and secure.   It isn't the cloud but it could be simply by taking the drive with me or by storing it in a fire secure enclosure.

The alternative is a service called Mozy - which is a bit more expensive (although not much) and seems to upload at as much as four times the speed.  From my experience I would not recommend Carbonite.

Disturbing Trends

I find three recent events similar in nature and find them troubling.  They are

1) The decision by the Wisconsin democrats in legislature to take off to prevent a vote on a bill which has generated controversy.

2) The decision by the Obama administration to ignore its responsibility to defend the Defense of Marriage Act (and in a similar vein for the Governor and AG of California to decline to defend Proposition 8).

3) The decision by the Majority Leader of the US Senate to demand that current spending levels are the equivalent of a freeze.

The third could be described as politics - although in an earlier post today I described it as irresponsible politics.  There is a lot of discussion about what the appropriate mix of revenues and expenses should be at the federal level.  But I believe it is an abdication of responsibility for Mr. Reid to make no serious attempt to balance the budget.

The second issue is one where I am basically in opposition to the position that the elected officials are required to defend.  But in both cases, there is a legitimate argument on the other side.   The voters and the Congress have expressed a clear opinion as as the country's chief legal officer, it should be the AGs responsibility to either act in defense of the act or to appoint a special counsel who could pursue the position.  Simply ignoring the enactment because you disagree with it is wrong.  It also belies a poor understanding of the nature of separation of powers.  If the Administration does not like DOMA, as I do not - then it should seek to change it in the legislative process but simply ignoring it IMHO sets the administration up in a quasi judicial role.  That is a very bad precedent.

The most troubling demonstration of abdication of responsibility is the walkout of the Wisconsin democrats.  I happen to agree with the approach of Governor Walker.  The public pension time bomb across the country is huge.   Something must be done and very quickly.  I suspect that the democrats, were they willing to engage, would be able to modify the provisions of the governor's proposal.  But they cannot do that simply by sitting in the corner.

In each of these examples, elected public officials have refused to carry out their responsibilities - the ones they were elected (or in the US AGs position were appointed) to fulfill.  I wonder at what point some citizen will take the role of attempting to hold these officials to account.  

Game Over?

The Bee has a story in this morning's paper about the possible impact of the departure of the Sacramento Kings - arguably the most incompetently run franchise in the NBA.  They have a picture of a billboard put up by one firm which says - GAME OVER - If the Kings leave we all lose.  Mayor Kevin Johnson says that the arena generates about (one wonders how close about is) $1 million in property taxes annually.  Based on the loan that is owed the city, that hole could be covered for more than 70 years when the current owners are required to pay Sacramento back for the loan they got a couple of years ago. If they leave us the current loan accelerates and they also owe us a prepayment penalty.  Clearly the region would event revenues and salaries but based on recent attendance to the games they would not lose a lot of event revenue.   With a bit of creative thinking they could provide some other amenities for the city that would be less of a joke.   Perhaps they could use half of the proceeds from the loan repayment to get the city to think about how to attract a better franchise or even to think about some non-professional sports options.


But then there is the speculation about the loss of the prestige of 13-41 Kings (the second worst record in the NBA) leaving.  "The loss to Sacramento would be devastating. There's no doubt about it," said Michael Meczka who is described as an "economic consultant" but seems to be in the business of chatting up the value of sports franchises to cities. Some people might call his operation sports pimping. 


If the existing arena were shaped up a bit, it might attract all sorts of shows and concerts.   The head of the Chamber of Commerce says when you do not have a professional sports franchise you are a second tier city.  What absolute nonsense.  Is Las Vegas second tier?   Conversely, is Charlotte or Houston first tier simply because they have sports franchises?


The NBA owners are greedy.  The franchises offer profits to the owners and lousy salaries to all but the NBA stars and a few of the managers.  They do very little for economic development except for this fanciful notion of "prestige."   When did it become mandatory to have a professional sports franchise to be a major city?    There is a second problem here also. Big time sports keeps claiming that they deserve a piece of the public fisc.  Why?  In Europe the large soccer teams are all private enterprises.  Many are even publicly traded companies.  


We should be brave enough not to take the bait of the NBA threats or the phony analysis of people like Meczka and wish them great luck in Anaheim or wherever they end up.  But first get them to pay us back the money they owe.

The Deficit is Only an Abstraction to the Majority Leader of the Senate

Harry Reid, who has spent the last couple of weeks trying to embrace the current deficit by proposing to "freeze" spending at current (inflated) levels commented yesterday "It is time to drop the threats and ultimatums, and work together on a path forward," the Nevada Democrat said in a statement. "I am asking Speaker Boehner to simply take the threat of a government shutdown off the table, and work with us to negotiate a responsible, long-term solution.”    I realize that the Administration can take all the usual steps (like making the most visible shutdowns first) but I suspect in a state where foreclosure has become the common house sale and where economic growth is a projection that Nevada's voters would choose to shut it down.

More Reflections on Mexico

The American perception on Mexico is a bit daft.  For example, the drug problem is mostly in the north of the country.  But many Americans are worried about the whole country.  One of the deans I worked with yesterday expressed concern that many Americans are worried about coming to Merida.  From my perception and actually from the data - Merida is a very safe place.

They also do not have a good idea about the depth and breadth of the Mexican attraction to technology.  WIFI spots in big and small towns are ubiquitous.  Compared to five years ago when many towns only had dial up service.  This morning as I was waiting for my flight to Mexico City, I counted five other passengers working with their iPads. (Lots of other computers too but I was counting iPads).

Then there is the electronic WSJ.  It seems that I cannot get it in Mexico.  I am not quite why that would be but it must be something about how it is delivered to my iPad.

Some reflections on Mexico

For the last three days I have been in Merida in the Yucatan Peninsula.   Most Americans know the region from Cancun.  I've never been there but I have done a lot of work in the city of Merida and in a couple of other areas.   One of the affiliate universities that I have worked with is called Universidad del Mayab.  It is a superior place.  We were working on building some connections with California colleges and universities.

Over the last dozen or so years we have done a series of projects in the area related to research and governance- bringing together scholars and politicians to discuss best practices. On this trip I had three interviews (TV, Radio and Newspaper).  I also got to meet the Mayor of Merida.  In the last few years a lot of women have entered political life.  The Mayor is an architect named Angelica Araujo Lara.  I was impressed with her command of the issues.   We also had lunch in Progresso - which is a beach town not far from Merida, but missed meeting the mayor there.

I have not been to the Mayab for a couple of years and am impressed by the growth in the place.  They seem to be working hard on making the place a bit larger but also in making it better.  I had the chance to meet with deans of each school and to talk about how to make connections and also with a small group of students who would like to come to California to talk about government.

I stayed in the Fiesta Inn.  One innovation there is a better way to charge for the internet.   They charge $175 pesos for 24 hours usage.  But that 24 hours can be done at any time of your stay.   So I ended up paying about four dollars a day for internet coverage.  That seems like a fair price.  I get really annoyed by American hotels who charge outrageous fees for internet services.

Today I went to an archeological site called Dzibilchaltun (ZIB-ILL-SHAWL-TOON) which means stones with words on it.  The top photo (I did not take either) is of the observatory.  The Mayans were pretty smart about astronomy but interestingly they failed at this site because they could not deal with a three year drought.   The bottom photo is of a Cenote which shows how smart the Mayans were on water - at least until the drought.  I will have some more photos up when I get my own pictures off my camera.   I will also have some more comments on the site.

I also had dinner at a hacienda near Merida - this particular hacienda produced henequen.

A stunning public conversation

This video from the Heritage Foundation is a real demonstration of the differences in perception and message between the public employee unions and the average taxpayer.   Governor Walker's proposal would make significant changes in the way Wisconsin public employees deal with their employer but it would also set some balance that has not been present in many states for a very long time.  Public employee pensions and benefits are significantly out of the market.  So, indeed, are their salaries.    This is a superb demonstration of how the issue is being formed.

Waterloo for the Public Employee Unions

The Public Employee Unions seem to have mis-judged the mood of the country.  As reported in the Bee and other papers a Clarus Poll suggests that the fight that public employee unions are waging in Wisconsin may not be winning them friends.   In response to the question - "Do you think government employees should be represented by labor unions that bargain for higher pay, benefits and pensions... or do you think government employees should not be represented by labor unions?"

Even with the margin of error (+/- 3%) the Wisconsin Governor seems to have the upper hand.  Even in the Northeast public employee unions are not popular.  The ratios in the rest of the country are 2:1 against.

Governor Walker, the Public Employee Unions and Reality

Former Senator Russ Feingold characterized Governor Scott Walker's proposal to change the way public employee unions can engage in collective bargaining in the following manner  “The notion this is about the budget is a complete sham … This is about an agenda of destroying unions,”  That sounds pretty terrible until one understands exactly what the Governor has actually proposed.


The state's deficit is more than 10% of the budget, which puts it below the average among all states but still at a significant shortfall.  So what is the attempt to destroy unions actually proposing to do?   Green Bay's paper describes the proposal in much less shrill terms.  It would require "nearly all state, local and school employees to pay half the cost of their pensions and at least 12.6% of their health care premiums."


Lets get some numbers here.  According the the Bureau of Labor Statistics, the average health care benefit cost for public employers was $4.65 compared to $2.94 in the private sector.  That is on top of an average wage premium for hourly compensation which is significant.  Here is a chart from the BLS comparing the relative costs of compensation for public and private employees.

Notice that health care costs are a third higher for public employees.  Notice also that pension costs are more than double for public employees (and remember that few private employees have defined benefit plans for their retirement).


From my perspective, the Governor's request to require public employees to pay a slightly larger share of their health and retirement costs is not only reasonable but necessary.   Wisconsin's deficit at about 12% of the budget is by no means the largest in the country. But the point is if every employee in the private sector is paying a portion of their health and pension costs, why should we not ask the same of the public employees?


Much of the press coverage has been that the Governor is trying to eliminate the possibility that public employees can bargain for wages.  That is simply not true.   Were it true, I believe that a high percentage of voters would support that broader restriction on the rights of public employees.  If the question were phrased "Is it appropriate for us to require public employees to shoulder more of their health care and retirement costs?", my suspicion is that a huge majority would say "why not?"


Feingold's statement, which is parallel to a lot of other democrats, including the President, is a huge distortion of reality.   He was called to account in the last election.  Those shills for the public employee unions should also be held to a standard of truth that most of the media is unwilling to require.

Spending

The Mercatus Center at George Mason does a lot of interesting research.  They published the following trendline on federal spending as a percentage of GDP.

There are at least three conclusions from the chart.

#1 - When the GOP took over congress in 1994 spending was restrained.
#2 - As the GOP got more comfortable in its position, that restraint began to abate.
#3 - When the Dems took congress spending grew rapidly.

There are also a couple of bonus ideas:
#1 - Both the final year of Bush and the first two years of Obama showed the risks of unbridled spending.
#2 - If you run the spending against economic growth from the beginning of the recession you cannot help but be compelled by the notion that when government spends a substantial part of the economy the positive effects of counter-cyclical spending is diminished.   (Admittedly some believe that the effects were always over-rated but there is little demonstration that all that dough we paid out for things like shovel ready projects and cash for clunkers did anything to lessen the effects of the recession - except of course to put mountains of debt on the backs of future generations.)

Obama Budget: Budget as Trabbant:Automobile

President Obama released his "budget" proposal yesterday.  But its resemblance to a budget is only distant.  The dictionary defines a budget thusly -
budget |ˈbəjit| noun   •an estimate of income and expenditure for a set period of time : keep within the household budget. | [as adj. ]a budget deficit.• an annual or other regular estimate of national revenue and expenditure put forward by the government, often including details of changes in taxation.• the amount of money needed or available for a purpose : they have a limited budget.Well indeed the President's proposal does present some very rough estimates of income and expenditure for the coming fiscal year and according to the second standard it does propose some increases in taxation.   But where it fails most completely is in its assumptions about how much debt the country can accept.   During the Bush administration the President was (rightly in my opinion) criticized for producing $400 billion deficits.  After all, it was just a few years before those deficits that federal spending first surpassed $1 Trillion.   But Obama takes us to new heights.  He proposes in his "restrained" budget to raise our debt from the current $15 trillion (about equal to annual economic output) to $25 trillion by 2020.   Doesn't anyone in Washington understand the definition of a "limited budget"  limited |ˈlimitid| adjectiverestricted in size, amount, or extent; few, small, or short

Atlas Shrugged

For the last several years, as they have been working on the script, I have anticipated the release of Atlas Shrugged, the movie version of the Ayn Rand novel.    There have been several attempts to capture Rand in video.  In 1949 there was a version of the Fountainhead, which from my point of view was pretty close to the book but is now quite dated.

Rand is hard to capture.  Her writing style was often pedantic.  There is a passage in Atlas Shrugged which goes on for 40 or so pages as a soliloquy that even for a libertarian is hard to slog through.  She needed an editor.  The Fountainhead is filmed in black and white in the 1950s realist style.  The movie was scripted by Rand so it has all the characteristics of a Rand novel.  

I've always liked Atlas Shrugged better than the Fountainhead.  For one thing, while both present Rand's objectivist philosophy, from my point of view Howard Roark is more a character of one against the establishment.  The story in Atlas Shrugged is more about the power of government.   If anyone was a precursor to public choice economics, it was Dagny Taggart, Hank Reardon and John Galt.   From the preliminary discussion about the movie and from the press reports, this first part of a trilogy, is supposed to stick to the story relatively well.   It is slated for release on April 15- not surprisingly on income tax day.   I am hopeful that the movie version - delayed for several decades - will accomplish two objectives.  First, I hope the movie is true to the book.  Rand's philosophy is complex but useful - especially in an era where nonsense like TARP has become an economic philosophy.  But second, I am hopeful that with a skillful editor that the excesses in Rand's writing style will be left on the cutting room floor.  That will be a hard needle to thread but if both are accomplished we should all be grateful.

Setting up for 2012

In the last few days there have been some interesting developments.   First the good news.  Four democrats (not surprisingly three are up for re-election) have announced they would vote to kill the individual mandate in the healthcare bill (McCaskill, Nelson, Tester and Manchin).   If this were not a political move they might also have voted to repeal the bill but that is a much more complicated story.   And indeed, my guess is that the American people want something done about Obamacare but they do not want to go back to status quo ante. Second, John Kyl announced he would not seek a fourth term.  In something typical of him he simply said "It is time for me to do something else and time to give someone else a chance."  Tea leaves have a way of changing so this may or may not be a trend.  Finally there is Jim Webb, who decided to become a one term senator.  While conventional wisdom might suggest that both seats will be GOP after the election, a lot depends on who is nominated for both sides.  Clearly Webb is leaving in part because of a very tough electoral cycle in Virginia.   But if you remember Webb got there because his predecessor did a couple of bonehead things in his re-election campaign.

Amazing

One of my favorite spots on the Internet is Visualizing Economics.  It is a site created by one Catherine Mulbrandon a graduate of University of Chicago in Economics who now has her own firm which works with clients on data and infographics.   She created a model on how people should do what she does (presented at the right) which has helped me think about how spreadsheets can be recreated into visual tools.

But her enduring contribution has been the website.  Every once in a while she comes up with a graphic which makes me think about something in a totally different way.   Her site should be in your bookmarks simply because it is so useful.  She has some data and some neat posters for either downloading or for sale.   But what intrigues me the most about her work are her infographics.  They are colorful and informative.  The one which most recently caught my eye was the bold statement that six countries house half the world's population.  But there you are.  If you take China, India, the US, Indonesia, Brazil and Pakistan you've got half the population.  Take the other 206 countries and you have the other half.

Nonsense in the Press

The AP and CBS carried a story today  which is technically correct but misleading.  The graph above shows their story visually.  They seem to concentrate on the now rather than the real long term story.  Tax collections as a percentage of GDP are down below 15% - whereas for the last several decades they have run between 18% and 20%. Income taxes will be 13% lower than they were before the recession.  That is primarily a function of the poor state of the economy.  Many of our taxes rely on economic activity from people who at this point are not that active.  The story should have been all that "stimulus" did not do much and all that borrowed money we used to pay for "shovel ready" and "cash for clunkers" has the potential to choke off growth.    The taxes that the administration has put into place are not likely to encourage growth either.  If you look at the out years of the CBO projection we go from low levels to the highest in history.

The Superbowl

I will admit that I was one of the three people in the country that did not watch the Superbowl - although I did catch parts of it.  But in today's world you can catch the high points.  And from the press reports this game was exceptional among the 44 previous ones in that it was entertaining.

I did hear Christina Aguilera blow her rendition of the Star Spangled Banner. I was at the gym (which was mostly empty) getting ready to workout.  I guess she thought bombast would make up for accuracy.  Some people thought it did not matter, but I think it does.

One innovation in the last few years is that you can now review all the commercials on one web site.  I thought the VW Ad with Darth Vader was superb.  I could see one of my grandson's doing exactly that.   I was amazed that Chrysler spent a boatload of dough on their ad.  At least in the dot.com era the fools were not using taxpayer money for their ego trips.

Finally there was the outcome.  From the reports it was a entertaining game and for Northern California, especially Chico, there was a real sense of pride with the Packers' victory.

The Daily - Not Ready for Prime Time

The Daily, a Rupert Murdoch production to create an iPad newspaper, is a first effort in need of a lot of work.  I was a bit surprised that it did not do better on the first iteration. After all Murdoch's empire includes perhaps the best electronic newspaper I know of the WSJ.  This effort is a bit more.


In a story from Reuters, one commenter suggested that the iPad is the most important part of building new subscriptions ("The rapid emergence of tablet devices is a potentially profound development for publishers.")  So getting this right is critical from many points.  The Financial Times publisher claimed that the iPad is driving their new subscription growth.


On the editorial side - I found two of the editorials to be things that were interesting.  But the news stuff - while media rich - seemed a lot like USA Today or what most people call news light.   They did a series of stories on the situation in Egypt, which while glossy were a bit underwhelming.


One thing I liked about the App was the ability to email articles.  Although I could not figure out how copy text, the App seems well designed.


The application is on iTunes and the paper is free for two weeks.  The paper will be about $40 per year for daily delivery.  I hope that it will develop and will follow it during the period.  But from the first look, I am not sure I would subscribe for the Daily at this point.

One more response on Vinson

As noted the Vinson decision is one which I believe will help lead a majority of the Supreme Court vote to overturn either the entire health care bill or at least the individual mandate.  Vinson makes a strong case that the mandate is so integrally tied to the rest of the bill that it cannot stand without that feature.  He also makes the point that the last congress in its wisdom chose to eliminate a severability clause from the legislation at the last minute.

But Judge Vinson also makes the point that the problem congress was trying to address is real.  I think the way forward, if the Administration and the democrats were actually going to look at alternatives would be to start with some tort reform, add a little set of incentives to allow competition in the health insurance industry across state lines and for pre-existing conditions but at the same time to protect the basic notion of individual choice in the system (which I believe, contrary to the Administration's assertions to the contrary is diminished or destroyed in the bill). Markets actually do work.   I would also support a change in the tax status of health benefits to help finance some of the changes but that may not be possible.   That last change would put some more price discipline in the system.   But based on how the Administration and the democrats handled the bill last year those thoughtful reforms are unlikely to be possible until a new president is elected or there is a GOP majority in the Senate.

The Vinson Decision

Yesterday's ruling in federal court by Judge Roger Vinson will become a landmark opinion which will ultimately wind up in the Supreme Court. (the full ruling is available as a click through on the word ruling in the first sentence.)  The opinion is 78 pages and worth reading in its entirety. It begins with the quote from Federalist #51, Madison's discussion of the need to limit the scope of government. "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."

Madison deeply understood the limited nature of government and the need to limit the expansionist tendencies of government.   In attempting to defend the bill the Justice Department had argued that by not participating in a health insurance program that individuals could shift cost to the rest of us through the cost shifting that occurs when uninsured individuals get sick and use the health system.  There is some logic to that position.  But if the case can be made that there is no direction in the constitution to create a health care system, then the logic falls.   Vinson caught the notion of limitation in the following “It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause.” If Congress has such power, he continued, “it is not hyperbolizing to suggest that Congress could do almost anything it wanted.” (as quoted in the New York Times).


Obviously, the decisions so far have been split on the issue, with some adopting the notion that the healthcare bill is within the scope of the Commerce Clause and some arguing that it is not.  But Vinson's decision is more comprehensive suggesting that the issue of compelling individuals to purchase a specific product is beyond the scope of the clause and therefore the entire bill is unconstitutional.   As a reminder, in the enumerated powers (Article 1, Section 8) Congress is given the authority to " regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes"   From my perspective the logic of the Administration in mandating purchase of a specific product (in this case health insurance) is a huge stretch.   But there are a couple of more chapters in this fight before we will know how the Supreme court will rule.