California Connundrum

Today we presented the Chapman University Economic Forecast. For the past five years we have asked Jim Doti (the president of Chapman) and Essi Abidi (the director of the Anderson Center) to present their estimates for the nation and California to policy makers in Sacramento. Last year was a pretty robust year - one estimate suggests that the single effect of growth in Google produced more than $400 million in revenues for the state - based on options and capital gains. The forecast suggests that the dandy growth that we experienced for the last couple of years is likely to slow down a bit in the coming year. The forecast also presented a longer term problem facing the state that I believe is under-rated. Housing affordability in many regions of the state is dropping below 15% (that means that fewer than 15% of the families in a region can afford to buy a house in the area.)

The challenge for the state is twofold. First, we need to attract industries that will produce workers who can afford our housing. But as you look at the housing numbers in key areas of the state - a lot of the demand for housing is speculative. The net growth in the Bay Area counties is actually negative - they are building more houses as people (and jobs) are leaving the region. That is not a sustainable situation.

If the growth in jobs (either through self employed individuals or salaried employees) is not sufficient to meet demands - the value of housing will decline. The Bay Area is fundamentally unsound economically. Other key areas of the state are also fundamentally slow in their growth prospects.

One other notion that was presented by the forecast. The ratio of self-employed to salaried employment in California has been shifting to self-employed. The forecast suggests that comes from a couple of sources - especially real estate and mortgage brokers. But there is plenty of evidence that a good portion of the self employed are people who are entrepreneurial in nature. To the extent that these people are liimted to the real estate industry - as rates rise - employment (and thus tax revenues) will decline. One could argue that many of these new self employed are outside of the real estate industry - but we need to think about that issue.

Clearly in the last couple of years the California advantage (the wage differential that was present in much of the last 40 year between the state and the rest of the nation) seems to have been narrowed considerably. The long term prospects for the state budget are not very good - if our reliance on the growth in real property prices has been the engine for growth. I will have more on this problem in a later post.

David Lean and Dickens

This evening we watched the David Lean version of Oliver Twist. Fagin was done by Alec Guinness. Like his version of Great Expectations - Lean seems to have understood what Dickens was writing about. This one was also in black and white. And again Lean used the elements of the camera to paint very different pictures in the stages of the story. Lean seems to have read Dickens well - he really catches the mood of the books. He also had a good idea for the characters - I am not sure who the actor was that played Bumble - but he was perfect. The relationship of adults to children - which is a constant Dickens theme is also presented well in this movie. This one too is well worth watching. Now on to Netflix to see if he did any other of CDs novels.

Why the Liberals are in sad shape in the US

The history channel did an excellent special on Lincoln recently which reviewed many of Lincoln's greatest speeches and at the same time had several historians offer views on what made him tick. The overall special was really good. But in one section on Lincoln's use of executive power author Gore Vidal commented that Lincoln had used legitimate power during the Civil War to do things he needed to do. He then first made a veiled reference to Bush and then made the following comment invoking emergency powers like Lincoln did during the Civil War to attack the war on terror is like starting a "war on dandruff." I am sure all of Vidal's buddies in the salons of the East Coast screeched with glee - but I will bet members of the 3000 people who were killed on 9/11 or the victims of the terror attacks faced by Americans in other venues did not think his comment was at all cute.

The Academic Bill of Rights

David Horowitz, the conservative commentator, has a movement to rile up academia. He argues that all of academia is mired in political correctness and the only way to solve the problem is to impose new legalistic rights on students and faculty which would lock colleges into endless litigation.

When I was a freshman at the University of the Pacific, I was also the county youth chairman for Barry Goldwater. In the middle of my first semester, in a course on Western Civilization, the professor began what turned out to be a six lecture exercise in pre-political correctness. He stopped our discussion of the Summerians and began to argue that Goldwated and fascism were the same thing. I listened to one lecture (or most of it) and by the second began to debate him in class. It was a wonderful experience. By the third class some other students began to feel empowered and raised questions both in support of me and the professor. The diversion limited my understanding of those parts of ancient history that we should have been studying but it was still valuable. When I first asked out my wife on a date - she went back to her dorm and one of her dorm mates said "Don't go out with him - he debates professors."

Horowitz's solution is simply the wrong way to go. Assume for a moment that higher education is pervasively PC. Even if it were, wouldn't it be better to try to get this generation of students to react in a different way - to begin to use their class sessions as a way to confront the intellectual slackers who resort to PC? At the University of Santa Clara, three conservative professors developed an extra program for students so inclined to learn about free market thinkers. The students read the great books of free markets and the Civil Society Institutealso holds lecture series on campus to stimulate debate and discussion on key issues. The American Council of Trustees and Alumni have even offered bounties to UCLA students who record leftist professors. Again, not a good way to solve a problem. The Civil Society Institute and creating clones in other academic settings seems a much better way to assure balance.

The point here is that universities should be a place of debate and discussion not litigation. Horowitz should think more creatively rather than reflexivly running to legalistic solutions.

Roman Hruska Reborn

In the Nixon era the two senators from Nebraska were Roman Hruska and Carl Curtis. Neither was given much credit for having brains. They were reflexive conservatives. When Nixon tried to appoint the notoriously unqualified G. Harold Carswell to the Supreme Court and the ABA refused to give him a qualified rating, Hruska defended the nominee with the phrase "of course he is mediocre but those people need a representative on the court too. " The joke at the time on the floor of the senate was "Which state has a senator who is dumber than (fill in one name of the two)?"

Well here comes Diane Feinstein, evidently running for re-election and worrried about the left (Cindy Sheehan has said she will run against DiFi) and declares she will support the filibuster against Judge Alito. In her statement on why she was opposing the nominee she made the following statement - "It’s a very different day and time than when Justice Ginsburg and Justice Breyer were before this Committee. There was not the polarization within America that is there today and not the defined move to take this Court in a singular direction." Indeed that is true. When Ginsburg and Breyer were considered they were considered on their legal background and demeanor. They both got huge votes for even though many members of the Senate knew what kind of justices they would be. But DiFi seems to think that it is ok to trash a nominee simply because of a disagreement in philosophy. Were the two nominees of Clinton moving the court to the left? Undoubtedly so.

It should be an embarassment that California's two senators now hold the title once owned by Hruska and Curtis - they are knee jerk to the left in the same way that the Nebraskans were knee jerk to the right. California deserves better.

Two quotes - can you fill in the rest of the story?

From the Sacramento Bee - January 28 - 1)The gap between rich and poor in the United States appears to be rising again because of globalization and other market forces that are limiting wage gains for low-and middle-income workers, according to a 50-state study released Thursday.

2) The Center on Budget and Policy Priorities and the Economic Policy Institute both criticized the massive federal tax cuts championed by President Bush as overly tilted toward the affluent.

This kind of nonsense is reported as news - but here is the clincher line - Elizabeth McNichol, an analyst at the Center on Budget and Policy Priorities, said states could raise or establish minimum wages, upgrade unemployment insurance systems, strengthen safety-net systems for the poor and adjust often-regressive tax systems to lighten tax burdens on the poor.

One wonders whether there is an agenda here in this supposed research. Cafe Hayek did a great job at pointing out the advocacy in this "research".

Zero Sum Games, Epiphenomenality and Political Correctness

Yesterday I attended a retreat for an organization I have worked with in higher education for a very long time. I presented some thoughts on two issues that seem to be evolving. First, at least among independent colleges, the middle class is not going to college. There is at least some annecdotal evidence that is also happening to the UC campuses - although the data is much less clear. The second issue relates to gender equity. In the last two decades the enrollments in higher education have shifted to a predominant female majority. Concurrently, the enrollments in basic and advanced programs in the science and math have declined. An OECD report last summer suggested that we compared to Mexico and Portugal among the developed countries in relation to our enrollments in the sciences and mathematics.

One of the errors of the liberal perspective is to think about the world as a zero sum game. Yet most of life is not organized in that fashion - my success does not often diminish your success. Yet liberals persist in seeing the world in these bimodal terms. About 25 years ago Julian Simon, in a demonstration of this principle, bet eco-doomsayer Paul Ehrlich that the world would not end in a decade. He offered Ehrlich the opportunity to establish some metrics to measure this issue and said let's bet the difference on the prices (of the market basket of scarce commodities). At the end of the decade Ehrlich was presented as the fraud that he has always been. He was simply wrong. He used a whole series of rationalizations to try to discredit the results but he looked even more foolish than he had in the start of the bet. Ehrlich looks at the world as a series of zero sum transfers, in the same way the Kyoto protocol drafters did. But that is not the way life works.

The gender problem in higher education is one that all of us should be thinking about - not in the zero sum sense. Currently about 57% of the students in higher education are female. When Harvard President Larry Summers raised the issue last summer he was derided into spending another $50 million in Harvard money to atone for his balsphemy. I wonder why a decreasing percentage of male students are choosing to go to higher education and to complete degrees. Is it because of the changes in curriculum in K-12 (as some have suggested)? Is it because this generation of young men have discovered that higher education does not matter? Is it because a large number of male students have been diverted from higher education because of other life commitments? I don't know. But it seems to me that we should be interested in trying to understand why this change has occured. One thinks that the problem was created inadvertently (epiphenomenality) but who knows. But the data looks to me as compelling - not in a sense that we should try to establish affirmative action or that we should reduce the number of women in higher education but more that we should think about why this generation of males is reacting differently than previous generations.

In the presentation yesterday one of the questions I got was about my sources. I have seen the data shifting for the last decade but an interesting article in the New Republic (Subscription Required but worth it) of January 23 the case is made that a series of factors has caused the shift. The first question I got was a political statement - my questioner said " The thought of you reading the New Republic boggles the mind." - this kind of question should not be limited by political correctness. But that may indeed be how we will handle the issue in the near future. That is a real problem for our society.

Davos and Old Line Media

This is the time for the World Economic Forum again. It is a classic closed loop. Fortune Magazine's Justin Fox made a novel argument about the forum of self-proclaimed heavy hitters. The founder of Davos created a semi-closed loop with hierarchies of players. Some people there get the E ticket (a historical reference to the best rides at Disneyland) while others get lesser activity. To assure that all these yahoos can yabber to themselves only the press that is acceptable is invited. The problem with that kind of event is it does not fit the realities of today's media culture. Ultimately, these kinds of discussions are more permiable than the sponsors seem to think they are. Transparency is a constant theme that will trip up both real and imagined leaders. Sometimes public comments can become magnified. But now sometimes so can private ones. The less transparent societal institutions are the less relevant they become. So while there might be a lot of dough in Davos, there may be a lot less importance than the participants think.

The importance of the event is a reflection of who attends. Christo- the idiotic cloth artist - is an attendee. Just what does he know about anything except conning the elites to put up his bizarre pieces of performance art? So is Michael Jordan - who is probably a pretty good businessman. But there are a whole bunch of other groupies that don't deserve to work at Walmart and certainly don't have a clue about how to build the world economy. What puzzles me is why some of the world's alleged economic leaders would listen to these bozos. So exactly what is the purpose of the forum? W.C. Fields once talked about being invited to join a club where he argued that if they invited people like him he would not want to join. Davos seems a lot like one of those clubs.

Ken Salazar and the Liberal Plantation

In recent weeks two prominent democrats have shown their true colors. First, Hillary in an MLK speech made a veiled (or not so veiled) reference to the "plantation" run by the GOP in the Congress - ending it with the code phrase "you know what I mean." Then comes Ken Salazar, the light weight senator from Colorado, who made a degrading reference to Justice Thomas yesterday in trying to explain why he was voting against Judge Alito. Thomas has written some very good stuff while he has been on the court. But the liberals, like Salazar, won't give him any peace because that is not the way that Blacks are supposed to act.

When Salazar ran for office, against Pete Coors, he clothed himself in the moderate cloth that would sell him in the state. But as he has operated in DC he has shown who he really is. Hillary, too, when she is trying to build her national campaign tries to put herself in the same moderate suit. But I don't think on a national basis many people will be fooled.

Jessica's Church

Tonight my wife and I and Mason went to the our son's fiancee's church up in Placerville. It was musical service with about a dozen praise songs. This is not the kind of music that I normally like but the energy in this service was palpable. The group- which was about 30 times the size of our own parish - was pretty mixed. There were lots of young kids. The music was rock based - mostly in the same key - but with a nice range of voices and a couple of songs that I thought were really inspirational. They had one bible reading - from the modern bible - and a couple of prayers and lots of music. The whole event was very positive. I guess I have a better idea why many of the evangelical churches are so successful.

The WSJ and the Legion of Christ

In yesterday's Wall Street Journal there was a front page story on the Legion of Christ, which is a Mexican Catholic order. For more than a decade I have worked with several universities that are part of the Legion. I have gotten to know more than a dozen priests, a host of seminarians, an even larger group of people who are active in the order either through the lay group (Regnum Christi) or simply as employees of these universities. I have worked on several campuses and have had the opportunity to get to know the people who are important in the order. I should say at the outset that I am neither a lay member of the Legion nor even a Catholic.

What bothered me about the article was what it left out. Indeed, the Legion has created controversy. They are a very young order. Like the Jesuits must have been early in their history, they are fervent. But that fervency is not intolerance. They set high standards for themselves. At the same time their priests are very much engaged with the world. The article also spent an inordinate amount of time on their relationship with the powerful of Mexico. One example they did not mention was that the priest who offered mass for President Fox before his inauguation was a Legionnary. Had they used that example they would have had to point out that the president elect celebrated a mass with some of the poorest children of Mexico City. The critics of the order argue that they minister only to the very wealthy. That is nonsense. The article did mention the annual missions trip where thousands of young people go into the poorest parts of Mexico and offer assistance. The contradition of the order, at least to some, is their absolute commitment to social justice without the silliness of political liberalism. The commitment to leadership involves a lot of discussion and direction to personal responsibility - but part of that commitment is to capacity building in that area. They don't look to government, as some religious groups seem to do first. In October I was on one of the campuses of the Anáhuac system in Mexico City to celebrate that campus' 25th anniversary. The School of Business, which is one of the most prestigious in Mexico held an international conference on capital formation in Mexico. They had a wonderful group of people at the conference - the two experts who were writing the Mexican equivalent of Sarbanes-Oxley, several prominent venture capitalists, representatives of several of the largest family owned businesses in Mexico. On the opening of the second day, the new rector of the university got up and congratulated the group on its first day of discussions - which had been fascinating. But then he commented that we also had a responsibility for the thousands of people who had just been devastated by hurricanes. He told a story of his own involvement in disaster relief but he then challenged his audience to help raise fund and money to help the people in those parts of Mexico. That same university provides some very innovative training for small micro credit banks that have stepped in to aid the very poor in developing economic opportunities for themselves. That kind of commitment has been demonstrated to me time and again. So the order does work with the very powerful (afterall their inspiration is to deal with leadership) but that does not mean they forget the obligation of all Christians to serve the poor.

In my home area, we have a Shrine of Guadalupe which was the Mexican church traidtionally in the Sacramento area. Several years ago the Legion took over responsibility for it. The local free newspaper printed a series of articles about the Legion's changes. Priests in the Legion believe in Catholic doctrine and try to live it faithfully. That means they are traditional in their view on a number of issues. And the local free paper played that up. What the paper did not say is that what was once a very sleepy parish with declining numbers was transformed in less than a year to a vibrant community center - with thousands of parishioners each week. In the places that I have visited where the Legion is offering its efforts, standards are not a mantra but a way to live. But I have not found that to be oppressive.

The WSJ (and the free paper) also covered charges concerning the founder of the order, Fr. Marcial Maciel. I have never met Fr. Maciel, although I know several of the first generation of priests in the order. I also have no personal knowledge of the charges that have been made against him. I do know that the charges seem to come up frequently and that each time they have been looked at carefully they have been dismissed. But regardless of their veracity, one should not underestimate the real contributions that this order has made to Mexico and to the wider Catholic community. I am consistently impressed with people who work in and around the order. They work very hard at trying to live their lives with some clear Christian order. The lay people value their children. Priests and lay also work hard on achievement. They make a conscientious commitment to being leaders in their community but also to serving the needs of those who do not have resources. Ethics and social commitment are a conscious part of the formation that they include in their educational programs.

Like most human organizations there are complex stories to tell about this order. But when I look at the contributions that individual priests and lay people make to their societies, I am impressed with the breadth and depth of their commitment to firm values and great implementation. I am not sure why the WSJ could not also get that message.

Senator Feingold's Bizarre Comment on Alito

This morning I was watching the final discussions in the Senate Judiciary Committee on Judge Alito and Senator Feingold seemed to say something very odd. He argued that we should not confirm a judge who uses personal judgement - as opposed to Constitutional principles to decide cases. Does that mean he voted against Breyer and Ginsberg?

Technowizzies

Today, my associate and I were on one of the Microsoft campuses in Washington. We had some excellent discussions with some of the senior Microsoft staff. We talked about our own consortium with Microsoft that allows our members to purchase software at very favorable rates - but as important we also get some good technical advice. Today we explored some new ways to connect campuses and students and faculty using the web and cellular phones.

Universities have traditionally been considered as places with Ivy Covered Walls. At the same time they are fundamentally based on the theory of networks. Several years ago we explored those issues at an international conference at Universidad Anáhuac del Sur in Mexico City. But as you think about these entities that have lasted for two millenia - those that will prosper in the coming years have figured out that ultimately the best universities are permeable walls - networks that at not limited by geography or by the artificial limits of disciplines. This new idea about the use of cellular phones would help build those new kinds of networks.

Microsoft is also developing some improvements in their Hotmail product which would allow colleges and universities to off load their emails (keeping their domain names) so that students (and alums) can stay connected to their university. Steve Sample, the president of USC, talks about his university in terms of "lifelong and worldwide" - he understands the absolute necessity for universities to make those kinds of connections and to build their linkages. Some of our discussions at Microsoft today show that others have also begun to think about these kinds of exciting opportunities.

Great Expectations

One of the best things about Netflix is their breadth of offerings. Beginning last week I began to relook at Alec Guiness movies. I am a great fan of Dickens so when I realized that one of Guinness' early movies (actually done with the director David Lean) was Great Expectations - it was immediately on my list.

I am such a fan of Dickens, that I must have a dozen versions of a Christmas Carol on film. (Yes, Alister Simm is the best one.) Each Christmas we have a tradition, that is mostly me now, of watching at least a couple of the versions in the days leading up to Christmas. Dickens characters constantly come up in my newsletter for the Association I work for. And the list of Dickensean references that one sees in every day life is huge. Pip, the name of the main character in the novel is a small seed or also the smallest unit of currency. Dickens had a way with names conveying more than just a name. Gradgrind, Pumblechuck, Scrooge, and even Pip all show up occasionally in our language.

When I was first in graduate school I was a bit bored. I came from an undergraduate degree at University of the Pacific to my first graduate work in International Relations at George Washington University. I was,at first, a bit intimidated. GW had a big time rep in what I thought then was a big time city. But I soon discovered that I could compete quite well AND that UOP had prepared me quite well for this program. So I began a process of self education. There was a big bookstore right above Foggy Bottom and I began about October to read authors. I would choose an author and buy all of his novels - by the end of the year I had read all of Hesse, Sinclair Lewis, Twain, Upton Sinclair, and Dickens (except Bleak House and the American Notes - I have since finished American Notes - which is really pretty good but Bleak House remains unfinished). I even took on some Thomas Mann. My idea at the time had been that I had spent my undergraduate career assiduously not reading novels and so I should get a somewhat organized look at some of the great novelists. That approach had two defects. First, when you read all of a writer's work at once the characters blend together. Second, although I think I got something out of all of the writers I chose - it is an odd list. I never got around to Tolstoy or some others that would round me out a bit. But the process kept me interested during that first year of graduate school. I never did finish a degree at GW - got into a riff with them about my language exam (it was pretty stinky, I did not take their language prep course and so I got a note I had passed and then failed, I protested and the Dean and the German department simply passed the buck saying if you convince the other I will change the result - so I left and went on to work in the White House and finally after a summer institute at the Harvard Business School went back to USC and finished a doctorate.)

The story in Great Expectations is well known. A country boy(PIP) is the recipient of a benefactor's gift which he suspects wrongly comes from one person but comes actually from another. He moves to London, pursues the ward of his supposed benefactor (at first unsuccessfully) and then discovers that his benefactor is actually a convict that he aided when he was a waif in the country. What I have loved about the story is the way that Dickens develops the characters. When Magwitch (the convict) is first seen on the screen he is truly scary. The lawyer, who is a crimminal lawyer (should be a clue but when I first read the book I completely missed it), Jaggers is typical of Dickens' pictures of lawyers - the lawyers in Bleak House are even more stark but this one serves his purpose. Miss Haversham (the character Pip thinks is his benefactor) is eccentric. Uncle Pumblechook is how Dickens always seems to portray relatives. Joe, his first guardian, is a wonderful mix of simple honesty. Estella is at first unattainable but has a good heart. Bentley Drummel, who Estella marries but then dies, is an upper class lout. So all of the characters are well drawn.

The movie is also striking because it has some very young and futurely famous actors. Herbert Pocket (Pip's room-mate and guide for his time in London) is John Mills - who went on to a distinguished career in stage and screen. Pip (mature) is Alex Guinness and you really have to strain to see him - the features are there but he is very young.

In the end the story is a good one. Magwitch finally reveals himself to be the benefactor. Seems he was sent away to Australia to be a sheep farmer and made a fortune there. He contacted Jaggers and because Pip had been kind to the convict when he was trying to escape from a prison ship - Magwitch drops this transforming gift on the young lad. The plot thickens because a part of the sentence that Magwitch is under is not to return to England. Pip figures this out and tries to spirit both he and Magwitch out of the country (his love interest has forsaken him so why stay) but Magwitch's former partner betrays him and he is sentenced to be hanged. Luckily, in a normal Dickens twist, either through the accident that happens in his capture or as a result of old age, Magwitch escapes the hangman by dying first. But because Magwitch is not a blood relative of Pip - the young ward loses his annual stipend. Luckily, because Bartley Drummel has died, he rehooks up with Estella - who does inherit the fortune of Miss Haversham and they sell the estate and (presumably) live happily ever after.

There are a couple of other versions of the story in film. This one is good because Lean used black and white very well. The goodness of some characters and the evil of others is extremely stark - just as in the novel. The transformation of Magwitch - which is partially done with the use of lighting and effect - is especially stark. The movie is well worth seeing, especially, if you like Dickens.

Kyoto and Reality

In an article in the WSJ this morning - the reality of rhetoric versus action is highlighted. The US has been criticized by our European friends and other signers of the Kyoto protocol on greenhouse emissions because we did not sign the thing. But the reality between yammering and action could not be clearer.

The editorial comments -

The U.S. thus saw a modest decline in greenhouse emissions of 0.8% between 2000 and 2002, according to data from the U.S. Department of Energy. Overall since 1990, American greenhouse emissions are up 15.8%, but this still puts the U.S. far ahead of many of its European and Asian critics. And this despite U.S. economic growth (and increasing energy demand) that has far exceeded Europe's.

The article can be found at The Wall Street Journal (Subscription Required)

John Shadegg in the WSJ

Arizona congressman is in the WSJ today with a stunning article about the leadership fight in the house (February 2). In part he says

Republicans promised the American people two things in 1994. First, we promised to rein in the size and scope of the federal government. Second, we promised to clean up Washington. In recent years, we have fallen short on both counts. Total federal spending has grown by 33% since 1995, in inflation-adjusted dollars. Worse, we have permitted some of the same backroom practices that flourished in the old Democrat-controlled House. Powerful members of Congress are able to insert provisions giving away millions--even tens of millions--of dollars in the dead of night. The recent scandals involving Duke Cunningham and Jack Abramoff have highlighted the problem, but this is not just a case of a few bad apples. The system itself needs structural reforms.
This has been clear for some time. I did not discover reform as an issue--like Saul on the road to Damascus--when I entered the majority leader race. It has been an integral part of my record, not at one time a decade ago, but constantly, year in and year out since 1994. Yesterday John Boehner wrote on this page about a proposal to reform the earmark process offered by Rep. Jeff Flake. While Mr. Boehner is suddenly talking about this idea, I was one of the first co-sponsors when it was introduced last spring.

The article can be found at The Spirit of 1994). It is well worth reading. Then send something to your GOP member - perhaps support for Shadegg's candidacy!

Is Ray Nagin really that stupid?

Yesterday at a commemoration of Dr. King, New Orleans mayor commented that the Big Easy will be a "chocolate" city again and that it was God's will for it to happen. No comment on his seems adequate.

Last Holiday

This afternoon we went to see the new version of Last Holiday. In the original Alec Guinness did a fine and understated job. In this one Queen Latifah does the same. I am constantly amazed at her versatility as an actress. In a bunch of different movies she seems to rise to the part. In the two movies out of Barber Shop, she played one character. In Bringing Down the House, a slightly different one. In Chicago she showed off both her singing and acting ability. In this one she is a bit frumpy at the start, a lonely, shy, single woman. As in the original - she gets diagnosed with a rare but fatal disease. If I remember Guinness' portrayal he dies in the end - but she does not. In all of her movies she has a graceful way of interacting with other people in the movie and in this one she does that well. The critics, for some reason, have not given this a strong response - but I liked it because the characters were engaging - the supporting cast is interesting (if a bit stylized) and the message is uplifting. It is an affirmation of good behavior. But not in a preachy way - it is very entertaining.

Blunt Glisters

Over the weekend Roy Blunt claimed victory in the fight for leadership. I don't have any inside knowledge but I would be surprised if he has locked up the necessary votes. There is just a bit too much glister here. (All that glisters is not gold.) The GOP would be foolish if it went such a traditional choice so easily. But we will have to wait until February 2 to see how silly they are.

Rough and Ready Days

Old West in Sacramento California, originally uploaded by armandesco.

This is a shot from a friend in Mexico who put it on his blog. We took him to Rough and Ready days a couple of years ago. It is a summer festival in the small town of Rough and Ready (the only city to Secede from the Union). The town claims 1500 residents - but that count is generous. The summer festival - to commemorate the actions during the Civil War includes a parade (it runs twice because it is not long enough if it only goes once) and food booths and all sorts of other community activities. It is in Nevada County and lots of fun.
In college I was one of those people who used Rough and Ready as an address, although I never lived there - it just sounded like a town I wanted to be from.
We had a good time that day. And Armando is actually a pretty good photographer. His flickr site is at Armando's Flickr SIte He works for a university in Xalapa, Mexico but is also in the process of starting a restaurant there. There are pictures of his new place on the site. It looks like a great place.

Leadership in the House of Representatives

On February 2, the House will vote on leadership. Clearly, we could do better. On the democratic side, we have Nancy Pelosi - a shrill liberal from California. In her vision, anything to the right of San Francisco is reactionary. Clearly, she represents what is wrong with the democratic party nationally (with Harry Reid and Howard Dean the party is in no shape to provide any guidance on any idea nationally). But the real fights are in the GOP.

Again, clearly something is drastically wrong. The role of K street, not just with Abramoff (all though he is bad enough) is too pervasive. That is shown by the role of set asides in almost every piece of legislation that is passed. Transportation bill, agriculture, energy bill - all loaded with narrow junk. Then there is the ability of former members to get on the floor at any time. A lot of retired members go up to K street. Why should they be allowed to go back on the floor when the House is conducting business? Then there is the open-ended junket problem - all sorts of interests can pick up a member and his staff fly then anywhere in the world for who knows what. In many cases the costs of the travel are required to be reimbursed but that is not enough. David Drier, the Chair of the Rules Committee, is working on a set of rules changes and when I heard him speak he at least had the right direction on many issues.

The real issue comes down to who is in charge. J.C. Watts, the former Oklahoma congressman, had a quip that the GOP became arrogant in 10 years while it took the dems almost 40 to do it. The leadership problems in the Congress are not just in this generation. Who can ever forget the Sleazer of the House - Jim (the booksalesman) Wright? The fight this time, comes down in part for one of the lesser positions to three people - John Boehner (Ohio), Roy Blunt (Missouri), and John Shadegg (Arizona). Boehner has been an interested chair in an area that I know something about (education). But he is a walking sign post for many of the things that are wrong with the Congress. He has a daughter that works for a subsidiary of the largest provider of student loans and a whole bunch of ties that look like conflicts of interest. Roy Blunt is Mr. set aside and the current majority leader. Neither of these guys seems like a likely candidate for change. Then there is John Shadegg. Yesterday a group of influential leaders from the blogosphere endorsed his candidacy.

I am not sure who the best candidate is. Clearly it is not Blunt or Boehner. What I am impressed about is a developing movement among some members to understand that some fundamental changes have to be considered and adopted. Dan Lungren, who is from the Sacramento area, and new this term (but has a lot of prior House experience) seems to be seeking out some new thoughts. He was an early opponent of set asides. He also has raised flags about his neighboring member (John Doolittle - who has the twin talents of being both sanctimonious and has a long and inglorious history of skating on the bounds of propriety - from his role in redistricting, to ties to Abramoff, to many things which are less visible). I am impressed with Dan's positions here. Hopefully, his positions will represent the new majority. If they do not, and if the GOP leadership does not recognize the genuine distrust of their position that is widespread around the country, then we might be blessed with a Pelosi speakership at the end of the year.

The Alito Hearings

I listened to a couple of hours of the hearings yesterday while I was driving to and from Macworld. I was amused and perplexed. Biden and Kennedy were laughable or simply pathetic. Neither could seem to carry a thought to its natural conculsion. Biden was covered at radio blogger. - It is worth a listen! Schumer was Schumer; his parents should have taught him a bit of humility. But what got me about the hearings was not the quality of the questions, Alito seems up to the task of responding and looks to me like a pretty good judge. What got me was the odd and curious nature of the process. William Fulbright, an icon of an earlier democrat era, used to say the President should have the opportunity to appoint any "damn fool" he wants to. Not that the President should be given a pass - but the recognition that when a person is elected to the presidency he should have the opportunity to shape his appointments. But the opposition in this looks like petulant school children flailing at not being picked for dodge ball. There are good questions for any court nominee - but membership in a Princeton alum group with conservative leanings is probably not one of them. Biden's questions in this area were the worst. Hugh Hewitt had a very funny bit which contrasted his long and rambling question - expressing confusion - with a speech he gave a couple of years ago at Princeton. The process did not show the "world's greatest deliberative" body in a positive light.

Then this morning Durbin kicks it up a notch by commenting that Alito is a Springsteen fan. Does anyone else think this is funny? Are the minority thinking of bringing in Roseanne Roseannadanna? That would add a counterpoint of lucidity at this point.

Molly the Invincible

Molly and Me, originally uploaded by drtaxsacto.

This morning we had to put our dog of the last 10 1/2 years down. We've written about Molly before. She was a unique dog.

She actually chose us. In 1995 we decided to get a puppy. Emily was going to college and so we went out to West Sacramento to a place that had golden retreiver puppies. We sat on the front lawn and one of the little fur balls crawled up into Emily's lap. That was that.

She had a spirit that inspired me greatly. When she was a puppy she had two incidents with a skin problem that required her to be shaved clean. Both times she was a pathetic fur ball without fur. But she kept the spirit.

We took her to puppy obedience school and some rat bag dog snipped at her - so she was always cautious around other dogs. She and I began to do walks. I developed a new group of friends in the neighborhood who knew Molly and me but no one else. When others in the family walked her (when I was away) they were always asked where is Jon? She had an amusing habit of picking out one or two dogs that walked in the opposite circuit and being very fierce - except, of course, when she was off the leash.

She only learned one trick. That was to take a dog bone on her nose, flip it up and then catch it in her mouth. I tried other tricks but she simply refused. One was enough.

About five years ago we noticed a mass on her left rear leg. She began to limp and so we took her to UC Davis where they operated and then tried radiation to eliminate what turned out to a mast cell tumor. (very common in Goldens) The treatments took a lot out of her- both the surgery and the radiation. But as time kept going she began to recover. You could see her constantly trying to extend her walk a little bit each day.

Then last Spring she developed a limp in her front paw. We again tried a bunch of stuff and after a great deal of agony we again went to Davis and after a series of tests decided to amputate the leg. It was a sarcoma. The prognosis was not good but we decided that it was the best alternative. We visited her soon after the surgery. She wimpered and was in real pain. It was a horrible sight. We stayed with her for about an hour and then took her home the next day. When we left her the first night (only to come back the next day) she whined pitifully. The first night she was home she was clearly weak. She wimpered in pain - but constantly tried to show her spirit. But over the next several months she began to recover. We were able to go back to the dog park in our neighborhood.

Molly loved the dog park. She was adept before her surgery at catching a frisbee. Even after she lost the leg she would make a good attempt at playing frisbee. It was a good way for us to communicate. Even without one front paw she would occasionally make a heroic catch - leaping into the air to nab the frisbee. But what she really liked about the dog park was not that or the other dogs but introducing herself to all the other people at the park. People were really her main mission. Over the summer she slowed down a bit, became less interested in running but still loved to meet the people.

A couple of weeks ago she began to show a limp in the rear leg that she had had the mast cell on. We took her back to the vet. She recommended we do some incremental steps. But nothing seemed to work. Then last night about one am Pete noticed that the leg had broken. We took her to the emergency vet and found that her leg indeed had a compound fracture and more importantly that the leg looked like swiss cheese around the break. The vet in the emergency room said that looked like cancer.

So we took her home one last time. She slept in my home office again and I stayed with her to make sure she was comfortable. Then this morning we went back to her regular vet, confirmed the situation and decided that it was impossible to guarantee any quality of life for her.

Officially Molly was Peter's dog but she was really a member of the family. Each of had our roles with her. I walked her. Peter sneaked her biscuits each night. She also preferred to sleeep in his room. Quinlan took her to the vet most often. She was often Mason's protector. And Emily, even though she did not live here during Molly's tenure, was her occasional friend. All of us, except Emily who lives in LA, were with her when she expired. Jessica, Peter's fiance was there too. She ws always there for our important events. A constant warm presence whenever we came home regardless of the events of the day. She was always ready for a walk. When she decided that one of us was not paying enough attention she would nudgle up to that person and bring us back to the basics. She had a wonderful relationship with her vet. She was, except for today when she clearly was in pain, eager to go to the vet - it was another chance to see people - all sorts of people. And the vet and her staff loved Molly.

Molly was a wonderful part of our family. But what she taught us about spirit and love will stay with me forever.

Add one more

A few months ago I made the modest suggestion that we create an island where people like the entire Jackson family be confined so that we do not have to listen to their endless prattle. I suggested adding a lot of others - Cindy Sheehan for one. But then Pat Robertson comes up with what one commenter called the idiotarian perspective - when he commented that PM Sharon's stroke was an example of the wrath of God. That tops a series of statements of the same level of abstraction and thought that should consign this moron to his own island. Unless his kind of pronouncements would be enough to drive the others on the island nutty.

Pete and Me

IMG_6768.JPG, originally uploaded by drtaxsacto.

The smiley young man next to me is my son Peter. This was the second year in a row that we went to a national championship game. Pete is a real fan who also knows the game. One of the highlights of the game for us this year was the generosity of the fans next to us. When they learned that Peter is getting married in May, they all contributed their souvenier beer glasses to his glassware. By the end of the night he had a matched set of 10 high quality, unbreakable stemware.

Rose Bowl 2006

Rose Bowl 2006, originally uploaded by drtaxsacto.

Last night Pete and I went to the Rose Bowl. Needless to say, this is not the way the game ended. There were a couple of strange calls - especially an interception by SC late in the game that was called an incomplete pass. The Texas receiver looked, to me from the game and in the replays I saw, to have control of the football and thus was eligible to fumble.
I was struck however with two things. First, a good deal of the game was spent standing up. It was truly an exciting contest. I would have liked SC to win. But in addition to a couple of calls that I would have questioned there were a number of missed opportunities. It looked to me that the fourth down that we failed to convert should have been an opportunity for a short pass. But who knows whether that would have worked.

The second thing was the Texas fans. Last year at the Orange Bowl, the Sooners were insufferable. We got a lot of "you guys don't belong here" the night before in the bar. But this crowd was different. At halftime I was waiting to go to the head and a Texas fan was in front of me. We struck up a conversation and both of us ended with - this is a hell of a game and we hope our team wins - but it is a hell of a game. As we walked out, several Texas fans said something like nice game.

Who knows where SC will be next year? LenDale White certainly showed he is going to be a good force. So did a couple of other players. So, we wait until next fall to see. But it was a hell of a game.

One dilemma of modern life

My wife and I were talking about what to do with our grandson tomorrow. She would like to go to school for a couple of hours and I said, I could probably take him to a movie. We looked at the G rated movies - Cheaper by the Dozen, Chicken Little, Pride and Prejudice, Chronicles of Narnia, Legend of Zorro and Yours, Mine and Ours. Some of those would not be appropriate for a three year old even without the gore and sex. Mason is three, smart and verbal - but we debated whether Narnia (which I really enjoyed) would be appropriate for him.

So I looked up Cheaper by the Dozen - which we saw when my wife and daughter sat through the interminable King Kong - and which we thought was mildly entertaining. The "critics" gave it a D. Then I read the people's critics reviews. I found two things interesting about their reviews. First, some were as well written as the professionals. But second, their general rating was a B. My own rating was a bit lower. The movie was formulaic. It had the required percentage of slapstick gags. It had the love interest (or several) between the two competing families. It had some pet tricks. It had some mildly off color humor. But in the end it told a story that all ages could enjoy.

I am not sure I understand the ratings system. And, at least for me, a PG and a G are about the same. But it seems to me that people who understand the business would do a bit of market research. The critics and the film companies seem to want to push stuff at us that does well critically. Were I in the same business I think I would try for a different marker.

A Tax on Celebrities

In the mid-1930s when California adopted the personal income tax - the celebrities ran a campaign against the new personal income tax. When I was doing my dissertation I found a political brochure by something called the "Committee to Save California Jobs" - in it the claim was made that the then new income tax would lose key jobs in the state - like those for "cooks, butlers and chauffers." Were the tax not eliminated - the celebrities would leave California for less taxed locations. That convinced me that celebrity political types were mostly daffy. Not all, but most. The initiative actually lost in 1936 (with arguments like that it is indeed a surprise).

Think of the salutory effects if celebrities were made to live by their own expressed principles. Then in the Weekly Standard, about six months ago, P.J. O'Rourke made for a new tax policy --

"The greatest pleasure of running a country (although no politician will admit it) is getting to tax people. We Republicans decry exactions and imposts and espouse minimal outlay by the sovereign power. But we control all three branches of government. This won't last forever. Let's have some fun while we can. Moreover, the federal deficit is -- contrary to all Republican principles --huge. Even the most spending-averse among us wouldn't mind additional revenue.

America's media and entertainment industry has a gross (as it were) revenue of $316.8 billion a year. If we subtract the income derived from worthy journalism and the publishing of serious books, that leaves $316.8 billion. Surely this money can be put to a more socially useful purpose than reportage on the going forth and multiplying of Britney Spears....

I suggest, therefore, a Celebrity Tax with a low-end base rate of, mmm, 100 percent. Furthermore, let's make the tax progressive to get some Democrats on board. (Probably not including Hillary, Ted, and Barney Frank. They'll be working nights and weekends to pay up.) Given the modest talent of current celebrities and the immodest example they set for impressionable youth, we'll call it a "Value Subtracted Tax," or, better, a "Family Value Subtracted Tax." And it will be calculated on the celebrity's net worth."

What a concept!

The World is flat.

A couple of months ago I began a post on Tom Friedman's wonderful book The World is Flat) and I never got around to finishing the post. There were a couple of things that prevented me, besides procrastination. The first was a genuine desire not to just regurgitate the substance. Friedman ties together some important ideas that link the fast process of technology with globalization of commerce. Those that understand the trends will prosper and those that do not will not. Second, I was a bit bothered that Friedman does not seem to clearly recognize the forebearers including writers like Kenichi Ohmae (a whole bunch of great books on the then increasing borderless economies) and Kevin Kelly (his original writing on New Rules for the New Economy gave many of us a first look at the possibilities of technology - in a speculative manner that now are realities in Friedman's book).

But the book is one of the most important business books in a long time. I gave it to my daughter's boy friend today as a Christmas present. It reminded me of how important the ideas are and what a great contribution that Freidman offered us all. In November I heard Friedman give his summary of his book. It was really quite good. He is good at explaining the ten trends he thinks are changing the way we interact - including things like WIFI and just in time practices. He is planning to go to business school in the Fall. This would be a good place to begin thinking about the themes that will occupy him for the next couple of years wherever he is accepted.

Hitchcock Presents

I've had a bad cold for the last couple of days and so have been mostly consigned to bed. One of the gifts I got for Christmas was a set of the first season of Hitchcock's show that ran for about a decade. There are 39 episodes, sans commercials. I was surprised by how good some of them are. They seem to have picked out some big stars of the day as well as some people who would be stars later. John Casavettes was very young when he played an escaped con. Each of the stories ends with a twist. For example, in the Casavettes story, he breaks into a house with a woman alone after breaking out of prison. At one point he forces her to answer the phone and she speaks to her mother. Unfortunately for Casavettes, who is feeding her the responses, she is deaf. So as he is leaving he is caught.

Barry Fitzgerald is also the star of their Christmas story. He gets out of prison as a hard core crimminal but the only job his social worker can get for him is as a santa. He meets a tought kid who covets a toy airplane. Barry has words with the kid - who said he intends to steal it. Barry instead, in a senseless act of kindness, and in an attempt to convert the kid off his own path, steals the plane and delivers it on Christmas eve - only to be caught immediately. But his social worker comes down and covers his tracks for him and gets him out. A nice story.

The best one so far has been the one on Lizzie Borden. Every child knows the song about Lizzie Borden but this one speculates that Emma Borden, Lizzie's sister, actually did the crimes. That led me to a web search to find out about the crime. It seems that the story on Hitchcock, included many of the important details of the case. The story became sort of a Doctorowed history. It includes a pushy female reporter who discovers where Lizzie hid the axe. (In the real case the axe seems to have been burned). There is an interesting twist because the reporter is from the Sacramento Record. (Not a paper in Sacramento but one in Stockton).

The series in total is an interesting melange of very good plays with a twist and run of the mill 1950s drama. But what is also interesting is that they get better as you go through the year - they seem to have learned how to work thourgh a thirty minute format. If you like Hitch, the introductions and conclusions are worth seeing on their own. They have a consistently wry sense of irony. One other thing strikes me about the series. As a bonus feature, they have a short presentation on how the series was developed. It seems to have worked on a very small staff. Seems very different from what I understand about today in television.

Why is it so complicated to get simple taxes?

At the end of each year, I go through a ritual where I pay property taxes and estimated federal and state income taxes. Property taxes in the state are pretty simple - based on a formula - 1% of market value and then 2% a year. Income taxes are not. We tried in 1986 to simplify the income tax and did a reasonable job of it but it now seems obvious that the time has come to cut away part of the thicket.

So where is all the thicket? In my view the most likely is the Alternative Minimum Tax or the AMT. The AMT was created to assure that some very small portion of the taxpayers paid their fair share. So, after you have done all of your calculations on deductions and credits you then do a second calculation to discover whether you paid your share. If not, then you get to add in this extra amount. What has happened in the last several years is the AMT has begun to bite with a vengeance capturing more and more people in its net.

Adam Smith warned about the potential perils of an income tax in the Wealth of Nations. But because it worked well as a revenue source in the 20th century there is strong support for keeping it. There is a tension here between fairness and simplicity. If you take into account the manifold variations in lifestyle and circumstance you will have a fair system but it won't be simple. On the other hand if you want something simple - perhaps a straight percentage tax on all income - it can be simple but does it stay fair?

So how do you solve this question? In my mind, the President's commission on tax reform came pretty close. They zapped the AMT in exchange for lowered rates and for other changes in the code which some people think are hallowed ground. The proposal would suggest that you can only deduct mortgage interest for something like the median house price in your area. Thus, the code would become neutral on housing. If you wanted the 40 room neo-gothic mansion - and had to borrow tons of dough for it you would not get subsidized. You would get a credit for the mortgage only to the extent that it does not exceed the regional average cost of housing. The proposal also takes a whack at charitable contributions by putting a floor on them and then move the item above the line so that all taxpayers could take advantage of that provision. Both of those changes are likely to get a lot of traditional interest groups very grumpy. And the "law of the few" could make this fight a very tough one. When a benefit is provided to society that is diffuse at the expense of a benefit that is concentrated - the concentrated one often wins. That is based on the notion that most people will not see or think about a diffuse benefit but those who hold the concentrated one will scream at any variation in the way they are compensated. Unfortunately, as we learned in 1986 real tax reform depends on a good mix of leadership and commitment. Which Jeff Birnbaum and Alan Murray so brilliantly demonstrated in Showdown at Gucci Gulch. In this era, although the changes would help us all, there may not be the same level of either leadership or commitment.

Progress/Congress

An old joke said - what is the opposite of progress? The answer is congress. The Senate has voted to eliminate the Byrd amendment. You may remember that this amendment by former KKK member Sheets Byrd "protects" companies from "foreign dumping" - in reality what it does is set up protectionist walls by collecting tariffs that are then sent directly to the companies claiming the dumping. Somehow in the logic of Senator Sheets this kind of legilsating makes sense - even though it makes us less competitive and rewards industries who whine to the government instead of trying to compete. The amendment would take effect in two years - that is way to long - but if that is the price to get rid of the monster porkbarrel then so be it.

The difference between fishing and catching

Some of the Scenery on the Delta, originally uploaded by drtaxsacto.

Today I went out with some friends on the San Joaquin delta to do some bass fishing. Need to be sure to tell you that this was a day of fishing not catching.

One of the best things about days like this is that the difference between a day of catching and fishing is mitigated by the scenery. Today we saw a couple of fish, a sea otter, some herons, a red hawk, and lots of sight like the above. The rain came a couple of times - at the end of the day quite hard. Oh, by the way, we did not even get a bite. It was cold - so no one was getting much action but ours was zero.

It was cold, I was pleased to have some long johns. But it was also quite relaxing. The subtleties of color and water and wind presented a canvas that was worth the look even without the fish. (although I can say, that days with catching are also nice.

The True Spirit of Christmas

Mason and the Tree, originally uploaded by drtaxsacto.

When we got our Christmas tree this year, Mason spent a good deal of time, while his dad was cutting down our especially wonderful and monster sized tree, just being a kid. He played in the dirt. He actively went through the farm looking for trees his size and for the one we actually chose. The actual tree we got this year was about 15' with a huge trunk and with lots of wonderful branches. But after we had made the selection he looked around for things to fascinate him. As all boys his age he was interested in the pebbles on the gravel road. He was interested in the other people. He was interested in the vast varieties of dirt samples - the size and color and muddiness which are often lost on adults. But he did not miss all those things. And what is more he brought us into his explorations. Showing us all those things with the wonder that they should be due.

The State of Capital in the US

Over the Thanksgiving weekend I had a discussion with one brother about the current economic situation. He commented that he was concerned about the twin deficits of trade (current fund) and government. I told him I was less concerned. Over the next couple of weeks we have had a lot of email exchanges about the issue.

His concern is that we seem to be "buying more than we sell" abroad and seem to be giving up some key industries. He is also concerned that the federal deficit is, if anything, understated. On that I agree. However, the situation is a bit more complex.

On the trade deficit, we do have a continuing problem with buying lots of stuff from other people in the world. A lot of the democrat critics seem to think that somehow it would be better to get shirts made in the US instead of where they are made now. And that we would be much better off as a result of keeping a lot on industries in our midst and our country. I think that is wrong for a number of reasons. First, is measurement. I am not sure we actually have an accurate count of the whereget and wheregone of trade. About a third of the total current fund balance is intercompany transfers. When GM makes a Suburban in Leon that shows up as a deficit. At the same time I am not sure that the numbers we collect accurately count the number of idea moves and their value. A recent book from the World Bank makes that point - and I will deal with that in a later post - but we are quickly moving from the physical production (which we are not as good at) to the intellectual production of goods. Those, at this point, have a much higher return. A second broad issue in my thinking relates to demographics. The US has been a huge importer of people. More than Europe. More than Asia. That has done a couple of things for us - it has created some new complexities of life through languages and customs that seem out of place. But at the same time it has lowered our demographic profile at a time when places like most of Europe and China are experience demographic imbalances. Europe has an aging population and a welfare system run amok. China has an aging population and an imbalance of males to females. In the long term neither trend is helpful to economic growth. Thus, I think the net gains from trade are significant - we are transitioning into an economy (if not already there) where mobility of capital is real and consistent. In the long term that can mean some greater variability but the net benefit outweighs the net potential risks. It seems silly to me to think about trying to get back the auto or steel jobs or other industries that have moved to off shore. At the same time we need to be energetic in promoting better educational opportunities to assure that we continue to be at the forefront of new areas of economic growth. Both of us agree that we have not been as good at that in the last couple of years as we should have been.

On the federal deficit, there are two trends. I do not think we have properly accounted for some potential liabilities including the new Medicare program and Social Security (curiously my brother thinks with "minor" changes the Social Security problem will go away). But at the same time, I think some of the contributors to the deficit are justified - the efforts in Iraq - if successful - will pay some significant dividends. (I realize that is an if). I liked Bush's emphasis on creating an "ownership" society although wish he would have put a bit more political muscle into his proposals. I am also worried, as I have commented before, that this president has been a bit too willing to allow new types of federal spending to be created on his watch.

On the whole I am less worried about the trade deficit and concerned about the federal budget deficit than my brother. He speculates that the long term problems will increase interest rates significantly and could produce a round of pretty agressive inflation. I think we have positioned ourselves a bit better than he does. There are risks ahead but I believe they are managable. The World Bank book makes some interesting comments including one that capital is not simply a set of physical assets but it is also (economic) climate and the intangibles that are created when people have the opportunity to be creative.

WIREYAPS

The controversy about the Bush administration's use of monitoring of phone conversations in the US seems to have created quite a storm. One wonders what the real issues are here. Last Thursday the NYT published a long story on the program which, by all press accounts, goes back to 2002. In that year the Administration captured a top Al Qaeda operatives computers and cell phones and ran traces on all of the numbers on both. They began to do two things with that information. First, they did some surveilance of phone calls and other communications that took place on foreign soil. Second, and this is where the controversy started, they also did some surveilance of people on American soil. It is unclear whether this involves a lot of US citizens or merely people who are on American soil.

As I understand it, the government has the power under something called the Foreign Intelligence Surveilence Court to ask for warrants to review cell phones and emails - and that, based on the public record, these proceedings are a) secret and b) almost overwhelmingly in favor of the government position. Thus, it is puzzling why the administration chose not to use this process. The FSIC uses a lower level of proof for a crimminal warrant than a traditional crimminal court. But for some reason the administration chose not to use that procedure.

In 2003 the ranking Senate democrat on the intelligence committee questioned whether this new procedure was a good idea. One of the interesting things is that Rockefeller has declined to comment on the story but the usual suspects like Senator Levin has chosen to yap about this.

I am worried about massive extensions of powers by the government and it seems odd to me that the adminstration chose to use this new authority without going through the FSIC process - which seems to be quite accommodating. However, at the same time many of the loudest critics seem to have little regard for the very real peril that Americans face as a result of a worldwide terrorist network. On balance, while I am skeptical of the procedure, I think a lot of the yapping about it seems based more on the commenter's hatred of the president than on some sound policy basis.

The president did a good job last night and today in making his case. We do live in dangerous times. While we should be cautious about massive extensions of governmental power, we need to be able to keep up with the technologies of the terrorists. They have shown a real willingness to use all sorts of new technologies to chase down their looney goals. All of the weltschmerzing about the Patriot Act have been mostly silly. The perils of the Act have been more perceived than real. Librarians are not being jailed or victimized. For the most part, except for the constant presence of the TSA in airports, most people don't realize any negative effects of the Patriot Act. We did find out that FEMA is no better prepared than before as a result of Katrina. But that is another longer and more complex story. (The MSM did an abysmal job of reporting the basic facts about the disaster including the fact of who was really hurt in the tragedy.) But all of the baloney about how terrible the Patriot Act could have been have been classic chicken little exaggerations.

The Congress should extend the Patriot Act before they go home for Christmas. They should also lower the level of rhetoric a bit. The terrorists are bad guys. We should take them seriously. They are not a single regime - but neither have they been provoked by our intervention in Iraq. If the insurgents in Iraq are not successful and if the Iraquis are successful in creating a democratic state in the Middle East, it will send a powerful message to the other beacons of terrorism. We need to lower the rhetoric a lot on this but I think the President is mostly right here. I am not worried about my phone calls and emails and if I did send something to Abdul or call him - it might not be a bad idea to monitor it.

The last issue to discuss is whether this is a Nixon redux issue. People like Senator Levin seem to think it is. Bush (Nixon) is being portrayed as doing stuff in the clandestine arena without regard for the law. Some in the press also seem to see this scenario. But his press conference today belies that setting. I thought the President's defense of his tactics was quite strong and his ultimate argument that announcing the program widely would allow the terrorists the ability to shift tactics is true. But some on the left want to think about reliving Nixon forever.

Another Reason for Optimism

The first post in this blog was about the first round of voting in Iraq. At the time, it was a remarkable event. Yesterday's voting seemed quite usual. The Iraqui people for the third time in less than a year went to the polls in very heavy numbers and chose a set of representatives. Are the people who were chosen going to be all American supporters? Of course not. But has this important area of the world taken another step toward something important? Yes. One of the best comments I heard from one person there yesterday was the remark "Every voter took a shot in the heart at the insurgents."

WAMU Baloney

I've recently begun an exercise in replacing my bank. I've used WAMU for the past 15 years but they seem to have become infected with businospeak. For example, in a letter that was completely unresponsive to my question they said

I appreciate you letting us know your feedback so that we may work to
improve our service and operations. To ensure this situation is
addressed, I've forwarded your comments appropriately.

There are many choices in banking today, and Washington Mutual is glad
to have you as a customer. Since we strive to provide premier customer
service during every interaction, we believe acting on your feedback is
critical to our success. I hope you find your future interactions with
us, whether by phone, via email, in person, or at an ATM, reflect that
commitment to service.

Does some business consultant actually think that will elicit a positive response from customers? Or is this really a high end joke?

Hooray for the Big Box Stores (Jib Jab's sorry attempt at misinformation)

Jib Jab became famous in the last election as a site to do parities. There most recent post is silly but in a negative way. It is called Big Box Mart - the premise is that a) big box stores exploit overseas labor and b) big box stores somehow encourage people to overconsume, c) that big box stores ultimately take American jobs and thus reduce the standard of living in the country. Normally, with something like this I would post a link to the site - but this one is so false - if you want to find the nonsense, simply Google it.

Do places like Walmart exploit foreign labor? Ultimately, Walmart and other big box retailers are examples of a good division of labor. We move jobs that we can no longer compete on out of the country for jobs that pay a lot more. Textiles moved from the US, where the domestic industries failed on two points - to keep up with technology and to regulate wages compared to what other countries were offering for the same work. The jobs went first to Mexico and then to Asia (mostly China). But if you look at my home state - the remaining jobs in the field are higher paying - LA is a design center - designs are created and then shipped somewhere else for production. The workers in the other location are better off because they have jobs that are higher paying by local standards- but ultimately so are the workers here. The American workers can purchase key items (and even some discretionary ones) for better prices. That sounds like a win-win. Sure, there are transition costs. The American workers in the industries that did not keep up are displaced. But how would the logic of the song have us solve the problem? Over pay American workers? Have American consumers over pay for their goods - when they can get them on the world market much cheaper?

Then the question of overconsumption comes in. Many of the big box stores have larger quantities of goods they sell - the Costco 40 pound can of chili is legendary. One of the assumptions originally about these stores was that bulk reduced price. What has been happening recently is a more subtle set of markets being created. The volume still produces reductions in price for many goods but the industrial sizes are no longer necessary. Would the writers on Jib Jab want to substitute their consumer preferences for those of the consumers at a big box store? Who is to say that the old distribution system - where choices were limited and prices were higher was better?

A good deal of this argument comes from the most inefficient producers or stores. I can go into my local Barnes and Noble or Borders and find almost any book. I can find a sales clerk who knows a lot about the wide range of books in the store. I can do the same thing on line at Amazon (an electronic big box). Would I be better off if I could only buy books at the small local store? Near my office 20 years ago there was a great bookstore called Levinsons - for years I would buy books from them - they did a great job at searching books out for me (obscure economics titles for example). But now I can go on Amazon and get the same level of service for a cheaper price. What is wrong with that?

Finally, there are the questions - if we continue to overpay for some types of work is the economy richer or will this movement of jobs ultimately reduce the standard of living in the country? By allowing freer trade are we worse off? The key to success in any country, in this globalized environment, rests not on the inherent kinds of protectionism advocated in the song but on the pillars of education (assuring that your population is educated), tax policy (and other governmental policy) that encourages investment in new enterprises, and open markets (that allow us to sell our goods overseas and us to find the best price for goods anywhere in the world). That is a pretty simple paradigm. If we do not follow it we will be worse off.

Ultimately, the economies where high paying jobs will be the standard, will follow those rules - not some silly notion that it is possible to hold on to a single set of economic conditions that do not apply to today.

Generosity

Yesterday I was in LA with some colleagues from Spain. About five years ago, in Rome, I met a guy from a Catholic university in Madrid named Universidad Francisco de Vittoria. A few months ago he wrote and said they would like to visit California and several institutions they could possibly work with on exchanges. We put together a set of meetings in LA and the Bay Area that had strong programs in areas they were interested in. They ranged in size from USC to Cogswell Polytechnic College (a couple of hundred students). UFV has large programs in communications and film and so we also are having them visit Mount Saint Marys and the Art Center College of Design and Menlo.

The first two visits were very good, everyone was cordial. But what struck me was the unexpected. We were on the Loyola Marymount campus (a wonderful film school and also a great communications school) and were walking around the campus. We went into the film school and popped in on the dean - who was temporarily out of the office and so simply walked throught the building to look at the labs. We found two professors in their offices and they were kind enough to spend about a half an hour showing our guests both the animation labs and the sound stages and to talk about the program at LMU. We talk often about the personal nature of independent higher education - and that extra care that the two professors showed our group reinforced that principle quite well.

All the people here are frauds

Tonight California executed Tookie Williams. The Governor, earlier in the day, refused clemency in a detailed statement that was actually pretty good and very thorough. I was in LA tonight with some colleagues from Spain. After I dropped them at dinner, I had to circle back to the airport to pick up a college president who had flown down to meet them. What struck me the most was how three radio hosts made a mockery of this event. John and Ken(the afternoon hosts) and then John Ziegler (From 640 KFI) were almost gleeful in their commentary about the pending execution. At one point they commented that all the people there were frauds. Indeed that was true. The three were gleeful at being able to point out that luminaries like Jesse Jackson could not name any of the victims of this quadruple murderer. Jackson is a fraud and a buffoon. But the irony of saying that all the people there were frauds was seemingly lost on them. Because they were (are) frauds too.

Eugene McCarthy

In a post at DailyPundit DailyPundit Bill Quick does a short rememberance titled Ave Atque Vale (Hale and Farewell) on the Senator from Minnesota who brought down a president.

I have a slightly different take. In 1964, I was a county youth chairman for Goldwater. But in 1968 I worked hard for McCarthy in the same county. Johnson, and McNamara and Rostow - were the precipitating events for both decisions. I thought, and actually still think, that they eased us into a war with hubris and deception, and then refused to make a real commitment to the outcome. It seemed (and seems now) such a horrible waste. I thought BMG was actually a pretty good guy. During the campaign he came to San Joaquin county twice and I met him both times. He was down to earth and really quite a figure. Reagan also came to the county and gave "the speech" - which I was impressed with at the time that is what began his race for national office. -When he died I reread it and was not as impressed. Goldwater had an easy laugh and a western manner. By 1970 I was working in the US Senate and ran into Goldwater in the halls. BMG had just come back into the Senate- where he stayed for another three terms. I saw him about the time he retired and he was really frail. His writing and speaking were a lot the same.

In 1968, as we continued to get deeper into the war - without admitting it - McCarthy came on strong. He came to the county in the late spring and I helped organize a rally for him. I had the chance to shake his hand and actually speak with him for a couple of minutes. He was thoughtful and very pleasant with a wry sense of humor.

Both campaigns were blessed with a lot of energy - different types of people - the Goldwater included a lot of libertarians but also a lot of silver haired old righties. The McCarthy included a lot of counter culture people but also a lot of libertarians. When the RFK campaign came into town it was clear that the raggle taggle group that had been involved in McCarthy's campaign would not be able to hold on to the state. Kennedy came to Stockton and literally sucked the wind out of the McCarthy campaign.

That is not bad nor good. What McCarthy did was to energize (or at least give us who were against the policy in Vietnam a vehicle). I wrote my senior thesis on a theory by James MacGregor Burns on presidential power. My professor liked my research - but because I criticized Burns theory (that a president can get anything he really wants) he wrote a long criticism of it. On March 31 when LBJ gave his speech, I actually drove over to the professor's house and when he opened the door - he said with a grin, I know why you are here and I am not going to change your mark.

Both BMG and McCarthy were from an era before handlers. The brief time I met both gave me a pretty good idea of who they were as people. They were both independents. Remember that BMG was one of the delegation that asked Nixon to resign and was turned off after he left the Senate by the rise of the Christian right. McCarthy was often a surprise. In 1980 he endorsed Reagan over Carter. I think both had a sense of themselves. That is certainly lacking in many of today's elected officials.

Workforce development

There is a big push toward workforce development in California - whatever that means. A number of the political players in Sacramento are trying to develop new ways to get people into the workforce. In the old days that was called vocational training. I met one of those people on the street yesterday and had a discussion with him about the issues - being someone who represents colleges, I guess I am supposed to have an opinion.

Indeed, I do have an opinion. Beginning with the Steiger Act in 1978, I have seen a lot of federal money get poured into the policy dejour in this area. For the most part they have shown little effect. I remember in the early 1970s going to one of the finest vocational training schools in the country (in Oklahoma) and watching a group of students working on NCR key punch machines. I asked the director, why? (I had recently worked in the White House and had installed something revolutionary called the MTST (Magnetic Tape Selectric Typewriter) which was a first generation of a word processor - and thought that punch cards would soon be converted into electronic information on a tape. So I thought the way of the key punch was soon out.) The director replied - we use these because NCR gave them to us.

So how do you get a prepared workforce? The responses are pretty simple. First, create a tax system that incentivizes capital - a low capital gains rate (and even low or no taxation on savings) is the first step. Create the energy for entrepreneurs to invest. Second, provide some funding for basic research. The engines of NASA and the NSF and NIH are pretty strong. Third, encourage all students to learn some basic skills including algebra. But it certainly is not by training people for this generation's jobs. We simply don't need a lot more key punch operators even if the vendors are giving us free stuff.

The AP on Corruption in Politics

The AP released a poll this morning on corruption in politics. It suggests that the American people are pretty skeptical that ethics and politics exist together in the current environment. Just over 50% of the responses think corruption in politics is a very serious question (88% think it is somewhat or more serious). Almost half believe that either a moderate number of politicians or everyone is involved in corruption. And by about equal numbers (36% to 33%) think one side or the other (democrats or republicans) have greater ethics. The story goes on to recount the Abramahoff, Delay, and Frist allegations and the Cunningham evidence (since he has admitted his crimes).

I think the poll mixes rotten apples and oranges. There is plenty of evidence that there are some serious bad apples in the current mix. But the corruptions are more subtle than a little influence peddling or bribe taking. Had the question been asked about the American perception on the increasing role of set asides - you would have seen significant revulsion against that process. Yet most of the political class would not see that as an ethical question. Ditto for the pervasive role of some lobbyists - a permanent class of allies or enemies. The American people would say we did not hire you guys to go to Washington or Sacramento and buddy up to a single group. I also suspect that were the same set of questions to be asked about the ethics of journalists or other professions that you might get similar high responses.

Responsible Talk Radio

Last night as I was driving home I switched to KFBK which is one of two or three talk radio stations on the Sacramento dial. The host, Marc Williams, was blabbering about the Tookie Williams case. He made two claims that seemed totally outrageous. The first, that Mr. Williams, whose case is being considered by the Governor for clemency, continues to direct killings by the Crips - the gang he helped to found. And second, the Williams (the one on death row) met the Governor and has established some kind of relationship that will eventually result in his pardon (the issue here is clemency not pardon). Neither charge has any basis in fact - but evidently the Williams on the radio is so against the Williams in prison (who seems to have had at least some positive effect on kids and gang members and who probably deserves clemency) that he will say anything.

Today, the pot and pan bangers in LA on KFI made some outrageous claims about the 48 CD race in which an American Independent Party candidate is running against a GOP candidate. John Campbell, who is currently a state senator and running for congress and favored to win, is running against a guy who left the GOP a couple of years ago to join the permanently minority party of the AIP. His single issue is immigration. The pot and panners - John and Ken - have made increasingly silly comments about immigration over the last six months - evidently in a desparate attempt to gain the entire share of xenophobes to their listening audience. Again, claims which are demonstratably false.

Then there comes John Kerry who makes the silly claim that US soldiers are doing "terrorist" activities in Iraq as part of their efforts in the country to find and get insurgents.

I guess we have come to an era where the limits of responsible commentary - based on any standards of decency - are simply ignored.

Blog Awards

The Weblog Awards are up at http://weblogawards.org/. What is amazing to me about the effort is not that there is a formal awards process - good thing, American thing (awards and all) but that as I looked through the categories I find most useful - I knew only a few of the nominees. That shows a very dynamic marketplace for all kinds of ideas. You may want to check it out for two purposes. First, it would be good to vote for a favorite (I like Taxprof blog for best law blog). But second, look through the categories and the links to find some new sources.

It is not just the military

Secretary Rumsfield, in his remarks to John Hopkins students commented today -

We have arrived at a strange time in this country where the worst about America and our military seems to be so quickly taken as truth by the press and reported and spread around the world -- with little or no context or scrutiny -- let alone correction or accountability -- even after the fact. Speed it appears is often the first goal, not accuracy, not context.

Unfortunately, while his commentary on the military coverage and the misreporting in the Middle East, his remarks were true for most of what the MSM calls news.

Backbone in Intelligent Design (of the tax code)

No, I do not want to get into the discussion on intelligent design in relation to evolution. But it seems that another area where intelligent design could be helpful would be in the tax code. Since the last major overhaul of the federal code (1986) we have allowed the code to be brought back to complexity. That is especially true for something called the Alternative Minimum Tax (or AMT). The AMT is one of those idiotic ideas that could only be thought of in Washington. The "logic" goes like this. We will create two tax codes - the first is the basic structure but if we think you do not pay enough tax under that one then we will create a second code with slightly higher rates and you will be taxed under that one. Instead of having the integrity to create a tax code with all the provisions in the right place - our lawmakers created a sort of code. The theory behind this provision was that if your use of many of the most popular provisions in the code was too vigorous - then we will tax you more. But of course, that is not the way the thing has worked. It was originally designed for the mythical taxpayer who is agressive in using "tax preferences" but as the code has continued it increasingly is attacking more and more taxpayers.

The president's tax reform panel looked at the AMT and declared it was bad. So they set out to solve the problem by eliminating it. If the proposal is adopted, it will require some adjustments. For example, the deduction of state and local taxes will go away. So will part of the deduction for mortgage interest (based on a calculation of what most people pay for housing). In both cases the panel is using some of the language of many tax theorists - why should we subsidize local government taxes or huge purchases of housing? The panel also establishes a 1% floor on charitable giving but moves it above the line. Thus, in order to qualify your charitable giving, you have to give at least 1% of your income to charitable causes but then the provision applies to all taxpayers. All of those changes yield some slight changes in rates (including some further reductions in the rate for capital income) and the elimination of the AMT. In my mind, that is a pretty good tradeoff. Sure there will be some people who whine about a lot of the provisions but that is a pretty fair balance.

The president's staff announced today however that they would take a year to build support for the ideas in the plan before trying to advance it. One wonders whether this will be the same team that has done such a good job of building support for the policy in Iraq and the same team that did such a wonderful job of building support for privitization of social security accounts. The president, at the beginning of this term, aruged that he had built up some political capital and that it was his intention to spend it to achieve his goals. But in the cases of Iraq and Social Security he has let the other side define the terms of the debate. Based on the first year of his second term, he seems to have been very good at spending that capital without any real or even apparent investment. That makes his announcement on the tax reform panel this morning look like a strategic retreat. That is a real disappointment.

When Reality Resembles Film

One of the pleasures of the last six months has been Netflix - a really great service. It does not have every movie but a pretty good selection of them - and it allows you to have three out at a time - no time limit. Send one back and get the next one on your list.

Last night I saw a movie about Terry Gilliam trying to make the film of Don Quixote. Orson Welles tried it long ago and failed but as you watch this documentary (called Lost in LaMancha) you see an allegory for what Cervantes was writing about 500 years ago. Gilliam is a very talented director. But between some odd plans and some very bad luck - he looked like he was tilting at windmills on this project. He started without a clear plan - chose a face that looked absolutely perfect for Don Quixote and Johnny Depp for Sancho Pancha. But between an inadequate financing, poorly organized plans and lousy luck - the film was never made. Or was it? Was this a documentary of the type like Spinal Tap? Were we spoofed?

Consultant Roles in Disasters

This morning's NYT had an interesting article about the role of consultants in addressing Hurricane Katrina. The story started like this

It was Thursday, Sept. 1, three days after Hurricane Katrina had ripped across the Gulf Coast. As New Orleans descended into horror, the top aides to Gov. Kathleen Babineaux Blanco of Louisiana were certain the White House was trying to blame their boss, and they were becoming increasingly furious.

"Bush's numbers are low, and they are getting pummeled by the media for their inept response to Katrina and are actively working to make us the scapegoats," Bob Mann, Ms. Blanco's communications director, wrote in an e-mail message that afternoon, outlining plans by Washington Democrats to help turn the blame back onto President Bush.

With so much criticism being directed toward the governor, the time had come, her aides told her, to rework her performance. She had to figure out a way not only to lead the state through the most costly natural disaster in United States history, but also to emerge on top somehow in the nasty public relations war.

Blanco released a ton of information over the weekend which included the exchanges above and others. Interestingly they released this mound of information only to the traditional media.

I had a couple of questions when I read the story. #1 - Why should any public official spend so much time trying to "win a PR war"? Bush's people were doing the same thing. But wouldn't it have been better to just do the job of responding to the disaster? #2 - Why should the Governor of LA think this was a complete disclosure if she only puts this stuff out to the media? Is there some idea about getting them to do the right story? Or is there an assumption that the average citizen does not have the same right to know as the media?

These consultants are always fighting the wrong war (concentrating on image not substance) - but always at our expense. Seems like an extremely bad bargain. But then we knew that.