Wish I'd been there....

Last night in Las Vegas the Rivercats won their game in the top of the 13th.   They started off well with three in the first, one in the second, fifth and seventh and two in the ninth.   And without those two in the ninth the Cats would have been losers.  But then in the longest game so far this year, they had a quick tenth, scored in the eleventh but only to be matched again, had a quick twelfth and then came to the deciding inning.  Anthony Recker opened with his third homer of the year.  Peterson got called out on strikes but then after a Horton double, Heather and Tolleson both ripped off their inaugural homers of the year.   That put us up by four.   The Cats ended up with twenty hits.  That puts us at 12-9.

Putting the Economics Debate in Rap - Round Two

 Russ Roberts and John Papola have put together another superb video on the differences in two schools of economics (Hayek and Keynes).  This is an entertaining and informative video that everyone should watch.  The project is first rate.

The Apple Tracking Controversy

One wonders what people will worry about next.  Apple's iPhone and other devices like Androids phones and any device that can locate you collect information about where you are.  The iPhone stores that data in a cache on the phone - which if you are clever can be downloaded when you hook the phone to back it up.   The location services option can be encrypted so no person can get the data, if you choose that option.

What does this "conspiracy" offer you?  All sorts of benefits.  It can help you locate friends when they are in your proximity.  It can help you locate services like gas stations and Starbucks and ATMs that are close to you.   From my perspective that feature has been valuable to me.   Apple, and I suspect all of the other phones that do that, are not secretly collecting the data that the phone produces. It also will allow you to find you phone when you have laid it down. So what is the beef - it seems to me like a simple example of over-reaction.   Why can't people just cool it and enjoy all those new services?  Evidently, except for those headline grabbers, based on the sales of these phones, that is what most consumers are doing.

Spring!

We have two friends from Mexico visiting and tonight after dinner took them to the Vernal Pools across from where we live.

It is hard to beat the show of color and wildlife that this area offers - most often a bit earlier in the year.   If we get enough rain- it collects and stays in the hard pan soil and then as it evaporates - ranges of wild flowers appear.  That brings brine shrimp and some tadpoles which a lot of birds find interesting and tasty.

Conventional Wisdom, once again is not

One of the continuing discussions at all levels in public policy has been the assumed decimation of the middle class.  Many commentators on the left and indeed even a couple on the right have suggested that since the early 1980s that the bottom of the economic pyramid has been dealt with cruelly ' the rich have gotten richer and the poor have gotten poorer.

There are some facts that are indisputable.  For example, the value of a high school diploma has declined in real value over the last several decades.   But a study by an economist from the Joint Committee on Taxation and one from Indiana University argues that when you impose some controls on the data that allows you to compare apples to apples - the numbers are not nearly as bad as the wonks with an agenda have suggested.  The numbers are reported in an article that raises some broader questions like which is more efficacious an increase in the minimum wage or expansions of the Earned Income Tax Credit?   Turns out the EITC is a better vehicle (although one could argue there are other consequences of expanding the EITC).

What are those controls?  Well, first, in order to make comparisons across time it would be a good idea to adjust for household size.  At the same time one should also account for changes in fringe benefits and for government transfers.  When you do all that the differentials change a bit.  Everyone is better off.  For example, without the controls the bottom 20% of the income curve suffered a decline of a third in their incomes.  But when you control for the variables they actually received an increase of better than a quarter.   The middle 20% show an increase from a 2.2% to a 36.9% improvement.   Those numbers are pretty dramatic.   The entire article can be accessed at the Journal of Policy Analysis and Management.

Clarifying thoughts on Taxes

It seems to me that a lot of talk about taxes is just plain silly.   The President's constant harping about raising rates on the rich will be counter-productive in terms of revenue raised.   The GOP claims that we have significant portions of the system not paying any tax is factually wrong.  And the Democrat's constant attempt to make the tax system into an instrument of policy beyond collecting taxes (which the GOP is also guilty of) adds burden and most often does not accomplish the intended purpose.

Here are several things which we know about the current tax system:
1) Increase rates too high and they will decrease the incentive to produce.   For higher income taxpayers (and there is a lot of dispute about who those are) by lowering rates they will pay more taxes.

2) About 45% of Americans pay no federal income taxes.  That does not mean they pay no taxes to the federal government - it just means they pay no income taxes.  It also does not mean that they do not file.  (See chart from Visualizing Economics) In FY 11 - the per capita burden of income taxes was $4554 and the per capita burden of Social Insurance Taxes at the federal level was $3003.
3) As rates have declined the most wealthy in society pay a greater proportion of taxes.  There may be two things at work here.   First, premise #1 may be at work. Higher income taxpayers have a greater ability to choose when they recognize income and if rates are too high, they will choose to defer it. (think capital gains)  But also premise #2 may also be at work.  As you exclude people from the tax system the distribution of tax payments from the remaining groups changes.   From my perspective, it is probably a bit of both.
4) The payments to Social Security (not medicare) are capped for a reason.   Benefits bear little relationship to payments and they are supposed to be a floor not a pension system for all.    For most people the expectation of the system is that they will save for retirement in other ways.

From my perspective there is some wisdom from Adam Smith that many modern taxwriters and talkers should know and do not.   In the Wealth of Nations, Smith wrote that taxes should be timely - "Every tax ought to be levied at the time, or in the manner in which it is most likely to be convenient for the contributor to pay it."   Smith's other three maxims should also be followed - they are "The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State."; "The tax each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, and the quantity to be paid, ought all to be clear and plain to the contributor, and to ever other person."; "Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the State."  (Ability to Pay, Timely and Non-Intrusive)   


Finally, among all the major tax changes done in the last six decades (beginning with the 1954 Act), the best among them was 1986 - which combined simplification with significantly lower rates.   Any discussion of tax "reform" should start with the premises of 1986.

African Cats

Last night we saw African Cats which is Disney Nature's movie about a group of Cheetahs and two pride of Lions in the African Savanna in Keyna.  Here are six things that I thought about the movie -

1) The photography is unbelievable.   Just the grandeur of the location is impressive.  The production values here compared to earlier Disney nature flicks are seriously better.
2) The movie tended to anthropomorphize the three groups a bit much for my taste.   In order to keep the animals straight they are named.  But the movie goes on to attribute behaviors to levels of thought not instinct.
3)Life on the Savanna is harsh.  During the movie a couple of the main characters disappear.  That is the way it is in the wild.  The cats are hunters so they are shown running down their prey - but always in a tasteful manner.   This movie is fine for small children.
4) It is hard to understand the timeline here.   Clearly the hunters rely a lot on a rainy season and the migration of prey into and out of the region.   But it would have been easier to follow the movie with a better understanding of the time it took for things to happen.
5) Samuel Jackson is a very good narrator but the script was horrible.  It was done in a mawkish fashion which I found off-putting.
6) While I do not object to this, the Disney people are doing a nature movie with a lot of tie-ins -so the website has a lot for sale.  They also give you opportunities to "get involved."  There is a teacher's guide which can be downloaded.  But ultimately what they are doing is selling a movie.  Not bad at all - but not noble either.

Townhall Baloney

The President's  stop  at a "Townhall" at Facebook is on Wednesday was a campaign event staged as news.   I am not sure why it merited any news coverage.   In the one hour and six minute event there was not one spontaneous moment.  These kinds of events seem to be a favorite of many politicians especially this one.  Each of the questions had been screened, in advance.   You can actually imagine the campaign guys reviewing the questions for their campaign value.  From the opening this was a staged event - "My name is Barack Obama, and I'm the guy who got Mark to wear a jacket and tie. (Applause.) Thank you. (Laughter.) I'm very proud of that. (Laughter.) "   (From watching the video it is not clear whether the President's staff used an applause sign or a laugh track."
Here are some comments from the event (with my comments attached)
"The main reason we wanted to do this is, first of all, because more and more people, especially young people, are getting their information through different media. And obviously what all of you have built together is helping to revolutionize how people get information, how they process information, how they're connecting with each other."   But more importantly this has the appearance of a live appearance, without the risks.

The first question from Mark Zuckerberg sets up a narrative that is partially false - How did we get here?   The President replies "What happened then was we went through 10 years where we forgot what had created the surplus in the first place. So we had a massive tax cut that wasn't offset by cuts in spending. We had two wars that weren't paid for. And this was the first time in history where we had gone to war and not asked for additional sacrifice from American citizens. We had a huge prescription drug plan that wasn't paid for. "  The diagram at the left shows the actual Federal debt.  Notice that in the last year of the Bush presidency the debt climbs quickly - but during the first few years of Obama it grows substantially.
The President then goes through a rap about the budget - "What the Republicans right now are saying is, number one, they can't agree to any increases in taxes, which means we'd have to cut out -- of that $4 trillion, all of it would come from education, transportation -- areas that I think are critical for our long-term future."  In the lead up to this part of his response he makes a series of false comparisons that suggest that unless we raise taxes all sorts of key programs will be eliminated.
Zuckerberg then goes on to the housing crisis, which most sane economists argue was caused in large part by government policy (remember that S&P also put Fannie and Freddie on credit watch).  - "What we've really seen is the housing market, which was a bubble, had greatly over-inflated in all regions of the country. And I know I probably don't get a lot of sympathy about that here because I can only imagine what rents and mortgages you guys are paying."  His response is government can help you renegotiate your mortgage bot that we need to think more creatively about whether there should be a federal housing policy.  Here is a great example of that thinking " There are certain communities with high foreclosure rates where what we're trying to do is see if can we help state and local governments take over some of these homes and convert them and provide favorable terms to first-time home buyers."

The key campaign ad speech is contained in a question about Congressman Ryan's proposal on the budget.  "The Republican budget that was put forward I would say is fairly radical. I wouldn't call it particularly courageous. I do think Mr. Ryan is sincere. I think he's a patriot. I think he wants to solve a real problem, which is our long-term deficit. But I think that what he and the other Republicans in the House of Representatives also want to do is change our social compact in a pretty fundamental way. "  He then goes on to argue that by changing the tax system that somehow wealthier people will sneak out of their tax burden. The President will try to misrepresent in fundamental ways what the Ryan plan tries to do.  A linchpin of his argument is on taxes.  The chart at the left compares tax rates and share of the burden paid from the end of the Carter administration.  It clearly shows that as rates are lowered the wealthier pay a higher percentage of the total tax burden.   However, there is one caveat in the data.  In the last 30 years, as a result of tax reform, an increasing percentage of taxpayers bear no income tax burden.  Thus, the percentage of taxes paid by the top bracket would go up some, on the natural.

A telling 13 seconds

Here is Joanne Kloppenberg, the losing candidate for the Wisconsin Supreme Court taking 13 seconds to answer a simple question about whether she believes she won the race that she has now asked the Government Accountability Board to review.   That self involved request will cost Wisconsin voters about a million dollars.  Her hubris is appalling.    She already used public financing to pay for her campaign (so did her opponent David Prosser) - thus the race has already cost voters $800,000.  Kloppenberg evidently thinks it would be good to double down even though no candidate has overcome a margin of this size before.

Independent expenditures amounted to $135,132 for Kloppenberg or against Prosser.  Prosser's forces spent $12,386.   Thus, outside dough was 12X for the inarticulate Kloppenberg.

The Perils of Mercantilism in Sports Franchises

Yesterday Baseball Commissioner Bud Selig took one of the proudest franchises in Major League Baseball because the current owner, Frank McCourt, has driven it into the dumps.   The LA Dodgers have a distinguished tradition that runs back to Branch Rickey and through the O'Malley family.   In recent years, after the Fox people took it over for a few years, McCourt has run up several hundred million in debts for the club.   (I will admit that I am a Dodger fan so this has been especially troubling.)

The takeover presents several issues - from the mundane, who has financial control of the club; to the more complex - what infractions would allow the commissioner to step in and take over a club?   Dodger attendance is declining and when we went to a Dodger game last Spring - the stadium is showing its age.

Then there is the melodrama of the Sacramento Kings.   Unlike the Dodgers, this franchise has moved around a lot but has been in Sacramento for the past 25 years.  While it had some reasonable teams five or six years ago in recent years the Kings have competed with the Clippers and one or two other franchises as the laughingstock of the NBA.    The current owners, Gavin and Joe Maloof have tried for a couple of years to badger the city or the region into building them a new arena for a couple of hundred million.  When voters said no to tax financing, the Maloofs tried to run away to Anaheim.   Problem is a lot of the Kings fans understand something about contracts and have bedeviled the attempt to sneak away.   In recent weeks, Sacramento's mayor has done some interesting things to keep the Kings here.   A lot of the discussion has been to figure out how much public money would go into the new enterprise.

From my perspective there is very little evidence that sports franchises make a city.  The Bulls or White Sox or Cubs did not make Chicago.  And even with their pathetic record on getting to the World Series, a Cubs game is still a must do on the bucket list.  But somehow even with that data the owners of professional sports, through a combination of civic boosterism and extortion have been able to badger cities into funding their enterprises.  Cities need to "man up" when the owners come to them.

On the other side, if we are going to allow sports franchises to be limited, then there may be a reason to allow oversight of the franchises.   In the case of McCourt, I don't like the idea that Selig has taken the franchise over any more than I do that McCourt has tarnished a franchise which helped to define best practices in professional sports.

More Evidence of Government Overreach

A lot of people actually like the FDA food labels that give us nutrition information.   I'm not sure how much it costs to do that - both as a taxpayer and in the increased costs for food producers.   But as I was drinking one of my favorite drinks (MINT WATER) I read the nutrition label.

Mind you that this product has two components - water and mint.  Thus, while it is quite refreshing, it has 0 calories.  (For those of you in Washington, D.C. who were surprised at the S&P credit watch announcement, that means this product has NO CALORIES).

But look at the label - 0 calories, 0 fat, 0 sodium, 0 carbohydrates and 0 protein.  All not unexpected - after all it is water.   But look at the serving size - 8 fl. oz.   Servings per container:2.

There are actually people in Washington who wonder why many Americans have questions about how much we spend out for our federal government.

Yes he really is that dumb

On March 10 Representative Jesse Jackson Jr said on the House floor - "Let me be clear about a few things," Jackson said, brandishing both an Apple iPad and an Amazon Kindle on the House floor. "These devices are revolutionizing our country — and they will fundamentally alter how we will educate our children."  But on Friday afternoon, he went to the House floor to blame the iPad for killing Borders.  He suggests that the iPad has eliminated "thousands of American jobs."


It is appalling that someone with this little knowledge of economics or technology could actually be employed in a responsible position - oh wait, he is a Member of Congress.  My bad.

The Civil War Today

150 years ago the Civil War was beginning.  The History Channel has developed an iPad APP which is stunningly good called the Civil War Today.   I found it yesterday in the APP store.  It costs $7.99 - which is pricey for an APP but well worth it.

The APP has a series of options to track the Civil War as it evolved beginning in 1861.  Each day begins with a quote of the day and then a reconstructed news story of the major event of the day.  At the same time you can find actual newspapers from the day and photos.  The APP also includes a casualty count and quizzes.

In essence, if you were to follow this through 2015 you would have relived the major and minor events of the Civil War contemporaneously but 150 years later.   This is a superb use of technology.

Atlas Shrugged - The Movie

Atlas Shrugged came out today.  This is a movie that I wanted to see.  As I mentioned earlier in the year, I looked forward to it after seeing The Fountainhead, which was Gary Cooper's attempt to do Rand's other major novel.  The other movie was flawed in a number of ways.  Its 1950s style made it hard to watch.  The version of Atlas Shrugged does not suffer from those problems.

Rand is a hard novelist to bring to the screen.  Her novels are long and have preachy sections. Much of her dialogue is serial soliloquies. But this version (which is the first of three) overcomes those issues well without attacking the substance of the book.   The first third begins by introducing the characters and the desperate situation the country faces.  Government of the time wants to control everything.   There is another problem with bringing this story to the screen.  Its main characters are involved in building a railroad in the future. (2016)   That seems a bit odd.

Each of the actors seem to have been chosen carefully.     They work together individually and as an ensemble.  

I was impressed  most with how closely the movie hews to the novel.   What I do not know is whether someone who has not read the book will get the same value out of it that readers will have.

The reviews of the movie have been interesting.  For some reason, many of them have been brimming with vitriol.  For example, Rolling Stone suggests a tie to the Tea Party.   Film School Rejects calls it "profoundly bad film making."   The Hartford Courant begins with "If you share my embarrassing adolescent affection for Ayn Rand, you may be wondering how a novel about a railroad can be made into a non-costume drama in 2011."  

We saw the movie at a 7:15 showing and the theater was pretty full and the crowd responsive.   I look forward to parts two and three.

An interesting website on civic responsibility

A lefty group called The Third Way has created something called Your Federal Tax Receipt.  It allows you to enter the taxes you paid in 2010 (or will pay) and then computes your share of all the budget categories.   The chart at the right shows some of the calculations for my federal taxes paid this year.  (The red line items are the top ten of the ones I chose.)  Obviously people with a bit more comfort in federal spending would choose different categories and come to different conclusions.

This list is admittedly arbitrary and the classifications at the top are not necessarily fixed.  But it begins to tell me about the priorities that our elected officials have made for our budget in a way that is tangible.  

With this information I can begin to ask some basic questions.  First, are these expenditures worth it?   In many cases, I think they are not.  Last year my taxes spent $15 on CPB and the National Endowments - were I setting the budget, I would save the $15.  Second, it helps understand priorities. I spent almost $5000 on Medicaid (not counting the state matching contributions which are bankrupting many states) was this a good use of my money?   Was it worth it to me to have almost $100 a year spent on the TSA (that does not count all the other fees and taxes I pay to travel by air)?   Could the almost $13,000 I spent on Social Security could have been better utilized?

The most interesting and disturbing numbers that came out of this exercise are ones that are constant.  The first, how much each American is in hock for past and current deficits ($48,382).  The second, how much this total went up from last year ($5,768).

A variation on the Emperors New Clothes

 On Thursday five members of the California legislature called out some LA talk show bullies by holding a fundraiser in Sacramento.   John Kobylt and Ken Champiou are afternoon hosts on KFI in Los Angeles.   They mix arrogance with ignorance in stunning fashion.  

One of the campaigns they have mounted since the beginning of the year has been to suggest that any GOP member of the legislature that votes to put the extension of taxes that were adopted two years ago on the ballot should have his head put on a stake.   That nicely parallels a campaign by ethanol supporter and anti-tax advocate Grover Norquist who has promised primary opponents against any GOP member who supports allowing the people to vote.

Wednesday's fundraiser was unusual on many counts.  First, the five members - who with a couple of others in the GOP caucus have taken their responsibility of legislating serious - pointed out that just because you have 50,000 watts does not mean you have brains.  Second, Governor Brown attended the function.  Brown recently has been quoting Article II, Section 1 of the California Constitution which reserves all political power to the people.

The point here is not whether the extensions of taxes are a good idea or a bad one or whether the voters would accept the extensions of the taxes that were adopted by the legislature two years ago or not.  The point is that the members who stand up to John and Ken are taking their job seriously.  The state's budget deficit has many sources  and the best way to solve those problems is to entertain lots of alternatives.   By discussing those alternatives the GOP might be able to secure a vote on issues like reforming the state's pension system or to establish a long term spending cap.   Both of which would reduce future deficits and at the same time point out the differences between the democrats and republicans on key issues.  

John and Ken's strategy, if you can call it that, would consign the GOP to a permanent minority status. It is refreshing to see five members point out that the shock jocks have no brains.

No further explanation is required

Las Vegas Top of the 7th - 

• Pitcher Change: Gabe DeHoyos replaces Guillermo Moscoso.
• David Cooper flies out to right fielder Adam Heether.
• Chris Woodward walks.
• Adam Loewen singles on a line drive to right fielder Adam Heether. Chris Woodward to 3rd.
• Ryan Shealy singles on a soft line drive to left fielder Steve Tolleson. Chris Woodward scores. Adam Loewen to 2nd.
• Brian Jeroloman strikes out swinging and Adam Loewen caught stealing 3rd, catcher Josh Donaldson to third baseman Josh Horton.

Las Vegas Top of the 11th

• Brett Lawrie flies out to left fielder Steve Tolleson.
• Eric Thames singles on a ground ball to left fielder Steve Tolleson.
• David Cooper walks. Eric Thames to 2nd.
• Chris Woodward singles on a line drive to center fielder Matt Carson. Eric Thames out at home on the throw, center fielder Matt Carson to catcher Josh Donaldson. David Cooper to 2nd.
• Adam Loewen strikes out swinging.

Sacramento Bottom of the 11th

• Steve Tolleson hit by pitch.
• Chris Carter flies out to center fielder Darin Mastroianni.
• Matt Carson singles on a line drive to right fielder Adam Loewen. Steve Tolleson to 3rd.
• Anthony Recker out on a sacrifice fly to center fielder Darin Mastroianni. Steve Tolleson scores.
• SACRAMENTO WINS IT 2-1

Opportunity Knocks and we don't answer

The Rivercats are now two for seven.   In the first series with the Tacoma Raniers they split.  In this one with the Las Vegas 51s - the best they could do (by winning tomorrow) would be to go one for four.   But in several games in this young season we have been presented with the possibility to win and we did not capitalize on the opportunity.

In Monday's game we lost 6-3 after being tied in the third.   The 51s then scored in the third, seventh and ninth.   Last night we went down early but then tied back and in the ninth with a series of lousy moves gave up two runs.   In today's game we went down early, tied it back up - had the go ahead run but then let a run score in the ninth and lost 6-5.

That is not to say that we have not had some good plays and some promising new players.  But we have let opportunity slip through our fingers too many times in this young season.  We're fourth from the bottom in hitting (with a .253 average) compared to the league leading Iowa club (.322).  Or batters have looked at a lot of third strikes.  Indeed they have had almost twice as many strikeouts (64) as walks (36).  59 hits have produced just 17 extra bases (2 homers and one very impressive triple).  The club has 62 strikeouts and only 24 walks.

The games have been exceptionally cold.  Let's hope as the weather improves so will our ability to create and seize on opportunities.

John Taylor has a point

A lot of conservatives have groused about the budget deal that was struck at the end of last week to avert a shutdown.  John Taylor calls the deal a "game changer."   Here's why.  The net change between what the Administration proposed and was actually adopted the first (Taylor believes) in a series of downward reductions in federal spending.  There is a real decline in the level of federal discretionary spending from 2010 to 2011.    Obviously, the step is small but the actual direction of spending is down not up.  There are plenty of next steps.  Over the course of the last two administrations federal spending has rocketed ahead.   Now we have an actual decline.  

What comes next is not simply discretionary spending.  A good deal of the $2 trillion increase in spending over the last couple of years came in non-discretionary spending.  One could eliminate entirely the range of discretionary spending and still not solve the deficit - so that change in mentality for both discretionary and non-discretionary spending is critical.

I hope Taylor is correct.  It is not clear, with the President's remarks over the weekend, that all of Washington has gotten the point.  This is not a revenue problem, it is a spending problem.  While it might be great policy to change the tax system in the country, it would not be a good idea to try to increase the pie to cover the deficit.  The President seems to think this is a revenue problem.

The more pessimistic view comes from Michael Ramirez, one of the nation's best political cartoonists.  He drew us a picture of the budget pie which puts the discussions over the last couple of weeks in perspective.

Out of Touch Presidents

During the first Bush administration, the President went into a market during his vacation and wondered what a price scanner was.   He was roundly criticized for his lack of knowledge of the common man.

Last week, the current president said the following in response to a questions about rising gas prices:


I’m just gonna be honest with ya. There’s not much we can do next week or two weeks from now [about gas prices]. (snickers) If you’re getting eight miles a gallon you may want to think about a trade-in. You can get a great deal. I — I promise you GM, or Ford, they’re — or Chrysler, they’re — gonna be happy to give you a deal on — on something that gets you better gas mileage. Gas prices? They’re gonna still fluctuate until we can start making these broader changes, and that’s gonna take a couple of years to have serious effect.

From my perspective Obama's remarks are both arrogant and out of touch.   Gas prices have risen because of uncertainty in the Middle East, and because of worldwide demand, and because of somewhat restricted supply (caused by countries who do not want to develop their resources).   The President's response seems to ignore that and concentrate on the individual's failings for not immediately buying a new car when gas prices rise.