Tuesday, May 30, 2006

Reasons to be Tearful, Part Three

by Ken Houghton

I had not thought about how horribly prophetic this post was going to be.

Thersites is a noble human being. Warning to those who would do similar to me: I am not.

UPDATE: Lindsay provides a graceful summary that complements the link Tom posted in comments. Interestingly, her links show which outgoing link is most popular: the top two are to the pudknocker who started the whole pissing match. (The third is to the correction to which he took umbrage, and the fourth is to the unmentionable comment.)

I hope he's happy with his fame, and wonder if he's figured out yet that he wet his pants.

Internships: Pay Them or Leave Them?

by Ken Houghton

The $124MM Question

Spent the non-writing part of the weekend moving the aforementioned wife's cousin into her summer housing and hosting relatives and others.

Part of the discussion on the way in was how she ended up interning at Columbia Journalism Review. She noted that of the places to which she applied, only a few were paid at all, and only three got back to her. CJR was one that fit both categories.

For instance, The American Prospect, which was one of the places that replied, does not pay its interns. (Which didn't keep Garance Franke-Ruta from noting and promoting the piece--nor, I hasten to note, should it have.)

But the key question is obscured by Kamenetz's linking it to union activity:
How are twentysomethings ever going to win back health benefits and pension plans when they learn to be grateful to work for nothing?

Make no mistake: I quite agree that even more workers would not have pension plans or health benefits if not for unions. But if 7/8 of workers are not unionized, the fault lies not in the union. Pension plans and health care benefits are basic Coasian economics: is it never optimal to manage social costs on an individual level.

Her roommate for the summer is interning at VH1. Viacom is not paying its interns anything. Kamenetz notes:
The Bureau of Labor Statistics does not identify interns or track the economic impact of unpaid internships. But we can do a quick-and-dirty calculation: according to Princeton Review's "Internship Bible," there were 100,000 internship positions in 2005. Let's assume that out of those, 50,000 unpaid interns are employed full time for 12 weeks each summer at an average minimum wage of $5.15 an hour. That's a nearly $124 million yearly contribution to the welfare of corporate America.

One person pooh-poohs this amount in the TAPped comments. And since Viacom's net earnings for 2005 alone were more than 10 times that amount, he's not incorrect that this isn't a major savings or (as I noted above) that it isn't the greatest use of union resources.

The question is more whether it's a good use of the interns, and there Kamenetz is on firm ground:
A 1998 survey of nearly 700 employers by the Institute on Education and the Economy at Columbia University's Teachers College found: "Compared to unpaid internships, paid placements are strongest on all measures of internship quality. The quality measures are also higher for those firms who intend to hire their interns." This shouldn't be too surprising — getting hired and getting paid are what work, in the real world, is all about. [emphasis, link to survey mine]

Employers who pay their interns have much more positive views about their interns than employers who don’t pay. Indeed, on average, employers who pay report that the interns have better attendance, reliability, and attitude than the alternative workers.[emphasis mine]

So for at least the past six or seven years, people taking unpaid internships have been able to know that the employee doesn't think much of them. Eventually, in a rational world, the Viacoms and American Prospects of the world would stop getting intern applications. Fortunately for them, that time has not yet come.

Henry Paulson's turn in the barrel

by Ken Houghton

The last CEO of Goldman Sachs is now my Governor. The likelihood that the momentarily-current one will be able to be elected dog catcher should now have an intrade contract around 6.

Well, Vaporware *Is* Affordable

by Tom Bozzo

One of Madison's Big Bad Mandates is the "inclusionary zoning" (IZ) ordinance, which requires that developers include "low-cost" housing in most new developments in the city — "low-cost" meaning affordable to families not exceeding 80% of the county median income.

The law is widely regarded as needing improvement. The required fixes relate mainly to terms that are intended to prevent IZ properties from being flipped to market-price housing, which also make IZ units less attractive to potential buyers. (Though in a post-bubble world of zero house price appreciation, the issue of being able to capture near-term market price increases should be less prominent.)

IZ is structured as a quid pro quo, with developers eligible for concessions such as increased project densities, expedited review, or waivers of fees as inducements for providing the low-cost units. IZ units which fail to sell to eligible buyers after a 240-day marketing period revert to market-price housing, too. Nevertheless, the real estate-industrial complex is bitterly opposed to IZ and has actively sought repeal of the ordinance, citing the cost of the mandate, the Law of Unintended Consequences, etc.

One of the possible unintended consequences is making market-price housing more expensive as the other units in a development cross-subsidize the low-cost housing. For there to be a cross-subsidy, though, the units have to be priced below the builder's cost.

As it happens, "low-cost" is relative. As noted by Ald. Brenda Konkel and Lisa Subeck in a fascinating exercise we'll return to, "affordable" means single-family houses priced in the vicinity of $175,000-200,000 for families with roughly $50,000 a year incomes. So how does this square with costs? I will pick on Veridian Homes, our biggest local builder, since they typically supply the bulk of single-family house building permits to the listing in the Thursday Wisconsin State Journal. Madison building permit fees depend on the project cost, so the permits theoretically provide some — certainly not inflated — indication of new construction costs.

The May 25 paper listed seven Veridian permits in Madison, one of which I'm throwing out as it's listed cost ($325,000) tags it as luxury housing of some description. The remaining six permits listed costs ranging from $119,000 to $156,000. In my reading of the permits listing, this is typical of Veridian's bread-and-butter contributions to suburbia. As of the last assessment cycle, the city values most of the lots at around $50,000 (relationship to actual land acquisition costs on the fringes of suburbia unknown). Put it all together and the cost of these Veridian houses with lots is something like $170,000-$206,000. I would conclude that while Veridian may not be earning much profit on a $201,988 IZ house, it's probably covering its costs. The immediate conclusion is that the cost — as opposed to profit — critique of IZ is greatly exaggerated.

This brings us back to Konkel and Subeck. They surveyed several developments and repeatedly found that the IZ units did not, except theoretically, exist; in some cases, the IZ units had indeed been marketed for the required period and been bumped out of the IZ program to market price without actually having been built. Go see their collection of pictures of dirt, piles of rocks, and port-a-potties — really.

Konkel and Subeck also suggest that in other cases, developers were frustrating the program by accentuating its complexities. (*) There's a fairly obvious financial incentive to do so, since the cost of waiting out the IZ marketing period is small (as long as the housing market doesn't crash in the meanwhile) relative to the benefits from selling the unit at market prices. This is particularly true for developers who aren't even carrying the IZ units as built inventory.

That IZ opponents are trying the "take the ball and go home" approach to obstructing useful reform of the ordinance seems like less of a problem as good faith in their dealings with the city is hard to find.


(*) You might recall, among the bad reasons advanced by business interests in opposition to the sick leave ordinance, the suggestion that paid leave would be a payroll accounting nightmare.

Monday, May 29, 2006

Holiday "Baby" Extra!

by Tom Bozzo

"Julia, Daddy's glasses aren't a toy. But first let me get the camera..."
(Note: If Apple wants to introduce a useful new feature for iPhoto 7, may I suggest a runny-nose reduction tool?)

Equal time bonus: John and Julia showing some of that love stuff. It's better than the whining toddler/whining preschooler feedback loop!

Saturday, May 27, 2006

Question Hour

by Tom Bozzo

(An occasional series of posts discussing search terms that lead visitors to this blog.)

I saw a Site Meter record the other day indicating that someone had visited the blog via the search term "Lego Factory Bad." My first reaction was "No! LEGO Factory good!"

I've now received and built two LEGO Factory sets, one of my own design (previously mentioned here), and the other by a prominent builder in the grown-up LEGO building community.* Word is that the pieces for the custom sets are picked and bagged in Denmark, shipped in bulk to the U.S., and then boxed and shipped to the end users in Connecticut; given that, the two week total fulfillment time was not unreasonable. The relatively small price premium for customization is more of a surprise. The conventional LEGO packaging process is highly automated, and they've either developed a means of adapting that to single-set runs, a la computer controlled milling machines, or they're taking a bath on each set. I'd suspect the former, which if nothing else would be the forward-looking technology.

As for DIY set design, it's very much a matter of garbage-in, garbage-out. Running a blog and all, I can't get too high-and-mighty about others' uses of vanity presses. A limitation of the system as it stands is that there's no easy way to be directed to work of particular merit, versus kids just slapping a few bricks together (not that there's anything wrong with that) — though unsurprisingly the online community partly remedies that.

Good builders can produce good creations with the system, even with the current assortment limitations.
At upper left is Chris Giddens's Space Scooter X-19 (173 pieces, about $20, astronaut not included), which is sturdy and swooshable. My black airspeeder (250 pieces, about $28) came out mostly as intended, though I'd omitted a structural connection between two segments of the upper fuselage; I'd overlooked it in the absence of simulated gravity in the CAD program. A couple ordinary bricks from my collection fixed it easily. Compared to its conventionally-built inspiration (at right), sturdy the airspeeder ain't, though; it's for static display rather than toddler play.

An interesting question is how they'll deal with customer service questions related to model design flaws. Dealing with my own error was not too annoying, but suppose it wasn't me? In the unlikely event anyone other than me would want one, I uploaded a less-flawed replacement model using six additional pieces. I'd assume that the sort of person buying someone else's creation at this stage of the game knows something about the wilds they're getting into. If not, I expect there's something in the Terms of Service I quickly clicked through.

Friday, May 26, 2006

When It's Time to Listen, The Rude Pundit Hears

by Ken Houghton

Mr. Papa is reserved

Via the legendary Duncan, but the important part is here:
Gore joked (earlier he had called politicians "a renewable resource"), and he said he had "no intention" to run for President. Then he turned it around, speaking quietly, which, whenever he does, it's time to listen. He made a statement about the power of the people, of James Madison's "informed electorate," and about the responsibility of citizens to be active participants in the destiny of the nation. For Gore, running for President would give him the wide national platform to even discuss these issues. But more important to him is a politics of engagement, whether in power or not.

He's not wrong. My favorite televised moment from the 2000 convention was Gore arguing in his acceptance speech that the Estate Tax needed to be fixed (note: not eliminated). Check the audio (which I haven't; am I the only one surprised that Gore's is the only non-videoed speech?). There were boos, and not just scattered ones. And he paused, and stared, and spoke directly. And the crowd was silenced, because he was direct and appealed directly to their values ("deep in the soul, religious, even, moral purposes").

The verbal cues work both ways. Lee Papa is generally spit and bile and hyperactive phraseology; in this piece, the title is the Rudest part of the piece. (Well, okay, "that inarticulate, shit-tossing baboon hunched in the ditch next to Tony Blair right now" may be worse--but it's the Rudest part that deals with Gore, at least.)

Al Gore has never been my first choice as the Democratic Presidential candidate; I was pushing Bradley in 2000, and my home network isn't called "Re-Elect Kerry in 2008" (entirely) out of whimsy. But this is not the best of all possible worlds, and I could live with the choice in 2000 (even with Lieberman as the VP pick) or now.

So, apparently, could The Rude Pundit.

The Onion is a Priceless National Treasure

by Ken Houghton

Little Comment Needed

My Only Non-Hockey-Related Professional "Sports" Post on this Blog. Click through to understand why.

(h/t The Sports Guy).

The Revolution Will Be Blogged. This Blogger Dinner, Not So Much

by Tom Bozzo

Even though Sara (no 'H') was wearing her "I'm blogging this" t-shirt and there were at least two digicams present, there was no contemporaneous record of yesterday evening's blogger meet-up in honor of Janelle Renée's Midwest vacation. So you'll just need to take my word for it that they would add good conversation and companionship to your dinner table, too. Or read their blogs!

It's actually been quite a while since my last meetup, and for the non-bloggers out there, it really is a little odd to meet "total strangers" for whom you have thousands of words' worth of written background information.

Thanks to both for graciously ignoring some of our routine chaos — the toddler raiding the dish of crackers, then returning the excess after everything got a taste; the Big Fat Cat raiding the Hook's Five-Year Aged Cheddar. (Ya'd think Iams Big Fat Cat formula got tired after a while...) Special thanks to Sara for bringing the Michael's Frozen Custard to cap off the dinner's Local Dairy Products theme. The Hooks' excellent blue cheese joined the aforementioned Cheddar and Farmer John's Provolone for the rest of it.

I hope that a good time was had by all. Confidential to S.Z., we'll have to repatriate your sundae supplies.

Thursday, May 25, 2006

Power Failure Halts Rails in Northeast

by Ken Houghton

A Three-Hour Tour

The great thing about public transport is that this is actually news. The bad thing is that leaving the house at 7:20 and arriving at work a little after 10:00 is not the "one-hour-door-to-door commute" I promised my wife.

(Her cousin, staying with us for the week until her NYC apartment is available, will probably arrive at her CJR internship about an hour late--on her third day. Fortunately, they probably read the NYT headlines website.)

But the world continues, and the infrastructure still mostly works. Hope the Iraqi leaders can say the same some day.

UPDATE: On the off-chance that you thought this post more appropriate for my personal blog than this one, I note that the GAO has made explicit what a lot of Congressmen are trying to avoid noting:
Commuter rail agencies provide mobility to millions of people across the country, often using Amtrak infrastructure and services. Given these interactions, an abrupt Amtrak cessation could have a significant impact on commuter rail operations. Amtrak's chronic financial problems and recent budget proposals make such a cessation a possibility. GAO was asked to examine (1) the extent to which commuter rail agencies rely on Amtrak for access to infrastructure and services, (2) issues that commuter rail agencies would face if Amtrak abruptly ceased to provide them with services and infrastructure access, and (3) the options available to commuter rail agencies should Amtrak abruptly cease to provide them services and infrastructure access.

The accompanying report can hardly be faulted for failing to note what we in the Northeast know well: we're a profit center for Amtrak. It's the small stations where no one ever gets off (or on) that are a drain on the budget and the plans. (I lived in one of those: in 1979, there wasn't a station; by 2000, the train stopped there--in the middle of the night, both for arrivals (now a civilized 5:00a.m.) and departures (3:01 a.m.), on specific days.

Over that time, the city population fell.

The GAO Abstract concludes by noting that today's once-in-a-while could become tomorrow's rule:
Most commuter rail agencies that rely on Amtrak have identified ways to mitigate service disruptions in an abrupt Amtrak cessation. However, these options are largely dependent on retaining Amtrak employees and access to Amtrak's infrastructure. Federal agencies could provide short-term options to mitigate potential impacts on commuter rail agencies through their authority to order continued commuter service (called "directed service"), although federal officials stated that service disruptions are likely and the cost estimates are unreliable. Private transportation companies could provide options for commuter rail agencies in the long term; however, other issues would need to be addressed to ensure a smooth transition. [emphasis mine]

The train takes me currently, on a normal day, about an hour less than driving would. So for the week, I'm still ahead on a time basis. I look forward to a return to normal travel tomorrow.

Yet another Reason to shop bn.com

by Ken Houghton

Amazon switches to Microsoft from Google

This was going to be a longer post, but I just realised the subtitle says it all.

Wednesday, May 24, 2006

The Coming End of Anonymity, Part Deux

by Ken Houghton

First, there was Duncan Black. Now, the legendary bitchPhD is soon to be revealed.

The curious thing is that, in both cases, anyone who honestly wanted to know would have had little trouble figuring out the person behind the blogspot. (Full disclosure: I don't know who bitchphd is, and didn't care all that much about Duncan Black going public, except to notice that it made Kathryn Cramer happy at the time.)

UPDATE: Apparently, ******* **** of an ill-named blog (he plugs himself in the
comments section) has "outted" an "anonymous left-blogger." Those who are
curious can see the gory details at the newly-redesigned
Sadly No!
; those who are curious about Mr. ****'s senses are referred
specifically to this comment,
which summarizes why this post ends the way it does.

This all comes to the fore mainly when I start thinking about datamining, which, for some reason or ANOTHER, comes to mind a lot these days.

The first rule of data mining is that you try to avoid "mission creep." As with "scope creep," tangents can be fatal. At the very least, they are distracting. And that means that the question has to be clearly defined and restricted. The difference between "data collection" and "data mining" is the difference between Schliemann and Troy and the sequencing of chromosomes in the Human Genome Project.

And that means that data mining is a very specialized profession, one that should not be managed by Donald "My goodness, were there that many vases? Is it possible that there were that many vases in the whole country?" Rumsfeld and his crew. Also, that the successes of the illegal, unconstitutional project are so minimal despite its having gone on since late 2001 (Times Select ref via The Booman Tribune via Larry Johnson's blog) that the only things they can mention are apocrypha such as blowtorching the Brooklyn Bridge or shoe-bombing a plane so that it crashes into a high-rise

That said, Charles Platt has maintained for years (sorry, no link; the comments are that old) that "privacy" is an outmoded concept. More accurately, as the cost of data collection and data mining goes down, it becomes easier to have the option to ensure that people are not private.

But the option still needs to be exercised. There is not "no cost" involved.

In a Knowledge Economy, the definition of "need to know" is likely to become increasingly driven by considerations of time and effort. The bugging of James Rubin's telephone line probably resulted in some preparational advantages to the incumbent in 2004. (It certainly makes "the outburst" seem less spontaneous.) As Jean Rohe said, "I'm curious to see which doors have been permanently closed to me in the future, simply because I've spoken up."

I grew up in a democracy. My daughters may never have that opportunity, no matter what I may hope.

Collecting money for nothing, get our chicks for free

by Ken Houghton

Fool Me Twice, Shame on Duke

Any chance that either of my daughters would go to Duke disappears forever:
The [Duke] women's [lacrosse team] plan to wear sweatbands [with the word "Innocent" written on them] on their arms or legs was reported Wednesday by The Herald-Sun of Durham. The teams plays Northwestern in the NCAA semifinals Friday.

"We want to win a national championship for ourselves but definitely also for [Duke] and the men's team," junior Leigh Jester told the newspaper. "They don't really have a chance to play their season, which is a shame."

No. A shame is when an assault conviction is treated as nothing. A shame is when a team that was supposed to get more supervision got less.
Although successive administrators in the Office of Judicial Affairs were generally aware that lacrosse players were often entangled in the disciplinary process, they did not take steps to determine the full extent of the record until the Fall of 2004. When the Dean for Judicial Affairs determined both the number of disciplinary charges against members of the lacrosse team and the number of lacrosse
players against whom charges had been filed, various administrators discussed what to do about it. Eventually, administrators brought the disciplinary record of his players to the attention of Coach Pressler. But neither administrators in Student Affairs nor administrators responsible for the Athletic Department adequately conveyed to Coach Pressler any sense of alarm. Nor did the administrators responsible for the Athletic Department demand that Coach Pressler take
extraordinary action to address the problem. Indeed, after advising Coach Pressler of his team’s problematic disciplinary record, the Athletic Director extended the Coach’s contract for an unprecedented three years. (p. 17)

As I noted earlier, this is primarily a Principal-Agent problem, and my respect for the University of Colorado is going up relative to Duke, where they don't even bother to pretend:
A university spokesman said Wednesday that the school had no objections to either the sweatbands or the invitation to Pressler.

"They don't clear those things with us ever," said John Burness, Duke's vice president for public affairs. "We're not sitting here looking over people's shoulders quite that much."

Or at all, apparently. Hope those licensing fees Present Value to more than the tuition opportunities lost.

UPDATE: Duke's women lost to Northwestern, 11-10 in overtime on Friday. Whether this was, as predicted by ESPN's Daily Quickie, due to their lack of focus ("Are you more concerned with making some big look-at-me statement ... or winning a title?") or some other reason is irrelevant.

Tuesday, May 23, 2006

"Vision" - Management = Bollix

by Ken Houghton

My favorite government agency reports on Tom's favorite (if economically-unsound) area of the government, and the result is--as would have been predicted by either of us--rather negative.

The problem is summarized by the opening of the Abstract: "The President's Vision for Space Exploration calls for human and robotic missions to the Moon, Mars, and beyond." They treat the "vision" as if it were a serious proposal. Which is their job, but Vision requires Management and Stakeholder Support. This Vision lacks all of the above:
The system--suffering from an aging, fragile infrastructure with some crucial components over 40 years old--has lost science data during routine operations and critical events. In addition, new customers find they must compete for this limited capacity, not just with each other, but also with legacy missions extended past their lifetimes, such as NASA's Voyager, that nonetheless return valuable science.

So the current system is overstrained and inadequate. Surely management has a plan?
The Deep Space Network's future utility is also in question because NASA does not currently match funding for space communications capabilities with agency wide space communications requirements. While NASA created an agency level entity to review the technical requirements for integrating assets like the network into an agency wide space communications architecture for the future, that entity does not address program level requirements nor influence investment decisions.

Joe Haldeman just won a Nebula, and has published a few "classics" in the sf field, but for my money, his best book remains Vietnam and Other Alien Worlds, which includes several essays dealing with NASA's management. That the book is 13 years old and officially out of print just emphasizes how long the problem has been evident. That the current Administration believes that it can initiate a "major vision" without a functional management is at best cynical--but more likely representative of the standard "we'll take the money, someone else will have to run the mess" attitude.

Monday, May 22, 2006

Suburban Socialism

by Tom Bozzo

We're back in Madison, where $2.2 million gets you a much uglier lake house than this Italian Renaissance revival gem on W. Lake of the Isles Parkway.

Irony struck in a big way when I saw the front page of the Wisconsin State Journal. Shorter local developer and candidate for beatification Terrence Wall: "Pass this mandate and we will bury you, provided we get a big subsidy to buy the shovel."

Let's set the way-back machine to last Tuesday's city council session on the sick leave ordinance. From Kristian Knutsen's account, here's a spokesperson for Wall:
A representative of Terrence Wall Properties is the next registrant. His message for the alders is one of economic blackmail. "We're counting on the council tonight to pass the sick leave ordinance as it will increase the value of our properties in Middleton," he says. "Madison is our greatest marketing tool for leasing our properties in Middleton."

Well, ya gotta build 'em first. And if you need to do so by going to the public hat-in-hand, you might as well make it a big hat:
Wisconsin State Journal: $65 million in TIF requested for Middleton development

A developer who wants to build a 24-acre urban neighborhood of housing, retail and office space in Middleton has asked the city for $65 million in public assistance over the project's 10-year span.

The request dwarfs the typical $2 million to $3 million per-project tax incremental financing in Madison, and it is four times larger than Middleton approved for the Greenway Center office project, the city's previous record holder for municipal financial aid.

Middleton officials say they're excited about developer Terrence Wall's proposal but not ready to take a position on it.

Maybe for $65 million Middleton can get Wall to pay for sick leave for the center's retail and restaurant employees.

Slightly more seriously, most of the TIF ($52.5 million) is supposed to "reduce suburban sprawl" by building underground parking ramps on the site. But the site, which is just past the edge of greater Madison's existing development, is itself sprawl. If Middleton wants to spend $52.5 million to reduce sprawl, they could (and arguably should) spend it to encourage infill development on the surface parking lots in the existing edge city to the SSW of the proposed Wall development — which also happens to be approximately where the western terminus of the hypothetical Dane County light rail line would be.

Is that too much of a Madison idea for Middleton? We'll see.

(Edina, MN) Two Americas in the Second America

by Tom Bozzo

Driving around this upscale Minneapolis suburb, you can't miss the signs of the late boom and incipient bust of the housing economy.

New high-end houses are springing all over from the foundations of what passed for affordable housing (i.e., affordable to the upper-middle class, not just the upper), even as "price reduced" is now as common as "sold" on the for-sale signs whose increased density is immediately apparent. The owners of the former may grit their teeth while filling up their Porsche Cayennes, but it's the fate of the owners of the latter that will tell whether Ben Bernanke is whistling through the graveyard in describing an orderly cooling of the market. The standard story is that we're seeing the return of normal supply-and-demand conditions, but the real question is whether the peak price levels are sustainable under such conditions.

That's of paramount importance to recent buyers who "solved" the affordability conundrum with advanced lending technology: among several warning signs reported in a Wall Street Journal article last week, recent studies showed zero or negative equity for 29 percent of 2005 mortgage originations and (not coincidentally, we'd suppose) increased delinquency rates for 2004 and 2005 mortgages. Barring a rapid turnaround, there aren't enough markets that haven't already peaked to give those owners unpleasant surprised should they need to sell in the near term.

But the consumer economy has been fueled to a remarkable extent by the consumption of rapidly growing home equity wealth through the bubble-like period, too. As a result, we're increasingly dependent on the 'fundamentals' of the economy. Eeeek?!

Saturday, May 20, 2006

(Minneapolis, MN) I Am A Fossil

by Tom Bozzo

Oh, the humanity.

Suzanne led me into a big record shop in the uptown neighborhood, where the 'modern rock' section alone was the size of about three Madison B-Side Records.

Suzanne's selection — a used copy of Everything But the Girl's "Idlewild" (1988), was in modern rock.

I found my selection, the Rhino Records extended reissue of Echo and the Bunnymen's "Porcupine" (1983), in 'classic rock.' In fact, the whole frickin' early eighties alt-rock catalogue seemed to be in classic rock — except (incongruously) Cocteau Twins: formed in 1980, first album released 1982.

Note to Jeremy: "Could You Be The One" is my favorite Hüsker Dü song, too. Consistent with the title of the post, my copy is on a 7" vinyl single.

News Flash: CEOs Are Overpaid

by Tom Bozzo

Over the last 25 years, corporate CEO pay has increased about sixfold, adjusted for inflation. This just happens to be about the same as the increase in firms' market capitalization. As Marginal Revolution's Tyler Cowen reported in his NYT column yesterday, two economists (Gabaix and Landier) have a recent working paper that purports to explain the latter as the cause of the former, without resorting to the usual array of CEO labor market failures. Mark Thoma and Brayden King are skeptical at best. Gary Becker — whose Becker-Posner contribution beat Cowen to the virtual presses by a couple days — suggests that grossly overpaid CEOs are just a few bad apples and that the CEO pay trajectory is just tracking the growth in the resources that CEOs manage.*

My two cents is that this paper (which would-be clickers through should note uses a fair amount of math) presents some interesting results derived from fantasy fundamentals — you read a sentence like "Our [CEO] talent market is neoclassical and frictionless" and try to resist the urge to snort.

An appeal to the scarcity of CEO talent as an explanation for CEO pay levels and distributions likewise rings hollow. In the model, the market works to assign the most talented CEOs to the "largest" (market capitalization) firms, yet Gabaix and Landier really make no effort to establish that the largest firms actually employ the most talented CEOs. Among other things, the ability to exercise market power and to ride good market fortune make some CEOs wealthy beyond their demonstrated managerial skill. Or, from a different angle, look at Suzy Welch's stenography of Neutron Jack (BW subscription req'd) at the back of BusinessWeek.**

That said, I have even more substantial objections to the result.

First, using alternative measures of firm size, the "fundamentals" don't support the magnitude of the CEO pay increase as obviously as Gabaix and Landier suggest. The authors wave their hands around the connection between the present value of profits and firms' measured market values, and in fact offer that profits could be an admissible measure of market size. In the aggregate, though, corporate profits adjusted for inflation (as measured by the BEA) have increased by a factor of three; the leadoff comment at Marginal Revolution also highlights the excess growth of CEO pay relative to corporate earnings and the potential dissconnection between profits and market valuations.

This points to a second, and arguably bigger, problem. Even if you were to accept market capitalization as the appropriate benchmark, the growth of market capitalization reflects various factors that are not causally attributable to CEO talent or effort. Investors' willingness to pay more for a dollar of earnings than they were in 1980 (for the time being, anyway) is Exhibit A.

Even the earnings growth, though, has substantial autonomous components. The recent spike in corporate profits seems to have a public "policy" component — it's hard to believe that other fundamentals have been that much better in the laggard recovery than at the peak of the '90s boom. (CEO-type money may have bought the policies — on account — but the growing consensus is that the public at large wish they hadn't.) Also, over the 25-year period in which real corporate profits have tripled, real GDP has increased by a factor of a bit over two, so much of the growth in profits is tracking general economic growth. CEOs are being rewarded for this, but not as obvious consequences of their efforts and talents; welcome back imperfect CEO labor markets.

Last, Gabaix and Landier's result would create a conundrum: why has executive pay diverged from that of the non-executive ranks? Their model setup offers no reason not to expect that any employee whose talent increases corporate profits shouldn't see pay tracking firm size. As an attempt to address the conundrum, some Marginal Revolution commenters argued that the value creation resides at the top of the corporate hierarchy. This is not especially consistent with the reality that many corporate decisions are developed or refined at lower ranks and 'sold' to various levels of upper management, often with easily digested action recommendations. So attributing all of the value to the final sign-off is arbitrary. Brayden reassures me that strains of organizational theory view employees as "carriers of value," in conjunction with corporate institutions; embodying all value creation in the CEO doesn't hold water.

Where does that leave us? Back in imperfect markets territory, almost certainly.

Friday, May 19, 2006

House Sales Data: A Select Sample

by Ken Houghton

Following up on Tom's post about housing prices, one of our local realtors has started sending out a post card noting the sales for the previous month in the area.*

I now have three months of data (19 sales in January, 18 each in February and March): not enough for a thorough analysis, but enough to put together a reasonable table:

Don't get me wrong; high season is still coming, but houses in this NYC suburb aren't generally selling "before they're on the market" anymore, and the first Open House isn't creating a Major Bidding War.

It's not that several people (self included) aren't sitting on major appreciations from when they bought; it's just that the market is weaker, and hardly a time for speculating. And no amount of NAR "many metropolitan areas are still showing double-digit annual gains" will take away from that reality.

Principal-Agent Problem, II

by Tom Bozzo

Ken reminds me of my second-favorite moment from the Madison council session on the mandatory sick leave ordinance, whose narrow defeat earlier in the week was a triumph of FUD over some combination of the popular will and good policy. For non-locals, background posts are here, here, here, here, and here.

The UW-Madison administration is not exactly keen on the institution's top party school reputation, but they were happy to put a good spin on it:
University officials said they weren't thrilled about topping another list for party schools after the Princeton Review named the school its top party school last year. But they said the Playboy ranking at least considered factors other than just the amount of alcohol consumed.

"It's good to be known as a place where there's a lot going on for students," said UW-Madison spokesman John Lucas. "It's good they do take into account the academics."

The Cap Times actually had no trouble finding an example of Madison exceptionalism:

Student body president Eric Varney said most students know their limits when it comes to drinking but "our limits are just higher than every other school."

Meanwhile, from the council session:
A representative of State Street Brats is up next, stating his opposition to the [sick leave] ordinance. "There is great potential for abuse from this," he says, particularly from his establishment's college-aged employees who engage in binge drinking.

Note, the problem is not the binge drinking per se. There's money to be made off that. Rather, the offense is the possibility of paying someone to sleep one off instead of coming to work sufficiently hung-over as to need to sleep one off. (We note that job performance issues could arise in such circumstances.)

As a practical matter, the UW's ambivalence at the problem is manifested in its pushing the problems to the campus exurbs — most of the egregious violations of alcohol laws (the pre-football game and campus-vicinity bar scenes; the Mifflin St. Block Party, etc.) are technically off-campus. But they're more off-campus than they might otherwise be in part because the university declines to battle the student housing landlords, who give the Chamber of Commerce a playing-the-smallest-fiddle lesson when the new dorm construction threatens the rental income stream from their dumps. Letting the private sector house the bulk of the student body makes facilities Vice Chancellor Alan Fish's job easier, but let's face it: (affluent) students love the new apartment towers in part because there isn't even the minimal supervision provided by university housing. (Having lived for an undergrad year in what can be called without exaggeration an animal house dorm, I have no illusions as to the minimalism. It's still something versus nothing.)


(*) My favorite moment of all was the anti alderoid Zach Brandon's effort to wrap his mind around the concept of paid time off:
Zach Branon discusses his "internal conflict" as "a small business owner versus growing up in a single parent home" in deciding upon the proposal. Ultimately deciding against it, "the issue for me isn't mandates," he says. Rather, it is a question of whether an employee should be paid even if they don't show up for work.

Thursday, May 18, 2006

Lightning (not Tampa Bay) Strikes Twice in One Day

by Ken Houghton

First for her, Second for the Day

Chez moi, I noted that the Christian Coalition and Moby are both in agreement on Net Neutrality. (which is almost as strange as the Sensenbrenner/Conyers corroboration (h/t Atrios) of their (and this blog's, from what I've seen) position.

Clearly, either Mercury is in retrograde or Strange Bedfellows is the blogsphere Conceit of the Day: Shakespeare's Sister and George Will agree.

Well, not entirely:

Of course Will manages to get in a typical dig at liberals by saying we "value equality indiscriminately" (I'll leave you to parse out the humorous illogic in that one), but remains level-headed enough to acknowledge "they vote their values."

But it's Ginger Yellow in comments who nails the underlying data:
You'd think if it annoys him so much, as it should, he'd have said so right after the election when you couldn't move for values voter rhetoric.

How much mileage did the Amy Sullivans and other Dem-hating Democrats get out of the revelation that 22% of voters went for GWB in 2004--as opposed to, oh, the 22% who went for him in 2000? (To be clear, it was reported immediately after the election that GWB won because he received more votes from the $200K-plus-p.a. voters--or Citizens, as they were described on The Colbert Report last night. (The rest of us--Morlocks--got a sliver of the tax cut. Yes, Comedy Central, I would link to the video if you posted it.)

The key point, though, is that Will didn't write this in 2004 because his handlers--the cocktail-weenie set, as it were--didn't think that was the story. Apparently, they do now.

I've never felt better about 2006. If only my ancestral home state had nominated a Democrat for Senator, instead of a Famous Name.

The Principal-Agent Problem

by Ken Houghton

Our Guys Redux: Your Administrators Blame the Victims

Is It Illiteracy or Nonsense that made Richard Sandomir of The New York Times write bollocks such as this?

They do not know when a student may post embarrassing images that can dramatically undermine their policies against hazing or other prohibited activities.

No, no, no! The images do not undermine the policy--the actions those administrators have sanctioned are what has made the policy a sham.

Sandomir has an AD expand on the view that the images are the problem.
"You're walking on eggshells every hour," said Jim Livengood, the athletic director at the University of Arizona, which is not one of the colleges depicted in the photos. "I can't rationalize the young person's thought process. You can't think those photographs won't be seen...."

"The hard part of it all is you can't control it," he said, adding that the issue would be discussed at Pacific-10 Conference meetings. [emphasis mine]

There are two possibilities for that "it" that you can't control: (1) the behavior or (2) the taking and posting of photographs.

If you can't control the first, you shouldn't be an AD. Allison Clarke summarized what was most damning about the Duke Lacrosse Report (p. 24 of the PDF:
4. The University's ability to deal fully with the problem of alcohol is undermined by its own ambivalence toward drinking and the conduct it spawns.

Alcohol is the single greatest factor involved in the unacceptable behavior of Duke students in general and members of the lacrosse team specifically, both on- and off-campus. Drunkenness is the cause of behaviors that represent a serious nuisance to the community and a source of significant personal danger for the student. The University's alcohol policy is reasonable, but it is inconsistently enforced and only ineffectually disciplined. The University's ambivalence is most obviously manifested in the University's tolerance of egregious violations of its own policies at events such as Tailgate and Last Day of Classes, as outlined in the Report of the Committee to investigate the Judicial Procedure. While the alcohol related misconduct by members of the lacrosse team is deplorable, the University is, by its lack of leadership in this area of deep concern, implicated in the alcohol excesses of lacrosse players and of Duke students more generally.

There are two choices: address the problem or blame the photographs. Credit where due: Duke seems to be at least trying to addressing the problem (h/t Ms. Clarke). But Sandomir and his innocent AD are blaming the photographs. Wonder why they think that will work?

Wednesday, May 17, 2006

Well, suppose this war does cripple us?/There'll always be Another

by Ken Houghton

The Economist is of Two Minds, both war-mongering

This is a late post, but I only just linked my print subscription to their website. (The article discussed appears to require a subscription. Those who have access to a library can find the print version in the May 6th issue, pp. 26-27)

The premise:
With the exception of Syria's, no government in the vicinity likes or trusts revolutionary Iran. And with the exception of Israel, no people in the region likes or trusts the Bush administration. As with Saddam Hussein's Iraq, most would love to see Iran's ambitions curtailed

Which is a difficult statement to rationalize in the context of
Iran is admired not merely for its defiance, but for its skill in first letting the superpower destroy its closest enemies--Baathist Iraq and Taliban Afghanistan [emphases mine]

Did Judith Miller write that "letting"? Certainly, Ahmad Chalabi is laughing all the way to the bank.

Strangely, the Economist concedes the worst-kept secret in the Middle East--that Israel has nuclear weapons. Is it any wonder then, that the question raised is a familiar one:
"What exactly is the Iranian threat to America, or to Israel for that matter?" asks a Saudi security consultant. "Even if they get an atom bomb, they can't use it without inviting their own destruction." Balancing Israel's local nuclear monopoly would not be bad for peace, he suggests. The only real danger he sees is of a nuclear accident inside earthquake-prone Iran spreading fall-out across the Gulf.

Never build a nuclear reactor on or near a fault line strikes me as Really Good Advice.

Juan Cole makes the point clearly by virtue of having looked at a map:
Moreover, Iran cannot fight Israel. It would be defeated in 72 hours, even if the US didn't come in, which it would (and rightly so if Israel were attacked). Iran is separated by several other countries from Israel. It has not attacked aggressively any other country militarily for over a century...It has only a weak, ineffective air force. [italics mine]

So Iran is not going to attack Israel, at least not Dick Cheney's lifetime. And there are several countries it would have to go through first.

There follow several paragraphs explaining how Iran is fiendishly clever, having trade and tourism relationships with its neighbors. And for having contingency plans in case it is attacked:
More ominously, [Saudi Arabia's leading broadsheet, Asharq Alawsat] has run stories, citing a senior source in the Iranian army, claiming that Iran has a plan, in the event of American military action, to stage suicide and rocket attacks, not only against Israel or Americans in Iraq, but also against Arab countries allied to America.

Imagine that! If at war, a country might consider attacking that aggressor's allies. Certainly no one would either consider such a thing or, Heaven forfend, plan for such a contingency!

The Economist's other history lesson is similarly enlightening:
Saudi Arabia has some experience of direct Iranian aggression. During the Iran-Iraq war, when the Saudis backed Saddam Hussein, they scrambled jet fighters to repulse Iranian aerial feints over their oilfields, while police in Mecca have often grappled with Iranian "pilgrims" [sic] using the haj as a chance for political agitation. Saudi Arabia's distrust also reflects its dislike for Iran's anti-monarchical model, and the opprobrium with which Wahhabist Sunnis regard Shias. [emphases mine]

Let's take those in order: (1) "direct Iranian aggression" means that their planes flew over your airspace (but did not attack) when you allied yourself with the aggressor against them; (2) the "political agitation" is caused in part because the Iranian model does not recognize hereditary monarchy but rather distributes power (another form of such distribution would be democracy--with which, certainly, the Iranian system should not be confused, but one might as well argue that Canadians are "anti-monarchical"); (3) Sunnis don't like Shi'ites.

This preponderance of common sense has a final sentence that must be seen to be, er, believed:
No wonder Saudi Arabia has close military ties with Pakistan, which may even extend to a (secretly promised) place beneath the Pakistani nuclear umbrella as well as the American one.

Yes, it is because of Iran--a country that didn't even attack when you supported its most bitter enemy, a country whose air force is ill-equipped and which has not been at war with anyone for over 15 years, or attacked in a century--that Saudi Arabia has been forced to align itself with Pakistan. Not even my old friend* Dafydd ab Hugh could create such a rationale from this cloth!

But the Economist is not content; it must make the case that Iran is responsible for All Evil in the World:
All America's Arab allies would like, for instance, to see Hamas sign the Saudi-sponsored initiative of 2002 that provides for the recognition of Israel. They would like to see stability in Lebanon, and resent the refusal of Iran-backed Hizbullah to tone down its militancy. Vocal support for Iran from the Muslim Brotherhood, which is the main opposition in many Arab countries, does not amuse the regimes it challenges.

Gosh, good thing no one in the region "destroy[ed] [Iran's] closest enemies--Baathist Iraq and Taliban Afghanistan," isn't it?

What do Iran's neighbors want?
"A strike against Iran would cause the whole region to explode," declared Jordan's King Abdullah recently. "Dialogue, patience and diplomacy are the only solution."

A reasonable English translation of that would be: "War would be stupid. They pose no threat. They can't even produce reactor grade nuclear fuel, let alone bomb-grade. They haven't attacked anyone. So attacking them would just radicalise their supporters in other countries--such as mine. Attacking Iran would cause uprisings that would de-stabilize the rest of the region."

The Economist, however, goes for war-mongering:
In other words, given the choice between eventual acceptance of a nuclear Iran and the more immediate danger of a vicious backlash, most of the region's regimes would opt for appeasement. [emphases mine]

No one with a knowledge of history--and certainly no Brit reading this newspaper, would take describing the opposition as practicing appeasement as anything but intentionally inflammatory. No matter that the "eventual"--and the matter that Iran has repeatedly reaffirmed its commitment to the Nuclear Non-Proliferation Treaty--belies any comparison to an Anschluss, let alone any imminent annexation of the Sudetenland.

The Economist is already resorting to Godwin's Law to buttress its arguments. Their thought process appears to mirror that of the King in the Stephen Schwartz-borrowed lyric that entitles to this post: leveraging the doctrine of pre-emptive war in an attempt to bring "democracy" to the Middle East has failed once, so let's try it again.

Hardly rational.

Quicker Than I Thought

by Tom Bozzo

Via Ezra Klein, I see that in speculating on the ability of corporate health care to cut some physicians out of the care delivery loop, I'd missed Exhibit A: small clinics co-located with chain drug stores and big-box discounters, using nurse practicioners to administer some primary care services at $49 or $59 a pop. That's about half the price via MDs, based on the insurance paperwork we see for our pediatric visits.

Like Ezra, I have nothing in principle against the concept of having NPs deliver some basic care at something like half the price of a physician taking a two-minute peek at a patient. I also agree with him that continuity of care is a concern, though to the extent that the next best alternatives for the clinics' target market are some combination of prayer and ER visits, the concern may well be secondary.

It's not too hard to imagine everyone being pushed into variations on these services for primary care — the next step for insurers would be tiered office visit co-payments and co-insurance. Conventional medical practices might respond by hiring more NPs of their own or by cutting their prices (to some insurance companies) on physician services if they needed to retain price-sensitive patients. Anyone whose tiered prescription drug insurance has followed the standard trajectory would expect insurers to inexorably increase the incentive to choose the lower-cost mode of care. The effect is to reduce the demand for (and hence compensation of) some physician specialties.

Tuesday, May 16, 2006

Statistics (Lies With): House Price Data Edition

by Tom Bozzo

The National Association of Realtors just issued its latest release on metropolitan area house prices, reported in the W$J and elsewhere. Here's the NAR headline and lede:

Metro Home Prices Begin to Cool but Appreciation Remains Strong

WASHINGTON (May 15, 2006) – The growth in single-family home prices continued to cool in the first quarter, but many metropolitan areas are still showing double-digit annual gains, according to the latest survey by National Association of Realtors®.
Nationwide, the year-over-year increase in the median house price was 10.3 percent, indeed in the double digits. But take a look at the data (PDF). The appreciation is highly concentrated in the early part of last year; for most metro areas, prices peaked or plateaued around quarter 2 or quarter 3 of 2005. So while the year-over-year increases appear to be "cooling," the sequential increases have ground to a halt.

So, either prices will pick up again — bucking the late trend in mortgage interest rates, recent increases in the supply of existing-home listings, and price-slashing by new house builders trying to unload their inventory — or the measured housing market "cooling" will rapidly turn into a deep freeze as the bubble-era quarters fall out of the price increase calculations.

How Safe is the Upper Middle Class?

by Tom Bozzo

Participants in the Ad-Hoc Book Club really should put Dean Baker's The Conservative Nanny State on their reading lists. It's only 100 pages or so, very readable, and free in the sense of being distributed at zero price under a creative commons attribution license.

A theme of Baker's that reappears in TCNS is that the plutocrats that provide the conservative movement with the bulk of its funding are abetted by a much larger group of upper-income professionals who benefit enough from policies that redistribute income upwards to sign on. In variations of the argument, conservative policies are described by Baker as favoring the working well-to-do at the expense of working stiffs.

As a framing device for his story, 'there are no free marketers when your job is being creatively destroyed' is highly effective, particularly as some categories of free-market advocates actually are highly insulated from market competition — either in tenured academic jobs or in think tanks generously funded by rich righties for the purpose of ideology production. Elsewhere, as Pietra Rivoli describes (in other Club reading with which I'm taking a break from the Hugo best novel nominees) the real story of global business is as much one of circumvention of markets as anything.

Otherwise, I think Baker's story works better as an epiphenomenon of conservative policies, almost (but not quite) to the point of being an unintended consequence. Granted, the working well-to-do provide quite a bit of political cover for things like tax policy, though as this graph shows, that's as much a matter of money delusion — some lower and middle-income earners see the low-six-figure incomes (in 2006 dollars) of the working well-to-do who show some (if not the primary) benefit of the tax cuts as being more attainable than they really are — as the number of swingable voters in the group.

Even as the upper middle class sees some benefit from upward redistribution of income as a group, many constitutent elements are not obviously favored. The professoriate's tenure is hardly sacred to conservative policymakers — indeed, as Bérubé notes, tenure is an Official Straw Man in the conservative analysis of the problems with higher ed. The disfavor of certain legal specialties (i.e., those darn trial lawyers; as Baker puts it, some contracts are better than others in the conservative analysis) is long-standing. Physicians are highly paid on average, but if health care corporations figure out some institutional technology to take some granite out of the countertops of the median doctor, is it likely that conservative politicians will stand in the way? And let's not even get statred with consultants and people in financial intermediation jobs — at first, presumably, the former will tell the bosses of the latter that bigger bonuses can be taken home by increased computerization of certain tasks.

To be certain, the privileges of the working well-to-do won't go away overnight. But to assume that corporatism holds our positions sacred in any way is to be unprepared for future rude shocks.

(More to come.)

Monday, May 15, 2006

A Belated Mother's Day Post

by Ken Houghton

Von Clausewitz Shows the Way--to the 7Ps of the Administration

The New York Times buried the lede, which presents the Scope of the Issue:
"The Medicare drug benefit is the biggest thing that's happened to the health care system and to the pharmaceutical industry in the last three decades," said Sidney Taurel, chairman and chief executive of Eli Lilly & Company. "The government --federal and state -- is becoming a bigger purchaser of drugs, in our case going from 30 percent to 50 percent of our total sales." [emphasis mine]

Readers of this blog know Tom's rational disdain for Medicare Plan D, with its donut, its explicit prevention of competition, and its concomitant high cost. My irrational, passionate argument against it is a simple one: an unfunded mandate with arbitrary deadlines and a lack of planning, training, and education doesn't make a working concept. (This is the bedrock theory of Project Management, which a co-worker accurately describes as "The 7Ps": P*ss-Poor Planning Produces P*ss-Poor Projects.")

Clear signs that Part D has fallen victim of the 7Ps include:
"There seems to be a panic out there right now," said Brian D. Caswell, who runs a pharmacy in rural Baxter Springs, Kan. "Many of the people who waited this long spend only $30 a month on drugs, and they're being asked to spend about $30 a month on premiums for a prescription drug plan. They need help making a decision."

Carol H. Carter, an insurance counselor at LIFE Senior Services in Tulsa, Okla., said today: "It's pretty crazy around here. We are overwhelmed. We can't help everyone who has called. At the end of the day, there will be some people who do not receive individual help because they waited to the last minute." [all emphasis mine]

That last piece of bollocks looks like positioning: "Well, we need to charge all those people even more for even less service because they didn't ask us to help them until it was too late."

Another clear sign of the 7Ps is when FUD is used instead of a rational argument:
The first lady Laura Bush and Michael O. Leavitt, the secretary of health and human services, went to a church in Washington to broadcast a final message. "Even if you are not taking any medications, it's really important to go ahead and sign up now," Mrs. Bush said. "As you age, it's likely that you will add medications to your health care."

So spend money now because you might need to spend it later. This is a standard of insurance, and certainly the premia are designed to cover the expected lifespan of the target group. (This is why insurance companies hire actuaries.)
The [late enrollment] penalty will increase future premiums by 7 percent or more.

In short, it is a punitive, not a necessary, action. So what was the Business Process that was supposed to make the penalty affect only those who truly procrastinated?
For months, the Bush administration has been urging insurers to hire additional telephone service workers to cope with today's expected last-minute surge in enrollment.

Someone more familiar with the actual machinations of the past several months than I needs to examine this statement, which strikes me as P*ss-Poor Planning on so many levels it's not funny.

The most obvious of those is that those extra, untrained, operators don't appear to solve any of the three primary issues:
Sherry Whitman, a state insurance counselor who serves 15 counties in the Upper Peninsula of Michigan, said people had three basic reasons for not enrolling. Some [1] have health insurance from a former employer or other source and do not need Medicare drug benefits, Ms. Whitman said. "Some have [2] no health problems, don't take any prescriptions and want to take their chances," she added. " [3] Others don't want to be bothered. The new program is too complicated for them." [emphasis mine]

People in the first category are not going to sign up no matter what the possible penalty is.* People in the second category can be assumed to have made the rational decision to sign up later, when they might need the program, instead of at the current "discounted" rate.

It's the people in that third category who probably make up most of the 5.5 million recipients estimated not to have coverage. And no matter how glibly one might accuse them of not "want[ing] to be bothered"--a contention rather refuted by Ms. Carter's admission quoted above--the proof of the pudding is in the eating: PPPPPPP.

Good luck, Mom. Hope you guessed right.

UPDATE: Via Mark Thoma, Paul Krugman presents the case with lucidity and temperance. Select highlights (read the Whole Thing):
It appears that millions of Americans, confused by the array of competing plans or simply unaware of the cutoff date, will miss the deadline. This will leave them without drug coverage for the rest of the year, and subject to financial penalties for the rest of their lives....

President Bush refuses to extend the sign-up period. "Deadlines," he said last week, "help people understand there's finality, and people need to get after it, you know?" [except in Iraq, of course - klh] His real objection to extending the deadline is probably that this would be an implicit admission that his administration botched the program's start-up....

Adding drug coverage as part of ordinary Medicare would also have saved a lot of money, both by eliminating the cost of employing private insurance companies as middlemen and by allowing the government to negotiate lower drug prices. This would have made it possible to offer a better benefit at much less cost to taxpayers....

Instead of providing drug coverage directly, Part D is a complex system of subsidies to private insurance companies. The administration's insistence on running the program through these companies, which provide little if any additional value beyond what Medicare could easily have provided directly, is what makes the whole thing so complicated. And that complication, combined with an obvious lack of interest in making the system work, is what led to the disastrous start-up.[emphasis mine]

What's the Sound of One Hand Burning?

by Ken Houghton

In the Monetization of the Internet, some firms realise sooner than others that keeping a quarter is better than losing a dollar.
Starting Monday, Vivid Entertainment says it will sell its adult films through the online movie service CinemaNow, allowing buyers to burn DVDs that will play on any screen, not just a computer.

It's another first for adult film companies that pioneered the home video market and rushed to the Internet when Hollywood studios still saw it as a threat.

The home video market revolutionised the porn industry, but required a complete revamping of the business model (e.g., the shift from shooting on film to tape for cost purposes and revamping the distribution system). See Boogie Nights for a reasonable fictional representation of the changes.

Some of that affected the Hollywood mainstream as well, but the savings weren't so great, and the studios attempted to maintain the business model that was centered on Theatrical Release. That, and other poor decisions--such as shooting films in television ratio (4:3 instead of 16:9)--belie the optimism of at least one analyst:
"The rest of Hollywood stands back and watches and lets the pornography industry work out all the bugs," [Michael Greeson] said.

Lest we think this is self-promotion, Greeson doesn't work in or with the pornography industry directly--but he benefits from their marketing.
"Leave it to the porn industry once again to take the lead on this stuff," said Michael Greeson, founder of The Diffusion Group, a consumer electronics think tank in Plano, Texas. [emphasis mine]

The article cautions that "[t]here are business and technology factors that make it easier for adult film companies to embrace new technology faster than traditional media." Trust me--or read the whole thing--that they don't raise any technology factors. And what is the main "business" factor?
[The major] studios are hesitant to anger large retailers such as Wal-Mart Stores Inc. and Blockbuster by selling DVD-ready downloads directly to consumers....

"We don't have to divvy up the pie," said Bill Asher, co-chairman and co-owner of Vivid Entertainment, the largest distributor of adult entertainment. "We sell in smaller stores, mainstream chains, but no one dominant component where we're going to get that phone call."

Translating those two paragraphs: the porn industry revised their business model in the late 1970s and early 1980s to concentrate on expanding their relationship with consumers. The major studios retained (indeed, expanded) their dependency on distributors--not consumers--of their product.

Is it any wonder that Mark Cuban argues that the studios aren't Quite Getting It?

That Popular NSA Spying Program

by Tom Bozzo

Kristian Knutsen has an interesting account at the Isthmus Daily Page of trying to get answers from AT&T as to whether his phone call records were provided to the NSA and how that would square with AT&T's obligation to keep customer calling records confidential. Shorter AT&T response: "We will say nothing that can be used against us in future class-action litigation."

Knutsen's investigations reveal that my CLEC-ISP isn't participating in the program, which is good exactly to the extent that I don't call anyone in the service territory of the participating baby Bells.


Meanwhile, with much less leading poll wording, the USA Today/Gallup poll found the public far less "enthusiastic" about the NSA program than the WaPo results that electrified portions of the right blogosphere.

Here's the main item, following a fairly typical "how close have you been following the issue" setup question:

3. Based on what you have heard or read about this program to collect phone records, would you say you approve or disapprove of this government program?
Approve Disapprove No opinion
2006 May 12-13 43 51 6

That large minority law-and-order contingent is present in both polls. But this suggests that the weak "acceptability" from WaPo is something less than support. It's also worth noting that as of this poll, 32% of respondents reported not having closely followed the story (including 12% "not at all").

Meanwhile, via Glenn Greenwald, Jane Hamsher takes a look at the WaPo's pollster's history at Firedoglake.

Saturday, May 13, 2006

Looks Like A Fish, Moves Like A Fish, Steers Like a Cow: My Long Tail Adventure

by Tom Bozzo

...or, "So I am a LEGO maniac. What's it to you?"

As I'd mentioned earlier in the week, the very cool LEGO Factory concept — design your own LEGO set on the computer, transmit the CAD file to shop.lego.com, and get the real parts to build it — took a huge leap towards very cool reality with the introduction of the first incarnation that actually provides fully customized parts assortments.*

Clearly, this involves some work on the part of the customer-designer. So how does it work? The short answer is pretty well. A fuller report with some pictures is after the jump.

After an 18 MB download, I installed the Lego Digital Designer (LDD) software without difficulty on my iMac G5. LDD has a totally nonstandard interface that's undoubtedly aimed at children; since the Mac download package omits the instructions, I had some difficulty navigating the controls at first. Based on the usually quiet iMac's fan noise, LDD sounds like a CPU hog.

The current part assortment includes 254 brick types, not counting color variations. While only a small fraction of the full variety of LEGO bricks, it's a workable start. Color availability can be limiting even for some varieties of basic brick, though. Looking over the available pieces, my best bet for a creation based on something I'd already more-or-less thought out was this:


However, many of the white and gray pieces aren't available currently, nor are the canopy and the parts used for the large engines on the wingtips. A workable assortment was available in black. The only windshield available would make for an open-roofed air-speeder if the model was somehow to accommodate a minifigure.

In black, the speeder could be a hearse, a limousine, or a sinister-looking hot rod. I went for a combination of all three:

Picture 3

I got what I like to think of as an air-speeder suitable for the fictional rock star Hotblack Desiato — Douglas Adams fans might recall that in The Restaurant at the End of the Universe, Desiato was spending a year dead for tax reasons.

Picture 2

The model's special hidden feature is a slot where the Han Solo in carbonite brick can be inserted. Despite its Star Wars origin, it's as suitable a representation of a temporarily deceased rock star as anything.

As for the time commitment, the speeder contains 250 pieces and took a couple hours to build. It was occasionally slowed down by pieces that didn't want to slide into place. The model uses an elementary form of what's called "SNOT"** in the LEGO community — the fuselage is built with upper and lower halves — and LDD sometimes resisted brick placements where the halves meet. If LDD allows you to view models edge-on, I couldn't figure out how; that's the most significant functionality shortfall I could discern.

As for the pricing strategy, it seems to be reasonable. The 250-piece speeder prices out to $28.84, in the unlikely event you want one of your very own. (None of which, as far as I'm aware, goes to me.) Mass-produced sets not atypically run 8-10 cents/piece — depending a lot on how many small parts are included. Full customization at an 11 cent/piece average is not bad at all.

More when the real thing arrives in the mail...

Go to the Marginal Utility main page.

Friday, May 12, 2006

A Post Related to the Visual Display of Quantitative Information

by Tom Bozzo

Congress has passed, and Il Duce President Bush is expected to sign, the latest $70 billion in tax "cuts" (see also here at Angry Bear) for the moderately to very well-to-do.

In Mark Thoma's post, I couldn't help but notice the distorting nature of this table from the New York Times, based on data from the Tax Policy Center:

This reminded me of nothing but the Lyric Opera of Chicago subscriber survey, where readers with elephantine memories might recall I was shocked by the number (relative to most other surveys) of income categories above mine. The table's distortion is that the bottom four of the eleven categories account for 55 percent of "tax units" — i.e., would-be tax filers, whether they earn enough to file a return or not. Having a majority of the categories show at least a decent dinner-for-two's worth of tax shift benefits, though, helps contribute to the "money delusion" whereby low income families mistakenly think they are material beneficiaries of Bushist tax policies (*).

A clearer table would at least show how the percentages of taxpayers and percentages of the "cuts" coincide. Using the Tax Policy Center's data, here it is:
Picture 5

Alternatively, you could show equal population categories to get a better indication of the distribution of benefits. While the Tax Policy Center doesn't report exact percentiles, here's a close-enough-for rock-'n'-roll approximation:
Picture 6

Given the presumably elite status of this blog's readership, if you're actually reading this, there's a decent chance that you actually are part of the elite that might benefit from the just-passed legislation. As for the general public, not so much.


(*) As co-CEO of a household that will "save" a grand or so from the 2006 AMT reprieve, I can only say this to low-income Bush voters: Thanks, suckers!

A Swarm of Sneeps

by Unknown

From a Slate article debunking the myth that meth mouth* is caused by corrosive chemicals in meth:

Teeth exposed to extrinsic (mainly dietary) and intrinsic acid (gastric acid) develop erosion lesions resulting in a bulk stripping or dissolving of enamel and then dentin. This is frequently seen in long-term lemon suckers involving the facial enamel surface, and in patients with gastroesophageal reflux disorder and bulimia involving the palatal/lingual and occlusal surfaces.(Shaner et al 2006; emphasis mine.)

You mean, there are enough long-term lemon suckers in the population to bother studying? Old Sneep would be so proud.

*Trying saying "myth meth mouth" 10 times fast. Mumble-mouth me mangles it to "miss meth mouse."

The Devil's in the Survey Design

by Tom Bozzo

There's been lots of buzz over (and efforts to rationalize) the Washington Post-ABC poll reported as registering broad public support for the latest infringements of civil liberties revealed in the NSA's domestic spying program. It's evidently right-wing talking point #1, as our own Bryan Smith hauled it out in the comments section to imply that if the vox pop has spoken, it must be right.

I've mentioned this in the comments, and others have so commented on other blogs, but it bears mentioning that the wording of the poll should not be discounted as a factor behind the measured support. Here's the first of the poll's NSA-related questions:

45. It's been reported that the National Security Agency has been collecting the phone call records of tens of millions of Americans. It then analyzes calling patterns in an effort to identify possible terrorism suspects, without listening to or recording the conversations. Would you consider this an acceptable or unacceptable way for the federal government to investigate terrorism? Do you feel that way strongly or somewhat?

This would appear to be about as favorable of a description of the program as could be formulated. It makes no mention of the program's dubious legality, or the possibility for information-sharing among agencies or possibly NSA contractors. It suggests only the ostensible national security purpose, and possibly conveys a faulty impression that the data analysis is focused on the identification of "terrorism suspects."

Here are the detailed results:
------- Acceptable ------ ----- Unacceptable ------ No
NET Strongly Somewhat NET Somewhat Strongly opin.
5/11/06 63 41 22 35 11 24 2

I'm not saying it isn't distressing that 41% of the public considers it "strongly acceptable" for the government to secretly mine phone call records. But the other 22 percentage points of support characterize the program as no more than "somewhat acceptable" — again, despite wording that plays up the fighting terrorism angle and plays down the unlawful privacy violation angle. So there's hardly 63% of ringing endorsement out of this poll.

Here's the even curiouser item, showing greater support for NSA snooping around one's own phone records:

46. If you found out that the NSA had a record of phone numbers that you yourself have called, would that bother you, or not? IF YES: Would it bother you a lot, or just somewhat?

NET A lot Somewhat No No opin.
5/11/06 34 24 10 66 *

Again, look at the wording. The NSA is described as "having a record" of the phone calls. Just for safe-keeping, I suppose.

That the innocent have nothing to hide seemingly is a belief among a substantial subpopulation of law-and-order types. Some of these results are just saying that. Otherwise, the WaPo poll wording appears to be putting a positive spin on a story that's as yet not fully investigated. The results should accordingly be taken with an appropriate grain of salt.


Meanwhile, as the blogiverse has been very busy on the subject, I'll point out to this "what do you take us for" moment, picked up at Waxing America:
Sen. Wayne Allard, R-Colo., said NSA was using the data to analyze calling patterns in order to detect and track suspected terrorist activity, according to information provided to him by the White House. "Telephone customers' names, addresses and other personal information have not be[en] handed over to NSA as part of this program," he said.
Bravo, Sen. Allard, for your Brooklyn Bridge salesmanship!

It would appear to go without saying that trying to identify the terrorist-suspect nodes in a vast communications network goes from very hard to essentially impossible if the nodes are anonymous. To do any useful analysis, the call records must be linked with personally idenfying information (PII). As anyone who's ever hung up on a cold-calling telemarketer surely knows, obtaining identity information on telephone customers is not hard — it only takes the money to buy a sufficiently comprehensive commercial database. It's the call records that are sensitive because once you know what calls are made, linking that information (if unreliably) to PII on the phone subscribers is straightforward, esp. if you happen to be sitting on a secret but no doubt impressive supercomputing capacity.


In the event you need a comprehensive background, Gary Farber has, in a deserved I-told-you-so post, dozens of links to informative posts here.

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