Netflix Finally Agrees to Caption 80% of Streaming Content!

Netflix has announced that 80% of its streaming content will be captioned by the end of 2011. It's about time. The issue of online captioning didn't appear to be on CEO Reed Hasting's radar at all in May 2009. That all changed with this May 2009 post.

Thank you so much to everyone who supported the online captioning campaign. We couldn't have done it without you!

Also, thank you to Netflix and CEO Reed Hastings for rising up to the challenge. We know it's not over yet--some people doubt that Netflix can meet its own goal of captioning 80% of its streaming content by the end of 2011--but at least the company finally appears to recognize captioning issue is an important issue.

Disclosure: I have either no shares or an insignificant number of shares in Netflix (NFLX). I continue to be a Netflix member, but have not watched more than a handful of movies online because of the captioning issue.

Update in January 2017: Reading Netflixed (2013), it appears Blockbuster's John Antioco had Netflix on the ropes when investor Carl Icahn disputed 5.6 million of Antioco's deserved bonus. The dispute led Antioco to leave Blockbuster, essentially bankrupting the company's online business (now Sling) and giving Netflix a clear path ahead.

Even more interesting is the "loss leader" strategy employed by Antioco to drive subscribers to switch from NFLX to Blockbuster Online. Having bricks-and-mortar stores once gave Blockbuster advantages--it could sell ancillary products to increase cash flow, and allow customers to return mailed DVDs to physical stores--while Netflix relied completely on online distribution. More importantly, the revenue from existing Blockbuster customers could allow it to create "loss leader" strategies to bankrupt the smaller Netflix--as long as franchisees were onboard. Such new strategies present fascinating anti-trust issues, because once a new competitor is vanquished, what prevents the sole winner of a complex, costly business model to drive up prices? 

Movie Recommendation: Gideon's Trumpet

It's actually a made-for-television film starring Henry Fonda, but it is beautifully done and a must-see. Gideon's Trumpet has everything--great acting and a look behind the scenes of the Supreme Court and our legal system. If you're a high school teacher, please show this film to your students.

Bonus: list of the best movies you've never heard of here.

Retired California Teachers Receive Lump Sums of $500,000

Oh, those poor, poor California teachers. They only get lump sums of $500,000 when they retire. Wait, what? Oh, you didn't know that? Keep reading.

"Of the 12,568 California educators who retired in fiscal year 2007-08, the median number of years on the job was 29 years. The average CalSTRS pension was $48,180 per year, which was about 62 percent of the average highest salary." See here [Update: link no longer works.]

Assuming a 6% rate of return and 29 years of retirement, you and I would have to save up almost $17,200 every single year for 29 years straight to get the same level of retirement income as an average California teacher. Why? Because most of us would have to buy an annuity on the open market to get something similar to a pension.

To give you an idea of how expensive these pensions are, let's do the math: to get $48K a year for 17 years, we would have to generate a nest egg worth about $500,000. Basically, California taxpayers provide the average California teacher with a nest egg of $500,000 upon retirement--the market cost of paying someone about $48K a year for 17 years of retirement. (Note: Hypothetical assumes you start teaching at the age of 31 and work 29 years, which means you're 60 years old. You then retire and then expire at 77.)

Will most Californians have at least $500,000 when they retire? If not, why are they responsible for guaranteeing the average teacher an annuity worth about $500,000? Also, how many of us can afford to save $17,200 a year? Even if private sector employees maxed out their 401(k)s, they couldn't put $17,200 a year in the account [as of 2011]. And people still think teachers, on average, are underpaid. Perhaps the newer and younger ones are--but that's not the taxpayers' fault. It's the union's fault for creating and enforcing a compensation system that shoves so many available taxpayer dollars in the back-end of a teacher's career rather than in the front.

P.S. Want to do the annuity calculations yourself? Here is one version of an annuity calculator.

Bonus: It looks like I may have underestimated the value of the pension. More here. The Money Blog calculates that as of 3/2011, a $300,000 lump sum would would get you just $1300/mo in annuity payments.

Also, see Margaret Collins, July 1, 2011, “Delay Taking Social Security, Add Annuity to Survive Retirement”: “For example, a contract [annuity] purchased for $95,500 by a 66-year-old couple in Florida may provide $4,262 a year until the death of the surviving spouse and include increases for inflation."

Bonus II: from Joel Klein, The Atlantic, June 2011:

[C]onsider the financial burden that comes with providing lifetime benefits. Given the time between first putting aside the money to fund such a “long-tail exposure” and having to begin paying it, the amount “reserved” by the employer necessarily depends on a host of imprecise assumptions—about the rate of return that the money invested in the pension fund will earn, about how long employees will live, and even about how much overtime employees will work during their last few years, which is normally included in calculations of the amount of the pension. Each dollar set aside this year to cover the ultimate pension exposure must be taken from what would otherwise be current operating dollars.

Consequently, elected officials have had every incentive to make extraordinarily optimistic assumptions about the pension plan—or to simply underfund it—so they can put as little as possible into the reserve. Unfortunately, but predictably, that’s exactly what has happened: most states “assumed” they would get an average 8 percent return on their pension reserves, when in fact they were getting significantly less. Over the past 10 years, for example, New York City’s pension funds earned an average of just 2.5 percent. Now virtually every pension plan in America that covers teachers has huge unfunded liabilities. A recent study by the Manhattan Institute estimated the total current shortfall at close to $1 trillion. There’s only one way to pay for that: take the money from current and future operating budgets, robbing today’s children to pay tomorrow’s pensions.

LeBron James: Justified in Leaving Cleveland?

Bill Simmons wrote an article unrelated to LeBron James, but it includes the best defense of "The Decision" I've seen so far:

Isn't loyalty a two-way street? When a team does what's best for itself, we call it smart. When a player does the same, we call him selfish. We never think about what a double standard it is.

I'd never thought of it that way before.

Government Unions: Hoodwinking the Public, One Voter at a Time

If you're a California voter, you've been the victim of a scam perpetuated by the state's public sector unions:

[Actual] CalPERS data shows the average career public employee, who put in at least 30 years of service and retired in the 2008-09 fiscal year, collected a starting pension of $67,000 a year, or 2.5 times the advertised figure [by CalPERS]...

The pension numbers are even higher for the separate local retirement systems that cover employees of the two East Bay county governments. The average was $85,500 for career workers who retired in 2009 from the Contra Costa system, and $83,000 from Alameda County. A majority of these workers also receive Social Security, which could add, very roughly, about another $19,000 to the annual pension.

More here. 1) think California doesn't spend enough on education? 55% of California's general fund will be spent on education (43% on K-12; and 12% on higher education); and 2) think we should tax people more? Think harder. If you're a company and want to expand, are you going to expand someplace where you and your workers have access to cheaper housing, reasonable wages, and lower taxes, or someplace with higher housing costs, higher salaries, and higher taxes?

What about taxing corporations instead of individuals, you ask? From David Walker's book, Comeback America (hardcover, page 121): "we must realize that corporations don't really pay taxes. Rather, they pass along any tax, in the form of higher prices to consumers, lower wages to workers, and/or lower returns to shareholders." It turns out trickle down economics exists--at least when it comes to taxes.

Bonus I: from Calvin Massey:

In the private sector a union bargains for a greater share of the entity’s revenue and profits. What it can provide in return is greater productivity, accomplished perhaps by work force stability, higher morale, and the belief that the common fate of employer and employee will be enhanced by productivity gains. If this happy event ensues, at the next round of collective bargaining, union workers can and should receive their fair share of the resulting gains.

In the public sector, by contrast, a union is not bargaining for a greater share of the revenue produced by economic activity; it is bargaining for a greater share of revenue that is obtained by force of law – taxation – or, if not a greater share, at least for a constant share of those revenues extracted from the citizens. What a public sector union can and does provide in return is political support for the faction that chooses to increase taxes or the union’s share of existing taxes. If public sector unions deliver on their support, they will be rewarded by ever more generous payments. There is no market that acts as an external monitor of worker compensation; there is only a steady repetition of a corrosive bargain – tax the public ever more in order to maintain political power. That is inimical to responsible government.

It appears Calvin Massey is a law professor at UC Hastings. Bravo!

Bonus II: Christopher Caldwell, FT, 2/25/11:

Public-sector unions have long posed a problem of what the economist Mancur Olson called the “logic of collective action”. Democracy tends to offer benefits to small, well-organised groups (who defend them vigilantly) while spreading the costs among the broader public (in doses that are too small to rally resistance around). The result is a hardening of privilege. What is new in Wisconsin is that those who do not belong to public-employee unions see this logic as clearly as those who do.

Ralph Waldo Emerson on Despotism

Ralph Waldo Emerson, from his 1844 lecture, "The Young American":

Fathers wish to be the fathers of the minds of their children, and behold with impatience a new character and way of thinking presuming to show itself in their own son or daughter. This feeling, which all their love and pride in the powers of their children cannot subdue, becomes petulance and tyranny when the head of the clan, the emperor of an empire, deals with the same difference of opinion in his subjects. Difference of opinion is the one crime which kings never forgive. An empire is an immense egotism. "I am the State," said the French Louis. When a French ambassador mentioned to Paul of Russia, that a man of consequence in St. Petersburg was interesting himself in some matter, the Czar interrupted him, -- "There is no man of consequence in this empire, but he with whom I am actually speaking; and so long only as I am speaking to him, is he of any consequence." And Nicholas, the present emperor, is reported to have said to his council, "The age is embarrassed with new opinions; rely on me, gentlemen, I shall oppose an iron will to the progress of liberal opinions."

The last line is hilarious, isn't it?

Got Enemies?

He has no enemy, you say;
My friend, your boast is poor,
He who hath mingled in the fray
Of duty that the brave endure
Must have made foes. If he has none
Small is the work that he has done.
He has hit no traitor on the hip;
Has cast no cup from perjured lip;
Has never turned the wrong to right;
Has been a coward in the fight.

- Alexander Anton von Auersperg

Unintended Consquences: Meredith Menden on Teacher Pay

Meredith Menden wrote a sarcastic Facebook note titled, "Are you sick of highly paid teachers?" proposing to pay teachers directly like babysitters, i.e., $19.50 a day. $19.50 x 30 kids x 180 days a year = $105,300 a year. Let's take Ms. Menden's idea further and actually consider paying teachers directly. First, we have to figure out how much each of us are paying teachers now.

In 2009, Californians filed about 12.8 million tax returns. (http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2009_Filing_Season_Statistics.shtml)

California's annual budget is about $89 billion. The annual budget number is different from the amount available in the general fund. The general fund is basically the state's operating budget and includes money that covers the day-to-day activities of various state programs. The state's annual budget number includes expenses outside the general day-to-day activities of various state agencies and is therefore higher than the amount available for its general fund.

About 40% to 50% of the general fund usually goes to K-12 education. For 2011-2012, when including college funding, about 55% of the general fund will be spent on all education (DOF link here), with about 42.8% spent on K-12 education (see Governor's eBudget summary).

In 2011-2012, Jerry Brown is proposing that we spend $37.7 billion on K-12 education: http://www.ebudget.ca.gov/StateAgencyBudgets/6010/agency.html

So California plans on spending about $38 billion on K-12 education in 2011-2012--and that only includes the amount received from the state. (K-12 schools receive more funding from other sources, but we'll ignore those sources for now.) Each state tax filer is paying about 3K a year on K-12 education. Instead of giving that money to the government each year, why not return it to each taxpayer and add another 1K, even to people who do NOT generally file tax returns (i.e., poor people)?

Under this system, a poor parent would get an additional 4K a year to spend on his or her child's education. A married couple with two children would have 4K to spend on each child's tuition. A married couple with only one child could receive up to 8K. If parents don't spend the full amount on schooling costs, they would be required to spend any excess money in the county where they live. All recipients with K-12 children must spend at least 2K of their 4K on K-12 tuition. Payments and purchases would be tracked using something similar to our current EBT card system.

Adults who have no desire to attend school or who have no children would receive 2K in tax credits but must spend the money within their county of residence. Depending on the state's finances, this proposal could be extended to college students to help them pay for tuition. (Instead of increasing college tuition costs as we're doing now, we might be able to help college students reduce higher education costs).

Taxpayers who earn more than 125K a year in adjusted gross income would not be eligible for the 2K tax credit or 4K tuition credit. Once again, any tax credit not used on tuition or reducing a person's tax liability will be loaded on a card that must be spent on a business physically located in the taxpayer's county of residence.

More ideas: teachers would be hired based on one year contracts. A month before the end of the school year, a majority vote of the parents by secret ballot could remove the teacher. Requiring that all recipients with school-age children must spend at least 2K of their 4K on K-12 tuition gives teachers a *minimum* salary of 60K a year (assuming 30 kids--2 x 30). Parents who have only one child would have to pay 4K a year (2K each is required to be used for school), which would increase the teacher's salary beyond 60K in many cases. The money would go into a common pool and be divided among the different teachers in science, math, English, etc. In exchange for higher pay, teachers would be responsible for their own health care and retirement, just like many people in the private sector. With so many more people buying individual health and dental care plans, the overall cost of individual insurance plans would fall, creating an indirect benefit for poor people, the uninsured, and the self-employed.

If parents want to spend more on teachers, they can give them up to 120K (4 x 30) or more. If you're concerned about poor people in California, many poor people live in the Central Valley and way up north. 60K a year--the minimum salary--is good money in places like Fresno, Bakersfield, outskirts of Sacramento, etc. Of course, millions of poor people live outside of the Central Valley and in more expensive places like L.A., San Jose, etc. Most likely, these parents would have to spend their entire 4K voucher on a local school (if we assume more affluent neighborhoods will vote in higher salaries for teachers). However, poor parents will still have more choices and more of a voice in their children's education because teachers would have to cater directly to them to get their votes at the end of the year. In any case, under this proposal, all poor adults, even those without children, would receive 2K more every single year.

One issue is factoring in the increase in expected tax returns. Obviously, there will be more than 13 million people filing taxes if they know they will get between 2K to 4K. Also, we would have to create a new agency to investigate fraud/kickbacks, supervise the annual secret ballot vote, verify residency, prosecute parents who don't send their kids to school, etc. But if existing funding sources are inadequate, let's assume we could implement at least two measures to cover any expected shortfall: one, raise sales taxes (that's what we're doing now when we have a shortfall); and two, force all government employees making over 100K to take a 15% pay cut down to a minimum of 100K. We may not have to implement either of those measures if we handle additional sources of funding wisely. Lest we forget, we haven't even included federal money and local property taxes, which are around 11% and 21% of K-12 school funding (See here). Those are tens of billions of dollars of existing funding we have not yet discussed or included in our calculations.

Another note: we would have to cut P.E., which means we would teach five subjects instead of six subjects (e.g., English, math, science, social studies, and one elective, e.g., a foreign language, logic, music, etc.). The ambitious high school students could enroll at the local community college if they wanted more classes.

There are some important factors I haven't considered (e.g., what if parents have more than two kids? how do we best count the votes of divorced and/or single parents?), but we can see that existing funding is enough to improve the education system and also assist low-income parents. Whatever we're doing now is not assisting the children of low-income parents, so we ought to be open to all ideas. Why not consider a plan that would help increase accountability, pay teachers more, and help poor people? Most studies show that academic success tends to be influenced most by levels of parental income, parental education, and parental involvement. The proposed idea addresses all three aforementioned factors.

Update:

1) Complaint: not all poor people live in the Central Valley, and private schools are expensive.

Response: the poor people in the larger cities would probably have to use the full amount of their 4K vouchers to attend public schools, but they would still have more choices. Remember that under our current system, poor people must currently enroll their children in a pre-determined school, regardless of whether it is failing or dangerous. Giving parents a voucher for 4K allows them to consider charter schools and to demand more accountability.

Some people have said that private schools cost more than 4K a year. Well, some do, and some don't. Right now, we don't have much competition in schooling, and rich people are the ones with options. However, once we establish a voucher system, it is likely that new charter and new private schools that cost between 2K and 4K annually would crop up and be available to everyone, not just rich people.

And remember: we're not eliminating public schools or forcing anyone to attend a charter school. All we're doing is demonstrating that we can double teacher pay using existing resources (and still have plenty of money left over). All public schools would be required to enroll students with 4K vouchers. The true debate centers around the process the parents would use to determine whether they would have to use 2K or the full 4K amount of their vouchers, i.e., is it a majority vote of the class, school, county, etc.?

2) Complaint: healthcare coverage would be difficult on the private market, because you are switching tens of thousands of teachers from group coverage to individual coverage.

Isn't it true that under Obamacare, insurers must cover all individuals regardless of pre-existing conditions? In any case, the health insurance issue is a separate topic that can be addressed via state or federal legislation.

3) Complaint: the proposed idea eliminates administrators and other non-teaching staff.

The proposed idea eliminates administrators and other non-teaching staff so we can pay most teachers more money. We can modify the plan to add more money for basic maintenance costs, which are not a large portion of California's existing education budget. About 80 to 85% of California's K-12 budget currently goes directly in the pockets of school employees. (http://www.ed-data.k12.ca.us/articles/article.asp?title=teachers+in+california) If we can resolve the school employee funding issue, which is about 85% of the battle, we can easily deal with the remaining 15%.

To the extent we cannot replace the remaining funding needs by increasing sales taxes or decreasing the salaries of high earning government employees, remember that we have not included additional sources of funding. Only 61% of K-12 school funding comes from the state. As discussed above, the federal government provides an additional 11% and local property taxes provide another 21%. (See here.) In short, our calculations above have not included tens of billions of dollars of existing funding. Even without including the additional sources of funding, we have devised a system that could potentially double the average teacher salary in California.

4) Complaint: poor kids sometimes receive their only meal of the day at school. What about cafeteria staff?

An additional 2K a year gives parents over eleven dollars a day to replace any missed school lunches (assuming 180 school days). In schools that require the full 4K voucher, we can require the schools to feed children at least once a day. See response to number 3 above. Again, we have not considered other sources of funding from the state, local property taxes, lotto sales, etc.

5) Complaint: what about the existing pension and medical benefit obligations we owe to retired teachers?

The proposed plan eliminates unpredictable, unsustainable liabilities for incoming teachers in exchange for higher pay. Basically, teachers get paid more and taxpayers get more budget flexibility and predictability.

What about existing and retired teachers? The studies I've seen indicate that existing plans to cover such liabilities are underfunded by around $30 to $50 billion. We can apportion a set amount each year from federal or local property taxes to cover existing liabilities owed to retired teachers. If we spread out the funding over thirty years, we should be able to cover existing liabilities. We could also change the way benefits are calculated for existing teachers, such as increasing their contributions to pension and medical plans.

6) Complaint: what about making sure that all students, nationwide, are learning the same basic skills?

Remember: we haven't touched sources of federal money in the above calculations. The federal government usually provides about 11% of education funding in California.

In exchange for accepting federal money, the federal government can require schools to fail students who do not pass a basic competency test at the end of the year. Results would be released before parents vote on whether to retain their child's teacher. Under this method, parents would have a nationwide standard to measure both student and teacher performance while also giving teachers more flexibility in how to teach.

Bonus: Did you know the average California teacher receives the equivalent--at least as of 2011--of about $500,000 when s/he retires? Never heard that before, huh? Funny how the teachers' unions don't mention that. More here.

Judge Ward Has a Blog!

One of the most fair, diligent, and personable trial judges in Santa Clara County recently retired. Judge Gregory Ward, a Harvard Law graduate, has blessed the blogosphere with his musings on case law and legislation related to California trials. For more, see here: http://www.caltrialpractice.com/

I particularly like this post--"Hey! Keep It Down In There!": http://www.caltrialpractice.com/2011/02/hey-keep-it-down-in-there.html. If you do employment law, you'll really like it.

By the way, Human Resources and corporate in-house counsel are usually not an employee's friend. They typically exist to protect the corporation, not the employee. I'm just sayin'.

Amazing Song by Asobi Seksu

Collective Bargaining as a Strong-Arm Technique

More on Wisconsin's labor issues, as seen on Facebook by Robert B:

Collective bargaining is not a right. It is a strong-arm technique utilized by unions to intimidate and force business owners to make concessions. There was a time when unethical business owners needed to be forced to act ethically [because civil laws were weak]. Those times are long past. Ever hear of OSHA?

Your grandfather, after a prolonged strike, ultimately had to cross the picket line and it ruined long term friendships and really hurt him personally. However, he ultimately felt the well being of his family outweighed the pressure from the union. Union leaders today now serve to garner the greatest income and benefits for themselves and members without consideration of the greater needs of the city, state, country, or other non-union neighbors. New hires are forced to join unions and pay union dues that fund lobbyists representing the extreme positions of the union. So your argument that unions stand for fairness is an anachronism that carries little weight in the United States today.

And finally, if I may share my experiences relating to my brief stint as a member of the AFL-CIO, the concept of a fair days pay for a fair days work did not exist in the mind of the union members I worked beside. They took their days pay but worked as little as they could get away with and constantly required supervision to do their fair day's work. It is time for the pendulum to come to rest in the middle where employees work hard to help maximize profitability of their employer and the employer demonstrates appreciation with a fair pay and benefits.

Businesses still have to be forced to act ethically, but Robert's point seems to be that civil laws already do the trick, and adding collective bargaining has swung the balance of political power too far in one direction. Private sector unions do not present the same problems as government unions; however, any unchecked power causes problems. When you add political kickbacks to unchecked power, the public at large usually suffers.

Wisconsin Showdown: Private Sector v. Gov Unions

People supporting Wisconsin's government workers don't seem to understand they are actually supporting fiscal suicide.

Part 1: Wisconsin is not proposing anything unusual. Almost half the states have already outlawed government unions (i.e., right-to-work states). In all right-to-work states, a family can buy a 4/2 house in a safe neighborhood for less than $180K (at least as of 2011).

While correlation does not equal causation, higher government employment costs generally require higher taxes. Higher taxes tend to favor government workers, not private sector workers. In an ideal system, the private sector does not work to provide an ever-increasing share of resources to government workers; instead, the private sector maximizes the income of non-government workers while minimizing inflation and government costs that do not benefit the public at large.

It appears, however, that government unions tend to do too well in compensation negotiations, especially with Democratic politicians, which means that wherever they exist, they have over-reached. Voters don't usually notice the government's generous compensation schemes until there's a recession, which suddenly exposes the actual costs of government. Indeed, recent data shows that public sector unions lack real checks and balances and tend to work against the interests of the public at large. (See Economist articles cited at the end of this post, showing government workers have negotiated trillions of dollars of benefits for themselves--yes, I said "trillions," with a "t.")

Generally, the more powerful government unions become, the easier it is for them to use non-unionized workers (the general public) to benefit unionized government workers. (Imagine a government-sponsored snowball gaining more and more traction, sucking up compliant politicians along the way.) During a recession, when revenues decline, states that have allowed government unions tend to drive out all but very high earners and union members. This is because politically-connected and politically-protected employees (government unions) and people with unique skills usually have high job security.

Thus, as long as recessions and layoffs exist, if someone wants to own a home in a state with government unions, s/he must either join a union; have sources of income unrelated to the job market (inheritance, a trust); or make a very high income in the private sector. Since not everyone can make a very high income in the private sector, government unions appear to drive out non-unionized middle class and poor residents. Furthermore, as we will see in the second part of this post, not only do government unions tend to work against the interests of the public at large, they drive out jobs and increase unemployment by imposing higher costs on corporations and businesses.

Do you support home ownership for the poor and middle class? Then you ought to figure out whose side you're on--the government unions, who drive up taxes and costs for everyone else, or the middle class and poor, who deserve a shot at buying a home even if they're not in a union.

________________

Part 2: Let's assume we have two states, X and Y. In state X, gov workers must negotiate benefits that are reasonable, because the absence of gov unions forces them to accept reasonable, predictable compensation. In Y, gov unions exist, and they demand and receive millions more annually than in state X. During a recession, State X can more easily cut costs than State Y, which must cut services and raise taxes to pay gov unions. State X's financial flexibility is directly related with its refusal to allow collective bargaining for its government workers.

You are someone who wants to buy a home, an entrepreneur, or a business that is considering expansion. You realize that State X can offer you lower taxes and costs and therefore a better environment to grow your employees and business b/c it has fewer long term fiscal obligations and more financial flexibility.

You also realize that State Y has no choice but to come after businesses and/or potential customers (i.e., taxpayers) to pay off gov unions during a recession. In other words, state Y must raise taxes if its gov unions refuse to agree to substantial pay and benefit cuts. State X, on the other hand, can ask the highest earning members of its government workers to accept lower benefits and salaries, thereby avoiding higher taxes, which reduces the burden on the private sector. State X's ability to demand that its highest earners in the gov workforce accept pay cuts also allows the state to avoid laying off its newer or lower-earning members. Avoiding layoffs allows State X to maintain its services, whereas State Y must cut services or create disincentives for private sector expansion.

Thus, we can see that gov unions are capable of driving investment and private sector jobs to states that lack gov unions, creating a death spiral for states with gov unions (absent a quick economic recovery). In short, if gov unions negotiate unreasonable compensation or refuse to reduce current and long-term compensation during a recession, the state's private sector has an incentive to disfavor expansion in the state.

Bonus: more here, from The Economist ("Three Trillion Dollar Hole," October 14, 2010) and also here, from The Economist ("A Gold-Plated Burden," October 14, 2010):

CHUCK REED is the Democratic mayor of San Jose, California. You might expect him to be an ally of public-sector workers, a powerful lobby in the Golden State. But last month, at a hearing on pension reform held by the Little Hoover Commission, which monitors the state’s government, Mr Reed lamented his crippling public-pensions bill. “City payments for retirement benefits have tripled over the last ten years even though our workforce has declined dramatically, and we have billions of dollars in unfunded liabilities that the taxpayers must pay,” he said. Mr Reed estimated that the average cost to his city of employing a police officer or firefighter was $180,000 a year. Not only can such workers retire at 50, but some enjoy annual pension payments greater than their salaries. They are also entitled to cost-of-living increases of 3% a year, health and dental insurance for life and lump-sum payments for unused sick leave that could reach hundreds of thousands of dollars.

More here, on one particular difference between the private sector and government sector (data from 2008-2009).

22 states refuse to allow collective bargaining: http://en.wikipedia.org/wiki/Right-to-work_law

Was Emerson a Capitalist?

Ralph Waldo Emerson, from his 1844 lecture, "The Young American":

The philosopher and lover of man have much harm to say of trade; but the historian will see that trade was the principle of Liberty; that trade planted America and destroyed Feudalism; that it makes peace and keeps peace, and it will abolish slavery.

Was Mr. Emerson a proponent of the Keynesian school of economics? Keep reading.

Bonus: We devise sumptuary and relief laws, but the principle of population is always reducing wages to the lowest pittance on which human life can be sustained. We legislate against forestalling and monopoly; we would have a common granary for the poor; but the selfishness which hoards the corn for high prices, is the preventive of famine; and the law of self-preservation is surer policy than any legislation can be. We concoct eleemosynary systems, and it turns out that our charity increases pauperism. We inflate our paper currency, we repair commerce with unlimited credit, and are presently visited with unlimited bankruptcy.

I'm going to go out on a limb and say Emerson was no Keynesian :-)

Iron Man 2: the Real Tony Stark?

I just saw Iron Man 2 (3/5 stars). The first one was much better, but I liked seeing Oracle co-founder and CEO Larry Ellison make a brief appearance in the second film. I suppose if anyone is the real-life version of Tony Stark, it's Larry Ellison. Or does Steve Jobs have a better claim to the title of dashing, outspoken entrepreneur?

Disclaimer: The views expressed on this blog are my own and do not necessarily reflect the views of any company or entity.

Race Relations

I see a lot of interesting debates on Facebook. This one's about race relations, which is always an interesting and controversial topic.

Controversial Person: For every race, tribe, color, and religious person, his/her fate starts and ends with jobs, the economy, adequate purchasing power, and a way to earn that purchasing power without being dependent on the kindness of persons who are of a different tribe, race, religion, or color. If a black man has to be dependent on a white man or welfare for his income, how far removed is he from slavery?

Cool Blue-Collar White Guy: This race subject has always bewildered me--shoot, most of the black people I know are more successful than I. I do not know what it is like to be a minority, however I grew up dirt poor and under-educated, and like most I did not go to the ends of the earth to get an education either....so my point is, it is up to the individual.

The Philosopher: I think it is a mistake to look at the African-American issue as a separate entity in the way Malcolm X makes it sound; it would be natural for him to mount his argument in the tone and rhetoric that he has - he is/was, after all, a black man himself. But the problem is a larger one – one that ‘I grew up dirt poor, under educated…’ comment of the comrade above illustrates rather well: it’s a problem of social construction as a whole. No doubt about it – race does matter, especially in a heterogeneous society like ours. But if you read books by intellectuals like Cornel West and/or Michael Eric Dyson, you’ll see how Malcolm’s message is put in perspective: we must (society at large, dominated by rich, white establishment) stop promoting the myth that a black man is either distant to a gang, or music or sports lifestyle. One may say those are merely stereotypes, but stereotypes, too, are constructed and have purpose. It’s the view of an African-American, permeating as a stereotype, that needs to be demolished (left behind – choose your own metaphor), which in turn will have the constructive and positive effect of better financial understanding, home ownership etc, etc… though not much mentioned, America very much operates on the basis of an unspoken caste system, and that unfortunately is true not just for African Americans, but whites and other races.

I also reject that success in a society is entirely dependent on the individual, but then I also disagree with a society that is merely concerned with equality of opportunity (and not equality of condition).

Cool Blue Collar White Guy: Books and scholars will not solve the problem. Friendships, Strong morals and family will. Furthermore I honestly believe the younger generations are doing this at a much greater rate than anytime in human history. I am 47 and can look you in the eye and honestly say that race or religion has not mattered to me.

Controversial Guy: @Philosopher: one reason African-Americans are stereotyped as athletes is because it is one area where they have been successful on their own and against the majority race.

@Blue Collar Guy: the last Fed Reserve study I read indicated that the only racial group (tracked by the Fed) that had a negative savings/wealth rate were African-Americans. Why is that? African immigrants from Africa tend to do very well in America and save money, so it's not a racial issue. One answer might be that African-Americans in this country have not found their niche outside of sports, which means that in every other category, they compete at a disadvantage with the majority race. As I've said before, never in the history of mankind (outside of apartheid or dictatorships) has the majority race ever allowed minority races to do well to an extent where they displace the majority race. The only way the minority races are able to succeed is by finding a place where they can outperform, based on merit, the majority race. For example, Christians wouldn't or couldn't handle money/interest in the old days, allowing others to handle that area for them. Muslims and Middle Easterners in America have done well because native born majority Americans have been unable to excel in math and science to the same extent as foreign Muslims, Hindus, Indians, Iranians, etc.

As a member of the majority race, Blue Collar Guy, you don't get to be automatically successful--but you get a default head start over racial minorities b/c the number of potentially available jobs is based on your skill set, not the color of your skin. With minority races, as I've posited here, the majority will never allow them to rise too high up in the ranks of government or union jobs and will defer charges of racism by hiring a few visible, compliant and perhaps not very exceptionally smart people (like Michael Steele, etc.). Having said that, so what? We can never dissolve all jobs based on political connections and limited accountability, i.e., union and government jobs, so all we can do is understand certain dynamics and work within those dynamics.

One contention is that political solutions to resolve racial wealth imbalances don't work (see President Johnson's War on Poverty), so we should look at solutions that allow minorities to gain independence and financial stability without relying on the kindness of the majority race. Assuming we want to assist minority communities specifically (rather than assisting all poor people regardless of race), any aid should come in the form of direct money into minority/poor communities, small business grants with someone vetting business plans, and assistance with teaching marketable skills (i.e., almost nothing that is taught in public schools today by unionized teachers).

There's another issue involved here. By attaching their fate to the majority race, minority races might be restricting women's mating choices. This is because only a limited percentage of minority men are allowed to get a part of the majority pie--in other words, the majority's pie will always be at least 51% in terms of gov and union jobs, and anything else that allows the majority to pass laws protecting themselves. This usually means the majority of minority men, at least those who cannot open their own businesses or find a niche, are unable to fully integrate into society on the same level as the majority race. It also means that the successful minority women who do successfully integrate and get a piece of the majority pie end up with fewer same-race men to marry who are on the same level, academically, financially, and geographically.

Cool Blue Collar White Guy: you know this feed is above my simple mind...I will just say that I have many "minority" friends and I am the minority in my neighborhood. I am cool with that...I know most my neighbors have my back, as I do them. I don't need my goverment to tell me whom to hire or to be friends with. That decision is best left with me. I have made the right choices. My "friends" list is a smorgasbord of personalities....all with their own qualities, and I dine there often :)

If our government is a reflection of the people why the disparity ? Or perceived disparity ? Shoot you have to be an attorney just to understand the tax code, let alone the civil rights stuff...and with 2300 pages of healthcare reform with more pork than a Jerry Springer show, I am definitely confused.

Controversial Guy: I totally agree with you when it comes to the ever-increasing laws and complexity of our political process. This phenomena makes it difficult for the average person/voter to stay interested. It has also led to dangerous apathy that will one day mutant into contempt, not just ridicule, name-calling, and Nazi references. We are not there yet, thank goodness. But if we do not move the debate back to realistic, fact-based, and data-driven solutions, we will get there soon enough.

Do California Goverment Unions Hurt Taxpayers?

Most California local school workers--everyone from gardeners to teachers--are eligible for pensions after just 5 years, as well as lifetime medical benefits after 15 yrs. Meanwhile, most corporate employees must wait until 67 years old to get benefits that are worth much less than those provided to California government employees.

In S.F., without changes, around $500 million a year will be spent paying city employees who no longer work. That means the City will not have $500 million a year to spend on new jobs, welfare, parks and recreation, community programs, or attracting small businesses to S.F.

Using taxes to favor gov workers, especially people who no longer work, has severe consequences for any state that wants to remain competitive. For instance, in 2007, 6% of California's population moved out of state, according to the Pew Center. Many CEOs will not expand in California, citing ABC: "Anywhere But California."

At the end of the day, corporations must be responsive to you and me; otherwise, they will not be able to sell their products and will go bankrupt. Government unions, in contrast, do not need us. Given low voter turnout, unions can effectively deliver 20%+ of votes in local elections to the politician of their choice. Then, unions can use their politicians to increase their benefits on the back end--i.e., pensions, lifetime medical benefits, etc.--where the bill doesn't come due for many decades and becomes another politician's and perhaps even another generation's problem.

The backending of gov employee compensation destroys accountability, because it allows politicians to make ironclad promises that do not activate during their term. For gov unions, the advantage of back-ending gov employee compensation is twofold: first, voters do not see any immediate consequences and think everything is fine; and second, unions can continue to pursue a deliberate strategy of keeping younger, newer employees underpaid so they can use them as propaganda tools, even as their retirees receive unpredictably high and unsustainable compensation. Who suffers the most? Newer and younger people, whom politicians usually ignore because of their low voter turnout and naivete in supporting teachers, police officers, firefighters and other gov employees at any cost.

More on union influence here: http://volokh.com/2010/01/25/californias-public-employee-pension-problem/

Bonus: Will Wilkinson writes an excellent piece on government unions--see here ("Bad Bargain").

Interesting Website on Captioning

The NIH has some excellent webpages. Here's one on captioning:

http://www.nidcd.nih.gov/health/hearing/caption.asp

Please support online captioning so all of us, including the hearing-impaired, can participate on the internet. Thank you.

Religion and Death

Below is a very controversial debate on Facebook regarding religion. Of course, correlation does not equal causation. Remember that when you hear anyone call a particular religion violent or peaceful. 

AC: In the last 250 years, has anyone who openly subscribed to a religion caused more deaths than the Christian-majority British, the Christian-majority Americans, or the Christian-majority Germans? And isn't it interesting that the only group that comes close to the number of killings as Christians are atheists? 

Count 'em: African slaves, the Holocaust, Korean War, Vietnam, WWI, WWII, Sabra and Shatila, Iraq, Afghanistan, Rwandan genocide (the Hutus are primarily Christians), Iraq (again), Abu Ghraib, Pakistan, etc. 

CB: Your whole hypothesis is one big logical fallacy. "correlation does not prove causation". You are saying that most wars in the 20th centuries involved Christian governments and therefore you state you are looking for reasons why "one particular religion has been so much more voluminous in killing people than other religions". That is a huge logical jump...you can't just make it and look for reasons. Who knows if there is even a connection. To say that Christianity "caused" WWII or WWI or the Vietnam war is absurd. Therefore to look for reasons why Christians "cause" more wars is just as absurd. Your argument might just as well be why do democracies cause more wars or why do white people cause more wars. 

In addition, your history is all messed up on Afghanistan. You are flat wrong on the facts about why we attacked Afghanistan. The war started less than a month after 9/11 and way before any war with Iraq. The stated goal was to defeat Al Qaeda and to demand the Taliban stop allowing Al Qaeda use the country as a base for terrorist operations. It had everything to do with 9/11 and zero to do with Iraq. You must have missed the whole state of the Union when Bush demanded the Taliban stop letting Al Qaeda use their country for that.It was Again, it had zero to do with some kind of base for Iraq. And I'm "surprised' that you are "surprised" about me stating that. In any event, you missed the point of my argument. You argued that Afghanistan was a "Christian" war. That's silly on it's face given the circumstances that lead up to the war. 

AC: 1) I never said any religion "caused" more deaths. I fully understand I was arguing correlation rather than causation. Thus, your entire argument involves knocking down something I never said. Let me leave you with the question you and everyone else continues to ignore: 

"In any case, no one here has provided any evidence that Christian-majority countries or atheist-majority countries have not killed the most number of people compared to other religions in the last 250 years. Therefore, my original point stands." 

The question is why is there such an unusual correlation. No one has been able to answer this question. 

2) re: Afghanistan, you completely ignored the potential link between short-sighted Soviet-era policies and modern day problems in Afghanistan. 

Even so, let's address the issue you raised: that "It [the war in Afghanistan] had everything to do with 9/11 and zero to do with Iraq." It depends on which part of the war we're discussing, and the answer depends on whether we're discussing the initial 2001 campaign, or the second, more extensive 2003 campaign. 

First, we basically captured Kabul and Kandahar in the initial invasion. For whatever reason, we neglected to secure other parts of the country. That meant that two years later, in 2003, the Taliban had returned and continued to destabilize Afghanistan. 2003 was the same year we invaded Iraq. You're assuming that is a coincidence--I do not believe it is. Just like we used Cambodia to prevent further escalation within Vietnam (i.e., Operation Menu), we may have used Iraq in 2003 to prevent further escalation in Afghanistan. In other words, it's possible the accusation of WMDs in Iraq had secondary practical purposes, i.e., preventing further escalation within Afghanistan. 

Second, I personally heard General Wesley Clark say that about two weeks after 9/11, he saw plans to invade mostly Muslim countries, including Iraq. 

Third, to the extent I called Afghanistan a Christian/atheist war, you missed my point--I said the country destabilized after atheist-majority (USSR) and Christian-majority (U.S.) countries interfered with it decades ago. (I notice you never disputed the aforementioned statement.) My point was that it is possible that our failure to have a Marshall Plan in Afghanistan post-Cold War led to a power void that allowed terrorists to increase their power within a destabilized country. You never disputed that point, either. 

In short, our military seems to rely on short-term strategies and alliances when faced with a greater potential perceived threat, and it's not clear if we understand the problems this strategy has caused long term. (By the way, we can apply the same line of questioning to our initial support for Saddam Hussein and then our eventual ouster of him.) 

Fourth, we're back at square one, b/c you've ignored my original statement: "In any case, no one here has provided any evidence that Christian-majority countries or atheist-majority countries have not killed the most number of people compared to other religions in the last 250 years." The question is, "What is the reason for this high correlation?" 

You should be able to figure out that I'm trying to teach you and everyone else a lesson so the next time you hear someone call Islam a violent religion, or, in your case, casually associate terrorism with "Islamic radicals," perhaps you'll think twice before associating religion with violence. Because it's quite clear which religion has the #1 death count, religiously-speaking, in the last 250 years. 

We're left with my more interesting question: if, absent religious and racial similarities, history shows that power tends only to understand power, are smaller countries justified in seeking nuclear weapons? Should we stop worrying and learn to love the nuclear bomb, which will force everyone to cooperate by raising the stakes of war? 

Bonus: "A controversial new history of the Indian Mutiny, which broke out 150 years ago and is acknowledged to have been the greatest challenge to any European power in the 19th century, claims that the British pursued a murderous decade-long campaign to wipe out millions of people who dared rise up against them." More here.

Coaching Basketball

In this dribbling drill, the kids have to go around sitting teammates in a weaving fashion. It's fun, especially when the kids try all kinds of "modifications" to stymie the ballhandler. One kid sitting on the edge actually moved next to the wall to prevent anyone from passing him. I thought of the line from Lord of the Rings: "You shall not pass!" :-)

Update: if we apply a legal perspective to the dribbling drill, we can see that some people will always try to game the rules, which is why laws ought to be as narrowly-defined as possible. In other words, the key issue in drafting a law isn't the potential good it can cause, but the potential harm "gamers" can cause.

Also, I just realized I posted this on Valentine's Day. I suppose I like the practice of law, but I love coaching basketball. It's so much fun being able to correct a kid's shooting form or defensive stance and see the player improve within a few hours. Even the advanced players benefit from coaching. I had one kid who is amazing on offense, but not so much on defense (he's smaller compared to others at his grade level). I taught him to immediately go back on defense and try to steal the ball from behind if he gets beat. He did it on Saturday, getting back on defense, stealing the ball, and changing the momentum of a very close game.

Just out of curiosity, if anyone reading this in 2011 has an available job coaching 2nd to 6th graders in basketball anywhere in the world, please let me know. Why 2nd to 6th? I don't have experience coaching 7th to 10th graders, and beyond the 10th grade, coaching is more about physical conditioning, adopting the correct style of play to maximize your players' skill sets, and teamwork than fundamental skills.

Also, pre-hormones, from a teaching perspective, kids are wonderful. By the third grade, they start to get their own personalities and quirks, which is fun to see. After the sixth grade, however, most teenagers tend to immediately rebel against authority, making teaching fundamental skills more difficult. The lesson? Teach 'em when they're young, because after elementary school, if they haven't learned the basic skills, it might very difficult to play catch-up.

Is Christianity a Peaceful Religion?

Is Christianity the religion of peace? Christianity's founder is on record as saying, "Do not think that I came to bring peace on the earth; I did not come to bring peace, but a sword."

Even if Jesus Christ meant an ideological conflict, Christian-majority countries have been the undisputed volume leaders in killing human beings over the last 250 years--at least compared to every other religion. Think WWI, WWII, Vietnam (including My Lai), Iraq (including "The Kill Team"), the Holocaust, etc.

The Old Testament is even more brutal:

Deuteronomy, Ch 7: "and when the LORD, your God, delivers them up to you and you defeat them, you shall doom them. Make no covenant with them and show them no mercy...But this is how you must deal with them: Tear down their altars, smash their sacred pillars, chop down their sacred poles, and destroy their idols by fire. For you are a people sacred to the LORD, your God; he has chosen you from all the nations on the face of the earth to be a people peculiarly his own...The LORD will remove all sickness from you; he will not afflict you with any of the malignant diseases that you know from Egypt, but will leave them with all your enemies...The images of their gods you shall destroy by fire. Do not covet the silver or gold on them, nor take it for yourselves, lest you be ensnared by it; for it is an abomination to the LORD, your God."  (See also Psalm 137.)

From Jesus Christ, full quote: "Do not think that I came to bring peace on the earth; I did not come to bring peace, but a sword. For I came to set a man against his father, and a daughter against her mother, and a daughter-in-law against her mother-in-law; and a man’s enemies will be the members of his household. He who loves father or mother more than Me is not worthy of Me; and he who loves son or daughter more than Me is not worthy of Me. And he who does not take his cross and follow after Me is not worthy of Me. He who has found his life will lose it, and he who has lost his life for My sake will find it." (Matthew 10:34-39 NASB)

Obviously, being related somehow to the most number of killings in the last 250 years doesn't mean Christianity or Christians are more violent in general. Everyone should know the difference between causation and correlation. This is why I find it interesting when Americans and American media outlets associate violence with Islam. I saw a more substantial "conversation" on the issue of religion and violence on Facebook, which I am copying below. The first person is responding to a comment about why Americans sometimes associate Islam with violence.

Facebook Debate

MNA: Some random thoughts... I'm generalizing, and "us" does not necessarily include "me." Radical Islamic fundamentalists have said "Death to America" and some people have chosen to take that personally and as a threat to their very well-being. When threatened, people don't always act rationally or accurately judge how serious that threat may really be. Some of it might be the media coverage - much as we are made to believe that things that kill 10 children a year are "dangerous" it's hard to not perceive the Islamic world as dangerous when we see stories of stonings of women accused of adultery, of honor killings and acid attacks. I think we like to believe that we have moved on and become more experienced and civilized... that confronted with the same situations, we would not behave in the same way. Seeing Muslims acting in vengeful ways straight out of the Bible doesn't make us view Muslims as equally "enlightened."

AC: "You" seem to be saying that it is reasonable for Christians and atheists to feel threatened by the actions of a small minority of Muslims acting barbarically. You then argue that Christians would not act the same way when confronted with the same situations, citing acid attacks and capital punishment. You allege that Christians have "moved on" and become more "civilized."

Acid attacks have happened in America, too--look up Bethany Storro, who, according to various reports, covered her face in acid and blamed it on a black person. I've also heard of acid attacks happening in several high schools in America. Is it rational to believe that America is an evil place because of isolated incidents? Of course not, but your words reveal a certain kind of bias based on selective application of general principles.

Also, America, like Middle Eastern countries, has capital punishment. It's hard to see electrocution as somehow better than stoning, but to the extent there is a difference, it is one of degree, not substance. Your comments seem to prove that human beings tend to think in terms of "us vs. them"--even when substantively, there is little difference between us and them. As a result, realists believe that only power convinces stronger nations to be "civilized." This might be what leads leads Iran and other countries to desire nuclear weapons, i.e., a realistic, rational policy of preservation.

But I'm not done yet. I have two words for you and anyone else who thinks Christian nations are civilized or somehow more civilized than other countries and nationalities: Abu Ghraib.

Let me now flip your statements as an academic exercise: Muslims would like to think that Christians are civilized and enlightened people, but when faced with Abu Ghraib, are Muslims and Muslim-majority countries justified in feeling threatened by Christians? The statistical record does indicate that Christian-majority countries have been highly predisposed to war and mass killings in the last 200 years. Taken together with Abu Ghraib and the 2003 invasion of Iraq based on a false allegation involving WMDs, are Muslim nations not justified in being concerned about their survival?

Overall, your comments indicate a selective memory and a willingness to attribute terrible things to Muslims but not to Christians. But my intent is not to single you out. My point is that human beings have a natural tendency to make people who look and act different from them into "The Other." Realists recognize this innate tendency to believe one's own people are more civilized than "the Other," which can sometimes cause tension and major misunderstandings.

MNA: Umm, I said "I think we like to believe" - I did not say we were right in thinking so, or that it is true. I think almost everyone thinks themselves morally superior to others, until put in a position where they have to make hard choices. Then it has nothing to do with race, color, creed or religion - only content of character as to how we rise to the occasion (or don't). There is no bias here, except yours perhaps ;) I think your entire argument was based around Muslims being somehow morally superior, their values leading them to be more peaceable. Speaking of peaceable...it's merely for "protection" that Iran seeks nuclear weapons? That might seem more plausible if they would stop denying the Holocaust and praying for Israel to be wiped off the map.

AC: Iran's president is a moron--let's agree on that right off the bat. However, his point seems to be that Israel emphasizes the Holocaust as a way of making its country's citizens into victims, which then allows them to victimize Palestinians and Muslims in the Gaza Strip and elsewhere (i.e., 2006 Lebanon War). (Most people intuitively believe that if you're a victim, you cannot be an oppressor or aggressor--see battered wife self-defense theory, etc.)

Thus, Iran's president's goal is to de-legitimize the Holocaust so he can paint Israel as an oppressor of Muslims, which is a stupid, grotesque, and ignorant way of approaching the situation. Even so, statements denying the number of deaths in the Holocaust--though unbelievably stupid and grotesque--say nothing about the likelihood of future attacks against Israel. (You seem to be forgetting that it was Christians that killed the Jews in the Holocaust, not Muslims.) Also, an isolated comment about wiping Israel off the map was stated in the passive voice, i.e., similar to saying that you hope that jerk across the street who's been beating up your brother dies soon. So you still lack objective evidence of any intent by Iran to attack Israel, which would be suicide for Iran, a country that's existed for 3000+ years. In other words, you seem to believe that a 3,000 years old civilization led by a Ph.D. civil engineer wants to commit suicide, even though Iran has a record of protecting Jews (see the story of Esther).

Also, Iran has never done to the Jews what America did to Muslims in Abu Ghraib. Based on your line of reasoning, we should believe that America's nuclear weapons are not for self-defense or peaceful purposes post-Abu-Ghraib and Iraq. If Iran ever rounded up the Jews in Iran and tortured them, your line of reasoning might make more sense, but in the absence of widespread human rights abuses against Jews within Iran, your line of reasoning appears based on prejudice and isolated statements rather than facts. Again, it was mostly Christians who rounded up the Jews in Germany and the Muslims in Iraq and Afghanistan.

It is also interesting that you fail to mention that in the last 200 years, Israelis have killed more Muslims than Iranians have killed Jews--and yet, despite the historical record, you believe Iran has less credibility than Israel when it comes to wanting protection, even though Israel has nuclear weapons and subjects Muslims in the Gaza Strip to daily human rights abuses, while Iran does not yet have nuclear weapons and does not commit daily human rights abuses against its Jewish residents.

In any case, hasn't your selective memory and reasoning proven my point? That no matter how educated or intelligent a person, he or she is a product of his/her environment and is easily led to accept theories based more on prejudice of the "Other" than facts, logic, and history? We are the country that invaded Iraq for no justifiable reason. Modern history shows that countries, especially Muslim-majority countries, not part of the elite or that do not share a sufficient number of characteristics with the power elite should seek the strongest protection possible as a means of self-defense. Is that not a reasonable conclusion based on the record post-Iraq and post-Abu Ghraib? Or do you think it's illogical for Iran to want protection when it sees what a Christian-majority nation did to Iraq and in Abu Ghraib?

Bonus: according Jewish journalist Roger Cohen, "Perhaps I have a bias toward facts over words, but I say the reality of Iranian civility toward Jews tells us more about Iran -- its sophistication and culture -- than all the inflammatory rhetoric. That may be because I'm a Jew and have seldom been treated with such consistent warmth as in Iran." More here.

Valentine's Edition: Songs about My Love Life

In my 20's, I would have chosen a different song to characterize my love life; in my early 30's, "Sometimes Love Just Ain't Enough" (Patty Smyth featuring Don Henley) is it.

I wonder if in my 40's, it will be "Nobody Wants to Be Lonely" by Ricky Martin and Christina Aguilera. As long as my theme song in my 50's isn't Pet Shop Boys' "Being Boring," I think I'll be all right.

The problem with the Bay Area in California is that few single people seem to have fiscally conservative habits. The ones who do are probably more risk-averse than the general population and settled down in their 20's. When I mention I would prefer someone who doesn't have any credit card debt, people call me unrealistic.

Although I've lived in large cities all my life, I identify with the smaller-city mentality I've seen in E.B. White's essays: "The quality in New York that insulates its inhabitants from life may simply weaken them as individuals. Perhaps it is healthier to live in a community where, when a cornice falls, you feel the blow; where, when the governor passes, you see at any rate his hat." ("Here is New York")

I am perfectly happy watching movies, playing basketball, coaching youth basketball, and reading books for entertainment. While I enjoy going out to a comedy show or music event once in a while, I don't feel my life would be empty without them. So I continue to wonder why I should pay $500K+ for a house in the Bay Area when I can buy a house for 85K in Nashville, TN or San Marcos, TX and live a similar lifestyle. Is California weather really worth $415K, which is about $700K before taxes?

Mom's Payback Time

I occasionally post conversations between my mom and me, where I gently and lovingly mock my Mom's interesting use of the English language. Here's one example, relating to the Super Bowl. And here's the most recent one, shortly after the Super Bowl event:

Me, on telephone, leaving someone a message: "I would rather have this [referring to a blunt person] than someone apathetic."

Mom, over-hearing me: "That's not right. It should be 'her,' not 'this.'"

Me: "Unbelievable. You're actually right for once."

Mom, later, texting me: "U should say in face book that I corrected your English. U make fun of my English. now is d pay back time. Let's see what your friends say."

FDR on Public Sector Unions

Fred Siegel has an interesting article in the WSJ (January 25, 2011) on liberals and government unions:

Liberals were once skeptical of public-sector unionism. In the 1930s, New York Mayor Fiorello LaGuardia warned against it as an infringement on democratic freedoms that threatened the ability of government to represent the broad needs of the citizenry. And in a 1937 letter to the head of an organization of federal workers, FDR noted that "a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable."

More here and here. More complete quote from FDR below (FDR to National Federation of Federal Employees, 1937):

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.

Also, unionization typically leads to higher salaries and benefits for employees, which is generally laudable, but with an important caveat: the more expensive you make something, the less of it you can have. If cops and teachers cost $150K a year, you can't have as many of them--at least not absent massive tax increases that will cause businesses to expand outside the state, thereby harming immigrants and poor persons who rely mostly on the private sector for jobs.

Also, isn't it generally better to have more teachers and police officers than fewer of them? If so, the more benefits and money you give them, the fewer of them you can hire down the road, especially if you're spending hundreds of millions of dollars a year on retired/non-working officers and teachers (in the form of pensions). By switching government workers to 401(k) plans rather than pensions, the same money we're using to pay non-working government employees could be used to hire more teachers and police officers and to pay them higher starting salaries.

One last point: when government unions cause a significant portion of their members' compensation to be back-ended, i.e., in the form of pensions and lifetime medical benefits, you have two major problems: one, the politicians involved in negotiating the promises won't be around to suffer any consequences if they made unfair, overly generous, and unsustainable promises; and two, budget planning becomes very difficult because governments are not life insurers and cannot accurately or fully predict the costs of their employees' lifetime health care and pension benefits.

[This post was updated on June 8, 2012.  More here, from Bruce Bartlett.]  

Interracial Marriage Stats

Interesting data on interracial marriage from the Pew Center:

http://pewresearch.org/pubs/1616/american-marriage-interracial-interethnic

Basically, according to the Pew Center report, 26% of Hispanic women, 9% of white and black women, and 40% of Asian women marry outside their race in America.

Superbowl Sunday Edition

My mom and I watched parts of the Super Bowl together. Here's one of our conversations from that day:

Mom: every touchdown is 7 points?

Me: it's 6 points, and if you make a free kick, it's 7.

Mom: you mean if it goes through that thing?

Me: [sigh] Yes. If it goes through the thing, it's an extra point.

Mom: what if it doesn't go through the thing?

Me: Then it's 6 points.

Mom: When is the halftime?

Me: At the half.

Mom: What do you mean the half? The time, or the score?

[P.S. We both liked the halftime show. I have no idea what people expect from a live halftime show, but some people's expectations seem unrealistic.]

Accuray CEO Euan Thomson

Dr. Euan Thomson, CEO and President of Accuray (ARAY). Congrats to Mr. Thomson for Accuray's most recent results (2011), which drove up the company's share price approximately 30%.

Bonus: review of Accuray's 2010 shareholder meeting here.

Disclosure: I have owned shares of Accuray (I haven't checked, but I might still own a few shares). My ownership positions may change at any time.

Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Milton Friedman on Immigration and Free Markets

One cannot be pro-socialism and pro-immigration. Immigrants are usually needed for private sector jobs, usually either highly specialized or low paying ones. Despite the prospect of a low paying, tough job, immigrants come to America and other non-socialist countries because they believe their children will be able to have a better life. But most union and socialist jobs are reserved for citizens, not immigrants. Thus, the sina qua non of the immigrant story is a large private sector rather than a large government sector. In other words, someone who is pro-immigrant must be capitalist, not socialist, assuming that socialism means a large government sector.

If you're still not convinced, please listen to Milton Friedman:

[Ch 7] "one of the paradoxes of experience is that, in spite of...historical evidence, it is precisely the minority groups that have frequently furnished the most vocal and numerous advocates of fundamental alterations in a capitalist society. They have tended to attribute to capitalism the residual restrictions they experience rather than to recognize that the free market has been the major factor enabling these restrictions to be as small as they are...the purchaser of bread does not know whether it was made from wheat grown by a white man or a [black man], by a Christian or a Jew. In consequence, the producer of wheat is in a position to use resources as effectively as he can, regardless of what the attitudes of the community may be toward his color, the religion, or other characteristics of the people he hires.

Furthermore, and perhaps more important, there is an economic incentive in a free market to separate economic efficiency from other characteristics of the individual. A businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not. Such an individual is in effect imposing higher costs on himself than are other individuals who do not have such preferences. Hence, in a free market they will tend to drive him out...

[Ch 1] As this example suggests, the groups in our society that have the most at stake in the preservation and strengthening of competitive capitalism are those minority groups which can most easily become the object of the distrust and enmity of the majority--the African-Americans, the Jews, the foreign-born, to mention only the obvious...[Yet] instead of recognizing that the existence of the free market has protected them from the attitudes of their fellow countrymen, they mistakenly attribute the residual discrimination to the market."

Bonus: Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.

CBO Slideshows

Neutral, non-partisan data is hard to come by these days. Thank goodness for the CBO. Its slideshows can be found here:

http://www.slideshare.net/cbo

One of the CBO's most recent (at least as of 2011) slideshows is about immigration. It includes the total number of immigrants apprehended and lots of other interesting statistics.

One of the Best SNL Skits Ever: Democratic Edition

Here's a bone to the Democrats--a fantastic 1998 skit that eviscerates the GOP:

http://snltranscripts.jt.org/98/98crepublicans.phtml [Season 24, Episode 3: Lucy Lawless]

Henry Hyde: Recently, the Republican Party has been accused of conducting a witch hunt aimed at overhrowing an elected President. Some even say we're in the midst of a coup d'etat. Well, I'm here to say, "You're damn right!" And, you know what, America - what the hell you gonna do about it? Okay? Most of you are too busy watching "Road Rules" and drinking Frappuccinos to go out and vote. We're gonna boot this hillbilly out! And then give tax breaks to the rich! So suck on that! Suck on it a real long time, then suck on it some more! Then keep sucking on it, and then suck a little bit more, and suck some more! And just keep sucking on it! Now, to further drive home how little respect I have for you as a nation, here's my good friend Sen. Jesse Helms.

Jesse Helms: Clinton raised the minimum wage, and I'm gonna cut it in half, mofos! [Will Ferrell as Henry Hyde claps ecstatically.] Everyone one o' ya gonna be workin' at Arby's for $2 an hour! And I'm-a gonna be gettin' off on it!

Republicans are your pals, they want a proud America, they don't want blacks anywhere! Oh.. oh.. I mean, no affirmative action, oh yeah.. Think of good things, America. Think of the TV show "Friends".. think of dancing babies.. fruit roll-ups.. that little kid from "Jerry Maguire".. Beanie Babies.. sharks fighting monkeys.. Ohhhh, you feel good? What's the point of votin'? Go to slee-eep.. slee-eep.

I tend to agree with the Democrats on social issues and with the GOP on economic issues. At the same time, my primary allegiance is to good and peaceful political opposition, because it promotes discussion and forces the other side to re-evaluate, explain, and/or strengthen its positions. Ridicule and satire are two effective forms of peaceful dissent. Just ask Jon Stewart and the Daily Show.

Ash Kalra: a Discussion on Unions and Pensions

Is Ash Kalra a government union puppet? You decide. Below is our discussion, copied from his Facebook wall, on January 27, 2011: 

San Jose City Councilmember Ash Kalra: [posts a link to Sarah Palin, who apparently made a gaffe by not fully understanding the Sputnik moment reference in President Obama's recent speech.]

Me: Palin may be a moron, but at least she would never vote to give public sector unions bonuses during a recession :-) Private sector unemployment is 12%, public sector unemployment is around 1%, and you voted to give bonuses to government unions? Do you understand the money that goes to the government unions comes from the private sector?

Ash Kalra: Matt, I don't know what bonuses you are referring to as most of our unions gave money back to balance our budget this last year. And, unlike the private sector, we do not give bonuses anyway. Also, in 2010, the largest segment in the workforce that lost jobs were public sector employees. Everyone is hurting and it does not help to pit the private sector versus the public sector. We need jobs for everyone including those that provide services to our community.

Me: @Ash: you don't know what bonuses I am referring to? See here: http://www.sanjose.com/news/2010/10/28/City_Council_pensions_deficit [Note: I've updated the link because the original SJ Mercury News link requires a password.]

Seems like the "Forgetful Foursome" moniker isn't just hyperbole. [Note: the SJ Mercury News dubbed Ash Kalra, Kansen Chu, Nancy Pyle, and Nora Campos the "Forgetful Foursome" after their vote supporting government pension bonuses. Seven (7) Santa Clara County Council members voted against the pension bonuses, prevailing over the four who voted to give additional pension monies to retired government workers, including some who receive six-figure annual pensions.]

You say that "in 2010, the largest segment in the workforce that lost jobs were public sector workers." This is a misleading statement. In the aggregate, government workers are such a large number, even a 1% decline in their ranks translates into more individual persons unemployed than compared to other individuals in discrete occupations. (According to the BLS, "In 2010, 7.6 million public sector employees belonged to a union...Within the public sector, local government workers had the highest union membership rate, 42.3%...The largest numbers of union members lived in California." (http://www.bls.gov/news.release/union2.nr0.htm)

See also: http://1.bp.blogspot.com/_HOMfaLGCZIY/THoXdPJM3TI/AAAAAAAAAdQ/GOFeYbeQrMg/s1600/the_protected_class.png

In any case, it's fairly obvious that a 12% unemployment rate in CA's private sector vs. a 1% unemployment rate in CA's public sector is cause for concern. When certain politicians use their discretion to give more money to the public sector during a recession, even when such monies are not contractually required, it's unclear whether they understand Economics 101.

If we want to assist both the private and public sector, we need politicians who understand that a thriving private sector is paramount, especially because the private sector funds the public sector--not the other way around.

Ash Kalra: Matt, I was referring to drops in Silicon Valley in 2010. The public sector was the largest category in job losses. As for the article you dug up, we did not give bonuses. That is the supplemental retirement bonus for retirees that had been paid out for about a decade. The decision was whether to suspend and examine it or keep it in place and examine it. I certainly felt we should keep it in place and examine it since there are some retirees that rely on it and it had zero impact on the general fund and almost zero impact on the pension fund to keep in place while it is being examined. Suspending it was purely symbolic except to some of the retirees that rely on that money. Even on Tuesdays meeting, I asked the staff, as we examine the supplemental payment, to identify those retirees that are truly in need so we can relieve those struggling on the lower end of our retiree pay scale. So, to say we are giving bonuses to government unions is certainly a gross generalization. I have voted time and again assistance to our private sector employers to help them retain and grow their companies and have spent countless hours meeting with CEO's in my district to find ways we can help them succeed including helping them access capital as well as grants and tenant improvement programs offered by the city. It's easy to buy into labels the media chooses to put on me but there is a lot of work I and my Council colleagues are doing to help our private employers.

Me: @Ash: thank you for your response. However, you are making misleading statements. First, by voting to maintain the current supplemental pension bonus plan, you voted to give bonuses to former government employees. You could have chosen to use that money for current government workers, businesses, or deficit reduction. You chose not to do so, which reveals your priorities (i.e., when given a choice, you choose retired government workers over current workers and deficit reduction [or at least a more fully-funded pension account]).

Second, Silicon Valley's public sector lost about 2,600 jobs in 2010, which you allege is a higher number than other individual occupation groups. But all you are doing is taking job losses within a very large group and comparing them to losses within separate, smaller groups.

It's like saying we should maintain bonuses to bankers because the entire financial industry in Silicon Valley (a large, diverse population) suffered more job losses than smaller groups of workers, such as hot dog stand workers, coaches, fishermen, etc. While 2,600 job losses are not something to sniff at, the way you present the information is misleading. [As such], you cause voters to question your judgment and economic knowledge when you vote to increase [or maintain discretionary] payouts to retired government workers during a recession that has caused massive deficits, in part due to the way cities like San Jose calculate pension benefits and payouts.

Perhaps a better question to ask is, "What reforms do you plan on enacting and supporting to ensure that pension payouts to retired government workers do not adversely affect future private and public sector job growth?"

For example, do you plan on lowering the projected pension investment return rate to something close to a riskless rate? Do you plan on increasing the time before which a city employee is eligible for a pension? (Right now, San Jose government workers are eligible for pensions after just 5 years.) [Note: What about basing pension payouts on a worker's average lifetime earnings instead of the final three years, when salaries are the highest?] In short, how do you plan on cutting pension costs, when such costs are clearly causing an adverse impact on city finances, according to the Civil Grand Jury, Stanford University, and [Mayor] Chuck Reed?

Ash Kalra: We voted unanimously on Tuesday to look at all of those options to reduce our pension liability. And, no, I did not vote to increase pension payments. And, the supplemental payment that has been in place for many years is not money that could otherwise be removed from the pension fund for any of the items you listed. They are solely for the benefit of the pensioners, although I do think it is reasonable to reevaluate the program and target the supplemental benefit to those truly in need and have the remainder returned to the pension fund. We also voted to evaluate the program to see whether it will be entirely eliminated or otherwise adjusted.

Me: @Ash: Thank you for correcting me. You voted to maintain, not increase, supplemental pension payouts (which were not contractually required). [Note: In other words, you voted to give discretionary pension payments to non-working government employees, despite the fact that the city's pension plan is currently underfunded.] I look forward to hearing your and other Councilmembers' ideas on fixing our city's budget problems in ways that focus on current public and private sector workers [as well as the unemployed].

Bonus: San Jose's employee pension bill, $63 million a decade ago, is now projected to be $248 million in the upcoming budget year, up from the $194 million that had been anticipated a year ago, even though the city's staff has shrunk from more than 7,000 to fewer than 6,000.

(SJ Mercury News, January 25, 2011, article "San Jose City Council OKs Pension Plan," by James Woolfolk)

If we had switched government workers to 401ks (defined benefit plans) instead of maintaining costly, unpredictable pensions, San Jose might eventually have $248 million to spend on new jobs in 2011 instead of paying government workers who no longer work.

Bonus II: my friend saw the discussion later and emailed me the following message:

Here are some facts and figures from San Jose's chief negotiator, Alex Gurza, regarding the "13th check"--"excess earnings can be declared and transfered to the SRBR ("13th check" pool) even if other actuarial assumptions have not been met and even if the plans are significantly underfunded, as they currently are."

"Largest payments are made to those who've been retired the longest and who served the city longest." These folks often are the ones that were receiving the less enriched benefits enacted in the 2000's; however, very few--perhaps four of five--workers are at or below the poverty line, and that's if you consider ONLY their pension payout. These few workers had only about 8 yrs of service, on average. We don't know if these folks worked elsewhere and have other pensions, 401(k)'s, savings, etc. [Anyone who works eight years for a single employer cannot expect to rely on his pension payments from that single employer as his primary source of income.]

3% automatic COLA [cost of living increases] went into effect for police and fire employees as of 2002. Over the 9 years since, the REAL cost of living rose an avg. of 2% per year. The compounding effect of the 3%-on-3%-on-3%-etc. gives us an average increase of 3.4% each year for these retirees. Just with their REGULAR pension payments, they've outpaced inflation by 12.4% over 9 yrs.

For Federated (the other) employees, they got the 3% COLA in 2006. Since then CPI has risen avg. of 1.8% per year. The compounded 3% COLAs equate to 3.2% gain, on average, over each of the past five years. These retirees have outpaced inflation by 6.8% in five years.

Update (Jan 2017): Rather than create better metrics measuring employee performance, governments are going the other way--resorting to fear and hero worship based on outliers--to maintain and increase employment.  Better individual metrics mean that governments will not be able to rely as much on social engineering or irrelevant issues to hire, fire, and demand tax revenue. If Inspector A has 10 successful investigations while Inspector B has 2, then the government may easily defend any off-the-job behavior of Inspector A if challenged, including social media postings. In a world without individual metrics, Inspector B prevails because the touchstone in hiring becomes non-controversy rather than merit.

Bonus (February 2017): another year, still the same political machine in California. This time, in Mill Valley, CA.  More HERE.