Film Rec: Wait Until Dark

Audrey Hepburn delivers an incredible performance in the thriller, Wait Until Dark. This film is an absolute must-see, especially for Alan Arkin fans. A very young Alan Arkin plays one of the best villains of all time, "Roat, Jr."

David Einhorn on Keynesian Economics

In "Easy Money, Hard Truths" (5/26/10), David Einhorn--in the NY Times--delivers some interesting facts:

http://www.nytimes.com/2010/05/27/opinion/27einhorn.html

Government employees are expensive and difficult to fire. Bloomberg News reported that from the last peak businesses have let go 8.5 million people, or 7.4 percent of the work force, while local governments have cut only 141,000 workers, or less than 1 percent.

Public sector jobs used to offer greater job security but lower pay. Not anymore. In 2008, according to the Cato Institute, the average federal civilian salary with benefits was $119,982, compared with $59,909 for the average private sector worker; the disparity has grown enormously over the last decade.

Modern Keynesianism works great until it doesn’t. No one really knows where the line is.

So much wisdom in one article. I recommend you read the entire article by clicking on the link above.

Grand Jury Report: Gov Employee Costs "Unsustainable"

Check out the latest report from Santa Clara County's Grand Jury ("Cities Must Rein in Unsustainable Employee Costs"):

http://www.scribd.com/doc/32084199/Grand-Jury-Report

The first priority in any government office should be to reduce undefined, unsustainable costs--such as taxpayer-guaranteed pensions.

Nepotism, Racism, and Fairness

As a California employment lawyer, I've represented people of all races--Caucasians, Africans, African-Americans, Asians, Southeast Asians, etc. After eight years of litigation, I am realizing that most employment issues revolve around a lack of communication. Usually, problems begin when the boss doesn't explain tasks properly or clearly; the employee fails to adapt to a personnel change or new methods; or the employer fails to correctly identify or reward the hardest working employees.

Overall, some of the most difficult cases I've seen involve promotions, especially government promotions. One "hot" current legal battleground is challenging the methods used to test into a particular job, such as a police officer or firefighter.

In San Jose, CA, the police department promotes officers based on several factors, including diversity. After a series of interviews and questions, the SJPD will draft a list of the top applicants and then choose from any of the top ten finalists, regardless of their actual placement. In other words, placing first does not necessarily give someone an advantage over the tenth place applicant. In practice, this "Rule of 10" allows the SJPD to promote based on various subjective factors, including friendships, peer reviews, personal relationships, diversity, etc. Other Bay Area police departments do not utilize the "Rule of 10" but still have diverse police forces; even so, most people would agree that the "Rule of 10" has increased racial diversity with the SJPD. Two questions come to mind: 1) "What about the people getting passed over on the promotion list when the SJPD reaches down and selects a lower-ranked applicant based on subjective factors?" and 2) How do we ensure that taxpayers receive the best employees based on merit, not nepotism?

Prior to answering the above questions, we should consider three interesting background issues. First, some people believe that diversity in hiring and promoting is important because local residents pay taxes and therefore deserve at least some commensurate ethnic representation in local agencies. Having an all-white police force in Oakland, CA or an all-black police force in Newport Beach, CA may appear problematic for various reasons and may weaken the credibility of the agency.

Second, most recent court cases involving promotions and testing deal with public safety officers. This development is not surprising. The cost of a police officer or firefighter has increased exponentially over the past decade due to positive sentiment post-9/11, as well as aggressive unionization. Today, a police officer hired in San Jose has won a lottery ticket. Over the course of his or her career, s/he stands to make millions of dollars in salary and benefits, including unique benefits such as job security, lifetime medical care for the entire family, and a pension of up to 90% pay. It is no wonder that public safety positions are much sought after. However, the more expensive a position, the fewer positions taxpayers can afford, which increases competition.

Hence, the third issue is basic economics: the more expensive you make something, whether it's emeralds, gold, or cops, the more likely it will be scarce. (This is a variation of the usual economics rule that there is an inverse relationship between price and supply.) Thus, as public safety positions become more expensive and more demanding, the number of available positions decreases, which increases competition. (As prices goes up, supply goes down, which increases demand and therefore competition.) Consequently, agencies must formulate tests to weed out some applicants, even deserving ones. Furthermore, although residents often want more officers, they may not be able to afford them in a time when training and hiring an officer has become a multi-million-dollar proposition. In some cities, such as Campbell, California, over half of the entire budget goes to the police and fire departments, much of it to retirees who no longer provide any services to local residents. [See here for more (page 8).] The lesson: price and scarcity are related, and the more expensive you make something, the less of it you can have.

Where does that leave us with respect to answering our two original questions? Stating one of them another way, "How does an agency create a fair test that doesn't slight a deserving person who is passed over?" I originally thought the test should be completely objective, like a multiple choice quiz. But then I realized that many government employees, especially officers, have to deal with the public, which requires social skills and anger management skills, which are difficult to measure in a purely objective test.

Yet, the minute we accept that hiring will be based on some subjective factors, how do we agree on the particular subjective factors to be used? After all, once we get to the top ten applicants in any widely-publicized position, most or all of them are probably capable of doing the job. How, then, do we determine which intangibles to use when it comes to selecting someone who has made the cut? Too often, I see nepotism being used in close calls. Someone golfs with someone else, or knows a mutual friend, etc. None of the aforementioned factors has anything to do with merit, such as an advanced degree, grades, or hours of training. At the same time, no law prevents nepotism, which forces spurned applicants to allege racism or some other element related to a protected class to get legal relief. Consequently, what should be a discussion about formulating a fair test becomes a supercharged discussion about race.

Even so, once we accept that subjective factors such as a person's demeanor, peer reviews, nepotism, or personal connections may be legally used to hire or promote someone, we open the door to other subjective factors, like diversity or race or gender. There's no way around it--one person's subjective factor is another person's public policy goal or another person's unfair reason. Realizing that we cannot use a purely objective test, how do we prevent a person being passed over from thinking that his race or gender caused him to lose the promotion or the job? How do we ensure that everyone is treated as an individual, regardless of his or her race or gender?

Fairness is the problem cities and counties face when hiring and promoting government employees, especially public safety officers. If taxpayers demand the best person for the job, what is the most fair way of making such an evaluation? What subjective factors may someone use during the testing process? Courts are ill-equipped to handle these questions, but applicants must continue to rely on allegations of racism or reverse racism to gain access to an impartial judge, and judges continue to rely on disparate impact numbers to overturn or approve testing procedures. Yet, the most important question of all--how do we make the most fair test?--continues to go unanswered, perhaps because the general public and our elected officials don't know enough about particular government jobs to demand that only certain factors be used. That means that government jobs have become the new cultural and racial playground, which is unfortunate for the applicants as well as taxpayers, who deserve better.

One solution is to make the entire promotion and hiring process transparent and public. We demand Supreme Court nominees go through a qualification process in public, but we allow local officials to hire employees behind closed doors. Yet, it is far more likely that a local police officer, firefighter, county counsel, etc. will have more of a direct impact on your life than a Supreme Court justice. The government hiring system currently lacks accountability because most employees are hired without any public scrutiny or public access to data.

On a lark, I once applied for a Social Security contact/service rep position. This job paid about $34,881 a year and required answering phone calls from people with questions about their statements, etc. The federal government told me that I was unqualified for this position--despite the fact that I've graduated law school and run my own law firm for several years, where I handled all phone calls personally.  I've applied for other government positions, and sometimes, I will get an email indicating I've made the initial cut. Unfortunately, that's all I usually get. Then, I won't receive anything else, not even a rejection letter or email. In one case, I actually received an interview, which required a written test beforehand. I ended up answering the test in a way that was correct but that exceeded the examiner's expected scope on one question. During the interview, my detailed answer appeared to embarrass the examiner in front of his peers, who realized the examiner had not considered other possibilities. The interviewer decided to use the interview to verbally joust with me. Predictably, I made the initial cut, but did not get the position. In another case, I applied for a job and never received anything indicating they had received my application. By the time I finally received a rejection notice, I learned that the agency had chosen its top candidates months ago.

The public and aspiring government employees deserve better. To make the system more fair, we should demand the government's testing and hiring process be open and exposed to public scrutiny. Otherwise, without some check on its power and discretion, the government will continue to mishandle taxpayer monies and weaken morale in existing and aspiring government employees. Over time, if our current nepotism-based hiring and promotion process continues, the government will lose credibility, and citizens may eventually lose faith in their country's representatives.

Are Teachers' Unions Bankrupting States?

How many non-government workers receive guaranteed pensions? Almost no one. Yet, teachers and other government employees have negotiated so many benefits for themselves, they are hurting future generations of students and teachers:

Although it is generally acknowledged that education is the foundation of every modern society’s future prosperity, schools unfortunately will have to compete with retirees for scarce dollars. This competition is uneven, because retirees have a legal claim on promised pension benefits that supersedes schools’ budgetary needs.

Basically, the more generous we become with pensions, the fewer benefits we can give current teachers and current students. For example, let's assume a state has 100 dollars in tax revenue. If it has to pay a retired teacher or police officer a pension almost equal to his or her regular salary, that's 90 to 100 dollars that the state can't use on hiring a new teacher or a new police officer. Or, as the report states, "Education finance is a zero-sum game: the more that is spent on closing pension funding gaps, the less there is to spend on reducing class size or improving instruction."

Note: "California, the most populous state, has the largest unfunded teacher pension liability: almost $100 billion." Yes, that's billion with a "b." See here for more.

Links for Interesting Reading

1. NYT, "Can States Fix Their Pension Problems?"

http://roomfordebate.blogs.nytimes.com/2010/05/20/can-states-fix-their-pension-problems/

"Gov. Arnold Schwarzenegger’s pension adviser, David Crane, recently told a state Senate hearing on pension reform, “One cannot both be a progressive and be opposed to pension reform. The math is irrefutable that the losers from excessive and unfunded pensions are precisely the programs progressive Democrats tend to applaud. Those programs are being driven out of existence by rising pension costs.”

2. 9th Circuit decision (Harper v. Poway, 445 F.3d 1166 (2005)) on academic free speech--no longer citable, but the dissent is worth reading:

http://ftp.resource.org/courts.gov/c/F3/445/445.F3d.1166.html

Judge Kosinski: "Tolerance is a civic virtue, but not one practiced by all members of our society toward all others. This may be unfortunate, but it is a reality we must accept in a pluralistic society."

Judge Kosinski: "We are taught to take pride in who we are; it is, in a sense, the American way. It seems particularly chilling to free expression to restrain speech that expresses pride in one's own religion, ethnicity, sexual orientation, etc."

"[The government] has no such authority to license one side of a debate to fight freestyle, while requiring the other to follow Marquis of Queensberry rules." -- See R.A.V. v. City of Saint Paul, 505 U.S. 377, 392 (1992)

Note: the picture above is of Judge Kosinski and I.  

Richard Wolff: "Capitalism Hits the Fan"

Richard Wolff, on Capitalism:

I don’t know about you, but I must get two to three solicitations for credit cards a week in the mail--none of which I request. It’s so profitable to push debt on the American people that everybody does it. It is a society out of control. It is a profit bonanza looking for more ways to make money. And the financial sector on Wall Street responded to this situation. It didn’t create it. It got its hands on the money and found new ways to lend new people new loans at high interest rates.

More here. Mr. Wolff seems to blame computers for declining wages, but he fails to mention the new jobs that new technology has created. The real issue isn't computers or technology, but the increasing wage gap between college-educated people and non-college-educated people. As the costs of a college education and graduate school increase, this troubling gap may continue.