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.

Documentary Recommendations: War on Terror

Though not for the squeamish, every American adult ought to watch Taxi to the Dark Side (2007). I also recommend watching 2010's documentary, The Oath, before watching Taxi to the Dark Side.

Both documentaries present mostly unfiltered information from first-hand sources, including frontline military personnel and former Al Qaeda members, about Guantanamo Bay, Iraq, Afghanistan, Al-Qaeda, and Abu Ghraib.

Update on 6/24/13: more movie recommendations here: http://willworkforjustice.blogspot.com/2009/08/best-non-famous-movies.html

Update on August 31, 2015: Check out Dirty Wars (2013).