Asymmetrical Information

From the desk of Jane Galt:

I can't be the only

I can't be the only one who noticed this um. . . misunderstanding over at Tapped:

Among religious conservatatives, it's long been a popular claim that there are "no atheists in foxholes." In other words, only those possessed of deep religious beliefs are capable laying down their lives for their country. For an atheist, the logic goes, the fear of death would simply be too overwhelming.

The trouble is, the facts quite obviously belie this argument. Indeed, the atheist Kurt Vonnegut fought in World War II and wrote a famous book about it, Slaughterhouse Five. Those who blithely repeat the "atheists in foxholes" mantra -- like that congressional pariah Rep. James A. Traficant, Jr. -- are really slandering the memory of atheists who fought and died for this nation.

Okay, raise your hand if you thought that the phrase "There are no atheists in foxholes" meant that only the religious could fight for their country? Hmm. . . you there, with your hand up, leave. You're having a bad day. The rest of us knew that the phrase refers to the blossoming of religious belief -- or we might call it "hope" -- in those who are afraid they are about to die.

Tapped. Debunking the undebunkable since 2002.

From the desk of Mindles H. Dreck:

What I Said..

There's been lots of renewed grumbling about American stinginess in foreign aid since the Bono/O'Neill tour.

Public "Official" aid is not necessarily superior to private aid, where Americans are particularly generous (see "update" and linked post below). Military aid (such as policing shipping lanes) can be critical to the successful delivery of any other kind of aid. The U.S.'s unfunded credit backing, not counted in direct aid figures, saves many (controversial) aid-providing international organizations billions of dollars. There may be a case for more public funded aid, but the U.S. is far from "stingy" in terms of actual value gifted to other economies.

I provided more detail (with help from Steven Den Beste) some time ago.

UPDATE: Leonard Dickens dug up a recent analysis of the (2000) ratio of private vs. official aid and posted it in the comments thread Jane Galt's site. Yup, U.S. is tops. Only Ireland is in the same ballpark (see page 26 of the link). Interestingly, this paper claims to quantify the "crowding out" effect of official aid on private aid (although the author suggests the resulting total aid may or may not be larger, depending on the nature of the donor economy).

One precious footnote from the paper:

Net private aid from France is almost non-existent

Official aid kept Mobutu in power in the former Zaire, even when we tied the aid to rice imports. Official aid is often restricted, by diplomatic necessity, to using corrupt government channels for aid delivery. Can private aid circumvent local corruption any more effectively? While we have established there is significant private aid coming from the United States, I have a feeling the relative effectiveness of each type of aid is a complex subject.

From the desk of Mindles H. Dreck:

Art by Mail

I received my copy of Ken Layne's DOT.CON Wednesday night. I've read the first two chapters and I'm having fun so far. More on the book when I finish. It may be a while as I am plowing through the awful and ponderous "Jihad vs. McWorld" right now.

I am forced to admit my projections were incorrect. As requested, the inside cover has an original Layne etching -a stunning but toothy rendition of my seagull (over there on the right).

Here's the thing you have to love about Layne: The book came wrapped in some harmless-looking prophylactic newspaper. As I set it aside I notice its the New York Times...May 10...a Krugman column on Gray Davis/California/Enron...adorned with original and unflattering Layne commentary and... yet another original portrait!

A lesser soul would have said "note the newspaper" or otherwise hit me over the head. Somehow, with Ken, you know to check.

Now that I have a drawing, I want a tape of his "country crooner" stylings.

From the desk of Jane Galt:

Oh my. Americans have been

Oh my. Americans have been advised to leave India, even the diplomatic personnel. Does this mean that the State Department thinks the balloon is really about to go up, or is this just a little CYA by the boys in Foggy Bottom?

From the desk of Jane Galt:

So now that the teen

So now that the teen sex debate is dying down, I'm going to weigh in.

My fundamental belief about the whole thing is that you shouldn't have sex unless you're prepared to have a baby. Not that I'm against birth control, mind you; but it isn't 100%. And I don't think that you should be engaging in it unless you are willing to cope with the baby that might result. I'll be generous with exceptions for those with health problems. But as a general rule, there's where I stand.

And 99.999999% of teenagers in our society are both unwilling and unable to do what is necessary to raise a child well.

Oh, I agree with Our Fearless Leader that this is because our society infantilizes teenagers. But I don't think that that's going to change any time soon.

Teenage girls, historically, were literally little women -- they followed Momma around cooking, cleaning, taking care of younger siblings, working in the garden, etc. When my farm-raised Grandmother wasn't in school, she had a full workday that was pretty much the same as her mother's.

The boys were little men, doing a man's work by the time they were fourteen or fifteen.

In a community like that, both boys and girls knew exactly what was likely to come from having sex, and were able to comprehend the consequences emotionally as well as intellectually.

Those days are simply not coming back.

It's not practical for teenagers to work with adults, for one thing, and even if it were, it does take longer for someone to garner the education necessary to make a career choice than it used to; my great-grandparents could start working at 13 or so because they didn't really get career choices. They could stay on the farm, or they could try to find a farm a ways down the road. That was what they'd been taught how to do. Imagine, now, sticking with the career choice you made at 13. Oh, sure, those of us with Masters degrees and such don't have to. But your average metalworker or cop is pretty much doing what he decided to do at the age of 21.

And there aren't a passel of younger children around to give your daughters a close-up view of what having one of your own to care for twenty-four hours a day, seven days a week, with no time off for good behavior, might look like. The families who have them, by and large, have already been infantilized by the welfare system. Nor does your average fourteen year old really know what it might be like to drive a forklift for the next 30 years to keep junior in diapers and baby wipes and such. We wouldn't actually want him to -- such work is too dangerous for children in a rich society, and our bodies aren't really up to the strain of physical labor for our new, improved lifespans.

I agree that the legal system that has turned our schools into baby-sitters is a contributing factor. But not the only one. Society really is different from what it was 100 years ago. A farm community is totally different from an urban environment. Girls were able to become mothers earlier in large part because there were a lot of family members -- or friends -- around to teach her what to do, and make sure that she didn't go off the deep-end. Not possible when those women all have jobs outside the home. Her husband was also within shouting distance. It's a completely different way to raise kids. Almost no one now has the kind of support network that made intermediate adulthood possible.

Girls also menstruated at 14 or 16, and probably ovulated irregularly for years after that, making it much less likely that very young girls would get pregnant in the first place. Which is good, because girls under 16 or 17 aren't physically ready to have babies, whether or not they have a job and an apartment.

So while I agree completely that the problem is not teen sex per se, I think that morally neutral distribution of birth control is not the answer; not even if you make the little nippers get a taste of real life with after school jobs. And I'm not talking about Christian values, so calm down. I'm talking about basic human values like responsibility. The affluent girls in my high school who had abortions were no more responsible than the poor girls at John F. Kennedy High School down the road who had babies they weren't equipped to care for. And it's hardly surprising that the sex education in both schools was focused entirely on you: Are you ready for sex? How do you feel? Do you understand that it's a serious step? Potential babies, and how you intended to dispose of them, were glossed over in favor of condom demonstrations.

Catholic readers may disagree, but I view birth control as the responsible action of mitigating possible consequences. But it doesn't eliminate them; merely reduces the possibility. I personally know of two pill-users, both of whom swear they never missed a dose, who are currently proud mothers of babies they didn't intend to have. And neither teens, nor sex education, really focus on those consequences as much as they should.

But then, I'm not sure there's much you can do. You can certainly change the system to make kids more responsible; I'm all for it. Personally, I think that everyone should work for four years before they go to college; it certainly focused my mind wonderfully in b-school. Overall, though, I think that our whole culture is infantilized; teen sex is just a symptom. Read nineteenth century literature and you realize that most people didn't expect to be happy; they expected to be good, and hoped happiness would come of it. These days, we've got that reversed. It doesn't seem to have made us all that much happier (I'd credit prosperity for any net increase in happiness). But is it any wonder that our children seem to have difficulty conceiving of any but the most immediate pleasures?

From the desk of Jane Galt:

Trick Accounting That's not only

Trick Accounting

That's not only the subject of Michael Kinsley's article on Halliburton; it's what he himself does in order to make his point. The article, which has a wickedly funny takedown of CEO's who attempt to fire Anderson and thereby absolve themselves of any guilt in the matter of accounting shenanigans, nonetheless lost all my respect when I read this:

Apparently, large construction projects work just like small ones, such as remodeling the bathroom. That is, the contractor states a price, runs over budget, then tries to get the customer to fork over the difference. Until 1998 Halliburton had the tact to wait until it got the extra money before putting it on the books. In that year, it began guessing how much of a disputed surcharge would ultimately get paid, and crediting itself in advance. Why not? You only live once! This self-administered pick-me-up added $100 million in reported revenue to Halliburton's books.

. . .

And where was the future vice president while this was going on? The company insists, graciously, that a mere $100 million flyspeck on the company accounts (1999 income: $438 million) was beneath the notice of a busy CEO such as Dick Cheney. This is believable. Cheney's income in 2000, his last year at Halliburton, was $36 million in salary, bonuses, benefits, deferred compensation, restricted stock sales, exercised options, frequent-flier miles, a turkey at Christmas and other standard elements of the modern CEO compensation package. It is a vital responsibility of anyone who is that valuable to remain completely ignorant of anything improper going on around him. He owes it to the company to be untainted.

Now, first of all, it doesn't add any revenue, permanently; if they don't get the money next year, it comes out of next year's earnings. As earnings manipulation goes, it's a venial sin at best. It's not only nowhere near the Enron level of misstatement that caused the Arthur Anderson scandal; it's not even that uncommon.

But can you spot the point where my ears got red and I had to blink to believe my eyes? It lies in the magical sleight of hand with two words: earnings and revenue.

Revenue is every dollar you take in for providing goods or services to someone. Income is what's left after you subtract all the costs of providing the goods and services -- your profit. This distinction is not known to most readers, who assume that corporate income is the same as person income -- in other words, what you get paid. So comparing those two figures, those readers will figure that the manipulation accounted for a full 1/4 of income -- or, in other words, that Dick Cheney had to have known about a manipulation that increased his company's income by almost 33%.

Now, construction profit margins are typically slim, so as soon as I saw him compare that damning $100 million in revenue to the $438 million in income, I knew that this was a spurious comparison. But I didn't guess how spurious. In 1999, the year Kinsley selected for comparison (because the effects of this particular manipulation are one-off), Halliburton had over $10 billion in revenue. In other words, the change in accounting altered revenue by less than 1%. Suddenly "he must have known" doesn't sound as compelling, does it?

Which is not to say that Cheney didn't know. He may well have -- I don't know, any more than does Michael Kinsley. But frankly, playing around with how you booked revenue was hardly a rare occurrence in the late 1990's -- not that I'm in favor of it, but many of the companies that did it managed to convince themselves -- and their auditors -- that they were perfectly justified. There are reasons to do things like that, most notably to match expenses with the income they generate. At any rate, not a capital crime. More importantly, if Kinsley knew enough about reading a financial statement to pick out those two numbers, he also knew enough not to compare apples to oranges. Perhaps there's an argument that that revenue flowed straight through to the bottom line. But he doesn't make it -- he doesn't even tell us that it's so. He just ignores the distinction as if it were meaningless.

From the desk of Jane Galt:

KrugmanWatch Teaser: Something bad happened.

KrugmanWatch Teaser:

Something bad happened.

It's the fault of the Bush Administration.

As usual, I haven't read the column yet; I'm testing the predictive validity of claims of Krugman's bias. Current PV is 3.5 out of a possible 4.

From the desk of Jane Galt:

In this article from the

In this article from the Christian Science Monitor, an Israeli security expert tells us how to make sure our planes are secure:

"If you want 100 percent security on flights, every passenger has to take all his clothes off, have his suitcase checked, and be handcuffed and tied to his seat."

Which should give Grandma quite a thrill.

Actually, even the security expert acknowleges this is impractical. Instead, he advocates changing our security system to one more like Israel's:

Israeli specialists have a low regard for American security searches. They say they tend to cause unnecessary discomfort for travelers, while being prone to missing potential assailants. "The United States does not have a security system, it has a system for bothering people," Dror says.

"The difference between the Israeli and American systems is that we are looking for the terrorist, while the Americans look for the weapons," he adds.

At the heart of the Israeli system is the questioning of the passenger, which Dror says is done not only to get answers, but also to gauge the passenger's behavior. "The reason we open the suitcase is to have another few minutes with the passenger, to ask some more questions," he says. The questioning also serves as a way to quickly decide who to send to the plane without probing more thoroughly, he adds. Dror advocates Israeli-style security clearances for all workers at the companies for whom he consults. They entail checking a person's history by interviewing acquaintances and family "We check the man himself, not documents."

There's a small problem with this, which is that our airports and airlines are expected to operate at a profit, not that they've been too successful at this in recent years. Israel picks up the tag for all that extra security, and for every money-losing flight El-Al makes (for one thing, their planes are too heavy to operate at a profit because of all that bombproofing). Are we willing to do the same? I'm not saying we shouldn't, mind you; just wondering if the American public is really willing to pay more, and put up with the lessened civil rights, for a better security system.

From the desk of Mindles H. Dreck:

Why, It's Just That Kind of Place!

And the award for best non-Arab America hater goes to -

A young man from Minnesota was arrested recently in connection with a number of pipe bombs placed in rural mailboxes across America's Heartland. According to reports, his ambitious and imaginative plan included leaving bombs in the pattern of a gigantic, multi-state smiley face, presumably as observed from outer space. He left messages along with his bombs, messages containing the delusional ramblings one associates with anti-government residents of remote compounds stocked with automatic weapons, ammo, and freeze-dried rations.

Having grown up in the region, this richly-nuanced bit of Heartland Americana just naturally set me reminiscing.

John Chuckman of Yellowtimes.org. and he's just getting started. First, his experiences with an unfortunate church school:

There were the hot summer nights spent in a cinder-block chapel at Camp Sycamore (not its real name). Here, every night, an evangelist with greasy, swept-back hairdo and heavy black-rimmed glasses, a la Buddy Holly, shouted and sputtered, spewing beads of sweat and saliva visibly into the stage-lighting, trying his hardest to scare a bunch of thirteen-year olds half to death in an effort to win souls for Jesus....

The experience at least taught an observant young man a good deal about the methods and purposes of tyranny. It was a few years later, after reading Allan Bullock on Hitler, that I realized that the Buddy-Holly preacher at Camp Sycamore had more in common with Adolf than Jesus. And all that panic-laden, nuclear-attack stuff at school owed more to Goebbels than concern for public safety. Still later, I understood that there is a connection between the fundamentalist obsession over the destruction of the world and Hitler's Götterdämmerung-destruction of Germany when his bid to rule Europe had failed. Nihilism is a common thread.

Ah, the good old days, when the evangelist would wearily shuffle the kids into the gas chamber, or plan an invasion of Poland...

When Timothy McVeigh put Oklahoma City on the map by trying to erase it, there were many editorials and columns opining how such a terrible thing could happen in the Heartland. The Heartland: that mythical place of cherry pie, gingham dresses, honesty, and big-hearted neighbors. Dorothy's Kansas. Little House on the Prairie. I detected a certain feebleness of insight in these pieces. There was nothing to be surprised about....

The fact is that the Midwest has always been more accurately pictured by the brutality of bloody Kansas just before the Civil War than by the schmaltz of Dorothy's Kansas, for even though the "Wizard of Oz" is a parable about American politics, its popularity has nothing to do with that fact. Crazed gangs, violent racist attitudes, and a dedication to choking your views down the throats of others are just some of the cultural landmarks that never make it into sugary television shows or Hollywood movies about the place.

Don't think your home will be spared, he's got a few more:

Buffalo, while not properly part of the Midwest, is definitely a close spiritual relative. Not just in its treasury of Frank Lloyd Wright and Louis Sullivan buildings, Frederick Law Olmsted parks, and location on a Great Lake, but right down to its flat-vowel, nasally accent and many colorful cultural attitudes....

Ted Kaczynski, the Unabomber, grew up and got his start maiming and killing around Chicago. He moved on to pursue the greater part of his career from a remote cabin out West, a fact which may reflect the early formative influence of a place like Camp Sycamore.

Chuckman and Kaczynski - don't blame them, blame their upbringing!

Recently, the remarkable English journalist Robert Fisk wrote a piece on why Hollywood actor John Malkovitch wants to kill him, something the actor, upset over Fisk's reporting from the Mideast, apparently ranted about in a speech on a visit to England. But I think Fisk is likely unaware that Malkovitch comes from the Midwest, actually the Chicago area, or he would not think there is anything unusual in his behavior. People do threaten to kill people there because they don't like their views or their color. It's just that kind of place...

Yes, the Heartland is full of unusual stories. It is a mysterious, fascinating place, one that leaves an intoxicating spell on you many years afterward. Of course, I remind myself, it could have been worse. I could have grown up in the South.

There's a hidden genius in this guy's style. He peels off cities and states like James Brown in concert, whipping up the crowd -

Detroit! Jackboots exploit! jump back!

Texas! All enmeshed in David Koresh! uh-huh!

New York! Thank you M'am, meet Son-of-Sam! Pow!

It's just that kind of place!..

Imagine if you just substituted random African cities in for the U.S. locales above? How would our Mr. Chuckman sound? A bit Nazi-like himself, I think.

By the way, sorry Damian, Mark, David, and others, this fellow exported himself North. He's one of yours now.

From the desk of Mindles H. Dreck:

Property Rights Eroding

Cypress California is exercising eminent domain to take land legitimately purchased by a church. The Cypress City Council voted 4-0 in favor Tuesday night. Why? In order that Costco might build a tax-paying retail store on the spot. Not even to build a road or install some "vital" public service.

Eminent domain, therefore, is justified purely by the government's need to optimize land use to maximize tax revenues. Furthermore, the municipality has used its zoning and permitting powers to minimize the compensation it will have to pay to Cottonwood Christian Center. It doesn't take a Libertarian to be alarmed by this precedent.

The Wall Street Journal editorializes today on this topic:

Cypress's city fathers aren't bigots; they simply insist that Cottonwood's 17.9 acres are too valuable as potential tax revenue to be allowed to remain in the hands of a tax-exempt church. But the whole point of property rights is that bureaucrats don't get to pick and choose who owns what. Ditto for businesses such as Costco, which should buy their land in the open market instead of relying on local governments to seize a juicy location at below-market prices.

The powers of eminent domain are tricky enough when exercised for highways, schools or other public uses. But when invoked on behalf of a private business it represents the worst form of political collusion. Our advice to Cottonwood is not to turn the other cheek.

I couldn't agree more. I don't have a firm legal perspective on eminent domain (Volokh? Reynolds?, Schrank?), but there must be greater legal checks on its use. Furthermore, zoning and land-use policy must be separated from the power of eminent domain and eliminated from the valuation of property when eminent domain is exercised. Is Cypress going to lose in court, or should I be very afraid?

Info and news links can be found at The Becket Fund, which is defending Cottonwood.

UPDATE:Fritz clarifies; Cypress blogger Ann Salisbury provides greater detail. She claims the Cottonwood folks have been both nasty and incompetent. While this is unfortunate, it doesn't allay my concern on the underlying issues (at least the nasty part doesn't - lord knows the private sector can be nasty).

My reaction - Fritz picks up on something I worded poorly - "highest and best use" should certainly be the standard for property valuation (although I have direct experience with how that concept can be manipulated in court). My concerns are as follows:

1) Can a municipality use its zoning and permitting powers (not to mention it s ability to alter the use or zoning of neighboring parcels) to effectively pay less when it takes property? Doesn't the highest and best use change when any applicable regulation changes? For instance, changes in Wetlands policy (or interpretation thereof) have drastically altered the highest and best use of millions of acres of land in this country. What are the checks on government's power to do this?

2) I don't think optimizing tax revenue should be considered a legitimate public purpose. It puts government directly at odds with land owners, and causes it to favor tax-paying constituents. Thankfully, Fritz feels tax revenues as sole justification wouldn't hold up in court.

From the desk of Mindles H. Dreck:

The crux of the matter

Thomas Friedman describes the core of an israeli-palestinian settlement in his column today:

The whole history of the peace process can be reduced to one simple point: If the Palestinians persuade the Israeli center that they are ready to live side by side in peace, they will get a state; if they don't, they won't. Everything else is just commentary.

Friedman argues that the situation is ripe for a large Western initiative. His comment above suggests why such an initiative should not be blindly anti-israel.

From the desk of Mindles H. Dreck:

Here we go...

From the desk of Jane Galt:

Very good column by Lynne

Very good column by Lynne Kiesling on gasoline prices and the power of markets.

From the desk of Jane Galt:

Gray Davis declares, regarding his

Gray Davis declares, regarding his state's $23.5 billion deficit: "The problem is not spending. The problem is lack of revenue." I plan to try this with my credit card company immediately and see if I can get "re-elected" to my platinum card.

From the desk of Jane Galt:

Predictive validity seems to be

Predictive validity seems to be slipping. On the one hand, Krugman doesn't blame all our woes on the Bush administration; on the other hand, he ruins an otherwise great column about the recovery we're all waiting for with bated breath by proclaiming that the real reason people were wrongly predicting that we'd be in recovery by now was that they falsely equated George Bush with Ronald Reagan.

Not anyone I know. Everyone with an actual job in the financial industry, as opposed to the financial pundit industry, is well aware that Reagan and Bush took over in very different economic climates.

Because of this strange obsession Krugman has with saying something bad about the Bush administration in every single column, he wastes valuable inches drawing pointless distinctions between the Bush administration and the Reagan administration when he could be discussing the stupid fantasies on which otherwise intelligent people did base their predictions of a recovery. Interestingly, Krugman seems willing to do anything, including praising Reagan, to get in a shot at Bush.

He misses an opportunity to talk about the various putative causes of recent recessions, and discuss how this one might be the same as, or different from, its predecessors. This recession seems to be very different from the last two recessions, which were classic monetary boom-bust cycles; or from the '73 recession, which seems to have been driven by oil prices. But we get none of that.

He does do something great, though. He poses the question "what will lead us into a full-fledged recovery?" and then answers "Beats me." Bravo.

Why do economists make so many wrong predictions? Because they're pressed for a sure prediction. There may be dozens or hundreds of variables going into that prediction, many or most of which are uncertain; yet the public doesn't want to hear them natter on about housing starts and durable goods inventories; it wants a sound byte. Which is what reporters give them, even if they do explain the uncertainties. It gets trimmed to "Greenspan says things are looking up" or some such. So Krugman has taken the bold step of saying that he doesn't know, rather than making a tenative bad prediction because his editors demand it.

The rest of the column after that point is very good; he says things that one may have noticed subconsciously, but not really verbalized; most notably, that the economy seems stuck in place, with consumer spending defying expectations by staying strong, and business investment defying expectations by staying weak. In other words, we're treading water.

Overall, good column. And I'm going to give this a PV of .5, bringing us to 3.5 out of 4.

From the desk of Jane Galt:

Via Doug Turnbull: Great article

Via Doug Turnbull: Great article on the final Camp David negotiations based on an interview with one of the negotiators.

From the desk of Jane Galt:

KrugmanWatch Teaser Predictive Validity Test:

KrugmanWatch Teaser

Predictive Validity Test:

Something bad happened.

The Bush administration is somehow at the heart of it.

Now let's read the column and see how the PV stands up.

From the desk of Jane Galt:

Now here's something that will

Now here's something that will make the hair of any reputable financial type stand on end: the House has just voted to raise the ceiling on federal deposit insurance from $100,000 to $130,000.

Those of you who, like me, have $14.73 in your savings account may not be aware that that $14.73 is backed, as they say, by the full faith and credit of the United States government. If your bank goes under, the government will hand you your full $14.73, in cash, so that you can seek another, hopefully more stable, institution. This is what's known as deposit insurance. Banks are insured by the Federal Deposit Insurance Corporation, or FDIC, while Savings and Loans have their own insurance agency, cunningly named the Federal Savings and Loan Insurance Corporation, or FSLIC. We'll pause for a moment while you tap your head lightly to rid it of this utterly useless information, and then move on.

All right. Well, there are some good things about deposit insurance. It keeps us from losing the $14.73 we need for a down payment on a Cuisinart. Most importantly, it prevents bank runs. This is what did so much damage to our banking system in the 1930's; it's what's threatening to devastate Argentina's now (or at least the tiny piece of it that hasn't already been devastated by the financial foolishness of the Argentine government). Here's how bank runs work. Banks do not actually keep very much money on hand; your deposits get lent out as quickly as possible so they can make money on it in the form of interest payments from mortgages and such. They only keep enough cash on hand to meet the day-to-day requirements of their depositors. (We'll leave the discussion of reserve banking for another time) However, if people start to fear for the solvency of the bank, they will want to pull their money out before it fails. In this way, the fear of insolvency can produce the actuality; as people try to get their money out before the bank fails, they make the failure inevitable by pushing the bank towards insolvency, since the bank can't call in all it's mortgages and such to hand its deposits back to depositors. When you know that the government's got your $14.73 covered, there's no need to rush to get it out before the whole house of cards collapses; bank runs are thus largely a thing of the past.

However, there's a downside to deposit insurance. For one thing, it reduces competition. Ever wonder why banks all offer pretty much the same interest on your savings account, and that interest rate sucks? Because the federal government regulates the hell out of the bank in order to minimize the risk of a bank failure requiring FDIC to come in and bail out their depositors, that's why. Innovative structures? Take them elsewhere, fiend! We will have none of this here! Willing to assume a little more risk to get a better return? Not with Uncle Sam's money, you don't. Bank accounts are probably less risky than is optimal, because the government doesn't want you or the bank playing with taxpayer money.

Which brings us to the real problem with deposit insurance: moral hazard. Which is a fancy way of saying that we take more risks when someone else is picking up the tab for our mistakes. People build their houses on flood plains when FEMA covers any water damage. People aren't as vigilant about setting the burglar alarm when the insurance company is responsible for replacing stolen items. Kids major in Comparitive Folk Dancing when it's mommy and daddy stumping up the 30K per annum.

And why should you care? Well, remember the Savings and Loan Crisis? The precipitating cause was the raising of the insurance ceiling from $40,000 to $100,000 in the early eighties, coupled with a decrease in regulatory oversight. To be fair, there were reasons for doing this: the S&L's were crippled by the inflation of the 1970's and 1980's. But the moral hazard afforded by the deposit insurance was a critical factor. Depositors didn't bother to check what the S&L's were doing with their money because the deposits, after all, were insured. And with no one watching them, the S&L presidents acted like high-school kids on spring break. Many of them were crooks, using their S&L's to generate slush funds for personal consumption and political advantage; this is why it was, contrary to the Democrats bleating, natural to be suspicious of Whitewater. Many others were just stupid, taking outsized financial risks because the downside had been effectively eliminated. Either way, it cost us a hell of a lot of money.

About 90% of depositors are fully covered by the ceiling. The ones who aren't are those least prone to panic, and least vulnerable to financial devastation from losing their whole bank account: large net-worth investors. In other words, raising the ceiling offers almost no benefit.

So why is the House doing it? Calm down there: it isn't the Republicans offering big payoffs to their rich friends. The interest group behind this one is distinctly plebeian: the American Association of Retired People. They're not shilling for cash; they're shilling for votes. At the expense of us taxpayers.

In other words, business as usual.

From the desk of Jane Galt:

This only makes this more

This only makes this more terrible.

From the desk of Mindles H. Dreck:

Indoctrination

Get 'em while they're young:

From the desk of Mindles H. Dreck:

Web's role in 9/11?

Thomas Friedman writes about a sort of new humility in Silicon Valley about the potential uses of the 'net and information technology.

Ever since I learned that Mohamed Atta made his reservation for Sept. 11 using his laptop and the American Airlines Web site, and that several of his colleagues used Travelocity.com, I've been wondering how the entrepreneurs of Silicon Valley were looking at the 9/11 tragedy — whether it was giving them any pause about the wired world they've been building and the assumptions they are building it upon.

I have heard and can understand how the flow of information in general may make a 9/11 attack more effective. Certainly, we all were able to watch it and discuss it immediately, including critical Al Qaeda audiences in the Middle East. But this article suggests that the internet (or Mr. Atta's laptop) enabled the attacks.

There is no doubt that Al Qaeda used the internet for communication and some e-commerce. But the entire operation was possible in the pre-internet age. Telegrams and coded phone calls would have done the trick. No Al Qaeda terrorists hacked into security systems to disable them. To my knowledge, no electronic identity theft faciliated the highjackings. In addition, Atta was allowed to do everything he needed to do - as Mohammed Atta.

Friedman gets a few Silicon Valley types to (sort of) agree with him -

John Doerr, the venture capitalist, said, "Culturally, the Valley was already maturing before 9/11, but since then it's definitely developed a deeper respect for leaders and government institutions."

At Travelocity, Mr. Hornthal noted, whether the customer was Mohamed Atta or Bill Gates, "our only responsibility was to authenticate your financial ability to pay. Did your name and credit card match your billing address? It was not our responsibility, nor did we have the ability, to authenticate your intent with that ticket, which requires a much deeper sense of identification. It may be, though, that this is where technology will have to go — to allow a deeper sense of identification."

Will Doerr and Hornthal start writing about Gray Goo soon?

Well, what would you say if contacted for this column? "nah, it has nothing to do with us"?

Not bloody likely.

From the desk of Mindles H. Dreck:

Drain the Swamp

Maureen Dowd quotes a European reporter in her column today:

A German reporter advised the president to "look beyond Iraq" and see that "Syria, too, in U.S. terminology, is a state sponsor of terrorism" and that "Saudi Arabia is anything but a democratic pluralistic society."

As a European ambassador to NATO said about Bush's fixation with Saddam, "You Americans want to kill the crocodile, and we think it's safer to drain the swamp."

OK, that sounds constructive. How do we drain the swamp? Sanctions? U.N. resolutions? Turning the other cheek? I'll be the first one to jump on the Anti-Syria bandwagon, but what do you propose we do? Aren't they on the security council? (thanks guys!).

The problem is the swamp is already drained and the crocs are roaming around.

The rest is the ususal Dowd "Fast Chinese Restaurant Punditry" - combine #2 meat and #4 sauce to make "spectacular paradise punditry" entree #19!

From the desk of Mindles H. Dreck:

Difficult Reading

If you haven't seen it, you should read (or try to read, as I did) "102 Minutes" in the times today:

From their last words, a haunting chronicle of the final 102 minutes at the World Trade Center has emerged, built on scores of phone conversations and e-mail and voice messages. These accounts, along with the testimony of the handful of people who escaped, provide the first sweeping views from the floors directly hit by the airplanes and above.

Collected by reporters for The New York Times, these last words give human form to an all but invisible strand of this stark, public catastrophe: the advancing destruction across the top 19 floors of the north tower and the top 33 of the south, where loss of life was most severe on Sept. 11. Of the 2,823 believed dead in the attack on New York, at least 1,946, or 69 percent, were killed on those upper floors, an analysis by The Times has found.

There are pictures, snippets of conversations with loved ones, and other stories from the time between impact and collapse. Tough sledding, but excellent, touching reporting.

From the desk of Mindles H. Dreck:

Honne and Tatemae

We all know neither Clinton nor Gore had a prayer of ratifying Kyoto. But they sure gave it a lot of "lip service". The truth is that covering up self-interest with lip service is a global, time-honored tradition. George W. Bush, however, refuses to spend much rhetorical or diplomatic time on initiatives he won't support in the end. This makes for effective leadership at home but it's driving Europe crazy.

There is a clear tradition of differentiating belief and intent in communication in Japan - in fact there are some special words for it - Honne and Tatemae. This is important cultural homework for anyone hoping to develop a close relationship with Japanese (and a concept I tripped over once or twice during my time there):

Honne is one’s deep motive or intention, while Tatemae refers to motives or intentions that are socially-tuned, those that are shaped, encouraged, or suppressed by majority norms. For example, an accepted code of Tatemae, “Be kind to everyone,” may be broken in order to justify the Honne that one’s own children are not expected to make friends with slow learners....

...Another dimension of this dichotomy is that Honne is expressed privately while Tatemae may be openly professed. Observing the formalities of a business meeting, a person tends to follow protocol. Later, while enjoying conversation with his colleagues over a glass of beer or sake (rice wine), the same person will frankly express his Honne regarding the issues raised at the meeting. Aiming at peace and harmony, the public self avoids confrontation, whereas the private self tends toward sincere self-expression.

In a goal-seeking situation, Tatemae might be considered polite or tactical, while Honne is purposeful and strategic. In general, Japanese oopenly embrace Tatemae in order to foster highly-valued consensus. I'll leave it to others to define the applicability of this polite/sincere dichotomy in Europe, but it exists to some degree in all cultures.

The face-saving powers of less-than-fully sincere engagement are more important to the politically divided European polity than they are here. Many European governments are coalitions, deeply divided within. A coalition leader (much like a CEO) must often make sure that the opposing viewpoints of his divided constituents are aired. It gives him the ability to say "I did the best I could", and seems to satisfy the condition that he "listened".* Those leaders with greens and pacifists in their majority must air those coalitions' views or risk political loss. Tatemae must be observed. In other words, braod coalitions increase the demand for consensus-building tactics.

The Independent (and others) urge President Bush to come around to a particular cross-section of beliefs represented by the Independent and Guardian and their loyal readers. Repent, they admonish, and come back to signing agreements and mouthing platitudes. Address threats that are decades away at worst while containing and preserving the status quo in parts of the world that already consider themselves at war with the west. "Multilateralism", in the form of treaties and talk, is paramount. These views are representative of a significant political force in Europe, ignored by European diplomats at their peril.

Steven Den Beste has penned some required reading reminding us of exactly who honored, and to what degree, one of the most important multilateral organizations of the twentieth century - NATO.

I saw some sympathy, but I saw damned little solidarity in the aftermath of the September attack. I saw the US make plans to take out al Qaeda and the Taliban, and I saw round denunciations of nearly everything we planned or did from the capitols of Europe. I saw us accused of war crimes; I saw us being told repeatedly that we were going to lose; I saw us being told that we were going to cause a humanitarian catastrophe. None of those things happened.

I saw NATO invoke Article V, and the total extent of NATO commitment was to move half a dozen AWACS planes from Europe to the United States, to free up American planes to commit to combat. Also, a small number of NATO ships were moved into the eastern Mediterranean, far away from any potential combat. The only other thing NATO did was to try to claim that because Article V had been invoked, that the US no longer was permitted to do anything militarily unless it got permission from Europe first.

With the significant exception of Great Britain, European participation in this NATO action has been more tatemae than honne, as Steven points out. The "incredible goodwill" Bush is supposedly squandering was welcome sympathy, not true coalitional action.

I'm thoroughly American. I prefer directness (even the kind of antagonistic directness this page sometimes generates). Furthermore, in a time of crisis, effective leadership requires blunt, inspirational communication, the kind that Ronald Reagan delivered in Berlin years ago -

General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!

The State Department, highly attuned to diplomatic sensitivities and master of Tatemae, was on record opposing that statement right through its delivery.

Bush is unwilling to alter his political communication for different audiences. He is no good at Tatemae. Paying Clintonian lip service to Europe gives the impression of "listening" as all these Guardependent editorials (and my correspondent Ted) require. I'm willing to consider this may be a weakness. On the other hand, conflicting signals about our commitment to an aggressive war on terrorism (No Iraq plan on his desk? Hardly.) might make Europe feel better, but imperils Bush with the folks who actually vote for him back home. It may take a better (and less sincere) communicator than Bush to be tough for the core audience yet make potential coalition partners feel sufficiently mollycoddled.

The divided nature of European governments, and the political necessity of keeping the United States at arms-length is a reality that we have to recognize. Similarly, Bush being tough on terrorists could not be a more basic necessity of political survival.

Much as some European multilaterists may think (wholly unrealistically) that national sovereignty and democratic institutions aren't modern , they still represent the system under which U.S. and Europeans must operate. Excuse me for being cynical, but at the end there really is only coalition and self-interest. Actors push towards or away from multilateralism (or permanence of coalitions) based on self-interest. Folks, we are all unilateralists. Multilateralism for the sake of multilateralism is a ridiculous conceit (much like confusing humans for the planet, pointed out in the post below).

I don't want to be nuked by a fanatic with a bomb supplied by Saddam. I don't want Israel to be nuked by the first thugocrat with a working nuclear missile. Do we have any doubt that these plans are in the works? Is there something about having 3000 civilians targeted and incinerated that does not suggest a state of war? Isn't targeting civilians directly against one of the oldest international agreements? Do we need new treaties to oppose it with every bone in our bodies? Why won't you listen to me?

Citizens of Europe, if you seek peace, if you seek prosperity for yourselves and the millions of victims of Middle Eastern terrorists and kleptocrats, if you seek peace, basic human rights and democracy for citizens of all countries: Come to liberty's defense! Condemn tyranny and defend democracy! Condemn the slaughter of civilians for the sole of purpose of establishing and maintaining fanatical dictatorships. Europe, help us tear down these regimes!

* Interestingly, both Japanese and Europeans seem to view our habit of enthusiastically shaking hands and addressing people we hardly know by their first name as completely insincere. But at least we guys don't go around kissing other dudes - yuk! (for the humor-impaired: I'm kidding here).

From the desk of Mindles H. Dreck:

Growth of Surface Nuisance Must be 'Trammelled'

Planet's Future At Stake, U.N. Report Says

This is the headline over at Common Dreams today, and it precedes one hell of a "Litany". I immediately thought of George Carlin:

We're so self-important. So self-important. Everybody's going to save something now. "Save the trees, save the bees, save the whales, save those snails." And the greatest arrogance of all: save the planet. What? Are these fucking people kidding me? Save the planet, we don't even know how to take care of ourselves yet. We haven't learned how to care for one another, we're gonna save the fucking planet? ...

....Besides, there is nothing wrong with the planet. Nothing wrong with the planet. The planet is fine. The PEOPLE are fucked. Difference. Difference. The planet is fine. Compared to the people, the planet is doing great. Been here four and a half billion years. Did you ever think about the arithmetic? The planet has been here four and a half billion years. We've been here, what, a hundred thousand? Maybe two hundred thousand? And we've only been engaged in heavy industry for a little over two hundred years. Two hundred years versus four and a half billion. And we have the CONCEIT to think that somehow we're a threat? That somehow we're gonna put in jeopardy this beautiful little blue-green ball that's just a-floatin' around the sun?

The planet has been through a lot worse than us. Been through all kinds of things worse than us. Been through earthquakes, volcanoes, plate tectonics, continental drift, solar flares, sun spots, magnetic storms, the magnetic reversal of the poles...hundreds of thousands of years of bombardment by comets and asteroids and meteors, worlwide floods, tidal waves, worldwide fires, erosion, cosmic rays, recurring ice ages...And we think some plastic bags, and some aluminum cans are going to make a difference? The planet...the planet...the planet isn't going anywhere. WE ARE!

We're going away. Pack your shit, folks. We're going away. And we won't leave much of a trace, either. Thank God for that. Maybe a little styrofoam. Maybe. A little styrofoam. The planet'll be here and we'll be long gone. Just another failed mutation. Just another closed-end biological mistake. An evolutionary cul-de-sac. The planet'll shake us off like a bad case of fleas. A surface nuisance.

You wanna know how the planet's doing? Ask those people at Pompeii, who are frozen into position from volcanic ash, how the planet's doing. You wanna know if the planet's all right, ask those people in Mexico City or Armenia or a hundred other places buried under thousands of tons of earthquake rubble, if they feel like a threat to the planet this week. Or how about those people in Kilowaia, Hawaii, who built their homes right next to an active volcano, and then wonder why they have lava in the living room.

Author Olivia Ward of the Toronto Star makes it known early who the "enemy" is:

Most damning is the "market first" scenario — one that strongly resembles the philosophy of the current administration in Washington.

With emphasis on untrammelled economic growth, the report said, 3 per cent of the Earth's surface will have been absorbed into cities within 30 years, with a disastrous effect on wildlife and biodiversity.

But then later:

The quality of air and river waters has improved in Europe and North America, and checks on chemical emissions have made it possible for recovery of ozone layer damage, which has been growing to alarming proportions. Forest management schemes, such as those of Canada, Finland, Norway and the United States, are ensuring that the impact of over-harvesting of timber will be reduced in those countries.

The number of hungry people in the world is also predicted to fall, in spite of the disappearance of farmland and pollution from agricultural chemicals.

But much of the progress is in wealthy industrialized countries, and the report found evidence of a widening gap between rich and poor.

How, Ms. Ward, did they get rich and make these improvement possible? What ingredient is missing in the poor countries by definition? Could it be (say this like Dana Carvey's church lady)-

UNTRAMMELLED GROWTH!!??!!

From the desk of Jane Galt:

Salon column is up! Provocatively

Salon column is up! Provocatively titled: Can We Sue Our Own Fat Asses Off? (I didn't pick the headline; as you know, the editorial position of Live from the WTC is against profanity. But that didn't prevent me from laughing my -- keister -- off.)

From the desk of Jane Galt:

Greetings from Key West! As

Greetings from Key West!

As you can see, I've celebrated my vacation by waking up three hours late. Of course, since I went to bed at 2:00, that's not as restful as it sounds, but no matter.

It's clearly the off season in Key West, at least on Thursdays, which gave us a great deal of time to drink margaritas, and ponder the mechanism by which the prospect of a visit to Florida goes to the head of otherwise sensible people and causes them to buy the most regrettable clothes they can get their hands on. If it's not the gentlemen walking about in pink madras shorts with their gut spilling over the top, it's the ladies baring things that should not be bared, and encasing the rest in a tropical print of Mickey Mouse sailing a boat in a lake of flowers and umbrella drinks. But, hey, I'm on vacation . . . why ask why?

Meanwhile, I've discovered the secret to flying with minimal security interference: wear as little as possible. I went to the plane in shorts with no pockets and a midi-t. I was singled out for a search twice; both times, they looked at my outfit and passed over me to search the person behind me. I also got better service at the stores in the airport. I realize that this seems to contradict the last paragraph, but if you take my advice, you'll at least tone down the print to something floral.

Now I'm off to nap by the pool. Happy Memorial day, everyone!

From the desk of Mindles H. Dreck:

The Committee on Committees

Valery Giscard D'estaing will present the creation of six working groups to study the EU's lack of efficiency:

The Convention on the future of the EU will on Thursday and Friday analyse the efficiency and legitimacy of the European Union and the way the EU is carrying out its missions. The debate on future reforms will thus enter the core of the political debate, to address claims that the EU has a tendency to legislate either in areas in which is not competent or in a too detailed manner....

....First, the lack of clarity, as certain provisions are complex and impenetrable, then the lack of precision of certain provisions of the Treaty, as some Treaty articles allow the Union to act beyond its confined area as they fail to set precise boundaries, thirdly the failure to comply with the principle of subsidiarity and proportionality, as they are not always applied by the legislator and a new procedure over observance of those principles is necessary.

The forth (sic)problem identified by the presidium’s paper is that, in some cases, the powers of the Union do not match the citizens’ expectations, and finally there is insufficient monitoring to ensure the respect for the delimitation of competences. A related question is whether the monitoring should be political or judicial, and how should compliance with the delimitation of competences be strengthened.

Hmm. That "powers of the union don't match the citizens' expectations" could be a thorny one. Better hold Monday as well.

From the desk of Jane Galt:

I'm off! If my plane

I'm off! If my plane is hijacked, or I go down in a fiery crash -- well, tell mother my last words were of her.

From the desk of Jane Galt:

Stephen Green has a clarion

Stephen Green has a clarion call to conservatives: clean your own house first. Your arguments should be so squeaky clean that no one can fault them. Especially resonant: get rid of corporate welfare.

Of course, the spoiler is that much of that corporate welfare is not, contrary to popular belief, extended to help the corporations; it's extended to help all the little people who work for corporations, and gather all their lovely, lovely votes into the fold of whatever incumbent sponsored the legislation.

But at the very least, the GOP could stick it in their party platform.

From the desk of Jane Galt:

I've always wondered about those

I've always wondered about those people who said that the SAT etc. didn't predict grades -- since I'm afraid I did notice that the smarter I thought someone was, the higher their test scores were likely to be. Now Mark Goldblatt explains why those people got their data - and why it's wrong. (Hint: skewed sample.)

From the desk of Mindles H. Dreck:

Back to Normal Coverage

Done feeling sorry for myself. Sorry about that. I'm a very lucky guy.

Speaking of which, I'm not sure if I related the strange story of my neighbor who worked in the World Trade Center. He's an equity portfolio manager. On a typical day he would join his fellow analysts and managers for working breakfast at the club next to Windows on the World Restaurant. He usually arrived between before 8:30. On-time would have been fatal on September 11.

As he was leaving for work that morning one of the toilets in his home overflowed. He stayed to clean it up and change. The delay was enough to save his life.

I have a colleague who was headed to the same place for a technology conference but stayed in our building for a meeting with me (and others). Another friend who worked high up in the North Tower was suddenly called to Chicago the night before.

Everyone's schedule is impacted by random events, but it must feel strange to be one of these folks.

My colleague attended seven funerals the next week.

From the desk of Mindles H. Dreck:

Another day in downtown NYC

My building was partially evacuated today because of a novelty paperweight.

Discovered in a file drawer with some other items, the WWII grenade was empty but still had its detonating mechanism. The workers who discovered it called the police, who asked three floors (including mine) of the building to go outside. It took 45 minutes for the bomb squad to arrive.

For some reason, everybody bunched up across the street. As a colleague of mine who fought in Vietnam observed, the best thing to do is spread out. It would be too easy for someone to phone in a bomb threat and then mow down the assembled population outside. Also, if the grenade (or something worse) had gone off, we would have been under the windows.

We adapt slowly to this new world of constant threats and supposedly inevitable attacks.

I missed the first part of this scene because I visited my asthma specialist today. Tests show there has been significant deterioration in my pulmonary function compared to last summer. He accused me of being in denial by not visiting me sooner after September.

My doctor happens to be in charge of a series of studies at Beth Israel on the long-term pulmonary effects on workers at Ground Zero. It is early days, but he expressed serious concerns with what he's seen so far. He also suggested the air testing around the site has been poorly designed and executed. For instance, he claims they were apparently testing for the wrong size asbestos fiber for months.

All of this in addition to the helicopters buzzing around the statue of liberty, the uniformed and plain-clothed presence at the Stock Exchange, and the traffic snarl around the Brooklyn Bridge.

Not a day goes by when I don't think about September 11 - after all, I see the site all the time. But some days it is just relentlessly in your face.

I fully expect Steven Den Beste will have some trenchant observations on the efficacy of a WWII fragmentation grenade for urban terrorism. Actually, I'm looking forward to it. Bloggers are usually a bright spot in the day.

From the desk of Jane Galt:

Sorry blog-readers. . . I'm

Sorry blog-readers. . . I'm busier than the proverbial one legged man in an ass kicking contest trying to get ready to go to Key West.

But Bruce Moomaw sends this bulletin on the sad state of affairs between India and Pakistan, and I'm posting it in full because I think (fear) he may be right:

CNN

Washington Post

Looks like a nuclear religious war between India and Pakistan is now more likely than not, possibly within a few days. And if it happens, not only will more people be killed in a few days than died during all of WW II, but it would be the perfect opportunity for vengeful extremists in the Pakistani military to hand over one or more nukes to individual terrorist groups, complete with operating instructions -- with the likely targets being India, the US and/or Israel.

I've been watching this story over the past few days, but I committed the unforgiveable error of simply refusing to believe it could be true. But India and Pakistan have been making war noises and mobilizing for months; the writing was on the wall. I hope someone has got a nifty way to avert this. And I still believe that neither nation is stupid enough to go nuclear. I do believe, I do believe, I do believe. . .

Meanwhile, there's been another bombing in Israel, and the security brigades are out here. Some of this is hype, of course, because of the fooforaw about "what Bush knew"; but a lot of it isn't. Things are looking pretty damn dark right now, folks.

But it's always darkest just before the dawn, and at least the treaty Bush and Putin are signing means that as I go to Key West, I don't have to worry about my family getting vaporized by a missile. That's something, anyway. Meanwhile, I'm going to adopt the time-honored strategy for world crises -- spend a weekend getting loaded. I'll be posting before I leave, I'm sure, but meanwhile, let a smile be your umbrella.

From the desk of Jane Galt:

Fleet Week is here! I'm

Fleet Week is here! I'm off to pick up a marine. Back later.

From the desk of Mindles H. Dreck:

Using the U.N.'s Time

Anne Bayefsky discusses the politicized U.N. process for addressing human rights in the NYT today:

Each year more than 100,000 letters about human rights violations are addressed to the United Nations. Many describe sad tales of abuse at the hands of government or officially sanctioned thugs. These letters, faxes, postcards and electronic messages go into piles in the cellar of the Palais des Nations in Geneva and stacks in the high commissioner's office in Palais Wilson.

In response, the annual Human Rights Commission session, which ended last month, was able to agree on resolutions concerning the conduct of just 11 of the 189 member states. This is not uncommon because in almost all cases commission members seek to avoid directly criticizing states with human rights problems, frequently by focusing on Israel, a state that, according to analysis of summary records, has for over 30 years occupied 15 percent of commission time and has been the subject of a third of country-specific resolutions.

I'd like to imagine a world where the U.N. regains moral authority, but I find it difficult when the only state they can bring themselves to criticize consistently is a functioning democracy.

From the desk of Jane Galt:

Our Fearless Leader writes to

Our Fearless Leader writes to say that he's got a spiffy new site, which can be found at www.instapundit.com just as soon as the DNS clears. Meanwhile, you can find him here: http://64.247.33.250/. Go check it out -- his new look is smurf-a-licious.

From the desk of Jane Galt:

Lee Bockhorn agrees that the

Lee Bockhorn agrees that the Democrats are only hurting themselves by going after Bush on "what he knew and when he knew it".

From the desk of Mindles H. Dreck:

Future Shock?

Blogspot? Instapundit? What's going on this morning? I had a brief glimpse of a snazzy new Instapundit site this morning, but I can't find it now. Every blogspot page is giving me a "page not found" error.

UPDATE: Here's Instapundit. Most of the other blogspot pages are coming back on after their masters republish.

I'm a bit surprised to see Glenn move. I've retained my Blogger Pro subscription and use it for "Rapid Droppings". Other than completely losing my history (grr.) I haven't had other problems with it.

From the desk of Jane Galt:

Hmmm. . . has the

Hmmm. . . has the controversial Ashcroft been selected as the scapegoat for the 9-11 intelligence failure? Sounds like if he was, it's hara kiri, not the Administration throwing him to the wolves.

From the desk of Mindles H. Dreck:

Is there a story here somewhere?

David Cay Johnston of the New York Times writes a story that implies he has a tiger by the tail but he comes away with a handful of lint.

"Officers May Gain More Than Investor in Move to Bermuda" reads the headline. AH-HA, I knew it. Those damn overpaid executives have figured out how to rip off shareholder funds by moving to shifty offshore domiciles.

But I've read through the story twice, and damned if I can see it. All of the projections of increased compensation for executives he describes are based on compensation packages that vary with cash flow, earnings or stock prices. Well, god forbid we should pay executives for increasing earnings, cash flow or the company we own's stock price!

The only semblance of a story here is when he describes the forced capital gains some Stanley shareholders may have to pay to make the move. Of course, part of his argument about Stanley's CEO's pay is based on the stock price going up more than is necessary to pay for those taxes - due to a significant rise in after-tax earnings. Yes, there is such thing as a P/E multiple.

Johnston is also upset that these executives hold much of their stock in tax-deferred plans while many investors do not. But the investors' tax structure isn't really the corporation's major concern, especially when a 25% increase in after-tax earnings is possible.

To top off this sloppy non-story, the suggestions about retirement accounts, and the allegations of obscene variable payments related to corporate cash flow go unresearched and unsubstantiated. Read Johnston's scathing critique of Nabors Industries (with my comments in parentheses):

At Nabors Industries of Houston, the world's largest operator of land-based oil drilling rigs, Mr. Isenberg could see his pay rise by tens of millions of dollars each year if shareholders approve on June 14 his plan to incorporate in Bermuda ...

Mr. Isenberg is already well paid. Over the past two years, he made more than $126 million, including profits from the sale of stock options, from a company with $2 billion in annual revenues (that is a lot).

That is partly because his contract pays him 6 percent of the company's cash flow — a measure of profits before certain charges are subtracted (those "ceratin charges" are items that don't require cash payment! This is a measure of how much cash the company generates and a number Enron analysts might have looked at a bit more closely) — once cash flow exceeds a certain amount (which is? Will the taxes saved cross the threshold? ). The company's No. 2 executive gets 2 percent of this cash flow.

The company expects the Bermuda move to increase cash flow significantly (this is a bad thing?). Mr. Foley and five other compensation lawyers said that beginning in the year after the Bermuda move, the related payments to Mr. Isenberg and his deputy also should begin rising. (variable compensation - what a concept)

What is more, Mr. Foley said, details of the Nabors stock option plan indicate that Mr. Isenberg will make an additional $100 million on the exercise of his 10.3 million options of Nabors shares, currently at $42.99, rise (sic) by $9.72. (if "rise by 900.72" he'll make $10 Billion. Investors will make 14 times as much based on fully diluted shares outstanding, which are DEcreasing. Call the cops. )The company has said that lower taxes and higher cash flow should increase share prices, but has not said by how much.

Mr. Isenberg owns 1.1 million shares outright, but it is not known how many of these are in retirement and charitable accounts, which would shield his gains from taxes. (As long as we're speculating, maybe he's got some in his sock drawer too!)Mr. Isenberg declined to comment, as did a spokesman for the company.

Stop the presses - overpaid CEO may share 94% of increased cash flow with investors! May be availing himself of legal retirement vehicles and giving his money away to charity.

This is just silly. I have no need to defend Mr. Isenberg (I don't know anything about him or Nabors other than one press release I just scanned), but certainly we can find something more interesting in the era of Enron, Global Crossing et al.. Thanks for the laugh, Dave.

UPDATE: By the way, if companies adopted my performance-based pay proposal based on relative stock price, there would be no huge windfall in moving to a tax haven, except for the first mover. Plenty of incentive, but a payoff only for the executive whose company's stock outperforms its competitors.

From the desk of Jane Galt:

So my blog vacation will

So my blog vacation will be starting a little prematurely.

I put my glasses down today, and when I picked them up they were broken. No reason, I didn't sit on them or anything -- just broken.

Prior to 9 months ago, I usually wore contacts. So I only had the one pair of glasses. But contacts don't do so well on a construction site, so I've been wearing my glasses since September. My contacts were in dry dock, so to speak. So now, with neither contacts or glasses, I'm finding out what it's like to be blind. Oh, I can move around, but I can't read, can't see the television, can't make out faces or shapes unless they're big. It's a damn good thing I touch type, 'cause that's how I'm writing this now. If there are any typos, I apologize; I can't see 'em.

So until I get some vision back, I'm afraid I'll be off ; I'll probably be back on some time tomorrow. Meanwhile, go read some of the fine blogs at the side there, and I'll just nip off and quietly drink myself insensible in the hiatus.

From the desk of Jane Galt:

Nat Hentoff lets loose with

Nat Hentoff lets loose with this savage indictment of Nick Kristof for saying that Sudanese slave redemptions are a scam. Hentoff says that there's no evidence this is so, and posts considerable evidence to the contrary.

However, it should be considered that the Christian groups who are buying ("redeeming") slaves are almost certainly increasing the market for new ones. Similar efforts by abolitionists here in the 1830's - 1850's freed slaves -- but also increased the profits of the rogue slavers who continued to traffic in fresh slaves from Africa, even though this was illegal.

Of course, what else can you do? Unless you go into Sudan en masse and institute some serious regime change, it's the only option these groups have. A tragic necessity, perhaps -- but it's not beyond the pale to ask whether it hurts more than it helps.

From the desk of Jane Galt:

Arrggghh!! I knew this was

Arrggghh!! I knew this was going to happen. Let me clarify one more time: I do not want to debate campaign finance reform. I don't think it is going to work. I'm pretty damn sure I'm right. No one has yet presented me with any argument as to why I am wrong. But I have a fundamental lack of interest in debating the subject. Unless you are a current political operative who can give me the inside scoop as to why this campaign finance reform will be different from all the other failed campaign finance efforts from Maine to Mexico, we are not going to have a meaningful argument on it. You will say there is too much money in politics. I will say that this is neither here nor there because there is no hope in hell of getting the money out. You will point to some obscure law elsewhere that is either unconstitutional at a federal level, or doesn't actually work the way you and Common Cause think it does. I will point to empirical evidence from the last 10,000 years of human existance that power breeds corruption. And round and round we go. None of the people I know who actually work in politics think that it will have much of an effect. I mean, they think that they're going to have to make changes in their fundraising style, but they don't think that it's actually going to alter the balance of power significantly -- except for the ads ban, which everyone expects to be struck down. I'm going to go with them on this one. 'Nuff said.

I will pass on a quote, however, from a source who insisted upon anonimity, but is eminently quotable: "The dirty secret of the environmental movement is that their biggest opponent on CAFE ain't Ford Motors -- it's the UAW." Which is logical and depressing, unless like me you're already pretty much of a cynic.

So instead of debating campaign finance reform, go read this terrific piece by Elizabeth Spiers on something we can all get behind -- venture capital financing.

From the desk of Mindles H. Dreck:

Drones and Clones

Regarding my prior post, Safire gets it:

This prescient investigative memo was sent to F.B.I. headquarters in Washington and New York — and was ignored. (What do they know in Phoenix?)

But can you imagine if word had reached the F.B.I. from Tenet at the C.I.A. that the president was personally interested in data about Qaeda threats in the U.S.? Every field office would have been instantly alerted and recent files searched; the troubling Williams memo would have rocketed up the chain and hit the president's desk the next morning.

I was also underwhelmed by Attack of the Clones. This represents my first opportunity to exploit fully the words of Moses Hadas: "I have read your book and much like it." How can any hollywood producer, let alone Lucas, have missed the lessons of Lord of the Rings and Harry Potter? A good story with compelling characters can turn first rate special effects into a blockbuster. I can't think of much that was compelling or engrossing in "Clones". Well, perhaps the skin-tight Portmann wardrobe.

I have seen your movie and much like it...

From the desk of Jane Galt:

Could we please have a

Could we please have a rest from declaring every single law, activity, or biological function that has a disproportionate effect on women to be "an attack on women?" Sometimes a tree is just a tree, and sometimes a bankruptcy law is just a bankruptcy law, not a thinly disguised way for the Patriarchal Power Structure to get us knocked up, unshod, and back in the kitchen, 'kay?

However, in perusing this, I was struck by the fact that our new law apparently has a provision inserted by the senate -- the only part of the bill of which the Op-Ed writer approves, btw -- making it impossible for anti-abortion protesters to declare bankruptcy to avoid judgements. Could someone without an axe to grind (i.e., no rants about the Evil Baby Killers or the Perfidious Sexist Haters of Choice, please) explain to me, first, whether this is actually a provision which, as it is described, singles out only anti-abortion protestors (or is written so narrowly as to have the same effect) and second, what legitimate state interest is supposed to be served by singling out anti-abortion activists, as opposed to, say, radical environmentalists who like to cause chain-saw accidents by spiking trees? Patrick? Fritz?

From the desk of Jane Galt:

Pejman rips, shreds, and dices

Pejman rips, shreds, and dices the military strategy of Darth Vader's empire -- then arranges it all on a bed of mixed baby greens with lemon-and-parsley garni for your reading delight.

From the desk of Mindles H. Dreck:

If We Elected Nader Would He Implement Libertarian Reforms?

I'm back. The one good thing about plane time is that you can get some reading done. Bouncing from one thunder cloud to the next over Colorado and New Mexico these last few days I finished Brink Lindsey's book "Against the Dead Hand" and managed to zip through Michael Lewis' "Next" and a bunch of trade articles as well. "Next" is far superior to Lewis' other books.

Of course, I also managed to read all the outraged editorials and politician comments about the intelligence that was sitting in Bush's inbox on September 11 of last year. For what it's worth, here's what I'm thinking about Bush now:

Bush seems too much like Clinton. In some ways, this made Clinton preferable. This is because they both spend valuable political capital going against type and party line. Obviously, I'd rather have Clinton going against his "anything is possible with taxpayer funding" platform than Bush deserting his limited government campaign positions.

After running on health care and "bridge building" (whatever that was), Clinton can count NAFTA and welfare reform as his two greatest achievements (I'm aware the latter was forced on him). Neither of these was from the Democratic party playbook.

Bush, he of spending discipline and small government, is setting back the cause of free trade more than any president in the last twenty years. His appointee at the justice department continues to irritate the secular majority of his party. It seems like the ironic cold war adage that only a Republican has the political capital to negotiate an arms control treaty may also apply to trade and other parts of the party platforms as well. Or perhaps, this tendency to go against type demonstrates the power of the swing voters - conservative southern democrats, blue-collar workers, etc.

Bush also ran against government bureaucracy . He made much of the fact he was a businessman, and promised an administration where members of his staff and their departments could take initiative and where communication would not be hamstrung by office and ceremony. Clinton delegated the government bureaucracy issue to Gore from the beginning. I think it was supposed to be a gift.

So different agencies of the government have been offering warnings about Al Qaeda's plans since at least 1998. Each had a different part of the picture. Of course, Al Qaeda's plans are clear in 20-20 hindsight, but it might even have been clear at the time if the CIA, the FBI and other branches of government were coordinating their information and actions. If the FBI sees suspicious middle-eastern enrollment in flight schools, can't they alert the CIA and coordinate surveillance of the students and their correspondents?

The agencies charged with protecting us have failed to think laterally, to assemble disparate bits of information and attempt to make something coherent from them. This is, in turn, a failure of leadership. Clinton and Bush both knew Osama bin Laden was planning major actions against Americans. Heck, he had already carried two off, one involving significant involvement by domestic actors. It was clear in 1993 that the mandates fo the FBI and CIA must overlap. Both presidents had plenty of time not just to make plans to take OBL out, but to build better preventative intelligence. Both of them talked a much bigger game than they were willing to play. Both of them surrendered their leadership to the imperatives of entrenched bureaucracies run by archaic rules.

It's not clear at this points that Tom Ridge represents anything more than a new coat of paint on our security agencies, the appearance rather than the reality of action. As I said, Clinton and Bush have more in common than I'd like.

I never had any hero worship for Bush, so I can't say I'm disillusioned, exactly. Nor would I demand that a politician execute exactly his campaign promises without some negotiation. It would be nice, however, to elect a President and rely on the convictions he expressed in the campaign. Whatever you may think about Ronald Reagan*, he was basically true to his convictions. He governed as he ran.

*I didn't support Reagan in 1980 because I was idealistically left-Liberal and still laboring under the impression that greedy men in suits were scheming to take my records (and whatever was in the fold of the double albums...) away. I was also underage. I didn't vote for him in 1984 because I was scared of the religious right, and I had only begun my political migration from Left-Liberalism to Classical Liberalism - I was very much "in the closet" among my family and peers.

From the desk of Jane Galt:

Wow, now this is interesting:

Wow, now this is interesting: Michael Feroli says that the corporate tax is actually more regressive than the income tax.

From the desk of Jane Galt:

Neato Mosquito! Robots!

Neato Mosquito! Robots!

From the desk of Jane Galt:

Annals of Innumeracy I'm beginning

Annals of Innumeracy

I'm beginning to think that a much needed restriction on speech will require journalists not to be allowed to print anything until they have taken a course in basic data gathering and analysis.

The American Prospect has a little web piece by Ellen Miller which purports to refute what they call a "classic canard" of campaign-finance opposition: that the money follows the position on issues, rather than the other way around.

For the record, I should state that I basically don't care about campaign finance, because I don't think it's going to make much of a difference. Some small difference, I'm sure, but not enough to get excited about, either way. So it's not really on my radar, except insofar as its advocates cherish the idiot notion that corporation money is corrupting, while union and left-wing PAC money is not, because, you see, everyone is really in their hearts behind all these left wing issues, and only the evil corporate money is preventing them from voting the way they know is right. Excuse me while I guffaw.

But as long as it's issue neutral, I just don't care that much. I'm sure it's unconstitutional and all that, and in general I'm against things that are unconstitutional, but frankly, I don't have much interest in debating whether and how and why it's unconstitutional. I leave it to people who do care, of which there are an astonishing number.

All of which is by way of saying that I am not making fun of Ms. Miller because I am particularly opposed to campaign finance reform. I'm making fun of it because it's silly.

In his latest Washington Post column, George Will strives to discount the common-sense notion that special-interest money corrupts legislative action. In the process, he finds himself falling back on this classic canard, often repeated by the opponents of campaign-finance reform: "abundant scholarship demonstrates that most legislative behavior -- and most campaign giving -- is explainable by the legislators' political philosophies, party affiliations or constituents' desires."

Is your innumeracy detector on yet? First sign: someone has declared that something they believe is "common sense". Usually this is followed by an assertion of anecdotal evidence that backs up their case, followed by the statement that any numbers that don't are wrong, or ideologically motivated. But let's go to the tape. Miller lists three cases in which she claims that money bought votes:

Dinner Bell for Donors. The Tauzin-Dingell telecom bill that passed the House in February, allowing Baby Bells to offer long-distance broadband services without opening local service to competition, is a classic example of "money in, votes out." Those 273 members who voted in favor of the Baby Bells got seven times as much money from them from 1999 through 2001 as they did from long-distance companies (whose stance was on the other side of the issue). And lawmakers who got twice as much from the Baby Bells as from the long-distance carriers -- some 298 House members -- voted with them by a margin of 4-to-1. Within that group, the 180 members who got at least 10 times as much supported the bill by nearly 5-to-1. Those who got twice as much from the long-distance carriers, on the other hand, voted 19-to-1 against the bill. This holds true across party lines.

Post hoc ergo propter hoc. Miller makes an undergraduate error: confusing correlation with causation. She offers no evidence that the money caused the vote; only that candidates who voted with the Bells got more money from them. But it is as easy to explain this with the supposition that the Bells gave money to people who were predisposed to support them, as that the Bells "bought" votes -- unless you have added an unstated, unproven assumption that people will vote against the Evil Corporations unless they are paid not to.

Maybe it's so (although the data suggests otherwise). But if you believe it is so, you have to prove it before you can insert it into a proof of anything else.

CAFE Tabled. Did fuel-efficiency standards ever have a chance? The auto industry accounted for nearly $4 million in soft money, political-action committee, and individual contributions to federal parties and candidates in 2001 (79 percent to Republicans). On average, the 62 senators who voted with the industry to avoid toughening the fuel-efficiency standards received more than $18,800 from auto companies. The 38 senators who wanted strong standards received just a third of that amount.

Again with the correlation=causation. It doesn't seem to have occurred to Ms. Miller that Senators might be concerned about auto jobs in their district, irate constituents unable to afford new cars, or businesses caught in the vise of paying vastly inflated prices for underpowered light trucks.

Called to Account. Or how about the accounting bill that passed the House on April 24? The bill's a huge boon to the industry. And the House members who voted for it got, on average, twice as much from the Big Five accounting firms and their trade association as those who voted against it ($33,150 versus $17,332).

I'm repeating myself. Class? That's right -- correlation does not equal causation.

Okay, the studies that George Will cited are serious, peer reviewed studies by political science professors who lean pretty damn far to the left (the ex-boy, whose mother was a poli-sci professor and who grew up in Ann Arbor, didn't know a single Republican growing up). Cato, which of course has its own axe to grind, nonetheless has a good summary of their conclusions here. Ms. Miller thinks that this smattering of anectdotal evidence gathered from lefty interest groups is a refutation? Even if it were actually valid, rather than a standard admixture of logical fallacies and unexamined assumptions, it wouldn't prove anything except that in the real world no data set lines up as pretty as it does in the textbooks -- there are complications.

But even the three anecdotes she cites don't make her case unless you already share her prejudices (which, of course, most of her audience does). And worse than the embarrassing unfamiliarity with even the basics of number gathering displayed by a journalist from a publication I enjoy, is the fact that it's appallingly common, on the right as well as the left. Witness the Horowitz Poll. How many journalists reported it as if it were conclusive? How many people wrote in to tell me that its methodology didn't matter because they already knew that there was liberal bias among faculty? I'm pretty sure myself, but that doesn't mean that it's irrelevant how we go about confirming our hypothesis.

But the closing line of the piece just makes me titter:

Thanks to the Center for Responsive Politics and Public Campaign for the number crunching above. Over the years, George Will has penned countless apologias for the rich in the form of anti-campaign-finance reform columns. These data show that his latest item is just as off the mark as all the others.

Not because her wide-eyed conviction that she's proven something she hasn't puts me in mind of the perpetual motion booth at a 3rd grade science fair. Not because she uses numbers from those two groups, when the sound of their hatchets whining against the grindstone practically drowns out the hum of traffic inside the beltway. No, it's because she refers to the process of using a spreadsheet to do simple addition as "number crunching". Where I come from, unless you at least throw in some multiplication, division, and a little simple factoring, we call that "typing".

Of course, on second thought, maybe that isn't so funny.

From the desk of Jane Galt:

Matthew Miller has a stirring

Matthew Miller has a stirring editorial about bringing some ideas back into politics. Now, they're Bill Bradley's ideas, so I probably disagree with most of them. But I'm very much behind the principle. Which is probably why I always felt I'd sooner vote for Bill Bradley than Al Gore, even though Bradley is farther to the left. He seemed more interested in ideas than raw power.

From the desk of Jane Galt:

Hmm. . . check out

Hmm. . . check out the Cranky Professor, which gets my Favorite New Blog O' The Month Award, offering an Emory Historian's perspective on the whole Bellesiles thing.

From the desk of Jane Galt:

Now I want people to

Now I want people to start preparing now.

I'm going to Florida for Memorial Day. After about Noon on Thursday, there will probably be little-to-no Live from the WTC action between Thursday and Monday. Any action that does occur will probably focus less on geopolitical crises and more on little drinks with umbrellas in them, and the strategic importance of beach volleyball.

Trying to go cold-turkey is not for everyone. Some people can handle it, but some people can't. The first thing to do is start preparing for the hiatus. Visualize how you will feel when you are unable to get biting commentary on pressing economic questions. Picture yourself dealing with it calmly, sitting quietly in your cubicle while taking deep, cleansing breaths. Practice saying to yourself "she'll be back Monday night". Prepare tapes of soothing music to play during particularly difficult times.

But if you aren't strong enough to go without my mordant wit all weekend, don't blame yourself! Scientists are finding more and more that there is a genetic component to addictions. Rather than castigating yourself -- which can often lead to a vicious cycle of blame and regret -- actively seek ways to help yourself. Get a friend to sit with you. If you spend too much time on the net to have actual, breathing friends that you see socially, now is a great time to find some! Bars are fertile ground for meeting new friends, although you shouldn't necessarily expect them to remember your name the next day.

If you find that the strain is simply too much, rather than doing something self-destructive, remember the archives! They're right there in the yellow box on the side of the page, and contain all of my amusing maunderings since the website began. Remember, most of what I say is pretty forgettable, so the nice thing is, you'll be able to read the archives without feeling like you're going over old territory.

But most importantly, don't go through such perfect withdrawal that you don't come back to see me on Tuesday. Because then I'll cry. Big, fat, tears rolling out of my darling green eyes, all because you don't love me any more. So it's okay to go away for a little while -- but don't forget to come back home when you're done.

From the desk of Jane Galt:

Department of Non-Leading Indicators I'm

Department of Non-Leading Indicators

I'm getting a lot fewer emails these days from people asking me to take a look at their blog. Does this mean that the warblogging craze has peaked?

From the desk of Jane Galt:

Great idea -- gather all

Great idea -- gather all the Star Wars reviews in one place.

From the desk of Jane Galt:

This just made me laugh.

This just made me laugh.

From the desk of Jane Galt:

So I saw Attack of

So I saw Attack of the Clones last night.

The most important thing you need to know about it is this: do not sit too close to the screen. I spent the entire night reeling from motion sickness after I got out.

Now, I want you to know that the original Star Wars came out when my sister was being born. I saw it 17 times that first week, while my mother was in the hospital with complications. My father is a very clever man; he knew it was better to sit through a movie many times than sit through the same number of hours of wailing 5-year old. I am second to none in my admiration for the Star Wars series.

(Side note: my father tells me that every time the movie would end, I would look at him with big, mopy eyes and say "Again, Daddy", and off he would troop to buy two more tickets. Poor but honest, that'