January 30, 2003
From the desk of Jane Galt:So I saw this on Mark Kleiman's blog, alleging that Shrub is now dying his hair even though he made fun of Gore doing the same thing. Which would be pretty damn silly.
Well, my first thought was "He's dying his hair gray?" Because I'd just watched him on the State of the Union, and I recalled it as pretty, y'know, gray. Not any color that comes in a bottle, as far as I know. The picture in the first link looks pretty damning. But then there are these:
They all seem to indicate that his hair is indeed gray, although of course I picked the ones that looked grayest. Lest you think I have too much time on my hands, I point out that these are from the first page of photos you get when you search on State of the Union.
Pictures are valuable, but not invaluable -- it's very hard to compare colors, for example, as anyone who's ever shopped from a catalog knows. So I think it's probably a bit of silliness caused by a trick of the light. The author appears to take it very seriously, as do the commenters -- they were discussing emailing Frank Bruni last I checked. Left and right: you have taken leave of your senses when you are trying to interest journalists, or the reading public, in the question of the president's dye job. And that's all I have to say on the matter; you'll all have to decide for yourselves whether our president is the kind of shameless hussy who dyes his hair.
From the desk of Jane Galt:Once you pay the Danegeld, you never get rid of the Dane. . .
Couldn't resist this item from Reason Express, partly because I enjoy all the email I get when I defend Microsoft, and partly because the SCO servers I've worked with are, hands down, the worst pieces of equipment I've ever seen:
It was inevitable that that the raucous glee with which anti-Microsoft techies cheered on the Justice Department's antitrust pursuit of the software giant would come back to haunt them. But who knew the karmic payback would be so literal?
Former anti-Microsoft bulldog David Boies has now been retained to put the screws to the Linux/Unix community. One branch of the Unix world -- SCO Group -- has Boies tracking down supposed violations of its proprietary versions of the business operation system.
It hasn't taken very long for professionals in the field to note that SCO's products haven't been very successful and that the legal route is a poor substitute for actually building something people want.
This, of course, is exactly the kind of thing which could be said -- and was, by some -- of Netscape, Sun, IBM, and the whole crew running to the feds over Microsoft's supposed violations. The point, then as now, is that bigfoot law is a tremendously clumsy thing to use to address the fluid market dynamics
of the software industry.
For those who invited Boies into the techie boutique while he was at Justice, the sound you hear now is a large, masculine bovine trampling all your fine porcelain.
From the desk of Jane Galt:This fact sheet says hydrogen's not explosive. But I seem to recall long explanations from people who ought to know that in an accident, hydrogen tanks would explode & kill the occupants of the vehicles: that safe storage was one of the key problems facing the engineers of hydrogen cars. Can my engineering/chemist people comment?
From the desk of Jane Galt:So Salon's got this new advertising plan: if you click through an ad, thus reassuring the advertiser you're actually eyeballing the thing, you can access Salon Premium.
Who's their first advertiser? Mercedes-Benz.
Huh? I mean, given my current employment situation, I'm not in their demographic. Nor, I suspect, are most of the other people who use it. If you're too cheap to pay $30 for Salon Premium, what are the odds you can afford an E-Class?
From the desk of Jane Galt:Josh Marshall, no apologist for the Bush Administration, has an absolutely stunning interview with Ken Pollack, author of The Threatening Storm: The Case for Invading Iraq. Everyone, for or against, should go read it.
January 29, 2003
From the desk of Jane Galt:Standing ovation
Chris Caldwell has a great bit on the Democratic applause problem:
Whether they're subtle or ham-handed, applause lines demand snap judgments from congressmen of the nonpresidential party, who must navigate between the Scylla of l�se-pr�sident and the Charybdis of treason to the party. Under Clinton, the Republican rule was: When in doubt, clap. Under Bush, the Democratic rule is: When in doubt, don't. The Republicans method looks better on TV. Democrats, by just sitting on their asses, implied disagreement with some pretty popular proposals:"... end the practice of partial birth abortion." (Subliminal message glum-faced Democrats gave voters: But we love partial-birth abortion.)
"... field a defense to protect this nation against ballistic missiles." (Who wants to be protected against missile attacks, anyway?)
Come to think of it, the Republican clap-for-everything rule was hard-learned wisdom. It was Gingrich, if I rightly recall, who alerted GOPers that the phrase "affordable health care" was not an occasion for rolled eyes and sniggering.
From the desk of Jane Galt:So what does Jane think of the State of the Union?
Well, long-time readers will know that I think micro-initiatives are the death of civic society by a thousand cuts. On the other hand, if you must have micro-initiatives, these weren't all that bad. AIDS in Africa? Yeah, that's nice. Rebuild Afghanistan? I'm on board. Faith-based initiatives? I doubt they'll work, but it doesn't get my knickers in a twist about the separation of church and state, either.
Prescription drug plans -- AAAAACK! But we already knew that was coming.
On the other side, I will withold public comment on the merits, but dang, he sure do talk purty. Clinton didn't make a memorable speech I can think of, after "It's the economy stupid" (well, I guess "I did not have sex with that woman" and "it depends on what the meaning of the word 'is' is" were memorable, but not in any way Democrats or Republicans would care to dwell on). He put it all over through personality. Bush isn't much of a public speaker, and he's awful off the cuff -- but he puts it right in the groove when it counts, and he's not afraid to hire speech makers who will take a couple rhetorical risks now and again.
The Dems did not cover themselves in glory. Between sitting when they should have stood, standing when they should have sat, and getting a guy who reminds everyone of their nice-but-ineffective eighth grade social studies teacher to deliver the response, they made a hash out of it. On the other hand, I guess politically they're between a rock and a hard place. Nonetheless, I think "Pick a direction and go in it" is a better political strategy than "flail wildly". The president outflanked 'em again -- every time I think he's dropping the ball, it turns out he's just biding his time. Whether or not you like the guy, you have to admire his political instincts: completely different from Clinton's, but at least as effective, if not more so.
They've got nothing to take to the public in 2004. And you could see on their faces that they knew it. Nancy Pelosi tried to pull it out with some faux-snotty-disbelief head shaking, but it just went to show that since Clinton, the party's political instincts have completely atrophied. She's no longer just the representative of a district whose residents are certain to be shaking their heads along with her, telling everyone else in the room what a perfidious liar the president is. She's now part of the national face of the party, expected to appeal to people outside of California's reflexive liberals. Those people have seen the same look on their teenager's face when the subject of, say, taking out the garbage comes up, and they don't find it endearing.
John Edwards and Joe Lieberman had the sense to look thoughtful, even when Edwards took it on the chin with that trial lawyers remark, and Lieberman even congratulated the President after the speech. The rest of the Democratic presidential hopefuls looked like sore losers at the awards banquet. And yes, Hillary, you didn't need to be much of a lip reader to see you whispering "[expletive deleted]" in Joe Lieberman's ear.
Overall, it was a pretty good speech. Not FDR-level good, but good. And if the Democrats are smart, they'll start trying to pull themselves together instead of, as I expect they will, whining about Bush.
January 27, 2003
From the desk of Jane Galt:Incentives Matter
Very nice piece on New York's absurb rent control laws from William Tucker.
From the desk of Jane Galt:Absence makes the heart grow fonder
Ampersand has a very interesting post on the "Absent Fat Person" -- the way that movies and TV use fat suits to make thin actors fat. He argues that they do this in order to keep us from being made uncomfortable by laughing at a real fat person, which would be mean, not funny.
I think he's right about that, although I think he gives it too much importance. Fat kids have been made fun of from time immemorial -- was it Chaucer, or one of his contemporaries, who has the long series about the fat priest? Most people associate extreme overweight with extreme forms of the same behaviors as those that make the rest of us gain weight -- eating too much and not moving. Whether that's fair or not, as long as self-control is prized, there will be a stigma attached to the external evidence of its absence.
From the desk of Jane Galt:One of the nice things about being me is that I get all these mass political emails. I just got one from the Democrats headlined "What do YOU think the State of the Union is?".
I'm so glad to be able to help out my Democratic friends. Personally, I think your party should have told you about it sooner, certainly before they spring a pop-quiz on you. But I suppose that's an internal manner you'll have to deal with. Anyway, here's the answer:
The State of the Union is an address, given by American presidents per the Constitution, at Article II, Section 3. Woodrow Wilson instituted the modern practice of delivering it to congress in person. It takes place in late January. In this address, the president lays out the major issues and achievements of the nation for the past twelve months, and outlines any plans he may have for addressing major areas of concern.
Now when you get the quiz, you'll at least have the first answer in your pocket. No, don't thank me. I'm a giver.
From the desk of Jane Galt:You know, I like Mark Kleiman's blog a lot, but sometimes he just revolts me.
January 26, 2003
From the desk of Jane Galt:Kevin Drum offers a first-hand account of Schumpeter's creative destruction.
He also asks a question I happen to know the answer to:
Yesterday Amazon reported fourth quarter results: revenues of $1.4 billion — up from last year — and a tiny profit of $3 million — down from last year. And of course there was also the usual "pro forma" malarky: we would have earned $75 million if we didn't have to, you know, follow normal accounting rules and all.This has gotten ridiculous. Amazon is the biggest and most successful of the Internet retailers, and yet they can't show more than a microscopic profit at an annual run rate of nearly $6 billion. If you can't manage a profit at that level, when can you?
The answer, my friend, is blowing in the amortization of a large capital asset base over a low-margin highly competitive business, and the crushing high interest debt they took on back when network effects were going to enable everyone to make money without working. Back in 2001, my more skeptical professors, and me, were pretty doubtful that they would ever manage to turn a profit. That they have done so for two quarters running in a potentially deflationary recession is actually, in my humble opinion, kind of impressive.
While we're talking about items on CalPundit's page, he comments on the dismissal of the fast food lawsuit, which I've been meaning to comment on, because as you may or may not be aware, I wrote an article predicting such lawsuites way back in May. He points out, correctly, that it was dismissed as the majority of frivolous suits. That is not, however, necessarily a reason to sit back in satisfaction that the threat has passed.
The anti-tobacco suits used to be just such frivolous suits. The immunity of tobacco from lawsuits was black letter law -- a number of textbooks and important cases cited it specifically as being immune from suit.
What changed? Well, class actions came along and verdicts began to get a whole lot bigger. That made companies prone to settle even bad lawsuits, because even though the odds were small of getting a bad verdict, the result of doing so wwould be catastrophic -- just ask Dow Corning.
Judges also got more reluctant to fulfill that gatekeeper function, throwing out suits. There is more tendency now to let the jury decide, even when the jury lacks the legal or scientific background to make an informed decision. That allowed tobacco lawsuits to be brought, even though historically they had been thrown out.
The advent of class actions had another effect: it allowed small groups of people to amass truly massive sums of money. White shoe lawfirms make a lot of money, but their income is limited by the fact that their business model isn't really scalable -- their income is limited by the number of hours they can bill in a year. Trial lawyers who win a class action lawsuit, on the other hand, can end up with a payoff that equates to an effective rate of thousands, or tens of thousands, of dollars an hour. The only other professionals I can think of off hand who are compensated like that are investment bankers. That money becomes a war chest to pursue the next suit, which is how asbestos money funded breast implants and tobacco suits and will now, if the soil looks fertile, be poured into the pursuit of fast food lawsuits. It will fund studies by "nonpartisan consumer groups", pay for PR firms, and most importantly, be poured into campaigns to elect sympathetic legislators to change the law, as they did in many states to make the tobacco suits possible. Campaign funds will also go to the kind of judges who like to "let the jury decide". If you notice the jurisdictions where bumper verdicts get handed out in any sort of civil suit, from personal injury, to medical malpractice to class actions, they tend to share a couple of characteristics: a large number of unemployed people to staff the jury pools, and elected judges.
So the fact that one suit has been dismissed does not mean that they all will be. John Banzhaf, the law professor who drove the tobacco lawsuits and has made the fast food industry his next target, has announced that he wants to file suit elsewhere. You can bet he'll find a more sympathetic forum, like Madison County, where the judges won't be so quick to dismiss his arguments.
Anyway, I could go on forever, but it would probably be more practical for you to just go read Kevin's excellent blog.
January 24, 2003
From the desk of Mindles H. Dreck:Compared to What?
Agencies predict human disaster in Iraq
The real question is: Would the majority of these poor folks be better off if there is no military action against Iraq?
This is very reminiscent of pre-Afghanistan predictions, and not entirely consistent with the ongoing complaints about sanctions.
Sometimes all your options suck.
January 23, 2003
From the desk of Mindles H. Dreck:Holy Smokes, Ice on Manhattan's waterways! I haven't seen that in a long time.
Note to tabloids and others: Draw ridiculous inferences about global climate change.
From the desk of Mindles H. Dreck:Fahrverboten
I've been looking at replacements for the Dreckmobile. I drive almost 20,000 miles a year, so I like a comfortable car with a good sound system and a low noise floor. And I want it to last 100,000 miles without turning into a shivering, creaking disaster.
Several of my prior cars have been of German make. I have never owned a French car, and can't think of a reason why I should, purely on the merits of the product. German cars, however, are often attractive and fun to drive, although not as reliable as the Japanese competition.*
Now I'm considering ruling out German makes as well.
"Consultation" with NATO allies always meant permission, and permission was never forthcoming. It's funny that the Germans and French lecture the U.S. about the wisdom of heeding them and keeping them happy. They're willing to tolerate all sort of misbehavior by others without repercussion, so why do they think we might worry about consequences of our decision on Iraq? (Well, they might accuse us of being "inappropriate" or call someone a [expletive deleted])
My actions are, of course, inconsequential (and Germans are virtually certain not to listen to a person named "Dreck"). However, if public sentiment here were to move heavily against Germany it would certainly be economically devastating for Europe. France and Germany's actions could provoke a backlash in a way that Japan never did. People will grasp these events much more firmly than previous boycott justifications such as dumping, cheap labor or Europe's ridiculous phobia about genetically engineered crops.
Furthermore, if it's shown and publicized that France and Germany have been selling weapons-related equipment to Iraq, as Steven Den Beste speculates, I expect many Americans to react viscerally.
Cessation of trade wouldn't be good for us either, but perhaps it would constitute the magical "sacrifice" everyone's been looking for.
* One thing the Germans can't do is ergonomics. Thousands of tiny cryptic (and beautifully machined) buttons stashed all over the cockpit make selecting a radio station more like adjusting a polygraph. Try to hit the blinker and reset your cruise control. Design by Committee.
January 22, 2003
From the desk of Jane Galt:Another correspondant forwards this article and asks whether there's anything to it. Apparently, some are arguing that executives at companies whose stock pays dividends are less likely to dump their stock.
Well, it makes intuitive sense, largely because executives with large stock holdings in dividend-paying company stock are less likely to need to dump their stock. Non-dividend paying stocks enrich their holders through appreciation in the stock price -- the perfectly innocent executive who merely wants some cash to buy a house, or diversify his portfolio, has to sell company stock to get it.
It would also, I think, reduce the incentive to dump, because it's harder for the executive to generate a big run up in the stock price; dividend-paying stocks are generally less volatile for a number of reasons.
But it's hardly definitive proof. For one thing, you have to remember that dividend-paying stocks are very different kinds of companies, from non-payers. And for another, a company in trouble may have stopped paying dividends before the executives dumped. Nonetheless, an interesting read.
From the desk of Jane Galt:Tax Cheats?
One of Asymmetrical Information's moles forwards this item from Businessweek:
A sure-to-be-contentious issue in the Jan. 28 confirmation hearings for Treasury Secretary nominee John Snow: His company, railroad giant CSX, didn't pay any federal income taxes for two of the years when he sat at the controls.CSX took deductions on depreciation of capital investments relating to its acquisition of Conrail and didn't pay taxes in 1998 and 2001, says spokesman Adam Hollingsworth. Indeed, Uncle Sam refunded CSX more than $50 million in each of those years.
While this is not unusual for capital-intensive companies, some lawmakers feel it's unseemly for a Cabinet official. Watchdog group Citizens for Tax Justice director Robert McIntyre says it makes Snow a "corporate freeloader." CSX counters that it paid taxes 9 out of the 11 years that Snow was the chairman.
The issue may spark fireworks, but it's unlikely to derail the nomination. Insiders say that Snow has been charming members of the Senate Finance Committee behind the scenes. "While we're not taking anything for granted, we've not been made aware of any serious concerns with his confirmation," reports Treasury spokesman Rob Nichols.
As my correspondant says:
Note the Al Gore-like, "some lawmakers feel..." followed by a quote from...a liberal lobbying group! . . .
To paraphrase Roman Weil's quote on WorldCom, "This is stuff we do in the [seventh] week [of intro accounting]!" My wife (who did corporate taxes for six years at Deloitte and Touche) read the article and concluded that CTJ is advocating CSX ignore the tax code. To put it another way, if Bush nominated a homeless man for Treasury Secretary, CTJ would be all over him for not paying income taxes.
This is a very silly article, and especially in Businessweek, which is generally a very sharp publication.
I'm willing to bet that CSX didn't just take depreciation allowances in the years it didn't pay any taxes, but in the years it did. I'm willing to bet it took them every year. Depreciation, for those of you who have always wondered, is how companies with capital assets expense the wear and tear on those assets. The basic idea of financial statements is that they should fairly and accurately represent the value of the company, to the extent that such a thing can be fairly and accurately represented in this imperfect world. Now, every year, capital assets generally become less valuable. Buildings are one year closer to being condemned or torn down to make way for a Multiplex. Computers are one year closer to not being able to run the next version of whatever OS they're on. Machinery is one year closer to breaking down from accumulated wear and tear. The financial statements should show this loss of value. That's what depreciation is: the loss of asset value over the course of the year.
Now, since it's a little hard to get the accountants to go down and calculate exactly how rundown your buildings are, how obsolete your computers have become, or how much wear and tear your machinery has experienced, assets are depreciated on a depreciation schedule: each type of asset basically has a table telling you what percentage of its value it loses each year. Thus computers are depreciated on something like a 3-year schedule, while machinery and equipment can depreciate over 20 or 40 years.
Thus, we can be fairly sure that CSX, whose assets are composed of highly depreciable physical plant like rails and cars, took substantial depreciation every year.
But how did they get money back, I hear you cry!
How did you get money back from the government last year, even though you'd lost your job and weren't going to pay any tax this year? You crook, you.
The answer is, you'd overpaid your previous year's taxes.
In the case of CSX it's more complicated. They probably used an NOL carry -- a Net Operating Loss credit.
A company's taxes are based on a snapshot -- roughly, the net cash position of the company over 12 months. But such a snapshot can be wildly inaccurate. Say they get a big contract with a juicy cash payment in December. They have to pay taxes on that. Now say that contract runs for the next year and goes over budget and costs them a bundle. You've taxed them on a profit they didn't really make. That's not only unfair -- it could push them out of business. Not what the government wants, no matter what the fellows at the local Chamber of Commerce lunch say after they've gotten into the Molson.
So companies can apply this year's Net Operating Losses -- the losses that they took on their regular business operations (not their financing activities, such as loans or stock sales; or their capital investment, like buying the railcars they exploit to get those juicy depreciation allowances) against earnings in other years. These losses can, if memory serves, be carried forward as many as three years, or back as many as one. This helps to smooth the tax picture, so that companies are in the long run paying taxes on the money they actually earned, rather than the distorted picture one might get from the calendar year.
At this juncture, I've undoubtedly got more than a few readers wearing a sarcastic expression and saying "If it's such a good idea for companies, how come I can't do it?"
Well, because if you have a couple of bad years, the government will make sure you have a roof over your head and something to eat. It doesn't do the same for the companies it puts out of business -- or so we lightheartedly hope.
And saying that it's "unseemly for a cabinet official" not to have paid taxes in a year when his company didn't make any profits. . . well, I thought the folks who write for Businessweek were supposed to know something about, y'know, business.
You know, Businessweek, it occurs to me . . . I know something about business. And I'm available. For very reasonable rates.
From the desk of Jane Galt:Scott Rosenberg wonders if the deflation we may be facing is due to cheap Chinese production.
Umm. No.
That's good deflation -- deflation produced by the higher productivity of comparitive advantage. In other words, it actually costs less, in total resources, to make something in China than in the US; therefore, prices fall. We've had that sort of deflation in all sorts of industries forever, and it doesn't cause the kind of deflation that economists worry about. The computer industry is the best example of this, but there are many, many others. Moreover, we've been importing from China, and before that Japan, for decades -- no deflation. Finally, trade is a relatively small part of the US economy.
The kind of deflation that economists worry about is the kind that is caused by a mismatch between the supply of money and the demand for it. Specifically, people want to hold more money and spend less, so you need more money in circulation. The problem is that, like hyperinflation, deflationary expectations can actually create more deflation -- people expect prices to fall, and therefore they want to hold onto their money longer. Manufacturers have to cut prices to sell their goods, which confirms the expectations and makes people hold their money longer. . .
Just create more money, you say? Would that it were so easy. The primary vehicle for money creation in the US is not the printing press, but the banks, which create money by extending credit. (I'm simplifying like hell here; if someone thinks I've simplified too far, feel free to email and let me know.) Part of severe deflation is usually that the banks don't want to create credit, because continued deflation makes it less like that people will be able to repay. At the same time, even if they wanted to create credit, people don't want to borrow, because deflation means they will have to repay their loans in dollars that would buy more tomorrow than they will today -- you'd need a hell of a lucrative opportunity to borrow in cheap dollars in order to repay with more expensive ones.
If the deflation is severe, banks will stop lending entirely, because the real interest rate gets unhinged from lending risk. The real interest rate is the rate of interest adjusted for inflation: if inflation is 2%, and you're paying 5% on your house, the real interest rate is 3%, while the nominal rate is 5%. Now, if the inflation rate is -3%, a real interest rate of 3% means that the bank would just give you the money, and you'd pay them back when you get around to it. But why would they do that? You might default -- whereas if they stick the money in their vaults, perfectly safe, they'll get the same return without the risk. So as nominal interest rates approach zero, banks have no incentive to lend at all. (This is very rare.) That's the supply side problem. The demand side problem is that if the banks charge a rate above what would otherwise be the market-clearing real interest rate in order to adjust for risk, people will find the loans too expensive and decline to borrow. The mechanism for generating money starts to break down. So just when you want the banks to be lending like crazy to stimulate demand, they lose their incentive to do so.
No one's really figured out how to end deflation, except have World War II, which doesn't seem very practical. Japan's tried Keynsian stimulus -- it failed. It's tried any manner of schemes to stimulate demand -- no go. Possibly some of the solutions that haven't been tried would work, but since the reason they haven't been tried is that they're politically untenable, that's not very helpful.
So no, we don't want deflation. Unless you're the sort of person who was so moved by your grandparents' tales of how desperately poor -- but cheerful and plucky! -- they were in the Great Depression that you'd like to give it a try yourself. But if we do get it, you can't blame it on trade.
From the desk of Jane Galt:Cat. Bag. Out.
Attention, fellow members of the VRWC: Wil Wilkinson has betrayed us!:
The Kochs, Coors', Scaifes, and a few other plutocrats gather secretly in the immense inner sanctum (mounted heads of endangered species dot the redwood paneled walls) of their undetectable mountain escape (each attended, naturally, by his own eight year old, third world, hunchbacked, spiritually broken, manservant) and outline a unified strategy for political domination. They put the word out (through special encrypted satellite telephones) to their Machiavellian savant operatives, who forthwith erect institutions in Washington. These institutions hire raving ideologues whose task it is to create carefully crafted propaganda cleverly disguised as "research," which they then feed to their allies in the media (who slyly camouflage themselves by propagating a myth--through the devious use of "studies" and "polls"--that the media is overwhelmingly Democrat), who then disseminate this misinformation to the minds of Americans everywhere, thereby creating "conventional wisdom", false consciousness, and Republican majorities.
From the desk of Jane Galt:I'm about to get shot, but. . .
Harold Pinter's latest is not a bad poem. The intellect it betrays is, of course, shallow and nasty and trapped in an adolescent attachment to utopian power-fantasies, but the poem itself is not bad; better than much of Pinter's work.
It's not all that good, either, mind you. For one thing, it goes from not-so-cryptic Crusade imagery, tied into "Praise America's God", to an extended singing metaphor without a direct reference to hymns. It hurts the poem. A one-line reference would both round out the poem, and make it immediately comprehensible in the way that a poem needs to be to be great. Mind you, the best poems are layered and textured -- but the surface of a poem must immediately strike you and grip the mind, or else the layers never work their way into your heart. The lack of an obvious transition loses the momentum he builds up with his striking introduction, and he never gets it back. The sharp contrasts he tries to draw don't make the emotional impact he's trying for because you've just spend three seconds out of the poem, wondering how we got from a to b, before your brain said "Oh, right, hymns" and moved on.
Most of his images are, alas, thoroughly recycled, but his writing is terse and workmanlike. I've read a great deal many worse poems.
I suspect that Pinter couldn't wait to get this out there. He will regret it; the poem betrays the hurry. It will last longer as a political curiosity than as a poem, which is always regrettable. Of course, if he waited much longer, and America invades Iraq and comes back with pictures of tortured baby Kurds from the Saddaam archives, the poem might not go over so well. As we learned in business school, often time-to-market trumps quality.
And doesn't that really tell you all you need to know about the effect his politics are having on Pinter's poetic legacy?
From the desk of Jane Galt:CalPundit has a nice little tribute to Virginia Heinlein, Robert Heinlein's wife and the inspiration for many of the women in his books. If you're a Heinlein baby like me, this means something to you. Otherwise. . . well, later I'll be posting about taxes.
January 21, 2003
From the desk of Mindles H. Dreck:Historical Allusion Missed By Gunman
UPDATE: Good God! What is happening to this peaceful university town?
Some news of Suburban "Packs not Herds" in The Princeton Packet (article not on-line). An article describes an unusual carjacking in Princeton yesterday, right on the corner of the University campus:
Rosemary O'Connell, 61, of New York City parked her gray 1992 Mercury Topaz sedan on Nassau Street outside CVS...While Ms. O'Connell sat in her unlocked car applying the makeup at 12:30PM, a man in his 30s entered the car and calmly told her to stay in the car, Lt. Reading said.
The woman, fearing the man had a weapon, jumped out of the car while he was still talking to her...
...Several pedestrians and motorists tried to prevent the man's escape in the car, but to no avail, Lt. Reading said.
An off-duty Trenton fire-fighter jumped in front of the vehicle but was knocked out of the way...
...R. William Potter, an attorney, was heading back to his Nassau Street Office when he heard the victim screaming for help. He ran alongside the car up to Vandeventer Avenue, trying to flag it down...
..A dump truck tried to cut off the fleeing car, but the driver maneuvered around the truck.
OK, so they're a suburban pack. They made the old college try and failed, but good for them for trying!
This hardly matches the best Princeton crime story of all time, in which an elderly historian stands up to a gun-wielding bank robber:
Princeton had an armed bank robbery in 1999 - right where yesterday's carjacking took place. One of the burglars jumped into the car of a well-known local man, Lucius Wilmerding -
News articles reported that the remaining robber fled with another hostage and met up with an accomplice in the parking lot behind the bank. Racing from the scene, the two crashed their car into a stone wall about one mile north of Nassau Street and one block from where Lucius was escorting his friend to the car. The two robbers separated on foot, leaving their hostage in the wrecked car.Brandishing a machine pistol, one of the robbers encountered Lucius at his friend's home. When the gunman burst into the rear seat of Lucius's car, Noelle Veitch astutely jumped out of the car's front seat, ran back into her home, and called the police. The gunman climbed into the front seat of the car and ordered Wilmerding to drive back up Witherspoon Street as fast as possible--at over 70 m.p.h. Lucius, angered by his assailant's rudeness, hit the brakes, whereupon the gunman stamped on the accelerator and threatened to kill him.
Wilmerding, an eminent historian, responded by quoting Admiral Dewey at Manila Bay: "You may fire when ready, Gridley." This historical allusion fortunately was missed by the gunman, who pistol-whipped Lucius across the face and threw him out of the car near Forer's Drug Store, located close to the Princeton Medical Center.
Lucius received a black eye from the pistol-whipping and a concussion when his head struck the pavement. He was hospitalized for three days, with a minor skull fracture and abrasions on his arm. Curiously, his assailant also threw Lucius's cane out of the car. Now, Lucius says he feels "pretty much back to normal, bothered only by occasional bouts of double vision." In December he made a trip to England to meet with some wartime friends.
Don't you love it?!
Sorry 2nd amendment devotees, no stories of armed citizens (in NJ? get serious).
One thing about this story doesn't seem right - a '92 Mercury Topaz? If you've been to Princeton, you'd know its chockablock with new Beamers, Mercedes and other expensive rides. What gives?
The last carjacking in Princeton seems to have been in 1999.
From the desk of Jane Galt:That would explain a lot. . .
If it's true, we may have found the reason behind Scott Ritter's abrupt 1998 about-face on the subject of Iraq's WMD: he was arrested for soliciting underaged girls (14 and 16). Weevil was wondering about blackmail way back when, and this would certainly be blackmail material. The charges have been dropped and the records sealed, suggesting something very odd indeed is going on here.
From the desk of Jane Galt:Lott Vindicated?
Julian Sanchez writes that someone has come forward to report having participated in the Lott survey. James Lindgren has interviewed him/her and found him/her credible; even Tim Lambert says this means the survey was probably done. I'd like to see another person come forward -- there are always wing-nuts out there -- but overall, I find it fairly convincing.
Disappointing for the gun control side, which was undoubtedly hoping the gun rights side would get it's own private Bellesiles. I think the gun rights side can be proud of its reaction -- with a few exceptions, rather than demonizing those who asked the questions, they were quick to call for investigation of the charges, and make it clear that if answers were inadequate, such behavior would not be tolerated. I think it makes a nice contrast to the Affaire Bellesiles for those of us who want the gun rights movement to win on the merits.
From the desk of Mindles H. Dreck:More on Medical Malpractice
Debate raged in an earlier post about the causes of the crisis in medical malpractice insurance.
Here's more fuel for the fire.
Did Investments Affect Medical Malpractice Premiums? answers that question with a definitive "No." It also provides color on other potential causes under discussion:
For premiums to have kept up with medical inflation for the period 1975 to 2001, they would have to increase by 41%. For premiums to have kept up with the increases in paid losses since 1975, they would have to increase by 325%. For the industry’s average loss ratio to drop back to its 27-year average, premiums would need to rise by 59%. For the loss ratio to drop to its nadir during that period, premiums would have to increase by 368%.Yup. Underwriting losses would seem to be the problem.
January 20, 2003
From the desk of Jane Galt:Very interesting article in Slate on the battle between directors and bowdlerizers. Looks like Mrs. Grundy has the law on her side.
From the desk of Jane Galt:Okay, techies, two questions:
Can anyone think of anything useful to do with an old IBM Thinkpad with 4-8MB of RAM and a 60-100MB hard drive? Other than making a pretty paperweight, I mean.
Will someone please tell me why, even though I copied the code for my hit counters into my template, they don't, y'know, count hits?
From the desk of Jane Galt:Pushing Up Daisies?
The group MoveOn has purchased airtime in 13 cities to run an updated version o the infamous "Daisy Ad" that Lyndon Johnson ran against Goldwater in 1964. The new version isn't getting good reviews:
What an absolutely hideous commercial! If one insists on featuring a child in a spot, I would think that one would first and foremost insist upon a child who could act. And who did not have -- as this child appears to have -- a curious facial rash. I won't even address the $7 spent on wardrobe. Let's move straight to the graphic, powerful scenes of war. Here, juxtaposed with the shots of the sweet, innocent "little girl," this war footage is supposed to fill us with terror. "If a bomb like that explodes here … that precious little girl could die!" Instead, these scenes of destruction and firepower have the opposite, thrilling effect. The poor quality of the video footage reminds us that it's been a long time since we've had a really good war. The media coverage would be spectacular, thanks to today's sophisticated digital video cameras. A new war would be great TV. Yeah, motherfucker, BRING IT ON! All the while, a voiceover drones on, hypothesizing. "Maybe‚ … maybe‚ … maybe …" By the third "Maybe" one has simply stopped listening and is instead looking at the explosions and wondering what sort of graphic design elements CNN will create when the war finally does happen. Will they include an explosion-orange color in their new War on Iraq graphics? Or is this color considered proprietary to "Connie Chung Tonight"?Alas, the greatest crime this ad commits is that it does not respect its viewer's intelligence. It uses a cheap scare tactic, an easy, manipulative play for sympathy. And it does this with production values that are far below the industry standard. I believe it is the moral responsibility of the creatives who conceived of this commercial to kill themselves. And take the little girl with them.
From the desk of Jane Galt:Tax divide
Arnold Kling has a succinct summary of the battle between left and right over tax cuts:
In Paul Krugman's model, government spending is given, and tax cuts increase deficits.
It's O.K. to run a deficit during a recession, as long as the deficit is clearly temporary. But both the numbers and the administration's search for excuses tell us that there's nothing temporary about the red ink. On the contrary, we'll probably be on a deficit bender until the baby boomers retire — and then it will get much worse.
History suggests that Washington spends whatever it receives in taxes plus as much more as it can get away with.
Virginia Postrel pointed out that this story and this sidebar in USA Today seem to confirm Friedman's model, at least for state and local governments.
State governments are struggling to pay for expensive programs that were approved or expanded during the economic surge of the late 1990s. Although the economy began to cool in 2000, state and local spending has continued to grow, increasing by an annual rate of 4.2% in the first nine months of 2002.
Discussion Question. How would economists prefer to determine the level of government spending and taxation?
Needless to say, I agree with Uncle Miltie.
January 19, 2003
From the desk of Mindles H. Dreck:Fully Moved In
I finally moved all my posts from the old site over here. Unfortunately, I made enough dumb mistakes that it has taken several hours of editing and rebuilding. I haven't assigned categories to everything, but I will take care of it in time.
You will notice this blog just aged by about two months.
From the desk of Jane Galt:Counterprotest Chic
Tee-hee! I had so much fun watching the protesters on television and remembering my days back at the Socialist Union that I decided to make myself some counterprotest gear:
Update InstaPundit asks where you get a t-shirt. Why, right at the cool CafePress store!
From the desk of Jane Galt:Fellow Travelers
I've seen a number of people say that it doesn't matter that A.N.S.W.E.R. organized the anti-war marches -- they may be quasi-marxist apologists for Stalin using the anti-war rallies to advance a hard-left statist agenda, but why should we let that stop us from marching in a good cause?
Come again? Would you go to a fundraiser for abandoned puppies organized by the Klan? Please do not bother trying to convince me; of course you wouldn't. You'd donate money to a shelter, or adopt a puppy, but no matter how good the cause was, you wouldn't stand up to be counted alongside the guys in sheets.
When you go to a rally whose principal speakers are Jesse Jackson, Cynthia McKinney, et. al., your presence gives them power. It makes them the spokesmen for however many people showed up on the mall, power they can trade on to get a hearing in the press and on the Hill. It doesn't matter how much you protest that they don't speak for you -- they do, now. You let them. That's why all those Nader groups try so hard to get you to pay a nominal membership fee, sign their postcards and petitions, and put your name on their rosters -- because it allows them to go to your congresscritters and say "All these people support me. Give me what I want." That power generally extends far beyond the original issue that made you sign; you might have been in favor of reauthorizing the Clean Water Act, but six months later, your name, along with thousands of others, will be lobbying for single-payer health care.
Now, if you don't have a problem with A.N.S.W.E.R., or with the fact that your presence helps them advance their agenda (not to mention funding them, since they charge groups a cover to set up a table), then that's fine. But if you don't like the group, or what they stand for, then you have to ask yourself whether attending the rally is worth handing them more power. Protesting is a fundamentally political act. It doesn't matter what your private intentions were; what matters is the public effect. And the public effect was just to tell the government and the public that you support A.N.S.W.E.R. and all the people you weren't listening to on the podium. I've been to a lot of those rallies, and I know how hard it is to hear those speakers -- but if I ever go to one again, I'll be right up front, listening to what I'm telling the world.
Update Hmm, lots of angry emails.
To those who said, as predicted "They don't speak for me", well, who were you trying to speak to? Undoubtedly the press and the government are aware that there were non-A.N.S.W.E.R.-type folks at the rally. But given who organized it, they're going to be taken as the fringe. That 50,000, or 100,000, or 8 zillion, or whatever the game of internet telephone is now placing the number of attendees at, is going to be interpreted as support for the hard-left anti-war movement, which is both the core and the public face of the movement -- and if you want to tell me it isn't, ask yourself how come A.N.S.W.E.R. seems to be the only group organizing sizeable rallies? I'm sorry, but the calculus of an activist group is that, if your body is there, the powers that be will treat you as a supporter of said group, whether you are or not. Just like if you saw a bunch of people walking down the street behind the Klan in support of your local children's hospital, the assumption would be that all those folks were not merely public-spirited citizens concerned about quality pediatric care in their community, but also, racist jerks who support cross burning in spirit if not in person.
I did not say you "should sit down and not rock the boat". I didn't say you shouldn't protest. I questioned whether this protest was the right one to attend, given that it funded and empowered an organization that supports every revolting left-wing maniac regime in the world, just as long as it isn't the US. Marching with a really foul political organization is not the same thing as a priest and a rabbi carrying a banner together at a civil rights rally, despite several writers who appeared to think that supporting A.N.S.W.E.R. was the same thing as marching with the World Council of Churches. There are some differences that shouldn't be papered over if you have any choice -- and I think people should ask themselves whether attending this rally was important enough to give power and money to A.N.S.W.E.R. That's a question only an individual can decide. But I think it's serious enough to deserve to be asked.
Update II Tacitus phrased it a little more pungently than I did.
January 17, 2003
From the desk of Mindles H. Dreck:Things that make you go "hmmm.."
Today's New York Times carries an article entitled "Inspectors Find Empty Warheads in an Iraqi Depot", featuring photos of physicist Faleh Hassan carrying documents out of his house in a corrugated box labeled "deionized water".
A corrugated box can come from anywhere, I suppose. They may even use deionized water for drinking in Iraq (although I doubt it). But Deionized water is a staple in chemistry labs where it is used to dilute or dissolve other chemicals. Faleh Hassan is a Physicist.
UPDATE: commenters have helpfully pointed out that DI water has uses for physics as well.
MAJOR UPDATE: This is bigger:
On the same morning that a team of inspectors had found the 12 artillery shells, another team of nuclear weapons experts had paid a surprise visit to the homes of two of Saddam's leading nuclear physicists who worked for Iraq's top secret for the Ministry of Military Industrialisation (MMI)...(via Eugene Volokh)...Once inside they found what one Western official has described as a "highly significant" batch of documents which, on closer inspection, revealed that Saddam's scientists were continuing development work on producing an Iraqi nuclear weapon.
From the desk of Jane Galt:What Are the Rich Getting Away With This Time?
What, my correspondants ask, is to keep evil rich people from taking advantage of the new dividend taxation scheme by forming corporations and taking all their income as untaxed dividends? Or setting up similar deals for managers? The subtext seems to be, "Bet you thought you could slip one by us regular folks, hmmm?" Well, you know me, Jeremiad Jane, Shill for the Military-Industrial Complex. I'm sure I'm going to disappoint the readers who thought they'd caught me pulling a fast one, but the answer, my dears, is "the tax code".
Before I explain myself further, I'd like to try to convince you of a proposition that is basically non-controversial in economics: that it doesn't matter whether you tax the employer or the employee; the employee still pays the tax.
Think of it this way: your boss has some amount of money he is willing to pay for your services. Any more than that, and he'll find someone else, or another way to accomplish the tasks he was willing to pay you for. Say that amount is $50K per year.
Now say that the government slaps a 10% tax on wages, payable by the employer. Say further that you are a crack negotiator who has extracted the maximum $50,000 he is willing to pay in salary bargaining. Does your boss go down to the money tree on the back lawn and pick another $5,000 to pay you with? Of course not. He fires you and hires someone cheaper. Or gets a machine to do the job. I had a nice email from a guy at a company making restaurant equipment a while back, saying that he could always tell when a state had raised its payroll taxes or its minimum wage -- there was a huge spike in purchases of labor-saving equipment from that state.
Salary negotiations basically go like this: your company has a maximum they will pay. You have a minimum you will accept. You settle on an amount somewhere in this range; exactly where depends on how good a negotiator you are.
Now add taxes into the equation. Say your boss is willing to pay a total of $50,000, and you're willing to accept a minimum of $40,000. Now, let's add a payroll tax of 10% into the picture. What does that mean? It means that the maximum you will actually get paid is $45,454. If you demand more than that, they will not hire you, because it will push their expense over $50,000.
Now let's imagine it's not a payroll tax, but an income tax of 10%. You'll get slightly less at the maximum: $45,000, rather than $45,454. But the difference is not large compared to the $4500 you lose to the tax. The effect of both taxes is to cap your after-tax salary around $4500 -- even though one tax is nominally imposed on the employer.
And that, my friend, is why companies can't just use the new dividend tax to make salaries to top managers tax free. When you look at a salary, you can't just look at the benefit to the employee; you also have to look at the cost to the corporation. And in this case, there's a big cost to paying salary in dividends instead of wages: salaries are tax deductible, but dividends are not.
Let's imagine again that the corporation is willing to pay a manager $50,000 net of taxes, and the manager is willing to take $40,000 net of taxes. Now, let's examine what happens under the two alternatives. We will assume, for the purposes of the excercise, that the manager is a real sharpie and squeezes every last dime out of his company.
Regular salary:
The company is willing to pay up to $76,923. Why? By paying that amount, the company saves $76,923 X 35% on its taxes: $26,923. That leaves them an after-tax cost of $50,000. Assuming an income tax burden of 20% (yes, this is NOT like real life), that leaves our manager a comfortable after-tax income of $61,538.
Salary paid as dividends:
Now, assume the company wants to pay the manager a nice tax free salary using some dodge to pay his salary as dividends. How much are they willing to pay? $50,000. Why? Because dividends aren't deductible. He gets it tax-free -- but he's worse off than under the regular salary scheme. Note that a dodge to get the employee his salary tax-free only really works when the employee's average income tax rate is higher than the corporate income tax. But that happens only at very, very high levels of taxation, and also, with the new phase-outs there won't be anyone in the country paying a higher rate than the corporate tax. So no one is going to pull that particular dodge.
The same goes double for rich people. Why would you dump your assets into a corporation for the pleasure of paying a 35% bite off every dollar if your marginal rate was lower than that?
There are corporate forms in which the company does not pay the corporate income tax, such as the partnership, the REIT, and the S-Corporation. However, those entities also do not benefit from deductible dividends. So while I'm sure that people would set up an entity to dodge their tax burdern if they could (and in fact, they do so all the time -- what do you think tax lawyers do all day?), this law is not going to help them accomplish their goal. It is going to shift capital distributions from stock repurchases, which were popular in an era of tax-advantaged capital gains, but it is not going to make it so they get to mint money without paying off Uncle Sam.
Next question?
From the desk of Jane Galt:A lawyer on the law
Medpundit posts a letter from a lawyer with some harsh words for the law:
The law in america is a 12th century construct with overlay of high middle ages guild thinking and a religious gloss over it. Lawyers can best be thought of as "free companies" ie mercenary knights of the 12-14th centuries. It believes in trial by combat(the adversarial process), the duty to zealously defend the client, no duty of the attorney to tell the truth(they are not under oath), a referee who can reverse any decision if it does not feel right ( equity taking the role of the archbishop), protection of the professionals
(lawyers and judges) from the rules imposed on the rest of society(the serfs or us), and a refusal to acceed to control from outside the caste (the supreme court is always right, especially when its wrong). I often contended that the legal cannons are an almost perfect definition of evil, ie no
responsibilty for any of your actions no matter how reprehensible(I was only following orders). The legal process has not yet come to grips with the enlightnment or scientific revolutions. Most legal process is indistinguishable from the process of the middle ages. A telling point on legal ethics is that all law reviews check each footnote in a legal article because of how commonly lawyers lie about facts. Anglo-american law holds that the highest right anyone has is the right to sue anyone else for anything. That actually trumps everything else. The judges view law written by the legislature as suggestions, after all only the judges can say what it really means. A bad legislative law can be reversed, reversing a bad supreme court is almost impossible.
That's gotta sting.
From the desk of Jane Galt:More on the TV show
I'm hearing a fair number of comments along the lines of "Wow! She's not jaw-droppingly hideous the way she said she was!" I don't recall ever really mentioning my appearance. . . how did I convey the impression that I was 300 pounds and covered with warts? Of course, I suppose it's better to set up low expectations than to disappoint.
From the desk of Jane Galt:I just had to share this testimonial with you:
Hello.I just had to e-mail you and tell you how your "Jane Galt"
merchandise made me a hero to my wife.I bought a fleecy top and a "Who is Jane Galt" apron for her as
gifts and she was thrilled to get them. She wore the top all day the
next day (it's COLD in Winnipeg) and has put the apron in the place of
honour in our new kitchen. Great stuff!!! Love the "Jane Galt"
business, too.
Get your hot Jane Galt merchandise today!!! Fleeces for winter, baseball hats for summer, and for that special someone -- the Who Is Jane Galt baby-doll T! All proceeds go directly to me for my drinking fund.
(I offered to share, but Mindles has a real job, so he can't take any money. So that $0.35 is all mine! mine! mine!)
From the desk of Jane Galt:There is a rising tide of ugly prejudice in this nation. We were warned. . . we saw the signs. . . but we did not heed. Now it is becoming clear that vegetarians face the oppression and violence that have plagued so many minority groups in the Land of the White Male Carnivore.
First they kill us for food.
Now Andrew Olmsted brings us another tale of horrifying anti-vegetarian prejudice.
When will the madness end, my brothers? We must band together now and take a stand against the rage of the opressor before we find it is too late. . .
From the desk of Jane Galt:More than a couple of people have indicated that they saw the segment on PBS and they want to start their own blog. How do they get started, they ask?
Well, if you don't have your own domain and host, you can start off by going to Blogger. Blogger is free software that will let you get started posting entries. They also have a free site, Blogspot, where you can host your blog. Don't worry about going to Blogspot; Blogger will let you set up a site there as part of starting the blog.
If you're a more advanced user with your own site, I use Movable Type to make this blog. It's also free to download, although you are encouraged to tip. It's a more complicated setup, so unless you're Unix/Web proficient, I recommend starting with Blogger to see if you like Blogging.
If you want a spot to host a Movable Type blog, I can recommend my provider, Cornerhost.
If you want a domain, Register.com will help you find one. It's more expensive than other services, but the service and features are better, and it's only $100 for two years.
You'll want to play with your template -- add links and features. This HTML Guide will help.
You'll also want to publicize your blog, after you've got some content -- I had some advice on that, way back when.
After you've publicized it, you'll want hit counters to track your stats. I use GoStats and Bravenet, both of which are free.
January 16, 2003
From the desk of Jane Galt:Well, I just saw myself on television. Conclusion: I have very large teeth. And, apparently, a lisp. This may be why my career as a spokesmodel never took off. On the other hand, I feel confident saying that I was the best looking woman on the segment.
From the desk of Jane Galt:Microsoft just announced a dividend and a stock split. Since Microsoft has been accumulating cash for some time, this is big news. Looks like the dividend tax cut may be working already.
From the desk of Jane Galt:When Branding Goes Mad
So NARAL is re-branding itself from the National Abortion Rights Action League to NARAL Pro-Choice America. Presumably, they will ultimately drop the NARAL part and go with Pro-Choice America, or PCA, for their full name. This Salon article calls the move brilliant.
This is why marketing people need to get out more. Someone buy this man a ticket to reality. Brand is very, very important, but there are limits, my mad little friend. If you package up radioactive garbage and try to sell it to people for their children to ingest, no matter how great your branding is, they aren't going to buy it.
You can switch the language from "abortion" to "choice" all you want, but people know what the euphemism means -- the Victorians didn't eliminate sex by calling it "family duties" either. People are for or against abortion on the merits, not the brand.
Language is very, very important, of course. The pro-choice movement succeeds, to the extent it does, by essentially editing the fetus out of the argument. One could argue that the pro-life movement succeeds by editing out what happens to the fetus after it's born.
I think that's why I've noticed that when I dare to post on abortion, I get a large number of pro-choicers policing the language -- most recently, when I described use of the morning-after pill as inducing an abortion. Abortifacient is, in fact, the medical term for that pill, which prevents conception by preventing the fertilized egg from implanting in the uterus. I shouldn't use that word, I was told. Why not, if it's a medical term? Because it's "loaded". Well, abortion is what we're arguing about. I am not going to pretty it up by discussing "choice"; if you think that women should be allowed to abort their babies, then you have to argue that.
I've no doubt there are pro-lifers out looking to police me into calling it "baby-killing" instead of abortion, but so far, they haven't had the courage to write.
So language is important. But it's not like people don't know what a group like NARAL does; they advocate for an absolute right to abort your babies/fetuses right up to the time they're born. Changing the name of the group isn't going to change people's minds about the activity the group stands for. Are they that stupid? Or is this less a branding move to win new converts, than preventing current members from being constantly reminded what it is they're actually fighting for?
UPDATE: Thank you, language police, I was not trying to imply that advocating for the pro-choice side is the same thing as packaging up radioactive garbage and trying to sell it to children. I used the latter as an extreme example to illustrate that there are some things you just can't brand. I then went on to attempt to argue that abortion is one of them, albeit not in the same category as packaging up radioactive garbage and trying to sell it to children. I apologize to anyone who was confused.
UPDATE II: My, the police are out in force tonight. Pro-choicers, I am told, are not "for abortion"; they are for choice. Fine. You may rephrase that sentence: "People are either for or against the right to have an abortion on the merits" or "the right to choose to have an abortion" on the merits, or however else you like, as long as you do not try to remove the word "abortion". We are not discussing the choice of what career to pursue or whether to hang a valence on the livingroom drapes.
UPDATE III: Let me make it clear that I know that there are people with deeply reasoned belief in the right to abortion. I myself am unenthusiastically in favor of keeping it legal, although not of the execrable Roe decision. I don't try to argue the topic itself, because ultimately it comes down to a value judgement of what is more important: the baby's right to be born, or the woman's right not to have to use her body to succor a child against her will. There is no logical argument that is going to persuade someone who has chosen one side that they are wrong, because it is simply a different weighting of two competing rights. My disdain is for the euphemism. If what you are advocating is so distasteful to you or others that it will not stand the cold light of plain words, you should rethink your advocacy.
From the desk of Jane Galt:John Lott Update
We have at least some corroboration of John Lott's story: Julian Sanchez has talked to people who remember John Lott's hard drive crashing, and work that had to be scrapped because of the data loss. But I'd still like to hear from some students.
From the desk of Jane Galt:Advertising, Marketing, and SG&A: or, how consumer groups lie with statistics
A number of you have asked how I could possibly claim that Pharma only spends 1% of revenue on advertising, when y'all have seen numbers from consumer groups that run 30%. Well, I got that number from an industry group, but they provided backup. (I can't find the link now, sad to say)
One should, of course, qualify that number, since in position papers like these, things are rarely what they seem. The advertising they are discussing is consumer advertising, not advertising to doctors, which is a very large expense. They backed it up with numbers on overall industry revenue and numbers from some advertising group on pharmaceutical advertising revenue. However, the percentage spent on advertising expensive drugs will be much, much higher than that. It's just that, although they're popular, expensive drugs do not actually make up the majority of industry revenue.
But although I certainly wouldn't have put it past the industry group to portray themselves in the best possible light, I know the consumer groups are lying. Or rather, stretching the truth into new and interesting shapes. The number they are calling "advertising" is actually a number on the balance sheet known to accounting professionals as SG&A: selling, general, and administrative expense.
SG&A is a basket term. It includes everything that happens outside of a factory (things that happen inside a factory are COGS: cost of goods sold) or a lab (things that happen in a lab are R&D: research and development).
So how do they get there from here? Thus: first one consumer group writes a report in which they render that SG&A expense as "Marketing" to make their point a little more punchy. Now, a large component of SG&A is marketing. But it is not the only thing. If you've ever worked in the headquarters of a corporation, think of all the departments. Accounting. IT. Payroll. HR. Mailroom. Reproduction. Marketing. Corporate Finance. Sales. Those are all part of SG&A.
Somewhat counterintuitively, to the accounting layman, Sales is not part of Marketing. Marketing is the department that figures out who your consumers are and how you should sell things to them, and what you should sell; the sales department actually goes and browbeats the customer into buying the stuff. Nonetheless, one consumer group decides that it's all pretty much marketing, and then writes a report called something like "Pharmaceutical Companies: Raping the American Family for Fun and Profit", which cites the SG&A figure as the company's "marketing expenditure".
Now, advertising certainly isn't the same thing as marketing. It's a component of marketing, but only a small one. There's also professional advertising in places like the JAMA, which no one really objects to (there wouldn't be any JAMA without that kind of advertising); there's product market research and sales materials to be written and junkets for physicians. Much of this stuff may also be objectionable to many, although one should keep in mind that if the pharmaceutical firms stop paying for physicians dinners and vacations, their patients may have to start, so it's not necessarily a net savings. All of which is irrelevent, because the important part is that it is not advertising.
Nonetheless, another consumer group takes that report and writes one of their own: "Pharmaceutical Companies: Satanic Spawn Who Dream only of Murdering Our Children and Selling Their Broken Little Bodies for Mulch". This report cites that "marketing" number as "advertising expenditure". Thus we get the claim that pharmaceutical companies spend 30% of their revenues on advertising, when the real number is much, much lower than that. And thus the belief common among advocates for a single payer health care system that we can force companies to lop of 30% of the price of a drug without touching R&D.
This is wrong in two ways, of course: the number is too big, to start with, and more importantly, it misunderstands the way that companies make decisions. Consumer groups are thinking of pharmaceutical expenditures as budget items -- expenses to be cut. But you have to think of R&D and marketing expenses as an investment. Every budget season, the company allocates its funds by deciding which investment will be more profitable. The assumption is that if you institute price controls, companies will give up marketing to focus on R&D. But the reverse is likely to be the case. R&D is very, very, risky, and very long term. Marketing is perhaps risky, but very short term, and so much less investment is required overall. If you cut the potential profit on a product in half or more, a risky project like R&D has to have a stratospheric potential return to ever get funded. Marketing dollars, on the other hand, are likely to have a much bigger return, because when prices are controlled, the only way to make money is through volume -- meaning advertising becomes crucial to maintaining profitability. Who advertises more: Qualcomm, with its fat margins and high R&D expense, or Proctor and Gamble, with skinny little margins and tiny research expenditure?
So anyway, that is how I arrived at my number, and how they arrived at theirs. You may dispute my number -- but only, please, with good numbers of your own, not with some PIRG screed, 'kay?
January 15, 2003
From the desk of Mindles H. Dreck:Media Matriculates
I was not aware my co-blogger obtained a Ph.D. in Economics!
January 14, 2003
From the desk of Mindles H. Dreck:Another Reason Not to Go to the Gym
One doesn't even want to imagine the incident that gave rise to this change in policy:
Physical, which operates nine gyms in the former British colony, recently posted signs in its Hong Kong facilities forbidding the use of mobile phones in locker rooms.Whodathunkit. Having a picture of yourself toweling down your own naked body at the health club isn't "good for your privacy.""It's just some areas that are restricted for mobile phones," said Physical spokeswoman Miran Chan.
"Some of these phones can be used as cameras. If someone uses a phone this way and takes a photo and puts it on the Internet, it's not very good for our members and their privacy."
It seems bit indirect, though. Are cameras banned?
From the desk of Jane Galt:Jim Henley has an update on the John Lott story based on an email that was sent to some bloggers who wrote on the issue, though not -- sniff -- myself. Some of the explanations strike me as potentially mitigating, such as offering the name of a faculty member with whom he discussed the questions, and other witnesses who can corroborate that he lost his hard drive in 1997; others are plausible but have no way to confirm. (He says it was only two Chicago students who organized other friends to do the survey. I'm slightly skeptical -- Chicago students have friends? At other schools? Plus it's awfully convenient. But if it's true, God help the man, because there's a good chance an email or an ad won't find them.)
I think he's toast. After Bellesiles, the gun-control folks are out for blood. Unless he finds those students, he'll never work in academia again.
From the desk of Jane Galt:Those heartless drug companies
Derek Lowe has a post on GlaxoSmithKline, which has just told Canadian pharmacies that if they don't stop selling to the US, Glaxo will stop selling to them.
No doubt we'll hear the usual parade of consumer advocates complaining that those heartless pharmas are putting profits before people. Snore.
Let's look at what this really tells us: first, that Canadians must be buying their drugs very close to marginal cost. If Glaxo is serious -- and I've no reason to think that they aren't -- then a loss of a small portion of the US market is more serious to them than the loss of the entire Canadian market. In other words, yes, my sweet, we are subsidizing the rest of the world's pharmaceutical R&D, because of the unbeatable combination of single-payer buyer power and the government's ability to break the patent if they don't like the price.
(NOTE: in Canada, many drugs are paid for privately, but there are price controls and other regulatory schemes, plus the government's complete hostility to private health care providers. My assertion stands.)
That also tells us that if we got single payer here, prices worldwide would have to go up, or R&D would collapse -- industries that sell at marginal-cost pricing do not have big research budgets. Yes, my single-payer-loving friends, so would the 1% of industry revenues that gets spent on advertising, plus whatever boondoggles they give the doctors. I'm more worried about the 20% R&D spending, thanks. If Canadians and Europeans were smart, they'd stop snotting about our health care system and start rushing to assure us that it's -- "just awful -- nothing you'd ever want to try for yourself".
Derek Lowe cuts loose on the Pharmas for not making the economic argument, and instead pulling out a lame basket of excuses about safety, like those wily Canadian pharmacists have been thinning out the Lipitor with talcum powder.
This argument is a disgrace. I can't imagine that these pharmaceuticals are in any worse shape than what's on the shelves here. No, the real problem is that PhRMA doesn't want to make the economic argument above - the real one - because they're afraid they might lose the battle. (So they've such lame positions that losing the battle is even more likely.) I really don't think that my industry's leaders understand how idiotic the "unsafe Canadian drugs" line sounds. It makes me grit my teeth, and I'm about as sympathetic a listener as you can find. We're in danger of sounding as out-of-it as the recording industry: like a joke, in other words. The last thing we need.
He's right. The problem is, if the pharmas made the real argument, they would lose. First of all, because there are any number of consumer groups out their with quasi-marxist agendas and no understanding of accounting or economics who will give people talking points memos just plausible enough for them to pick the argument they like -- I can have all the prescription drugs I want at low cost, and research will be just fine! Consider this talking point from the Manitoba Pharmacists Association that made its way unquestioned into the article above:
The Manitoba pharmacy group estimates about one million U.S. residents, mostly senior citizens, obtain drugs they otherwise could not afford through Canadian online mail-order pharmacies.
Okay, one million is the number of people who order drugs from Canada. Those are not all people ordering drugs they can't afford. Can't afford is when, after you pay for rent or mortgage, taxes, food, and enough clothing to cover your body, you do not have sufficient cash to pay for your drugs. I'm willing to bet that many or most of those seniors have greens fees, grandchildren's birthday presents, travel expenses, meals out, and assorted other things that could be scaled back sufficiently to cover their drugs if they wanted to. They don't want to pay a lot of money for their drugs; it pinches. They have to give up other things they enjoy. But that is not the same thing as being unable to afford drugs, which is when, no matter how frugal you are, you could not possibly scrape together the money. Seniors are by far the richest segment of our society; they also know how to stretch a dollar. It strikes me as vanishingly unlikely that most of the seniors ordering from Canada actually could not pay for their drugs any other way.
And second of all, Democrats need an issue, and Greedy Corporations Bleed Seniors Dry seems to fit the bill just fine. So the Pharmas make lame arguments and lose anyway. But at least they give it the old college try.
From the desk of Jane Galt:Why does one bother to point out bias in the New York Times, many readers have asked. Mickey Kaus sums it up nicely:
How many of the New York Times' journalistic problems would be solved if the paper just replaced the slogan in the upper-left hand corner of its front page ("All the News That's Fit to Print") with the phrase:"A Crusading Liberal Newspaper"
I'd guess those four words would neutralize about 80 percent of the animus against Times editor Howell Raines. What's deeply annoying about Raines and his henchperson Gerald Boyd isn't their liberalism, or their bias, but their insistent pretense that what they are doing isn't liberal or biased but just straightforward objective newspapering the way the Times has always done it. ("Call it journalism.") They're selling their product dishonestly, sneakily trying to trade on the credibility earned in an earlier, different time. The truth would set them free. There's nothing wrong with being a crusading liberal newspaper, after all.
But today the Times seems to be heading in the opposite direction, taking steps to shore up the lie, to reinforce the false impression of objectivity, by -- according to the description in Editor and Publisher -- banning reporters from
contributing to campaigns; or taking part in "public causes or movements." This includes wearing campaign buttons, marching in support or opposition of causes ....
Will this fool anyone? That would seem to be the idea. As Michael Kinsley has noted, such rules ban only the appearance of bias, not the actuality of bias. NYT Supreme Court reporter Linda Greenhouse marched in a big pro-Roe, pro-choice demonstration a few years back. Does anybody think she's changed her mind since? Will they think she's changed her mind if she now refrains from marching? (Or will the Times, in keeping with the spirit of its new rules, transfer Greenhouse from the Supreme Court beat because she's already blown her cover?) ....
I think that liberals feel quite complacent about the New York Times right now, just as they were about the presidency as long as Bill Clinton was in it -- when people you like are in power, it seems to be the natural order of the universe. However, I think they, and Sulzberger and Raines, believe that the paper's status as the Paper of Record is too enshrined to be changed by slanting their coverage -- and I think they're wrong. Not everyone who subscribes to the New York Times does so because they are part of the choir Raines et. al. are preaching to. Those readers won't stay with the paper if they come to feel that the news coverage is going to give short shrift to the side of the story the reporter disagrees with -- not just in always-misreported issues like gun control, but on a wide range of social and policy issues. Like most heirs, I think Punch regards his fortune as inexhaustible, a fact of nature -- and he's rapidly spending down the reputational capital his forebears built up. He wouldn't be the first heir to tank a seemingly unstoppable company.
There is nothing wrong with being a great liberal paper. But Raines & Co. don't want you to read their coverage thinking "this is a great liberal paper". . . they want you to read their coverage thinking "this is objective news coverage". They want to use your belief that their coverage is objective (or as nearly so as it is possible to get in this world of fallible humans) to sell their political beliefs. Now, having lived on the West Side my whole life, I can vouchsafe that it is possible that they believe their slant is the objective point of view, which just goes to show the danger of being surrounded only by people who agree with you. But in the case of a major newspaper, it behooves one to get out and research the market once in a while. Their subscriber base is growing. But can it continue to do so if the paper keeps moving well to the left of the electorate? Eventually, the paper risks being simply out of touch on the major issues of the day. I find the Village Voice a fascinating read -- but I'm not looking to it for policy coverage, or to take the pulse of the nation.
Are all papers biased? Sure. Most reporters are liberal; all reporters have an audience to please. But there's a difference between the Washington Post, where the editors try to keep an even keel because their audience is, after all, half Republican; and the New York Times, where the editorial direction seems at times to be actively in favor of slanted coverage. And I think that the more the New York Times moves to the left, the more they erode their reputation, and leave the office of "Paper of Record" up for grabs. It is their perfect right to do so. I comment on it only because, first, aggressively editorial news coverage annoys me (yes, my dears, I also switch the channel when O'Reilly comes on); and second, there is always an element of schadenfreude in watching someone make a really gargantuan mistake.
From the desk of Jane Galt:Steven Den Beste says that Mac is losing market share among the high end users, as the difference in speed is making it impossible for even long-time Mac afficionadoes to keep using their Mac. If he's right -- and the numbers seem to back him up -- the company is in big, big trouble. Big trouble. BIG TROUBLE.
Before the Mac folks start sending me hate mail, let me point out that I'm simply not in their demographic. I installed NT servers for years before I went to B-School, and now that I'm unemployed, it's one of the few ways I make money. I run my own servers, which won't work on Virtual PC. I am not afraid of my system crashing, though my Dell's been running for five years without a single problem and is only now beginning to run out of steam, with a full-up hard drive, a dying fan, and a creaky bus. I don't find the Mac interface intuitive; I find it an enormous pain in the ass, because I already know where everything is on a PC, and the Mac insists on doing things for me that I want to do for myself (and XP has followed it in that direction. Arggh.) I've also had a very bad experience with Macs -- I'm more than willing to stipulate that it's possibly a six sigma event, but I've had an inordinately high number of catastrophic failures on the Macs I've worked with, given how low that latter number was.
But users seem to love their Macs, and find them intuitive and incredible, and want to keep them, and I think that's fine. I think that the more fanatic comments about PCs generally reveal that the last PC they worked on for any length of time was running 3.1, but that's fine too. The Mac is a great piece of equipment, with an ease of use made possible only by integrated manufacture of parts and software. And the downside is, as Den Beste points out, higher cost of production (because the production function and cost curves of hardware and software manufacture are radically different, meaning you can't drive prices down the way PC's do), and the risk that a component bottleneck will hose you. Which is what has happened. Apple is hostage to Motorola for chips, and Motorola isn't making a new generation chip, meaning that Apple has to wait over a year for IBM's 970 series. That's why PC's are pulling away so rapidly from Macs -- all their components are being improved, while Apple is pretty much mired in the fact that no matter how much you improve the other components, the processor's still running at 1 Ghz. It is possible that small variations in chip speed can be overcome by software or components, but by the time the chip is twice as fast -- and the memory is three times as fast, and the bus. . . at the high end, the differences will become very apparent.
Speed makes the least difference at the low end -- though even I've noticed how big a difference there is between browsing on my lowly PII-400 and the new 2.6 Ghz machines I'm installing. (Many components contribute to this, not just the chipset.) That's where Mac is winning customers, with its glamorous cases and, I guess, intuitive software.
But the company can't live on those customers. Not and remain the company it is.
Apple is the high cost producer in the consumer computer market. Even with fabulous design, competing solely for the most price sensitive segment of the market is not a long-term winning strategy -- one bad move could kill you. More importantly, the rule of thumb in computer hardware is that the high-end segment subsidizes the R&D for the low end guys, who get the technology initially designed for the power users only after something bigger and better has come along. The premium price charged for the power machines is what covers most of the cost of R&D.
That R&D produces all the software that Mac afficionadoes rave about. If the power users defect, it's going to severely erode their ability to continuing to produce all the stuff that makes Mac users love Mac. As Den Beste points out, everyone steals software features, including Apple. The advantage to having a Mac is that you get them first. If Apple gets pushed out of the high end market -- and the likelihood is that their 970 ma