Sunday, August 30, 2015

Sunday Food Blogging

The "Good-for-you" in the name of this recipe comes from the original that I found in a magazine. It was not Mexican, had cloves in it, and was advertised as healthy because it specified salt-free canned tomatoes. It also specified brown sugar, so I'm not sure of the validity of the claim, but anyway. I modified it beyond recognation and called it "Bill's Good-for-you Spicy Chicken." Further modification has resulted in this offering.

Ortega offers diced green chiles, but I never use them. I get the whole ones and dice them myself because I have found that their diced offering is usually nothing more than a mushy mess.

Bill’s “Good-for-you” Mexican Chicken

1# skinless boneless chicken breasts
1 lg onion (for about 1 cup chopped)
1 lg Bell pepper (red or green), cut to 1” chunks
1 can Ortega green chile, diced small
½ tsp ground cumin
½-3/4 tsp chile powder
1 tsp garlic, crushed or minced fine
1 can diced tomatoes (15.5oz )
1 can tomato sauce ( 8 oz )

Cut the the chicken into bite-sized pieces and saute it with the onion and garlic, stirring frequently, until the opion is just transparent and the chicken is no longer pink. Don’t worry about cooking the chicken all the way through at this point; we’re going to simmer it in liquid for a bit.

Add the bell pepper and continue cooking a few minuter on medium high, just enough to soften the peppers a little.

Add the tomatoes with all the juice, tomato sauce, cumin, green chiles and chile powder. Stir well, leaving heat up until it is bubbling then turn heat down to a low simmer for about 10-15 minutes. Serve over rice.

Saturday, August 29, 2015

No Shit?

Hillary Clinton now tells us that, "Using a private server was obviously not the best choice." That's what we need in a president, someone who has fully mastered the fine art of stating the obvious. Especially one who can do so after vigorously trying to avoid it for six months.

She then bravely says that, "I take full responsibility for that decision." What does that even mean? It certainly doesn not mean that she expects or is willing to be penalized for it. Gack.

Friday, August 28, 2015

The Last Ship

There are things that I enjoy about this series, but as a former sailor there are issues with it which rather have me grinding my teeth. The big flaw is, of course, the Captain of the ship repeatedly leaving the ship to participate in hazardous excursions ashore. No Navy Captain would ever leave his command leaderless like that even once, much less do it on such a routine basis.

A smaller issue is the officer who keeps telling the Captain that she has assigned “the snipes” to perform various tasks. That’s sort of bizarre. The term “snipes” is a term the Navy uses to apply to all specialties which are “below deck” rates, essentially those which relate to engineering. Other ratings are referred to as “deck rates,” even when their work has nothing specifically to do with the deck, such as Yeomen.

So when the officer says that she has assigned “the snipes” to do something, she is being really nonspecific, and no naval officer would use the term in that manner, which could be inclusive of, for instance, assigning Enginemen to fix an electrical problem.

What clouds the issue even further is that sometimes she is talking about a mechanical problem, which would be a snipe responsibility, and other times she says she assigned the snipes to deal with a communication problem, which would be the responsibility of Electronics Technicians, who are not snipes but are deck rates.

Thursday, August 27, 2015

I Wasn't Speeding

Police Officer: Good morning ma’am. Do you know why I stopped you?
Hillary Clinton: No I don’t officer.
PO: You were going 55mph in a 40mph zone. License, registration and proof of insurance, please.
HC: hands them over.
PO: Ma’am, both this registration and insurance expired six months ago.
HC: Officer, I was only going 37.4 miles per hour.
PO: Well, you can tell that to the judge. Do you have a current registration and evidence of current insurance?
HC: Well, can you prove that I was going faster than 37.4 miles per hour?
PO: I’ll prove that to a judge, ma’am. Unless you can furnish a current registration and insurance card I’m going to have to impound your car.
HC: You can’t impound my car! I was only going 37.4 miles per hour.

Wednesday, August 26, 2015

Yes, Content Matters

Okay, Bruce, back to my driving analogy. I was not suggesting that for the driver to be exceeding the speed limit was insignificant. Of course there should be a penalty for speeding. I was saying that the speeding issue was not relevant to the car being impounded. It was not impounded because the driver was speeding, so arguments about how fast she was driving are irrelevant to the impoundment issue. It was impounded necause the car was not registered and was not insured.

The fundamental issue is that Clinton used a private server, taking her officvial communication out of the official record and subjecting it to being tampered with. Whether or not that commmunication was classified is irrelevant to that issue.

It's Not About The Content

This Hillary email thing drives me nuts. Let’s say someone is driving without a license, in an unregistered car, and is stopped for speeding. The car is impounded. Are we going to contest that impound by arguing about how fast the guy was driving, with some insisting that he was not actually exceeding the speed limit? Are we going to utterly ignore that the car was not registered?

Now, in pointing out that Caroline Kennedy also used a private server, we are saying that if some other dude drove an unregistered car then this unregistered car should not be impounded. That is the same hilarious argument that was used by Obama defenders for many of his shenanigans; “Bush did it too,” utterly abandoning logic by ignoring the premise that Obama was supposed to be different.

Whether or not there were any classified documents on the server is pretty much irrelevant, the problem is the private server itself, and no one denies that she was using a private server exclusively, Hillary included.

The requirement for using a government server is to provide an official record of government communication and to assure that no one can tamper with that record. Hillary cheerfully admits that she bypassed that recordkeeping and that she tampered on a massive basis with the records that she kept on her private server.

Classified materiel be damned, how can we pretend that what she did in, to repeat, bypassing official records requirements and massively tampering with the records she kept privately is not a huge problem?

If not a legal problem, it is a massive problem with respect to transparency and trust.

Hillary threw up this smokescreen about classified material herself and quite deliberately by, when challenged about using a private server, dodging the actual question and saying that the server contained no classified material, creating a conversation and a controversy that would be at best difficult and possibly impossible to prove. This is her style. This is what she does.

And it worked because no one is talking about the private server itself. We are all arguing about how fast she was driving whether or not there was classified material on the server, which is utterly beside the point and is precisely what Hillary wanted us to do. It’s not working as well as she thought it would, but it’s working, because it hasn’t buried her yet. If we had stayed on topic it would have buried her in a couple of weeks.

Tuesday, August 25, 2015

Dim Bulb

I use an electric toothbrush, Oral-B, the disposable battery operated kind. You do not realize the degree to which the bristles and battery have deterioriated until you buy a new one. Well, maybe you do; I didn't.

Simarly, the light bulb over my range burned out. While changing it I realized that maybe I needed to clean the accumulated grease from the translucent cover over the light. Well, nominally translucent anyway. We are not going to talk about the condition of the light bulb itself. Yikes. It's amazing how bright a 60 watt light bulb is.

You may interpret the title any way you want to.

Saturday, August 22, 2015

Paul Krugman Is An Idiot #7,941b

In his op-ed yesterday, Paul Krugman goes on to tell us that today’s low interest rates “are telling us something about what markets want.” I would suggest that government is supposed to serve the public rather than markets, and that “what markets want” is not necessarily good for the public, but Krugman is probably incapable of discerning the difference.

He then tells us that “having at least some government debt outstanding helps the economy function better” because, he says, “the debt of stable, reliable governments provides ‘safe assets’ that help investors manage risks, make transactions easier and avoid a destructive scramble for cash.”

The last two reasons are just laughable. What, precisely, is a “destructive scramble for cash,” and how does government debt prevent it? And the provision of “safe assets” is not as logical as it would seem, which Paul Krugman promptly proceeds to explain, neatly destroying his own argument in the process.

In the very next paragraph he tells us that “the private sector can also create safe assets, such as deposits in banks that are universally perceived as sound.” In fact, banks did that for many decades, a point which Mr. Krugman does not dwell on much, actually glosses over pretty much entirely by skipping to “the years before 2008” which, you may recall, were the years leading up to a major financial crash.

He describes the private sector’s claim “to have invented whole new classes of safe assets by slicing and dicing cash flows from subprime mortgages and other sources” which turned out not to be safe at all and that as a result “investors scurried back into the haven provided by the debt of the United States” as a result of which “they drove interest rates on that debt way down.”

So much for his economic theory that the Fed is in control of interest rates, lowering them when times are bad and raising them when times are good. There is much talk about fear that the Fed is going to raise interest rates soon, but if investors drove the rates down, how is the Fed going to arbitrarily raise them? Paul Krugman, like most economists, has this problem: he cites the Fed as being in control when that suits his present argument, and then turns around and cites the market as the controlling factor when that suits a different point which he is trying to make.

Anyway, to the current point, a more reasonable action by government would have been to force the private sector to stop the “creative financial instrument” process, which is fraud by another name, and return to their proper function of providing safe assets, rather than allowing private sector fraud to continue and going into greater debt to provide the “safe assets” that the private sector was no longer providing.

He then goes even further down the rabbit hole. Having praised government debt at low interest as a “safe asset” and a bargain for the taxpayer he says that “low returns on safe assets may push investors into too much risk-taking — or for that matter encourage another round of destructive Wall Street hocus-pocus,” all of which is, of course, bad.

So what can be done about the low rates which, apparently, are good for government and the taxpayer but bad for investors and the economy? First we have to answer the question of how they can be good for taxpayers and bad for the economy, which is a question that has no viable answer. You notice that he has utterly abandoned the concept of building infrastructure, roads and bridges and such things, and is now talking entirely about investors buying government bonds.

Raising interest rates, he says, “would undermine our still-fragile recovery,” so we can’t do that. He wants to see us have “policies that would permit higher rates in good times without causing a slump,” which means he wants the economy to recover before we raise interest rates and is a non-answer. Sort of, “don’t do anything to solve the problem until after the problem is solved.” But, he suggests, a policy which would do that “would be targeting a higher level of debt.” And he went the place he always goes.

So Krugman starts by telling us that today’s low interest rates are a good thing, then he tells us that they are a bad thing, then he tells us that we should be “Targeting a higher level of debt” as “a policy which would allow higher interest rates,” meaning that we would be borrowing more money so that we could raise the cost of borrowing.

And they accused Reagan of Voodoo Economics.

Friday, August 21, 2015

Paul Krugman Is An Idiot #7,941a

Sometimes I just want to tear my hair out. The guru of “liberal economic thought” goes from nonsense to insanity. Paul Krugman now says in today’s op-ed that the problem causing our current economic doldrums is insufficient government debt, and that the solution is to engage in even greater government deficit spending.

He starts by saying that “issuing debt is a way to pay for useful things” without, of course, saying that one can also pay cash for useful things or that debt is also a way to pay for utterly useless things like wars of choice and graft.

He then describes how at this point “the federal government can borrow at historically low interest rates” and goes on with one of his favorite songs with lyrics about how “this is a very good time to be borrowing” and a tune that sounds to me like fingernails on a blackboard. Low interest rates is an utterly stupid reason to be borrowing money. It may make sense in terms of timing, but to advance it as a reason for the act of borrowing is beyond ridiculous.

Reminds me of the television commercial which tells me that “You can save $1000 by buying a new car this month,” to which I reply by saying, “No, I can save $30,000 by not buying a new car at all.”

Krugman’s argument about the “good time to borrow” is made more absurd by the fact that government does not incur debt at a fixed rate. It sells bonds which are redeemed after a period of time, at most thirty years, many of them shorter than that, at which time the government either has to pay down the debt by redeeming the bonds, or “roll over” the debt by selling new bonds at whatever interest rate is prevailing at the time. So what happens if the interest rate, as it inevitably will, goes up?

The current national debt is $18.1 trillion, on which we paid $430 billion in interest last year, an average rate of 2.5%. About twenty years ago the prevailing rate was around 10% so assume we increase the national debt to $25 trillion, which Krugman would certainly applaud, and are paying 10% interest; that means interest payments of $2.4 trillion per year. Our current total spending is $3.3 trillion, so does that still sound cheap, Paul?

He then goes into some even more nonsensical babble about “what markets want” which I will discuss in a post tomorrow. At the moment it is time to go see if the lady on Alvarado Canyon Road can stick me with all the rest of the dead bodies that I know she has hidden in that gym.

Tuesday, August 18, 2015


Danica Patrick has scheduled a news conference for tomorrow at 11:am EDT. (She finished 25th yesterday, two laps down.) I am breathless with excitement. I cannot imagine they would make such a big deal over something so mundane as a contract extension. Well, with Danica, we can't rule that out.

I think she's going to announce a sex change. "Women do not do well in NASACAR," she will say, "So I'm going to become a man."

The other possibility is that she's retiring because she's pregnant. Oh God, I am such a sexist pig.

Update, Wednesday 8:00am: Well, that was boring. She has a new sponsor. A bakery, no less, and no, I am not going to start babbling about buns.

Update, Thursday 8:30am: One sportswriter said that the bakery and Danica were "a perfect fit,"  which did certainly tempt me to indulge in some bun commentary. The fit, however was something about how the bakery requires machinery to bake its buns (no, no, no, don't go there) and Danica requires machinery to, um, win races.
I do hope the barkery has a better success record at baking buns than Danica does at winning races.

Fear of the Police

Many years ago, the Cold War was still hot actually, I was at a party of some sort and met a young man who was newly in this country from Poland, which was still behind the Iron Curtain at the time. I asked him what most impressed him about this country, and he didn’t even have to stop and think before he answered, “You don’t have to be afraid of the police.”

As I have watched the news lately, of events in Ferguson MO, and the protests of Black Lives Matter, that event has popped into my mind. If your skin is not the right color in this country, you do have to be afraid of the police.

What must it be like to live in a nation which talks about itself the way this nation does, using words like “freedom” and “opportunity,”  when you live as people did in Poland under the bootheel of the Soviet Union, afraid of police?

Monday, August 17, 2015

Dean Baker is an Idiot

Paul Krugman is not the only idiot in the field of economics, Dean Baker, who writes for the Center for Economic and Police Research, comes out with some statements which can make one wonder if the field is populated entirely by idiots.

On Friday he wrote a piece refuting Steve Rattner, who was deriding Donald Trump’s economic statements. He agreed that Donald Trump is an idiot, but said that so is Steve Rattner in his derision of Trump. As illustration to make his point, he made a couple of statements that lead me to believe he has been spending too much time with Paul Krugman.

First he tells us that, “productivity in manufacturing is not new, but the large-scale loss of manufacturing jobs is.” He does not mean productivity itself, of course, but rather increases in productivity, but that is a form of shorthand used by many businessmen and economists, so I’ll let that go. If by “new”  he means thirty years ago, then I have no real bone to pick with him so far.

He goes on to say that, “in 1971 we had 17,200,000 jobs in manufacturing. In 1997, we 17,400,000 jobs. This is in spite of the fact that there was enormous productivity growth in manufacturing over this quarter century.”

He’s trying to make a point here and not making it very clearly, if at all, because he thinks he is refuting Rattner’s claim that increases in productivity caused the export of jobs. He is, actually, refuting a claim that Rattner didn’t make, because what Rattner said was that efficiency improvements overseas attracted the exported jobs, and Baker is talking about efficiency gains at home.

Baker also omits to mention that the economy and the scale of manufacturing increased dramatically in those years, while the number of jobs increased by barely more than 10%, suggesting that increases in productivity actually does reduce jobs and making a point which is not particularly pertinent to the discussion and which I seriously doubt he wanted to make.

I have written many times that improved productivity is not a friend of the labor force because by definition it means more output from less labor and therefor fewer jobs, and while I agree with Dean Baker that productivity had nothing to do with the export of manufacturing jobs overseas, this is not the way to make the point.

He then delivers the wisdom that, “The big difference between this decade and the prior twenty-six years was the explosion of the trade deficit as jobs were lost to China and other developing countries.”  Just to be sure that he is not making some irrelevant statement which is merely correlation and does not involve causation, he follows up with, “The fact that we would have more manufacturing jobs without the trade deficit is almost definitional.”

Actually, he has it backward, of course; his statements posit the trade deficit as the cause of jobs exports, while reality is exactly the opposite that. The export of manufacturing jobs caused us to import manufactured goods, and it is those imports which result in the trade deficit. His statement should be reversed, “We would not have the trade deficit if we had more manufacturing jobs,”  because the trade deficit is the result of the export of manufacturing jobs, not the cause of it.

Dean Baker is one of the very few economists who talks about the detrimental effects of the trade deficit on our economy, and I have applauded him for that, but then he comes out with a nonsensical statement to the effect that it caused the export of jobs to overseas. Even when economists have a valid point to make, it seems they are utterly incapable of making it in anything approaching a sane manner.

Friday, August 14, 2015

Modern Law

A year ago Tony Stewart was racing open wheeled cars on a local dirt track with a bunch of amateur race drivers. There was a minor kerfuffle between Tony’s car and one of the locals and the local guy’s car spun out and hit the wall. It doesn’t matter who was at fault in that part of the incident, because no real harm was done.

The local guy unstrapped and got out of his race car, and then ran down to the part of the track where the cars were continuing to circle under caution, lined up closely one behind another at about 50 mph. He darted close to Tony’s car to gesture and express his displeasure and was run over by Tony’s rear tire and killed.

Authorities investigated and found that the local guy had been smoking marijuana in quantity such that his judgement was likely to be impaired at the time of the incident and that the guy had left the safety of being strapped into his car and advanced into the close proximity of open wheeled cars traveling at 50 mph. They therefore concluded that Tony Stewart was not at fault in the local guy’s death.

The local guy’s parents have now filed a wrongful death lawsuit against Tony Stewart, seeking unspecified damages. Lawyers are talking about “future earnings their son would have provided them,”  and “pain and suffering their son experienced during the time he saw Stewart's car coming toward him.”

I’m not sure on what planet there is a reasonable expectation that a child would be providing his earnings to his parents, even assuming that the kid would turn out to be a successful race car driver; something that is actually very unlikely. Nor is there any part of this space-time continuum in which one person is reasonably compensated for another person’s pain and suffering.

Sort of like a guy killing his parents and then throwing himself on the mercy of the court because he is an orphan. In today’s legal system that would fly.

Thursday, August 13, 2015

Yet More "Cooking Magic"

It was originally titled "You're Cutting Your Steak Wromg,"  but after thousands of comments saying "No I'm not, I've been slicing my flank steak that way for fifty years,"  they changed it to "The Trick To Making Flank Steak As Tender As New York Strip,"  which is only slightly closer to being accurate.

The "trick" is to simply slice the flank steak across the grain after cooking it, which has been known by everyone who has ever been within fifty yards of a kitchen. It does not makes it as tender as a New York, by the way, even their little demo admits that it remains 16% tougher. One wonders, though, why after all of those comments they didn't just decide that everyone already knows to do this and simply ditch the article.

They sort of imply that flank is a substandard steak, served by people who can't afford the better cuts, but it has a very nice flavor all its own. Top restaurants serve it, calling it "London Broil,"  and I have been known to grill
it even when I could have afforded a nice T-bone.

Wednesday, August 12, 2015

The Clinton Emails

This subject is being handled like the patter of an auctioneer; designed to whip the audience into a frenzy and obscure what is actually going on.

Did Clinton’s email server contain any material which was classified? Not in the form of an outgoing email, since she alone generated those, she alone had access to the server, and nothing is classified until someone classifies it. Obviously she did not access her own server and mark anything classified.

Emails which she received would, by the same criteria, not be classified since they were new material at the time they were sent.

There is a possibility that there might be classified material in the form of an attachment to an email, so the question is not exactly stupid, but it invites obfuscation.

Did Clinton’s personal server, however, contain material that should have been classified? Well, let’s consider this. That system was her only means of email communication, and if she was not sending and receiving sensitive information via email as Secretary of State, then what the hell was she doing to earn her salary?

A Secretary of State whose email was entirely suitable for public release would without question be the most worthless cabinet member in the history of the United States, so why are we even having this discussion?

Tuesday, August 11, 2015

Tuesday Potpourri

Megyn Kelly strikes back at the attack from Donald Trump by saying that, “I will not apologize for doing good journalism.”  The point is moot, I think, since she didn’t do any journalism at all, good or otherwise, but then she also owes no apology to a New York buffoon in any case.

Big news from NASA that the “universe is slowly dying,” with galaxies becoming more dim, etc. I’m not sure why this is startling anyone, since I learned the basic law of entropy sixty years ago that “all systems tend toward equilibrium.”  So the universe is tending toward a state where all energy is equally distributed. I could have predicted that in my high school physics class.

We lost two good ones Sunday, two men who had much in common. Both excelled at the sport in which they engaged, and both had the exceedingly rare ability to become superb media representatives for their sport after retirement.

Frank Gifford was a halfback and a wide receiver. He played his entire career with the New York Giants and was second only to James Taylor on that team’s list of all time greats. He was exciting to watch on the football field, and delightful to listen to in the announcer’s booth. He will be missed.

Buddy Baker was a race car driver, specializing in stock cars. He won a lot of races and was one of the funniest men in NASCAR, once commenting on another driver’s crash by saying that, “he ran out of talent halfway through turn two.”  He was a southern gentleman in the finest sense of the word, which included an ineffable courtesy to women. When he retired and took up the microphone he was a joy to listen to. He died Sunday after a short battle with lung cancer.

Mayor Kevin Faulconer of San Diego revealed the latest plan for funding a new stadium for the Chargers, necessary because the last plan floated like a lead colander. This one, he promises, means “no new taxes” because the public funding is in the form of $350 million in bonds. Bonds which, apparently, are unique in that they do not have to be repaid to the investors who buy them. Or perhaps they will be paid by unicorns emerging from those rainbows which Mr. Faulconer sees hovering over the Pacific Ocean.

It also included a 6,000-page environmental impact report that was prepared in less than two months. That’s pretty awesome. Forget the research; how many people did it take just to type 6,000 pages in two months?

I think they should pay for a new stadium with the $1 billion worth of cocaine that the Coast Guard just brought in to San Diego.

Speaking of football, which I have to admit does have me a bit excited, I keep thinking that I’m going to watch preseason games, and then I remember why I don’t watch them when they turn the game into mere background for their irrelevant interviews and discussion group blather.

Another cooking article that presumes to teach me how to cut a cantaloupe in half without having it roll out from under my knife. Seriously. I’m waiting for the one that teaches my grandmother how to suck eggs. This one shows, at the end, cutting the flesh of the melon from the rind by using the knife in the right hand to cut towards the left hand which is holding the partial melon. Yikes. Did his mother teach this author nothing?

Hillary Clinton has a plan to have government spend $350 billion to send people to college without them having to go into debt. Um, might it be a better idea to legislate to force universities to charge less money?

Of course that’s consistent with “health care reform” where, rather than driving down the cost of health care, we provide government money to allow more people to pay the existing cost. In both cases it is Democrats who would rather spend taxpayer’s money than drive down corporate political donor profits.

Republicans, of course, claim otherwise but government spending increases on their watch as fast as it does under Democratic control.

Monday, August 10, 2015

The Death of "No First Use"

It was seventy years ago that the United States dropped atomic bombs on Hiroshima and Nagasaki, making us the only nation in the world ever to have used nuclear weapons against another. Despite all of the discussion on the subject, that does not particularly concern me. There was a world war in progress, albeit in the waning stages, and the act was performed against the backdrop of the routine firebombing of cities, which had been going on for several years. It’s easy to sit in judgement decades later when viewing through the lens of hindsight.

What does disturb me is that we are, today, of all the nations which posses nuclear weapons, the only nation which repeatedly threatens to use them; slightly veiled threats to be sure, but unmistakable threats nonetheless.

During the Cold War this nation had a firmly stated “no first use” policy regarding nuclear weapons. Our leaders held the policy that our nuclear arsenal was strictly a deterrent, and that it would never be used except in retaliation against anyone who perpetrated a nuclear attack upon us. Our leaders often stated openly that under no circumstances would this nation be the first to use nuclear weapons.

That policy was changed by George W. Bush and the change has been continued by Barack Obama and his Cabinet. When asked about using nuclear weapons, an asinine question which should be rejected rather than answered, today’s reply is not the reiteration of the “no first use” policy which it should be, but that “all options are on the table.”  It’s bad enough that Obama is parroting, word for word, replies given by Bush; it’s worse that he is parroting such an execrable reply.

Friday, August 07, 2015

Winners & Losers

I only watched the first half, but that was enough to decide that there were no winners. None. The biggest loser was Fox News, because the only thing that made less sense than the answers given by the candidates was the questions themselves.

"Mr. Trump, you once called a woman a fat pig. Would you care to respond to that?"  He should, of course, simply have said, "No, I would not,"  but...

Some of the questions were provided by the audience over the Internet, but I still blame Fox. First, they used
the Internet as a source. Come on, they know what the Internet is. Second, they then selected which of the proferred questions to use.

Wednesday, August 05, 2015

Paul Krugman Is Not Modest

Paul Krugman illustrates a high level of modesty and humility in his post today. In analyzing the adversarial nature of economic discussion, he says of his opponents that, “early on in the debate they were, in effect, caught with their intellectual pants down,”  and that “they have been driven largely by a desire for revenge.”

He goes on to remind us that, “I was a grad student as much of this was going on.”

Well, I’m glad we got that cleared up.

Tuesday, August 04, 2015

Method Two

I often verify my logic by using a second method for calculating outcomes, so I did that in figuring the impact of a 107% increase on wages, using total costs rather than unit costs.
wage calculation
The blue numbers at the bottom of the first column are arrived at from the table provided by the D&T accounting firm. The red numbers are calculated based on actual numbers arrived at from the Reality & Sanity accounting firm located in my residence. It is by no means surprising that this method also arrived at a 42% price increase.

I'm not saying I oppose raising the minimnum wage to $15, but let's be honest about the effects of doing so.

Monday, August 03, 2015

Lies, Damned Lies & Accountants

Subtitled, “How we degrade the discussion because our minds are made up and we don’t want to be confused by any facts.”

I was involved in a discussion of raising the minimum wage to $15/hr, a proposition on which I hold no strong position one way or the other. I consider government regulation of business to be necessary generally, and as to wages, as long as everyone is playing on a level field I don’t see how it hurts business. I don’t see how proponents can claim that it isn’t inflationary, but

One person cited a study by Purdue University’s School of Hospitality and Tourism Management to say that the increase of 107% in wages would only raise fast food prices by 4.3% on average. Not quite believing that doubling labor cost, which is typically 30% or more of total cost, would have an impact that small on overall pricing, I went to the news article in question and it took less than a minute for me to see that either the study was entirely bogus or the journalist was quoting it out of context, or perhaps both.

The article states, without supporting calculation, that,
“If hourly wages were $15 (106.9% change from $7.25) food prices would rise 4.3%.”

Support was provided in the form of a table from the Deloitte & Touche accounting firm titled “Derived Sales Calculations – Increased Wages.”  The word “derived” in there was an immediate red flag, as it is a word with the same root as the financial “derivatives”  that caused the crash of 2008. It didn’t take long for my bs detector to start buzzing.

Three columns are shown, one for current wages, one for $15/hr and one for $22/hr, and all three show the same costs until you reach payroll costs. The column for current conditions shows nothing for payroll costs, which is an odd way to provide comparisons and upped the volume on my bs detector. The other two columns show wages per employee circled in red, which took my bs detector to a deafening level.

If you want to discuss the impact of a wage increase, it’s hard to do that without knowing the current payroll amount, and the cost per employee which they circled in red is meaningless. They also made the rather astonishing assumption that the average fast food restataunt has only nine employees.

They slipped up, though, and did include enough information in this table that the current payroll amount can be calculated, because while they do not show the total revenue in the first column, they do show it in the second two columns for the purpose of comparison. So if you back out the 6.3% profit margin from that $626,796 current sales figure and subtract all of the costs “Before Payroll and Benefits,”  you get a current payroll and benefits cost of $231,534.

You also get a total overall cost, then, of $591, 316 based on current wages; a figure which we will put to use just a little bit later in this discussion.

They show a payroll cost of $253,352 based on the $15/hr, supposedly representing the 107% increase over current wages. But, does that look like a 107% increase over the current $231,534 payroll cost? No it does not, which is why they did not show the current payroll costs. It is actually a 9% increase in payroll cost, which might indeed be consistent with a 4.3% price increase, but has nothing to do with the 107% wage increase from $7.25/hr to $15/hr which is the subject they are presenting.

They show “total costs and expenses”  in the last two columns, but they are based on payroll costs which are badly out of touch with reality, facilitated by not providing the starting point from which the costs are calculated. The payroll cost in the second column should actually be $479,275, and in the third column it should be $703,863.

They then show “Derived Sales”  and compare them to the current sales in the second and third columns.They apparently simply pulled those “derived sales” numbers out of their collective ass, because there is no other explanation for how they arrived at them. You may recall that the “derivitaves”  in 2008 were financial instruments which were so complex that only the sellers could understand them, but I suspected at the time that even the sellers did not understand anything about them either, other than that “If you buy these from us we will have more money and you will have less money.”

There is the business management method of calculating a price increase, which is much more simple because it involves nothing more complex than plain arithmetic. First you calculate the cost, which you can do by subrtacting the 6% profit margin from the selling price; so that $4.77 hamburger costs you $4.48 to produce. (That’s 94% of the $4.77 selling price.)

Now you need to know how much of that cost is labor. D&T accountants omitted that figure from their “Derived Sales”  chart, but we can determine it from the numbers that they did provide, and can calculate that the payroll portion of your cost is payroll cost of $231,534 divided by total cost of $591,316 which amounts to 39%.

So of that $4.48 total cost, 39% is payroll cost, which amounts to $1.75 for labor. That amount, we have been told, increased by 107% which amounts to $1.87. So the original cost of $4.48 has increased by $1.87 and is now $6.35. You want to retain the same 6% profit margin, so divide that cost by .94, for a new selling price of $6.75.

The $4.77 hamburger is now selling for $6.75 which is an increase of 42%.

That’s a long way from the 4.3% that the Deloitte & Touche accounting firm got by the “Derived Sales” method. Any company that doubles its wages and follows the accountant’s advice to raise prices by only 4% is not going to stay in business very long.

When I pointed out the flawed model in the discussion the response was “I didn’t waste my time figuring it out”  and, to paraphrase, “I don’t care because I am in favor of raising the minimum wage and am willing to cite any source that supports that position whether it is valid or not.”  That really should not have surprised me.

Progressives are critical of conservatives for making bogus arguments but are, of course, quite willing to make the same type of argument themselves.

Sunday, August 02, 2015

Well, She's a Cat

I get home from the grocery store and Molly does not meet me at the door or at the top of the stairs as she usually does. I put the groceries on the kitchen table and go looking for her and she is nowhere to be found. Look in all the back rooms and both closets, no cat. Check both of her beds, even look in the litter box, which is in the shower enclosure in the hall bathroom. No cat.

I go back into the kitchen and she is sitting on the rug in front of the stove, looking very prim and implying, “Where have you been? I have been right here waiting for you to come in and give me some of that Tuna Dinner you just bought for me.”  Little brat.