Friday, April 29, 2016

Repairing the Unrepaired

In San Diego non-summer heat waves usually last only a few days, so by the time the air conditioner repairman comes gets there the weather has cooled, you are no longer using the air conditioner, and you don’t know whether the repair has been effective or not.

We had one of our brief warm spells in February and my unit (which is still under warranty) did not keep the house cool, so I called for service. The guy said it was low on refrigerant and added five pounds along with some "stop leak," which he said would fix it.

I did not use it again until April, at which point it did not cool the house properly, so I called for service again. The guy said that the unit was overcharged and removed five pounds of refrigerant, which he said would solve the problem. The weather dropped to a high of 68 degrees, so we’ll have to see, but one has wonder.

Let’s say you have a machine which is running lopsided. The repairman says, “Oh, it needs a frammis,” and puts a frammis on it. The next time you go to run the machine, it is running lopsided again and a different repairman says, “Oh, the problem is that frammis. That shouldn’t be there,” takes the frammis off and proclaims it fixed.

The next time you go to run the machine, how is it going to run? Lopsided is how it’s going to run. It is now in the same state that it was in before the frammis was added, and it was running lopsided at that point. Why is adding and then removing a frammis going to make it run any better?

Why is adding five pounds of refrigerant and then removing it going to make my air conditioner work any better? The service company has not explained that. To give credit where it is due, at least they have not charged me any money for not fixing my air conditioner.

Monday, April 25, 2016

The Information Age

When is the last time you heard of anyone contracting Malaria in the United States? In 1947 the United States Health service was tasked with stamping out Malaria which is a disease carried by mosquitos and was, at the time, a major health problem all across the southern tier of states. They accomplished the task in two years.

Today we are wringing our hands and quaking in fear over Zika virus, a disease also borne by mosquitos, being told that eradicating it is a task beyond comprehension, and are unable to even get started due to Congressional paralysis.

I was reading a discussion over the weekend the gist of which is that the development of the Internet and related technology has not done much of benefit, and this would seem to be a case in point. We are living, we are told, in the “information age” but it appears that history is not part of that information. It is certain that we are not living in the “accomplishment age.”

Thursday, April 21, 2016

Hyperbole Exposed

Danica hype is significantly reduced this year, but whenever she is shown during a race the commentary has been that she is “learning” (after three full seasons!) and that she is “getting better all the time” and about what a great future she has. The facts so far this year would suggest otherwise.

At this point last season, after eight races on the same tracks, she had an average 17.6 finishing position. This year she has a 24.6 average, no less than seven positions worse than last year. She finished 24th in the standings last year, and ranks 25th so far this year.

Last year she finished on the lead lap in six of the eight races, this year she has done so only twice. Last year she wrecked in none of the first eight races but has wrecked twice this year. Crashing out of 25% of your races is not going to put you high in the standings.

Last year she finished a total of four laps off the lead lap, this year her total is almost twice that, finishing a total of seven laps behind the leaders.

She was inside the top ten twice last year, a 7th place finish and a 9th; this year she has no top tens, with a best finish of 16th at Martinsville. In six of the eight races she finished worse than she did last year. At Phoenix she finished better by position, but was on the lead lap last year and a lap down this year.

I’m not sure what part of all that constitutes “getting better all the time.”

Monday, April 18, 2016


To repeat my earlier disclaimer, I do not oppose a $15 minimum wage, but I do oppose pretending that it will be entirely free of any negative consequences.

Dean Baker has a discussion today of criticism of the Sanders plan for health care in which he cites an example of a “single mother with two children, earning $26,813 a year,” and how her health care costs would be affected. He then points out in his argument that Sanders is also proposing a $15 an hour minimum wage and that “if this single mother were working a full time job, she would see her pay increase by almost $3,200 a year, even if her pay was only at the new minimum.”

He then throws the real kicker into the argument about raising the minimum wage, saying, “it is likely that her pay would increase enough to leave her still well above the minimum,” which is a very good point indeed.

Picture an employer which has some jobs which are unskilled and pay minimum wage, and these workers are working alongside other workers who are skilled and are being paid above minimum wage. I assure you, this is by no means an uncommon scenario. Now assume that the workers are told that all of them are being paid the same amount because the unskilled workers have gotten a big raise, from $7.25/hr to $15.00/hr, while the skilled workers have gotten a very small raise, from $14.50/hr to $15.00/hr. That is most certainly not going to fly.

Proponents of the raise in minimum wage claim that employers can afford it because they will only have to raise prices a miniscule amount to cover the increase for the minimum wage workers, but reality is that employers will have to bump their entire pay scale upward consistent with the increase at the bottom of it, and that represents a major increase in payroll costs. History has, in fact, shown this to be the case when the minimum wage is increased by any amount.

Some employers will not be able to increase revenue sufficiently to cover the increase in costs and will be forced to reduce their work force. It may be only a few, and we can hope that such is the case, or it may be more than a few.

So is the minimum wage something we want to do? Sure, maybe it is, but let’s be sure we are informed as to the consequences.

Saturday, April 16, 2016

Economists Are Idiots

The other day I commented that economists know as much about business as does the average house cat, and Dean Baker penned a piece on Wednesday in which he sets out to correct a mistake published by a Stanford Business School professor and proves that my statement was right on the mark.

To clarify my remark, a businessman does actual bookkeeping and manages a business, planning based on those numbers for the future course of his company and keeping track of whether or not his business is or is not making money. Sometimes he lies about the latter, of course, but even so he knows the facts even when he is not revealing them accurately. Economists, on the other hand, create “models” and formulas which explain why the overall economy does what it does. That largely consists of developing a mathematical formula from present conditions and claiming that it predicts what will happen in the future, much like predicting based on the El Nino of 1998 that San Diego would get 28” of rain this year and then trying to explain why we only got 6” of rain.

At any rate, Professor Joshua Rauh of Stanford Business School wrote that state and local pension funds are more seriously underfunded than claimed by the funds, because they are using a 7% rate of return on their investments rather than a more reasonable rate of return on risk free investments of 2.5% which currently prevails.

Dean Baker refutes the professor’s claim, saying that the numbers used by the funds “are not pulled out of the air,” but rather are “projections of investment returns based on actual experience and a range of standard economic projections.” That is to say history and numbers pulled out of the air by people like him. History is good because interest rates have not dropped recently. Oh, wait…

And Professor Rauh’s projections are no good because he is a business professor, while Baker’s projections are good because he’s an economist. You say tomato…

Then he gets to the real proof that economists should never be allowed to discuss business. He discusses how pension funds “typically average the value of their assets over the prior five years,” and points out that in 2013 that average “would have included 2009 and 2010 when the stock market was badly depressed.” He does not point out what part of Professor Rauh’s discussion involved 2013, nor does he say why that has anything to do with this discussion, because no reputable pension fund manager would put more than a very small portion of a fund into the volatility and high risk of the stock market.

As even further proof that Baker is badly out of his field of expertise, he acknowledges that the stock market is not a "risk free" investment which pension funds require by going on to say that as 2009/10 was replaced in those averaged years “with the much higher stock market values of 2014 and 2015, the funding status of these pensions will look considerably stronger.” Yes, it would look considerably stronger but, due to the risk that those stock values will dive back down to 2009/10 values, it would not be considerable stronger.

So, aside from the fact that pension funds are not materially invested in the stock market, something that Dean Baker should know if he does not, his little journey into fantasy land points out that economists are concerned with how things look, while businessmen are more concerned with how things are.

Thursday, April 14, 2016

Aliens Have Landed

Paul Krugman and Dean Baker have both written pieces in the past few days regarding the need to increase inflation in order to “reduce the real interest rate” (emphasis mine). That “real interest rate,” in case you are not familiar with it, is the actual interest rate minus inflation. So, if the interest rate on your loan is 3.5% and inflation is running at 2% then the “real interest rate” on your loan is 1.5%.

There are so many things wrong with that that it’s hard to decide where to begin.

Let’s open with the fact that interest does not apply only to loans, it also applies to savings, so reducing interest is devastating to people who depend on income from their savings to augment their retirement income in their declining years. Inflation generally is devastating to people on fixed incomes, but economists don’t really care about that. They are perfectly willing to screw the senior population in the name of “growing the economy.”

There is also the working person who is setting aside money for future retirement and wants to see those savings grow. Reducing interest means they will be disappointed and will have to work longer or retire more frugally, and economists don’t really care about that either. No economist is willing to say outright that savings are bad for consumers, but they prate constantly that they are “bad for the cconomy,” so they are perfectly to screw the working class as well as seniors.

There is also the little fact that while I am having to pay more for practically everything I buy, my house payment is still the same because the bank thinks the “real interest rate” is the one printed in the loan documents. I have not had the temerity to go to a loan officer and demand that they reduce the interest rate by whatever the current inflation rate is, because I don’t want to get thrown out of the bank.

Notice I did not say that I’m paying more for food and energy, because those are not included in the calculation of inflation. They are excluded because they are “too volatile,” meaning that their prices change too rapidly. It’s interesting that computers can keep up with stock prices that change hundreds of times per second but cannot keep up with changes in the price of beef at Safeway.

At any rate, after that little side trip, inflation means that people pay more for the goods and services that they buy, but it does not mean that they pay lower interest rates. Not to mention that the Fed is breathlessly waiting for increased inflation so it can raise interest rates.

Part of the rationale is that businesses are more willing to borrow because they believe they will repay the loan with inflation-affected money that is "worth less." I’ve never met a businessman who subscribed to that little piece of insanity; the only ones who buy into it are economists, who know as much about business as the average house cat does. If nothing else, it depends on knowing not what inflation is now, but what it will be in the future when the loan is repaid, and no reasoning businessman is going to stake his future on that kind of uncertainty.

What planet did these economists come from anyway?

Tuesday, April 12, 2016

Sanders Has A Plan

I know this is kind of wonkish, but I was greatly cheered today to hear that William K. Black has signed on as an economic advisor to the Bernie Sanders campaign. Black was a central figure in prosecuting corruption in the savings and loan crisis in the late 1980s, including imprisoning the infamous Charles Keating and charging the “Keating five” that included John McCain (who got off thru the influence of his wealthy and politically powerful father-in-law).

He has been very outspoken about the failure to prosecute the financial crimes of the decade past, and of Congressional failure to reregulate the financial industry, but the media has rigorously ignored him. He is smart, highly articulate and indefatigably ethical.

Some have been critical of Sanders for not having a specific plan for “breaking up the big banks.”  Well, maybe or maybe not, but he certainly has an excellent one now.

Monday, April 11, 2016

Dishonesty Abounds

Establishment Democrats are wont to accuse Republicans of lying and of spouting gibberish, Paul Krugman leading the chorus but far from being a solo voice, but manage constantly to demonstrate that this is a classic case of the pot calling the kettle black.

Obama has now said that the worst mistake of his presidency was, “failing to plan for the day after what I think was the right thing to do in intervening in Libya.” The rightness of the decision to intervene in Libya is certainly arguable, but the point here is why he thinks that he should have been planning for the aftermath.

The announced purpose of the intervention, and the scope permitted by the United Nations resolution, was to prevent a massacre of the people of Benghazi, which was actually a fairly spurious claim in itself, and the administration claimed repeatedly that there was no intention of using that intervention as a pretext to overthrow the Ghadaffi regime. The UN resolution, in fact, specifically forbade any attempt at regime change. The US pretense did not, of course, hold up very long but still, the claim was made.

The intervention was made under the principle of “responsibility to protect,”  and that was the basis on which application was made to the United Nations for authorization to do the intervention. How do you plan for the aftermath of the overthrow of a government while at the same time not intending to overthrow a government?

So Obama is now saying that he made a mistake by not planning for what to do after having done what he never planned to do in the first place, sort of like saying that I made a mistake by not planning in advance what to do after I crashed my car, and almost as asinine as claiming that the reason for continuing our presence in Afghanistan is that “we are denying them space in which to plan their attacks.”

Meanwhile Hillary Clinton, in response to an accusation that she supported a foreign policy that gave rise to ISIS, claimed that, “ISIS was primarily the result of the vacuum in Syria caused by Assad first and foremost. Aided and abetted by Iran and Russia.”

Either she thinks that is true, in which case she is grossly unqualified to be leader of anything larger than a dog pound, or she is lying, in which case she is very well qualified to be president because that's what presidents do most of the time.

ISIS was created in Iraq, and Iraq remains the center of its power to this day, not to mention that many of its senior leaders are Iraqis. Its first major victories were in Anbar province where, at one time, it presented an artillery threat to the Baghdad airport. Its growth was fueled by sectarian politics in Iraq and the Obama administration, with Clinton as Secretary of State, certainly supported the Iraqi government’s suppression of the Sunni people who provided the core of the Islamic State movement.

She will probably get away with it for the same reason that Obama gets away with his nonsensical foreign policy babble, which is that the vast majority of the American people couldn't find Iraq on a map and really don’t give a shit what happens outside the borders of this nation. They think that “supporting the troops”  means buying a magnet for your car.

Friday, April 08, 2016

Paul Krugman Is A Shill

Paul Krugman has now completely abandoned logic and honesty in his pursuit of supporting the oligarchy and shilling for a Clinton presidency. In a blog post today he asks, “were big banks really at the heart of the financial crisis, and would breaking them up protect us from future crises?”  and answers his own question with a dishonest and a historically revisionist “no.”

“Predatory lending,”  he goes on to say, “was largely carried out by smaller, non-Wall Street institutions like Countrywide Financial; the crisis itself was centered not on big banks but on ‘shadow banks’ like Lehman Brothers that weren’t necessarily that big.”

Bank of America was a huge player in the predatory lending game. It was certainly not small at the time, and it definitely could not be considered a “non-Wall Street institution,”  so Krugman’s first defense of “big banks” is bullshit. Besides which, predatory lending was not the proximate cause of the crash, it only laid the groundwork.

The crash itself was caused by trading in financial instruments based on those faulty mortgages. It was that which took down Lehman Brothers, which was the fourth largest investment house in the United States at the time that it failed, so it’s pretty hard to agree with Krugman’s dishonest claim that it “wasn’t necessarily that big.”

Not to mention that it was the failure of Lehman which revealed that all of the other investment banks, including the three larger than Lehman, were as rotten and buried in bad investments as was Lehman and being "too big to fail"  had to be bailed out.

Krugman’s claim that “going on about big banks is pretty much all Mr. Sanders has done”  is utter bullshit, as his claim that an “absence of substance beyond the slogans seems to be true of his positions across the board.” Krugman is not ignorant of the truth regarding the campaign of Bernie Sanders, he is lying in an attempt to bolster Clinton’s presidential aspirations.

Tuesday, April 05, 2016

Making It Up

Dean Baker has a post today critical of the concept that economists praise the shipment of jobs overseas because it improved the lives of people in poor countries, and are at the same time pushing for welfare programs to improve the lives of people in this country who were impoverished by the loss of those jobs.

“Let's imagine,” he says, “that mainstream economics wasn't a make it up as you go along discipline,”  stating a position that I have held for several decades.

Economists have these mathematical formulas which they claim can foretell how the economy will perform, but I maintain that the claim is laughable since they developed those formulas by concocting the formulas to fit an aggregation of present facts.

Based on that process I could concoct a formula to determine who will win the Super Bowl based on scores in the first eight games of the season. That team would, of course, probably not even win their division.

Baker had a post yesterday which rather proves that economists are making it up as they go along, in which he claims that the failure to increase productivity is caused by low wages. WalMart, he points out, is hiring lots of workers such as greeters who do not do anything productive, and they do that because wages are low. If wages were higher, he claims, they would no longer hire these workers and productivity would improve.

He has, however, been claiming for years that raising the minimum wage would not cause employers to lay off any workers, so he sort of needs to make up his mind.

Monday, April 04, 2016

No, I Don't Oppose It

As a matter of fact, I think it's idiotic that they "phase it in" over a five year period. Who does that serve? If you are going to raise it, just raise it.

As with most laws passed by most legislatures, I think it is poorly implemented. For instance a waiter making $20,000 per year in tips must still be paid a salary of $31,200 per year; the same salary as a janitor or a lawn care worker, who rarely, if ever, is tipped at all.

Sunday, April 03, 2016

Thinking Outside The Box

A minimum wage of $10.50, translating to $21,840 per year, is considered unacceptable. California feels the need to raise that to $15/hr, or $31,200 per year. Meanwhile, they have no apparent problem with seniors living on an average Social Security of $14,160 per year. So the Millennials cannot, or should not, be expected to live on $21,480 per year, while it's okay for seniors to live on 66% of that amount. Just a thought.

Friday, April 01, 2016

Small Cons and a Big Con

The Chargers knew that the chances of getting a stadium deal on its own merits was slim at best, nonexistent at worst. They claimed to need $350 million in revenue from the city, but in reality they needed $550 million given that the $300 NFL “contribution” included a $100 million grant and a $200 million loan.

The plan was to sell the deal in Mission Valley with new 2% hotel tax paying the cost so that they could convince the people of San Diego that it would require “no new taxes.”  After several months of peddling this plan somebody pointed out that a court had ruled that 2% hotel tax illegal. Ironically, they thought they could get away with diverting that tax to the stadium because the hotels weren't presently getting it anyway.

That is the first of two small cons. The hotel tax increase supposedly is “from 12.2% to 16.5%” and is merely a 30% increase. Except that the 2% tax is not currently being imposed and so the actual increase is a 60% one, from 10.5% to 16.5%.

The second small con is that in the current plan there is still no mention made as to how the $200 million loan from the NFL will be repaid.

The big con is that, knowing he could not possibly sell his stadium to the taxpayers, Spanos combines it with a convention center expansion which is much more well received by the public. The public will vote in favor of the convention center expansion so that ComicCon will not carry out its threat to move to Los Angeles, and will not mind that the price of that expansion is a football stadium that we don’t want.

Sort of ironic that we don’t mind if the Chargers move to LA, we just don’t want ComicCon to do so. Tells you something about San Diego.