Monday, November 23, 2009

Its alive...

The Commission is still with us, but the combination of work, an election, and a variety of household issues have kept us a bit too busy...

Rest assured, there are plenty of discussions here at the commission, and we expect to be back to regular blogging soon...


The Commission

Wednesday, October 28, 2009

More Fear And Loathing In New Jersey

So--whatcha doin' next Tuesday? As the campaign trail has unfurled before us, we have seen an unforgiving landscape of potholes, twisted guardrails, unkempt weeds, and week-old fast food detritus. But let's face it--we live in a representative democracy. This election is our mirror, folks, and we've let it get this way.

Tell me, as you read this, has your hedge fund manager called to tell you that your multi-thousand-dollar investment is now your multi-million-dollar investment? Has your local police chief called you to not to worry about that speeding ticket you got last week?

Here's something scary--I've got nothing to pick on Daggett about. I don't know if that's good or bad, actually.

In delis, in diners, in bars, the talk has been the same these past few months: ABTE--Anything But The Election. For something that's going to affect all of us for at least the next four years, it's almost like we couldn't give a damn--and maybe we'd couldn't.

Have we reached that critical point in our society where apathy has become the accepted norm? Government has already proven that it doesn't understand the concept of vox populi, vox Dei, at least on an intermittent basis. Is it our fervent hope that government can join the white noise, the incessant hum of commerce that forms the backdrop of so many of our lives? Do we not care about what happens to us?

From the absence of clamor, one thing is apparent--this election isn't so much about electing someone as it is about making sure somebody else isn't the person in the driver's seat. But when you stand in that booth on Tuesday, ask yourself one question:

"Was this trip really necessary?"

Yes? Well, then--welcome to the Revolution.

Tuesday, October 13, 2009

Congestion Pricing?

Eric A. Morris, a researcher at U.C.L.A.’s Institute of Transportation Studies and a regular contributor to the Freakonomics blog points out the results of a new study on the effect of Congestion Pricing in London.

Since most of the current members of the 108Warren Commission live in the fine state of New Jersey, arguably home to more congestion per mile of paved roads than any other state, there is a great deal of interest in any economic solution to the scourge that is traffic congestion.

Now as Mr. Morris points out, the study (which found that the benefits DID outweigh the cost) was conducted by the entity that manages the congestion pricing scheme in London, so this information should be viewed with some skepticism. Yet in the overall analysis, the numbers do seem to support the use of a congestion pricing system to reduce traffic (and generate revenue).

Folks that live anywhere near New York City will recall that Mayor Bloomberg tried to implement a similar system in NYC and was soundly defeated. Philadelphia has never even considered it, and not surprisingly, people in London are wildly NOT in favor of the system either -- so, even though it appears to achieve the goals set out for it, it may not be long for this world. The current Mayor of London is already talking about making the area where it is charged smaller.

The Commission is not surprised. The positive impact is measured at the Macro level, while the cost is felt on a Micro level. In other words, people don't notice a 2% reduction in their travel time, even thought it does add up to considerable savings overall, but they certainly notice a £8 charge in their own wallets.

The challenge is that traffic congestion is what Economists call a negative Externality -- a cost that is imposed on others, rather than the individual who makes his choice. Managing externalities like this is one of the functions that some people feel should be the role of the Government. Congestion Prices are essentially a Pigovian Tax to try and discourage those additional drivers at the margins whose presence on the roads leads to extreme traffic.

The Commission is torn when it comes to Pigovian Taxes. In general we agree that they can be effective in reducing behavior that produces negative externalities. The issue is in determining which "Public Good" should be addressed. There are days when the Commission would sell their souls to remove congestion at the Turnpike Merge @ Exit 8...

Thursday, October 1, 2009

I Heard America Singing...Slightly Off Key

Just when you wonder whether or not it makes sense to take out a second mortgage to send your kid to a private school, along comes a gem like we saw in Burlington Township just recently--a flock of uneasy elementary school students singing the praises of our sitting President as part of a celebration of Black History Month during February 2009.

It's great that we want kids to know who their President is--and to take pride in the fact that said President was elected courtesy of a democracy that has persevered through more than two centuries of change. There is nothing wrong with that--but I don't remember any paeans to Gerry Ford when I was growing up.

If you want to teach civics, teach the office, not the man. Let's try this same scenario in the opening days of the Clinton Administration--same schoolkids, same song. Now flash forward to that teacher, six years later, trying to teach that song while her students are asking her why the President was on TV last night saying he didn't have sex with somebody.

There's a reason you laud the office and not the man. The same democracy that gave us Washington, Jefferson, Lincoln, and Adams also gave us Taft, Garfield, Pierce, and Harding--the latter four being as potent an argument for term limitations as you can find. The ideal of a presidency is pristine; the reality is that those who occupy the chair are human, and fallible.

Let's focus on the things that are going to make our kids leaders in the next generation: good values (taught at home), strong knowledge bases (built in schools), and the drive to creatively solve any problem they may encounter. It's a recipe that worked in 1809; surely it can succeed in 2009.

Tuesday, September 29, 2009

Game Theorist: Paying to sit next to your children

Game Theorist: Paying to sit next to your children

Backwards Pricing...

Apparently British Airways is now planning to add a surcharge for parents to sit next to their children... This is a perfect example of a company that got the pricing backwards.

Joshua Gans an Economist from Australia (and the author of Parentonomics) makes note of the pricing and immediately points out that the system is perfect for him to game -- allowing him to save money, and offload the responsibility for managing his children's behavior. See his take here:

A majority of the Commission have children, and all of us have had the uniquely painful experience of flying with other people's children nearby...

Thus, we feel that BA got this completely backwards. While passengers may not want to admit it, given the opportunity to pay more for a seat that had no children nearby -- particularly none in the seat behind them, with their seemingly limitless desire to kick -- they most certainly would pay more. In fact, depending on the route -- any flight to Orlando, FL comes immediately to mind -- passengers without children might be willing to pay nearly double to fly without children nearby...

Yet under the British Airways plan, parents will be given an incentive inflict their children on other fliers, unsupervised...making other passengers' flights less pleasant as well. Score another one for Virgin Atlantic...!

Tuesday, September 22, 2009

Vanuatu, We Hardly Knew Ye

It seems a safe bet nobody will be naming an island in the Maldives after our Only President. Faced today with a world stage and the possibility for a real statement on how the US would pitch in to arrest the advance of rising CO2 and sea levels, we said developing nations needed to do their share. That's like the pot calling the kettle carbon-stained.

Here's a news flash--developing nations don't need to set up coal-fired utilities; that step can be skipped over, and the utility infrastructure built on renewable energy and distributed generation grids. Here's another news flash--people in these countries may have sex. Occasionally, that sex may produce offspring. Always, however, those offspring will require resources to survive. How about we take those ACORN dollars and turn them into contraception education and resources? Instead of teaching the next generation of Don Magic Juans how to evade The Man, we could help developing nations keep their population growth from outstripping the evolution of their infrastructure. Or maybe--just maybe--we could take a look at our 20% of the world's production of CO2 and ask ourselves why we can't keep up with China. Mao has to be laughing his ass off right about now--it was his idea to make those little hats recyclable.

If you think global warming is a myth, that we can beat on the Earth like a drum with no repercussions, that's fine. However, do you really want to take the risk that someday downtown Cleveland could be oceanfront property?

The problem is that we believe correcting our climate impact is directly tied to our economy. It is--it is directly tied to our current economy. We've got an economy that looks like a three-car pileup, unemployment numbers that refuse to shrink, and a populace that thinks the vast majority of its leadership isn't up to the task--and that goes for both sides of the aisle, in every State, and in both Houses of Congress. If we keep thinking inside our current box, all we're going to wind up with is the same stale ideas.

America works best when Americans work. It's time to resurrect the WPA--only this time, they'll build geothermal plants instead of buildings, windmill blades instead of monuments, and solar panels instead of highways. Let's face it--Americans need their pride back. Whether it's returned by soldering together a solar array or by harvesting pond scum to make synthetic fuel, it doesn't matter--it just needs to make a return, and swiftly.

Before the waters rise any higher.

What "Everybody" knows about the US Healthcare system...

Now this may come as a shock, but the Commission is not against improving our Healthcare system, and is in fact open to a number of the changes that are being suggested...

But the root of the 108Warren Commission is skepticism... and the Commission is always skeptical of things that "everyone knows are true."

"Everyone knows" that European Healthcare is better than what we have here in the US -- if you have any doubts, just look at life expectancy -- a kid born today in the US has a shorter life expectancy than a child born in most of the European countries, and Japan too.

Now comes word in the New York Times (of all places) that maybe what "Everyone" knows about our healthcare being worse than Europe's might not be accurate after all...
...a prominent researcher, Samuel H. Preston, has taken a closer look at the growing body of international data, and he finds no evidence that America’s health care system is to blame for the longevity gap between it and other industrialized countries. In fact, he concludes, the American system in many ways provides superior treatment even when uninsured Americans are included in the analysis.

Apparently the fact that America has a significantly more diverse population, and until recently lead the world in cigarette consumption for decades, has far more to do with our health outcomes than the quality of our healthcare...

Maybe we should take a closer look at some of the rest of the things that "Everyone" knows about our healthcare system before we make any final changes... Sometimes it really is worthwhile to go back and check the facts...

Friday, September 18, 2009

Too many topics for one day...

Sometimes there are too many topics to write about. Here are a few that have caught our eye just today...

Having not completely bought the argument behind Wikinomics, the Commission was heartened to see "The Dirty Little Secret About the "Wisdom of the Crowds" - There is No Crowd," which correctly points out that small groups of people create most of what is commonly called "Crowd-sourced..." Key point: 1% of Wikipedia users are responsible for half of the site's edits.

Rick Woldenberg is continuing his fight to bring some semblance of common sense in the application of the CPSIA, and maybe getting some few folks in Congress to reconsider their actions... this week, he sends some simple questions to the new Chair of the CPSIA. At least he is keeping his sense of humor...

Yet Congress didn't learn from the CPSIA experience, and now we are seeing more "unintended consequences" as a result of
the new "Home Valuation Code of Conduct" (HVCC). Another law intended to help consumers is going to raise costs and lower value...

Of course Congress is not the source of all our problems. Sometimes it seems that the record companies, the artists, and the consumers are working together to kill the music industry. One blogger's solution -- Ban all music... The Commission is pleased to see that Modest Proposals are still in vogue.

Lastly, the Commission was interested to discover that apparently, and perhaps not surprisingly, having your heart broken increases your risk of a heart attack.

Thursday, September 17, 2009

Studying Conservative Thought...

Regardless of your ideology, the 108Warren Commission urges you all to read Mark Lilla's piece in the Chronicle of Higher Education. In it, he discusses the new UC Berkeley Center for the Comparative Study of Right-Wing Movements.

The lack of inclusion of conservative views from university and college campuses is a poor trend, and limits the opportunity for true education. The fault lies not just on the Left -- modern Conservatives have embraced an anti-intellectualism that helps to perpetuate the problem...

The Commission (a group with a striking diversity of political thought) is not sure that UC Berkeley is serious about this line of study, but there is hope that just as one note can sometimes suggest a melody, this leads other institutions to open the doors to differing political thought...

It would make a positive change to our democratic institutions as well as our social discourse...

PS, the New York Times take is HERE.

Monday, September 14, 2009

The Government's "Next Phase" plan...

The government is unveiling their plan for the "THE NEXT PHASE OF GOVERNMENT

The Wall Street Journal has it up for viewing on their site. It is worthwhile reading -- if only to see that there has been some real return on the government's spending... at least so far.

Perhaps of more interest is the large series of graphs in the appendices that show how bad it got over the past year...

More on Krugman's "theya culpa..."

The commission wants to give credit where credit is due, and the "theya culpa" phrase came from Alex Tabarrok's very good piece over at Marginal Revolution.

Mr. Tabarrok agrees with the Commission that there is some truth in Krugman's piece that the Commission has been blogging about over the past few days... but like the commission, he finds some pretty fair sized holes in his hypothesis...

It's a good story--not the least because there is some truth to it--but there are also many omissions which cast doubt on the thesis. Hardly anyone wants to recall today, for example, that it was Alan Greenspan who popularized the term "irrational exuberance," in a speech in December of 1996. At the time, Greenspan's remarks were covered around the world and they created a sell off in stocks. In a NYTimes article titled Irrational Exuberance, Louis Uchitelle wrote:

That sort of optimism cannot last; stocks that are too highly priced will inevitably fall, perhaps over a long period, as they did in the mid-1970's. Mr. Greenspan, who is 71, lived through that painful downturn as a top economic adviser in the Ford Administration.

This time, a falling stock market might have a broader impact. Many more Americans own stocks today than in the past, and a downturn could cut deeply into their sense of well-being. The result could be a severe cutback in spending, hurting the economy. For that reason, the stock market has become increasingly important in the deliberations of the Federal Reserve over interest rates -- whether to raise them to slow the economy or lower them to encourage spending and growth.

Greenspan in Uchitelle's piece is the one raising questions about market prices. Furthermore, no economist in Uchitelle's piece says that prices are always correct or that markets are perfectly efficient or that bubbles are impossible--the mainstream view according to Krugman. Robert Shiller is quoted not Eugene Fama. And, of course, it was Robert Shiller who would later author two bestsellers warning of bubbles, another discomforting fact for those who argue that dissenting economists were marginalized.

The Commission suggests that the key is to remember that despite his well-deserved Noble prize, Mr. Krugman is still human, and subject to the same internal biases and political assumptions as the rest of us... The Commission is certain that in his heart and mind, Mr. Krugman understands this, we just wish that he would acknowledge it in his writing once in a while...

As always, the comments below Mr. Tabarrok's piece are worth reading -- Marginal Revolution's regular readers are remarkably well informed, and even when disagreeing with each other, offer great information.

Tuesday, September 8, 2009

Following up on Economic Navel Gazing...

Arnold Kling over at the Library of Economics and Liberty does a nice job of re-casting the discussion of economic theory that Krugman started in his piece...

He puts together a good Recalculation story to describe the current hits a number of good points...

The discussion in the comments section below his piece is even more worthwhile...

It is absolutely worth reading:

Friday, September 4, 2009

Economic Navel Gazing...

PAUL KRUGMAN has a new piece up on the NYTimes website on new debates within the Economic community springing from the economic meltdown.

Krugman can be tough to take -- in fact some members of the Commission find his smug certainty that he is always right, and significantly smarter than everyone else in the room almost intolerable -- but this piece is definitely worth reading.

There are a number of telling points in the article dealing with the fact that most economists never even saw the possibility of the current recession...

stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year.

As a result of this failure, Krugman sees Economics returning to Keynesian thinking - which of course coincides nicely with his increasing support for Government intervention in the economy...

Krugman uses as an example a true story of a babysitting co-op in Washington DC:

This co-op, whose problems were recounted in a 1977 article in The Journal of Money, Credit and Banking, was an association of about 150 young couples who agreed to help one another by baby-sitting for one another’s children when parents wanted a night out. To ensure that every couple did its fair share of baby-sitting, the co-op introduced a form of scrip: coupons made out of heavy pieces of paper, each entitling the bearer to one half-hour of sitting time. Initially, members received 20 coupons on joining and were required to return the same amount on departing the group.

Unfortunately, it turned out that the co-op’s members, on average, wanted to hold a reserve of more than 20 coupons, perhaps, in case they should want to go out several times in a row. As a result, relatively few people wanted to spend their scrip and go out, while many wanted to baby-sit so they could add to their hoard. But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer. . . .

In short, the co-op fell into a recession.

What Krugman ignores by using this story is that the co-op members self selected to join the group, and therefore had common characteristics that made it a structurally inefficient economy. Babysitting is not generally an occupation that parents would choose to do, and the fixed exchange rate of the currency does not create enough value to overcome the inherent challenges in getting parents to do additional babysitting in trade for future babysitting.

While the Commission is happy to see Economist begin to appreciate that not all markets are perfect, and not all individuals make "rational" decisions, it is is not excited by calls to return to pure Kaynesian thought. In the Commissions view, Keynesian thought discounts the Externalities caused by government intervention in the economy, and those externalities played a big (but almost universally ignored) part in the lead up to the economic collapse.

While the Commission does not agree with neo-classical economists that unemployment is driven by people making a conscious choice to work less.... it does recognize that government policy has created some of the joblessness...

By relentlessly advocating increased home ownership and failing to encourage citizens to understand the trade-offs that come with owning a home, it played a large part in causing the bubble... Government policy ignores the fact that owning a home makes it much harder to move to find a new job. In fact, through action at the local, state and federal level, government encourages people to think that they have a pre-ordained right to have a job in the community of their choice. Through advocacy, government has created an entire cadre of irrational consumers, as well as fundamentally irrational markets in employment and housing...

Mr. Krugman would ignore that fact, and advocate for increased government action.

Fear and Loathing In Jersey

Watching elections in Jersey is akin to rooting for the shark in Jaws. You know he's going nowhere, but there's going to be a swath of destruction left in his path before he's gone. Since we somehow got rid of the concept of anarchy, it also appears that we are doomed to watch the movie forever, like cockroaches trapped in a B-movie Hell.

Elections have become the stuff of legend, and not in a good way. Behind in the polls? Announce your opponent did a little side deal with a subordinate. If the story's not strong enough to clear a news cycle, drop hints about the possible 'intimate' nature of their friendship. Don't feel you're getting your points across? Start talking about how the other guy screwed everything up, but never mention how you're going to fix things. Want to win the day come First Tuesday? Pay the other guy's street people extra to sit home and watch reruns of Gunsmoke.

To answer the Torricelli question, we became an unforgiving people when we became an uninvolved people. Machines take over the daily labor tasks once done by hand; computers make even the worst typist not have to worry about running out of white-out or bond paper--every moment of our lives focused on producing more with less effort. On a deeper level, that has infected our daily thinking--why look for substance when the 60-second spot damns the other guy without really saying anything? The commercial serves as the dishwasher for the analytical part of our minds--it does the work researching the candidate, so you don't have to.

Give me the guy swinging an ax, not a chainsaw, to fell a tree. Give me the craftsman building a desk, not the factory worker manning the milling machine. These are the people who built America--men and women not afraid to have their brow sweat and their nails chip. People who knew that a representative democracy meant that they needed to elect somebody who represented them--someone hardworking, who understood what it was like to go without, and was grateful for what they had earned. People who took the time to see who they were electing for themselves, not just passively listen to a voiceover dripping with venom rail on about the inadequacies of their opponent.

For too long, we have accepted the status quo as mental pablum. Well, no more. This year, the choice is simply to 'four-get'--get up, get working, get thinking, or you'll have nobody else to blame when you get stuck with someone who, unfortunately, has the gravitas of a cheeseburger.

Monday, August 31, 2009

Great Soundtracks of our time...

So the Commission has been debating the best Soundtrack recently...

The current contenders are:

Purple Rain -- the seminal Prince and the Revolution companion to the movie of the same name. Some of the classic tracks include: Let's Go Crazy, Purple Rain, When Doves Cry.

There is no arguing that this is a great album, and that the movie was a game changer in the early 1980s. That said, the commission sat down to watch the movie the other night, as was staggered by the absolutely terrible acting and the telegraphed plot. Really, was there any real competition between Prince and Morris Day and the Time - Really?

Among the Commission's issues with Purple Rain is the inclusion of only Prince's music from the film -- the Time's Jungle Love and The Bird would have been great additions...

Once -- the soundtrack album to the film, with Glen Hansard and Marketa Irglova as struggling musicians who work together for a brief while. Key Tracks include: Falling Slowly, If You Want Me, Lies, Gold.

This album and movie work together beautifully, telling what is fundamentally a story of unrequited love. Neither lead is an actor by training or profession, but the chemistry and the storyline of the movie make thee most of this fact.

The Commission has two basic issues with Once as a contender for Best Soundtrack. The first is that neither the movie nor the album are as widely known, despite the Academy Award for best song. The second is that that it is not Purple Rain...

Garden State -- the soundtrack to the Zach Braff film of the same name. Key Songs include: Don't Panic, Caring is Creepy, I Just Don't Think I'll Ever Get Over You.

This album is a wonderful counterpoint to the film, and each song brings out a piece of the movie. The combination of artists as diverse as Coldplay, Collin Hay (formerly of Men at Work), the Shins, and Simon & Garfunkel manages to convey moods and feelings that add to the film.

While at least one Commission member feels that this is perhaps the perfect album, the basic flaw is one that Mr. Braff himself describes when he discusses the album. "Essentially, I made a mix CD with all of the music that I felt was scoring my life at the time I was writing the screenplay." While the songs are evocative of the moods in the movie, they do not advance the plot the way the songs in Purple Rain and Once do.

The Economics of Marriage...

There is a great post over at today. Betsy Stevenson (and Economist at Wharton and also the wife of Freakonomics blog contributor Justin Wolfers) gave her take on the economics of choosing a mate.

Here is the link:

While it is not romantic, there is certainly some truth in Ms. Stevenson's approach to the topic, although she may be skipping over the emotional needs a bit...

The comments below the article are worth a read as well...

Thursday, August 27, 2009

Guilt and Shame in Child Rearing...

Joshua Gans (author of Parentonomics) over at his Game Theorist blog points out a good article in the New York Times on the value of Guilt in child rearing.

Here is the link:

Unlike Shame -- something that should definitely be avoided in raising kids -- recent studies (including the somewhat cruel one detailed in the article) seem to indicate that a good sense of guilt is positively correlated with good behavior.

So apparently the Commission's mother(s) were on the right track after all...

Tuesday, August 25, 2009

This is why I read the Freakonomics blog...

Daniel Hamermesh has a great post over at Freakonomics that uses the new SciFi movie District 9 to explain monopolies...

Definitely worth reading:

Thursday, August 20, 2009

In the Market for Water...

In a recent article over at Freakonomics, Daniel Hamermesh points out that market pricing might help citizens of Central Texas get through the worst drought in 50 years... It is very short but a good read...

Market pricing is tough to enforce for goods that are required for daily life though. People that don't want to pay honest market rates have an easy job framing the discussion in terms of limiting access of necessities to the poor.

Tuesday, August 18, 2009

Licensing and Regulation...

The 108Warren Commission had to go out and get a dog license today for their fine pet dog. Normally that wouldn't really be a cause for a blog post, but today it got the commission thinking.

During this remarkably challenging economy, there has been a great deal of talk about state and local budgets. Since the members of the commission have the distinct pleasure of living in southern NJ, close to Philadelphia, we have had the opportunity to hear even more about state and local budget problems. While NJ has passed a state budget, our neighbor Pennsylvania has yet to do so...and the local municipalities are all having serious financial difficulties.

So, what does this have to do with the dog license you ask?

As local and state governments are looking at unbalanced budgets, much of the conversation has been about how to increase revenue. The consensus is that services have already been cut to the bone. The commission thinks that perhaps the consensus is a bit off base.

After getting back from spending 15 minutes and $8 to license the dog, the commission came across this article over at Market Design. It is a brief discussion on licensing, from doctors and lawyers, to an assortment of other professions. Going through some of the links from Texas' Department of Licensing and Regulation, and in particular their Cosmetology section, the Commission began to wonder at the need to regulate cosmetology and related professions. The Commission wondered what it cost the citizens of Texas for this department to rule that Fish Pedicures are not legal?

Perhaps, in this era of declining tax revenue and unbalanced budgets, it is time for citizens to reconsider the level of regulation needed in their daily lives, and what it costs. Texas is not alone -- although I have not seen a ruling on fish pedicures so easy to find in other states' websites. Do citizens really need their state to license their hair stylist? Wouldn't the market pretty quickly put bad or unsanitary salons out of business? Aren't their legal tools available to someone who feels that their salon experience has been less satisfying?

Does the Commission's town really need to know if my dog has been neutered? That seems a bit personal. Again, aren't there civil penalties in place for dog owners whose pet get "too friendly" with other dogs? Do we need the municipality to spend tax dollars to track this? While these rules may have begun to limit disease (rabies vaccination was also required for licensing), one wonders what a comparative cost analysis of licensing vs rabies treatments would show.

Perhaps it is time for citizens to take a long look at the services they ask government to provide. Everyone knows that certain entitlements are the third rail of politics, and the commission is not suggesting that we start there. The Commission suggests that if we start looking at the smaller issues where government services are really not required, perhaps someday, we will look at the larger ones too.

Wednesday, August 12, 2009

How much does Government cost?

The Commonwealth Foundation -- an unabashedly conservative group -- has a study out that finds the cost of government is now 61% of our national income.

Read the article (and find the link to the actual report) at the Commonwealth Foundation's blog.

As with a study from any partisan group, take the study with a grain of salt, but it is worth reviewing. Even if the numbers are inflated, there is no doubt that the cost of government has been rising for some time, and is continuing to rise.

It is tough to call for smaller government during a recession when more people find themselves in need of government services, but it is important to remember that we the people are paying for the government out of our pockets.

Every dollar spent by the government is coming from the people, so at some point it is worth asking how much we can really afford.

Tuesday, August 11, 2009

More Bad Loans on the Horizon?

US Economics News blog has a great post on the danger of Ginnie Mae and Federal Housing Authority becoming the next Fannie and Freddie -- putting huge taxpayer dollars at risk.

Here is the link:

It is hard to imagine that the government would repeat the same bad practices that caused a large part of the housing bubble, and resulted in multi-billion-dollar bailouts of Fannie and Freddie...but it appears that history may be repeating.

Monday, August 10, 2009

Cap and Trade vs a Carbon Tax...

Gregory Mankiw had a great article in the New York Times this weekend on Climate Change and the proposed Cap and Trade program that is making its way through congress -- you can read it yourself, here.

Whether you are a believer in global warming or not (and the commission knows that some of you are not convinced), this article does a good job of highlighting the differences in the Cap and Trade program that President Obama campaigned on, and the one proposed by Congress.

Basic economics teaches us that if we want to actively reduce the carbon emitted as part of economic activity a Carbon Tax would be the most effective way to do so. Even those who do not believe in global warming would agree. The higher cost of releasing carbon as a byproduct of production would drive increasing efficiency and the search for new methods of production that did not reduce carbon. At the same time, prices for those products would increase. The revenue from the Carbon tax would be used to offset these higher prices through tax reductions.

Despite the fact that it would be the most efficient, a Carbon Tax is not politically viable. That leaves Cap and Trade. What Mr. Mankiw points out so effectively in his piece is that the Cap and Trade legislation is substantially less efficient than that proposed by President Obama when he was running.
The numbers involved are not trivial. From Congressional Budget Office estimates, one can calculate that if all the allowances were auctioned, the government could raise $989 billion in proceeds over 10 years. But in the bill as written, the auction proceeds are only $276 billion.
The issue is by lowering the proceeds to $276 billion -- that reduces the possible taxes to be offset -- which will mean higher prices in the rest of the economy.

As Mr. Mankiw explains:
The hard question is whether, on net, such a policy is good or bad. Here you can find policy wonks on both sides. To those who view climate change as an impending catastrophe and the distorting effects of the tax system as a mere annoyance, an imperfect bill is better than none at all. To those not fully convinced of the enormity of global warming but deeply worried about the adverse effects of high current and prospective tax rates, the bill is a step in the wrong direction.
The Commission feels that if we are going to try and do something about global warming, we should do it in the most efficient way possible. Unfortunately, Congress is hardly the place to go for efficiency...

Counting Brothels in Japan...

Apparently the Bank of Japan is now counting brothels in an attempt to measure the service sector more accurately. This is important as Japan shifts from a manufacturing and export economy to one that is more service based.

Don't just take the Commission's word on it -- read the Bloomberg article yourself, here.

In a related note, the bank is apparently not having much trouble hiring service-sector auditors...

Managing Risk

There is a great guest post on the Freakonomics blog today about the need to manage risk.

Here is the link:

The Authors of the post (Jeremiah H. Chafkin and Andrew W. Lo) base their post on the Laurence Gonzales book Deep Survival -- the story of 4 mountain climbers who died while climbing back down Mt. Hood in Oregon after reaching the summit.

The climbers' error was in focusing on reaching the summit of the mountain -- supposedly an "easy" mountain to climb -- and not remembering the need to pay as strict attention to the way down. Lo and Chafkin take the Gonzales premise (that the climbers' mental model of this "beginners" mountain did not match the reality of that day) and point out the similarity in thinking about the economy prior to the current downturn.

In their words:
The remarkably consistent performance of the U.S. residential real-estate market over the decade from 1996 to 2006 may have had the same effect, leading many experienced businessmen to conclude that such growth was likely to continue indefinitely. And despite all the protections that were available to these captains of industry — analytics that showed large potential losses in the event of a downturn in housing prices, leverage constraints imposed by regulatory capital requirements, and warning signs from the hedge-fund industry in 2005 and 2006 — they charged ahead anyway, with the single-mindedness of a well-funded expedition hell-bent on conquering a mountain. Their mental models apparently did not match reality either.
The authors point to modern science that shows that decision-making is not always fully rational and fully informed and question the need to build professional skepticism into senior management -- a Chief Risk Officer.

It is definitely worth reading...

Sunday, August 9, 2009

Comic Con...

From the beginning, the 108Warren Commission was intended to cover pop culture just as thoroughly as it does economics and politics. Until now though, the commission members have been woefully uninspired.

To remedy that, the Commission is welcoming a new member this week. He brings a broad appreciation for pop culture and a fairly biting wit. Below is his first post -- a very tame discussion of his visit to Comic-con in San Diego...

Comic-Con can be an exercise in sensory overload and sleep deprivation that takes a week or so afterwards to let sink in. While you are in the middle of it, Comic-Con is a whirlwind of A-list celebrities promoting their new projects, booths selling everything from video games to Thor's hammer, and tons of people dressed as their favorite super hero or Star Wars character. Basically it's 4 days of geek nirvana in sunny San Diego.

I got to San Diego early Wednesday afternoon and met up with my friend Nicole. We had enough time to check into our hotel and get something to eat before heading to the convention center for preview night.

It doesn't take long to for the sensory overload part to kick in. First thing you are hit with is the overwhelming crowds, with 150,000 people a day Comic-Con can feel very claustrophobic. The crowds can make it difficult to navigate the massive exhibit hall that takes at least 2 or 3 tries to get all the way through.

On Thursday, the first real day of Comic-Con begins. We get there by about 9:00am even though the first panel that we want to see isn't until 3:00. It gives me a chance to people-watch --one of the things that I love to do at Comic-Con.

I'm constantly amazed at the huge variety of people who turn up here, especially my favorite group --the cos-players (costume-players). I admit that Halloween is my favorite holiday, and a big part of the reason is that I love costume parties, but I've never felt the urge to dress up and go out in public any other time of the year. The folks who are into cos-play, seem to come to Comic-Con to express their love of a particular character, but more importantly, with the goal of getting into as many pictures as possible. The costumes that I've seen over the years have been truly amazing, and I admire the work and detail that goes into them I just couldn't imagine walking around all day like that.

We found out that Sony Pictures would be promoting Zombieland on Thursday night with a zombie walk through the Gas lamp District a few blocks from the convention center. We went and got our zombie “makeover” and shambled the streets for about an hour with about 200 other zombies while getting many smiles and some very strange looks from the people who were eating at the many outdoor restaurants that we passed. After the walk it was dinner and drinks then back to the hotel knowing that there will be another long day tomorrow.

On Friday there were a few panels we wanted to see that were all in the same room. Now here is one of the downsides of Comic-Con, in order to see the panels, we have to get in the room early in the morning and sort of camp out there because of the huge lines that form the later it gets. Many times if you don't plan ahead and get into a room early you will never get to see the things you want to see. This also means that you are stuck sitting through things that you have no interest in so that you will have a seat for the things that you're there for. This is why the scheduling of where you are going and when is vitally important. Someone said to me that it's not about what you see at Comic-Con, but what you miss. Very true.

On Friday night Nicole decides that since we are hanging out late to meet up with friends, that she is just going to sleep out in line to get into the Lost panel on Saturday morning. I went back to the hotel, not planning on going to see Lost because it was running against a few other things that I wanted to see. That was a mistake on my part.

I get to the convention center early Saturday morning, figuring I would bring Nicole the drinks she wanted and get in line for my own panel. When I finally find a place to park, which is a daily adventure all its own, and get to the con I realize, when I see the line (probably on the order of about 15,000 people), that there is NO way that I will ever get into the panels that I want, so I stay with Nicole and see the Lost panel. Saturday was another day spent entirely in one room in order to see the things that I want to see. On the bright side, unlike Friday I actually want to see almost everything that's being shown.

After the panels, I take a walk through the exhibit hall to get some pictures and collect some of the freebies that they hand out at the booths. Once the exhibit hall closes for the day, I meet up with Nicole we get something to eat and then head to the hotel. It was a very long day and we are planning on getting back early again on Sunday to get back in line.

We get up about 5:30 Sunday morning, grab some breakfast on the way and are in line by about 7am. It's the last day of the con, and although they say it doesn't get as crowded on Sundays, it seems that somebody forgot to tell that to the crowds.

After seeing one early panel I take a last walk of the exhibit hall floor picking up a few things that I've been eyeing all week and taking some final pictures. I catch up with Nicole and a couple other friends, for one last check to see if we missed anything before calling it a con.

All in all it was another good year at Comic-Con. Although there is no way to see everything that you want to see, and you will no doubt miss the cool thing that everyone will be talking about for the rest of the week because you left 5 minutes earlier to catch something else, it's really cool for 4 days to be at the center of the pop culture universe.

Monday, August 3, 2009

Even Worse Than Taxes...

Everyone knows the old saw about Death and Taxes, but the Commission ran across a fascinating (and a bit disheartening, if you had illusions about living forever) post today at Gravity and Levity with a lot more detail on mortality.

Apparently the odds of your dying in a given year actually double every 8 years.

The author notes that:
For me, a 25-year-old American, the probability of dying during the next year is a fairly miniscule 0.03% — about 1 in 3,000. When I’m 33 it will be about 1 in 1,500, when I’m 42 it will be about 1 in 750, and so on. By the time I reach age 100 (and I do plan on it) the probability of living to 101 will only be about 50%.

Apparently this was discovered by a British actuary (Benjamin Gompertz) back in 1825, and is now called the Gompertz Law of human mortality...

What the 108Warren Commission finds fascinating is that this "Law" still holds true, even with the tremendous advances in medicine over the past 184 years -- the odds have certainly improved over that time, but they still double every 8 years.

Just something to consider as the US looks at changes to health care policy...

Thursday, July 30, 2009

Is Powerpoint hurting your company's decision-making?

Anyone in the business world over the last decade and a half is familiar with PowerPoint, or one of its competitors.

In a recent Armed Forces Journal Article, T.X. Hammes argues that PowerPoint is killing the Pentagon's decision-making ability.

Here is the link:

It is definitely worth reading, and considering the impact PowerPoint is having on organizations you work with.

Are "summer hours" making a yearlong comeback?

In Utah, all state employees were shifted to a 4-day work week last August. They still put in 40 hours a week, but over 4 days instead of 5.

The benefits are pretty substantial -- through May, the state had saved $1.8 million, and that is before the (expensive to cool) summer months...

Additionally, the estimated CO2 reductions are estimated to be equivalent to pulling 2300 cars of the road for a year...

The details are covered in The New Republic, HERE...

Once upon a time, "summer hours" were common in the publishing industry. Now it looks like they may spread to other industries. The nature of international business won't make it possible for everyone to shift to a 4-day week, but it would be interesting to see other areas where it could work.

At the very least, it appears to offer some economic benefits, and possibly some significant environmental ones as well.

HT: Freakonomics

Monday, July 27, 2009

A Bubble in China...

Once you get past the hyperventilating coverage of the US economy, there has been growing concern about a bubble in Chinese stock markets.

However, Vitaliy Katsenelson over at Foreign Policy feels that the potential stock market bubble is unimportant. Instead, he paints a pretty dramatic picture of the entire Chinese economy as a bubble that is on the verge of bursting -- The China Bubble's Coming -- But Not the One You Think

There are lots of folks here in the US who would secretly (or not so secretly) enjoy the idea of the Chinese economy imploding, but they underestimate the effects on the US economy. If the Chinese economy implodes, who will buy the Treasurys that are funding US deficits and deficit spending? What happens if the US government has to come up with the cash it needs on its own, without its lender of choice -- who then foots the bill?

It is not a pretty picture.

Friday, July 24, 2009

A bubble burst...

Take a look at the link below to see a perfect example of the bursting real estate bubble...


The fine folks at Zillow keep sending the Commission helpful e-mails about the declining value of the 108Warren Commission homestead, but at least they are not that bad.

Unfortunately, our hometown has accepted funds from the state to buy up distressed property in foreclosure. While this may be some help to the folks who own those homes, the city will be paying foreclosure-level prices for the property, and that will do wonders for property values in the rest of the city... Looks like we can expect more love-notes from Zillow!

Thursday, July 23, 2009

Shattering myths about the Subprime crisis...

John Carney at The Business Insider republishes an essay by Fed economist Yuliya Demyanykon on 10 Myths About the Subprime Crisis. This is absolutely worth reading!

Among the myths that Ms. Demyanykon busts are the belief that Subprime loans went only to borrowers with impaired credit, and that subprime borrowers were offered low"teaser rates."

Mr. Carney correctly points out that this is a good "reminder that many of the popular explanations for our mess are way too simple," but he seems to have missed the part that the 108Warren Commission finds so troubling. A significant portion of the new regulatory framework that is being debated on Capital Hill is based on exactly these same myths.

When we legislate and regulate based on an inaccurate understanding of what happened, how can we even hope that this legislation or regulation will do any good?

Knee-jerk legislation and regulation is very dangerous...

State furloughs and deferred payments -- do they violate the law...

Matt Brouillette (of Commonwealth Foundation for Public Policy Alternatives) posts an interesting question on their blog this morning...

PA State (ok, Commonwealth) workers have been forced to accept deferred payments during protracted budget negotiations. They are not alone, this happened in California too...

Due to this involuntary deferral of compensation, it may be possible that Pennsylvania is violating the Federal Minimum Wage Act. Each violation is subject to a $1000 fine per successful claim.

It will be quite interesting to see where this leads. I don't imagine many state workers will file complaints, but even if only a few do, it would certainly generate some attention.

Here is the link to the article:

Wednesday, July 22, 2009

Taxation as the route to legalization???

Interesting article on the Freakonomics blog today...

Apparently a medical marijuana dealer in Oakland, CA has helped push for a new tax on his business, that will generate significant tax revenues for the city.

As Dr. Levitt notes in his post, this is clearly an attempt to put additional obstacles in the way of those who would like to shut his business down.

The commission notes that encouraging taxation is a great way to get government support for your business... the only thing more addictive than illicit drugs is increased tax revenue...

Tuesday, July 21, 2009

Bouncing Checks...

Ian Ayers has an interesting piece on Freakonomics today about Antoine Walker being arrested for writing bad checks...

In the past, for writing bad checks to be a criminal offense, there has to be intent. Mr. Ayers notes that in Nevada, the law as written is a different, assuming intent to defraud if the author of the bad check does not make the check good in 5 days.

Mr. Ayers questions whether it this is fair or correct.

Under this provision, if you bounce a check and don’t make it good within five days, you are presumed to have intended to defraud the payee and can be subject to criminal punishment. This presumption is unconscionably broad. If you mistakenly thought that you had enough money in your account and then find that you do not, you can go to jail. I’ve bounced checks by mistake in the past, and this presumption scares the bejabbers out of me.
Like Mr. Ayers, the Commission has bounced a check (once), and the idea that it could be treated as a criminal act is scary.

At the same time, there is no law that requires consumers to use checking accounts, and the use of checks comes with the moral and legal responsibility to not write bad checks. This is one of the few times when the Commission has felt that Mr. Ayers is off track. Even though he makes a reasonable point in tying the Nevada legislation to the casino trade, that does not make it a bad change in the law.

If you write checks, you are responsible for making sure that there is enough money in the account to cover them.

Friday, July 17, 2009

A must read...

The New Atlantis has a great article on the impact of the CPSIA on books...

Here is the link:

Where does the buying decision belong...

Regular readers will have noticed the link to Danger Room over on the left side of the page, and some of you may have even clicked over to see what it is.

Danger Room
is a blog over at Wired that focuses on national security issues with an occasional foray into pop culture (a military analysis of the recent Star Trek movie, and How to Stop a 500-Foot Monster part 1 and part 2 are worth reading for their entertainment value...)

Today, Danger Room did another follow up on the battle between the Pentagon and Congress over the F-22.

Congress is trying to force the Pentagon to buy more of the F-22 Raptors, while the Pentagon has decided that they already have enough, and do not want to spend any more money on them.

It brings up an interesting point. Nominally, Congress retains the right to make buying decisions for the country -- it comes with the power to tax and write appropriations. Yet for all practical purposes, congress assigns this power to different government agencies that use their institutional expertise to determine how to spend the money.

It seems reasonable that the Pentagon knows more about weapons being bought -- their strengths, weaknesses, and appropriateness for current and future military threats -- than the current members of congress. Of course, the person in charge of the Pentagon, is a political appointee, but in this case, President Obama has kept President Bush's appointee. So the current Sec Def is likely about as non-partisan as possible.

Now the Pentagon is more than just the Secretary of Defense, and there are likely a lot of folks there who have independent opinions and may still think that we need the F-22s. So Senators and Representatives are able to find "defense experts" who think that we need more Raptors, but let's be honest -- The congressmen and congresswomen pushing for more F22s are the ones whose districts benefit from their construction.

At $250 million a pop, the decision to add 7 more run to about $1.75 Billion -- with a B...

While the Commission feels strongly that congress should be independent of the executive branch, in issues of defense procurement, there should be a pretty high bar before congress starts meddling in individual weapon-systems procurement...

By why is the Commission interested in this, you ask? Secretary Gates is now making an economic argument -- every dollar spent on the unwanted planes is a dollar taken away from our forces in Afghanistan...

Is this accurate, probably not. But if the broader media picks up on this, you can bet it will be effective...

Thursday, July 16, 2009

Tracking Labels coming soon...

**UPDATE** the Washington Times is not a fan either -- see today's editorial...

Well, one month left until the Tracking Label provision of the CPSIA (Consumer Product Safety Improvement Act) becomes law, and yet there has been no guidance (as in ZERO) from the CPSC (Consumer Product Safety Commission) as to how companies should proceed.

Like so much else related to the CPSIA, this provision sounds good to begin with -- Products intended for children must have labels that clearly indicate to consumers the manufacturer, date and location of production, as well as lot and batch information. This is designed to make it easier to recall any tainted products.

There are lots of things wrong with the Label provision, as others have written about more clearly than I can... See:

Richard Woldenberg's posts on Tracking Lables

Wikipedia on Criticisms of the CPSIA

CPSIA Central's piece on Tracking Labels

It is unimaginable to the Commission that the government could allow a major change to something so basic, without providing any guidance on how manufacturers are supposed to comply.

These labels are not only problems for importers from China -- it is just as big a problem for domestic companies, and along with the remarkably incoherent testing requirements is simply driving small companies out of business.

The saddest part is that none of this will make children safer. There were lots of ways to address risks to children, but in creating the CPSIA, Congress and the President (and it was President Bush who signed it), seem to have ignored every one of them in creating this law.

See the National Center for Policy Analysis for their take on the impact of this legislation. Or take a look at for their thoughts.

Fair warning, the more you read the higher the risk of spikes in blood pressure...

[...edited to include a good piece on tracking labels from]

The battle over Credit Card fees begins to heat up...

The New York Times has an article today on the brewing battle between Retailers and Credit Card issuers.

Card Fees Pit Retailers Against Banks --

At issue are the fees paid by retailers on every single credit card transaction they process. Some folks don't realize it, but when you pay for an item with a credit card, the retailer is making 2%-3% less then they would if you paid with cash or a check. Retailers would like to have this rate reduced, while issuing banks are adamant that the fees should not go down.

The Times appears to be approaching this story from the Retailer's perspective, and in doing so, glosses over the reasons credit cards exist in their current form.

Yes, banks make significant fees from processing these transactions, these fees help provide the incentive for these firms to continue to offer consumer credit, and along with their interest income, offset the risks inherent in the business.

But the banks aren't the only ones who benefit --retailers benefit too.

Imagine for a moment, a world without bank issued credit cards... Retailers would have to accept far more cash tranactions. Additionally, in order to increase sales, they would likely develop independent credit facilities -- i.e. store credit accounts -- and accept a large number of checks.

Sound familiar? That pretty much describes the world before Credit Cards. Granted, it was a simpler time, but what about the drawbacks?

Retailers had far more physical cash on hand. More cash on hand sounds like a good thing, but in reality, it forced more banking transactions, required more on-site cash management, and significantly increased security needs -- all at additional cost to the retailer.

Issuing store credit sounds great, but it moves all default risk to the retailer. It doesn't take many defaults to start adding up to a lot of money. It also requires retailers to have active credit departments -- with all the inherent staffing costs that entails.

Accepting more checks, also increases the number of banking transactions, and puts the retailer at risk of accepting checks that bounce.

These issues are a large part of what drove the market for modern credit cards, with banks taking on these risks.

The question really comes down to this -- do those potentially increased costs total up to more than 2%-3% of each CC sale. They sure did -- that is why we have seen an explosion in CC acceptance over the past 30 years.

See a brief history of credit cards (according to Wikipedia).

Whether those rates are still appropriate, or have become too high is a market discussion, and one in which the government should play no part. If the rates are too high, and the costs to retailers is too much for the market to bear, then the market will resolve the issue independently. Among the options:

1) Retailers start to discourage CC use, and the CC issuers, seeing a decline in business reduce their fees to an equilibrium rate.

2) Seeing an opportunity created by the high processing fees, a new player enters the market with competitive rates and the market reacts.

3) Retailers develop their own Credit processing network and compete directly with issuers.

I am sure that readers can think of many more.

The government's only role should be making sure that they are not interfering with the market's response to this issue. New competitors should be allowed to enter the market and earn the same regulatory acceptance that current players now enjoy, without undue bureaucratic hurdles placed in their way.

Monday, July 13, 2009

The costs of being cheap...

There is a good review in Salon today -- The book is called Cheap, and it is a discussion of the costs inherent in our culture's seemingly insatiable desire for ever-cheaper products.

In addition to Walmart, and China, IKEA comes in for a particularly rough ride in the book -- for their lumber usage, and the impact of their goods on consumer culture.

The review is well written, and it appears that Cheap is definitely worth the read. It is being added to the 108Warren Commission reading list...

So many good books to read, so little time...

Thursday, July 9, 2009

Book Preview -- Bailout Nation

The commission is anxiously awaiting the delivery of this book from its friends at

Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy by Barry Ritholtz

Based on the reviews posted so far, this looks like an excellent primer on the perils of bailouts, at least on the larger scale.

Keep your eyes peeled for the review in the coming weeks...

Wednesday, July 8, 2009

Don't Believe the Hype -- Job Retraining Edition...

For years, the 108Warren Commission has been skeptical of "Job Retraining" programs.

The programs are funded by state and federal tax dollars and are designed to help educate folks who have spent the bulk of their career in jobs that are no longer economically viable so that they can move on to a new career. On its face, this sounds like a great idea, and one that most taxpayers would be reasonably comfortable paying for.

Skeptics on the other hand, have pointed out that the employees most commonly displaced are those with the least education, and those least likely to be successful in developing new skills. While some have college degrees, most have not seen the inside of a classroom since they graduated from High School 20 years earlier. Even discounting the likelihood of potential age discrimination, the challenges facing "retrained" members of the workforce are not easy to overcome.

Now, in a bit of a surprise, the New York Times is pointing out the pitfalls of "Job Retraining." In an article on July 6th, Job Retraining May Fall Short of High Hopes, Times reporter Michael Luo points out the challenges faced by a group of Michigan residents who are going through, or have already completed "Job Retraining."

As an added bonus, Mr. Luo's article also pointed out a "little-noticed" study by the department of Labor that highlighted the same issues. For a link to this study, please CLICK HERE. Be warned, the factual conclusions are not highlighted in the Executive Summary -- in fact, the Summary appears to be cherry picking positive statements somewhat out of context.

As a concept, helping employees in displaced industries develop new skills so that they have improved odds in the job market is a good thing, but it is not a panacea. The reality is that the best thing we can do for employees in industries that are being displaced is to begin to train them for new opportunities while they are still working, and for that, the workers have to take the lead themselves.

As in most things, employees taking personal responsibility for their careers will be able to set themselves up with more options than those who don't.

Hat Tip to Marginal Revolution for the link.

Tuesday, July 7, 2009

Consumer Product Safety (and the CPSIA)

Rick Woldenberg has written yet another compelling post on the impact of the Consumer Product Safety Improvement Act on his Blog.

Here is the link to today's article:

Written in an AnswerMan format, the post highlights the contradictions and confusion surrounding the CPSIA.

Regular 108Warren Commission readers will recognize this as a familiar topic -- see my earlier post here -- and others will recognize the topic from other writings over the past few months.

For those of you who may have missed it, the Consumer Product Safety Improvement Act was passed by Congress and signed by President Bush in response to the rash of recall notices on products made in China during 2007 and 2008. It was passed in 2008, with provisions going into effect in staggered fashion throughout 2009.

This should go without saying, but 108Warren Commission is completely in favor of product safety -- particularly for children's products. Unfortunately this law does absolutely nothing to make children's products safer -- instead, because of its complexity and contradictory nature it hurts those company's that try to comply, and simply eases the way for the unscrupulous to compete with honorable companies.

The issues with this law are legion, and are better covered in other places -- see Amend the CPSIA,, CPSIA-Central, and many others...

What is particularly troubling is that despite the deep and thoughtful issues raised by the people who are affected by this law, there has been no response from Congress. The legitimate concerns are routinely ignored, or even worse, are tossed aside as carping. Even the Consumer Product Safety Commission has made it clear that the law, as written, is too restrictive, and does not allow the CPSC to use its institutional experience and expertise to actually make products safer for children.

Instead of working to resolve fundamental issues, Congress is ignoring them, and small businesses across the country are failing. Libraries and schools are restricting access to books published before 1985.

In the coming month, companies are going to be required to comply with another part of the CPSIA -- new tracking labels that identify the source factory (whether that is proprietary information or not), and batch and run information. While this sounds reasonable at first, think about how to put it into practice, and the problems start to jump out at you... Where does the label go? How large does it have to be? do I have to list my actual factory so that my competitors can go then go contact them directly? What about for small items -- how do I fit a label on something small... the list goes on and on.

And that doesn't even begin to cover the problem for folks whose business is crafting handmade items... Milagros Boutique has written a good piece on the impact:

Sadly, with just over a month to go before this provision is active, there is ZERO guidance on how businesses can comply with this law... Faced with these burdens, and in a down economy, this will push even more businesses into trouble, and will put more people out of work.

Monday, July 6, 2009

More on Lending opportunities...

In an earlier post, I noted that one possible avenue of competition to payday lenders was the rise of peer-to-peer lending (or micro-credit).

Seems I am not the only one thinking this way...

Here is a link to a quick post on Freakonomics --

Here is the link to the original article on --

According to research, peer-to-peer lending does have a lot going for it...

Wednesday, July 1, 2009

Payday Lending...

The Payday Loan business has quietly grown into big business, without much fanfare. That is beginning to change, and people are beginning to question some of the business practices, and whether or not they are a burden on the communities they serve.

Devona Walker on The Loop makes a compelling case that Payday Lenders's practices are wildly unfair in her article: "Payday loan sharks feed on the black community." Her argument is that this industry is ripe for regulation, and that even with heavy regulation, the industry would still be profitable. She takes on the Wall Street Journal's take directly, and her comments on customer satisfaction are absolutely priceless.

The Wall Street Journal's view is that price controls will make things more difficult for borrowers.

It is awfully hard to stomach the idea of a structured loan with interest and fees that annualize to 390%.

At the same time I do tend to agree with the Journal's assertion (based on recent research research by GWU professor Gregory Elliehausen) that borrowers are rational, and fully informed on the costs of the loan. Honestly, a large percentage of Payday borrowers are repeat customers, so it would make sense that they are aware of the true cost.

With an average APR on a two-week checking account overdraft at 1,067% (from a WSJ analysis of a 2008 FDIC study of Overdraft protection), payday loans don't look like such a bad option, but I am not sure that is a reasonable comparison.

The larger issue that this comparison ignores is that for a significant section of our population payday lenders are the only option. When banks and credit cards are out of reach for living paycheck to paycheck, what choices do they have.

On the other side of the coin, market economics teaches that prices are not set in a vacuum. If the prices for payday loans were too high, people would stop using them, and similarly if they were too debilitating to individuals and the community the lenders would loose customers and fail.

Is better regulation the answer? Maybe so, but like fire and government in general, regulation is a very dangerous tool, and should only be used as a last resort.

I wonder if the new availability of micro lending here in the US will offer competition to the payday lending market. Apparently there is enough of a market to support at least 2 micro lenders in the US so far -- check your Google listings for additions to the list...

Is competition from micro lenders enough to bring down payday loans? Probably not, but it can't hurt.

Baseball Ticket Prices -- and the value of the Phillies...

The past few weeks have been rough for our Philadelphia Phillies, that is for sure.

But there is one area where they are near the very top of Baseball rankings. Apparently our World Series Champions have some of the lowest ticket prices in Baseball.

See this fascinating graph ( from Flip Flop Fly Ball for the details. While you are there, take a look at some of the other Baseball-related graphs Craig Robinson has done. Mr. Robinson has a unique knack for presenting information.

I particularly like his representation of the Green Monster at Fenway, and his "Really Fantasy Baseball" game between the Wu Tang Clan and the E Street Band.

If you don't mind sitting in the cheap seats, Major League Baseball is still one of the great family entertainment bargains around. While the 108Warren clan tends to go to minor league games more often -- baseball is one of the few sports where the whole family can afford to go to a major league game on a whim.

I just wish Flyers tickets were cheaper...

Monday, June 29, 2009

Scientific Publishers -- trouble on the horizon...

This topic hits pretty close to home for the 108Warren Commission family, as Mrs. 108Warren Commission works for a leading academic/scientific publisher...

Michael Nielsen in his blog posted an excellent piece on the nature of disruptive technologies and their impact. He starts with a discussion of why Industries fail -- and pointing out that while it is easy to claim that the leaders of those industries that are failing are either stupid or malevolent (his terminology), that is rarely the case. Instead, he points out that it is the development of a disruptive technology that opens new opportunities that successful firms are blind to, as a result of the nature of what has made them successful.

He follows this up with evidence that the same forces are now at play in the Scientific Publishing industry. He points to the development of successful science blogs in which serious levels of research are being discussed, and lists a number of additional examples.

I don't disagree with Mr. Nielsen's premise -- in fact, I think his point about the impact of disruptive technology and its role in the failure (past or impending) of leading companies and industries is perhaps one of the most important and under-reported issues in both traditional and new media today.

What is missing from his essay is any discussion of the atmosphere that drives the publication of scientific papers -- the publish or perish paradigm in higher education. While it may not eliminate the risk that Mr. Nielsen has sketched out, this significant externality will certainly play a role in how this industry copes with technological disruption.

Here is a simple link to Mr. Nielsen's article:

Wednesday, June 24, 2009

Is the TV Business doomed...?

I'm a bit late in finding this, but this link: is to a provocative article whose premise is that the TV business as we know it is in roughly the same position that the newspaper business was in back around 2002. Take a quick look, I'll wait...

OK, now that you've read it, what do you think?

While it certainly makes for an interesting story, I am not sure that the analogy works. There are too many differences between TV and Newspapers.

Still, if I were Brian Roberts, or if I were working for him, I would be looking at alternative methods to monetize the delivery of unique content.

But the problem is not just theirs. The reality is that if people are not willing to pay for good content, then they will get exactly what they pay for... Tanstaafl --There ain't no such thing as a free lunch. While everyone bemoans the death of the newspapers, I wonder where the average reader expects to get his/her independently reported news once that happens. At current rates, the internet news economy is not generating enough income to pay dedicated reporters...

Food for thought...

Monday, June 22, 2009

A great post over at Entrepreneur in the Making...

Aspiring entrepreneurs should definitely take a quick look at this post over at Breaking the 9 to 5 Jail (Entrepreneur in the Making).

It is the story of the poster's first venture, and what he learned from its failure... It is part of a series, so I would expect other great posts to follow.

Aside from the lessons he lists, it is clear that he learned two additional lessons, and in my opinion they are the most important ones.

The first lesson he learned is that new businesses do fail -- even when they are based on really good ideas. The second lesson that he clearly learned was to keep on going.

The numbers are staggeringly ugly when considering starting a new business. The fact is, most new businesses fail. More interestingly, almost every successful business that started from scratch, was started by someone who had already failed once.

Here is the clear link:


UPDATED: Great minds apparently think alike -- clicked away from here and ran almost immediately into an ad for Honda entitled: Failure -- the Secret to Success. Here is a link to the video the ad leads to -- it is pretty short, and worth watching...

Sunday, June 21, 2009

National Health Care, coming soon...?

In new poll numbers collected over the past week, the New York Times is showing that 72% of respondents are in favor of a government-run health care plan. Even more shocking -- 50% of Republicans were in favor of this.

See the original article here -- NYT Poll on Government Health Care.

This would have been astounding to me a few years back, but after wrestling with health care costs at my last company, and then shopping for private health care while starting my new business over the past 6 months, I am not that surprised.

Because I left my prior employer at the end of the year, and had to make the Cobra Election decision before the stimulus package was signed, I was not eligible for the low cost Cobra option in time to take advantage of it. Instead, I had the dubious pleasure of shopping for personal health insurance. In the end, it didn't take that long to find coverage, but the coverage options were terrible, and the costs were/are very high. I settled on a low end plan with very limited prescription coverage, and still spend almost $500/month to cover myself and a child.

I would imagine that challenges like that are behind the poll results that CBS news and the NYT found. It wasn't that much better when purchasing insurance in a small business -- there is only so long that companies can absorb 8-15% annual premium increases before even diehrd libertarians are willing to accept a government progam.

It will be very interesting to see if other polls find similar responses, and if so, where the debate goes from here...

Stay tuned...

Friday, June 19, 2009

The Law of Unintended Consequenses strikes again...

This link is to a great piece in Roll Call on June 15th about the impact of the Consumer Product Safety Improvement Act (CPSIA), and the unintended consequences that this law has generated...

I have commented on this before a number of times -- the law is overreaching, under-informed, and will absolutely put a large number of small businesses out of business.

If you sell or make a product that could be marketed for use by children 12 and under, even if it is a reseller that is marketing to this group, this law applies. Not only that, but any violation is required to be reported within 24 hours, and may be criminal...

Worst of all, each state's Attorney General is now empowered to independently prosecute under this law.

Here is another link to the same piece in Roll Call...

And here is a link to another piece on CPSIA from CNN Money.

Lastly is a piece from -- a great site in general -- on the whole CPSIA debacle you can find here.

State Spending Transparency Hearing

State Spending Transparency Hearing

This is a great post from across the Delaware where they are debating a bill on making spending by the Commonwealth transparent to taxpayers...

I was particularly interested in the note from the testimony from the former Chief of Staff to the Governor of Missouri, who noted that their web portal had more than 20 Million hits, and that constituents had already identified savings for the state. All this, and according to him, the site was built with current staff and no additional funding.

In an era of fiscal distress, this would seem to be a natural way to improve government... and yet there is significant opposition. The more things change...

Thursday, June 18, 2009

Graphic view of the current bailout....

I ran across this post today, and was left with my jaw hanging open... Go ahead and take a look, I'll wait...

Back? Good. Now for those of you who didn't feel like clicking, it was a graphic representation of the costs of the programs enacted over the last 12 months to combat the financial crisis as compared with some of the largest single item expenditures in our country's history -- like the Apollo program, the Korean War, and the New Deal, to name a few...

He did adjust the numbers for inflation, but a quick review of the comments shows that there is some significant disagreement over whether to value "investment" activity, like TARP funds that will be repaid as sunk costs...

I won't debate that here, except to say, that not valuing them ignores the fact that they are being paid for with Debt, which will have to be paid back with interest...

The only quibble that I have with the graph is that the author has assigned a value to the New Deal that I don't think is completely accurate... In the comments, the author mentions opportunity costs as part of the justification of calculating the costs of the recent programs, but I am not sure that the same opportunity costs were used in calculating the historical costs. Social Security is an ever-growing expense that came out of the New Deal -- and I don't think that he is including the current and expected costs from this program.

That said, the dollar amounts are staggering... The government is/will be issuing tremendous amounts of debt to cover these costs, and that is not something to be taken lightly...

Have these programs kept the economy from getting even worse? Quite possibly...but the bigger question is whether the costs of these programs will cause more pain in the long haul then the immediate pain would have been had they not been enacted.


Gold for sale -- at what real cost....?

So apparently the Germans have a strong desire to buy gold, and an entrepreneur is looking to help them out by placing Gold-vending machines in train stations all over Germany...

If this is true - and this article is from the Financial Times -- then folks in the EU should be pretty nervous about the long term health of their economy.

Germany is the largest economy in the EU, and of course in the Euro zone. If German citizens are anxious enough to replace their individual currency holdings and Euro-denominated investments with personal holdings in gold that is a serious issue. Not only is this indicative of terrible consumer confidence, which would be an albatross around the neck of the economy, but it poses a risk to the value of the Euro, which would have an impact on the entire Euro zone.

Granted, one entrepreneur setting out to sell gold in small lots does not a crisis make, but if there is real market demand for this type of "investment" then I would add it to the list of reasons to be nervous about holding Euro-denominated investments.

Also -- wouldn't this be an invitation to petty larcenists of to camp out near the machines?

Here is a link to the article in the Financial Times: Link

Just thinking out loud...