28 February 2007

Houston and the Death Penalty

Houston is in Harris County. Harris County has had 96 executions since the death penalty was reinstated, after being declared unconstitutional, in the 1970s. Only one U.S. state other than Texas, Virginia, which has had 98 executions, has carried out more death penalty sentences than Harris County.

Harris County has about 1% of the population of the United States, but accounts for about 10% of U.S. executions since 1977.

Only a handful of countries in the world have had as many executions in the past 30 years at Harris County. China, Iran and Saudi Arabia clearly have more, but few other countries are in the list.

The Auto Industry Isn't All About Layoffs

While American automobile manufacturers are laying off tens of thousands of workers, this doesn't mean that nobody is hiring in the auto industry in the United States. Both Toyota and Nissan have recently opened new plants in Mississippi.

Health Care Is A Matter Of Life Or Death

Twelve year olds shouldn't have to die for want of a routine $80 dental procedure in the United States. But, they do.

Until we fix our health care system, we cannot be said to live in a rich country. Any country that lets children die for want of medical care is bankrupt.

26 February 2007

Twenty-Five Observations About Houston, Texas

A journey to Houston for a contract law conference has left me with certain first impressions:

1. Houston smells bad.

2. Vast expanses of inscrutible interstate highway seem to cover a large part of the metropolitan area. The airport shuttle got lost on the way to downtown.

3. National chains have not yet conquered the local retail market place.

4. Downtown Houston looks as tired as rural towns that have survived solely because they are county seats, places like Hamilton, Ohio. The place could definitely use a face lift.

5. Houston is dead after 5 p.m. Even the bars and restaurants at the airport close well before the last flights of the day have left.

6. The locals felt that the prudent thing to do to provide local culinary culture was to give us delightful gourmet cajun food (several hundred miles out of place), rather than the actual local specialties. I believe that they made a wise choice.

7. Texas is one of the few states that acknowledges no duty on the part of people who are in contracts with each other to act in good faith. The "Texas is a lawless state" meme continues to develop vitality.

8. The stereotypical Texas accent is grossly exaggerated.

9. The itty bitty downtown light rail system looks good, but allegedly has more accidents than any other system in the country.

10. The bronze statue in the South Texas U. law library really does have a genuine Texas cowboy hat and bandanna on it.

11. Notwithstanding being a death penalty capitol of the world, locals claims that the downtown has little crime -- it is hard to mug someone when everyone spends all their time outside the office in their cars, I was told.

12. Houstonian are eager to remind outsiders that Mr. Rice, the patron of Rice University (which incidentally was originally a white males only institution) was murdered not in Texas, but on the East Coast.

13. The fog common this time of year is beautiful and adds its charm to the rest of the city.

14. Houston has a Westword clone called the Houston Press. The cover story when I was there, Homeless in Suburbia seemed to capture the zeitgeist of the city.

15. Black-white race relations in Houston are markedly less tense than in Ohio (where I grew up), or Atlanta (where I was born and have returned from time to time).

16. Houston is considerably less vibrant than Denver which has half the population. Locals acknowledged that downtown had failed to attain critical mass, in part due to a lack of zoning and lots of post-automobile development. Locals claimed that there were business centers outside downtown that were more dynamic.

17. The big stadium downtown is sponsored by that all American, genuinely Texan company known as Toyota.

18. I had hoped to get a glimpse of the Gulf Coast, but didn't from the highest vantage points I was at on my trip (7th floor windows and roof decks).

19. Houston has not joined the "if it's hot outside it needs to be chilly inside" air conditioning ethic found in most of the rest of the United States. Muggy is a joint indoor-outdoor phenomena in the city.

20. There is a certain charm about being able to eat outside, just sheltered from warm rain, in February.

21. I missed the rodeo underway there, due to conference activities, but it is apparently a big deal.

22. American Airlines cancelled a flight from Houston to Dallas on Saturday afternoon, because there were storms in Chicago and Arkansas. While I'm inclined to blame the quality of geography education in Texas for this eventuality, I'm sure that there are more rational reasons for this happening.

23. When the flight from Houston to Dallas was cancelled, passengers scrambled to find substitutes for their duties at church the next morning.

24. I overheard a fellow passenger en route to Houston make the dismayed remark that even "real news stations like Fox and CNN" were covering Britney's latest adventures rather than real news.

25. Stereotypes notwithstanding, not a single firearm was in evidence anywhere.

22 February 2007

Brain's Fat Control Regulator Identified

The fat mouse lacks protein SH2B1.

Once again, it's good to be a mouse, if you get assigned to the right group, until they dissect you.

You probably know that dopamine plays a key role in your brain's pleasure centers, and that other chemicals in your brain, like melatonin and serotonin play a key role in governing brain functions like sleep and mood, respectively.

Now, it appears that a protein, with the unpronouncable name SH2B1, plays "a key role in the flurry of signals that govern fat storage, sugar use, energy balance and weight." Mice that lack the protein "become obese, diabetic, and unable to stop eating." Its roles includes allowing the brain to receive the "I'm full" signal that molecules leptin and insulin send to the brain.

Principal investigator Liangyou Rui, Ph.D., Postdoc Decheng Ren, Ph.D, and other investigators at the University of Michigan Medical School have published their latest research in the February issue of the Journal of Clinical Investigation. Early research was published in a 2005 edition of Cell Metabolism. The researchers, with University assistance, are seeking to bring the advance to the next level by using it to formula an anti-obesity treatment for humans.

Whole Foods Buys Wild Oats.

As I predicted in my story at Wash Park Poet, Whole Foods has bought Wild Oats. No word yet on the name of the combined entity, although the deal sounds like Whole Foods has had Wild Oats for dinner.

21 February 2007

The Soft Boundaries of the Universe

A great deal of academic and popular interest in physics has concerned the fundamental structure of the universe. What are the fundamental, indivisible units out of which matter and energy are assembled? What physical laws govern these fundamental units? How do matter and energy behave in extreme conditions?

The confidence of scientists at the end of the 19th century that we were close to an answer has been repeatedly rebuffed. While all sorts of forms of matter turn out to be theoretically possible, relatively few are stable.

Unnatural elements and isotopes

We have detected 118 chemical elements and have every reason to believe that elements with a larger number of protons are theoretically possible. But, no chemical element with an atomic number of 102 or greater has a single isotope with a half life of 1 day or greater.

No element with an atomic number greater than 82 (lead) is stable and not radioactive. Only four isotopes of three elements with a greater atomic number, Bismuth (atomic number 83, isotope 209), Thorium (90, isotope 232) and Uranium (92, isotopes 235 and 238), are found in nature. The most stable isotypes of each are radioactive, although this was just discovered in 2003 in the case of Bismuth. As Wikipedia explains:

232Th (thorium), 235U and 238U (uranium) are the only naturally occurring isotopes beyond bismuth that are relatively stable over the current lifespan of the universe. Bismuth was found to be hypothetically unstable in 2003, with an α-emission half-life of 1.9 × 1019 years for Bi-209. All other isotopes beyond bismuth are relatively or very unstable. So the main periodic table ends at bismuth, with an island at thorium and uranium. Between bismuth and thorium there is a sea trough of severe instability, which renders such elements as astatine, radon, and francium extremely short-lived relative to all but the heaviest elements found so far.

There are also two elements with atomic numbers lower than lead that do not have stable isotopes and are not found in nature. They are Technetium (atomic number 43) and Promethium (atomic number 61). Technetium was first synthesized and discovered in 1937 (some historians of science use a date a few years earlier which is disputed). Promethium and every chemical element with an atomic number of 93 or greater was first synthesized and discovered in 1940 or later. Science has only made these elements available to human experience for seventy years.

Thus, while it is possible to synthesize about 3,000 isotopes of at least 118 different chemical elements from protons, neutrons and electrons, less than 300 isotypes of 83 of these elements are found in nature, and there are only a handful of synthetic isotopes which are not found in nature but are as stable as the least stable isotopes found in nature.

Unstable Subatomic Particles

The quest to find out why big atoms are unstable, and why atomic nuclei hold together revealed yet more unstable types of matter. Subatomic particles other than the proton, neutron and electron were not discovered until the mid-20th century.

The standard model of particle physics, one of the iconic parts of modern quantum mechanics, has twelve particles it associates with ordinary matter called fermions. Half are leptons comprised of 3 kinds of neutrinos which come in two types each (particles and anti-particles) and 3 electron-like particles which come in two types each (particles and anti-particles). There are also 6 fermions called quarks, in six types each (red, green and blue in particle and anti-particle versions), which are the particles that combine to form particles such as protons and neutrons. Chirality almost doubles the number of types of particles in the standard model.

Quarks are never observed in isolation, they are always found in multiple quark structures called hadrons, almost always made of equal numbers of quarks and anti-quarks pairs of the same color (mesons), or one quark of each color (baryons). Unstable five quark structures may exist as well.

All quark structures containing heavier types of quarks than the up and down quarks (or their anti-particles) are unstable. All 140 or so of the two quark combinations (called mesons) are unstable with mean lifetimes on the order of a hundred millionth of a second or less. Likewise, all but four kinds of three quark combinations (called baryons) are extremely unstable with mean lifetimes of a tiny fraction of a second (on the order of one ten billionth of a second or less). The four stable baryons are protons and neutrons, which are composed solely of up and down quarks, and their anti-particles. Proton decay has not been observed and neutrons have a mean lifetime of just under 886 years.
The vast majority of stuff in the universe is composed of non-anti-matter up and down quarks connected in triplets that make protons and neutrons. Anti-matter has a nasty habit of swiftly transforming into pure energy upon contact with ordinary matter and is overwhelmingly outnumbered by ordinary matter in the universe.

Of the three electron-like particles, the two higher order versions are likewise unstable. See here and here.

The situation with neutrinos is complex, as they oscillate from one type to another. But, neutrinos, first observed in 1956, are hard to notice. According to Wikipedia: "Most neutrinos which pass through the Earth emanate from the sun and more than 50 trillion solar electron neutrinos pass through the human body every second."

On top of these are particles associated with fundamental forces, one for electromagnetism (photons), three for the nuclear weak force (two kinds of W and one kind of Z particle), and eight types of another for the nuclear strong force (gluons). Particles that account for interia mass (the Higgs boson) and for gravity (the graviton) have been hypothesized but not observed. All three particles associated with the nuclear weak force are very short-lived with a mean life of about 3 × 10^−25 second. Gluons are never observed in isolation, a property called confinement; they always bind multiple quark structures.

The longest lived massive subatomic particle for which a lifetime is meaningful, other than the proton, the neutron, and the electron, is the muon (i.e. a second order electron), which has a mean lifespan of 2.2 thousandths of a second. The only long lived observable force carrying particle is the photon.

Thus, nature provides an immensely complex array of hundreds of subatomic particles and combinations thereof, but leaves all but four so ephemeral that they are virtually impossible to observe without sophisticated scientific instrumentation.

The Uncertainty Principle

It is a basic tenant of quantum physics that it is theoretically impossible to ever know a full set of initial conditions for even a single quantum particle. There is dispute over whether the concept of a particle with an actual but unknown set of initial conditions is even a meaningful concept in quantum physics.


Meanwhile, at the other end of the universe where things are big, general and special relativity render what seems as if it should be simple, far more complex.

Phenomena that we currently call dark matter and dark energy that account for the vast majority of the matter-energy that general relativity implies must exist in the universe for it to behave as it appears to behave. But, we have never directly observed either, and have ruled out ordinary matter of any of the types described above as a possible source for more than a tiny fraction of dark matter and dark energy. Indeed, the only plausible candidate in quantum mechanics for dark energy (spontaneous formation and destruction of matter out of empty space sometimes called "zero point energy") produces back of napkin amounts of dark energy orders of magnitude out of whack with astronomical observations.

The more powerful a telescope you use, the farther back in time and the farther away from Earth you can see. We have seen objects many billions of years old, and many billions of light years from Earth. But, it is practically, and to some extent, even theoretically, it is impossible to see back to the moment of the presumed Big Bang, and while mainstream cosmology posits a finite universe, it is impossible to observe any boundaries of the universe directly.

We can look very far back in time and very far away, but ultimately are left guessing about where it all started, something irrevocably beyond our view, although we can get very, very close.

Soft Boundaries

The world of the small (and the ancient, and the very large and the very distant), thus, has soft boundaries.

About 99.93% of stuff in the universe is made up of only ten chemical elements (just four, Hydrogen, Helium, Oxygen and Carbon make up more than 99%).

There are lots of kinds of atoms, but only about 10% are stable or only mildly radioactive.

There are lots of kinds of subatomic particles, but only 1% are stable and massive.

There are three forces understood at the quantum level, but only one operates outside the nuclear level.

The stuff we encounter in day to day life can be more or less fully understood with sophomore in college level mathematics. But, understanding the subatomic world, precisely as it really is, requires graduate student level mathematics.

There is an immense variety of possible kinds of matter, and yet just a handful of combinations overwhelmingly dominate the universe.

The deeper you dig, the more largely irrelevant forms of matter you discover. We live in a universe full of dead ends. We never seem to get to the bottom of everything, despite getting tantalizingly close.

To paraphrase the first scientists to observe the particle zoo, "who ordered this?"

UPDATED 12-5-2007 from an original post on 2-21-2007 at 6:29 P.M.

Iran Next?

With a modicum of peace secured with North Korea, the drums of war seem to be beating for Iran.

First, Bush invaded Afghanistan. Then he invaded Iraq. Now, we are saber rattling at Iran. The British press reports that an invasion could be just days away. There are two aircraft carriers, and a mini-carrier outfitted with a compliment of aircraft heavy on fighters and skimpy on the usual helicopters in the region. Iran is ringed with U.S. bases in Afghanistan and Iraq and Turkey. The carriers and mini-carrier have a large compliment of supporting ships. The WMD and terrorism support claims are flying again. Bush is unpopular. Perhaps, he thinks we will receive a war boost and increased support from Congress if he goes to war again.

Does Bush have stock in a company planning to build a pipeline or road from Pakistan to Syria? Did even the Arabic empire seek to rule so much Middle Eastern real estate so quickly? Does he think that there are economies of scale involved in fighting three regional wars right next to each other?

The British are bailing on the Coalition of the Willing in Iraq, with plans to remove a third of their troops by summer, and a majority of them within the year. Most of the other parties to the Coalition have already left or greatly reduced their commitment. The U.S. is increasing its troop commitment. This isn't a surge, it's U.S. troops replacing departing troops from our allies. The U.S. is increasingly fighting the war in Iraq on all its own.

We've spent more on the wars in Iraq and Afghanistan combined, in real dollars, than we did in Vietnam. We've been at war under the Bush Administration longer than we were at war in World War II (or World War I). We are months from making this the longest period in U.S. history that the country has been at war other than Vietnam and the "Indian Wars". U.S. troops don't seem to be dying at quite the rate that they were earlier in the conflict, but the U.S. appears to have responded to this fact by putting U.S. troops in less well defended outpost in Baghdad. Almost everybody in the Army, Marines, Army Reserves, Marine Reserves, and Army National Guard who has a specialty in any way relevant to the war has served multiple tours in the "sandbox" or hasn't been in long enough to do so yet.

The public opposes the war in Iraq. A majority want troops out now. By an almost 2-1 margin, they favor some sort of withdrawal. Bipartisan majorities in both the U.S. House and the U.S. Senate oppose the surge and want U.S. troop levels to decrease.

It is hard to believe that Bush could seriously contemplate another conflict. There is no meaningful public support for such a move right now in Congress or among members of the general public. But, it seems that the idle war planes and missiles of the Air Force and Navy want to have their own turn at playing war, and Bush seems happy to oblige them by bombing Iran back to the stone age (they're already leaving in a medieval society as it is, socially anyway).

While it isn't so hard to justify selected strike of potential nuclear bomb production sites in Iran, apparently the calculation that the Bush administration has made is that any strikes will produce fierce retaliation, so that they should eliminate the possibility of retaliation for U.S. strikes, as well as making the strikes themselves.

Does it really make sense to inflict massive damage on a country that has made real progress towards restoring a somewhat democratic regime in the last few decades? Iran's elections are not up to Western standards, but they are more free and fair than any ever held in the last forty years or so in Iraq, Saudi Arabia, Egypt, Kuwait, United Arab Emirates, Qatar, Oman, Jordan, Syria, North Korea, Libya, Cuba, Nepal, Myanmar, Kazakstan, China, Singapore, Morocco, Sudan, and a host of other countries that few people other than geographers know exist.

The election before the most recent one in Iran brought reformers to significant power. The Iran of today is very different from the one that emerged in 1979 in the revolution against the U.S. backed Shah. A majority of Iran's population wasn't born when that happened.

The level of democracy in Iran is comparable to that in Putin's Russia, Lebanon, Pakistan, and a host of other countries with seriously flawed democracies that aren't dead letters either. It is on a par, really, with Mexico in the era when the PRI dominated the political scene.

We ourselves, i.e. the United States, have in the Bush administration ushered in the birth of fragile governments in both Afghanistan and Iraq where Islamic law is part of the constitution and has the power in principle to override secular law -- the theocratic institutions in those governments aren't as robust as they are in Iran, but the difference is one of degree, not of principle.

Unlike Sudan, Rwanda, and Uganda, Iran has not engaged in a genocidal campaign against its people. It does not have gulags full of political prisoners. While not disinterested in the war in Iraq, the evidence that it has been a major military participant is weak indeed and any such involvement has come in the last few months after several years of restraint.

Iran is no model for diplomatic poise, democracy, personal freedom or capitalism. It was probably complicit on rocket attacks on Israel last year through the proxy Army of Hezbollah. It is a leading user of the death penalty (although far more restrained than either Saudi Arabia or China, both of whom we maintain better diplomatic relations with than Iran). Unlike Iraq, there is a plausible argument that it is trying to develop nuclear weapons (Iraq wasn't even trying to develop nuclear power). But, the community of nations is full of members who are less than model citizens.

War on Iran will permanently put U.S. interests abroad at risk, further bankrupt our country which has been fighting its two current wars on the moral equivalent of credit cards while cutting taxes and increasing domestic spending, and keep U.S. troops in harms way for years to come, all against the public will. Is this any way to run a democracy?

20 February 2007

DC Circuit Upholds Military Commissions Act

The Military Commissions Act of 2006 provided that all pending litigation involving detainees at Guantanamo Bay was removed from the jurisdiction of all U.S. Courts. The United States Court of Appeals for the District of Columbia Circuit upheld that provision today in a 2-1 decision after sitting on the cases for more than two years, well before the Military Commissions Act was passed. The cases are know by the name of the lead case, Boumedine.

Judge Randolph wrote for the majority joined by Judge Sentelle. Judge Rodgers dissented. This gist of the dispute between the majority and the dissent is over whether Guantanamo Bay is within or outside the United States, applying a different legal standard that was present in prior cases where Guantanamo Bay was treated as effectively within the United States.

The Majority

The majority buys the argument that the MCA is not an unconstitutional suspension of the writ of habeas corpus because the writ, in 1789, did not extend to aliens held beyond the sovereign territory of the country.

Thus, they held that a suspension of the writ applies only to the rights of habeas corpus as they existed in 1789, and reject that findings of Rasul and Hamdan admittedly under the then not repealed statutory habeas corpus authority, that Guatanamo Bay was within the habeas corpus jurisdiction of the United States Courts, even after the Detainee Treatment Act of 1995.

In their view, the status of Guantanamo Bay is different for statutory purposes than for constitutional purposes, and that unless the constitutional minimum right is abridged, that there is no supsension of the writ of habeas corpus. This hinges on analysis of some ancient British habeas corpus cases.

The Dissent

The dissent argues that while the MCA purports to deny jurisdiction that it is invalid as a violation of the suspension clause.

It finds that the U.S. Supreme Court already ruled on the historical scope of the right of habeas corpus in Rasul and found that detainees at Guantanamo Bay were within that scope, quoting its opinion to that effect.

Finding that the habeas corpus extends to the detainees, the dissent then determines if the Combat Status Review Tribunals set up to replace habeas corpus in the courts is an adequate substitute and finds them wanting, because many of the rights found in a habeas corpus case are absent in a CSRT.

It then determines that Congress did not intend the act as a suspension of the clause (which is what the government argued on appeal), so the law is unconstitutional.

On remand the dissent would order the trial court to discern in evidentiary hearings if the government has put forth credible evidence that the person in question is an enemy combatant. If so the detention is held lawful, if not the person must be released.

Next Step

Now the detainees will undoubtedly appeal to the U.S. Supreme Court. I think that the U.S. Supreme Court will take the case. It has taken these kinds of cases twice before, the nation expects it to do so, and in its order allowing a transfer of Jose Padilla to a criminal court is expressed interest in continuing to oversee the process. There is no procedural reason to delay at this point. It has reversed the D.C. Circuit on these cases before, and the dissent makes the case that the D.C. Circuit is simply defying the U.S. Supreme Court's ruling in Rasul. I will even hazard that the U.S. Supreme Court will find the Military Commissions Act to be unconstitutional. It may even do so by a supermajority.

If the U.S. Supreme Court rules in the ordinary course, the administration will have still been permitted to operate without due process for about six years.

19 February 2007

Brown Water Warfare

Brown water warfare refers to warfare conducted in coastal areas and rivers. Recent developments brings news on that front.

First, Coast Guard efforts to upgrade its fleet, called the Deepwater program, are a disaster. The only good news here is that failure has been admitted, so that change can occur.

Second, the Navy is starting river based forces, a la the Swift Boats of the Vietnam era. The good news here is that a some active duty military personnel that have been useless in Iraq because they are in the Navy, can help releave burdens that existed on the Marines and Army. The bad news is that this approach screws with the operational chain of command -- do we really want soldiers in Iraqi rivers to report to the Secretary of the Navy, while the soldiers on the shore report to the Secretary of the Army? In the short run this might be a band aid that helps, but in the long run, wouldn't it be better to leave the Army in charge of fighting in rivers?

We're Number Two. . . In Stale Snow

Today, Denver enjoyed (survived?!) its 61st continuous day with measurable snow on the ground. This makes this winter second only to the winter of 1983-1984, when Denver had 63 continuous days of measurable snow on the ground. They measure it at 6 a.m. in Stapleton. Today broke the second place record from 1913-1914.

More snow is due this afternoon and evening, so despite warm temperatures today, we are likely to make it, at least, to day 62 on Tuesday morning. Wednesday would tie the record, and Thursday would surpass it. Warm temperatures expected during the day all this week makes this is a close call.

We know that we can never get enough moisture in Denver, and with the evidence for global warming growing ever more conclusive, we may be looking at long eras of drought that will leave us nostalgic for winters like this one. Still, it does get old.

Happy Engineer's Week!

It's Engineer's Week once again. This is far more important than Mardis Gras (which is tomorrow), or Ash Wednesday (this week).

While your Mardis Gras hangover may indeed make you feel the need to put Ashes on your head, let's face it. What has contributed more to your life?

Your stereo, created by engineers, or Mardi Gras beads? Mardi Gras beads are fricking dangerous. I had a client once who slipped on some and suffered a serious injury. I have never had a client slip and fall on a stereo. QED (or not).

Seriously though, there are several things you need to do for engineer's week.

1. Eat cherry pie. This is the single most important thing.

2. Admire the way engineers have made our life better.

3. Be nice to your favorite engineer (ideally after wiping your hands and face from having consumed said cherry pie).

Have a good week!

16 February 2007

New Warning Symbol

If you see this image you are very swiftly going to be nuclear fried toast. When you see this, it means run like hell for safety. Radiation decreases based on the square of distance. The further you are from the source, the safer you will be.

Texas Still Nuts

The head of the House Appropriations Committee in the Texas state legislature, Republican Warren Chisum, had the termerity to distribute to his colleagues a diatribe, from a fellow nutjob in the Georgia state legislature, denouncing the notion that the Earth rotates around the Sun and spins on its axis, claiming that Copernicus was part of a Jewish conspiracy, and of course opposing evolution instruction in the schools. Isn't it wonderful to know that Texas has people like this in charge of its education budget.

When confronted about the memo, he apologized for the anti-semetic bit, but not for the anti-science part.

Can we move NASA's facilities out of Houston now?

15 February 2007

Against RICO

United Healthcare, one of the nation's largest health insurers, is being sued under the Racketeering Influenced Corrupt Organizations Act (RICO), commonly known as the organized crime law. I have no problem with having private civil causes of action for systemic conduct of white collar crimes, which is what civil RICO suits usually involve.

But, RICO is popular because it has harsh penalties included because it was originally meant to combat organized crime gangs. Organized crime gangs should be subject to harsh penalties, of course. So what's the problem?

The problem is that RICO's definition of organized crime gangs is very different from the popular conception that drives the harsh penalties for violations of the federal criminal statute and the related civil penalties.

The sine qua non of organized crime in the popular imagination is the coordinated use of violence or threats of violence to secure ill gotten gains. The classic organized crime offenses are extortion, murder and assault.

Now, organized crime rings generally don't make a lot of their money from the violent offenses per se. They use the violent offense to create a climate in which crimes involving financial gain, such as loan sharking and vice, can prosper. But, no organization which regularly violates the law is really an organized crime ring unless its organization depends upon or has a pattern of using violence or the threat of violence to achieve its ends.

However fradulent United Health or any other business corporation devoted primarily to a legal trade or business (which may be conducted in violation of the law) may be, this alone does not suffice to make it an organized crime ring in any place but a U.S. District Court. Nobody is accusing United Health of sending Guido out to intimidate doctors or rough up troublesome insureds.

But, because RICO lumps corrupt organizations in with true organized crime rings, it punishes the corrupt activities more harshly than the drafters of the law or the public would feel was appropriate if the conduct being punished was described more honestly. RICO is one of a number of laws that contributes to unjustifiably harsh sentences for non-violent property crimes which bloat our prisons.

RICO also aggravates the civil justice system in these cases. It encourages fierce, sometimes questionable defenses, in order to avoid what is often rightly perceived as a risk of unduely harsh penalties. It also unduly taints those accused with associations with the Gambino families of the world, which is undeserved and poisons the well against any reasonable and prompt settlement.

Earned Income Tax Credit

While dealing with some client income tax issues today, I happened to cruise through the instructions for the Form 1040, the main federal individual income tax form. This includes instructions for the earned income tax credit, a tax credit available to the working poor, which is a leading cause of tax audits.

It is complex. How complex? The instructions fill pages 46 to 59 of the instruction book (14 pages including the table). The basic analysis takes six steps with twenty-one numbered sub-steps (in addition to the steps on the work sheet and a three part test that has to be analyzed in one of the steps and carrying over the worksheet result to the main tax form). There are two worksheets. One of the worksheets has three parts with six steps. The other has four parts with five steps. There is a full page plus an additional quarter page of definitions and special rules. The seven page table (some entries in which require footnotes) has six credit numbers per modified income range from which the taxpayer must select the proper number. There is nothing in the instructions that explains the formula that drives the table so people can understand the incentives created for them by the earned income tax credit.

This isn't primarily a matter of poor technical writing on the part of the drafter of the tax form. Tax forms are, as technical writing goes, among the better written documents out there. But, the relevant provisions of the Internal Revenue Code are quite complex.

By comparison, the instructions for the dreaded alternative minimum tax, which is widely derided as a source of tax code complexity, take just a page and a half, including a worksheet that takes up almost an entire page.

If a provision of the tax law relating to insurance companies or publicly held corporations or vacation homes is complex, that's fine. Those taxpayers can afford to hire accountants and lawyers to figure it all out for them, tend to be sophisticated themselves, are relatively small in number, and have considerable tax savings at stake.

But, the earned income tax credit impacts tens of millions of taxpayers, who are by definition low income (the maximum earned income to get any credit is $38,348 for a married couple with two children, $36,348 for a single person with two kids, $34,000 for a married couple with one kid, $32,000 for a single person with one kid, $14,120 for a married couple with no children, and $12,120 for a single person with no kids) who tend not to be sophisticated, and who rarely have huge dollar amounts at stake. The maximum credit, for a married couple with two children, is $4,536 who have between $11,300 and $16,850 of earned income.

I am all for helping working poor taxpayers with tax credits, like the earned income tax credit and the work opportunity tax credit. And, I am well aware that tax credits shift a bigger share of the benefit to lower income people than tax deductions.

But, I am also a firm believer that we can provide comparable economic benefit to this group of taxpayers without the administratively cumbersome system we have in place now. And, while it is beyond the scope of this post, the earned income tax credit phaseout has the econmic effect of imposing some of the highest marginal tax rates faced by anyone on the working poor, which is also bad policy.

We have many tax provisions that all aim, at least in part, to cushion the impact of federal income taxes on modest income families. They include the standard deduction, the additional standard deduction, personal exemptions, head of household filing status, married filing jointly status, the per child tax credit, the additional child tax credit, the child and dependent care expense credit, the credit for the elderly and disabled, and the work opportunity tax credit.

The tax code does not have to be this complex to get us to roughly the same place in terms of tax liabilities. Also, reform of these provisions has the ability to dramatically reduce tax complexity for a large share of taxpayers, with a very low revenue impact, because the lowest income 50% of taxpayers has a quite small share of the income of all taxpayers and pays a smaller share of federal income taxees.

13 February 2007

State Terrorism and the War on Terror

There are people who like to use the word "state terrorism" to refer to violent abusive conduct by governments. I don't. I also don't like the terminology "war on terror." Why?

[The text below, is copied, with edits for grammar, from a comment of mine at Daily Kos using the term in the context of Israel, the most common place the term "state terrorism" is used.]

Like "war on terrorism," the term "state terrorism" frames the issue in a way that doesn't naturally lead to productive solutions.

Both the U.S. and Israel conduct military operations without enough regard for the human rights of bystanders, civilians, the societies impacted by their actions and the human rights of prisoners.

Both countries are frequently deaf to political solutions to the conflicts they address with military force.

Traditional "terrorism" is usually a form of civil war by other means, in which the legitimacy of the prevailing government is questioned. Those who feel compelled to fight it use terrorism because they have no political clout and also lack traditional military force. It is often committed in a suicidal manner. It thrives on publicity. It has very different causes and solutions than abuses of state power.

The biggest problem with the "war on terrorism" meme is that it incorrectly suggests that there is one "terrorism" problem, when in fact there are myriad independent political legitimacy problems in which terrorism is a tactic used to address them.

So called "state terrorism" has almost the opposite source. Rather than flowing from desparation in the face of powerlessness, it flows from excessive unchecked power, and often from misarticulating the military goals in conflicts (e.g. seeking to destroy the insurgents, rather than seeking to secure peace). It flows from a culture of impunity, from administrative corruption, and from unenlightened leadership (violence is the last refuge of the incompetent). It thrives on secrecy.

Approaches that address ordinary terrorism well are almost doomed to fail, indeed, may be counterproductive, in addressing "state terrorism".

Certainly, the goal of the "state terrorism" meme is to more strongly condemn this activity by associating it with something that is already widely condemned. It is an attempt to create moral equivalency. But, terms like "genocide" (where appropriate), "oppression" (where genocide is inaccurate) and other terms invoking the same idea, better capture what is going on, and as a result, are more likely to produce knee jerk solutions that are fruitful.

Prosecutors Gone Wild

Two recent stories I've read highlight the ability of a District Attorney in a major metropolitan area to wreck havoc on the criminal justice system by seeking extraordinary sentences at odds with customary practice elsewhere in the state.

First, from Maricopa County, Arizona:

[There are] "130-plus death-penalty cases pending in Maricopa County." Let's put that number in some capital context, help by this data:

*Since Furman, Arizona has only executed 22 persons over the last three decades.

*Since Furman, no state other than Texas has executed more than 100 persons

*Last year, only roughly 115 death sentences were handed out nationwide

And yet, prosecutors in one county in Arizona believe that 130-plus persons should be facing capital charges. Wow! Considering that, just by bringing capital charges, the county prosecutors likely cost the state at least $100,000 in extra lawyer and court expenses, the Maricopa County prosecutors through its capital charging practices have, in essence, allocated an extra $10 million in tax dollars to capital punishment administration by virtue of having decided to pursue 130+, rather than just, say, 30+ capital prosecutions.

The second is closer to home. In Arapahoe County, Colorado, the D.A. is making heavy use of habitual offender sentence enhancement options in felony prosecutions:

In 2006, the 18th Judicial District filed habitual criminal charges in 232 felony cases, far more than any other DA's office in the state. That's ten times as many . . . as Denver handled last year, and four times as many as the 18th itself filed in 2005.

Denver and Arapahoe Counties have comparable populations. Crime is probably lower in Araphoe county than it is in Denver, since Arapahoe is more affluent and suburban than Denver which is a central city.

Partial Victory For Doug Bruce

Doug Bruce, who brought us TABOR, sued the Pikes Peak Library District, for TABOR violations.

At trial all his claims were dismissed. On appeal, the Colorado Court of Appeals held that most of his claims were without merit, but that the District has to refund $8,430 of revenues that it received in one year, over those forecast, receiving to taxpayers. This is about 1.6 cents per person who lives in the District. The District serves about half a million people and had a 2006 budget of roughly $2.85 million.

Thus, any savings Bruce's suit may have secured for taxpayers was likely overshadowed by the legal fees involved that deprived county residents of services. Thanks Doug!

SEC Pushes To Gut Auditor Liability

Conrad Hewitt, the Security and Exchange Commission's chief accountant, and the European Commission, the executive branch arm of the E.U. think "the big audit firms should be given legal protection against claims." Among the proposals (as reported by tax research firm RIA) are:

* Establishing a monetary cap on liability.
* Establishing a monetary cap on liability based on the market capitalization of the audit firm.
* Establishing a monetary cap on liability based on a multiple of the fees charged by the audit firm.
* Establishing proportional liability, where the audit firm's liability would be limited to the role it played in damages.

Basically, he argues that liability will make big auditing firms go under, to which the obvious response is, that if they are doing that shoddy a job, that they deserve to go under.

Treasury Secretary Hank Paulson and the Committee on Capital Markets Regulation are also involved in the U.S. effort. The adminisration may plan to try to get around Congressional opposition to the plan by issuing regulations or audit standards that would change audit firm liability.

A proposal like this would be basically an invitation for auditors to act laxly in assuring the accuracy of corporate books, which could undermine the very basis of the capital markets.

Grass Roots Civil War Revisited

At the end of last year, I argued, based on the low tech kinds of weapons that we saw being used in the Iraq War, that the civil war there seemed to be largely a grass roots affair with little outside military influence.

In the past month and a half, it appears that this has changed.

There is weak evidence that anti-aircract weapons have recently started to be used against U.S. helicopters and there is weak evidence that armor piercing rounds are entering wider use. The U.S., of course, fingers Iran. But, given the drum beat of war against Iran and the U.S. record of coming up with fake intelligence to start a war, this is receiving lots of skepticism.

Suppose it is true. Does that mean that war with Iran is the right move? Not necessarily. We are already assisting in military occupations of Iraq and Afghanistan. We simply do not have the military resources to stretch a U.S. Zone of Influence from the Syrian border to the Pakistani border.

Yet, while selected air strikes or special operations missions could conceivably shut down Iran nuclear efforst that could give it nuclear bombs, since that is a highly centralized program by its very nature, nothing short of regime change and a bloody occupation far worse than the campaign in Iraq could shut down Iran's ability to ship sophisticated small arms to proxy forces in Iraq.

It is also very hard to seal the border. The U.S. is unable to do that along its comparably sized border with Mexico. Yet, on the Mexico-U.S. border, unlike the Iran-Iraq case, there is no serious allegation that the official Mexican government policy is to devote professional military forces to smuggling goods across the border.

And, efforts to control insurgent finances are useless if the weapons are being offered for free, or have access to U.S. funds going into the Shi'ite controlled ruling coalition (which may include someone who has committed terrorist acts against the U.S.).

In short, there is no good reason to believe that even if the Iranians are shipping arms to insurgent militias that U.S. military actions which is less than truly massive (something Congress would likely not authorize) could stop it.

In the same way, the U.S. ultimately backed off in both the Korean War and Vietnam War in the face of Chinese backing for local forces.

Expeditionary Fighting Vehicle Program Starts Over

The Marine's Osprey tilt wing airplane-helicopter hybrid has attracted lots of attention for the technological hurdles it has had trouble overcoming. But, it is now being fielded.

This has turned attention to the Marine's second biggest program, the expeditionary fighting vehicle (the most recent of many names for the program). This is a medium weight armored personnel carrier, similar in purpose to the Army's Stryker vehicle, with a twist -- it is suppose to be able to go from ship to shore, without a landing craft, at landing craft speeds.

But, this September, the military cut its planned buy in half from 1,013 to about 500 because the program is going way over budget. Then, earlier this month, the Washingont Post reported that the eleven year old program may be killed entirely and replaced with seven new prototypes.

[T]he program has struggled with repeated delays, cost increases, budget cuts and dashed expectations, according to military officials and government reports. Problems range from leaks in hydraulics systems to software glitches, according to the reports. Last year, the vehicles completed just two of 14 planned tests. . . .

General Dynamics defends its progress, noting that the vehicle has met many goals, including being able to reach speeds of 30 knots on the water. The vehicle is fast enough to keep up with the Abrams tank on land, it can carry 17 Marines, and its systems can communicate with other ships and tanks, all key performance criteria, the company says...

An independent review released in December by the Navy's acquisition office questioned the company's commitment to solving the development problems that plagued the vehicle.

Optimistic announced until last fall had led outsiders to believe that this program was just on the verge of getting into the field. But, it appears taht there were just too many kinks. It will be another two years before the prototypes are ready.

Snow Getting Old

The snow in Denver is literally getting old. It is already the third longest duration Denver has had snow on the ground, with more than 55 days of it. Considering the snow coming down this morning and due tomorrow, we are on track to make it a record 64 days.

12 February 2007

Mark Grueskin All Wet

Mark Greuskin is the lawyer who has been hired to come up with legislation that would tame the beast that is Amendment 41, a pervasive and draconian gift ban on all gifts to government employees adopted by the people of Colorado as part of the state constitution this past November.

Today's Q&A with him is found at Colorado Confidential. His basic argument is that the breach of public trust language found in the legislative intent section of this constitutional amendment can be used to override the express language of the gift ban that bans all gifts without regard to intent.

His argument is implausible and a stretch. While I'd always been skeptical of the implementing legislation course, some rather clever arguments (if not terribly strong arguments) made by Luis at Square State about how to interpret gifts to spouses and children under Amendment 41 had left me secretly hoping that Mark Grueskin would have great ideas that I hadn't noticed about how to tame the beast.

Instead, he thinks that it is possible to turn Amendment 41 into a bribery statute, in which only gifts intended to influence legislation count.

The trouble is that bribery was already illegal, and that no government employees who weren't elected officials and political appointees would have been included in the gift ban if that we the case. Yet, it is unambiguously clear that file clerks count as government employees under this law, and that they are not permitted to receive any kind of gift.

Implementing legislation can't rewrite express terms of legislation, or override the constitution. Neither can legislative intent provisions. Both sources can only clarify ambiguities. Amendment 41 doesn't suffer from ambiguity, it suffers from excessive, overzealous detail.

The people who drafted Amendment 41 to say this are idiots and assholes (albeit with overzealous good intentions), but Greuskin's main battle plan so to speak, as expressed at Colorado Confidential, is simply lame. I have real doubts about whether the leigslature will even show interest in passing legislation along those lines.

Jared Polis deserves all the shit he gets for backing this measure.

April 17, 2007 Tax Day in Colorado

The deadline for federal tax returns is April 17, 2007. This is due to the celebration in the District of Columbia of Emancipation Day (the anniversary of the Emancipation Proclaimation), and the celebration in some Northeast states of Patriot's Day. Colorado's returns, and returns in most U.S. states are also due on April 17, 2007.

In particular Massachusetts, Michigan, New Mexico and Ohio (I know I have raders in all of those states) are among those states with an April 17, 2007 state tax deadline. If you aren't in one of those states, check on your local deadlines before risking filing late.

09 February 2007

One Form of Autism Cured In Mice

Aside from being eaten by cats, having incredibly short life spans, and being dissected for no fault of your own, mice have it really good. They always get the benefits of cutting edge medical science. This time, a way to reverse advanced autism in mice has been discovered.

It isn't a general cure. It applies to a mouse form of a kind of autism found in one in 10,000 to 15,000 girls. Boys are swiftly killed by the disease. The most recent data shows that 1 in 150 children have an autism spectrum disorder and it is more common in boys than in girls - so only a fraction of 1% of autism cases are directly impacted by the discovery. Treatment was easier to devise in this kind of autism than others because scientists know precisely what causes this form of autism, a defect in the operation of specifically identified genes. This is a particularly nasty version of autism, however:

After its outset—usually within 18 months of birth—young girls suffering from the illness begin to display asocial symptoms similar to those of autism. RS [Rett Syndrome] primarily affects the nervous system and can eventually lead to problems with speech and movement, often leaving patients with a stiff gait or confined to a wheelchair. Symptoms can also include tremors and irregular breathing.

The scientists treated the mice with tamoxifen, a breast cancer drug, with great results.

All of the symptoms . . . were erased in the female mouse model. . . . "It's like a dream result, to me," marvels biologist Rudolf Jaenisch of the Massachusetts Institute of Technology's Whitehead Institute. "Even if you have the disease—and these animals were almost moribund—you can still rescue them."

There is no known cure for inappropriate use of similes by biologists at this time, perhaps because mice are not known to suffer from that disorder.

Don't try this at home with your Rett Syndrome afflicted child. While scientists eventually got a good result with a proper dosage of the drug, the trial and error process to determine the proper dose of the drug killed a lot of mice.

But, the good news is that one autism spectrum disorder may be headed for a cure in the foreseeable future.

08 February 2007

Star Crossed

Oil multi-millionaire J. Howard Marshall II married the stripper and Playmate Anna Nicole Smith at age 89. He died at 90 in 1995.

This led to the world's most famous probate and undue influence case between Anna Nicole Smith and her stepston E. Pierce Marshall over the estate. The case went all the way to the U.S. Supreme Court which drew refined the line between bankruptcy court and probate court in the process. Smith lost the probate suit, but the bankruptcy trustee brought litigation on behalf of her bankruptcy estate alleging that the reason that there wasn't a valid will was that E. Pierce Marshall engaged in fraudulent conduct to prevent his father from making gifts to her and to prevent him from executing the Will that he wanted to establish.

The Supreme Court held that fraudulent conduct of this type isn't within the narrow court created probate exception to federal jurisdiction. The litigation isn't over, but both of the litigants in that much watched U.S. Supreme Court case are dead now. The survivors may continue the battle.

Anna Nicole Smith died today. E. Pierce Marshall died died June 20, 2006 at age 67.

Smith is survived by a 5-month-old daughter whose paternity is in dispute.

The birth certificate lists Dannielynn's father as attorney Howard K. Stern, Smith's most recent companion. Smith's ex-boyfriend Larry Birkhead was waging a legal challenge, saying he was the father.

Her elder son, Daniel Smith, died September 10, 2006.

Texas Bound

The registration is in place, the tickets are booked, the hotel room is reserved and my abstract and biography have been submitted and proofread. I'm headed to Texas, the most lawless state in the nation.

No, not for good, thank goodness. Just for the Third International Conference on Contracts which will be held February 23-24, 2007 in downtown Houston.

I was a little surprised, but not disappointed, to learn that all of the papers, mine included, will be presented in plenary sessions, rather than in many parallel presentations. All the other presenters are professors of one stripe or another.

07 February 2007

Castle Pines Golf Tourney Gone

Castle Pines is in the news again. Not only is the neighborhood in a feud over incorporation plans in the area, it has also lost its internationally recognized golf tournament.

The story also notes that Denver has lost its Grand Prix car race on the city's streets.

New Blogger Here We Come

After various false starts and considerable indecision, I have ended up moving from the old blogger platform, to the new one. This is supposed to sold myriad problems I had with the old platform like an inability to categorized posts (except laboriously in index posts), greater reliablity, and other cool stuff that escapes me at the moment.

I actually tried to do this a couple of times, but before, it didn't work because this blog had too many posts.

We'll see. Please comment at this post if you notice any gliches as a result of the transition.

Who Owns America Revisited

Some points deserve to be repeated, like the highlights of this post from last summer, which relied on Federal Reserve research:

* The wealthiest 1 percent of Americans held 33.4 of the wealth in 2004. . . The top 5 percent collectively held 55.5 percent of the wealth in 2004.
* The poorest 50 percent of the American population collectively held 2.5 percent of the wealth . . . the very wealthiest 1 percent of Americans own a bigger piece of the pie (33.4 percent) than the poorest 90 percent put together (30.4 percent) . . . .
* The wealthiest 1 percent of Americans owned 62.3 percent of the business assets in 2004.
* The wealthiest 5 percent collectively owned 88.7 percent of business assets.
* The wealthiest 5 percent also owned 93.7 percent of the value of bonds, 71.7 percent of the nonresidential real estate, and 79.1 percent of the value of stock.

The family net worth cutoffs referenced above are:

99th percentile at $6,006,000
95th percentile at $1,393,000
90th percentile at $827,600
50th percentile at $92,900

. . . About 8% of Americans are millionaires. . . .

Unrealized, and hence, untaxed, capital gains make up 31% of the wealth of the top 1% and come mostly in investment assets for these families. . . .

Among African-Americans . . . the 75th percentile is $97,000, and the 90th percentile is $248,000. Among Hispanics . . . the 75th percentile is $103,200, and the 90th percentile is $304,100.

Last time I emphasized the fact that the distribution of wealth makes estate taxation, and tort reform damage caps relevant only to the a small percentage of Americans. This is still true. The forgiveness of tax liability on unrealized capital gains taxes at death is also a huge boon to the top 1% and of very little benefit to most people.

About Business Regulation

Today, I want to make a bigger point about business regulation and government efforts to secure social equality. As the facts above indicate, the vast majority of business assets in America are owned by 5% of the families in America, both big business which is owned through stocks and bonds, and privately held business (those referred to as "business assets" above).

Depending on how you count it, between 10% and 20% of Americans own privately held businesses or farms. But, most of those businesses aren't worth very much, and most of those businesses are either essentially one man or one woman shows that basically sell the services of the proprietor (whatever the form of business organization) or very small, single location, no middle manager, low capital investment type businesses like single location coffee shops or restaurants or food carts or tiny construction subcontractor operations, or "lifestyle" farms.

At the level of the economy as a whole, business regulation overwhelmingly impacts the rich and the near rich. Almost everyone who owns a business large enough to make worrying about unionization an issue (and clearly it is for business lobbies, who have made unprecedented efforts to oppose Colorado's HB 1072, a moderate pro-union bill this legislative session now awaiting a decision of the Governor), is in the top 5% of the wealth distribution in this country.

The Limits Of Soaking the Rich

This is not to say that liberals should overregulate or overtax business.

Republican style trickle down economics is largely a myth. Economic growth in the past thirty years has done far less to help "the rest of us" than would be expected. The United States is the only major developed country where the income of those at the top has risen greatly while the income of those at the bottom has fallen, in recent years.

But, while economic growth and prosperity for the nation as a whole is not a sufficient condition to make the majority of the population better off, it is a necessary condition. The only ways to make average people wealthier are to increase the size of the economic pie, or to seize wealth from the rich and to give it to the poor.

Seizing wealth from the rich, wholesale, may sound attractive. But, it doesn't work. Harsh efforts, in the alleged interests of the masses, to crack down on the well off produce the economic and social disasters of Stalin's Russia, Pol Pot's Cambodia, and China's Cultural Revolution. Traumatic effort to redistribute wealth are counterproductive.

This isn't simply a matter of history book communism. Zimbabwe, which in the year 2000 confiscated the wealth of a 3,500 ultra-wealthy white plantation owners whose wealth was a legacy of apartheid, however just or unjust the government's cause for doing so may have been, has paid dearly for this policy.

Since 2000, the national economy has contracted by as much as 40%; inflation has vaulted to over 1000%, and there have been persistent shortages of foreign exchange, local currency, fuel, and food.

In 2006 alone, the GDP contracted by 4.7%. And, while wealth was certainly concentrated in Zimbabwe before the land seizure, "whites made up less than 1% of the population but held 70% of the country's commercially viable arable land" in 1999, compared to the numbers above for the United States, it really wasn't so different when it comes to economic assets (60% of the population is engaged in agriculture, even after a collapse of the agricultural economy in Zimbabwe since the land seizure).

Examples Of Wealth With Greater Economic Equality

This isn't to say that the stark inequalities we see in the United States are necessary to prosperity either.

Japan and almost all of Europe has far smaller contrasts in wealth between the rich and the the rest of the population than the United States. Indeed, the United States distribution of wealth looks more like a Third World country than it does like a modern industrialized democracy.

Also, wealth distribution isn't terribly closely tied to usual suspects like tax policy and state regulation of the labor market. While Europe has largely chosen to organize its economy to work fewer hours than Americans do and impose higher taxes to support a stronger social safety net, Japan has taken a very different approach. Japan is neck and neck with the United States in both its high number of hours worked per person, and its low tax levels as a perecentage of GDP. Yet, the only country in the world with less income inequality than Japan is Denmark.

Government policy can foster an "ownership society" where the middle class has greater wealth, this wealth heightens social equality, and this shift fosters a sense of national solidarity because far more people have an economic stake in the system. But, the kinds of policies that the Bush Administration has fostered don't move us in that direction.

The most effective "ownership society" transitions in American history have been characterized by massive government largess for average people. The first was the Homestead era, when the government gave away tracts of land to anyone looking for a fresh start in the West.

The second was the post-World War II era whose signature policy was the G.I. Bill. The G.I. Bill provided government aid that allowed veterans (who made up a huge share of the adult male population) to get higher education and own homes. Federally sponsored corporations created the modern middle class mortgage market, also vastly expanding home ownership. Unions were strong which gave large numbers of working and middle class Americans jobs that paid a decent wage with benefits and relatively fair conditions of employment. Widespread employer provided health insurance and pensions (both, in part, creations of lingering war era wage controls) came into existence.

The benefits of the Social Security safety net, created in the Great Depression, became more noticable as more people lived to retirement age and people had fewer children. A massive reduction in poverty among the elderly had the side effect of allowing making some meaningful inheritance something most middle class families experienced, as opposed to something restricted to a privileged few.

Achieving progress now will take new efforts. But, we know from these experiences that it can be done.

05 February 2007

On Trade and Shoes

On Trade and Shoes

There are lots of people who think it is an outrage that 98% of shoes sold in the United States and similarly high percentages of televisions sold in the United States are made abroad. This scares them. I don't know if the numbers are exactly right, but the point is well taken. It is undeniable that the United States imports a significant share of its manufactured goods, and that this share is particularly great for certain classes of products.

If international trade stopped tomorrow, we'd be doomed. Well, not quite doomed. We could rebuild a manufacturing economy in a couple of decades, but in the meantime, we'd suffer dire shortages and economic dislocation. Some products that rely on imported raw materials would virtually vanish (say goodbye to coffee and rubber). Others would have to undergo major redesigns in the face of changing raw material economics.

We aren't importers of everything. We export grains. We produce almost all of the beef, chicken, milk and pork that we eat. A large share of our electricity is locally produced from domestic fuels and most of the rest that isn't domestically sourced has North American fuel sources. Our natural gas supplies are North American. Most of our timber is, at least, North American in origin. We import graduate students and export PhDs. We import sick people and export high end medical care. We import investment capital and export interest, dividends and capital gains. We export popular music and Hollywood movies.

While we import oil, we are more self-sufficient in petroleum than most of our developed world peers. Switzerland, Japan, Singpore, and Luxembourg, to name just a few, import essentially all the petroleum that they use.

I don't find it inherently worrisome that we import our shoes. When is the last time you met anyone who didn't own a single pair of shoes and walked around barefoot even in the winter? We may not have universal health care or universal higher education or even universal housing, but we are damn close as a society to universal footware ownership. Not only that, in our society, people manage to not just wear shoes universally, but own them free and clear. Almost no one rents shoes or has to mortgage their shoes to afford them. Shoes are so common in our society, that even if someone goes bankrupt we let them keep many pairs of shoes.

Indeed, while television ownership is not universal, our society also pretty effectively provides a television to everyone who would like to have one. A few deeply poor and financially ignorant people rent televisions rather than owning them, and a few extravagant people buy such expensive televisions that they feel a need to finance them and pledge the televisions as collateral, but I have yet to hear a politician campaign for the cause of universal television ownership (although a give away of a converter box to everyone without cable or satellite TV, to make it over the digital broadcast TV hump in the near future comes close).

The things in our society that some people need badly, but do not have, have little or no corrolation to the percentage off that thing that is obtained in foreign trade. If anything, things obtained primary from abroad are more widely available to the general public than things obtained primarily domestically. Importing manufactured goods from abroad has provided the United States with historically unparalleled abundance in its supply of material goods.

This doesn't mean that there isn't a serious concern hidden in the obscure and emotionally driven ongoing debate over foreign trade and outsourcing and the changing nature of our economy.

The two big questions are, "How do we conceptualize the economic activity of the people who are outside the goods producing sector?" and "Is our international trade situation sustainable?"

A Post-Industrial Society

We do live in a post-industrial society. The American manufacturing sector has been shrinking steadily since the 1970s, at least. General Motors and Ford are on the brink of bankruptcy. Chrysler was bought by the Germans. Almost the entire steel industry has collapsed. It is a real challenge to buy American made clothing. Even manufacturing companies (e.g. the company that makes Celestial Seasonings tea in Boulder) tend not to have a whole lot of manufacturing employees as a share of their total employment. Automation and outsourcing have conspired to devistate the ranks of American factory workers.

American factories actually produce more goods than they did in the 1950s, the peak of the manufacturing economy, and they also produce better goods, but manufacturing is a much smaller share of our total economic output.

While we often call the non-goods producing sector the "service sector," this name, which calls to mind maids and burger flippers, doesn't accurately represent the shift in our economy.

Personal services have grown as a share of employment. A decreasing percentage of people are mowing their own lawns, cutting their own hair, walking their own dogs, cooking their own food, fixing their own clothes, or taking care of their own children. We are socially uncomfortable with the notion of household servants, which we associate with aristocratic societies, and increasingly efficient ways of carrying out household chores have made it uneconomical to have someone on the family payroll to provide particular services full time in mosts cases. But, as more and more women enter the work force, and Americans have moved into first place in the world for number of hours worked per year, we need to use money to pay for personal services we once provided for ourselves.

But, the growth in the personal services sector only scratched the surface of the growing service sector. Services are increasingly indirectly tied to the economic fruits that create. What is the product that a law firm creates? And, a law firm, in turn, employs people to engage in activities even less directly related to that final outcome. We have a web page developer, a IT troubleshooter and network maintenance person, a book keeper, a billing company, a handyman, a cleaning service, and a copier repairman, all of whom come onto our premises from time to time and do some of the work that ultimately produces whatever it is that we produce.

In the big picture, of course, it is obvious that a functional economy needs to have people who structure their activities in an economically functional way, and an economy that assigned responsibility for things that go wrong to the appropriate people, but, there isn't a lot of middle ground between this highly conceptual sense of what lawyers do, and the immediately urgent situations that send people running to lawyers. We don't produce goods, we make "the system" work for people because they would be out more money if they didn't hire us. We trust that system to produce the right results when we look out for our individual clients and other lawyers do the same for theirs.

Our society has far more lawyers than it did a century ago. Clearly, this is because there is a greater need for lawyers now. But, putting your finger on precisely why that is the case is far from obvious.

Sustainable Trade

Trade Deficits

We can hardly fault the indicators we use to look at international trade, like the "trade deficit" for being conceptually wanting, when the concepts that explain how different players in our economy ad value are themselves obscure.

The phrase "trade deficit" is almost an oxymoron. Trade implies an equal exchange. Deficit implies an equal exchange. In a world where most of the players in the international trade world are sophisticated rational actors (or some reasonable approximation thereof), why would sellers consistently sell goods for less, or more, money than they are worth?

And, suppose that a "trade deficit" is a meaningful concept. Why would anyone be against it? We give other people pieces of paper called money and get really stuff called goods. Other people get our goods in exchange for us taking pieces of paper from them. When the dust settles we have more real stuff called goods, and they have more imaginary stuff called money that our banking system and government simply make up out of thin air. How cool is that? It is like getting stuff for free. If we wanted to, we could simply refuse to honor their pieces of paper going forward one day and they would be screwed.

Of course, it isn't all that simple.

Some of the money that isn't used to buy American goods is used to buy (directly, or through a series of transaction) American services, like vacations and health care and education.

Some of the money that isn't used to buy American goods is invested in the American economy, in the form of bank accounts, stocks, bonds, real estate and ownership of American privately held businesses, which in turn represent ownership claims against American economic assets. People all over the world own stakes in General Motors, the American national debt, commercial real estate and the like.

When we are in a "trade deficit" this simply means that they are getting more American services and making more financial investments in the American economy, than we are buying foreign services and making financial investments abroad.

To the extent that this happens in the investment sector, this is because domestic and foreign investors agree that on average, the United States is a better place to invest money than places outside the United States. This is a function not just of the desirable opportunties that exist in the United States for profit, it is also a function of the fact that the U.S. financial system is more fair to investors and less corrupt and uncertain legally than many foreign financial systems in countries with whom the United States trades in goods.

To the extent that this happens in the "services sector" this means that American services are on average, a better deal compared to foreign services, than American goods are compared to foreign made goods. This doesn't necessarily make sense across the board, but there is certainly an abudnance of skilled professionals in the United States that isn't found in many foreign countries with whom the U.S. trades in goods.

And, if that wasn't complex enough, there are also difficulties with determining where services and financial investments involving money provided in exchange for foeign goods is counted as being spent. For example, private college tuition spend by a child of a foreign national at a U.S. university doesn't show up in the international balance sheet as a form of foreign trade.

If our trade deficit were simply do to these kinds of accounting issues that fail to recognize the true equality of exchange, and the economy was relatively static, this would be fine. The trade deficit wouldn't be a worry. The prior U.S. trade surplus would reflect our industrial era economy, and the current trade deficit would reflect our post-industrial economy.

Complicating Factors

But, once government action is thrown in, and once longer term economic trends are considered, there is reason for worry.

Even in relatively standard economic theory, we don't expect government actors to behave as rational economic actors.

For example, the Chinese government might choose to keep the exchange rate for the dollar artificially strong vis-a-vis the yuan, even though this may not make economic sense for those involved in individual transactions, because it may desire for policy reasons to boost the part of the economy that makes goods for export, even if it means reducing the amount of foreign consumption that thos producers can receive in exchange.

Similarly, the Chinese government might choose to buy U.S. government bonds, even if they may not have the optimal investment return of available foreign investments, because consistently financing American government spending might discourage Americans from gong to war with China because it would force tax increases to pay for deficits far beyond those associated with mere military expenses.

Also, the reason that countries like China and Vietnam and Mexico have trade deficits with the U.S. is that they have comparative advantage over the U.S. in producing goods because they have low labor costs relative to the U.S.

This won't last forever. Developing countries, on average, and certainly in the case of the trade partners with whom Americans have the biggest trade deficits, are in economies that are growing faster than the American economy, not least, because they are growing increasingly productive as the modernize to catch up to U.S. levels of technology.

The ranks of the developed nations aren't closed. Japan and South Korea, for example, have gone from being poor, technologically primative societies, to being affluent and technologically advanced societies, mostly since World War II, although one can look back further than see the antecedents of these changes.

Many countries in Latin America, Eastern Europe, and Asia are rapidly modernizing, and even many of those that aren't modernizing particularly rapidly are still growing their economies, even adjusting for population growth, faster than the American economy is growing, adjusting for population growth. Modernization is a fundamentally exponential phenomena, just like compound interest. A country with a percentage growth edge over a competitor will catch up faster and faster and faster over a longer and longer and longer period of time, until it is nearly caught up with its modernized competitors.

It is almost inevitable that places like China, Vietnam, India, Indonesia, Brazil, Mexico and Romania will eventually secure standards of living similar to those in the United States. The standard of living in Mexico has already risen to the point where it outsources manufacturing calling for low cost labor to China. China's growth rate, in turn is steadily three and four times that of the U.S., often growing at high single digit or low double digit percentages each year.

While there will be laggards, in places like Africa and Burma and North Korea, sooner or later, most of the world is going to be made up of high wage, modern economies. At that point, the American economy's reliance on the economic imperialism of having goods made for it by ill paid workers in inferior conditions abroad will end. The crutch will be cast away and American's will have to pay "full price" for what it consumes, and to compete in the international marketplace based on productivity and quality alone.

This is a harsh reality to wake up to. But, we are coming to that point. We import a lot of cars into the United States, which are gaining an increasing market share, from Japan and Germany, even though neither nation is competing based on low wages for their workers anymore. Toyota is gaining market share, General Motors and Ford are losing it. Product quality is a bigger part of the reason than price competition at this point.

As prices for manufactured goods slowly rise with rising foreign wages (offset in part by increasing productivity) abroad, the workers with rising wages abroad will barely notice this, because their increased incomes will allow them to afford the increasingly expensive goods. Meanwhile, Americans will see prices for imported goods, even from historically poor countries, rise relative to their income growth.

I'm not aware of any good measurements of how much profit Americans make in international trade from the lower wages we pay abroad. The "fair trade" movement, which seeks to certify that foreign workers who provide "fair trade" goods are making better than sweatshop wages has shown by the example of the higher prices charged for "fair trade" goods that there is some benefit. But, no "fair trade" scheme seeks to insure that Third World Worker's are earning amounts comparable to those in modernized Western Europe, the United States and Japan.

Payback time is coming at home as well. Since the 1960s, large sectors of the American economy, such as labor intensive agriculture, agricultural food processing (like slaughter house work), construction, and personal services have been greatly impacted by immigration, much of its initially in violation of immigration laws. As local economies in the countries that are sending workers to the United States to fill these jobs improve, the desire to relocate to the United States from these countries will wane.

Some of this immigration will be replaced by immigration from countries that remain poor. But, geography will make the trip to the United States far more difficult than it was for immigrants from Latin America.

If Americans want this kind of cheap labor domestic economy, they will need to open up immigration for unskilled foreign workers in waves from different countries, like Africa, legally. The children of immigrants inevitably adopt American standards for themselves in compensation and the kind of work they are willing to do, because they are Americans.

If Americans don't open up the doors to low skilled labor immigration, the result will be the need to either import goods from countries will large unskilled labor forces (possible in the case of agricultural goods), or find more efficient ways to do the work (like shifting more home construction to a factory model), or change their consumption preferrences to accomodate higher prices (consuming less relative to services than they do now).

Of course, eventually, both outsourcing and cheap immigrant labor are going to fail as economic options, because eventually more and more affluent countries will chase fewer and fewer poor countries for this kind of cheap labor, and the few remaining countries will develop even faster than those that came before them as a result.

By 2100, I suspect that we will live in a world in which there are no longer any countries that can be counted as "poor" and the last of the formerly poor nations of the world will have endured and put behind it the sweatshop phase of economic development.

Americans may very well still not be making shoes or TVs in 2100, and if we are not it will not be a crisis.

This doesn't even necessarily mean the end of the sweatshop or of a cheap labor economy. It may simply mean that the economy goes from one in which the cost of labor is primarily an issue of geography, to a global labor market where the unskilled have to work very cheap regardless of nationality, while the skilled are paid lavishly regardless of where they are born. Sweatshops may return to our backyards, moral concerns shrugged off out of a desire to maintain our standard of living. It wouldn't be the first time in world history that the poor and de facto slaves lived shoulder to shoulder with the ruling class in the same neighborhood. But, given the widespread political support for social welfare programs and leveling measures like the minimum wage, I don't think that we will see that kind of development.

Bottom line: We shouldn't be concerned because our goods are often made abroad. We should be concerned that we rely on cheap labor to maintain our standard of living, despite the fact that the cheap labor won't last forever.

02 February 2007

Teen Driving Rules Save Lives

There is strong evidence that a law restricting teen driver's licenses that went into effect on July 1, 2005 has reduced teen driving fatalities by about a third. This is three teen lives saved every month in the state.

The lives saved (and this doesn't even count the lives of non-teenagers killed in accidents involving teenagers) make the inconvenience teenage drivers face as a result of new graduated driver's license restrictions worth it.

Not Surprising Given The Data

The evidence is overwhelming that very young and very old drivers are at much higher risk of being involved in fatality accidents than other drivers.

Driver's aged 16-22 and older than 76 years old have at least twice the average driver's risk of autombile accident fatalities (it is more than triple the average risk for drivers age 19 and aged 80 or older). The risk of being in a fatality accident is elevated between 50% and 100% for drivers aged 23-25 and aged 73-75. Drivers aged 30 to 67 have a risk 5% to 25% lower than average.

Male drivers are also much more of a threat than female drivers.

Women aged 16-17 and aged 79 or older have double the average risk of automobile accident fatalities (women age 81 and older have at least triple the risk). Women aged 18-21 and aged 74-78 are at a 50%-100% increased risk (the data has a couple of outliers, 20 year old women are a little safer than their 18-21 peers, while age 77 is a little more dangerous than their 74-78 year old peers). Women aged 23-70 are 5% to about 55% safer than average.

Men aged 16-25 and aged 76 or older have double the average risk of automobile accident fatalities (men aged 16-22 and aged 80 and older have at least triple the risk; ). Men aged 26 and aged 73-75 are at a 50%-100% increased risk. Men aged are 5% to about safer than average. Men 30-67 tend to have an average risk of automobile accident fatalties although the data jumps around quite about around the average.

The Governor's Proposal

Governor Ritter has proposed a new law that would ban cell phone use by drivers under the age of eighteen. I support that too. I've seen the consequences when a teen driver in Jefferson County mowed down two young women in a crosswalk, driving through a red light, probably because he was distracted by a cell phone in car. Accidents like that don't need to be repeated, and avoiding even a small number of accidents like that is worth it.