29 July 2012

Bible Park Prophet

I am not going to alter the Wash Park Prophet "brand" that I have used to blog here under for the last seven years. But, in the interest of transparency, I must report that I no longer living the neighborhood of Denver's beloved Washington Park that I have known and loved for more than a decade. Instead, I now live in the neighborhood of Denver's James A. Bible Park, commonly known as "Bible Park."

Oh, the irony! Am I now a godless biblical prophet? I have not yet grown accustomed to the suburban-style digs, but all things come with time.

26 July 2012

European v. American Party Politics

Most European countries, mostly due to their proportional representation electoral systems and/or strong regional political differentiation, have more viable political parties each at the national level than the United States, which has just two viable national political parties.

Overall, in general and on average, European countries have a political center (median set of policy views) that is discernably to the left of the American political center. In substantial part this is because they have wider electoral participation (ca. 90%+ v. ca. 50% eligible voter turnout in top of the ticket elections), in part because their electoral system makes everyone's vote count much more palpably, and also because they did not have strong franchise limiting factions in the post-WWII era when the franchises were set. But, they also lean left for historical reasons: the leveling effects of World War II, the Nazi movement's defeat's effect in discrediting the political far right for a while, and the sense of shared collective purpose that followed from the need to rebuild after World War II.

But, the multiparty systems of Europe also mean that political extremists, such as Communists (as opposed to Center-Left Socialists and the Labor Party), Fascists or Neo-fascists (as opposed to Center-Right Christian Democrats and the British Conservative Party).

Europe also has more separatist parties. This is due to stronger and more ancient regional identities, often with their own languages, compared to that of the United States. It is also probably due in part to a lack of federal institutions that can sufficiently satisfy separatist urges.

The supermajoritarian features of the American living constitution (e.g., separation of powers, judicial review, Senate filibusters, bicameralism, staggered Senate elections, federalism, Senatorial privilege in judicial appointments), also heightens the political power of politicians in the muddy middle relative to political extremists, in a way not nearly so true in strongly majoritarian unitary parliamentary systems. The path to real power in American politics is ultimately through moderation and not extremism, although there are still fewer moderate elected officials than there are moderate members of the enfranchised population. More accurately, the path to political power in the United States is through moderate partisanship as opposed to extreme partisanship.

A very weak tradition of direct action in American politics (e.g. general strikes, insurgencies, assassination, huge street protests) relative to our European peers also weakens the power of extremists in our political system. Then again, this may put cause and effect backward, the political weakness of extremists may be an important source of a weak tradition of direct action in American politics.

The not quite consensus in academic political science and on the political left is that a European multiparty system created by European style electoral and constitutional institutions would be preferrable to the American political system. But, would the cultural price that American democracy would pay in legitimatizing a much wider range of ideological extremism really be worth having a set of politicians who more precisely and unfettered by political party history match the views of the voting public at large?

There is, of course, middle ground. One could ease up the constraints of our election laws in a way that naturally favors three or four political parties, rather than just two. This would open the door to less extremism than the kind of political systems of Europe that naturallly gravite towards five or six political parties, let alone an Israeli style nearly pure proportional representation system that allow a panopoly of tiny parties to flourish. But, whether one expands the number of parties that the electoral system can naturally support from two to four or to twenty, the trade off between legitimatizing political extremism and providing more choice to voters, represents two sides of the same coin. They are almost inextricably intertwined with each other.

Navy's Cargo Helicopter Drone Works

The U.S. Navy (in support of the Marine Corps) has deployed an unmanned cargo helicopter called K-MAX in Afghanistan where it has worked well. Since they helicopter doesn't put flight crews at risk, it can operate in weather conditions where the military wouldn't ordinarily have risked flying for a mere cargo mission and it has had little downtime.

Also, unlike many military technologies, Lockheed's K-MAX helicopter has obvious cross-over potential in civilian applications.

Lockheed has also successfully tested a system that uses lasers to wirelessly recharge the two hour life batteries on a small unarmed electrically powered UAV with a three pound payload while it is flying. In a flight test, Lockheed was able to keep the drone aloft for 48 hours, in admittedly optimal indoor conditions.

The U.S. Navy is also at an advanced state in using drone helicopters (the Fire Scout) in roles similar to a (sometimes) armed reconnaisance helicopter.

And, the Navy is in an advanced prototype stage of the development of a carrier based drone stealth fighter with both Boeing and Northrop Grumman having advanced prototypes in contention for a weapons system that is supposed to enter service in the U.S. Navy six years from now, in 2018. Adapting such a drone to the less specialized requirements of deployment from ordinary runaways for the Air Force would presumably be a trivial modification of the technology.

One of the primary ethical issues that is emerging as armed drones develop is serious skepticism about the extent to which their strikes are causing civilian casualties in places like the CIA prosecuted drone strikes in Northern Pakistan intended to target Taliban forces that have taken refuge there from their former base of operations in Afghanistan.

Meanwhile, the U.S. military's top of the line (and extraordinarily expensive) manned Air Force fighter, the F-22, has been having serious problems with a system unique to human piloted craft, its oxygen systems, that have cost several planes and some pilot lives.

23 July 2012

Life Happens

I expect my blogging volume to be far below average over the next two or three months, at least, due to a variety of other responsibilities that have come up.  But, I have not abandoned this blog and will post from time to time when I do have the opportunity to do so (finding something to write about is rarely a problem).

19 July 2012

There Is A Shortage Of Ideas, Not Money

The strongest argument that the biggest current barrier to new capital investment is a shortage of good ideas, and not a shortage of investment capital, is the revealed preference of "technology" companies like Google, Microsoft and Apple that have huge stockpiles of cash, and effectively zero percent interest rates at a time of very low inflation, to horde that cash rather than investing it in new technology projects.
[Discussion moderator] ADAM LASHINSKY: You have $50 billion at Google, why don’t you spend it on doing more in tech, or are you out of ideas? . . .

ERIC SCHMIDT [of Google]: What you discover in running these companies is that there are limits that are not cash. There are limits of recruiting, limits of real estate, regulatory limits as Peter points out. There are many, many such limits. And anything that we can do to reduce those limits is a good idea.

[Discussion participant] PETER THIEL: But, then the intellectually honest thing to do would be to say that Google is no longer a technology company, that it’s basically ‑‑ it’s a search engine. The search technology was developed a decade ago. It’s a bet that there will be no one else who will come up with a better search technology. So, you invest in Google, because you’re betting against technological innovation in search. And it’s like a bank that generates enormous cash flows every year, but you can’t issue a dividend, because the day you take that $30 billion and send it back to people you’re admitting that you’re no longer a technology company. That’s why Microsoft can’t return its money. That’s why all these companies are building up hordes of cash, because they don’t know what to do with it, but they don’t want to admit they’re no longer tech companies. . . .

ERIC SCHMIDT: So, the brief rebuttal is, Chrome is now the number one browser in the world.
One exception to the rule of lack of innovation that was identified in the discussion was Amazon.com, which it was noted, is less profitable than the companies that are hording their cash.

Google has tens of thousands of the smartest people in the world working for it. Microsoft and Apple do too. If those companies don't have the collective brainpower to come up with capital investment that make economic sense in a time of zero percent interest rates, when they have large hordes of cash that they don't need any banker's permission to spend, how can we expect less well positioned economic players to be making new capital investments?

Notably, commercial banks also have far more of a capacity to lend money profitably at low interest rates than they are utilizing. There are far more ways to explain their activity than there are to explain tech companies that horde cash. But, the behavior of commercial banks is certainly consistent with the theory that banks are lending money to support capital investments because would be borrowers have failed to identify them. And, I've seen blog posts from the Federal Reserve Bank of Atlanta's economist's blog that likewise make the point that the banks it gathers data from in its Federal Reserve district aren't making as many business loans in substantial part because businesses aren't coming to the banks asking to borrow money for business investment.

While Schmidt reiterates a number of potential non-cash limits to business investment stated by another participant in the discussion, "limits of recruiting, limits of real estate, regulatory limits" suffice it to say that limits of real estate can almost always be solved with enough cash. Recruiting and regulatory limits are far more serious obstacles.

This is pretty depressing.

There are a number of quite well understood tax policy and fiscal policy options for improving the availability of money to firms that want to make capital investments in ways that are consistent with a belief by the firms using the money that the capital investments will be profitable, at least in the medium to long term. A shortage of money to invest is a problem that government can solve.

The problems associated with a shortage of ideas of ways to make profitable capital investments is muddier territory. There are policies that can address these problems as well. But, economic policy makers have become wedded to the notion that economic growth policy in the developed world begins and ends with the operation of the capital markets.  Other options have gotten dusty from sitting on the shelf and lack the kind of broad based political and academic support that they need to be implemented. For example, there are several measures one can take to address recruiting limitations, which either have a sound theoretical basis in economics and logic, or strong empirical support, or both. You can:

* Make it easier for highly skilled people to immigrate.  Free trade in labor markets is the last bastion of free market economics that economic policy makers in the United States have failed to adopt.

* You can weaken the legal effectiveness of non-competition contracts. This has been empirically identified as a key component of greater tech company competitiveness in California relative to Massachusetts.

* You can make a bigger and more effective public investment in education.

Similarly, while the universe of potential regulatory barriers to technological information are conceivably so many that they can't be numbered.  But, a company like Google isn't very concerned, for example, about the Clean Air Act regulations that regulation opponents have consistently identified as the most costly of recent new federal regulations.  From the perspective of an Internet technology company look Google, some of the principal regulatory barriers to innovation are:

* Excessively protective copyright, patent and trade secret laws that infer that can create "gridlock" in the process of trying to combine old ideas in new and profitable ways, or to better implement old ideas.  Many of Google's potentially most profitable concepts that it has developed to date are limited materially by the way that copyright laws and weak policing of new patents have shrunk the public domain and expanded the breadth of intellectual property protection via doctrines like the protection of "derivative works" under copyright law.

* Privacy protections and confidentiality rules that prohibit useful data from being shared at a low cost without considerable advanced planning by the sources that collect the data.  Securities laws also impair dissemination of "insider information" and create a risk that for the sharing of ideas for addressing corporate governance by a select subset of investors could be prohibited as a form of market manipulation of as some form of "civil conspiracy."

* Securities laws requiring costly disclosures before public offerings of investment opportunities can be advertised and offered to the general public that prevent companies like Google from getting into the investment brokering business for small capital firms where disclosure costs are material relative to the amount of funds that could be raised. 

Even more depressing, of course, is the possibility that a lack of ideas is due not to governmental barriers to innovation but due to "the end of science," i.e. to the fact that we are close to mastering the a whole host of scientific disciplines and hence have fewer innovations that can arise from new scientific discoveries.  To the extent that this is the case there are fundamental reasons, indifferent to government policies or business policies that we can expect greatly diminished long term economic growth, i.e. "the Great Stagnation."

11 July 2012

Looking for Islamic Civil Society References

Any references my readers could point me to that discuss governance practices, ideally more than just theoretically, in business and NGOs (including mosques and political movements), in majority Muslim countries (online or on paper) would be greatly appreciated.

10 July 2012

Around and About

Colorado's intense heat wave and dry spell has abated a bit, although we are still almost three inches (about 40%) below normal for rainfall for the year.

The construction industry seems to have finally recovered in Denver.  Cranes, not as many as at the peak, but plenty, have popped up across the city.  St. Joseph's Hospital has a major new project underway in Uptown, Union Station's ongoing redesign as a FasTracks hub has heavy machinery moving, and the new RTD West line is set to open in April.  The new appellate court building and Colorado attorney general's office is going up.  The new Colorado History Muesem, Denver jail, Denver criminal court house, and Denver zoo renovations are just coming on line.  The Fitzsimmons Medical Complex continues to grow like kudzoo.  National Jewish Hospital has finished the demolition of the city block sized former Gove School site and is now working on building its own improvements there.  The Beyers School (formerly Denver School of the Arts) complex renovations are about to take start.  Street repairs are in progress everywhere.  The reconstruction of the Valley Highway part of I-25 is moving forward after long and hard efforts by Diana DeGette and the Colorado delegation generally to make it happen.  Washington Park's trail system is being tweaked.  The Denver Convention Center has managed to fence in a little bit of its green space to serve as a locale for catered events.  Mayor Hancock has thwarted the efforts of "Occupy Denver" in part by doing work at Civic Center.  All of these projects from the public and non-profit sectors are providing a lot of what is buoying the construction economy in Denver, especially at the scale of big projects.

There are private sector projects too, of course.  A huge new luxury apartment building with ground floor shops is going up at the corner of University and Evans immediately across the street from the University of Denver campus.  A new retail complex next to the Hilton Gardens hotel in Glendale is going up.  A new Target location is going up near Tamarac square replacing a dead mall and movie theater.  I have clients working on a new downtown Denver hotel, a new apartment complex in the North suburbs of Denver, and on a smaller scale, a few new apartments in one of Denver's old urban residential neighborhoods.  The Denver Post reports that building permit activity is up.  Here and there you can see union picket lines pronouncing shame on this or that building contracting company.

One by one vacant retail spaces are filling up in the never ending process of creative destruction.  The hole left by the two Blockbuster franchises that once sat at 6th and Grant have been replaced by a Sushi restaurant, Cosmos Pizza (one of the best new pizza producers in town on an old school model), and a frozen yogurt shop.  A failed thrift shop near the Esquire movie theater is being replaced by an independent video store, a necessity given that there is now only one, ratty, ill patronized Blockbluster store in the entire City and County and kiosks, Netflix, the Denver Public Library, and Hulu all have flawed selections of movies.  My neighborhood as seen Cafe/Bar succeed where a Vietnamese restaurant and used book store failed, a new high end Italian restaurant (La Scalia) where there was once a weekly dinner assembly storefront, a new breakfast place and local gym in a the real estate of yet another dead Blockbuster, and a Larkburger franchise.  After a gloomy moment or two at the Cherry Creek Mall with many TBA storefronts, the holes in the mall are starting to fill in with new shops and other shops are spilling out into Cherry Creek North which against all logic and reason given that most of the botiques sell expensive, useless stuff, the parking is only so so, and the space is almost too big to be walkable, is somehow thriving - my favorite coffee shop, Avianos, managed to find a new home there as well after being booted out of the Beauvillon on Broadway by an insane common space owner who foreclosed when construction defects maimed its financial viability.

02 July 2012

Texas Republicans Opposed To Critical Thinking

The following is part of the duly adopted 2012 party platform of the Republican Party in Texas.
We oppose the teaching of Higher Order Thinking Skills (HOTS) (values clarification), critical thinking skills and similar programs that are simply a relabeling of Outcome-Based Education (OBE) (mastery learning) which focus on behavior modification and have the purpose of challenging the student’s fixed beliefs and undermining parental authority.
Elsewhere in the document, the platform stipulates that “[e]very Republican is responsible for implementing this platform.”

From the Talking Points Memo blog.

01 July 2012

The Road To Truth

All truth passes through three stages.
First, it is ridiculed.
Second, it is violently opposed.  
Third, it is accepted as being self-evident.
- attributed, probably inaccurately, to Arthur Schopenhauer (1788-1860) (there are no published citations to him as a source for this quote prior to 1951).

Other attributions are to Dr. J. Marion Sims, Richmond & Louisville Medical Journal, Vol. 7, p. 290 (1868) (similar but not verbatim) and to Sir James Mackenzie (1853-1925) in The Beloved Physician, by R. M. Wilson, John Murray, London.

All sources would reflect the lessons learned by the direct inheritors of (but not the participants in) the Age of Englightenment.

The saying may have been a source the concept that was later elaborated into the "five stage of grief".