Governments are not good at managing complexity.

The driving logic for smaller government comes down to the difficulty in managing complexity.  Business tends to focus along narrow lines and once there is no synergy between product A and service B it will divest part of the company or split the enterprise.  Alternatively the business will outsource part of its activities to another group.  Companies that get too complex to manage tend to fail.  But government services rarely fail; they simply give poorer service and raise taxes to their captive constituency.  And when they give away a service private companies can’t compete.

Our Federal government and large state governments have gotten so large and complex that they are simply incapable of managing the complexity.  No corporate CEO could manage it either, and I have far more faith in our top CEOs than I do with our professional politicians dealing with this complexity.  The CEO loves simplicity; the politician tends towards trying to do everything for everyone.

And government can rarely differentiate between what people say they want and what they are really are willing to pay for since most of the prices for their services have no relationship to the cost of providing the service.  What are the odds of a government-run airline deciding that customers were not really willing to pay for meals on their flights or the added costs of assigned seating like Southwest Airlines did.  This fundamental change never would have withstood the onslaught on the media and unhappy customers complaining about the lack of the meals they were “entitled” to.

The answer is to stop government providing services that can be found in the private sector – this means education, and this means health care.  It does not include national defense, police, immigration and border patrol.  Government can still subsidize some education (although this leads to other distortions) but removes the government from running these complex activities.  Our government just isn’t capable of handling the complexity just like the Soviet government was never built to make the millions of economic decisions that needed to be made in the old USSR.

Posted via email from John's posterous

How good are we at predicting tomorow's weather?

The same climate models that are being “fine-tuned” to predict future global temperatures predicted that the tsunami waves today would hit the Eastern Hawaiian shores at 4:05PM (Eastern time).  But of course the first wave did not hit the shore until 5:00PM (55 minutes late).  And these models did not predict waves that were only three feet high.

Just an example of the difficulty in predicting the future via computer models.  Little mistakes can get magnified after millions of iterations and what is a relatively accurate predition for the next 15 minutes get quite inaccurate eight hours later and not very credible at all ten years from now.

So when you start thinking about the Al Gore’s climate predictions take them with a grain of salt.  Check how accurate they are at predicting tomorrow’s weather first.

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Snowiest month in city’s history.

Article.

I always like to think in opposites when I am looking at a problem.  I am not convinced that “Global Warming” is nearly the problem that some make it out to be – but there is a chance.  So when I was talking with friends not long ago I asked the question “OK – let’s say that Global Warming is as severe as Al Gore suggests – can you see any benefits to global warming?".  But my global-warming-worried friends could not come up with a single benefit of global warming.

Well here it is.  Perhaps with a bit of global warming, New York City might reduce its spending on snow removal. 

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Teachers go to court!

Of course the outcome of this dispute was destined to end up in court.  If we had a free labor market when the buyer of the services (the school district) and the seller of the services (the teachers) could not reach an agreement they would go their own ways.  But this is more like a hostage situation.

The union position is usually “we need a structured labor agreement” (that must be negotiated by a huge legal team) and describes how long each teacher’s morning and afternoon breaks, what union dues each union member  will pay, and that each teacher will receive 40% more for getting a Masters degree.  No one can point to the better education the students will receive now that most of the teachers  have a Masters degree, but since we can’t use any results-based criteria, we need something to show that our teachers are “trying”.

Teaching is important and I have great respect for teachers.  The problem is that when we overlay a union, common sense disappears.

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A school superintendent demonstrates how to manage a public employee union.

Henry Blodget’s comments on the subject of firing teachers.

This is the type of action we need with far more public employee unions.

Now there is plenty to question in this article including the assertion that the teachers average $72-$78k salaries.  This seems quite high and if it is an average there is one number that represents the average salary.  Are benefits included this figure?  Usually it is the benefits package (pensions, health care) that make the total compensation for government employees so much more than those in the private sector.

But most importantly this public employee union has added such inflexibility to the process that a reasonable negotiation was likely never possible.  The unions start with the premise that they will never take less, they will never do more for the same amount and end up insulated from the pressures of competition that private sector employees face.

The problem is that most politicians won’t or can’t fire their entire work forces like was done here or when Ronald Reagan fired all the air traffic controllers that tried to strike.

Now in cash-strapped California a judge has decided that the governor had not authority to furlough state workers and they must receive backpay for their forced days off.  And the teacher’s union has formed a new committee called “Taxpayers for Jobs and Against Corporate Handouts”.  A sure way to drive company headquarters out of California and into more reasonable business climates.  The entire California economy will be hurt by this kind of concept.

Public employee unions should be abolished, government salaries and benefits should be adjusted to that of the private sector and we need to reduce the role of government because they can’t get much done at a reasonable cost.

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Why isn’t this story front page news?

Article

The woman who accused the Duke lacrosse players of rape four years ago was arrested for attempted murder.  She ruined those players lives and got off scot free.   But why was the media so ready to pounce on these young players but not her – something is totally out of whack here.

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We do not need congress as our lending committee

Congress is now hammering Ben Bernanke because some companies are having difficulty borrowing.  The false premise here is that all borrowing is good and that loans that should be made are not getting made.  Look how that logic worked out in the housing market and student loan market.

 

Banks love to make loans where they get repaid.  But they have to make an awful lot of good loans to make up for one bad one.

 

We do not need congress as our lending committee; they are horrible at this job.  Let the banks make loans to those companies where they expect to get paid back and have congress stop micro-managing the economy.

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Thirty years ago today!

Thirty years ago I think I saw the Americans beat the USSR in Hockey.   But I can’t tell you where I was or with whom I was with.   I can give you all the details (location, fiends, food) of the Jan 24, 1982 Super bowl when the 49ers beat the Cincinnati Bengals.  I can tell you about the friends I was with at (Max’s in Salinas) but I can’t quite put my arms around that date 30 years ago when I know I saw the American’s beat the Russians.  But I was there (despite the lack of detail)!  Prove me wrong.

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Evil banks have bamboozled us but not the US government!

Americans owe about $775 billion on their credit cards according to CBS News (Feb 22, 2010).  This is a big problem and getting plenty of attention from Obama and congress.  “America’s addition to plastic has got to change.”

But no mention of the government-assisted college student loans that are almost as big a liability at $720 billion.  And about 40% of the student debt is in the equivalent of “foreclosure” – in other words not being paid back as promised.  The evil banks have bamboozled us but the US government has “eased” us into a life of addictive college “financial aid”.

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Real action in reducing California's budge woes

California is facing big budget deficits.  One idea for reducing their deficit might be to remove the Ethnomusicology ("the study of social and cultural aspects of music and dance in local and global contexts.") degree from their curriculum.  Here are the universitys in California at which one can obtain this vaulted (but not very useful) degree:

• University of California, Berkeley
• University of California, Davis
• University of California, Los Angeles
• University of California, Riverside
• University of California, Santa Barbara
• University of California, Santa Cruz

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The Roseburg Blast

Just got done moving my father from his home in Conyers, Georgia to a nearby senior apartment soon after his 85^th birthday.  He told me the story of how he just missed the “Roseburg Blast”.  He was a dynamite salesman (yes!) for Hercules Powder Company and was traveling in the Roseburg area that day.  He tried to get a motel room in Roseburg the night before the blast but could not find a vacancy.  So instead he drove the rest of the way to our home in Eugene.

Within about a year Hercules had bought the offending company Pacific Powder Company and merged into the Hercules operation.

Here is the Wikipedia version of what happened….

“The Roseburg Blast

On 7 August 1959, at approximately 1:00 a.m., the Gerretsen Building Supply Company^[7] caught fire. Firefighters soon arrived at the building, located near Oak and Pine street, to extinguish the fire. Earlier in the evening, a truck driver for the Pacific Powder Company, George Rutherford, had parked his explosives truck in front of the building, a fact which went unnoticed until shortly before the truck exploded, destroying buildings in an eight-block radius and severely damaging 30 more blocks.^[8]

The truck was loaded with two tons of dynamite and four-and-a-half tons of the blasting agent nitro carbo nitrate. Rutherford had parked the truck after arranging his delivery for the following morning, despite warnings given to the Pacific Powder Company two days earlier not to leave such trucks unattended or park them in "congested areas." Fourteen people died in the blast and fire and 125 were injured. Damage was estimated at ten to twelve million dollars; the Powder company was eventually made to pay $1.2 million in civil damages, but was acquitted of criminal wrongdoing.^[8]

Roseburg's downtown was rebuilt, primarily by businesses using money collected from insurance claims. The city built a new bridge over the South Umpqua River on parcels affected by the disaster.^[8] Since the incident, it is commonly referred to as the "Roseburg Blast" or simply "The Blast." In 2005, SOPTV produced a documentary examining the Blast and the experiences of those who were involved or witnessed it, entitled The Roseburg Blast: A Catastrophe and Its Heroes.^[9]”

 

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Excellent NY Times article Future Bailouts of America

Excellent NY Times article Future Bailouts of America.

The Federal government has gotten in the habit of making guarantee after guarantee (some explicit and some implied) without putting enough money aside for those inevitable rainy days.  From hurricane insurance that encourages homes to be built where they will soon be blown down, to FDIC deposit insurance where a token insurance premium is collected from the participating banks, insurance is easy to guarantee but painful to pay off.

But the implied guarantees are the worst.  The Federal government had an implied guarantee (although you would be hard pressed to find any wording in any legislation that gave a hint of these guarantees) for Fannie Mae and Freddie Mac and look what that eventually cost Americans.

But with many US states approaching insolvency we have another big storm approaching.  We have no bankruptcy provisions for a state to enter bankruptcy, no way to unwind the mess and no mechanism for a conservator or trustee to manage the state out of its mess.  All we have is an implied federal guarantee because California and New York are arguably “too big to fail”.  We need to work on this problem now so that the first state to go does not have to be rescued in a hasty plan written over a weekend.

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Wall Street Journal ratchets up the requirement to subscribe

Just went to Wall Street Journal online Opinion page.  The first three pieces I went to required me to subscribe in order to read.  Won’t  be going back any time soon.  I have no problem with them charging for their services and once I can’t read a far range of opinions without reading them I might even pay.  But in the meantime I think they are going to struggle.

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Greece GDP

Turns out that the Greece GDP is only about 2.6% of the Euro total
(per Wikipedia) - not the 6% that I had heard and quoted. But it is
having
a big negative impact on the euro even though it is a small country.

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A cowboy before St. Peter

A cowboy appeared before St. Peter at the Pearly Gates. 'Have you
ever done anything of particular merit?' St. Peter asked.

'Well, I can think of one thing,' the cowboy offered.

'On a trip to the Black Hills out in South Dakota , I came upon a
gang of bikers who were threatening a young woman. I directed them to
leave her alone, but they wouldn't listen. So, I approached the
largest and most tattooed biker and smacked him in the face, kicked
his bike over, ripped out his nose ring, and threw it on the ground.
I yelled, 'Now, back off or I'll kick the crap out of all of you!'

St. Peter was impressed, 'When did this happen?'

'Couple of minutes ago.'

source - email received from a friend

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Thomas Sowell’s new book "Intellectuals and Society"

Thomas Sowell’s new book "Intellectuals and Society" is a very good read.

One of the points Sowell makes is how the left somehow got away with
changing the description of the Fascist and National Socialist (Nazi)
parties from World War II from a label of “totalitarian left” to
“totalitarian right” without much debate. He describes how they are
much closer to each other than the term “far left” and “far right”
would suggest. Both the totalitarian Communist parties of the USSR
and China believed that a few smart bureaucrats in the central
government could make much better choices for the masses than the
people could make for themselves. How did the left get away with this
linguistic ploy?

Sowell argues that totalitarian governments [communist (Cuba & North
Korea), socialist , military dictatorships (Franco’s Spain),
theocratic (Iran)] always end up confiscating property from one group
and giving it to another. These totalitarians also have no qualms
about suppressing freedom of speech nor managing dissidents via murder
and execution.

How much totalitarian management do you want in your government?

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Greece versus California bailouts

Greece represents about 6% of the European GDP. California represents
about 13% of US GDP. The Europeans look like they are bailing out
Greece as the southern European countries are bringing down the value
of the euro. But what is the US Government doing about California,
New York, Illinois, Arizona and Virginia? We need to start now on
state bankruptcy and conservatorship laws that allow an orderly
process to run these governments once they are insolvent. If we wait
until the last minute it will be a poorly thought out bailout.

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An email from a friend

AN ACTUAL CRAIG'S LIST PERSONALS AD

To the Guy Who Tried to Mug Me in Downtown  Savannah  night before last.

Date: 2009-05-27, 1 :43 a.m.  E.S.T.

I was the guy wearing the black Burberry jacket that you demanded that I hand over, shortly after you pulled the knife on me and my girlfriend, threatening our lives. You also asked for my girlfriend's purse and earrings. I can only hope that you somehow come across this rather important message.

 First, I'd like to apologize for your embarrassment; I didn't expect you to actually crap in your pants when I drew my pistol after you took my jacket.. The even ing was not that cold, and I was wearing the jacket for a reason.. My girlfriend had just bought me that Kimber Model 1911 .45 ACP pistol for my birthday, and we had picked up a shoulder holster for it that very evening. Obviously you agree that it is a very intimidating weapon when pointed at your head ... isn't it?!

 I know it probably wasn't fun walking back to wherever you'd come from with that brown sludge in your pants. I'm sure it was even worse walking bare-footed since I made you leave your shoes, cell phone, and wallet with me. [That prevented you from calling or running to your buddies to come help mug us again].

 After I called your mother or "Momma" as you had her listed in your cell, I explained the entire episode of what you'd done. Then I went and filled up my gas tank as well as those of four other people in the gas station, -- on your credit card. The guy with the big motor home took 150 gallons and was extremely grateful!

 I gave your shoes to a homeless guy outside Vinnie Van Go Go's, along with all the cash in your wallet. [That made his day!]

 I then threw your wallet into the big pink "pimp mobile" that was parked at the curb .... after I broke the windshield and side window and keyed the entire driver's side of the car.

 Later, I called a bunch of phone sex numbers from your cell phone. Ma Bell just now shut down the line, although I only used the phone for a little over a day now, so what 's going on with that? Earlier, I managed to get in two threatening phone calls to the DA's office and one to the FBI, while mentioning President Obama as my possible target.

 The FBI guy seemed really intense and we had a nice long chat (I guess while he traced your number etc.).

  ;In a way, perhaps I should apologize for not killing you ... but I feel this type of retribution is a far more appropriate punishment for your threatened crime. I wish you well as you try to sort through some of these rather immediate pressing issues, and can only hope that you have the opportunity to reflect upon, and perhaps reconsider, the career path you've chosen to pursue in life.. Remember, next time you might not be so lucky.Have a good day!

Thoughtfully yours,

Alex

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