Lies, Damn Lies, and Invented Metrics

Ever since the debate about the President’s stimulus package began, I’ve been bugged by one phrase he and his team keep using. They keep referring to the number of jobs “added or saved” that will result from passing the stimulus. I understand that there are departments in the federal government that track employment numbers, unemployment numbers, hiring numbers, and more. I can see how you can estimate the number of jobs added. I’ve never understood how you can track the number of jobs saved.

The implication here is that these are jobs that would have been lost had the stimulus (or some other program the President is advocating) been blocked. How exactly do you measure that? When I watch sports, I often find myself playing the “what if” game. What if the buzzer beater doesn’t go in? What if that last pitch had been called strike three? What if the officials had called holding on that touchdown play? But, I catch myself because you can’t predict what would have happened. But, this is exactly what the Obama White House is trying to do.

The administration is trying to convince you that they know how bad it would have been and how much better it is now because of their actions. I’ve come to the conclusion that this is nothing more than smoke and mirrors. This is a complete dodge. More knowledgeable men than I have realized the same thing (and much quicker than I did). Here’s Tony Fratto at CNBC:

Here’s an important note to my friends in the news media: the White House has absolutely no earthly clue how many job losses have been prevented because of the stimulus bill. None.

And later in the same article:

There is only one necessary data point to make the “jobs-saved” claim: an accurate measure of expected employment levels in the future. That baseline data is critical to measure what the employment level would be in the absence of the stimulus. Unfortunately for the White House, they cannot possibly know that measurement within any degree of confidence — and they know it.

This whole bait-and-switch is being done to make the stimulus look like a success. It’s a nonsensical statement that’s meant to make the employment numbers look good no matter what. With this formulation, there’s no way to lose! The truth is that unemployment is rising. True, it may be slowing, but it’s still rising. In fact, it’s far worse than the Obama administration ever planned.

This graph (with a description at Innocent Bystanders) explains it all:

stimulus-vs-unemployment-may-corrected

The unemployment rate is far worse than the Obama administration said it would be without the stimulus. Hey, guys, how about we give all that money back and just live with the unemployment rate as is? At least, then, I wouldn’t be worried about the impending inflation problem.

Inflation? Yep, it’s coming. Here’s a quote from Arthur Laffer writing at the Wall Street Journal Online:

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

Now, fortunately, I didn’t have to deal with finding a job or financing a mortgage in the 1970s, but I know enough to know that it was very bad. It was a cycle of inflation and rising interest rates that kept the economy painfully flat for quite a while. I’m not all that interested in experiencing what my parents did. Of course, now I can document the misery minute-by-minute on the Internet and blog about it here. Hurray.

Counterintuitive

Some aspects of the real world are counterintuitive. By that, I mean things that seem like they should do one thing and then do another. There’s the idea of turning into a skid or large planes staying in the air or how bumblebees fly. These are counterintuitive in observation.

When someone does something counterintuitive, you have to conclude that they are either very smart and have recognized a relationship of which you are unaware or they are rather clueless and have made a bad decision.

President Obama has yet to display any great depth of knowledge about history, economics, or foreign policy. I am not saying that I’m smarter than he is, but he certainly hasn’t convinced me that he’s far smarter than I am. So, it comes to pass that his actions seem counterintuitive to me and, additionally, nobody has been able to explain what it is that I’m missing such that he’s justified in his decisions. In fact, all the evidence points to him either making bad decisions or making decisions for reasons other than what he’s stated. I’ll be generous and just assume he’s performing poorly rather than suggesting he’s deceptive. Although, I suppose that wouldn’t be unusual for a politician.

Next on today’s list of evidence is his effort to impose higher taxes on the foreign profits of US companies. By Obama’s argument, this would prevent companies from sending jobs overseas. In fact, many CEOs are complaining that it would make more sense for companies to move their entire operations overseas, instead.

This Bloomberg article by Ryan J. Donmoyer gives the details. I’ve never been a fan of Steve Ballmer, CEO of Microsoft, but he is in a position that requires he make a profit for his shareholders. Here’s his take:

“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

John Thompson, the Chairman of Symantec Corp. summarizes exactly why companies would want to flee the US.

Thompson called the Obama proposals “counterintuitive” to the administration’s other stated goals of fostering an innovation-oriented economy.

“It is a little bit ironic that most of our most significant trading partners and partners globally have taken the tack that they’ll reduce corporate tax rates to stimulate economic growth and not raise corporate tax rates,” Thompson said.

Once again, it is impossible to tax yourself into prosperity. It’s more than ironic, it’s stupid. I fear that this is an initiative driven by talking points from the left that have not been critically evaluated. Companies will not stand around and have their profits confiscated without doing something to adapt. It’s the unexpected adaptation that will hurt the economy in the long run.

We are the Better Choice

For many issues, there are those who will start the discussion with, “Why is America better than any other country/culture/organization to manage this?” When we went to Iraq, it was argued that the rest of the world didn’t support us, so we should not do it. When we discuss global warming, it is argued that the world has decided we are the worst carbon producers so we should abide by their decision that we decrease our output. When we discuss the morality of our law, it is argued that international law is more sophisticated and nuanced, so we should take our cues from the international “consensus”. 

Needless to say, I will almost never agree with the idea that our culture or way of life is morally equivalent to any other. This is, by far, the most productive, most freedom-loving, and most altruistic nation this planet has ever seen. I am a firm and proud believer in the idea of American Exceptionalism.

This is some grand stage-setting to make a case in point. One of the many issues that has been driven by the mantra of, “Why should America be in charge?” is the management of the Internet naming authority

The IANA, the Internet Assigned Numbers Authority, is the organization responsible for managing top-level domains. Top-level domains are the last parts of URLs like .com, .org, .edu and the country-based domains like .uk for the United Kingdom, .nz for New Zealand, etc. The IANA is operated on behalf of the US Department of Commerce. How this came about is a winding story, but it boils down to the fact that the United States build the first parts of the Internet and we’ve managed the naming schemes ever since.

Now that the Internet is clearly necessary for governments and businesses to function internationally, those who believe that the United States would abuse it’s authority are demanding that the IANA turn control of the top-level domains over to an international body like the UN. Has there been any major mismanagement at the IANA? Has there been any legitimate controversy that would suggest they are abusing their privilege? No and no. This is simply a case of arguing that the United States has no more rights than any other country to run this service and, in fact, the US is less equal than others (this is where moral equivalency morphs into anti-Americanism. A very common occurrence.).

Ariel Rabkin wrote this great article for The Weekly Standard describing the situation and the legitimate fears and dangers of letting anyone else control the top-level domains. He makes the case that letting any other group decide how to manage those domains would invite censorship and persecution by a group that likely wouldn’t have to answer to any particular population. See how Islamic countries feel about Israel in the UN. Do you think they wouldn’t argue for shunning them technologically? See how the UN feels about whether to recognize Taiwan (who currently has it’s own top-level domain separate from China). Do you think a permanent Security Council member wouldn’t argue for downgrading Taiwan’s Internet status?

Mr. Rabkin wraps up with a great point:

It is natural for other countries to resent the privileged role of the United States in Internet governance and to demand a greater measure of control. But if we believe in free speech, we ought to keep control of the Internet away from foreign governments that value it far less than we do.

Which brings us back to the beginning. How many foreign governments value free speech like we do? How many foreign governments value property rights like we do? How many foreign countries are built on the idea of limiting government like we are?

You see, America is exceptional.

Snake Fuel

The title is a poor attempt to combine the term “snake oil” with the substance I’m discussing here: ethanol.

Ethanol has been perpetually trumpeted as a fuel source that we could produce domestically to lower our foreign oil dependency. This has always been a pipe dream. From day one, the ethanol industry needed government subsidies to even get it off the ground. Guess what? It’s still failing. As Ed Wallace describes in this Business Week article, this is a scam that is costing the average American in three ways:

First, the taxpayers are paying to subsidize the farmers to grow the corn and other crops sold to create ethanol.

Second, the average American is paying more for food costs because the use of these crops as fuel has driven up prices of the foods that used to be grown in the same place.

Finally, and most subtly, car-owners are paying for repairs because ethanol damages engines of all kinds. As Wallace describes, high ethanol content (in the 10-15% range) will damage or destroy fuel filters, fuel lines, and fuel pumps in a variety of cars. It is damaging to small engines (such as those used in lawnmowers, blowers, edgers, etc.), and will break down the resins used in marine engines. For many cars, simply using fuel with more than 10% ethanol immediately voids the warranty.

So, you have a product that has no sustainable business model, causes price inflation in other, more important, markets, and actually damages the property of those who use the product. Oh, and the government pays to have it created and sold. When this industry tanks anyway, isn’t just time to let it die a natural death?

Apparently not. Ethanol producers are lobbying for the government to mandate 15% ethanol fuel to increase demand in an attempt to revive the industry. And, of course, the EPA is considering it. I have to agree with Wallace’s conclusion about this madness:

Sadly, when a truly bad idea is exposed today, Washington’s answer is to double-down on the bet, mandate more of the same, and make the problem worse. Only this time around motorists will be able to gauge the real cost of ethanol when it comes time to fix their personal cars.

Through the Looking Glass

There are times, in public debate, when the sides seem to switch and they begin to look like their opponents from the past. It’s sort of a “through the looking glass” moment when I see the same people saying the opposite things or the critics of a certain practice now engaging in it themselves. Is it hypocrisy? Is it jumping the shark? Is it just the weird side-effect of a changing debate?

Any way you slice it, it’s time for a fresh consideration of the topic.

Bjorn Lomborg wrote a fascinating op-ed in the Wall Street Journal here about how some business leaders are becoming advocates of government intervention to deal with climate change. Whenever you see something unexpected like this, it’s always a good rule to follow the money. As Mr. Lomborg points out, these companies see an opportunity to sell products and services to those who are forced to deal with new government regulations. This is simply a recognition of a new market being created by government intervention. The obvious comparison to the classic “military-industrial complex” mentioned by President Eisenhower is drawn and, actually, I think it’s more apt. In the case of the Cold War, at least the government was doing a job that it was constitutionally empowered to do. I don’t see where the government should be telling us how to live, work, and produce based on shaky science.

Didn’t the environmentalists used to be the underdogs? Weren’t they supposedly the voices crying out in the wilderness about how we were cluelessly destroying our planet? Wasn’t the case being made that we were blindly marching to oblivion because we wouldn’t pay attention? 

Now, I feel like the populace is that voice in the wilderness. Every day, the evidence mounts that we are not responsible for climate change. Now, it’s the government and big business leaders who are demanding punitive taxes and subsidies for technologies that aren’t ready. They demand these ostensibly to solve a problem that cannot be solved by man. Now, it’s our government that is marching into danger with our money because they won’t listen to the evidence.

Mr. Lomborg finishes his op-ed with precisely the same sentiment I have, so I’ll let him have the last word here:

The partnership among self-interested businesses, grandstanding politicians and alarmist campaigners truly is an unholy alliance. The climate-industrial complex does not promote discussion on how to overcome this challenge in a way that will be best for everybody. We should not be surprised or impressed that those who stand to make a profit are among the loudest calling for politicians to act. Spending a fortune on global carbon regulations will benefit a few, but dearly cost everybody else.

Bully In Chief

President Obama has given new meaning to the term “bully pulpit”. I have read and watched in amazement as more and more stories emerged of the President strong-arming investors to give up their rights and financial interests under threat of a public derision from the White House. I can understand the President encouraging the involved parties to come to an agreement, but to flat out threaten them into compliance is outrageous.

Michael Barone, via the Washington Examiner, describes the core of this story:

[I was angered] when I heard what bankruptcy lawyer Tom Lauria said on a WJR talk show that morning. “One of my clients,” Lauria told host Frank Beckmann, “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”

Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.

Did you catch that? The President thought that a reasonable solution was to give a better deal to the unsecured debts of the UAW than to the secured debts of the bondholders. Then, when someone representing the investments of those secured bonds objected, he was threatened by the White House! When the President of the United States overrides the risk-reward calculations involved here, the whole foundation of free markets begins to collapse. You can’t change the natural tension without significant consequences.

It’s not unusual to see this kind of bullying in Third World countries where the victims are threatened at the point of a gun. In the most productive capitalist society in all of human history, though, the only thing worse than threatening to kill the CEO is threatening to ruin the company’s reputation in the press. Bad press can cripple a good company and will destroy a weakened one. This is a fate worse than death for a corporation.

I’m not surprised by the direction and plans articulated by President Obama. What amazes me is the pure chutzpah involved. I like this observation from Clifford S. Asness in his open letter:

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.

It’s bad enough when the President tries to pass unfair or un-Constitutional laws. It’s worse when he simply acts as if they don’t exist and ignores them. It’s just crass when he ignores the law and tries to pay off friendly organizations in the process.

Subsidized Mediocrity

I’ve long been skeptical about labor unions. It’s not that they don’t provide a useful service, it’s just that I believe the negatives far outweigh the positives. This article in the LA Times is actually a well-researched investigation into the problem of tenure for public school teachers and how it protects laziness, incompetence, and borderline criminality. Jason Song backs up the premise he lays out in the early paragraphs:

It’s remarkably difficult to fire a tenured public school teacher in California, a Times investigation has found. The path can be laborious and labyrinthine, in some cases involving years of investigation, union grievances, administrative appeals, court challenges and re-hearings.

Not only is the process arduous, but some districts are particularly unsuccessful in navigating its complexities. The Los Angeles Unified School District sees the majority of its appealed dismissals overturned, and its administrators are far less likely even to try firing a tenured teacher than those in other districts.

Isn’t it reasonable to conclude that something has gone sideways when it’s so hard to rid our schools of unqualified teachers that the authorities simply move them around? Can’t we agree that something needs to change when the preferred method of pushing a teacher out is to harass with in-class observations and vaguely threaten to make life uncomfortable? And, finally, can’t we agree that the unions are part of the problem when they pass the buck with quotes like this?

“The union is bound by law to defend our members, and we do,” said A.J. Duffy, president of United Teachers Los Angeles. “That should in no way deter the resolve of the district to do their job, which is to help failing teachers to get better, or, if they can’t, to work to get rid of them.”

So, the same unions that have created the byzantine dismissal processes with review panels an multiple appeals are saying that it’s not their job to help excise the deadwood? In fact, it’s their job to defend the deadwood and it’s the district’s job to prove them wrong. But, fret not, because they assure us that the kids come first.

Reason #418 why we homeschool.

The Earth is Warming, So What?

I think some folks may still confuse my position. I do not deny that the Earth has been warming over the last several decades. I happen to think that some measuring mechanisms are flawed and produce skewed data, but generally I do believe that we have been warming. Furthermore, I think that we’ve been cooling again over the last several years. However, my skepticism is that human beings have anything to do with either change.

There is simply overwhelming evidence that the Earth warms and cools all on its own and it happens independent of human behavior. Matt Patterson’s article at Pajamas Media is the most concise summary I’ve seen (thanks to Powerline for pointing me to it).

Make no mistake — the earth has warmed.  Unfortunately for the climate-change catastrophists, warming periods have occurred throughout recorded history, long before the Industrial Revolution and SUVs began spitting man-made carbon into the atmosphere. And as might be expected, these warm periods have invariably proven a blessing for humanity.

In his summary, Patterson nails what I think is the motivation for those pushing the AGW mythology:

Why, then, do otherwise sensible people believe that we are both causing the current warming and that the warmth is a bad thing? To me it seems some grotesque combination of narcissism and self-loathing, a mentality that says at once “I am so important that my behavior is causing this” and “I am so inherently tainted that it must be bad.”

Where does this arrogance and low self-image come from? Well, that is a theological discussion that we should save for another day.

Correlation and Causation

So, if correlation does not imply causation, what does non-correlation imply?

I only ask because it’s very difficult to see how CO2 is even remotely correlated to temperature change. The International Conference on Climate Change met in New York earlier this month to discuss the latest in the science on the issue. The breath of fresh air was that this really was about the science and not the politics. You can review the proceedings here. (Thanks to Powerline for reminding me about this conference and picking out some of the best charts). Click the images to see them full size.

don_easterbrook1017

dennis_avery4005

If there’s any correlation at all, it’s to solar activity and not to CO2 levels. How long to will they keep drawing connections to disconnected data?

Oh, and as an exclamation point, here’s some fairly clear evidence that we are not, in fact, warming at all.

don_easterbrook2033

Maybe it’s just me, but that graph sure seems to be rolling downwards. What exactly were we looking for again?