Do you feel like giving your neighbor a $1,000,000 gift?

Let's say a dear friend of yours has hit hard times. She lost her job while trying to take care of her sick children. She is behind on her mortgage. Besides, the current market value of her home is less than the money she owes on it. You have a boatload of money which is either going to earn a negative real rate of return sitting in a bank, tied up in treasuries, funding public pensions via muni bonds or in a tanking stock-market. So, you decide to help her out by giving her $100,000.

YOU have to pay tax on that gift.

Now, there is a guy who lives down the street from her. He bought a mini-mansion at the height of the housing boom using no-money down with a variable rate and negative amortization for the first three years or something crazy like that. Say, he now owes about $2,000,000 on that loan. Of course, he could walk away, but he likes his domicile (lesser European monarchs would have considered themselves lucky to have residences of such size and scope).

The bank does not want him to leave either. They'd rather have a steady payment stream than an empty house they can't sell.

So, the guy gets in his Ferrari and meets with the bank rep, and they agree to restructure the mortgage. The bank forgives $1,000,000 of the amount he owes.

Does anyone pay any tax on this? Apparently, the answer is no.

What if this were a small business that owed $2,000,000 and the bank forgave half their debt? Would that $1,000,000 increase in the net worth of the small business have been taxed? My gut feeling says yes, but who knows?

Why should we be asking this question in the first place?

Why, if you borrow money to acquire a house, you are treated more preferentially than when you borrow money to buy a tractor-trailer?

This is especially relevant now that the $1000 down mortgage is back.

Buy new with $1,000 down, the advertisement says, the words resting atop a trim green clapboard house offset by a bright blue sky. The time has come. Stop wasting rent check after rent check and start building equity in your own home. And with only $1,000 down, affordable monthly payments and no private mortgage insurance required, the dream is closer than you think.

It sounds too good to be true. But it is true. This offer does not come from a subprime lender, looking to reel in thousands of unqualified and ill-advised homebuyers, only to slap them with add-ons, fees and variable rates. It is not a teaser or a trick. The advertisement references a program initiated by the National Council of State Housing Agencies and Fannie Mae, the taxpayer-backed, government-sponsored enterprise that buys up mortgages from lending banks.

If nothing else, this will be a great display of the moral hazard created by bailouts of so-called homeowners (you do not own the house until you have paid it off! Is that really so hard to understand?)

Say you were not able to participate in the craziness of the housing bubble. What have you seen since 2007? For one thing, you have seen politicians in a great race to take from your pocket and put into the pockets of people who "bought" real estate and the people who financed them.

The politicians are falling over each other trying to make sure those people do not lose "their" homes.

Are you going to say no when someone backed by a government agency offers you a new house in exchange for $1,000 and "affordable" mortgage payments?

After all, if something goes wrong, you can tell the government to make your neighbor pay your mortgage.

Employment

In September 2008, I took issue with a certain former Enron advisor's Chartsmanship.

This New York Times blogger looked at a funky thing he called average annual employment growth rate for each president and came up with the following graph:

As you can see, the graph paints a flattering picture of the Carter presidency.

The growth rate in total employment depends on a lot of things that are beyond a president's control. For example, in 1976, young people born between 1955—1960 were entering the labor force. 25 years later, not only was the population pyramid turning into a barrel, but also some young people were seeking employment later and later due to subsidized education and some others were being left out of the labor market due to a high minimum wage etc etc.

The post's title, Look who's talking, along with the remark at the end Obamanomics is a recipe for recession, declares Michael Boskin, the chief economic adviser during the administration of George H.W. Bush, suggest that the New York Times blogger thought President Obama would repeat President Carter's success and be elected for a second term just like his role model (oooopsss!!!)

Here's a different way of looking at the employment situation. The graph below shows the ratio of the number of employed civilian non-institutionalized population to the total civilian non-institutionalized population in July between 2000—2010:

And, just for the sake of completeness, here is the U6 series:

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

Congress shall make no law ...

Looking at the whole Ground Zero Mosque "thing", I am perplexed by certain reactions on the left from President Obama to the mayor of New York City, Mr. Bloomberg (yes, I do consider him a leftie).

These politicians argue that the U.S. Constitution implies that the mosque should be built.

In my humble opinion, it implies no such thing:

Amendment I

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

The first amendment, plainly, states that government has no business designating a specific religion to be the state religion or preventing anyone from freely exercising their religion.

That does not mean anything and everything that is done in the name of religion is immune from government intervention.

If that were so, then I would expect President Obama and Mr. Bloomberg to defend the rights of certain individuals to have multiple child wives with the same vigor they have displayed defending Imam Rauf and Sharif al Gamal.

In this situation, there are some people with interesting connections who want to build a mosque at ground zero. There are other people who are disturbed by this. As far as I understand the U.S. constitution, neither group's opinions and preferences are more privileged or protected against government intrusion than the other's.

If the Imam and the Developer get enough funds together and obtain the requisite building permits and purchase the materials and hire the workers etc, there is nothing the opponents can do to stop the mosque from being built. The most they can do is to protest something they do not like. And, this being the U.S., they have a right to do so.

Various governments and their law enforcement agencies have the duty and responsibility to protect the lives and property of all involved.

Other than that, I cannot see anything that would compel the President or the Mayor to actively defend this project put forth by this particular Imam and this particular Developer.

In Turkish, there is a name for what the Imam and the Developer are doing. It is called Müslüman mahallesinde salyangoz satmak.

Now, go figure that out.

That is the most you will ever pay

Politicians everywhere have a tendency to make promises they cannot keep.

Notice the following on The 1936 Government Pamphlet on Social Security:

beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.

(emphasis mine, h/t Walter Williams)

The page helpfully states This is an archival or historical document and may not reflect current policies or procedures.

Now, go re-read all those statements about ObamaCare keeping your taxes and deficits down and saving all sorts of money.

Hey Ayatollah, Leave Those Kids Alone!

My introduction to the Islamic Revolution came when I was very young from my father who, as a reporter, followed the events for the TRT.

A few years later, when I was taking evening classes at the British Council in Ankara, Turkey, I met a bunch of college age kids who had escaped from Iran by themselves or with their parents. Their lives were in constant danger as Iranian agents were on the hunt. Every now and then, we would read in the papers that an Iranian refugee had been assassinated and Iranian agents were suspected.

When I spent a year in Denmark as an AFS exchange student, I ran into more Iranian refugees, doctors, engineers, college students, trying to make themselves new lives in exile.

I do not know what happened to all those people since then. I do not even remember their names.

All I know is that the regime that is responsible for the deaths and substandard living conditions of millions of Iranians is still in power.

The regime's leaders are treated with undeserved respect and deference in Western capitals as the people of Iran suffer.

All I can say is, Hey Ayatollah, Leave Those Kids Alone!:

See also No one knows about Persian cats:

Does the President have a problem with Islam or Muslims?

This question has been nagging me ever since the 2008 election when the Obama campaign set up a web site called FighttheSmears.com. I remember Wolf Blitzer announcing the web site breathlessly on CNN.

When I checked out the web site, I learned that candidate Obama considered being called a Muslim a smear. In the aftermath of the most recent controversy involving the President's religion, I decided to check the site again. Well, there you go:

But shameful, shadowy attackers have been lying about Barack's religion, claiming he is a Muslim instead of a committed Christian. When people fabricate stories about someone's faith to denigrate them politically, that's an attack on people of all faiths.

I have a hard time understanding why being called a Muslim is a smear. I ran into quite a few people in Turkey who believed the new U.S. President was a Muslim for various reasons. Some of them thought the President himself had told them he is a Muslim. See, in his speech to the Turkish parliament on April 6, 2009, Mr. Obama said: (see also around the 22:30 mark in the video of the speech):

We will convey our deep appreciation for the Islamic faith, which has done so much over the centuries to shape the world — including in my own ountry. The United States has been enriched by Muslim Americans. Many other Americans have Muslims in their families or have lived in a Muslim-majority country — I know, because I am one of them.

Now, maybe it is obvious to you exactly what he meant by I know, because I am one of them.

However, just take a look at Hürriyet's reporting where they quoted the President as saying ABD'DE ÇOK SAYIDA MÜSLÜMAN AİLE VAR, BEN DE ONLARDAN BİRİYİM which literally means There are many Muslim families in the USA. I am one of them. Of course, underneath the all caps caption, there is a more exact translation of the President's words, but this gives you a good idea how the President's own words were perceived — regardless of his intentions.

Could the extremely eloquent former senior lecturer or his team of elite speechwriters not have phrased that sentence less ambiguously?

What is that awkward other doing there? Just before I am one of them.

Was the ambiguity intentional? Was it part of the outreach to the Muslim hearts and minds to make them think the President of the United States is a Muslim? Or, was it just sloppy writing by someone who just wanted the speech to be done? After all, the ambiguous passage cames towards the end of the speech.

Well, that may be.

But, that is not my point.

My point is simple: The President seems to want to tout his connections to Islam when he feels that might provide him a political benefit. When that causes some people to think of him as a Muslim, his supporters scream smear, smear, smear!

Me? I just don't understand why Mr. Obama's religious beliefs matter to this extent.

I know there is no reason for the President to take my advice, but I will give it anyway: Please drop it.

Mr. President, please redact your FighttheSmears.com site. I mean, you are claiming that being called a Muslim denigrates you. That goes beyond just a factual statement.

If you actually did want to build bridges and remove misunderstandings, you would not equate being called a Muslim with defamation.

Does Bill Gates Sr. understand English?

First, it was Warren Buffett whispering sweet words into then Senator Obama's ear about how he does not pay enough in taxes. Of course, there is a solution to that: Take all your assets, sell them, and donate the cash to the U.S. Treasury. Simple. Problem solved. No need to increase the tax rate of millions of other people to assuage your guilt.

Now, there is Bill Gates Sr. selling something called Initiative 1098 in Washington State. Yeah, don't search the site in vain: The text of the legislation they are pushing does not seem to be there. Not even a link. Luckily, you can find it on the web site for the Secretary of State, Washington.

The centerpiece of the proposal is:

NEW SECTION. Sec. 501. EXCISE TAX IMPOSED--RATES. (1) An excise tax is imposed on the receipt of all taxable income of resident individuals and on all individuals deriving income from sources within this state for each taxable year based on the type of return filed and the amount of income in accordance with this section. An excise tax is not imposed on the assets held by a person resulting from income after its receipt, but only upon the receipt itself.

If you think this is a funny way to word a tax proposal, well, you are not alone.

The Constitution of the State of Washington states:

SECTION 1 TAXATION. The power of taxation shall never be suspended, surrendered or contracted away. All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word "property" as used herein shall mean and include everything, whether tangible or intangible, subject to ownership.

(emphasis mine)

See, Initiative 1098 taxes income at different rates depending on income levels.

To get around that, Bill Gates Sr. and his friends claim that your income is not your property until you buy something with it.

The language of the Constitution of the State of Washington seems plain enough: All taxes shall be uniform upon the same class of property and The word "property" as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. By this logic, say, if you put some money in a bank and earn interest income, that income is neither your property nor the bank's: It exists in some kind of limbo where the plain language of the Constitution of the State of Washington does not apply and it can be taxed at different rates depending on your total income.

Or, as the Wall Street Journal puts it: Proponents claim that because the tax is withheld from worker paychecks, the money was never the property of the person who earned it. That's like saying if someone steals your paycheck, it's not your property.

Why do I care, given that I have absolutely no connection to Washington State? Well, I am simply tired of the already rich and well connected concocting and supporting schemes aimed at re-distributing wealth, wherever they may be.

Does Mr. Obama "own" the stimulus?

Even before taking office, Mr. Obama liked the financial bailout and the stimulus. As a senator, he voted for TARP. And, after the election and before he took office, he said:

There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.

President-Elect Barack Obama, JANUARY 9, 2009

Later, CATO took out an ad pointing out With all due respect Mr. President, that is not true.:

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's lost decade in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

This statement was true then. It still holds.

Mr. Obama (along with McCain, Bernanke, Paulson and everyone else who seemed to be running around in panic) was on the wrong side of the equation. He still is.

Nostalgia for Times Past

As I watch people in the media get all worked up over the behavior of —and signs carried by— some people at Tea Party rallies, I could not help but think of some scenes from the demonstrations against the RNC convention in New York City in 2004.

For example, here is a guy selling a t-shirt that accusses George Bush of organizing an act of war against the U.S.:

Here is another guy kicking Bush in effigy:

Here are a couple of other truthers, referring to the Bush regime and again accusing the administration of treason against the U.S.:

I never figured out what these dudes' point was:

And, of course, in those days, no protest would have been complete without the Code Pink ladies (speaking of, where are they now?)

In fact, that is the wonderful thing about the U.S.: People are free to speak their minds. Other people are free to decide whether to take those people seriously. They can criticize politicians and officeholders without fearing that they will be sent to a prison or held in a mental institution for crimes such as Insulting Americanness or Sowing the seeds of division.

Media commentators need to keep in mind that there are far more people at protests than the few they choose to focus their cameras on and highlight in the news. When those commentators pick one or two interesting people in a crowd of thousands and try to pretend those people are representative, well, that does not play well with the rest of the people who were there. But, those people don't go back to their corners and sit quietly.

They talk to friends. They talk to family. They talk the strangers. They get more motivated to tell other people about their beliefs and opinions.

In closing, here a bunch of people who are calling members of the NYPD Good Germans:

All photos © 2004 A. Sinan Unur

Paul Ryan's Roadmap

The full text of Paul Ryan's roadmap is available.

I have not read it in its entirety yet, but it contains many of the ideas I have supported, and I like what I see so far.

It is a document that should be read and examined by everyone concerned about the size of government, government intrusion in individual decisions, government solvency who also wants affordable health insurance and a social safety net to be available to all legal residents and citizens of the U.S.

The most audacious Nigerian scam attempt to date

I actually read all varieties of Nigerian scam messages I receive before reporting the phishing attempt.

I think I just received the most hilariously audacious one to date.

I am happy to learn that the intelligent monitoring unit wants me to stop any further dealings with Imposters and non-recommended Officials.

Nigerian scams and varieties from other countries (such as the Saudi Muslim match-making scam) are now so commonplace that I thought I was totally desensitized.

this fiscal year 2008. President, Goodluck Ebere Jonathan(GCFR). OMG!

Well, this one made me laugh, at least.

NB: If you don't know what a Nigerian scam —or more generally advance fee fraud scheme— is, please disconnect from the intarwebs immediately.

1. from: Smith Walters <ssssfsfs@yahoo.com>
2. reply-to: unionbnk2000@w.cn
3. to:
4. date: Wed, Aug 11, 2010 at 8:31 PM
5. subject: Immediate ATM Cash Card Payment Notification

Attention: Sir/Madam

This is to officially inform you about our recent agreement with the Federal Government of Nigeria to handle all their foreign contract payments. Based on this development, we have verified your Contract/Inheritance file and discovered reasons why you are yet to receive your payment. It is because of Irregularities and Complications discovered on your payment file by our technical experts in respect to your contract /Inheritance payment requirements which have just been duly rectified.

However, you are hereby directed by our intelligent monitoring unit to stop any further dealings with Imposters and non- recommended Officials in the Bank like central bank of Nigeria . Such Acts Must Stop For Security reasons. If You Wish to receive your payment in time and accordingly, Since we have decided to bring a Solution to your Problem, right now we have arranged your payment through our ATM Swift Card.

Payment Center of UNION BANK OF NIGERIA P L C. That is the Latest Instruction By Our President, Goodluck Ebere Jonathan(GCFR) Federal Republic Of Nigeria.

Below Is The Arrangements;

The Swift card Center will Send you an Atm Card which you will use to withdrew your money from any ATM Machine in any part of the world, But the Maximum is (Two Thousand Five Hundred Dollars US $2,500) Per Day, So if you like to receive your fund this way please do let us know by Contacting the ATM Card

Payment Center Of UNION BANK OF NIGERIA P L C.

Note: Because of Imposters, we hereby issue you our Code of Conduct Tag Number Which is (ATM-505) So You Must Have To Indicate This Code When Contacting the payment center with the information's below.

1. Your Full Name:
2. Occupation:
3. A Valid Phone Number
4. Sex:
5. Age:
6. Marital Status:
7. Address where you want the ATM CARD to be Delivered

CONTACT PERSON
REV FR PETER Moses
Director of Swift Card ATM Payment Centre
UNION BANK OF NIGERIA P L C
E-mail:unionbnkatmcarddepatment@hotmail.com
Phone No+234 8033 438486

We have been Mandated by the Federal Government of Nigeria to issue out US$ 8,3 million Dollars as part payment for the this fiscal year 2008.

For your information you have to Stop any further Communication with any institution or office until you receive the Atm Card.

Is any American who does not buy a Chevy Volt anti-American?

Jennifer Granholm equated criticizing the Chevy Volt with being anti-American:

It's just un-American. I can't believe that somebody would say this about this American product, said the Guv. You know, why wouldn't you be supportive of American manufacturers building American vehicles with American workers, who now have jobs as a result of this. Why wouldn't you be supportive of that? It is mind-blowing to me.

According to Media Matters, a Chevy Volt, produced by the government of the U.S., is priced at $41,000. If you buy one, you get a $7,500 tax credit.

That is, if you buy one, someone else has to make enough money doing something else to reward you with $7,500 for buying a government car.

And, why do you need a subsidy anyway? Isn't it your patriotic duty to buy a government car no matter what the price and no matter how it performs?

The fact that you can get two very nice Hyundais (a lot of which are also produced by Americans) for the price of one Chevy Volt should be irrelevant. Your government wants you to buy the Chevy Volt! It is your duty to buy it. Why do you need a subsidy? To top it all, you don't need to recharge a Hyundai (or any other gasoline powered car) every 30 seconds.

Governor Granholm also says something very interesting at the end of the following video:

Of course, the public is getting paid back. GM has paid back the loan.

Well, if you believe that, I have an electric car I want to sell you.

And, even if they had paid back the loan, the $7,500 gift every buyer of a Chevy Volt is going to get out of the pocket of another U.S. taxpayer will never get paid back. That is $7,500 some other person could have spent on something other than giving a new car to some stranger.

See also Living the GM Life and How did GM pay back that loan?

Oh, and, regarding the value of government created jobs, see What is a government job worth?

Before Peak Oil, there was Peak Coal

Malthusian fears are hard to extinguish.

From the another in a long series of premature announcements of the end of civilization as we know it department:

The question is how soon will our mines approach the limit of commercial impossibility and fail to secure us any longer that manufacturing supremacy on which we are learning to be wholly dependent (p. 56) …

The alternatives before us are simple. … If we lavishly and boldly push forward in the creation and distribution of our riches it is hard to over estimate the pitch of beneficial influence to which we may attain in the present. But the maintenance of such a position is physically impossible. We have to make the momentous choice between brief greatness and longer continued mediocrity (p. 349).

From The Coal Question: An Enquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-mines By William Stanley Jevons, 1865

.

In plain language, he is saying the great advancements of the 19th century cannot be sustained as the world is going to run out of coal.

Does that sound familiar?

"We can't drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times …

Presidential Candidate Obama, May 16, 2008.

Too bad, Jevons wrote this about the same time the world's first commercial oil wells were being drilled.

The world did not move to using oil and its byproducts because some government planned it and gave subsidies to find alternatives to coal.

Using oil has opened incredible frontiers and opportunities for humankind since early 20th century.

If we ever get close to running out of oil, we'll know it. Entrepreneurs will know it. There will be a cheap, alternative form of energy that will open even more frontiers and free up even more opportunities for human kind.

We do not know what form that energy source will take. And, a government planning board knows even less.

We eat, therefore you farm

In Upstate New York, you occasionally run into people wearing t-shirts or sporting bumper stickers that say I farm, therefore you eat.

This display of arrogance and self-importance is offensive on its own. But, what bothers me more is the complete willful ignorance of a basic understanding of economics.

If all people who are currently farmers stopped supplying food today, nobody would go hungry.

Since we do like to eat, given a shortage of food, we would be willing to pay a premium to get it. This would induce others, in the U.S. and elsewhere in the world, work really hard to produce food to satisfy U.S. demand. The only way that can be prevented is by government coercion, creating a fixed class of farmers (Medieval times, anyone?) and banning the production of food by anyone else in the U.S. and banning food imports from other countries. I find that unlikely, but not impossible (see Zimbabwe).

Second, given the increased premium on food, some people would find it beneficial to grow some of their own food. That would help all sorts of people such as publishers of howto web sites, books, suppliers of gardening equipment, seeds and what not. People in neighborhoods would set up a mechanism to trade whatever surplus food they have with each other.

Third, such an action would not benefit the farmers: They chose how to make a living based on their skills, abilities and knowledge and the demand for their product. Without farming, they will now need to find an alternative way to make a living, that, according to their own revealed preference, was inferior to farming.

Add to that the fact that no farmer grows more than a few varieties and depends on other farmers to feed themselves and their children, the premium they would have to pay the kinds of food items they do not produce would hurt them as well.

The higher premium they can get by breaking their commitment not to supply their products would prove irresistible to some.

In short, a food embargo on the U.S. by U.S. farmers would not be sustainable. Just as an oil embargo by Arab countries on the U.S. is not sustainable. All parties to the embargo agreement would have a strong incentive to break it under the table.

End Farm Subsidies

In fact, I do believe the world would be a better place if fewer people in rich, Western countries went into farming. Currently, those countries have too many farmers and produce too much food, and the price of food is too high because of the subsidies they get and because of the barriers to trade the U.S., the E.U., and other rich Western countries place on food imports.

Without those subsidies and barriers to trade, people all over the poorer parts of the world, from the Congo to Afghanistan would find it profitable to grow the products demanded by the richer countries. Their reliance on foreign aid would diminish. The power of abusive, corrupt governments who are usually the gatekeepers for the distribution of such foreign aid would go down as well.

Consumers in the rich, Western countries would get cheaper food. The people in those countries whose farming operations are mostly supported by subsidies and barriers to trade would have to develop other skills and contribute more to society than they take out.

Maybe farmers wearing those t-shirts and sporting those bumper stickers that say I farm, therefore you eat should take a break from farming for a year, and see if anybody misses them.

Can the little people be trusted to decide when, where and how to swim?

Lake front rules from a beautiful town in the Fingerlakes Region in New York State:

You are not allowed to swim when there is no lifeguard on duty

Why not? Can people not decide for themselves when it is safe to swim in a natural lake taking into account their own abilities and the conditions? Is that too much to ask?

You may be asked to pass a swim test before going in to deep water

Why? Why would someone who cannot swim go in to deep water? Can people not be trusted to know their own swimming ability?

You may not wear a mask, snorkel, or fins

Why? Are people not allowed to see what's under the surface of the water? Does swimming faster cause envy or something?

*Sigh!*

Can the little people be trusted to choose their toothpaste?

While going through some files on my computer, I found the podcast of an interview on WHCU870's Morning NewsWatch with Assemblywoman Barbara Lifton. I cannot figure out the exact date of the interview, but I think it was in May 2009.

She was discussing the impact of the Stimulus Plan on New York State with the host. Toward the end of the interview, Dave Vieser asks Ms. Lifton the following question:

The Republicans have said, instead of spending so much on projects, let's use some of this money for tax breaks, let's not increase taxes, let's use this money fill in those gaps. What would say to Dean Skelos who said that in Long Isl…

Ms. Lifton did not wait for him to finish his question. Here is the audio:

Barbara Lifton on the Economy on WHCU870 (some time in May 2009)

We need … we need … You know. You put money in people's pockets, sometimes it gets spent. You know, sometimes it gets spent on a, you know, do we need a new brand of toothpaste. … Do we need that? Do we need more of that? Or, do we need to pay teachers and nurses and doctors? … What is that we need? Do we need the things government does right now? Or, do we need more, private sector, oh, let's buy another little thing. And, I would argue that we have done enough of buying all the little things, buying a lot of junk that we are throwing in the landfills and throwing in the ocean and get back to some basics.

First, it is wrong to think that teachers would not be paid without the government. Same for doctors and nurses. Schools, hospitals, treatment center, teachers, doctors, nurses etc provide a private good that is valued by consumers. They do not need a government to be able to make a living.

Second, Ms. Lifton has this whole thing backwards: It is not a government that magically puts money in people's pockets. Rather, people generate wealth by producing things and trading them. They pay taxes out of the money they earn to various governments. Reducing their taxes is not putting money in their pockets.

It is taking less of the money they earned through their application of their own skills, talents, passion and labor to produce something other people value.

At this point, I can do no better than quote Mises once more:

On the market of a capitalistic society the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality. Those shops and plants which cater exclu­sively or predominantly to the wealthier citizens’ demand for re­fined luxuries play merely a subordinate role in the economic setting of the market economy. They never attain the size of big business. Big business always serves—directly or indirectly—the masses.

…

There are in the fabric of a market economy not sabotaged by the nostrums of governments and politicians no grandees and squires keeping the populace in submission, collecting tributes and imposts, and gaudily feasting while the villeins must put up with the crumbs. The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public. In a daily repeated plebiscite in which every penny gives a right to vote the consumers determine who should own and run the plants, shops and farms. The con­trol of the material means of production is a social function, subject to the confirmation or revocation by the sovereign con­sumers.

Ludwig von Mises, The Anti-Capitalistic Mentality, 1956

The terms capitalism, capital, and capitalists were em­ployed by Marx and are today employed by most people—also by the official propaganda agencies of the United States government—with an opprobrious connotation. Yet these words pertinently point toward the main factor whose operation produced all the marvelous achievements of the last two hundred years: the unprecedented improvement of the average standard of living for a continually increasing population. What distinguishes modern industrial conditions in the capitalistic countries from those of the precapitalistic ages as well as from those prevailing today in the so‑called underdeveloped countries is the amount of the supply of capital. No technological improvement can be put to work if the capital required has not previously been accumulated by saving.

Ludwig von Mises, The Anti-Capitalistic Mentality, 1956

And you thought weather in the U.S. was all messed up

By that, of course, I refer to the coverage of weather in the news media.

The Turkish newspaper Hürriyet just pretty much outdid every single exaggeration I have ever seen made.

See, it's the sheer ballsiness of the exaggeration that got me. Here is a screenshot from the front page of Hürriyet's web site at about 10 AM Eastern time:

It says: Situation update for İstanbul's boroughs. What are those numbers 61, 53, and 45, you may ask? Well, they are degrees (derece in Turkish).

61°C is 141.8°F.

The exaggeration is ballsy because if you just follow the link and read the story, you get the director of the Turkish State Meteorological Service, Mehmet Çağlar warning about exaggerated news stories in the press about the heat wave:

Devlet Meteoroloji İşleri Genel Müdürü Mehmet Çağlar, bazı illerde hissedilen sıcaklık değerlerinin 60 dereceye kadar çıkacağına dair haberlerin abartılı olduğunu söyledi.

In English: The General Director of State Meteorological Service Mehmet Çağlar said that the news stories about heat index values reaching 60 degrees in some cities were exaggerated.

Now, we had heat waves in the summer months of my childhood in Ankara and İstanbul. Temperatures anywhere between 32°C to 36°C is what we considered normal in those places when I was growing up.

Given that experience, when someone throws 61°C at you, you start thinking, Ohmigod! It's so much warmer now!! We are all going to burn in Gaia's furnace!!!

Here is the temperature range, humidity and heat index table given in the original story (as I ready at about 10 am Eastern time in the U.S.):

And, here is that same table at about 11:15 am Eastern time in the U.S.:

Note, the only differences between the two are in the heat index column (the last one).

You can also see that the maximum temperatures (the second column) really are not that bad, ranging from 30°C (86°F) to 34°C (93.2°F), but it's always the humidity that kills you.

It is possible to visit New York City without staying in New York City

So, New York State just passed a new tax on internet hotel room resellers:

The measure defines remarketers as anyone who reserves, arranges for, conveys or furnishes occupancy, whether directly or indirectly, to an occupant for rent in an amount determined by the room remarketer.

Mr. Weinstein said: It is basically anyone making a profit on a room. Travel agencies, tour operators, convention planners, potentially even wedding planners.

He said the added burden of compliance, including bookkeeping and possible audits, particularly on small firms, could be more costly than the taxes themselves and further increase prices for consumers.

If you are traveling to a place like the Fingerlakes Region, you have no practical option but to stay in a hotel in New York State.

If you are traveling to Niagara Falls and have the right papers, you can stay on the Canadian side. I am not sure if that would provide a cheaper experience, but at least the view is better.

On the other hand, if you are one of the many who travel to New York City, you have much better alternatives: There are many excellent hotels just across the Hudson River, in New Jersey, which I am assuming has not enacted a similar tax on hotel rooms sold on the web.

Hotels such as the Hyatt in Jersey City, the W in Hoboken and the Sheraton in Lincoln Harbor offer great views of Manhattan combined with easy transportation by bus, path train or ferry. The ferries are my favorite in decent weather. You also get great photo opportunities.

I personally find the W tacky and not worth the price. The staff at the Sheraton seem to take their customers for granted and the policy seems to be geared against generating repeat business.

If you do not need a Manhattan view at night, you can go a few miles inland in New Jersey, to the Secaucus and Meadowlands area hotels. I have found the LaQuinta Inn and Suites in Secaucus to be very convenient (New Jersey transit bus route 320 to Port Authority in New York City stops right in front of the hotel) and the staff to be very helpful and friendly, but there are many other choices such as Holiday Inn Express, the Hyatt Place and the Meadowlands Plaza, all of which offer easy access to Manhattan by bus (check for routes with the hotels and obtain schedules from New Jersey Transit.

If you also fly in and out of the Newark airport (EWR), you can rent a car, get easy and free parking at these hotels and get a chance visit other interesting places including the Six Flags amusement park or the Bear Mountain State Park (rest stops on Palisades Parkway provide great photo opportunities).

Of course, this is an entirely different experience than being immersed in the Manhattan environment 24 hours a day during your visit. If that is not your purpose, however, reasonable alternatives to paying through the nose to help close New York State's budget gap (which can only be closed by cutting the size of the New York State government, not willy-nilly taxes likes this) do exist. A little bit of research will pay off.

Of course, the long run effect of higher hotel room taxes in New York City will be to raise the prices of close substitutes such as hotel rooms in New Jersey and Connecticut.

Food for thought: Meaningless correlation

The Case of the Cuban Consumption Function

People read too much into sample correlation coefficients computed from data that were not generated from an experiment.

After all, the sample correlation coefficient is just a number that comes out of a bunch of arithmetic operations. The value of the coefficient cannot tell you if it was a meaningful exercise to calculate it, if it made sense to look at it.

As a humorous example, consider the following excerpt from Sturdy Econometrics:

Suppose you had planned a regression to estimate the Cuban consumption function and, using income and expenditure data from the Cuban national accounts, you find the estimated equation to be

Expenditure = 1.9 + 0.69 x Income

with an R² of 0.71. This seems like a pretty good equation with a high R² and a coefficient with the right sign. But suppose further that you had the presence of mind to look at a scatter of observations [as shown below]. The message in these data is very different than the one suggested by the estimated regression. Clearly, the chance that any batch-oriented processing could have picked up this message is very remote indeed. … You would therefore be wise to reserve the right to do some interactive processing and to adjust the way you interpret the data if something unanticipated is discovered.

Well, that ought to explain my fascination with looking at source data in many different ways.

Overview of station data continuity in GHCN-v2

See Station data continuity in GHCN-v2 for motivation and observation counts in the GHCN-v2 data set by country for background.

Here is a bitmap version with various countries of interest shaded. Those are China, Russian Federation (Asian Sector), Canada, United States of America, Australia, Russian Federation (European Sector) and Turkey.

As you can tell, I am not an artist.

As the data are ordered by country and station identifiers, the order above is the same as the order in which shaded blocks appear in the bitmap.

Each gray pixel corresponds to a month where there is a monthly mean for a particular station in a particular year. Years go across from 1880 to 2010 and stations go down. There are reference lines at 10 year intervals (fully visible only when zoomed in).

Without further ado (the thumbnail is distorted to fit, click to get the full 1560 x 13418 graphic):

Perl script used to generate the graph:

#!/usr/bin/perl

use strict; use warnings;

use DBI;
use GD;

my $year0 = 1880;

my $dbh = DBI->connect(
    'dbi:SQLite:ghcn.db', undef, undef,
    { RaiseError => 1, AutoCommit => 0 }
);


my $sth = $dbh->prepare(
    q{
        SELECT (country || station || modifier || dupeno) AS key,
                ((year - ?) * 12 + (month - 1)) AS x
        FROM temperature
        WHERE year >= ?
            AND mean <> -9999
        ORDER BY country, station, modifier, dupeno, year, month
    }
);

$sth->execute( $year0, $year0 );

GD::Image->trueColor(1);
my $gd = GD::Image->new(1_560, 13_418);
$gd->alphaBlending(1);

my %color = (
    bg => $gd->colorAllocateAlpha(0xff, 0xff, 0xff, 0x00),
    grid => $gd->colorAllocateAlpha(0xff, 0x5a, 0x00, 0x00),
    marker => $gd->colorAllocateAlpha(0x99, 0x99, 0x99, 0x40),
    205 => $gd->colorAllocateAlpha(0xFF, 0x33, 0x33, 0x50), # china
    222 => $gd->colorAllocateAlpha(0xFF, 0xFF, 0x33, 0x50), # russia (asia)
    403 => $gd->colorAllocateAlpha(0xFF, 0x99, 0x33, 0x50), # canada
    425 => $gd->colorAllocateAlpha(0xFF, 0x33, 0x99, 0x50), # usa
    501 => $gd->colorAllocateAlpha(0x00, 0xB8, 0xB8, 0x50), # australia
    638 => $gd->colorAllocateAlpha(0xB8, 0x00, 0x00, 0x50), # russia (europe)
    649 => $gd->colorAllocateAlpha(0x33, 0x99, 0xFF, 0x50), # turkey
);

$gd->filledRectangle(0, 0, $gd->width, $gd->height, $color{bg});

for (my $year = 1880; $year <= 2010; $year += 10) {
    my $x = ($year - $year0) * 12;
    $gd->line($x, 0, $x, $gd->height, $color{ grid });
}

my $y = -1;
my $key = '';

while ( my $row = $sth->fetchrow_hashref ) {
    unless ( $key eq $row->{key} ) {
        $key = $row->{key};
        $y += 1;
        my ($country) = $key =~ /^([0-9]{3})/;
        if ( exists $color{$country} ) {
            $gd->line(0, $y, $gd->width, $y, $color{ $country });
        }
    }
    $gd->setPixel($row->{x}, $y, $color{marker});
}

use File::Slurp;
write_file 'ghcn-matrix-bitmap.png', { binmode => ':raw'}, \ $gd->png;

Station data continuity in GHCN-v2

Today, I noticed an interesting graph on E.W. Smith's blog credited to Verity Jones.

Some stations in the GHCN-v2 database have multiple series associated with them. These are identified using a station modifier and possibly a duplicate number. It is not easy to visualize where one version of a station leaves the stage and another one takes its place. Verity Jones has come up with a nice matrix view of those series by listing stations by identifier in the first column and marking the years with data on that row.

Using the database I had set up back in May, I decided to take that one step further by shading cells according to how many months of data exist in a given year and also entering that information in the spreadsheet. Years where there is no mean temperature in the base GHCN v2 mean temperature file are left blank. Years where all 12 months have mean temperatures are marked with a black background: The fewer months in a year have data, the lighter the cell background color. Zooming out gives you a decent overview:

And, here is a 1,560 x 13,418 bitmap (one pixel per month, between 1880—2010 with reference lines at 10 year intervals):

You can download the resulting spreadsheet. It is in a ZIP file because the size of the Excel file was about 10 MB before compression.

Update: For information on observation availability by country, see Observation counts in the GHCN-v2 data set by country.

The spreadsheet was generated using the following Perl script:

#!/usr/bin/perl
# Copyright (C) 2010 A. Sinan Unur 
# Licensed under the GPL: http://www.gnu.org/licenses/gpl.html
use strict; use warnings;

use DBI;
use Spreadsheet::WriteExcel;

my $year0 = 1880;

my $dbh = DBI->connect(
    'dbi:SQLite:ghcn.db', undef, undef,
    { RaiseError => 1, AutoCommit => 0 }
);


my $sth = $dbh->prepare(
    q{
        SELECT (country || station || modifier || dupeno) AS key,
                year, count(month) as nobs
        FROM temperature
        WHERE year >= ?
            AND mean <> -9999
        GROUP BY country, station, modifier, dupeno, year
    }
);

$sth->execute( $year0 );

my $book = Spreadsheet::WriteExcel->new('ghcn-matrix.xls');
my $sheet = $book->add_worksheet('GHCNv2 Matrix');
my %font = (
    font => 'Courier New',
    size => 8,
    bold => 1,
);

my @bgcolors = map {
    $book->set_custom_color(8 + $_, (20 * $_) x 3 )
} 0 .. 11;

my @fgcolors = map {
    $book->set_custom_color(20 + $_, (255 - 20 * $_ ) x 3)
} 0 .. 11;

my @marker_formats = map {
    $book->add_format(
        %font,
        pattern => 1,
        fg_color => $fgcolors[$_],
        color => $bgcolors[$_],
    )
} 0 .. 11;

$sheet->freeze_panes(1, 1);
$sheet->set_column(0, 0, 16);
$sheet->set_column(1, 255, 4);

my $y = 0;
my $key = '';
$sheet->write_row($y, 1, [ 1880 .. 2010 ] );

while ( my $row = $sth->fetchrow_hashref ) {
    unless ( $key eq $row->{key} ) {
        $key = $row->{key};
        $y += 1;
        $sheet->write_string($y, 0, $key);
    }
    my $nobs = $row->{nobs};
    $sheet->write_number(
        $y, ($row->{year} - $year0 + 1), $nobs,
        $marker_formats[$nobs - 1],
    );
}

$book->close;