Making life sour by a thousand mandates

The first time I heard about the move to make rear view cameras on cars mandatory, I was teaching an Intro Stats class at Cornell in September 2005.

Let me tell you, that was a tough semester to teach Economics and Statistics.

In the aftermath of Katrina, all rationality about Statistics was out the window. Everyone around me seemed to take it for granted that one could blame what happened in New Orleans on Global Warming whereas to me the culprit was clear: Years and years of government subsidization of housing in all the wrong places to bolster locally entrenched politicians, followed with a perfect confluence of ineptitude and a culture of looking out for number one entrenched in all levels of local government. I had spent a week in New Orleans for a conference in 1996 and vowed never to come back to a place where I constantly felt like the water was going to come rushing down on us over the top of the levees.

If you remember, there was also a run up in gasoline prices during that time. The rules of demand and supply, the standard market reaction to a negative supply shock were out the window. No, that was the time where people with Ph.D.s and their lemmings kept repeating the mantra Bush had let New Orleans drown because of his hatred of black people, oil men in the administration were running up the gas prices on purpose, and that me being able to fly at a moment's notice to my father's funeral was responsible for the effects of the hurricane.

One of my favorite routines at the beginning of class was to take a news story from either the campus paper, or one of the local Ithaca papers, and rip apart the reasoning step-by-step. For one lecture, I noticed a story that gave a sob story about some grandma who had driven with her Suburban over little Joey playing in the driveway or some such thing. A sad event that could have been easily prevented by teaching little Joey not to play in the driveway or teaching grandma not to get in the car without making sure little Joey is not in the driveway, or, preferably both.

What was the proposed solution in the newspaper article? Make rear cameras mandatory on all cars.

One of the most important factors in evaluating whether requiring everyone to pay for a rear camera on their car is to ascertain what the benefit would be. The benefit is almost always cited in expected lives saved. The problem is, the analyses tend to ignore the human factor in the situation: Putting a rear camera on a car does not change the kind of grandma who'd drive over little Joey playing in the driveway. It also does not change the parents who let little Joey play in the driveway. It also does not change the little Joey who has been taught it's OK, go play in the driveway, in the middle of the street, just don't interfere with my Oprah!

A rear camera also provides absolutely no benefit in many situations. For example, in a full supermarket parking lot, coming out from between two cars seems to be increasingly fraught with peril these days because of parents who let their children run up and down the length of the aisle. How many camera/driver combinations will be able to detect little Suzie, all of three and a half feet tall, when she darts out from your left, from behind the car next to you?

So, what do I see today? A story in the New York Times: U.S. Rule Set for Cameras at Cars' Rear.

First, if you are against rear cameras on cars, you must be for killing children:

On average, two children die and about 50 are injured every week when someone accidentally backs over them in a vehicle …

Second, you can't object to this new mandate because there are already a whole bunch of them. And, one was mandated by a Republican:

Cars are filled with safety features that have been mandated by government regulators over the years, including air bags and the Liddy Light, the third brake light named for Elizabeth Dole, who made it standard as secretary of transportation in the 1980s.

Third, let's pretend the cost doesn't matter, but the benefit is huge:

… regulators predicted that adding the cameras and viewing screens will cost the auto industry as much as $2.7 billion a year, or $160 to $200 a vehicle.

Of course, the relevant measure of cost is not per vehicle. What matters is the answer to the question how much does it cost to save a life?

But regulators say that 95 to 112 deaths and as many as 8,374 injuries could be avoided each year by eliminating the wide blind spot behind a vehicle.

Hmmm, what is the cost per life saved? What is the cost per injury prevented? They don't mention it. It is also weird that they give a range for deaths avoided by a single number, a very precise one at that, for injuries avoided. For meaningful numbers, we'd need the full report, but National Highway Transportation Safety Administration News page or any other section immediately accessible from the sites front page mentions a report on rear cameras.

Let's pull more at our heartstrings even more, shall we?

But in terms of emotional tragedy, backover deaths are some of the worst imaginable. When you have a parent that kills a child in an incident that’s utterly avoidable, they don’t ever forget it.

No, the really sad part is, to a casual, rational observer, most of these tragedies seem to be avoidable solely by the people involved acting differently rather than the government mandating one more thing!

… backovers are the most common cause of off-road deaths involving children and vehicles …

In many cases, the incidents involve a phenomenon that safety advocates call "bye-bye syndrome," when a child runs outside to wave to someone driving away, without that person's knowledge.

The solution is completely internalized here: If you're worried about this sort of thing, you can specifically shop for cars with cameras. Life's about trade-offs. If you choose to buy the car without the camera, then you make damn sure your kid knows not to run behind your car when it's moving. Come to think of it, how old are these kids anyway? Are you leaving them with no supervision when you drive away?

Along the way, your kids may also learn such useful life skills as NOT running into traffic while texting, NOT going down the wrong way in a one-way street on a bicycle without a helmet while listening to deafening music using earphones.

And, sometimes, despite all the best intentions, and all the precautions, accidents will happen. People will be hurt, they will die of one thing or another.

Mandating every single bit of behavior in the name of improving safety will take the pleasure out of living.

Interesting Valentine's Day Activity for a Climate "Scientist"

If you don't know what I am talking about, you might want to take a look at the following posts by Anthony Watts and Steve McIntyre:

• Heartland
• Peter Gleick Confesses
• Notes on the Fake Heartland Document
• etc … etc …

I am just wondering why anyone would spend his lunch break on Valentine's Day scrubbing PDF documents. See the following bit from the so-called Strategy Memo:

<xmp:ModifyDate>2012-02-14T12:36:20-08:00</xmp:ModifyDate>
<xmp:CreateDate>2012-02-13T12:41:52-08:00</xmp:CreateDate>
<xmp:MetadataDate>2012-02-14T12:36:20-08:00</xmp:MetadataDate>

Now, to be sure, I am looking at the version of the memo I downloaded from http://www.desmogblog.com/sites/beta.desmogblog.com/files/2012 Climate Strategy (3).pdf linked from Evaluation shows "Faked" Heartland Climate Strategy Memo is Authentic.

Demand your right to buy whatever car you want!

You must rise and demand that you be given the right to buy whatever car you want!

What? You think already have that right?

No … You're wrong.

Your insurance company is not required to pay for it. We can only say you have the right to buy whatever car you want if your insurance company is mandated by the government to pay for it.

At least, that is the argument the Obama administration is making:

Under this policy, women who want contraception will have access to it through their insurance without paying a co-pay or deductible.

Can everyone who wants a good job find one?

Mr. President says:

We've got a long way to go before everybody who wants a good job can find one;

Yeah, like, forever.

This statement illustrates an interesting ignorance.

There is a difference between jobs and, say, cars.

It is perfectly OK to say we want to reach a level where everyone who wants a good car can buy one.

What, then, is the difference between a car and a job? Simple: No one wants a job for the pleasure of it. If that were the case, then people would be working for free left and right.

No, you want a job, correction, you offer your services, your human capital, to do work for someone else so that you can earn the money with which you can buy the things you want.

There is no way to ensure that everyone who wants a good job can fine one. First, a good job is one that pays gobs of money in return for very little effort. Secondly, and more importantly, whether someone is willing to hire you depends on whether they can sell the stuff they make using your services at a profit.

Jobs are not things made in the Star Trek replicator, shrink-wrapped, and sent to your local welfare office for you to pick up.

You can be the most skilled person with a great work ethic, but you are not going to get paid to do stuff unless there is someone out there who can expect to turn a profit employing your services to produce something that others will pay for.

The president is right. We are not at a point where a lot of people can see with some degree of confidence that they can make a profit producing stuff. The reasons are varied. First, there is the huge amount of debt that has been created by this president. It seems that the administrations is dead set against pro-growth policies and is planning to both tax and inflate its way out of it. Would you risk your resources if you expect either the returns to be eroded by inflation or grabbed by the government?

Second, the Federal government is currently taking money from people who produce things people want and giving it to people who produce things people do not want (e.g. Solyndra and Chevy Volt are prime examples) in addition to mucking up the health care market and contributing to stagnation in the housing market.

Third, the Fed is giving money away to the banks with its super low interest policy. The people who manage the free money they get are not stupid. If they expect inflation, there is no point in tying up that money in longer term, productive but risky projects. No, it is much better to make loads of money in short term speculation.

All this without even going into the global risks that we are facing. But, even without them, conditions at home are not conducive to people parting with their money to employ others.

It is as simple as that.

Demand curves are downward sloping

The debate over the Obama administration's mandate that all insurance plans make contraceptive available for free is not just an affront to the First Amendment, it is also a perfect example of the kind of waste generated by government mandates that things of all sorts be made available for free when they require real resources to produce them … read full article

Rest in peace, Roxy

A wonderful horse left us a couple of days ago.

I feel truly blessed to have had the chance to see her in action. She lived a good life among people who loved her and I hope she enjoys the big pasture in the sky.

Holy Insurance

So, apparently, the administration wants all employers, including, say, Catholic charity hospitals, to cover the cost of contraceptives, birth control devices etc for their employees.

In the process of searching for a public statement on this issue, I was able to find a video of Mr. President shooting marshmallows. Awwww! He's so cute when that expression of wonder and amazement takes over his face!

So, I read a statement posted on the White House blog by the Director of the Domestic Policy Council.

Ms. Muñoz writes:

Thanks to the Affordable Care Act, most health insurance plans will cover women’s preventive services, including contraception, without charging a co-pay or deductible beginning in August, 2012. This new law will save money for millions of Americans. But more importantly, it will ensure Americans nationwide get the high-quality care they need to stay healthy. Under this policy, women who want contraception will have access to it through their insurance without paying a co-pay or deductible. But no one will be forced to buy or use contraception.

Oh, boy! Am I glad … no one will be forced to buy or use contraception. Like, seriously, dude?!

If you are one of the seemingly dwindling number of those of us who knows anything at all about insurance and are not scared of basic arithmetic you are already shocked. See, you don't need to bring in any appeal to anything holy to understand why such a mandate imposed by government is incompatible with the idea of insurance.

What is insurance?

Insurance is about large losses that occur with some probability that can at least be inferred. Let's say, every year, 100 out of a million people in a country are diagnosed with a disease that costs $1,000,000 to cure. So, we can say the probability that a randomly picked person is going to be diagnosed in a particular year is 100 / 1,000,000 = 0.01%. The expected cost of treating all of them is $100,000,000. The financial burden of being diagnosed by this illness might be devastating to a given individual.

Given the choice, between paying, say, $500 annually for an insurance policy covering all the costs of treatment if one is diagnosed during the year versus having a 99.99% chance of not having to shell out any money and a 0.01% chance of financial disaster, most people would choose to incur the $500 cost of the policy. (To be sure, that kind of premium would indeed enable the insurance company to cover the payout in almost all states of the world, and, more often than not, they would make out like bandits.)

That's what insurance is: You give up a small amount with certainty in return for the assurance that the big loss with small probability hits, someone else foots the bill.

Now, the administration already is hacking away at the insurance market with the whole preexisting conditions dogma: It only makes sense to sell insurance to someone before that person is hit with a loss. Why would anyone give someone $1,000,000 in return for $500?! But, that was one of the first steps the Shoveler and his pals took to destroy the health insurance market.

Coming back to our contraceptives … First, note that contraceptive use is not a random event.

It's a choice.

When an insurance plan is required to cover contraceptive use, that means paying for something which some people use with 100% probability on a continuous basis due to their choices.

When someone else pays for something that you choose to buy for certain, that is not insurance.

This is just as stupid as requiring auto insurance to pay for the gas people put in their cars. The only effect of that would be to force people who use less than average amount of gas to pay for those who use more than the average amount.

That's a subsidy, not insurance.

Religious Freedom

Here is where the founding principles of the United States of America come in.

The per person cost of such "coverage" will be the average amount spent on contraceptives by the plan enrollees plus a portion of the administrative costs of the plan.

People who do not use contraceptives will pay for the contraceptive use of others who do.

OK, this is no different than the gas case, you might say, what makes this about religious freedom, any more than the government requiring me to pay for someone else's gas consumption.

A lot of people of a variety of religions believe some or all forms of birth control are against their fundamental values. Under the administration's rules, all people who obtain health care insurance coverage through their employers are going to be forced to subsidize the contraceptive use of others. That is, people will be forced to pay for others to be able to do something against their religious beliefs.

While right now, most of the reaction is coming from Catholic organizations, make no mistake about it, if such a policy is allowed to stand, even with an itty-bitty exemption for religious organizations, the rights of everyone will have been violently violated.

What’s true about them is NOT true about all of us

I was probably the last one to have heard about Chrysler's self-serving Super Bowl Ad. Not because I did not watch the game, but because I did watch the game and paid scant attention to the ads themselves.

Here's what the ad says:

Detroit's showing us it can be done. And, what's true about them is true about all of us.

It is impossible for what's true about GM and Chrysler to be true about the rest of us.

For the rest of us have to make sound decisions and generate wealth to pay for the mistakes of the executives and unions of GM and Chrysler.

For the rest of us cannot get "lifelines" worth tens and tens of billions of dollars when we make unprofitable decisions.

No sir, what is true of you is definitely not true of the rest of us.

And, that's the problem.

Not just a matter of counting

The Bureau of Labor Statistics is out with the January 2012 Employment Situation Summary. The report is chipper with good news. Haven't you heard? The unemployment rate is down to 8.3%!

The unemployment rate is calculated by dividing the number of people who are willing to work in current market conditions but can't find employment by the number of people available to work.

It is not, as some people instinctively think, the number of non-working people divided by the working age population.

This has implications for what we'd expect to see if things really were getting better and people were feeling it.

According to BLS data (series CEU0000000001), 137 million people were employed in October 2008. This number, in October 2011, was 133 million.

Similarly, in January 2008, before the dynamic Bernanke-Paulson chicken-dance-duo kicked into high gear, 136 million people had jobs. In January 2012, this number was 130 million.

In January 2009, right before the Shoveler in Chief took office, 132 million people were employed. A year after he rolled into town with his expert Keynesian economists and grand plans for all of us, in January 2010, employment was down to 127 million people.

Make no mistake about it, 130 million is more than 127.

Now, according to the Census Bureau, the population of the U.S. in January 2009 was 306 million. That is, about 43% of the country was employed. In other words, for every 10 employed people, there were 13 people not gainfully employed.

Fast forward to today, where the population of the country was apparently somewhere around 313 million, and we have about 42% of the country employed.

That is, for every 10 employed people, there are now about 14 people not working.

After all, this is the number that matters. For the working people produce stuff to meet the needs and wants of the entire population.

In addition, the per capita real GDP fell by about 1.2% between the end of 2008 and the end of 2011.

So, a smaller proportion of the population is working and they are producing less stuff.

We'll see where we go from here.

The home owner deception

You are not a homeowner until you've paid off your mortgage in full.

So, you decided to take out a loan to buy a property at the height of the housing bubble. It wasn't like the housing bubble was a well kept secret. The popular press regularly ran articles about the housing bubble for at least the 3-4 years leading up to the crash of 2008.

Still, everyone occasionally makes financial decisions which, in hindsight, turn out not to have been the right ones.

For example, back in the 90s, I bought some stock in a regional Internet access provider. They seemed poised for explosive growth. They had been in the market since way before anybody had heard of AOL. The stock price started to fall almost as soon as I purchased my shares. Before long, the company had been delisted and had declared bankruptcy. All I could do was to re-learn the fact that picking individual stocks was a fool's errand and people like me were much better off buying broad based index funds. Did I have a right to expect to have the loss in my stock portfolio be made up by the contributions of the rest of the country?

So, some of you bought a property and now you find out you can't afford to pay back the money you borrowed to do it. The reasons don't matter. You might be the most responsible, kind-hearted person. But, you can't pay back the money you borrowed. There is only one thing to do: Return the collateral to the lender and find some other living arrangement.

Oh, I am sorry, I forgot. Mr. Shoveler is here to help you stay in your homes.

This is a sure fire recipe for continued lackluster demand for real estate and a housing market in the funk.

See, there are people who might be interested in buying properties. The problem is, they know there are a bunch of people who are not going to be able to pay off their mortgages. That means, they expect more property to be offered for sale in the future and at lower prices by banks and institutions trying to recover whatever they can.

Simply put, most housing markets around the country have not found their bottoms yet.

Crutches offered by the Shoveler in Chief and other politicians only serve to bolster the gut feeling that prices will remain stagnant in the face of inflation or even fall even further in the near future.

Keep that in mind when you hear things like:

Pass this plan. Help more families keep their homes. Help more neighborhoods remain vibrant. Help keep more dreams defended and alive. And I promise you that I’ll keep doing everything I can to make the future brighter for this community, for this commonwealth, for this country.

Hey, while those responsible(!) homeowners were pushing property prices up to nutty levels, some decided not to get into mortgages that made no sense. They are now being punished with still non-realistic property prices in addition to continuing to pay for the mortgage interest deductions of homeowners(!).

Give me a break! Stop trying to plug the hole in the hull by piling sand onto the ship.