Peoples Republic Of

Mickey Kaus gives another great example of absurd and outrage inducing union work rules:

Antiquated work rules hurt BART finances by ramping up overtime, BART officials said.

They point to rules requiring that two workers remove seat covers and backing for cleaning. A utility worker unsnaps the cushion. A journeyman mechanic is called in to remove two screws for the seat backing.

Among cleaning crews, a worker in one job classification cleans inside stations and another worker in another classification cleans outside the roof line of stations.

I had been having problems with the My Documents folder on our Living Room laptop that is connected to our network wirelessly. The main problem was that I could not access any files that had been changed since some time in late April!

Because we use Small Business Server 2008, folder redirection was set up so that the My Documents folder actually resides on the SBS 2008 box. Because the laptop connected wirelessly, I had Offline Files activated so that if the laptop were disconnected from the network, I could continue to work on documents.

I discovered that by turning off Offline Files (conveniently reached in Vista by typing “Offline Files” into the search bar) the problem was solved. (I had previously tried leaving and rejoining the domain, but that did not work.)

In the wave of the popping of the housing bubble and and resulting damage to financial institutions, I have heard many calls for “more regulation.”

First the standard point from government skeptics: why more regulation and not better regulation? I have seen surprisingly little evidence or arguments that a lack of certain regulations resulted in the runup in housing prices or the sensitivity of financial institutions to weakness in the secondary mortgage market. Most of the calls for more regulation appear to be 20-20 hindsight that “something” should have been done by the government to prevent these problems.

Despite the vacuity of calls for more financial regulations, I am open to the possibility that a better regulatory structure might improve the operation of these markets. It is certainly conceivable that even radical changes might be useful. Unfortunately, most of the specific proposals made seem like really bad ideas, e.g. reinstitute the Glass-Steagal separation of commercial banking and investment banking.

Giving regulators more discretion only seems like a good idea if we believe regulators know more, or are wiser, or have fewer conflicts that affect their judgment than market participants. The insights of the public choice economists suggest regulators are likely to be worse than market participants in all these areas. One possible exception that comes to mind is that there may be suboptimal controls on individuals’ ability to receive extraordinary current compensation while their companies at being set up for future failure. Although this is a classic agency problem that seems better addressed by a robust market for corporate control than increasing regulatory discretion.

I was also struck today by the fact I have heard no real proposals for political reform. Surely some large part of the recent financial problems were caused by a Congress that, for example, created Fannie Mae and Freddie Mac, encouraged lenders to hold their stock as capital, implicitly backed their debt with a government guaranty and encouraged more sub-prime lending. Are there structural reforms we should be considering to make the political system respond more to what is in the long term interest of the entire country rather than those of vocal interest groups? I supposed campaign-finance reform would be such a proposal, but by all accounts it has not succeeded in altering this dynamic and is a remarkably unimaginative proposal.

What about incentive pay for elected representatives based on various measures of national well-being in the future, to the exclusion of other compensation? Perhaps each piece of legislation could have such incentives built into it? Or perhaps taking seriously enumeration of powers in the constitution? I would like to see more ideas for political reform along these lines.

Mickey Kaus recently asked the following rhetorical question about the lack of union concessions in the government financed GM reorganization:

Why should the government tax unskilled workers making $18 an hour, who haven't bankrupted their employers, in order to protect unskilled workers making $28 an hour, who have bankrupted their employers, from having to take a pay cut?

The obvious answer is that they shouldn’t.

But, I was surprised to see this argument, because its logical extension is that there should not be any government expenditure that doesn’t benefit the least wealthy taxpayers as much as the portion of their tax dollars that are being used for it. In other other words if a dollar is taken from a poor taxpayer for a program, that person should get at least a dollar’s worth of utility from that program.

That is a pretty tough standard to satisfy. Almost all industry subsidies, scientific research, public works, and transportation programs would fail such a standard. Resorting to more ephemeral justifications like these programs benefit the entire country and such benefits flow indirectly to the poor taxpayer would also justify the GM bailout.

So I welcome Mickey Kaus as a supporter of the minimal state!

A number of blog posts from Ian Dixon, Chris Lanier and Ben Drawbaugh over the past week or so have cause me to rethink where I think the Windows Media Center platform is headed. In three words: away from extenders. Not just stand alone Media Center Extenders, but Xbox 360 Media Center Extenders as well. I think they will be replaced by dedicated PCs running some version of Windows that is designed to function more like a consumer electronics device that a conventional PC.

Here are the pieces of evidence and arguments that have led me to this conclusion (albeit one I’m not that certain of):

• HP has discontinued their media center extenders and MediaSmart TVs. Linksys extenders have also been discontinued.
• When Netflix Watch Instantly functionality was added to the Xbox 360 last Fall, and to Media Center recently, there was no support for Media Center Extenders.
• The Zune Marketplace will be available on the Xbox 360, but not Media Center.
• Chris Lanier writes:

  More so, I don’t see Microsoft investing the time to use Media Center as the core for the home.  Media Center isn’t dying, it isn’t coming out of Windows, but I continue to think the focus will shift.  Microsoft will still work with partners on Extenders (I’ve been assured of this), but they will still release products and features that forget these Extender’s even existed.  They will connect your life, but they will not connect your life using Media Center.

• Reports I read previously concerning Windows 7 and TV shows recorded with OCUR tuners suggest that other PCs in a Windows 7 Homegroup will be able to play DRM laden TV shows recorded on a Media Center PC (something that is impossible now).
• However, even Chris Lanier agrees with Ben Drawbaugh that Media Center is likely to be integrated into Windows Home Server relatively soon.
• Ian Dixon points out that we will soon be seeing a retail PC designed as a set top box in the form of the  Mediaconnect TV box.

In my mind all of these developments point toward the extender model of multiroom Media Center use being replaced with set top PCs in each room that do the work of Media Center Extenders.

Why? Architecturally, the extender model has always been something of a kludge, with extenders running as different users users on the Media Center PC when operating. This has led to many difficulties with extenders like each having its own library of music, the inability to fast forward or rewind audio content on extenders, and many add-ins not running on extenders.

The advantage of the extender model was that (i) you only needed one PC and each extender was relatively inexpensive, and (ii) key data and infrastructure was all in one place (like recordings and the schedule of TV shows to record). These advantages are what have made Media Center the best multi-room solution for TV available at any price.

If there really are cheap CE-style (i.e. really cheap, simple and reliable) PCs coming then this will negate rationale (i) for the extender model. With the coming of Homegroup in Windows 7, I suspect we see the beginning of the negation of advantage (ii) of the extender model if these advantages of centralization can be duplicated using Homegroup in some way.

Using a set top box instead of an extender means that Microsoft will no longer have to dedicate resources to making the extender kludge work and can instead devote those resources to coordinating the media related activities of multiple PCs on a network. A pursuit that may well be useful in contexts beyond whole-home AV.

I don’t think extenders will disappear any time soon, but I think the evolution of hardware technology and the advances in Window 7 point toward their eventual replacement by a consumer electronics-style set top box PC that serves the same purpose.

For weeks I had been having a problem with one of the two CableCard OCUR tuners in my Vista Media Center PC. A fee weeks ago, I decided to try an figure out what the problem was. My testing revealed that one tuner worked fine all the time, but that the other would stop tuning anything but clear QAM (unencrypted digital cable channels that generally carry local broadcast channels) channels after a few hours. If I either powered down the tuner (via the web interface) or removed and reinserted the card, I could once again tune all of my cable channels, but then after a few hours I would be back to only being able to tune clear QAM channels.

Because the problem would be solved after reinserting the CableCard, two visits from Comcast resulted in some tweaks to my cabling and some new cable splitters, but the problem would always recur shortly after they left.

I posted on The Green Button, any received the opinion that the problem likely lay in a bad CableCard. So with my third visit from Comcast, I insisted they install a new CableCard. That seems to have done the trick as the four days after the new card was installed all OCUR tuners still tune all channels.

This evening I tried using Orb with the Bold on my 20 minute train ride home from work in downtown Chicago. I was pleased to find that Orb worked. But AT&T’s network was not a match for Sprint’s and the quality of the podcast I was listening to suffered repeatedly. Unlike when using Orb with Windows Mobile, however, the network connection never broke so badly that I needed to manually resume listening to the podcast. Both were suboptimal experiences, but with the Bold the issue seems to be more with AT&T’s network than with the Bold itself.

Having found that I would need to continue to sync podcasts to the Bold, I tried connecting it via USB cable to a Vista PC in our house to see if I could sync it directly with J River Media Center. I found that I could! Upon connection, Vista found drivers for the Blackberry and recognized the Bold. Plug and Play. Likewise I could easily transfer photos from the Bold to my PC using Windows Live Photo Gallery. The Bold’s microSD card and internal memory both show up as standard removable drives when the bold is connected with a USB cable. In my mind, this is a Big improvment over ActiveSync which for me was fraught with problems: it would often just stop working and the device would need to be repaired and resync’d. So often in fact that I would seldom bother to connect the device to a PC using ActiveSync (instead I would sync music files to the removable SD card).

I had been planning to get one of the new iPhones when the come out in June, but I fear having to start using iTunes. The Bold’s more conventional connection to Windows makes me more inclined to keep using the Bold.

A few more observations after a few more days of use:

• The media player application crashes every couple of days. This is significantly more frequent than any crashes in Windows Mobile 6.0.
• When I turn on my Bluetooth headset. Unlike Windows Mobile, there is no tone generated by the Blackberry that lets me know I have a good connection.
• My A2DP Bluetooth dropout problems appear to improve if fewer applications are running, especially if the “Phone” app is not running.
• The only Windows Mobile app I miss is ListPro, but I will try SplashShopper to see if that gets me the listkeeping functionality I liked in ListPro.
• If I have chosen “column view” in the Blackberry web browser, that setting is not persistent after following a link, meaning it needs to be reset with every page. This is annoying, but would be more so if the trackball weren’t a pretty good way to get around web pages that are bigger than the Blackberry screen’s horizontal dimension.

Although, I find the Blackberry browser generally better than that in Windows Mobile 6, it is really annoying that there are many pretty simple pages that can’t be used at all to enter data or make selections from dropdown boxes. I’m looking at you Zefty.com.

A few days before our recent trip to Europe, I decided that I needed PDA/Phone that I could use overseas on the trip. Our MIS department set me up with a new Blackberry Bold and I have no intention of going back to my HTC Mogul on the Sprint network. My firm pays for the data plan, so that isn’t an issue for me. Here are some of my initial thoughts on the Bold, in no particular order:

• It is great having a phone and internet connection on a phone I can use overseas.
• The trackball generally works great for navigating—as well or better than a stylus or touch screen. I occasionally miss scroll bars, however.
• In general, the browser on the Bold works as well or better than that on my Windows Mobile 6 phone.
• But… I find myself unable to download large files or web pages getting an error that the requested amount of data is too large.
• The A2DP stereo Bluetooth connection is not as solid as that I experienced with the HTC Mogul. Often, I will get dropouts when the phone is in my pocket. This problem seems to be lessened significantly, if I am not running any application other than the music player.
• The lack of native support for reading scanned PDF files is somewhat annoying.

More later…

Ignoring problems of aggregation, probably so.

Mickey Kaus writes somewhat confusingly this morning that:

I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life.  But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me. 

Huh? Kling’s point is that because the government is subject to interest group pressures (from the sick) it is likely to spend more on healthcare than individuals would choose to spend if they they actually paid the cost of the care out of their own pockets or through insurance policies that they purchased. Why would we want to spend more than this?

Absent a postulate of market failure in the insurance market, the reason insurance would not cover this procedure is that ex ante, is that the purchasers of the insurance policy would rather spend their money on other things than buy insurance to cover this type of treatment (i.e. one that costs $20 million per life saved). If consumers did value having a right to such a treatment, a well functioning insurance market should be able to provide insurance that covers it for a competitive price. If consumers didn’t really value this right, insurers would not provide it and their not providing it would be evidence of how little consumers valued the right (a revealed preference!).

I agree that controlling the cost of healthcare is not inherently desirable. For largely the reasons explained by Megan McArdle and Mickey Kaus: we’re rich, why shouldn’t we spend more on healthcare? But we don’t place an infinite value of healthcare. At some point the marginal value is less than the marginal cost. We should stop buying it at that point and have a system that let’s us do that. Private insurance is such a system as long as we have a well functioning market.

It is likely that we don’t have a perfect market for health insurance and I am open to arguments that there might be superior systems (including tweaks to the current one), but I have seen no proposed changes involving universal coverage (or even a significantly greater government role) that I think would actually be an improvement on the current system that would make people better off in any concrete way.

Universal coverage could make everyone more equal, but at the cost of making them worse off (at least in terms of satisfaction of concrete revealed preferences). I think that is a tradeoff Mickey would be willing to make, but I remain skeptical.

Mickey Kaus responds to my defense of Samuelson saying “aspirational preferences” sound pretty good to him and that “It seems like it would be hard to achieve any desirable form of equality--equality before the law, equality of opportunity, or social equality--simply by aggregating the choices of individuals spending their own money.”

Perhaps, but here are a few caveats:

• Going back to the context of Samuelson’s post, even if those are desirable things it is hard to see how increases in types of equality are signs of economic growth or economic progress. His point was that a number of Obama’s plans involve sacrificing economic well being to pursue aspirational preferences.
• It is hard to know how to value aspirational preferences about people want their society to look because talk is cheap. We know how much I value a new car by the amount I’m willing to pay for it. Not so with aspirational preferences which are mostly expounded rhetorically rather than revealed by the cold hard test what people are willing to forgo to satisfy that preference. Aspirational preferences are mostly satisfied by spending other people’s resources.
• Aspirational preferences have been used as an excuse for lots of bad policy. Welfare for example: people don’t want to live in a world where single mothers and their children go wanting.

None of this is to suggest that there should be no weight given to aspirational preferences, but I would probably accord them less weight than Mickey and remain highly suspicious of them as justifications for policies that make people economically worse off.

Mickey Kaus takes Robert Samuelson to task for seeming “to argue that because health care is not "material" it isn't a valuable service and can't be the basis for capitalistic economic growth.”

I think that misreads Samuelson, but then Samuelson is not being very clear on this point. I suspect Samuelson would agree with Kaus’ broader (correct) point that a significant part of increased health spending is due to the fact that we are richer and other desires are more easily satisfied with a smaller portion of our income, leaving more to spend on the more labor intensive business of keeping us healthy.

Samuelson's point is he believes Obama's world in which everyone is insured doesn't really make people as a whole better off because the moral hazard associated with health insurance encourages wasteful spending on things someone else is paying for. The cost of that wasteful spending is that resources have been used on healthcare rather than things people really want like bigger houses or leisure.

Taken to a higher level of abstraction, we will have succeeded in satisfying an aspirational preference (something about which we would say "gee wouldn't it be nice if...") for everyone to be insured at the cost of satisfying the actual preferences of people revealed by how they spend their own money in the absence of compulsion by the government.

Samuelson is saying satisfying aspirational preferences for things like green energy, universal insurance or limiting greenhouse gasses as the expense of revealed preferences is not economic progress because we will not be better off. My sur-response to Mickey is here.

Two fine paragraphs from Will Wilkinson responding to a silly post by Matt Yglesias:

Now, I am willing to say that, ceteris paribus, a certain kind of grasping, unprincipled pecuniary self-interest is a destructive quality. If that’s greed, then I’m against it. But I’m not willing to say the same thing about the pursuit of wealth generally.

I think we have recently punctured some dangerous misconception about the real value of certain kinds of “financial innovation,” and so we should reconsider how much those who have become wealthy in these fields have actually enhanced general welfare. I think a lot of execs basically failed to do their primary job: to manage their firms’ assets responsibly on behalf of the owners of those assets: the shareholders and creditors. This makes them justifiable targets of outrage. We’ve learned a lot of lessons. I think we’ve been given reason to think much harder about the principal-agent problem — the mismatch of incentives between owners and managers — at the heart of corporate organization. I think we’ve learned just how “socially responsible” maximizing long-term value really is, and how anything that distracts from focus on long-term value creation (whether it be myopic bonus systems or irrelevant-to-the-business “corporate social responsibility” initiatives) is a potentially hazardous nuisance. The Smithian congruence between self-interest and the general welfare is not a natural fact of the world, but is mediated by social norms and the structure of institutions. We need to make sure the desire for wealth takes the right shape, and that the institutions within which people pursue wealth tend to actually work to convert “low” aspirations into real social benefits. But we’ve been given no special reason to second-guess the general utility of the desire to become wealthy. It is a crucial and necessary resource. And it remains a much more likely engine of utility than the desire for political power — a truly dangerous motive Matt tends to ignore.

The Economist asked David Frum this question and it was striking how much his answer reflected what I had been thinking:

Democrats in Congress have said "No" to organized labour on its demand to eliminate secret ballots before union certification. To date, the Obama administration has brushed off demands from its angrier constituencies to impose some kind of legal sanction on those in the Bush administration who made national security decisions with which Democrats have disagreed. They have not acted precipitately in Iraq, they have not granted a blank check to the auto companies, and they have shown impressive open-mindedness and adaptability in addressing the crisis in the banking sector—even if they have been awfully slow to arrive at a credible final policy. And, of course, President Obama himself has shown great calm, reassurance, and dignity in office. The "reset" of tone in US foreign relations is a great service both to America and the world.

Those are all good things. Not sure they're worth $800 billion in wasteful stimulus spending though.

There is a deeper problem as well: a naive trust in the ability of government action as an antidote to unwelcome results in the market. Unfortunately it is a problem that seems to be shared by Republicans.

To be clear, it seems likely that many markets can be improved. But most of that improvement seems likely to come by making changes that eliminate distortions, which is wholly different that change inspired by unwelcome results.

After updating the firmware in of the OCUR CableCard tuners in my Vista Media Center PC, I noticed that it would only tuner clear QAM channels, which in my case limited it to cable channels that had over-the-air counterparts, e.g. NBC, CBS, PBS.

I was able to solve this problem just by removing the CableCard from the OCUR tuner and reinserting it.

Noam Scheiber writes of AIG in the current issue of The New Republic that:

The real problem was more fundamental: Companies that deal in risk have a natural tendency to take on too much of it, whether they're arranging homeowner's policies or elaborate arbitrages. Over time, a steady march of profits desensitizes them to the dangers they once sweated; even institutional checks begin to weaken.

Which is why the difference between a successful risk enterprise and an unsuccessful one often has less to do with the complexity of its schemes than with its leaders' fanaticism about discipline. It was, among other things, the lack of such leadership at AIG in recent years that made the company a ward of the state.

This seems plausible with respect to AIG. And probably even more true with respect to governments. Has anyone else noticed a lack of sensitivity to risks and dangers of new policies and the weakening of institutional checks on the actions of the federal government recently? Where is the fanacticism about discipline with respect to risky new schemes in the current administration? No, really, where?

In fact, for all the reasons identified by the public choice economists, the government is likely to be even worse at running things than the private sector. That’s why institutional checks and institutional modesty should be the order of the day when it comes to government initiatives. Too bad Barack Obama does not appear to understand this.

The essence of what I alluded to my post yesterday about the President’s actions with respect to the auto industry was nicely captured by David Brooks in today’s New York Times:

Well, the president certainly acted tough on Monday. In a show of force, he released plans from his Office of People Who Are Much Smarter Than You Are. These plans insert the government into the car business in all sorts of ways. They pick winners (new C.E.O. Fritz Henderson) and losers (Rick Wagoner). They basically send Chrysler off into the sunset. Joe Biden will be doing car commercials within weeks.

This new Office of People Who Are Much Smarter Than You Are will not only run the auto industry, they will also run the energy industry, the financial services industries and the the healthcare industry.

I am somewhat intrigued to see how this will all play out. I am quite confident that, if brought to fruition, the plans for these industries will make Americans generally worse off than they otherwise would have been. What is hard to predict is the magnitude of the suffering induced (so small isn’t even noticed, or so large that people’s standard of living actually drops noticeably) or what the reaction to noticeable suffering might be (a commitment to “cure” still more market failures, or a realization that enough is enough).

My fear is that even if the failure is manifest and people are convinced that enough is enough, the current Republican Party lacks a message that could channel an opportunity into a deeper understanding of the dangers of the fatal conceit evidenced by this administration. My fear is that one set of conceits would be replaced by another.

I found the following passage from President Obama’s remarks on the U.S. auto industry striking:

It's with deep reluctance but also a clear-eyed recognition of the facts that we've determined, after careful review, that Chrysler needs a partner to remain viable.  Recently, Chrysler reached out and found what could be a potential partner -- the international car company Fiat, where the current management team has executed an impressive turnaround.  Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to build -- building new fuel-efficient cars and engines right here in the United States.  We've also secured an agreement that will ensure that Chrysler repays taxpayers for any new investments that are made before Fiat is allowed to take a majority ownership stake in Chrysler.

When did the President of the United States start making evaluations about the appropriateness of potential merger partners for private companies, the strength of such merger partners’ management, the value of their technology, their product mix, the best locus of production, and the priority of different tranches of their debt?

I guess at the same time he started picking their CEO’s and having the United States guarantee their warranty terms.

The White House press office cannot even bring itself to quote the concluding sentence in the remarks about GM: “Let me be clear: the United States government has no interest or intention of running GM.”

Sure… as long as GM (and others) do exactly what the administration wants.

Businesses (and citizens) of the United States should consider Gerald Ford’s warning that “A government big enough to give you everything you want is a government big enough to take from you everything you have.”

The introduction to a draft article on the regulation of Credit Default Swaps has an excellent explanation for what went wrong at AIG. It has everything to do with the mispricing of risk associated with mortgage backed securities and little to do with Credit Default Swaps themselves.

HT: Marginal Revolution

I spent some time this afternoon looking around the web for discussion of the Friday evening’s Battlestar Galactica finale and the best I came across is Tim Goodman’s (including the comments!).

A few of my own thoughts that I have not seen elsewhere:

First, to me one of the most interesting aspects of the show has been Gaius Baltar’s theology and its many incarnations. It was nice to see it play such a prominent part in the conclusion of the show. If someone else doesn’t beat me to it, I’d like to trace that evolution.

Second, I read many complaints that the story could have been wrapped up more neatly had the show had a set arc that was followed from the inception of the series through its conclusion. That may be the case, but we would have missed out on many of the great intermediate developments that people have really liked. I have really enjoyed listening to Ron Moore’s podcasts after watching each episode. Among other things, they relate how much of the show has been modified on the fly, usually to make the story better. Those sorts of modifications have enhanced the series as a whole and would not have been possible in a series with a more defined arc.

Third, Ron Moore’s podcasts have made me more more willing to forgive things that seem “unrealistic” because often there will be an acknowledgment of such aspects of the show with an explanation of why they were necessary because of a limitation of the medium, or because they enhanced the story telling, e.g. the helmets have lights on the so you can see the actors’ faces.

Fourth, to me the fact that the story ended 150,000 years ago on Earth makes the ending somewhat bittersweet, despite being ostensibly upbeat. The Star Wars stories took place a long long time ago in a galaxy far, far away, but you could imagine the stories continuing and progress being made, legacies being carried on etc. In contrast With the Battlestar Galactica ending we now know that all the individuals we grew to care about over the life of the series are gone, and have been gone for 150,000 years. Their only legacy is an impersonal one: that they were instrumental in seeding the earth. That’s not nothing, but it is still a little sad.