Canada has a Front-Row Seat...

...from which to watch the U.S. go down the drain.  Conrad Black is the author; here's his blistering conclusion:

And now, in an astounding demonstration of national fecklessness, a failed president is running slightly ahead in the polls of a challenger who has a real CV, unlike recent presidents, but who is so politically oafish and plastic, he makes Elmer Fudd seem charismatic. The incumbent has raised the national debt by 50% on what had accumulated in the 220 years of American independence prior to four years ago — that is $17,000 for every man, woman and child in the United States, in just four years. And Mr. Obama’s tocsin is the comprehensive assertion that: “Experts agree that my plan will reduce the deficit by $4-trillion.” These magic 13 words confirm the reduction of the deficit from $1.5-trillion annually to $1.1-trillion annually in the next ten years, in a country that four years ago had a money supply of only $900-billion.

About 70% of the American deficit is “bought” directly or through the banking system by the Treasury’s 100% subsidiary, the Federal Reserve, and the minimal interest paid on it is recycled back through the Federal Reserve to the Treasury, so the cost of borrowing is zero. It is the ultimate Ponzi scheme, the fiscal nirvana of endless, mountainous debt, rendered easily bearable because it doesn’t cost anything. It is a fraud, a mirage. It all possesses the hypnotic allure of the Gotterdammerung — as the Gods ascend to a burning Valhalla. If this administration is re-elected, Canada, as it has for the entire mighty spectacle of the inexorable rise of the United States, will have the ring-side seat for a disaster. Prudent, hesitant Canada, ran 14 federal government surpluses in a row. We are the pigs in the brick house — it isn’t a heroic position, neither daring nor stylish, but Canadians are peering through the portals of their stout solid home, transfixed and astonished.

The fact that Willard M. Romney is still running almost even in the polls despite his demiurgic implausibility as a candidate, afflicted by a one-person pandemic of foot-in-mouth disease, illustrates the concern of the American voters. Either Romney lucks through and numerate sanity starts to return to American public life, or the most self-destructively incompetent regime since James Buchanan brought on the Civil War, will come back and stoke up a truly spectacular inferno that will purify America in a mighty economic Jonestown. There will be no more tugging at a trouser leg from Canada — either a comradely pat on the back, or a neighbourly blast with a fire extinguisher, but this operatic crescendo can’t continue for one more full act.

Now go read the whole thing...

Top Ten Things Obama Should Have Done...

According to Mickey Kaus, one of the few sane Democrats writing on the web...

Curiosity: At Work, Examining a Tasty Rock...

The Curiosity team is almost finished with the checkout phase.  Meanwhile, on the way to their first “real” science assignment, drove by this interesting-looking rock.  This presented a perfect opportunity to try out some of the instruments on the big arm, and that's what you're seeing here...

You Can't Make This Stuff Up!

Naturally, New Jersey is first with this likely-to-be-growing trend.  They have banned smiling on driver's license photos.  Really!

Uncivil Campaigning...

We often hear complaints that the tone of modern campaigning is outrageously uncivil, surely more so than at any time in the past.  I've read quite a bit of history, including in particular a lot of U.S. history.  Such complaints about campaign incivility sometimes make me laugh out loud, because I've read so much worse.  In fact, I'd say that by historical standards our current campaigns are certainly in the 10% “most civil”, possibly even the top 5%.  Many U.S. histories, especially biographies of past presidents, cite old campaign ads and flyers; some are even reproduced.  But that stuff is hard to get up on the web.

The good folks at Reason have done it for me.  The video below (which I just ran across this morning) is from them, and makes the above point very nicely.  It's also quite funny.  And being the good citizens that they are, they even include their sources.  Enjoy!

You Mormons Need to Get With the Program!

One small excerpt from the inimitable Mark Steyn, writing on the Obama administration's response to the attacks in Libya:

What other entertainments have senior U.S. officials reviewed lately? Last year Hillary Clinton went to see the Broadway musical "Book of Mormon." "We reject all efforts to denigrate the religious beliefs of others"? The Book of Mormon's big showstopper is "Hasa Diga Eebowai," which apparently translates as "F*** You, God." The U.S. Secretary of State stood and cheered.

Why does Secretary Clinton regard "F*** You, God" as a fun toe-tapper for all the family but "F***, You Allah" as "disgusting and reprehensible"? The obvious answer is that, if you sing the latter, you'll find a far more motivated crowd waiting for you at the stage door. So the "Leader of the Free World" and "the most powerful man in the world" (to revive two cobwebbed phrases nobody seems to apply anymore to the president of the United States) is telling the planet that the way to ensure your beliefs command his "respect" is to be willing to burn and bomb and kill. You Mormons need to get with the program.

I long for the day when I can be proud of my president again, instead of disgusted.  But in the interval, I'm very glad to have Mark Steyn around to make me laugh...

Quote of the Day...

Spoken by Dorothy Woods.  She's the widow of Ty Woods, one of the ex-SEALs killed in Libya last week along with Chris Stevens, our Ambassador to Libya.  She said this during her eulogy to her husband, as reported by Froggy on Blackfive:

RID THE WORLD OF THOSE SAVAGES!

We sleep safely only because of the Ty Woods who place themselves in harm's way on our behalf. I am grateful every day for their existence. And I am greatly moved to see the evidence of the strong support Ty received from his proud wife...

Romney's Tax Returns...

Megan McArdle speaks for me on this issue with finer prose than I could muster.

It surely is wonderful to see her blogging again.

But reading the comments on her post makes me want to go find another country to live in...

Thomas Jefferson, Revisited...

An excellent article in the Smithsonian, summarizing a lot of newly discovered or revealed information about Thomas Jefferson.  Most of this country's founding fathers have had their histories surrounded by a protective cocoon built by misguided historians trying to preserve the heroic narrative I learned in grade school.  Our founding fathers were all too human, though.  Personally, I would rather know the truth about them, as it is generally far more plausible and always provides far more understanding than the too-good-to-be-true historic gruel we've been dealt.  In recent years more and more such revelations have occurred, and I welcome them all. 

I like my history served up black; no cream or sugar please.

Efficient Health Care Markets...

There's a fascinating article in the WSJ($) today that profiles a company that delivers top-notch health care to those who can afford it. The company is Private Health Management, and its CEO is Leslie Michelson. They don't actually deliver the health care themselves – rather, they match up each patient's needs with the absolutely best health care that can be found anywhere in the world for them.  It is an attempt to address the opacity of today's U.S. health care marketplace.  Mr. Michelson has dreams of delivering that services to the masses, not just the ultra-rich.  The conclusion of the article resonates with me:

Americans, says Mr. Michelson, are "extremely good at buying things." But they don't know how to buy health care, and his company can help by giving them the tools they need. "The entire engine of American consumerism is missing in health care. What a preposterous thing."

Preposterous, indeed.  I am fascinated by the ideas underlying this company.  I also want to channel Glenn Reynolds and say: faster, please.

Creepy and Depressing...

I can't help it; that's how the election “tea leaves” are looking to me.

First: the creepy.  Check out the “Obama version” of the U.S. flag at right.  That flag is for sale on the official Obama web site.  There are only 250 of them (it's a limited edition print), so the listing may disappear at any time – so I've preserved a screen shot of the entire store screen, just in case someone doesn't believe it.

What's creepy about it?  Look how the Obama “O” logo is replacing the standard field of stars for each state.  It's sending a message to me, a creepy message: ”Replace the states with Obama!”  And those red stripes – five of them – look like streaks of blood from the fingers of someone's hand.  Shivers...

And here's another creepy thing: official Obama spokeswoman Jessica Alba asks people to pledge allegiance not to the United States of America – but rather to Barack Obama.  She even asks people to take pictures of themselves with their hands over their hearts (as when you pledge allegiance), like the one at left.  It's way too much like the personality cults of Mao, Stalin, or the various NoKo leaders...

Well, all of that certainly wasn't calculated to make me feel good.  I couldn't help thinking that Romney was running against a new version of Mao, but with competent PR people (and, thankfully, minus the violence).  And I'm not the only one noticing this...

As I drank my morning tea, pondering the above, it suddenly occurred to me that a fixture of previous election reporting – the Iowa Electronic Markets – was conspicuously missing from what I've been reading for the 2012 elections.  If you're not familiar with the Iowa Electronic Markets, it's a futures market (all accessed via the web) where you can purchase “contracts” for all sorts of things.  Essentially it's a legal way to place a bet on some particular outcome.  It's run by the University of Iowa's School of Business, and it's the best of the efforts attempting to “crowdsource” judgment about future events.

Of relevance here, you can purchase a contract that pays based on the outcome of the 2012 presidential election.  The way these contracts work is quite simple.  In the 2012 presidential election “Winner Takes All” contracts (the most popular by far), you can buy one of two contracts: either a contract that says the Democratic nominee (Obama) will win the popular vote, or a contract that says the Republican nominee (Romney) will win the popular vote.  Each contract pays $1 after the election if the candidate whose contract you bought wins the popular vote, or nothing if he didn't.  Where it gets interesting is how much you have to pay to buy one of those contracts today.  Someone is selling you that contract, and they will set the price based on how likely think it is that they will have to pay out that $1 in the end.  The graph at right shows you the price of those contracts over time; blue for the Democrat winning, red for the Republican winning.

If you're not used to interpreting these graphs, this may not be conveying much to you.  Here's the short interpretation: if you're an Obama supporter, this graph tells you that the wisdom of the marketplace is that Obama is very likely to win the popular vote (I wrote that carefully, for reasons I enlarge upon below).  That graph tells me that right now it would cost me about $0.75 to buy a contract for Obama, and about $0.25 for a Romney contract.  The price for a Romney contract is low for a very simple reason: the person selling that contract doesn't think it's very likely that he'll have to pay off.  The thing that's powerful about a system like the Iowa Electronic Markets is that you're seeing the cumulative judgment of many thousands of people.  It's precisely the same dynamic that's at work on the options markets, or the commodities futures market.  It's as close as you can get to an actual measurement of the probability of a future event like the outcome of a presidential election.  The Iowa Electronic Markets have a good track record – not perfect, but good – in their predictions of political outcomes.  What they're saying right now is that Obama is a 3:1 favorite in the election.  Obummer...

The reason I made a point of being careful to qualify the WTA market as being based on the popular vote outcome is this: it is possible for a candidate to win the electoral college (and therefore the election) while losing the popular vote.  This actually happened in 2000 with Bush vs. Gore – Bush won the electoral college vote (and therefore the election), but Al Gore actually won the popular vote.  That's an artifact of our Constitutionally prescribed presidential voting process, and not evidence of George W. Bush cheating somehow.  This artifact drives a lot about how presidential campaigning works.  All of this is discussed in some detail in this nicely done article.  Only three times in U.S. history has a candidate won the popular vote but lost the election.  It could happen again this time, but it's not very likely.  So the WTA results, even though based on popular vote and not electoral college, are still a reasonably good proxy for the election's outcome.

The Iowa Electronic Markets presidential WTA results should be (and probably are) ringing all sorts of alarm bells at Team Romney, and be a reason for the Team Obama folks to be sleeping peacefully at night.  They are not a good omen, most especially the way they're trending (and with a steep slope, too!).  They are not cause for despair – not yet, anyway.  It's still six weeks until the elections, and much can happen in that interval.  But if Team Romney wants to win, they'd better start upping their game, 'cause the tea leaves are not saying cheerful things from their perspective...

State Income Tax Distortions...

I heard a radio news report of this phenomenon, and did a little digging to see what the heck they were talking about.  The sources for this all suffer from a severe progressive/socialist bias, but on this issue I think they've struck something that ought to be a problem for people of any political persuasion.

Here's the basic idea that some genius politician came up with (I've no idea what the original source for this notion was).  Let's say you're a state politician in New Jersey.  A large company – say, General Electric – is planning to build a large plant that brings 2,000 direct jobs with it, and even more indirect jobs to support it and its employees.  You (the politician) want to persuade General Electric to locate that plant in New Jersey, but you don't want to give even the appearance of spending tax dollars to do it, because that will alienate the voters.  Here's the sly trick: you tell the company that you will give them a special deal – a tax credit equal to the income tax withheld for all its employees.

Here's how that might work.  General Electric, with the new plant's 2,000 employees, might withhold and pay an average of $3,500 per year, per employee for New Jersey state income taxes.  With 2,000 employees, that works out to $7 million per year – not chump change, for sure.  With the special deal, however, General Electric gets a tasty $7 million dollar check from the state, exactly offsetting the employee income tax they paid.  That's really just a bookkeeping trick, though – what really happened is that General Electric's 2,000 employees paid state income taxes to General Electric instead of to the state.  The companies that receive this credit aren't even required to tell their employees about it, and of course they don't.

A video primer:


Much more on this here and here.

There are several things very wrong with this practice.  The one that offends me the most is the opaque expenditure of tax-payer dollars. By making it a tax credit instead of an appropriation, the politicians have carefully disguised this expenditure.  It is effective, too, for most tax payers – even those tax payers who actually pay attention to such things.  I had no idea this practice existed until yesterday, and apparently it has existed for over a decade.  There are other big problems as well: the government is picking winners and losers (always, always a problem), only large and well-connected companies will ever get this sweetheard deal, and it presents large and very obvious opportunities for Russian-style political corruption (which I have no doubt has already happened, and frequently).

The politicians promote this program as if it was a job creator, but of course it is no such thing.  The jobs involved will be created somewhere, just not in the state that doesn't offer such a deal.  The politicians also claim this program is free, but it obviously is not.  If New Jersey gives General Electric a $7 million check, either there's $7 million less to spend on other programs, or the state has to raise $7 million from other tax payers.  It is not free in any sense of that word.

Finally, there is an unintended consequence that is becoming a big problem in the earliest states to adopt this idea (and will be an increasing problem as the others “catch up”): companies who already are in the state are now threatening to leave these states unless they too get this special deal.  States are caving into this “job blackmail” for fear of the political consequences.  In these increasingly common cases, enormous tax credits are being granted to companies already located in a state – and all because they were originally offered to bring new companies in.

This is a corrupt practice with a veneer of legality poorly glued on.  It's also a great example of the kind of political rot that occurs in any government the longer it's been in existence.  Many political theorists have postulated that all systems of government have a natural lifespan that has never been exceeded, basically because the accumulation of this political rot eventually causes the government to become completely ineffective at its most important jobs.  When I learn about things like this happening in America, my thoughts immediately go to these theorists...because it looks like damned good evidence that they are correct.

Doom is not a particularly pleasant thought for a Friday morning...

The Obama You Don't Know...

Interesting article in the Washington Examiner that calls into question 10 elements of the Obama story.  It's good reading if you aren't an Obama fan.  I doubt it will shake any believer's foundation, though...

My Dog: the Paradox....

The Oatmeal has long been one of my favorite humor sites, but somehow I missed this particular strip.  James C. (a friend and colleague) passed this along to me yesterday.  At right is just two frames out of a much longer strip.  If you're a dog owner or dog lover, this is required viewing – but make sure you've swallowed your morning beverage and set down your cup before reading it.

Also for dog lovers, this awesome compendium of dog-related words and phrases. 

Poor Kitties...

Most of these kitties are most definitely not having fun, but Debbie and I laughed like hell anyway.  Via my lovely bride:

This Sure Looks Like Fun!

Via my mom:

13 Years Old...

Goosebumps. Awesome.  She looks like a 13 year old, but she certainly doesn't sound like one!

Fire Tornado...

Via my mom:

Merit Pay for Teachers...

The way we compensate teachers in most jurisdictions today has always struck me as a priori idiotic.  The notion that increases in compensation derive only from how long you've spent in a job is clearly not a recipe for extracting maximum performance from employees.  Unions, on the other hand, absolutely love it – because it means they can tell every person who joins the union that their performance will not be measured.  All they have to do is stay on the job (and the union will also make that a near-certainty) and they'll have a lifetime of raises.  How well they do their job has nothing to do with whether they get raises. 

That's just stupid.  Anyone who thinks otherwise must be, at their core, a socialist – a believer in a political system that has proved a failure in every single attempt ever made to implement it, and that has killed more humans than anything else humanity has ever done.  Call me an extremist if you must, but to me this is one of the most dangerous notions mankind has ever surfaced – and that's not for lack of competition!

A completely separate question, and one that I find very interesting, is just what kind of merit pay actually works to improve performance.  Megan McArdle has some thoughts on this.  It's a question that I'm very familiar with, as it's one that any manager in a business setting deals with as a routine part of their job.  I've spent much of the past 40 years (more, actually, dang it) as a manager at some level.  Designing compensation systems that extract maximum performance from employees has been a key part of every one of those jobs.  Teachers aren't any different in this respect than any other employees (though they, of course, argue that they're special and unique).  Every kind of employee I've ever worked with (and I've worked with many), and every corporate and contemporaneous societal culture changes the shape of what kind of merit pay works.  Individual people vary greatly in terms of what motivates them – when it's feasible to design individual compensation plans, that's going to get you the best result.  Generally speaking, though, any organization with more than a dozen or so individuals is too big for that to really work.

Over time, managers have come up with a bazillion different ways to deliver merit pay.  In my industry (software), most of the time merit pay is delivered in the form of stock options (or more recently, stock grants) and quarter's end (or year's end) cash bonuses.  Nearly every company I've ever worked with has done a poor job of managing these programs, from one particular perspective: ensuring that the money spent actually delivers improved performance.  It's hard to make these things work well, and the differences between individuals' motivations makes it challenging to find a “one size fits all” system that actually works on average.

Yesterday I heard about yet another bonus scheme.  It was the first time I'd heard of it, but it's not a new idea. This time the scheme was applied to teachers, with markedly positive results (measured by their students' performance).  That's a very interesting result.  Here's an article on that study, which relies on a psychological principle that I have heard of, called “loss aversion”.  If you're a leader who motivates people as part of your job, this is fascinating stuff.  To me, it is fascinating from a completely different perspective: it puts the lie to the long-time union contention that no merit pay system will affect teacher performance.  It turns out (and of course this is no surprise to me) that teachers are people, too – and just like any other person, if you design a compensation system that rewards better performance in a way that is meaningful to them, you will get (wait for it!)...better performance!

For the children, of course.

The 47%...

Romney's remarks about the 47% who do not pay (Federal) income tax has been much in the news recently.  I've wailed about this myself.  The graph at right nicely illustrates the issue (from this article).  When I first entered the workforce (in the late '60s), only about 12% of the workforce paid zero taxes.  At my first paid job (as a dishwasher/busboy at Howard Johnson's on the NJ Turnpike), I was paid minimum wage (then $0.85/hour for teenage workers, and $1.25/hour for adults).  I paid taxes out of those wages, enough taxes to thoroughly piss me off.

But Megan McArdle (writing at her new home with The Daily Beast) writes some uncomfortable truth.  Uncomfortable for conservatives, that is.  As she points out, the reason so many people don't pay Federal income tax is that Congress has started using the tax code to promote social policy, by picking winners and losers.  The winners (those paying less tax or getting credits) are those who follow the supported social policy – and many of those policies are those supported and promoted by conservatives.  In the chart above, the numbers don't lie: for the most part, the massive increases in the percentage of the workforce paying zero Federal taxes have occurred in Republican administrations.

Ms. McArdle strikes directly to the right problem: the use of the tax code to support social policy.  She supports this use of the tax code; I (and many others) do not.  The only way to eliminate all this picking of winners and losers would be to completely flatten the income tax – one rate, charged on all income over a threshold level, with zero exemptions, deductions, or credits.

Now if I can only live long enough to see this happen...