The September Job Report

The headline number of nonfarm payroll employment came in below expectations at +51K jobs. However, the rest of the report looks better. The household survey shows growth of 271K jobs and a decrease in the unemployment rate to 4.6%. A decrease of 8K in government employment is also good news. The upward revision of August jobs to 188K is big but the big item is the "Preliminary Estimate of Benchmark Revision to the Establishment Survey".

Each year, the Current Employment Statistics (CES) survey data are benchmarked to comprehensive counts of employment for the month of March derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For national CES series, the annual benchmark revisions over the last 10 years have averaged plus or minus two-tenths of one percent. The preliminary estimate of the benchmark revision for March 2006 is +810,000

That is that tax returns for unemployment insurance filed by all employers shows much larger employment gains then by tracking the employers in the employment survey. Tax statistics, when available, are much more accurate than survey statistics since they represent all employment.

In the Apr-Mar 06 period NFP increased by 2,029K, employment increased by 3,040K and unemployment decreased from 5.1 to 4.7%. The upward revision of 810K closes most of the gap between NFP and employment. (However, the revision has not correlated with the difference between NFP and employment in the past decade.) In the six months since NFP has increased by 708K and employment has increased by 1,209K. High employment growth with low unemployment claims tend to indicate that NFP is the out-lier statistic that is diverging from the economy and that job growth has been strong.

Ig Nobel Prizes

The 2006 Ig Nobel Prize Winners have been announced. Highlights include:

• Acoustics: for conducting experiments to learn why people dislike the sound of fingernails scraping on a blackboard.
• Mathematics: for a trivial calculation on the number of photographs must be taken to ensure that nobody in a group photo will have their eyes closed.
• Physics: for research on why bent dry spaghetti breaks into more than two pieces. Experiments in spaghetti can be easily reproduced in your own home.
• Chemistry and Biology: for research involving cheddar and limburger cheese, respectively.
• Economics: no prize this year.

Katrina Rebuilding

Is the government so far failing in rebuilding New Orleans or succeeding in not rebuilding?

The LA Times reports that so far only $44 billion of the $110 billion of aid approved has been spent. That means that the government has not yet spent $66 billion rebuilding in an unsustainable below-sea-level river delta that is likely to flood again when the next tropical storm hits the New Orleans area. It is much more wise to build new in locations that do not need the protection of multi-billion levee systems to survive the next tropical storm. The challenge is how to encourage people to build elsewhere without being seen as not caring about New Orleans. Especially when the accusation "George Bush doesn't care about black people" has already been made.

Doing nothing is often the right thing to do. But for the government, doing nothing can actually be difficult. The media will attribute doing nothing to not caring, which to the press is usually worse than failure to "do something". For example, the administration has succeeded in doing nothing about China's exchange rate, which has required a delicate balance of providing just enough rhetoric to be seen as caring while preventing arch-protectionist Chuck Schumer from imposing massive tariffs and quotas. They also succeed in doing nothing in Lebanon for the first few weeks.

If it takes failure to not spend taxpayer's money than incompetence can be a virtue.

Sleeper Cell

FOX News reports that the airplane bombing plot was infiltrated by an undercover British agent. The cell had "planned to stage a dry-run within two days, with the actual attack expected just days after that". In the television series Sleeper Cell, where the plot has many similarities to the real terrorist plot, the cell was rounded up with much less time on the clock.

HBO's The Wire is another show to watch. The third season should help anyone understand the necessity of the NSA program and how it relates to arrests of terror suspects with hoards of prepaid cell phones.

Distracted

Before Iraq, when we were not distracted by all our operations overseas, when all our troops were at home, we were successfully attacked at home by Al Qaeda twice. One attack on the World Trade Center was partially successful and the other was 9/11. Now that we are completely distracted by Iraq, with more people hating us because of our actions in Iraq and elsewhere, the number of times we have been attacked at home is zero. And today that number remains zero, thanks to intercepted terrorist chatter and other surveillance.

What are our troops supposed to do make us safer after we bring them home?

We want to hunt down and kill the terrorists wherever they are.
We can hunt down and kill the terrorists wherever we are.
We will hunt down and kill the terrorists wherever both we and they are.

To help win the war on terror our troops need to be where the terrorists are. Not at home, not where the terrorists were, but where the terrorists want to be. Right now, this is Iraq. Iraq is where the most terrorists are being killed. That is because our troops can be there and the terrorists want to be there. We cannot hunt down and kill them where we are not or where they are not.

Minimum Labor Cost

An increase in the minimum wage will always result in lower employment because the demand curve slopes downward. However, a wage increase now will probably not reduce employment as much as expected, most of it will be passed on to consumers. We have recently had an extinction event. We had a bubble where labor costs rose out of control until the bubble burst. The fittest companies that could control costs survived, the rest did not. Most employers now can control costs well, and will just pass on an increase in labor costs to consumers. Those employers that cannot control costs and would have to pass them to investors or reduce employment died in the bust. This is why profits have reached record highs and will continue to be strong for a long time.

The minimum wage is paid disproportionately by the poorest consumers. Poor families will be hurt more as consumers than they will gain as workers. A single mother of two, for example, will benefit once from a wage increase but will pay for it three times. Raising the minimum wage will also make legal workers and employers even more uncompetitive against illegals.

A minimum wage increase is an increase in the cost of living of the poorest Americans.

Capitalism in Cuba

Fidel Castro is ill, and there is no prediction market contract on his expiration.

There has been some hope that his brother Raul may be more market friendly and that capitalism may be coming to Cuba shortly. But why wait? There is one place where we can start building capitalism in Cuba right now—Guantanamo Bay. We could build a free capitalist port city there in the same model as Hong Kong. Some current residents there that would have to be moved, but there is plenty of space in the rest of the world that can be used for prisons.

Update (8/4): TradeSports now has a contract on Fidel resuming power by the end of August. Independent Sources links to some betting sites taking bets on Fidel.

Zarqawi Contract Expires

Zarqawi is dead. The TradeSports contracts have expired at 100. The Market had yesterday's closing prices at 5.5 for the June contract, 15 for September, and 25 for December. His demise was not immenently expected by the market.

Debt Limit Raised

The Senate voted to raise the federal debt limit to $8.97 trillion. This new massive debt limit is all of 70% of current GDP. Even 70% debt to GDP is small compared to other countries, but by the time we reach the new debt limit our GDP will be much higher and our debt ratio smaller.

To conceptualize our debt, $8.2 trillion is the total amount of treasury securities that are demanded at current interest rates (about 4.6%). $4.7 trillion of that is all voluntarily held by the public, the rest is held by our own government. $9 trillion is about 16 days of trading volume in the treasury market, which has a total daily trading volume of over $500 billion.

Without our current national debt there would be trillions of dollars of demand for risk free securities that would not be met. It is inconceivable that the demand for treasury bonds would ever vanish in the future. Treasury bonds are one of the few things that only the government can supply. But it seems that treasury bonds are the only thing that some people don't want the government to provide.

State of the State

5:06 PM Arnold Schwarzenegger begins with a USC joke.

5:12 PM "We will never catch up unless we know where we are going."

5:15 PM Arnold begins proposing the big bond spending. Each proposal ends with "... I say build it!"

5:24 PM Arnold proposes $1 mininium wage increase.

5:26 PM Proposes reimportation of prescription drugs.

5:30 PM "The state of our state is sound because our dream is sound."

Nothing really good in the speech. The defeat in the special election shows. Some of the building will be cost effective and some will not, but all of the spending will come in one bond issue.

A minimum wage increase when legal workers are competing with illegal workers is even worse than normal. However, the minimum wage is already higher in some places. Cost of living is a local issue, so the minimum wage should not be a state or federal issue. A living wage is really a "living on your own" wage. If you are not worth a living wage before you are living on your own then you never will be.

Price controls on drugs is a bad idea and importing price controls is as bad. Drugs are always getting cheaper. They drop from price infinity (unavailable) to expensive, and then decrease further as competitors enter the market and patents expire. The amount spent on drugs is increasing, but the benefits from drugs are increasing more. The amount of money spent on many things is also increasing, but nobody is proposing price controls on cellular, broadband, and other emerging technologies.

Rose Bowl Halftime

ABC showed both marching bands. No out-of-key pop-stars or wardrobe malfunctions.

Thank You. Unfortunately, there was no Big 10 band.

Ben Bernanke

Ben Bernanke has been selected from the global glut of candidates to replace Alan Greenspan as chairman of the Federal Reserve. There were only three 'leading candidates' and Bernanke was trading in the high 30's on TradeSports before the nomination. Bernanke is a good pick favored by conventional wisdom and by most bloggers, which is a good thing after the Miers nomination. Tyler Cowen rounds up Bernanke's major economic contributions.

Southern California Weather

Proposition 76

The anti-prop 76 ad speaks for itself. Their claim that Prop 76 gives the governor unlimited power to cut the budget reveals their intent to spend unlimited amounts of your taxpayer money. Prop 76 allows the governor to cut spending only if the state spends more money than it collects in taxes and the legislature fails to agree on budget cuts. If the legislature would simply pass a balanced budget without any budget gimmicks then Prop 76 will not be triggered unless there is a real emergency. And if the legislature can agree on budget cuts, then the governor will not have a budget to cut. Since their own ad shows that they insist on spending unlimited amounts of your money you should take that power away from them.

Yes on Prop 76.

Proposition 78

Prop 78 is being packaged as a drug discount measure, but it is really a price discrimination measure.

Drugs are intellectual property with high fixed costs and low marginal supply costs and profits can be increased by price discrimination. Student discounts increase profits because vendors can charge one profit maximizing price to students and a different profit maximizing price to non-students. This leads to higher profits than if vendors charged only one profit maximizing price to all. Rebates are another price discrimination program, charging one price to people with the patience to claim them and another price to those who don't. The drug market is already split into two segments, low-income families on Medi-Cal who have drugs purchased by the state at taxpayer expense, and the rest who pay market prices. Prop 78 creates another segment of lower-income families with income below 300% of poverty level. All the language about voluntary discounts and rebates really means that lower income people will pay one market price and everyone else will pay a different market price for drugs.

Prop 78 is a rent-seeking measure that uses the government to create an artificially segment the market so that drug companies can increase profits by price discrimination. Lower income families will pay a lower market price for drugs, a discount. But with low-income families excluded, higher-income families will pay higher market prices than they otherwise would. This will increase drug company profits but it is not a big give-away. The costs will be paid by consumers and not taxpayers. It will distort the free market and Prop 78 should be opposed on principle, but...

Prop 78 is also a compromise to prevent Prop 79. Prop 79 is an anti-business price-control measure that will adversely affect drug research and hurt consumers of drugs in the future that will not be developed. Price controls are bad for consumers because they create shortages and price controls on IP hurt consumers in the future because of shortages of future IP products not developed. Also, this is California. If both are defeated, anti-business groups and the legislature will continue to attack drug makers. The drug market is already segmented by Medi-Cal, and creating another segment would not be that bad. Without Prop 78 the legislature will probably attempt to have more drugs purchased at taxpayer expense.

Prop 78 will likely hurt the non-poor as consumers but help them as taxpayers. Prop 78 is worse than no legislation but much better then Prop 79, and is probably better than what we will end up with if neither pass. I am hesitant to recommend special-interest favored legislation, but Prop 78 has been endorsed by Schwarzenegger. If Schwarzenegger thinks we need to compromise on drugs than I think he is probably right. Because this is California, Prop 78 should get a reluctant yes vote.

The rest of the Special Election is a no-brainer. Yes on 73, 74, 75, 76, and 77 and no on 79 and 80.

Harriet Miers

If you trust George W. Bush you should not oppose Miers.

If you don't trust Bush, then why would you trust his replacement pick to be any better?

None of Bush's choices or leaks, Clement, Roberts, and Miers, were conservative favorites before they came up. If Bush thinks Miers is the most qualified than it would be unwise to trust his replacement pick to be significantly more qualified then Miers. And a replacement would need to be significantly better and confirmable to be worth the political cost of withdrawing Miers. If you don't trust Bush on Miers then you shouldn't trust him to pick her replacement, and you should not oppose Miers.

We can decide whether we trust Bush's judicial nominations later.

Serenity

Certainly the cast of Firefly has been described as Libertarian or Burkean conservative, and act with strong principles. Since most bloggers and fans tend to be libertarian-leaning, they may be biased to this point of view. Because of this bias, someone needs to serve as an apologist for the Alliance.

The Alliance does often get "in the way", but not significantly more than our own big governments. For a government that just fought a unification war, it does not seen to be especially repressive. Our own Union government during our Civil War was not a bastion of freedom. Also, groups that resist joining a new government are not usually the good guys. Just look at Iraq and Afghanistan. The biggest injustice by the Alliance government would seem to be how they treat psychics, notably River. But real psychics can be a big problem for any government to handle. In Babylon 5, psychics had to either join and be regulated by the Psy Corps or have their abilities suppressed by drugs. This was not widely considered as evil by B5 fans. There are also no known free psychics in America, Since there are no real psychics, as far as we know. The Alliance wanting to restrict and track down people with extra powers is not completely unjust. Also, all of the details about River and the program she was in are provided by her brother. But many "moonbats" are family members of people harmed by the government, and their information has often been very unreliable. We do not know enough about their psychics program to call it evil.

The Alliance does, after all, allow Mal, a soldier who fought against them, to own his own spaceship and the freedom that it provides. The Alliance would probably leave him alone but for the fugitives who are his passengers. Except for psychics, people in the Alliance seem to be mostly free.

But by the trailer, we will probably see many questions about the Alliance and River answered in the new movie, Serenity, opening this Friday.

Joss Whedon, the Oscar® - and Emmy - nominated writer/director responsible for the worldwide television phenomena of BUFFY THE VAMPIRE, ANGEL and FIREFLY, now applies his trademark compassion and wit to a small band of galactic outcasts 500 years in the future in his feature film directorial debut, Serenity. The film centers around Captain Malcolm Reynolds, a hardened veteran (on the losing side) of a galactic civil war, who now ekes out a living pulling off small crimes and transport-for-hire aboard his ship, Serenity. He leads a small, eclectic crew who are the closest thing he has left to family -- squabbling, insubordinate and undyingly loyal.

Missile Launch Detected

A Minotaur missile was launched from Vandenberg Air Force Base at 7:24 PM tonight.

Photos at 7:30 PM and 7:34 PM.

Schwarzenegger Reruns

The Arnold Schwarzenegger for Governor show will return to California again in 2006.

Pledge Dumped

A judge on the 9th U.S. Circuit Court of Appeals has declared the Pledge of Allegiance unconstitutional. It violates the clause in our constitution where "no law can be contrary to the beliefs and provisions of the sacred religion of Atheism."

Banning Video Games

The California legislature passed AB 1179 that penalizes the sale of violent video games to minors. The same legislators who voted for this are also opposed to all attempts at increased penalties for convicted sex offenders, voted against the people's will to uphold marriage, and oppose most structural reform to improve schools. California Democrats are only for the children if it involves spending money. Do they think that violent video games are more dangerous than having sex offenders living next door?

But this is really an anti-business bill. This will place a special extra burden on video game creators and retailers. Video games are a big part of California's high-tech computer industry. But even Silicon Valley's own legislators are trying to punish one of their best high-paying employers. Schwarzenegger may veto this, but Democrats will claim that it is a conflict of interest because he appears in Terminator video games.

Update: (9/15)
The Sacramento Bee reports that Schwarzenegger is likely to veto AB 1179. Also, apparently his game is not affected by the bill.

Taking any action on Yee's Assembly Bill 1179 could create the perception of conflict for Schwarzenegger. If Schwarzenegger signs the bill to ban the sale of certain "violent" video games to anyone younger than 17, he could be seen as eliminating videos that compete with his own "Terminator 3: The Redemption."

He will probably be attacked for conflict of interest either way, since the truth has never mattered in anti-Schwarzenegger ads.

The bill's author, Leland Yee, definitively claims that violent games harm children. Yee was also the author of a bill attempting to mandate Feng Shui in building codes last year.

What's Poverty Got To Do With It?

Many of the residents of the areas New Orleans that were flooded had incomes below the poverty line. But what government policy would have saved more of them?

Government has been very successful in promoting home ownership. There was over 50% home ownership in the flooded part of the city, and the rest still owned rooms full of possessions. Even poor Americans live with lots of stuff they don't want to leave behind. Some people could even afford non-productive non-food animals (pets) that they were reluctant to leave behind. People in true poverty have little to leave behind, and would be less reluctant to leave their homes. The "success" of federal disaster aid also makes living in disaster prone areas more affordable. It is the success of our economy that so many people had homes and possessions that they did not want to leave behind. Only because of our success did so many people choose to stay behind.

The lack of private transportation is frequently cited as causing so many to stay behind. Two in 10 households in the disaster area had no car. But all government policy, from labor, CAFE, emissions, and safety standards, has been to make cars better, but more expensive. Our government does not try to increase car ownership. The government has always encouraged the use of public transportation, by rich and poor alike, to reduce pollution, congestion, and other problems. Our successful use of public transportation allows people to live without cars. But it was the failure to utilize public transportation that was more responsible than anything else for the number of lives lost in the flood.

Chief Roberts

Bush nominates John Roberts for chief justice. This means only two confirmation hearings instead of three. I don't see any reason why we can't have three confirmation battles at the same time. Everyone is already prepared for full-scale judicial war. Congress should be able to handle multiple confirmations, a hurricane, making the tax cuts permanent, repealing the estate tax, reforming social security, and fundamental tax reform all at the same time. We pay them a full-time salary and provide a large staff budget.

Hawking Blinks

Physicist Stephen Hawking's one remaining usable hand has been slowing down. Now he is controlling his computer by blinking his eye.

Typhoon Talim

The world has not stopped after Katrina. A Typhoon with 125 kph winds (78 MPH) has hit China and killed at least 54 people.

We should not be calling the rest of the world stingy for not doing enough to help us. There are millions of people around the world who are worse off than the survivors of Katrina. Those in Zimbabwe, Darfur, and many other places are worse off than we are and need the world's help far more.

Kelo in Sacramento

The California State Senate Judiciary Committee failed to advance the property rights movement by defeating Tom McClintock's amendment.

Majority Democrats derailed SCA 15, a broader constitutional amendment that would have barred all seizure of private property unless it was for a public use, such as roads or schools. Sen. Christine Kehoe, D-San Diego, and others agreed to shelve a narrower version protecting homeowners, SCA 12, until hearings can be held this fall.

The committee did approve the much weaker AB 1162, "a measure that would impose a two-year moratorium on taking homes for private projects". But that bill will not stop the eminent domain runaway. The full Senate just approved a bill allowing a tribe to help manage land taken by eminent domain financed by the tribe.

Yolo County is attempting to acquire the land through eminent domain in hopes of preserving the property and its water rights. The owner of the land, developer Steve Gidaro, is fighting the action....

Senate Republicans assailed the proposal on Wednesday as representative of eminent domain's problems. Sen. Tom McClintock, R-Thousand Oaks, said AB 1747 would enable a theft that is being underwritten by the Rumsey Indians.

The private benefit of the government is not "public use".

America's Worst

The looters in New Orleans have been shooting at helicopters and rescue workers and now the National Guard has to be called with order to "shoot and kill". Instapundit links to a suggestion that looters should be shot to deter violence. Unfortunately, in this case, shooting looters will not deter them because without communication it is impossible to get the message out that looters will be shot.

But that is not the worst behavior in America. KFI AM in Los Angeles found a flyer calling for a "Jihad" against the LAPD.

KFI NEWS has obtained a copy of a flyer that's been circulated in South Los Angeles, calling on members of two violent street gangs to join the Nation of Islam in a jihad, or holy war, against the LAPD.

This after their local leader was arrested after challenging police officers. We are not a theocracy! religious leaders are not above the law!

Blogburst

It's blogburst day for hurricane relief. Baldilocks recommends donations to Soldier's Angels to help families of soldiers serving overseas that are displaced by the hurricane. The Truth Laid Bear has a donation tracking page. California Mafia has a Bear Flag League blogburst roundup.

Tag: flood aid, hurricane katrina

2005 Q2 GDP up 3.3%

Real GDP increased at an annual rate of 3.3% in the second quarter, revised down from 3.4%.

Today's GDP revision was little noticed due to hurricane coverage, though there has been speculation on how much the broken window fallacy will affect future GDP measurements.

Invasion!

The United States is being invaded ... by itself. In addition to all the National Guard troops being sent to the Gulf Coast, the Navy is also sending some ships to the area.

The Pentagon effort includes the Navy amphibious assault ship USS Bataan, whose helicopters have been flying relief missions from off the Louisiana coast.

The ship, which resembles a small aircraft carrier, can produce large quantities of fresh water and is equipped with 600 hospital beds. (Watch video report on storm-related health risks)

Several other ships, including a rescue and salvage vessel and the USS Iwo Jima, another amphibious assault ship, are on their way from Norfolk, Virginia, the Navy said.

The USNS Comfort, a floating hospital based in Baltimore, Maryland, will depart in coming days. A medical crew from Bethesda Naval Hospital will staff the ship. It has full hospital capabilities, including operating rooms and hundreds of beds.

We sent the USS Abraham Lincoln Carrier Strike Group to Indonesia to assist the tsunami victims. Should we have had a similar force trailing the storm to be there quickly in anticipation of roads and airports being unusable?

Chief's Disease

The Sacramento Bee reports that the man appointed to find workers' compensation fraud in the California Highway Patrol claims that it is the top brass and not individual officers who were abusing the system.

The Bee's investigation last year found that about 80 percent of CHP chiefs file workers' comp claims within two years of retiring. They win injury awards and lifetime medical care, with the injuries laying the groundwork for medical pensions, which shield half of retirement income from taxes.

Several CHP employees have complained anonymously to The Bee in the past year that the system has been used to ease out those who face disciplinary problems or have fallen from favor.

So nobody ever gets fired, they just go on disability. It is pretty much a universal problem that under-performing state employees never get fired. This is a huge expense in the state budget. What we need is for Schwarzenegger to literally be "The Terminator" for employment contracts.

Stem Cell Boondoggle

The Sacramento Bee reports that the advocates of stem cell research who passed Prop 71 are retreating from their claims that the research would pay for itself. The legislators offering the money for the research want to have strings attached in the form of royalties or discounts. But the advocates who promised the benefits of the measure don't want any strings on their money.

Proposition 71 supporters are doing a flip-flop. Biotech firms and university officials are saying that royalties and discounted care would discourage "innovation" and diminish the potential for medical breakthroughs. To drive home this point, they are now throwing cold water on the idea that stem cell research will be very profitable.

If embryonic stem cell research had the potential to pay for itself from royalties and savings then venture capitalists would already have been funding the research. The state should not think it can do better than private venture capitalists at finding profitable research investments. There are also additional legal difficulties in the state using tax-exempt bonds to finance for-profit research.

California faces obstacles in issuing tax-exempt bonds for certain stem cell grants. In a May 23 letter to state Treasurer Phil Angelides, the state's bond counsel warned that patents and royalties resulting from state grants might be construed as taxable "assets," making them ineligible for financing by tax-exempt bonds.

Apparently, Angelides and leaders of the stem-cell institute have known about these challenges for some time, but haven't said anything. To flush out this issue, this page filed an open records request for all memos written by the treasurer's bond counsel on Proposition 71 prior to its passage. Angelides rejected those requests, citing attorney-client privilege.

Other lawsuits have prevented the state from selling the bonds and spending the proceeds. Is it not too late to pull the plug and save the state from spending $3 billion on research that offers little benefit to the state?

More Blackouts

The loss of a transmission line combined with moderately high heat led to rolling blackouts in Southern California.

Temperatures that hovered around 100 in inland areas and reached 94 in Los Angeles had created increased demand of about 1,500 megawatts. A megawatt is enough power to serve about 750 homes.

The demand crisis was exacerbated by the sudden loss of power from a transmission line originating in southern Oregon, officials said.

A transformer in California that converts the power took itself offline automatically at 3:56 p.m. when an oil flow alarm went off, said Carol Tucker, a spokeswoman for the Los Angeles Department of Water and Power, which co-owns the line.

The converter station, in Sylmar about 25 miles north of downtown Los Angeles, is capable of distributing 2,250 megawatts of power. It was operating at half capacity Thursday evening, and an inspection was under way to determine if the transformer could be fixed, Tucker said.

The emergency order from the ISO caused SoCal Edison to reduce demand by 800 megawatts throughout its territory. The ISO asked San Diego to shed 100 megawatts.

The loss of transmittion clearly exceeded the increased demand from the heat. Perhaps it is time to pay more attention to the advice by Vernon Smith on deregulating transmission in OpinionJournal.

Mortgaging Education

The California Teachers Association is mortgaging their headquarters so that they can spend $54 million on the special election. They will pay for it by increasing union dues by $60 million. These dues are paid by teachers, and ultimately by California taxpayers. But they say that the people of California are too poor to spend $50 million on a special election while their union members are so rich that they can easily afford to pay $60 million for political activism. This is Robin Hood in reverse. Paycheck protection must pass.

Another candidate in the last election was able to get a $6 million mortgage on a house even though he did not report paying one penny of property taxes on his tax return.

The Kelo Strip

In a small strip of land near the Atlantic coast, Local Liberty reports that the city of New London wants to charge back rent to the Kelo litigants.

The U.S. Supreme Court recently found that the city's original seizure of private property was constitutional under the principal of eminent domain, and now New London is claiming that the affected homeowners were living on city land for the duration of the lawsuit and owe back rent. It's a new definition of chutzpah: Confiscate land and charge back rent for the years the owners fought confiscation.

In some cases, their debt could amount to hundreds of thousands of dollars. Moreover, the homeowners are being offered buyouts based on the market rate as it was in 2000.

However, I think the outrage is not what what is happening now but what happened in 2000. The injustice is that the City seized the land in 2000. The law, however wrongly determined, is that the City paid for the land in 2000 and has owned it since then and can charge the occupants for rent. The last appeal must go to the court of public opinion. The City may want to settle to avoid bad PR. But the litigants claim that rents were not part of the 2000 agreement.

A lawyer for the residents, Scott Bullock, responded to the letter on July 8, 2004, asserting that the NLDC had agreed to forgo rents as part of a pretrial agreement in which the residents in turn agreed to a hastened trial schedule. Bullock called the NLDC's effort at obtaining back rent "a new low."

"It seems like it is simply a desperate attempt by a nearly broke organization to try to come up with more funds to perpetuate its own existence," Bullock wrote. He vowed to respond to any lawsuit with another.

I had originally noted when the ruling came out that the taking was for government self preservation not for public benefit. However, I doubt that the City had planned on profiting from collecting rents during a long court fight. They had planned to hand the land to developers and start collecting taxes from them as soon as possible.

Also, the City is now doing for housing exactly what Social Security reform opponents insist on doing for retirement. When the City seized the property in 2000 they bore the full risk of owning "blighted" property. House prices are risky while fixed rents are risk free. The government is taking their property and giving them a "guaranteed risk free housing benefit" just as reform opponents insist that the government take 1/6 of your income so it can give you a "guaranteed risk free retirement benefit".

Meanwhile, in a larger strip of land on the Mediterranean, the government is seizing land, with compensation, in order to transfer the land to another government. The hold-outs there could lose a third of their compensation. I don't know if disengagement will make things better or worse, but there has been little progress under the status quo peace process. Whatever happens there, the sooner it begin the sooner it will be finished. We need to watch and learn what happens when extremists are in charge of their own land.

And on our large strip of land on the Pacific, Local Liberty reports that a Democrat State Senator has proposed a two-year ban on Kelo style eminent domain seizures.

Reproposition

Daniel Weintraub just reported that Prop. 77 has been returned to the ballot. The state Supreme Court restored the measure and will review it again after the election. This is not unexpected since the court restored Prop. 80 to the ballot despite obvious constitutional problems in that proposition.

Update: (6:20 PM)
The Sacramento Bee has the story on the return of Proposition 77 to the California Special Election ballot.

The state Supreme Court moved Friday to put Gov. Arnold Schwarzenegger's redistricting measure back on California's special-election ballot, saying discrepancies between different versions of the measure were not "likely to have misled the persons who signed the intiative petition."

"We conclude," the court added, "that it would not be appropriate to deny the electorate the opportunity to vote on Proposition 77..."

In their half-page order, the justices said they would determine after the election whether the initiative was flawed.

Illegal Immigrant Homeowners

There has been a large increase in banks providing home loans to illegal immigrants. This is definitely a positive symptom. It is a good sign that foreigners who rise into poverty by crossing our borders can further rise out of poverty by earning enough money to buy a home. Our economy must be quite healthy for illegal immigrants to be able to afford to buy homes despite large increases in home prices, especially in heavily immigrant markets. Illegal immigrants who both can and want to participate in the American dream by purchasing a home are certainly the top candidates for participation in some sort of guest worker program. However, there is no real need to provide any government assistance to illegal immigrant home buyers like what is provided for legal American home buyers.

We need immigration reform so that we can be more selective about who is allowed to immigrate to America. Home buyers are usually high among those who we want to select.

Exit Strategy

Independent Sources notes that the Democrats' exit strategy from the 2004 election has failed. Despite all the reasons why liberals would be welcome in Canada, a Reuters reports that "in the six months up to the U.S. election there were 16,266 applications from people seeking to live in Canada, a figure that fell to 14,666 for the half year after the vote." But he does not mention the downside reported in the story.

"I can only assume the Americans who checked out the Web site subsequently checked out our winter temperatures and further took note that the National Hockey League was being locked out and had second thoughts,"

So it was the NHL labor union and the failure of global warming that foiled the Democrats' exit strategy.

Camp Crawford

After praising the French for all the vacation time that they have no choice but to take, the MSM is now attacking Bush for the vacation time that the President chooses to take. Bush has hosted several foreign dignitaries in his Crawford ranch, which is both a workplace, the "Texas White House", and a vacation spot. But the Huffington Post reveals that the Press Corps's opposition is not about vacation time but about location, location, location!

Prisoners of Camp Crawford complain of small cells, poor meals, constant surveillance, and disrespectful--even disdainful--treatment from Presidential staff.

"Thirty-three days in this hell-hole feels like thirty-three years," said a bitter long-time White House correspondent. "You're away from your family. We're all billeted into these crappy Waco motels--you know, the kind they hose down with antiseptic every day and you've got one lousy blanket which is made of recycled Coke bottles or something. There are huge fights for the cells with fast Internet connections but not many have them. The networks always get those. We didn't mind the facilities in Santa Barbara or Martha's Vineyard. Even Kennebunkport was more endurable than this."

A Fox News camera man agreed. "Basically you sit around in baking heat, bored out of your mind. How many times can you visit the 'Texas Sports Hall of Fame' or beat Nora O'Donnell at Scrabble? Nothing happens, except maybe when one of the staff summons you to watch the President pulling brush. After a few minutes, they pile you back into the buses, and that's it. It's torture."

All inmates interviewed agreed that the food they were served was inferior to that of other camps, such as Guantanamo. "How can I put this?" said a Los Angeles-based correspondent. "The meals would be paradise if you were six-years-old. Like, what is it going to be tonight: chicken nuggets or pizza again? It's like living that movie, 'Supersize Me.' A big deal is to go to the Marriott Courtyard's breakfast buffet. At least you can get a piece of fruit, even if it's not ripe."

The inmates agreed, however, it was far better to be in Waco than have to do duty in the press pool in the town of Crawford itself. Even Crawford's own website describes the facilities this way: "The town currently boasts only one restaurant, a converted gas station called The Coffee Station. There's no supermarket or hotel but there are five churches. Tourists will find that this 'dry' town has no sale of alcoholic beverages."

The Press Corps would probably be much happier if Bush took a vacation to Aruba. A vacation there would do wonders for Bush's ratings.

War on Terror

President Bush is sticking to using the label "war on terror". It seems it was only the defense department that wanted to use "global struggle against violent extremism".

Many pundits have been saying "Our enemy is not really 'terror' but ..., this is really a war on ... (zzzzz)". They are right, but "war on terror" is shorter and this label has stuck, having been used in many speeches. If there was a better short label then that is what we would have used it in first place.

After all, what was so bad about the numeral 'II' that 60 million people had to die in a war over it?

Retirement Insurance

The New York Times notes that the insurance industry is lobbying congress for a piece of the Social Security action. If they want it, we should let them have it. The private insurance industry already competitively provides retirement accounts, annuities, life and disability insurance, everything that Social Security provides. Instead of private accounts, people should be allowed to put part of their Social Security contributions into private insurance and annuities that meets government constraints.

What should be the role for Social Security? What government insurance uniquely provides is risk blindness. Only the government can be blind to risk without going out of business, either by mandating contributions or by passing losses to taxpayers. The blind Social Security insurance annuity currently does the former, but should be doing the latter. It is better for Social Security to be a small money-losing program than a large solvent program. Social Security's solvency is meaningless since we have a unified federal budget. Instead of raising contributions or reducing benefits to keep the blind Social Security retirement annuity solvent, we should let people opt out while leaving Social Security as a backup. Social Security benefits could be more flat, based more on hours worked than contributions, so that most would opt out while adequate benefits would still be available for low earners.

The insurance industry is also trying to prevent the elimination of the estate tax, which many wealthy Americans now pay with the proceeds of life insurance policies. As a compromise for sending them annuity business we should reduce their planning business by eliminating the estate tax. The AARP could also compete for retirement annuity business, so they would probably not be opposed.

Make Life Frist

Now that Bill Frist has reversed his opposition to embryonic stem cell research a better compromise needs to be found. To make the best compromise we need to ask what is the most pro-life goal for human embryos?

• Preventing the destruction of human embryos.
  or
• Bringing as many human embryos to life as possible.

I believe that the latter is the non-greedy pro-life goal. Because we cannot bring all the human embryos so far created to life, the best compromise is to have the use of embryos for stem cell research conditional on successfully bringing embryos to life. This is the policy I previously proposed in "make life first".

I think that we can allow leftover embryos from a fertility process that has already successfully created a living baby to be used, with permission, for embryonic stem cell research. I think we should create embryos only for the process of creating life, and we should destroy embryos for research only if the creation of life is successful.

A federal stem cell compromise would also reduce the demand for state financing of embryonic stem cell research, like the California Proposition 71 boondoggle.

2005 Q2 GDP up 3.4%

Real GDP increased at an annual rate of 3.4% this quarter.

GDP from past quarters has been revised downward somewhat.

For 2001-2004, real GDP grew at an average annual rate of 2.8 percent, 0.3 percentage point less than in the previously published estimates. The average annual rate of growth of real GDP from 2001:IV to 2005:I is 3.3 percent, 0.2 percentage point less than in the previously published estimates.

And inflation in past quarters has been revised up slightly.

The percent change from the preceding year in the price index for gross domestic purchases was revised up for all 3 years: From 1.5 percent to 1.6 percent for 2002, from 2.0 percent to 2.2 percent for 2003, and from 2.4 percent to 2.9 percent for 2004.

Bear Flag League

The Bored has been admitted to the Bear Flag League.