California ran out of other people’s money to build its high-speed rail line?

“California Scraps Plan to Build High-Speed Railroad Between Los Angeles and San Francisco” (TIME):

California Governor Gavin Newsom is abandoning plans to build a high-speed railroad between Los Angeles and San Francisco, saying the ambitious project that was approved by voters and championed by his predecessor is too costly.

Instead, the state will finish roughly 120 miles of track already under construction in the Central Valley, a mostly rural agricultural region that runs down the spine of the state, Newsom said.

California was one of the first U.S. states to champion a government-owned high-speed rail system like those that are ubiquitous in parts of Europe and Asia. Former Governor Jerry Brown defended the project as part of the state’s nation-leading effort against climate change, an issue that Newsom has made a centerpiece of his administration.

The Central Valley segment was expected to cost $10.6 billion, according to the latest business plan. [That’s about $66 million per mile in what would seem like some of the world’s simplest terrain.]

Newsom said workers will continue building a stretch of the line between Merced and Bakersfield.

What could have changed? The project has grown a bit in price, but not dramatically more than anything else government does. I wonder if the difference is the new tax law. With direct federal cash plus California state taxes being deductible, taxpayers in Indiana, Ohio, New York, et al. were previously going to pay for 75 percent of this fun project? Now that non-Californians would be stuck with only 50 percent of the bill, it isn’t fun to do anymore? So it would be fair to say that California ran out of other people’s money?

[Regarding the new mini-line: Google Maps shows that it is practical to drive between Merced and Bakersfield in roughly 2.5 hours. Why spend $10.6 billion on a short train line in a thinly populated area and then $1 billion/year (?) to run it? The answer can’t be energy efficiency, I don’t think, because even when tracks already exist an ordinary inter-city bus uses less energy per passenger than today’s trains. If Californians wanted to save energy, wouldn’t they just run more buses on their existing roads?]


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Theranos was an immigration and H-1B story

Bad Blood, the authoritative book on the rise and fall of Theranos, describes American- and British-born engineers and scientists being fired for saying “the goal is too ambitious” or quitting when realizing this. Who replaced them? According to the book, almost all immigrants from India, either folks who’d recently completed a degree in the U.S. or coming over on H-1B visas, all managed by Ramesh Balwani, Elizabeth Holmes’s boyfriend.

During the “grand fraud” stage of Theranos, therefore, it was a primarily immigrant show except for the young impresaria.

[I’m going to guess that neither Mr. Balwani nor any of these engineers and scientists make it into the children’s book First Generation: 36 Trailblazing Immigrants and Refugees Who Make America Great…]

The money to fuel the craziness of Theranos seems to have been all domestic. Walgreen’s kicked in $100 million(!) as an “innovation fee” and then loaned the company another $40 million, according to the book. The credulous yet imperial CEO Steve Burd (Wikipedia shows him hanging out with Barack Obama) drained huge amounts of Safeway shareholder cash to help Theranos. The idea in both cases was that Theranos devices were supposed to be placed in these retailers’ stores.

If the end result is a tech staff that is mostly Indian, I wonder if the Silicon Valley location makes sense. Why not have all of the engineers and scientists work from Bangalore or Delhi? Instead of 8 people sharing a two-bedroom apartment in Menlo Park, each of those 8 workers can enjoy his or her own comfortable house (rent for a 3BR apartment in the center of Bangalore is about $570/month (source), 1/10th the price of Menlo Park (source)). What’s the advantage of bringing H-1B slaves over to toil on a Silicon Valley plantation compared to running the tech farm in India?

(Another interesting aspect of the book is learning just how much room there is for human error in traditional medical lab tests, e.g., in the handling of reagents. Elizabeth Holmes was not wrong in thinking that a fully automated process could potentially be more reliable.)


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Bay Area sentiments

My high-level impression… Suppose that a dystopian science fiction novel published in the 1950s had imagined a city in which fabulously rich people lived in new gleaming towers, getting marijuana delivered to them by runners on electric skateboards. The rich people who work stroll on sidewalks that are half covered in tents in which the “homeless” (but not “tentless”) reside. When they get to work they’re in a bullpen that is packed tighter than a commodities trading pit. If they need to make a phone call while at work they’ll duck into a soundproof transparent pod.

People who read a book like that circa 1950 would have said “This author has a great imagination, but none of this could ever happen. Even in the Great Depression people didn’t simply pitch tents on downtown sidewalks. And an employer wouldn’t have valuable workers distracted by noise and crowding.”

Yet that imagined future has been fully implemented by San Franciscans today! What are people saying as they live and visit this unusual place? Some miscellaneous sentiments gathered from around the Bay Area during a recent trip…

A friend has been complaining about unfairly low tax rates (“you didn’t build that”) since Bill Clinton left office. He and his wife said that they wanted to see a big tax rate increase on “the rich.” This trip was my first opportunity to talk to him since the late 2018 tax law change. Due to the fact that this couple can’t deduct their California state income tax (13.3 percent max rate) or the property tax on their $4 million home from their income for federal tax purposes, he believes that his effective tax rate has actually gone up. This is his dream of higher tax rates fulfilled? Apparently not since he is hopping mad about it!

In response to my saying that I’d finished a book on naval battles of World War II, friends in Berkeley said that they considered the U.S. to be the world’s most evil nation currently, committing acts comparable to what the Germans and Japanese did during the very darkest parts of World War II. What exactly was the U.S. doing? Separating children from one or both parents during the migration/asylum process. What about the fact that their neighbors, in availing themselves of California family law‘s no-fault divorce and winner-take-all custody provisions, regularly separated children from the loser parent? “That’s different. Children don’t need two parents. Trump is separating children from both parents.”

Folks in the suburbs and exurbs complained about the poor condition of the highways, which were indeed rough (therefore noisy) and potholed. “There is no frost here,” a friend in Napa noted. Gasoline in the suburbs was almost exactly 2X the cost that I had paid in Bentonville, Arkansas:

Complaints about Trump were ubiquitous. One knock against the dictator was that he lied (previous American politicians were paragons of truth!) and therefore the U.S. was no longer a role model to nations around the world.

Expressed concern for the environment was high, but nearly every buildable surface in Silicon Valley is covered. See this photo from the XNA-SFO flight just before landing (incidentally, if you want to know how to run an enterprise with H-1B visa holders, the Bentonville to San Francisco flight holds all of the folks that you need to talk to).

Do folks in the Bay Area actually have valuable lessons to teach the rest of the nation (and the world!) on how to live in harmony with Mother Earth? Bentonville certainly seemed like a place where the Earth was still in some sort of recognizable condition, e.g., with a lot of farms growing hay.

Expressed concern for the homeless and/or “vulnerable” is high. And expressed support for increased immigration is high, including low-skill undocumented immigration. Yet one drives by homeless encampments in Berkeley on the way to $20 per-person diner breakfast. One common explanation for this apparent contradiction is that homeless people are mentally ill. But for their mental illness, they would be commuting 4 hours round-trip each day to a job and using the money earned to pay for a modest exurban apartment. Would they then support screening immigrants for mental illness? “Of course not!”

Expressed faith in the virtue of higher minimum wage was universal. It will get people off welfare. Taxpayers won’t be subsidizing evil low-wage employers with Medicaid, welfare, public housing, and other means-tested programs for which low-income folks may qualify. In 2018, the income limit for government-allocated “inclusionary” public housing was $236,800 for a family of four in San Francisco, $165,800 for a single person. Thus, based on a 40-hour week, minimum wage for a childless worker would have to be more than $80/hour before he or she wouldn’t be entitled to welfare subsidies.

[If a higher minimum wage is the silver bullet for cutting welfare expense, why wouldn’t at least one of the 50 states deploy it in a serious way? If the Bay Area minimum wage believers are correct, a state could set minimum wage to $25 or $50 per hour, for example, and enjoy massive savings and robust economic growth. I don’t think that the answer is  “It can only work at a national scale because otherwise it is too easy for employers to move to another state” because, due to NAFTA, at the national scale it would be almost as easy for employers to move a factory to Mexico or Canada.]

Enthusiasm for a gynecocracy remains undimmed despite Hillary Clinton’s defeat. From the (Fairmont) hotel gift shop:

You and Me will be doing great… as long as we both identify as female.

Partly due to my passions for art museums and dim sum, I still like San Francisco as a place to visit, though I’m noticing that the entire northeast quadrant is essentially without parks or other greenspace. It is a concrete jungle like Lower Manhattan. A lot of the folks with whom I talked have grown to hate the city and try to minimize their time in San Francisco itself. One 30-year-old work colleague will go so far as to stay in a hotel in Daly City and commute in. No 30-year-old guy in the 1980s would have preferred to be in Daly City!

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Middle class Californians subsidize wealthy Tesla owners, 2019 edition

“I got an electric car. My electric bill went down” by Brad Templeton is worth reading. He summarized it on Facebook:

Surprise: I got an electric car and my power bill went DOWN. Why? When you get an electric car in California, it allows you to switch to a heavy “time of use” power plan with expensive power in the peak (2pm-9pm) and much cheaper power in the night. I charge my car at night and moved my pool pump to the night so the net was my bill went down — my electric car gets almost “free” electricity, it seems. YMMV.

One angle he doesn’t cover is that the guy who could afford to purchase a new Tesla is being further subsidized by people who can’t afford to purchase a new Tesla (or any other new car!).


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If programmers are anti-social, how did they end up in the bustling hives of Silicon Valley?

People often are drawn to computer nerdism partly because they prefer interacting with machines rather than with other people. (James Damore made this point while working at Google and learned that free speech is for Americans who don’t need to work!)

Yet the coder in a modern Bay Area software plantation is sandwiched tightly between two other galley slaves (how’s that for a mixed metaphor?). He or she has less personal space than a McDonald’s cashier.

How did it come to pass that people who went into programming because they could be alone with their beloved machines are now packed like sardines into densely populated coding plantations and, after hours, packed like ocean liner steerage passengers into shared apartments?

Despite the somewhat lower salaries, wouldn’t most of these people actually be better off working as COBOL programmers for an electric utility? They’d at least have a private office or cubicle.

I asked the founder/CEO of one of the companies that I visited in SoMa whether he wouldn’t get more productivity out of his workers with a more traditional office layout. “Interviewees would just walk out if they saw cubicles or rows of private offices. This [array of tightly packed desks] is what they expect for a modern tech company.” He also told me that the grungy industrial space was costing over $70/ft triple net. “It’s actually more than a modern office tower because people want ‘authentic.'”

[The same CEO told me that the monk-like amount of space per coder also is associated with a monk-like abstinence from sex. “The guys are always complaining that there are no woman to date in San Francisco.” (presumably the imbalance is far larger down in the Valley!) Perhaps if they had a better understanding of California family law they would not complain as much and/or would look at neighboring Nevada, with its $13,000/year cap on child support and 50/50 shared parent default, as a destination for romance …]

Is it fair to say that, aside from the cash, Silicon Valley now offers one of the nation’s largest mismatches between workers’ preferences and working conditions?

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Working in San Francisco today

I am attending a meeting in the shining northern capital of California and had asked a business colleague who has experience with the location to recommend a hotel. His answer:

[the meeting is] inside of WeWork Civic Center on Mission between 7th and 8th wedged between a homeless encampment and emergency heroin detox center. I would recommend picking a hotel in another part of town. … Due to the layout and direction of the one way streets and traffic I’ve found cabs/Uber to work fairly poorly and often take longer than BART. I stopped using cars when junkies started trying to open my door at stop lights.

I think the level of understatement here is comparable to that in The Jean-Paul Sartre Cookbook:

Today I made a Black Forest cake out of five pounds of cherries and a live beaver, challenging the very definition of the word “cake.” I was very pleased. Malraux said he admired it greatly, but could not stay for dessert.

The good news is that a Hampton Inn at Mission between 5th and 6th is only $469/night.

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