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We posted an ad for a helicopter instructor to work at East Coast Aero Club here in Boston. 34 people have applied so far. As our only interest is in how effective and safety-conscious the instructor will prove to be, we didn’t ask any of the applicants to indicate their race or sex. On the other hand, just from the first names we’ve been able to infer the male/female ratio. Thus far… 33:1.

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Various experts have been saying that Greece’s problems would be mostly solved if the country had its own currency. The Greek population is just over 11 million, somewhere between that of the Chicago and Los Angeles metropolitan area populations. With its own currency, Greece could devalue its debts and pension obligations in real terms.

If that is true for Greece, why not for U.S. states with similar or larger populations? Just like Greece, U.S. states have big debt obligations and they also run massive budget deficits (though this is mostly in the form of unfunded pension obligations and therefore hidden). If Michigan devalued it would be a more attractive place to invest. Workers could continue to earn their former salaries in “Wolverine Bucks”, but the cost relative to goods and services on the world market would be much less. If California devalued, its state pension obligations would be greatly reduced. The state might owe a 51-year-old retired fire chief $241,000 per year or approximately 2410 barrels of oil, but if the state issued Grizzly Bucks instead, the obligation could be satisfied with just a few hundred barrels of oil.

Conversely, if we think it would not be helpful for a U.S. state with a population of 11 million to have its own currency, why do we think that it would be helpful for Greece?

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Unemployed Americans will be cheered to see Practice Fusion, a free Web-based electronic medical record system. Physicians who adopt the free system will get $44,000 in cash from the federal government (i.e., taxpayer funds). http://www.bls.gov/oco/ocos074.htm#earnings notes that the folks getting the free $44,000 have earnings “among the highest of any occupation” (median of $186,044 for primary care docs; $339,738 median for specialists).=

http://www.practicefusion.com/pages/HITECH_healthcare_stimulus.html explains “On February 17, 2009, President Obama signed the American Reinvestment and Recovery Act (ARRA). Under the economic stimulus plan, physicians and providers can qualify for $44,000 in Medicare incentives if they demonstrate ‘meaningful use’ of an Electronic Health Record starting in 2011.” The page goes on to explain additional $4,400 and $12,500 cash payments that are available as well as 4 percent bonuses of whatever Medicare is otherwise paying.

[You might ask how Practice Fusion gets paid for keeping their server hard drives spinning. They sell ads in the front and aggregate data out the back.]

Update (email today from a doctor friend): “I just got a letter from Medicare that I have to send them a check for $27.42 because they overpaid me for 67 patients with overpayment amounts ranging from $0.01 to $1.37 with the majority being in the $0.30 range. It’s their fault, since we bill the same for everything, and they overpaid me that penny.”

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This New Yorker article on the Galleon hedge fund insider trading prosecution is worth reading if you’re curious about how the SEC goes out about investigating Wall Street and in what percentage of American business folks can be persuaded to break the law.

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Today’s New York Times carries “Struggling to Stoke Economic Growth in Greece”, an article about how the heroic economists and politicians in Greece intend to restore economic growth. It turns out that the politicians’ answer was green energy:

“A few months after Greece was seized by its debt crisis, Prime Minister George A. Papandreou had a grand idea to revive growth: sun-drenched islands would be dotted with solar panels and wind turbines to transform the country into a ‘green economy,’ attracting badly needed investments and creating hundreds of thousands of new jobs.”

As Greece would presumably be importing all of the technology from China and Germany, it is unclear why this guy thought there would be any competitive advantage for Greece over other sunny portions of the globe.

Is it time to short a country when the politicians begin talking about how they’re going to revitalize the local economy through green energy?

[The article did make me wonder how Greece digs its way out. Given the risk of Greece being ejected from the Eurozone and a subsequent currency devaluation, anyone with money on deposit in a Greek bank should probably be thinking about moving it to France or Germany. An investor thinking about setting up a new business in Greece would have to worry about civil unrest (will a riot destroy my new enterprise?), dramatic tax hikes (the politicians can’t resist spending and nobody will lend to them anymore, so they will eventually have to establish new taxes; how can one be sure that they won’t fall heavily on the new enterprise?), and a shortage of skilled labor (as the smart young people emigrate to the more successful EU countries). Of the bigshots negotiating the latest Greek bailouts, I wonder how many of them would be willing to invest their personal funds in a new Greek business. If the answer is “none”, how do they expect the country to recover?]

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Folks:

An older relative who uses AOL dialup (their last customer?) was asking for advice on a new PC to buy. I said “Since you have Verizon FiOS and an old analog tube TV, maybe you should consider getting a Sony Internet TV and just read email and write documents on that. Then you’d have a nice HDTV and could do your computing from your easy chair.” A Sony 40-inch “Google TV” costs $800, about the same as a decent PC. It comes with a wireless keyboard. It runs the Google Chrome browser. I assume it has an Gmail app. Is it practical for reading email and doing word processing with Google Docs as well as generally surfing the Web?

I’m wondering if a big issue would be the viewing distance and consequent small size of text. Currently this dialup user is viewing a 17″ VGA screen. Text is fuzzy and there isn’t much screen space, but he is sitting at a conventional desk so is pretty close to the screen.

Or should he wait another year when he can expect to be able to surf the Web and read Gmail on a typical microwave or toaster oven?

Thanks in advance for comments.

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One issue that has come up in Wealth, War and Wisdom is the amount that Germany owed in reparations following World War I. From a quick Google search, it seems that Germany owed about 83 percent of its GDP at the time and had to pay 2.5 percent of GDP every year. Conventional history textbooks present this as an unbearably high burden that Germans could not handle and therefore they needed to vote for Adolf Hitler and the Nazis.

Attitudes toward debt must have changed considerably since the 1920s. Japan owes more than 200 percent of GDP. The U.S. governments (federal, state, and local) owe about 100 percent (flashy ource; boring source; Washington Post). The U.S. debt service as a percentage of GDP is forecast to rise to 3.1 percent (source) for federal debt alone. If we add another 2 percent for the states, which is probably too low since they pay a highest interest rate than the feds, that’s 5 percent of GDP or double what the Germans supposedly could not possibly afford. This page of 2010 data indicates that the world average for debt service was 4.6 percent of GDP.

What has changed such that 2.5 percent was considered unbearable in 1918 but 4.6 percent is normal today?

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I stopped by my favorite bike shop, ATA Cycle in Concord, Massachusetts, to pick up my ten-year-old Trek hybrid. For $250 they replaced the persistently troublesome rear derailleur and shifter (one of the things that I’ve never figured out about bicycles is why a repair or tune-up almost always costs more than an entire new bike from Walmart or Costco). The owner, Husam Sahin, a road biking enthusiast from Turkey, said “they only made that drivetrain for one year and now you know why”.

Casually leaning up against the counter was a Storck road bike. “It’s a carbon fiber frame from Germany,” Sahin explained. “All of the components are from Japan, though. I’m delivering another one just like it over there in the window.” He demonstrated the motorized Shimano derailleurs, powered by a lithium battery just underneath the back of the seat. “The battery is good for 1000 miles,” Sahin noted, “and there are eight shift buttons in different places around the handlebars.”

Was there a big market for a bicycle like that? “It’s $10,000 just for the frame and $25,000 with all of the components,” Sahin noted, “but still there is a two-month waiting list. On the other hand, I can’t sell any $500 bicycles to young people.” He arranged his hands like a teenager playing a video game with his thumbs.

[http://nbda.com/articles/industry-overview-2010-pg34.htm shows that the number of adult-sized bicycles sold in the U.S. is currently about the same as in 1986, a year in which the population was 240 million (22 percent smaller than today), the real GDP per capita was supposedly smaller, and the real cost of a bicycle was no doubt higher due to the lack of Chinese imports (the average price of a bicycle today, including kids’ bikes, is just $79 or $38 in 1986 money).]

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Walking around your yard and see a 3-4″ limb or entire tree trunk that needs to be cut through? The lightweight ARS Pruning Folding Turbocut Saw fits nicely in a coat pocket. It is infinitely superior to the Fiskars equivalent sold at Home Depot and not much more expensive. I own two already, so think that I will buy a slightly longer non-folder ARS saw: ARS Straight Blade Professional Arborist Saw. Also worth considering: ARS pruner.

[This is part of my personal scheme to help our Japanese brothers and sisters recover from the tsunami.]

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As the U.S. economy’s growth continues to disappoint, various folks are calling for an increase in government spending. If U.S. businesses aren’t expanding then government should step in and do the spending and hiring itself. In the classical economic analysis of this process (see Keynesian economics) there is no adjustment made for the fact that government spending might not be as efficient as private business spending.

As the owner of a very small Boston-based helicopter charter company, I spent one morning this week with a very bright and experienced FAA safety inspector who drove out to my house in his government-issued car to inspect our records. This helicopter charter operator is licensed in the special “single pilot 135” category, which generally means that the owner is the pilot and nobody else can fly paying customers. The FAA inspector, however, was working from a checklist that applies to all 135 operators. We went through a bunch of questions relating to how familiar was I with the procedures for hiring additional pilots and making sure that I had checked with their previous employers to find out if they’d ever failed a drug test. The FAA inspector also looked at my monthly duty time records to make sure that I hadn’t flown more than 1400 hours in the preceding 12 months (FAR 135.67). No Boston helicopter charter company with a single helicopter has ever flown more than about 50 hours per year, but we went through page after page of reports showing either 0 hours flown or 0.5 hours flown. Finally, the FAA inspector looked at my random drug testing program to make sure that everything was in place. I’m subject to the same drug testing requirements as United Airlines. I am the drug testing coordinator for our company, so I am responsible for scheduling drug tests and surprising employees when it is their turn to be tested. As it happens, I’m also the only “safety-sensitive employee” subject to drug testing, so basically I’m responsible for periodically surprising myself with a random drug test. As a supervisor, I need to take training so that I can recognize when an employee is on drugs. But I’m also the only employee, so really this is training so that I can figure out if I myself am on drugs. As an employee, I need to take a second training course so that I learn about all of the ways that my employer might surprise me with a random drug test and find out about drug use. But I’m also the employer so really I’m learning about how I might trap myself.

Given the costs of this guy’s salary, pension, government-issued car, supervisor, and office space, I estimate that the records inspection cost the U.S. taxpayer $500. Just a handful of these inspections, therefore, would have paid for an online system that would eliminate the need for inspectors to drive around to folks’ hangars and houses.

Five minutes after the FAA inspector left, I received a phone call. “I’m from the FAA and we’d like to schedule an audit of your drug testing program.” I remarked that a fully qualified FAA inspector was barely out of the driveway and had just gone through every document that I had on the subject. “He was from the FSDO (Flight Standards District Office)? That’s a completely different department. We’re going to send two inspectors up from Atlanta next month.” Why two? “We always send them in pairs.” What did they want? “We’re going to fax you a detailed list of all of the information that we need and you should immediately contact your drug testing provider (Lexis/Nexis) to tell them that you’re being audited. There is a bunch of information that you can get only from them. As soon as you get the fax, you should re-fax it to Lexis/Nexis.” I said that I didn’t have a fax machine, so he promised to send the information via U.S. mail. It could not be emailed.

As we also deal with some separate FAA maintenance regulators, I think it is fairly likely that we will meet with more FAA employees this year than with paying charter customers (most of the business is sightseeing or flight instruction; those activities are regulated separately and by different FAA employees; we have a separate drug-testing program for the sightseeing operation).

The FAA performs a valuable service in conducting checkrides with charter pilots and looking at maintenance records, though what they do has considerable overlap with our insurance company, which employs its own check airmen. But the paperwork inspection and drug testing program audits (this is our second) are done at a cost that would bankrupt any private enterprise that was subject to competition. My interactions with other government agencies have been much more limited, but I don’t see why they would be different, on average, than the FAA. If so, government stimulus money is not a substitute for private spending because the government spends money in ways that no private business or individual would choose to spend money.

[Update: This posting read out loud in Congress by a U.S. Air Force veteran.]

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