Philip Greenspun’s Weblog

The latest New Yorker magazine includes an article on civil forfeiture. Back in 1995 I took a class at Harvard Law School called “Advanced Criminal Procedure.” An example civil forfeiture case that I can remember involved a man who drove his wife’s car to a shady part of town looking for a prostitute. The police didn’t have enough evidence for a successful criminal prosecution but they took the wife’s car via civil forfeiture, arguing that the car was involved in prostitution. The wife appealed, pointing out that she certainly did not authorize the use of her car for such a purpose, but lost. The appeals court ruled that the government had the right to take her car.

Now that adult children are moving in with parents in increasing numbers, the case of the elderly Philadelphia couple whose 31-year-old son made three $20 marijuana deals from the front porch should be cautionary. I would rate this as another argument in favor of renting rather than owning a home (see previous posting on the subject). An owned house is a irresistible target for a variety of predators, including the government (gradual via property tax) and the police (sudden via civil forfeiture). Insurance cannot protect against these kinds of risks.

If Mary and Leon Adams had purchased a basket of stocks in 1966 instead of the house they would be a lot better off today. A jealous neighbor cannot plant a marijuana seed in a Vanguard portfolio and then call 911. A wastrel child cannot deal drugs while standing on top of a record in a Fidelity Investments relational database management system.

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I spent a couple of days on Mount Desert Island (“MDI” to the Rockefellers) and was invited to join the swells of Bar Harbor and Northeast Harbor at the Friends of Acadia annual benefit auction.

About 500 people attended the event, held in a tent on the lawn of the Asticou Inn. Many of the waitstaff seemed to be speaking with Eastern European accents. Our table included the owner of one of the island’s larger hotels and we asked him why, in a time of supposedly high unemployment, there weren’t Americans who wanted to spend the summer on MDI. “I offer pretty high wages and housing, but Americans still aren’t interested,” he noted. “I had a single mom working for me for a few months but then she figured out that she could collect more from public assistance if she quit. Americans can usually obtain a comfortable material lifestyle by moving in with their parents or collecting Welfare. Why would they want to be on their feet serving two meals per day?”

Men wore salmon- and orange-colored pants with navy blazers and boat shoes without socks. Nobody seemed to have a problem bidding over $40,000 for a Willys Jeepster (photo below) or a week’s vacation in Antigua. Out of 500 people attending I noticed just one black person and no Asians.

The least obvious auction item was a set of four bicycles that the Obama family had rented during a brief visit to the national park in 2010. They sold for $7000. Asked why someone would pay that much for bikes that the Obama family had touched, a woman at our table said “Probably they are going to re-sell them at a profit to liberals in Cambridge.” Upon returning home I asked a Cambridge neighbor how much she thought the four bikes might have sold for. She estimated their auction value as $50,000.

[My best MDI moment was reading a Mo Yan novel while looking out at a moored yacht and think “Mo Yar” would be a good name for a sailboat maker (see Philadelphia Story for definition of “yar”).]

 

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I spent a long weekend making two trips in the Cirrus SR20. The flights included an instrument approach down to 500′ overcast at the untowered airport in Bar Harbor, Maine, operations at a busy towered airport (Hanscom), and short-field operations on the 2500′ runway at Block Island, Rhode Island. It included running into someone we knew at an airport (California instructor Jeff Moss training a new jet owner from Texas).

My host in Maine is an accomplished pilot who owns and operates a single-engine turboprop. He has a college-age daughter who would be any parent’s treasure.  Despite the fact that my friend has ample funds with which to have purchased this child an airline ticket or even a jet charter, he sent her back to Hanscom Field with me in the Cirrus. How often does one have an opportunity to find out how one’s friends truly evaluate one’s level of skill and responsibility? It reminded me of being a 200-hour pilot working on my instrument rating in Alaska. My instructor had more than 5000 hours of flying time… on skis. In addition he had been an FAA employee for decades, supervising air taxi operations. When he asked me to give his wife a ride to a nearby airport I felt much more proud than when I had passed my Private checkride.

It is definitely simpler to stay home and/or drive a Honda Accord everywhere that one needs to go. But I’m happy that I have challenged myself and invested enough time with flight training that friends will trust me with their children.

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The federal government has been planning since the reign of King Bush II to require that automakers include a backup camera as standard equipment (to cut down on the roughly 17,000 people per year who are injured in “backover” accidents). I’m helping a friend who is shopping for a new car (she needs to move her two kids and maybe some extra children a few miles within a city so naturally her first choice is a pavement-melting SUV) and decided to check to see if all new 2014 cars would have backup cameras. This April 15, 2013 story says that the Obama Administration is still debating the rule.

Given the pace at which technology becomes cheaper and government workers become more expensive I’m wondering if now we are actually spending more as a society on arguing about these cameras than they would have cost to install. It seems that perhaps 30 percent of new cars won’t have the cameras in 2014.

If the camera and screen add $50 to the cost of making a car and the 2012 sales rate of 14.5 million is sustained, that is $217.5 million that would be spent on the backup cameras for those vehicles that lack them. The U.S. Department of Transportation budget was $79 billion in 2011 (Wikipedia) but it is tough to know how much of that was spent on making rules for backup cameras. Given that members of Congress are engaged in this debate and also journalists and members of the public, and that the debate has been ongoing for at least 10 years (George W. Bush signed the law (text of H.R. 1216, the Cameron Gulbransen Kids Transportation Safety Act of 2007) requiring cameras back in 2008, but presumably the law came out of a previous debate), it doesn’t seem inconceivable that $217.5 million has been spent arguing. Let’s not forget travel expenses for advocates of the law who flew to Washington, D.C. to try to get audiences with bureaucrats and members of Congress.

What do folks think? Will Americans spend more arguing about this hardware than the Chinese will charge us to build a year’s worth of the devices?

[Note that this is not an argument against the spirit of the 2007/2008 law. The automobile market is already so heavily regulated and, in some cases subsidized with federal tax dollars, that there is not really an obvious argument to be made against any additional regulation. As a parent I certainly don’t want any of my kids to be backed over because a car maker saw an opportunity to sell a $2000 option package and a consumer didn’t have the $2000 to spend on the package that included the camera. I think the cameras will pay for themselves over time, even if no lives were saved, because drivers won’t back over/into as much stuff (economic analyses of the law that I’ve seen concentrate on the cost of each life actually saved, but ignore the costs of property damage and injuries). I would, however, say that this does show a weakness in the American political system. Congress could write “There shall be a backup camera in every car starting in 2011, covering at least whatever a driver can’t see with the mirrors, and the screen will be at least 3″ diagonally.” Instead the law will say “This authorizes bureaucrats to engage in an endless debate, during every minute of which they draw fat salary and pension benefits at taxpayer expense, about the best way to regulate each and every detail of backup cameras. If they can’t conclude their debate by 2010 then they can pay themselves for an additional five or ten years to continue studying the issue and talking to their pals in the auto industry.”]

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George W. Bush graduated from Yale in 1968 with a C+ average (source: CBS News). How might he have done today?

The July/August 2013 Yale Alumni Magazine points out that “Sixty-two percent of all grades awarded by Yale College in the spring of 2012 were As or A-minuses. Comparing that with 50 years ago, when only ten percent were in the A range, some faculty believe Yale has a grade-inflation problem.”

Perhaps Yale students today are simply better prepared due to the increased competitiveness of getting into an elite school (larger and more mobile world population; women now eligible for admission; roughly same number of slots).  Or maybe Yale students spend more time studying than did their counterparts in the 1960s, contrary to the conclusions reached by Babcock and Marks in http://www.nber.org/papers/w15954.pdf (“Using multiple datasets from different time periods, we document declines in academic time investment by full-time college students in the United States between 1961 and 2003. Full-time students allocated 40 hours per week toward class and studying in 1961, whereas by 2003 they were investing about 27 hours per week. Declines were extremely broad-based, and are not easily accounted for by framing effects, work or major choices, or compositional changes in students or schools. We conclude that there have been substantial changes over time in the quantity or manner of human capital production on college campuses.”)

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Consumer Reports has rated the Tesla sedan the best car that they’ve ever tested (list). Tesla has a market capitalization of about $14 billion (July 22, 2013). According to Wikipedia, Tesla seems to have required about $1 billion in debt and equity funding.

The GM/Chrysler bailout required roughly $85 billion in taxpayer funds (Wikipedia). Instead of preserving these relics we could have instead have had nearly 85 startup automobile manufacturers on the same scale as Tesla. Wouldn’t that have been a lot more interesting and more likely to push forward the automotive state of the art?

Let’s consider the suspension. GM and Chrysler sell vehicles with springs and shock absorbers, more or less the same system that carried Henri Fournier to victory in the 1901 Paris-to-Berlin race in an automobile made by Mors (source). What would nimbler upstart car vendors, forced to compete with each other and unable to tap into the federal river of cash, be likely to do with suspension? One hint is provided by Levant Power. They make an active shock absorber that can push against the spring if necessary to preserve vehicle composure. The shock can also generate electricity from the pounding action of the road on the wheels. See this video for a demonstration of ride over bumps (the company says that more videos are coming soon). I’m not sure how much funding went into Levant, but I am betting that it was less than $85 billion and they are the only company that seems to be doing anything practical to address my main complaint with my 6-year-old sedan (review). Note that Bose has a Web page devoted to its 33-year-old effort to build active suspensions but for whatever reason (maybe because they don’t have to compete too hard!) car makers never bought it (and it does seem a lot more complex than Levant’s idea).

Whenever a company or a government finishes spending a ridiculous amount of money on something the PR folks say “Look at this great thing you got for your money!” Somehow hardly anyone ever asks “What could we have gotten if we’d spent the money on something else instead?”

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If you want to feel better and stop complaining about your own life, Frozen in Time: An Epic Story of Survival and a Modern Quest for Lost Heroes of World War II is a great book to read. The story concerns a crazy American who bankrupts himself, the author, and the U.S. taxpayer in an attempt to dig a Coast Guard airplane (Grumman Duck) out of a glacier in Greenland. The plane crashed during World War II while rescuing the crew of a B-17 bomber. They in turn had crashed while trying to rescue the crew of a military version of the DC-3 cargo plane.

As someone who has flown piston-powered aircraft in the Arctic (e.g., from Boston to the Arctic Ocean at Kugluktuk in a Cirrus SR-20 and then south to Alaska!) I found the descriptions of similar activities during World War II fascinating. These guys took crazy risks due to their inferior-by-modern-standards navigation equipment and avionics.

If you’re suffering from the maladies of modern life, e.g., being stuck in traffic while commuting and/or handing over 50 percent of your wages to local, state, and federal governments, this book will show you how much worse things could be. The lucky guys in this book were stuck on the ice for months; the unlucky ones died.

The U.S. Air Force comes out looking good in this account. They truly spared no expense and effort in supporting these guys on the ice, e.g., with B-17 flights and supply drops every day with flyable weather.

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I just finished listening to No Easy Day: The Firsthand Account of the Mission That Killed Osama Bin Laden as an audiobook. For those curious about the Osama bin Laden raid about one quarter of the book will be interesting and the rest may be skimmed. The author, Matt Bissonnette (the pseudonym “Mark Owen” appears on the cover), was a passenger on the Blackhawk that crashed in bin Laden’s front yard. The crash has been previously attributed to vortex ring state (see previous post) and Bissonnette’s account seems to confirm this. He describes the helicopter as rocking and then yawing sharply to the right, as though suffering from loss of tail rotor effectiveness (Wikipedia).

Much of the rest of the book concerns Navy SEAL training and missions in Iraq and Afghanistan. As a American citizen you’ll be simultaneously awed that some of us are willing to endure so much physical discomfort and risk and dismayed that so many tax dollars are spent to fight against a handful of barely literate guys with a few hundred dollars worth of Chinese-made weapons. Owen describes how SEAL tactics have evolved from “flying to the X” (dropping in on a house by fast-roping down from a helicopter) to “patrolling to the X” (landing a few miles away and walking quietly in the dark). Much of the tactical advantage of the SEALs seems to come from their use of infrared lasers and night-vision googles. They light up the house with a bunch of bright IR beams, quietly enter, and shoot people in their beds. When they are lucky, people in adjacent bedrooms don’t even wake up from the sound of the silenced rifles that the SEALs typically use. What is difficult to understand why a market has not developed for an automated system that uses a CMOS sensor and a bit of software to sound an alarm when swept by an IR laser. One would think that Afghans and Iraqis would be willing to pay a reasonable price for a machine that they could place in a window and that would wake them up when U.S. forces come to visit.

[Wikipedia says that the U.S. military was upset about the book’s publication on the grounds that it revealed secret SEAL tactics. To the extent that the guys we are constantly at war with did not previously appreciate the importance of infrared lasers I would have to agree with the Pentagon.]

Finally the book has a few stories from Bissonnette’s childhood in a remote Alaskan village.

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I haven’t been following the immigration “reform” debate too closely. But I know a lot of immigrants. One guy has been here for about 10 years. He spent his first two as an MBA student. He has split his time for the remaining 8 years working for Goldman Sachs and for a health care technology company. His two employers have probably paid close to $50,000 in legal fees to keep him on the green card track, but he has not yet received a green card and is thus nowhere close to citizenship. Let’s assume the government has paid public employees $25,000 to look at the paperwork that his employers have filed, scrutinize his paperwork every time he comes and goes, etc. “The quotas were set up in the 1960s,” he explained. “And Iceland would be given the same quota as India, despite the disparity in population. So the waiting time for a green card is much longer if you come from India or China compared to other countries.”

Right now we’re getting a great deal from having this guy here. He is paying staggering amounts of tax every year, much of it to support obligations incurred prior to his arrival, e.g., pensions for public employees who retired in the 1980s. He is paying into Medicare and Social Security but if we deport him before he reaches 65 he won’t be able to collect any benefits from these programs (which may, in any case, be restricted to folks with lower incomes than his by the time he reaches 65).

On the other hand, if he were a citizen he might add a bit to the property bubble that America’s successful cities are enjoying. “I have the money to buy a condo or house,” noted the immigrant, “but if I were to lose my job I would have to leave the country within 10 days. So I keep renting.” (probably he is happier as a result!) If he goes into the property market that might inflate the prices available to existing owners of residential property (but maybe not; his demand for rental should also work).

I’m wondering what happens if immigration reform goes through. My friend’s immigration should consume at least $100,000 in private and public paperwork and bureaucracy costs by the time he becomes a citizen. Supposedly if the laws are tweaked there will be 10 million new citizens. If each of these new citizens consumes the same $100,000 that’s $1 trillion that will be added to the officially calculated GDP.

[Whether or not this kind of paper-shuffling should be calculated separately from, say, maintenance of machine tools in factories and other more obviously productive activities, is a separate issue.]

Maybe this is the answer to Detroit’s woes. Everyone there can become an immigration lawyer or a federal government worker reading paperwork filed by immigration lawyers…

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Detroit has now filed for bankruptcy protection. The estimated cost of funding its pension obligations fully would be somewhere between $3.5 billion and $9.2 billion (Guardian article) though in fact the actual cost is not knowable (future interest rates and life expectancy for currently fairly young retirees being impossible to know for certain). The cost works out to an estimated maximum of $13,143 for every man, woman, and child currently living in Detroit. There are only about 225,000 people in Detroit who work (source) so the $9.2 billion estimate (from public employee unions) works out to about $41,000 per worker.

Unless you have a printing press for money and/or a direct connection to God who will tell you how long people are going to live and what return on investment can be expected 30 years from now, why would you promise to pay someone, e.g., $150,000 in today’s dollars starting 20 years from now and continuing until that person dies? Politicians seemingly cannot resist making these promises, however, so perhaps it is time to restrict their ability to do so. They are not, after all, actuarial experts. If insurance companies stuffed full of such experts are now having trouble meeting their annuity obligations (WSJ; nytimes) why would we expect politicians, motivated by a desire to get reelected, to do better?

Back in 2009 I wrote a review of a book covering the history of public employee unions and consequent pension commitments. Here we are four years later and one of America’s largest cities needs bankruptcy protection. Many of the rest (notably those whose populations are not growing) will follow into bankrtupcy if only their retirees can contrive to live a bit longer than expected and/or if interest rates remain low. Why would we want politicians to place those kinds of bets on our behalf?

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