Philip Greenspun’s Weblog

Waiting for a new Cirrus alternator, I’ve had plenty of time to roam around downtown Memphis, Tennessee. There are buildings or stores available to rent on every block. Approximately one third of the retail space seems vacant. Not too many folks are out on the streets, with the exception of Beale Street and its tourist blues joints. Overall it would appear that the city has about four times as much land as necessary and perhaps twice as much built space. Rehabbed townhouses a mile or so from downtown seem depressingly isolated; there is just not enough density to form a neighborhood and not enough green space to qualify as a suburb.

If there is an economic recovery happening, it is difficult to see the effect on Memphis.

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I flew from Boston to San Antonio, Texas yesterday on American Airlines. I dutifully segregated my liquids (sunscreen and toothpaste) into a quart-sized Ziploc bag and put it in the front pocket of my carry-on. Then I forgot to take it out when going through the Logan Airport security line at 5:00 am. The 25 TSA employees present at the checkpoint failed to notice this infraction (liquids remaining in bag). It occurred to me that this has happened many times before. I have left liquids in my bag and the TSA folks have not harassed me as expected. Are they in fact enforcing this rule?

The second odd thing about the flight was that I arrived early in Dallas. Right next to the gate where I arrived was an American Airlines flight departing for San Antonio. As I was holding a valid ticket from Dallas to San Antonio, I asked if I could get on the earlier flight. The gate agent explained that they had changed their policy and would no longer allow anyone to do this except super double triple platinum award club members. So I walked to another terminal, watched a second AA flight depart for San Antonio (did not try to get on that one), and went over to the gate for my scheduled flight. They’d boarded the first class passengers already and then shut down the ramp due to a lightning storm. We waited for another hour or so and then got on the plane. I got to San Antonio about 2.5 hours later than I could have, at exactly the same cost to the airline.

I’m sure that this policy has a rational business basis, but I’m wondering what it is. The main advantage of a legacy airline, from a consumer’s point of view, is that they are bigger. I may not like the ancient MD-80 planes that American flies compared to JetBlue’s shining new Airbus fleet, but American might be able to get me there faster due to their larger fleet and more frequent schedule. Except because of this policy I know that I won’t derive any benefit from American’s larger size. I will have to wait for my scheduled connection, just as I would with JetBlue, Southwest, or Virgin. How is American benefiting from denying consumers the benefits of their airline’s size? I would naively expect this to hasten their decline in the face of competition from JetBlue and the other startups.

[The purpose of the trip was to help a friend pick up a 2005 Cirrus SR20 that he purchased with 780 hours on the meter. We flew for about 3 hours, just shy of Memphis, Tennessee, just ahead of a line of thunderstorms, before the main alternator failed. The Cirrus electrical system design worked pretty well, with the non-essential systems failing gradually. Thanks to the small backup alternator, we still had the primary flight display, a GPS, a communications radio, and a transponder for a landing on 18R at Memphis International. We shut down at Wilson Air Center where a mechanic came in from home to begin troubleshooting.]

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Folks: I’ve drafted a book review of The Death of Common Sense and would appreciate comments/corrections. (It will be very interesting to see what kinds of ads Google finds relevant to this article, perhaps a good guide to who has a financial interest in the status quo.)

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I just finished listening to The Man Who Loved China: The Fantastic Story of the Eccentric Scientist Who Unlocked the Mysteries of the Middle Kingdom, by Simon Winchester, one of my favorite non-fiction writers. The book concerns Joseph Needham, an English biologist who, starting in the 1950s, directed the production of an enormous multi-volume series on the history of Chinese science and engineering (Winchester says that the best place to start is with Science and Civilisation in China, Vol. 4, Part 3: Civil Engineering and Nautics). The book works as an interesting biography of an unconventional thinker, a reasonable survey of some of the highlights of Chinese science and engineering in the ancient world, and as a way to put recent Chinese innovations into historical perspective.

The big question of why China stagnated while Europe was booming with the Enlightenment and Industrial Revolution was not definitively addressed by Needham or Winchester and the scholars that he cites, but Winchester points out that when historians look back from the year 3000 A.D. it may not be very interesting that China had a slow period from 1650-1980 (roughly the years of the Qing Dynasty and Mao).

[The mammoth size and cost of the Cambridge University Press volumes shows the power of the Web and the comparative ineffectiveness of print. Needham was not able to work very effectively with collaborators; most of the real experts in this field were on the other side of the globe from his rooms in Cambridge (England). At $150-350 per volume, not too many folks are going to buy a set for their living room. It would have been very interesting to see what a guy like Needham could have done with a distributed army of 500 scholars rather than just a handful of assistants.]

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As a new suburbanite I confront the big issues on a daily basis. Today the question is where to mount a bird feeder. Our ancient Deck House has eaves that stick out about 1.5′ from the house and it is trivial to screw a hook into them and then hang a tube-shaped bird feeder. This means that the bird feeder is fairly well sheltered from the rain (helps keep the seed dry?), close to the window (good for viewing, but maybe scares some birds?), but it is also mostly in the shade. An alternative is to clamp a curved pole to a deck railing and have the tubular feeder 6′ or 8′ away from the windows and exposed to the elements, including sunshine.

What’s more likely to attract birds?

Some data: I tried the under-eave position on the NE side of the house starting yesterday and so far no birds have appeared. I tried a similar feeder on the S side of the house underneath an eave there and a few small songbirds showed up but have now departed (full?).

Separately, I admit with shame that I tried a window-mount bird feeder. I filled it up half way and stuck the suction cups to a window, came back 10 minutes later and found it on the ground below the window.

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A friend emailed me an article about public employee salaries and pensions and asked my opinion. Here was my reply:

He does sound like an angry white guy 🙂

I think he has missed a big part of the point, though. Bureaucracies can’t reward themselves; it is politicians who trade handouts from the public treasury of tomorrow for votes today. And Republicans have been almost as bad as Democrats in this regard, and the Greeks just as bad as Californians, so it looks like a fundamental flaw of our political systems, not something specific to a party.

He doesn’t propose any solutions. Probably the only workable one is to prevent government workers from voting. That was pretty close to what the Framers wanted, by excluding D.C. from the electoral college, House, and Senate. Now that government payrolls have grown to such a huge percentage of the workforce at all levels, we probably need to do that in state politics as well.

So… were the Framers wiser than we are today? They figured out that there was an inherent conflict of interest in allowing a government worker to vote because he would almost surely vote for politicians who promised to expand the government and increase salaries for government workers. The folks who drafted various state constitutions didn’t bother to exclude government workers from state elections because at the time no more than 1 or 2 percent of American households could possibly have been dependent on a government paycheck (since government at all levels was such a tiny percentage of GDP).

It seems harsh to deny the franchise to what will soon be nearly half of all American workers, but perhaps it is the only way to save the country from insolvency.

[Of course, I recognize the impracticality of getting any such change to the American system passed; roughly 50 percent of voters would be almost guaranteed to vote against it! So mostly this idea is good for understanding how democracies collapse once a sufficient percentage of the citizens are government workers. Note that Greece was under military dictatorship until 1974. The economic collapse occurred after 36 years of democracy and roughly when their first large batch of government workers retired with pensions approved by democratically elected leaders. U.S. government workers were first allowed to unionize and collectively bargain for wages and pensions in the early 1960s. Our problems became acute after about 50 years and would have occurred much sooner if not for a near doubling of our population due to immigration (population explosions are great for government finance).]

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Waiting for a friend in a downtown skyscraper the other day, I pulled a corporate finance text off her shelf to refresh my memory about why companies borrow money rather than allowing individual shareholders, if they want a higher-risk investment, to borrow money on their own and purchase shares with leverage. The book covered the Modigliani-Miller Theorem, a 1958 result showing that borrowing money doesn’t help a company’s managers or shareholders… in a world free of corporate taxes. Given a corporate income tax and deductible interest, however, a company can significantly improve its performance by borrowing.

The U.S. has some of the world’s highest corporate taxes (source) and we’ve also had a lot of leverage (Wikipedia says that private equity is more than twice as big in the U.S. than in Europe despite comparable economy sizes). The leverage made the Collapse of 2008-? a lot more painful than it would have been without the leverage (or maybe the collapse wouldn’t have happened at all).

Has anyone heard a public debate on this subject? I.e., whether or not our tax code substantially increases the risk of corporate bankruptcies by encouraging leverage?

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In the last week I’ve replaced three compact fluorescent (CFL) light bulbs. All were rated to last between 8,000 and 12,000 hours; none had been installed for more than two years. Two of the bulbs were manufactured by Philips. One was installed in a seldom-visited garage 1.5 years ago and had been on for perhaps 1 hour per week. So it lasted 75 hours. I don’t think that it was temperature extremes that killed it because it was stamped “Outdoor”.

How are CFL lifetimes calculated? Are they for turning on the light and walking away for a few years? Does cycling them on and off destroy them much sooner than the published lifetime? My main reason for buying CFL bulbs was that I thought I would be spared the hassle of changing light bulbs, but so far I seem to be running around with replacements about as fast as before (except now it is costing 8X as much).

And who has tried the new LED light bulbs? Are they ready for prime time? I am ready to give up on CFL.

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On Friday I assisted with getting a Mercedes SLK convertible to the dealer for service. The car needed an oil change ($279) and for a whole bunch of crud to be cleaned out from near the ventilation blower (over $1000 for the cleaning and a new motor; the car apparently has no protection against sucking in leaves, pine needles, squirrels, etc.). If you are less than 5’3″ tall and want a $50,000 two-seater with less nimble handling than a Honda Accord, this vehicle should be on your short list…

We were given a brand-new Toyota Camry as a loaner. On the basic model of Camry, Toyota doesn’t want to give the consumer the convenience of a climate-control thermostat, so the temperature control looks like the old cold/hot slider. However, underneath the system has all of the mechanical complexity of the fully automatic system. The dashboard knobs are not mechanically connected to a valve controlling hot water from the radiator, as in my friend’s 1989 Honda Accord (still working fine at 340,000 miles). The dashboard knobs send electric signals to motors that push on the same levers as in the fully automated system. Except that in this car something was broken and there was no heat at all. The consumer thus pays for maximum possible complexity, unreliability, and expense to maintain while receiving the minimum possible convenience in return.

How was it to drive around in Massachusetts in February with no heat? We’d just flip on the heated seats… except that there weren’t any on this trim level.

We returned the Camry and received a brand-new Mercedes C300 sedan as a substitute. The car had a GPS antenna on the roof, a medium-sized LCD screen in the middle of the dashboard, and a complex user interface controlled by a multi-function knob. The only thing missing? A $2 GPS chip. In their attempt to get a consumer to pay up an extra $2000 for a GPS, Mercedes had compromised the car’s interface (a driver doesn’t need the multi-function knob and menus on the LCD screen to control a radio and a heater/AC system) and uglified the roof. What do they do with all of those useless pixels on the LCD screen? Display a 1950s-style FM radio dial and show a moving needle as the seek up/seek down buttons are pressed.

I’m wondering if turning out so many brain-dead products is hurting these companies’ long-term prospects. What happens when the Chinese manufacturer shows up here with a low-priced car that has all of the electronic stuff people would expect as standard equipment? If people remember their $25,000 Toyota with no heat or $35,000 Mercedes with no GPS they might be a lot more willing to try a new brand.

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.. from The Week, which just arrived at the house in old-fashioned hardcopy.

An item about a quintessentially American event: a church hosts an NRA firearms safety training class; the instructor shoots a student in the foot (more).

Quote from Calvin Coolidge: ““Nothing is easier than the expenditure of public money. It doesn’t appear to belong to anyone. The temptation is overwhelming to bestow it on somebody.”

The French spent an average of 1 hour 38 minutes eating lunch in 1975; today the number is 31 minutes.

A Zebra ran loose in Atlanta for 40 minutes (excerpt from 911 call in this news article).

The Wall Street Journal reported on research that shows actively managed investments suffer more than you’d think because of excessive trading: “According to Morningstar, mutual funds with the highest portfolio turnover rates have underperformed the slowest-trading funds by an annual average of 1.8 percentage points over the past decade. A study of pension-fund stock portfolios found that, on average, the funds would have raised their annual returns by nearly a full percentage point if the managers had gone on a 12-month vacation and never made a single trade.” (source)

Harvard eggheads show that a developed country starts to suck wind economically when debt reaches 90 percent of GDP (full paper); the U.S. debt is now heading over 100 percent of GDP and soon we will be “giving 110 percent” (since the federal deficit is roughly 10 percent of GDP).

My favorite was about some guys who built a huge “treadmill” and use it to study elephant gaits in Thailand. When I found the original story, however, it turned out that the reporter was confused. The researchers built only a platform with strain gauges and elephants walked over the platform. It would have been fun to see video of an elephant using a treadmill desk…

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