Philip Greenspun’s Weblog

In thinking about the Federal Government’s $1.3 billion spent so far on coupons for digital TV tuners, it occurred to me that at $40 per coupon, $1 billion+ was an awful lot of conversion boxes. Dividing the $1.3 billion by $40, we find that the government has apparently handed out 32.5 million coupons.

http://www.connectmycable.com/resources/cable-vs-satellite.html says that 85 percent of U.S. households had cable or satellite TV in 2006. Is it believable that the remaining 15 percent of U.S. households figured out that this government hand-out program exists, took the trouble to fill out the Web forms or paperwork to get their coupons, and brought home a converter box to uglify their homes?

If it is not believable, might there be some enterprising retailers out there who are delivering fictitious converter boxes to fictitious consumers?

[Note that this analysis is slightly oversimplified. A house could have cable TV in the living room and an analog TV with rabbit ears on the kitchen counter. The government might be wasting some of the $1.3 billion on administrative costs rather than putting it all into coupons (the newspaper articles on this subject aren’t clear on whether the budget was $1.3 billion in coupons or $1.3 billion in total for the program).]

[As a second aside, can anyone think of a greater waste of government money? Regardless of how much was raised from selling the recovered spectrum, why would we choose to spend it on these converter boxes? Wouldn’t $1.3 billion in extra scientific research have been more likely to give the U.S. economy a boost?]

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Suppose you asked an employer building factories in Mexico, China, and South Korea rather than the U.S., “How come you’re not building the factory here?” Perhaps the answer would be “I’m concerned that my workers won’t watch enough television. They might spend their evenings learning new skills, reading books, or volunteering.” In that case, Barack Obama is coming to the rescue of our economy by proposing a delay in our conversion to digital TV (nytimes story).

God forbid that an American would wake up one morning, turn on the television, and find out that there was no longer a broadcast analog signal. If he wanted to continue to watch, he would have to order cable, get a new TV, or buy a conversion box without a subsidy from the Federales (we have apparently spent $1.3 billion so far so that people can keep running their old power-hogging CRT televisions; now the budgeted funds for conversion box coupons have run out).

It is comforting to know that our incoming president wants to ensure that as many Americans as possible waste as much time and electricity as possible watching old analog CRTs.

[I’m almost embarrassed that I didn’t add this important initiative to my economic recovery plan.]

[The government-issued coupons are for $40. The converter boxes are $60-77 at Amazon.com. All of this is to achieve the effect of having a crummy CRT-based TV with a digital tuner, which Walmart will sell you brand-new all in one box for $115 without government intervention. Should you wish to enter the LCD flat-panel age, that starts at $228 at Walmart.]

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I mentioned to a friend my wish that, as long as the government is spending money in hopes of boosting the economy, it would spend it on something that has proven to yield very high returns, i.e., open-source software. He asked “How would you decide which projects to fund? Most of the funding for software so far has come from the Department of Defense.”

My proposal would be copied from the way that universities implement their race-based hiring programs for faculty. Each department in a university is given a fixed number of slots that they can fill by hiring whomever they believe is best qualified to be an assistant professor. If, however, a department should hire someone whose skin is dark enough to qualify them as a desirable minority, that hire does not count towards their allocation. In other words, a department with one slot that has found a white or Asian candidate can still hire that person and a favored minority in addition. This way the university enlists its entire staff in helping with race-based hiring, rather than having one administrator at the top whose job is to find potential professors with the appropriate skin tone.

How can we apply this to open-source software and government agencies? It might seem as though each government agency were spending as much money as humanly possible at all times. Yet in fact each agency has an annual budget and is constrained by that budget. If we were to set aside a few billion dollars we could say “Any agency that wants enhancements to existing open-source projects or wants to fund new open-source software can do so with all of the money coming from the central open-source software fund.” That way agencies would be encouraged to spend money on open source because any funds spent wouldn’t come out of their usual budget.

How would it work? Suppose that a 30-person group within the National Park Service wanted a Web-based tool for collaboration amongst themselves and a volunteer organization. They find that a Drupal module does 85 percent of what they want. They would hire the developer of that module to add the features. Those features could be rolled into the public distribution or made available separately to other programmers worldwide. The money would come from the open-source software fund, no questions asked, rather than the Parks Service budget.

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A rich friend forwarded me an advertisement that he got…

“Ferrari of New England is pleased to announce that we have 7 brand new Ferrari’s [sic] in Stock [sic] and ready to go, including 6 F430’s [sic] (Spider’s [sic] and Coupes) and a 612 Scaglietti. This is indeed a rare opportunity to become the first original owner of a new Ferrari. Most times it takes years and a purchase of a pre-owned Ferrari to attain this status.”

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Automobile sales in the U.S. are down 35 percent for December 2008 compared to December 2007. My conclusion is that the economy is in surprisingly good shape. Why? There is hardly a single person in the U.S. who actually needs a new car. Cars have become so durable that the easiest purchase to defer is a new car. A neighbor of mine is selling a 1997 Chrysler minivan. It has 125,000 miles on it, works perfectly, and looks almost new because it lives in a garage. He doesn’t trust it for long highway trips anymore. The Blue Book value of this car is $3000 for a private party transaction, $1625 for a trade-in. It would surely be nicer to have a brand new version of this same van (about $23,000 invoice, which presumably is the maximum you’d ever have to pay), but there would be no shame or inconvenience in driving this 12-year-old minivan.

The population growth rate of the U.S. is about 0.9 percent, so we might expect about 2.5 million cars to be sold as a consequence of newly licensed drivers (there are 250 million registered cars on our roads). There are roughly 6 million car accidents every year in the U.S. If we assume that the car is destroyed in 3 million of those, we would expect another 3 million sales due to accidents. That’s an annual sales rate of 5.5 million. In fact, sales are running at a rate of closer to 10 million, which means that 4.5 million cars are being sold as luxury splurges. That doesn’t sound like a depression yet.

[January 6 Update: The New York Times has an article today on the fact that cars have gone from an average of 6 years old to an average of 9 years old.]

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The news today describes the withdrawal of Bill Richardson from the job of Secretary of Commerce. None of the articles point out that the guy has never had a job outside of government (wikipedia). Does it make sense to have someone running Commerce who has never had any experience of trying to do any sort of business? As private industry continues to shed jobs and government continues to grow, one might argue that in the long run all U.S. jobs will be government or government contracting, but we’re not there yet. As a taxpayer, I get a bit nervous when I see the entire government run by people who’ve never been net payers of taxes (of course government workers do pay income tax, but their tax-funded salaries are larger than their tax payments, so on balance they are net recipients of tax dollars).

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Title pretty much says it all… “Obese Patients Necessitate Bigger Plane For Aussie Flying Doctor Service”

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The newspapers are filled with stories about the latest battle in the Arab-Israeli war, which started in 1948 but somehow is presented in our media as a fresh conflict. Hamas is described as a terrorist organization that has somehow occupied various buildings and rocket-launching sites throughout Gaza. In fact, Hamas is the legitimately elected government of all of the Palestinians, having won 76 out of 132 seats in a 2006 election (the Fatah party won only 43), as its Wikipedia article explains. Despite a military conflict with Fatah in 2007 (wikipedia), which resulted in the loss of power in the West Bank, Hamas supposedly remains the popular choice of the average Palestinian and overwhelming the choice of Gazans when it comes to political representation.

We don’t have to like what Hamas advocates or Hamas’s army does, but we should have the courage to accept their authority to speak and act for the Palestinians.

[Hamas is actually delivering on its campaign promises, which is more than most of us Americans can say for our politicians. Hamas promises in its charter to “raise the banner of Allah over every inch of Palestine” and to fight against Jews (they can’t be fighting against the state of Israel because they don’t recognize the existence of the state of Israel and certainly they aren’t fighting against the 20 percent of Israelis who are Arab).]

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The New Yorker magazine ran an interesting article in January 2007 about Michael F. Bennet and the Denver Public Schools. Bennet was recently named the new U.S. senator from Colorado, so the article is timely again.

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… you get to keep selling mortgages that are guaranteed by the federal government (and that probably won’t ever get repaid). This from a November 19, 2008 Business Week story: “FHA-Backed Loans: The New Subprime.”

As the government gets ever bigger, there will be more and more situations in which gains are privatized and losses are socialized (paid by us taxpayers). The real question is why anyone starts a business that does not tap into federal guarantees of one sort or another. What kind of fool would take the risk of failure?

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