Their Own Separate or Private Idaho?

It turns out the B-52's were ahead of their time. Not musically, of course. No, they were forerunners in the great privatization debate about the great state of Idaho.

Kidding of course, but the always interesting Marginal Revolution blog put its spotlight on the state and wonders how things would be different if the 1846 border dispute between the U.S. and Great Britain had ended differently. In the inevitable surfing which ensues, we end up with some interesting facts about Idaho:

• Idaho first appeared as a Territory name in 1860, but was edged out at the last minute by Colorado in 1861
• Idaho was supposed to be an Indian name signifying 'Gem of the Mountain,' but there was no mention of that in the newspapers of the time
• There was an eccentric lobbyist / politician named George M. Willing, who claimed that he made up the name as a hoax
• The Peoria Indians [today based in Miami, Oklahoma] told the first white settlers that the tribe living in that area (their rivals) was named the Moingoana, which became the root of Des Moines. But it turns out that Moingoana was really the Peoria word for 'shitfaces.'

Lyrics to Private Idaho and article referenced are copied in full at end of post.

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Private Idaho Lyrics
Hoo Hoo Hoo Hoo Hoo Hoo Hoo Hoo Hoo
You're living in your own Private Idaho
Living in your own Private Idaho
Underground like a wild potato.
Don't go on the patio.
Beware of the pool,
blue bottomless pool.
It leads you straight
right through the gate
that opens on the pool.

You're living in your own Private Idaho.
You're living in your own Private Idaho.

Keep off the path, beware the gate,
watch out for signs that say "hidden driveways".
Don't let the chlorine in your eyes
blind you to the awful surprise
that's waitin' for you at
the bottom of the bottomless blue blue blue pool.

You're livin in your own Private Idaho. Idaho.
You're out of control, the rivers that roll,
you fell into the water and down to Idaho.
Get out of that state,
get out of that state you're in.
You better beware.

You're living in your own Private Idaho.
You're living in your own Private Idaho.

Keep off the patio,
keep off the path.
The lawn may be green
but you better not be seen
walkin' through the gate that leads you down,
down to a pool fraught with danger
is a pool full of strangers.

You're living in your own Private Idaho,
where do I go from here to a better state than this.
Well, don't be blind to the big surprise
swimming round and round like the deadly hand
of a radium clock, at the bottom, of the pool.

I-I-I-daho
I-I-I-daho
Woah oh oh woah oh oh woah oh oh
Ah ah ah ah ah ah ah ah
Get out of that state
Get out of that state
You're living in your own Private Idaho,
livin in your own Private.... Idaho
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Marginal Revolution blog
Would Idaho have more people if it were a separate country?

Call me silly but I think about questions like this. It's a big state with only about 1.5 million people, even though it is the only place with six pointed star garnets (refined here). Much of the state is beautiful.

Imagine the counterfactual that, in 1846, when the U.S. and Great Britain resolved the border, one part of the area went its own way. Today an independent Idaho would probably a) be more "right wing" than the U.S. as a whole, and b) free ride upon U.S.-provided public goods, such as national defense. A federal Idaho government might be more concerned with boosting tax revenues (it would be full residual claimant) than is the current state-level government. All those factors would militate in favor of population increase. Most of all, I have the odd (Bayesian?) notion that since it would look and feel like an underpopulated country, more people would flow in.

On the other hand Idaho would face the risk of trade barriers and its legal order might be less secure than for the U.S. as a whole. The prospect of mobility barriers could either keep people in the area or out of it.

Would the place still be called "Idaho"? I doubt it. Might the town of Nampa -- #2 in the state -- be much better known to the world at large? I think so.

Does EU accession add or drain people from its smaller units, such as Slovakia and Estonia? There's much at stake here, yet governments sign on to many agreements without thinking about the long-term consequences for their populations, whether pro or con.

Note: The comments section on this post is not for rehashing standard debates over immigration.

Posted by Tyler Cowen on March 30, 2009 at 08:26 AM in Political Science | Permalink
Comments

Additional to the question on the EU's affect on smaller unit population, does the EU facillitate the creation of smaller units (such as "devolution" in Scotland, or Catalonian autonomy) by taking on the desirable qualities of the nation states they are currently a part of? And further to this, on Idaho, would it become more nation like if a multinational entity (say, NAFTA, for hyptohesising stakes) replaced many of the functions desirable in the United States?

Posted by: Richard Green at Mar 30, 2009 8:52:20 AM

The only way an Independent Idaho would beable to free-ride on national defense is if it weren't afraid of being taken over by the US. Its own national defense would have to be quite strong if it felt threatened by the US or Canada.

Posted by: Rochelle at Mar 30, 2009 8:56:16 AM

Perhaps the best example for aspiring micro-nation population experts to examine would be Switzerland. Their cantons seem to remain much more distinct than US states; and they have on -Lichtenstein - that remained independant.

Posted by: Diversity at Mar 30, 2009 9:05:59 AM

This is essentially the crux of the Independant Quebec movement. Quebec meets alot of the descriptions outlined for Idaho and has the added perk of being the center of canadian finance. Quebec might make for an interesting template to think about Idaho, esp given how many opinion papers and how much research has been done both on the "for" and "against" side

Posted by: Farmer at Mar 30, 2009 9:08:42 AM

My curiosity is what the relationship would be between this federal Idaho government and the Mormon Church. Would the State have prevented the Mormons from moving there in the first place? Would the current residents have felt more threatened? Perhaps they would have allowed the Mormons to move in, and it would have created a safe heaven. It seems to me it would have had to have gone one way or the other. I think the answer to this question would have a large impact on the question of whether Idaho would be more or less populated today.

Posted by: anon at Mar 30, 2009 9:09:53 AM

Idaho probably would not be more "right-wing" than the rest of America. Depends how you define it. My guess is that Idaho would be more "cruncy con" - more family focused than the US, socially more conservative but that independent Idahoans would have less sympathy for American neoliberal/neocon interventionist foreign policies. Also as a small fairly homogeneous country Idaho would probably be much further to the "left" on welfare issues like healthcare and social security and would tend to be more influenced by its northern neighbor Canada in these areas.

Posted by: vanya at Mar 30, 2009 9:09:58 AM

The European examples are a bit odd, Slovakia and Estonia were very recently parts of larger countries. In Estonia, there was a large influx of Russians. Czechoslovakia saw a faster population growth of Slovaks than of Czechs, but I don't think there was a large flow from one side of the country to the other.

Some important points here are that very few European regions are underpopulated in an American sense of the word, and that language barriers can be much more important in the long run than trade or legal barriers. I doubt Idaho can teach us much about the EU.

Posted by: Zamfir at Mar 30, 2009 9:10:44 AM

I think Idaho would be indepenedent in name only. Since it would be much smaller than Canada and without access to water, it would be very difficult to maintain truly independent trade policy, as well as economic and foreign policy.
Independent Idaho would not be independent in any meaningful way (it could legalize pot maybe, but not much else).

Also, if I'm not mistaken, rural, low-population states generally receive large transfers of wealth from large states like NY, California, etc via farm subsidies and income taxes so most Idaho citizens would be paying more.

Posted by: MS at Mar 30, 2009 9:15:50 AM

Why do large countries allow small countries to exist so close to them? Andora, San Marino, Losetho. Do these countries provide benefits to their larger neighbours?

Posted by: davidc at Mar 30, 2009 9:35:38 AM

Take it from someone who lived in Idaho for more than 20 years and visits family there all the time- it is already more right-wing than the rest of the country and free-rides on the federal government in a way that it would not be able to if it were independent. factor in that federal money largely made Idaho habitable (by building dams that allowed for the larger part of the agriculture) and the idea that it would have been a plausible independent country or more people would live there than do now seems unlikely.

Posted by: Matt at Mar 30, 2009 9:37:00 AM

I think Idaho would be indepenedent in name only. Since it would be much smaller than Canada and without access to water

Idaho actually has a port, the city of Lewiston, which is on the Columbia-Snake river system.

Posted by: Peter at Mar 30, 2009 9:39:33 AM

MS says: I think Idaho would be independent in name only.

Quirky history can produce small, landlocked states, although they are rare. Botswana is very similar in size, Luxembourg and Bhutan are smaller than Idaho, Paraguay and Switzerland are not that much larger. The former USSR and Yugoslavia have given us some new examples, but how long those will stay really independent is a bit of a guess.

Posted by: Zamfir at Mar 30, 2009 9:42:30 AM

Ports? I think this question would be much more interesting if the state was adjacent to the ocean and had ports. Then again, I suppose such a state wouldn't be so underpopulated either.

Posted by: CJ at Mar 30, 2009 9:44:00 AM

Southern Idaho, curiously, has almost exactly the same climate as Switzerland.

Posted by: Sammler at Mar 30, 2009 9:44:02 AM

Quebec as the center of Canadian finance? Maybe before the 1970s that was correct, but the escalation separatist movement in the 1970s caused all the major banks, and much of corporate Canada to decamp to Toronto. Montreal was once Canada's largest city but now Toronto is by far.

Separatism has helped Quebec earn substantial tax subsidies from the rest of Canada but otherwise the implied risk of political instability has hurt them economically, reduced direct investment and a relatively negative effect on population growth.

Posted by: Thomas Purves at Mar 30, 2009 9:57:10 AM

DavidC, Andorra and San Marino are independent countries in name only, more municipalities with some strange rules.

Lesotho is weird, with a complicated history including some recent struggles with South Africa. I think the answer to its independence is ironic: it was not independent until the 1960s or so, after which South Africa was not really in the position internationally to take it over.

Posted by: Zamfir at Mar 30, 2009 9:59:41 AM

Peter: But would Columbia-Snake river be considered international waters? I think the Dunabe is but I'm not
sure what the general practice is for rivers.

Zamfir: I think EU examples are a bit different. There we have many small countries and a few larger countries.
In the Idaho example, we have one giant supercountry (in terms of economy, culture, influence and so on) that is dominant globally, let alone in its own back yard. Sometimes when you are small, you can still choose your patron, other times you can't.

I think Idaho could in theory be sovereign, but not really independent.

Posted by: MS at Mar 30, 2009 10:02:21 AM

Idaho is a small, agriculturally unproductive state which until recently lacked industry. It is heavily dependent on the federal government. It might possibly achieve some economic power by manufacture and smuggling of pot and crystal meth into the US and Canada.

Posted by: capitalistimperialistpig at Mar 30, 2009 10:05:28 AM

Tyler, great post. I think it offers a perfect segue: Your list of the best from Idaho?

Posted by: GG at Mar 30, 2009 10:06:49 AM

@Zamfir thanks for the info. Andorra seems to be a haven for certain activities that are not very popular with the Spanish/French government. Banking with lax regulations, distilling and prostitution. I wonder do such small principalities (gernsey the isle of man and gibralter also have odd tax status) serve to allow an acceptable level of 'corruption' (if that is the right word)?

Posted by: davidc at Mar 30, 2009 10:08:14 AM

A key question is how land usage would change in an independent Idaho. Over 60% of Idaho land is federally managed (http://crapo.senate.gov/idaho/fast_facts/idaho_lands.cfm). Presumably in an independent Idaho, some of those formerly federal lands would become open to commercial, agricultural, and residential uses, potentially increasing the likelihood of population increase.

Posted by: Todd P at Mar 30, 2009 10:08:22 AM

MS, I would say that realistically Tyler's counterfactual would not necessarily have just Idaho independent. Or it could be a Lesotho-type situation: by the time Britain gave independence to Idaho, the US was no longer in a position to arbitrarily occupy land without hurting its standing. Like with Canada.

Posted by: Zamfir at Mar 30, 2009 10:13:47 AM

"Does EU accession add or drain people from its smaller units, such as Slovakia and Estonia? There's much at stake here, yet governments sign on to many agreements without thinking about the long-term consequences for their populations, whether pro or con."

I love this blog, but statements like this are what drive many of us nuts about economists, bloggers, and their deadly combos. What on earth gives you the confidence that governments don't think about this? And, more generally, what is at stake in accession?

Posted by: Ani at Mar 30, 2009 10:14:54 AM

You have to look at the circumstances under which Idaho became "independent". To me, the only plausible reason would have been if the local Indians had fought off the US cavalry and white settlers and had gained independence that way. Of course, such an "Idaho" would be very different from the current "Idaho" the state.

In other words, an independent Idaho is a contradiction in terms. "Idaho" only exists as a US state. Its boundaries were defined by the US Congress. Many of those Western states were admitted with low populations to boost Republican representation in Congress (maybe not Idaho, but this was definitely the case with Nevada and North Dakota). A more plausible counterfactual is that Idaho doesn't become a state, either it remains a federal territory, maybe gains Commonwealth status, or is admitted as a state as part of a larger entity, maybe including eastern Oregon and eastern Washington.

These other microstates such as Luxemburg and Lesotho were formed before their much bigger neighbors, and for various reasons the neighbors decided not to absorb them.

A better counterfactual would be Utah as an independent country. The Mormons settled the area before it became US territory.

Posted by: Ed at Mar 30, 2009 10:27:24 AM

@ Thomas
re: Quebec
That's why it's interesting! That is has (almost) been done before. the results seem to be you loose enterprise but you gain rents.

Posted by: Farmer at Mar 30, 2009 10:32:44 AM
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Looking for God? Be Quiet

A portion of Fr Vallee's homily on the last Sunday of Lent

We will be judged based on what we hear and how we hear, on what we are listening for in our lives. You see, and this is the point, grace is all around us and within us. There is no place in all of creation where grace is not present. The problem is that some of us are listening and some of us are not. Actually the problem is more subtle than that. The problem is that even those of us who might be listening are only listening sometimes and none of us is listening perfectly, as Jesus listens. The irony is that God is always speaking but we misinterpret it – sometimes we only hear the loud and horrible crack of thunder, sometimes we hear the veiled whispering of angels. Only rarely do we catch a bit of the voice of God. God is always speaking but sin and hurt are like wax in our ears. To borrows a phrase from Augustine, we must find a way to clear out the “ears of our hearts.” The voice of God is there for our sakes. We will be judged, and are being judged, on what we are listening for and what we hear. Angels are better than thunder. But God is better than angels. Listen! Listen carefully! God is in all this mess. But he tends to speak more in silence than in shouts. The thing is we have grown so noisy that we can’t hear much of anything below the level of a shout. Shhhh! Be quiet, that’s where God is.

The email address to request to be put on Vallee's email distribution list is Cioran262@aol.com. To see the entire homily click on 'read more.' Search for other Fr Vallee homilies in this blog by entering 'Vallee' in the search box in the upper left hand corner.

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Fr Vallee Homily: Last Sunday of Lent

I. Sir, we would like to see Jesus
There is an odd and lovely passage in today’s Gospel: “Some Greeks came to Philip and said, “Sir, we would like to see Jesus. Philip goes and tells Andrew. Then Andrew and Philip go and tell Jesus.” I say this is odd because it seems so out of character for Jesus who tended to meet and talk with anyone who came up to him. In fact, he precisely gets into trouble with the religious authorities because he is not too picky about the company he keeps – Prostitutes, tax collectors and Samaritans, for example. Here, it seems more like the wonderful land of Oz: “No one gets in to see the Wizard, not no way, not no how!”

II. Two Possible explanations
We must consider two possibilities which might help to explain this oddity. First, remember that Jesus had just cleared the Temple and as he says, “His hour was upon him.” It was, doubtless, dangerous for Jesus to appear so publicly at this point. The cleansing of the Temple made a lot of very powerful people very angry. So the Greeks might not have been able to find Jesus just teaching in the streets and the Temple courtyard as he had always done. The authorities were looking for a way to trap him. A second possible explanation is that the Greeks had to go through Philip as a translator. Philip is a Greek name. He, perhaps, spoke Greek. Andrew and Jesus almost surely did not; Mel Gibson’s fancy of making Jesus an omniglot notwithstanding.

III. Jesus does not respond, voice of the Father
Of course, however, the most interesting part of the story is the response of Jesus. We have no way of knowing whether Jesus meets with the Greeks or not. Jesus does not seem to respond to the request at all. Instead, he launches into an anguished meditation about he coming Passion and Death. It is almost as though he sees the end coming and has no time left for social engagements, trivialities or small talk. He turns to talk to his Father and the Father responds: “I have glorified your name and I will continue to glorify it.” What I have always found interesting is the reaction of the people who are standing around to the voice of the Father. Some just hear thunder, a meaningless noise. Others hear what sounds like the voice of an angel, pure intellectual or intuitive knowledge. Jesus hears the voice of his Father. Then Jesus says, “It is not for my sake that the voice came, but for yours. Now is the judgement of this world.”

IV. Conclusion
To me this is fascinating and deeply profound. We will be judged [we are being judged--I assume this is included as a typo--JC] based on what we hear and how we hear, on what we are listening for in our lives. You see, and this is the point, grace is all around us and within us. There is no place in all of creation where grace is not present. The problem is that some of us are listening and some of us are not. Actually the problem is more subtle than that. The problem is that even those of us who might be listening are only listening sometimes and none of us is listening perfectly, as Jesus listens. The irony is that God is always speaking but we misinterpret it – sometimes we only hear the loud and horrible crack of thunder, sometimes we hear the veiled whispering of angels. Only rarely do we catch a bit of the voice of God. God is always speaking but sin and hurt are like wax in our ears. To borrows a phrase from Augustine, we must find a way to clear out the “ears of our hearts.” The voice of God is there for our sakes. We will be judged, and are being judged, on what we are listening for and what we hear. Angels are better than thunder. But God is better than angels. Listen! Listen carefully! God is in all this mess. But he tends to speak more in silence than in shouts. The thing is we have grown so noisy that we can’t hear much of anything below the level of a shout. Shhhh! Be quiet, that’s where God is.
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Florida Marlins Attendance: Fact vs Myth

Tuesday I heard an experienced local sports writer on the radio discussing Marlins attendance. He basically said that a new stadium would not significantly affect attendance and that "we'll look back and wonder why we built this stadium." I'm not naming the writer because this is not meant to be a criticism, since I believe what he expressed to be the conventional wisdom. There was something missing from his opinion though, quantifying what increase in attendance would constitute 'significantly.' The writer went on to note that the Marlins would "never draw 30,000 in average attendance."

Talk radio is typically a numbers-free zone and it is just made for controversial topics like the new ballpark. Typical is the call from the guy whose voice [a world-weary, former 2-pack-a-day guy] just screams Aventura, 'they sold us out ... that's why Miami is a banana republic ... etc.'

I'd like to ask everyone whose attaches the banana republic tag to Miami to explain the Big Dig to me. How could THAT have happened THERE, most of their immigrants being at least four generations into the process? My point being that corruption and mismanagement are more attributable to how government works [or doesn't], as opposed to the ethnic composition of a particular government.

But back to attendance. Why do we have a conventional wisdom about something we can look up past numbers on and project accordingly? Here's why I think there is an aversion to numbers. The #1 reason is that numbers can be conversation and controversy killers.

Radio Caller: So and so is a great clutch player!
Radio Host: Ugh no, he's hitting .238 in late game pressure situations... hello?
Radio Host: Plenty of phone lines open in Miami-Dade County.

The second reason is that if you're not a numbers person, they're like ... work. Sometimes, not always I admit, but sometimes the numbers or facts can be more interesting than uninformed opinions. I urge my fellow sports degenerates to--in the words of a future saint--be not afraid and visit web sites like Shysterball and Sabernomics.

Look at the attendance numbers in the spreadsheet below--please click on the image to enlarge and/or print out. The numbers are from an ESPN Attendance web site which provides numbers back to the 2001 season. My interpretations are optimistic, but at least they originate from facts.

Question: If the Marlins have had the worst attendance in MLB since 2006, what reason is there to believe that the reason for that is something other than a lack of a fan base in South Florida? Do the numbers indicate that attendance is impacted by non-team performance factors?

• In took MLB attendance 12 years to recover from the Strike in 1994. During a time of significantly increasing revenue, it still took 12 years for the average attendance in 2006 to surpass the 1994 numbers.
• In addition to the Strike, Marlins fans have dealt with 2 additional strike-like events. The salary dumps after the 1997 and 2005 seasons.
• On top of those three significant and measurable events, the Marlins since 1998 have been under the cloud of possible relocation, something which is currently affecting the Oakland franchise.
• Recent Marlins TV ratings [middle of the pack] have consistently been proportionately higher than their attendance [last]. Which indicates that their fan base exceeds what is reflected by their attendance figures.

Question: Even so, why didn't the 2 World Championships have a greater impact?

• The Marlins average attendance in 1997 was 29,190. It could have realistically been expected to increase the following season, but the sell-off of players began immediately after the 1997 season.
• The 2003 team's success was obviously unexpected. While the attendance increased 62% [to 16,290] during that season, the preceding season [2002] was so poor [10,038], that it loses any statistical significance. However, we can see the effect of the Championship in that the 2004 attendance increased another 35% and then another 3% in 2005.

Question: Aren't the Marlins and Rays skewing MLB attendance figures?

• Just like the Marlins and Rays have been having a downwards impact on the average, so do the Yankees and Mets excess of 50,000 skew the numbers at the other end.
• However, average MLB attendance drops only by 1,400 if you exclude the NY teams and increases only by 900 if you exclude the Florida teams.
• Attendance has been typically pretty evenly spread-out, in that the median and average attendance have both been close to 30,000.

Question: Are we going to call any improvement in attendance success? What constitutes an acceptable average attendance for a MLB team?

• For those who claim that the Marlins could never average 30,000 in attendance, they exceeded that in their 1st and 2nd years and averaged 29,190 in their 5th season. Which obviously could have been expected to increase in their 6th season, following the Championship.
• In fact, the Marlins exceeded the MLB average in 3 of their first 5 seasons. The post-strike season, their 3rd, was the first season they did not exceed the MLB average.
• I believe that Marlins attendance in 2005--22,792, which represented 74% of the MLB average--is the most conservative indicator of what to expect in the new ballpark, past the first year. It also represents the percentage achieved by the Pittsburgh Pirates in 5 of their first 6 seasons following their new stadium. That would represent a 43% increase over last year's attendance--which could obviously increase between now and then. I believe that would be significant.
• Further, I say that 70% of the MLB average attendance is an acceptable attendance for a smaller market team. What say you? But more importantly, why do say what you say?

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Why Are You Parking? ... You Can't be Serious

The analytical Jay Cost does a good job of explaining why President Obama has been so ideological to date. I prefer analysis that attempts to understand how behavior may be rational. The only thing irrational about Obama, is that his supporters thought he would be different.

Those trust-filled Obama supporters are kinda like a lady on what appeared to be a promising first date. Until that is, he parked the car and made his move before they arrived at the restaurant [clearly a fictionalized account-JC]. She realizes what's happening, she just can't believe she could have been so wrong. She's no saint, mind you. But the guy just ain't Turnpike rest stop-worthy. See that's the thing, he had the 'nice' thing working for him, absent that ....

Jay Cost summarizes:

Thus, bipartisanship is of little political use to him now. As a rallying cry against the Bush administration, which pulled the policy needle to the right, it was extremely helpful. However, not any more. When the "old categories" suddenly give you an opening, why "transcend" them? Why court the other side, which will only slow you down and moderate your programs? Instead, the politically savvy move is to do exactly what Obama has done: stuff bipartisanship, see how much you can squeeze out of Congress before the next "correction," and get your name into the history books.

I expect politicians of both parties to do this. Their commitment to bipartisanship is typically situational: they praise it when they're in the minority, then forget it when they're in the majority. Of course, Obama promised to be above politics as usual. That's why he pursued his party's nomination against Hillary Clinton, whose experience was greater but who had the "taint" of politics on her. Obama didn't have the taint, and assured us he never would.

So much for that.

Article referenced is copied in full at end of post.

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Obama's Liberal Moment By Jay Cost

RealClearPolitics - March 23, 2009

Last week, the Washington Post ran a front page story on the Obama administration's legislative strategy.

Senior members of the Obama administration are pressing lawmakers to use a shortcut to drive the president's signature initiatives on health care and energy through Congress without Republican votes...

The shortcut, known as "budget reconciliation," would allow Obama's health and energy proposals to be rolled into a bill that cannot be filibustered, meaning Democrats could push it through the Senate with 51 votes, instead of the usual 60. Presidents Ronald Reagan and Bill Clinton both used the tactic to win deficit-reduction packages, while George W. Bush used it to push through his signature tax cuts.

Yet Senator Obama writes this in The Audacity of Hope:

There's an instructive story about the negotiations surrounding the first round of Bush tax cuts, when Karl Rove invited a Democratic senator over to the White House to discuss the senator's potential support for the President's package...[The senator] suggested a few changes that would moderate the package's impact.

"Make these changes," the senator told Rove, "and not only will I vote for the bill, but I guarantee you'll get seventy votes out of the Senate."

"We don't want seventy votes," Rove reportedly replied. "We want fifty-one."

Recently, I noted my concern that the President is willing to engage in tactics he made a name opposing. This Washington Post story indicates this is not limited to rhetoric, but extends to legislative maneuvers as well.

Why has the President adopted such a highly partisan posture, one he was decrying just three years ago?

The following graph might help answer this question. It outlines the median ideological scores of the House and Senate from 1932 to 2008 (-1 is liberal, 1 is conservative). It runs from FDR to George W. Bush. It shades periods blue for liberal government (both chambers have a liberal tilt and there is a Democratic President), red for conservative government (both chambers have a conservative tilt and there is a Republican President), and purple for an ideological mix (one chamber or the President is of a different ideological bent than the others).
Ideological Scores.jpg

This graph likely understates the extent of ideologically mixed government. The median senator is not the critical vote in the upper chamber. Instead, the 60th (filibuster) senator is. Thus, practically speaking, the Senate has been more moderate than pictured here.

Notice the historical power of Southern Democrats. Though Democrats held the House from 1954 to 1994, an alliance between Republicans and Southern Democrats could often check liberals.

Clearly, "realignment" has some explanatory power, but it oversimplifies a great deal. Overall, there are not really extended spans of liberal or conservative government; instead they are more like moments, lasting a few cycles until they are "corrected" by the other side.

Scanning to the present day, we can appreciate why Senator Obama would plead for bipartisanship in The Audacity of Hope. That book was written during the most conservative government in more than 75 years. Additionally, the GOP seemed by then to have over-reached. Preaching the virtues of bipartisanship was smart politics for an ambitious Democratic pol in 2006.

But notice the leftward swing in that year's midterm, which was extended in the current Congress (not pictured in the graph). Add in a new Democratic President, and the country is now in another liberal moment.

Three observations about these moments are relevant.

They have been short. FDR's moment basically lasted six years - the longest of all. Johnson and Clinton's were extremely brief, followed by conservative "corrections."

They have not necessarily yielded policy innovations. FDR won major programmatic changes, as did Johnson. However, Carter had nothing to show for his moment, and Clinton had little.

They have been rare. Not reducible to the grand ideological march of history - they have been partially contingent on historical events, like the Great Depression and Watergate.

So, President Obama has a unique opportunity. He cannot presume that it will last long, that it will assuredly yield significant changes in policy, or that he'll have another chance.

Thus, bipartisanship is of little political use to him now. As a rallying cry against the Bush administration, which pulled the policy needle to the right, it was extremely helpful. However, not any more. When the "old categories" suddenly give you an opening, why "transcend" them? Why court the other side, which will only slow you down and moderate your programs? Instead, the politically savvy move is to do exactly what Obama has done: stuff bipartisanship, see how much you can squeeze out of Congress before the next "correction," and get your name into the history books.

I expect politicians of both parties to do this. Their commitment to bipartisanship is typically situational: they praise it when they're in the minority, then forget it when they're in the majority. Of course, Obama promised to be above politics as usual. That's why he pursued his party's nomination against Hillary Clinton, whose experience was greater but who had the "taint" of politics on her. Obama didn't have the taint, and assured us he never would.

So much for that.

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Buy a House, Get a Visa

The always interesting Marginal Revolution blog, endorses an idea so simple and smart, it must have no chance of succeeding. Thomas Friedman describes the source of the idea:

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

Gary Shilling outlines the idea:

The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president's $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.

The housing bailout ... doesn't get to the basic problem -- the huge inventory of excess houses. We estimate that 2.4 million houses over and above normal working inventories are left over from the 1996-2005 housing bubble. That's a lot, considering the long-term average annual construction of 1.5 million single- and multi-family units.

Excess inventory is the mortal enemy of house prices, which have already fallen 27% since the peak in early 2006. We predict another 14% drop through the end of 2010 if nothing is done to eliminate the surplus.

Doing nothing to eliminate the excess inventory might well push the recession through 2010 and into a depression. Declining home values, for example, are eliminating the home equity that has funded oversized consumer spending for years.

A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.

All articles referenced are copied in full at end of post.

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Immigrants Can Help Fix the Housing Bubble

MARCH 17, 2009, 9:49 A.M. ET

By RICHARD S. LEFRAK and A. GARY SHILLING

The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president's $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.

The federal bailout forces taxpayers to subsidize overextended homeowners who bet on ever-rising house prices and used their abodes as ATMs, and it doesn't get to the basic problem -- the huge inventory of excess houses. We estimate that 2.4 million houses over and above normal working inventories are left over from the 1996-2005 housing bubble. That's a lot, considering the long-term average annual construction of 1.5 million single- and multi-family units.

Excess inventory is the mortal enemy of house prices, which have already fallen 27% since the peak in early 2006. We predict another 14% drop through the end of 2010 if nothing is done to eliminate the surplus.

Doing nothing to eliminate the excess inventory might well push the recession through 2010 and into a depression. Declining home values, for example, are eliminating the home equity that has funded oversized consumer spending for years.

As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.

A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.

Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.

These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.

There is a high correlation between education and incomes, and in today's uncertain economic climate, many wealthy foreigners desire U.S. resident status just as a number in Hong Kong secured residences in Singapore and Canada before the British handover to China in 1997. They rapidly became over a quarter of Vancouver's population, and brought in billions of dollars to buy houses and make other investments.

We could benefit from such an influx. Merrill Lynch estimates that in 2007 there were 10.1 million individuals in the world, 7.1 million outside the U.S., with at least $1 million in financial assets that totaled $29 trillion. If new immigrants bought the 2.4 million excess houses at today's $184,000 median price with funds from abroad, they would bring untold billions. The immigrants would also buy consumer goods, pay taxes, and start many new businesses.

The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

America's relatively open immigration policy makes this country better off than many other developed lands whose governments also must fund the pensions and health care for growing numbers of retirees. Yet there's still a huge need for more productive and skilled people, both current residents and immigrants, who will produce enough goods and services to provide for their own needs and for those in retirement. Otherwise, entitlement spending eventually will touch off intergenerational warfare.

Granting permanent resident status to foreigners who buy houses in this country will curtail a primary driver of the deepening recession and financial crises -- excess house inventories and the resulting collapse of prices. Since the people who will buy these houses will tend to have money, education, skills and entrepreneurial talents, they will be substantial assets to America in both the short and long runs.

Mr. LeFrak is chairman and CEO of LeFrak Organization, a real estate builder and developer. Mr. Shilling, an economic consultant and investment adviser, is president of A. Gary Shilling & Co.
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Buy a House, Get a Visa (2)

The buy a house, get a visa program which I have been pushing for some time is getting some serious play. Writing in the WSJ, Richard Lefrak and Gary Shilling note:

The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

Why not reduce the investment required and expand the program to 100,000?

Barry Ritholz has further thoughts and links. Thanks to Jim Ward for the pointer.

Posted by Alex Tabarrok on March 22, 2009 at 07:40 AM in Economics | Permalink
Comments

The no free lunch department requests an accounting of the downsides. (Other than the "foreigners suck our jobs away" argument which is a known issue.)

Posted by: Andrew at Mar 22, 2009 8:01:00 AM

Possible TINSTAAFL side-effects for Andrew:

Rich foreigners who otherwise wouldn't meet the requirements to get in might be able to find easier access through this.

All some of this investment could go to less-useful programs, though it seems they'd go to less-useful programs in the US and the "more useful" programs would be over seas. So less efficient global allocation of capital.

Foreign capital crowds out native US investors who would otherwise have invested in these opportunities, potentially driving US capital overseas.

All of these seem pretty benign to me. I really like this idea. We always like to tell ourselves that one of the things that makes the US great is the freedom it offers. Seems like if we're concerned about strengthening this country, we should be willing to use this as a selling point to bring in foreign capital and foreign skilled laborers.

Posted by: mravery at Mar 22, 2009 10:26:08 AM

In the last 10 years the average the average number of people utilizing the EB-5 visa is less than 800 per year.

Posted by: Zack at Mar 22, 2009 10:57:00 AM

The downside is that sooner or later, bleeding hearts will start whining about how unfair this is to immigrants who can't afford a house. At that point, congress will figure out a way to subsidize it.

Posted by: ian at Mar 22, 2009 11:26:29 AM

This is an interesting idea.

But what about starting new programs? Like: 1) Individuals who owe backtaxes get a pass if they buy a foreclosed home; 2) nature conservancies can get a matching grant from the government if that non-profit turns swaths of depressed/ghost-towns into nature preserves; 3) people in depressed areas are paid to moved to high-growth areas; etc.

Honestly, those would do better than expanding the EB-5 program.

Possibly some of the reasons why foreign capitalists are not applying to this program is droves are: 1) the US is not THAT desirable to rich foreigners; 2) rich foreigners do not see an economic advantage coming to the US or gaining US citizenship (which one might believe cause sneaking around taxes in Spain, Italy, Turkey, Laos, etc. is easier than in the US); 3) once rich foreigners become rich Americans their assets and earned income anywhere in the world are taxable by the IRS & due to new-ish agreements with secret banking states (the Swiss, Luxembourg, etc) offshore accounts are now easier to identify; and 4) if you had the money to life anywhere in the world would you really WANT to live in Detroit or some other economically depressed US city/state? (Put another way, if you one the Powerball, what incentive would you need to move to Moscow or Bombay or Mexico City [and those are fun cities]?)

Posted by: Jim at Mar 22, 2009 11:30:22 AM
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The Open-Door Bailout By THOMAS L. FRIEDMAN

February 11, 2009 - Bangalore, India

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

While his tongue was slightly in cheek, Gupta and many other Indian business people I spoke to this week were trying to make a point that sometimes non-Americans can make best: “Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”

While I think President Obama has been doing his best to keep the worst protectionist impulses in Congress out of his stimulus plan, the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas.

Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower — anywhere? That’s called “Old Europe.” That’s spelled: S-T-U-P-I-D.

“If you do this, it will be one of the best things for India and one of the worst for Americans, [because] Indians will be forced to innovate at home,” said Subhash B. Dhar, a member of the executive council that runs Infosys, the well-known Indian technology company that sends Indian workers to the U.S. to support a wide range of firms. “We protected our jobs for many years and look where it got us. Do you know that for an Indian company, it is still easier to do business with a company in the U.S. than it is to do business today with another Indian state?”

Each Indian state tries to protect its little economy with its own rules. America should not be trying to copy that. “Your attitude,” said Dhar, should be “ ‘whoever can make us competitive and dominant, let’s bring them in.’ ”

If there is one thing we know for absolute certain, it’s this: Protectionism did not cause the Great Depression, but it sure helped to make it “Great.” From 1929 to 1934, world trade plunged by more than 60 percent — and we were all worse off.

We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs.

According to research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com.

He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that “found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit.”

We don’t want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to — we have to — come out of it with a new Intel, Google, Microsoft and Apple. I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today — in the clean-energy space they’re dying like flies — because of a lack of liquidity from traditional lending sources.

Newsweek had an essay this week that began: “Could Silicon Valley become another Detroit?” Well, yes, it could. When the best brains in the world are on sale, you don’t shut them out. You open your doors wider. We need to attack this financial crisis with green cards not just greenbacks, and with start-ups not just bailouts. One Detroit is enough.
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The Logic of Billy Preston and the Ballpark Vote

I got tired of not finding an actual headcount on how the Miami-Dade County commissioners might vote tomorrow, so I'll take a shot at it here. [Warning: I'm getting killed in my Descarga NCAA Brackets--I'll never trust Clemson again--so please, no wagering.]

I bring no particular insight into the topic of how the commissioners might vote, given that I was unfamiliar with more than one of them before I started this post. What I can contribute as a long-time Miamian, is to say that any politician of a Hispanic background would be loathe to cast the deciding no vote on the Marlins ballpark deal. Whereas white politician's with a non-Hispanic background, would wear that no vote like a 'stinkin-bage' among their Howard Beale-sque constituencies. To say nothing of the annually replenished Norman Braman vehicles at their disposal [new ones for the first two years, then pre-owned, then ... listen, just talk to Buddy Ryan] such a vote would produce. The African-American vote is more of a wild-card. This and what follows represents my shameless attempt to channel The Wire.

Publicly committed: 3 Yes votes - 3 No votes

District 4 - Sally A. Heyman - No
District 5 - Bruno A. Barreiro - Yes
District 7 - Carlos A. Gimenez - No
District 8 - Katy Sorenson - No
District 9 - Dennis C. Moss - Yes
District 12 - José "Pepe" Diaz - Yes

Publicly undecided - the Circumspect Six = 6 Yeses

All six of these commissioners voted for the stadium project in 2008.

District 1 - Barbara J. Jordan: Ms Jordan was recently appointed Chair of the Transit, Infrastructure and Roads Committee by the Commission Chairman Dennis Moss, who is a stadium supporter. No seemingly ideological agenda re public funding etc, so I assume she's a reliable Moss ally on this issue.
District 2 - Dorrin D. Rolle - Mr Rolle's most recently sponsored legislation involved the Port of Miami tunnel. That tunnel is a key component of the mega-plan which is encompassed by the Marlins ballpark deal. Further, he is very active with inner-city youth groups. If MLB doesn't end up sponsoring one of his activities in Liberty City, someone should get sued for political malpractice.
District 3 - Audrey Edmonson - Ms Edmonson's district is adjacent to Little Havana neighborhood where the Marlins ballpark is to be built. Further, she co-sponsored the Port of Miami tunnel legislation with Mr Rolle. Her activities include a lot of outreach to the Hispanic community. Again, I have to assume she's a reliable Moss ally on this issue.

Considering the four African-American commissioners as a voting-block--Moss, Jordan, Rolle and Edmonson--it is just hard to imagine one of them breaking off and sinking this project. In addition, one would assume a degree of cooperation with Michelle Spence-Jones over at the City of Miami commission, especially with respect to ensuring that their constituencies are not ignored in disbursing potential CRA funds.

District 6 - Rebeca Sosa - Ms Sosa's district encompasses the city of Hialeah. A MLB-backed youth baseball academy was established last year in Hialeah. Non-Hialeah Cubans-Americans think Hialeah Cuban-Americans are really loud and intense baseball fans. Forget any issues here. The woman has to vote yes just to be able to enjoy meals in her district.
District 11 - Joe A. Martinez - West Dade district. Has been a commissioner since 2000 and once served as Commission Chairman. He probably is the biggest no vote potential given his experience, but I just don't see the end game to his no vote. Again, following my perception that Hispanic commissioners would not want to be identified as killing this project, the safe play would have been to be out in front with a no vote.
District 13 - Natacha Seijas - The longest tenured commissioner, since 1993. Recently reappointed as chairperson of a Trade Consortium by Moss. Has ties to the AFL-CIO and recently commented that she is pleased that her concerns about labor unions have been addressed.

So while the 'Circumspect Six' may not exactly represent profiles in courage, the logic of the great Billy Preston--Nothin from nothin , leaves nothin'--will likely carry the day. The odds are high that County commissioners will have some new concession to point to--like their brethren at the City of Miami--by the time they vote. When you think about it, the undecideds are are practicing, at a gut-level, the same skill which is earning tenure at universities, game theory--an egghead description:

Game theory is the study of the ways in which strategic interactions among rational players produce outcomes with respect to the preferences (or utilities) of those players, none of which might have been intended by any of them.

See politician's are laughing at those geeks, 'Man, you had to go to college to learn to keep your options open?' It's actually pretty interesting stuff, see the Pirate puzzle example.

One publicly undecided Commissioner's odyssey -
From Amerigo Bonasera to Alfredo Amezega

Of the undecideds, Mr Souto is the only one to have voted against the project in 2008.

District 10 - Javier D. Souto - Despite his no vote in 2008, Mr Souto's remarks about the stadium deal merely express concern about getting a better deal for the County. Which is what politician's do to keep their options open.

Check out what Mr Souto was doing Saturday according to the Miami Herald:

... County Mayor Alvarez [stadium supporter] spent Friday morning at the Miami International Cattle Show, admiring prized stud bulls with key swing-vote Commissioner Javier Souto. The cattle show is Souto's pet project. Souto could not be reached for comment Friday night.

My guess is that he is for now, the pro-ballpark forces Amerigo Bonacera, a dormant asset. One text later, he will be their Alfredo Amezaga. Although Mr Souto lacks Amezaga's distinction of having attended the great Miami Senior High, he can play one on the Commission.

OK we're done, I've officially jinxed the Marlins ballpark deal. Wait, let me bury it completely; Hell, what could go wrong?

The lyrics to Billy Preston's 'Nothing From Nothing' and article referenced are copied in full at end of post.

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Lyrics for: Nothing From Nothing

Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me

I'm not tryin' to be your hero
'Cause that zero is too cold for me, brrr
I'm not tryin' to be your highness
'Cause that minus is too low to see, yeah

Nothin' from nothin' leaves nothin'
And I'm not stuffin'
Believe you me
Don't you remember I told ya
I'm a soldier in the war on poverty, yeah
Yes, I am

[Instrumental Interlude]

Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me

You gotta have somethin'
If you wanna be with me
You gotta bring me somethin' girl
If you wanna be with me
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Struggle for a Florida Marlins stadium comes down to last pitch BY JACK DOLAN AND CHARLES RABIN

Posted on Sun, Mar. 22, 2009

With a final vote on the Florida Marlins' new stadium looming Monday, the franchise appears to be one tense afternoon away from a goal it has chased since 1994 -- a South Florida ballpark to call its own.

For critics opposed to spending hundreds of millions from public coffers to build the stadium in Little Havana -- and those pushing the Marlins to pick up more of the proposed $634 million tab -- Monday's vote by the Miami-Dade County Commission could be the last stand.

Momentum swung dramatically in the Marlins' favor Thursday at Miami City Hall, where the team won a tight 3-2 vote approving the deal.

But city commissioners extracted two significant concessions: a greater share of the profits for the county and city if the team is sold after construction, and a promise that at least half of the people who will build the stadium will be hired from South Florida.

That leaves stadium skeptics on the County Commission eager to extract concessions of their own, even as some begin to admit that the stadium deal will likely pass.

''I think they have the votes now, but you can still make the deal better by changing some aspects of it,'' said Miami-Dade Commissioner Carlos Gimenez, the most outspoken stadium critic on the county board.

Commissioner Joe Martinez made a similar point in a memo to his colleagues immediately after the city's vote.

''In the eleventh hour, the Marlins have now conceded to changes under pressure from the City Commissioners,'' Martinez wrote. ``If the Marlins will agree to these changes, perhaps they will do even more.''

So the question isn't so much whether the stadium agreement will pass, but how much the Marlins might have to give up to make the deal go through.

County Mayor Carlos Alvarez, the principal county advocate for building a stadium for the Marlins, argues that professional sports teams are a key feature of any world-class city, and that the stadium will create public-works jobs at a time that the economy is starved for them.

He announced Friday that he wants the commission to cast a single vote on the five contracts that constitute the deal -- an effort to avoid the spectacle of the agreement being carved apart piece by piece on the dais.

That's bold, because one measure -- waiving the competitive bidding process to allow the Marlins' chosen firm, Hunt-Moss, to build the stadium -- requires a nine-vote super-majority of the 13-member board.

A SUPER-MAJORITY

''We want it to go forward as one big resolution that requires nine votes, with everything in it,'' Alvarez spokeswoman Victoria Mallette said Friday.

That announcement came after Alvarez spent Friday morning at the Miami International Cattle Show, admiring prized stud bulls with key swing-vote Commissioner Javier Souto. The cattle show is Souto's pet project. Souto could not be reached for comment Friday night.

The agenda for Monday's meeting, released late Friday, shows all five stadium contracts voted on at once. But the agenda can be changed by a simple majority.

Among those firmly behind the project are Chairman Dennis C. Moss and Vice Chair Jose ''Pepe'' Diaz.

On Friday, Diaz said that if the hotel-tax money that would finance most of the stadium could be used for police or social services, he wouldn't vote for the deal. But by law, bed taxes must be spent on tourist development, such as a stadium.

''We're going to create jobs in making the park itself,'' Diaz said. ``We're going to create jobs around the park. It will create jobs when the stadium is functional.''

Opponents have other ideas.

Gimenez has called for scrapping the existing contracts and writing new ones, with the public contribution dropping from about $480 million to about $76 million. The Marlins are committed to paying $120 million toward construction and repaying a $35 million county loan.

''A motion to start all over? That's absolutely ludicrous at this point,'' Alvarez said.

PUSH FOR REVISIONS

Should Gimenez fail to persuade his colleagues to start from scratch, he said he wants the Marlins to contribute their share for construction first. Under the current deal, the public pays to build the first three-quarters of the stadium; the Marlins pay to finish it.

Gimenez also wants the public to get a share of the profits if the team is ever sold -- not just in the first nine years, as the current contract stipulates. And he wants the county to hire an independent auditor to make sure that the Marlins have the money to live up to the deal. Team owner Jeffrey Loria has refused to open the Marlins' books to show assets and liabilities.

''It's a major-league franchise,'' Alvarez said. ``We met with the commissioner of Major League Baseball. These are legitimate people.''

A skeptical Gimenez said the county shouldn't enter into such a big business deal based on its partner's word.

Gimenez isn't the only one who will be waiting for the deal with a legislative scalpel.

Commissioner Sally Heyman said she'll introduce an amendment to reduce the county's share of the construction cost to $206 million and to make Major League Baseball cosign the Marlins' promise to stay in Miami for 35 years. That way, the league could be sued if the team were to leave.

Heyman also wants to get rid of the so-called ''death clause'' that would allow Loria's heirs to sell the team without the requirement to share the profits with the city and the county.

''I am very concerned about the agreements because they offer little financial or legal protection for our citizens,'' she wrote in a memo Wednesday.

While commissioners debate the contracts Monday, Loria will sit in the audience, possibly one momentous roll call away from a dream that he and two previous owners have been chasing for 15 years: a permanent home, with a retractable roof, for a team that consistently ranks near the bottom of the major leagues in attendance and payroll.

Despite playing in a football stadium that is often nearly empty, the players have managed to win two World Series.

''South Florida really needs a baseball-only facility,'' Marlins catcher John Baker said last week after Miami's vote. ``It would be a great benefit to the community to have a stadium.''

Miami Herald staff writer Andre Fernandez contributed to this report.
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How Do You Know You Have a Monopoly?

I read this on Paul Krugman's blog:

I’m working at home today, waiting for the Fios [fiber-optic internet] guy. Which means that I’m probably going to drop off the face of the earth for much of today.

Which amazed me. I also read one of the comments on the post which put it in perspective:

Wow, you won a Nobel prize and you’re still stuck at home between 9 AM and 5 PM waiting for the cable guy. Glad to hear that you’re still one of the proles!— Ramesh Mantha

There might be better indicators, but poor customer service has to be one of the best tell tale signs of an oligopoly or quasi-monopoly markets. Cable companies customer service is terrible and even their wealthier customers can't pay their way out of it.

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Perfect Villains?

Just when the lefty powers that be seemingly found their perfect villains, bailout enabled bonuses, but along comes Henry Blodget with some really inconvenient facts. The House recently passed a 90% tax on any household income exceeding $250,000 for employees of firms that have accepted federal bailout funds. Blodget points out the following:

• The U.S. taxpayers bailed out those firms to ensure they survived.
• The U.S. taxpayers now own a major stake in those firms.
• When young professionals at those firms realize that their family's pay will be capped at $250,000 indefinitely, they will have a strong incentive to leave those firms.
• Which ones will stay? The ones who don't have the ambition, skill, or time to make more than $250,000 a year.

So in effect, we U.S. taxpayers have invested in companies which will increasingly by staffed by persons who would not be hired elsewhere. Would you want to buy stock in that company?

Blodget summarizes:

The frantic passage of the Populist Rage [90%] Tax was a new low in the US government's response to this crisis. It shows just how likely we are to doom ourselves to a decade or more of misery--by choking our markets, closing our borders, turning our banks into tools of social policy, and wrecking what's left of our economy.

Seriously, you gotta feel for the left. It was just so much easier to hate President Bush.

Article referenced is copied in full at end of post.

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90% Tax? Now We Really ARE Screwed

Henry Blodget|Mar. 19, 2009, 10:01 PM|comment168

The frantic passage of the Populist Rage Tax was a new low in the US government's response to this crisis. It shows just how likely we are to doom ourselves to a decade or more of misery--by choking our markets, closing our borders, turning our banks into tools of social policy, and wrecking what's left of our economy.

In case you've been too outraged by AIG (justifiably) to notice what happened, here's a recap:

If the "TARP bonus" bill the House passed today becomes law, any of the hundreds of thousands of people who work for Citigroup, Bank of America, AIG, and nine other major US corporations will have to fork over 90 cents of every bonus dollar that puts their household income over $250,000.

That's household income, not individual income. If you're married and filing singly, you'll have to surrender anything over $125,000. Indefinitely.* [See the comments below for a discussion of the mechanics of this.]

Is $250,000 per household a lot of money? Sure. But it's not a lot of money for two moderately successful corporate executives. Or a corporate secretary married to a lawyer. (If you're a $40,000 a year telemarketer at a TARP company married to a $210,000 lawyer, any bonus will be taxed). So this tax will be felt by a lot more than the handful of execs at AIG and Merrill who ran off with several million dollars apiece.

But that's not the really distressing part. The really distressing part is what this tax will do to the corporations that we now own and are supposedly trying to save.

(Remember? That's the reason we bailed Citigroup, AIG, GM, and the rest of them out--to save them. Because we convinced ourselves that civilization would end if we didn't.)

Thanks to our stupidity bailouts, we now own major stakes in these firms--at mind-boggling expense. So it's not clear why we want to destroy them. But that's what we seem determined to do.

Believe it or not, hidden inside these companies are thousands of decent, competent people whose households bring in more than $250,000 a year. Many of these folks had NOTHING to do with the gambling addiction that bankrupted their firms. Many of them still have a choice where to work. And now that they've learned that their family's pay will be capped at $250,000 indefinitely, many of them will quickly decide that now is a good time to pursue their careers elsewhere. (That is, unless their firm takes the easy and obvious step of just paying them a fatter salary, which just renders the whole thing a farce.)

Will everyone leave these firms? No. The folks whose households don't have the education, desire, ambition, skill, or time to make more than $250,000 a year won't. But a lot of the rest will. And however little our massive investments in these companies are worth now, they will soon be worth a lot less.

The real lesson here, unfortunately, is that it's a disaster for the government to run private companies. We used to understand that. But ever since we started telling ourselves that we had to save bankrupt institutions by taking them over and pretending not to "nationalize" them, we have apparently forgotten.

Originally, I read the bill as applying to all income over $250,000. As you can see in the comments, several readers believe it applies only to bonuses, not income.

I feel the same way about the tax even if it only applies to bonuses, because then it is preposterously easy to get around (just raise base salary) and will be almost equally bad for the companies (pay will no longer will pay have anything to do with performance, and the best folks will still leave.) I've included the relevant section of the bill below:

(1) IN GENERAL- The term `TARP bonus' means, with respect to any individual for any taxable year, the lesser of--
(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or
(B) the excess of--
(i) the adjusted gross income of the taxpayer for such taxable year, over
(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).

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Baseball on the Radio

I had one of those busy nights last Tuesday. I was shuttling my kids, my Mom & Tia around from nightfall on. The next to next to last stop was to pick up a friend on our way to a funeral home for the father of a mutual friend. We arrived at the funeral home around 9:30, paid our respects and engaged in the type of conversations which make you question why we allow petty concerns to dictate so much of our 'regular' lives. The conversations can be predictable and yet still cathartic. The seriousness of the moment permits us to outwardly show appreciation towards friends and inwardly entertain big and serious thoughts.

In one of those traditions which 'we should begin if it didn't exist,' the funeral home visit was followed by a stop at a restaurant with friends. By law, the restaurant must serve Cuban coffee, in this case, La Carreta. I skipped the coffee--I said the restaurant had to 'serve' the coffee, not that you had to have it--and waddled straight to the flan--staying above 30% body fat is not a hobby for the feint of heart. However, that is not what I meant to write about.

Tuesday night was the night of the exciting Team USA win over Puerto Rico in the World Baseball Classic. After the game, a moving story unfolded as a handicapped U.S. Army veteran--Felix Perez--was brought into the U.S. clubhouse by the usher of the century, Brian Finnegan. Perez was treated, very appropriately, like a hero. However, even that is not what I meant to write.

I listened to the WBC game intermittently on the car radio, catching the entire 9th inning rally on the way home. A local station picked up the ESPN televised broadcast. The play by play guy on the broadcast is very familiar to Miami sports fans. Jon "Boog" Sciambi was part of the Marlins radio network from 1997 to 2004 and for a while hosted a mid-day radio show here. He was a bright guy who knew his stats and could never bring himself to do the typical sports radio thing, i.e. yelling at callers. When someone would try and bait him, he would offer to fight them on their home lawns. I was a fan. Currently, aside from ESPN, Sciambi is part of the Atlanta Braves broadcast team.

Sciambi made my favorite sports 'call' ever. The odd part is that I did not even hear his call live, if that makes any sense. He was part of the radio broadcast and I only heard his call on the DVD of the Marlins 2003 playoff run. The thing is that the DVD served as a reliable lullaby for my kids, so I heard it often. The call described Mike Mordecai's second at bat in the eighth inning of Game 6 of the 2003 NLCS against the Chicago Cubs. It would be hard to describe the absolutely unbelievable turn of events represented by an inning which started with a dominant Mark Prior [as a former Dodger fan, I was having Miamian Steve Carlton [1983] flashbacks during the game] retiring Mike Mordecai to start the inning. That seven runs later Mordecai would be standing on second base still amazes me. Sciambi's call captured the incredulity of it all.

Sciambi's call of the WBC game mixed in easily with discussing the home run controversy the previous night and other topics. When Rollins got on base, he lead Buck Martinez into a discussion about the strategy in those situations and highlighted just how good Rollins is in that department. Good stuff for us baseball fans. As I listened to Sciambi, I was reminded of what approaches. The baseball season. Following baseball in Miami in the early 1970's meant listening to the Braves on WKAT. A lifelong (hopefully) habit was born. So goodbye audiobooks burned to CD's, MLB is back. Soon, seemingly every time I get in the car at night, there will be baseball, and in the case of the Mets, hopefully their blood.

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Real March Madness

The Real March Madness - By RICHARD VEDDER and MATTHEW DENHART

MARCH 20, 2009

The economy may be tanking and our pocketbooks are slimmer, but we can rejoice in one thing: March Madness is here and we can watch our favorite teams participate in the annual NCAA college men's basketball tournament. Behind all the hoopla, however, is the reality that the players who entertain us receive compensation that amounts to only a very small percentage of what they would have earned if they sold their services in a competitive market.

Take Kevin Durant, for instance. After a stunning freshman season with the Texas Longhorns in 2008, Mr. Durant elected to forgo his final three years of college and entered the NBA draft. Selected by the Seattle Supersonics (now the Oklahoma City Thunder), he agreed to a contract paying $3.5 million in the first year. By contrast, his yearly compensation (in the form of room, board, books and tuition fees at Texas) amounted to about $33,120, less than 1% of what was offered by the Supersonics.

Football is the other major revenue generating sport. In 2006, Heisman Trophy winner Reggie Bush skipped his senior year at the University of Southern California and entered the NFL draft. Selected by the New Orleans Saints, he agreed to a six-year contract guaranteeing $26.3 million with the possibility of huge performance bonuses. The compensation package of about $44,000 offered by USC paled in comparison to Mr. Bush's true market value.

Top-level college sports is big business, but very little of this flows to the student-athletes. Ohio State, for example, receives about $110 million in revenue each year from ticket sales, television rights, concessions, parking, logo sales, etc. -- over one-fifth of what it receives in tuition revenue from its more than 50,000 students. And its basketball players are paid about $29,500 each.

In a competitive market, companies cannot exploit workers in this way for long, as rival firms will hire them away at higher salaries. In basketball, however, the NCAA cartel prevents that, dictating limits on pay (essentially college costs) and even penalizing transfers to other schools. Strict rules also prevent college athletes from signing lucrative endorsement deals or accepting gifts beyond a certain amount. Soon after entering the NBA, Mr. Durant further augmented his earnings by signing a $72 million deal with Nike; he inked other endorsement contracts with Gatorade, EA Sports and Upper Deck.

If all of that money from ticket sales and television rights isn't going to student-athletes, where does it end up? In 2006, salaries for coaches and administrators accounted for nearly 32% of total athletic-department expenses. Many head football coaches at top universities earn five times the salary of their university president. At a time when most schools are tightening their belts with salary freezes, staff layoffs and the like, the University of Tennessee just announced it was going to start paying two assistant football coaches $650,000 or more each (the head coach makes $2 million). Jim Calhoun, head coach of the University of Connecticut men's basketball team, recently made headlines when he launched into a tirade at a blogger who questioned his $1.6 million annual compensation. Those high salaries are financed from the talents of unpaid student-athletes. (Talk about income inequality.) So not only are the young being exploited, but the exploitation is being committed by their adult mentors.

Maybe it's time the players did something about this situation. Usually when workers think they are getting a raw deal, they form a labor union. For example, to preserve their current amateur status, football and basketball players (and perhaps even all college athletes) might demand that they receive 25% of gate receipts and television revenues, to be placed in escrow to finance annuities for them payable beginning with college completion.

But should we really feel sorry for the players? In a sense, college football is like the minor leagues in baseball -- a steppingstone to the top. But top-flight AAA minor league players typically get a "living wage" of about $50,000 and sometimes considerably more a year, none of which need be spent on classes they don't have time to show up for.

Of course, for the students who go on to the pros, putting off their financial bonanza won't be a big deal. But most college athletes do not make the pros. They may not even end up with the basic skills necessary to succeed in other workplaces, since only a minority of student-athletes in major sports even graduate (25% in top-ranked University of Connecticut men's basketball, for example). Long practices and missed classes make it difficult to succeed academically. A recent study funded by the Andrew W. Mellon Foundation shows the academic performance of athletes is lower than non-athletes even at Division III schools.

So why haven't players unionized already? First, the "workers" are around for only three or at most four playing seasons, making it hard to build up much of a movement. Second, coaches control playing time and enormously influence career success, so it is the rare college kid who will incur the coach's wrath to form any kind of insurrection. Finally, most players don't have a lot of contact with the members of other teams. But if you see them whispering before the tipoffs this weekend, you'll know why.

Mr. Vedder directs the Center for College Affordability and Productivity, where Matthew Denhart, a student at Ohio University, serves as a research associate.
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Greed vs Incentives - Liberals Take a 2nd Look

Fans of Alec Baldwin would not recognize him--even skinny non-elder ladies who strive mightily, but without success, to retell his 30 Rock jokes--in his latest role, supply-side economist. That's right one of Hollywood's most vocal liberals has seen the low-tax incentives light--from a WSJ Editorial:

The actor recently rebuked New York Governor David Paterson for threatening to try to help close the state's $7 billion budget deficit by canceling a 35% tax credit for films shot in the Big Apple.

"I'm telling you right now," Mr. Baldwin declared, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television is going to collapse and it's all going to go to California."

This is a great example of the need to recognize the importance of incentives, instead of moralistic judgments [i.e. greed], when it comes to setting public policy, especially taxation. From a conservative point of view, by acknowledging that people's actions are largely driven by responding rationally to incentives, we avoid being exposed as frauds when the issue hits closer to home. So while we agree with Mr. Baldwin's current economic analysis, it reinforces the perception that liberals like him who advocate a greater role in for government in public life, do so never expecting to be affected themselves. He is not alone in his hypocrisy.

Liberal nonprofit organizations are now also invoking the I-word. Again from an earlier WSJ Editorial:

... one of Obama's ideas for funding public welfare is to reduce the tax benefit for private charity. His budget proposes to raise the top personal income tax rate to 39.6% in 2011 from 35%, and the 33% rate to 36% while reducing the tax benefit from itemized deductions for the top two brackets to 28% from 35% and 33%, respectively. The White House estimates the deduction reduction will yield $318 billion in revenue over 10 years.

From the Ivy League to the United Jewish Appeal, petitions and manifestos are in the works. The Independent Sector, otherwise eager to praise the Obama budget, worries the tax change "could be a disincentive to some donors." According to the Center on Philanthropy at Indiana University, total itemized contributions from the highest income households would have dropped 4.8% -- or $3.87 billion -- in 2006 if the Obama policy had been in place. That year, Americans gave $186.6 billion to charity, more than 40% from those in the highest tax bracket. A back of the envelope calculation by the Tax Policy Center, a left-of-center think tank, estimates the Obama plan will reduce annual giving by 2%, or some $9 billion.

If the groups protesting are in favor of expanding the role of the Federal Government, did they think about how it would happen? My guess is no, they hoped or assumed there were enough greedy corporations, not in their communities of course, who would be the ones affected.

All articles referenced are copied in full at end of post.

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Tax Me If You Can

WSJ Editorial - MARCH 14, 2009

We're constantly told that taxes don't matter to business and investors, but listen to that noted supply-side economist, Alec Baldwin. The actor recently rebuked New York Governor David Paterson for threatening to try to help close the state's $7 billion budget deficit by canceling a 35% tax credit for films shot in the Big Apple.

"I'm telling you right now," Mr. Baldwin declared, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television is going to collapse and it's all going to go to California." Well, well. Apparently taxes do matter, at least when it comes to filming "30 Rock" in Manhattan.

Believe it or not, Mr. Baldwin's views are shared across the movie industry, which is pleading in state capitals across the country for most-favored-tax status. Hollywood productions are highly mobile and can film just about anywhere. So they have taken to shopping around the country -- and the world -- for the most lucrative tax avoidance deal.

According to the Motion Picture Association of America, nearly 40 states have corporate tax carve outs or generous cash rebates to lure movie studios to their states. In Michigan, producers negotiated a 40% tax credit on their production costs. A bipartisan bill introduced in the Texas legislature last week and supported by Governor Rick Perry would allocate $60 million into the Texas Film Incentive Program. Members of the Screen Actors Guild held a rally last week in front of the state capitol urging the tax breaks.

In some cases these state tax credits exceed a company's tax liabilities, which means that Disney, Dreamworks and others can get a net cash subsidy from state taxpayers. "In many states, today, movie producers actually pay a negative tax," says a Tax Foundation report on the subject.

The Hollywood studios are ruthless profit maximizers and are expert at playing state suitors against one another. In the midst of California's recent $42 billion budget showdown, producers threatened to leave the state if the legislature didn't offer more inducements. So lawmakers in Sacramento gave the industry a new $250 million deal to stay put.

The film "Annapolis," about the Naval Academy, was supposed to be shot in Maryland, but producers negotiated a better offer in Pennsylvania shortly before filming was set to begin. So they packed the trucks and drove up the interstate to save $10 million on their taxes. A film based on the John Grisham novel, "The Runaway Jury," is set in Mississippi but filmed in Louisiana thanks to tax incentives.

Of course, this is the same Hollywood film industry whose members fund causes and candidates that favor raising taxes on everyone else. The Motion Picture Production and Distribution industry last year gave $14 million in political contributions: 89% went to pro-tax Democrats. A few years ago, director Rob Reiner funded a successful California initiative to raise the state income tax rate to more than 10%. Unlike a film shoot, which can relocate on a moment's notice, your average small businessman in Encino is stuck paying the highest tax rate in the country -- at least until he gives up and moves to Reno.

We've got nothing against industries trying to reduce their tax liability. Shareholders expect nothing less. When we asked the Motion Picture Association to justify these tax breaks, a spokesman gladly pointed to studies showing that the industry is creating thousands of jobs and hundreds of millions of dollars of new investment in the likes of Michigan and New York. Fair enough. This is called "dynamic analysis." The movie industry's tax machinations are irrefutable evidence that low tax rates do affect business decisions.

As a general principle, however, states shouldn't chase smoke stacks or film production crews with specific tax breaks. It makes much more sense for cities, states and the federal government to lower tax rates for everyone. New York City can survive without Alec Baldwin and "30 Rock," but it can't function without the thousands of small businesses that pay taxes without the benefit of lobbyists and loopholes.
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The Charity Revolt - Liberals oppose a tax hike on rich donors

WSJ Editorial - MARCH 10, 2009

Among those shocked by President Obama's 2010 budget, the most surprising are the true-blue liberals who run most of America's nonprofits, universities and charities. How dare he limit tax deductions for charitable giving! They're afraid they'll get fewer donations, but they should be more concerned that Mr. Obama's policies will shove them aside in favor of the New Charity State.

What did these nonprofit liberals expect, anyway? Mr. Obama is proposing a vast expansion of the entitlement state, and he has to find some way to pay for it. So logically enough, one of his ideas for funding public welfare is to reduce the tax benefit for private charity. His budget proposes to raise the top personal income tax rate to 39.6% in 2011 from 35%, and the 33% rate to 36% while reducing the tax benefit from itemized deductions for the top two brackets to 28% from 35% and 33%, respectively. The White House estimates the deduction reduction will yield $318 billion in revenue over 10 years.

From the Ivy League to the United Jewish Appeal, petitions and manifestos are in the works. The Independent Sector, otherwise eager to praise the Obama budget, worries the tax change "could be a disincentive to some donors." According to the Center on Philanthropy at Indiana University, total itemized contributions from the highest income households would have dropped 4.8% -- or $3.87 billion -- in 2006 if the Obama policy had been in place. That year, Americans gave $186.6 billion to charity, more than 40% from those in the highest tax bracket. A back of the envelope calculation by the Tax Policy Center, a left-of-center think tank, estimates the Obama plan will reduce annual giving by 2%, or some $9 billion.

In defense, White House budget chief Peter Orszag wrote on his blog: "If you're a teacher making $50,000 a year and decide to donate $1,000 to the Red Cross or United Way, you enjoy a tax break of $150. If you are Warren Buffet or Bill Gates and you make that same donation, you get a $350 deduction -- more than twice the break as the teacher." This Administration wants to turn even philanthropy into a class issue.

Mr. Orszag revealed the real agenda at work when he pointed out that the money taken from the "rich" would be used to fund such Obama state-run charities as universal health care. The argument is that any potential declines in private gifts, whether to universities or foundations, will be balanced by increases in government grants paid with higher taxes -- redistribution by another means. This is how Europe's welfare state works: Taxes are so high that private citizens have come to believe it is only the state's duty to support cultural institutions and public welfare. The ambit for private giving shrinks.

America has always operated on a different philosophy, going back to Tocqueville's discovery of thousands of private associations that sustained communities without a commanding state. We doubt that a tax benefit is what drives most giving even today. The exception may be the confiscatory death tax that drives many of the superrich to form foundations to avoid the tax. But we suspect that without the death tax the wealthy would give even more of their income away.

Americans of all income levels have long given generously, notably in the 1980s as income tax rates fell and the economy boomed. Over the last five decades, American giving overall has hardly deviated from 2% of personal income, according to the Tax Foundation. In an ideal world, the U.S. would eliminate most tax deductions, including the one for charity, in return for a simpler, flatter tax that would help create more wealth to give away. With his many new income-limited tax credits and deduction phase-outs, however, Mr. Obama is sprinting in the opposite direction.

Meanwhile, the White House may have underestimated the power of the liberal nonprofit lobby. The charity deduction cut is the only one of the President's many tax increases that Democrats on Capitol Hill have publicly criticized. Politics hath no fury like a rich liberal scorned.
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