Lemon Socialism - California style

What would happen if the Communists occupied the Sahara?
Answer: Nothing—for 50 years. Then there would be a shortage of sand

There's a significant squeeze (pun totally intended) on California citrus fruits recently. Per the Produce Blue Book:

Throughout the analyzed period, lemon prices for product coming from South & Central California, have been increasing which is in contrast with to stable pricing of the 2019 season, said Miguel Montero, executive vice president of strategy and revenue with Agtools Inc.

Anecdotally, I can confirm. Supermarket lemon and lime prices in particular are significantly up compared to last year.

OK, so what? Pandemic drives increased demand, there's inelastic supply, prices rise.

Problem is, supply is very elastic. In California, fruits are weeds. When you move to California from Wisconsin, Maine or wherever, if you have a garden of any size then you'll have citrus trees: orange, lemon, grapefruit; also non-citrus pomegranate, apricot, asian pear, Japanese plum, persimmons. Even bitter orange, if you like a mouth-wrenching sour taste and vicious thorns.

It's not like this has been a citrus-hostile recent climate. The neighbourhood orange and lemon trees are very fruitful this year. They grow everywhere, and without any particular gardening care other than a bit of water now and again.

You'd expect that anyone with a reasonable-sized garden would be able to sell their lemons and oranges into the local market to take advantage of rising prices. You'd be wrong. Doing this is limited to road-side stalls outside the main Bay Area, where local law enforcement knows not to ask too many questions. Try this in San Jose and you'll be hit with citations for missing permits, causing a nuisance, and various public health violations.

Law enforcement carries out public policy. Public policy is to keep prices high for local major farmers, and allow indocumentados to earn a living without too many questions. Anyone else with citrus trees is shit-outta-luck.

Unrest expected - the firearms indicator

I was at my local gunsmith on Monday - they do exist in California, you may be surprised to learn - and mentioned that I was thinking about acquiring a handgun, so I could practice short-range target shooting. Even in California it eventually gets cold and wet, and outside ranges are less attractive.
"Ah," he said, "are you in a rush for it?"
Well, not break-neck speed; something in the next 3-4 weeks would be good (allowing for the usual - and pointless - California 10 day waiting period). Not looking for anything special or custom, do you have something utilitarian in 9mm? My aim really isn't good enough to justify anything more.
"At the moment, Glock is telling me 6-8 months for a California-legal 9x19."
Wuh? Is this some issue with California's steadily increasingly insane gun restrictions?
"Not even that; I went to Las Vegas the other week, and the Nevada dealers there were having the same problem."
Ah, it must be because of the election, presumably there's a bump every 4 years?
"No man, not like this. Sure, you get a bit of a bump as a Presidential election approaches, but I've never seen anything like this. You can't get a gun anywhere except the ones that no-one with any knowledge wants."

It seems that the combination of civil unrest over the summer, the general abandonment of cities by police chiefs, and the potential election of Joe Biden with gun-grabbing Beta O'Rourke as his stooge, has soured the population on relying on the police force to defend their homes.

To give you some context, even in one of the gun-grabbiest states in the Union, the estimate in 2018 is that 4.2 million California people were gun owners, out of a population of 37 million or so, or about 1 in 7 adults. There were about 20 million firearms - so clearly the average number of firearms owned would be about 4 per owner. One can only imagine what it looks like now - and what it will look like in mid-2021 when the current order backlog is complete.

This is not peculiar to California:

Ammunition sales blew up in March because of COVID-19, said Gary's Gun Shop assistant manager Nick Meyer. But increased sales stayed steady after riots started in May in response to the death of George Floyd and ahead of the presidential election.
"Firearms and ammunition and the Second Amendment are all hot topics for election times," Meyer said, "and it always spurs a little bit of a spree."
But this year is different.
The gun shop only has 20% of its normal ammunition supply on its shelves, Meyer said.

Can confirm: ammunition is increasingly expensive, assuming you can find it. As this gentleman on YouTube notes, it started in March and has gotten increasingly bad over the year. ("Federal" in this video refers to a manufacturer name, not the federal government).

This all signals something, and it's not good for the prospect of peace in the United States.

The pace of PACER

Permit me a brief, hilarious diversion into the world of US Government corporate IT. PACER is a USA federal online system - "Public Access to Court Electronic Records" which lets people and companies access transcribed records from the US courts. One of their judges has been testifying to the House Judiciary Committee’s Subcommittee on Courts, IP, and the internet and in the process revealed interesting - and horrifying - numbers.

TL;DR -

1. it costs at least 4x what it reasonably should; but
2. any cost savings will be eaten up by increased lawyer usage; nevertheless,
3. rampant capitalism might be at least a partial improvement; so
4. the government could upload the PACER docs to the cloud, employ a team of 5-10 to manage the service in the cloud, and save beaucoup $$.

Of course, I could be wrong on point 2, but I bet I'm not.

Background

PACER operates with all the ruthless efficiency we have come to expect from the federal government.^[1] It's not free; anyone can register for it, usage requires a payment instrument (credit card) but it is free if you use less than $15 per quarter. The basis of charging is:

All registered agencies or individuals are charged a user fee of $0.10 per page. This charge applies to the number of pages that results from any search, including a search that yields no matches (one page for no matches). You will be billed quarterly.

You would think that, at worst, it would be cost-neutral. One page of black+white text at reasonably high resolution is a bit less than 1MB, and (for an ISP) that costs less than 1c to serve on the network. Therefore you spend less than 9c on the machines and people required to store and serve the data, and profit!

Apparently not...

The PACER claims

It was at this point in the article that I fell off my chair:

Fleissig said preliminary figures show that court filing fees would go up by about $750 per case to “produce revenue equal to the judiciary’s average annual collections under the current public access framework.” That could, for example, drive up the current district court civil filing fee from $350 to $1,100, she said.

What the actual expletive? This implies that:

1. the average filing requests 7500 pages of PACER documents - and that the lawyers aren't caching pages to reduce client costs (hollow laughter); or
2. the average filing requests 25 PACER searches; or
3. the average client is somewhere on the continuum between these points.

It seems ridiculously expensive. One can only conclude, reluctantly, that lawyers are not trying to drive down costs for their clients; I know, it's very hard to credit. ^[2]

And this assumes that 10c/page and $30/search is the actual cost to PACER - let us dig into this.

The operational costs

Apparently PACER costs the government $100M/year to operate:

“Our case management and public access systems can never be free because they require over $100 million per year just to operate,” [Judge Audrey] Fleissig said [in testimony for the House Judiciary Committee’s Subcommittee on Courts, IP, and the internet]. “That money must come from somewhere.”

Judge Fleissig is correct in the broad sense - but hang on, $100M in costs to run this thing? How much traffic does it get?

The serving costs

Let's look at the serving requirements:

PACER, which processed more than 500 million requests for case information last fiscal year

Gosh, that's a lot. What's that per second? 3600 seconds/hour x 24 hours/day x 365 days/year is 32 million seconds/year, so Judge Fleissig is talking about... 16 queries per second. Assume that's one query per page. That's laughably small.

Assume that peak traffic is 10x that, and you can serve comfortably 4 x 1MB pages per second on a 100Mbit network connection from a single machine; that's 40 machines with associated hardware, say amortized cost of $2,000/year per machine - implies order of $100K/year on hardware, to ensure a great user experience 24 hours per day 365 days per year. Compared to $100M/year budget, that's noise. And you can save 50% just by halving the number of machines and rejecting excess traffic at peak times.

The ingestion and storage costs

Perhaps the case ingestion is intrinsically expensive, with PACER having to handle non-standard formats? Nope:

The Judiciary is planning to change the technical standard for filing documents in the Case Management and Electronic Case Filing (CM/ECF) system from PDF to PDF/A. This change will improve the archiving and preservation of case-related documents.

So PACER ingests PDFs from courts - plus, I assume, some metadata - and serves PDFs to users.

How much data does PACER ingest and hold? This is a great Fermi question; here's a good worked example of answer, with some data.

There's a useful Ars Technica article on Aaron Swartz that gives us data on the document corpus as of 2013:

PACER has more than 500 million documents

Assume it's doubled as of 2019, that's 1 billion documents. Assume 1MB/page, 10 pages/doc, that's 10^9 docs x 10 MB per doc = 10^10 MB = 1x10^4 TB. That's 1000 x 10TB hard drives. Assume $300/drive, and drives last 3 years, and you need twice the number of drives to give redundancy, that's $200 per 10TB per year in storage costs, or $200K for 10,000 TB. Still, noise compared to $100M/year budget. But the operational costs of managing that storage can be high - which is why Cloud services like Amazon Web Services, Azure and Google Cloud have done a lot of work to offer managed services in this area.

Amazon, for instance, charges $0.023 per GB per month for storage (on one price model) - for 10^9 x 1MB docs, that's 1,000,000 GB x $0.023 or $23K/month, $276K/year. Still way less than 1% of the $100M/year budget.

Incidentally Aaron Swartz agrees with the general thrust of my article:

Yet PACER fee collections appear to have dramatically outstripped the cost of running the PACER system. PACER users paid about $120 million in 2012, thanks in part to a 25 percent fee hike announced in 2011. But Schultze says the judiciary's own figures show running PACER only costs around $20 million.

A rise in costs of 5x in 6 years? That's approximately doubling every 2 years. As noted above, it seems unlikely to be due to serving costs - even though volumes have risen, serving and storage costs have got cheaper. Bet it's down to personnel costs. I'd love to see the accounts break-down. How many people are they employing, and what are those people doing?

The indexing costs - or lack thereof

Indexing words and then searching a large corpus of text is notoriously expensive - that's what my 10c per electronic page is paying for, right? Apparently not:

There is a fee for retrieving and distributing case information for you: $30 for the search, plus $0.10 per page per document delivered electronically, up to 5 documents (30 page cap applies).

It appears that PACER is primarily constructed to deliver responses to "show me the records of case XXXYYY" or "show me all cases from court ZZZ", not "show me all cases that mention 'Britney Spears'." That's a perfectly valid decision but makes it rather hard to justify the operating costs.

Security considerations

Oh, please. These docs are open to anyone who has an account. The only thing PACER should be worried about is someone in Bangalore or Shanghai scraping the corpus, or the top N% of cases, and serving that content for much less cost. Indeed, that's why they got upset at Aaron Swartz. Honestly, though, the bulk of their users - law firms - are very price-insensitive. Indeed, they quite possibly charge their clients 125% or more of their PACER costs, so if PACER doubled costs overnight they'd celebrate.

I hope I'm wrong. I'm afraid I'm not.

Public serving alternatives

I don't know how much Bing costs to operate, but I'd bet a) that its document corpus is bigger than PACER, b) that its operating costs are comparable, c) that its indexing is better than PACER, d) that its search is better than PACER, e) that its page serving latency is better than PACER... you get the picture.

Really though, if I were looking for a system to replace this, I'd build off an off-the-shelf solution to translate inbound PDFs to indexed text - something like OpenText - and run a small serving stack on top. That reduces the regular serving cost, since pages are a few KB of text rather than 1MB of PDF, and lets me get rid of all the current people costs associated with the customized search and indexing work on the current corpus.

PACER is a terrible use of government money

Undoubtedly it's not the worst^[3], but I'd love for the House Judiciary Committee’s Subcommittee on Courts, IP, and the internet to drag Jeff Bezos in to testify and ask him to quote a ballpark number for serving PACER off Amazon Web Services, with guaranteed 100% profit margin.

Bet it's less than 1/4 of the current $100M/year.

[1] Yes, irony
[2] Why does New Jersey have the most toxic waste dumps and California the most lawyers? California New Jersey got first choice. [Thanks Mr Worstall!]
[3] Which is terribly depressing.

CASH / CASSH 2017 and the importance of attracting funding

Both my regular readers will recall my personal crusade to investigate the Marcela Trust and why UK "charities" such as "Consensus Action Salt for Health" (CASH) and "Action on Sugar" (different branch of same charity) are being funded to stop people eating bacon.

As part of this ongoing investigation I downloaded CASH accounts for 2016-2017 from the UK Charity Commission website. Saved a copy as well for future reference. The TL;DR:

• Rebranded to Consensus Action on Salt, Sugar and Health (mission-merged title, happened some time after April 2016);
• Notes that they're associated with charity Blood Pressure UK featuring long-time CASSH reps Katharine Jenner and Prof. Graham MacGregor (and they accidentally mis-cite the charity number, it's 1058944 not 1059844);
• Blood Pressure UK burned through 30% of their funds in year-end 2017 (£210K to £140K) so it's anyone's guess how long this venture will last without a cash infusion;
• CASSH brought in £50K in 2017 - down from £215K in 2016 - and spent £250K in 2017 - up from £153K in 2016. So they're down from just over £750K in funds to a bit over £560K. This doesn't seem very sustainable long-term
• Basically, no-one is giving CASSH any significant amount of money. Tragic, really. I'd imagine that the general choke-off in government funds to "charities" is starting to bite.
• About half their expenditure is in food salt/sugar surveys; seems that those surveys aren't translating into funding for action. No-one cares about what they find.
• In summary, CASSH is going to run out of cash in the next 3-5 years unless they can find a charity or government agency with reasonably deep pockets to fund their surveys

Great quote from their annual report:

Andrea Martinez-Inchausti told attendees [of the CASH reception at the House of Commons, sponsored by Sir David Amess MP] that BRC members, such as Tesco and Waitrose, are committed to salt reduction but following initial reductions, further reductions in salt are posing a technical challenge.

Let me guess: no-one wants to eat food with near-zero salt?

In fairness, I'd note that a key difference between CASSH and the Marcela Trust is that the latter sends large chunks of its finances to a few directors in remuneration, whereby CASSH at least has the decency to avoid hosing money at its trustees. (I'm curious about where in detail the £120K of survey cash goes, but have no reason to believe it ends up in CASSH trouser pockets).

Ah, CASSH. It seems that trying to reduce sugar and salt consumption in the UK, or indeed world-wide, is very much a minority interest and not one than people are prepared to back with significant quantities of their own money. I'm sure people talk a good game, but their revealed preferences in funding show that they don't actually care. Sorry guys!

Government-class service

I was chatting at the coffee machine yesterday with a buddy - let's call him Mike - who was just back from paternity leave. He was showing me many, many pictures of his baby son - we can thank Apple and Google for making death-by-mobile-photostream a thing - and mentioned in passing that he'd spent half the morning phoning around local post offices to make a passport appointment so they could go en famille to visit his brother's family in NZ.

"But you said you're not planning to go until October?" I pointed out, puzzled.

Well, it turns out that if you're applying for your first US passport, you can't just send off a few forms. The American passport application form (DS-11) isn't as bad as you might think if you've dealt with other US government forms, but first passports and passports for any under-16 child require that you appear in person at an "acceptance facility". This, in practice, means one of a small number of passport offices, some city clerk offices, or a subset of US post offices. Passport offices allow you to turn up on the day; city clerks and post offices are appointment-only. The appointments are usually only available 3-4 days per week - not weekends, natch - and only a few hours per day, e.g. midday through 4pm.

After canvassing four or five different venues to get a handle on availability, Mike had managed to find himself an appointment for Wednesday 2nd August as the earliest available - ignoring all other scheduling concerns. That's 2 months hence.

"That's a bit tight for an October flight - why not go in person?" I wondered. Unsurprisingly Mike had already done the research, and pointed me to the Yelp reviews for Willow Glen Passport Station, San Jose as a guide to what he'd be dealing with:

#1 tip is get there early - and I mean 3, 4, 5, 6 AM early (the doors open at 10 AM). There will always always be a line. I talked to so many people who just expected to walk up and have their application processed. Even if it LOOKS like there are only 2 or 3 people in front of you, it's entirely possible they are saving a spot for additional people. We thought we were 7th in line but once everyone's relatives showed up at 10, it was more like 15th in line.
[...]
Weekends have WAY more people in line and some people have been known to show up as early as 3 AM. We took off work on a weekday just for this reason. Arriving at 4:30 or 5 AM on a weekday SHOULD ensure you're near the front of the line.
[...]
Arrived at 4:30. Nine families were there already. At 5, about 20 people. At 6 about 30 people. Total 50 numbers were issued. Therefore, after 6 am chance is small. Numbers were given out by post office employee at 9:55. Got in at 10. Finished at 11:10. Staffs are nice and professional.
[...]
Got in the line at 3.20AM. There were 15 folks ahead of me. Long line formed behind me by 8AM. A post office employee came out at 8AM and said "if the applicants are in the line, please come inside, 10 at a time, and I'll validate the forms". Chaos ensued, since most of the folks in the line were holding a spot for their families. Eventually things calmed down. The employee was out again and stated that they would only process 30 passport applications (not 30 customers).

Do you think that there might be a demand signal here? (In case you think Willow Glen is a special case, read the Eastridge reviews.)

What I took away from those reviews is that the passport station staff (generally) were individually trying to do a good job and make things run smoothly, e.g. by pre-validating application forms, but were totally ham-strung by being desperately under-staffed relative to the demand. Similarly, the city clerks and post offices had no incentive at all to add staff and expand the number of face-to-face appointments. It looks like they're limited to claiming $25/person fees so there's no ability to raise fees to respond to demand, and hence no reason to hire extra staff to increase their processing capacity because that's probably below the employment cost here in Silicon Valley.

I remain completely baffled by Americans who want more Federal government involvement in their lives. This is what Federal government involvement looks like. (At the state level, they should examine the well-oiled customer-service-friendly machine that is the Department of Motor Vehicles.)

Journalist ecomonic understanding makes me cry

The megalopolis of San Jose, CA has approved a rise in the minimum wage to $15 by January 1 2019. The usual suspects are weighing in approvingly, but my eye was drawn in fascinated horror to the way that the journalist (or press release author) expressed the financial changes expected:

Mayor Liccardo launched the effort last fall to follow the lead of five other cities in Santa Clara County and to come up with a regional approach to raise minimum wage throughout Silicon Valley.
City statistics show it would mean a $300,000 raise for 115,000 workers.

To which I can only say huh? Assuming they're on $12/hour now, they're working 100,000 hours per year?

What the author means, one assumes, is that each worker is going to benefit by just under $3 per hour, but that's a horrible way of expressing that statistic. And of course, the statistic itself is misleading. The workers are going to pay a varying amount of tax on that additional money, other benefits they are currently paid may change, and of course that assumes that otherwise their salary would not have risen at all by January 2019 despite the extra 2 years of experience and possible promotion they would have achieved by then.

But let's look at what the author believes is the downside of this measure - because they're trying to be even-handed, yes?

Some small business owners and non-profits worry raising the minimum wage would reduce their share of the economic pie. The result could either mean service reduction for non profits or price increases for mainstay businesses.

Or, you know, firings left and right for any worker whose skills aren't valued at $15/hour (plus additional costs) by the business they work at. Or businesses closing down because they're no longer economically viable. Or employers cutting existing worker benefits to offset the new costs. Heck, ask workers and business owners in Seattle how their new $15/hour minimum is working out.

You can just taste the disdain for business owners in the expression "reduce their share of the economic pie". Why exactly does the author think the owners have put in all the work and risk to create the businesses that create the jobs for these good people in the first place?

The logistics of de-immigration

Eminent social justice activist Shaun King raises a pertinent point on the current topic (in the sphere of the US presidential candidate selection process) of what to do with the "immigrants of dubious legality" in the USA:

What do you think it would look like, practically speaking, for Trump to "round up" 450,000 immigrants per month and "ship them off".

— Shaun King (@ShaunKing) October 15, 2015

This is, as several people has observed, quite a hard problem.

The first problem you have is finding the immigrants, and this is probably the killer. You've got 360M people in the USA, illegal immigrants are 10M-20M in number by various estimates, so for every 1000 illegals found you have to trawl (naively) about 20,000 legal citizens - and at 450K illegals/month constant rate you're looking at 2 years to remove nearly everyone. So every month you need to annoy 9M legal residents at some level in order to meet your quota. As immigrant numbers fall, that number of recently annoyed legal residents will rise. You'll start with unobtrusive measures, but as time goes on you'll need to get more and more intrusive - and most of the annoyed legal residents are citizens, and can vote against representatives who are supporting this measure.

Then you need to make them leave the country. Detention is expensive, ask anybody in the Federal Bureau of Prisons - average is about $100/day and that assumes amortizing entry and exit costs over many months. The sooner you can export them, the better. You need to fund daily 1-way flights from a wide range of cities to the dominant countries of residence of illegal immigrants: Mexico (obviously), major nations in Central/South America, and Pakistan/India/Bangladesh. The immigrants won't be paying for this - they'd rather pass their US$ to legal resident friends and rely on that largesse being transmitted to their home country for later pick-up, at a generous margin. So the US government will be implicitly boosting illegal financial transactions as a result. Occupancy rate on those planes is going to be highly variable. Assuming average occupancy of an evacuation plane at 50% - realistically, you can't fill them with paying passengers, ask anyone in the UK - that $700 is a reasonable round trip fare to Latin America, and noting that the return journey will need to be empty (don't even think about eating the profit margins of existing airlines, there's no way this turns out well) you're spending about $700M/month just on the export. This assumes zero cost on detention and transport to the airport, which is "optimistic".

What's the end run around this? Make the illegals deport themselves. Illegal immigrants come to the USA to work and earn money for their family, with the (faint) hope that they can eventually stay. This might occur by having a baby in the USA who will be a US citizen, and applying for residency on compassionate grounds; alternatively they might eventually find an employer willing to sponsor them. So remove that attraction. There are definite areas of employment for illegal immigrants; it depends on the region, but generally agriculture (crop picking), daily manual labour and domestic service are the top areas. Focus tax audits on those areas, reduce the marginal cost of legal labor (e.g. by increasing the deductability of costs associated with a provably legal labourer) and watch the illegal employment rate plummet.

This isn't a free ride - the government will still need to fund the free no-questions-asked one-way flights home, but if they really want to make this happen then it's probably the cheapest way to achieve the goal. With no income, and easy access to return journeys to one's home country, the labour problem will mostly fix itself.

Of course, this reduces the government benefit of illegal employment - is an incumbent administration willing to forego all the income from illegal activity?

You can't be too careful - car crashes

The class of systems with high distributed costs and focused but inadequate benefits is going to have another member: auto-calling police in the event of a car crash:

In the event of a crash, the device calls the E.U.'s 911 equivalent (112) and transmits to authorities important information including location, time, and number of passengers in the vehicle. An in-car button will also be installed in all vehicles. The eCall requirement will add an estimated $100 to the price of a car.

$100 on each (new) car sold: so how many new cars are sold in the EU each year? About 14 million in 2012. So this measure will cost $1.4 billion, and maybe $150 million in the UK. What's the benefit?

Each year nearly 26,000 people are killed in the E.U. by car crashes. This new device is estimated to reduce that number by 10 percent, saving 2,600 lives annually, by cutting down emergency response time by as much as 60 percent.

The cost of a life for purposes of safety varies by country and mode of transport, but let's take $1 million as the average. Given the quoted statistics, $2.6 billion saving (though optimistic, probably lower) comprehensively dwarfs $1.4 billion cost (though also optimistic, probably higher). Why isn't this a slam-dunk decision?

The problem is twofold: a) zeroing cost for lives saved, and b) the assumption of 10% saving. Let's consider each in turn.

If an injury is potentially fatal but not actually fatal due to timely intervention, it's almost always due to either early suppression of severe blood loss, or timely (within 1-2 mins) clearing of obstructed airway. The latter isn't relevant due to emergency service response times, so we only consider the former. This injured person will still need emergency treatment followed by several days of hospital care, and quite possibly follow-on care of injuries, rehab, and in some cases reduced lifetime tax payments due to reduced earnings and disability payments, so you're looking at order of $100K average costs. That's still not really significant.

However, consider a typical case where a life is saved: a car driver has an accident in the countryside when no-one is around. His car calls 112 and so the police (not the ambulance service initially, because they are too stretched to respond to wild goose chases) respond to his location. Seeing the crash they call for an ambulance which arrives 10-30 minutes before it would have otherwise arrived due to a passer-by report - people tend to notice a crashed car with no emergency services around it. He would have died due to shock (depletion of oxygen to the critical organs due to blood loss / asphyxiation / traumatic damage to heart and lungs) but the ambulance got there in time to oxygenate him and transport to hospital. Just how common is this?

Fatal road accidents rarely happen on remote roads - unsurprisingly, they happen where there are many more cars and roadside obstructions to run into. If an accident happens where passers-by are prevalent, this system doesn't help at all since nearly all passers-by have mobile phones. So we're only looking at a small fraction - 5% is optimistic - of accidents. The press release assumed 10%, so the benefit has already halved and is perilously close to the cost.

But bleeding to death is not a common cause of death from road accidents for drivers/passengers. Much more likely is traumatic head injury, which tends to kill them right there in the car. Unsecured drivers/passengers fly through the windscreen, or secured drivers/passengers bang their head against the car frame. This kills instantly, or in a few minutes. Another mechanism is the "third collision" where the car bangs into a tree (collision 1), the driver bangs into their seatbelt (collision 2) and then the free-hanging organs like lungs, heart bang into the drivers chest, or their blood vessels bang into ligaments that cheesewire them (collision 3). If you're in this situation and your aorta (the major blood vessel coming out of the heart) is damaged you can expect a 60%-80% chance of death no matter how quickly you get to the hospital.

Therefore, before we stick the European population with an extra $1 billion of annual costs, why don't we conduct a limited experiment introducing this requirement into a single country which is similar to another country in road crash death rates to see what effect, if measurable, this measure has? Or is the notion of trade-offs too alien to the EU?

Net neutrality - be careful what you wish for

I'm driving my forehead into an ever-deepening dent on my desk in despair at the news that the US Federal Communications Commission has approved new rules governing net neutrality in the USA. This may seem like the sort of news that a progressive geek like your humble bloghost would welcome, but it turns out to involve some inconvenient wrinkles.

The EFF, guardians of liberty, were originally cheering on behalf of net neutrality. Then, 2 days ago, they started to get a little concerned with some of the details being proposed by the FCC:

Unfortunately, if a recent report from Reuters is correct, the general conduct rule will be anything but clear. The FCC will evaluate "harm" based on consideration of seven factors: impact on competition; impact on innovation; impact on free expression; impact on broadband deployment and investments; whether the actions in question are specific to some applications and not others; whether they comply with industry best standards and practices; and whether they take place without the awareness of the end-user, the Internet subscriber.

In essence, the proposed rules for Net Neutrality gave the FCC - a US government agency, headed by a former lobbyist for the cable and wireless industry - an awfully wide scope for deciding whether innovations in Internet delivery were "harmful" or not. There's no way that this could go horribly wrong, surely?

Broadband in the USA

Now, let's start with the assertion that there is an awful lot wrong with broadband provision in the USA currently. It's a lot more expensive than in the UK, it's almost always supplied by the local cable TV provider, and in general there is very little if any choice in most regions. See the broadband provider guide and choose min, max of 1 - there's an awful lot of the USA with monopoly provision of wired high-speed internet.

The dominant ISPs with high-speed provision are Comcast, AT+T, Time Warner, CenturyLink and Verizon. It would be fair to say that they are not particularly beloved. Comcast in particular is the target of a massive amount of oppprobium: type "Comcast are " in your favourite search engine, and you get autocompletion suggestions including "liars", "crooks", "criminals". American broadband is approximately twice the price of British, and you generally get lower speeds and higher contention ratios (you share a pipe of fixed size with a lot of people, so if your neighbours are watching streaming video then you're out of luck). As effective monopolies, ISPs were in a very powerful position to charge Internet services for streaming data to their customers, as last year's Comcast-Netflix struggle showed - and it ended with Netflix effectively forced to pay Comcast to ship the bytes that Netflix customers in Comcast regions were demanding.

Google's upstart "Google Fiber" offering of 1 Gbps (125 MB per second) fiberoptic service tells a story in itself. It's targeting a relatively short list of cities but has been very popular whenever it opened signups. It has spurred other broadband providers to respond, but in a very focused way: AT+T is planning to offer 1Gbps service, but only in Google Fiber's inaugural area of Kansas City which is impressive in its brazenness. Other community-based efforts are starting to bear fruit, e.g. NAP is proposing their Avalon gigabit offering in part of Atlanta, Georgia. However, most of the USA is still stuck with practical speeds that have not changed noticeably in half a decade. Entrenched cable ISPs have spent plenty of money on lobbyists to ensure that states and cities make it expensive and difficult for newcomers to compete with them, requiring extensive studies and limiting rights to dig or string fiber-optic cable to residential addresses.

So there's clearly a problem; why won't Net Neutrality solve it?

The ISP problem

Net neutrality essentially says that you (an ISP) can't discriminate between bytes from one service and bytes from a different service. Suppose you have two providers of streaming Internet movies: Netflix and Apple iTunes. Suppose Comcast subscribers in rural Arkansas pay Comcast for a 20Mbps service, easily sufficient for HD streaming video. Comcast controls the network which ends at their customers' home routers, and when it receives a TCP or UDP packet (small chunk of data) from their customers they will look at its destination address and forward it either to its destination - e.g. a server in the Comcast network - or to one of the other Internet services they "peer" to. Peering is a boundary across which Internet entities exchange Internet data. When data comes back across that boundary with the address of one of their customers, Comcast routes the data to the customer in question. So far, so good.

Now the customer is paying Comcast for their connection, so it's not really reasonable for Comcast to force them to pay more for more data above and beyond the plan they've agreed. If you've got a 20 Mbps connection, you expect to be able to send / receive 20Mbps more or less forever. Comcast might have a monthly bandwidth cap beyond which you pay more or get a lower speed, but that should be expressed in your plan. Comcast might weight certain kinds of traffic lower than others, so that when 20 people are contending for use of a 100 Mbps pipe traffic which is less sensitive to being dropped (e.g. streaming video) is dropped more often than more sensitive traffic (web page fetches), but that's all reasonable as long as you know how many people you're contending with and what the rules are.

Streaming video is one kind of traffic that's problematic for ISPs: it requires very little bandwidth from the paying customer. They send an initial message "I want to see this video" and then a low volume of following messages to control the video stream and assure the video streaming service that someone really is still watching it. From Comcast's point of view, though, they have a large amount of latency-sensitive traffic coming into their network from a peering point, so they need to route it through to the destination user and use up a large chunk of their network capacity in the process. If lots of people want to watch videos at once, they'll have to widen the incoming pipe from their peer; that will involve buying extra hardware and paying for its associated management overhead so that they can handle the traffic, as long as they are the limiting factor. (Their peer might also be the limiting factor, but that's less likely).

So the more data users stream concurrently, the more it costs Comcast. This can be mitigated to some extent by caching - storing frequently used data within the Comcast network so that it doesn't have to be fetched from a peer each time - and indeed this is a common strategy used by content delivery networks like Akamai and video streaming firms like YouTube. They provide a bunch of their own PCs and hard disks which Comcast stores inside its datacenters, and when a user requests a resource (video, image, music file, new operating system image) which might be available in that cache they will be directed to the cache computers. The cache will send the data directly if it's available; if not, it will download it and send it on, but store it locally so if someone else requests it then it's ready to send to them directly. This has the effect of massively reducing the bandwidth for popular data (large ad campaigns, "Gangnam Style" videos, streaming video releases), and also increases reliability and reduces latency of the service from the user's perspective, but costs the provider a substantial overhead (and operational expertise) to buy, emplace and maintain the hardware and enable the software to use it.

The non-neutral solution

If Netflix aren't willing or able to pay for this, Comcast is stuck with widening their pipe to their peers. One might argue that that's what they're supposed to do, and that their customers are paying them to be able to access the Greater Internet at 20Mbps, not just Comcast's local services. But Comcast might not see it this way. They know what destination and source addresses belong to Netflix, so they might decide "we have 100 Gbps of inbound connectivity on this link, and 50 Gbps of that is Netflix video streaming source addresses at peak. Let's reduce Netflix to a maximum of 20 Gbps - at peak, any packet from Netflix video streaming sources has a 60% chance of being dropped - and see what happens."

You see where the "neutrality" aspect comes in? Comcast is dropping inbound traffic based solely on its source address - what company it comes from. Only internal Comcast configuration needs to be changed. From the customer's point of view, Netflix traffic is suddenly very choppy or even nonfunctional at peak times - but YouTube, Facebook, Twitter etc. all work fine. So Netflix must be the problem. Why am I paying them money for this crap service? (Cue angry mail to Netflix customer support).

Net Neutrality says that Comcast can't do this - it can't discriminate based on source or destination address. Of course, it's not really neutral because ISPs might still blacklist traffic from illegal providers e.g. the Pirate Bay, but since that's normally done at the request of law enforcement it's regarded as OK by most.

The problem

The USA has handed the Federal Communications Commission, via the "general conduct" rules, a massive amount of control of and discretion in the way in which ISPs handle Internet traffic. It presumes that the FCC has the actual best interests of American consumers at heart, and is intelligent and foresighted enough to apply the rules to that effect. Given the past history of government agencies in customer service and in being effectively captured by the industries they are supposed to regulate, this seems... unwise.

Anatomy of a timeshare sale

Dear readers, the things I do on your behalf. Herewith my notes from participating in a recent timeshare sales session which was the condition of a fairly well discounted holiday which my partner and I recently enjoyed.

The vacation property itself was very pretty - manicured lawns, artfully trimmed flowering bushes and a background of blue skies and the sound of crashing waves. The sales office itself was tucked away in a corner of the imposing main clubhouse, presumably because once you’re an owner you don’t like to be reminded of how and where they got you. It was a reasonably high traffic operation, several other couples there waiting or coming through - note that there were no singles, only couples. I'd guess they’re maximising their chances of finding a weak spot and then leveraging it to pressure the other party. Divide and conquer FTW!

The waiting room had the usual free beverages to enjoy for the few minutes we were waiting. Coffee was from a press-top urn and was awful. Normally I'm OK with urn coffee in a pinch, but my goodness this stuff was dreadful; I had to fall back to Lipton tea. This was scheduled to be a 2 hour session so my tolerance for coffee absence would be tested to its limit.

I'll call our sales rep "Nick", who was audibly a New Yorker. He led us down to his office and the presentation started after a few minutes of soft soap "how was your vacation so far? what have you enjoyed?" which was fairly obviously an intelligence-gathering exercise.

Nick started the sell emphasising that this was not a high pressure sales session. He then described the "price integrity" of his company, that they never discounted or negotiated on price (yeah, sure, you betcha snookums) and referenced back to how much we'd enjoyed the holiday so far to stimulate the guilt gland. He then noted the extra financial incentives if we bought right now, today, with a yes/no decision at the end of the session. What was that about "no high pressure sales", Nick? He outlined our aim today which was to decide whether our future vacations would be better with or without TIMESHARECO ownership, which was studiously neutral so far. At the end of the session we would be meeting with the company inventory manager for details on prices, incentives etc.

About 10-15 minutes in and Nick took a break to "get some water". Presumably this was to check with his boss on his boss's read on the situation so far. I didn't think to check for a video or audio monitor in the office; nothing was obvious, and I'm guessing that there wasn't any eavesdropping going on. Certainly nothing subsequently made me suspect that.

Nick started the next session reviewing our past holidays and latched on to our holiday last year as similar to the kind of thing he was selling. He asked us to name our "dream" 3-5 money-no-object vacations which we did. He picked out quality as a factor in our holidays and started talking numbers on room prices, picking a $200/night base price.

We learned after casual conversation from me that he had retired from a job as a retirement plan sales manager, but had come back into the timeshare sales game after a couple of years. In light of the later discussions, this made a lot of sense. He likened the scheme he was selling as a "401(k)" (money purchase pension scheme) for holidays - invest money and get a steady yield of vacations.

During the meeting he took very short but effective notes on a single sheet of paper, only a few words per concept; around now he read back to us a summary of what he'd noted, and pretty much nailed everything. I was very impressed at his technical skill. I also approved of the strategic placing of his office with a genuinely lovely garden and waterfall view - he sat with his back to it, so it clearly wasn't intended for his benefit. I bet the room views aren't like that (except for the show rooms.)

Now we come on to the numbers. He was trying to sell on the basis of 7 days stay, $200/night, over 20 years - that if we did this with his company then it would be cheaper than renting a hotel room each year. He presented a table showing cost of hotel rooms in brackets - but quoting in non-constant dollars. The chart spanned 40 years - so starting from the mid-1970 when 11% annual inflation was the average - but actually only 7% over past 10 years (I did the math). Later, checking the US inflation calculator it's clear that 1974-1984 is by far the steepest inflation decade of the past 40 year - 110% compared to 42% (1984-1994), 27% (1994-2004) or 25% (2004-2014).

I innocently asked him "but aren't wages inflating too, so shouldn't this be expressed in constant dollars or at least expressed in terms of purchasing power? And aren't hotel prices determined by supply/demand - what you can persuade people to pay, not what your costs are, so heavily influenced by wages?" at which point he pretended confusion. I also asked why he was looking at a 40 year basis when we were talking about a future span of 20 years, which met with a similar response.

Now it makes sense why he used to sell retirement plans... he's essentially selling a financial plan. He's saying that if we give TIMESHARECO about 20 grand then they can invest it in property and meet the cost of our stays over the next 20 years while presumably turning a small profit including his commission. And yet, they can't persuade the major financial establishments to make the same investments and profit directly. I wonder why?

Now the "here's all the places you can stay!" list. About 70 locations in 10 countries - not a massive amount, but they have "affiliates" in 100 countries with over 5000 resorts you can stay at. Minimum of 3 nights per stay, no max, which seems reasonable. With your purchase of the plan you get X points per year to spend on properties, and can transfer points between years. It costs $100 to carry forward non-spent points, but $0 to borrow them from future years - cheaper to take a loan than save up. What's wrong with this picture? It means that they want the additional money they get from you actually staying, of which more later.

We toured through photo sets of properties in countries we might visit, though only TIMESHARECO properties not affiliates - which was a nice sleight of hand. Apparently TIMESHARECO "reviews" the quality of the affiliates to ensure they're up to scratch. I'm sure you're as reassured as I was. It's a first-come first-served model for all properties. Nick claimed that there was a low probability of all affiliate properties being full in an area even in busy time e.g. spring break but didn't address TIMESHARECO numbers directly. So they almost certainly have a problem with availability during this times. Affiliates charges $200 per booking which is a nice little earner and pushes you towards fewer, longer holidays in affiliates.

He gave us a brochure for the affiliate program: RCI. According to their SSL cert information they are Wyndham Worldwide Corporation based in Parsippany, New Jersey. Their stock is up about 15% y/y so clearly the timeshare business is doing well out of the boom.

Nick took another break, this time more extended than the previous one, presumably to allow replanning of his sales approach. I couldn't help but notice that he didn't offer us a refill of our beverages.

He mentioned in passing that there was also a maintenance fee which covers insurance for the property, in response to an earlier question I had about "what if the property we buy rights to burns down?" We fenced for a few minutes, then 70 mins after the start of the discussion he gave up, said that we didn't have to tour the property if we didn't want to - we didn't - and handed over the bonus gifts that we were due to receive at the end of the property. He did try a last gasp attempt with vacation offer similar to what we had already enjoyed, with another timeshare presentation linked in. I'm sure that if we'd taken this up then we'd have been lined up with their Top Gun negotiator. But we said no thanks, and left.

Overall a fascinating view into the world of timeshare sales. I didn't feel in any danger of buying at any point, but I give Nick his due that he tried very hard and used most of the tricks in the book without resorting to what I'd regard as "high pressure" sales. Perhaps the fact that I was taking notes alarmed him a little; he emphasised at the start that he'd give us all the items discussed in writing, but of course with us leaving before closing this didn't happen (if it would have happened). Credit to him that he recognised when he was beaten and didn't waste our time or his beyond that point. It also turned out to be remarkably easy to elicit information about him and divert him off course for a few minutes. Presumably this was because he thought that he was making a social connection and common ground.

The offer itself of course was completely overpriced - I checked out the secondary market in TIMESHARECO properties and they were a) heavily discounted, around 60% of face value and b) not selling, though of course these are related and just give you a ballpark idea of the market clearing price. The annual maintenance cost was around $1300 - i.e. the same as 6 nights of hotel stays at $200/night. If you buy in the primary market, you are a total mug or you have lots of money, the holiday model fits you and you don't mind paying a healthy excess for the convenience.

Lipstick on a postal pig

I can't help but share this lunacy with you. The (American) Center For Economic and Policy Research thinks that the problem with the US Postal Service isn't the lackadaisical, contemptuous, inefficient distribution of mail which it perpetrates. It's just not properly utilized. Instead, we should allow it to run banking services at the same efficiency with which it delivers mail:

[...] the Postal Service could improve its finances by expanding rather than contracting. Specifically, it can return to providing basic banking services, as it did in the past and many other postal systems still do. This course has been suggested by the Postal Service's Inspector General.
This route takes advantage of the fact that the Postal Service has buildings in nearly every neighborhood in the country. These offices can be used to provide basic services to a large unbanked population that often can't afford fees associated with low balance accounts. As a result they often end up paying exorbitant fees to check cashing services, pay day lenders and other non-bank providers of financial services.

Of course, the reason that banks have run a mile from providing banking services to clients with low income or dubious immigration status, running away from a steady (albeit low) income stream, is due to... government regulatory pressure. Who'd have thought that the government would have caused these problems?

Now the CEPR is proposing that a government agency can step in and fix the very real problems in banking access that other government agencies have created. I don't know whether to laugh or cry.

Incidentally, my personal experience with sending mail through the USPS - a monthly mail to a residential address within the same state, dropped in a regular post box - is that the failure rate is about 1 in 13. This is corroborated by the experience of The Advice Goddess (Los Angeles resident Amy Alkon, if you're not reading her blog or buying her books then you really should):

How sucko is @USPS? Called to complain re lazy postal wkrs not picking up from blue boxes; USPSer says "I'd never put mail in one of those"

— Amy Alkon (@amyalkon) November 5, 2014

There is no way that the USPS could comply with the existing banking regulations in the USA without having the same order of overhead as the major US banks. I suspect their savings in property costs are insignificant; even if they could train existing post office counter staff to be bank tellers as well without any major salary inflation, all the backend systems and personnel required would kill their cost advantage. Check out the USPS compensation and benefits: "regular salary increases" means you're paid by length of service, not productivity, they get federal health benefits which are a step or three above Obamacare coverage, and they get a defined benefit retirement plan. Believe me, if you're staff at a major bank, you would sell your mother on the streets to get these benefits.

All the CEPR is doing in this article is lobbying for an increase in (unionized) federal government employees. The government, and therefore the taxpayer, is going to pick up the tab, but that's Just Fine with them. The only way I can see this working is if the USPS is exempted from most of the existing banking regulations - and if that's the problem, why not just repeal them for everyone else as well?

Minimum wage: Seattle airport workers find out that TANSTAAFL

An interesting tidbit from the Northwest Asian Weekly about the effect on airport workers of Seattle-Tacoma Airport's $15/hr minimum wage:

"Are you happy with the $15 wage?" I asked the full-time cleaning lady.
"It sounds good, but it’s not good," the woman said.
"Why?" I asked.
"I lost my 401k, health insurance, paid holiday, and vacation," she responded. "No more free food," she added.

For non-Americans, the 401k is like a money-purchase pension scheme where employers normally match some level of employee contributions. It's possible that the loss of health insurance wasn't strictly related to the $15/hr minimum wage, which took effect at SeaTac on Jan 1st, since employers across the country have been diligently pushing workers onto the state health insurance exchanges where they can get away with it. However, the rest of the losses are quite instructive.

It seems that you can legislate a minimum wage, but where you force employers to pay more than they would otherwise they have a surprising number of ways to reduce the impact on their bottom lines.

The effect of the minimum wage hike has been seen in other ways as well. Labor-intensive businesses are finding ways to shed employees:

At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe. The nearby Cedarbrook Lodge, by contrast, is undergoing a $16 million expansion.

The SeaTac $15 minimum is a great case study because it only applies to businesses which have dealings with the airport; as such, you can see the difference between nearby similar businesses where one is affected by the law and one is not.

I did wonder about an assertion in an article that unionized businesses were not affected; but indeed, the ordinance is clear about this point:

7.45.080 Waivers
The provisions of this Chapter may not be waived by agreement between an individual Covered Worker and a Hospitality or Transportation Employer. All of the provisions of this Chapter, or any part hereof, including the employee work environment reporting requirement set forth herein, may be waived in a bona fide collective bargaining agreement, [my emphasis] but only if the waiver is explicitly set forth in such agreement in clear and unambiguous terms. Unilateral implementation of terms and conditions of employment by either party to a collective bargaining relationship shall not constitute, or be permitted, as a waiver of all or any part of the provisions of this chapter.

So unionized businesses can agree with the workers' union to waive this (e.g. if it's posing a profitability problem that may otherwise result in firings) but non-unionized businesses have no such option even if the workers are willing - they would have to unionize first. A nice touch, and one that seems to have been under-reported in the press. I wonder why?

Hat tip: The Advice Goddess who has a new book coming out this week: "Good Manners for Nice People Who Sometimes Say F*ck".

A tip on tipping

Oh, for fuck's sake. Arun Sethi in CiF complains about the poverty of tipped employees in the USA:

Across the country, advocates are organizing, rallying, and speaking out in support of raising the US tipped minimum wage of $2.13.
Yes, you read that right. Tipped workers include parking lot attendants, bellhops, baggage porters, manicurists, and barbers. They also include many people in the restaurant industry – waiters, waitresses, and food deliverers. They haven't seen a raise since 1991.

That's a rise in their employer-paid minimum wage. Why aren't they deserting these roles in droves for a (federal, hence minimum across all states) minimum wage of $7.25/hr, say at the local Taco Bell? Well it might just be because retail prices are rising rapidly, and the tip % is rising independently. All that employer minimum wage covers for salary is slack hours when you're doing nothing; as soon as you get a customer, tips come in to play.

If you haven't lived in America, here's a primer on tipping. A reasonable tip for most roles is 15%-20% of the purchase price - and in the past 10 years this has moved closer to 20% than 15%. For bartenders it's $1-$2 per drink (glass of wine, shot of regular spirits, pint or bottle of beer). If you go out to a restaurant for a family meal, say 4 people at a table for 1 hour and a bill of $50-$80 then you'll pay a tip of $10-16. If the waitress only serves one table per hour she'd be way over minimum wage. Realistically she's covering more like 5-10 tables - she'll do really well out of this; not as well as the figures suggest since she has to "tip out" (pay a % of tips) to the busboys and kitchen staff, but still a very comfortable wage. She certainly won't get the high rates during the 2pm-7pm slot, since the customers drop off, but even two occupied tables per hour should keep her quids in.

Attendants, porters and bellhops get $1 per bag (ballpark); I don't know much about their baggage carrying rate, but they should clear minimum wage without any problems and should be able to make $12/hour (one customer with one bag per 5 mins) just fine during moderately busy periods. Manicurist charges are about $20/30 mins, so 20% yields $8/hour; this is by no means extravagant, and unlike waitressing is capped at one customer per 30 mins or so, but is still above minimum wage. They get screwed over by slack periods of course. But compare "service" at a restaurant in the UK versus one in Manhattan, Dallas or Minneapolis and you'll see just how well financial incentives work.

If by "parking lot attendants" Sethi means "valet" - you don't tip the person in the booth at the city parking lot - then they do staggeringly well. At a hotel with valet you pay $10-$20 per day and tip $1 min, $5 max per fetch (5 mins). Valet 8 cars per hour with minimal tip and you're still ahead of the game. I've typically tipped in the $2-$3 region, and the valets I've seen are busy for most of the day.

Note that fast food staff aren't covered by this since you don't normally tip at McDonalds, Five Guys, In-N-Out, Wendys, Taco Bell; they get regular minimum wage.

You don't tip gas station attendants; postal workers and gardeners get a one-off Christmas tip. Taxi drivers get 15%-20% and do just fine - try leaving a 10% tip for a Manhattan cabbie and learn inventive new words. And only assholes don't tip at all; I've left a sub-15% tip on maybe 5% of occasions, and only for service that was well below "adequate" and tending to "derisory".

Who is this mendacious clown?

Arjun Sethi is an attorney in Washington, DC, and a frequent commentator on civil rights and social justice related issues. He is a member of the Minimum Wage Coalition, a consortium of more than 40 groups, nonprofits, and faith-based organizations, working to increase the wage.

Wow, certainly no conflict of interest there. I note that he doesn't add "and conspiring to reduce employment" to that description, despite that being the net effect of his lobbying; highly-qualified and privileged asshole that he is.

Supply and demand - it's a bitch

Pity Mr. Cookson who wants to take his kids to Center Parcs during the school holiday and is paying 40% extra for the privilege:

Posting a screengrab of the online booking form showing the price leaping from £699 to £999 in consecutive weeks, he wrote: 'For exactly the same villa the week before the school holiday, it's £300 cheaper!
'Do you get anything extra? NO. Same villa, end of.'

He is of course, completely right at the same time as being completely wrong. Center Parcs has been running for about 20 years and has great data on how demand fluctuates over the year. They've built the optimum number of villas to serve customers year-round; the marginal cost of an occupied villa for a week probably isn't huge, but the construction cost and maintenance probably is, and they have constrained space. They want to get the place as full as possible, and will hence increase the daily occupancy cost to a point where 99.9% or so of villas are occupied. The one or two families who will pay £969 but not £999 will be the unlucky ones.

Center Parcs put a good spin on this:

'We reduce our prices significantly during off-peak periods to reflect the lower demand at these times,' a spokesman said.

I like that: they reduced their prices off-peak, rather than increasing the prices during peak. The spokesman clearly is earning his pay.

Mr. Cookson is of course complaining to precisely the wrong people. If he wants to fix the problem, he shouldn't be talking to Center Parcs - there's no way in hell that they're going to sacrifice £300 times five holiday weeks times a few hundred villas times five sites just to get a small amount of good publicity. There are two ways to reduce the cost; the most feasible approach is to make different schools stagger the vacation weeks. Do this on a per-district basis so you don't have the problem of different vacations for kids in the same family of different ages, and randomise the choice for each district, and you've halved the effect of the holiday surge. Now you're still going to pay a premium for Center Parcs during the two weeks, but it should reduce demand and hence price - maybe £840 instead of £999 for the week. ABTA reports that Germany uses this approach, which is eminently sensible.

The more effective approach is to remove this stupid restriction in state schools that children cannot take holidays during term at all. Give each child in primary education a couple of weeks per year to take off with no penalty, and a week per year in secondary education, then price a couple of additional weeks by a sane amount - say, £15 per day per child.

Of course, this will cause all the businesses catering to families to lose money since they can no longer charge a hefty premium for those vacation weeks; demand might increase a little for the average non-vacation week, but I suspect they'll still lose overall.

Let's contrast this with a post on the subject by the Guardian's education editor Richard Adams:

Is it really that big a problem?
Yes. According to Bradford metropolitan council, between September 2012 and Easter 2013 more than 41,000 days of education were lost owing to parents in the city taking their children out of school for holidays during term time.

How many pupils in Bradford? The population of the city is about 520,000. If we assume (very conservatively) that about 10% of the population is between 5 and 16, that's 52,000 students. So that's less than 1 day of education per student per year - I assume that after Easter the marginal cost compared to waiting for the summer holidays means that not many more days are taken. That statistic is stupid - they are clearly not putting it in context because it is so small.

Does a week make that much difference?
A child who takes a week's extra holiday each year at school will have missed at least 70 days – or the equivalent of more than three months of teaching – by the end of their time at school.

Wow, 70 days. That's quite the statistic. 5 days per year implies 14 years, so they are including students from age 4 through to the end of A-levels. Schools have to be open for at least 190 days (38 weeks) per year so that's 2660 days over 14 years. A child taking a week's extra holiday per year is missing less than 3% of the school week.

If schools really thought that 1 week of school made such a marginal difference, they'd be paying for supply teachers to cover the 2-3 inset days per year which affect all pupils. At 2 inset days per year, 104,000 days of education are lost to parents in Bradford as a result of inset days.

Any long-term solutions?
Parents could accept that their child's classroom education is far more important than a week in Europe, no matter how many museums they visit. That's especially true for young children: the evidence is unanimous that early-years education is vital for future attainment.

Really? I can believe that having a year of education for a 5 year old, compared to having no education, has some benefit - still, many countries don't start formal education for children until a year later than Britain does. But missing a week of sounding out words, painting and listening to stories compared to travel, hearing and learning words in a foreign language, trying new foods, seeing different sights and meeting new friends doesn't seem to be to be the slam-dunk that Richard Adams suggests.

The world is getting better, not worse

That's the conclusion of billionaire philanthropist Bill Gates. In his annual Gates Foundation letter he explains (and justifies) why three myths about world poverty are untrue - and why they block progress for the poor:

1. POOR COUNTRIES ARE DOOMED TO STAY POOR
2. FOREIGN AID IS A BIG WASTE
3. SAVING LIVES LEADS TO OVERPOPULATION

Now I consider Windows Vista a crime against humanity, but can't fault Mr. and Mrs. Gates for their commitment to making the world a better place with their own money. Bear in mind that Bill Gates doesn't seem to have any vested interest in these matters - he's richer than Croesus, he doesn't seem to care about political power, he doesn't have people to pay off; if he makes these claims, it's most likely to be because he believes them. And he's not dumb or politically naive by any stretch of the imagination. Bill Gates - and it pains me to say this after trying to use Word 6.0 - has more authority in this area than pretty much any government, business or NGO.

Just to give an example of his claims:

Income per person has in fact risen in sub-Saharan Africa over that time, and quite a bit in a few countries. After plummeting during the debt crisis of the 1980s, it has climbed by two thirds since 1998, to nearly $2,200 from just over $1,300. Today, more and more countries are turning toward strong sustained development, and more will follow. Seven of the 10 fastest-growing economies of the past half-decade are in Africa.
Africa has also made big strides in health and education. Since 1960, the life span for women in sub-Saharan Africa has gone up from 41 to 57 years, despite the HIV epidemic. Without HIV it would be 61 years. The percentage of children in school has gone from the low 40s to over 75 percent since 1970. Fewer people are hungry, and more people have good nutrition. If getting enough to eat, going to school, and living longer are measures of a good life, then life is definitely getting better there.

Sure, capitalism has its faults. But the implications of these figures are pretty hard to dispute. You can claim that if we had centrally-planned ethical socialism in the Western world, life in Africa would be better, but given the above data the onus is on you to show that your claims are true. Life in Africa is getting much better; if you're going to change the world, how will you prove that your changes won't reverse this progress?

Racism by association

I appreciate that if someone wants to get paid for a "all Tories are racist" article then the first instinct is to head to The Guardian, but it would be nice if the editors imposed at least some kind of quality bar. I refer, of course to Lola Okolosie's piss-poor piece in today's edition: "Yes, you can have a Chinese girlfriend and still be racist":

[Tory candidate] Edward de Mesquita complains that he has had to fend off recurring accusations that his party produces "racist" polices. His strategy? To remind constituents that "Conservatives are not racist." The proof? Well, erm, "so many of the Conservatives have foreign wives after all".

Okolosie's text drips with scorn as she recounts this conversation, but my sympathies are actually with Mr. de Mesquita. After all, how can you prove a negative: that you are not racist? There are undoubtedly racist (by any reasonably narrow definition, say "openly prejudiced against people with an African or West Indian background) Tories, as there are racist Liberals, Labourites, Quakers, preachers and atheists. If I were to claim, for example, that BME English teachers are racist - undoubtedly, some of them are - and ask Ms. Okolosie to show that BME English teachers are not racist, how could she do so? It's not her fault that I'm asking a stupid question.

She helpfully lists six reasons why you can have a wife/husband/boyfriend/girlfriend/best friend from a BME background and still hold racist views or prejudices, including that you might:

[...] subscribe to the exotification of BME women which casts south-east Asian women as docile, demure and able to "treat a man well" [...]

An interesting prejudice she has there. It's an observable fact that in the UK and USA many of the younger generation of white male engineers have Chinese, Japanese, Filipino or South Korean girlfriends, fiancées and wives. It's equally observable that few white women have CJFK boyfriends or husbands - I've known precisely one female white engineer with a Chinese-ancestry husband. (The Indian male and female engineers seem to be pretty equally cosmopolitan in their choice of partners, by contrast). Having met a number of such couples, the CJFK ladies are significantly more vocal and have more drive than the white men. Perhaps they value the personality and earning potential of the man more than white women do?

Incidentally, Chinese parents seem to have a lot more problems with their daughter marrying outside their race than white parents do - and white fiances seem to be a lot more acceptable than other non-Chinese races. One Indian-Chinese couple I know ended up with the Chinese girl's father boycotting the wedding because her husband-to-be had such dark skin. Filipino fathers tend to look askance at black boys trying to partner with their daughters. I've even known a Filipino girl's father who applauded his daughter marrying a white guy because he thought Filipino boys were no good...

Okolosie also suggests that you may:

[...] believe in the idea of a model minority that is enterprising, while the majority within the BME community need to "pull themselves up by their bootstraps" and get with the programme of what life is like in the UK.

Well, you could look at the financial profile of the various ethnic groups in the UK and discover that Indian families tend to be disproportionally wealthier than black and Pakistani families, with their median wealth pretty close to white families and more than double that of Pakistani families. Either the UK has a weirdly specific racial prejudice that affects Pakistanis but not Indians, or there's some explanation besides simple white racism for black and Pakistani poverty. You can also look at low income in Birmingham and discover that Pakistani, Bangladeshi and black ethnic groups are over-represented in poverty vs population, while white, Indian and Chinese groups are under-represented.

This is not saying that poverty is the fault of black, Pakistani and Bangladeshi families (I suspect that the sharply different economic profile of immigrants has a lot to do with it), but it does at least partially support the assertion that Ms. Okolosie scorns so much. But she's an English teacher, and they are famously scornful of such white patriarchical concepts as "data". (See what I did there?)

Let's assume, getting back to Ms. Okolosie's original point, that the Tories have policies which are objectively bad for the black community - since black ethnicity and poverty are somewhat correlated, policies which negatively affect the poor will likely negatively affect the black community. We might say that such policies are "racist" since they negatively affect an ethnic group. Except that Tory policies tend to support businesses - and hence benefit Indian and Chinese families who tend to work in or own small or medium sized businesses. If we assume that Labour policies benefit the poor but penalise businesses, aren't they racist as well? Indeed, unless you have no policies at all, it's likely that one or more of your policies penalise an ethnic group. So every politician is racist! Even (heaven forfend) Diane Abbott.

Okolosie's label of "racist politician" is hence information-free. Effectively every politician is racist, by her definition.

Anti-discrimination laws may do a lot but they haven't quite yet made us a post-racial society.

As long as self-aggrandising divisive special pleaders like Okolosie (and Al Sharpton, Jesse Jackson, Diane Abbott) are held up as arbiters of correct behaviour, you bet we're not post-racial.

The progress from first world problems

One of my favourite thinkers, Virginia Postrel, has a great take on how this Christmas's UPS next-day-delivery failure is actually a vital step in world progress:

Counting your blessings is always a good idea, but calling the Christmas delivery breakdown a "first world problem" points to what's wrong with that criticism. We want first world reliability, and if the public just shrugged when things went wrong we wouldn't get it.

The instinctive reaction when UPS delivers your friend's purchases 1-3 days late is to snark about "first world problems", but Postrel point out that actually this kind of demand is what drives most if not all of modern progress. In software, for example, many of the key leaps forward have been due to someone dissatisfied with the obstructions that current technology put in their way. Larry Wall was dissatisfied with shell scripting and ended up inventing the programming language Perl which glues together too many websites to count; Donald Knuth put together the TeX typesetting language because he was dissatisfied with the mathematic typesetting available to him writing The Art of Computer Programming ; Linus Torvalds created Linux because the existing Unix operating systems weren't sufficiently accessible for tinkering.

We should therefore complain when life falls short of our expectations, no matter how wonderful our current situation would be to someone from 20 years in the past or a thousand miles in the distance:

Complaining about small annoyances can be demoralizing and obnoxious, but demanding complacency is worse. The trick is to simultaneously remember how much life has improved while acknowledging how it could be better. In the new year, then, may all your worries be first world problems.

By the time Christmas 2014 rolls around, UPS will have a lower-latency method of tracking its order load versus maximum capacity, and be able to either buy up additional delivery capacity from other mail firms or start to signal to retailers that it will not be able to deliver goods next-day. This way customers will have a better delivery experience, and technological progress will have been achieved.

Next step in health care - rationing by availability

Now that the enrolments of US citizens under the Affordable Care Act are finally rising (albeit slowly) it seems that the next challenge for participants once they can afford the payments will be finding a doctor who accepts their insurance:

Independent insurance brokers who work with both insurance companies and doctor networks estimate that about 70 percent of California's 104,000 licensed doctors are boycotting the exchange.
Mazer, a past president of the San Diego County Medical Society, agreed, saying, "I cannot find anybody in my specialty in the area that has signed a contract directly with any of these plans."

It seems as if the way that insurers on the California exchange managed to make premiums as (relatively) low as they were was by dropping reimbursement rates; consequently, a large number of doctors aren't going to be playing. They already have plenty of business with customers via employer plans that reimburse at acceptable rates, why should they drop their rates for other customers?

By the middle of next year the effect of the Affordable Care Act plans on regular customers should be clearer. It'll certainly be an improvement for people with preexisting conditions who couldn't get insurance, but it seems that an awful lot of people forced onto the exchanges will be paying more, for plans with higher deductibles, and yet will struggle to find a nearby doctor who will accept them...

Eventually if there's enough of a market I'd expect more doctors to come in and open up large treatment centres to make economies of scale and provide OK-if-not-great care at lower rates, but this rather depends whether the hassle of dealing with ACA regulations and insurers is going to make it worth their while...

(The next "logical" step if this turns out to be a problem is for the government to force doctors to accept ACA exchange insurance rates as a condition of practice...)

Minimum wage, maximum unemployment

Following the previously-blogged move by SeaTac to up its minimum wage to $15/hour, this campaign seems to be going national in the USA, heavily backed by unions such as SEIU:

Organisers hope workers in as many as 100 cities will participate in what is the latest in a series of such actions.
Unions want a $15-an-hour (£9.19) federal minimum wage. The current one, set in 2009, is $7.25 per hour.

Oh dear. Where to start? Well, $15/hour in NYC is very different from $15/hour in rural Kansas in terms of buying power. In the latter, you'll be lumping a huge range of jobs together with the same wage. I don't know what socioeconomic effect this is going to have, but it's not going to be pretty.

There's also the small matter of unemployment. Some businesses won't be economic to operate with a doubled wage bill. They'll either have to get more productivity out of their existing workers, or do without them all together. This is where the much-famed robot burger flipper comes in - for a fast food establishment you shrink your workforce to a small number of managers and technicians who deliver $15+/hour of organisational value, and then steadily replace the servers and burger flippers with machines. This is more likely for larger businesses since they can more easily amortise the costs of integrating the machine with their menu and kitchen layouts. Once the principle of robotic food preparation (and self-cleaning bathrooms) is established, there will be a lively market in the associated hardware and software. Meanwhile the number of jobs for relatively unskilled workers plummets, with the most likely unreplaceable jobs involving customer interactions like waitressing and more skilled cooking - and if you don't have great people skills or a trade skill, you're screwed because there's a much larger pool of people competing with you.

Given all the likely and very visible negative effects of a doubled minimum wage, I'm desperately curious why the major unions are pursuing it. They're not stupid, after all. It would seem that they're making a massive millstone for their own necks, and those of the politicians they own, when the wage goes up and unemployment shoots up to match. Are they that confident in the media carrying water for them and blaming the unemployment effects on "the rich", and panning the opposition when they proposed lowering the minimum wage back to something like $8/hour?

"What we need is a social movement in this country that says enough is enough," said David Rolf, the president of the local Service Employees International Union.

Yes, enough with employment for many - let's restrict it to the elite. Doesn't seem like a very progressive message to me, but what do I know?

Caveat emptor

The Chinese are sternly warning the Americans not to default on their debt:

Mr Zhu said that China and the US are "inseparable". Beijing is a huge investor in US Treasury bonds.
"The executive branch of the US government has to take decisive and credible steps to avoid a default on its Treasury bonds," he said.

Google found me the major foreign holders of US debt as of July 2013:

1. China: $1.3 trillion
2. Japan: $1.2 trillion
3. Caribbean banking centers: $300 billion
4. Oil exporters: $260 billion
5. Brazil: $260 billion

I'm reminded of the maxim: "Borrow $1000 and the bank owns you; borrow $1 million and you own the bank." China's GDP is about $8 trillion, so US debt that it owns is about 12% of GDP. Japan's GDP is about $6 trillion so US debt that it owns is 20% of its GDP. Is China seriously concerned that the US might default on its debt? If Japan is similarly concerned, it seems to be keeping very quiet.

I expect that the problem arises from the Chinese banks relentlessly trying to get out of yuan before the Chinese economic bubble starts to pop. There are huge flows of money out of China to buy dollar-denominated assets; million-dollar houses all over Silicon Valley are being bought up for cash by Chinese buyers. As a data point, friends of mine who just put a $800K townhouse on the market in the South Bay were almost immediately given a cash offer by a Chinese couple wanting to buy a house for their daughter to live in when she goes to college in late 2014. If the US were to even threaten default, the dollar would drop significantly in value - in the past three months alone, the pound has risen from $1.50 to $1.60 due to the concern about the US political situation. If Chinese banks have leveraged investments in dollar-denominated assets, the shockwaves from even a technical US default could land them in very hot water.