Finance

Comment Of The Day: “More Evidence That Arthur Herzog’s Novel ‘IQ 83’ Is Coming True—”

/ Jack Marshall / 4 Comments

(I enlarged the two Fenway Park stops for your convenience…)

I grew up rising the buses and  subways in Boston, and later oversaw a huge U.S. Chamber of Commerce study on transportation infrastructure funding problem (hopeless then, much worse now) , so the Boston Councilwoman’s fascinating theories about how making public transit in Beantown free to riders immediately interested me…since I knew it was crap.

I probably should delve into this issue more frequently, so I was pleased and relieved that fellow New Englander Rich in CT gave us this Comment of the Day on the post, “More Evidence That Arthur Herzog’s Novel “IQ 83” Is Coming True—Beside The Fact That Bernie Sanders Is Leading The Race For The Democratic Nomination, That Is”:

The economics of public transportation are counter intuitive, and this plan is not as insane as it sounds. However, for a city like Boston, it would be absurd to eliminate ridership fare.

Let’s look at my hometown. We have one bus hourly from 7 AM to 10 AM, and 2 PM to 6 PM, that connects to a neighboring city. The farebox recovery ratio is about 15%: For every dollar spent on the service, customer fares return $0.15 – 15 cents on the dollar.

The bus is provided as a bare bones courtesy for those who need it. If the bus company raises the fare, ridership will go down, because people cannot afford to use it anymore (they then cannot get to work…). Fare recovery goes down with an increase in fare, but the cost of running the shuttle remains the same. The very population it is meant to serve is not served. We’d be running an empty bus back and forth.

In all truth, my town subsidizes 100% the cost of the shuttle under its contract with the city; the $2.00 fare effectively pays for the transfer to a city bus. Eliminating the bus fare only modestly increases the necessary public subsidy; any expansion of hours or geographic distance would also require an increase in subsidy.

If we look at a city like Boston, the economics are very different. The service is still provided for those who need it, but a great many more need it. The fare box recovery is closer to 30%-50%. The cost of the service is the same whether people are on it or not, so the city offers discounts for bulk purchases to attract people who would otherwise use a car. This has the positive effect of increasing ridership and improving the fare box recovery slightly; it also has the perverse effect that the people who need it the most pay the most for it. Continue reading →

Morning Ethics Warm-Up, 2/17/2020: The Presidents Day Edition

/ Jack Marshall / 12 Comments

Good morning, guys!

Thank-you for your service!

In honor of our Presidents, Ethics Alarms is  posting some of the best and most important Presidential speeches during the day. We’ll see how many I get up; there are a lot of excellent ones to choose from.

In all of these cases, whichever I post, a President was acting in one of the non-partisan functions of the office, when the President’s job is to represent all of our nation’s citizens. It is a disturbing fact that the current President has been virtually blocked from discharging these duties, as part off the long, relentless effort by the A.U.C.—the Axis Of Unethical Conduct: Democrats, the “resistance,” and the mainstream media—to deny his Presidency’s legitimacy and to reduce his support among the public to the point where it becomes politically feasible to remove him without an election.

The nation needs those non-partisan Presidential moments, because they symbolize unity and strengthen, rather than weaken, our bonds: throwing out the first pitch of the baseball season, attending the funerals of distinguished Americans, hosting the Kennedy Center Honors. It is not this President’s fault that he had been prevented from doing his job.

1. Why look! Here’s another example! Yesterday President Trump, having been invited to serve as grand marshal for the Daytona 500, uttered the traditional “Gentlemen, start your engines!” and boarded  his official limousine, nicknamed “The Beast”, and, with a U.S. and Presidential flag on the front fenders flapping in the wind, headed out onto the track, pacing the full field of cars.

The Horror. Tweeted Maggie Halberman, the usual co-author of New York Times front page features—inevitably negative– on the Trump administration,

Nah, there’s no mainstream media bias! Obama and Bush throwing out the baseball season’s ceremonial first pitches, Obama using his limo for a Jerry Seinfeld comedy bit, and prominently attending an NCAA basketball tournament game–all good! President Trump serving as grand marshal at a NASCAR event? Unacceptably political.

This is smoking gun bias from the journalist the Times uses to inform its readers about what this President does.

2. Now Trump’s stupid tweets, however, are another matter entirely.  Politico reports on what District Judge Reggie Walton, a Reagan appointee,  had  to say about President Trump’s gratuitous social media commentary on the McCabe investigation: Continue reading →

Comment Of The Day: “Ethics Observations On The ABC Pre-New Hampshire Primary Democratic Candidates Debate”

/ Jack Marshall / 14 Comments

Joel Mundt picks up his second Comment of the Day opining on the ever-green and always perplexing ethics controversy of slavery reparations, which was again broached in the recent Democratic candidates debate in New Hampshire.  The topic has had  a resurgence in recent years due to the advocacy of the current rock star of race-baiting , Ta Nihisi Coates, who regards the mass white to black wealth transfer as a the only way to solve America’s persistent economic gap among the races.

It has also had a long record of debate on Ethics Alarms, notably in the commentary on this 2019 post, where I admitted that I had momentarily lost my mind  in this one from 2016, in which I made…

“….no sense whatsoever. While again rejecting the concept of reparations (“the hell with that. [The idea is] to punish [whites] for the sins of slavery committed by their ancestors by arranging a massive transfer of wealth based on principles of tort law and damages. This has always been a pipe dream of civil rights extremists, couched in the language of revenge, as if the nation and the nation’s white citizens have made no efforts, sacrificed nothing, expended no resources or wealth, to try to undo the legacy of slavery and Jim Crow. Reparations are not going to happen, as the concept itself is unjust….”), I proposed a solution….that was indistinguishable from reparations…”

I concluded that mea culpa post by writing,

I’m better now. I am also, unfortunately, also back at Square One, my “Do something!” phase regarding race in America having accomplished nothing, as “Do something!’ arguments always do, and I still see no solution on the horizon.

I still don’t. Joel’s perspective can’t address that.

Here is Joel Mundt’s Comment of the Day on the post, Ethics Observations On The ABC Pre-New Hampshire Primary Democratic Candidates Debate:

The issue of reparations has tied numerous candidates up in knots. Now it’s Steyer’s turn, though I think he’s a knot-head regardless. I firmly believe that reparations have already been paid. If the practice of slavery had been cut off solely by Presidential decree or Executive Order, or because the South simply decided to halt it, one could make an argument, however painful and convoluted, that financial reparations had a place at the table of discussion.

But I believe that slavery was ended with bloodshed. Those who supported slavery and secession from the Union paid dearly for it. Hundreds of thousands of Confederate soldiers died for their cause, cities were razed and burned, and their newly-formed government was terminated. And the North paid, too, with the lives of hundreds of thousands of young men who fought to save the Union and ultimately, to end slavery.

And now, 160 years later, people like Steyer (and Buttigieg, and others) say that’s not enough. They are, in effect, telling those soldiers, “Thanks for the sacrifice, but this is more about money than you getting eviscerated by cannon shot and having your body eaten by gangrene.” I’m not sure spitting on their graves is worse.

But it does get worse. Continue reading →

More Evidence Of The Ethics Void That Is Elizabeth Warren.

/ Jack Marshall / 8 Comments

As America waits for the results of the epically botched Iowa caucuses, the fact that Elizabeth Warren still attracts any support at all is more testimony to the fact that 1) a lot of people are just as dumb as Warren thinks they are, and 2) Democrats just aren’t paying attention.

In an awful field for the Democratic Presidential nomination, Warren stands out for her Machiavellian manipulation, pandering and abuse of her presumed authority as a scholar. After I posted on Facebook about her head-explosionworthy promise to let trans teens have a veto over a cabinet position, maybe the most ridiculous pledge I’ve ever heard from any candidate regaring anything, a Facebook friend wrote that I appeared to be biased against Warren. It’s true—I am irrationally biased against politicians who say things they obviously don’t mean in order to get votes, and who are shameless, lying, demagogues.

Liz had a particularly revealing few days before the caucuses.  The Wall Street Journal reported: Continue reading →

Elizabeth Warren Is Confronted With The Injustice Of Facile Giveaways

/ Jack Marshall / 23 Comments

Good.

Res ipsa loquitur.

Go ahead, Senator, explain how this is fair. I’d love to know.

Comment Of The Day: “Comment Of The Day: ‘Sunday Ethics Warm-Up, 1/12/2020′” (Economic Data Thread)

/ Jack Marshall / 12 Comments

This Comment Of The Day covers a wealth of ethics issues, including the ancient ethics debates over what is a fair share on societal wealth and who decides when someone has “enough” wealth. It also is an Ethics Alarms first: Chris Marschner’s Comment of the Day is on his own Comment of the Day!

And here it is, his Comment of the Day on his previous Comment of the Day on the post, “Sunday Ethics Warm-Up, 1/12/2020: Broken Ethics Alarms, An Ethics Conflict, And “Who Are You Going To Believe, Me Or Your Own Eyes?”

The point I was making was that people use economic data to illustrate all kinds of things. Typically they use charts and graphs to illustrate a point THEY want to make. The values within those charts and graphs need full examination before drawing a conclusion. For example, Reagan dropped the unemployment rate overnight by including the military in the labor force. In that case the number employed went up and the labor force went up as well. Given that the unemployment rate is the number unemployed/labor force if the denominator rises the UE rate falls.

Conversely, between 2008 and 2012 the unemployment rate showed a downward trend because the Labor force participation rate (LFPR) shrank and not because more people got jobs. People gave up looking for work so they were no longer treated as unemployed and the number of people working grew relative to the LFPR. Since 2016 the LFPR has been growing and the UE rate is dropping. That means that there are more people are working. That is a good thing because it puts upward pressure on wages.

For some, higher wages have overtaken what is known as an individual’s reservation wage. The reservation wage is the minimum amount needed to get a person to accept the offered job. Unfortunately, we have a great number of people whose true reservation wage has been distorted in both psychological and real terms. Reservation wages have been growing because of the growth in governmental income maintenance programs. Imagine how many will decide to live only on Yang’s guaranteed $12K a year. Couple that $1000 a month with housing assistance, food stamps, childcare, Medicare, and WIC you can live quite well on the dole. Oh I know, Yang says he would replace all those other programs to fund his guaranteed minimum income. Name a program that ever went away. We just layer one atop another.

These are not my opinions but well established facts and fundamental economic theory that is taught in first year Econ classes. I know because I taught those courses for 20 years. Continue reading →

Comment Of The Day: “Sunday Ethics Warm-Up, 1/12/2020: Broken Ethics Alarms, An Ethics Conflict, And ‘Who Are You Going To Believe, Me Or Your Own Eyes?”’

/ Jack Marshall / 21 Comments

For today’s “Economics for Dummies” lecture, and we can only hope those in thrall to the “income inequality” hucksters running for President will somehow hear it, we have Chris Marschner. What inspired his discourse was this chart,

from #3 in the 1/12 Warm-Up, regarding Michael Bloomberg’s deliberately dishonest statement, “The U.S. economy is working just fine for people like me. But it is badly broken for the vast majority of Americans.”

Here is Chris Marschner’s Comment of the Day on the post, “Sunday Ethics Warm-Up, 1/12/2020: Broken Ethics Alarms, An Ethics Conflict, And “Who Are You Going To Believe, Me Or Your Own Eyes?”

One of the great fictions of economics lies in how data is portrayed. Growth rates are one of my favorite methods of telling lies. The wage growth rate above requires a bit of basic math and economics understanding to fully capture its relevance.

The lowest quartile or quintile will have substantially higher rates of growth even if all incomes rise at exactly the same amount. For example if someone making the highest limit of the lowest quartile (say $25,000) gets a $5000 raise that earners wage growth is 20%. As we move up the line, if the highest limit of the second quartile is $50,000 and a  $5,000 raise, that rate of increase is a mere 10%. As we move up the ladder the basis or denominator gets progressively larger and if the numerator – the raise – remains constant, the rate of growth falls. Most people know this or should know this. Continue reading →

Netflix’s “The Laundromat” And Money Laundering Ethics

/ Jack Marshall / 2 Comments

Now streaming on Netflix, “The Laundromat” is an entertaining and flamboyant  examination of the phenomenon and roots of international money laundering, brought to us by director Steven Soderbergh (“Erin Brockovich,” “Traffic”) using a screenplay by Scott Z. Burns. The often tongue in cheek film is narrated by actors Gary Oldman and Antonio Bandaras playing lawyers Jürgen Mossack and Ramón Fonseca , whose now defunct firm set up tax shelters and shell corporations for the rich, corrupt and criminal  all over the world. Their empire was shattered by the Panama Papers data dump in 2016.

The film’s tone veers from smug to blunt as it focuses on three adaptations of true stories involving  Mossack Fonseca clients, all narrated by the excuse- and rationalization-spouting lawyers, the real life versions of which tried to sue to halt the production.

“The Panama Papers” as they are now called consisted of 11.5 million leaked documents that detailed financial and attorney–client information for more than 214,488 offshore entities, many of which were legal, but that supported fraudulent schemes and other crimes.  The documents were the property of  Mossack Fonseca. Even now, the fall-out from the release of the documents is unclear, in large part because so many of them involve attorney-client privilege, and the rules and laws governing their legal handling are spread over many nations, laws and ethics rules. The leak itself was a crime, and the hacker responsible, who goes by the name of “John Doe,” has never been identified.

This is an international ethics train wreck, and one that is so complicated that I didn’t cover it in 2016. That was ethics commentary malpractice on my part, I think. It was the biggest ethics story of the year, even if it is still largely unresolved.

Whether the law firm itself broke any laws is still a matter of debate. As Oldman and Bandaras constantly remind us, Mossack Fonseca set up arguably legal structures, and, they claim, didn’t know or care how they would be used. This is still a gray area of legal ethics in the U.S., one that was highlighted when “60 Minutes” broadcast its Global Witness episode in 2016 . Partners in eleven large Manhattan  law firms were caught on hidden cameras  exploring possible ways to represent an individual posing as the agent of an “African despot” seeking ways to launder millions of dollars. The ethics rules say that a lawyer may not knowingly assist a client in a crime or fraud, but contrived ignorance can be an effective, if unethical, device for lawyers to avoid  accountability when representing  unsavory (but profitable) clients.  Remember, Enron’s law firm avoided any sanctions, while the company’s accounting firm, Arthur Anderson, was prosecuted and destroyed.

No, Ethics Alarms didn’t cover the Global Witness scandal either, though I have talked about it in legal ethics seminars ever since. Clearly, money laundering has not had proper priority here. Again, my fault. I’ll do better. Continue reading →

Cancellation Culture Gone Nuts: The Kenneth Fisher Saga

/ Jack Marshall / 20 Comments

“Be afraid…be very afraid.”—Geena Davis in “The Fly”

Kenneth Fisher, the acclaimed billionaire money manager whose investment firm manages more than $112 billion of investors’ money,  spoke at an October 8 conference.  In his remarks, he said getting new clients was akin to “trying to get into a girl’s pants.” The analogy between marketing and seduction is old, common, and not without validity. It can (and should) be expressed in less vulgar ways, to be sure, but no one in the audience could have mistaken Fisher’s meaning.

Yet the New York Times described the remark as a “lewd and sexist joke”—Lewd? Joke?—and like-minded cancellation culture posse members set out to destroy Fisher and his business in retribution for using an analogy of dubious taste. [ I should note that some attendees at the conference–including some who are Fisher’s competitors—reported that there were other “off-color” comments that could not be confirmed by the Times.]

Thanks to a news and social media campaign since he made that “joke,” the past two weeks have seen public pensions and institutional investors pull nearly $2 billion from Fisher Investments, which has 3,500 employees.  They also deserve to lose their jobs, presumably, because their boss is insufficiently sensitive in a #MeToo world. Other public pensions have placed  Fisher’s firm on a watch list for potential action.

Oh, Great. ANOTHER Fake Stat That Everyone Will Cite As True For A Decade Or More: The $400 Emergency Expense Lie

/ Jack Marshall / 27 Comments

“Good news, Fake Campus Sexual Assault stats, Fake Gender Pay Gap stats, Fake Gun Violence stats, and the rest of the club! You have anew member!

Senator Kamala Harris cited the stat in April, and if someone doesn’t stop her, it will become part of the pro-socialism “narrative” during the 2020 election campaign.  “In America right now today,” she said, “almost half of Americans are a $400 unexpected expense away from complete upheaval.”  Naturally the statistic appealed to Top Demagogue Senator Elizabeth Warren, who echoed Harris last month: “The gap between incomes and costs is so gaping that 40% of Americans can’t come up with $400 in an emergency.” Then there is  Bernie, or course,  who says: “Four in 10 [Americans are] unable to afford a $400 emergency expense.”

I’m sure the rest of the field will come around to using the stat too; dishonesty loves company, especially when the idea is to frighten the members of public who trust what politicians say. And why shouldn’t they? Warren was a Harvard professor—she must know what she’s talking about! She wouldn’t use a statistic like that without checking it, would she? Nah! Warren and Harris are both lawyers too, and lawyers have enforced ethics rules that say they must not lie. All three—Warren, Harris and Sanders—are U.S. Senators. Surely three distinguished Senators wouldn’t all use a false statistic to deceive us! Would they? Continue reading →