The Customer Is Always Right

A group has found a way to make a profit by delivering a service.  In this case, they deliver white guilt to college students and other groups:

The Lost Voices found purpose in tragedy.

Each of the eight members who visited University of Wisconsin-La Crosse to speak to students Thursday evening at Valhalla in the Cartwright Center shared their personal stories, speaking about how the death of Michael Brown at the hands of Officer Darren Wilson changed their lives.

If you were hoping that the group was there to stop blacks being terrorized by folks likd Michael Brown, then you are sadly mistaken:

“Why would (Wilson) do that?” Jones remembered asking. “I thought police were supposed to protect us,” she said.

Jones took to the streets, where she met others who felt the same horror and anger, and demanded Wilson be held accountable for Brown’s death, arguing against the grand jury decision not to charge Wilson and put him on trial.

Capitalism is an amazing system that provides for the wants of the consumer.  Neither MWG or Bernie gets should decide what is provided.  Buyers decide that.  There is the issue of the buyer.  It is not exactly clear, but if student government funds (or taxpayer funds) were used then there are concerns.  The problem is that student government is unlikely to bring Heather MacDonald or even Megan McArdle on campus.  Providing guilt with OPM should require that there be a balanced presentation of views.  Selling guilt is entirely fine.

Never Waste A Tragedy

Part of a front page opinion (not marked as such) today:

At nearly all workplaces in America today, regulators, insurers and workers themselves demand safeguards to make it less likely for a careless mistake to become a tragedy. Coal mines, factories and construction sites are safer as a result.

Not the family farm. Minnesota and other Midwestern states allow small farmers to rely on their own judgment and experience to decide what’s safe and what isn’t. State and federal budget cuts have slashed farm training and safety programs, even as farm machines have become more powerful and more dangerous.

In case you are wondering, the article does not think it is a good idea that the people doing the work (who are also the owners) should be using their own judgment.  The left and some on the right are enamored with family farms.  Only the left wants to regulate their love out of business.  There is no reason to favor family farms but there is no reason to subject them to full bureaucracy either.  A family farm (and a home) is different than a factory.  Even the government should recognize that.

Fun with Facebook

There is a funny Facebook post about attacks on (US) embassies during Republican administrations and the current administration.  The alleged bottom line is more investigations during the current administration despite fewer deaths.  Gee, if they just didn’t lie about the cause during an election campaign and then try to cover it up perhaps it would have been different.  Ya think?

Greed

Greed is often associated with capitalism but it is one of the seven deadly sins for a reason.  It is a universal condition as a Venezuela oil giant shows.  Venezuela is one of the lowest cost producers of oil.  Since oil is sold at a global market price (with some adjustments for type), this organization should be extraordinarily profitable.  Yet it is still reportedly asking for bribes in the amount of $150 million.

Greed is a common condition.  Capitalism harnesses it for the common good.  Other system are equally beset by greed but have no method to control it.

A Bad Day for Canada

Canada has had a great run under Stephen Harper.  Unfortunately, it ended today.  One of the purposes of conservative governments is to bring the liberals back to reality.  It doesn’t look like Justin Trudeau, the new PM, wants to go anywhere near reality:

Trudeau had promised to cut taxes for the middle class, raise taxes on the wealthiest 1% and boost government deficits to stimulate Canada’s sluggish economy.

The politics of envy were successful up North.  Unfortunately, we will only have a year to evaluate the outcome before the US election.  Will envy be a winning edge in the US in 2016?

Thanks to Stephen Harper for all he has accomplished.  We see the wisdom of Washington and the 22nd amendment.  US Presidents make their mark positively or negatively and then leave the stage.

Truth

An email from an injured fellow competitor contains a simple truth: Life is less good without handball.

We recognize that we can’t play handball forever but we’re hoping that an exception will be made.  There are other ways to compete.  Golf is fun and it does not require all the physical attributes that handball does.  Bridge requires almost no physical attributes.  But life is less good without handball.  It makes the importance of finding new players paramount.

Defined Benefit Pensions

Pensions for public employees are big issue.  Lawrence McQuillan discusses them in an incomplete way.  He gives the example of San Jose:

In San Jose, pension costs exploded from $62 million in 2003 to nearly $210 million in 2013. So even though the San Jose Police Department budget skyrocketed nearly 50 percent during the past decade, police staffing fell 20 percent — because so much of the money was eaten up by the pensions.

Then he comes to a conclusion for New York:

Yet the same story may soon unfold in New York. Here, state and local governments have promised $308 billion more in pension benefits than what’s in their pension funds. That’s a $15,000 debt for every New Yorker. California’s pension debt is nearly $20,000 per resident.

Yet the state of New York is constantly ranked as one of the best funded pension plans.  Here is one example of its high ranking.  The problem with defined benefit pension plans is that governmental entities don’t fund them or makes unreasonable assumptions like they expect to earn a 10% return.  It is much like when you don’t invest in your retirement plan.  It becomes very expensive to do it later.  It is not the type of plan that is the problem.  It is government behavior.  Now it is entirely possible that local New York governments have underfunded their plans but New York state is in relatively good shape.

Defined benefit pension plans give the risk to the employer.  Because state governments have lots of employees with predictable outcomes the type of plan is not the problem.  The failure to fund them is a big problem.

There are other reasons to consider defined contribution plans.  A more mobile workforce might make desire defined contribution plans because defined benefit plans only pay off for employees that stay with the employer for a long time.

Madison Critics Are Right

Recently the University of Wisconsin Board of Regents approved waiving the the limit on non-resident students at UW-Madison.  The campus claims:

[UW-Madison Chancellor] Blank and UW System President Ray Cross pushed for the plan, saying it is necessary to meet Wisconsin’s workforce needs as the number of working-age adults and high school seniors in the state is projected to decline in coming years.

The critics claim:

Critics have said the proposal is aimed at increasing tuition revenue from out-of-state and international students who pay a higher rate to attend the university.

In addition there is the question of access.  Will this move deny access to Wisconsin residents?

We support the policy but agree with the criticisms.  Yes it is all about revenue.  Non-resident students pay substantially more than in-state students and more that their marginal cost.  Non-resident students are a crucial part of the budget for most state universities.

On the other hand, there is no reason to think that educating non-resident students at UW-Madison will help the Wisconsin workforce.  Madison students are recruited nationally and internationally.  As an example, our regional campus places many students in Madison because UW-Madison graduates go elsewhere.  Another example is that we get a substantial number of non-residents from a neighboring state.  Those students return home.

Will this move deny access to Wisconsin residents?  Yes, it will deny access to specific programs.  Highly sought after programs like the School of Business (SOB) limit enrollments to a fixed number of students.  if ten more non-residents are accepted to the SOB then ten less residents get in.

We support the policy and accept that may have been necessary to market it as workforce improvement.  We can still be disappointed that they chose to do so.  UW-Madison has the brand to attract non-resident students.  It will help their budget in a time of diminishing state support and pressure on tuition.  The policy might keep a few of those non-residents in Wisconsin but don’t count on it.  An equally likely scenario is that the policy increases national and international recruiting at Madison and leads to increased exports of students.

College Professors

Kevin Williamson rants on college professors in an otherwise great article on market power:

A lot of the guys at Goldman Sachs do not have a lot of personal merit, Kim Kardashian has no detectable brainpower, and college professors are famous for their disinclination to hard work, but they all make a pretty good living.

College professors are not famous for their disinclination for work.  Most faculty work very hard (although folks may not like what they work at or be impressed by their efficiency) but the are very much subject to market power.  Elizabeth Warren and most of her comrades at Harvard do extremely well.  Here are the 10 highest paid professors. Faculty like them have individual market power.  In-demand disciplines like computer science, accounting, finance do relatively well at almost all larger schools.  They have discipline market power and perhaps some individual market power.  Salary.com has a few disciplines.  Remember that professors are at the top of the faculty pyramid.  Check assistant professors to see the growth over time.  Instructors that are not tenure-track are almost always paid less than professors.  Faculty at disciplines not in demand or at many smaller schools with limited market power are not doing well because they have very little market power.  Of course, part-timers are notoriously poorly paid.  The university faculty without market power are often making less than high school teachers.

We are supportive of the article but the college professor stuff is misleading.  College professors have the same market issues that everyone else has.