Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts


Observations: The Qando Podcast for 11 Apr 10

In this podcast, Bruce, Michael and Dale discuss the state of the economy, and the Obama  Administration’s childlike foreign policy. The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


The Internet: Still Not Getting It

It’s been an interesting week for me, because I’ve run into three situations that illustrate to me that, even though the Internet has been around since 1995, and has been hugely important to business–and politics, of course–since 2000, it’s clear that many people are still unclear about it.  Ive been a web developer since ’96, and have been the Managing Principal of WebmasterDeveloper.Com since 2003.  There was a time when I just assumed that no one knew anything about the Internet, and that sort of attitude among customers was defensible. In 2010, however, those days should be long gone.

But that attitude is still out there, and I’ve been hit over the head with it repeatedly this week.

Client 1:

This client created an affiliate marketing web site, aimed at a group of customers to which they have direct access through their other lines of business.  They spent months crafting the web site to provide the best affiliate programs they can think of.  After going live with their web site a few weeks ago, they’ve had 1 sale, and about 40 affiliate click-throughs.  They were shocked that their direct marketing of the site to existing customers has had such a dismal response.  In the course of conversation with the client, I asked, “Did you ever do any surveys of your customers to see what kind of offers would have value to them?  The answer:  No.  We didn’t want to spend a bunch of startup capital doing that.

They’ve spent thousands of dollars building a web site without any knowledge about what their customers want.  They’ve never talked to their customers; never gotten any idea of what their customers need, and how to fulfill that need.  They’ve spent every penny on building a web site to fulfill a need they haven’t even defined with their customers.  And now, since the customers aren’t responding, they’re concerned that there may be some sort of technical problem.

Client 2:

“I haven’t been getting any orders from my web site.  Apparently, the web host shut my site down for non-payment, but I don’t remember getting any notifications that there was a problem with my credit card. Anyway, can you see what I owe, so I can pay them, and you guys can download my site and transfer it to another web host?”  As it happens, the web host not only sent out email notifications, but made phone calls to try and collect payment, with no response.  In May of 2009.  Of course, their web site files are loooong gone.

So, the client clearly hasn’t even looked at his own web site for at least 10 months.

Client 3:

This client is completely changing their web site to become the single point of contact with their customer base.  Their customers will have to pay an annual fee just to see the products they sell, then use the web site to submit initial bids for salvage auctions.  I informed the client via email that we needed content from them.  I received an angry phone call from the client, who screamed at me, “I just want to concentrate on my business, which is [widget salvage]!  I don’t want to spend all my time doing web design!  That’s what I pay you for!”

In other words, the client wants to make the web site his sole source of initial interaction with his customers, but he is uninterested in writing any content for it.  His web site will be the primary public access that customers have to his company, but working on the web site is a distraction from his real business.

And the real kicker is, on the day we finished the initial programming, he drops the bombshell that the site’s design–which he approved on January 27–is completely unacceptable, and he wants to completely redesign the site.  This is akin to approving the blueprints for a home construction project, then kiting in on the day the contractor finishes laying the last bits of carpet and exclaiming, “I wanted four bedrooms, not three!”


All of these clients, despite their differing details, have one glaring thing in common:  It’s the assumption that once something goes out onto the Internet, it works because pixies sprinkle magical fairy dust on it.  Tinkerbell waves her wand, sparkly bits fly through the air, and money just comes rolling in to your bank account.

In the real world, the Internet operates on the same principles any brick and mortar business does.  You still have to perform due diligence.  You still need to market to your customers.  You still need to go into the office–even if it’s a virtual one.

Nothing magical happens simply because people can access your business online, rather than jumping in the car and driving to it.


Observations Podcast for 04 Apr 10

In this podcast, Bruce, Bryan and Dale discuss the state of the economy and the Obama Administration’s foreign policy. The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.


“Everyone deserves health care”

That’s been the starting position for everyone who supported the health care reform monstrosity that just came out of Washington DC.  It’s stated in various ways, such as health care being a “right”, but the axiom is always that in our society everyone should have health care, or as a practical matter, health insurance.

It sounds so compassionate and decent doesn’t it? But that little phrase packs in some nasty principles.

It’s one thing to say that you deserve to control your own life, or property or income.    That’s pretty uncontroversial.  But when you say, “I have a right to have health care–or a pension, or a home–provided for me even if I can’t afford it”, then what you’re really saying is that I have an obligation to provide you with those things.  Whether I wish to provide them to you, or whether it causes me some degree of privation, is irrelevant.  To say that you–or anyone else–has a right to something I must provide is to say that you have an irrevocable claim on my life, labor or property.  I owe you.

No matter how you try to gussy it up, or dress it in compassion, the fact is that by claiming that such an obligation, you place me in indentured servitude.  My wishes are irrelevant.

Indeed, it’s not even indentured servitude.  At least in an indenture, I have to agree to provide you with my labor for some period, after which I am manumitted.  In actuality, by claiming such an obligation on me that I cannot evade, you make me, to some degree, your serf.  You are the laird of the manor, and I have my obligation of labor days to provide you.

Now, perhaps I should be willing to provide you with health insurance.  Perhaps that is the moral and/or ethical course of action I should undertake.  But that, too, is irrelevant.  By demanding it, and by forcing me to provide you with a good or service by law, you not only ignore my conception of morality, you impose your morality on me.  Whether I agree with your morality is not even a consideration for you.  You have a claim,you say, so your morality trumps mine.

Moreover, once you’ve accepted that it’s perfectly all right to impose a form of servitude on me, in order that I might provide you with a good, what’s your limiting principle?  If you may impose an obligation on me to provide a part of my income or property in order to procure a good for yourself, why can’t you simply take all of it?  After all, you’ve already signed on to imposing slavery in principle, because you’ve decided that you can impose an obligation on me against my will.  Why stop  at serfdom?

Slavery, to one degree or another, is, of course, the inevitable outcome of any attempt to enforce some sense of cosmic justice on life, and the lives of your fellow men.  Because there is no such thing as cosmic justice.  Nor is there any general agreement on what cosmic justice should be.  So, your attempt to impose it on others invariably must be done by force, either through the majesty of the law, or with a knife to the throat.

Which is often the same thing.

So, what you are really saying when you claim that “Everyone deserves health care,” is, “I have the right to enslave you, in whole or in part, in order to require you provide health care to me.”  When you strip the high-sounding phrases to the principles, it doesn’t sound nearly so moral and compassionate, does it?

Oh, and by the way, it does no good to tell me that I also have the same claim on others, and can force someone else to provide me with health care, too.  Because all you’re really telling me is that I can become a slavemaster, too.  The fact that I don’t care to be a slavemaster, or that I find it morally abhorrent, is utterly irrelevant to you.  Again, your morality trumps mine.

Because, after all, if you can get everyone else to join you in your crime–indeed, to glory in it–who will condemn you?

Discuss amongst yourselves.


Precarious Guam

This is a congressman grilling the CNO about future plans for stationing military personnel on the Island of Guam.  The Congressman is deeply concerned with consequences of putting too many people on the island, because…well…you have to see for yourself.  The money quote starts at 1:16 into the clip.

And there you go.  These are our “leaders”.  No doubt this is the same intellectual heft and clarity of thought they brought to health care reform.  And will bring to Cap & Trade, Immigration Reform, etc.

Think about that for a while.


NOW they tell us…

John Cassidy, writing in one of the blogs at that hotbed of reactionary conservatism, the New Yorker, notes the following about the BFD.  First, he writes that the individual mandate is likely to prompt rather different behavior than the law assumes:

Consider the so-called “individual mandate.” As a strict matter of law, all non-elderly Americans who earn more than the poverty line will be obliged to obtain some form of health coverage. If they don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per cent of their income—whichever is the most. Two issues immediately arise.

Even if the fines are vigorously enforced, many people may choose to pay them and stay uninsured. Consider a healthy single man of thirty-five who earns $35,000 a year. Under the new system, he would have a choice of enrolling in a subsidized plan at an annual cost of $2,700 or paying a fine of $875. It may well make sense for him to pay the fine, take his chances, and report to the local emergency room if he gets really sick. (E.R.s will still be legally obliged to treat all comers.) If this sort of thing happens often, as well it could, the new insurance exchanges will be deprived of exactly the sort of healthy young people they need in order to bring down prices. (Healthy people improve the risk pool.)

He then moves on to note that employers may respond in a rather unexpected fashion as well:

Take a medium-sized firm that employs a hundred people earning $40,000 each—a private security firm based in Atlanta, say—and currently offers them health-care insurance worth $10,000 a year, of which the employees pay $2,500. This employer’s annual health-care costs are $750,000 (a hundred times $7,500). In the reformed system, the firm’s workers, if they didn’t have insurance, would be eligible for generous subsidies to buy private insurance. For example, a married forty-year-old security guard whose wife stayed home to raise two kids could enroll in a non-group plan for less than $1,400 a year, according to the Kaiser Health Reform Subsidy Calculator. (The subsidy from the government would be $8,058.)

In a situation like this, the firm has a strong financial incentive to junk its group coverage and dump its workers onto the taxpayer-subsidized plan. Under the new law, firms with more than fifty workers that don’t offer coverage would have to pay an annual fine of $2,000 for every worker they employ, excepting the first thirty. In this case, the security firm would incur a fine of $140,000 (seventy times two), but it would save $610,000 a year on health-care costs. If you owned this firm, what would you do?

I assume that final question is rhetorical.

Too bad no one could explain this prior to the bill’s passage.

If only there was some intellectual discipline that tried to predict how people respond to incentives in a world of scarce resources!


The Kangaroo is Still Hopping

Bruce mentioned yesterday that the 5-year note auction drew thin demand, with a low bid-to-cover ratio, and a steep drop in indirect buyers.  This led to a jump in interest rates for both the Fives and the Tens also went up by 13 basis points.  meanwhile, investors began moving into corporate paper, instead of treasuries.

I also note that this week saw weaker than expected durable goods orders, atrocious new home sales, and initial unemployment claims still at 442k–which is better than it was last week, but not great.

The “recovery”, apparently is still on pretty shaky ground.

Meanwhile, the new health care reform law attempts to shift a bunch of spending via Medicaid to the states, who are not really in a position to cover those costs, as state tax revenues have sharply declined from 2007.

In short, with a weak economy, we are planning on adding what may be as much as $2 trillion to the deficit over the next 10 years–deficits that are already at $1 trillion per year as far as the eye can see.  How neatly that coincides with the announcement that Social Security will run into the red this fiscal year, paying more in benefits than it receives in payroll taxes, six years earlier than previously expected.

So, we got that going for us.

The United States is supposed to be the richest country in the world.  But, on our present fiscal course, that cognomen will not attain in a very few years.  We simply will not have enough money to service the debt load we will be carrying.  In a very real sense, it doesn’t matter whether the Republicans can win in November and repeal the HCR law just passed.  Or Cap & Trade.  Or Medicare Part D.  Or whatever.

We are directly on course to having to run massive inflation by monetizing the debt, or to simply defaulting on it, both of which will result in massively high interest rates, and economic stagnation. With the added bonus of runaway inflation, for good measure.

That this will happen cannot be in serious doubt if we continue our present course. Our fiscal and monetary policies are self-evidently unsustainable.

I can only presume that the Democrats believe that, at the appropriate time, fairies will appear out of thin air to sprinkle magical pixie dust on the economy, and all will be well.  The current raft of policies they are proposing to enact will crush the economy.  We’ve seen it happen time and again in South America, and now even in the EU, in which the Greeks are headed for a default in the very near future.

What is coming out of Washington is not policy.  it is full-scale flight from reality.


The Twins: A Czech Sa Vz 58 Review

A matching brace of Czech-made SA VZ 58 rifles

A matching brace of Czech-made SA VZ 58 rifles

You may remember me writing some time back about my disappointment in the horribly made and extremely jam-prone M1 Carbines that I purchased for Chris and I last year.  Horrible rifles.  Shoddily made.  I’ll never buy anything from Kahr again.

But, I did need replacements for them, and those replacements have arrived, and are all kitted out–while still being California-legal.

The rifles are Czechoslovalkian Sa Vz 58 civilian rifles.  The handguards, grips, and buttstock are aftermarket accessories from Israeli Arms, who make a complete tactical package–several of them, actually, for the VZ 58.   The accessories are all polymer, and are made to what seems to be a very high level of quality and craftsmanship.  When it comes to stuff for guns, you gotta hand it to those Israelis, boy.

Unlike most other states, unfortunately, California has very restrictive–and quite stupid–firearms laws regarding rifles. According to the California Penal Code:

12276.1 (a) Notwithstanding Section 12276 [which contains a list of specifically prohibited models of rifle, such as the AK-series rifles], “assault weapon” shall also mean any of the following:

(1) A semiautomatic, centerfire rifle that has the capacity to accept a detachable magazine and any one of the following:

(A) A pistol grip that protrudes conspicuously beneath the action of the weapon.

(B) A thumbhole stock.

(C) A folding or telescoping stock.

(D) A grenade launcher or flare launcher.

(E) A flash suppressor.

(F) A forward pistol grip.

(2) A semiautomatic, centerfire rifle that has a fixed magazine with the capacity to accept more than 10 rounds.

(3) A semiautomatic, centerfire rifle that has an overall length of less than 30 inches.

Alas, the California version of the VZ 58 has a fixed, 10-round magazine (any rifle or pistol magazines, fixed or removable, with a capacity greater than 10 rounds are strictly prohibited in California), and the overall length, with the stock fully collapsed, is 32.5″.

Top view of the Rifle, with the stripper clip guide visible at the front of the bold carrier assembly

Top view of the Rifle, with the stripper clip guide visible at the front of the bold carrier assembly

The “foregrip” is actually a bipod, as you can see. And the magazine accepts loading from the same stripper clips that the SKS uses.

You may notice that the rifle has a very AK-like look, but that’s entirely coincidental.  When the Soviets demanded that all Warsaw Pact countries standardize around the 7.62x39mm intermediate rifle cartridge, the Czechs were unamused, since they had an inordinate fondness for the 7.62x51mm round.  Apparently, the Czechs believe that when they  shoot you, you should know you’ve been shot.  Or, maybe, never know at all.

The Czechs were also unamused by the idea that the demand to switch to the AK round also came with the Soviet expectation that their client states would also buy the rifle that chambered it, the AK-47.  The Czechs have had a world-class reputation as gunmakers for centuries, and they were unimpressed by the AK.  So, they accepted the ammo requirement, then let the world-famous Brno arms factory produce a rifle to fire it, the Sa Vz 58.  Other than the cartridge, and a similar gas piston/op rod mechanism, the rifles are completely different.  No parts are interchangeable with the AK.  The parts are all CNC-machined, instead of stamped.  It fires from the closed-bolt position.

Ejection port open, bolt locked to the rear

Ejection port open, bolt locked to the rear

Unlike the AK, it is not a side-ejecting rifle.  Instead, the bolt carrier exposes a huge, honkin’ “ejection port”, which is actually about half of the upper receiver.  I can’t even imagine how you’d get a stovepipe or ejection jam.

The gas piston is in a separate chamber from the  short operating rod, very similar to the SKS gas system, so the receiver is isolated from gas system.  The chamber and barrel, by the way, are also chrome-lined.

Another nice feature is the design of the safety, which pokes down below the receiver.  This means that, even in total darkness, you can feel that the safety is engaged as soon as you grasp the pistol grip.  Flock it up with your trigger finger, and you’re ready to rock and roll.  In a safe and approved manner.

The sling is also from Israeli Arms.  It’s the tactical sling the Israeli Army uses so you hang the weapon across your chest, and bring it up to firing position, if needed, in about a second.

It’s about as accurate as any rifle firing the 7.62×39 round can be, with low recoil, and decently fast target aquisition, especially with a reflex sight mounted on the picatinny rails on the top of the forward handguard.  It’s really a hoot to shoot.

It’s reasonably priced, built like a tank, and is still about 1.5 pounds lighter than the AK.

It’s really a very nice rifle, and I highly recommend it, especially for those of you who don’t like the AK, but who despise the lightweight round and nasty direct-impingement gas system of the AR15-series rifles.