Questions and Observations

Free Markets, Free People

Economic Statistics for 27 Aug 13

The following US economic statistics were announced today:

ICSC-Goldman Store Sales still look weak, with a 0.2% increase for the week, and 1.9% annual increase.  Redbook, on the hand, reports a stronger 3.8% year-on-year same-store sales increase.

The S&P/Case-Shiller home price index rose 0.9% in June, a 12.1% increase from last year.

The Conference Board’s consumer confidence index rose 1.2 points to 81.5 in August.

The Richmond Fed Manufacturing Index rose sharply from -11 to 14 in August as business activity picked up in the mid-Atlantic district.

Confidence among institutional investors remains high, though it declined a bit from 107.6 to 105.1 in August.

~
Dale Franks
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Government abuse: not surprising, not unexpected, but certainly something that needs to be stopped – now!

This has been in the news recently and now it is getting some Congressional attention.  It has to do with possible illegal activities involving the NSA and DEA.  As you know, the NSA’s job is to focus outside the US, not inside, and primarily on enemies of the United States, not it’s citizens:

Eight Democratic senators and congressmen have asked Attorney General Eric Holder to answer questions about a Reuters report that the National Security Agency supplies the Drug Enforcement Administration with intelligence information used to make non-terrorism cases against American citizens.

The August report revealed that a secretive DEA unit passes the NSA information to agents in the field, including those from the Internal Revenue Service, the FBI and Homeland Security, with instructions to never disclose the original source, even in court. In most cases, the NSA tips involve drugs, money laundering and organized crime, not terrorism.

Five Democrats in the Senate and three senior Democrats on the House Judiciary Committee submitted questions to Holder about the NSA-DEA relationship, joining two prominent Republicans who have expressed concerns. The matter will be discussed during classified briefings scheduled for September, Republican and Democratic aides said.

“These allegations raise serious concerns that gaps in the policy and law are allowing overreach by the federal government’s intelligence gathering apparatus,” wrote the senators – Tammy Baldwin of Wisconsin, Ron Wyden of Oregon, Tom Udall of New Mexico, Richard Blumenthal of Connecticut and Sherrod Brown of Ohio.

Why, other than the fact that the NSA has no charter or permission to pass its information about American citizens on to other agencies, is this important?

The Reuters reports cited internal documents that show how DEA’s Special Operations Division funnels information from overseas NSA intercepts, domestic wiretaps, informants and a large DEA database of telephone records to authorities nationwide to help them launch criminal investigations of Americans.

The documents show that agents have been trained to conceal how such investigations truly begin – to “recreate” the investigative trail to effectively cover up the original source of the information, raising questions about whether exculpatory information might be withheld from defendants at trial.

The internal documents describe the process of recreating the evidence trail to omit any reference to the Special Operations Division as “parallel construction.” For example, agents said in interviews, they act as if a drug investigation began with a traffic stop for speeding or a broken taillight, instead of a tip passed from the NSA. An IRS document describes a similar process for tax agency investigators.

Emphasis mine. So not only is passing such information to these agencies unauthorized, the government then instructs its agents on how to lie about the source of their information (a lie of omission). And, of course, it is also legitimate to ask whether or not exculpatory evidence could also have been available but not passed to these agencies.

Is this really the type government we want?  One that spies on us, intercepts our electronic messages and phone calls and uses them secretly by passing what should be private to various other government agencies and then lies about it?  Peggy Noonan addresses those questions quite directly today:

If the citizens of the United States don’t put up a halting hand, the government can’t be expected to. It is in the nature of security professionals to always want more, and since their mission is worthy they’re less likely to have constitutional qualms, to dwell on such abstractions as abuse of the Fourth Amendment and the impact of that abuse on the First.

If you assume all the information that can and will be gleaned will be confined to NSA and national security purposes, you are not sufficiently imaginative or informed. If you believe the information will never be used wrongly or recklessly, you are touchingly innocent.

If you assume you can trust the administration on this issue you are not following the bouncing ball, from Director of National Intelligence James Clapper, who told Congress under oath the NSA didn’t gather “any type of data at all on millions or hundreds of millions of Americans” (he later had to apologize) to President Obama, who told Jay Leno: “We don’t have a domestic program.” What we do have, the president said, is “some mechanism that can track a phone number or an email address that is connected to a terrorist attack.”

Oh, we have more than that.

Almost every politician in America lives in fear of one big thing: a terrorist attack they can later be accused of not having done everything to stop. And so they’ll do anything. They are looking to preserve their political viability and historical standing. We, as citizens, must keep other things in mind, such as the rights we are born with as Americans, one of which is privacy.

Lord Acton nailed it when he said “Power corrupts …”.  We’re currently in the midst of watching exactly that happen to an even greater degree than in the past. If you give government power, it will do everything it can to expand that power – whether legitimately or illegitimately.  It is the nature of the beast.  And we have to put up a hand to stop it.

If you’re wondering why the Tea Party is characterized in such nasty ways by the establishment of both parties, it is because it does indeed attempt to put up a hand to stop these sorts of abuses and remove power from the abusers.  They threaten the very base of power the political establishment has worked so hard to build over the years.

~McQ

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Economic Statistics for 26 Aug 13

Here are today’s statistics on the state of the economy:

Durable goods orders fell -7.3% in July, with ex-transportation orders down -0.6%. On a year-over-year basis, orders are down -0.3%, but ex-transportation orders are up 5.9%.

The Dallas Fed Manufacturing Survey shows overall business activity in Texas rose 0.6 points to 5.0, but the production index fell 4.1 points to 7.3.

~
Dale Franks
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Stagnant wages, among other things, a result of the economic doldrums

That’s certainly one of the factors keeping GDP growth low.

Four years into the economic recovery, U.S. workers’ pay still isn’t even keeping up with inflation. The average hourly pay for a nongovernment, non-supervisory worker, adjusted for price increases, declined to $8.77 last month from $8.85 at the end of the recession in June 2009, Labor Department data show.

Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation’s economic growth.

Not only that, but unemployment remains historically high years after the “recovery”. The question, however, is why wages are remaining stagnant. The WSJ cites three factors:

Economic growth remains sluggish, advancing at a seasonally adjusted annual pace of less than 2% for three straight quarters—below the prerecession average of 3.5%. That effectively has put a lid on inflation, which has been near or below the 2% level the Federal Reserve considers healthy for the economy. With demand for labor low, prices not rising fast and 11.5 million unemployed searching for work, employers aren’t under pressure to raise wages to retain or attract workers.

Emphasis mine. The Fed is happy with the inflation rate. And the administration, despite numerous claims to be focused like a laser beam on “j-0-b-s” has done little if anything to address unemployment or economic growth. Finally, given the uncertainty that regulation and new laws (such as ObamaCare) bring to the table, employers are even less likely to hire until the regulatory and legal dust settles and they have a much better idea of how both effect their business and industry.  It’s not about “pressure”.  It’s about a lack of incentive.

Secondly:

Businesses are changing how they manage payrolls. Economists at the Federal Reserve Bank of San Francisco in a recent paper said that, in the past, companies cut wages when the economy struggled and raised them amid expansions. But in the past three recessions since 1986—and especially the 2007-2009 downturn—companies minimized wage cuts and instead let workers go to keep remaining workers happy. As a result, to compensate for the wage cuts that never were made, businesses now may be capping wage growth. “As the economy recovers, pent-up wage cuts will probably continue to slow wage growth long after the unemployment rate has returned to more normal levels,” the researchers said.

Another point to make, again considering the unemployment rate, is that those working are glad to still have a job. And with the economy still struggling it is unlikely that many feel the time right to push for higher wages. In fact, it is a “buyers market” right now when it comes to labor. And it will remain one until we get into much higher growth percentages and the demand for labor begins to outstrip the supply. We’re not even close to that at this point.

Finally:

Globalization continues to pressure wages. Thanks to new technologies, Americans are increasingly competing with workers world-wide. “We are on a long-term adjustment, as China, in particular, but all developing countries, get their wages closer to ours,” said Richard Freeman, an economist at Harvard University. According to Boston Consulting Group, there will be only a roughly 10% cost difference between the U.S. and China in making products such as machinery, furniture and plastics by 2015.

Technology is also replacing workers in many industries. Automation is especially tough on low skilled workers. But again, given laws like ObamaCare, the incentive at work is to have fewer employees, not more. Businesses will automate where it makes sense and helps make a profit. It is also a means of closing that wage gap mentioned above, so it isn’t a trend that is likely to end anytime soon.

All of those factors and what I’ve mentioned in addition to them combine to make unemployment and wage growth both remain static. There simply aren’t any incentives at the moment to hire more people. Certainly not in GDP growth. Certainly not with the plethora of new regulations and laws.

In fact, as is mentioned in the article, at the moment there are only two paths to higher wages:

The only path to wage gains is through a stronger economy or an increase in demand for specialized skills.

The economy is moribund and has been for quite some time with GDP growth under 2% for the last three quarters.

That narrows the path to wage gains to a single one – developing specialized skills. It isn’t a path open to everyone, unfortunately, for a number of reasons.

So how could government help change all of that? Quite simply by getting out of the way – something it seems completely unable to comprehend or do.

And because of that, it continues to contribute negatively to the economic situation we endure.

~McQ

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Observations: The QandO Podcast for 25 Aug 13

This week, Michael, and Dale discuss Syria, the NSA, and tiptoe ever so carefully around the subject of race in America.

The direct link to the podcast can be found here.

Observations

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Welcome to the future

I’ve spent the last 20 years developing software, managing software development, and doing software systems analysis full-time. I’ve been programming since I was 16. The first time I went to college, my major was computer science.  Since then, I’ve seen one major revolution in the computer industry, which essentially blew up everything that came before it.

That first revolution was the advent of the PC. I started college in 1982, when there were very, very few PCs. Our computer lab had a couple of Apple IIs, Osbornes and TRS-80s. We played with them. They were cute. But we did our business on a Digital DEC 1133 mainframe with 50 dumb terminals and an old IBM 64 that only took punch card input.  Programming was done by an elite group of specialists Who logged into the mainframe and began writing in plain text, or who pushed up to a massive IBM card punch machine, and typed in their programs one line at a time, punching a card for each line of code.

The punch cards were the worst. At least, on the DEC, you you could compile your program while writing it. With the punch cards, you’d stack them up all in order—being very careful to write the card number on the back in magic marker, in case you dropped your card stack and had to re-sort the cards—and turn them into the computing center.  Then you’d go back the next day to learn that you’d forgotten to type a comma in card 200, and you had to re-type the card. You’d turn your stack in for another overnight wait, only to learn you’d missed a comma in card 201.

It was worse than being stabbed.

The PC killed all that. It killed the idea of programmers being this small cadre of elite specialists. And once PCs could talk to each other via a network, they killed the idea that software development had to take a long time, with shadowy specialists toiling away on one large machine in the bowels of the building.  By 1995, self-taught amateurs were programming database applications to handle their small business inventory in FoxPro.  Corporations employed hordes of programmers to build complicated database applications.

In fact, for all the snide attitudes they get, the people at Microsoft pretty much single-handedly created the worldwide software development community we have today. The Visual Basic for Applications programming interface for Microsoft Office, Visual Basic, and, eventually, the .NET Framework allowed millions of people to learn programming and create applications. Practically every corporation with more than 100 people has their own programming team, building custom desktop software for the organization.  Millions of people are employed as free-lance software developers. Yes, there are other programming technologies out there, but none of them—none—have had the impact on democratizing software development that Microsoft’s has had.

There are still some mainframe computers, of course. IBM makes 90% of them. It’s a small, mostly irrelevant market, except for governments, universities, and very large corporations. Every computer used to be a mainframe. Now, almost none of them are.

We’ve gotten used to this software development landscape. Even the advent of the Internet—while revolutionary in many ways—has not been particularly revolutionary in terms of software development. Until now, the changes to software development caused by the internet have been evolutionary—building on existing technologies. In fact, in some ways, the internet has been devolutionary. Thirty years ago, workers logged in to dumb terminals with no processing power, using a mainframe to do all the work.  Similarly, using the internet until now has mainly meant opening up a dumb web browser like Firefox or Internet Explorer to talk to a web server where all the magic happens. The browser has really been just a display device. The web server takes a request from a browser, retrieves information, gets database data, formats it, and sends it back in simple text so the browser can display it.

Until now.

In the past year or so, a number of technologies have hit the market that make the browser the center of processing instead of the web server.  Now, instead of running programming code on the server to do all the hard processing work, the browser can run JavaScript code and do all the processing locally. This has long been theoretically possible, but it was…difficult. Now, an entirely new kind of programming is possible, with JavaScript tools like Node.JS, Google’s AngularJS, and database technology that departs from the traditional relational database like MongoDB. (Though not, maybe MongoDB itself, for a variety of reasons.)

It’s still in it’s infancy. All of the smooth developer productivity tools we’ve become used to aren’t there yet. It’s still a bit of a pain to program, and it takes longer than we’ve been used to. Indeed, it’s very much like programming was back in the 1990s, when the developer had to code everything.

For instance, in Microsoft’s .NET development environment today, developers have become used to just dragging a text box or check box onto a form and having the software development environment write hundreds of lines of code for them. In a Windows application, a data-driven form that connects to a SQL Server database can be created almost entirely through a drag and drop interface, where the development environment writes thousands of lines of code behind the scenes. The developer has to actually write about 15 lines of code to finish up the form so it works.

We don’t have that yet with the current generation of JavaScript tools. We have to type a lot more code to do fairly simple things. So, for someone like me, who’s lived in the .NET world since 2001, it’s a bit of a pain. But it’s a thousand times better than it was just two years ago. Five years from now, the tools for rapid application development for browser-based applications will be everywhere.

This is the second revolution in computing that will change everything we’ve become used to. Right now, a software application generally has to be installed on your computer. A software application designed for Windows won’t install on a Mac or Linux machine. Well, that’s all going away. Browser-based software is platform independent, which is to say, it doesn’t matter what your computer’s operating system is. Do you need an office suite? Google already has a browser-based one online, and there’s probably someone, somewhere in the world, working on a desktop-based version right now.  Need to access your database to crunch some data? No need for Access or FileMaker Pro. We can do that in the browser, too. In fact, we’re pretty much at the point where there is no commonly-done task that can’t be done in the browser.

We can now make almost—almost—any software application you think of, and anyone, anywhere in the world, can run it, no matter what computer they’ve got. This is the second revolution in computing that I’ve seen in my lifetime, and it’s going to change everything about how applications are developed.  Software that is dependent on the operating system is essentially as dead as the mainframe. Microsoft’s advantage in building a software development community? That’s dead now. Desktop applications? Dead. In 5 years there’ll be nothing that you can’t do in a browser. On a phone. I think that means the days of Windows having a natural monopoly on corporate computing is now dead, too.

There’ll still be desktop systems, of course. And, as long as your system can act as a web server—and pretty much any desktop or laptop can—you’ll still have software that you run on the desktop.  After all, you may want to work locally instead of on a big server run by someone like Google or Microsoft, who’ll be doing God knows what with any data you store on their servers. But your choice of computer or operating system will not be driven by whether the software you want to use is available for it. In fact, in 10 years, when you think of desktop, you may just be thinking of a keyboard and display monitor that you plug your phone into to work more conveniently. Assuming that you just don’t have to talk into it to get things done.

If you’re working in software development, and aren’t embracing the coming wave of platform independent, browser-based programming, you’re not doing yourself any favors. It may take another 10 years or so, but the technology you’re working on right now is dying. For someone like me, who’s invested decades in Windows applications development, it’s a bit sad to see all that accumulated knowledge and experience passing away. It’s not easy to move into an entirely new development technology and go through all of it’s growing pains. But I don’t see any choice.

Thirty years ago, everything I learned in college about how to work with computers got tossed out the window.  All of those hours struggling to write RPG programs in IBM punch cards, learning about mainframes…all of it was utterly useless within a few years when the PC came out. Now it’s happening again.

I remember how, back in the 90s, all the old mainframe Unix guys were grumpy about having to kiss their Unix machines good-bye. In 10 years, I’m not going to be one of those old Unix guys.

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Style Evolves

Once again, it’s time for a change. This time, I’m rigidly going after a reading-centric style. No graphics. No bells and whistles. Just large, readable text. The body text is done in a Google font called "Vollkorn" that I really like.  Even some of you…ahem…more mature folks should find it much more readable.

Everything about the new template is focused on reading the blog. The sidebar has been moved over to the left. The ad banners have been moved so that there is only one in the text area, while the third has been moved to the sidebar. All the sidebar text is much lighter, so that it fades into the background of the blog post text.

Still, I’m not sure I like it. In successive iterations, I’ve gone for a simpler and simpler look.  I may have gone too far with this one. This isn’t much different than a web site from 1996. It doesn’t look like progress, with flashy graphics and image sliders and what-not. It’s just…text.

Ah, well, I can always switch back to the previous one. Or the one before that.

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Why does anyone still take Al Gore seriously?

That’s a legitimate question.   The man makes it up as he goes.  The latest evidence is his invention of a new category for hurricanes (which is right up there with his invention of the internet for veracity).  Yes, friends, his claim came during an “interview” (here, see if you can hit these softballs, Al) by Ezra Klein.  In it, he likened “deniers” to slave owners, racists and just about any other bit of nonsense he could muster. 

As to his claim:

A Union of Concerned Scientists (UCS) expert says Al Gore goofed during his widely circulated Washington Post interview on global warming.  Gore, noting stronger storms fueled by climate change, told the paper “the hurricane scale used to be 1-5, and now they’re adding a 6.”

I’m sorry, that’s more than a goof.  It’s a lie.  It is simply not true.  Period.  It never has been true, no have there been any plans to add such a category by the one place that would do it:

“There are no plans by the National Hurricane Center, the federal office responsible for categorizing storms, to create a new category,” she wrote on the environmental group’s website.

There there was this as well (James Taranto covers it):

Gore uses the interview to claim vindication for his 2006 "documentary," "An Inconvenient Truth": "You mentioned my movie back in the day. The single most common criticism from skeptics when the film came out focused on the animation showing ocean water flowing into the World Trade Center memorial site. Skeptics called that demagogic and absurd and irresponsible. It happened last October 29th, years ahead of schedule, and the impact of that and many, many other similar events here and around the world has really begun to create a profound shift."

But that’s not what Al referred too when he talked about water flowing into the WTC memorial site in his movie:

The reference is to Hurricane Sandy, a Category 2 storm when it struck the Northeastern U.S., flooding parts of New York and New Jersey, including downtown Manhattan. (Sandy peaked in the Caribbean as a Category 3 storm. By comparison, 2005’s Hurricane Katrina went as high as Category 5 and made landfall at Category 3.)

But if we roll the film–which is less than scintillating, but the clip lasts less than 2½ minutes–we find that what Gore predicted in "An Inconvenient Truth" was something far direr than a storm and a flood. He predicted that lower Manhattan–along with vast and heavily populated swaths of Florida, California, the Netherlands, China, India and Bangladesh–would be permanently submerged owing to higher sea levels.

"Think of the impact of a couple of hundred thousand refugees when they’re displaced by an environmental event," Gore intoned in the movie. "And then imagine the impact of 100 million or more." And then keep imagining. While Sandy caused severe temporary disruption and wrought an unusual amount of damage because it happened to hit a population center, it was not different in kind from other natural disasters. Lower Manhattan was soon dry again.

Again, a lie, or at best an extreme exaggeration.

And that has been typical of this entire politically driven “science based” effort to claim that we’re headed to disaster because of man.   As Taranto says, “while Al Gore isn’t a scientist, the Climategate scandal showed that some scientists are no more scrupulous than he is.”  

Have to agree.  Exaggeration and alarm are the only way their science-deficient bunk can get any press.  So they indulge in it freely and call their opponents names.

Hurricane Sandy was a Cat 2 hurricane.  I’ve actually flown into a Cat 2 hurricane (Alex).  Trust me no one was calling Alex a “super storm”.  That’s because it hit Mexico.  But Sandy hit one of the world’s biggest media centers (and it hit the area perfectly for maximum effect).  Had it bumped into North Carolina instead it would have just been another Cat 2 already forgotten.

Instead we have this charlatan hyping it for headlines which are easily debunked.  You have to wonder why?  Certainly in hope of headline reading low information citizens seeing and believing his bunk.  But there’s more to it than that … follow the money.

~McQ

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