Questions and Observations

Free Markets, Free People

Dealergate and Statistics

Yet another statistical analysis of the Chrysler dealership closings has been conducted, although this one appears to be both much more thorough (albeit preliminary) and concentrated on the correct data (my emphasis):

To start with, we pulled raw donor data from The Center for Responsive Politics / OpenSecrets.org for the 2008 election cycle and extracted ~865 megabytes of 2008 individual contribution (“IC”) cycle table entries.

[...]

… this particular output is the widest available dataset on contributions. We matched this data against two Chrysler dealer lists:

First, Docket #797 “Document #3″ “Schedule of Designated Domestic Dealer Agreements and Cure Costs Related Thereto” (a list of dealers expected to survive).

Second, the famous “Exhibit A” document of dealers to be closed.

[...]

We ran binary logistic regressions across the variables. The results are interesting but the most dramatic was saved dealers v. donations by candidate and/or party.

The results of the analysis suggest that donors to Hillary Clinton in the recent presidential race received some preferential treatment. That does not mean that anyone has proven anything, nor that the statistical analysis makes any sort of unassailable case. It merely raises a concern that, given the probabilities, Clinton donors appear to have survived the dealership closings surprisingly well.

This puzzled us. Why would there be an significant noticeable (we have rightly been called out for using significant here) and highly positive correlation between dealer survival and Clinton donors? Granted, that P-Value (0.125) isn’t enough to reject the null hypothesis at 95% confidence intervals (our null hypothesis being that the effect is due to random chance), but a 12.5% chance of a Type I error in rejecting a null hypothesis (false rejection of a true hypothesis) is at least eyebrow raising. Most statistians would not call this a “find” as 95% confidence intervals are the gold standard for this sort of work. Nevertheless, it seems clear that something is going on here. Specifically, the somewhat low probability that the Clinton data showing higher survivability of Clinton donors could result just from pure chance. But why not better significance with any of the other variables? Why this stand out?

Then we got to thinking. Steven Rattner, the Car Czar, is married to Maureen White, one-time national finance chairman of the Democratic National Committee. What does Maureen do now? From her website:

Maureen White is currently Chairman of the Board of Overseers of The International Rescue Committee (IRC), a member of the North American Advisory Board for the London School of Economics, and a National Finance Chair of the Hillary Clinton for President Campaign. (emphasis ours)

That website looks dated, but you get the idea.

Again, we want to point out that our findings are preliminary and subject to change. But whatever the result, the Administration has made themselves very vulnerable by taking charge of the dealership closing decisions.

I’m still not sure if there’s anything to the allegations, but there seems to be more than enough anomalies to warrant some questions being asked of the Obama administration. It should be noted that the theory regarding potential shenanigans has morphed from Obama creating a Republican hit list with the closings, to Obama benefiting Democrat donors by allowing their dealerships to survive (and thrive), to Obama’s “Car Czar” rewarding donors to his wife’s favorite political candidate (Hillary Clinton). When the theory moves that much, often it’s a sign that one is fishing for a villain. And despite the evidence amassed in this case showing that an unusual number of Democrat donors are set to prosper from the closing decisions, that may be the case here.

However this all turns out, one thing is certain: by involving itself so deeply in the fate of Chrysler (and GM), the Obama administration invited scrutiny concerning its decision-making processes. Furthermore, in being so opaque about how the government is picking winners and losers (not to mention that it is making these decisions at all), the Obama administration has left itself open to attacks of favoritism. That has nothing to do with Obama or partisanship in particular, but with the fact that unaccountable power rightfully raises fears and suspicions of favoritism. If Chrysler had been left to fend for itself in bankruptcy, none of these questions would have been raised.

The government arrogated to itself tremendous amounts of power over what would normally be private business decisions. In the process, the Obama administration blatantly used its power and influence to reward a favored constituent group (the UAW). Now that statistical evidence suggests more favoritism may have been in play, it’s a little late to cry “conspiracy theory.” Instead, the Obama administration should start opening the books and answering questions.

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Podcast for 31 May 09

In this podcast, Bruce, Michael, Billy, and Dale discuss the economy and the Sotomayor nomination.

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 2007, they can be accessed through the RSS Archive Feed.

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“Revolutions happen when a system suffers a major loss of political legitimacy.”

Amir Taheri broaches a subject that I’m sure will sound over-the-top to many. He asks, “Is England on the verge of revolution?”

Given the way the British government increasingly treats their citizens as serfs, I’ve wondered if serious resistance to such treatment would build to significant levels. I’ve only had one brief visit to Britain, so I’m in no position to venture an informed opinion. But Taheri finds some evidence that a tipping point may have been reached:

“I do sense a revolutionary mood,” David Starkey, one of Britain’s foremost historians, told the BBC. “I won’t be surprised if we did end up having a revolution.”

The current scandals of British MPs are one of the main drivers of the mood. They seem to be blatantly abusing their offices to feather their own nests (shades of John Murtha, et. al.), and simultaneously becoming increasingly irrelevant and hapless to do anything constructive because of the shift of power to the EU. Taheri thinks this has a pretty dramatic effect on the British:

Every nation has a number of founding myths. Britain’s principal myth is that it is the birthplace of modern democracy and a land where the law is supreme. The shocking realization that “the mother of parliaments” may have been acting as the rudest of street sluts is not easy to stomach. Some of the same politicians who go around the world lecturing others, especially in the “developing world”, against corruption, have been exposed as practioners of petty larceny.

I’m no expert on the British character, but I would not expect such behavior by itself to drive a revolution. However, it has a synergistic effect with a shrinking economy and significantly higher unemployment, which Britain is suffering. No one likes it when they suffer while their political elites are prospering by playing fast and loose with the rules.

Taheri points to the unpopularity of the wars in Iraq and Afghanistan as additional factors. Given that we have plenty of war opponents here, and that Britain was one level removed from the responsibility for those wars, I suppose they probably have more.

But to me, the main point was captured in the quote I used for the title. Revolutions can only happen when a sufficient numer of the people no longer believe their government is legitimate. It’s very unlikely for one single incident to cause such a shift in thinking. It more of a water-torture, drip, drip, drip process. Items such as the apparent politically-motivated dropping of charges against a serious example of voter intimidation are examples of incidents that don’t look that major on their own, but every one of them risks convincing another small set of citizens that their government isn’t playing by their own rules, and no longer cares about the welfare of the nation as a whole.

I choose that particular incident because erosion of confidence in the rules surrounding the ballot box are particularly damaging to the legitimacy of the government. I’ve talked to people who are convinced that our elections are a sham and participating in them is not only a waste of time, but actually bad because it gives a facade of legitimacy to what they perceive as an illegitimate process.

I’m not advocating revolution, but it’s worthwhile to point out that the ultimate check on an abusive, out-of-touch government is revolution. I don’t see it as a bad thing for our political elites to understand that their authority and ability to abuse us is not infinite. Since Britain is a few steps further along the path that Obama seems determined to take us, I hope our elites pay some mind to what might lie at the end of that path.

(Found via Instapundit)

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North Korea: Tough Talk But Little Else

While at a conference in Singapore with Asian defense leaders, Sec. Gates did a little podium thumping about North Korea’s recent nuclear test:

“We will not stand idly by as North Korea builds the capability to wreak destruction on any target in Asia — or on us,” Mr. Gates told a major defense conference here that has been dominated by North Korea’s test this week of a nuclear device and the firing of at least six short-range missiles, all in defiance of international sanctions.

It took a foreign journalist to point out to Sec. Gates that while the US may not recognize North Korea as a nuclear weapons state, it was, in fact, already a “defacto nuclear weapons state.”

And, of course, it was important that Gates do a little apologizing to the assembled group as well, since this seems to now be an integral part of any foreign visit:

Mr. Gates concluded that the United States, “in our efforts to protect our own freedom, and that of others” had “from time to time made mistakes, including at times being arrogant in dealing with others.” Mr. Gates did not name names, but then said, “We always correct course.”

Other nations in the region weighed in on the North Korea nuclear test as well:

In Moscow, the Kremlin issued a statement saying President Dmitri A. Medvedev and Prime Minister Taro Aso of Japan had agreed on the need for a serious response to the nuclear test, Reuters reported.

As is usually the case in these sorts of situations, no one has any idea of what might constitute a “serious response” . In essence, the most “serious response” discussed thus far at the conference has been tightening sanctions.  And we know how well sanctions have worked in NoKo and Iran.

Unofficially, about all that’s gone on is this:

“There’s no prescription yet on what to do,” said a senior American defense official who asked for anonymity because he was not authorized to speak publicly. The official said that one “prudent option” was “what should we be thinking about in the event that we need to start enhancing our posture, our defenses?” But the official said that it was premature to talk of building up American forces in the region — an echo of comments from Mr. Gates on Friday that the United States had no plans to reinforce some 28,000 American troops based in South Korea.

Well there you go. China also had a few words to say as well:

“We are resolutely opposed to nuclear proliferation,” General Ma said, adding that “we hope that all parties concerned will remain cool-headed and take measured measures to address the problem.”

China is resolutely opposed to nuclear proliferation only after NoKo. That means it wants no nukes in Japan. And its admonishment to all to remain “cool-headed” and take “measured measures” means it is in no hurry to do much of anything about the present problem. Of course, China holds the key(s) to dealing with NoKo and everyone knows it.

So? So as usual, North Korea does what it chooses to do and nothing of significance is being done to “punish” it for doing so. I’m sure, as is the MO of the Obama administration, that the blame for all of this will be laid at the previous administration’s feet, but a quick perusal of history going back later than 8 years will show than no US administration has actually dealt effectively with North Korea and the present one isn’t going to be any different – despite its apology.

~McQ

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“Transparancy” Apparently Trumps The 1st Amendment

From the White House Blog in an entry written by Norm Eisen, special counsel to the president for ethics and government reform in “the spirit of transparancy”:

… [T]he President’s March 20, 2009 Memorandum on Ensuring Responsible Spending of Recovery Act Funds. Section 3 of the Memorandum required all oral communications between federally registered lobbyists and government officials concerning Recovery Act policy to be disclosed on the Internet; barred registered lobbyists from having oral communications with government officials about specific Recovery Act projects or applications and instead required those communications to be in writing; and also required those written communications to be posted on the Internet.

However, a couple of changes have been made, among them:

First, we will expand the restriction on oral communications to cover all persons, not just federally registered lobbyists. For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process. We concluded this was necessary under the unique circumstances of the stimulus program.

So thinking this through, could “anyone” include a TV or print reporter asking an oral question to a government official concerning Recovery Ac Policy? Or a particular Recovery Act project that might impact their viewership or readership? Is it possible the information provided, if government officials are subjected to such oral scrutiny, might end up “exerting influence on the process”?

How about a concerned citizen who happens to be a blogger?

Doesn’t this give government officials the cover to duck such oral inquiries?  How does that enhance transparency?

And ultimately, doesn’t this smack of a wee bit of a conflict with the 1st Amendment (free speech, free press, the right to petition government)?

And if “the unique circumstances of the stimulus program” are enough to limit 1st Amendment rights, per this paragon of “ethics and government reform, what other “unique circumstances” might be cited in the future to do the same sort of thing, given the precedent this sets?

As Mark Tapscott says:

This is the Camel’s nose under the tent, being poked because of special circumstances.

Carter Wood notes:

“Lobbyists and organizations that lobby complained that the White House’s restrictions on lobbying on stimulus fund projects were discriminatory and unfair because the same restrictions didn’t apply to people like corporate executives or officials. So these memorandumly noted changes address that fairness issue by expanding the ban on orally petitioning the government or expressing one’s views through speech. In the interests of transparency the First Amendment must be sacrificed.

“The restrictions are also ambiguous enough that a lobbyist or other petitioner won’t be sure how to fully comply. So if someone runs afoul of White House officials, a phone call to a news outlet or a friendly prosecutor can punish the offender. Ambiguous rules plus capricious application equals negative rule of law.”

The only transparency in this process is the fact that the White House is telling you the rule. But the rule then precludes oral questioning which might make the process even more transparent. If even the remote possibility exists that such communication might “exert influence on the process” then it is prohibited.

The White House’s apparent intent is to run a transparent process. The result is overreaching by the executive branch with poorly thought through restrictions on speech that are seemingly unconstitutional. The problem is they obviously don’t feel that to be the case. Or if they do, they think they should have the right to restrict certain forms of communication between government and anyone they decide if “unique circumstances” are existent (guess who get’s to determine whether they are or not?).

Frankly that should bother you.

However, fear not – I’m sure those that continually cited the Bush administration for alleged expansion of executive power will be among the first to address this obvious abuse of Constitutional power and call for an immediate revocation of the rule.

~McQ

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Money? Or Receipts?

Recently, while listening to the Opie and Anthony show, I heard an interview with Loius CK, the comedian.  And he said something that struck me as quite profound.  And quite true.

Back in olden times–i.e., prior to the 1930s–our paper money wasn’t actually money, as such.  Instead, it was a receipt for the real money–gold, or silver–that we had stored in the bank.  And the amount of gold we had determined how many of those receipts we could get.  The gold or silver we held had an intrinsic value, and the paper currency we carried was simply a representation of that intrinsic value.

Then, in the 1930s, we simply got rid of the metal, and kept the receipts.  Ever since then, the paper money we carry around with us has no intrinsic value.  And the value of that receipt is worth whatever the government says it’s worth.  It is a medium of exchange, and nothing more.

You may have $1,000,000 in the bank.  And if the government says that it’s only worth a cup of coffee in exchange, then that’s exactly what it’s worth.  It doesn’t matter if acquiring that million bucks was the work of a lifetime.  The government can, if it wishes or is unwise, reduce the stored value of your life’s work to a trip to Starbucks.

Just something to think about.

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Our Inordinate Fear of Inflation

That’s the subject Paul Krugman addresses in his NYT Op/Ed piece today.  In fact, he implies that even talking up the possibility of inflation comes solely from bad political motives, mostly from people who don’t grasp The Fierce Moral Urgency of Change™.

Why shouldn’t we worry about inflation, according to Prof. Krugman?

Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves. And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.

But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.

But, let’s grant that the current monetary moves aren’t immediately inflationary.  What happens when the economy recovers and the banks do begin to spnd those extra reserves?  Krugman attempts some sleight of hand, in an effort to make it appear that he addresses that concern.

Still, don’t such actions have to be inflationary sooner or later? No. The Bank of Japan, faced with economic difficulties not too different from those we face today, purchased debt on a huge scale between 1997 and 2003. What happened to consumer prices? They fell.

Yes, they did.  But since Japan hasn’t had a real economic recovery even today, and is entering its third “Lost Decade”, that really isn’t a compelling argument.  Since 1999, Japan’s rate of GDP growth has averaged 1.31%, which is less than half of the average GDP growth rate of 3% a mature economy should experience.  Indeed, over the last decade, Japan has experienced exactly 5 quarters where GDP growth was at 3% or more. In that same period, there have been 9 quarters when GDP contracted.  The highest annual rate of growth was in 2000, when the annual GDP growth was 2.85%.

So, let’s not pretend we know how the inflationary pressures fall out in Japan once a recovery hits…until there actually is a recovery.

ON the other hand, since our policymakers seem hell-bent on following the same path the Japanese did in the 1990s, the return of inflation when the economy recovers might turn out to be worry we can avoid until sometime in the relatively distant future.

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Real Voter Intimidation – No Biggie!

Remember the uproar during the 2004 presidential election about supposed voter disenfranchisement and voter intimidation that allegedly took place in Florida. Reports of blacks being stopped at police roadblocks and turned away from voting places? The Civil Rights Commission as well as numerous media outlets descended on the state in an attempt to validate the rumors. The story remains an urban myth to this day despite the fact that no evidence of any of that taking place was found.

Fast forward to the 2008 election and these video tapes:

What you would expect to happen, at the time and given the video evidence, happened:

The incident – which gained national attention when it was captured on videotape and distributed on YouTube – had prompted the government to sue the men, saying they violated the 1965 Voting Rights Act by scaring would-be voters with the weapon, racial slurs and military-style uniforms.

Career lawyers pursued the case for months, including obtaining an affidavit from a prominent 1960s civil rights activist who witnessed the confrontation and described it as “the most blatant form of voter intimidation” that he had seen, even during the voting rights crisis in Mississippi a half-century ago.

What happened next, however, wasn’t expected, although for most it comes as no real surprise:

The career Justice lawyers were on the verge of securing sanctions against the men earlier this month when their superiors ordered them to reverse course, according to interviews and documents. The court had already entered a default judgment against the men on April 20.

Got that? A default judgment. A done deal. Guilty.

But they were ordered to drop the charges and case and settle for this:

A Justice Department spokesman on Thursday confirmed that the agency had dropped the case, dismissing two of the men from the lawsuit with no penalty and winning an order against the third man that simply prohibits him from bringing a weapon to a polling place in future elections.

Ed Morrisey asks the pertinent question:

Recall, please, that Democrats screamed about the supposed politicization at Justice during Alberto Gonzales’ tenure as Attorney General for replacing political appointees who serve at the pleasure of the President. They claimed that the replacement of nine US Attorneys was a plan by the Bush administration, supposedly through Karl Rove and Harriet Miers, to affect the outcome of investigations and prosecutions. It touched off a Constitutional fight over executive privilege that continues to this day, as the House and Senate Judiciary Committees are still conducting its “investigations” into this supposed politicization.

This looks significantly more like politicization of outcomes that anything alleged during the Bush administration, especially since the DoJ already won the case. In fact, the government had prepared arguments for penalties against the men as late as May 5th, before the political commissars under Attorney General Eric Holder ordered them to withdraw. Holder, during his confirmation hearing, had called career DoJ lawyers his “teachers” and the “backbone” of Justice. Apparently, the political leadership trumps teachers and backbone when it comes to voter intimidation on behalf of Barack Obama.

So will the same Congressional committees open an investigation into this reversal to benefit voter intimidation on behalf of the administration?

Just as important, will the same portion of the leftosphere which went berserk over Gonzo and made a cottage industry of the allegations treat this obvious politicization of justice the same way they treated the alleged politicization by the Bush administration?

Methinks probably not.  Let the spinning (or ignoring) begin.

~McQ

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