I'll get straight to the point:  I'm with Larry Kudlow, plus one step further - 

"Save the country; Kill the Bill!" 

can be upgraded to:  

Save the country; Kill the bill(s)...if that's the way Nancy insists on having it.   

Call her bluff; call her out; take her on!  The legislative calendar is so crowded that she will probably cave - and decouple the two bills.  When the reconciliation behemoth is stuffed back into that evil place from which it came, the country will, in fact, be saved.  

Measure G election March 3rd, 2020 in Redlands California

These are notes, thoughts, and observations about a local measure in the election in Redlands, CA where I reside.  So it's relevant locally, and only a curiosity to everywhere else.

I'm voting NO.  I recommend you do the same if you like the architectural charm and history of Redlands, and like what's left of its small-town feel. 

As someone said in earlier commentary, follow the money.  Then think just a little bit.  The reason the new train route is being built is in part for the purposes of ESRI.  Employees can commute in, and some residents can commute out. The train will have some good consequences, and some bad. More customers for Redlands businesses will come in, at least in theory. Also, it will bring some undesirables that most Redlanders would not want here. 

But the train will stand or fall on its own, economically.  If the people behind the train are depending on the building of crackerbox towers and an "urban feel", aka "stack and pack", for riders, as a long-time Redlands resident I hope they are severely disappointed. 

Is ESRI behind the push for Measure G? Several inputs suggest they are highly in favor of Measure G.  ESRI is expanding at a rapid rate, which on balance is great for Redlands.  But Redlands should be careful.  I watched in Bellevue and Redmond WA through the 1990s and early 2000s, as Microsoft expanded from its initial "intended" campus to multiple campuses. Traffic, electrical and other utilities, taxes, building codes and even freeway offramps all had to be considered and changed to accommodate the company as it grew from 5,000 to 50,000 people going to work daily. Effects on quality of life were negative, almost everybody agreed, even if financial effects were positive.  

If I were advising ESRI, I'd advocate multiple campuses, or "sub-headquarters".  Site diversity is good!  This is countered by most company's natural desire to have everybody together, and enjoy both real and imagined efficiencies. But if there is a bomb scare, a flood, a power outage (I experienced a case where someone forgot to maintain the backup generators! We all were sent home.), a fire, a riot, an earthquake, a terrorist act, or anything else, the benefit of having multiple "HQ-capable" sites becomes apparent. If Redlands is landlocked, as some say, go to other lands.  North San Bernardino, by Cal State SB? Closer to the main train station; great freeway access (a negative would be a location essentially on the San Andreas fault).  Moreno Valley/east Riverside? Freeways; land; housing; shopping.  Menifee? Temecula? Housing and freeway access; potential employees, ex of Orange County.

A friend argued that Redlands is land-locked.  Therefore, the argument went, Measure G is needed to increase Redlands' tax revenue.  Redlands doesn't need more tax revenue, in my opinion, as much as it needs to spend what it has better, on some more basic things.  The new city manager's emphasis on street repair is good, even if it's inconvenient at times now.

We pay high property taxes in California in general, and in Redlands in particular. Over the years I've watched as we voters have voted to pay for more and more stuff. The slow creep upward has not been fun to watch. At these heights, we should expect a sparkling, homeless-free, safe, well kept city with great infrastructure, with great education for our kids.  The argument that the crackerbox towers will expand the tax base without expanding the city's cost structure sounds like a fantasy to me. Read the City Attorney's Measure G analysis where the developers get a sweetheart clause that no longer requires them to pay the normal fees supporting infrastructure for their developments.  

The argument that Measure G will enable the Redlands Mall property to be re-developed, and that defeating Measure G will prevent that, is a lie. It is further an insult to people's intelligence. If an extra story or
two is needed for the mall to pencil financially for a developer, get a code variance on that specific property.  If a law prevents a code variance, we can vote on a law for that property. But "Transit Villages"? Train stations? Sustainability? Housing policy? Dreams of an "urban feel"?  None of that is relevant to the mall. 

The land that the Redlands Mall improvements (the actual mall building) sits on is owned by the owner of the mall.  Nothing unusual there.  But the parking lot land, which surrounds the mall building, is owned by the City of Redlands.  And that is a problem for developers who consider re-developing the mall.  If this is still true, and if we in Redlands want the mall re-developed, Redlands should quit-claim deed the surrounding parking lot to the mall's re-developer, and negotiate a tax deal in return.  Or something of that type. ( I just learned from a City Council member that the improvements and surrounding parking has been consolidated under single ownership.  This is good.)

It seems that CVS likes its location and has a lease in the mall building.  But they can't be made to move?  I'm sure the right terms in a new building would convince them to move.  They're a business, unlike the legendary or proverbial last homeowner in an eminent domain case!

Now for some arithmetic.  When my family moved here in 1963, Redlands population was around 40,000.  I even remember the number 36,000.  I read that our population had reached around 70,000.  Redlands feels full.  We shouldn't go north of there.  But what do the numbers in Measure G indicate?  My guess would be that Redlands could grow to 100,000. Here's how.

First let's find the theoretical maximum of new residents within the Measure G area.

The Measure G "Transit Village" area is over 780 acres.  The measure says the residential unit density can go up to 27 per acre. Using an average of 2.03 residents per household, Redlands could add over 21,000.  (2.03 x 27 units x 780 acres) / 2 = 2c,375. We divide by 2 because not all of the acres would have any such density. So if you add population growth outside the "transit villages" area to the 21,300 inside, you see a Redlands with a population over 100,000.  I don't want that. Do you?   

Reading the "WHEREAS" clauses of the Measure G text indicates the mindset of the authors.  It's certainly not about preserving the unique architectural heritage and experience of Redlands.  It seems to be about inflicting an urban high-density dream on Redlands to achieve some notion of environmentalist and "cosmopolitan" buzzwords to make the authors feel better. 

It won't work.  It has no chance.  And people who value classic Redlands won't be happy.  The developers of the "transit villages" will profit, and return to their yachts in Newport Beach and Marina Del Ray. 

If a group wants to develop a cosmopolitan/urban "transit village" utopia, they should buy land in the desert and start from scratch with a completely new design.  Osaka, Japan, for example, has concentric subway belts around the city center, on which one can get from most places to most other places in the city.

I close with a cautionary tale from personal experience. Across Lake Washington from Seattle is Bellevue. It had a small-town charm in ways somewhat like Redlands.  Some people in the region can still remember when the upscale mall at the center of town was a raspberry farm.  In the late 1990's Bellevue decided that it wanted a more "urban feel" like Seattle.  They changed the orientation of the downtown parking places to parallel so they could stuff more lanes on the roads, and put meters on all of them.  Bellevue's downtown is now a forest of towers.  People who moved to Bellevue to get away from Seattle's problems have taken their money and moved again.  This began long before Seattle suffered from its problems with homelessness.

If you've read this far that's great.  Thank you.  Here are my final high-level impressions:

• Redlands is deciding whether it wants an "urban feel" or wants to remain what it is: a unique, upscale suburb. 
• Mayor Foster and most of the City Council cautions voters about a future threat of dictates from Sacramento ruining our city with ham-handed housing units building requirements.  
• I haven't heard the Redlands is making any effort to fight the State's over-reach into municipal affairs that supposedly makes it prudent to adopt Measure G. California cities like Redlands, Claremont, Woodland (a suburb of Sacramento) and many others should band together and tie up the Sacramento nonsense in court.  All of these cities have historic architecture and a suburban feel that is to be treasured.  
• The City Council is basically asking us to trust them to exercise restraint and good judgement, after we vote away hard-won restrictions on over-building.  As a side note, this is the same group that brought us Redlands Mall in the first place.  The Mall replaced the beautiful (and very solid!) La Posada hotel and shops complex.  
• Even if one was in favor of some increased residential and commercial development downtown, Measure G reads as a gross over-reach of anything that makes sense for Redlands.  For example, go to the intersection of Alabama and Park, and take a good look at the 2-story concrete tilt-up light industrial park being built.  Now multiply the height by 3.  Six stories?  Really?  Good for Redlands?  No on G!  The gross over-reach means the City should go back to drawing board and do it again, if anything is to be changed from existing law.  
• The City Council has been working on this awhile.  The City let an RFP for an "urban feel" city plan in 2017.  An architectural firm out of Pasadena was hired whose website says they are "Architects and Urbanists". What's that?  Why would we want to pay to import big-city problems to Redlands? No on G! 

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source for 2.03 avg persons per household, by income.
https://censusreporter.org/profiles/04000US06-california/

Where's the Good Cop in the Standoff? The Debt Ceiling, Gov't Shutdown, and Obamacare

President Obama is wrong about not negotiating. He already is already negotiating. It's just that the position he's taking in the negotiation is that he won't talk to anybody. It's really that he's not talking to anybody *yet*. But he'll talk if forced to. He's a stubborn and power-loving lawyer, but not an idiot. If he takes this to the point of idiocy, it's up to Republicans to undertake a PR program to show it for what it is. Regardless of all the talking John Boehner and the Republicans are doing, it's not enough. Republicans are not pounding hard enough on the federal debt problem and its relationships with the shutdown, with excessive regulation, with the debt ceiling, and with Obamacare costs.

The President says he won't negotiate this way so as to not establish a pattern? The pattern is already established. It was started in 1995, was confirmed in 2011 and has already continued. Sorry, Mr. President, but brinksmanship, grandstanding, and legislative guns to heads is very much part of the pattern for both sides. So come off the pretend pedestal and get real.

It's a pretty sorry position for the chief executive in the executive branch to take. The executive branch should be herding the supposedly childish legislators to the table and keeping them talking and establishing priorities and negotiable items, the way it is said that LBJ did. If an executive does that, he/she can then say "See, I was a good executive and did everything I could to move the process forward, get the sides together and solve the problem." The President's chance to say that is already gone. He's been an  obstructionist so far, and that's all.

Why Harry Reid and Barack Obama have not played any version of "Good Cop-Bad Cop" puzzles me. They're both willing to be seen as complete obstructionists. The key is making one of them feel enough heat that they're forced to talk to the sides and start some substantive deal-making.

In the present scenario the Republicans and John Boehner are missing opportunities to paint the President for what he is. However, it's a slightly long and complicated message. Some education of the electorate would be called for. It couldn't be done with one 10-second sound bite.

Of course John Boehner can be painted with the obstructionist brush also. But we should keep in mind what the mission is. The original mission is to slow down the rise in federal deficits and the accumulation of federal debt. And subsidiary to that is finding a way to stop or at least slow the damage of Obamacare.

The Democratic side says people like Obamacare. Well, yes, there are some good insurance rules and many givaways for consumers of medical services in the bill. Likewise there are government benefits in many other pieces of legislation. But the vote-buying and the handouts, if you will, are only half of the argument. The costs and inefficiencies to the economy, and forgone wealth and income creation, not to mention the future financial viability of the country and the by extension the world economy are on the other side of the argument. Just poll the Japanese and ask them if they wouldn't like to have seen some economic and banking decisions made differently starting in about 1989.

Again, the mission is based on the fact that the federal debt is too high, and it's rising too fast. And the projections for staying on this course show that this level of government is unsustainable.

That's for two key reasons. The debt cannot be allowed to rise to too high a percentage of GDP. Also, having fiscal policy very much out of sync with monetary policy creates market distortions, the effects of which are large, have long lags, and result in a lot of wealth and income not being created. But these last two issues have been explored by others and are widely known in reasonable economic circles.

The Democratic side essentially says Obamacare is law, it's court approved, the debate's over, let's move on, and we got our prize so keep your hands off it! Well, not so fast. Anyone who was paying attention as the law was being created and passed will recall that it was a highly flawed, and I would observe actually dishonest affair.

A low point was when then-Speaker Nancy Pelosi famously said "We have to pass the bill so that you can find out what is in it - away from the fog of the controversy." She wasn't referring to San Fransisco bay fog, but to DC fog. The catch is that the controversy was legitimate. The bill was rammed through the process.

The vote should have been held up, and time provided to read the bill and debate its points. Then the proper conferences should have been held to either craft something that was financially sound and market-oriented enough for Republicans to support or to kill the bill in that congress. Harry Reid and Nancy Pelosi may have to answer for their effective but defective guidance of the legislative process some day. I hope they do.

Later the Supreme Court gave Obamacare a pass, but with a wink and a kicker. The kicker essentially said that the law stinks but that the problem must be solved legislatively.

Which brings us to the present standoff.

Balance? We're nowhere near it! Lower Spending!

When you're in the situation pictured below, you take some boxes off the cart. You don't go get a bigger donkey!  Cutting spending is like removing some boxes, of course. Increasing taxes resembles getting a larger donkey, and also has a suspicious resemblance to getting more of our present government.

So the question is Balance? Taxing versus spending balance? We're so far from that, it makes a mockery of the word. While others debate 3 dollars of spending cuts for 1 dollar of tax increases, I think it should be somewhere above 10 dollars of spending cuts for each dollar of tax increases. That's if it's not all spending cuts, pure and simple. Government spending simply needs to be a smaller percentage of GDP. As Speaker Boehner's recent spending chart showed, spending is the problem, not taxation.

The problem with the taxation side is that we're taxed enough already. Yes, that spells TEA, as in TEA party. The meaning of the phrase "TEA party" has evolved quite a bit since it first emerged. It's had a lot of help in that evolution from people who neither like nor understand what it stands for.

By what measure are we taxed enough already? A good measure is whether the level at which entities in the economy are taxed, cause them to alter their behavior significantly to avoid taxes. Of course, rational economic actors will alter their behavior at any level of taxation, from a little to the truly crippling. That's the foundation of the saying "tax anything and you'll get less of it!" But above significant behavioral changes, markets get so distorted that people's wealth is reduced and overall economic performance suffers.

Back to balance. I'm with CNBC's Rick Santelli on balance. For another illustration see his videos using watermellons and a pea as props to illustrate how little Congress is dealing with the spending side of this "balance".  

Todd Akin, Republicans and Winning Elections

The Two Personalities of the Republican Party

The Todd Akin brouhaha brings into focus something I've thought about the Republican party for a long time. The Republican party is a mash-up of economic thought and socio-religious thought.

As you read this, recall those circular drawings you saw way back in about forth grade. You were studying the intersection of sets. There is the set of economic conservatives who vote Republican. And there is the set of social conservatives who vote Republican. The Republicans seem to assume at times that their voters are at the intersection of those sets. I don't assume that, and as I listen to peoples' commentary I suspect that most are outside the intersection of these sets.

That is, they vote Republican for economic reasons *or* because they are socially conservative. Often I think the social conservatives don't care about economic issues and the economically-minded or free-market voters stay Republican in spite of the socially conservative platform planks.

I worry about the limiting effect of the intersection of those sets. As I survey the American scene it appears to me that the set of social conservatives is shrinking. They may be hard-core and vocal, but small in numbers. And the rise of Hispanic voters may render them less important than otherwise.

What about those who are economically conservative and socially liberal, such as myself? We are sometimes called Libertarians. The only catch with voting Libertarian is that they don't have the juice to win - and a vote Libertarian is basically a split from a Republican candidate or issue that might win. 

Into all of this comes Todd Akin

The Republican assumption seems to be that it must have hard-core religious social conservatives in the tent (with Todd Akin suddenly excepted). I don't agree - instead, the whole fiasco is just another exhibit illustrating the wisdom of separating religion and state. I could mention Islam at this point, but I won't.

George W. Bush's strategy was brilliant at the time, I thought. He said a lot of nice things to keep social conservatives in the tent, but did very little in terms of trying to change policy. I liked it that way.

I believe that in America today, and given the ways it is trending, the closer Republicans move to a Libertarian-style platform the better they will do. That's because hard-core church attendance and socially conservative believers are declining in numbers. And young people who are not constrained by any such belief systems are increasing in numbers. And those same young people can no longer assume affluence will be theirs in middle age. They  hear the constant drumbeat in the media about the economy. Some of them will give economics systematic study, and come around to free-market thinking.

I'd celebrate if the entire abortion plank were dropped from the platform. To wit, if Todd Akin does not want an abortion, he does not have to get one. :-)

In my personal experience I've seen that a woman does not get an abortion lightly. That's even if that woman fights vehemently for the right for women to have them. It seems the right to have them is important, but theoretical, before a woman is pregnant. But when the fetus is hers, a lot of feelings, hormones, religious beliefs, fears, medical risks and facts, social concerns, and advice from loved ones suddenly come into her equation. And that's probably how it should be.

Markets Down Hard, Debt, and Obamanomics

I haven't written here in my blog in a long time. But I've been watching the economic scene. And as you might imagine I've been quite unhappy with our President, his administration, and the results of their economic policies. Here in California the effect is magnified and made even worse.

I see these factors holding back the U.S. economy:

• Debt
• The effects of some misguided corporate rescues
• Market and corporate uncertainty caused by government actions, discussions and personnel appointments
• Present and expected future avalanches of regulations
  

After U.S. markets closed today, after the 512-point Dow drop and 60-point S&P drop, I watched a clip of Obama in 2008 or 2009, in which he said the economy should be much better 3 years out, or his presidency will be a single term. Well, here we are, it seems. I'll soon hoist a martini to his single term.

The pundits' observations I thought most valuable were that the market's fall is not about the U.S. debt deal, but about Euro-zone debt worries, and the growing perception that the U.S. economy is not growing fast and may actually fall into a "double-dip" recession. We'll see what actually happens, but though I've searched and listened to truckloads of commentary, I don't see a catalyst for U.S. growth. Yes, there are some sectors that should grow, and yes, the middle classes may be growing in China and India. But in our present trade environment we can't take proper advantage of it.

Obama said one correct thing, as far as the basic concept. He said Congress should approve the 3 or 4 international trade agreements in its queue. Now the agreements are forgotten and Congress has flown out of town for a month. The trade agreements would be one small catalyst for growth.

Hedge fund manager Phil Falcone was interviewed today on CNBC, mostly about his LightSquared network. In it he said that innovation was the only way for the U.S. economy to get going and grow again. I agree with him.

And what stands in the way of that innovation, or would foster the economic growth we all want (well, everyone except a few Luddites of various stripes)? In short, Obamanomics stands in the way of the innovation Falcone mentioned. Instead, for growth we should be repealing the laws, throwing out, simplifying, and rationalizing the regulations, and basically undoing all we can of the four factors listed above.

As an aside, during the Reagan administration, he said that he would reduce government employees by a significant amount. One evening I was looking up at the federal office building in West Los Angeles and doubted anything would happen. A very few years later the building was 40 or 50% vacant, if I recall correctly. I was very happy to see that Reagan did what he said he would do. Today the size of government employment has grown past any nightmare Reagan ever had. It's time to slim down again. The regulations and other scribblings of the bureaucrats are not needed. In fact, they're harmful.

Again, the bottom line is "back to free markets" to create the growth and jobs we need.

No Public Option for Healthcare Insurance!!

It's been fun watching the healthcare reform circus as the months have rolled by. It's also been disappointing. I view the notion that the government can "compete" with private companies in any market as preposterous. Ridiculous. Nonsense.

Government "competition" with private industry is not within the definition of a free market, and therefore a free-market optimum result or equilibrium cannot be attained. However the public-option proponents imagine things will play out, I can guarantee it won't happen that way. That's because they are basically hoping for an outcome that contradicts human nature, and the fundamental mathematics of markets and incentives systems. To me it looks as ridiculous as expecting water to run uphill.

We can refer to my earlier post about market regulation and the ice rink analogy. As applied here, medical insurance companies are the skaters and the government is the rink owner. The goverment can define the playing surface in a proper, free market, but it can't "compete", by definition. That's because if the rink owner plays, it will always win. It controls the game.

Or imagine a football game where one team includes the referees and the stadium owner, and millions of dollars are at stake. Oh, and the refs can change the rules anytime during the game. Who will win? I'll bet on the team with the refs. Do you want to take the other side of the bet?

In the medical insurance market, the government specifies the market parameters, has infinite resources, is subject to massive political incentives from the electorate (who are also insurance customers) and has the power to tax all of the other insurance companies. Again I ask "who will win?"

At the very best, as an outlier case one could imagine the federal government running its public option as a wise, benevolent despot. That is, it would undermine the private insurance options just enough to squeeze profits a little and force increases in efficiencies, and then stop. In this scenario it would be self-limiting, and forbear on many actions it could take. This won't happen. Please take an honest and critical look at any other program the government has undertaken. The contitutional limits on government exist for reasons based in experience and wisdom.