Tag Archives: economics

Is cannibal tourism good for Michigan?

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Governor Snyder has no appetite for it, but ex-governor Jennifer Granholm did, and some of her Democratic colleagues still do. Not cannibal tourism, as such, but movie subsidies paid for by a tax on business property independent of profits. Some seven years ago, in 2008, then-governor Granholm and a majority of our legislature instituted a $132 million/year subsidy program that provided up to 42% of movie production costs. The hope was that films would bring Hollywood-type wealth and glamor, and that they would spark tourism. As it happened, the jobs went to Hollywood transients to such an extent that the total number of MI film employees was reduced. It is now 100 lower than at the start, and virtually all of the money spent went to out-of state employees (quite often the high-priced star) who left as soon as the filming was done. The report concluded that the program returned 11¢ for every tax dollar spent. One of Governor Snyder’s first acts was to diminish the subsidies, and the legislature has just put an end to them: revenge of the nerd.

Offspring, filmed in Michigan. It does not seem to have promoted Michigan tourism.

Offspring: no jobs created, and perhaps no tourism … but think of the cool factor.

The amount spent in the early years, $132 million/year, was about 1/3 of the state’s deficit, a major misuse of funds. Reason magazine claimed it was “stone-crazy” to support movies when the state had, at the time, 14% unemployment, the highest rate in the nation. They argued that the money could be better spent on roads, or schools, or left in folks’ pockets (I agree).

The effect on tourism isn’t quite what was hoped. Movie makers tend to see Michigan as a setting for dystopian films, for example, “Offspring,” a film about cannibal tourism. This film got one of the largest state subsidies. A plot summary is:  “Survivors of a feral flesh-eating clan are chowing their way through the locals.” If this encouraged tourism, it’s not necessarily the tourists you wanted. You can tell it’s Michigan by the Michigan symbol on the police cars. Michigan funds also brought two Batman movies to Detroit, along with Michael Moor’s “Capitalism, a love story“, a  movie billed as showing how capitalism makes life in America a nightmare. The current head of the film board has noted that “realistic cannibalism; the gruesome and graphically violent depiction …. is unlikely to promote tourism in Michigan or to present or reflect Michigan in a positive light.” I can agree.

Batman and Superman in Detroit.

“Batman vs Superman.” They battle in Downtown Detroit, as do “Red Dawn” and “Transformers.”

Opposition to dropping the program came mostly from the Democratic side of the aisle. Rep. Jeremy Moss, D-Southfield, said the film incentives were creating good jobs. Rep. Kristy Pagan, D-Canton, pointed to “… the cool factor. Who doesn’t want to see Ben Affleck or Amy Adams walk down our streets?” (I don’t). In the end, three Democrats and virtually every Republican voted to end the program. Among the Republicans for keeping the program were Kathy Crawford R-Novi, and Mike McCready, R-Birmingham.

You should not feel too bad for the makers of gore films. Subsides are still available in Massachusetts, Oregon, Washington, California, Minnesota, Nevada, and several other states. Massachusetts welcomed Part 2 of The Offspring, a Massachusetts headline proclaimed the victory: “Come to Massachusetts, We Love Cannibals!” Massachusetts folks have been full of themselves for years. As for the money we saved, our Michigan legislature has finally begun balancing the budget and decreasing the destructive personal property tax that helped fund these schemes.

Robert E. Buxbaum, November 5, 2015. I should also commend the legislature for making “talk like a pirate day” a state holiday, and for passing, on November 3, a necessary roads bill. It was signed by most Republicans and two Democrats. Bipartisan-ish. With good management, Michigan might be coming back – lets hope it continues.

Say no to the dress

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A popular reality TV show follows the struggles of young brides-to-be shopping for a wedding dress at a famous store, Kleinfeld’s. They’ve come to believe that this charming adornment will make their dream-wedding really perfect. There is some sort of idea that the perfect wedding is necessary (or desirable) to get you started on a perfect life. This is stated in various ways throughout the show with phrases like: “you deserve to be the princess,” or “you deserve your special day.”

Each woman brings a retinue to help her pick the gown, and to help advise her about what dress has the most pop, or looks best on her, or makes her look the most special. Often it’s someone in this retinue that will pay for the dress too, a father, uncle, or a close family member. The store caters to the retinue at lest at the beginning to get a commitment to the price, generally $5,000 to $10,000, but sometimes to “no limit on the price.” It then provides a dazzling variety of dresses and an old hand or two to guide the young lady to the right one. At first, the retinue chimes in, but eventually the retinue is detached, and the bride is made to embrace that it’s her special day, alone. Then, when the perfect dress is finally chosen (often at the high-end of the budget), the bride is asked: “are you ready to say yes to the dress?” She does, with tears, and everyone claps, especially the retinue. Often, there is a final shot of the beautiful bride at the beautiful wedding. It’s touching, but perhaps unnecessary. So here’s an alternate  thought: just say “no”. No to the expensive dress; no to the expensive cake (sorry, cake boss) and no to the fancy, big diamond. instead, throw a big fun wedding on the cheap, perhaps at a park in a rented gown; friends will get you through life, the big dress and big cake will not.

An expensive wedding didn’t keep John Kennedy faithful, nor did it help cement Elizabeth Taylors 7 husbands (two to Richard Burton). Just the opposite: a recent study on marriage stability showed that the higher priced the wedding, the more likely it is to end in divorce.

Marriage stability goes down as the wedding costs go up.

Marriage stability goes down as the wedding costs go up. If you dress costs $5,000, your wedding is unlikely to come in at less than $10k. From Francis and Mialon, “A diamond is forever and other Fairy Tales,” 2014. The average cost of a US wedding: $30,000.

The point of the wedding is to have a long, happy marriage, not a one day party, and expensive weddings appear to be counter-productive to stability. Things are worse for those who enter poor, backing up the observation that money stresses are among the main causes of marriage failure. This is not to say that you should not have a wedding party, but that spending should be watched especially if the couple isn’t that extraordinarily rich. The average, employed US 20-something earns about $26,000/year before taxes. That’s not bad money until you realize that the average US wedding costs over $30,000 not including dress, ring and honeymoon. There is a far lower chance of divorce for the couple with the $5-$10k wedding, and even lower if the couple can keep expenses in the 0-$5k range.

Give her a diamond ring, but the ideal cost is between $100 and $2000 (unless you're super rich)

Give her a ring, but the ideal cost is between $200 and $2000 unless you’re super rich.

Statistics suggest that spending on the diamond doesn’t help either, unless it’s a very expensive stone — and that, perhaps, is because the very expensive stone is only bought by the very rich groom. Still, even for the 1% who can afford it, the dress or stone should be considered a sunk cost, not an investment. You’ll never be able to resell that dress at all, and though you can resell a diamond it is virtually impossible to get even half your money back. This isn’t to say that you should not give a ring — without a ring the bride will feel cheated, but most grooms will be better served giving one in the $100-$2000 range.

It seems that having lots of people at the wedding is perhaps the single best thing you can do for marriage stability. On the other hand, this graph might show that the sort of person who has 200 good friends is the sort of person to remain happily married.

Having lots of people at the wedding is perhaps the single best thing you can do for marriage stability. On the other hand, this graph might show that the sort of person who has 200 good friends is the sort of person to remain happily married. ibid.

While your wedding should be cheap, or at least affordable, it should not be small. It turns out that having lots of friends and family in attendance correlates strongly with having a long, stable marriage. I’m not sure if this is entirely cause and effect: perhaps those with lots of friends and family are giving and stable than those without. Still, it strikes me that friendships are good for every couple, and very worth maintaining. These are people who will be there for advice, or just be there when things get rocky. Give them a good party, and don’t drive them away by sending a message that a large gift is expected. If you get married on the cheap, it’s likely your guests will feel more comfortable showing up in business clothes with simple affordable gifts. Most bridesmaids are happier if they don’t have to buy a big expensive dress.

Honeymoons help malaise stability too.

Honeymoons help marriage stability too. ibid.

Robert E. Buxbaum, July 12, 2015. My 3 children are all entering marriageable age — and PhD age (I wrote a post comparing a wedding to a PhD.) The above are my thoughts before being hornswoggled into buying $5,000 worth of taffeta. They are also suggestive of the sort of work to get a PhD. Another good spending investment, I think, is to go on a honeymoon. I didn’t, and though we didn’t get divorced, in retrospect it seems like a good idea. I plan to finally go on a honeymoon for our 25th anniversary. Let’s toast (with Geritol) to finding the right mate. Good luck.

Of Scrooge and rising wheat production

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The Christmas Carol tells a tale that, for all the magic and fantasy, presents as true an economic picture of a man and his times as any in real-life history. Scrooge is a miserable character at the beginning of the tale, he lives alone in a dark house, without a wife or children, disliked by those around him. Scrooge has an office with a single employee (Bob Cratchit) in a tank-like office heated by a single lump of coal. He doesn’t associate much with friends or family, and one senses that he has few customers. He is poor by any life measure, and is likely poor relative to other bankers. At the end, through giving, he finds he enjoys life, is liked more, and (one has the sense) he may even get more business, and more money.

Scrooge (as best I can read him) believes in Malthus’s economic error of zero-sum wealth: That there is a limited amount of food, clothing, jobs, etc. and therefore Scrooge uses only the minimum, employs only the minimum, and spends only the minimum. Having more people would only mean more mouths to feed. As Scrooge says, “I can’t afford to make idle people merry. I help to support the establishments I have mentioned [the workhouses]. They cost enough, and … If they [the poor] would rather die,” said Scrooge, “they had better do it, and decrease the surplus population.”

Scrooge, the poor rich man.

Scrooge, the poor rich man with a tiny carbon footprint.

The teaching of the spirits is the opposite, and neither that of the Democrats or Republicans. Neither that a big government is needed to redistribute the wealth, nor that the free market will do everything. But, as I read it, the spirits bring a spiritual message of personal charity and happiness. That one enriches ones-self when one give of and by ones-self — just from the desire to be good and do good. The spirit of Christmas Present assures Scrooge that no famine will result from the excess population, but tells him of his 1800 brothers and shows him the unending cornucopia of food in the marketplace: spanish onions, oranges, fat chestnuts, grapes, and squab. Christmas future then shows him his funeral, and Tim’s: the dismal end of all men, rich and not:  “Will you decide what men shall live, what men shall die? It may be, that in the sight of Heaven, you are more worthless and less fit to live.” And Scrooge reforms, learns: gives a smile and a laugh, and employs a young runner to get Cratchit a fat goose. He visits his nephew Fred, a cheerful businessman for dinner, and laughs while watching Tom Topper court Fred’s plump sister-in-law.

The spirits do not redistribute Scrooge’s wealth for him, and certainly don’t present a formula for how much to give whom. Instead they present a picture of the value of joy and societal fellowship (as I read it). The spirits help Scrooge out of his mental rut so he’s sees worthy endeavors everywhere. Both hoarding and redistribution are Malthusian-Scroogian messages, as I read them. Both are based on the idea that there is only so much that the world can provide.

World wheet production

World wheat production tripled from 1960 to 2012 (faostat.fao.org), but acreage remained constant. More and more wheat from the same number of acres.

The history of food production suggests the spirits are right. The population is now three times what it was in Dickens’s day and mass starvation is not here. Instead we live among an “apoplectic opulence” of food. In a sense these are the product of new fertilizers, new tractors, and GMOs (Genetically modified organisms), but I would say it’s more the influence of better people. Plus, perhaps some extra CO2 in the air. Britons now complain about being too fat — and blame free markets for making them so. Over the last 50 years, wheat production has tripled, while the world population doubled, and the production of delicacies, like meat has expanded even faster. Unexpectedly, one sees that the opulence does not come from bringing new fields on-line — a process that would have to stop — but instead from increased production by the same tilled acres.

The opulence is not uniformly distributed, I should note. Countries that believe in Malthus and resort to hoarding or redistribution have been rewarded to see their grim prophesies fulfilled, as was Scrooge. Under Stalin, The Soviet Union redistributed grain from the unworthy farmer to the worth factory worker. The result was famine and Stalin felt vindicated by it. Even after Stalin, production never really grew under Soviet oversight, but remained at 75 Mtons/year from 1960 until the soviet collapse in 1990. Tellingly, nearly half of Soviet production was from the 3% of land under private cultivation. An unintended benefit: it appears the lack of Soviet grain was a major motivation for détente.  England had famine problems too when they enacted Malthusian “corn acts” and when they prevented worker migration Irish ownership during the potato famine. They saw starvation again under Attlee’s managed redistribution. In the US, it’s possible that behaviors like FDR scattering the bonus army may have helped prolong the depression. My sense is that the modern-day Scrooges are those against immigration “the foreigners will take our jobs,” and those who oppose paying folks on time, or nuclear and coal for fear that we will warm the planet. Their vision of America-yet-to-be matches Scrooge’s: a one-man work-force in a tank office heated by a single piece of coal.

Now I must admit that I have no simple formula for the correct charity standard. How does a nation provide enough, but not so much that it removes motivation– and the joy of success. Perhaps all I can say is that there is a best path between hoarding and false generosity. Those pushing the extremes are not helping, but creating a Dickensian world of sadness and gloom. Rejoice with me then, and with the reformed Scrooge. God bless us all, each and every one.

Robert Buxbaum, January 7, 2015. Some ideas here from Jerry Bowyer in last year’s Forbes.

High minimum wages hurt the poor; try a negative tax

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It is generally thought (correctly I suspect) that welfare is a poor way to help the poor as it robs them of the dignity of work. Something like welfare is needed to keep the poor from starving, and the ideal alternative to welfare seems to be a minimal job — that is one that is easy enough for a minimally skilled worker to do it, and high-paying enough so that this worker is able to support a family of 4. Such jobs are hard to produce, and hard to sell to those currently getting welfare — that is those getting paid the same amount for no work at all. I’d like to propose something better, a negative tax along with the removal of our minimum wage.

I suspect that our current system of minimum wage hurts the desperate poor and middle class at least as much as it helps the working poor. One problem with it is that it flattens the wage structure, hurting the ego and incentive of those who work harder or with higher skills. The minimum wage encourages lax work, and reduces the incentive of workers to improve. A higher talented or more experienced worker should make more than an unskilled beginner, but with the current minimum wages they hardly do. Our high minimum wage also hurts the desperate poor by cutting the lower rungs off of the employment ladder. Poor, unskilled, young folks are not hired because it will take a while before they’re productive enough to justify the minimum wage. And anyway, why should the minimum wage number assume that every worker lives independently (or should) and that every job deserves to support a family of four. Most unskilled workers are neither independent nor are they supporting a family of four. Most unskilled workers are not independent, nor are they the sole support of a family.

I suspect that people push for high minimum wages as a way to help without giving themselves. The cost is borne by the company, and companies are seen as evil, faceless oppressors. They prefer not to notice that the a high minimum wage creates high unemployment in central cities and other low skill areas, like Detroit before bankruptcy, and Puerto Rico today. In Detroit before bankruptcy, the living wage was set so high that companies could not compete and went bankrupt or fled. The ones that stayed hired so selectively that the unskilled were basically unemployable. Even the city couldn’t pay its wages and bills.

A high minimum wage increases the need for welfare, as some workers will be unemployable — because of disability, because of lack of skill, or from an ingrained desire to not work. The punishments a community can mete out are limited, and sooner or later some communities stop working and stop learning as they see no advantage.

The difficulties of taking care of the genuinely needy and disabled while the lazy and unskilled has gotten even some communist to reconsider wealth as a motivator. The Chinese have come to realize that workers work better at all levels if there is a financial reward to experience and skill at all levels. But that still leaves the question of who should pay to help those in need and how.  Currently the welfare system only helps the disabled and the “looking” unemployed, but I suspect they should do more replacing some of the burden that our minimum wage laws places on the employers of unskilled labor. But I suspect the payment formula should be such that the worker ends up richer for every additional hour of work. That is, each dollar earned by a welfare recipient should result in less than one dollar reduction in welfare payment. Welfare would thus be set up as a negative tax that would continue to all levels of salary and need so that there is no sudden jump when the worker suddenly starts having to pay taxes. The current and proposed tax / welfare structure is shown below:

Currently someone's welfare check decreases by $1 for each dollar earned. I propose a system of negative tax (less than 100%) so each dollar earned puts a good fraction in his/her pocket.

Currently (black) someone’s welfare check decreases by $1 for each dollar earned, then he enters a stage of no tax — one keeps all he earns, and then a graduated tax. I propose a system of negative tax (red) so each dollar earned adds real income.

The system I propose (red line) would treat identically someone who is  incapacitated as someone who decided not to work, or to work at a job that paid $0/hr (e.g. working for a church). In the current system treats them differently, but there seems to be so much law and case-work and phony doctor reports involved in getting around it all that it hardly seems worth it. I’d use money as the sole motivator (all theoretical, and it may not work, but hang with me for now).

In the proposed system, a person who does not work would get some minimal income based on family need (there is still some need for case workers). If they are employed the employer would not have to pay minimum wage (or there would be a low minimum wage — $3/hr) but the employer would have to report the income and deduct, for every dollar earned some fraction in tax — 40¢ say. The net result would be that the amount of government subsidy received by the worker (disabled or not) would decrease by, for 40¢ for every dollar earned. At some salary the worker would discover that he/she was paying net tax and no longer receiving anything from the state. With this system, there is always an incentive to work more hours or develop more skills. If the minimum wage were removed too, there would be no penalty to hiring a completely unskilled worker.

At this point you may ask where the extra money will come from. In the long run, I hope the benefit comes from the reduced welfare rolls, but in the short-term, let me suggest tariffs. Tariffs can raise income and promote on-shore production. Up until 1900 or so, they were the main source of revenue for the USA. As an experiment, to see if this system works, it could be applied to enterprise zones, e.g. in Detroit.

R. E. Buxbaum, June 27, 2014. I worked out the math for this while daydreaming in an economics lecture. It strikes me as bizarre, by the way, that one can contract labor for barter, pay a pizza for two hours labor, but you can’t contract labor for less than the minimum cash-rate $7.45/hr. You can go to jail by paying less than this in cash, but not in food. In Canada they have something even more bizarre: equal wages for equal skills — a cook and a manager must earn the same, independent of how well the cook cooks or how needed the work is. No wonder violent crime is higher in Canada.

In praise of tariffs

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In a previous post I noted that we could reduce global air pollution if we used import taxes (tariffs) to move manufacture to the US from China and other highly polluting countries. It strikes me that import tariffs can have other benefits too, they can keep US jobs in the US, provide needed taxes, and they’re a tool of foreign policy. We buy far more from China and Russia than they buy from us, and we get a fair amount of grief — especially from Russia. An appropriate-sized tariff should reduce US unemployment, help balance the US, and help clean the air while pushing Russia in an alternative to war-talk.

There is certainly such a thing as too high a tariff, but it seems to me we’re nowhere near that. Too high a tariff is only when it severely limits the value of our purchasing dollar. We can’t eat dollars, and want to be able to buy foreign products with them. Currently foreign stuff is so cheap thought, that what we import is most stuff we used to make at home — often stuff we still make to a small extent, like shoes, ties, and steel. An import tax can be bad when it causes other countries to stop buying from us, but that’s already happened. Except for a very few industries, Americans buy far more abroad than we sell. As a result, we have roughly 50% of Americans out of well-paying work, and on some form government assistance. Our government spends far more to care for us, and to police and feed the world than it could possibly take in, in taxes. It’s a financial imbalance that could be largely corrected if we bought more from US manufacturers who employ US workers who’d pay taxes and not draw unemployment. Work also benefits folks by developing, in them, skills and self-confidence.

Cartoon by Daryl Cagle. Now why is Russia a most favorable trade partner?

Cartoon by Daryl Cagle. Trade as foreign policy. Why is Russia a most favorable trade partner?

In a world without taxes or unemployment, and free of self-confidence issues, free trade might be ideal, but taxes and unemployment are a big part of US life. US taxes pay for US roads and provide for education and police. Taxes pay for the US army, and for the (free?) US healthcare. With all these tax burdens, it seems reasonable to me that foreign companies should pay at least 5-10% — the amount an American company would if the products were made here. Tariff rates could be adjusted for political reasons (cartoon), or environmental — to reduce air pollution. Regarding Russia, I find it bizarre that our president just repealed the Jackson Vanik tariff, thus giving Russia most favored trade status. We should (I’d think) reinstate the tax and ramp it up or down if Russia invades again or if they help us with Syria or Iran.

A history of US tariff rates. There is room to put higher tariffs on some products or some countries.

A history of US tariff rates. Higher rates on some products and some countries did not harm the US for most of our history.

For most of US history, the US had much higher tariffs than now, see chart. In 1900 it averaged 27.4% and rose to 50% on dutiable items. Our economy did OK in 1900. By 1960, tariffs had decreased to 7.3% on average (12% on duty-able) and the economy was still doing well. Now our average tariff is 1.3%, and essentially zero for most-favored nations, like Russia. Compare this to the 10% that New York applies to in-state sales, or the 6% Michigan applies, or the 5.5% that Russia applies to goods imported from the US. Why shouldn’t we collect at least as high a tax on products bought from the non-free, polluting world as we collect from US manufacturers.

Some say tariffs caused the Great Depression. Countries with lower tariffs saw the same depression. Besides the Smoot-Hawley was 60%, and I’s suggesting 5-10% like in 1960. Many countries today do fine today with higher tariffs than that.

Robert E. Buxbaum, March 25, 2014. Previous historical posts discussed the poor reviews of Lincoln’s Gettysburg address, and analyzed world war two in terms of mustaches. I’ve also compared military intervention to intervening in a divorce dispute. My previous economic post suggested that Detroit’s very high, living wage hurt the city by fostering unemployment.

Stoner’s prison and the crack mayor

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With the release of a video of Rob Ford, the Mayor of Toronto, smoking crack while in office, and the admission that at least two US presidents smoked pot, as did the Beatles, Stones, and most of Hollywood, it seems worthwhile to consider the costs and benefits of our war on drugs, especially pot. Drugs are typically bad for productivity and usually bad for health. Thus, it seems worthwhile to regulate it, but most countries do not punish drug sale or use nearly as harshly as we do in the US.

The Freak Brothers by Gilbert Shelton. Clearly these boys were not improved by drugs, but perhaps we could do better than incarcerating them, and their fans, for years, or life.

The Freak Brothers by Gilbert Shelton. Clearly these boys were not improved by drugs, but perhaps we could do better than incarcerating them, and their fans, for years, or life.

While US penalties vary state by state, most states have high minimum penalties that a judge can not go below. In Michigan, where I live, medical marijuana is legalized, but all supply is still illegal. Marijuana cultivation, even for personal medical use, is a felony carrying a minimum punishment of 4 years in state prison and a $20,000 fine. For cultivation of more than 20 plants the minimum sentence is 7 years in prison and $500,000; and cultivating 200 or more plants results in 15 years plus a $10,000,000 fine. These are first-time, minimum sentences where the judge can not consider mitigating circumstances, like a prescription, for a drug that was accepted for use in the US in the 70s, is legal in Holland, legalized in Colorado, and is near-legal in Belgium. While many pot smokers were not served by the herb, many went on to be productive, e.g. our current president and the Beatles.

In Michigan, the mandatory minimums get worse if you are a repeat offender, especially a 3 time offender. Possession of hard drugs; and sales or cultivation of marijuana makes you a felon; a gun found on a felon adds 2 years and another felony. With three felonies you go to prison for life, effectively, so there is little difference between the sentence of a repeat violent mugger and a kid selling $10 rocks of crack in Detroit. America has more people in prison than Russia, China, or almost every industrialized nation, per capita, and the main cause is long minimum sentences.

In 2011, Michigan spent an average of $2,343 per month per prisoner, or $28,116/year: somewhat over 1.3 billion dollars per year in total. To this add the destruction of the criminal’s family, and the loss of whatever value he/she might have added to society. Reducing sentences by 10 or 20% would go a long way towards paying off Detroit’s bankruptcy, and would put a lot of useful people back into the work-force where they might do some good for themselves and the state. 60.8% of drug arrestees were employed before they were arrested for drugs, with an average income of $1050/month. That’s a lot of roofers, electricians, carpenters, and musicians — useful people. As best we can tell, the long sentences don’t help, but lead to higher rates of recidivism and increased violent behavior. If you spend years in jail, you are likely to become more violent, rather than less. Some 75% of drug convicts have no prior record of violent crime, so why does a first-time offense have to be a felony. If we need minimums, couldn’t it be 6 months and a $1000 fine, or only apply if there is violence.

Couldn’t we allow judges more leeway in sentencing, especially for drugs? Recall that Michiganders thought they’d legalized marijuana for medical use, and that even hard-drugs were legal not that long ago. There was a time when Coca-Cola contained cocaine and when Pope Leo was a regular drinker of cocaine laced wine. If the two presidents smoked pot, and the Mayor of Toronto could do a decent job after cocaine, why should we incarcerate them for life? Let’s balance strict justice with mercy; so the fabric of society is not strained to breaking.

Robert Buxbaum, Jan 16, 2014. Here are some other thoughts on Detroit and crime.

Chemist v Chemical Engineer joke

What’s the difference between a chemist and a chemical engineer?

 

How much they make.

 

I made up this joke up as there were no other chemical engineer jokes I knew. It’s an OK double entente that’s pretty true — both in terms of product produced and the amount of salary (there’s probably a cause-and-effect relation here). Typical of these puns, this joke ignores the internal differences in methodologies and background (see my post, How is Chemical engineering?). If you like, here’s another engineering joke,  a chemistry joke, and a dwarf joke.

R.E. Buxbaum –  June 28, 2013.

Detroit: maximum punishment

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Some moths ago, I argued that getting rid of its extra-high minimum wage was perhaps the single best thing that Detroit could do to improve its bankrupt finances and to provide jobs for its youth. I argued that this living wage of $11 or $14/hr, depending on whether healthcare was provided, was too much for the city to pay for it’s minimal skill workers. I also argued that a lower minimum wage would help the city finances, and would allow the unskilled of Detroit to find jobs: it would provide the first rung of a ladder. Well, sort-of good news: Detroit’s living wage has been declared unenforceable by the Michigan Supreme court.

Unenforceable does not mean that wages will lower immediately: anyone working for the city will keep their high salary job, so the finances of the city will remain strained. Also, private companies can not lower anyone’s contracted wages. The only difference is that workers on non-city jobs who agree to be paid $7.50 to $14/hr, can no longer sue to recover additional dollars to meet Detroit’s “living wage.” Bit by bit I expect that more low-skilled workers will be hired, and that their wages will stabilize downward to a free-market value.

The next big things that are needed are reduced crime and increased population who are employed in businesses other than selling drugs or themselves. One way to reduce crime, I think is to have less-stiff minimum penalties for non-violent crimes like drug possession and driving with a suspended license. Currently the penalty for possession runs to 15-20 years. No one who spends that much time in prison will fit back into society. Let’s do them and ourselves a favor by reducing minimum sentences so that the normal sentence is only 1-5 years (ideally with < 1 oz marijuana possession punished by a fine).

Another horror is the penalty for driving with a suspended license. It’s $3000 for a start (a reasonable amount, I think), but then the state adds a $4000 per year penalty for the next 3 years: a total of $15,000. That’s too much for a minimum-wage earner to pay, but the minimum wage earner needs a car to get to work. So he/she can’t work, or he/she drives without a license or insurance. Is this what we want? Lets give a second chance and lower the penalty to produce more working, law-abiding citizens. There is nothing wrong with Detroit that could not be fixed by 200,000 more, law-abiding, employed Detroiters.

R.E. Buxbaum owns REB Research, a maker of hydrogen purifiers and hydrogen generators. We used to be located in Detroit, but are now in Oakland county, 1/2 mile north of the Detroit border.

For parents of a young scientist: math

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It is not uncommon for parents to ask my advice or help with their child; someone they consider to be a young scientist, or at least a potential young scientist. My main advice is math.

Most often the tyke is 5 to 8 years old and has an interest in weather, chemistry, or how things work. That’s a good age, about the age that the science bug struck me, and it’s a good age to begin to introduce the power of math. Math isn’t the total answer, by the way; if your child is interested in weather, for example, you’ll need to get books on weather, and you’ll want to buy a weather-science kit at your local smart-toy store (look for one with a small wet-bulb and dry bulb thermometer setup so that you’ll be able to discuss humidity  in some modest way: wet bulb temperatures are lower than dry bulb with a difference that is higher the lower the humidity; it’s zero at 100%). But math makes the key difference between the interest blooming into science or having it wilt or worse. Math is the language of science, and without it there is no way that your child will understand the better books, no way that he or she will be able to talk to others who are interested, and the interest can bloom into a phobia (that’s what happens when your child has something to express, but can’t speak about it in any real way).

Math takes science out of the range of religion and mythology, too. If you’re stuck to the use of words, you think that the explanations in science books resemble the stories of the Greek gods. You either accept them or you don’t. With math you see that they are testable, and that the  versions in the book are generally simplified approximations to some more complex description. You also get to see that there the descriptions are testable, and that are many, different looking descriptions that will fit the same phenomena. Some will be mathematically identical, and others will be quite different, but all are testable as the Greek myths are not.

What math to teach depends on your child’s level and interests. If the child is young, have him or her count in twos or fives, or tens, etc. Have him or her learn to spot patterns, like that the every other number that is divisible by 5 ends in zero, or that the sum of digits for every number that’s divisible by three is itself divisible by three. If the child is a little older, show him or her geometry, or prime numbers, or squares and cubes. Ask your child to figure out the sum of all the numbers from 1 to 100, or to estimate the square-root of some numbers. Ask why the area of a circle is πr2 while the circumference is 2πr: why do both contain the same, odd factor, π = 3.1415926535… All these games and ideas will give your child a language to use discussing science.

If your child is old enough to read, I’d definitely suggest you buy a few books with nice pictures and practical examples. I’d grown up with the Giant Golden book of Mathematics by Irving Adler, but I’ve seen and been impressed with several other nice books, and with the entire Golden Book series. Make regular trips to the library, and point your child to an appropriate section, but don’t force the child to take science books. Forcing your child will kill any natural interest he or she has. Besides, having other interests is a sign of normality; even the biggest scientist will sometimes want to read something else (sports, music, art, etc.) Many scientists drew (da Vinci, Feynman) or played the violin (Einstein). Let your child grow at his or her own pace and direction. (I liked the theater, including opera, and liked philosophy).

Now, back to the science kits and toys. Get a few basic ones, and let your child play: these are toys, not work. I liked chemistry, and a chemistry set was perhaps the best toy I ever got. Another set I liked was an Erector set (Gilbert). Get good sets that they pick out, but don’t be disappointed if they don’t do all the experiments, or any of them. They may not be interested in this group; just move on. I was not interested in microscopy, fish, or animals, for example. And don’t be bothered if interests change. It’s common to start out interested in dinosaurs and then to change to an interest in other things. Don’t push an old interest, or even an active new interest: enough parental pushing will kill any interest, and that’s sad. As Solomon the wise said, the fire is more often extinguished by too much fuel than by too little. But you do need to help with math, though; without that, no real progress will be possible.

Oh, one more thing, don’t be disappointed if your child isn’t interested in science; most kids aren’t interested in science as such, but rather in something science-like, like the internet, or economics, or games, or how things work. These areas are all great too, and there is a lot more room for your child to find a good job or a scholarship based on their expertise in theses areas. Any math he or she learns is certain to help with all of these pursuits, and with whatever other science-like direction he or she takes.   — Good luck. Robert Buxbaum (Economics isn’t science, not because of the lack of math, but because it’s not reproducible: you can’t re-run the great depression without FDR’s stimulus, or without WWII)

Detroit economics and the minimum wage

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A cause of Detroit’s financial problems, it seems to me, is that Detroit has an uncommonly high minimum wage, $13.75/hr for all employees in any company that contracts with the city and does not provide free health care; or $10.50/hr for companies that provide healthcare. This minimum, called a living wage, is about double the state minimum wage of $7.40.

Although the city is financially bankrupt, the city can not hire janitors and pay less than this, nor hire accountants from a company that pays its janitors less than this. Besides the burden on Detroit’s budget, this puts a burden on its unemployment system. Many in Detroit don’t possess the education or skills to justify jobs at this wage. This high minimum wage effectively cuts them from the bottom rung of jobs at these companies — jobs at the bottom of the ladder of success. Many businesses find innovative ways around the law, using corruption and bribes to skirt enforcement, if the recent trials of the mayor are any indication, but a system of corruption is not good for the city.

As these wages are far above standard, most employed workers for the city get their jobs by corruption and connections, and most everyone knows they got their jobs this way rather than skill. As a result, workers have no incentive to improve at their job. In a corrupt system like this, there is no likelihood that  a raise would come with improved performance.

The justification for the living wage is the cost to support a family of 4 or 5, but Detroit is a much cheaper place to live than most, and not all workers are supporting families of 4 or 5. It therefore makes little sense to force all potential workers to refuse entry-level employment at $8.00/hour, a wage that would allow a single, motivated individual a decent living and a chance to climb as his/her needs and skills grew. Instead of promoting hard work and merit, this ordinance fosters corruption and cronyism; it makes it expensive for the city to hire contractors, makes it hard for workers to get their first jobs, and removes the benefits that normally come with improved skills. It’s a disaster, I suspect, and a reason the city is bankrupt.

Dr. Robert E. Buxbaum is a self-employed curmudgeon who tries to speak the truth as he sees it.