Government Motors' Killing Of 13 Is A Small Part Of The Problem

A few days ago General Motors agreed to pay a $35 million fine to the U.S. Department of Transportation as a result of alleged "ignition switch defects" that are claimed to have caused 13 deaths and 42 crashes.  Expect numerous other regulators and prosecutors to pile on in coming weeks and months.

Well, US DOT, who owned GM when all these deaths were occurring?  In substantial part, that would of course be the U.S. government.  Agents of the same U.S. government then waited a barely respectable 5 months or so after the government sold its final stake in December 2013 to announce this settlement.  But didn't the problem occur on the watch of the U.S. government itself?

A long article by Bill Vlasic in the New York Times on May 17 traces the timeline of the story, and essentially accuses GM's in-house legal department of a long-running cover-up.  It's the usual Times narrative of the greedy corporation hiding safety problems to avoid having to pay settlements all while the innocent die.  According to Mr. Vlasic, GM had a "wall of secrecy on the switches," ultimately cracked by a combination of lawyers for injured plaintiffs and brave government investigators.  Somehow Vlasic manages to write the whole long article without once mentioning that the government was the largest owner of GM during most of the time in question, and even the majority owner of GM during some of the time in question.

Here's the timeline:  In approximately 2006 GM made some major changes to the ignition switches in its Chevy Cobalts -- changes that may have caused the problem.  It then conducted a series of investigations of the switches from that time through and including 2013, but according to Vlasic maintained its "wall of secrecy" during the whole stretch.  Meanwhile, in July 2009, as a result of the GM bankruptcy, the government came to own some 61% of it.  That stake was reduced to about 26% in 2010, 19% in 2012, and ultimately to zero in December 2013. 

So the government was the largest beneficiary of the cover-up, and sold out just before the problem came to light.  How exactly does it get to maintain its status as some kind of innocent bystander, let alone have its investigators claim to be brave sleuths bringing wrongdoers to justice? 

The real news, of course, is that these 13 deaths are a very, very small part of the government killing large numbers of people and getting a free pass from all concerned.  And no, I'm not talking about military campaigns.  Consider, for example:

• Corporate Average Fuel Economy standards, or CAFE.  Since 1975 the government has set ever-increasing levels of mpg fuel economy that car manufacturers must achieve.  The current standard for cars is an average of around 30 mpg.  The way to achieve that standard is to make your cars somewhat smaller and somewhat lighter -- in other words, more dangerous when someone gets in an accident.  J.R. Dunn at the American Thinker in 2011 summarized studies from the likes of the Harvard School of Public Health, the Brookings Institution, USA Today, and the National Highway Transportation and Safety Administration, which showed a range of estimates from about 41,600 to 124,800 excess deaths over a thirty-five year period (1975-2010) resulting from the CAFE standards.  Suddenly the 13 ignition-switch deaths at Government Motors pale into insignificance.  So what's our next move?  Why, of course, to increase the CAFE standards to an average of 54 mpg.  This increase was announced by President Obama in August 2012 and is already in place and scheduled to take effect by 2025.  Hundreds of thousands will die, but don't worry, this will help us to "address global climate change."
• The FDA.  The mission of the FDA is supposedly to make sure that our drugs are "safe and effective."  In practice, they are obsessed with the idea that even one person might die from taking an approved drug, and don't care one whit how many hundreds of thousands of people die while waiting year after year for an approval to come.  According to this report from the Independence Institute, prior to 1962 statutory revisions giving the FDA increased authority, the average time from filing to approval of a new drug was 7 months; more recently it has been around eight years.  Various studies estimate the number of deaths due to this "drug lag" in the hundreds of thousands -- a huge multiple of the number that may have been saved by keeping unsafe drugs off the market.  As just one example, tens of thousands of deaths have been attributed to the FDA's multi-year delay in the 1970s and 80s in the approval of "beta blockers" to prevent second heart attacks.  And then there is the FDA jihad against "off label" marketing -- that is, selling a drug that has been approved as both safe and effective for treatment of a condition that was not the condition for which the FDA approved it.  There is no legitimate health reason to restrict off-label marketing; this is about putting a higher priority on preserving the privileges of the regulators than on the lives and health of the people. 

To come up with other examples of the government killing large numbers of people, you only have to think about it for a few minutes.  How about the current VA scandal, where vets were put on waiting lists and kept there without treatment until they expired?  Or the government's promotion of the "low fat" diet over several decades, now starting to be recognized as a major cause of obesity.  Or the collateral damage of the drug war.  The government's current campaign to take cheap energy and electricity away from the poor hasn't gotten too far yet, but has the potential to kill many hundreds of thousands, if not millions.  So overall, while I'm a little upset that the government is getting a free pass on the 13 GM deaths, that's really the smallest part of this problem.

New York: Will We Get A More Real Budget?

In an article several days ago, "Not A Good Week For New York -- But It Could Have Been Worse," I looked at de Blasio's newly released budget and the new teachers contract, and noted that the two didn't seem to add up.  Where were the retroactive raises being hidden?

[U]nder any honest accounting, if you committed to that today, wouldn't you have to accrue the whole liability today even though you won't be paying for years? . . .  So where are you hiding these pay increases, including the retroactive ones?

Turns out that new Comptroller Scott Stringer had the same questions.  The New York Times reports the story today, "High-Power Tug of War Over Teachers' Deal," buried rather deeply at page A23. 

 [C]ity [C]omptroller, Scott M. Stringer['s] . . . team . . . discovered basic accounting problems with the deal.  In a series of extraordinary weekend meetings that started with an evening summit at Gracie Mansion, Mr. de Blasio and his senior aides pushed back at Mr. Stringer’s critique, . . . arguing that their deal was in compliance with standard accounting principles.  But Mr. Stringer insisted the administration had violated those principles, which have governed city finances since the 1970s, by spreading out the liabilities for certain back wages over several years, rather than booking the costs up front.

Result:  there will be a $725 million "adjustment" to the accounting for the deal, to bring the costs of the retroactive raises into the current fiscal year instead of spreading them over the years in which they are expected to be paid.  Here is the press release issued jointly by de Blasio and Stringer reflecting the agreement.  Key quote:

In order to ensure that the city’s financial accounting reflects a preferred approach, the Mayor and Comptroller have agreed that certain expenses now shown over the four-year plan will be presented as Fiscal Year 2014 costs.

That leaves two issues unaddressed by both the press release and the Times article:  (1) Is the current year budget going to be adjusted to put in this new expense?  and (2) What about all the other retroactive raises that de Blasio is about to agree to and thought he could put in out years where nobody would notice them?

The whole incident is extremely discouraging in showing de Blasio as totally willing to hide known expenditures in out years so that spending on political paybacks can be maximized in the current year.  I'll give the same advice to de Blasio today as I gave to new Newark mayor Baraka yesterday:

If you view the role of government as to spend as little as possible to accomplish its core functions, then Newark [New York} can resume a path to growth and success.  But if you regard the government's role as to spend as much as it can get away with to please and pay off the people who put you in power, then Newark's [or New York's] decline will continue and accelerate.

And meanwhile, among what may well be many other problems that I don't know about, it is clear that the pension projections in de Blasio's budget are wildly optimistic.  That has the effect of both deferring the problem and hiding it from public view.  Sadly, it is hard to see how we are not setting ourselves up for a period of decline. 

Newark Elects A Mayor

While New York enjoys the services of its new Mayor Bill de Blasio, just across the river in New Jersey, the largest city, Newark, elected a mayor yesterday.   It appears that Ras Baraka has prevailed over his opponent Shavar Jeffries.

I put Newark firmly in the category of the "basket case" cities.  Sitting right near the middle of one of the largest and most prosperous metropolitan areas in the world, Newark still has managed to find itself in a state of decline and financial crisis for decades.  The population, which peaked at 442,337 in 1930, was down to 277,140 in the most recent (2010) census.  Needless to say, if you are a basket case city, then somehow you are required to double down on the policies that have brought you decades of failure.  Newark is not an exception.

Some suggest there has been a modest recent renaissance in Newark under just-departed Mayor (now Senator) Cory Booker.  Steve Malanga of the Manhattan Institute analyzes that claim in a May 9 WSJ op-ed here.   He points out that the seeming progress of Booker's early years as mayor has largely been lost back in the more recent few years.  Murders declined from  over 100 down to 67 by 2008; but then they were back to 111 in 2013.  Unemployment fell from 9.4% when Booker became mayor to 7.4%, but now is back to 11.9%.  Newark's regression has occurred while New York has continued to prosper -- notably including areas heavily populated by African Americans that had previously suffered economically.  In Newark there are a few new office buildings downtown -- but even Detroit has that, and in the case of Newark it is hard to attribute new business arrivals to anything other than massive state giveaways to buy a few corporate relocations.  For example, according to nj.com here, Panasonic moved its North American headquarters to Newark in 2013 after New Jersey agreed to a $102 million "Urban Transit Hub" tax credit for the company.  For the $102 million, Panasonic pledged to create some 200 jobs over the next ten years -- that's almost $500,000 per job!

This race was nominally non-partisan, but no Republican would waste time trying to compete.  Jeffries was the moderate.  Baraka is most commonly described as a radical progressive.   Charles Upton Sahm in the Daily Beast on May 5 called him "a firebrand whose politics of racial resentment seem out of date many places in 21st-century America, but still resonates in Newark."  Sahm quotes an unnamed "prominent business owner" as saying "This guy is as radical as they come . . . .  He makes de Blasio look like Ronald Reagan."  Baraka's web site is rather short on specific policy proposals, but an idea of where he's coming from can be obtained from his past actions on the City Council.  For example, on his attitude toward charter schools, Sahm reports:

Thousands of children are on wait lists to get in charters and Baraka insists that he supports them as part of the overall system. But he introduced legislation in the city council in 2013 to place a moratorium on the opening of any new charters and voted against nine of 10 charter school lease agreements.

Needless to say, support of city unions, and particularly the Newark Teachers Union, was an important factor in the Baraka victory.

Well, I still wish Newark luck with this new guy.  But here's my advice to him.  If you view the role of government as to spend as little as possible to accomplish its core functions, then Newark can resume a path to growth and success.  But if you regard the government's role as to spend as much as it can get away with to please and pay off the people who put you in power, then Newark's decline will continue and accelerate. 

In Case You Thought That Our Government Was Other Than Completely Fraudulent

I have frequently pointed out here how most government statistics are designed and/or manipulated fraudulently to induce the public to support further government growth.  In case you are a bit skeptical about that, you need to take a look at the new "National Climate Assessment" Report just out from NOAA  This thing is really a new low in government fraud.  It has little or nothing to do with a fair assessment of the climate, and everything to do with an effort to scare the people into accepting additional government control over their lives.  

An honest climate assessment would, for example, need to feature and deal with the fact that global temperatures have failed to rise now for some 17 years, even as atmospheric CO2 levels have continued to increase.  An honest assessment would need to set forth the predictions from the alarmist government models from 10 and 20 years ago and compare those predictions to the real world data, which have failed to match the alarming temperature rises predicted.  This Report doesn't show the slightest interest in these subjects.  Instead, the Report treats one after another topic in the way to maximize the scare factor, in the process ignoring and/or cherry-picking data in a way that is insulting to the intelligence of anyone who follows this subject.

Out of a Report of some 800 pages, I'll just pick a few examples.  The very first chapter purports to summarize "Observed Change."  Anybody who follows the data knows that current temperatures are higher than those at the beginning of the twentieth century, but that the rise has two anomalies that are difficult for the climate alarmists to explain -- a period from about 1940 to 1970, when temperatures cooled despite increasing CO2; and another period from about 1997 to present, when temperatures have been flat despite increasing CO2.  After the thirty-year cooling starting around 1940, temperatures hit a recent low around 1970.  With that in mind, consider these key quotes from the Report:

Temperatures at the surface, in the troposphere (the active weather layer extending up to about 5 to 10 miles above the ground), and in the oceans have all increased over recent decades . . . .  The majority of the warming at the global scale over the past 50 years can only be explained by the effects of human influences.

"Recent decades" and "the past 50 years."  Could they really be cherry-picking the period of the late 1960s to present to maximize the apparent warming and avoid having to explain 1940 - 1970 and 1997 to present?  Yes, that is exactly what they are doing.

Or turn to the chapter on "Melting Ice."  They actually begin with a discussion of ice on the Great Lakes, including a big chart purporting to show that ice there has been decreasing for decades.  The chart ends with the winter of 2012-2013.  Yes, they are leaving out that Great Lakes ice is just coming off a record-setting 2013-2014 season, having been at record high levels from mid-winter through the spring, including up to right now.  It's almost impossible to believe that they would present this data truncated in a way that anyone who knows anything about the subject will immediately recognize as intentionally misleading.  They then move to a discussion of sea ice, with emphasis on declining ice in the Arctic.  But hasn't Antarctic ice been increasing, leading to a combined total that has recently been at record highs?  Here's how they try to slip the Antarctic ice increase past us:

While the Arctic is an ocean surrounded by continents, Antarctica is a continent surrounded by ocean. Nearly all of the sea ice in the Antarctic melts each summer, and changes there are more complicated than in the Arctic.

Got that?  The Antarctic is "more complicated," so it doesn't count.  Could they please mention that global sea ice actually hit record highs at various points during the past (Northern Hemisphere) winter?

Then there's my favorite topic, "ocean acidification."  "Acidification" -- there's a rather scary word!  They actually feel a need to define the term:  "lowering ocean pH levels ("acidification")."  A big chart shows the pH of the ocean at Hawaii declining since measurements began in 1988 from about 8.10 to about 8.07 today.  So let's whip up some fear!:

Such large changes in ocean pH have probably not been experienced on the planet for the past 100 million years, and it is unclear whether and how quickly ocean life could adapt to such rapid acidification.

But hang on a second.  I thought that pH over 7 means it's not acid at all; it's "alkaline."  Well, now we know why they defined the term.  Nobody using normal English would call pH going from 8.10 to 8.07 "acidification"; the normal term would be "decreasing alkalinity."  Unfortunately, nobody is going to get too scared about "decreasing alkalinity"; but "acidification" has just the right ring.  There is literally nothing honest about this exercise.  Guys, how scared should we really be if the ocean gradually came to have a pH, like pure rainwater, of right around 7?  By the way, at the rate it's going, it will take many centuries to get there.

Somewhat encouraging is that the abandonment of science for scare tactics increasingly induces honest scientists to break ranks, and even to express their disgust at what is going on.  For example, Judith Curry, Chair of the School of Earth and Atmospheric Sciences at Georgia Institute of Technology, who until several years ago continued to attempt to defend climate alarmism, has really had enough.

Some of the basic underlying climate science and impacts reported is contradictory to the recent IPCC AR5 reports…the phrase ‘climate change’ is now officially meaningless.  The report effectively implies that there is no climate change other than what is caused by humans, and that extreme weather events are equivalent to climate change.

Marc Morano at Climate Depot has a round-up of other negative reviews of the Report, ranging from "designed to scare people," to "simply made up," to "science fiction."  But I continue to be amazed at how many so-called "scientists" let their names be associated with this kind of transparent scam.  As to the government, scamming the people to increase their size and power is just what they do.  

UPDATE May 13, 2014:  As if part of a coordinated campaign to keep the climate alarmism going, the New York Times gives its lead slot at the top right of the front page this morning to a story by global warming propagandist Justin Gillis titled "Scientists Warn of Rising Oceans From Polar Melt"  Seems that NASA held a press conference yesterday, where the takeaway quote was "Today we present observational evidence that a large sector of the West Antarctic ice sheet has gone into irreversible retreat."  Supposedly the mechanism causing the problem is that warming waters are eating away at the edges of the sheet.  Somehow they manage to write the whole story without mentioning that the Antarctic sea ice "anomaly" (variance from normal for this date) as of this week is just slightly below the all time record high set in 2008 -- it's more than 1.6 million square kilometers above normal.  They also never mention the actual water temperatures, or variance from normal.  So somehow the "warming" waters are melting the land ice but not the sea ice?  In a post relating to a previous (2012) scare story from Antarctic ice researchers on this same issue, Steven Goddard of the Real Science web site had this to say:

Sea ice is expanding around Antarctica because the water is getting warmer. Makes sense if you have the IQ of a turnip.

To think that I once thought of the New York Times as a trusted news source!

There Is At Least One Dissenter To The Monetary Policy Folly

In December 2012 I asked the question, "Do Our Monetary Authorities Know What They Are Doing?"  My conclusion was, "All indications are that they don’t have a clue."  But then, is it just me?  Unfortunately, the question is rather important.  But very few people pay much attention to what's going on in monetary policy, and the ones who do are almost all specialist economists caught up in a big dissent-free groupthink.

The official Federal Reserve word is that they operate monetary policy with two goals, one an interest rate target and the other an unemployment rate target.  Does monetary policy have any direct short-term effect on the unemployment rate?  The idea seems preposterous to me.  Yet from presentations I have attended of the Shadow Open Market Committee, I'm given to understand that there is no dissent on the FOMC from having an unemployment rate target for monetary policy.  The result has been QE I, II, and III, and the Fed balance sheet growing from about $800 billion in 2008 to about $4 trillion at the last report in March.  This is a monetary "stimulus" wildly larger than anything previously undertaken in the history of the world.  We have had a sluggish, gradual decline in the unemployment rate, more of it coming from a declining labor force than from more jobs.  So far, no meaningful inflation.  On the other hand, the monetary base created by the asset purchases turns up as excess reserves on bank balance sheets.  Is that any kind of a problem?  I would say that it's a huge problem -- a gigantic inflation pre-baked and ready to explode upon us at any time without notice, and probably nothing that can be done about it when it happens.

I had thought nobody was concerned about this but me, but then on Thursday the Wall Street Journal carried an op-ed by economist Allan Meltzer that says all the things I've been saying for a couple of years.  Here are a few key quotes:

Fed Chairwoman Janet Yellen recently admitted that the central bank doesn't have a good model of inflation. . . .

The Fed's forecasts of inflation ignore Milton Friedman's dictum that "inflation is always and everywhere" a result of excessive money growth relative to the growth of real output. . . .

But long before idle reserves reached $2.5 trillion, the Fed didn't ask itself: What can we do by adding more reserves that banks cannot do by using their massive idle reserves? The fact that the reserves sat idle to earn one-quarter of a percent a year should have been a clear signal that banks didn't see demand to borrow by prudent borrowers. . . .

We are now left with the overhang. Inflation is in our future. Food prices are leading off, as they did in the mid-1960s before the "stagflation" of the 1970s. Other prices will follow.

That all sounds right to me.  Nobody seems to be paying much attention.  Meanwhile, back in Europe, what's the plan?  More "monetary stimulus" of course!  Here's Bloomberg reporting today on a speech by ECB President Mario Draghi yesterday:

Analysts from Goldman Sachs Group Inc. to UBS AG revised their forecasts to expect an interest-rate cut in June after ECB President Mario Draghi said officials would be “comfortable” adding stimulus if needed.

And then there's the Bloomberg editorial from Thursday advocating more of same:

In recent months, Europe's economies have begun a tepid revival. . . .  ECB President Mario Draghi has room to maneuver and should use it.

And these people think that our big worry should be climate change!  I guess it all depends on your perspective.  

Not A Good Week For New York -- But It Could Have Been Worse

Sorry to disappear for the past week.  Sometimes they make me work hard around here.

While I've been tied up, new Mayor de Blasio has gotten started on launching his big initiatives.  The two big things last week were the new "housing plan" and the contract with the teachers' union.  The bad news is that this guy does not have a clue what he's doing.  The good news is that he seems to feel at least a little constrained by reality, so it's considerably less bad than it could have been.

"Affordable housing" -- particularly "affordable housing" in Manhattan -- has been nominated for "worst possible public policy" by the Manhattan Contrarian.  Of course, it's a signature initiative from de Blasio.  Here in New York City the politicians have been trying to make housing "affordable" by an endless series of initiatives tying up the housing market since about the time of World War II.  We have rent control, rent stabilization, and a dizzying array of housing subsidy programs -- low income projects, middle income projects, tax exempt bonds to subsidize housing, property tax exemptions of multiple sorts, zoning bonuses, and lots more that I can't even think of right now.  And the result, of course, is the most expensive housing in the country.  Meanwhile, plenty of other growing cities that meddle little or none in their housing markets (think Houston, Dallas, Atlanta, Phoenix) have far lower costs of housing. 

So the big new "plan," Housing New York, was released on May 1.  Of course, this being New York and de Blasio, the "plan" consists of doubling down on decades of failure.   More city-as-developer; more subsidies; more forcing (supposedly) private developers to include "affordable" housing in their developments as a condition for permission to build.  On the other hand, it's almost all platitudes, with very few specifics on how it's going to be implemented.  Go to the section on "implementing the Plan" (page 12) and you will find a lot of airy wishful thinking, such as "Working with financial institutions, pension funds, financial intermediaries and philanthropy, we will also seek to leverage private capital on a greater than 3 to 1 basis," or "We will work in partnership with the State and the Federal government to identify new resources to fund affordable housing in the City and help us meet these critical objectives."  Sure thing, Bill. 

The actual numbers of units to be created are remarkably small.  The headline number is 200,000 units of affordable housing, but that's over 10 years -- so 20,000 per year.  But wait, isn't a mayoral term only four years?  Yes, he's counting most of this from after he's long gone.  And the 20,000 per year is "created or preserved," of which only 8,000 per year created.  That compares to the 80,000 per year created by the private markets in the 1920s -- the last decade when New York had a relatively free housing market and no depression going on.  In a city of 3+ million housing units, this 8000 per year is really a drop in the bucket.  And, given New York's terrible record in actually getting anything built, I would be extremely skeptical that much of this will actually happen.  In the Soviet Union, after seven decades of socialist housing production, they had 25 year waits for tiny shoddy apartments.  We won't have that because we allow a restricted private housing market to continue to operate; it's just that we drive up the cost of the private alternatives by 50% or so.

Also coming out in the last week have been the new teachers' contract, as well as the budget for the coming fiscal year.  Given that de Blasio was essentially put in office by the teachers' union, things could again have been far worse.  The main issue was that the teachers had been working without a contract for several years, and insisted on retroactive pay increases for those years.  Bloomberg refused to agree to that, with the result that he left without doing a new deal.  De Blasio has agreed to the retroactive raises, but with a gimmick:  raises covering 2009 - 2014 will be payable in five payments from 2015 - 2020.  So again, he's putting a big piece of it off until after he's gone.  And then, under any honest accounting, if you committed to that today, wouldn't you have to accrue the whole liability today even though you won't be paying for years?

Go to the budget (follow link here) and you will be hard-pressed to figure out where the increased costs of this contract are hidden.  At page 4 you learn that salaries and wages of city workers are projected to be less in FY 2015 ($23.1B) than FY 2014 ($23.6B).  So where are you hiding these pay increases, including the retroactive ones?  Or is the headcount going down by 10%?  Oh, and the financial plan only goes out to 2018, so the retroactive pay to be doled out in 2019 and 2020 isn't in here anywhere.

And how about pensions?  Supposedly the cost of pensions for city workers is going to go from $8.2B per year in FY 2014 to only $8.7B in four years out in FY 2018.  This is completely fictional.  The section on pension costs tells you nothing about the assumptions.  They're catching a big break this year because the stock market just went up 25% or so last year.  Do they really think that that is going to continue? 

But again there is some relatively good news, which is that they are being quite conservative in their revenue assumptions.  Of course, if you threaten tax increases at every opportunity and have twenty or thirty prosecutions going against your biggest taxpayers (the big banks) at any given time, the idea that your tax revenues might not grow much is probably right.

For now, New York City continues to grow, following 20 years of Republican and semi-Republican governance.  These developments threaten to slow that down some, but not to stop it dead in its tracks.