Category Archives: local craftsmen

Nestle pays 1/4,000 what you pay for water

When you turn on your tap or water your lawn, you are billed about 1.5¢ for every gallon of water you use. In south-east Michigan, this is water that comes from the Detroit river, chlorinated to remove bacteria, e.g. from sewage, and delivered to you by pipe. When Nestle’s Absopure division buys water, it pays about 1/4000 as much — $200/ year for 218 gallons per minute, and they get their water from a purer source, a pure glacial aquifer that has no sewage and needs no chlorine. They get a far better deal than you do, in part because they provide the pipes, but it’s mostly because they have the financial clout to negotiate the deal. They sell the Michigan water at an average price around $1/gallon, netting roughly $100,000,000 per year (gross). This allows them to buy politicians — something you and I can not afford.

Absopure advertises that I t will match case-for-case water donations to Flint. Isn't that white of them.

Absopure advertises that I t will match case-for-case water donations to Flint. That’s awfully white of them.

We in Michigan are among the better customers for the Absopure water. We like the flavor, and that it’s local. Several charities purchase it for the folks of nearby Flint because their water is near undrinkable, and because the Absopure folks have been matching the charitable purchases bottle-for bottle. It’s a good deal for Nestle, even at 50¢/gallon, but not so-much for us, and I think we should renegotiate to do better. Nestle has asked to double their pumping rate, so this might be a good time to ask to increase our payback per gallon. So far, our state legislators have neither said yes or no to the proposal to pump more, but are “researching the matter.” I take this to mean they’re asking Nestle for campaign donations — the time-honored Tammany method. Here’s a Detroit Free Press article.

I strongly suspect we should use this opportunity to raise the price by a factor of 400 to 4000, to 0.15¢ to 1.5¢ per gallon, and I would like to require Absopure to supply a free 1 million gallons per year. We’d raise $300,000 to $3,000,000 per year and the folks of Flint would have clean water (some other cities need too). And Nestle’s Absopure would still make $200,000,000 off of Michigan’s, clean, glacial water.

Robert Buxbaum, May 15, 2017. I ran for water commissioner, 2016, and have occasionally blogged about water, E.g. fluoridationhidden rivers, and how you would drain a swamp, literally.

The argument for free trade is half sound

In 1900, the average tariff on imported goods was 27.4% and there was no income tax. Import tariffs provided all the money to run the US government and there was no minimum wage law. The high tariffs kept wage rates from falling to match those in the 3rd world. Currently, the average tariff is near-zero: 1.3%. There is a sizable income tax and a government income deficit; minimum wage laws are used to prop up salaries. Most economists claim we are doing things right now, and that the protective tariffs of the past were a mistake. Donald Trump claimed otherwise in his 2016 campaign. Academic economists are appalled, and generally claim he’s a fool, or worse. The argument they use to support low tariffs was made originally by Adam Smith (1776): “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy…. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry.” As a family benefits from low cost products, a country must too. Why pay more?  How stupid would you have to be to think otherwise?

A cartoon from Puck 1911. Do you cut tariffs, and if so how much. High tariffs provide high wages and expensive prices for the consumer. Low tariffs lead to cheap products and low wages. Uncle Sam is confused.

A cartoon from Puck, 1911. Should tariffs be cut, and if so, how much. High tariffs provide high prices and high wages. Low tariffs lead to low prices for the consumer, but low wages. Uncle Sam is confused.

Of course, a country is not a family, and it is clear that some people will benefit more from cheap products, others less, and some folks will even suffer. Consumers and importers benefit, while employees generally do not. They are displaced from work, or find they must compete with employees in very low wage countries, and often with child labor or slave labor. The cartoon at right shows the conundrum. Uncle Sam holds a knife labeled “Tariff Revision” trying to decide where to cut. Any cut that helps consumers hurts producers just as much. Despite the cartoon, it seems to me there is likely a non-zero tariff rate that does not slow trade too much, but still provides revenue and protects American jobs.

A job-protecting tariff was part of the Republican platform from Lincoln’s time, well into the 20th century, and part of the Whig platform before that. Democrats, especially in the south, preferred low tariffs, certainly no more than needed to provide money for government operation. That led to a diminution of US tariffs, beginning in the mid- 1800s, first for US trade with developed countries, and eventually with third world as well. By the 1930s, we got almost no government income from tariffs, and almost all from an ever-larger income tax. After WWII low tariff reductions became a way to promote world stability too: our way of helping the poor abroad get on their feet again. In the 2016 campaign, candidate Donald Trump challenged this motivation and the whole low-tariff approach as anti- American (amor anti America-first). He threatened to put a 35% tariff on cars imported from Mexico as a way to keep jobs here, and likely to pay for the wall he claimed he would build as president. Blue-collar workers loved this threat, whether they believed it or not, and they voted Republican to an extent not seen in decades. Educated, white collar folks were uniformly appalled at Trump’s America-first insensitivity, and perhaps (likely) by the thought that they might have to pay more for imported goods. As president, Trump re-adjusted his threat to 20%, an interesting choice, and (I suspect) a good one.

The effect of a 20% tariff can be seen better, I think, by considering a barter-economy between two countries, one developed, one not: Mexico and the US, say with an without a 20% tax. Assume these two countries trade only in suits and food. In the poor country, the average worker can make either 4 suits per month or 200 lbs of food. In the developed country, workers produce either 10 suits or 1000 lbs of food. Because it’s a barter economy with a difference in production, we expect that, in the poor country, a suit costs 50 lbs of food; in the rich country, 100 lbs of food. There is room here to profit by trade.

The current state of tariffs world-wide. Quite a few countries have tariffs much higher than ours. Among those, Mexico.

Tariffs world-wide. While we put no tax on most imported products, while much of the world taxes our products rather heavily.

With no tariff, totally free trade, an importer will find he can make a profit bringing 100 lbs of US food to Mexico to trade for 2 suits. He can return two suits to the US having gotten his two suits at the price of one, less the cost of transport, lawyers, and middlemen (relatively low). Some US suit-makers will suffer, but the importer benefits immediately, and eventually US consumers and Mexican suit workers will benefit too. Eventually, US suit prices will go down, and Mexican wages up, We will have cheaper suits and will shift production to produce what we make best —  food.

In time, we can expect that an American suit maker will move his entire production to Mexico bringing better equipment and better management. Under his hand, lets assume his Mexican workers make 6 suits per month. The boss can now pay them better, perhaps 100 lbs of food and two suits per month. He still makes a nice profit, more than before: he ships two suits to the US to buy the 200 lbs of food, and retains now two suits as profit. Hillary Clinton believed this process was irreversible. “Those jobs are gone and they’re not coming back,” her campaign told CNN. She claimed she’d retrain the jobless “for the jobs of the future” and redistribute the wealth of the rich, a standard plank of the democratic platform since 1896. But for several reasons industrial voters didn’t trust her. Redistribution of wealth rarely works because, for example, the manufacturer can keep his profits off-shore, as many do.

While a very high tariff would stop all trade, but lets see what would happen with Trump’s 20% tariff. With a 20% tariff, when the first two suits come to the US, we extract 0.4 suits in tax revenue, but nothing on export. The importer still makes a profit, but it’s now 0.6 suits, the equivalent of 60 lbs of food. He can sell his suits for less than the American, but not quite as much less. If the manufacturer moves to Mexico he makes more money than by trade alone, but not quite as much. Tax is still collected on every suit brought to America — now 20% of the 3 suits per Mexican worker that the Boss must export. The American worker’s wages are depressed but he/she isn’t forced to compete with the Mexican dollar-for-dollar (suit for suit). In barter terms, he isn’t required to make 6 suits for every 100 lbs of food.lincoln-national-bank-internal-improvements-tariffs

Repeating the above for different tax rates, we find that, in the above fictional economy a 50% tariff in the maximum to allow any trade (or the minimum rate to stop trade completely): the first two suits might enter; but they’d be taxed at one suit, just enough to pay for the 100 lbs of food. There would be no profit for the importer, and he/she would stop importing. At 50% tariff, we would get no new goods, and we’d collect no new revenue – a bad situation. Lincoln’s “protective tariffs” of 1861 may have contributed to Southern succession and the start of the civil war. While there is a benefit to trade, it seems to me that some modest tariff (10%, 20%) is better for us — a conclusion that Trump seems to have intuited, and that many other countries seem to have come to, too (see map-chart above). As for the academic economists, I note that they also predicted that stock market crash should Trump be elected; it’s gone nearly straight up since November 8, 2016. For experts on money, I find that most economists are not rich.

Robert E. Buxbaum, March 27, 2017. I learned such economics as I have from my one course in economics, plus comic books like the classic “Once upon a dime” produced by the New York Federal Reserve. Among the lessons learned: that money is a distraction, just a more convenient way to carry around a suit, 100 lbs of food, or a month of work. If you want to understand economics, I think it helps to work things out in terms of barter. As

A British tradition of inefficiency and silliness

While many British industries are forward thinking and reasonably efficient, i find Britons take particular pride in traditional craftsmanship. That is, while the Swiss seem to take no particular pride in their coo-coo clocks, the British positively glory in their handmade products: hand-woven, tweed jackets, expensive suits, expensive whiskey, and hand-cut diamonds. To me, an American-trained engineer, “traditional craftsmanship,” of this sort is another way of saying silly and in-efficient. Not having a better explanation, I associate these behaviors with the decline of English power in the 20th century. England went from financial and military preëminence in 1900 to second-tier status a century later. It’s an amazing change that I credit to tradition-bound inefficiency — and socialism.

Queen Elizabeth and Edward VII give the Nazi solute.

Queen Elizabeth and Edward VII give the Nazi solute.

Britain is one of only two major industrial nations to have a monarch and the only one where the monarch is an actual ambassador. The British Monarchy is not all bad, but it’s certainly inefficient. Britain benefits from the major royals, the Queen and crown prince in terms of tourism and good will. In this she’s rather like our Mickey Mouse or Disneyland. The problem for England has to do with the other royals, We don’t spend anything on Mickey’s second cousins or grandchildren. And we don’t elevate Micky’s relatives to military or political prominence. England’s royal leaders gave it horrors like the charge of the light brigade in the Crimean war (and the Crimean war itself), Natzi-ism doing WWII, the Grand Panjandrum in WWII, and the attack on Bunker Hill. There is a silliness to its imperialism via a Busby-hatted military. Britain’s powdered-wigged jurors are equally silly.

Per hour worker productivity in the industrial world.

Per hour worker productivity in the industrial world.

As the chart shows, England has the second lowest per-hour productivity of the industrial world. Japan, the other industrial giant with a monarch, has the lowest. They do far better per worker-year because they work an ungodly number of hours per year. French and German workers produce 20+% more per hour: enough that they can take off a month each year and still do as well. Much of the productivity advantage of France, Germany, and the US derive from manufacturing and management flexibility. US Management does not favor as narrow a gene pool. Our workers are allowed real input into equipment and product decisions, and are given a real chance to move up. The result is new products, efficient manufacture, and less class-struggle.

The upside of British manufacturing tradition is the historical cachet of English products. Americans and Germans have been willing to pay more for the historical patina of British whiskey, suits, and cars. Products benefit from historical connection. British suits remind one of the king, or of James Bond; British cars maintain a certain style, avoiding fads of the era: fins on cars, or cup-holders, and electric accessories. A lack of change produces a lack of flaws too, perhaps the main things keeping Britain from declining faster. A lack of flaws is particularly worthwhile in some industries, like banking and diamonds, products that have provided an increasing share of Britain’s foreign exchange. The down-side is a non-competitive military, a horrible food industry, and an economy that depends, increasingly on oil.

Britain has a low birthrate too, due in part to low social mobility, I suspect. Social mobility looked like it would get worse when Britain joined the European Union. An influx of foreign workers entered taking key jobs including those that with historical cachet. The Brits reacted by voting to leave the EC, a vote that seems to have taken the upper class by surprise, With Brexit, we can hope to see many years more of manufacturing by the traditional and silly.

Robert Buxbaum, December 31, 2016. I’ve also written about art, good and bad, about the US aesthetic of strength, about the French tradition of innovation, And about European vs US education.

The most offensive thing in America – Parker House

There are many offensive things about Americans, and many offensive things, but perhaps the most offensive is the famous Parker House restaurant, Boston, shown below in a photo taken by a friend of mine, historian Jim Wald. The Parker House is the home of Parker House rolls and Boston Cream Pie. Then there are the customers: Colin Powell and John Kennedy among them. It’s also the site of the Saturday club of Emerson, Longfellow, Holmes, Agassiz, Dana, and Charles Dickens; he lived in the Parker Hotel for two years. But more remarkable than either  is that its staff have shown a singular tendency to go off and become revolutionarily anti-American after working there for even a short time.

The Parker House restaurant, Dec. 2015, photo by jim Wald, perhaps showing the next world leader.

Among Parker House employees we find Malcolm X, he worked as a busboy under his original, given name: Malcolm Little. We also find Ho Chi Minh, a pseudonym taken — it means, the enlightened one or the one who will enlighten (strangely enough, Genghis Kahn also means the enlightened one — in Mongol) was a pastry chef. he arrived in Boston as a ships cook, and worked in the hotel as Nguyen Cung. After Boston, he moved to Paris where he again made cakes and pies but changed his name to Nguyen O Phap (Nguyen who hates the French). Eventually, he and Malcolm X revolted against America and managed to turn the tables, as it were, on their customers.

Why do workers in this hotel turn out this way. Perhaps it’s because the hotel tries to hire hard-working, intelligent staff. You’ll notice, in the photo above that the waiters look more physically fit than the customers and at least as sharp. They are as engaged in their conversation as the customers, but this is not the entirety of the issue. I suspect that the waitstaff in this location constantly listen to socialist discussions from the customers, and then are sent off for coffee, or ignored, and perhaps insulted as well.

My guess is that Malcolm X and Ho Chi Minh became socialist revolutionaries because they came to believe they deserved more than they got from the customers at Parker House. I’m reminded of the “Uber” driver in Kalamazoo who picked up customers between bouts of a shooting spree. Apparently he showed no sign of mental illness, and got a five-star rating from his last customer.

So what can you do if you eat at Parker House or any fancy restaurant? I think it pays to tip. Don’t tip so much that your driver/ server feels like a peon, but tip. It would help to chat, I think. It’s likely to leave a good feeling — important if your waiter is homicidal — and if your waiter becomes famous some day, you might get a mention, or have the basis for a great story — “Me and Genghis go way back…” It’s nice if the next world dictator doesn’t hate you. I’m given to understand that the people hate Satan is that you can serve him, but he never tips.

Robert Buxbaum, February 29, 2016, updated August 24, 2017. I run REB Research, and I’m running for drain commissioner. I try to be nice to my employees and waiters.

Michigan’s road bill — why not?

Stagnating before the Michigan Senate is a road improvement bill that passed the Michigan house 10 days ago. Though it’s not great, I hope they sign the bill. The bill would raise raise $600 million to $1.2 billion/year, an increase of $60 to $120 per person per year ratcheting up over the next six years. The first stage of the bill would take effect in October 2016, and would raise $400 million by increasing our car/ truck registration fees by about 40%. People with normal sedans would pay about $60 more per car per year. Those with more expensive, heavier vehicles would pay more. Though our registration fee is already among the highest in the nation, raising it further has the potential (It seems to me) to be the most fair and reasonable source of additional revenue. People with fancy cars, I imagine, are wealthy and those with heavy cars (I imagine) do the most road damage. This is the part of the bill that has proven the most contentious.

The next stage would begin in early 2018. It would raise $200 million by increasing Michigan diesel and gasoline taxes. The larger part would be on diesel fuel, an increase of 7.3 cents/gal presumably to soak out-of-state truckers who come through Michigan. These individuals deserve extra taxation, I imagine, because they don’t pay registration fees and probably damage our roads even more than those with fancy cars. Besides, they don’t vote in Michigan. The gas tax increase is smaller, 3.3 cents/ gal on regular gas, but Democrats are correct to point out that it is regressive. It takes a greater fraction from the poorer than from the rich. The hope is that, by the time the tax increase takes effect, we’ll have some inflation and also some more fuel-efficient cars so the bite won’t be as bad. Sorry to say, we already pay the 10th highest gas tax in the country.

The final phase of the road funding bill would not take full effect until 2021. The idea is to transfer $600 million from the general fund to pay for the roads with money left over to reduce home-owner taxes. Underlying the ability to do this is an assumption that Michigan industry and home prices will recover enough between now and then that we’ll be able to stop using the gasoline taxes to fund our schools, ideally with money left over from the regular income and sales tax. While I’d like to see this happen, and while this is possible given that the last few years have seen the state’s GDP recover at a 15.5+% growth rate (third highest in the nation) there is also a basis to say the assumptions are over- optimistic. On the other hand, the Democratic plan, based on 1.6% growth next year is likely over-pessimistic. As The Yogi says, “Predictions are always difficult, especially about the future.”

Whatever your views of the future, our roads are crumbling now, and new money is needed to fix them now before they get worse. If taxes must be raised, I’m inclined to do it with use -taxes, that is by charging those who use the services most. This is a philosophical preference of mine. Not all Republicans agree with this, and only one House Democrat has signed on so far. It was the view of the old-time, labor Democrats I grew up with, but not of today’s Democrats who prefer to tax “the rich” for any and all goods and services. Their point: that there are struggling, poor people who drive heavy, expensive cars. They’ve something of a point on the heavy cars, but I have less sympathy for the rest. I wrote a comic story about a poor guy trying to dispose of an expensive car, a Viper. My guess is that struggling rappers and poser politicians would not find it funny.

Dollars per capita spent on roads, 2013. From MDoT's road funding proposal.

Dollars per capita spent on roads, 2013. From MDoT’s road funding proposal.

Part of the way that MDoT (the Michigan Department of Transportation) justified its target of $600 million to $1.2 billion was by comparison with surrounding states — not my favorite way of analysis. The MDoT graphic shows that Michiganians spend about $57 less per capita on roads than folks in Illinois, Wisconsin, or Ohio, and about $100 less than folks in Indiana or Pennsylvania. Multiply $57 by our state’s population, 10 million, and they conclude we should spend some $570 million more per year. Multiply by $100, and you get $1.0 billion.

While the need for at least $600 million/year sounds about right, I note that the per-capita spending justification seems dubious. If you calculate instead on the basis of dollars per lane-mile, as below, you find that Michiganians are already paying more per mile than Minnesota, Wisconsin, or Indiana. You’ll also note that Ohio and Illinois pays about 1 1/2 times as much their roads aren’t much better. A major part of the variation, I suspect, is corruption, and the rest, I guess is incompetence. Illinois, perhaps the most corrupt state in the mid-west, has seen 4 of its past 5 governors go to jail, along with innumerable Chicago Aldermen and lesser officials. Citizens of Illinois pay for this corruption in over-size construction projects, and over-size construction fees. After the $600 million increase, we’ll pay $8,950 per lane mile suggesting we are still not quite as costly per lan-mile as Illinois or Ohio. If it turns out we need the full $1.2 billion extra, it will suggest we are even more incompetent or corrupt than Illinois.

Road funding state by state comparison.

Road funding state by state comparison, from the same MDoT report, 2013.

An ideal way I’d like to reduce the costs of Michigan’s roads would be to reduce corruption, a trend that’s already helped to revitalize Detroit since the Justice department jailed the mayor and his father plus some associates for “pay for play”. I’m sure it also helped to remove the chief of police (millions in his ceiling) and Bobby Ferguson of the useless, expensive Jail project and Guardian building scandal.

Conviceted IL

It’s somewhat hard to judge the level of general incompetence in a state, and even harder to find a fix. Minnesota had a bridge collapse in 2007, and we had the Zilwaukee in 1982 (and 2008), the 9 mile bridge collapse of 2009, and the Southfield overpass collapse of 2014. It’s been proposed that we should be able to fix both our corruption and our incompetence problems by holding the contractors responsible for any failures. If only it were that easy. Holding contractors responsible might get some contractors to allow the concrete cure for longer periods under water before opening a road, but I’m not sure the public would stand for it. A more-likely outcome is that crooked contractors would charge more for the same bad work, and then go bankrupt as soon as the road fails. If their company were appropriately structured, they could re-appear the next day: the same people and equipment, operating under a new corporate name.

The biggest single incompetence issue that I can see appears to be poor under-road drainage. In Oakland county, where I am, the drain department looks responsible for the major flood of last summer. We’ve had rains this big in previous years without this massive flooding. I suspect a lack of dry-wells, but don’t know. From what I see, the drainage is bad beneath many Oakland roads, too. It seems like the concrete slabs are not deteriorating as much as they are coming apart. That’s a sign of bad drainage. I also see sink-holes, new lakes, and places where the sidewalks sink. Again, that’s a sign of bad drainage; a sign there is a swamp near or beneath the road. If the ground below a major road is a swamp, there is no practical way a contractor can build a long-lasting road over it. Until the drains get better, or the corruption subsides, we’re going to have to replace the roads often at a cost of another $600 million/year. We might as well acknowledge our problems and sign the bill.

Robert Buxbaum, November 2-3, 2015. If you feel like getting involved, contact your state senator and tell him/her to vote yes (or no). Our senator is Vince Gregory. And if anyone would like to put me on a drainage board, I’d be happy to serve for free.

Detroit emerges from bankruptcy. Not quite.

missing homes Detroit

While Detroit’s central core comes back, surrounding, homes burn at 220+/month, leave Detroit streets looking like the teeth of an aging hillbilly.

Detroit went bankrupt last year, the largest US city to do so since New York in 1970. As with New York’s bankruptcy, Detroit’s was used to cancel old debts and rewrite ill-thought contracts. Detroit also got to jail some crooked politicians including mayor Kilpatrick, described as “a walking crime wave.” But the city and county have no easy path out of bankruptcy as both city and county are likely insolvent. That is, they spend more than they take in despite massive out-state funding, and high taxes, 10% above the state level. To make matters worse, they are losing population at the rate of 1% or so per year. It’s hard to fund a city built for 2 million on the tax revenue of 1/3 as many, especially when they are mostly unemployed. Unless a lot changes soon, another bankruptcy is almost inevitable — likely this time at the county level.

We got in this state, largely as a result of a 50 year war between the black, solidly Democrat, somewhat anarchist, political establishment of Detroit, and the white, stayed, mostly Republican out state. The white population fled following the riots of the 60s and the richer black population soon followed. The remainder stayed, trapped in slowly decaying neighborhoods as the city went broke. White flight allowed the black community to develop its own, Motown culture, but except for the music industry, it has not benefitted from this culture.

Detroit's murder rate, 45/100,000, is the highest in the US. It's coming down but not that fast.

Detroit’s murder rate is the highest in the US. It’s come down 10% in the last 2 years, but has far to go.

Detroiters have poor health, poor savings rates, high murder rates, and a fire rate of about .22% per month, 2.6% per year. The city lacks basic city services like reliable fire fighting and street plowing. Police at one point erected signs that said, “enter at your own risk.” There is a lack of small businesses and the services they would provide too: laundromats, grocery stores, and taxis (though no lack of bars and marijuana maintenance clinics). Employment in the auto-industry is down. And it’s not being replaced by home-grown small business – perhaps hampered by the low savings rate. A surprisingly large fraction of the Detroit homes are in foreclosure, see map, and with it a high abandonment rate and a high fire rate. As pheasant and dear return, non-core Detroit is beginning to look like farm country.

Detroit foreclosures near me. Blue is occupied homes, red is unoccupied, yellow unknown, and green is destroyed homes or vacant, foreclosed land.

Detroit foreclosures near me. Homes in dark blue are occupied foreclosed, red is unoccupied, and green plots are destroyed homes or vacant, foreclosed land.

It’s not clear what political leaders should do. The city council would like to return to their pre-bankruptcy ways where they could borrow as much as they felt they needed and spend on whatever they saw fit — often on fast friends, fast cars, gambling, and vacation homes outside of the city. But the out-state population has been reluctant to give them the credit card. Is this racist or is it prudent — probably both, but this can not continue. The city and county pension funds were ransacked for ill-advised investments and consulting fees to cronies and their power-lawyers. Either the money is replaced from out-state or there will be some unhappy retirees in the not-too-distant future. My guess is that the state will have to pick up the tab for this mismanagement, but that they won’t want to hand over management control afterwards.

Rand Paul, a potential GOP presidential candidate, has proposed rebuilding business and property values by a method that the city will almost certainly reject. His solution: cut services to low-population density areas and cut taxes on business and earned income. While this would likely bring in new people and new businesses, the people would likely be white, and the businesses white-owned/ white-serving. Black-Detroiters have too little savings, organization and income to directly benefit from this plan. Detroit’s Democrat politicians will claim, not without merit, that this is welfare for rich whites: a way for them to become yet-richer while doing nothing for the poor blacks of the burning neighborhoods. They are likely to demand control as the elected officials of the town: regulating business and raising the minimum wage to create “equality.” I suspect this is a bad idea.

Detroit hunger games

Detroit suffers from two populations and a divide.

To some extent we’re already seeing the return of white-owned, white-serving businesses. Classic buildings in the core of the city have been purchased by white developers – notably Dan Gilbert of Quicken Loans leading to gentrification and an influx of single, white hipsters. The newcomers are viewed as half-saviors, half-carpetbaggers. They dwell in a whiter city core with hipster bars and expensive restaurants. Does a poor city with massive debt, crime, and unemployment benefit from a core filled with high-priced, gourmet coffee and fern bars?

The author, Robert Buxbaum, enjoys a day at an artificial beach in central Detroit.

The author, Robert Buxbaum, enjoys a beer at an artificial beach-cafe in central Detroit with some, few black folks, none poor. Is this good for Detroit?

The new hipsters put a squeeze on city services too — one that’s hard to deal with fairly. Detroit can not afford to plow all the streets after a snow. Should the new high-tax white folks get plowed streets, or should they suffer equally with everyone else? Detroit education is abysmal, but the high tax-bracket folks want better. Should they get it, or suffer equally? They want extra street lights and police protection. Should they get it, or suffer equally? Is this the way up?  A solution I’d proposed some while ago was to divide the core city from the now-rural outskirts so that each could be managed more sanely. It’s not a grand a solution like Rand’s plan, but less likely to be rejected. One way or another, we seem destined to have a Detroit with a rich core and abandoned neighborhoods. I suspect it might as well be managed that way.

Robert E. Buxbaum, February 10, 2015. I don’t have solutions, but write about the city’s problems, and the partial solutions I’ve heard as a way to clarify my thinking — and perhaps yours too.

In praise of tariffs

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.

Where does industrial CO2 come from? China mostly.

The US is in the process of imposing strict regulations on carbon dioxide as a way to stop global warming and climate change. We have also closed nearly new power plants, replacing them with cleaner options like a 2.2 billion dollar solar-electric generator in lake Ivanpah, and this January our president imposed a ban on lightbulbs of 60 W and higher. But it might help to know that China produced twice as much of the main climate change gas, carbon dioxide (CO2) as the US in 2012, and the ratio seems to be growing. One reason China produces so much CO2 is that China generates electricity from dirty coal using inefficient turbines.

Where the CO2 is coming from: a fair amount from the US and Europe, but mostly from China and India too.

From EDGAR 4.2; As of 2012 twice as much carbon dioxide, CO2 is coming from China as from the US and Europe.

It strikes me that a good approach to reducing the world’s carbon-dioxide emissions is to stop manufacturing so much in China. Our US electric plants use more efficient generating technology and burn lower carbon fuels than China does. We then add scrubbers and pollution reduction equipment that are hardly used in China. US manufacture thus produces not only less carbon dioxide than China, it also avoids other forms of air pollution, like NOx and SOx. Add to this the advantage of having fewer ships carrying products to and from China, and it’s clear that we could significantly reduce the world’s air problems by moving manufacture back to the USA.

I should also note that manufacture in the US helps the economy by keeping jobs and taxes here. A simple way to reduce purchases from China and collect some tax revenue would be to impose an import tariff on Chinese goods based, perhaps on the difference in carbon emissions or other pollution involved in Chinese manufacture and transport. While I have noted a lack of global warming, sixteen years now, that doesn’t mean I like pollution. It’s worthwhile to clean the air, and if we collect tariffs from the Chinese and help the US economy too, all the better.

Robert E. Buxbaum, February 24, 2014. Nuclear power produces no air pollution and uses a lot less land area compared to solar and wind projects.

Near-Poisson statistics: how many police – firemen for a small city?

In a previous post, I dealt with the nearly-normal statistics of common things, like river crests, and explained why 100 year floods come more often than once every hundred years. As is not uncommon, the data was sort-of like a normal distribution, but deviated at the tail (the fantastic tail of the abnormal distribution). But now I’d like to present my take on a sort of statistics that (I think) should be used for the common problem of uncommon events: car crashes, fires, epidemics, wars…

Normally the mathematics used for these processes is Poisson statistics, and occasionally exponential statistics. I think these approaches lead to incorrect conclusions when applied to real-world cases of interest, e.g. choosing the size of a police force or fire department of a small town that rarely sees any crime or fire. This is relevant to Oak Park Michigan (where I live). I’ll show you how it’s treated by Poisson, and will then suggest a simpler way that’s more relevant.

First, consider an idealized version of Oak Park, Michigan (a semi-true version until the 1980s): the town had a small police department and a small fire department that saw only occasional crimes or fires, all of which required only 2 or 4 people respectively. Lets imagine that the likelihood of having one small fire at a given time is x = 5%, and that of having a violent crime is y =5% (it was 6% in 2011). A police department will need to have to have 2 policemen on call at all times, but will want 4 on the 0.25% chance that there are two simultaneous crimes (.05 x .05 = .0025); the fire department will want 8 souls on call at all times for the same reason. Either department will use the other 95% of their officers dealing with training, paperwork, investigations of less-immediate cases, care of equipment, and visiting schools, but this number on call is needed for immediate response. As there are 8760 hours per year and the police and fire workers only work 2000 hours, you’ll need at least 4.4 times this many officers. We’ll add some more for administration and sick-day relief, and predict a total staff of 20 police and 40 firemen. This is, more or less, what it was in the 1980s.

If each fire or violent crime took 3 hours (1/8 of a day), you’ll find that the entire on-call staff was busy 7.3 times per year (8x365x.0025 = 7.3), or a bit more since there is likely a seasonal effect, and since fires and violent crimes don’t fall into neat time slots. Having 3 fires or violent crimes simultaneously was very rare — and for those rare times, you could call on nearby communities, or do triage.

In response to austerity (towns always overspend in the good times, and come up short later), Oak Park realized it could use fewer employees if they combined the police and fire departments into an entity renamed “Public safety.” With 45-55 employees assigned to combined police / fire duty they’d still be able to handle the few violent crimes and fires. The sum of these events occurs 10% of the time, and we can apply the sort of statistics above to suggest that about 91% of the time there will be neither a fire nor violent crime; about 9% of the time there will be one or more fires or violent crimes (there is a 5% chance for each, but also a chance that 2 happen simultaneously). At least two events will occur 0.9% of the time (2 fires, 2 crimes or one of each), and they will have 3 or more events .09% of the time, or twice per year. The combined force allowed fewer responders since it was only rarely that 4 events happened simultaneously, and some of those were 4 crimes or 3 crimes and a fire — events that needed fewer responders. Your only real worry was when you have 3 fires, something that should happen every 3 years, or so, an acceptable risk at the time.

Before going to what caused this model of police and fire service to break down as Oak Park got bigger, I should explain Poisson statistics, exponential Statistics, and Power Law/ Fractal Statistics. The only type of statistics taught for dealing with crime like this is Poisson statistics, a type that works well when the events happen so suddenly and pass so briefly that we can claim to be interested in only how often we will see multiples of them in a period of time. The Poisson distribution formula is, P = rke/r! where P is the Probability of having some number of events, r is the total number of events divided by the total number of periods, and k is the number of events we are interested in.

Using the data above for a period-time of 3 hours, we can say that r= .1, and the likelihood of zero, one, or two events begin in the 3 hour period is 90.4%, 9.04% and 0.45%. These numbers are reasonable in terms of when events happen, but they are irrelevant to the problem anyone is really interested in: what resources are needed to come to the aid of the victims. That’s the problem with Poisson statistics: it treats something that no one cares about (when the thing start), and under-predicts the important things, like how often you’ll have multiple events in-progress. For 4 events, Poisson statistics predicts it happens only .00037% of the time — true enough, but irrelevant in terms of how often multiple teams are needed out on the job. We need four teams no matter if the 4 events began in a single 3 hour period or in close succession in two adjoining periods. The events take time to deal with, and the time overlaps.

The way I’d dealt with these events, above, suggests a power law approach. In this case, each likelihood was 1/10 the previous, and the probability P = .9 x10-k . This is called power law statistics. I’ve never seen it taught, though it appears very briefly in Wikipedia. Those who like math can re-write the above relation as log10P = log10 .9 -k.

One can generalize the above so that, for example, the decay rate can be 1/8 and not 1/10 (that is the chance of having k+1 events is 1/8 that of having k events). In this case, we could say that P = 7/8 x 8-k , or more generally that log10P = log10 A –kβ. Here k is the number of teams required at any time, β is a free variable, and Α = 1-10 because the sum of all probabilities has to equal 100%.

In college math, when behaviors like this appear, they are incorrectly translated into differential form to create “exponential statistics.” One begins by saying ∂P/∂k = -βP, where β = .9 as before, or remains some free-floating term. Everything looks fine until we integrate and set the total to 100%. We find that P = 1/λ e-kλ for k ≥ 0. This looks the same as before except that the pre-exponential always comes out wrong. In the above, the chance of having 0 events turns out to be 111%. Exponential statistics has the advantage (or disadvantage) that we find a non-zero possibility of having 1/100 of a fire, or 3.14159 crimes at a given time. We assign excessive likelihoods for fractional events and end up predicting artificially low likelihoods for the discrete events we are interested in except going away from a calculus that assumes continuity in a world where there is none. Discrete math is better than calculus here.

I now wish to generalize the power law statistics, to something similar but more robust. I’ll call my development fractal statistics (there’s already a section called fractal statistics on Wikipedia, but it’s really power-law statistics; mine will be different). Fractals were championed by Benoit B. Mandelbrot (who’s middle initial, according to the old joke, stood for Benoit B. Mandelbrot). Many random processes look fractal, e.g. the stock market. Before going here, I’d like to recall that the motivation for all this is figuring out how many people to hire for a police /fire force; we are not interested in any other irrelevant factoid, like how many calls of a certain type come in during a period of time.

To choose the size of the force, lets estimate how many times per year some number of people are needed simultaneously now that the city has bigger buildings and is seeing a few larger fires, and crimes. Lets assume that the larger fires and crimes occur only .05% of the time but might require 15 officers or more. Being prepared for even one event of this size will require expanding the force to about 80 men; 50% more than we have today, but we find that this expansion isn’t enough to cover the 0.0025% of the time when we will have two such major events simultaneously. That would require a 160 man fire-squad, and we still could not deal with two major fires and a simultaneous assault, or with a strike, or a lot of people who take sick at the same time. 

To treat this situation mathematically, we’ll say that the number times per year where a certain number of people are need, relates to the number of people based on a simple modification of the power law statistics. Thus:  log10N = A – βθ  where A and β are constants, N is the number of times per year that some number of officers are needed, and θ is the number of officers needed. To solve for the constants, plot the experimental values on a semi-log scale, and find the best straight line: -β is the slope and A  is the intercept. If the line is really straight, you are now done, and I would say that the fractal order is 1. But from the above discussion, I don’t expect this line to be straight. Rather I expect it to curve upward at high θ: there will be a tail where you require a higher number of officers. One might be tempted to modify the above by adding a term like but this will cause problems at very high θ. Thus, I’d suggest a fractal fix.

My fractal modification of the equation above is the following: log10N = A-βθ-w where A and β are similar to the power law coefficients and w is the fractal order of the decay, a coefficient that I expect to be slightly less than 1. To solve for the coefficients, pick a value of w, and find the best fits for A and β as before. The right value of w is the one that results in the straightest line fit. The equation above does not look like anything I’ve seen quite, or anything like the one shown in Wikipedia under the heading of fractal statistics, but I believe it to be correct — or at least useful.

To treat this politically is more difficult than treating it mathematically. I suspect we will have to combine our police and fire department with those of surrounding towns, and this will likely require our city to revert to a pure police department and a pure fire department. We can’t expect other cities specialists to work with our generalists particularly well. It may also mean payments to other cities, plus (perhaps) standardizing salaries and staffing. This should save money for Oak Park and should provide better service as specialists tend to do their jobs better than generalists (they also tend to be safer). But the change goes against the desire (need) of our local politicians to hand out favors of money and jobs to their friends. Keeping a non-specialized force costs lives as well as money but that doesn’t mean we’re likely to change soon.

Robert E. Buxbaum  December 6, 2013. My two previous posts are on how to climb a ladder safely, and on the relationship between mustaches in WWII: mustache men do things, and those with similar mustache styles get along best.

Surrealists art joke

How many surrealists does it take to screw in a lightbulb.

 

The fish.

 

Surrealism aims to show the reality that exceeds realism; the dream-like absurd that is beyond the rational, common-sensical and practical. Beyond control engineering.

And you know “How many engineers would it take to screw in a lightbulb?” —- “Minimally two, and it would have to be a very large lightbulb.”

Even if the insights of surrealism are common-place, for example, that the eye is a false mirror of the world, I like is that they become real (if the surrealist is talented.)

False Mirror by Magritte; The idea, I suppose is that the eye is a false mirror of the world, seeing what's already within it.

False Mirror by Magritte; the idea, I suppose is that we see what’s already within us.

“The greatest obstacle to discovering the shape of the earth, the continents, and the oceans was not ignorance but the illusion of knowledge.” What I particularly like is the falseness of the mirror is shown as both false and true. The world is rarely this or that. Another insight / joke.

We all have masks, especially with those we love.

We all have masks, especially with those we love.

I imagine most I could make second-rate surrealistic works. The way to know your work is second rate it’s beautiful and insightful, but not funny.

Creation of Man-the-militant in the style of Michelangelo

Creation of Man-the-militant. Kuksi. It’s well done, and interesting (a retake on Michelangelo), but it’s not funny. See my cartoon in mechanical v civil engineers joke.

And then there is bad modern art. You could argue that this isn’t surreal, but some sort of other modern art, or post modern art. But that’s all false: it’s just bad art.

Bad modern art: little skill, little meaning, no humor. If you have to ask: "is it art?" It usually isn't.

Bad modern art: little skill, little meaning, no humor. If you have to ask: “is it art?” It usually isn’t.

If you buy something like this, and put it in your corporate headquarters lobby, the joke’s on you, and the artist is laughing his or her way to the bank.  Here is a link to why surrealism should be funny, And why architecture should not be (someone’s got to live in that joke).

R. E. Buxbaum, August 5, 2013