Carl from Chicago

Business executive interested in history, economics, taxation and energy policy.

The Many States of America

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Recently I was reading how a professor at the University of Illinois at Chicago was arrested for bringing an unloaded handgun to work, and that it made the news media. I reflected briefly on the fact that you can bring a loaded, concealed gun with you in most places in many states in the US and it wouldn’t be news, it would in fact be normal activity, for instance in the adjacent state of Indiana.

Meanwhile, in California, it is common for people to smoke marijuana openly as is discussed here. Needless to say, this behavior would get you immediately arrested in many states particularly in the south and midwest.

Taxation is also highly variable on a state and city basis. New York and California have some of the highest taxes, particularly on income beyond a particular level (progressive taxes). On the other hand, states like Florida and Texas have a much lower level of taxation and a much freer business climate in terms of regulation.

Without getting into the hottest of hot-button issues, clearly there are differences in the types of marriages and reproduction rights / right to life on a state by state basis. These differences are narrowing in some areas and getting wider in others.

Some states have “right to work” laws which massively limit union power, and have flourishing and expanding manufacturing economies as a result. Visit Alabama, South Carolina, and Texas to see where all the former manufacturing might in the midwest and Northeast and West Coast migrated to (if it didn’t go to China or overseas). The enacting of “right to work” laws obviously sends an important signal to business leaders whether or not a state is a friendly place to do business for incremental investment (along with taxation).

The “fracking” revolution has unleashed vast wealth in some states, and in other states it has been banned or severely curtailed. Meanwhile, California is going in on its own with carbon regulations and highly aggressive “green” energy targets, while other states are heavily reliant on traditional (and cost effective) technologies.

The differences on a state-by-state level on these different dimensions seem large and growing. They are much more subtle (though often correlated) with the Red / Blue analysis. An attempt to classify these vectors could be done as follows:
Energy Freedom – the ability to extract and use cost effective technologies (like natural gas, fracking, and coal) and a state’s willingness to invest more for reliability or the requirement to use expensive (green) technologies and curtail energy use even at the expense of industry competitiveness and reliability. California is likely on one end and Texas is on the other side, although many others have large freedom including Pennsylvania.
Safety Freedom – the right to defend yourself at home, in transit, at work and during study or whether that is assumed by the state. Sadly the most restrictive is Illinois and there are many candidates on the other side throughout the south and midwest (Indiana).
Personal Substance Freedom – the right to smoke, the right to drink, and the right to use various drugs or stimulants. Some odd states (like Colorado) are leading the way on this, it isn’t always the traditional Red / Blue divide.
Freedom to Work & Hire – the right to work and not be forced to join a union, and this is also tied with local laws and practices that limit the ability to hire and fire and direct hiring or limit firing in various dimensions.
Freedom to Build / Live / Rent – Houston is famous for having very limited zoning while other states and municipalities have highly restricted zoning practices. The New York co-op concept also severely limits new entrants along with rent control. These laws can also include whether you can work or have a business in your home. While subtle, these practices can have a large impact on prices and how the region functions.
Freedom From Excessive Taxation – Some level of taxation is necessary for government to function but high tax levels have severe intended and unintended consequences of under investment and evasion. Taxation includes state, local, city, sales, estate, property, and “sin” taxes. These vary significantly by area but are highest in California and the East Coast and likely the lowest in the South.
Freedom of Marriage Choice – A larger portion of states are recognizing marriages beyond the traditional marriage, and this varies by state
Freedom of Reproductive Rights – There are a wide variety of approaches and trends on a state level and then there are practical impacts, as well. This is highly variable by state in practice
Freedom on Medical Rights – an emerging model will be how each state approaches new medical practices and funding methodologies, along with the practical availability of doctors that subscribe to the state’s controls and funding methods. This area will grow exponentially in the near future

I believe that these sorts of analyses on a state by state level are much more useful than the traditional Red / Blue view (although they are often correlated) and when you start to dig in to the differences on a state and municipal level they are staggering, particularly when you view the extremes.

It would be interesting and useful to begin to put together the various data sets to analyze states and municipalities along these continuums, and others that I’ve likely missed.

Cross posted at LITGM

On Blogging Technology

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I have been working with blogs and blog-like technology for many years. The transformation of the tools in terms of cost, ease of use, and capabilities has been amazing to watch.

We have blogs on the “blogger” platform run by Google and the “wordpress” platform, which can either be self-hosted or run on the wordpress.com free sites (you get ads in some of your posts, and can pay a bit more to have those ads removed).

Regardless of the usefulness and / or future of the blogging format, here are some of the advantages that have come up over the last 10 or so years in terms of technology, cost, ease of use, and capabilities:

1. Cost – the software has always been free from either Blogger (Google) or Word Press (Open Source). However, many people chose to self-host for many reasons, and the cost of hosting has gone down dramatically over the years. The “free” alternatives are also extremely robust
2. Performance – the performance of the sites have exponentially increased in terms of speed, although it is difficult to quantify the differences in terms of the general increase in overall processing speed (bandwidth) on the part of the consumer as well as the provider, which is also tied to the reduced cost / MB of a high speed connection
3. Stability – Stability used to be wobbly on some of the sites, particularly from the administrative perspective. We used to have to save our posts all the time in case the site crashed, and fixing items like categories / tags used to be a lot of effort and painstaking. Many of these problems seemed to have gone away or are significantly reduced on the major platforms
4. Features – Many, many things you’d want a blog to do are built in. Not just the traditional items like links, categories, tags, photos, polls, but also more exotic items like linking to different media and different sorts of geographic data. Advertising is also built in, but since we don’t advertise, I’m not an expert in this, although I assume this is crucial to many people
5. Coding – you used to need to know some HTML or other languages in order to work effectively with blogs or to deploy the most advanced features, but since many of those capabilities are now built into the tool, this is less important or hardly needed at all

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Another Tale From the Front – A Year’s Worth of Guns and Ammo Sold Out in 3 Weeks

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This is another installment from our friend Gerry over at LITGM who is in the “front lines” of the gun rights issue working for a major retailer.

It is becoming all too weary for me to tell customers “no”. As a major outdoor equipment retailer it must be frustrating to know how a great sales period that is usually slow could have been even greater if they had the product to sell. That said, our store and the entire chain is doing very well. Turkey season is approaching and all the necessary items are being bought at a brisk rate. Now it’s fishing’s turn and yesterday the customers who are fishermen came in for a special sales event. They were all buying new tackle in anticipation of the season.

At work the phone doesn’t stop beeping so we started playing a new game. Between us we call out a caliber we each predict that will be requested by the caller whenever the phone beeps. I usually go with .22. Paul likes 9mm while Don prefers 5.56 or .223. “Hello, hunting department, how may I help you?” is soon followed by a “no sir, we are all out of 9mm.” Paul quickly lets out a “woo-hoo I won!” No bets, just fun. Breaks the monotony of constantly saying no.

Not much new to report from the firearm front. There is no retreat, more of a cease fire mode, awaiting replenishment from the supply line. AR’s come in small numbers and are quickly snapped up. Same holds true for ammo. Each morning the same dozen or individuals so show up looking for their favorite calibers. These are the battle hardened. They know they’re unlikely to find what they want but they still arrive to look. Maybe, and occasionally when they show up we actually have meager replenishment for them. Then it’s Katy bar the door – soon it’s gone. It goes into basements, garages and some to the great aftermarket to be resold. My bet is not much is being used at the range right now. When asked how soon ammunition will return to full supply I repeat the same answer trying my best to appear positive instead of weary. When the entire nation’s supply of consumer ammunition is sold within three weeks it takes a long time for manufacturers to recover. That is the simple truth.

What I witnessed last week was astonishing. 62 cases of PMC .233 55 gr. FMJ disappeared within 36 hours. That is 62,000 rounds (1000 per case) packaged in boxes of 20 and with a limit of 10 boxes per customer sold out in our one store alone. The first wave of regulars came in and while packing their baskets were simultaneously calling friends to alert them to their find. About an hour or two later that larger second wave arrived. Late in the day the after work crowd came in to clean up the leftovers.

They tell me of their own conspiracy theories or those they discover on the internets. The one most interesting is that the government is intentionally buying enough ammo with the intent of keeping the civilian supply low. So I went to a close acquaintance who is with the FBI. I asked him if what I hear about government bureaus such as NOAA and the DCFS buying excessive quantities of ammunition is true and why they would need so much, as many customers have claimed.

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Another “Tale From the Front” – Women Shooters and a Gun Show Visit

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This is another “tale from the front” from our friend Gerry over at LITGM. He works with guns and gun buyers all day in the thick of everything…

Women And Firearms

While most may not realize this, a fair amount of new firearms currently being purchased are by those who never held one before – especially women of all ages. This fact alarms those nanny-state leftists, Trotskyite politicians, useful celebrity idiots and milquetoast media sluts. While they gasp at the thought of so many first time gun owners this is a good sign that the Second Amendment may not be infringed after all.

A Gallup poll reported that in 2005, 13 percent of all women owned a gun. That number jumped to 23 percent in 2011. Here is an interesting read on the subject, from the New York Times of all places.
If we were a well-armed society last year then we are a very well armed society this year.

Thank you ladies!

Last weekend a lady who reminded me of my mother was standing at the end of an aisle holding some packages in one arm. She asked me for some assistance. She was somewhat overweight, well-dressed and used a cane for support. While not as old as my mother there was something very similar about the two.

As I drew near I could see one package was a clear plastic container holding Howard Leight hearing protection headphones. In the other was a nylon holster. Her question to me was – is the holster she chose able to fit her new handgun, a small .38 special S&W revolver?

Upon close inspection the holster was the type to be worn on the belt, outside the pants. Before explaining the function of different holsters I politely inquired what she intended to use her handgun for. Personal protection was the answer. Do you intend to wear the holster outside the pants or concealed, under the pants? Neither, she was simply looking for one that would keep her revolver from being banged up in her purse or, in her words, “have it accidentally go off”. What to do?

I explained that while the holster she chose was a good fit it was meant to be worn on  the belt and exposed. It had a safety thumb break strap secured by a button snap with a thin piece of plastic. The strap keeps the revolver secure and by using the thumb it will release the revolver for use. With the button snap and strap secured I explained, it could take her two hands and at least thirty seconds to draw it from her purse. A long time to fumble around in a self-defense situation. I steered her toward a thin, concealable foam/nylon product from Blackhawk. I use it as my personal carry choice. It’s lightweight, good for protecting her revolver from abuse in the purse and somewhat easier for her to interact with due to the lack of a safety thumb break. And it’s very affordable.

All of this considered I proposed another solution. We sell a line of handbags designed for women who wish to carry self-protection firearms. I led her over to the “Gun Totin’ Mama” line of handbags on display. Demonstrating to her the built-in feature of a zippered side compartment containing a lightweight nylon holster with soft velcro on one side and opposing hook velcro on the other, this slight holster (similar to the Blackhawk) could be positioned according to her style for ease of use.

She smiled. “You just gave me a great idea” was her reply. She did not wish to spent $99.99 on another handbag. Instead this inspired her to use another handbag she already owned. Her intent was to buy the Blackhawk $14.99 conceal holster and sew velcro to it. The other velcro side would be stitched to the inside of her old handbag. Clever.

The lady explained to me that when her husband asked what she wanted for Christmas her response was a gun. This floored the old boy, who had just arrived on the scene and explained to me his surprise at her request. They would soon be going to the range where he would help her become more familiar with her new gift. This explained the headphones.

The Leight brand sells, it’s a good commercial retail product. They both asked me why there was a large price difference in the selection of headphones on display. I explained the features on more expensive models.

The lady was so thankful and delighted that I spent so much time with her she went home and wrote a nice note about me on the corporate feedback website. This got back to me through management, who were very grateful and complementary.

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It Feels Strange Outside Economically

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A few things have happened recently that have the hairs on the back of my neck standing up in economic terms. It feels like it did right before the crash in 2007-8, when we were still in the end stages of the bubble.

One – Japanese and Venezuelan devaluation

Japan (a thoroughly modern economy) and Venezuela (a semi-dictatorship oil economy) both recently devalued their currency. Japan was warned by the G7 (fat lot of good that will do) here about it:

The official said: “The G7 statement signaled concern about excess moves in the yen. The G7 is concerned about unilateral guidance on the yen. Japan will be in the spotlight at the G20 in Moscow this weekend.”

Venezuela did more of an “old school” devaluation, where the “official” rate is moved closer to what it really is trading for in the black market, and Bloomberg writes about it here.

Venezuela devalued its currency for the fifth time in nine years, a move that may undermine support for ailing President Hugo Chavez and his allies ahead of possible elections later this year… He ordered his government to weaken the exchange rate by 32 percent to 6.3 bolivars per dollar… A spending spree that almost tripled the fiscal deficit last year helped Chavez, 58, win a third six-year term. The devaluation can help narrow the budget deficit by increasing the amount of bolivars the government receives from oil exports. Yet the move also threatens to accelerate annual inflation that reached 22 percent in January.

I kept that whole paragraph in the block quote because it encapsulates all the elements of fiscal ruin so succinctly – profligate government spending, impact on commodities imported or exported (that move opposite of currencies), and the impact on inflation.

Two – The Chinese and Russians Aren’t Buying Our Debt – We Are

I had thought that the Chinese and other countries were big buyers of our debt which funds our budget deficit. But I was wrong. Per this WSJ article:

China’s holdings of $1.17 trillion in U.S. Treasurys in November 2012—the most recent date for which we have a figure—are virtually unchanged from two years earlier, when they stood at $1.16 trillion. Beijing has purchased a lot of Treasurys over this period but many have been redeemed. Net new investment is essentially zero.

But if the Chinese aren’t buying our debt, who is? The answer – the US government.

The largest buyer of new U.S. Treasurys during the past three years has been not China but the U.S. Federal Reserve. In fiscal year 2011, for example, the Fed bought more than three-fourths of all new Treasury debt.

Here’s a challenge for you – try explaining to a child or someone unfamiliar with economics how it is that we can spend money that we don’t have, issue debt, and buy it back ourselves.

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