Dying Monopolies – The Post Office

In the River North neighborhood of Chicago there are many affluent customers packed into a small physical area. The vast majority of these individuals shop online and receive physical packages as a result.

And yet the post office building that sits right smack dab in the midst of all these package-receiving citizens is not a hub of activity; many times it seems empty and forlorn.  Why is that?  It is due to the fact that the US mail system, which provides service across the United States, is not viewed as either a reliable or competitive delivery mechanism for e-commerce goods delivery, and the flood of packages that arrives is generally delivered by either UPS or Fed Ex.

The post office dutifully delivers all the stuff I don’t want – junk mail, catalogs, bill reminders, an occasional holiday card for those that are sent via snail mail, and notices from governmental entities that haven’t joined the internet era (to their credit some of them have moved much of their operations to the internet).

While the post office is crippled by liabilities, benefits, civil service protections for workers, and a mandate to serve every US address for first class mail, they would be in a much better situation if somehow they had been able to capture a significant share of the package delivery market that flourished right beneath their noses.  This article from Slate describes the situation as it exists today.

The loss of the package delivery opportunity is only the most obvious squandered one; think of what the post office COULD have done tied vai the internet (guaranteed, reliable domain names linked to addresses for bill paying or as a pre-cursor to social media) or with sales of goods since they have access throughout the entire USA.  However, given that they were set up as a monopoly to do one thing well (deliver first class mail), they didn’t have much pressure to innovate.

In the end the post office is mostly a machine to employ government workers, spread throughout the US and in every congressional district.  Per wikipedia (which has a solid write-up here) the US post office employs 574,000 workers, with government perks, pensions and benefits that most of you will never receive, in order to deliver that first class mail that you mostly throw into the recycling bin.  The proposals that they are floating show how tied their hands are; they want to cut Saturday mail delivery which will make them even less competitive vs. UPS and Fed Ex – they aren’t really talking about ways of outsourcing services and cutting expensive staff en mass which would be needed to move even close to breaking even.

The post office is probably just betting that their employees (through lobbying) and government protectors (the politicians) will be enough to stop significant cuts while their service (first class mail deliveries) becomes ever less essential.  Since we bailed out the banks and print enormous amounts of money to fund the US deficits, who will ever even notice tens of billions of dollars in losses on first class mail service to boot.

The sad part is, they are probably right.

Cross posted at LITGM.

Fiat Money and Real World Impacts

In the US we have slowly debased our currency, the US dollar, and debt levels have risen at all levels of government. Since the US has extensive economic interests and huge reserves of oil, minerals, and agricultural capabilities, it will be a long time before the proverbial “wolf” shows up at our door.

In other countries, like Egypt, however, the wolf comes to the door right away. Egypt has an immense population concentrated along the Nile River and relatively few sources of income. Tourism has been badly damaged by the revolution against Mubarek and the rise of the Muslim Brotherhood hardly is something to put on a brochure at the pyramids, given that they have been known to slaughter their heathen guests in the past.

In order to feed their population, Egypt needs fuel, particularly diesel fuel. While Egypt does have some petroleum riches, they don’t have much refining capacity, so they must import diesel. In order to import diesel, you need “hard” currency, and the Egyptian dollar has been falling in value.

Finally, the Egyptian government distorts the local price of diesel so that it is subsidized, causing all sorts of negative impacts, including a huge black market, queueing, and all the other behaviors inevitably caused by hare-brained policies.
This situation was described in a recent NY Times article titled “Short of Money, Egypt Sees Crisis in Food and Fuel” which you can find here.

In a place like Egypt on the edge of starvation and social chaos, the safety net is thin, indeed, as they summarize in the last quote of the article:

At the empty Mobil gas station in town, attendants said profiteers, hoarders and desperate farmers were already threatening them with knives, clubs and shotguns. At harvest time, “People are going to kill each other,” said Hamdy Hassan, 37, a truck driver hanging out at the shuttered station.

Our understanding of economics in a theoretical basis and our casual acceptance of paper money has blinded most of us from understanding the practical, real-world economics that stands before us. People need goods or services, and they have to trade for it by providing alternatives that are acceptable to the seller.

If your currency is worthless, you need something else to trade, or your country will be bereft of necessary supplies. In this instance, Egypt needs refined petroleum products (diesel) or their entire economy will grind to a halt (and mass civil strife will immediately follow). As their currently depreciates relative to others in the region, their ability to purchase fuel is accordingly reduced.

This can be seen in medicines and fuel in Greece as well and likely soon to be Cyprus; it is assumed that these countries will be able to maintain first world status for their populace but it is difficult to see how that will happen while they have almost nothing to trade in return. One article about Cyprus ended with a quote from a local that if they don’t act as a banking haven “they will all just be selling ice cream and setting up deck chairs” to support any tourists that happen to visit.

With the implosion in Cyprus and likely deterioration of weakened countries like Egypt, Venezuela  Argentina with minor home currencies, we appear to be entering a new era where things we’ve taken for granted about smooth business transactions and friction-less international banking and trade are going to be put to a severe test.

Cross Posted at LITGM

Christo Anesti! – Eastertime in Greece

(This piece was part of a much longer essay about life in Greece when I was stationed at Hellenikon AB in the early 1980s. I posted it originally on The Daily Brief, and also rewrote much later to include in a collection of pieces about travel, people and history for Kindle.)

Christmas in Greece barely rates, in intensity it falls somewhere between Arbor Day or Valentines’ Day in the United States: A holiday for sure, but nothing much to make an enormous fuss over, and not for more than a day or two. But Greek Orthodox Easter, in Greece – now that is a major, major holiday. The devout enter into increasingly rigorous fasts during Lent, businesses and government offices for a couple of weeks, everyone goes to their home village, an elaborate feast is prepared for Easter Sunday, the bakeries prepare a special circular pastry adorned with red-dyed eggs, everyone gets new clothes, spring is coming after a soggy, miserable winter never pictured in the tourist brochures. Oh, it’s a major holiday blowout, all right. From Thursday of Holy Week on, AFRTS-Radio conforms to local custom, of only airing increasingly somber music. By Good Friday and Saturday, we are down to gloomy classical pieces, while outside the base, the streets are nearly deserted, traffic down to a trickle and all the shops and storefronts with their iron shutters and grilles drawn down.

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Trying To Sweep Up After the Last Boom…

Recently I saw this sign in River North, indicating the start of another large high rise project, with an optimistic start date of 2016. Apparently there is plenty of money sloshing around to fund the construction of large buildings, because cranes are up in the sky all over the downtown area. I don’t know if lessons have been learned from the last and most recent bust in 2008, where developers who put in only a bit of equity defaulted and handed the projects back to the creditors, who also took big losses. The most obvious lessons would be 1) require developers to put significant equity into the project 2) don’t fund too many projects competing for the same tenants. These projects don’t seem to be condominiums for the most part; I am only speculating but perhaps the failure of so many condominium projects rattled the banks (those that are still standing, at least).

I would consider it a victory if they finished a few of the half-built structures that have stood idle for five or more years without any progress. This hotel in River North is now restarting; I have been looking at this ugly mess for years so it is great to see some sort of actual effort to complete the hotel.

The real issue is whether or not the structures being built right now, at what is likely the apex of the boom, will be seen through to completion. I certainly hope so, because it is depressing to see half-built structures marring the skyline for years. The famous “Chicago Spire” didn’t get far (only a hole in the ground) which is a good thing because it would have been sad to see the “Stub” along the lake shore for years to come.

Cross posted at LITGM

Some Observations on Gay Marriage

I have been kind of neutral on the whole gay marriage issue. I think it began as an artifact of the AIDS epidemic and an attempt to curb the promiscuity of male gay life. In the early days of the epidemic, I had to inform a very nice nuclear engineer that he was HIV positive. This was well before treatment had developed and it was a death sentence. He told me it was impossible because he had been in a monogamous relationship with his partner for ten years. What could I say ? I once had to inform a nice lady who was a Christian Scientist that she had breast cancer. Her response was that she was losing her breast and her religion at the same time.

It has been taken over by activists who are determined to validate their life style and to force conventional society to accept it as equivalent to heterosexual family life, which it is not. It is surprising the success they have had with the young who seem to accept the argument that it is a “civil rights” issue, which is, of course, nonsense. Mark Steyn usually has something worthwhile to say on most subjects and this time is no exception.

Gays will now be as drearily suburban as the rest of us. A couple of years back, I saw a picture in the paper of two chubby old queens tying the knot at City Hall in Vancouver, and the thought occurred that Western liberalism had finally succeeded in boring all the fun out of homosexuality.

He does have a sense of humor amid reflections on a dying culture.

In the upper echelons of society, our elites practice what they don’t preach. Scrupulously nonjudgmental about everything except traditional Christian morality, they nevertheless lead lives in which, as Charles Murray documents in his book Coming Apart, marriage is still expected to be a lifelong commitment. It is easy to see moneyed gay newlyweds moving into such enclaves, and making a go of it. As the Most Reverend Justin Welby, the new Archbishop of Canterbury and head of the worldwide Anglican Communion, said just before his enthronement the other day, “You see gay relationships that are just stunning in the quality of the relationship.” “Stunning”: What a fabulous endorsement! But, amongst the type of gay couple that gets to dine with the Archbishop of Canterbury, he’s probably right.

The problem, as pointed out years ago by Vice President Dan Quayle, is that the elites set the pattern for those whose lives cannot succeed without the structures of traditional society. They set the pattern, unfortunately, by what they say, not what they do.

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RERUN–Author Appreciation: Rose Wilder Lane

(Originally posted in February 2012. I don’t usually rerun posts that are this recent, but RWL’s thoughts are relevant to the recent posts by Jonathan and myself, and more broadly, to the issues of freedom versus control which dominate our current political debates.)

Rose Wilder Lane, born in 1886 in the Dakota Territory, was the daughter of Laura Ingalls Wilder, author of the “Little House on the Prairie” books. Lane is best known for her writings on political philosophy and has been referred to as a “Founding Mother” of libertarianism; she was also a novelist and the author of several biographies.

In her article Credo, published in 1936, she describes her political journey, beginning with the words:

In 1919 I was a communist.

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“Often, the insights of behavioral economics are used or misused to support this thesis.”

Riffing on David Foster.

It’s like how Keynes’s theory about liquidity traps is used to rationalize all kinds of govt spending programs, perhaps far beyond what Keynes himself would have advocated.

1 Great man has a theory about a, b and c.

2 Great man’s acolytes turn the theory into a dogma, religion and, eventually, industry.

3 Politically savvy third parties with agendas use the theory to justify x, y and z.

Rock is Dead

As a rock music fan, it is difficult for me to stand back and appraise the impact of rock and roll in an objective and neutral manner. Growing up, I listened to music continuously, and over the years have bought it in almost every format from album to cassette to CD to digital. I owned early MP3 players (like the Rio) on to pretty much every variety of iPod. In addition, I have been going to concerts for many years, some of which I’ve discussed in the blog. I’d consider myself pretty knowledgeable about rock music from the ’60s through today.

At Lollapalooza I’ve seen the growth of “Perry’s Stage”, which is an electronic music tent. Here is a link to a post I wrote about it after the August 2011 show. I noticed how the young kids migrated over to the DJs and had a great time, while the “old” concert goers sat on blankets and watched the mainstream acts.

Today we look back on rock music as if it has always existed in its current form but it used to be an electric, alive, underground party. The rebellion has moved over to hip hop but the party migrated over to electronic music. Rock doesn’t stand a chance today in the popular consciousnesses compared to the DJs.

While rock bands struggle to find a few thousand fans at a show, the “Electric Daisy Carnival” can pack in over 100,000 fans a day. Here is the link to the trailer for the inaugural event that they will hold in Chicago.

It is amazing that the last Grammys telecast didn’t feature much in the way of electronic music, but then again they have not been a very good indicator of anything. They had many performers but none of the electronic winners were highlighted (last year they had a mash up with Deadmau5 and Dave Grohl, at least). The Grammys too are in the thrall of the past, but that’s to be expected since their demographics and voters skew so old.

It is easy to figure out where they kids are going. They are heading where ever there are bikinis and a good time. Bye bye rock music.

Cross posted at LITGM

History Friday: Mason County HooDoo War Part 3

Scott Cooley, who lived for revenge on those who had a part in the murder of his foster-father, Tim Williamson, made a kind of headquarters with his violent and disreputable friends in Loyal Valley. George Gladden had a place there – he, like many other participants in the feud – was a small rancher with a reputation as being handy with a gun. A few weeks after the murder of Deputy Whorle, Cooley’s gang targeted Peter Bader, who was reported to have been in the lynch mob who ambushed Tim Williamson on the road between the Lehmburg ranch and Mason, and had fired the final shot killing Williamson. Unfortunately, Cooley and Johnny Ringo hit Peter Bader’s brother Carl, instead – gunning him down in his own field where he had been working. Whether this was deliberate or a case of mistaken identity is a matter undecided – but by committing this murder, Cooley had thrown a rock into a hornets’ nest. The Clark faction responded by attempting to draw out the Cooley gang to Mason. Sheriff Clark convinced – or hired – a local gambler named Jim Cheney to try and talk the Cooley gang into coming to Mason.

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“You don’t currently have permission to access this folder.”

My opinion on Windows 7 has soured considerably. Its permissioning system is terrible and has cost me a lot of time in trying to make external hard drives readable. No doubt permissioning functions as designed. The problem is the user interface. Most users of Windows 7 Home Premium are running one computer or a home network and don’t need to restrict file access. For them there should be a conspicuous button on the file-sharing or security tab of the Properties window that overrides permissioning for a file, folder or drive. Otherwise if you do something like try to read an external HD that you formerly used as an internal HD in another Windows computer you get permission errors and have to perform complex tasks to make the drive readable. This is like requiring all drivers to type a numeric combination and blow into a breathalyzer before they can start their cars — after first googling around for instructions. The fact that a small subset of users needs a particular feature is no reason to impose that feature on all users.

RERUN–The Scribes and the Idea of Freedom

(Originally posted in October of 2010. I was reminded of this post by Stuart Schneiderman’s post here about the growing acceptance of the idea that government knows best what’s good for everyone..and should have the power to make them do it. I should note that Cass Sunstein is no longer an Obama Czar but is back to being a law professor.)

I haven’t read Jonathan Franzen’s novel, Freedom, but Erin O’Connor has been reading it and reviews it here. Based on her summary, it seems that Franzen’s basic opinion about freedom is this: he doesn’t like it very much. Consider for example these excerpts:

…the American experiment of self-government, an experiment statistically skewed from the outset, because it wasn’t the people with sociable genes who fled the crowded Old World for the new continent; it was the people who didn’t get along well with others.…also: The personality susceptible to the dream of limitless freedom is a personality also prone, should the dream ever sour, to misanthropy and rage.

Erin summarizes:

“Freedom,” for Franzen, is a red herring. As a national ideal, it paralyzes us, preventing government from behaving with the rationalism of European nations (there are passages about this in the book). And, on a personal level, it is simply immiserating. Every last one of Franzen’s major characters suffers from the burden of too many choices.

In a novel, of course, one cannot assume that opinions expressed by the characters are those of the author himself–but in this case, it seems to me that they likely are, and this opinion appears to be shared by most commenters at Erin’s post.

What really struck me in Erin’s review is her remark that I am starting to think that this novel may amount to a fictional companion piece for Cass Sunstein’s Nudge..the referenced work being not a novel, but a book about social, economic, and political policy co-authored by Cass Sunstein, who is now runnning the Office of Regulatory and Information Policy for the Obama administration. (See a review of Nudge, Erin’s post about the book, and my post about some of Sunstein’s policy ideas.)

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Truth, Fiction, Whatever

I was at a Passover seder tonight. One of the other guests was someone who is pleasant enough but who I sometimes find a bit annoying. He was wearing a sweatshirt with a dopey anti-corporate slogan on it, and he used the phrase “the Republicans” a couple of times. I don’t remember how the conversation got there but someone said something about Mayor Bloomberg’s soda ban. My fellow guest may have defended Bloomberg: the soda ban had been struck down so why be upset about it; Fox News had exaggerated the importance of the issue; Bloomberg had the right idea. Something like that. Maybe he didn’t actually defend Bloomberg, I don’t remember. I didn’t feel like arguing with him. So I said something like, Did you know that Bloomberg has banned Pop Rocks? I said this forcefully and with a straight face. This got a rise out of people. Someone asked if I was serious. I said yes. Then I told them that Bloomberg had also banned haircuts for dogs. Someone mentioned P____’s dog — she pampers it and recently had its hair cut (do you realize how much dog haircuts cost, etc.). Someone asked me how I knew these things about Bloomberg. I said I have sources in NY. I think I had a few people there believing me for a while. Because how do you know it isn’t true?

Kids These Days

At the age of 21, Danielle Fong cofounded LightSail Energy, a venture focused on energy storage via compressed air, with heat generated by the compression recovered for later use. Investors include Peter Thiel, Khosla Ventures, and Bill Gates. (GE and RWE of Germany are also developing a compressed-air-based energy storage technology that they call ADELE…it will be interesting to see how these two alternative approaches play out.)

A New York University student has developed a new substance for wound closure, which may be able to replace bandages in many cases. Any comments, Michael K?



A great post by Jeff Carter.

The gist:

People at home feel isolated. That isolation can lead to depression. It’s rough being an independent contractor. There is a lot of rejection. Entrepreneurship is hard. It’s better to experience it with people in the same boat as you.

All of this is true in my experience. Working at home gets depressing. Getting a conventional office removes the distractions but you are still isolated. Working from someone else’s office removes the isolation, but typically you don’t have much control over your environment, and the fact that the other people in the office are a team while you are operating solo kills some of the social benefit. The best situation is to be part of a team that you lead or are a partner in. Next best is to work independently in the same physical space as other people who are working independently. Starbucks or the public library ain’t it. Businesses that offer high-quality flexible working environments at low-enough rates to make using them a low-thought decision for contractors and entrepreneurs should do well, going forward.

UPDATE: Another take on the same issue:

These are variations on a theme of tech-driven individual empowerment that’s closely related to the America 3.0 argument.

Quote of the Day

The low rate of overt accidents in reliable systems may encourage changes, especially the use of new technology, to decrease the number of low consequence but high frequency failures. These changes maybe actually create opportunities for new, low frequency but high consequence failures. When new technologies are used to eliminate well understood system failures or to gain high precision performance they often introduce new pathways to large scale, catastrophic failures. Not uncommonly, these new, rare catastrophes have even greater impact than those eliminated by the new technology. These new forms of failure are difficult to see before the fact; attention is paid mostly to the putative beneficial characteristics of the changes. Because these new, high consequence accidents occur at a low rate, multiple system changes may occur before an accident, making it hard to see the contribution of technology to the failure.


How Complex Systems Fail (pdf)
(Being a Short Treatise on the Nature of Failure; How Failure is Evaluated; How Failure is Attributed to Proximate Cause; and the Resulting New Understanding of Patient Safety)
Richard I. Cook, MD
Cognitive technologies Laboratory University of Chicago

Time Travel

Margaret Soltan’s husband was searching for his grandmother’s name on Google, and found her in a 1908 portrait, which is now in the National Museum at Warsaw.

The post reminded me of a post from a couple of months ago by Bookworm, about finding a book in which  her grandmother’s friends at her finishing school in Lausanne, Switzerland, wrote her farewell letters when she graduated and moved back to Belgium in 1913:

As befitted a young woman of her class back in the day before WWI began, my grandmother was multilingual, so the messages in her book were in French, German, Dutch, and English.  The young ladies all included their home addresses — in Belgium, France, Switzerland, Germany, Holland, America, Scotland, England, Wales, Romania, and Persia (Tehran).  Each inscription was written in beautiful copperplate and the girls all drew exquisite little flags reflecting each girl’s country of origin.

Since I, unlike my grandmother (and my parents), am not multilingual, I was able to read only the inscriptions from my grandmother’s English-speaking friends.  I have no word for how charming these little missives were.  An American girl wrote about the irony that she and my grandmother hated each other at first sight, only to become close friends by the end of their time together.  An English girl wrote about the “jolly good times” they had going to concerts with “modern” music consisting of one note, played so low no one could hear it.  Another girl wrote about the disappointment of endless dinners consisting of macaroni and disappointingly watery “chocolate creme.”

And Bookworm’s post, when I first read it, reminded me of a passage in the memoirs of British general Edward Spears, close friend of Churchill and emissary to France during the campaign of 1940. Spears had grown up in France, and in the 1960s he returned to the house he had lived in. There, he found a picnic basket filled with his grandmother’s old letters:

The next letters I opened dropped me back two generations into a land of other people’s memories but with an occasional sharp glint as they recalled things I had heard of as a child. They were the letters of a poor sick young woman written to her absent husband whilst she was immobilised awaiting her first and only child, my mother.

I never imagined my grandmother other than I had known her, white haired, stout, and dignified. The picture painted in these letters of a girl frantic with loneliness and longing, exasperated at the threat of a miscarriage which kept her lying on her back, begging her husband to come to her, all told in the reserved language of that day, filled me with a kind of fond protective amusement. It was so unexpected. Time, so long imprisoned in these boxes, was revealing itself in an entirely new guise, oscillating quite regardless of years from one generation to the next or back again–more, it was taking me, an elderly man in the 1960s, and leading me back to the year 1864, there to watch over, with infinite tenderness, a young woman I had never known, my grandmother as a young wife…

Another time-travel experience, albeit of a less directly personal nature than the above three ventures back in time, can be found in this set of photographs: 1910–The Summer of our Content.

Quoted Without Comment

“Bus attacks by suicide bombers have fairly monotonous features. They occur during the morning rush hour because ridership is high at that time. Bombers board buses near the end of their routes in order to maximize the number of people in the bus at the time of detonation. They preferentially board at the middle doors in order to be centered in the midst of the passengers. They detonate shortly after boarding the bus because of concern that they will be discovered, restrained, and prevented from detonating. They stand as they detonate in order to provide a direct, injurious path for shrapnel. Head and chest injuries are common among seated passengers. The injured are usually those some distance away from the bomber; those nearby are killed outright, those at the ends of the bus may escape with minor injuries. The primary mechanism of injury of those not killed outright by the blast is impaling by shrapnel. Shrapnel is sometimes soaked in poison, eg organophosphate crop insecticides, to increase lethality.”

Resilience Engineering: Concepts and Precepts
Chapter 13, Taking Things in One’s Stride: Cognitive Features of Two Resilient Performances
Richard I. Cook and Christopher Nemeth

“But wouldn’t it be luxury to fight in a war some time where, when you were surrounded, you could surrender?”

For Whom the Bell Tolls
Ernest Hemingway

Utility Rate of Return

The utility industry in the United States has made a giant return to traditional rate-making in many parts of the country. For someone who is unfamiliar with the concept, here is a brief summary:

1. Utilities receive a “monopoly” on services in a particular region (a city or county) which means that they are the only company allowed to provide service (thus you don’t have 2 sets of power lines going to your house)
2. The utility submits their expenses and capital requirements to a state regulator, who approves the spending plan
3. For the portion of the utility funding that is provided by equity (shareholders), the company is allowed to earn a “rate of return” that gets included on rate-payers bills

When I was fully engaged in the industry in the 1990’s, there was massive talk of “de-regulation” and traditional “cost of service” regulation as described above was seen as an archaic relic to be disposed of as quickly as possible with newer, more innovative models. If you would have told someone in the mid 1990’s that here, 20 years later, utilities would be HAPPY to still be part of a guaranteed return on their regulated investments, you’d have been greeted with a blank look of incredulousness.

The most famous critique of this model was a CEO who was said to have stated that “this is the only industry where I can make more money by remodeling my office” which of course was technically a true concept. This sort of talk was endemic in the 1990’s.

To be fair, the entire energy business used to be run this way (except for the municipal entities which were completely owned by some part of the government), and now much of the generation and parts of customer services are run using other methods involving some sort of at least partial competition. The generation of power, for the most part, has been financed using alternate methods (auctions, price caps, etc…), but it is notable that the only utilities going forward with nuclear plants are those with the old-school rate of return regulation (Southern Company in Georgia and SCANA in South Carolina).

For those entities that are still primarily regulated (non-competitive) or whom have substantial portions of their business subject to this regulation, one item coming under fire is the “rate of return” that they receive on their equity capital. When I was in the industry this number was in the 12% – 14% range; per this WSJ article “Utilities’ Rates of Return Draw Flak”:

In 92 major rate decisions last year, regulators… granted gas and electric utilities returns of 10%, compared with 10.21% the prior year and 11% a decade ago.

These rates of returns, however, conflict with the type of risk profile and links to debt interest rates that traditionally anchor utility rates of return. Today interest rates are famously low, so why is it reasonable that utilities should earn 10% or more on returns when that sort of return is far out of reach in a 401(k) for investors, for example?

Further pressure on this model seems inevitable, although rate of return is rarely so simple because if a utility spends more than they plan, in most cases this essentially comes out of the return bucket, although their are exceptions like “pass through” increases for fuel which can be made depending on the jurisdiction. This sort of item should be watched by those who have utility investments, since a serious re-appraisal of this rate would likely push it down further.

As a long-time watcher of the industry, however, the continuing existence of this sort of rate of return regulation is astonishing, given how much it was ridiculed for so many years. It is sad that we haven’t come up with anything better in the interim. The issue with monopolies is not so much the rise in costs, but the lack of innovation, I once heard. This is the case with the rate of return model that continues to exist, today.

Cross posted at LITGM

Illinois Leads The Way – “Factoring” our State’s Receivables

While many states in the midwest are tackling their structural problems head on, Illinois is contentedly doing things the old-school Dem way. Michigan (of ALL states!) recently enacted a right to work law and is taking over Detroit, in an attempt to finally deal with their unending fiscal decline. Wisconsin is famously taking on their state unions (with the usual assortment of hacks picketing the state capitol to boot) as well as implementing a right-to-carry law. Indiana has made fiscal prudence, right-to-carry, and right to work laws a centerpiece for many years, with commensurate success. Yet while these midwestern states attempt to reform, Illinois (mostly) stands pat.

Illinois’ litany of woe is so long that I won’t bother summarizing problems that you can find for yourselves on the internet. We recently bucked trends in the region with a giant tax increase, designed to fix our immediate fiscal hole. The immediate problem is that we are not even paying vendors in a reasonable time frame, much less fixing our structural debt issues.

However, even with this giant tax increase, the state is far behind in paying vendors for services. A WSJ article titled “Startup See Profit in State’s Financial Woes” summarizes the situation:

A Chicago startup is aiming to mine a silver lining in the fiscal misery hanging over Illinois.

The nation’s fifth-largest state is running an estimated $7 billion behind on bills for everything from Medicaid reimbursements to doctors to plates purchased for prison mess halls, forcing some vendors to wait six months or more to get paid.

That is where Vendor Assistance Program LLC is stepping in. The closely held company says it can profit by advancing the money to pay the vendors, then keeping late fees the state owes them. Vendors forego the penalty payments but get their money faster than they would otherwise.

Thus the state of Illinois, which is paying 1% / month on balances over 90 days, is essentially funding this start up. In an era of record low interest rates, our fiscal ineptitude has us paying out these high penalty fees because we cannot get our act together and fund and pay bills on a 90 day cycle.

Given that the state of Illinois funds these programs and creates a budget and just raised taxes enormously, WHY can’t they figure out a plan that pays vendors in 90 days? This should be a scandal, but like everything else in Illinois, you just get inured to ineptitude, and this is just another story among a sea of stories of criminal behavior enmeshed with old-school Dem political hacks.

To be fair, one guy that deserves some credit in Illinois is Rahm Emanuel, who is attempting to close 61 schools in the City of Chicago, and is supporting the growth of charter schools which chip away at the education monopoly and cause competition so that some neighborhood schools and selected high schools are actually up to the type of standards that would cause parents’ to consider sending their kids locally.

Cross posted at LITGM

More Gun Control Tales… From the Front Lines

Here’s another post from our good friend Gerry over at LITGM who is at the “front lines” of the gun buying explosion at a major outdoor retailer…

The federal threat of banning of certain firearms and hi-cap mags has eased for now. The Hairy Reed said so.

Politicians are still willing to present some new background check legislation for what that’s worth. A second separate gun ban bill will be proposed but highly unlikely to pass.

The gun grabbers may seem to be in retreat mode but will be firing back when they believe any upcoming tragic event provides them with another opportunity to try it once again. One thing I know for sure about libtards is they never give up until they accomplish their ultimate Utopian goals. On this issue that would mean eliminating private ownership of all firearms no matter what the spewing heads in the media say. Some states will ban a this or a that and maybe that’s the way it will happen. For now I am still proud to be an Indiana resident and happy refugee from Illinois.

Coincidentally for the last three days the ammo truck came through. Since the 5 box limit is still on we are now able to make it through an entire day with some leftovers except .22LR. Each morning the ammo locusts enter and clean that category out within the first 30 minutes even with a 100 round limit. In my observation .22 LR is currently THE most popular round, taking over in requests for all rifle and handgun ammo combined.

Soon all things relating to firearms should get back to normal, becoming more available and prices easing up at retail. Our customers will be more at comfortable when coming in to buy ammunition and I can get busy dong my job instead of making excuses why the shelves are bare. Answering the phone and not being asked if we have any .22 or 9mm ammo in stock will be a relief in itself. I will feel much better when the first boxes of PMAG’s arrive and an assortment of AR’s occupy the shelf once again.

Credit goes to the NRA and all its members new and old for placing pressure on the Trotskyite politicians, it looks like the grabbers will head back to their hide-holes for a while. But they will be back. There are times when I watch Wayne LaPierre on television and cringe. We could use a more articulate and plain-spoken spokesman (paging Dr. Ben Carson) in my opinion but Wayne did get the job done. In addition, all the law abiding gun owners deserve praise for calling their representatives, calling in talk shows and doing what it takes to demand our Constitutional right to self protection. Citizens spoke with their wallets too, buying record numbers of firearms of all types and (I hate to say this) buying up every box of ammo, bullet, primer, press and powder container in sight. Reloading has become extremely popular. Special credit goes to all the first time gun buyers especially the women. Many more women now feel much safer when out walking or jogging alone. Practice, practice and practice, ladies.

We’re still out here in flyover country clinging to our guns and religion. We’re prepared to put up a fight again whenever our Constitutional right to personal protection and right to hunt is threatened. No east coast libtard with a Central Park West worldview is taking away our Second Amendment rights dammit.

The grabbers will be back and you can count on it. Until then stay vigilant. This could be my last entry for the “Tales From The Front” category for a while.

Peace, Love and The Second Amendment.

Cross posted at LITGM