Wednesday, October 30, 2013

High Hypocrisy and Stunning Ineptness walk into a bar...

...and the bartenders says, "What is this? A political cartoon?"

If only...

High hypocrisy (or worse) on the right. (Tea Party - go find a mirror, please)

Stunning ineptness (or worse) on the left. (Administration, please administer!)


WSJ: Fixing Procurement Process Is Key to Preventing Blunders Like

and  (scary-bad no matter which of the three choices you choose to believe)

These are all pretty mainstream, middle of the road kind of guys saying these things.

Me?  It's clear that we need a good dose of competence and character more than we need ideology, issues or policy.

We need more of this: "Comity is hard to achieve. From a lifetime of experience, I know that most people don’t view Democrats and Republicans symmetrically. In their view, truth and virtue lie entirely with the group to which they happen to belong" (from Mankiw Op-Ed column.  Read the whole column, it's interesting!)

and this:

There is an actual plan! You can read about it here: They came up with a framework that's tough, but it works!  Both the right and left hate it because it contains things they have sworn they will never surrender, namely entitlement reform and higher taxes (among others). 

Well, maybe that's the sign of a good compromise!

You have to give up something to get something.

This situation is not new.  Dr. Seuss had it pegged.

Except, we can't just ignore them.

Monday, October 21, 2013

Little Trains - Big Event! (part one)

I like trains. A lot of other people do, too. Why?  We just do.  Ask us and you'll usually get a rather unsatisfying answer.  The real answer is often a bit of an enigma, even to ourselves.

Trains are big, and fast and loud and colorful and do useful, varied work and railroads are complex organizations with complex processes and game-like operations.  Lots of things have these attributes, but they are not trains!

The "how did it happen" seems easier to explain.  I was exposed at a young age.  Most Saturday errands with my dad included a quick stop at the local Long Island Railroad station to watch a passenger train or two go by.  At age two, I had decided my life's ambition was to "build a locomovis." I pretty much stuck with that plan through to adulthood!  However, I tried this method of indoctrination with my kids and it didn't stick.  So, maybe not.

Apparently, it can occur spontaneously.  According to Wick Moorman, CEO of Norfolk Southern, "The story I tell, which obviously is probably not true, is that my mother apparently dropped me when I was very young. I landed on my head, and then she picked me up, the only difference was that my brain had been slightly addled and I loved trains. I was always interested in the railroad business and always kind of a railfan, if you will." (Railway Age interview, January 2011)

A typical "railfan" will display much of the following behavior:

1. Find places to watch trains go by.
2. Visit railroad museums
3. Ride tourist trains
4. Take pictures of trains and/or locomotives
5. Ride Amtrak when practical (or even not-so-practical!)
6. Take trips to see trains in other areas
7. Incorporate some "train activity" in family vacations
8. Considers a getting a job with a railroad or volunteering at a railroad museum.
9. Collect railroad related "stuff"/decorate with railroad related themes
10. Have model trains/model railroad

Not everyone does all of these things.  Some guys get into the details of the various locomotive models - which manufacture built what locomotive and how can you tell them all apart. They can tell you difference between and EMD SD60M and and SD60I at a glance.  Some guys just like to take train pictures, focusing as much on creative photography as the trains.  Some guys like model trains better than real ones.  Some the other way around.

I like both.

So, when the National Model Railroad Association had their annual convention in Atlanta, I had to go! There's lots going on at the convention.  They have clinics on "how to do things" and on railroad history and operations.  They also have special interest groups that cover designing and operating model railroad layouts.  Additionally, they have tours to local railroad facilities and museums.  But, the thing I was most interested in was going on some tours of the best model railroads in the area.

I took a couple days vacation to do this.  There were big ones, small ones and ones focused on operating like a functioning, real realroad.  Some were focused on capturing a historical era accurately.  Some were focused on creating the "railfan experience" in minature, that is providing a setting for watching interesting trains go by.  The ranged from "good" to "superb".

Here's the synopsis of what I saw, with pictures.

Pennsy Southern Division
Host Name: John Kelley

What made this one special was the catenary.  

Nice cat poles and signal bridge
Whitford? Yup.
Looks like Grif Teller's 1949 PRR calendar painting, to me!

Host Name: Ra & Barbara Barr

A nicely done garden railroad.  FTB stands for "For The Birds".  Houses are birdhouses...

The faithful gather to watch the action

Freight rolls by town of bird houses

View from the deck

Live Oak, Perry & Gulf
Host Name: Revis Butler

A supremely detailed and documented layout depicting the first half of the 20th Century in the Florida Panhandle.

Turpentine production

Typical panhandle rural town

Nice station model!


Beautiful freight house model

...and tower

Early 20th Century...

terrific details in this scene

Brandywine & Benedictine RR
Host Name: Norm Stenzel

Really phenomenal layout.  Fictitious road, but realistic operations and scenery.  Lots of visual puns and inside jokes, too.

"Moby Dick" experimental steam turbine

Future GE locomotive on display - why not?

Nice engine terminal

Buying a new car, or some other thing... :-)

Normally, when we want to buy something, we shop around for a good price.  Sometimes, on big ticket items, like a house, you can negotiate.  But, just about everything else  is marked with a price.  Anyone can buy the item for the price on the tag.  It's easy to compare similar items based on price.

Let's suppose you need a new car.  You an go to one of many internet sites and find out all about every car, including the sticker price, invoice price, available incentives, and more.

But, they are expensive and all that research is a hassle, so you've enrolled in this new car buying service.  Just about everyone is doing it, so you jump on board.  Here's how it works.

The plan lets you trade in your old car for a new one every five years.  You sign up for the level of service you want.  If you want a basic car, you take the bottom level plan.  If you want a luxury car, you take the highest level plan.  Based on the level of plan you select, you pay a certain amount into the plan each month.

For each plan level, there is a list of cars that qualify and the amount extra you have to pay for some options.  For example, if have the basic plan and you want a sunroof, you pay $300.  If you have the luxury plan , you pay $25.  The trailer-towing package is only available with the luxury plan and is included for "free."  Each service company has their own, distinct levels of plans and option menus.

The plan also covers any and all maintenance and repairs.  This is pretty standard.  After all, if you need a transmission rebuilt, that can get pretty pricey.

Time to buy a car.  You look a the list of cars in your plan and pick one.  You go to the dealer, find one you like.  The window sticker shows MRSP of $75,000 plus $6000 for the sunroof and $5000 for the XM Radio.  Total, $86,000.  You don't pay much attention to this since you have "the service".   The dealer swipes your service card.  You give the dealer your old car, pay him $25 for the sunroof and $15 for the XM radio, and away you go.

Two weeks later, you get the statement from your car buying service.  After staring at it for an hour you figure out that it shows they payed the dealer just $25,000 for the car and $1500 total for the options.  They resold your old car for $10,000.  Net paid out, $16,500.

You are paying $400 a month for this service.

Is it a good deal?

If you're sharp, you might be able to figure out the answer to this question.  You have to figure out the current value of five years of payments, the likely service and repair costs, the residual value of your new car after three years, etc.  Some will be hard to find.  Since these buying services have dried up the internet car pricing databases and individual used car sales lists, you'll just have to take a swag at these.  You also don't know what service and repairs really cost, either.  There are super-high prices on the dealer's garage wall, but, you have the "service" and it's covered.  You don't really care.

In then end, you find it's all very confusing and you quit.  You can figure out what you're spending, but you really can't figure out the value of what you're getting in return.  You can't even figure out which level plan is the best value since you can't find out what things really cost.   It's all very opaque.

The "service" likes opaque. It's how they make their money.

What's happened?  The car buying service has inserted itself between you and the car dealer/manufacturers.  They negotiate the price between themselves.  You have no idea what that price really is.  You only see what you think is the price on that statement that comes weeks after you "buy" the car.  You have no idea if there are incentive discounts or side deals between the service and the dealer/manufacturer.

You look in the financial section of the paper.  Your car buying service is making a good profit.  The car manufacturers are making a good profit.  You know that the money you pay each month for the service is powering those profits, but your only real choice is to switch services - and they won't consider the trade value of the car you bought with your current service.  Plus, they have an equally bewildering array of levels, lists of cars and prices on options. You're clueless and out of the loop.

Would any sane person sign up for such a thing?  Is this any way to buy health insurance a car?

Health insurance?  Who put that in there?

We have the most expensive health care on the planet - but we don't get the best outcomes - in part because we are so disconnected from the price of the service, we have no idea what stuff costs....nor do we really care.

Getting more people covered by insurance doesn't fix anything to any real degree.  It just gets more people into the game. What just might work, is taking down that opaque wall.  Get real price tags on things, let us have some "skin in the game" and let us shop like we're buying a shirt at Macy's.  Buying stuff.  Hunting sales.  That's something we're REALLY good at!

How about something like this? (plus some, cheap catastrophic insurance...)

Simple Math

Sometimes understanding the numbers tossed around in political debates is like having bees live in your head.  It's noisy and painful and makes thinking fuzzy.  But, sometimes, things are simple. Here's an example:

I found this blog post interesting:

The Federal budget is $3.6 trillion. The shutdown only effected 17% of government spending.  That's $626 billion a year. The rest is on "autopilot".  The "autopilot" part is mostly Social Security, Medicare, Military (these three are about 20% of the budget each) and debt service (interest on existing debt -about $220B a year, at present), plus stuff like the TSA.

Where does the money come from?  About $2.7 trillion is from taxes and fees.  The remaining $900 billion is borrowed.

During the latest Obamacare-debt ceiling-budget deficit bru-ha-ha, there were some suggesting that the debt ceiling issue wasn't all that critical since there was still money coming in and the Treasury could essentially pick and choose which bills to pay, choosing to pay the debt interest first and then pay for other stuff.

(More here:  Myth #2, WARNING: this is a "bees in your head" blog post.  Also, more here: - third from last paragraph)

Can you avoid default by choosing what to pay?  Sure. Here's the simple math that exposes some ugly truth:

If you don't raise the debt ceiling, all you have in your "checkbook" is $2.7 trillion.  That's what comes in from taxes and fees.  You have bills for $3.6 trillion, $220 billion of which is debt service.  You are $900 billion short.

You can "shut down government" and not pay $626 billion. But, you are still $274 billion short.

You could shut some mandatory spending, like the TSA - which would ground everyone - but that only gets you $6 billion (net - once you subtract off the $5 fee for TSA screening charged to each ticket that covers about 25% of the cost of screening).  And, perhaps shut down the Coast Guard, Boarder Patrol, ATF, FBI, Pell Grants, ACE operation of locks and dams, US highway repair and construction (but keep the fuel tax), farm subsidies, bureau of printing and engraving, TVA power generation, IRS (but somehow keep the tax revenue coming in) and all the rest, and you might just have just enough in your checkbook to cover the fees.

But, most likely, you'd have to take a chunk out of the "Big Three" - that is Military, Social Security and Medicare.  Each are about 20% of the budget - about $750 million each in rough numbers.

This rather conservative fellow gets it done.  He chooses some very steep militrary cuts (from $670B down to $400B)

Which would you choose?

BTW, you can see from these numbers that solving the budget deficit is much harder than, say, shutting down the Dept of Energy ($35 billion), Dept of Education ($72 billion), NASA ($18 billion), Amtrak ($1 billion) or privatizing the TSA and let users pay the whole cost ($8 billion).

(more here: and here: )

The gap is huge!  It's $900 billion!  The play-at-home version of the "Reduce the Deficit Game" is here:  The choices here don't balance the budget, but they do reduce the total debt as a percentage of GDP - which is the really important goal. (ask any homeowner with a mortgage about being "house poor"!)

It is obvious that there is no template for closing this gap that is palatable to the left and the right.  "No increase in taxes!"  "Defend the military budget!"  "Defend Social Security!"  "Health insurance for everyone!"  Etc, etc.  So, obviously, all that's left is something equally distasteful for both sides.  This is more than choking down a few Brussels sprouts before you get your apple pie.  Everybody has to "eat a bug" and there may be scant dessert.

Which side is brave enough to go first?