13 October, 2017

Is Driving (to and from work) a Right or a Privilege?

Courts are increasingly indicating their agreement with the view that suspending driver's licenses for certain offenders is unconstitutional and a violation of individual civil rights. This is especially so when it is held that licenses of indigent traffic offenders are lifted for failure to pay cascading fines and fees without benefit of some sort of means testing or harm reduction being considered.


I propose (modestly) a solution:

While I maintain that automobile ownership and use is actually a privilege as opposed to a God-given (or state-given) immutable right, it is clear that in many parts of the U.S., the ability to drive, or more to the point, access to private point-to-point personal transportation is essentially a necessity. Removing that access is a draconian measure and may perpetuate a cycle of poverty and law-breaking.

So how about this very simple solution? Local governments/municipalities establish and subsidize ride-share programs that get those that have lost their licenses to and from work, grocery stores, churches, the doctors, the library, etc. If you drive your own car for these purposes, it costs you something in terms of gas, insurance, maintenance, etc., so it would be only fair and reasonable for program participants to contribute those amounts towards their share of the project. The subsidies I mentioned would cover the shortfalls.

Participants might rely on Uber (a boost to Uber drivers), or ride-share in personal cars driven by others. It might be possible and even desirable if some program participants act as drivers, their license suspensions lifted in exchange for performing this task.

As a condition of program participation, a payment plan would be set for the fines and other fees that are currently blocking individuals from reinstating their licenses.

So how does that sound?

03 August, 2017

Is Corporate Diversity Real or is it a Game?

Yet again, "diversity" is being viewed as some extrinsic quality that by simple inspection can be identified, categorized, quantized, and classified. "Let's see, we need so many blacks, a few white males, some gays, as many increasingly au courant transgenders (male and female, pre- and post-transition) as we can find. Cross-dressers are always handy for immediate impact in the annual report... And then season with some women and those spicy Latinos. There, perfect." 

This form of diversity, if looked at objectively, might just as easily be deemed racism. True diversity is based on what the constituents of a company's workforce bring to the table based on: life experience, culture, education, ways of thinking, etc. It is definitely not, "Get me some Jewish guys because they'll be really good at contracts, and then some Asians because, you know, they're all great with numbers."

This goes back to the classic "nature versus nurture" debate: some of the dimensions of diversity may be "baked in" and carried by some ethnic or other affinity/identity group, but to totally rely on this to achieve an important goal is simplistic, overly reductive, and prone to failure. Perhaps worst of all there is a high likelihood of its either being perceived as or actually being a cynical ploy to keep government and activists off your back.

If diversity is important enough to do, it's important enough to do for real.


01 August, 2017

Why is the "Developing World" Still in Very Dire Need of Development?

Executive Summary: If you give a bunch of poor people a bunch of money and do nothing else for them, in the short term you'll have a bunch of poor people with money. In the long term, you'll again have a bunch of poor people. This is the state of things in Latin America, pockets of the United States, the middle east, and much of the continent of Africa (I feel the need to stress that Africa is indeed a continent, as many people, especially in the U.S., seem to view it as a monolithic country).

An article appeared today on Quartz (https://qz.com/1024546/stop-blaming-poor-countries-poverty-on-corruption-sometimes-its-just-bad-luck/) titled, "Stop blaming poor countries’ poverty on corruption—sometimes it’s just bad luck."

If we accept the hard luck thesis, it doesn't leave us much in the way of constructive ideas as to how to be of assistance in improving the lives of people in these benighted precincts. After all, how does one change luck for the better? If life is nothing more than a succession of (fair) coin flips, is there anything within the laws of physics that can guarantee nothing but heads coming up?

Having the temerity to observe that because, largely due to human nature (which can be pretty darned inhuman), oligarchy, corruption, theft, graft, "kleptocracy," and "the resource curse,"a lot of people in the world are stuck in poverty is not the same as shaming the poor and oppressed as being morally flawed. But demographic, social, and societal problems have taken generations to take root and result in the status quo that we see. Fixing problems of economics, education, health & welfare, and lack of opportunity for upward movement are not reasonably going to be amenable to an overnight fix. Bill and Melinda Gates, as a case in point, have done admirable and compassionate work to improve availability of drinking water in parts of Africa. Despite the dollars invested in easing this problem, the efforts still appear to stall when they confront the issue of sustainability. So, for example, a village water pump stops working because no one in the village understands how to replace a fan belt and the village is back to women carrying jugs of water on their heads.

A lot of well-intentioned people in the west seem to view large swathes of the population of Africa the way marine biologists view dolphins: "They're super smart and industrious and the only reason they never invented the radio is because they live in water which would short everything out."

30 July, 2017

Why it's a bad idea to eat late in the evening. A prescient message for @ulalaunch @torybruno @SpaceX and @blueorigin ? A story of angst and foreign object damage? I had a vivid dream last night. A dream so strange it positively screams out to be documented. It has quite possibly changed my entire outlook on life and the nature of reality: 

My boss (whoever that was,
I never saw him – only heard his voice)) showed up at the house, urgently waking me to tell me I needed to get to a very important meeting. It was at the factory of a rocket engine manufacturer that had some sort of technical problem causing their engines to fail and blow up. I quickly threw on a blue seersucker suit (just like the one younger my brother wore to our nephew's wedding in Nashville last October). The boss approved of the choice and left to go on his own to the meeting.

I had a little lamp at bedside but was unable to turn it off. It had about six switches, but none of them seemed to do anything, individually or in combination, other than make it brighter. Finally, I just unplugged it. It was at this point that I noticed a small hole in the left leg of my suit pants
a few inches above the knee. It didn't seem to be a tear, but rather a circular hole due to wear, I’d guessed. I decided to keep the suit on since time was growing short and I needed to get going for the big meeting.

I walked into the bathroom to brush my teeth. Floating in the toilet was a capsule-shaped pill that was red and brightly striped
in a spiral. The colors were like a rainbow. It was gigantic for a pill one would be expected to swallow, at least 3 inches in length and maybe three-quarters of an inch in diameter. Next to it was a gray feather. Seeing that pill floating in the toilet invoked a feeling of deep existential dread in me for an unknown reason. I felt sick. I knew it was my wife's, but what was it for and why had she thrown it away? Did she leave it there intentionally for me to see? Just then, the wife (whom I had never seen before, though this didn't strike me as at all remarkable) entered the bathroom. She had what seemed to be reddish shoe polish on her face where a man might have a mustache and beard. It looked a bit like Kirk Douglas’s beard in ‘Lust For Life.’ "This marks the facial hair I'm going to remove; don't worry, this will all just come right off," she told me.

Next I know, I'm in a vehicle driven by
a good friend and former co-worker, Glenn. I say ‘vehicle’ because I'm not sure if it was a car, a van, or a truck. I'm not sitting but rather stretched out horizontally on my back with my feet at the back. We're on our way to the meeting at the rocket company. "Hey, I forgot my shoes," I tell Glenn. I'm hoping he'll turn back at the one opportunity to make a quick turn back. Instead, he passes it and presses on. We both know that there's no time to go back to get my shoes, especially now that we're on a road with no options for turning around. I'm thinking that my boss (and possibly my wife) are already en-route and maybe ten minutes ahead of us.

Glenn pulls into a MacDonald's drive-through and asks if there's a shoe store nearby. The kid in the window (who has the same croaky, breaking voice as the teenager in 'The Simpsons') tells us there is, just around the corner behind the MacDonald's, but
that he doesn't know how to get there. "You have to go through the junkyard," he says. Glenn and I both realize that neither the junkyard nor the shoe store will be open at this early hour. We also feel the pressure of time.

We pull out onto the street where we pass a couple of bums
(And I say ‘bums’ because they look like hobos from the 1930’s, carrying belongings in bindles on the end of sticks hoisted over their shoulders. They both wear fingerless gloves, the utility of which I’ve never quite figured out.). I ask if they have any shoes they'd sell me. On of them offers up several pairs, but they're all obviously too small. This prompts me to tell them that the size I need is ten and a half (which is untrue since I’m a size eleven and a half). The other bum removes his own beat up pair in that size, but I tell Glenn, "It's no good. They're brown. They won't go with this suit. So we drive on until we stop outside a Subway store. Glenn runs in and quickly returns with two foot-long sandwiches; tuna, I think. Clearly, his intent is for me to somehow clamp them to my feet. I try, but there's no way to make it work.

Now we're in the lobby of the rocket engine plant. I'm barefoot and stressing out over this. On the wall is a chart with the specifications of all their products
arranged from smallest to largest. The thrust of each is listed in Newtons, and I'm trying to convert them to pounds. I have no feel for what a Newton is. Our hosts arrive. Looking down at my bare feet, the chief engineer says, "I get it! I get what you're trying to tell us! The problem we're having is contamination and we can solve it by having all of our employees remove their shoes before entering the production floor. Thank you!" 

09 October, 2015


Affected U.S. vehicles (~482,000 total)

VW Jetta TDI (Model Years 2009 – 2015)
VW Jetta SportWagen TDI (Model Years 2009-2014)
VW Golf TDI (Model Years 2010-2015)
VW Golf SportWagen TDI (Model Year 2015)
VW Beetle TDI and VW Beetle Convertible TDI (Model Years 2012-2015)
VW Passat TDI (Model Years 2012-2015)
Plus Audi A3


This scandal is an existential threat to VW. This based on the financial and legal risks they face along with the possibly fatal loss of confidence in the brand of what is now the world's largest automaker.

Driving through Houston, I've already seen billboards soliciting plaintiffs in anti-VW lawsuits. Television commercials normally targeting medical malpractice and "bad" medical devices and drugs, are now sharing the spotlight with ads against VW. Since emissions compliance is regulated at the federal, state, and in many cases county levels, VW faces lawsuits from potenitially hundreds of entities. Harris County Texas, where Houston is (mostly!) located, has already filed suit.

I imagine individual owners could easily find lawyers willing to prosecute suits based on fraudulent and deceptive trade practices. VW faces a "death of a thousand cuts" scenario.


The California Air Resources Board (CARB) that rules over emissions law in that state and indirectly in other states, has announced that it will not, for the moment, take action against owners or their cars when it comes time to register or sell their Volkswagen diesels. "There should be no impact at this point, because the investigation is ongoing," CARB spokesman David Clegern told Consumer Reports.


It's been pointed out that there is no absolute leverage (under current law) by which municipalities and even the federal government might compel owners of affected cars to accept a software solution. And folks may resist such a solution if it is perceived as adversely impacting mileage, performance, or driveability. In jurisdictions where there is no standard for diesel emissions or a testing protocol as part of the registration and safety inspection process, a large number of car owners may choose to simply shun any fix. 

I have to speculate that enterprising individuals may create a market for "black market" engine control firmware "downgrades" that reverse the VW fix, whatever it turns out to be.


Wholesale auctioneer Manheim typically sells about 50 used TDIs per week, among those models involved in the emissions debacle, with about 70 such cars listed for 'upcoming auction.' However, Manheim’s most recent numbers are 15 cars sold and 11 cars listed.SIX POSSIBLE VW TDI DIESEL RESOLUTIONS

Resale values in the U.S. have taken a substantial hit in the weeks since the emissions scandal emerged, falling an average of 13%, or about $1,700 per vehicle since mid-September as car dealers stay away from the tainted vehicles, according to respected used-car pricing guide Kelley Blue Book.

“Early indications from auctions are that dealers are more hesitant to buy the VW diesel units,” KBB’s lead product analyst Tim Fleming said. “Used car values typically decline at this time of the year, but the large price drop on the VW diesels certainly stands out.”

The number of affected VW diesel cars being sold at auction has also tumbled 27% in the last two weeks, KBB says.


Affected owners should “wait and see” if VW decides to issue compensation (direcSIX POSSIBLE VW TDI DIESEL RESOLUTIONSt cash, credit towards another VW), a buy-back, etc.) or issues a widespread recall. Owners are smartest to refrain from immediately selling their cars. Any sale in the short term will be for a low value, since dealers have yet to find out the necessary costs of repair for these vehicles. Additionally, Volkswagen has yet to announce its solution, deterring potential buyers who may have to deal with further action from the auto maker.

In the three states (California, Texas, and Florida) with the most VW diesel cars caught up in the emissions scandal, only California withholds registration renewals from cars that fail to comply with recalls. In Texas and Florida, which have the second- and third-highest number of VW diesels after California, there are no emission standards in place for diesel vehicles.

Nationally, only 17 states are required by the Clean Air Act to confirm that owners of cars subjected to a recall show proof they have complied with it betoughfore they are allowed to take an emissions test required to register their cars, the Environmental Protection Agency said.


The following fixes/resolutions are ranked from most likely to unlikely:

1) "RE-FLASH" THE ENGINE CONTROL UNIT FIRMWARE TO REMOVE THE "TEST CHEAT": VW hopes that a simple software fix will work, and this is the most likely fix according to VW. I doubt this for an inescapable reason: if such a simple solution to the emissions and performance issues existed, VW engineers would have done this to begin with. Obvious issue with this sort of easy modification is owners may object that performance and driveability are sufficiently changed (for the worse) as

2) USE MORE ADBLUE (DIESEL EXHAUST FLUID (DEF)/UREA): For the subset of vehicles already fitted for selective catalytic reduction (SCR) and accompanying urea tank, VW states that a combination of both a software fix and greater use of ADBLUE may allow TDI's to comply with U.S. emissions regulations. This approach might work for 2012-2015 Passats and 2015 Golfs. VW would probably be compelled to supply owners the additional ADBLUE at no charge, but again the specter of the car not being what they bought (requires more frequent refill of Adblue fluid).

3) CASH COMPENSATION FOR CURRENT OWNERS: VW will most likely be required to send each owner of an affected vehicle a payment of some sort to account for diminished resale value, reduced mileage and performance, and increased future service costs. How this value gets determined and owner's rights to reject it in pursuit of a larger settlement is a question.

4) RETROFIT AN SCR SYSTEM: Doing this would be complicated, time-consuming (for VW, dealers, and owners) and expensive. Adding SCR (avoidance of which probably got them into this mess in the first place); the urea tank, filler location, associated pumps, sensors, plumbing, and wiring to vehicles in the field would be a 6) SWAP OUT NON-COMPLIANT TDI's FOR NEW MODELS: major undertaking. Owners would not be thrilled with losing trunk space, fuel tank capacity, or possibly the spare tire to the urea tank, along with the cost and inconvenience of having to periodically refill the fluid. This fix could cost VW $5K - 8K per vehicle.

5) JUST BUY BACK THE CARS OUTRIGHT: Any TDI that could not be brought into compliance with software tweaks owners would accept would be bought back and destroyed. VW stated that average buy back price would be $15,000.00 for a total cost of $4.5 Billion.

6) SWAP OUT NON-COMPLIANT TDI's FOR NEW MODELS: VW stated this would be the most costly solution.

07 January, 2014

Elastic Collisions: The Limits of Dynamic Pricing

Early New Year's morning an Uber user paid $82 for a one mile ride. My first reaction to this news is that the rider appears doubly stupid: first for paying $82 for a one mile ride; and second for admitting to having paid $82 for a one mile ride. But the experience has kicked off a debate or at least a renewed awareness of dynamic pricing for goods and services.

Obviously the theory of dynamic pricing is to efficiently, some would say ruthlessly, match supply and demand for a given product or service at a specific time and location. In this regard, it's exactly analogous to how a *skilled* bookie uses the odds he sets to ensure he has as many bets for team A as for team B. So catching a cab at 1:47 AM on New Year's Day might be a high demand proposition. On the supply side of that transaction, I guess it's possible that some drivers might decide to be off duty at this time, thus lowering the supply, but I suspect the imbalance is mostly on the demand side of this particular transaction.

Balancing supply and demand assumes a certain amount of elasticity in both supply and demand. If the asking price of a service rises beyond a "threshold of pain" for a specific consumer, it is reasonable to assume that they will not engage in the transaction at that price. Personally, I'd have to be in an amazingly compelling scenario in order to knowingly and willingly pay $82 for a ride of one mile.

On the supply side, the elasticity is manifest in drivers' decisions to be out on the road offering rides. If a driver knows he or she can charge let's say 10% more than normal for a ride, some of them will find this premium attractive; others may decide that 10% is not enough to incentive roaming the streets at two AM on January 1st. Obviously, as the premium rises, so too does the number of drivers that will decide to enter the market.

The dynamic pricing model faces a limit to elasticity on both supply and demand sides. Above some price, the overwhelming majority of consumers will not buy. Below some price, suppliers will not find it worth their time to compete for customers. Obviously, this elasticity is in constant flux, is situation, and is temporal. When the IRIDIUM satellite phone system made its debut, I was asked who would be willing to pay more than $7 per minute to place a phone call. I assumed that two plausible answers were: a CEO who wasn't particularly sensitive to spending $7 per minute at any time and an arctic explorer who wished to call for help after a polar bear had bitten his leg off to whom money was no object at that specific time. My family goes through maybe two gallons of milk per week. Like George H. Bush, I will confess to being a bit hazy on the price I pay per gallon, but let's assume it's around three dollars. If it goes a bit higher, say to four dollars, our buying habits likely will go unchanged. But if the price suddenly went to eight dollars, I'd examine alternatives, including just shunning milk.

Efficiency in a market and how it sets prices (i.e., values things) is also limited by how promptly the links between supply and demand (and their respective elasticities) are mediated. The energy industry is an example of delayed market signals (or their realization) leading to unfortunate investment decisions. This is because while a cadre of Uber drivers can decide almost instantly to take to the streets, it can take a decade to carry out a plan to find and exploit energy resources.

The other limit to elasticity is information. Do prospective buyers know what the current going rated is and what the cost drivers are? Do suppliers know how many buyers are out there, how many competitors are in the game, and what strategies both buyers and sellers are using? An efficient and fair dynamically priced market also assumes a high level of information symmetry: buyers and sellers all have the same information upon which to base decisions. Automated systems like Uber ought to easily meet these criteria.

So why someone chose to spend $82 to be carried a mile escapes me, but I assume some other factor was at play. Maybe intoxication, seriously inclement weather, the desire to impress a date (or having done so, the urgency to whisk that date to one's apartment before the bloom falls off the rose)? All I can say is that if I willing paid $82 for a one mile trip, the destination would be a hospital and I'd be apologizing to the driver for all the blood emanating from my polar bear severed leg.

06 January, 2014

*Asterisk*: Government Subsidies and inducements and alternative energy winners and losers

You can look at subsidies in two ways: as a consumer; and as an investor. We could also have a third prospective, that of a taxpayer, but that will probably just make you angry.

Let's say that aided by state and federal tax credits you can purchase a very desirable Tesla for the price of a 3-series BMW. As a consumer, that can be a great deal assuming the Tesla is the car for you. Once you make the purchase, your savings on "the real cost" of the car are locked in and you should be quite pleased.

As in investor, you might decide that Tesla has a tiger by the tail and that you'd like to get in on that by buying a small slice of the company. You can study projections for sales and expected profit margins, the typical financial underpinnings of any investment target. But you would be unwise to neglect investigating the role that subsidies play in the business. To what extent are they driving sales and how long are they likely to remain in place? Who are the competition and what might they do to reduce Tesla's subsidies or get some of their own? What is the future of carbon credits that prop up Tesla's margins right now? What are the economics and sustainability of Tesla's free SuperCharger stations? Who pays to maintain the integrity and capacity of local power grids when 100,000+ EVs are charging in the evening?

Similar questions exist for solar, wind, and geothermal energy. Subsidies will certainly reduce your installed price per kilowatt-hour. But how long of a "free ride" can you count on in the form of laws requiring your local utility to purchase from you your excess power while relying on their base-load safety net? Who pays to maintain and synchronize the 60 cycle AC we all assume is present at every wall outlet? These issues affect both consumers and investors and are significant drivers to the long-term viability of these energy sources.

Another, less obvious, variety of subsidy is where the government enters into a lucrative and possibly very large contract for services with a relative newcomer to the field. This is the case in commercial space launch services.

When Roger Maris had his 61 home-run season, breaking Babe Ruth's record, many baseball purists insist the record have an asterisk attached to it. The asterisk would denote that Maris accomplished his feat in the span of a 162 game season, while Ruth did his in the days of the 154 game season. If folks can get worked up about that distinction, a giant asterisk is certainly merited for the artificial subsidies, credits, legislation, and other inducements that tilt the cost:benefit equations for alternative energy products and sources.

Consumers can ignore (or just be pleased by) what's behind the asterisk as it lowers their purchase price below the true cost. But they must still remain wary of how their ongoing future operations and other cost of ownership items are affected.

Investors are foolish to ignore the asterisk as what's behind it can make or break the viability of their long-term bet.