Alternatives to blocking American-US Airways merger via Lawsuit

On Tuesday, the U.S. justice department announced that it was filing a lawsuit to prevent American Airlines and US Airways from merging.

The Justice Department and attorneys general from six states and the District of Columbia filed a lawsuit Tuesday challenging the $11 billion merger of American Airlines and US Airways, saying the combination would lead to higher prices and less service for consumers. The merger, which would create the world's largest airline, would "substantially lessen competition" for commercial air travel, contends the complaint, filed in U.S. District Court in Washington.

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A top concern is local markets, the Justice Department said. It cited the example of Ronald Reagan Washington National Airport, where the combined airline would control 69% of takeoff and landing slots, and 63% of the outbound nonstop routes.

All I can think is that the government and business are going to spend a whole lot of money and time fighting this.  Don't get me wrong, I agree with the goal of keeping the airline industry competitive and with smaller, not bigger airlines.  In the article the CEOs of the companies tried to portray the merger as "pro competitive", but that, to me, is an abuse of language.  Any time a market has fewer and bigger players, it is -almost by definition - going to be naturally less competitive.

Instead of using anti-trust law to break the increasingly large airlines, consume them by encouraging more start-ups to compete with them.  Smaller companies tend to be more nimble and better able to out compete niche areas of the market, and consume market share from the massive companies that become large and unwieldy.

The problem is that this hasn't been happening in the airline industry.  According to this site, there's only been about 1 new airline startup in the United State per year.  And just as many failing.  Why are there so few startups?  This article makes some suggestions as to why.

But getting an airline off the ground has become a lot more treacherous. High oil prices these days mean carriers must fly full planes to turn a profit, and smaller airports just do not provide enough passenger traffic. At the same time, the major domestic carriers are more entrenched than ever in their own hub airports, making it harder for a new entrant to wrangle gates there. And investors have become more cautious about lending to just any airline project.

But is that it?  I would add that the number or rules and regulations from the FAA, TSA, and other agencies piles on to the cost of startup airlines.  There are thousands and thousands of regulations on everything from plane specs, to passenger movements, and airports.

One might be tempted to think that those rules are put in place to protect passengers.  That may have been the intent, but the additional costs of compliance help further entrench the big airlines by raising the startup costs of potential competitors.

In some cases the big airlines may have helped write some of those regulations with the mind that it would cost them little to comply, but cost other's greatly.  Here a great article that goes into detail about how this has occurred in other industries.  How Regulations Help Sustain Corporate Monopolies

However, in the world which we inhabit, most in the “business community” (who are actually antithetical to true business), tend to favor the status quo where regulations are concerned. This conglomerate of business interests do their part to actually favor certain regulations, especially those that would save their huge corporate monopoly from the doomed-uncertainty and promise of competition a truly free  market would provide.

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The example I shall be drawing from is documented on Bloomberg News, in an article published just yesterday. It is titled Accidental Death Becomes Suicide When Insurers Dodge Payouts by David Evans. Evans analyzes the case of Todd Pierce, a 46 year old cancer survivor killed in a horrific and fiery car accident. Through his employer, Todd took out accidental life insurance that would pay his wife were he to pass away unexpectedly, as did happen. Due to the pursuant contractual obligations mutually agreed upon by both parties, MetLife was expected to pay Todd’s widow an total of $224,000.  Despite the sheriff, the state medical examiner, and the official autopsy report concluding that Todd’s death had been an accident, however, MetLife made their own medical decision. They labeled the death a suicide, noting Todd’s previous battle with cancer and the toxicology reports which indicated he had a prescribed drug in his system. As any breach of contract would be submitted to, the case was brought to Federal court in Montana by Todd’s wife, Jane Pierce. What Jane didn’t know, however, is that she wasn’t just fighting for her husband’s benefits, she was fighting the corruption of the entire American corporate monopoly system.

This is but one existing example.  I'm willing to bet that the same is true with the airline industry.  It would be better, and more cost effective if the government started curtailing as many of these regulations as possible.  If it did, we might see more new competition and it wouldn't have to spend tens of millions of dollars to fighting lawsuits to keep the big guys from getting bigger.  Instead, the little guys could do that for us.

Latest Grand Bargain is (mostly) a Grand Waste of Time

It's so frustrating to know how the economy works(MMT), and then watch a bunch of men who don't, try and improve the national economy. Here is a one line sentence explaining how to grow an economy.

People need to spend more money so that there will be the increased demand for new jobs and new business.

That's it.  But let's look at Obama's latest Grand Bargain proposal from a critical MMT perspective.  Obama's plan has 3 parts.

1. Simplify the corporate tax code
2. Try to coax companies to "repatriate" their foreign money holdings
3. Use the tax increase to fund infrastructure jobs.

The first plan is to simplify the corporate tax code in 2 steps.  First, it's going to eliminate several deductions and so-called "special interest" loop holes.  That will increase the amount of taxes the government collects.  The second step is to lower the tax rate to the point where the money gained by closing loopholes is roughly equivalent to what's lost by lowering the tax rate from 35% to 28%.  Overall this is "revenue" neutral.  Will this help the economy grow?  Hell no!  At best it might make the economy run more efficiently(always a good thing!), but it won't grow.   It won't grow because all they're doing is changing who pays what, and not the total amount taxed.  No growth.

The second part is to get companies with foreign money holdings to bring the money into the country.  Normally, there is, apparently, a tax on doing that.  Therefore, companies leave their earnings overseas.  This estimate says there are over a trillion dollars out there.  Obama's proposal is to try and get those companies to bring in the money by offering a one time, low tax, to do so.  From an MMT perspective this would be bad for the overall economy because it's taking money out of the economy.

The third and final part of the Obama plan is to start funding infrastructure and job training programs.  From an MMT perspective, increasing government spending will be good for the overall economy because it will increase demand for jobs and business.  Hooray!

The reason I call this plan a waste of time is because, the first part offsets itself and the good in the third part is offset by the harm of the second part.  Making these plans revenue neutral will never give the economy the boost it needs.  Infrastructure jobs that aren't offset with tax increases will.  Tax cuts that aren't offset by tax decreases will also do the trick.

If there is any redeeming part of the proposed 'grand bargain' is the possibility that money will be shifted from those who are letting it sit, to those who will spend it.  That's why I added the qualifier(mostly) into the title.  If that money is truly just sitting in a foreign bank, collecting low interest dust, then shifting the money to infrastructure and creating jobs for the unemployed will help some.  My guess is that only some of that money is "just sitting there", the rest is being reinvested into other enterprises and will only end up moving around who gets it.

The thing that Obama, along with the GOP that's already dismissed the whole thing, don't understand is that the government doesn't need that money to spend on infrastructure.  The government can't run out of money anymore than a stadium can run out of points on a scoreboard.  Therefore, we can grow this economy until unemployment is back to a non-embarrassing level.

Who is the Next Big Winner in the Console Gaming Wars?

What do the Wii U, Playstation 4, and Xbox One have in common?  Answer:  All three run AMD processors inside.  AMD managed to find it's way into each of the three gaming consoles: Either as the Graphics processor or, Graphics AND Central processor.  That seems like a huge deal to me.

AMD has been a big player in the microchip market for a long time, but it's never been the biggest.  Currently nvidia is still the biggest player in graphics.  Providing all the graphics cards for the consoles might change that.  ExtremeTech explains how:

The real worry with AMD’s push for unified gaming is that games developers might shirk Nvidia optimizations. If it’s relatively simple to get Xbox One games up and running on PCs with AMD graphics, publishers might not see the need to spend the additional cash to optimize for Nvidia cards. This could be a huge hassle for the majority of PC gamers with existing Nvidia cards, but it would be even worse for Nvidia itself. While AMD has been lagging well behind lately, this PC-console strategy could help it leapfrog its competitors in a meaningful way.
Despite being the company that created the first x86 64 bit processor, and the first dual core x86 processor

It would be exciting if console and PC hardware started moving closer to each other.  Porting of top titles costs a lot of time.  If it's moving from one type of chip and hardware set to another will mean even more time to make sure it looks and plays the same.  But if the console hardware is similar to PC hardware, then it won't take as long.  That means more and quicker game ports.

AMD could really use the boost because right now, despite the legacy of creating the first 64bit x86 processor, and the first dual core x86 processor, AMD is getting it's butt handed to them by Intel in the x86 server market.  It's also losing ground on mobile devices.  Qualcomm and Samsung overtook AMD's second place in the mobile phone market.

Overall, I think this was one hell of a strategic coup for AMD.  One that keeps them a big player in the chip market.

Why eBooks should cost MORE than paper books

E-reader on top of books.

You will be hard pressed to find a title in the amazon store or barnes&noble that is cheaper to buy in paperback than as an ebook.  But why?  Well, presumably it is a lot cheaper to produce and upload copies of an ebook than it is to print and ship a paperback.  But, in my not-so-humble-opinion, ebooks should cost more than buying a print book.  Here's why I say that.

First of all, ebook will last for ever and never wear out.  Paperbacks start getting worn out after just the first read through.  If it's a good book that you reread or loan out it's gonna look pretty ragged.  Same thing never happens to ebooks.  They are always as good as they were on day 1.  In theory, my children's children could inherit all my ebooks and they will work just as well for them as they do for me.

Second, it's hard to lose an ebook.  Since most ebooks sellers allow you to redownload an ebook an unlimited amount of times, There is no such thing as misplacing an ebook.  You can't leave it at the beach, or on the bus.  Sure you could leave your DEVICE, but you can always re-download it.  Even if they don't let you redownload a purchase, it is easy enough to make several backups of a file.

Finally, ebooks are upgradable.  If you're used to reading brand new first edition books, you can come to expect a few typos or small grammar errors.  If the publisher releases a second edition, most ebook services will let you update those books to the latest version.  Print books you would have to buy the new edition.

I think that ebooks objectively provide more to readers than a print edition ever could.  I understand many people still prefer physical books.  But to me, eBooks provide so much more, that you would think people would be willing to pay more for them.  Fortunately, since ebooks are cheaper to produce they are cheaper to buy despite their advantages.  To me, ebooks are a real steal.

Recognizing who\what Really Controls Interest Rates

Just in case there was any doubt about what really controls interest rates, the past couple of months should dispel any lingering doubts.  The Federal Reserve(The Fed) is without a doubt in full control of interest rates going up or down.

Back in spring, the Fed hinted that it was going to ease up on "Quantitative Easing" or QE3.  Quantitative easing, for those who don't know, is the Fed trying to flood the market with dollars by buying stocks and bonds(*True Story)  They call it Quantitative Easing to make themselves sound smarter than you(*Not a true story).

So guess what happened?  Interest rates have been steadily rising this summer.  Despite that, many people mistakenly believe that interest rates are determined by a "Free Market" or by "bond vigilantes".  The only time "the market" really gets involved is when they start trying to guess at what the Fed is going to do.  That was demonstrated last Wednesday.  The Fed said nothing, the market reacted as if that meant interest rates were going to go up.

The policy implications for this are immense.  I won't get into all of them on this little post.  But let's just start at the bottom.  The Fed sets interest rates.  That is a fact, one that cannot be denied.  Whether or not that is desirable is a different argument.  But, right now, the only thing standing between a 0% interest rate, or a 40% interest rate is a whole bunch of wealthy, well-connected bankers.

No amount of budget deficits or surpluses can change that fact.  Granted, the bankers may make their decisions based on federal budgets or the health of the economy.  But the decision is still in the hands of a small number of people, not "the market".

Sony will win

As the Wii U, PS4, and Xbox One come to tangle in the next round of the console wars, Here is my bold prediction:  The PlayStation 4 will win the next round of the console wars.

PlayStation One and PlayStation 2 were the top selling consoles worldwide of all time.  The PlayStation 3 was set to be huge, but then the Wii came along and blew everybody away in the last round.  So why do I think sony will be back on top?

Here's what I see.  The Wii won because it was revolutionary.  It's working name was even "Revolution". It expanded the video game market instead of competing for the existing one.  It was different.  Games were excited, non-gamers were interested.  Eventually PS3 and Xbox started making back some ground, but they never caught up with the Wii's original sales and are virtually tied for second.

But now, the Wii U is old news.  It's touchscreen controller is more an evolution than a revolution.  It still uses Wii controllers.  It's working name was Wii 2, and the end product reflects that.  While the Wii U will benefit some from past success, there is not as much buzz about it.

The other competition is Microsoft's xbox One.  Originally, I thought Microsoft was going to win.  They were going to concentrate on better and better online features and integration.  Instead, they are locked into a boxing match with their own customers.  They're adding and removing features and pissing of different groups.  I can't help but think that all this confusion is going to hurt them.

All of Xbox controversy wouldn't hurt Microsoft as much if they were the only game in town like Windows on PCs.  But Sony is making huge strides to catch up with Microsoft's online advantages.  Sony is also making lots of other new changes.  You can read about them here.  Nothing is revolutionary, just evolutionary... just like the other 3 consoles.

So here it is.  All the consoles made evolutionary steps, I believe Sony made more.  And in addition, Sony isn't repeatedly pissing off large groups of users.  I believe Sony will find it's way back on top their fourth round of the console wars.

When did Following the Constitution become Optional?

Could someone please tell me exactly when following the constitution became optional?  In the last week I have heard Senators openly call on the president to violate a citizen's rights.  Some prominent figures have demanded that the government act like following the Bill of Rights is optional and can be decided on a case by case basis.  It is my humble opinion that every American citizen has certain unalienable rights that cannot be taken away without due process.  I never thought that would be a controversial opinion to hold in the United States, but apparently it is now.

I think we have all been horrified by the Boston Marathon bombing.  Made even worse by the high profile manhunt that resulted in shootout and dead police officers.  Because of the heinous nature of the crimes and the high profile, Senators and media figures are calling to throw away the constitution when dealing with the American citizen that did these awful things.  I'm going to type that again, because it is an important point.  Dzhokhar Tsarnaev is an American citizen.  And that (should!) guarantees him the right to due process - no matter how terrible his crimes.

Yet, we have yahoos lie Senator Lindsey Graham calling for him to have his citizenship revoked and treated lie an 'Enemy combatant' so that there doesn't have to be a trial.   John McCain and others has called for not giving an American citizen his Miranda rights.  For McCain, this is not the first time he has done so.  Sean Hannity wants to torture an American citizen and do so without a trial.  So much for the 4th, 5th, 6th, and 8th amendments in the Bill of Rights... (try to walk past the Ann Coulter Statement in that last link where she wants an American citizen  arrested for what they wear - that absurdity is WAY beyond the scope of this post)

To be clear, I think that the Boston Marathon bombers are horrible people that deserve whatever they get.  Thanks to the high profile of the case, I can be reasonably certain that Dzhokhar Tsarnaev is one of those bombers.  I shouldn't have to say this, but I have to, to keep people from accusing me of being a "terrorist lover" or "America hater".  I will not get emotionally upset if bad things happen to him.  It is the next person, the less high profile case, that I'm concerned about.

Our rights don't exist to protect guilty parties such as Tsarnaev, they exist to protect the innocent and falsely accused.  If the government has the power to take away certain rights from the guilty - without trial - what prevents it from doing the same to the innocent and falsely accused?  We cannot let the government say that since somebody is a horrible person they don't deserve his constitutionally guaranteed rights. Why? because without a trial how do we know he is guilty?  That is my concern and is the thing that everyone should be concerned about.

If the president has the power to declare a guilty person an "enemy combatant" and swooped off to a secret prison to be tortured - all without a trial -, he also has the power to do it to an innocent person.  If we give the president that power, that means we are only one sociopath getting elected president away from a dictatorship.  If the president can declare ANYBODY an "enemy combatant" what is to stop him from doing that to his political enemies?

I am not an expert in liberty, constitutional law, or history, but these are very basic arguments.  These are foundational principles of our country. These arguments can be grasped by any middle schooler in a basic government class.  These are the things that concerned our founding fathers and lead them to create the Bill of Rights.  It scares me that they aren't grasped by prominent members of the media and long time U.S. Senators.  An even scarier thought is the possibility that they do know them and are purposely ignoring them.

Dzhokhar Tsarnaev must have his full rights as a U.S. citizen(because he IS a U.S. citizen) protected because it is the only way to guarantee that the rest of us will have them.  Any arguments about denying Tsarnaev his rights because he's a bad person or a public danger is, at best, an extremely short-sighted view.  At worst it is emotional manipulation by a future dictator.