The Equifax Data Breach

Equifax Site Generates Phishing Error

Equifax Site Generates Phishing Error

[Update September 20]

Equifax experienced a breach in March.  Apparently they did not inform anyone.  From Bloomberg:

Equifax Inc. learned about a major breach of its computer systems in March — almost five months before the date it has publicly disclosed, according to three people familiar with the situation.

In a statement, the company said the March breach was not related to the hack that exposed the personal and financial data on 143 million U.S. consumers, but one of the people said the breaches involve the same intruders. Either way, the revelation that the 118-year-old credit-reporting agency suffered two major incidents in the span of a few months adds to a mounting crisis at the company, which is the subject of multiple investigations and announced the retirement of two of its top security executives on Friday.

Equifax hired the security firm Mandiant on both occasions and may have believed it had the initial breach under control, only to have to bring the investigators back when it detected suspicious activity again on July 29, two of the people said.

Brian Krebs, among others, has noted that the vulnerability was in Apache Struts:

Krebs on Apache Struts

The Apache Struts Project Management Committee issued a lengthy statement which you can read here. But most people just want to know what the heck this application does.  Here’s the short description from the project website:

Apache Struts Project Description

Apache Struts Project Description (click for larger image)

On a lighter note, Twitterer @PlanetKingdom found this in the thicket of the Equifax website:

Equifax Recomments Netscape and IE

Equifax Recomments Netscape and IE (click for larger image)

You read that correctly.  Equifax was, at least until recently, recommending Netscape and Internet Explorer. Is it still 1999?  Yet another demonstration of utter incompetence.

[Original article begins here]

143 million Americans had their identities compromised in the Equifax data breach. U.S. population 20 years and older in August, 2017, was 353.5 million. Fully 40 percent of the adult U.S. population had virtually 100 percent of their personal data stolen. The purpose of this article is to summarize and pull together advice from my personal experience as well as four good sources:

Krebs on Security “Equifax Breach Response Turns Dumpster Fire
Krebs on Security, “How I Learned to Stop Worrying and Embrace the Security Freeze
Krebs on Security, “Breach at Equifax May Impact 143M Americans
ArsTechnica “So Equifax Says Your Data Was Hacked. Now What?

Here, I’ll look at three issues. First what should you do? And – importantly – what shouldn’t you do? Second, what the heck happened and how has Equifax responded? And, third, why has Equifax’s response been so utterly incompetent?

What Should You Do?

Don’t panic. Yet. First find out if you are affected. From Krebs:

Equifax has set up a Web site — https://www.equifaxsecurity2017.com — that anyone concerned can visit to see if they may be impacted by the breach. The site also lets consumers enroll in TrustedID Premier, a 3-bureau credit monitoring service (Equifax, Experian and Trans Union) whichalso is operated by Equifax.

According to Equifax, when you begin, you will be asked to provide your last name and the last six digits of your Social Security number. Based onthat information, you will receive a message indicating whether your personal information may have been impacted by this incident. Regardless of whether your information may have been impacted, the company says it will provide everyone the option to enroll in TrustedID Premier. The offer ends Nov. 21, 2017.

Next, get your credit reports from all three credit reporting agencies (Equifax, Experian, and TransUnion). You can do this fairly efficiently via http://annualcreditreport.com. But beware. Some of the security questions are obscure. For example, “In which of the following years did you take out a mortgage?” Even worse, some of the answers the site thinks are correct are wrong. One question asked while I was trying to get a credit report for my lovely wife: “Have you ever used any of these last names?” One choice was her ex-husband’s last name – which she never used. I checked “None of the above” and was promptly told I had failed the security questions and would have to call the company to get the report. Even worse, after that the Annual Credit Report website crashed so I couldn’t get the report from the third agency.

Annual Credit Report fail

Annual Credit Report fail (click for larger image)

My advice is to print these reports to pdf files and put them somewhere safe. All three have a section just below your personal information that flags any problems that may exist. If that’s clear, so are you. At least for today. Remember, a credit report is a snapshot at a point in time. The report could change ten minutes after you download it.

Third, take advantage of Equifax’s offer of one year free enrollment in TrustIDPremier credit protection service. You can find out whether your information was stolen here: https://www.equifaxsecurity2017.com/enroll/ — in fact, there are two questions that determine whether you’re a likely victim before you can proceed to the enrollment page:

Equifax Questions to Determine Eligibility

Equifax Questions to Determine Eligibility (click for larger image)

Once you enroll, you’ll be given a date on which you can actually complete enrollment. As of August 9, the wait was five days. It’s probably longer now. And beware: the free protection only lasts for one year. After that, Equifax will undoubtedly try to sign you up for the paid version of this service. Reasons why anyone would do that escape me.

Fourth, if you don’t have a Discover card, get one. (Disclaimer: my only connection with Discover is as a satisfied customer.) Discover offers a zero-price service that will monitor thousands of risky websites as well as Experian’s credit reporting. They look for your Social Security number on those sites. Experian is used to see if anyone is trying to obtain credit in your name. Search for Social Security Number and New Account Alerts. The link will take you here: https://dashboard.discoveridentityalerts.com/dashboard

Discover security message

Discover security message (click for larger image)

Fifth, consider freezing your credit. I won’t go into details on this, but Krebs on Security has a great article about why you shouldn’t be afraid to do this and how to proceed.

Equifax has their own special site for their security freeze. https://help.equifax.com/s/article/ka137000000DSDjAAO/How-do-I-place-a-security-freeze-on-my-Equifax-credit-file

But beware: some users report that entering a random last name and an equally random last six digits of a Social Security number is treated as a regular account with the usual response.

You may be charged a fee for each credit reporting service where you place a freeze. These fees vary by state and, perhaps, age. In California, the fee is $10 each unless you are 65 or older. In that case the fee is $5. Click here to see the complete table (downloadable pdf). State by state fees for security freeze:

Finally, if you are a victim of identity theft, the Federal Trade Commission is the government agency acting as a clearinghouse for these reports. First, file a police report. Then visit the FTC identity theft website.

What Happened?

Equifax screwed up bigtime. The problem began when they failed to install a security patch. Oops.

Equifax said the attackers were able to break into the company’s systems by exploiting an application vulnerability to gain access to certain files. It did not say which application or which vulnerability was the source of the breach.

Here’s what Krebs has to say:

That the intruders were able to access such a large amount of sensitive consumer data via a vulnerability in the company’s Web site suggests Equifax may have fallen behind in applying security updates to its Internet-facing Web applications. Although the attackers could have exploited an unknown flaw in those applications, I would fully expect Equifax to highlight this fact if it were true — if for no other reason than doing so might make them less culpable and appear as though this was a crime which could have been perpetrated against any company running said Web applications.

The problem has now been compounded by total incompetence by Equifax management and IT people. For example, just after http://www.equifaxsecurity2017.com was opened, some browsers were giving invalid certificate errors. Users of OpenDNS were affected. It’s unnerving to get this error message at that site:

Equifax Site Generates Phishing Error

Equifax Site Generates Phishing Error (click for larger image)

Management beara a big chunk of the blame. Their former head of IT security, Susan Mauldin, has two degrees in music composition – and zero in any computer-related field.. Accompanying her out the door is former CIO David Webb.  Ms. Mauldin is being scrubbed from the internet as fast as Equifax can manage it. Too bad they didn’t devote the same effort to handling this data breach. Luckily the folks at Reddit did a screen grab of her Linkedin profile:

Susan Mauldin LinkedIn bio from Reddit

Susan Mauldin LinkedIn bio from Reddit (click for larger image)

Equifax deserves to be sued out of existence. Frankly, I hope a few executives go to jail. As Krebs puts it,

My take on this: The credit bureaus — which make piles of money by compiling incredibly detailed dossiers on consumers and selling that information to marketers — have for the most part shown themselves to be terrible stewards of very sensitive data, and are long overdue for more oversight from regulators and lawmakers.

And the markets are already punishing them. The stock price has fallen by 1/3 since the incident:

EFX stock price from Yahoo finance

EFX stock price from Yahoo finance

Why Has The Response Been So Incompetent?

I’ve already explained part of the problem: giving someone with zero qualifications a sensitive job in IT. This is similar to what happened at the Office of Personnel Management.

Incompetence starts at the top. CEO Richard F. Smith was previously an executive at General Electric. His responsibilities there had little to do with data security:

Prior to joining Equifax, Smith spent 22 years with GE holding several president and chief executive officer roles across numerous businesses including Engineering Thermoplastics, Asset Management, Leasing, and Insurance Solutions. GE appointed Smith an officer of the company in 1999.

But there is a connection with Ms. Mauldin via the great state of Georgia. Recall that her degrees are from the University of Georgia. Mr. Smith:

In May 2010, Smith was inducted into Georgia State University’s J. Mack Robinson College ‘Business Hall of Fame.’ He was the 2013 chairman of the Atlanta Committee for Progress where he is a current board member, and also serves on the board of directors for the Commerce Club. Smith was the 2009 chairman of the Metro Atlanta Chamber of Commerce and now serves on its board of directors and executive committee. As co-chairman of the Atlanta Super Bowl Bid Committee, Smith was part of the team instrumental in Atlanta’s winning bid for Super Bowl LIII in 2019.

Sounds like a bit of quasi-nepotism. But also consider former CIO David Webb (emphasis added):

Dave Webb is chief information officer for Equifax, where he is responsible for leading a global team of IT professionals in delivering the technology strategy as well as support for the company’s innovative consumer and business solutions. He joined the company in 2010.

A 30-year veteran of the IT and financial services industries, Webb joined Equifax from Silicon Valley Bank, where as chief operations officer he led the company’s IT strategy. He also served as a vice president at Goldman Sachs, supporting the investment and merchant banking divisions, and held technology leadership positions at Bank One and GE Capital’s auto finance business.

Additionally, Webb has served as a technology consultant to several large corporations in the U.S. While living in Europe, he held positions at companies servicing the oil industry, including Kestrel Data Limited, Marathon Oil UK Ltd., and Brown and Root Ltd.

Webb earned a bachelor’s degree in Russian from the University of London and a master’s degree in business administration from the J.L. Kellogg Graduate School of Management at Northwestern University.

Russian and an MBA. Sounds ideal for a CIO. Experience is no substitute for education when hiring people in IT. Ah, but note that last phrase in the third paragraph: “and held technology leadership positions at Bank One and GE Capital’s auto finance business.” Another guy from GE, Mr. Smith’s former employer. More quasi-nepotism.

Incompetence plus hiring for sensitive positions based on who you know. If there’s a better formula for disaster, I haven’t heard about it yet.




Otkritie stock price Is Russia’s Banking System Collapsing?

Is Russia’s Banking System Collapsing?

State-run firms are withdrawing billions from Russia’s largest privately held lenders as panic spreads following the largest ever bank collapse in the country’s history.

Is Russia’s banking system collapsing? Or perhaps the private banking system in Russia is being gradually taken over by the government. That would be consistent with Mr. Putin’s past behavior. It appears three of the four largest private banks are being deliberately punished by the government. An article on the Financial Times website dated September 18 includes new information about Russia’s largest banks. →

B&N Bank

B&N Bank

The banks are B&N Bank (БИНБАНКБ, pronounced bean-bank) and the Credit Bank of Moscow. The withdrawals were 12.3 billion rubles at B&N and 11.1 billion at Credit Bank of Moscow. These are respectively 36 and 17 percent of state-run deposits at each bank.

Credit Bank of Moscow Strategy

Credit Bank of Moscow Strategy

There may be elements of retaliation involved. This summer Credit Bank of Moscow withdrew its rating from Expert RA, a Russian agency. Credit Bank CEO Vladimir Chubar said the withdrawals were made by a single large state-run organization in the aftermath of the rating revocation.

A branch of Otkritie bank

A branch of Otkritie bank

All this comes in the wake of the crisis at Otkritie, once Russia’s largest private bank. Last month Russia’s central bank had to bail them out. In that instance, state-run corporation withdrawals led to a run on the bank. Otkritie lost a full third of its balance sheet over the summer. According to Bloomberg, in June and July alone the bank lost 26% of deposits from all customers, totaling 433 billion rubles. The central bank has accused Otkritie of cooking its books and manipulating bond prices. (Unfortunately I was unable to find the amount withdrawn by state-run enterprises.) ()

Otkritie borrowed 728 billion rubles from the central bank in August. That means it owes the central bank over one trillion rubles.

Those three banks are part of the “Garden Ring,” located on Garden Ring Road in Moscow. The fourth bank, Promsvyazbank, saw state-run business deposits increast by 79 percent in August to a total if 98 billion rubles.  Interestingly, Promsvyazbank’s website is only available in Russian:

Promsvyazbank

Promsvyazbank

But Google translate says this:

Promsvyazbank translated

Promsvyazbank translated by Google translate

According to my calculations, total net withdrawals[1] were $475 billion rubles out of total deposits of 1,888.9 billion. That’s a serious hit to any bank’s capitalization. Bloomberg says,

Bank of Russia Governor Elvira Nabiullina has overseen a purge that has seen one in three lenders lose their licenses since 2014 as she attempts to eliminate under-capitalized institutions. This is the first time the cull has impacted one of the 10 lenders designated as systemically important by the central bank, with the bailout financed through a new fund created to assist in the consolidation of the banking sector.

At the same time these four banks were declared too big to fail by the central bank. Given the way Russia is being governed, the real mystery is why the banks were not simply nationalized.
A good working hypothesis is that Mr. Put8in wants to maintain the appearance of a market economy.  Private banks are crucial to that process.

[1] Withdrawals from Otkritie include all depositors. Activities at the other three banks are only state-run enterprises.




Sort of Good News on Regulations

George Washington University’s Columbian College of Arts and Sciences hosts the Regulatory Studies Center. And today they released some good news.  The volume of new regulations emanating from Washington, D.C. has decreased.

Regulations Issued by Type and Year

Regulations Issued by Type and Year (click for larger image)

Naturally, I have a complaint.  The horizontal axis is at zero.  When I see a bar on a graph like this that extends below that axis I’ll be much happier.




The Latest Bad Tax Ideas From Washington

Bad ideas flow from Washington, D.C. like water flows over Niagara Falls.  But there are two that make up the latest bad tax ideas from Washington.

Niagara Falls The Latest Bad Ideas From Washington

(click for animation)

Naturally, these are being floated as part of the tax reform effort. Politico has summarized the proposals being kicked around. You can read more there. And Dan McLaughlin, attorney and columnist for the National Review Online, has written briefly about one of these proposals. (In fact, it was Dan’s column that alerted me to the potential problem.)

But here are two of the many ideas floated in the Politico article.

One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front: an idea that would raise billions of dollars in the short-term and is pulled from the Camp plan. This policy idea is widely disliked by budget hawks, who consider it a gimmick; the financial services industry that handles retirement savings; and nonprofits that try to encourage Americans to save.

Among the decisions that the White House, Treasury and congressional leaders have settled on is that any tax proposal will require U.S. companies to bring back earnings from overseas at a one-time low tax rate, a favorite proposal of the business community known as repatriation.

I’ll discuss these proposals in order.

Taxing Retirement Contributions

It happens you can already make retirement contributions out of taxed income. The Roth IRA allows you to make contributions out of after-tax income. You get no tax deduction in the year you contribute. But you are allowed to withdraw when you retire and pay zero taxes. To summarize, contributions to Roth are from after-tax income, while withdrawals are tax-free. Contributions to conventional IRAs are from before-tax income, but withdrawals are taxed as ordinary income. (Rollover IRAs are accounts created when a balance is transferred from, say, a 401(k) account. Employers sometimes require this, especially for employees who no longer work at the firm.) Also, some households hold more than one type of IRA.

But this proposal is different. It would essentially mandate that contributions to 401(k) plans be made out of after-tax income. (Presumably, the 403(b) plans used by academics would also be included.) This is a terrible idea for a number of reasons. First, as Dan McLaughlin noted,

While the overall goal of cutting business and investment taxes by lowering the corporate tax rate is a good one, much of the pro-growth benefit of reducing business taxes will be kneecapped if the budget bean-counters get away with slapping additional taxes on money invested in 401(k)s, many of which flow into investments in the same corporations getting the tax cut. Taxing individual retirement savings is also bad from the standpoint of conservative economic philosophy, because it discourages self-reliance. It would unsettle plans made in reliance on the existing code by lots of people – not a reason to freeze the code in amber, but certainly a caution for anyone monkeying with the rules. And as an electoral matter, it’s likely to be politically radioactive with precisely the sorts of wavering suburban voters who were staunch Republicans during the Obama years but are uncomfortable with Trump.

Second, economists have complained for decades that Americans don’t save enough. And it’s true. In the second quarter of 2017 household saving was 5.4% of gross national income (GNI).[1] The last thing we need is to remove an incentive to save. But that’s exactly what this proposal would do.

Political Risk

Finally, there’s political risk. Roth IRAs essentially create tax revenue for the government today. But future tax revenue will be lower when retirees withdraw funds tax-free. Future Congresses are likely to be unhappy with this. What today’s Congress has done any future Congress can undo. It’s entirely possible that a future Congress could revoke the tax exemption for withdrawals.[2] This explains something that has puzzled many economists and investment advisers. If you believe the government’s promise, no one with an ounce of understanding of economics would ever choose a conventional IRA over a Roth IRA. Yet Roth IRAs have not been very popular. To see this, we can compare the demand for Roth and conventional IRA accounts.

The Employee Benefit Research Institute publishes data on IRA holdings (among many, many other topics). Their latest data is from 2013.[3] And there are two measures: the percentage of households holding each type of IRA and the percentage of assets held in each.

Looking first at the percentage of households, conventional IRAs were 34.5% of the market, Roth IRAs were 20.5%, and rollover IRAs were 21.0%. The remaining 24% of households held two or all three.

Market share by households The Latest Bad Ideas From Washington

Market share by households (click for larger image)

The market share by percentage of asset valuess shows conventional IRAs were 26.6%, Roth IRAs were 5.7% and rollover IRAs were 19.8%. Again, the remaining 47.9% of total assets were allocated to two or all three.

Market share by assets The Latest Bad Ideas From Washington

Market share by assets (click or larger image)

Roth vehicles continue to be unpopular. As Vice-President Pence said recently, “People in Ft. Wayne understand this.”

Repatriating Funds Held Overseas

Where to begin? The first objection is that corporations would be required to repatriate funds held in other countries. This sounds more like Socialism than capitalism. The government will actually order businesses to return those funds?

But even worse, this is a one-time offer at a lower tax rate. Corporations have already paid taxes on those earnings in other countries. The correct U.S. tax rate would match what other countries charge: 0.00%.

Finally, it’s temporary. As economists once knew, temporary tax changes do not change long-run behavior. Even if these funds are repatriated, the deadline for this deal will pass and corporations will once again begin to accumulate funds in other countries. Sadly, this is typical of the short-sighted “thinking” in Washington, D.C. Whoever dreamed up this idea should be booted out of the meetings discussing tax reform.

Conclusion

Over the past 30 years I’ve positively dreaded the idea that the tax system would be overhauled again. When Congress opens up the tax code for any serious rewriting, you can bet the farm that the code will not get any simpler. As I’ve written many times before, Congress and the President use tax complication to hide the many favors they dispense to favored interest groups. Sadly, it appears that we may be in for another 5,000 pages added to U.S. tax law.

[1] Source: U.S. Bureau of Economic Analysis. Accessed September 4, 2017.

[2] I once used this example in an MBA finance class. One of the students exclaimed, “They [Congress] would never do that!” He became more cynical as the course progressed.

[3] Craig Copeland, Ph.D., Employee Benefit Research Institute. “Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances” November, 2014, Number 406.. https://www.ebri.org/pdf/briefspdf/EBRI_IB_406_Nov14.IAs1.pdf accessed September 4, 2017.




Operation Choke Point Is No More

Red Tape

Red Tape (click for larger image)

A win for the good guys!  Operation Choke Point is no more.  This underreported story was pointed out by James Taranto who helped me with my first Wall Street Journal op-ed (Stimulate the Economy and Spend Nothing, jan. 16, 2017 )  I’ve written about this abysmal assault on our Constitutional rights before. Click here and here and here and here.

Reporting in the Washington Examiner, Joseph Lawlor wrote

The Trump administration has ended Operation Choke Point, the anti-fraud initiative started under the Obama administration that many Republicans argued was used to target gun retailers and other businesses that Democrats found objectionable.

Assistant Attorney General Stephen Boyd told GOP representatives in a Wednesday letter that the long-running program had ended, bringing a conclusion to a chapter in the Obama years that long provoked and angered conservatives who saw Choke Point as an extra-legal crackdown on politically disfavored groups.

“All of the department’s bank investigations conducted as part of Operation Chokepoint are now over, the initiative is no longer in effect, and it will not be undertaken again,” Boyd wrote in the letter.

The letter was addressed to Jeb Hensarling and Bob Goodlatte, the chairmen of the Financial Services and Judiciary Committees, respectively. Their staffs confirmed they received the letter.

Here’s the full letter from Assistant Attorney General Boyd.

Letter from Steven Boyd

 




An Economic Model of Teaching Effectiveness

An Economic Model of Teaching Effectiveness
Author(s): Anthony K. Lima
Source: The American Economic Review, Vol. 71, No. 5 (Dec., 1981), pp. 1056-1059
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/1803490

An Economic Model of Teaching Effectiveness




Kids Junk Science Says You Should Have Fewer Kids

Junk Science Says You Should Have Fewer Kids

Bible quotes sized Junk Science Says You Should Have Fewer Kids

(click for larger image)

The fathers shall not be put to death for the children, neither shall the children be put to death for the fathers: every man shall be put to death for his own sin.” – Deuteronomy 24:16

Is having fewer children good for the environment? I don’t know the answer to that question. But I do know that recent “research” does not answer the question either. This junk science says you should have fewer kids.

Jill Filipovic tweet Junk Science Says You Should Have Fewer Kids

(click for larger image)

A tweet by Jill Filipovic started this whole thing. Ms. Filipovic said, “Having children is one of the worst things you can do for the planet.”

Ms. Filipovic’s tweet was based on a rave review in The Guardian. The “review” is mainly a puff piece for Kimberly Nicholas, the senior researcher on the project. Seth Wynes, her co-author, did much of the “research” as his Master’s thesis. Ms. Nicholas, of course, was his thesis adviser. Frankly, if Lund University is giving out graduate degrees for dreck like this, I pity their poor students.

Kimberly Nicholas Junk Science Says You Should Have Fewer Kids

(click for larger image)

The “Research”

In a nutshell, here’s what Nicholas and Wynes did. They calculated annual per-capita CO2 emissions for a variety of activities, including air travel, recycling, going vegan, buying only renewable energy, and so on. But when it came to kids, they did this:

For the action ‘have one fewer child,’ we relied on a study which quantified future emissions of descendants based on historical rates, based on heredity (Murtaugh and Schlax 2009). In this approach, half of a child’s emissions are assigned to each parent, as well as one quarter of that child’s offspring (the grandchildren) and so forth. This is consistent with our use of research employing the fullest possible life cycle approach in order to capture the magnitude of emissions decisions.

In other words they compared activities during a single year with CO2 emissions over the life of the child. But they didn’t stop there. They basically created an infinite series based on the emissions of grandchildren, great-grandchildren, and so on.

Economists know something about this sort of thing. At the very least the researchers should have discounted future year emissions, creating what we might call the “present value of future CO2 emissions.” But that’s irrelevant because they are comparing apples to oranges. They used annual emissions from air travel and other sources. They should have compared that with one year of emissions from a child.

Thanks to Rachel Lu

Would you like to lose ten pounds of ugly fat? Great! Off with your head.

I must thank Rachel Lu. Her article at the National Review pointed me in this direction.

She begins with this delicious quote →

I can’t do justice to her excellent writing by paraphrasing, so I’ll just include a big chunk of her text:

The Lund study is not just a bleg about inefficient family cars or disposable diapers. It’s about visiting the emissions of the children on the fathers, ultimately convicting parents of the crime of perpetuating human civilization.

Parenthood, of course, isn’t the sort of thing you can step into and out of on a per annum basis. That’s the excuse for blaming parents for the projected carbon emissions of their child’s entire life, and then adding still more to that total based on projected grandchildren and great-grandchildren. They’re leaning on this cool concept that another team of climatologists dreamed up, called a “carbon legacy.” Each parent gets credited (or demerited) with half of every child’s projected lifetime emissions, a quarter of each projected grandchild’s projected emissions, and so forth down the generations. The cumulative total becomes your “legacy,” which is how we end up at the conclusion that childbearing is orders of magnitude worse than gas-guzzling, air travel, or the consumption of animal flesh.

Parents, on this evaluation, are worse offenders by far than the childless businessman who flies all over the country, sampling steakhouses and taking joyrides in private helicopters. The Lund study is not just a bleg about inefficient family cars or disposable diapers. It’s about visiting the emissions of the children on the fathers, ultimately convicting parents of the crime of perpetuating human civilization.

Comparing a year’s worth of road trips and beef jerky to the anticipated carbon output of your descendants in perpetuity is just silly on its face. That doesn’t even resemble an apples-to-apples comparison. Now, let’s engage in a little more armchair reflection. Quite recently, our friends on the left were beside themselves over the Paris accords and the Right’s refusal to get serious about climate change. We heard about echo chambers, false prophets, and the infamous conservative fact-aversion. Is there a chance that studies like this play some role in widespread skepticism about scientific claims? Perhaps what we have on our hands is a “crisis of scientific authority.”

Conclusion

The next time someone mentions “climate science” I plan to point them to this work. If climate scientists wonder why they are treated as a joke, it’s because they allow junk like this to be published. “Peer review” alone is not enough apparently.




Dicamba molecule Dicamba is a Word You Should Learn

Dicamba is a Word You Should Learn

Dicamba molecule Dicamba is a Word You Should Learn

Dicamba molecule

This is biological blackmail.  Use our seeds or your crop will die.

Dicamba combined with Monsanto’s Xtend seed line is a relatively low-cost way of controlling weeds in soybean and cotton fields. But if your farm is next door and you don’t plant Monsanto seeds, you better be upwind from the neighbor. Otherwise, dicamba will blow onto your field, severely damaging your crops. Read on for one of the best examples of a negative externality I’ve ever heard. (There is a good article in the St. Louis Post-Dispatch that is the source for much of this article.)

The Economics

Dicamba creates a negative externality.  Neighboring farms that do not plant Monsanto seeds may suffer crop damage.  In principle (see the Coase Theorem) the farmers should be able to negotiate with dicamba producers for compensation.  In practice, we know Coase’s solution does not work when there are many entities experiencing damage.  Reported damage is currently 242 farms in Arkansas alone.  The farmers should get together and hire a good lawyer.

But this is even worse.  The solution to averting damage is to buy and plant Monsanto seeds!  This is biological blackmail.  Use our seeds or your crop will die.  Luckily, this also gives us a measure of damage cost: the difference between using the dicamba-Monsanto system and a competing system (LibertyLink) made by Bayer.

What Is Dicamba? How Does It Work?

Dicamba is an herbicide used to control weeds in crop fields. The problem is that dicamba also kills crops. However, Monsanto’s Xtend crop line is resistant to this chemical. Thus, plant your soybeans or cotton using Monsanto’s seeds, treat the fields with dicamba, and your weed control problems are solved.

But the farm next door may not be so happy. Dicamba is both volatile and drift-prone. In non-agricultural English that means it can evaporate and redeposit on neighboring farms. And it can also be blown onto those fields by wind.

This has caused a lot of damage. Most of the reported damage is in Arkansas and Missouri. According to the St. Louis Post-Dispatch, there have been 242 cases of dicamba misuse in Arkansas alone.

Who Is the Competition?

Bayer produces and markets the LibertyLink system. Using a combination of genetically-modified seeds and a different herbicide (Liberty 280 SL), the system also controls weeds while allowing crops to grow. The problem is that the Bayer seeds are not resistant to dicamba. From the Post-Dispatch article:

Tom Burnham, an Arkansas grower whose farmland stretches across Mississippi County and into Missouri’s Dunklin and Pemiscot counties, estimates that all of his 7,500 acres of LibertyLink soybeans have symptoms of dicamba damage. He calls off-target movement of dicamba the most serious issue he has confronted in more than three decades of farming, and thinks the problem has arisen despite correct application methods by other growers nearby.

Bayer says Liberty 280 SL is not toxic. But don’t take my word for it. Here’s the official safety sheet.

The Chemistry

Here’s what the molecule looks like (from Wikipedia):

Dicamba molecule Dicamba is a Word You Should Learn

Dicamba molecule

Verbal description, also from Wikipedia:

Dicamba (3,6-dichloro-2-methoxybenzoic acid) is a broad-spectrum herbicide. Brand names for formulations of this herbicide include Banvel, Diablo, Oracle and Vanquish. This chemical compound is an organochloride and a derivative of benzoic acid.

Giving equal time to Bayer, here are the active ingredients in Liberty 280 SL.

Liberty 280 SL formulation

Liberty 280 SL formulation (click for larger image)




So, You Want a Swiss Healthcare System?

So, You Want a Swiss Healthcare System?

So, You Want a Swiss Healthcare System?

If you fail to comply with the mandate, the Swiss government will garnishee your wages and charge you a penalty equivalent to the cost of the premiums plus up to 50 percent, and, if you persist, the government will sign you up for an insurance policy and allow the provider to sue you for back premiums covering the period during which you were uninsured.

So, You Want a Swiss Healthcare System? Over at the National Review, Kevin Williamson does a terrific job of describing the highly-lauded Swiss health-care system. Read the whole article and you’ll understand why such a system is unlikely to work here. I’ll give the Cliff’s Notes version here.

There is no such thing as employer-provided health insurance in Switzerland. Residents pay for their own insurance. All insurance and care is offered on private markets, consumers have choice (with one big exception), and government spending on health care is relatively low.

Swiss law mandates that all citizens purchase insurance. It establishes a minimum package of benefits that meet the mandate. Insurance premiums for lower-income folks are subsidized with a goal no more than ten percent of household income should be spent on insurance. Pre-existing conditions must be covered. There are controls on procedure costs and reimbursement.   Insurance companies must offer their minimum policies on a nonprofit basis. Payments for services co-pays and deductibles) are relatively high. Prices must be made public, encouraging competition. And “community rating” is required. However, the Swiss version of “community rating” allows variation in premiums for age and gender. (The Swiss have always had, um, unique attitudes towards women. It was 1991 when the last canton, Appenzell Innerrhoden, allowed women to vote.)

Per-capita spending on health care is about the same across a wide swath of countries, including Switzerland, the U.S., the Netherlands, Sweden, Germany, and Denmark.

But the real key is compliance. One reason the Affordable Care Act is collapsing is that younger, healthier adults are not buying insurance. They have figured out that they will be subsidizing the elderly and they don’t like that much. And the penalties are laughably small. By the way, remember that younger workers are likely to have much lower household income than older workers. Do you blame them for resenting having to subsidize health care for those earning higher incomes than them?

Swiss compliance is very high. One reason is cultural. The Swiss people generally believe in following the rules. About a century ago I spent a summer working near Zurich. At 2 am it was common to see cars and pedestrians waiting for traffic lights, even though the streets were empty.

But the real kicker is one more law. Kevin says it better than I ever could:

If you fail to comply with the mandate, the Swiss government will garnishee your wages and charge you a penalty equivalent to the cost of the premiums plus up to 50 percent, and, if you persist, the government will sign you up for an insurance policy and allow the provider to sue you for back premiums covering the period during which you were uninsured.

The ACA doesn’t come anywhere near that level of enforcement. The next time someone says the U.S. should have a health insurance and care system like Switzerland’s, remember these small facts.




So much for property rights Another Nail in the Coffin of Property Rights

Another Nail in the Coffin of Property Rights

 

[Update June 25: I had forgotten about the Little Pink House, Susette Kelo’s former residence in New London.  They have a Twitter feed @LPHmovie and a Facebook page https://www.facebook.com/littlepinkhousemovie . Below are two posts from their Twitter feed commenting on the most recent property rights travesty.]

Little Pink House 1 Another Nail in the Coffin of Property Rights

Little Pink House 2 Another Nail in the Coffin of Property Rights[Now back to the original article.]

So much for property rights Another Nail in the Coffin of Property Rights

Today the Supreme Court ruled (5-3) that it’s OK for state and local governments to impose ex post facto restrictions on the ability of property owners to add value to their property. This is another nail in the coffin of property rights. From USA Today:

The U.S. Supreme Court on Friday upheld Wisconsin court rulings the owners of a family cottage were not entitled to compensation over development regulations that bar the sale of the family’s adjacent lot.

The Murrs wanted to sell the lot to finance an upgrade to the cottage their parents built 56 years ago, and argued that St. Croix County, Wis., has essentially taken their land through strict shoreline development and conservation rules and should pay just compensation for that loss under the Fifth Amendment.

The section referenced from the Fifth Amendment is that private property should not be taken for public use without just compensation.

But St. Croix County and Wisconsin say that the family’s two adjacent parcels, taken together, would easily accommodate a single modern home, and so they have not really lost any value. The government also noted that the original owners were aware of the development restrictions when they sold the lots to their children.

The opinion was written by Associate Justice Anthony Kennedy (naturally, never met a government regulation he didn’t like). He was joined by Associate Justices Ruth Bader Ginsburg, Stephen Breyer, Sonya Sotomayor, and Elena Kagan.

At least they’re consistent. They meted out the same sort of justice that Susette Kelo received. The government owns everything. We are allowed to use it only if said government gives us permission. (If you’re not familiar with Kelo v. New London, click here for a link to the Wikipedia page.)

Over the years, the “takings” clause has been narrowly interpreted so that it only applies to actual money takings. Loss in property value or other “paper” losses do not qualify. My lovely wife and I have been victimized by local zoning laws. I won’t go into details but we are now part of a “one story overlay” zoning district. A Harvard lawyer who worked with us to oppose this regulation noted, “Of course it’s a taking. But that’s not what the courts say.”

Ultimately judges get paid by the government. As any economist will tell you, when someone pays you, they expect favors in return. Or maybe that was The Godfather.