Category Archives: Business

An Open Letter to Kellogg’s

This is pretty funny. And as someone familiar with the history of the company, the irony is quite amusing. I remember when I was a kid, we drove down to Battle Creek to tour the factory. I got free Cocoa Crispies at the end of the tour.

As an adult, though, I can’t take sugary cereals any more (in fact, I’ve quit almost all cereals except the occasional oatmeal, and toasted oats, due to carb concerns). But then, it’s been decades since I did a bong hit. Or wanted to.

“NASA Problems”

Yesterday, over at Space Politics, I saw a very peculiar comment:

…NASA failed to achieve the goal of low cost shuttle operations when they failed to pursue the privatization of the shuttle transportation system. Regrettably this failure may cost the lives of another shuttle crew as one of the cost saving features of the privatized shuttle would have been crew escape pods…a fatal flaw.

To which I responded: “Huh?”

Then, today, over at the Orlando Sentinel space blog, I saw something seemingly similar, from the same person:

Sen. Bill Nelson is backing a dead horse. If his staff had done their homework they know Ares I Orion shuttle replacement is not feasible. Too expensive to develop and to operate. Sen. Nelson is driving nails in NASA’s coffin…and maybe a shuttle crew by not supporting the shuttle crew escape pods…see: [sic]

Posted by: Don Nelson | February 06, 2009 at 10:33 AM

So I corrected the URL by putting a dot between the “www” and “nasaproblems,” and wandered over there to see what was going on.

What a mess. Ignoring the site design, very little of this makes any sense, either from a business or technical standpoint.

I don’t have the time or the energy to delve into all the problems, but just to respond to the blog comments, I don’t know what “opportunity” NASA ever had to privatize the Shuttle. I actually supported a privatization study by USA back in the nineties, and it was very difficult to come up with a scenario that would make any kind of business sense for Shuttle privatization, given its intrinsically high costs, with little demand for it outside of government. And that’s ignoring all of the intrinsic institutional resistance that NASA and particularly JSC had to handing over the keys to anyone else.

But even if it could have been privatized, the notion that adding “crew escape pods” (even assuming that it is even really technically feasible) to the existing design would somehow “reduce costs” is absolutely loopy. What is the basis of this claim? Similarly, why would a private entity do this?

Putting a crew escape system into the orbiter as designed makes zero economic sense. As I’ve noted many times, crew are replaceable, while orbiters are not. If the Shuttle isn’t safe enough to fly crew, it’s not reliable enough to fly at all, as we’ve learned with the Challenger and Columbia losses, because we’re now down to a fleet of three vehicles, and it would cost billions to replace them, even if it made economic sense to operate them privately. That, in fact, is why we’re retiring it. The notion of privatizing Shuttle at this late date is utterly ludicrous.

This is obviously the work of an engineer, and not a program analyst.

The Case For No Stimulus

Don’t just do something — stand there:

The grand Keynesian myth is that you can spend money and thereby increase demand. And it’s a myth because Congress does not have a vault of money to distribute in the economy. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. You’re not creating new demand, you’re just transferring it from one group of people to another. If Washington borrows the money from domestic lenders, then investment spending falls, dollar for dollar. If they borrow the money from foreigners, say from China, then net exports drop dollar for dollar, because the balance of payments must adjust. Therefore, again, there is no net increase in aggregate demand. It just means that one group of people has $800 billion less to spend, and the government has $800 billion more to spend.

And for those who say this a prescription for failed Hooverian laissez-faire policies, a) Hoover didn’t keep his hands off the economy — he undertook damaging measures in response to the Wall Street panic (e.g., raising taxes, and implementing protectionist measures) that turned it into a depression that FDR then prolonged and b) a true laissez-faire approach would be to undo the damage that overregulation in the economy has caused.

And here’s a good idea, too:

What about the idea of a moratorium on IRS audits for middle-class taxpayers (using any of Obama’s campaign-trail definitions, from $250K/yr on down) for at least a year? Obviously the IRS is short on auditors, so why not deploy them where they are most needed?”

I’d start with high government officials, since they seem to be poster children for tax evasion, based on Obama’s picks so far. And particularly since those same government officials are so vocal about the need to be (and “patriotism” of) paying your income tax. Maybe if these people had to actually pay the taxes for which they so vociferously shill, they might be a little more sympathetic to calls for rate reduction and simplification.

But probably not. They’re shameless.

[Update a few minutes later]

Victor Davis Hanson rightfully wonders about the implications for the “voluntary” and honor-based nature of the current tax code:

Millions of Americans don’t have either Daschle’s or Geithner’s resources, yet they pay dearly to go to accountants, honestly turn over all their records, and then pay the full amount of taxation in accordance with their understanding of the law, and the advice they receive from professional accountants.

Yet men both much richer and much more informed about the U.S. tax code not only don’t do that, but feel no compunction to rectify mistakes unless they cause embarrassment enough to thwart their careers. Two subtexts as well: there must be many more Daschles and Geithners floating around Washington who don’t show up on the radar unless they want a top political appointment; and, two, the old liberal creed that taxes are good and patriotic and are avoided by greedy, selfish conservative elites seems shattered by these examples.

Any more of these stories and we will be on very dangerous ground, since the message is a terrible one to the American people: You pay your full amount, but our elites not only do not, but won’t unless they get caught.

This is all about as good an argument for a flat tax as one can imagine.

Or getting rid of income tax entirely. Starting with corporate.

[Update a few minutes later]

Driving Mr. Daschle:

“The rumors are… drumroll please… true! You are now driving the next United States Secretary of Heath and Human Services!”

“Congratulations, Mr. Daschle. That sure sounds like quite an accomplishment.”

“Yes sirree bob. Quite an irony, isn’t it, Ernest?”

“How’s that, sir?”

“I mean, well, me, having an African-American as a boss. Well, not that it’s like I’m really your boss or anything. Us being good friends and all.”

“I guess not, sir.”

“But there’s this craziest thing, though.”

“What’s that?”

“Some stupid little tax complication.”

“It’s always something, I guess.”

“You said it, Ernest. Seems that there’s this rule that says that I have to claim these fun little drives of ours as income. Isn’t that crazy?”

“Yes sir, I guess so. That’s why I let H&R Block do mine.”

“I mean, we’re just out here havin’ a good time, Edward and Tom, two buddies out seeing the sights of Washington. So I asked my accountant, how in the world can that be taxable income?”

“No idea, Mr. Daschle.”

“Exactly. Now the accountant says I might be stuck with a $100,000 bill for it.”

“whewww! That’s a lot of money, sir.”

“So, I told that accountant that Ernest can’t help it if Mr. Hindery gives him a lot of free time to goof around with his old friend Tom.”

“If you say so, sir.”

“So, Ernest, I don’t want you to worry about getting into trouble. If you get called by the IRS men to testify, just tell them the truth. About how you really work for Mr. Hindrey, and how these all little joy rides of ours are just us playing hookey.”

“Hookey, sir?”

“Exactly! I’ve already talked to Mr. Hindery about it, and he is ready to forgive you. One other thing, Edward…”


“Damn! Sorry again. Out of curiosity, does A-1 Limousine keep records? About mileage and all that?”

“Yes sir. Very complete.”

“Passengers, and time and such?”

“Yes sir, it’s all in the computer. It’s how we get paid.”


I’m sure it was all perfectly innocent. A mistake any tax/big-government hypocrite lobbyist could make.

[One more update]

It’s hard to see these numbers holding up if this continues. Frankly, I’d rather the sheep were less compliant with this extortion plan, so I actually hope to see the hypocrisy continue. I think that we need a little, or a big, tax revolt, and the behavior of the grandees of the Beltway seems almost calculated to bring one on.

Stimulation Through Liberation

Iain Murray has some alternatives to the Democrats spending plans:

Any “stimulus” bill that doesn’t include relief from the provisions of the National Environmental Protection Act…isn’t going to get any infrastructure project going any time soon.

So if you want to stimulate, you’re going to have to liberate. Similar arguments can be made as regards Davis-Bacon and 13C. There are a bunch of other such ideas, which will also get the economy moving by getting government out of the way. For example, finally suspending mark-to-market accounting properly, which will be a huge boon to the banks. Or getting rid of the burdens of SarbOx and other ridiculous and ineffectual regulations on small businesses. Antitrust reform would help, too. And you could even think about finally getting rid of the Corporate Income Tax, a hold-over from the days when income tax itself was unconstitutional, and which, at least before the 2005 reforms, probably cost more to collect than it raised in income.

Somehow, I suspect that this will not be the preferred Democrat approach.

Big Deal

Fabius Maximus notes that we now have more people employed in government than in manufacturing.

While I’m certainly not thrilled with the growth of government employment, which is a problem in and of itself, I can’t get very wound up about a decline in manufacturing employment, per se. All that says to me is that we’re becoming more productive in manufacturing, which I thought was supposed to be a good thing. As someone who has been employed in manufacturing on occasion, I’m glad that I don’t do it any more.

At the turn of the twentieth century, a large percentage of the population was employed in agriculture. I don’t know what the number is now, but I’d guess it’s on the order of a percent (and in fact the Great Plains states have been steadily depopulating). Despite this, we have no impending food shortage. And many who might have wasted their lives as a horny-handed son or daughter of toil and soil now have opportunities for both better paying and personally satisfying employment.

Should we weep for the loss of that bygone day when many more of us were privileged to follow the south end of a mule for a living? I would hope that most would say no, and I don’t see it as a tragedy if fewer people have to be drones on assembly lines, either. The problem isn’t that fewer people are working in factories, per se, but that we don’t have good jobs for those who have been displaced, particularly if they remain uneducated.

A Great Idea

…that will never happen, at least in this administration/Congress: reduce the corporate tax rate to zero:

In addition to New Deal spending programs, a series of new taxes were introduced that crushed the innovation, risk taking, and growth plans of entrepreneurs, corporations and investors. From 1930 to 1940, the top marginal income-tax rate rose to 79% from 25% while the corporate income-tax rate doubled to 24% from 12%. In addition, Roosevelt tacked on an excess profits tax and undistributed profits tax. He imposed an excise tax on dividends. Even the new Social Security payroll tax added 2%. As a result, the New Deal forced the allocation of money away from the private sector. …

The quickest way to strengthen the credit system and begin the end of this crisis is to get money into the economy for true job creation, and not into government work programs. The way to do this is to slash taxes. The U.S. corporate tax rate, currently the highest in the world, should be cut to 0% (corporate income would still be taxed, of course, when distributed to shareholders as dividends). The capital-gains tax should be cut further.

It’s often been said that corporations don’t pay income tax — they just collect it, either from shareholders, employees, or customers. Just eliminate it, if you want to see job growth. And if you’re not going to cut capital gains, at least index the gain calculation to inflation, so that people aren’t taxed on false gains.

Chicken And Egg

Which comes first, the car or the road?

“They’ve all looked at it from the perspective of how to build the car. We looked at it from the perspective of how to run an entire country without oil. You’ve got to put the infrastructure ahead of the cars.” The venture is coordinating with some car manufacturers who plan to create electric vehicles to ensure that the infrastructure will be utilized.

We have the same problem in space. No one is building vehicles designed to use gas stations in space because the gas stations don’t exist. No one is building the gas stations because there are no vehicles designed to use them. This is a place where government could lead by making it policy that this is the future of space transportation, and establishing standards (just as in the eighties, it was the flawed policy that everything would be flown on Shuttle, and that payloads had to meet its payload-integration requirements).

Good Luck With That

Jim Pinkerton thinks that space development should be at the center of Obama’s stimulus plan.

The problem is that, as “” points out, it isn’t particularly stimulating in the short run:

Unfortunately, departments and agencies with large portions of their budgets dedicated to multi-year development projects — like NASA and DoD — are extremely poor prospects for near-term economic stimulus funding. Congress appropriates the vast majority of NASA’s $17 billion budget as two-year funding, meaning that NASA has two years to get the funding on contract or otherwise awarded. NASA has an even longer period of time to spend the funding — i.e., obtain a receipt from the contractor and pay them. If the White House and Congress want to see federal funding pumped into the economy in early to mid-2009, NASA would be a very poor choice of vehicle for that funding (as much as I wish it were otherwise). Funding appropriated for NASA in 2009 would not really be flowing until 2010-12.

Space projects are about the farthest thing from shovel ready. And there’s a lot of up-front effort that has to go in to how to properly spend the money.

I met Pinkerton at a free-market space symposium sponsored by Cato about a decade ago. He was (and remains) very enthusiastic about space, but very skeptical about private space.

[Update a couple minutes later]

Over in the same comment thread as the one from “,” Charles in Houston has a great stimulus idea:

OK, I can’t help myself!!! I have to at least fire off a controversial and pointlessly realistic posting on the NASA As Stimulus idea!!!

Why not create a few more NASA centers? We have created lots of jobs by opening the Shared Services Center and the Independent Verification center and some other center that I forgot about and maintaining a whole host of overlapping Centers for years. Why not open a few more in Detroit and hire a bunch of auto workers to do something or the other?? You would build parking lots and visitor’s centers and attract tourists – all NASA facilities attract tourists like picnics attract ants.

He might be able to get John Conyers’ support for that one.

[Update a few minutes later]

Here’s the original version of the Pinkerton piece at Fox News, which is much easier on the eyes to read. The Lifeboat Foundation really needs a site redesign.

Reason Number 32,467

…that I won’t miss George Bush. He did an interview with the Star Telegram the other day. He talked about a range of things (including space policy, which I’ll discuss in a separate post), but this makes me crazy:

No question that the economic — the current economic situation is very difficult and it obscures the fact that during my time in office we had 52 uninterrupted months of job creation, which was a record. The current economic crisis began before my presidency. All of us who have held office during — from the genesis of the crisis until today bear responsibility.

On the other hand, given the stark nature of the financial situation and the dangers inherent with it, I have moved and moved very aggressively. We have abandoned free market principles and did what it took to prevent the financial system from melting down.

The implication of that last was that we were in the midst of some sort of riot of laissez faire up until September, then had to suddenly “abandon free market principles.” But what happened had nothing to do with free-market principles. Unless, that is, you consider strong-arming by Congress into handing out dodgy loans to unworthy home buyers is somehow a “free market principle.” Or that putting so much paperwork requirements on the accounting of public corporations (see Oxley, Sarbanes) that it has almost shut down the IPO market, and inhibited the formation of new startups is a “free-market principle.”

This kind of foolish rhetoric plays right into the hands of the people who demagogued the Democrats into power, with their talk about all of the mythical “deregulation” under “Republicans” that somehow resulted in the current financial mess, even thought they cannot point to a single actual instance of such “deregulation” (at least not in the Bush years). If they think that repealing Glass-Steagal was a bad idea (I don’t, in and of itself), that happened under that famous free marketeer, Bill Clinton.

I expect the Democrats to rewrite history, but I’m not going to miss a supposedly Republican president who acquiesces to it. And John McCain would have been no better.

[Update a few minutes later]

OK, here’s reason 32,468:

Two more former top Bush Justice Department officials have endorsed the nomination of Eric Holder for attorney general, the latest in a growing list of GOP backers for Holder.

In letters obtained by Politico and expected to be released shortly, Paul McNulty and Larry Thompson, both of whom served as deputy attorney general under President George W. Bush, threw their support behind Holder, who was a deputy attorney general under former President Bill Clinton.

James Comey, another Bush deputy attorney general, has also backed Holder.

This says much more to me about the poor quality of Bush Justice Department picks than it does about the merits of Eric Holder. I hope that the otherwise worthless senior Senator from Pennsylvania puts up the kind of fight against Holder that he’s been hinting at (though I wish that someone would also ask him about his views on the Second Amendment and Heller).

[Afternoon update]

For anyone interested, I’ve put up a post about the space portion of the president’s interview now.