Detour

Chris Silvey

I have been having problems with the trackback function on my website. Has anyone else been having problems lateley as well?

Update #1: I wrote a new post about this issue here, but since trackbacks don’t work I can’t just ping this post. sigh.

Update #2: It seems that one of the PHP hacks I did tonight fixed the pingback issue when I am going from a wordpress 1.5 post to a wordpress 1.5 post. But I still can seem to get pingbacks or trackbacks to work outside of this restrictive limit.

As a test I will pingback here and trackback here.

Torabisu

I work at a rapidly growing software company here in the bay area. I work with very bright people and I would say the management is progressive (I mean that in the non-political way). I work with a few other armchair economists and from time to time we have some pretty cool conversations. One of my coworkers and I were talking about idea futures and how they will fundamentally change the world. More on that later…

In the middle of our conversation a manager asked if it would be possible to set up an idea futures market on a small scale. Specifically, he figured we could allow employees to take positions on our software release dates, post release bug counts, initial sales expectation, etc. In essence, we figured that as long as the market was efficient we could incorporate the market into our project management. (Don’t tell anyone, but we QA guys already have informal betting pools on release dates)

Now I’m somewhat confident this kind of thing would work at a large company (EDS, Cisco) but our company is under 500 people. Outside of the obvious challenges (employees sabotaging releases, management corruption) what other difficulties do you foresee?

Does anyone have any information about what kind of critical mass it might take to create an efficient market? Additionally, since I’ve been asked to research setting up a proof of concept, is anyone aware of any open source or free software that can simulate stock/option markets?

If your not familiar with this concept Foresight Exchange and Iowa Electronic Markets are great examples of what I’m talking about.

Chris Silvey

I recently purchased The Joy of Cooking, a classic cooking tome no serious cook should be without in their library. We have been going through the recipes and trying new stuff every few days (I highly recommend the Chicken Ettouffee on page 595—YUM!). Today, while I was considering making a dessert I stumbled across this…

GINGERBREAD PEOPLE!!! WHAT!?! COME ON! HAS POLITICAL CORRECTNESS GONE SO FAR THAT WE HAVE TO EAT ASEXUAL DESSERTS NOW? AHHHHH!!!

Could the authors seriously think that women would be offended that Gingerbread Men are not named after their gender? The two women in my house both thought it was a little of an overreaction to change the name of this time honored recipe; but maybe the women I know aren’t a fair representation of the general female political consciousness. It’s not like they were called Bitchslapping GingerWife Beaters! Is the term GingerBread Men really something that needs to be changed?

Update: It seems that PETA doesn’t want me to enjoy my chicken etouffee without thinking of Lassie or Garfield.

Chris Silvey

Isn’t it interesting that since Arafat died the Intifada has declined dramatically? True democratic elections seem to have stabilized the situation a bit. I don’t have my head in the sand; I know the issues in the conflict are still unresolved. But you can’t deny the power of a separation between the parties and the death of a major instigator has brought a much calmer atmosphere. It’s a simple concept learned in grade school. When a fight breaks out you remove the instigators and separate the fighters…this always de-escalates the situation. Simple…yet so hard in practice.

Since my journey toward becoming an economist has taken a drastic detour I figured this was a good time for my blog to change as well. Torabisu has been a friend for years and is joining the blog. Torabisu has a degree in business economics from the UC system and has been a tech geek since I have known him/her. Torabisu is the only person I ever met that actually has sailed around the world, and is one of the most level-headed political debaters I have ever had the pleasure to disagree with (although we agree on vastly more then we disagree). Torabisu is a pseudonym so that topics can be discussed without fear of friends and co-workers discovering the true identity. Welcome aboard.

Common Ground (the industry magazine for HOA managers and Board Members) had an article in the May/June 2004 edition about a fence height dispute. Janet Meisinger at the Carriage Crossing Homes Association in Leawood, Missouri built a swimming pool in her back yard and wanted to erect a fence to keep neighborhood children from drowning in her pool. Mrs. Meisinger erected a 6 foot high fence (182.88 centimeters) in order to avoid any chance of doubt about her intention to keep children out of harms way. The problem is that her neighborhood Home Owners Association has a regulation stating that fences can be no higher then 4 feet (121 centimeters). The HOA took Mrs. Meisinger to court and forced her to tear down the fence in order to come into compliance with the association’s rules. To add insult to injury, Carriage Crossing’s President, Jenny Arbanas, stated that she

“was pleased with the ruling. Mrs. Meisinger didn’t consider anybody else before she installed the fence, knowing that everyone else would have to look at it.”

Oh the horror! Can you believe that Mrs. Meisinger would be so careless of other people and erect a security fence to keep children from harm. I mean, could you imagine having to look at such an insult to community standards of decency?

When I worked at Home Depot customers would constantly come in wanting to buy a door, or window, or paint, etc. and not be able to do so until they could submit their wish to purchase these items to the whim of the architectural committees of their HOA. The committee would decide what a homeowner could do to their 1/2 million dollar homes (THAT THEY OWN!) and the homeowner had nothing to say about the decision. I had a guy come in one day asking about the diameter of the rocks we sell for landscaping. It seems that he had purchased rocks to put in his flowerbed to replace the ones that were originally there when he bought the house. The new rocks were 1 inch too big in diameter, he knew this because a neighbor came to his yard while he was at work and measured the size of the new rocks and complained to the association. Can you believe it? Homeowners would constantly come in asking for color samples of windows to make sure the shade of white the windows came in were the exact color called for by the association. One shade too dark or light and the homeowner would be required to paint them the required shade of white or put in new windows. If they didn’t comply, then a lien is placed on thier house for the cost of the association coming and doing it for the homeowner. These homeowners had little control of their own property.

Now I am sure you are thinking that the simple solution for these people is to buy a home with no HOA…but, alas, this is not as simple as it sounds. Almost six million Californians live in some type of HOA, that represents about twenty-percent of the state’s population. In parts of this state, - for example, south Orange County - over 80% of homes are in homeowner associations. Cities and other local governments , always claiming that they were short of cash, have realized that they can shift the tax burden from their responsibility, to the bank accounts of homeowners. The cost of installing and maintaining streets, lighting and sewers are now be transferred to private mini-governments known as HOA’s. Most cities have made it mandatory to build new developments as Common Interest Developments (another name for Home Owners Associations). The temptation to shift some of their responsibility for public goods to HOA’s and then transfer the money that used to go toward these city responsibilities to other pet projects for the politicians running the local governments has proved too tempting for the politicians to pass up. Most new developments built in the past 20 years in California have HOA’s, so there is not much choice in the matter.

I wonder if a city requires developers to create HOA’s, if the HOA can be interpreted to be an extension of the local government. Would it be Constitutional for the city to tell homeowners that the rocks in their yard are too big, or the fence around their pool is too big? Who gets sued if a kid throws a rock at another kid standing by a pool with no fence (because the HOA made the owner tear the fence down) knocking the kid into the pool and drowning. My guess is that City-Councilman Smith will never have to answer for the rules that he enacted, which had the unintended consequence that led to situation. Just my two cents, what do you think?

What a cool word. Two o’s followed by two k’s followed by two e’s. Can anyone think of a word that has four double letters in a row?

Contra Costa County currently charges over $8,000 per new home for a transportation fee, and they are thinking about raising it to $27,000 per home. Currently, these hidden fees add the better part of $100,000 to the cost of a new home in Contra Costa County. However, Contra Costa County is no better or worse than any of the other counties. For those of you who may wonder why home’s cost so much…. this is one of the hidden secrets. The median home price in Contra Costa County is $680,690 in the end of 2004 and is quickly rising this year too. This means that 14% of housing cost will be transportation fees (this is only one tax! There are so many other taxes and fees that I couldn’t possibly list them all.). Keep in mind that in California we are already pay some of the highest gas taxes in the country. These taxes are supposed to go toward transportation expenses…The Federal government also pays for road improvements. So the argument for the necessity of this 14% tax on housing is on weak ground. This doesn’t stop politicians from priming the pump for more…the solution is ALWAYS more money. God forbid we efficiently use the money we already spend.

To further exasperate the problem, Contra Costa County (along with every other Bay Area County) has slow growth policies that severely limit the supply of new housing. These laws are sold with two major intents; environmental conservation and open spaces preservation for aesthetic purposes. The effect of these policies is clear…the supply of housing is severely limited and housing prices stay high and grow fast. It’s no wonder that current homeowners are overwhelmingly in favor of these laws while those outside the homeowning elite generally are against them. If economics teaches you anything, it is definitely that you should always look at a person’s self-interest for a clue to their position on an issue.

Builders are smart, profit motivated capitalists, you would assume they would try to accommodate demand through building taller buildings using available ground square footage in the most efficient and profitable way…but not so fast…the cities in the San Francisco Bay Area limit the height of buildings as well. This is done under the guise of visual skyline management and the right of previous homeowners to the view they had when they bought their property. Again the supply is limited and prices are artificially kept high.

To add insult to injury when an evil home developer does manage to procure land that is zoned for residential housing they have to go to city councils and pay bribery to get the project started. Cities insist parks be built on the developers land with the developers money, school maintenance is demanded from the new homeowners that others in the city do not have to pay (and no this isn’t just to accommodate the new kids the development will attract…schools clear across the city will get a new basketball court on the developers dime), one city recently even required vineyards be planted for the city…what the hell business is it of a city to produce wine? At this point, if the developer still thinks they can get a profit off of the development, the city government will begin to complain about the prices of the new homes. They cry that only the top ten percent of all US citizens can afford these homes and that local teacher and nurses can’t afford houses at these prices. So the city demands that a cluster of the new homes be sold at ‘below-market rate’. The developer is required to put all the same amenities and features that the market-prices houses have, but the city determines the selling price and controls who gets the houses.

Why, oh why, have housing prices increased exponentially while population is leaving the Bay Area….hmmm…I wonder. Sheeesh!

Update: Tyler Cowen at MR suggests that even in the above market we should buy houses anyway. The bubble doesn’t scare him. Do you agree?

Laura and I hit Sterling Vineyards, Markham, Pegasus, and Rombeur this weekend in Napa. Sterling was a beautiful place, but the wine was unimpressive and the staff was pretentious, talking down to us throughout the process. The price of the tasting was outrageously prices as well. I highly recommend missing this place if you ever go. Pegasus had great artwork all over the place and was an interesting building. The vineyard is relatively new and the wines were unimpressive as well.

Markham had a decent Pinot Noir (God, ever since Sideways came out, I find myself embarrassed whenever we order a Pinot. I hate the thought of people thinking we are only ordering the wine because of the movie.) that we bought for Laura’s parents.

We ended the day at Rombauer (Yes the guy that wrote the Joy of Cooking). Good wine, generous pours, and they didn’t charge for tasting. Good place.

Indiana Pacer’s player, Jermaine O’Neal (yes the same guy who was an integral part of the big fight with fans earlier this year), said the NBA’s desire to put an age limit in the next collective bargaining agreement could be driven by racism.

“In the last two or three years, the rookie of the year has a been a high school player. There were seven high school players in the All-Star game, so why we even talking an age limit? As a black guy, you kind of think that’s (he means racism) the reason why it’s coming up. You don’t hear about it in baseball or hockey. To say you have to be 20, 21 to get in the league, it’s unconstitutional. If I can go to the U.S. army and fight the war at 18, why can’t you play basketball for 48 minutes?”

He later goes on to say that this isn’t an issue with predominantly white sports like hockey and soccer. I happen to agree with Jermaine, an 18 year-old is old enough to join the army and have a kid, playing professional basketball shouldn’t have a stricter limitation (don’t even get me started on the consumption of alcohol until age 21!). But insinuating that the NBA is racist is just laughable. With well over three-quarters of it’s players being black (or African-American if you prefer, although I prefer African-American-American), the accusation just doesn’t pass the smell test.

I think the reason the NBA is attempting this move is to save themselves from….errrr….themselves. A kind of perverted Tragedy of the Commons is occurring now, and the NBA is trying to prevent implosion. Huge bidding wars over untested and immature players straight out of High School are becoming more and more common. The teams are bidding up these players from a fear that if they don’t get them early, another team will. However, by taking these young players early in the draft they have to pay huge dollars for a high-risk player. We all know about the talent the High School players can posses, Kobe and Jermaine are prime examples. But there is no guarantee that this will be the case. There is more then one story of teenage basketball players being held back a year or two in the pre-teens so that when they get to high school they are bigger and far more developed then the other kids they are playing. This is the 16-year-old in the 9th grade scenario. These kids dominate their competition in high school, but when they get to the NBA they could very easily be crushed by the pressure of real competition by seasoned pros.

The immaturity aspect of the problem is obvious to even the uninterested observer. Again, Kobe and Jermaine are prime examples (Kobe and his indiscreet sexual problems and feud with Shaq while Jermaine is known for his fighting problems). The responsible team owner may want to pass on an 18-year-old, but he does it at his own peril. By passing on a potential superstar that has four years of extra expected playing life you end up giving your competition an advantage that could be devastating for years. A kind of max-i-min strategy takes place, in which the teams maximize there negative exposure by picking the unknown and risky high-schooler instead of giving their competitors the opportunity to lock that player in to their organization for years to come. So the NBA wants to create a rule that forces young players to go through a couple of years of college or other life experience that will help them gain some maturity and stop the temptation of the team owners. I’m not sure if the rule will solve the NBA’s problems in this regard, but I am sure that racism is not a motivating factor…