Unexpected Football Payment Arbitrage

I’m using my platform to take up a new issue – payment of college football players. I understand the purist arguments waxing nostalgic about the glory days of amateur collegiate athletics but clearly the game has become big (and increasingly big) business. Since the amount of revenue generated by college programs is so large, and the payroll of players so small, the money that should have been in the players pockets starts to show up in unexpected places.

Here’s an article highlighting the use of custom graphics and artwork to recruit players. It reveals that the University of Alabama has a full-time staff of 10 graphic artists. The article highlights the competition between schools (Alabama and Tennessee, in this case) for graphic artists!

If they could properly pay the players to play then that money would go straight into their salaries, instead of this kind of fluff masquerading as compensation. Fundamentally it is the players ultimately buying the artwork. Why can’t we just ask them if they wouldn’t rather have the money instead…?

Affordable Care Act Hurts Young People


This is a good article which explains some problems with the Affordable Care Act (aka Obamacare) for young people.

First, the proper observation that the ACA is an explicit transfer of wealth from young to old:

“Preventing health insurers from fully accounting for age will not change the reality that, in general, the older you are, the greater your medical expenses (six times greater, when you compare 64-year-olds to 18-year-olds). These are costs that someone has to pay. If insurers can’t charge those older according to their risk, they have to overcharge those younger to make up the cost. In California, for example, once the new health law’s various rate restrictions and other provisions kick in, 25-year-old non-smoking men will see their premiums at least double.”

Next, is an easy to understand case study in why the Affordable Care Act’s mandate on healthcare expenditures make it harder to achieve:

“Even though Brian judges this to be the best way to manage his medical expenses, under the health law, it’s illegal for insurers to offer him a policy geared to his actual risk. Instead, per government mandate, a portion of the income he earns and intends to use to build his life is channeled into the pockets of others.”

Ned continues to campaign against the market distorting mandates included in the Affordable Care Act.

Cost of Climate Change

From http://www.cnbc.com/id/100912062:

The rapidly melting Arctic is an “economic time bomb” likely to cost the world at least $60 trillion, say researchers who have started to calculate the financial consequences of one of the world’s fastest changing climates.

I’m on record with my position on Climate Change which is, essentially, that there is no policy fix for this. But I couldn’t help but notice the fear mongering in this article reminding me of the demands of a certain Doctor…


On Privacy, and Control of Disclosure


The problem isn’t so much that we haven’t set up a legal architecture to preserve our online privacy from the government; it’s that we haven’t set up a legal architecture to preserve our online privacy from anyone at all. If we don’t have laws and regulations that create meaningful zones of online privacy from corporations, the attempt to create online privacy from the government will be an absurdity.

I think that creating a narrative of “privacy” is confusing the issue. Privacy sounds like some abstract concept about remaining anonymous or something. The issue is not the disclosure of information but the control of the disclosure of information. When you tell your friend that you have diabetes, then some personal information about you has been disclosed. Has your privacy decreased? Well, yes, absolutely. But we are not trying to protect privacy only the control of the disclosure of information. So, when you send an email via Gmail or make a purchase at Target with your credit card, you are clearly sharing information with another individual or group of individuals. Your “privacy” was clearly diminished. But you had control over that. Even if Google tells you that they will mine that data and sell it to third-party advertisers, you chose to share that information with them. So, the question is not whether or not individuals should have privacy, but whether or not they should be forced to disclose information about themselves to parties that they choose not to. Should an individual be forced to disclose information to a party, like the NSA, unwillingly? Well, control of the disclosure of information is valuable property. Should that property be forcibly taken from an individual?

How valuable is this property? Well, it is worth billions of dollars. Consider just this example. The NSA program collects information on credit card transactions:


But people familiar with the NSA’s operations said the initiative also encompasses…purchase information from credit-card providers.

Now consider how much money Google is spending to try and collect this same information:


The company has dedicated hundreds of developers to Wallet and spent about $300 million to acquire digital payment startups to help develop the app.

For Google, the goal wasn’t to generate fee revenue from the transactions, as banks, PayPal (EBAY), and other companies do. The idea was to collect data on consumer habits and target ads to them. Google pays such high fees to the credit-card companies it works with, though, that it loses money on every transaction

Bedier, a former PayPal executive who joined Google in 2011, says the streamlining is a big shift and that he was encouraged to spend freely to develop Google Wallet.

Jason Gardner, the CEO of loyalty-card startup Marqeta, says brick-and-mortar payment information is too lucrative a possibility for Google to ignore. “The amount of data at the point of sale is so significant that they’re not going to throw in the towel,” he says.

So, Google is willing to spend hundreds of millions of dollars to entice people to disclose credit card purchase information. I would say that that property is pretty valuable. Politicians, appreciating value like everyone else, naturally want acquire this value.  Will we protect it? It doesn’t look like it.


You should not think that recent events will simply cement a previous status quo in place, rather it moves us down a very particular path and probably makes the entire problem worse.

This whole post was basically a complicated way of saying, “Unprotected property is lost.”

Suppose a homeowner witnesses a burglar sneaking out of his house holding his toaster. After some contemplation, he chooses not to put a lock on his front door. A few days later he is outraged to find his laptop stolen. What happened? The homeowner either:

  1. Thought that burglar was only interested in low-value items.
  2. Didn’t think that burglar knew that there were other valuable items in the house.
  3. Didn’t think that the burglar knew the value of the other items in his house like his laptop.
  4. Thought that the burglar was satiated with capturing only a little value.
  5. Didn’t value his laptop.
  6. Thought protecting his valuables was not worth the hassle of having to unlock his house when he got home.

We seem to not be attempting to put a lock on the tremendous value that we have in controlling the disclosure of information that we possess. For which of the above reasons?

A New Long-Term Unemployed Entitlement?

The Atlantic published an article about the problem of long-term unemployed. Apparently there is something magical about being 6 months unemployed such that a person becomes almost unemployable from that point on.


The author concludes with a policy prescription:

It’s time for the government to start hiring the long-term unemployed. Or, at the least, start giving employers tax incentives to hire the long-term unemployed. The worst possible outcome for all of us is if the long-term unemployed become unemployable. That would permanently reduce our productive capacity.

The government should start hiring the long-term unemployed – I’m trying to figure out if that is a serious proposal? The author leaves the implementation details up to the reader to imagine, so let’s imagine them:

What work will they do? Will these be fulfilling jobs? If not, why not? If so, who in the world would ever take an unfulfilling job in the private sector if all you have to do is wait 6 months and become entitled to a fulfilling job working for the government?

How long will the job last? Will it be short term or long term? If short term, it’s hard to see how that is going to “trick” private sector employers into looking at the participants’ resume again. Hiring manager thought process: “I see you were unemployed for 6 months, then employed by the government for 6 months, and now you’re unemployed again. Remind me: why am I more likely to hire you now?” If long term then how will we ever afford this, and why would anyone, once hired, ever look for work in the private sector or anywhere else?

How will the participants be selected? I can envision a couple of options:

1) Everyone gets hired – so this is a true, new entitlement. Anyone and everyone who is unemployed for more than 6 months gets hired by the government.

2) Political process – people unemployed greater than 6 months get hired according to who has a friend or family member working for the “Department of Long-Term Unemployed”. Although, if you had a friend working for such a department wouldn’t you have an in for one of our existing government jobs?

3) Merit-based process – the government will review the resumes and hire only the best and brightest of the long-term unemployed. Because I’m sure the government is better at picking out those diamonds in the rough than 6 months worth of private sector resume reviewers.

4) Lottery – random draw for government jobs! Woo hoo!

Note that (2), (3), and (4) don’t solve the problem which this program was initially designed to solve, which is “the long-term unemployed become unemployable [and] permanently reduce our productive capacity” – it just reduces the number by a few.

How will these new employees be organized? Will we set up a new organization in the government, with some hired as managers, and others worker bees? Will we hire one executive long term unemployed per one hundred worker bees? Or are we going to just randomly plug these people into existing government organizations? If there were a match with their skills to the mission of the organization they probably would have already been hired. The point was that we are hiring them as an entitlement so it doesn’t matter what their skills are at all.

I’m not questioning that employers discriminate against long-term unemployed, and agree that it is a problem for the macro economy, and especially for the individuals who cannot find work. However, starting a government program to hire the long-term unemployed is a not a solution.

Thoughts on “You Didn’t Build That”

Some thoughts from some smart people on President Obama’s Roanoke Speech:


To me, the speech was not troubling because the President was picking on the little guy. It is also not troubling because he shows a preference for government solutions over private solutions. It is troubling because he is making the case why business owners don’t deserve a strong right to their property. He has made the case why he won’t strongly defend their property rights. This is terrifying because we know that if the government will not defend property, it is lost. Period. The property has value and value is pursued by humans. If the government will not protect your property, it will be lost. I would even go so far as to say that without government, there is no property. And here we have the leader of our government explaining why he will not protect it. This terrifies me. The first rule of property: If you don’t protect it, you lose it.

WSJ Interview with George Shultz

Some interesting areas of the interview:

“For Mr. Shultz, the tax issue is not just about rates—though he believes lower rates often produce more revenue than higher ones, and “it’s the revenues you’re looking for”—but about predictability.

He asks me what sports I like. “Let’s talk about football. . . . You want to know the rules and have an impartial referee, but you also want to make sure somebody isn’t going to come along and change the rules in the middle of the game. . . . Now it’s as though we have all these people who have money on the sidelines and we say ‘Come on and play the game,’ and they say ‘Well what are the rules?’ and we say ‘We’ll tell you later.’ And what about the referee? Well, we’re still struggling for who that’s gonna be. . . . That’s not an environment designed to get people to play.”

Mr. Shultz cites the handling of the auto bankruptcies as an important deviation from rules-based economic policy. The question was “are we gonna have a political bankruptcy or a rule-of-law bankruptcy? Political bankruptcy was chosen. So the result is that the unions got paid off and the regular creditors didn’t.”

Every now and then, you just have to step back and ask yourself, “Why are making this so hard?” We’ve got all of the brightest minds in the country pouring over how to fix the malaise we are in. But even a miracle cure would be negated if the economy has no confidence in the rules. All of the brillance of the best economists is for naught if we can’t get some of the basic fundamentals right. Leave it to the 91-year-old guy to bring us back to reality.

“That would be ObamaCare, of course. “I fear that the approach to controlling costs in the health-care business is moving more and more to a wage-and-price-control approach. And one thing you know from experience is when you control the price of something, you end up getting less of it. So if you control the price of health-care providers, you will have fewer of them and that’s gonna wind up as a crisis. The most vivid expression of that . . . was Jimmy Carter’s gas lines.”

Another obvious point but somehow gets lost in the debates.