December 2006 Archives

Clayton Cramer sent me an email a week or more ago about a fascinating take on the Chinese price advantage by Tupper Saussy. My Saussy says that one of the main reasons the Chinese are dominating our import market for cheap goods is that their goverment is subsidizing shipping costs by essentially giving away those huge steel shipping containers.

It costs about $2000 to ship one from Shanghai to the west coast, Oakland or Seattle. I figure that it costs another $1000, minimum to get it from there to, say Kansas, by train and then truck.

Here's what inspired my thinking about those containers. I was talking to a guy who imports after-market auto parts for pick-up trucks, lots of fancy wheels and other gizmos. They all come from China. He told me that his shipper was having troubles making timely deliveries because their storage yard was packed with the containers. According to him, for every three that come here, only one ever carries anything away. So the shipping yard is packed and stacked full of "empties." ...

I build stuff for a living. Most of it's made of steel. I took a look at that big steel box and realized I'd want five figures to build one. In big time production mode, that would drop to $7500. There's that much welding involved. The steel costs alone, FOB a rolling mill in China, are over $2000. Even if I had laborers at 20 cents an hour and a factory 20 miles from the rolling mill, the overhead costs of the shop, 20 mile cartage, electricity, machine tool wear, welding rods, wastage on the steel plate, etc. would force me to a price of $6000. The box weighs 2.5 tons. $6000 ain't a bad number, given what's involved in building one. If I wanted to buy one for storage at my shop and got told, "It'll cost you $6000," I wouldn't even blink at the price.

Tumble the numbers with me. At $6000 each, three cost $18,000. The shipper made 3 x $2000, $6000, to send them to the US, full of Chinese made goods. Only one goes back for re-use. He's instantly down by $12,000, the logical result of a trade imbalance - and that doesn't even account for the fuel costs by the ship to get them here. Nobody is going to ship the empty containers by truck or rail back to a port. That would cost $1000, each. So, the shipper really ought to include the additional costs of $12,000, distributed into every three shipments. Instead of it costing $2000 to get a container full of goods from Shanghai to Seattle, it ought to cost $6000. $2000 + (1/3 x $12,000) = $6000. But even at that number he's just giving the container away at what it cost him - a very bad business practice - so the number has to be greater than $6000.

But if it cost +$6000 to ship it from China, then the Chinese labor discount vanishes from the goods in the box. The product would be the same price, or less (!) if manufactured here!

So, he concludes not only that the Chinese government must be subsidizing these shipping containers to keep costs down in America and Europe, but also that the shipping companies are making a killing by getting these containers at such a cheap price.

Now comes a nifty little Ponzi scheme. The shipper goes to a bank, a big international bank. He seeks a loan. The collateral is the shipping containers. He spent $7500 for three of them. But the fair market value is at least $18,000 (what they'd cost if built anywhere). He borrows $17,000. He buys six new containers for $15,000 and pockets $2000. But the fair market value of the new six is $36,000. He borrows another $34,000, using those six as collateral. With that $34,000, he buys 12 more containers and pockets $4000. I could keep doing the iterations, but you can see the game. It's a doubling up with each pass, with a cash profit of about 15% put into the shipping company each time. To keep it simple I started it at low figures. It's probably running at around 1,000,000 containers a year - given that 18 million of them have been built in only 30 years.

The shipping companies can offer very low rates from Shanghai to Seattle - all they want to do is break even, if that. They have a market incentive for that. They do NOT make money on the shipping. They make money by buying containers for shipping! They have to keep the shipping costs very low, as that's what's driving the whole "globalization" concept. If shipping costs were anywhere near their historical norms, then the low labor rates in China would be offset by the shipping costs, and importation would also go back to historical norms. We'd build far more stuff locally! Then the shipper would make very little money - as ocean shipping would drop substantially. But far worse from the shipper's perspective - he'd not need any more new containers. The scheme collapses.

There's a lot more, and I'd love to quote it all bit then you wouldn't have to go visit the site!

(HT: Clayton Cramer.)

The first part in what is sure to be an ongoing series about The Donald's awesomeness, Trump's immense patriotism stomps Palm Beach flat.

Donald Trump is suing this oceanside town for $10 million after being cited for flying an oversized American flag over his Mar-a-Lago Club.

Attorneys for the club filed a complaint Thursday, saying that flying the flag is a constitutionally protected expression of free speech — and that the large flag is a proper match for the size of the real-estate mogul’s patriotism.

“A smaller flag and pole on Mar-A-Lago’s property would be lost given its massive size, look silly instead of make a statement, and most importantly would fail to appropriately express the magnitude of Donald J. Trump’s and the Club’s members’ patriotism,” the lawsuit says.

I'm sure it's that, and not the simple fact that The Donald wants to do whatever he wants without regard for pesky regulations.

Town officials said Trump violated zoning codes when the lavish club hoisted a 15-by-25-foot flag atop an 80-foot pole on Oct. 3. The citation was for having a flagpole taller than 42 feet, for not obtaining a building permit and for not getting permission from the landmarks board. ...

“The day you need a permit to put up the American flag, that will be a sad day for this country,” Trump said in October.

The Donald is awesome because he does with his money what we all wish we could do: harass the government for all the stupid regulations that take the fun out of life.

(HT: Perez Hilton.)

Update 061229:

The flag is so big it can't fly at half mast for Gerald Ford!

Meanwhile, The Donald apparently isn't all that sad about former President Gerald Ford's passing. As Ben Widdicombe reports, the Stars-and-Stripes above his Mar-a-Lago property in Palm Beach is so big, it can't fly at half-mast because it would knock down the 40-foot palm trees nearby, so it's at three-quarters mast.

Merry Christmas, etc. I'm on vacation this week so I'm pretty busy doing nothing, which includes reading the news. There isn't much blog traffic either, so, I doubt anyone is reading this.

What's the best present you got this year? What's the best present you gave?

Penn and Teller have a fantastic episode of their show that explains why and how recycling is a waste of time, energy, and resources. This has always been intuitive to me, and I don't know anyone else who has openly and explicitly rejected recycling like I have. I usually get diry looks when I tell people, but now I've got evidence that I've been right all along.

(Warning: vulgar language ahead.)

Except for aluminum cans, recycling is basically a scam.

(HT: The Agitator and Geeks Are Sexy.)

I've written before that one of the few crimes worse than rape is making a false accusation of rape, and now it looks like the accuser in the Duke rape case, Crystal G. Mangum, did just that. The charges have been dropped for lack of evidence, and the tragic thing is that prosecutor Mike Nifong knew he couldn't make the case a year ago but decided to put the accused young men through hell anyway.

The district attorney dropped rape charges Friday against the three Duke University lacrosse players after the stripper who accused them changed her story again. But the men still face kidnapping and sex charges that could bring more than 30 years in prison. ...

In dropping the rape charges, Nifong filed court papers that said the accuser told an investigator Thursday that she is no longer certain whether she was penetrated vaginally with the men's penises, as she had claimed earlier. Nifong previously said he would rely on the woman's account because of a lack of DNA evidence against the players.

Lacking any "scientific or other evidence independent of the victim's testimony" to corroborate that aspect of the case, the district attorney said in court papers, "the state is unable to meet its burden of proof with respect to this offense." ...

The defense has complained that the stripper has given authorities at least a dozen different versions of her story. Among other things, she has given conflicting accounts of the number of attackers _ anywhere from three to 20 _ and the ways in which she was supposedly assaulted.

So did Nifong just screw up? How do we know it was malicious prosecutorial misconduct that should land him behind bars? Don't forget this story from last week:

The head of a private DNA laboratory [Brian Meehan] testified Friday that he and District Attorney Mike Nifong agreed last spring not to report DNA results favorable to Duke lacrosse players charged with rape. ...

In court Friday, Meehan said his lab found DNA from unidentified men in the underwear and body of the woman who said she was gang-raped at a lacrosse party in March. Nurses at Duke Hospital collected her underwear and samples from her body a few hours after the alleged assault. Meehan said the DNA did not come from Reade Seligmann, David Evans, or Collin Finnerty, who have been charged with rape and sexual assault in the case. ...

"Had Mr. Nifong said, 'We want a report on everything,' that is what we would produce," Meehan said.

"You violated the protocols of your own lab," Bannon said.

"Correct ... I don't have a legal explanation for it," Meehan said. "I was just trying to do the right thing."

Do the right thing by ignoring the evidence that suggests that a rape accusation was completely false? How is that justice?

Mike Nifong needs to face criminal charges and should be removed from his elected position as soon as possible. How many other cases has he manipulated during his tenure? They'll all have to be revisited.

And as for Crystal G. Mangum, if that is her real name, she should be put in jail for a term no less than what her victims would have faced if they had been convicted.

Clayton Cramer has fallen victim to the same New York camera scammers that stole my credit card information earlier this year.

Don't buy anything over the internet from New York-based companies!

My research indicates that these shops are mob-connected, so I'd stay as far away as possible.

Yet another reason I'm glad my wife and I left California: proposals to "expand" healthcare by forcing employers to buy insurance for everyone. All the laws forcing employers to buy insurance for their employees were bad enough, but now the people who make jobs are going to have to buy insurance for people that don't even work for them... people who have no connection to the insurance purchasers in any way.

A senior California Democrat proposed on Thursday that employers pay to expand health care coverage to all uninsured children in the state, including those of illegal immigrants, as leaders across the political spectrum agreed to focus on universal health care. ...

Democratic Assembly Speaker Fabian Nunez unveiled his plan to extend health care coverage to uninsured children by requiring employers to pay for insurance, or to have them pay a fee to the state.

Why stop there? Make employers pay salaries to poor children too! This plan is the absolute worst sort of socialism conceivable and will certainly continue the state's determined and relentless slide into insolvency. The only plus side is that pro-illegal-immigration Californians will perhaps begin to appreciate the costs of their favored policies.

I'm glad I won't be there to see it. Have fun!

I always want to understand everything, but sometimes, when looking backwards, trying to figure out "why" is impossible and overrated. The "20/20" of hindsight is often little more than after-the-fact rationalization.

Research psychologists have known for decades that it is very difficult to determine causation in mental life and thus, of behavior. For one thing, we can never perform an experiment. Take my patient Karen, 50, who spent most of the 1990s smoking crack. She is certain that the decade-long binge would never have happened had her mother not died when she was 12. We will never know if she is right because we cannot rewind Karen’s life, play it again, and see what would have happened if her mother had lived.

Reconstructing the story of one’s life is a complicated business for other reasons. What scientists call hindsight bias kicks in when we try to figure out the causal chain of events leading to the current situation. We may well come up with a tidy story but, inevitably, it will contain large swaths of revisionist history. It’s not that we bias ourselves deliberately; it happens because the mind tends to make events in the past appear comprehensible and orderly. We forget the uncertainties that might have beset us as we struggled in real time.

Sometimes we can understand ourselves by looking into the past, but getting caught up in it is a fool's errand.

It is time to retire the myth that insight is a prerequisite for change. For the patients in our clinic, change without hard-won insight is the rule. And who has time to wait? Not Natalie. This past month she and I worked on getting an abusive, shiftless boyfriend out of her apartment; finding tutoring for her son; and building a new social network to replace the drug users that she used to hang out with.

At this stage in her treatment, awareness of what she needs to do will get Natalie further than insight. Less chaos in her life means less anxiety and that means less risk of relapse.

Down the road she may ask, “Why did I use drugs?” But in the meantime, what’s important for Natalie and her son is that she is determined to stop.

Oftentimes the quest for "insight" is just a way to procrastinate making the changes we know we need.

(HT: My brother.)

Anyone who has been paying attention to the news for the past few years has heard of Blackwater USA, a private security company -- mercenaries -- who work as guards, law enforcement officers, and in other paramilitary roles all around the world, often in conjunction with American military forces. A curious phenomenon, so let's learn a little more about them.

Here's a six-part series about the company: "Blackwater: Inside America's Private Army". The articles cover their training programs, their work in Iraq, and their role in the Katrina recovery. Exhaustive and fascinating.

A reporter for Popular Mechanics tags along with Blackwater contractors who ferry VIPs from Baghdad's airport to the Green Zone.

Here's a paranoid sort of conspiracy page about the hundreds of millions of dollars Blackwater is paid by the US government to provide security for diplomats.

Finally, here's the Wikipedia entry for Blackwater USA that contains information on some of their training facilities and business divisions.

Telling kids that Santa Claus doesn't exist can get a teacher fired, but telling kids that God doesn't exist is an essential part of the curiculum.

A primary school has been accused of spoiling Christmas for pupils after a lesson telling them that Santa Claus does not exist.

Children as young as nine were told that only 'small children believe in Father Christmas'.

And yesterday their parents criticised teachers for taking the 'magic' out of the festive period. ...

Last week a primary school teacher was sacked for telling her young class that Santa does not exist.

Such stories illustrate the absurdities of our culture, in which fantasy is protected and legitimate beliefs are relegated to the shadows.

My brother pointed me to a Slashdot post about using "digital fingerprints" to catch intellectual property thieves.

Attributor analyzes the content of clients, who could range from individuals to big media companies, using a technique known as 'digital fingerprinting,' which determines unique and identifying characteristics of content. It uses these digital fingerprints to search its index of the Web for the content. The company claims to be able to spot a customer's content based on the appearance of as little as a few sentences of text or a few seconds of audio or video.

That's a giant search problem, and it won't scale well. Each "fingerprint" (or more technically, "feature") that is extracted from the input data will be searched for in a database of the web's content. Assuming a piece of intellectual property will have thousands of features that need to be found together, in the right order, you're looking at thousands of seconds of search for each song, picture, video, book, or whatever that you're trying to protect. (Searches on Google typtically take between 0.1 and 1 second.) So they're going to need processing and storage capacity on par with Google's to do their matching.

On the plus side, they'll probably only need to check each piece of IP once a week or month; catching infringements faster than that wouldn't serve much of a purpose. This isn't a difficult project from an algorithm standpoint, but setting up the hardware will be daunting.

(HT: Slashdot.)

Here's a nifty visual guide to where you tax dollars go. It doesn't include "non-discretionary spending", so it's only a partial picture, but it's still quite informative.

Daniel Muniz has a brief post about preferential traffic enforcement for beautiful women that concludes with several comments by law enforcement officers who swear up and down that they've never let a woman off a ticket they would have otherwise given to a man. Maybe it's just a cliche. Do any beautiful women out there have any experiences to share?

Reader JV passes along a couple of useful links.

First, a guide to blank DVD media that tells you which DVDs to buy (and it depends on the original manufacturer, not the brand name they're sold under).

Second, the periodic spiral, a potential improvement over the traditional periodic table of elements. There's a Flash demo, but it isn't full-featured, which makes it kinda lame.

I almost titled this post "Kids Are Dumb" but then I realized that nearly half of Americans would probably agree with the priorities of children under 10.

The poll of just under 1,500 youngsters ranked "God" as their tenth favourite thing in the world, with celebrity, "good looks" and being rich at one, two and three respectively. ...

Meanwhile "killing" and "wars" head the list of the "very worst things in the world", followed by drunks, bullies, illness, smoking, stealing, divorce and being fat. Dying is in tenth place. ...

The children who answered the survey would also put a stop to stealing, but wanted more holidays and more hospitals.

Sounds like the list was made by the Democrat Party! (Except for "divorce".) And what would happen if we put them in charge?

Asked what rules they would make if they were king or queen of the world, the number one response from the under-10s was to ban knives and guns.

They would also put a stop to fighting and killing, telling lies, drugs, bullying, drunks, and smoking.

Knives? Good luck cutting your tofurkey on Thanksgiving Academy Awards night.

It's hard to care about Florida's so-called botched execution of the murderer of Joseph Nagy. You might be confused -- where did I get the name of the victim, Joseph Nagy? He isn't mentioned in the article anywhere! Instead we're treated to pictures of Angel Nieves Diaz's family crying because their murdering kinsman is being put to death 27 years after his crime.

In Florida, medical examiner Dr. William Hamilton said Wednesday's execution of Angel Nieves Diaz took 34 minutes - twice as long as usual - and required a rare second dose of lethal chemicals because the needles were inserted clear through his veins and into the flesh in his arms. The chemicals are supposed to go into the veins.

Hamilton, who performed the autopsy, refused to say whether he thought Diaz died a painful death.

"I am going to defer answers about pain and suffering until the autopsy is complete," he said. He said the results were preliminary and other tests may take several weeks.

That seems like a waste of money. Despite his protests of innocence, even Angel Nieves Diaz's entry on Amnesty International admits that he is at least an accomplice to murder, which carries the same penalty.

Angel Diaz’s former girlfriend testified that on the night of the robbery, he had told her that Angel Toro had shot a man during the robbery. The testimony of two other witnesses, who had been in the bar at the time of the robbery, indicated that Angel Diaz was not the gunman. However, a jailhouse informant testified that when they had been held in the same jail, Angel Diaz had indicated that he had shot Joseph Nagy. Jailhouse informant testimony is notoriously unreliable.

It doesn't matter. If you rob a strip club and your partner shoots someone, you're both guilty of murder and should both be executed.

I really do feel sorry for Diaz's family -- it would be terrible to go through such an ordeal over one of my loved ones -- but I feel worse for the family members of Joseph Nagy who have gone without him since 1979.

So Time magazine's person of the year is "you" -- that is, us bloggers I guess.

The annual honor for 2006 went to each and every one of us, as Time cited the shift from institutions to individuals - citizens of the new digital democracy, as the magazine put it. The winners this year were anyone using or creating content on the World Wide Web.

This would have been groundbreaking in 2001, or even 2004... but this is 2006! Now it just comes across as pandering.

"If you choose an individual, you have to justify how that person affected millions of people," said Richard Stengel, who took over as Time's managing editor earlier this year. "But if you choose millions of people, you don't have to justify it to anyone."

Oops, I meant lazy pandering.

One of my favorite celebrities, The Don, has fired Miss USA for conduct unbecoming.

Hard-partying Miss USA Tara Conner was booted out of her ritzy Trump Place apartment and fled the Big Apple to her tiny Kentucky hometown with her reputation in shambles, as reports swirled yesterday that her runner-up had already been tapped to replace her.

"She does not live here anymore," said a doorman at the posh Upper West Side property, where the Miss USA winner is given an apartment every year. "She is not allowed any where on Trump property. She is certainly not allowed to come back. I don't think it was her choice, really."

Great! The only sad thing is that we don't hold our elected leaders to the same standards as our beauty queens.

It's hard to think of any recent scientific breakthroughs that are as as viscerally exciting as the artificial heart.

A 65-year-old Quebec man who received a new long-term mechanical heart last month is being described as the only living Canadian without a pulse.

Dr. Renzo Cecere implanted the “Heartmate II” mechanical heart into Gerard Langevin in an three-hour operation Nov. 23.

Officials at the McGill University Health Centre say the device, which is about the size of a flashlight battery, could last up to 10 years. ...

The new mechanical heart, which is powered by batteries located in pouches on Mr. Langevin's body, provides a continuous flow of blood so the patient has no pulse.

“Mr. Langevin happens to be the only individual currently living in Canada without a pulse and without a measurable blood pressure,” Dr. Cecere said Wednesday.

That's amazing, and it's pretty hard to argue that Gerard Langevin isn't a cyborg in the fullest sense of the word. Once we've perfected artificial blood we'll really be in business.

So how long until someone has an organ replaced by an implant not because it's medically necessary, but simply because the artificial version is better? I say 10 years, before we get to the moon again.

Building fences to keep out illegal immigrants won't work unless we also go after the companies that employ them. As long as there are jobs and government benefits to be had, people will find a way to come get them. This ironic story about Golden State Fence company getting caught hiring illegal workers highlights the need for a multi-prong strategy.

After an immigration check in 1999 found undocumented workers on its payroll, Golden State promised to clean house. But when followup checks were made in 2004 and 2005, some of those same illegal workers were still on the job. In fact, U-S Attorney Carol Lam says as many as a third of the company's 750 workers may have been in the country illegally.

Golden State Fence built millions of dollars' worth of fencing around homes, offices, and military bases. Its president and one of its Southern California managers will pay fines totaling $300,000. The government is also recommending jail time for Melvin Kay and Michael McLaughlin, probably about six months. ...

Golden State Fence's attorney, Richard Hirsch, admits his client broke the law. But he says the case proves that construction companies need a guest-worker program.

No, it proves that fences won't stop employers from breaking the law -- but maybe fines and jail time will. Illegal immigration will only stop when we do all of the following:

1. Build a fence.

2. Punish employers of illegal immigrants.

3. Eliminate the publically-paid-for benefits enjoyed by illegal immigrants.

Once those are complete, let's talk about increasing legal immigration in a way that gives us control over who comes here, how long they stay, and what they're allowed to do.

Brian M. Riedl of the Heritage Foundation lists the top 10 examples of government waste. This is why solving a problem through government should be a last resort.

Donald Norman has several suggestions for making cars more usable. First, an idea I think I've had before, the front passenger seat should be able to face the rear.

Why not allow the front seat to face to the rear? Now, suddenly, the front and rear passengers are united. Moreover, the front passenger seat could now slide forward, with its rear abutting the dashboard, thereby increasing legroom for the two facing passengers. This position allows everyone in the car to converse: front seat passenger, rear seat passengers, and even the driver, for now the driver is certainly no worse of than before, possibly better.

Folklore has it that passengers reject the idea of facing backwards. But why do they sit this way on trains? And what if it were a choice, with the front seat either swiveling or constructed like a train seat, with the backrest being movable from the rear of the seat to the front? Safety? Rear-facing seats are safer than front-facing ones – we require them for babies -- but a flexible seat poses some difficulties with crash resistance and seat belt placement, but nothing a clever designer could not overcome. This is not a new idea: see the Renault Deck'up and the Espace. An idea whose time is now.

Second, make passengers first-class citizens.

Passengers have more and more choice. Entertainment, individual temperature controls, individual video and audio controls. Cell phones, music players, video games. Lights. Where do they put all that stuff? Where do they plug it in? Years ago the need arose for places to put drinks: coffee for the adults, and canned or bottled drinks for everyone. It took years, but finally most car manufacturers obeyed the request, adding a wide variety and quantity of drink holders. (Some recalcitrant manufacturers still resist.) Today, we need places to store and plug in a wide variety of devices: music and video players, game machines and controllers, earphones, cellphones, and computers. Each needs a safe, secure place to be docked, each needs electrical power, and some need to be networked to one another. Someday soon many will need internet connections. And the same facilities have to be provided separately for everyone: the driver, the front passengers and the rear passengers (and in larger vehicles, the third-row passengers).

“But,” I can hear the automobile purists complaining, “you are confusing the automobile with the family room.”

Yup, that I am. Deliberately. Today’s vehicles are not just for driving: they are for living. And living means work and play, fun and entertainment.

I completely agree. There's no reason your car shouldn't have more power outlets, a beefier power supply, and a built-in wireless router. A car should be a traveling outpost of personal space and civilization, so it needs to keep up with the house and have more modern amenities.

(HT: My brother Nick.)