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No, the Federal Government is Not Like a Shark

| Wed May. 15, 2013 9:32 AM PDT

In a response to Jonah Goldberg, Charles Cooke admits that sharks aren't actually all that dangerous:

Still, it’s best to presume that every single shark you meet is going to eat you. My view is that, because a shark can eat you, and has eaten people in the past, you should have, as per the definition that you provided, ”suspicion and mistrust of people or their actions without evidence or justification” — or, rather, of sharks and their actions

....The bottom line is that we should treat government as we should sharks: As George Washington is supposed to have said, “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.” Even he couldn’t have imagined how dangerous and fearful governments could become.

My problem is that I’m not sure that the alternative to paranoia is reason. Is the way in which most people trust “reasonable”? No, not in the slightest. If people are going to be unreasonable — and they certainly are – it’s better that they’re unreasonably scared....There are no black helicopters and there may never be any black helicopters. But isn’t it positive that people are worried about them?

Well, I agree with Cooke about sharks. But there's a pretty important missing point here: for most of us, there's zero upside to palling around with sharks and zero downside to being unreasonably scared of them. So sure: you should avoid sharks at all costs. Why wouldn't you?

Needless to say, the same is not true of government, no matter how much conservatives like to think otherwise. It provides many useful services! I like the fact that police keep me safe, paved roads let me go places, pensions and healthcare are available to me when I get old, and government agencies keep my air, water, and food tolerably clean and safe. There are genuine tradeoffs to be made here, which means that reason really is the only non-insane way to evaluate what kind of government we want. Even coming from National Review, I'm a little surprised that apparently someone needs to make this rather obvious point.

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Is Our Robot Paradise Already Here?

| Wed May. 15, 2013 8:00 AM PDT

Ashok Rao has a response to my robot article that, unfortunately, I don't entirely understand. But there are bits and pieces I'd like to respond to, so let's get to it. First off, the main point of my piece is that even if a robot paradise awaits us in the future, a lot of people are going to be put out of work in the meantime, and rich people are going to resist income redistribution to address this. Here's Rao:

What Drum ignores is, the Great Redistribution has already started. Our tax code was designed for a bygone era and, therefore, obscures the immense change technology has created in the past ten years. Redistribution in the form of pure consumer surplus. The web application system allows us, for the first time, to quench our materialistic desires for free.

Well, I sure hope I didn't ignore this. I didn't mean to. In fact, I devoted a considerable part of my piece to exactly this, though from the flip side of the coin. The economic effects of smart machines, I argued, started around 2000, and we've been seeing the disemployment effects ever since. The impact so far has been tiny, but real.

Now, Rao usefully points out the mirror image of my point, namely that the rise of automation has positive consumer effects too. However, I think we'd be well advised to take a closer look at just who benefits from this. The problem is that disemployment hits a certain class of people, while the consumer surplus generated by the web economy primarily benefits a different class. Nor is the web economy free. It's cheap, certainly, but not free. Nor is it enough. Even if we can immerse ourselves in the web all we want for low cost, we still need to eat, clothe ourselves, live somewhere, and so forth. Until our future robot paradise arrives, this is a big deal. If you lose your job to a robot, your net economic position is going to be sharply worse than it used to be.

The last few paragraphs of Rao's essay sound interesting, and I'd like to engage with them, but unfortunately I didn't understand what he was getting at. It's unclear how much of it is being attributed to me and how much is stuff he himself believes. However, this part is clear enough:

But there is no “dimly lit tunnel”. There will be manual jobs: until there aren’t. The future will be a cornucopia of thought, refinement, ideology, and science. For the first time, millions can enter the “thinking classes”, no longer tethered to labor as a need of production. No longer tethered to the capitalist machinery that hitherto made us rich. Thusly, we won’t be living in Fukuyama’s nostalgic sense of an ahistoric world, either. Rather, the rich social and intellectual interactions unlocked will generate the most amazing cascades of culture at a sophistication never-before-seen.

I very much doubt this. The vast majority of humans have neither the skills nor the desire for this. Rao may be right about "millions," but that represents just a tiny fraction of the human race. What about the rest of us?

Ex-IRS Director: Tea Party Groups Deserved Scrutiny, But IRS Bungled the Job

| Wed May. 15, 2013 3:00 AM PDT

Among those in attendance last Friday when IRS official Lois Lerner admitted that agency staffers had systematically singled out tea partiers and other conservative groups for special scrutiny was a lawyer named Marcus Owens. Lerner's admission was shocking, and nobody realized that more than Owens. That's because he served as director of the Exempt Organizations Division from 1990 to 2000, prior to Lerner holding the job.

Owens, who has worked on tax law issues in private and public practice for almost 40 years, including 25 years at the IRS, says he has been getting a lot of calls about the scandal. The way he sees it, he told me in an interview on Tuesday, is that the IRS was right to take a close look at conservative groups applying for tax-exempt status during the 2010 and 2012 election cycles. Particularly in 2010, hundreds of new conservative groups were springing up across the country. "I think that it would be unreasonable to expect the IRS to ignore that, and to simply approve these 501(c)(4) applications from politically active organizations as if they were Scout troops or Little Leagues," he said. "That doesn't mean they should be denied exemption or that the evaluation should be overboard or overly intrusive, but there should be special evaluation."

Mysterious Poop Foam Causes Explosions on Hog Farms

| Wed May. 15, 2013 3:00 AM PDT
A sample of the manure foam that caused an explosion that lifted a hog barn two feet off the ground and blew a man 20 feet away from where he had been standing (see video below).

When you hear about foam in the context of food, you might think of the culinary innovations of the Spanish chef Ferran Adrià, who's famous for dishes like apple caviar with banana foam.

But this post is about a much less appetizing kind of foam. You see, starting in about 2009, in the pits that capture manure under factory-scale hog farms, a gray, bubbly substance began appearing at the surface of the fecal soup. The problem is menacing: As manure breaks down, it emits toxic gases like hydrogen sulfide and flammable ones like methane, and trapping these noxious fumes under a layer of foam can lead to sudden, disastrous releases and even explosions. According to a 2012 report from the University of Minnesota, by September 2011, the foam had "caused about a half-dozen explosions in the upper Midwest…one explosion destroyed a barn on a farm in northern Iowa, killing 1,500 pigs and severely burning the worker involved."

And the foam grows to a thickness of up to four feet—check out these images, from a University of Minnesota document published by the Iowa Pork Producers, showing a vile-looking substance seeping up from between the slats that form the floor of a hog barn. Those slats are designed to allow hog waste to drop down into the below-ground pits; it is alarming to see it bubbling back up in the form of a substance the consistency of beaten egg whites.

And here's the catch: Scientists can't explain the phenomenon.

Check out this amazing 2011 video presentation on the matter by University of Minnesota researcher David Schmidt. He opens by describing a 2009 explosion that lifted a hog barn a "couple of feet off the ground" and blew the farm operator himself 20 feet from the building. (Thankfully, he wasn't injured, and there were no animals in it.) And check out the footage, starting about 3:19 in, of the foam itself, which must be seen to be believed. At one point , a shovel dips into the mire and scoops up as sample—which jiggles and pulsates, alive, apparently, with microbial activity. Schmidt also does a great job of explaining just how manure foam can cause explosions.

David Schmidt: Foaming Manure Pits from Iowa State University Extension on Vimeo

I wrote about the phenomenon about a year ago. But these days, there's not much in the agriculture trade press about it. Which led me to wonder: Has the mysterious foam subsided—or congealed into yet another fact of factory farming that isn't even notable anymore, like, you know, raising hundreds of pigs over pits that concentrate their waste, or dosing them them daily with low levels of antibiotics, leading to rampant antibiotic-resistant bacteria?

I decided to do a bit of digging for an update. Via email, Angela Kent, an associate professor in the department of natural resources and environmental sciences at the University of Illinois, informed me that "manure foaming" is "still a very serious problem among pork producers in the Midwest." Scientists have still not been able to finger the cause of it, but "we are in the midst of a large multi-institution investigation focused on finding the cause of this very serious problem."

So: still happening, and still no explanation.

Surveys show that around 25 percent of operations in the hog-intensive regions of Minnesota, Illinois, and Iowa are experiencing foam—and "the number may be higher, because some operators might not know that they have it."

I then got Larry Jacobson, a professor and extension engineer at the University of Minnesota who has been working on the issue, on the phone. He confirmed that the problem persists—just about a month ago, he said, workers were welding metal fixtures in an empty hog facility and a fire broke out, likely because a spark managed to penetrate foam enough to free trapped methane and ignite it. (No one was injured.)

Jacobson said that surveys show that around 25 percent of operations in the hog-intensive regions of Minnesota, Illinois, and Iowa are experiencing foam—and "the number may be higher, because some operators might not know that they have it."

He added that the practice of feeding hogs distillers grains, the mush leftover from the corn ethanol process, might be one of the triggers. Distillers grains entered hog rations in a major way around the same time that the foam started emerging, and manure from hogs fed distillers grains contains heightened levels of undigested fiber and volatile fatty acids—both of which are emerging as preconditions of foam formation, he said. But he added that distillers grains aren't likely the sole cause, because on some operations, the foam will emerge in some buildings but not others, even when all the hogs are getting the same feed mix.

But if the causes of manure foam remain a mystery, a solution seems to be emerging, Jacobson told me: Dump a bit of monensin, an antibiotic widely used to make cows grow faster, directly into the foam-ridden pit. At rather low levels—Jacobson told me that about 25 pounds of the stuff will treat a typical 500,000 gallon pit—the stuff effectively breaks up the foam, likely by altering the mix of microbes present. No other treatment has been shown to work consistently, he said.

Thankfully, monensin isn't used in human medicine. Still, it's striking to consider that the meat industry's ravenous appetite for antibiotics has now extended to having to treat hog shit with them.

Our Amazing Slowdown in Healthcare Spending Growth

| Tue May. 14, 2013 10:05 PM PDT

The growth rate of healthcare spending, which once seemed to be putting us on a path to national bankruptcy, seems to be abating pretty seriously lately. Jon Chait comments:

The general conservative response to date has involved ignoring the trend, or perhaps dismissing it as a temporary, recession-induced dip likely to reverse itself. Yesterday, the Wall Street Journal editorial page offered up what may be the new conservative fallback position: Okay, health-care costs are slowing down, but it has absolutely nothing to do with the huge new health-care reform law. “It increasingly looks as if ObamaCare passed amid a national correction in the health markets,” the Journal now asserts, “that no one in Congress or the White House understood.” It’s another one of those huge, crazy coincidences!

My take is a little different: I think the Journal is wrong to suggest that we're merely in the middle of a temporary correction, and Chait is wrong to imply that Obamacare has played a role in the slowdown of healthcare spending. Take a look at the chart below, which is a home-brewed version of one that's cropped up in a lot of places recently. I took the CMS figures for per-capita national healthcare consumption expenditures and compared its year-over-year growth rate with the inflation rate. A high number means healthcare spending is growing faster than inflation. The chart is noisy, but the pattern is pretty clear: the growth rate of healthcare spending has been on a pretty steady downward trend for three decades. If it keeps following the current trendline, per-capita healthcare spending will be growing at the same rate as general inflation by around 2020 or so:

For a more rigorous look at this over just the past decade, check out "When the Cost Curve Bent," described here by Sarah Kliff. Standard caveats apply: the trendline might not keep going down; more people will still mean higher healthcare spending; and recent data might be artificially depressed by the recession and the sluggish recovery.

Bottom line: I think the moderation of healthcare spending growth has been going on for quite a while. And while Obamacare may very well accelerate this trend, it's too early to say it's had any effect yet. At the same time, Chait's more general mockery of the Journal's about-face on this subject is fully merited:

Of course, it’s not just that the Journal didn’t predict the health-care cost slowdown. The Journal insisted it couldn’t possibly happen. Indeed, it insisted that Obamacare would destroy — was already destroying — any possible hope for a health-care cost correction, and would instead necessarily lead to a massive increase in health-care inflation.

That's been the party line on the right all along. Along with hyperinflation and spiraling interest rates, I think we can put this squarely in the basket of stuff they just don't get.

IG Report Says IRS Has No Idea What Its Own Rules Mean

| Tue May. 14, 2013 6:56 PM PDT

The Inspector General's report on the targeting of tea party groups by the IRS is now out, and I was hoping there might be some interesting tidbits now that we can see the whole thing. Not really, though. Mainly, it paints a drearily predictable picture of bureaucratic FUBARism, with various groups in various places either misunderstanding each other; not responding to each other; or assuming that stuff was getting done that, in fact, wasn't getting done. Anyone who reads Dilbert regularly gets the picture.

But the soporific paragraph below actually tells us something pretty important. In fact, it's the heart of the whole issue:

In April 2012, the Senior Technical Advisor to the Acting Commissioner, Tax Exempt and Government Entities Division, along with a team of EO function Headquarters office employees, reviewed many of the potential political cases and determined that there appeared to be some confusion by Determinations Unit specialists and applicants on what activities are allowed by I.R.C. § 501(c)(4) organizations. We believe this could be due to the lack of specific guidance on how to determine the “primary activity” of an I.R.C. § 501(c)(4) organization. Treasury Regulations state that I.R.C. § 501(c)(4) organizations should have social welfare as their “primary activity”; however, the regulations do not define how to measure whether social welfare is an organization’s “primary activity.”

Did you get that? IRS regs say that 501(c)4 groups can't primarily be engaged in political activity. Instead, their "primary activity" has to be social welfare. To call this vague would be a disservice to mirages and chimeras everywhere. How the hell are actual human beings sitting in cubicles in Cincinnati supposed to decide whether a group is planning to spend more than 50 percent of its time engaged in something other than social welfare? For that matter, how are they supposed to decide what "social welfare" is in the first place?

The IG report recognizes this, and Recommendation 8 in its audit is that this really needs to get resolved at a policy level, not a line level:

Recommend to IRS Chief Counsel and the Department of the Treasury that guidance on how to measure the “primary activity” of I.R.C. § 501(c)(4) social welfare organizations be included for consideration in the Department of the Treasury Priority Guidance Plan.

Good luck with that! Frankly, I think it's a mug's game. There's really no way to define this in any kind of rigorous way, and even if you could, how would you apply it to organizations that are merely applying for 501(c)4 status? In the wake of Citizens United, this whole section of the Internal Revenue Code is a definitional witch's brew that admits of no sensible resolution. If we had a functioning Congress, I'd suggest that they should address this from the ground up and provide a set of guidelines that makes sense in the modern world. But I don't suppose that's very likely, is it?

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Could Federal Seizure Be the Beginning of the End for Bitcoin?

| Tue May. 14, 2013 5:03 PM PDT

In what may be the first move toward a federal shutdown of the wildly popular online currency known as Bitcoin, the Department of Homeland Security today issued an order that has restricted the transfer of funds in and out of Mt. Gox, the Bitcoin exchange that handles some 60 percent of the transactions.

A creation of bank-fearing techies, Bitcoins are now worth more than $1 billion, and consumer interest has been skyrocketing. For more background, read our Bitcoin explainer.

Elizabeth Warren to Obama Administration: Take the Banks to Court, Already!

| Tue May. 14, 2013 4:34 PM PDT

On Tuesday, fierce consumer advocate and needler of banks Sen. Elizabeth Warren (D-Mass.) called out Wall Street regulators for their habit of giving tepid punishments to misbehaving banks, and asked the agencies to justify their policy of settling with the wrongdoers out of court.

Warren sent a letter to the Justice Department, as well as to the Securities and Exchange Commission and the Federal Reserve, asking them for evidence on how a settlement that doesn't require a bank to admit guilt would be better policy than taking the bad apple to trial. If regulators at least show that they are willing to play tough, she argued, it will help deter bad behavior and allow regulators to negotiate bigger fines in the event of a later settlement.

BREAKING: United States No Longer Going Bankrupt

| Tue May. 14, 2013 3:05 PM PDT

The CBO has released its latest budget projections, and guess what? The medium-term national debt has stabilized. Hooray!

You might still not be happy about this. Maybe you won't be happy until debt drops back down to Carter-era levels. That's fine. It's a free country, after all. But for the next decade, at least, the trendlines are no longer shooting upward, and if the economy continues to improve the trendlines will look even better. So no more screaming about how the country is going bankrupt, OK?

Word of the Month for May: BOLO

| Tue May. 14, 2013 2:43 PM PDT

Here's my favorite part of the IRS scandal yet. According to the Inspector General's report, the Cincinnati office of the IRS developed an acronym for "Be On the Look Out." Yep, they turned it into BOLO. Apparently the spreadsheet which listed words and phrases that might indicate political activity became known as the "BOLO Listing." I expect this to take Twitter by storm any second now.

UPDATE: Pardon my ignorance. Turns out this is a standard police term. A "BOLO alert" is issued when police are trying to find someone suspected of a crime. I guess the IRS appropriated the term, they didn't invent it.