It'll be interesting to see if Walmart's 2nd store and rising visibility in Baltimore fuel the kind of backlash that occurred in Chicago, where anti-Walmart sentiment has held the chain to only one store even though it wants to build a lot more. Led by unions, anti-Walmart activists pushed Chicago aldermen to pass a "living wage" bill a few years ago applying to Walmart and other big-box stores. Mayor Richard Daley vetoed it, saying the city needed the jobs Walmart would bring. But the store's Chicago presence is still limited.

So far sentiment against a Walmart in Baltimore's Remington section may be confined to neighbors worried about traffic and crime. But Baltimore would seem ripe for anti-Walmart animus focused on the chain's employee pay and destruction of mom & pop stores. Baltimore is home to the nation's first living wage law applying to city contractors. Three years ago Gov. Martin O'Malley signed a living wage law for state contractors. A few years ago the General Assembly passed a law (over the veto of Gov. Robert L. Ehrlich Jr.) forcing Walmart and only Walmart to offer a certain level of health benefits. The courts struck it down. The Remington Walmart will certainly be a challenge to established, smaller stores.

Even so, the retail unions don't seem to have the kind of pull in Baltimore City Council that they do in Chicago. In any event, benefits of the low prices Walmart brings to Baltimore will outweigh the negatives of low wages. Some liberals bash Walmart as the enemy of lower- and middle-income folks when in fact its low prices deliver huge benefits to working families.

Posted by Jay Hancock at 6:07 AM | Permalink | Comments (28)
        

Great YouTube appeal for Google broadband by Baltimore schools chief Andres Alonso. This is how you get these campaigns going. If you want to show the world's premier Web company you can use the Web, use the Web to ask for its business. Even better, get a top, nationally recognized leader to make a Web appeal. And do it now, in Internet time, not two weeks from now. In the video, Alonso speaks of the broadband access available to students in surrounding counties that Baltimore kids don't have.

Thus the digital divide is severe in Baltimore City, and through no choice of their own city schools, hardworking students, face an external barrier that sets them at a disadvantage to their more-wealthy peers. To my friends at Google: You have the opportunity to change this by investing in Baltimore City. You will have leveled the playing field, opened the door to opportunity and offered Baltimore City students access to the educational resources that will further support our work to close the achievement gap. We look forward to partnering with you.

Thanks to @bferguson for the pointer.

Posted by Jay Hancock at 2:01 PM | Permalink | Comments (2)
Categories: Bmorefiber
        

Here's an update to a recent post on what BGE's prices will be for the 12 months beginning June 1. First, a correction. When Public Service Commission chair Doug Nazarian posted BGE's upcoming summer price in the blog's comments section, I thought he was including the transmission charge. Turns out he was including only the price for generating the electricity. So the number I gave for the BGE's upcoming June - September standard price, 11.333 cents per kilowatt hour, is a little too low. Including transmission, says BGE's Mark Case, it'll be 11.78 cents, which is about 5 bucks more a month for a typical user.

BGE's total summer price, adding up all the charges of delivery, transmission and generation, will still be about 5 or 6 percent less than in the summer of 2009. (It'll go up over what it is now because summer prices are almost always higher.)

But here's the real news: According to numbers supplied by Case, BGE's total standard electricity price (including delivery) starting Oct. 1 could be about 10 percent lower than what it is during the current "non-summer" period of October 2009 through May 2010. BGE hasn't bought all its electricity yet for the next non-summer period, but they've locked up 75 percent and have projections for the rest. And Case thinks prices will keep dropping into 2011. "If you look toward the longer term, I think we're headed toward 9-cent power," he said, referring to generation and transmission costs only.

What that means to shoppers: Take Dominion Retail's offer of 10.37 cents for generation and transmission to avoid BGE's upcoming summertime generation/transmission price of 11.78 cents, as noted above. (That switch will save more than $10 a month this summer.) Then start shopping again next fall and look for even lower prices. If you want to switch before the Dominion deal expires at the end of the year, not a problem. Unlike other companies offering alternatives to BGE's standard product, Dominion lets you terminate early without penalty.

Posted by Jay Hancock at 9:06 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

The city has responded to a January column that chronicled the sufferings of businesses in Crossroads Business Park. (Formerly Industrial Park.) They have lots of problems -- crime and vandalism, especially -- but the place was also littered with trash and discarded furniture. Baltimore Development Corp.'s Jay Brodie sends me pictures of the cleaned-up spots, which are hugely improved. Especially Bernard Drive where it goes under I-95.

But Brodie is mistaken in his assertion that city public works folks also took care of a boat dumped months ago in Crossroads. The boat has become the symbol of Crossroads' travails. Months ago Marc Van Camp, chief financial officer for Bindagraphics, sent the city an email, titled "Ahoy there!" with a picture of the boat and a request that it be removed. Nothing happened. After my column appeared, Brodie said: "We'll get rid of the boat."

Yesterday, shortly after Brodie told me it was gone, Van Camp pointed his camera out an office window and took a picture of the boat, surrounded by snow but still very much there. Brodie says signals were crossed and that he was told about the removal of an earlier boat at Crossroads. Strange to say, there was another boat. Two others, actually. But they were a long time ago. Says Van Camp: "Shiver me timbers."

The cleanup is great. But Crossroads' bigger problem is crime. It has been hit repeatedly by burglars destroying air conditioning compressors for their copper and aluminum. The businesses' customers don't have to look at garbage when they drive through, at least for now. On the other hand, Maryland Thermoform owner Scott MacDonald tells me his insurance company just canceled his policy because of enormous vandalism claims.

Posted by Jay Hancock at 8:22 AM | Permalink | Comments (0)
        

Thanks to Mind Over Machines' Tom Loveland's pointer to this Hartford Courant story on one of the many towns lining up for a shot at Google's gigabit broadband.

WEST HARTFORD — - Just like someone buying a lottery ticket, the town is taking a chance on winning a fortune — an opportunity to partner with Google and gain a fiber-optic network with Internet speed and capacity up to 100 times faster than most people use today.

"We're applying and we think we have a leg up," West Hartford Finance Director Chris Johnson said Wednesday. "We have a glass [fiber-optic] network that the town bought a few years ago. We're connecting all town buildings to it, so we already have a good chunk of the network, which can be extended."

Google set March 26 as the filing deadline. It's too early to tell how many communities will apply.

But news stories published after the Google announcement indicate there are likely to be dozens. So far, the list of probable applicants includes Washington, D.C.; Pittsburgh; Seattle; Duluth, Minn.; Madison, Wis.; Greensboro, N.C; Columbia, Mo.; and Rochester, N.Y.

Posted by Jay Hancock at 11:27 AM | Permalink | Comments (0)
Categories: Technology & Innovation
        

Today's column is about the grassroots campaign, quickly spreading to political and commercial institutions, to persuade Google to build one of its superfast broadband networks in Baltimore. In talking about this yesterday with MP3Car's Rob Wray, Roundhouse Technologies' David Troy and others, the hazy topic of how much Google would spend came up.

Google says it wants to build gigabit networks in a small number of test markets in the United States. "We plan to offer service to at least 50,000 and potentially up to 500,000 people." Using the estimated figure that Verizon is spending $10,000 per household to connect its FiOS broadband to each subscriber, some are estimating that Google could spend $1 billion in each of several cities. ($10,000 x 100,000 households.) This sounds like way too much to me.

A billion dollars is a ton of money for a project that may generate only nominal revenue, even for a moneybags like Google. Note that Google is saying it will "offer" service to 50,000 to 500,000 people. That's not the same as connecting that many households. Verizon may spend $10,000 per household that it signs up for FiOS, but it spends far less -- ~$2,000 -- for each home "passed," that is, each house to which it can offer service. Not every house with broadband fiber at the street curb subscribes.

Also, Google says it will offer the service to from 50,000 to 500,000 "people." There are about 2.5 people per household in this country. So if Google means "people" literally, we're talking 20,000 to 200,000 households for all the test markets. Of course the company will hook up businesses, too, for which the person-per-connection ratio would be even higher. At some businesses you can get 1,000 "people" with essentially one connection.

This is why I used a conservative, "tens of millions" figure in the column for a potential pricetag for Google Baltimore broadband. (Which is still lots of dough.) For more on the bmorefiber movement, see the Web site, the BaltTech blog, the Daily Record blog and the Twitter stuff. Oh and the Facebook page.

Posted by Jay Hancock at 7:42 AM | Permalink | Comments (4)
Categories: Technology & Innovation
        

More amateur slapstick from Maryland's snakebit attempt to license and build slots parlors. Not only can't Canadian developer Michael Moldenhauer come up with $19.5 million in earnest money for a Baltimore slots license; he can't/won't pay the vendors who worked on the project. As Scott Calvert reports in today's Sun, folks who worked for Moldenhauer's Baltimore City Entertainment Group have claimed $771,000 of a $3 million deposit Moldenhauer made for work they performed but said they weren't paid for.

Those dunning Moldenhauer include PR queen Sandy Hillman and strategic consultant Michael Cryor, who dropped out of the project last month, telling the Sun's Annie Linskey: "A contentious appeal is not the relationship I want to have with my city and state." Especially if he's not getting paid!

Add to this delays for the Arundel Mills slots operation, the pratfalls of the De Francis family, the bankruptcy of the parent of Laurel Park and Pimilco racetracks and you have set up a casting call for Abott & Costello.

Posted by Jay Hancock at 9:12 AM | Permalink | Comments (17)
Categories: Slots
        

I blogged this yesterday as an update but wanted to repeat because it's news. While neither Baltimore Gas & Electric nor the Public Service Commission have officially published BGE's standard electric price starting June 1, Public Service Commission Chairman Doug Nazarian posted it in the blog's comments section yesterday. The default BGE price for generation and transmission this summer will be 11.333 cents per kilowatt hour, Nazarian said. Add about 2.5 cents for BGE to deliver the power to your house and it's 13.833 cents.

That's about a 6 percent decrease from the 14.745-cent delivered price of electricity during the summer of 2009. (The price for just generation and transmission fell from 12.245 cents to 11.333 cents.) Not great but a little relief. It'll save a typical household $5 or $10 a month, depending on how hot it gets and how much you run your air conditioner.

You can save a little more than this by switching to one of several third-party offers of about 10.3 cents for generation and transmission. Add in the 2.5-cent delivery charge and you get an inclusive price of 12.8 cents per kilowatt hour. That's another penny cheaper than the price Nazarian disclosed yesterday and would save an additional $10 or $15 a month over the standard BGE price.

I recommend the offer from Dominion Retail of 10.37 cents for generation and transmission. It's a little more than other offers, and it goes only until the end of the year. But it give you instant savings and the cost-free option of switching to another deal if energy prices continue to drop. Other vendors charge you an arm and a leg for early termination.

Posted by Jay Hancock at 8:46 AM | Permalink | Comments (17)
Categories: BGE/electricity
        

Life is a journey, not a destination. The people who figure out that working for and anticipating something are often more pleasurable than achieving the goal have begun to figure out the secret of success. Here's an elegant little study that demonstrates this and seems to prove what we all intuitively knew was true.

Social scientists looking at about 1,500 Dutch people found that the act of planning a vacation significantly boosted happiness for about two months before the vacation. But afterward, "generally, there is no difference between vacationers’ and non-vacationers’ post-trip happiness," the researchers reported.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (3)
        

Liz Kay has a piece in the resurrected Baltimore Sun Sunday business section on surge of competitive electricity offers in Maryland for residential customers. Basically Baltimore Gas & Electric bought a lot of long-term residential juice a couple years ago when energy prices were sky high. That allows competitors, including BGE Home, also owned by BGE parent Constellation Energy, to offer lower prices now that the wholesale market has come down.Gov. O'Malley's statement that he'll drop his attempt to re-regulate Maryland electricity (whatever that meant) has also probably contributed to competitive vendors testing the Maryland market.

But unfortunately consumers are operating with incomplete information. You're supposed to compare offers from Washington Gas Energy Services, BGE Home, Dominion Retail etc. with BGE's 'price to compare,' which has been 11.97 cents per kilowatt hour for electricity generation and long-distance transmission for the last year. Competitive suppliers are waving that price around and boasting they can beat it. But it's out of date. First of all, 11.97 cents is a blended, annual rate, including BGE's high prices from the summer of 2009. (Summer prices are almost always higher than non-summer prices.) Last time I checked summer ended in September. BGE's standard residential price since Oct. 1 has been 11.527 cents.

UPDATE. Pulled from comments. Public Service Commission Chairman Doug Nazarian says BGE's summer rate is set: "11.333 cents/kWh (down from 12.245 cents for the same period in 2009)." That's still a penny higher than the competitive offers on the table. Of course, the non-summer price (beginning Oct. 1) will probably be lower than that, but we don't know how much lower. So your savings will be less. Residential summer prices for 2010 for Pepco and other Maryland utilities are also in Nazarian's note.

But here's the bigger problem. The 11.527-cent price expires at the end of May. What shoppers really need to know is what BGE's standard price will be beginning June 1 for the next year. How can you decide whether to switch to a competitive supplier if you don't know what price they have to beat? BGE's post-June 1 standard price will almost certainly be lower than last summer's 12.692 cents, and BGE's post-Oct. 1 price will probably be lower than what it is now. BGE can't give me the exact prices because it hasn't finished buying electricity for those periods. That's fair. But so far I've been unsuccessful in getting information on the juice that it has bought. That would help us figure out if standard prices are likely to drop low enough to make switching not worth the trouble.

If shopping persists, somebody will have to fix this. Policymakers are asking consumers to make a basic economic decision about electricity prices. Good economic decisions require good information. But at the moment there is flawed information on one hand (the out-of-date 'price to compare') and an information vacuum on BGE's future standard price.

Posted by Jay Hancock at 8:43 AM | Permalink | Comments (14)
Categories: BGE/electricity
        

This is cool. The folks at LinkedIn tracked employment changes in their database to produce a flow chart of where employees from doomed Wall Street investment houses went after the collapse. Unfortunately nobody puts "unemployed" on their LinkedIn card. Would have been interesting and sad to see how many folks have that as their destination.

Posted by Jay Hancock at 5:10 PM | Permalink | Comments (8)
Categories: The Great Recession
        

Boccaccio was one of the premier restaurants in an area that needs more premier restaurants and reinvestment. My visits to Little Italy in recent years have made me think the area and its restaurants have been sitting on their laurels. They greatly benefited from the revitalization of the Inner Harbor -- even though some restaurant operators were opposed at the time. They thought nearby competition would drain business. In fact, the crowds at the Inner Harbor revitalized Little Italy.

As people on Elizabeth Large's blog have suggested, Peter Angelos may be buying the Boccaccio building for sentimental reasons. He was a frequent patron. Whatever his motivation, it's good to see he's interested. He may open a restaurant, although his restaurant record is uneven. But no matter what he does, he brings new investment to an area that could use it.

Posted by Jay Hancock at 9:19 AM | Permalink | Comments (1)
Categories: Real estate
        

Markets are responding to yesterday's surprise move by the Federal Reserve to raise the "discount rate." The dollar is gaining strength; stocks are down overseas; journalists are saying this is the beginning of the end of the cheap money that the Fed has been mainlining since late 2008.

I would put a contrarian spin on it. Hardly anybody uses the Fed's discount window, which is intended to provide emergency capital to member banks. The decision to raise the discount borrowing rate to 0.75 percent means absolutely nothing in the mechanics of finance. The Fed's main instrument is the overnight rate, which banks charge each other for overnight lending. Banks who need extra capital almost always get it from each other, not the discount window. And the Fed shows few signs of raising the overnight rate.

My take is this: The Fed is always under pressure to show it is vigilant against inflation. These days it is also under pressure to show it is vigilant against asset bubbles. So, as the recovery slowly proceeds, it feels like it must demonstrate that the watchdog is awake. On the other hand, the Fed's Bernanke knows that the economy is still in terrible shape and that tightening credit prematurely helped prolong the Great Depression.

To thread this needle, a Fed policymaker would do exactly what Bernanke just did: Make a purely symbolic move with the discount window to show that he's paying attention. But leave the policies that matter alone. Rather than signaling imminent tightening, I bet Bernanke is using the discount-rate increase to buy time to leave other monetary policy alone. Markets should calm down.

Posted by Jay Hancock at 9:01 AM | Permalink | Comments (3)
Categories: The Great Recession
        

The county-by-county health study reported by Meredith Cohn and Larry Carson includes many variables derived from data collected by the Centers for Disease Control. These include premature death, binge drinking, obesity, low birth weight etc. The conclusion, as they note, is no surprise. On average, people who live in well-off suburbs are healthier than folks in rural counties or Baltimore city.

Howard County is healthiest, Montgomery County No. 2, Frederick County No. 3. Least healthy is Baltimore, followed by Somerset and Dorchester counties. Click here for an interactive map and ranking of Maryland counties by health.

But the results would have been very similar if the surveyors had looked at one variable only: smoking. Somerset County is No. 1 in smoking -- 33 percent of adults vs. 11 percent in Montgomery County. In Baltimore 26 percent of the adults smoke. Other top smoking counties are Cecil, Caroline, Dorchester and Allegheny. Not only is smoking deadly. It's also strongly associated with other unhealthy behavior. Click here for an interactive map and ranking of Maryland jurisdictions by smoking.

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (0)
Categories: Health Care
        

As Michelle Deal-Zimmerman reports, Baltimore-Washington Marshall airport won the prize for best in its size according to customer surveys by Airports Council International.

We don't know how quantitatively credible the survey was; Michelle says it was based on 275,000 questionnaires. The results are very puffy. They're like the swim-team awards ceremony, where almost every kid gets a medal. Like the U.S. News & World Report college rankings, there are numerous categories, boosting the number of "winners." And the criteria that the council says are important for being a good airport are not the ones I would have chosen. I don't care about the "business lounges" or "good shopping facilities" or "helpfulness of the airport staff."

Nevertheless, BWI Marshall is an awesome airport. I can't help being impressed every time I use it or pick somebody up there. Why? It's not because of the "cleanliness of the washrooms," although that's fine. BWI rocks because it is the most hassle-free flying station I have ever experienced. There are tons of domestic flights. It's incredibly easy get in and get out. The parking facilities are top notch. Love the lights and signs that tell you where the spaces are. I don't even mind paying the new, higher parking fees. If it means avoiding a LaGuardia- or O'Hare-like experience, they're worth it. If the airport had more international flights that would be great, but it's not its fault that it doesn't.

Posted by Jay Hancock at 8:24 AM | Permalink | Comments (7)
        

Today's column praises Ed Hale for putting up his own money to help save 1st Mariner Bank. Yes, I know that by buying trust preferreds Hale and other directors are hedging their bets. That way, if next month's offering of common stock craters, they'll hold securities that would probably do better in a 1st Mariner seizure than if they bought common stock right away. Presumably they'll wait to convert the TRUPs to common after or simultaneous to the public offering.

Even so, this is real money they're putting up -- the only recent example I know of of an executive giving back his own money to prop up his company. And the extinguishment of the TRUPs bought by Hale and the other directors has a real effect on the balance sheet of 1st Mariner's holding company and the capital ratios that regulators scrutinize.

Posted by Jay Hancock at 9:32 AM | Permalink | Comments (3)
        

Conservatives are starting to realize the obvious: The United States will never reduce government spending enough to balance the budget. Given this, financial catastrophe is inevitable if we do nothing. Given this, some kind of tax increases are also inevitable -- not now, but when the economy has sufficiently recovered to bear the burden.

George Mason University's Tyler Cowen makes the argument for a value added tax -- basically a national sales tax. He cautions:" I am by no means convinced this argument is correct." But his argument is a darn good one. And in Sunday's New York Times Greg Mankiw, head of the Council of Economic Advisers when George W. Bush was president, says: "Ms. Pelosi’s suggestion of a VAT may be the best of a bunch of bad alternatives."

Cowen's argument includes these points:

-- The United States is on an unsustainable fiscal path.
-- I would prefer spending cuts, but voters seem too irrational to be willing to cut spending.
-- We could, for now, wait and postpone fiscal reform. That means encountering a sudden collapse some number of years from now.
-- We'll get a better deal, and make wiser decisions, if we do it today rather than in a panic. Plus another financial crisis would prove deadly to both the budget and to the quality of economic thinking.

Posted by Jay Hancock at 8:35 AM | Permalink | Comments (6)
Categories: Taxes
        

General Growth Properties has rejected Simon Property Group's unfriendly takeover offer. But there is a good chance Simon will get the bulk of General Growth's properties, including Harborplace, Towson Town Center, Columbia Mall and White Marsh Mall. Simon has the cash, the desire and the encouragement of General Growth's unsecured creditors.

Of course General Growth executives want to stay in charge. But the company has been in bankruptcy court since last year, which loosens the hold of incumbent managers. In the long run, creditors tend to steer the boat in bankruptcy court, and Simon has the wherewithal to please them. Perhaps alone among major mall operators it has husbanded cash in the recession to buy competitors cheaply. Simon would pay off unsecured creditors in full, and even General Growth shareholders would get money, which is unusual.

Stifel Nicolaus analyst David Fick tells the Sun he foresees a bidding war between Simon and Brookfield Asset Management, which according to the New York Times owns some of General Growth's debt. He also sees potential antitrust problems. But Simon has been plotting this deal for months and seems to want General Growth badly. Antitrust concerns could be addressed by selling off some of the malls.

Posted by Jay Hancock at 8:07 AM | Permalink | Comments (3)
Categories: Real estate
        

There has been a growing sentiment among the gnomes -- I'm talking since about 2002 -- that a moderate amount of inflation is a good thing. Krugman, who Saturday said, "yes, let's have more inflation," gives the idea its latest voice. Inflation gives companies leeway to raise prices and make nominal profits, the thinking goes. Because inflation is associated with higher interest rates, it gives central bankers room to cut short-term rates to stimulate the economy when it slumps. Inflation of 4 percent would give the economy a decent cushion against the dangers of deflation -- broadly, persistently declining consumer prices.

And, although few will come right out and say this, inflation would be a politically painless way for debt-drunk governments to pay off their creditors. The United States, for example, could use inflated, depreciated dollars to pay off old debts without raising taxes.

But here is the question that nobody has answered, as far as I can see: How do you create consumer price inflation without fueling another bubble? Thanks to overcapacity of productive and consumable stuff, thanks to fierce global price competition, inflation is dead. When the Federal Reserve and other central banks create liquidity these days, it doesn't go into consumer prices. It fuels bubbles in Internet stocks, houses and other assets.

Posted by Jay Hancock at 9:03 AM | Permalink | Comments (6)
Categories: Inflation/Deflation
        

Here's WBAL's Bill Vanko and me discussing how the snowstorm was a new challenge to an already difficult economy.

Posted by Jay Hancock at 2:25 PM | Permalink | Comments (0)
        

I was asking city and state officials about budget effects of the snowstorm. Naturally costs are huge and unbudgeted. But there's also a modest hit to tax collections as a result of closed stores, employees not working etc.

And here's one you didn't think of: Sparse traffic means fewer fines for traffic violations. In an email, Baltimore budget chief Andrew Kleine says, "Parking is one obvious place where we're losing money, along with transportation-related fines (red lights, speed cameras, etc.)."

Posted by Jay Hancock at 8:53 AM | Permalink | Comments (3)
Categories: Taxes
        

Hilzoy, aka Hilary Bok, is the Associate Professor of Philosophy, Luce Professor in Bioethics and Moral and Political Theory, at the Johns Hopkins University. So she knows her John Locke! And her situational ethics. And the feeling of seeing somebody take a parking space she spent three hours digging out.

Her thoughts, pulled from comments. Says Hilzoy:

Locke's actual argument doesn't cover lawn chairs. For one thing, he's talking about claiming things in the state of nature, in which there is no system of private property. Here, of course, there is. For another, his argument turns on the inferred purposes of God in creating us. These do not obviously extend to lawn chairs.

That said: I spent about three hours digging my car out on Monday. Tuesday I had to go to an appointment. I got back, and discovered someone in the spot I dug out. I drove round the block, but couldn't bring myself to park in someone else's spot. On the other hand, where else was I going to put my car? Luckily, when I drove past "my" (?) spot again, someone flagged me down -- she had parked there, but was just digging out her Mom, and volunteered to move her car. My faith in human nature was restored. ;)

I truly don't know what I would have done otherwise. In my neighborhood, there is *nowhere* to park other than spaces people have dug out.

Posted by Jay Hancock at 10:22 AM | Permalink | Comments (4)
        

Gov. Martin O'Malley says the state has spent $40 million on snow removal so far. The tab will surely go much higher, and that has implications for Maryland's difficult budget situation if the Feds don't come through with aid. But the snow has another budget effect. It'll depress tax revenue. Closed stores mean that sales tax doesn't get collected. Furloughed workers pay less income tax. Frozen commerce depresses corporate income and corporate income taxes.

David Roose, director of the Bureau of Revenue Estimates, figures it could be perhaps $10 million.

"We have in the past seen big hits on the sales tax from snowstorms, and we think that's what happened in December--January collections (December sales) were well below expectations after that storm right before Christmas," Roose says via email. "This one will presumably have a big impact also, though this is one of the smallest months for sales tax collections."

Snowstorms also tend to boost Web sales at the expense of local sales. That's another hit to taxes because Amazon and some other Web companies don't collect state sales taxes.

Posted by Jay Hancock at 9:04 AM | Permalink | Comments (5)
Categories: Taxes
        

Alex Tabarrok at Marginal Revolution picks up on the meme of John Locke and the shoveled-out parking spaces.

He points us to this piece, which I hadn't seen, Snow Jobs by Fred McChesney at the Library of Economics & Liberty:

In the end, then, the Chicago snow fracas [over protecting shoveled-out spaces] is a re-run of so many other disputes involving property. Some find it unfair to exclude others from using a resource. But the ability to exclude provides the incentives to create more resources, reducing scarcity over time. Popular writers focus on perceived unfairness. But economists observing the controversy will see the wealth-increasing invisible hand at work again—this time hoisting a snow shovel.

Posted by Jay Hancock at 3:23 PM | Permalink | Comments (2)
        

Those who say no point to Facebook's dominant status in social networking and the tendency for dominant networks to stay that way. Did Microsoft's search functions hurt Google? Did Barnes & Noble's online sales hurt Amazon? Will H&R Block's big ad campaign for its tax software hurt TurboTax?

Avis tries harder, but on the Net, when network effects rule, there's not as much upside in being No. 2. There is plenty of money to be made in "the long tail" of product distribution on the Web, but not so much in networks, where the dynamics of increasing rather than diminishing returns often leave only crumbs for the runners-up.

But, you say, Google already has a network, perhaps the awesomest ever. It's a good point. But Buzz still figures to be a long-shot to take much social networking juice from Facebook. And just to make sure, PC World's David Coursey has a great idea for Facebook:

To protect itself from Google, Facebook content must never appear in any form as part of any Google product. Not ever, and Facebook should make the announcement today. (You can see our visual tour of Google Buzz here).

Here's why: If Google Buzz is ever connected to Facebook, it will be the beginning of the end for today's #1 social network.

For Buzz to succeed, it needs Facebook content. By denying it, Facebook can help secure its future and help wall off Google.

in re, Goog me-too-ism, tweeters point out G search and email, both amazing, were started in established categories. and Wave is own thing.

Posted by Jay Hancock at 10:49 AM | Permalink | Comments (7)
Categories: Technology & Innovation
        

There seems to be an appetite for this.

HuffPost: Hey Moron! Get that Crap off my Street!

Washington Post: Whose Job is This? Snow Etiquette Lost on DC

Baltimore Sun: Mayor says she won't enforce ban on parking space savers

DCist: On-Street Parking Becomes Valuable Real Estate.

Baltimore Sun: Don't put chairs in your parking space

Boston Globe: South Boston residents won't yield on spots they dug out

Fredericksburg.com: Stealing cleared parking spots is not the neighborly thing to do

Facebook groups:

NO PARKING IN MY SPOT IF I DUG IT OUT OF THE SNOW IN PHILLY, 154 members

Lawn Chairs In A Parking Spot Will Result In You Being Told To Suck It, 9 members

We Respect the Parking Chair, 8 members

Just because you spent hours digging your car out from under the snowdrifts - and then drove away - does NOT mean you "own" the parking spot! And leaving a plastic chair there? Really???, 148 members

Posted by Jay Hancock at 9:26 AM | Permalink | Comments (13)
        

This is how political earthquakes start. The Freedom to Park movement has moved to Facebook. Next, major public figures need to be pressed for their opinions. Then, op-ed pieces and letters to the editor. Then a referendum on the 2010 ballot.

Then a presidential candidate in 2012. The Republicans ought be backing the property rights of hardworking Americans who through their rugged individualism create a parking space where once existed only piles of frozen water. The Freedom to Park movement, on the other hand, can look to Democrats, who ought to have compassion for the person in need of a space even if s/he didn't shovel one out.

The movement's Facebook title: "Just because you spent hours digging your car out from under the snowdrifts - and then drove away - does NOT mean you "own" the parking spot! And leaving a plastic chair there? Really???"

Doesn't fit in a headline, guys. Go with Freedom to Park. Only 18 members now. But just wait. Meanwhile, the debate rages in Pittsburgh. 

UPDATE: Check out The Sun's photo gallery of illegal street furniture claim stakes made by hardworking Baltimoreans. Like the one that says "MOM AND BABY PARKING, PLEASE."  

Posted by Jay Hancock at 8:59 AM | Permalink | Comments (62)
        

So far we can file this only in the Department of Irony, not Hypocrisy. But stand by. The Wall Street Journal is reporting that the Mortgage Bankers Association, the country's premier mortgage trade group, is selling its headquarters for $41.3 million -- way less than the $79 million it paid for the building three years ago. That's also far less than its mortgage of $75 million, says the Journal, via Reuters.

Will this turn into a short sale? Will the MBA walk away from the difference that it owes a lending group headed by PNC Financial? Will it do what it has urged homeowners not to do? That would be an act of headline hypocrisy for the books. As the Journal's James R. Hagerty reports, MBA executive John Courson has urged families with underwater mortgages to keep making the payments.

"What about the mess they will send to their family and their kids and their friends?" Courson asked the Journal last year.

Now, says Hagerty: "On Saturday, Mr. Courson declined in an interview to say whether the MBA would pay off the full loan amount. 'We're not going to discuss the financing,' he said."

Posted by Jay Hancock at 11:48 AM | Permalink | Comments (0)
Categories: Real estate
        

Digging a parking place out of maybe 400 cubic feet of snow exerts a classic claim of property rights as described by John Locke. When somebody takes the trouble to create something useful out of a wilderness or a desert, Locke said, he obtains a natural right to use it for his own benefit to the exclusion of others.

I'm with Locke here. If you can't assume you'll be able to use the parking space you dug out, your incentive to create it would plunge. The city and neighborhoods would lose the labor of thousands of car owners who help recreate civilization each time the heavens dump white stuff all over the place. True, during the time the proprietor claims exclusive rights to the parking space by protecting it with a lawn chair, it's not doing much good for anybody else. But it does help society a little by furnishing "positive externalities," in the jargon. Cleared curbs make it easier to cross streets. Mail deliverers can get around more easily.

And in the long run, space-by-space citizen snow removal accomplishes what would be difficult for the city to do. Municipal plows can't clear curbs with all the cars parked there -- or even one or two per block. So by giving Baltimoreans temporary, exclusive use of the spaces they dig out -- allowing cars to move and commerce to resume -- civic good is accomplished. Honor those lawn chairs!!

Posted by Jay Hancock at 8:47 AM | Permalink | Comments (44)
        

Ryan Avent, for some reason, confuses current account deficits with fiscal deficits. This is not a mistake one wants to make blogging for a magazine called The Economist. Brad Delong, whom I admire, catches the mistake. But the response is notably un-DeLongian. Gentle, even.

"A Rare Event: The Sharp and Thoughtful Ryan Avent Gets One Wrong..." is the heading of Brad's post. If the Washington Post had made the same error, or any newspaper, all the bandwidth in Berkeley could not have handled the DeLongian scorn!

Posted by Jay Hancock at 5:26 PM | Permalink | Comments (1)
Categories: Media
        

Today's column is about 91 folks who were laid off from Erickson Retirement last year and promised severance payments, vacation-time payments and other money that they never got. The payments got hung up in the bankruptcy process, which is normal. What's not right is that Erickson and its creditors have neglected to press the bankruptcy judge for permission to make the severance payments. More than three months have gone by since the bankruptcy filing, and nobody will even tell these folks what's happening.

They're in tough shape -- without a job and then without even the compensation they were supposed to get for being laid off. They didn't seek publicity. I found their names in court papers and called them up. Most were hesitant about talking on the record. And most of them still have great things to say about Erickson. But, to be blunt, they were screwed by the bankruptcy process. Pressure needs to be put on the company and the other people involved in the bankruptcy to pay them the money.

UPDATE: Thanks to William Brattain for telling his story and allowing himself to be photographed. He doesn't have much to gain by going public; if he files for bankruptcy anything he eventually gets from Erickson will probably go to his creditors. But he said he wanted to talk about it for the sake of others in the same boat.

Posted by Jay Hancock at 7:49 AM | Permalink | Comments (33)
Categories: Erickson Bankruptcy
        

Think of The sells a Glad-style baggie with fake mold on the plastic so it looks like your sandwich inside is moldy. It's getting attention in the blogosphere as an anti-sandwich-theft device. However, I suspect workplace lunch larceny is exaggerated. People wouldn't steal the sustenance of their colleagues, would they?

Posted by Jay Hancock at 8:56 AM | Permalink | Comments (13)
        

Holy cow. As Noam Levey reports in today's Baltimore Sun, federal bean counters estimate that health care comprised 17.3 percent of the economy last year. That's the highest portion ever. Also, last year health spending jumped higher in one year as a portion of the economy than ever before in the half-century statisticians have been keeping track. You can see the trend in metro Baltimore, where health-care has accounted for maybe half of all the jobs created in the last five years.

The Woodlawn-based Centers for Medicare and Medicaid services report that government-financed health care could surpass privately-paid health care this year for the first time. That's 6 years sooner than had previously been estimated. The recession is a driving factor in these trends. The non-health-care portion of the economy was stagnant last year, which would give health care a bigger portion even if it grew at a normal rate. But the recession caused many to lose their private health insurance and go on Medicaid, the health program for low-income folks.

It's a total mess. It can't continue. Congress needs to do something.

Posted by Jay Hancock at 8:41 AM | Permalink | Comments (7)
Categories: Health Care
        

The Public Service Commission is out with an offer to settle complaints against Verizon's bad service record for its traditional, landline phone service. The company was taking too long to fix failed service, missing appointments, the usual stuff. As most telecom is increasingly unregulated, the PSC would explicitly tie Verizon's ability to raise prices for local landline service to the company's service record. Verizon can accept the offer or counteroffer.

Some excerpts from the offer:

As we explained at length in the April 6 Order, Verizon’s service quality performance has fallen far below our regulatory standards, and neither competitive market forces nor an open service quality investigation has improved Verizon’s performance.We rejected the Prior Proposal in part because it left unbridged the structural gap between service quality and rates. A new AFOR [regulatory structure] consistent with our Order will address this fundamental concern.

Among other things, the AFOR we contemplate creates a new set of service quality metrics, holds Verizon directly accountable to its customers (by requiring it to pay substantial customer credits) if it fails to satisfy those metrics, precludes Verizon from raising prices on residential basic local telephone service until it demonstrates service quality improvements, and provides customers with a year (calendar year 2009) free of any increase in residential basic local service rates.

In order to understand and monitor Verizon’s progress, however, we will, as set forth below, require Verizon to submit an annual operational plan (“Operational Plan”) detailing how it will improve its service quality, and monthly performance reports detailing its performance against the Operational Plan and the metrics in the new AFOR. We will hold periodic hearings as well, and we reserve the right to take any and all further steps necessary to ensure that service quality improves, or to respond if it does not.

A core issue at the heart of the Proposal is Verizon’s service quality – or, more precisely, Verizon’s long-running failure to restore customers’ lost service in a timely fashion. We detailed the history of Verizon’s service quality problems and our efforts to investigate and address them in the April 6 Order,9 and we will not repeat that discussion here.

As we said in the April 6 Order, the Prior Proposal “le[ft] Verizon free to increase prices freely without adequate service quality protections – and thus le[ft] customers in a worse position than they sit now.” Moreover, the Prior Proposal would have granted Verizon the equivalent of three years’ worth of price increases on residential basic local service up front before “freezing” them, again without any regard to service quality performance.

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (3)
Categories: Regulation
        

Maybe I'm trying too hard, but I detect tea-party anger in the opposition to Gov. O'Malley's plan to rescue the empty unemployment-insurance pool with federal stimulus money. That's the topic of today's column.

Opposition to a federal bailout of Maryland's unemployment fund is channeling the anti-government energy that gets aimed at less humdrum targets elsewhere. Gov. Martin O'Malley's plan to accept $127 million in stimulus dollars to fix the fund has assumed a symbolic importance greater than its substance.

It's hard to believe the protest is mainly about money.

Read the whole thing here.

Posted by Jay Hancock at 10:30 AM | Permalink | Comments (2)
Categories: Politics
        

Baltimore Gas & Electric has posted a natural-gas price for February of 65.85 cents per therm -- a nice dip from January's 72.59 cents. Unlike BGE's electricity price, which stays the same for months at a time, the BGE gas price floats from month to month based on the company's costs in the wholesale market.

Wholesale gas prices have been trending up lately, but obviously not enough to put serious upward pressure on what BGE customers are paying. BGE locked up a lot of its supply for this winter in the middle of 2009, when prices were really low, so that helps. In any event we're way below the costs of recent winters. Last February the gas commodity price was 89.71 cents; in February 2008 it was 93.60.

Those of us who said "no" to this winter's fixed-price deal from Washington Gas Energy Services of 73 cents per therm should have no reason to regret it. Looks like BGE's standard price will stay below that at least until the cold months are over. Now WGES is offering a 1-year gas deal for 85 cents and a two-year deal for 88 cents. If the economy picks up and energy demand rises (or if another Hurricane Katrina disrupts Gulf gas commerce), those prices may look good. But the other factor is the new supplies of shale gas that have come on line in recent years. Those could keep the wholesale price somewhat contained even with an increase in demand.

Posted by Jay Hancock at 8:47 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

As Paul West reports, President Obama's budget contains numerous goodies for Maryland, a development that is hardly surprising and that will continue to shield the state from the worst part of the economic slump.

Among other things, federal workers, of which there are 133,000 who work in Maryland and many more who live in the state and work in D.C., would get a 1.4 percent raise. The president would spend $800 million on Maryland construction, including $219 for a power station at the National Security Agency and $120 million for Aberdeen Proving Ground.

Raised from the archives: The Jan. 1 column about how growing federal spending was the economic story of the decade for Maryland. Read the whole thing here.

For 2008, the year for which the most recent figures are available, total federal spending and obligations in Maryland came to $78 billion. That includes everything from Social Security checks to Transportation Safety Administration salaries to payments to computer contractors.

It's up 60 percent from the level in 2001, almost three times the inflation rate. Maryland's whole economy is less than $300 billion in size. So you can see, more than a decade after then-House Speaker Casper R. Taylor Jr. said, "We no longer have the luxury of relying on the public sector employment engine," Maryland relies on government spending as much as ever.

Posted by Jay Hancock at 8:21 AM | Permalink | Comments (7)
        

Is it crass for restaurants and stores to solicit business by promising that part of the proceeds will be donated to Haiti? (Or any other cause?) Here's a discussion on Don Rockwell's DC dining site, which contains good views from both sides. Rockwell starts it off by saying:

"Restaurants and bars that donate an insignificant portion of their revenue to Haitian relief organizations are both trite AND self-serving. Here's an actual example, if you can believe it: One restaurant group has the chutzpah to say that they're going to "donate $1 to the Red Cross every time certain appetizers and entrees are ordered between Jan. 19 and Feb. 19." Guess who gets to take the tax deduction on that dollar?"

My view: A donation to a good cause is a donation to a good cause, as long as it gets to the right nonprofit. But there is something bathetic about tying charity for catastrophe victims to an order of nachos. Or certain other products.  

Posted by Jay Hancock at 7:05 AM | Permalink | Comments (1)
Categories: Nonprofits
        

Two profs at Dartmouth compared snowfall as reported by ski resorts with that in government weather records. The resorts had seemingly found an astonishing new meteorological phenomenon: Regular, unusually large deposits of fresh powder on weekends, just when most skiers are inclined to head to the slopes and just when resort prices are higher! Of course, the weekend-powder pattern didn't show up in the weather-service reports.

Here's what's coolest: The iPhone's ski-report app, which lets skiers share real-time conditions, is forcing the resorts to be more honest. Exaggeration fell at the resorts with iPhone reception. The wisdom of crowds, indeed. HT Marginal Revolution.

The paper, by Jonathan Zinman and Eric Zitzewitz, can be read here. Here is the abstract:

Casual empiricism suggests that deceptive advertising is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report 23 percent more snowfall on weekends; there is no such weekend effect in government precipitation data. Resorts that plausibly reap greater benefits from exaggerating do it more. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, we observe a shock to the information environment: a new iPhone application feature makes it easier for skiers to comment on resort ski conditions in real time. Exaggeration falls sharply, especially at resorts where iPhones can get reception.

Posted by Jay Hancock at 6:40 AM | Permalink | Comments (2)
Categories: Marketing
        

Interesting story in the Albany Times-Union over the weekend. Two sisters in their 30s, heirs to the Seagram liquor fortune, are alleged to have lost tens of millions of dollars through NXIVM and leader Keith Raniere.

Court documents claim that Keith Raniere "is the absolute leader of a cult called NXIVM" who "exercised complete control" over Sara and Clare Bronfman. The sisters are heiresses to the Seagram Company liquor fortune and have been bankrolling Raniere's investments and his substantial legal fees, court documents say.

For several years, the sisters have been trainers and followers of Raniere's philosophies on ethical life and paths to self improvement. Raniere's organization, NXIVM (pronounced like the patented drug "NEXIUM"), also known as Executive Success Programs, has given many people, including celebrities, instruction in personal improvement though courses and seminars.

Raniere's NXIVM biography says he is a Rensselaer Polytechic Institute graduate who made "The Guinness Book of World Records" for his high IQ. He once ran Consumers Byline, a buying club.

Accusations in the Jan. 11 filing in California are "salacious" and "malicious" and filled with false statements, said Robert D. Crockett, a lawyer representing the Bronfman sisters. He said NXIVM is not a cult. He acknowledged the heavy losses the Bronfmans have incurred from investments in commodities and real estate in Los Angeles and said the Bronfman sisters are believers in Raniere's ideas.

Posted by Jay Hancock at 12:54 PM | Permalink | Comments (1)
        

Big pharma concern AstraZeneca announced more major job cuts and restructuring this morning, but it could be good news for the company's MedImmune division, based in Gaithersburg. While the company plans to shrink as a whole, including in research & development, it sounds like AstraZeneca is bringing additional jobs to MedImmune. Overall the company anticipates a net decrease of 1,800 jobs. But the press release also refers to "further expansion of our Biologics activities." That's MedImmune. From the press release:

These initiatives are designed to achieve material efficiency savings in R&D, which will partially mitigate the increase in R&D investment that would be required as projects in the current pipeline progress to the more resource intensive, later phases of development. By 2014, annual savings of $1 billion should be realised, of which one-half is estimated to be cost savings and the other half cost avoidance. Based on preliminary estimates, approximately 3,500 positions may be affected by this programme. After taking account of positions that will be retained whilst being relocated to another site, the investment in new skills and capabilities and further expansion of our Biologics activities, the net reduction may be around 1,800 positions.

Posted by Jay Hancock at 9:17 AM | Permalink | Comments (1)
Categories: Health Care
        

The latest survey of Maryland business activity by the Baltimore office of the Federal Reserve Bank of Richmond continues to show optimistic hiring plans.

Survey respondents anticipate a strong increase in labor demand despite the current weakness in the labor market and uneven business activity. Looking at respondents’ expectations six months from now, the number of employees and hours worked indexes remained strong in January after a sharp increase in December. Close to a majority of respondents indicated that they will be expanding their workforce over the next six months.

Expectations of economic activity six months from now remained strong in January. The expectations index for general business activity at respondent’s companies eased to 55 from 60 last month. Expectations for sales, customer traffic, and investment also moderated slightly but remained at very high levels. Expectations of economic activity for the state and national economy also remained firm registering 47 and 46, respectively.

Posted by Jay Hancock at 7:18 AM | Permalink | Comments (0)