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The big news at this year’s Australian Open has been the weather. For four days temperatures hovered above 100 degrees Fahrenheit, peaking at 111 before breaking for the second week of play. These extreme conditions hobbled many competitors in both the ladies’ and gentlemen’s draws. The players in the Oz Open are all finely conditioned athletes, but the top players are also the most fit. Grand Slam champions win many matches with physicality rather than stroke production .

Many spectators are not aware that whatever the ambient temperature, it feels much warmer on the court. The Plexi-Cushion surface is an acrylic paint on top of a ground rubber cushion layer laid over an asphalt base. A thermometer hung off the net post would register 12-15 degrees warmer than the ambient temperature, while the surface of the court would have been 140-150 degrees F. during this period. Caroline Wozniaki claimed that she put a plastic water bottle on the court surface and it melted. Many players came to the court with multiple pairs of shoes because their feet blistered while frying on the court. Ice vests were placed over the competitors at changeovers. Even a couple of the ball kids passed out.

Using Ice to Battle the Heat in Oz c. Firstpost Australia

Under WTA rules the women (who play best 2 of 3 set matches) can get a 10 minute break after the second set in the heat. Men playing best of 5 sets (and getting equal pay) get no such accommodation. Players who have competitive 5 set encounters will be on court for around four hours. Expecting players to compete at such a high level for so long under ordinary summer conditions is tough enough. To do so in this level of heat borders on the ridiculous in that it ceases to be about the tennis and becomes strictly a test of endurance.

Early on the second day of the heat wave, Australian Open tournament officials invoked their “Extreme Heat Policy”. First introduced in 1998 at the insistence of the players, the EHP comes into play when a combination of temperature and heat stress makes play dangerous. They calculate the Wet Bulb Globe Temperature which is a combination of ambient temperature, wind speed, humidity and the intensity of solar radiation.  A combination of the WBGT with the actual air temperature is used to decide whether the EHP is activated. On Tuesday, the 109 degree F. ambient temperature was high enough, but the WBGT was not, presumably because the humidity level was only 44%. On Wednesday, with temperatures at 111 degrees and humidity on the rise, play was stopped for several hours on the outside courts.

“Grinding” an opponent by extending rallies and refusing to miss is a time tested low risk strategy for well conditioned competitors to play their matches. Many top players who are also extremely fit welcome the heat. Jim Courier, known as a physically intimidating presence while on the tour and a resident of Florida, won the Oz Open twice. In 1993, the tournament discussed closing the roof of the arena to lower the court surface temperature. At the time the world #1 ranked player, Courier declared his refusal to play the final if that were done. The court stayed hot and he won. Today’s classic grinder is David Ferrer, the number 3 seed who today advanced to the quarterfinals.

Fitness can vary dependent upon training, and adaptations can improve resistance, but some players (as all people) are more susceptible to heat than others. Heat of 110+ degrees F. will eventually cause dehydration  in all athletes. The symptoms include headaches, dizziness and cramping, which can set in even after the match ends. Part of the code of tennis etiquette is that default is anathema. If you are still on your feet, always believe that you can come back…and win! But when dehydration sets in, your brain becomes fuzzy. That can be dangerous, because if one continues to play, heat stroke or worse can follow.

Although they dread it, most competitors are prepared to suffer to win. They recognize that fitness is a weapon honorably employed. The television audience was treated to the gladiatorial spectacle of athletes struggling to stay coherent in the heat, even as the live audience was surely discomforted almost as much as the players. Diogenes believes that Grand Slam matches are tough enough and that play should be stopped at temperatures above 100 degrees F. If it’s sufficiently hot that a sensible individual wouldn’t volunteer to venture out anywhere other than to a beach or pool, then it’s just too hot to play!

What would happen if heat delays the competition early in the tournament? At the Oz Open, play could continue around the clock inside the two enclosed arenas (a third stadium will be finished by next year). The players are used to extended delays and playing at odd hours around the globe. Most of the television audience watches the matches on tape delays because of the time difference from Australia to the rest of the world. The Grand Slams are all grueling competitions. They should be more about tennis skills than physical endurance.

We Still Need Health Care Reform

The Obamacare fiasco is an almost perfect illustration of the difference in approach to government by the left and the right. Liberal pundits routinely depict conservatives as uncaring, but the fact is that both sides fundamentally agree on the need to provide all Americans with affordable health insurance. Indeed, government insurance exchanges and universal mandates originate from Republicans, but the ways to achieve goals are vastly different from right to left.

Conservatives would prefer to provide a catastrophic health care safety net for all while also lowering total medical expenses for all Americans. This would be accomplished by providing a regulatory framework and allowing the states and market forces to achieve their objectives. Examples would be to allow insurance to be sold across state lines with limited mandates as to coverage requirements and making health care insurance portable and permanent.

Progressives fundamentally believe the federal government should mandate coverage requirements for all that include routine health care, and that the program should employ a wealth transfer mechanism whereby care for the poor and chronically ill are subsidized by wealthy and healthy Americans. This vision is similar to the Social Security system, which originated as a safety net program and not as insurance. Like Obamacare, Social Security was supposed to be self funding via mandatory payroll taxes, and benefits would be available to all regardless of payments into the system. (Can we imagine a new introduction of Social Security in an era of distrust of government?)

The Affordable Care Act Needs to Be Replaced

Obamacare is on life support, and it is almost certain to fail. Once the fiasco of the healthcare.gov website is fixed, there will be a continuing cascade of problems to hit those newly enrolled in the system. Until now, anyone who appeared at an emergency room for catastrophic care was treated regardless of their ability to pay. Obamacare expands to the 45 million Americans previously without health insurance the right to seek care for routine health issues from the current provider network, while at the same time reimbursing those providers at a lesser rate than private insurance plans and individuals. Adding 15% more patients to provider workloads logically requires an expansion of service providers, but this has not been done. Waiting times for appointments will be rapidly extended for public patients, even as private patients secure shorter access. Many providers will begin to restrict or eventually refuse to accept public patients, much as has previously occurred with Medicaid patients.

As newly insured patients demand more routine and preventive care from the system, costs will escalate and require higher premiums from those not subsidized by government. Total costs for all health care will expand even as the program fails to be self funding. Americans now understand that the essence of the Affordable Care Act is that millions of people are being conscripted to buy overpriced policies they would never choose for themselves in order to spend on the poor and those who are medically uninsurable due to pre-existing conditions. In essence, this will be a wealth transfer mechanism from the middle class to the poor. It is not insurance in the classic sense. Obamacare does not only cover unforeseen events. It is meant to cover most, or all health care expenses. Since one can enter the system with small penalties at any time, why not avoid entry into the system until one has a need for services? In “real” insurance systems, one buys coverage for say fire insurance to cover the small probability of a catastrophic event. Under Obamacare, one buys fire insurance after the fire has devastated your home.

The Affordable Care Act provides people with access to health insurance rather than access to medical care. The health insurance and pharmaceutical companies are entirely complicit in this disaster. Seeing only riches in millions of new customers required by law to buy inflated coverage or pay a (voluntary/optional) tax, they ghost wrote long sections of the ACA, which all congressional Democrats voted for “so they could find out what’s in it”. Diogenes, for one, would like to see the insurance mandate commuted to catastrophic (requiring surgery or a hospital stay) medical care. Routine care could be “uninsured” for all. Making these routine expenses discretionary might well allow medical care providers to compete on service/quality and price, as do almost all services providers.

Now Could Be A Great Time for Reform Because of What We Have Learned

In our hyper partisan political climate, it is difficult to imagine thatAmerica’s health care problems can be remedied by legislative action. But the failure of the ACA provides just such an opportunity. After warning for years about the impending disaster of the ACA, conservatives finally have earned some credibility concerning how to restructure a health care safety net. Liberals who would like to salvage that goal without ending their political careers could finally reach across the aisle to find real solutions.

Obamacare will in time be seen as the high water mark of progressive government. The administration’s many foreign policy failures have meant little to most Americans who do not pay attention to world affairs. Obamacare is different in that it hits many directly in their wallets. We are now approaching another crossroads in the health care debate. Liberals will say that the solution is a single payor system run by government. Conservatives point out that embarking on a single-payer system would not expand access—though that slogan would be used—but would deny and limit care in order to control runaway spending.  After the disaster that was the roll out of healthcare.gov, who in their right mind would want to give our central planners even more power?

45 million previously uninsured Americans need to have access to health care that does not bankrupt them or the rest of us. As a society, we can afford to do this, and the moral imperative is that we must do so.  The federal government, having assumed the job of subsidizing these people, should do so honestly and openly. Instead of the 2000+ page Rube Goldberg system under the Affordable Care Act, we need a simpler framework that allows a multitude of alternative solutions at the state and local level. Expanding the role of a ridiculously inept government would be madness.

As in other sports, rule and equipment changes have periodically modified how tennis is played. Fifty years ago, Diogenes first used a 65 square inch wooden racquet with strings made from sheep’s guts and used it to strike white balls. The professional tours adopted yellow balls in 1972 because they provided more contrast and were easier to see on color televisions. Over the next several years, yellow balls were adopted by most recreational players. In the late 1970s, the game migrated to graphite racquets with about 100 square inch heads, allowing players to hit much harder with greater spin and consistency.

By the 1980s, nylon strings replaced natural gut strings for most recreational players. They were less expensive and not as sensitive to moisture degradation as gut. Co-polyester strings were widely adopted by professionals in the early 2000s, although nylon is still used by most recreational players. Polyester strings are very stiff and have very little elasticity.  This is what makes them popular with big hitters. Because of this lack of elasticity, the ball doesn’t trampoline off the stringbed, so a player can take a big swing at the ball without it sailing long.  The stiff string also digs into the ball generating more spin as the strings brush across the ball. Most recreational players find that this stiffness requires taking bigger swings at the ball or the resulting shot lands short in the court, which is a weak shot. Not only do they have to work harder, but the string’s stiffness results in more shock transfer to the player which can result in shoulder, wrist or elbow injuries.

The search for increased control by using more spin has been a constant quest by string and racquet companies for years. Tennis researcher John Yandell analyzed slow-motion video and determined that current world #1 Rafael Nadal hits his average forehand with 3200 rotations per minute (rpm) and sometimes reaches a mind-boggling 4900 rpm. By comparison, Roger Federer’s forehand averages 2700. And Pete Sampras and Andre Agassi, two of the America’s greatest players ever, hit their forehands at a mere 1800 rpm, imparting slightly more than half as much spin as Nadal. When we talk about spin, mostly we are referring to topspin. Although underspin (slice) is a solid occasional play, chipping the ball is as often as not  a defensive stroke. This is so because of the trajectories of balls struck with topspin versus one struck without spin, as shown in the chart below.

A flat tennis ball has a lower margin of error to both clear the net and land inside the baseline. A ball hit with more topspin will travel higher over the net and bounce higher,  making it more difficult for the opponent to hit. (This is so because most strokes should be hit at a height between the player’s knees and below the chest in order to create a low-to-high loop. When the ball bounces above the shoulder, a player can choose to hit a weaker, higher shot, or retreat in the court in order to create the proper contact height.) In the past, the combination of smaller head size, lower powered racquets and lower technology strings prevented players from being able to easily access spin.

Dr. Rod Cross, co-author of The Physics and Technology of Tennis, demonstrated through lab research that as a ball is about to leave the strings, the main strings snap back and give the ball a sideways kick, thereby increasing the rate at which the ball spins as it comes off the strings. In other words, about 80% of the spin, and control of a ball is determined by the mains, or vertical strings in the racquet. A looser pattern imparts more spin, but lower control. In the past, players chose between tight string patterns such as 18 mains X 20 crosses in order to maximize control, or looser string patterns such as 16 mains X 18 crosses to increase power. These trade-offs could be somewhat mitigated by other variables such as string tension (looser for power; tighter for more control), string type, frame size, beam width and racquet weight. As a DIY racquet stringer, Diogenes has considered what enhancements could boost effectiveness.  The holy grail would be to retain control while increasing spin or power. Other stringers had suggested to Diogenes that one could achieve that end by either skipping the first and last crosses, or skipping every fourth cross. The results from these experiments were not good.

In early 2013, Wilson put out the Steam 99S, a racquet that had a 16 X 16 string pattern. Intended for intermediate players, the results were too powerful for Diogenes. Prince jumped on the idea, and about a month ago introduced several racquets with fewer cross strings. Two weeks ago, Wilson introduced the 6.1 95S, with an 18 X 16 string pattern geared towards more advanced players. “For every 100 r.p.m.’s of topspin you can put on the ball, you can reduce the flight distance by 6 to 12 inches,”  Bob Thurman, Wilson VP for R&D said. The goal, is to reduce the coefficient of friction between the strings and allow them to move more, which creates more force when they snap back. In other words, to create more spin without a change in one’s swing. Wilson has attempted to solve this problem for control players by creating a racquet with fewer cross strings than vertical main strings.

A few days ago, for the first time, Diogenes purchased a racquet without first demoing it. The new 95S has the potential to radically improve his mediocre strokes without making changes in how he strikes the ball. Many iterations of stringing may be required to achieve that result, but that is part of the fun of a winter indoor season. Testing and adjusting to new equipment is a routine practice from the pro tour down to lesser players. Sometimes it works, and sometimes not, but the pleasure is in the process of finding things out. Ain’t life just grand?

Last Wednesday, hours before a default, Congress finally agreed to raise the debt ceiling and fund the government…until January 15th, when we can repeat the drama. Of course, the bipartisan group set to negotiate a longer budget might come to broad agreement by December, but that doesn’t seem very likely.

Viewers of Spielberg’s Lincoln were were witness to the agonizingly slow process of achieving consensus for the permanent abolition of slavery in all states even at the late date of 1865. The film presents Lincoln using any and all means to cajole, bully and horse trade his way towards passage of the 13th Amendment.Lincoln was concerned that court challenges after the war might endanger the freedom of slaves freed by 1863′s Emancipation Proclamation, which he had issued as an Executive Order during the war. He wanted to have their liberty confirmed and slavery permanently abolished by writing it into the constitution. Contrast that imagery with the methods used to pass the Affordable Care Act (ACA) in 2009.

ObamaCare was rammed through by crook. Americans were promised they could keep their health insurance if they wanted to. We were told it would bend the rising costs of health care down, and that the Universal Coverage Mandate was not a tax. Before the House vote, then Speaker Nancy Pelosi said of the 2000+ page bill ”…we have to pass the bill so that you can find out what’s in it…”.  In the end, unlike the 13th Amendment or any other major entitlement program in American history, the ACA was passed along entirely partisan party lines, with no Republican votes.

So why are the Republicans still essentially crazed about the ACA? After all, the Supreme Court has confirmed the legality of ObamaCare’s Universal Mandate (as a tax), and the 2012 elections confirmed that new leadership would not repeal the law. Republicans have obstinately kept up defund Obamacare efforts because they believe government’s overhaul of the health care sector creates an expensive and unfunded new entitlement for all Americans at a point in time that any private person or entity would be looking to more prudently manage expenses. This fiscal house of cards must ultimately collapse,  and the resulting pain to Americans will make the ”great recession” seem like the good old days. As seen in the chart below, absent entitlement reform, these spending programs will crowd out all discretionary program spending by around 2030.

Actual & Projected Federal Spending & Revenue as % of GDP

 There hasn’t been a serious federal budget and tax overhaul since 1986. Discretionary spending in 2012 accounted for about 36% of the federal budget, but without reforms, these will be completely overtaken by entitlements in the near future unless tax revenues are significantly increased above historical norms. Compassionate citizens understand that all Americans should have some form of major medical health care coverage that does not bankrupt them, but ObamaCare is a terrible and costly way to achieve this end when there are many better alternatives. (see 7 Practical Solutions on Health Care)

Government spending is typically inefficient, but a look at the shutdown of the government and the rollout of Obamacare are especially illuminating. 800,000 government employees were furloughed for 16 days, inconveniencing taxpayers, and then were awarded back pay (over $6 billion including benefits) for no work done.

Healthcare.gov cost taxpayers over $500 million and was planned for years.Ill conceived and poorly executed; it simply doesn’t work. And clueless HHS Secretary Kathleen Sebelius is still on the government payroll, and has the full support of the president. In an age when the U.S is home to the world’s largest, most successful Internet companies, how is it possible that our government can’t even manage to build a functional website without blowing through hundreds of millions of dollars? What would be the news media and public judgment be if Apple, Google or any other company promised a revolutionary new product for nearly four years, and then botched the introduction so completely? Why do the people who can’t build a working website also deserve the power to reorganize one-sixth of the U.S. economy?

The executive branch of government is so named because it is supposed to “run” the government. Even if Congress cannot agree, all Americans have a President who is charged to make it all “work”. When we look at our “great” presidents, they came from alternate sides of the aisles during our history in mostly a two party system. Among the traits they shared were meeting problems with a willingness to incorporate at least some of the other side of the aisle into their solutions.

The “system” of checks and balances is actually working in Washington today. A serious imbalance in the direction of government has unleashed as torrent of vitriol by the Republican right because the Democratic left has pushed too far, too fast without incorporating contrary views and opposing solutions. It is precisely this “winner take all, losers shut up” attitude that is making our country more difficult to govern. Elections do matter—almost as much as leadership. We want our President to act like a leader, not just a politician who gained a tactical advantage this week. The man who won the Nobel Peace Prize should now do something BIG… like being bigger than everyone else, make peace and do the people’s business.

For starters, form a new bi-partisan commission to tackle budget and tax reform. Unlike the Simpson Bowles Commission of 2010, this commission should be constituted with a mandate to present their conclusions for a simple up or down vote, without amendments, from both houses of congress and a commitment from the President to sign such legislation. Second, another bi-partisan commission should be formed to restructure government. Sen. Tom Coburn has documented $365 billion annually in waste, duplication and silliness in federal programs, but can’t enact reforms because of lobbying activities. If a bi-partisan commission were to make cutting and restructuring proposals that were guaranteed a straight up or down vote in both houses (like the periodic Base Realignment & Closure Commissions ), it could give Congress the political cover it needs to do the right thing. These commissions would be exercises in finding common ground, and could incrementally lead to better government as well as progress on immigration reform and other issues that urgently require action.

Americans require compromise solutions to end the gridlock and allow for greater economic growth that will lift all boats, including government coffers. The country rightly counts on its chief executive to bridge the gaps, make the compromises, and smooth the way to passage. We need less drama, less cost and more effectiveness. Trying to lead with constant partisan bickering is no leadership at all. It’s no way to run a country.

America has been both a constitutional republic and a representative democracy for over 225 years. During that period, we have continually redefined what those terms meant and what people they applied to. The constitution has been amended 27 times. 15 of these changes have expanded and enumerated the rights of citizens, while 7 have codified states’ rights and electoral procedures.

Our Constitution declares that the states shall determine how we vote in congressional districts, and how we tally those district votes in presidential elections. Indeed, re-drawing the map on how a congressional district is composed within a state is mandated every 10 years. So calling for election reform is not particularly unusual. Reform is particularly needed now, because our polarized congressional representatives appear incapable of reaching necessary compromises to enact important fiscal reforms needed to remove economic threats to our country and its future.

How Did we Get Here?

Gerrymandering by state legislatures over the last 15 years has contributed mightily to our dysfunctional congress.”Packing” has been used to push minorities, racial or political, into compressed districts to diminish their influence into only one district. The “cracking” technique draws voting districts so as to disperse minority votes across several districts in attempts to deny or dilute minority representation. The following chart illustrates how many Members of Congress represent “safe” districts. If incumbents can’t realistically be voted out, challenges to them decrease, and our voting rights are diminished. 

 

 

The chart also shows the success of state Republican legislatures in maximizing their party’s results in the US House. Of the 345 congressional districts that lean strongly to either party, one would expect that the party split would mirror the underlying population. A Gallup Poll of likely voters in 2012 found that 47% of Americans self identify as Democrats and 42% self identify as Republicans. Yet the “safe” Republican districts account for 42% of the House, and Republicans are able to contest another 90 seats, an additional 20% of the house. The magic of drawing partisan districts explains how Republicans could have lost the popular vote for the House in 2012 by more than a million votes nationally, yet kept control of the House by 33 seats.

The methodology for drawing congressional voting districts is easily subverted by the party in power doing the drawing, and in 1964 the Supreme Court ruled that congressional districts must be contiguous in order to be constitutional. This sounds reasonable, until one looks at the contortions employed to produce some very strange looking districts. Take for example the Illinois 4th. It was intended to pack Hispanics, and is also known as the “earmuff district”, and is shown below. Unfortunately, there are many more such examples of oddly drawn districts.

Illinois 4th Congressional District


Solutions

Delegating specific responsibilities to the states results in the development of various responses to the same problem. The states are all over the spectrum in terms of the primary systems that they employ. 20 states allow each party to determine whether primary voters must already be registered as a party member (a closed primary). In 13 states, voters are able to declare themselves a party member and vote in the primary on primary day (a semi-open primary), and in 17 states voters are able to vote without declaring as a party member (an open primary).

Washington and California use a top two primary, which allows unaffiliated voters to vote for any candidate in a primary. The top two vote-getters from any party proceed to a final election. This system, which of course infuriates party officials, is meant to produce general election candidates who have the broadest appeal within the district. Proponents of the top two system think closed single party primaries exacerbate the radicalization that often occurs at the primary stage, when candidates must cater to their party’s “base” rather than the political center.

The top two primary is a positive electoral change that could easily be adopted across the country. The problem would still be that the congressional districts themselves are being gerrymandered in clear attempts to rob some of us our our democratic rights. Elections for the US Senate take place across every state instead of only house districts, and they are usually more competitive than House elections. If statewide elections are both more competitive and are not subject to gerrymandering, what changes in primary election procedures could capture these benefits in House elections?

The most intriguing idea is the Single Transferable Vote (STV).  Under STV, a voter has a single vote that is initially allocated to his or her most preferred candidate. As the count proceeds on election night and candidates are either elected or eliminated, that vote is transferred to other candidates according to the voter’s stated preferences. The exact method of reapportioning votes can vary, but the STV attempts to avoid “wasted” votes as compared to a simple one person, one vote system, because presumably it is better to count a voter’s second choice than to give that voter no voice. This system can be used for either one person or multiple person elections.

Maine and Nebraska use proportional voting for presidential elections, which are statewide and not subject to tampering by gerrymandering. Rather than winner take all for electors, each political party can claim some portion of the votes. But then when they vote for the House, these states revert to voting in gerrymandered districts. Some argue that the states should give redistricting authority to non-partisan groups. This never seems to resolve the issues, and is made even more problematic whenever a state loses a House district through relative population changes, because as in the game of  musical chairs, there is always a clear loser in such cases.

In the past few weeks local news in NY was dominated by the mayoral primaries, which were won resoundingly by Democrat Bill DeBlasio and by Republican Joe Lhota. If this had been an open primary, Bill Thompson, a Democrat, would be facing DeBlasio in the general election. Thompson received more than five times as many votes as Lhota. In fact, three other Democrats, Christine Quinn, John Liu and even the disgraced Anthony Weiner (a/k/a Carlos Danger) received more votes than Lhota. In November, voters will chose between the most progressive Democrat and a Republican, and a moderate, centrist candidate with perhaps the broadest appeal to all voters will not be on the ballot. The latest poll shows DeBlasio at 62% among eligible voters, more than 40% ahead of Lhota.

The preferred change would be to incorporate widespread use of the top two primary system in house elections. Ideally voters would vote in statewide elections, but this is impracticable in larger states that have many representatives such as California (55) and Texas (38). No matter how voting districts are drawn, more moderate voices should be capable of being elected if much of the country was less tied to a traditional two party primary system that is not working well for America.

Many Americans were painfully aware of the dispute between Time Warner Cable and CBS which was finally resolved this week. The network attempted to sharply increase fees paid to it by TWC to transmit CBS’s programming, demanding $2/head. Time Warner knew that it would not to able to pass along this cost to subscribers and allowed the network to go black for subscribers.

TWC had many reasons to fight. It argued that the networks have traditionally been advertising based revenue models who provided their programming free to local over-the-air broadcast stations. The cable companies have for years paid small fees for bundles of the networks’ channels, but CBS wanted a substantial increase.

The biggest reason TWC was resisting the new fee demands is that many of its subscribers now consider cutting the cord on cable television monthly fees altogether. Paid television peaked at 86% of households a few years ago, but are now shedding subscribers, and as the following chart shows, nearly 20% of US households will no longer pay for television by 2017.

 

For anyone who has been tethered to cable or other paid TV most or all of their life, cutting the cord is liberating. Alternative technology allows one to time or place shift consumption of any media. Many consumers today believe that paying for media in any place should entitle them to consume/watch or listen to that media anywhere and anytime so long as it is not done so in the context of a commercial enterprise.

How then does one go about actually cutting the cord without becoming a hippy or an “intellectual” who proudly doesn’t even own a TV? Aereo.com is an intriguingly simple solution to local, public and broadcast network programming with a DVR function at a cost of $8/month. With Netflix, a la cart purchase options from I-Tunes and the Google Play store, and free online distribution, many techies believe most content should be advertising supported and freely available. To such viewers, any amount paid for cable is too much in an age of Miracast bluetooth wireless display from an Android phone to a big screen TV.

Alternatives to cable TV can even be an improvement to the viewing experience. For example, coverage of the US Open Tennis Tournament has been confusingly split between CBS, ESPN, ESPN2 and The Tennis Channel. Parts of the coverage are overlapping, with The Tennis Channel and ESPN showing different matches at the same time. Web simulcasts on ESPN3 are available when ESPN cable channels are showing live matches. Earlier in the two week long event, internet viewers had a choice of as many as six different matches, which were also available for replay shortly after the matches finished. The weekend coverage, which migrated to CBS, could not be viewed on Time Warner Cable a few days ago, but five courts had internet webcasts available from USOpen.org. In this day of 4G wireless, the high definition signal was stunningly sharp.

Cable and other paid TV growth has slowed in the US as alternatives have appeared. The experience can be better on the internet, as is the case with the US Open, but the changes have been driven as much by economics as by technology. Paid television costs have risen by an average of 6% over the last 17 years, far outpacing inflation according to NPD. The average US cable bill was $86 in 2011. NPD projects that monthly cost to increase to $123/month in 2015, and to reach $200/month in 2020. It’s no wonder many Americans would rather pay around $25 or less/month to consume their media without cable TV. By using a combination of Aereo, Netflix, and Itunes, they are easily able to do so while consuming media when and where they choose.

Sports viewing constitutes a significant portion of TV consumption. The ESPN franchise, owned by Disney, has become the single most valuable media property in the world, with average cost to cable households of over $5/month of their cable bill, whereas the average cable channel costs consumers $0.26/month. ESPN recently announced an 11 year deal starting in 2015 with the USTA for total coverage rights to the US Open. Every match on all 17 courts will be available on the web, and it is likely that by then ESPN’s revenue model will include an internet only option, as the technology continues evolving to present more content at lower prices and in more convenient ways. The cord cutters among us can’t wait.

 

The US government has a corporate tax problem of epic proportions. On a statutory basis, America has the highest corporate tax rate on income in the developed world. Theoretically, 35% of the worldwide income of US based corporations is to be paid as federal income tax, after deducting for foreign taxes, other credits and preferences such as depreciation. State and local taxes can bring the theoretical tax rate to over 40% of income.

In a recent report commissioned by Senators Carl Levin (D-Mich.) and Tom Coburn (R.-Okla.), the GAO looked at taxes paid by profitable U.S. corporations with at least $10 million in assets. Even when foreign, state and local taxes were taken into account, the companies paid only 16.9% of their worldwide income in taxes in 2010. So how is it possible that almost 25% of all corporate profits are not being paid as taxes?

Unlike other countries that tax only corporate profits made within its borders, the US taxes worldwide corporate income but then allows companies to postpone the payment of income tax on profits that remain abroad. As a result, many large companies simply do not repatriate most of their profits or shift income to subsidiary entities abroad. The American worldwide income tax regime perversely encourages corporations not only not to bring their profits home. It also discourages them from investing those profits in the US, where the profits on future investments will be subject to continuing high tax rates. If those companies build new factories in foreign low tax countries, future profits will not be subject to taxes.

The solution to the lack of corporate profit collections is to revise the  US tax code to have a lower rate on regional profits. But nothing is easy in Congress today. Bipartisan efforts at tax reform are dead in the water for this term, with Senator Majority Leader Harry Reid stating that any reform he permits to come to the senate floor for a vote must include higher revenues in exchange for lower rates; a non starter for Republicans.

So what is the US government supposed to do to end a Mexican standoff with corporations that refuse to gratuitously pay taxes they can easily avoid? Diogenes believes that Congress should enact a one time only tax holiday in 2013 on corporate profits held abroad that are paid out as dividends in excess of 105% of those paid out in 2012. In other words, pay no corporate taxes on marginal increases in dividends paid out.

The profits repatriation dividend would:

  • stimulate the economy
  • increase the total amount of taxes paid
  • discourage corporations from moving more investments abroad

There is about $1.9 trillion held abroad as unrepatriated profits. The overwhelming bulk of those funds are held abroad to delay/defer the payment of US taxes rather than for operational needs. Let’s assume that $1.5 trillion would be returned to the US and paid out as dividends under the one time tax “holiday” being proposed. About 80% of American stocks are held individually by Americans or through mutual funds and retirement plans.  Not all taxpayers are in the highest brackets paying 39.6% federal taxes, but they own stocks so presumably most are above median income levels, so let’s assume a 25% federal rate. This one time event would/could generate $1.5 T  X  80% Individuals  X 25 % tax rate = $300 billion. And $1.2 trillion would be left over for Americans to save or spend. It’s a “free” stimulus!

We give most small businesses the option to file as LLCs or Subchapter S Corporations. These structures give liability limitation benefits to owners similar to those of larger corporations and still allow for a single level of taxation. Under the Diogenene proposal, we turn that policy inside out by offering the benefits of one level of taxation to companies that have already limited their liability.

In an ideal world, no tax regime should use one time gimmicks, but our tax code is dysfunctional. It does not raise taxes and it encourages our companies not to invest here. This proposal is not ideal, but it is better than other workable options right now. Perfection is the enemy of the good.

Equal pay for equal work has long been considered an international human right. 2013 marks the 50th anniversary of the US Equal Pay Act which states that “employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.” Despite this law and others since, women in the American workforce earn only 77% on average of the earnings of men, so that it is rare to discover a situation where women are paid more than men for equal work.

Tennis professional tour events utilize a best of three sets format for both men and women for all tournaments except for the four “Grand Slam” major events (Wimbledon, the Australian, US and French Open championships). In these “majors”, the women play best of 3 sets as they always do, while the men play best of 5 sets. The lengthier format for men was once used for many other tournaments, but as most tournaments changed from grass to hard courts, the shorter format was adopted almost everywhere. Traditionalists managed to keep the format unchanged from amateur days for the majors and for Davis Cup play.

All of the grand slam tournaments have paid the men’s and women’s champions equal prize money since  2007. While few players dare to publicly disparage the equal pay, many believe it is unfair to the men not to be paid more, since they are playing more sets on the court. Furthermore, Wimbledon charges considerably more for tickets to the gentlemen’s final than for the ladies’ final, and it is argued that this reflects their relative appeal and should affect the prize money paid out to each gender.

The primary argument in favor of continuing best of 5 set matches at the majors is that the longer format is a bigger test of mental and physical endurance which more often allows the better players to prevail. Unfortunately the evidence does not support this theory. Best of 3 sets format was instituted for doubles at every tour event for the past several years. It was generally expected that the shorter formats would disadvantage the top teams, but there turned out to be no effect at all. The best players before the format change continued to top the rankings.

Diogenes believes the equal pay argument is a canard. Rather than considering paying women less, the question of pay should be re-framed as to what is best for tennis, and for the fans whose ticket purchases and TV viewership support the game? Clearly, what needs to be done is to amend men’s competitions in all events to best of three sets.

Almost nobody ever plays best of 5 set matches. 70% of all play in the US is on public courts where someone is usually waiting to take over your court after only an hour of play. Each set on the pro tour is far more grueling, and the players wear out with best of 5 sets matches. Almost every player who manages to win a long 5 set match at the majors goes on to lose in the next round to a fresher opponent.

The fan experience would also be enhanced by shortening matches. Except for die-hard fans, who wants to spend four or five hours watching long five set matches? For many viewers, a decisive third set climax two hours in would be just great.

A serendipitous byproduct of shortening the men’s format in the majors would be an increased incentive for the top players to participate in doubles at the slams. At other longer events where players do not have singles matches every day such as at Miami and Indian Wells, the top singles players also play doubles to the delight of the fans. Few do so in the slams because they fear the longer format.

Tennis is one of the only sports followed and played by both men and women, together and separately. The ATP Tour needs to adopt the best of 3 sets format for all events, including the majors. It would be a boon for players and the fans, and it’s the right thing to do to signal the sport’s commitment to support and practice equal pay for equal work.

Like many New Yorkers, Diogenes was surprised by last month’s return to the political arena of Anthony Weiner. A former congressman from Queens, only two years ago Weiner resigned in disgrace after sending lewd photographs of his “little Anthony” to six different women he met on the internet even as his wife was about to bear their child. When reports came out, Weiner then proceeded to lie about it, claiming that his account had been hacked by someone else and he was being framed. When this lie was exposed, Weiner continued to claim that he was fully capable of representing his constituents before being pressed to resign by the House Democratic leadership.

After the scandal broke, Democratic candidates who had received contributions from Weiner donated those funds to charity. Republicans called for Weiner to return unspent funds to donors. But Mr. Weiner simply held on to the money, presumably contemplating a return to politics. He claims that while he was away from the public eye, he did a lot of thinking and learned a few things that have made him more mature.

In jumping into the New York mayoral race, Weiner entered a crowded field of Democratic contenders. Despite his scandal, Weiner has two advantages over his rivals. He has the highest name recognition of all the candidates, and retains about $4.3 million in campaign funds left over from fundraising for an aborted 2009 mayoral run. That money remains eligible for one-time matching funds from the city of about $1.5 million in the upcoming 2013 election. According to Bonny Tsang, press aide at the city’s Campaign Finance Board, if Weiner had decided not to run this year, his 2009 funds would not enter the matching program, which provides six public dollars for every eligible dollar raised. Weiner can hold onto the money indefinitely, as long as he files the proper disclosures according to the deadlines. The money can also be given to charity, contributed to other campaigns or given it back to donors, the Finance Board said.

A Marist College poll conducted late last month found that 53% of voters said Mr. Weiner deserved a second chance, while only 39% said he lacked the character to be mayor. His immediate support of about 19% put him in second place amongst the Democratic primary contenders. Weiner claims that he will outwork all the other candidates, and will win the election. Political insiders and some cynics believe the 2013 campaign is more likely intended to rehabilitate his reputation by inuring the public to his sexting episode so that he can run and win in a future election, or perhaps jump start a lucrative consulting business.

In sports as in life, fundamental and hugely important aspects of our character are only truly revealed when we are put under pressure. Sooner or later a crisis will occur for anyone holding office. When that moment arrives, we want our elected leaders to function well. Anthony Weiner argues that he should be given a second chance to hold our trust. But he has shown that under pressure, he lacks the intestinal fortitude to own up to his mistakes.

Our leaders should be role models for our children to emulate if we are to continue to have a civil society. They should have a history of integrity so that when crises arise, we can trust them to do what is best for all rather than what gains them advantage. Compare Anthony Weiner’s response to being caught in sexual scandal with that of General David Petraeus, who was serving as CIA Director last November when an extramarital affair with his biographer was discovered. The general immediately admitted his involvement and resigned.

The 19th century legal concept of moral turpitude typically was only loosely defined, but has been described as “act of baseness, vileness, or depravity in the private and social duties which a man owes to his fellowmen, or to society in general, contrary to the accepted and customary rule of right and duty between man and man.” Anthony Weiner’s scandalous behavior was tawdry even by today’s lax standards. Even worse were his lies after being found out. He should be allowed to move on with his life, but his actions after being exposed should disqualify him permanently from holding public office as someone who simply cannot be trusted. New Yorkers can easily do better.

When you buy something at a local store, the merchant automatically tacks on state and local sales tax to the item’s purchase price. When items are purchased online taxes are not included in the total purchase price unless the vendor is located in the same state as the customer.  Let’s say you want to save some money and purchase an I-Pad Mini from E-Bay for example, because the listed price is $39 less than the $329 list price from Apple. If the vendor is from Georgia and you are in New York, you would not incur and sales tax. But if the vendor is in NY, you would be charged 8.875% , or $25.74 on this purchase.

Why aren’t internet sales taxed now?

States and localities fund their operations from a variety of other taxes and fees including property taxes, income taxes, gasoline taxes, corporate taxes, usage fees (tolls, parking, water, garbage), and federal grants to administer programs such as Medicare and Medicaid. 45 of America’s 50 states have some sort of retail sales tax. The highest state tax is California’s 7.5%, but local sales taxes can add as much as another 3% in many locales.

The US Congress is currently considering new legislation to tax online retail transactions that have until now been largely free of sales taxes. This is because in 1992 the Supreme Court in  Quill  Corp. Vs. North Dakota ruled that a business must have a physical presence in a state for that state to require it to collect sales taxes, in part because of the complexities of doing so.  It was the late pre internet age and the ruling referred to mail order retailers. The court explicitly stated that Congress can overrule the decision through legislation. Today, if an online retailer does not collect sales tax at the time of purchase, the consumer is supposed to pay the sales or “use” taxes on such purchases directly to the state when filing annual tax returns. This happens so rarely that Congress is now considering legislation to collect these “lost tax receipts”.

How much are we talking about?

Purchasing merchandise across state lines was historically limited to catalog buying and comprised only a small portion of retail sales. However, the growth of E-commerce has increased at more than twice the rate as bricks and mortar retail sales for 10 years, and now accounts for 5.5% of all retail sales. Internet sales are trending at a rate approaching $250 billion/year.

Local retailers and their many organizations have for several years supported efforts to tax online sales. They claim that online retailers have an unfair advantage when they do not charge consumers taxes. The congressional initiative known as the Marketplace Fairness Act (MFA) is the latest effort to tax internet sales. It will require all retailers with sales over $1 million/year to use “simplifying” software from the Streamlined Sales Tax Project (SSTP), which will be instantaneously able to sort through the thousands of taxing entities and calculate taxes for each locale in order to collect, report and remit local sales taxes for each one. If enacted, all internet sales other than from very small vendors will be taxed regardless of the location of the vendor. The MFA is estimated to generate from $11 billion to as much as $24 billion to state and local governments. Shown below is the relative impact upon consumers in the various states.

Why the MFA is not good legislation

Proponents claim that sales taxes are merely one of several methods to fund local and state governments. But sales taxes in most locales are a way that these governments mitigate property taxes. In terms of “fairness”, sales taxes are far more regressive than property taxes, which are disproportionally imposed upon our wealthier citizens.

An internet tax allocates sales from each retailer to each state and local entity. Yet it also creates the framework for a federal sales tax, or VAT. Lawmakers salivate at the prospects for a “new” revenue stream. Those seeking more limited government are strenuously opposed.

More troubling than the prospect of additional taxes is that an internet tax would be an egregious violation of federalism, in that states would be able to enforce their tax laws outside their borders. Online retailers would be remitting taxes to governments where they are unrepresented, and local citizens would be precluded from voting with their wallets by purchasing from vendors who do not charge those taxes.

A privacy concern related to internet taxes is that the SSTP software creates a vast new database which could be used to track any individual’s purchases. At some point, a security breach is a massive risk which could make this information available to unauthorized parties. Potential government usage of the data is more dangerous. Diogenes is entirely uncomfortable with this.

Internet retailers may not have to pay local taxes, but this  advantage is mostly mitigated by two factors. First, shipping charges are often about equal to sales taxes. Secondly, ordering online requires consumers to wait for their merchandise, and many shoppers require the instant gratification that local shops provide.

Diogenes believes that the case for taxing internet sales with the MFA is not at all persuasive. It is contrary to good public policy in that it taxes citizens without representation or benefit. It creates privacy concerns. It creates the framework for a new federal VAT.  Evening the playing field with local retailers is not a valid reason to take billions more in taxes from Americans.

Other solutions

Some believe that internet retailers should pay some sales taxes, albeit at lesser rates because of their better ecological footprint and diminished use of local services. After all, online sales don’t need more cops or streets paved or other costs which support local retail. Internet sales also allow for efficient warehousing and delivery which could reduce America’s carbon footprint.

There is an alternative solution to an internet sales tax than that proposed by the Marketplace Fairness Act. Diogenes believes that internet sales could and should be taxed at the rate in effect at the location of the vendor, in the same way that sales at local retailers are taxed. There would be no reports to file, data to be collected, violation of federalism or infrastructure created for other new taxes. A consequence of this solution would be that many smaller internet vendors might relocate to one of the five states that do not levy sales taxes. This “competition” between the states is a wonderful benefit for all citizens to make use of…or not.