I lost my virginity this weekend again….this time on Priceline. For years, I have resisted using Priceline because I really disliked the concept. Sure, I have people tell me great things about it all the time…but I don’t like not knowing what I am getting. And then there’s the whole concept of using “stars” to determine quality. I mean, I don’t pore over guidebooks and message boards for nothing. Accommodations can easily be the costliest part of any vacation and things like location make it too weighty a decision to just cast care to the wind.

Rita meanwhile, has had plenty of good luck with it. So last Friday, on my way to work we tried the ultimate experiment. We picked a rate that was really low and we picked a neighborhood in Pueblo Viejo, about two hours south of where we live. And then it was accepted…at arguably the finest resort in Alta Sonora… the “Hilton”.

So off we went, suddenly freed by a combination of factors to have a long weekend. And so we did. Pueblo Viejo is Alta Sonora’s second city, a place where time moves to a different beat. The weather wasn’t too hot but Rita was not doing too well traipsing around the desert. But that didn’t stop us from shopping at Ross or catching a show at the planetarium.

On the way back, I told Rita that after spending a weekend in Pueblo Viejo, I didn’t see what the big deal was about Cougar Country. She agreed.

As you might have heard, this week California had a special election. The purpose was to, by way of public referendum achieve various budget reforms which hopefully would help the state climb out of its gargantuan deficit. Strikingly, only one of the measures passed: a ban on legislative pay increases if the state budget is late. The post-mortem, though, began two days before the polls even opened, when it became clear through polling the package would fail. What’s amazing (to me) is how surprised everyone is about the result. No one seems to remember that just four years ago, the Governor championed initiatives with some of the same goals only. And the outcome, while closer and more divisive, was the same.

The irony here is that most armchair quarterbacks always point to the initiative process as the reason that California has what some might just call a “structural deficit”. Everyone, even commentators who have never stepped foot in the state seem to know that Proposition 13 radically changed state and local finance in California. It took established methods of governance dating back the colonial period (if not English history) and turned it all upside down. Yet this sort of Manichean attitude about Proposition 13 obscures the fact that it and the initiative process actually are minor (if I can use that word) causes of the state’s woes. And more importantly, it is possible to fix things without repealing Prop 13 or eliminating direct democracy. I realize this sound like heresy to everyone…but as you will see…it’s true.

Overlooked frequently (though not always) in the budget debate is the impact caused by term limits and gerrymandering. I group these two influences together for a reason. Together, they have ensured that partisanship trumps policy. You see, California is one of a few states that require a 2/3 majority for passage of the budget. So as you can imagine, this renders the typical legislative leadership useless because they often needs votes from the other side of the aisle. And believe it or not, once upon a time (back when that Reagan guy was Governor) both sides had input on the budget. But then, in the 1990s, the state got term limits and problems ensued.

Thing is, not everyone views it this way. Seemingly intractable incumbents were cast out, and the Legislature was returned to the people. But more importantly, new Legislators always had to be worried about the next job in their political career instead of staying put. That tended to make partisan battle lines thicker as members needed to establish “street cred” to move up the ladder. It also lowered the chance that members would suffer the consequences of poor budget choices in later years…unless they managed to be lucky enough to go from the Assembly to the Senate. Last of all, (but at least well documented) is that term limits wiped away nearly all the “institutional memory” of the legislators themselves and gave the keys almost exclusively to staff.

Bad as this was, its impact was magnified by gerrymandering. Time and again, the Democrats (who have been the majority for the last little while) have had the ability to reach a 2/3 majority in the Legislature. Instead, they consistently seem to favor making existing seats as “safe” as possible. This has allowed the Republicans (the minority) to detonate budget proceedings like the Polish Diet in the absence of a supermajority.

Proposition 13, by contrast plays a much a smaller role. At the time, the California legislature had just become “full-time”, abandoning the concept of a compressed, ephemeral legislative season. So too, did legislators themselves go from part-time employees of the state to full members of the bureaucracy. Initiatives, which were hardly used at that point (1978) were seen by some as a tool to check the expanding power of the state legislature. Too bad the “People’s Initiative to Limit Property Taxation” had the exactly opposite effect. Instead of marginalizing Sacramento, Prop 13 made Sacramento the town it is today.

You see, for all the high-mindedness surrounding the initiative’s campaign, it was largely funded by Howard Jarvis, lobbyist for the rental property owners looking for LOCAL tax relief. As California school districts had the authority to receive local property tax receipts directly from the county assessor, Prop 13 not just limited property tax increases but also redistributed how the revenue was spent.

So alas, this is what I mean when I said you could in fact, fix some if not all of the state’s structural deficit without jettisoning the initiative process or good ol’ Prop 13. You see, if property tax flows directly to the state then, the thinking goes, all state taxes should go to Sacramento. What’s that you say, you thought property tax was the only exception to the rule? Indeed, it is not.

You see, although state property and income taxes have been governed by propositions, strangely, the sales tax is not. And sure enough, the Bradley-Burns Act of 1957 includes a provision that allows cities to collect a portion of sales tax revenue from the point of sale. (Counties have the authority to increase this for things such as public transportation). One solution, that remains eminently debatable is changing Bradley-Burns and eliminating the guaranteed share from the actual sales that occur in city limits and exchanging it for some Prop 13-esque redistribution.

Yes, I know, you never thought someone would come and tell you such a big secret did you? You can’t believe after all you have heard it’s so simple…and it’s not….politically.

In a nutshell, California suffers from serious problems in part because the incentive to generate more sales tax revenue has no logical counterweight. Rational zoning decisions and master planning are chucked aside because politicians and land barons are seduced by the so-called “fiscalization of land”. Building bigger, and bigger, and bigger pits of sales-tax revenue by any means necessary. Not because they are greedy….no….its because they know that the increased sales tax revenue is needed to offset the loss of property tax revenue building up since Proposition 13 passed in the first place. This is the real structural deficit in the state, finding ways to finance the infrastructure and costs from 30 years ago not today.

After all, the Legislature (notice a theme here?) created lots of tools to assist in patching local finance for NEW developments after 1978. But nobody, but nobody wants to figure out how to level the taxation playing field on established, entrenched homeowners. (Oh, and of course I should add, these homeowners, kids, grandkids, legal partners, and anyone else grandfathered into Proposition 13 over the years.)

Hence, my thinking that if we can’t beat Prop 13, we might as well redistribute other tax revenue the same way.

But there is another thing: the sales tax alone isn’t big enough to slow the deficit. It’s only a long term fiscal solution. As cities lose the incentive to zone for maximum sales tax revenue, the prevailing strategy will likely be much slower growth. That in turn, would reduce new developments which would in turn, add new residents that strain existing public infrastructure. Over time, this would have another impact which is equally important. It would limit the fiscalization of land as a economic driver. Yes, that’s right community development would have to be more about human capital, produces, and services, than mini-malls. And ironically, that would generate higher paying jobs and increase business and income tax receipts.

It’s still entirely possible though this won’t be enough. That the structural deficit will go on to live another day. But that would not surprise me. For so matter how wonderful California can be, from it’s nature preserves, to its public universities, to its transportation networks, there are other established barriers to all this social investment. You know, like race.

Thus it’s easy for me for to believe that California’s budget woes can be solved, even if it takes a while. After all, compared to its environmental and sociological troubles, the “structural deficit” doesn’t look that intimidating at all.

This weekend was supposed to be more of the same. Temperatures hovering around 100 degree Fahrenheit with hot and dry conditions. So as you can imagine, I figured the highlight of the weekend would be seeing what Rita exchanged her gift for. You remember don’t you…that I had the presence of mine to duplicate something she already had (cocktail glasses) for her Mother’s Day gift. As luck would have it though, she decided instead to buy the kids some clothes with the money…feeling they were more deserving.

On the one hand, I thought it was a good idea and evocative of why Rita is a dedicated mom. But I also felt she deserved something nice for herself. Nevertheless, I’ll get another chance to be sure.

Sunday, though brought a surprise. The weather was suddenly hot and Rita didn’t feel like doing anything. But then as I went around doing my errands, I noticed clouds bulging in the sky. I couldn’t believe it. The monsoon in May? Technically that’s not true, as the National Weather Service only considers the monsoon now to last from June 15th to September 30th. But before that, the monsoon was considered to begin after three consecutive days of the dew point being 55F or higher. So far that hasn’t happened.

Still, this is odd very odd indeed. Late May is supposed to mark the foresummer in Alta Sonora….when cloudless skies result in the hottest weather of the year. Not this. The forecast is supposed to change yet again for the weekend…which is a good thing:

Rita has plans to take me and the kids camping.

Recently, I noticed there was a lot of chatter over apparently lower jobless claims. Economic confidence seem to grow as people assumed the recession was over, and that such data was proof. The reason of course, is that unemployment as a statistic is constantly referred to as a “lagging indicator”. That’s true, for it takes serious economic expansion before a firm (under textbook conditions) hires new workers. Still, I hate to be on the one to say it, but the economic malaise is far from over. And the unemployment number is going to head upward again soon.

You might wonder why I’m so certain of this. That’s because the economic crisis has germinated from demographics as much as economics.

You see, just as many Baby Boomers were finally reaching retirement…two important developments happened. One, employers started jettisoning traditional pension plans. (Where there is a defined benefit to the employee.) Many companies simply replaced them with 401(k) investment accounts which seemed equally solid at the time. That exposed lots of relatively old people to lots of risk and encourages many of them who were ready to leave the workforce to stay on. Meanwhile, health care costs continued to rise in part because older workers are likely to keep their nicer employee health plans than go onto Medicare.

Younger workers for their part are usually cheaper. (Paid less because of experience, and healthier.) So the solution seems obvious, companies will ditch their old, decrepit employees and hire young, hale replacements. Unfortunately for the guy reading the economics textbook, age discrimination laws get in the way…and suddenly everyone is caught in the pink slip dragnet.

In addition, many of the layoffs that happened at the end of 2008 and start of 2009 were actually strategic. What’s that you say? People cut workers for the sake of cutting workers. In fact, I’d argue that because of how leveraged many firms are to their stock price, the layoffs were calculated to push up the stock price just enough to create buzz and spur investment.

Now at some point, as the economy turns around, the thinking goes, you would just absorb back what employees hadn’t retired or died. But there’s another hitch: new workers.

Yes, you knew this was coming didn’t you. The real problem with a Lost Decade isn’t slow growth per se. It’s that every spring will bring a flood of new, cheap workers and make it that much tougher for dislocated “senior” workers. Compounding matters is that because the federal government is keen to run deficits, the remaining workforce is going to be faced with tax increases just to keep the situation stable.

In fact, I wouldn’t be surprised if unemployment reaches 15-20% before the American economy is back on its feet. But that feat is possible even without more layoffs. What’s that you say? How is that possible? The answer is that unemployment only measures people looking for work, not those who are either underemployed or simply not looking for work. This is going to seem strange, but remember how I was talking about the decision to switch pensions to 401(k)? Well that’s the funny thing. If the pensions had stuck around, many people now who are happily retired could stay so. But there are those who will yet be forced back into the workforce if those stock price gains aren’t made up…soon. And that’s just a little impossible given that the stock market has been inflated for years by money from the housing bubble and credit.

So if you are worried about your job now, you ain’t seen nothing yet. But the other thing to keep in mind is that if you are young and healthy…time is on your side. That’s because it’s a lot easier as you might expect to start over at 30 than say, 55.

Of course, the real economist’s dilemma is what to do with all these geriatric Baby Boomers. I don’t have an answer for that, but maybe MGM does.

I lost my virginity this weekend…in the kitchen. Okay, so let me elaborate…on Thursday night Rita came over and I cooked a meal for her. But as the night went on, I had to use more and more cookware until the sink was full. At which point I looked and sighed and Rita told me it was time to use my dishwasher. Yes, I’m that low-maintenance. I don’t use a dishwasher. Reason being, I rarely generate dirty dishes. (Can’t you tell I cook a lot at home.) And sure enough, I don’t like to waster water or electricity. But Rita told me, she swore that using the dishwasher wasn’t wasteful…unless of course…I had only a fork or something. (And sometimes that is all you will find in my sink.)

Come Saturday, with Rita coming back from a funeral in San Diego…I went to the store and bought dishwashing liquid joining what must be a giant conspiracy of social domination by Procter and Gamble. I wonder, would it even work. I’ve never used the one in my unit since I moved in October….of 2007. So I pour in the gel, close the door and let ‘er rip, praying for it to all go right.

I left my apartment, needed to do two very important errands. One, I had to wash my car and two I had to shop for a Mother’s Day gift for Rita. Guess which place was busier, the mall or the car wash? Yes, that’s right I managed to spend nearly an hour waiting to wipe my old ride clean. Ironically, I had waited a while not for economic reasons but because the weather had threatened to rain long after the usual dry spell before the monsoon begins in the summer. So there I was, watching basketball and slurping on a soda when I started talking to an elderly lady.

She had a funny accent, and I learned, had moved to Cougar Country fifty years from Georgia. I mentioned that she could have hardly picked a place that would have changed more in fifty years, but she replied that in fact…she loved it. It grew on her, she said, and now she wouldn’t live anywhere else because everywhere is air conditioned. I learned about her Yorkies, and then …. just for good measure she whipped out of picture of an earlier dog from her purse like it was a grandson. If this had been a movie I might have gotten her name and taken her to lunch someday. Instead, I had to hustle out to my car in the heat and tip the guy.

I then had to stop a Circle K for a Thirstbuster. It was hot, and I was none too happy. So I soldiered on to Cougar Canyon and proceeded to look for an “affordable” gift for Rita. I thought back to a recent trip to Costco where she fell in love with what I thought was a set of martini glasses. So before long, I was at Crate and Barrel, buying a set of martini glasses and having them package them in a box. Next, the phone rings, and Rita needs me to watch the kids in an hour while she goes out to a party. I stealthily park the car away from hers, so she can’t see the box. I go upstairs and wait for her to leave.

I take the kids to dinner at a cowboy steakhouse all the while revealing none of my plans. The courtyard was also hosting a wedding reception, which made for an odd situation to say the least. Julia and Justin could barely concentrate as the band started to fire up and play music. They also didn’t care for the fire-cooked steak. Nevertheless, I had them tell me where to hide Rita’s gift before I put them to bed.

Her closet, they told me, she’ll never look in there. So I went inside with the box and put it down. I stood up and realized I had put them right next to another box. It had on it a familiar decoration, one of martini glasses from a set Rita had bought at Costco.

Luckily, the cashier at Crate and Barrel had asked if I wanted a gift receipt….

There’s a certain irony to the whole thing. I went out of my way this year to celebrate Cinco de Mayo. I even went to work in a green dress shirt, black pants, and a red tie. Then there was lunch with Duane at the Rancho Mercado replete with papaya agua fresca. But nevertheless, it was Tuesday when I heard the news about the Phoenix Coyotes.

The NHL’s biggest melodrama in years unfolded as we learned that Jerry Moyes, CEO of the Phoenix Coyotes had offered to sell the team to Jim Basillie, sending them to “southern Ontario”. But because of a cancellation provision in the lease the team has, Moyes had to take the extraordinary step of filing bankruptcy. And that was only after the NHL had told Moyes his actions violated his franchise agreement and that he was no longer the owner…

The weird part is that everyone seems to have their own theory as to why the Coyotes weren’t able to survive financially. (Nevermind the small detail that the bankruptcy was in fact, to get out of their lease.) Instead three major schools of thought emerged:

• The new arena is in the wrong part of town. Most of the ticket holders didn’t live nearby.

• Wayne Gretzky is not up to the job/ the team was poorly managed.

• Hockey can’t make it in the desert. All the Sunbelt teams struggle in the League.

I found the entire debate fascinated, because in part, I suspected this day was coming. Back in 2006, the eight-seeded Edmonton Oilers became the lowest seeded team ever to play in Lord Stanley’s Championship. But they were also only the second Canadian team in over a decade to be in the Finals. And as a greater bit of irony, Canada’s hockey fortunes were improving as fast as the exchange rate back then…buoyed by the export of what else…oil from Alberta.

I told my friend Andrew, who is a big hockey fan, that I expected to see team move back to Canada, partially because Canadian teams had been hurt by the exchange rate and because the new TV was not nearly as rich as the old one. Basillie for his part, has tried to buy other franchises before, eager to own a team and given southern Ontario (the most populous part of Canada) someone else to root for than the Maple Leafs.

And now, my prediction mind finally come true, if Moyes has his way in bankruptcy court.

As for the various theories on why the Coyotes aren’t doing too well, I’d offer this:

• Attendance at the new arena is nearly the same at the old one. Therefore, it’s entirely possible the projections were too high on potential revenues. But the city poured in money to build it, and its surrounded by a mixed use development that mimics a streetscape.

• A team with average attendance around 14,000 is on the low end for a NHL team these days. But at capacity (18,000) the arena is only in the middle of the pack.

• There are plenty of Canadians who come to Phoenix in the winter. Hockey has an affluent fan base (the most affluent of any major sport) and if anything the team didn’t play this up enough.

So now you ask, just what is going on here?

It’s no secret that when NHL Commissioner Gary Bettman was installed in 1993, his job was to get the League its first national television contract in its long history. The only problem is that it was with Fox. Not that the network’s coverage was bad, but that it happened at the same time that “the Fourth Sister” had made a similar deal with the NFL. And then, Fox started to televise Major League Baseball. So, unsatisfied with its poor cousin status, the NHL leveraged its deal with ESPN to make its new national television deal with ABC.

The NHL though, was dumped by ABC in favor of the NBA and found itself unable to get a matching deal from NBC. So Bettman locked out players in the hope of reducing costs. (Compare this to the supermarket strike I mentioned in my last post to this…and you’ll see the parallel.) Now a few games appear on NBC…but the majority appear on Versus, a cable channel owned by Comcast.

It’s also no secret how Bettman got his national TV deal. He added more teams in the US and moved Canadian teams south like the Winnipeg Jets who became…the Phoenix Coyotes.

Now if I was Commissioner…here’s what I would do:

I wouldn’t put a team in “southern Ontario” until two teams were moved back to Winnipeg and Quebec City (which are more populous than the town Basillie has in mind, Hamilton).  If I had to pick who they were, it would be the Nashville Predators and Atlanta Thrashers, who are recent expansion teams without much history. I’d do some realignment to spread the Canadian more evenly among the divisions. I’d also probably send one of the Florida squad north to Baltimore.

But most of all, I’d use Comcast and Versus to import National Hockey Night in Canada. The program is an institution in Canada, and the fact is, fans appreciate informative commentary. Also, I would give the Canadian Broadcasting Company more input on the television schedule.

Given Phoenix’s size, and popularity with Canadians I’d leave the Coyotes where they are. But I might, just might, improve the food and put Molson Ice on tap.

Some strange developments this week conspired to keep Rita and I right where we were all weekend. The principal cause was, as always the fact that rent is due on the first. But other factors didn’t help.

That set the stage for Rita to do some cooking as we spent some quality time together. After having to eat takeout far too much in my life, her willingness and ability to cook is welcome. But as was the case Saturday, required me to head to the store to buy some of the ingredients.

Each time I had to purchase one or two items and return home quickly. The catch was that the closest supermarket to her is a Safeway. Now, realize I grew up in Southern California where Safeway does not have much of a footprint, compared to say Ralphs or Vons, or Albertsons. Those of you who shop at Safeway know, the first thing they ask you at the register is not what your name is, or if you want paper of plastic…it’s your Safeway club card.

And every time I tell people I don’t have one.

Each time I went this weekend, I got a different response from the cashier. The first time, she gave me one without asking and scanned it. The second time, the guy scanned one he had at the register. And when it was a pharmacy tech the final time, he didn’t even bother. (Rita about had a heart attack when she saw the Safeway card I had been sent home with. She couldn’t believe that I broke down and “got one”.)

So now of course, you are wondering…if the club card saves you money…why on earth do I go out of my way to avoid the program? Indeed, there is a good explanation, but it is hardly a straightforward one.

A part of me doesn’t particularly like revealing what I buy and being tracked. But I assure you, my inner libertarian didn’t stop me from getting a Costco membership or having a bank account, or a cell phone or a car…. But then there’s my inner lawyer, the guy who always thinks that everything and everyone is trying to screw you out of a dollar without you realizing it. And that is the story behind the supermarket loyalty cards.

Back in the 1990s, when Wal-Mart first started to build Supercenters with “full-service” grocery departments (but no butchers), supermarkets faced a thorny problem. Margins in the food business are tight, and Wal-Mart had an advantage in that nearly all grocery stores are union shops, and Wal-Mart is notorious for its anti-union tactics. Moreover, supermarkets have always paid health insurance (and bore this cost) whereas Wal-Mart always let Medicaid (and the taxpayer) subsidize them.

By the time loyalty cards had appeared, my sister happened to be dating a guy who worked as a deli service person in a supermarkets. I joked at the time that they were really “price of loyalty cards” where he worked and he laughed and agreed. After all, with margins so thin, the best way to manipulate profits is to find out what people are buying. So if you go to Safeway (or Ralphs) and take the discount, know that what they are really doing is a lot of whiz-bang market research to figure out if their prices are too low or high and you are the guinea pig.

It’s a distant memory now, but I lived through the 2003 supermarket strike in Southern California. That fight was over health care, and the fact that despite national consolidations that sent Ralphs, for example, to be bought by Kroger Wal-Mart was at the door threatening to build a Supercenter in Southern California. (The first ironically was in Indio, which is truly the outskirts of town.) After the strike ended with the owners winning out, Wal-Mart was able to find a city pliant enough to allow a Supercenter within its city limits. (The town in question was Rosemead, and its City Council faced a recall after approving it. I stopped by one day before moving away in 2007. Its hardly the biggest one I’ve seen.)

In any case, the real reason to not use the loyalty card is more selfish. It’s that if you like to shop around, the loyalty card makes that difficult. Every time its scanned, the company learns what volume of an item sells at what price. Sales and discounts for “club card” members are really ways to figure out the equilibrium price. On the one hand, you may not have any problem with this. But I do, largely because I like competition. I like shopping around for the best price or if nothing else, stocking up when things are on sale. And you might say….dude….these things are compatible with having a loyalty card…what do you mean?

In statistics, there is this concept called “the value of perfect information”. It’s the value between the most likely outcome and the best outcome. By participating in loyalty cards, you are essentially giving this to the supermarket for free. So not only do you face in the long run higher prices, but you also surrender its worth for basically the cost of a coupon.

Moreover, this only occurs if everyone participates. So while I have no problem with other people signing up…I just prefer to throw some uncertainty into Safeway’s grand plan.