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vineri, 4 martie 2011

SEOmoz Daily SEO Blog

Posted: 04 Mar 2011 04:20 AM PST

This post was originally in YOUmoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc.

Adso, if I knew the answers to everything, I would be teaching theology in Paris.
(William of Baskerville - The Name of the Rose)

I am not a mathematician, therefore I cannot give you formulas to play with; I am not a what can be defined strictly as a technical SEO, therefore I cannot give you insides about technical methodologies to fight spam. I have an old marketing school background mixed with humanistic studies. So, my approach to the quality of SERPs issue, so hot during these last weeks, will be more philosophical and theoretical than high tech and statistic.

The Socratic method will be guiding me here in a series of questions I ask and answer to myself. Are they the Answers? They are not, but I think they are painting a probable future.

Is Web Popularity the same as Web Quality?

Mostly not.

Let's be clear: even if spam did not exist, people do not usually link to the most valuable things in the Internet. People link to cats playing the piano, talking dogs, some kitsch website and, oh yes, sometimes to viral content crafted by some agency. Or to Brands.

But when it comes to niches, web popularity becomes a more blurred concept, where popularity gets mixed with authority. For instance is more probable that we as SEOs (yes SEO is a niche) will link to SEOmoz citing their posts because we cite them, blame them, commend them than to some unknown SEO newbie.

Sometimes the miracle happens, and an authority discovers a great piece of content hidden in the web, and therefore it becomes popular. Remember: authority.

Fortunately, there is SEO, and popularity can be obtained with creative link building; but "black hat" techniques makes the "popularity" factor a very risky one to base the SERPs on.

And the risks of popularity are even more enhanced now that tweets and shares are officially counted as a ranking factor.

Should not SERPs present popular content?

Yes, but...

If people do not find in the SERPs what everybody talks about, well, Search Engines would last like a breath. But popularity should be based just in links or should have to be based mostly on trusted links?

Ask yourself: would you choose a restaurant suggested by bazillions people and one link on Yelp or in hundreds of affiliate sites?

Trust, authority...again. And that is something that we as SEOs always preach in our Belief Pray for a Well Optimized Website. And Google preaches the same. But, if it is so, why still is it possible to see so many websites artificially popular because they own millions of links from thousands of unrelated and not authoritative sites?

Maybe the reason is that something is failing on the trust authority check by Google, and it knows it.

So...is it possible to balance popularity and quality?

Yes.

Personally I am not one of those who pretend that the Search Engines should show only astonishing web sites. OK, maybe I am a little bit of freaky tastes, but I don't want search engines to become some sort of Wikipedia.

But, at the same time, I do not want SERPs polluted by clearly spam/insignificant sites. What I want is to see and explore genuine web sites, and I believe that Google could use tools and concepts that already exist making them better.

If link popularity (as other factors) has proved to be a too difficult factor to control now that exist billions of websites and searches and a quite easy formula to game, than another factor (or factors) should have to be highlighted for rankings.

If this factors exists, what are they?

Authority and Trust.

And we all know they are the real factors we really care for, because we do it already in our life. It is simple common sense. We buy that car because we trust that brand; we see that movie because we trust what says a friend of ours; we believe in what a scientist says about climate because he is an authority in climatology. Therefore it is logical that also the search engines should base ranking mostly on those two factors: Authority and Trust.
They are already counted in the Google algorithm, as Rand told in 2009 and Trust Rank is an old dude.

This graphic from another 2009 post here on SEOmoz explains better what TrustRank is than I could possibly do.

The Concept of Trustrank
Someone, using the Occam's razor principle, could now say: "Put Trust Rank as most important factor and we will see the end of spam".
But that would not be so true in this moment.

Are trusted seeds really to be trusted?

Theory says yes, practice says no (ok, I am a little bit paranoid, but – hell! – I am Italian).

The J.C. Penney case is just one that came to light because the New York Times pointed its finger on it. If not, we would be still probably seeing its site quite well ranking, as many others trusted brand sites. But J.C. Penney is not the only website that consciously or not makes use of not licit SEO tactics. And, on the other hand, it is a clear example of how much Google has to improve the trust factor in it algorithm.

What happened to BMW some years ago seem did not teach that much to Google.

And we know well how easy can be to obtain links from .edu sites and also .gov ones.

No, trusted seed can be gamed... if Google forget to control them first.

WTF can be done (exclaimed the SEO in despair)?

In reality a lot.

And a lot of things seems are moving to a new big algorithm change. Let see the signals Google sent especially in the last two months:

• December 1 2010. Danny Sullivan publishes the famous article What Social Signals Do Google & Bing Really Count?. In the post Google, apart saying that use (re)tweets as a signal in its organic and news rankings, also affirms Yes we do compute and use author quality. We don't know who anyone is in real life :-). This is not like saying that also Users are now counted as trusted seeds?

• December 1 2010. Another article by Danny Sullivan, that did not received a deserved attention, maybe because published in the same date of the previous one: Google: Now Likely Using Online Merchant Reviews As Ranking Signal. In that post Danny cite this declaration from the Official Google Blog: In the last few days we developed an algorithmic solution which detects the merchant from the Times article along with hundreds of other merchants that, in our opinion, provide a extremely poor user experience. The algorithm we incorporated into our search rankings represents an initial solution to this issue, and Google users are now getting a better experience as a result. Danny adds that customers' reviews are probably used as a new factor in the algorithm (but not sentiment analysis). Again, user signals used as confirmation of the trustiness of a website.

• Between December 2010 and the end of January, the SEOsphere saw an increasing number of posts claiming against the everyday worst quality of Google SERPs. Somehow as a reaction, we started to see an increasing number of ex Search Quality Googlers answering in Quora and Hacker News and usually predicting some big change in the algorithm. During this period Matt Cutts says that all the engineers that were moved to work on other Google project will return full time into the Search Quality Department... that means more people working on the Algorithm or more manual reviews?

• On January 21 2011. Matt Cutts publishes a post in the Official Google Blog, the most official of the many Google has Google search and search engine spam. It is the famous announcement of the against-content-farms Google campaign. In the post, Matt Cutts affirms: we can and should do better. Again a move that seems showing how Google is going to favor trusted authority sites. In the same post he says how the May Day Update and the later "Brandization" of SERPs were meant as previous steps in this direction.

• January 31 2011. The always clever Bill Slawski publishes a post that can give hint on how Google may rank social networks, presenting three 2007 patents that have been published few weeks ago. Probably some of the signals described in the first patent are the ones Google is actually using in order to bestow authority to influencers.

• February 1 2001. At Future Search Google accuses Bing of copying its search results detecting them thanks to Bing toolbar. Ironically, another ex Search Quality Team Googler reveals in Quora that Google use the same technique with its toolbar. Again, users' data.

• February 12 2001. The J.C. Penney case comes to light thanks to an investigation of the New York Times. Google intervenes, but this delayed intervention shows one thing: that Google does has serious problem on the Trust side of its algorithm.

• February 15 2001. Matt Cutts presents a video where he explains how Webspam works at Google (an advice?) and promote actively the new spam blocker Chrome plugin launched on San Valentine's day. Another way to detect useful signals from users about what is relevant or not on the web.

What conclusions can be drawn?

That Google seems to have understood that it has to come back to its origins and the base of its core business: quality of SERPs;
That Google has probably understood that old classic link-ranking factor can be so easily gamed that some other factors, as Trust and Domain Authority should be given priority;
That Social Media is so influencing the way people searches, that social signals must be considered as important ranking factors and that Trust and Authority must be translated to the Social reality;
That users generated content and users interaction with the websites is more active than ever was before, therefore that the users factors must be considered as relevant, at least as a litmus mirror, even though it has to be very well crafted into the algo, as elements like reviews can be easily gamed.

And that the frantic series of news about Search is just at its beginnings.

Post Scriptum: I wrote this post between the 13th and 14th of February, totally unaware that Rand Fishkin was writing a post that touches the same subject. Anyway, I hope mine will give another perspective to the search quality issue and the predictions that can be done on the basis of the last event in search.

Update - 03 of the March 2011

In my last line I was saying that we were still at the beginning of a long series of events and change that could change - a lot - the SERPs we knew.

Infact we had: the penalization of Forbes for selling link, the Farmer Update, Google Social expanded in the Universal Search and today March the 3rd Google has announced that will retouch the Farmer Update in order to penalize legitimate site...

Let see if Google - citing "Il Gattopardo" - is changing everything to change nothing.

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Bing's Duane Forrester on Webmaster Tools, Metrics, and Sitemap Quality Thresholds

Posted: 03 Mar 2011 01:07 PM PST

Posted by Aaron Wheeler

This week we are thrilled to have a special guest joining us for Whiteboard Friday: Duane Forrester, a top-of-the-line SEO who went over to the other side of the fence and now works at Bing's Webmaster Project as their Senior Project Manager. Duane's the one you'll see throughout their blog, and if you have a feature request or any questions about Bing's Webmaster tools, he's your man. Duane joins Rand to discuss a multitude of search topics, including Bing's Webmaster Tools suite, the metrics used and displayed in their tools, and some exciting and extremely important news about Bing's use of quality thresholds for sitemaps. Check it out, and let us know what you think in the comments below!

Video Transcription

Rand:    Howdy, SEOmoz fans. Welcome to another edition of Whiteboard Friday. This week I have another very special guest for you. Duane Forrester used to be one of the chief SEOs for Microsoft, architecting all the things that Microsoft had to do about SEO. Duane, you felt the webmasters' pain, you felt the SEOs' pain, and now they handed you the keys to the Ferrari and you are running Outreach for Webmasters for Bing, the search side of things. You switched sides. It's amazing.

Duane:    Yeah, totally.

Rand:    First off, thanks for being here. I really appreciate having you.

Duane:    Thanks for having me over.

Rand:    Second, tell me what this change has been like for you, to go from SEO guy to search engine guy.

Duane:    Yeah, it's been kind of intense. I spent over a decade of my life as an in-house search SEO, and this is a dramatic change. Seeing things from the other side gives me an entirely new perspective. Some things are very validating. Other things, I'm slightly embarrassed by.

Rand:    That's a good combo.

Duane:    Yeah, and it's humbling is what it is. So, part of what I'm keeping in my mind as I go into work every day and I work on Webmaster tools and I work on bringing new ideas and content forward is this idea that I was there, and the people that are there now are fulfilling a very important role for their business. They need as much help as they can get. So I truly am the eyes and ears of it. It's amazingly exciting.

Rand:    It's great for you to have that background rather than . . .

Duane:    Completely.

Rand:    . . . an attitude of antagonism potentially towards people doing SEO. You've got one of empathy. I think that's wonderful.

Duane:    No, my antagonism is directed internally toward everybody I work with because I want all this stuff and they keep bringing me in.

Rand:    So on that front, let's talk about some of the stuff that you've already gotten into the product. The last six months have been phenomenal. I just logged in for the first time in about 30 days, maybe 20, 30 days, and there's tons of sweet new stuff. Talk to me first about this Index Explorer thing. This is kind of spiffy.

Duane:    So, Index Explorer for you Mozzers who have been watching, you'll know this. Index explorer is an area, if you come into Webmaster tools and you actually look at the tab called Index across the top, on the left-hand side at the top of the navigator, you'll see Index Explorer there. I've known about Index Explorer for a few years now because it's something that I can use as an internal employee to kind of peer into Bing's index and see what's there.

It's a really handy thing for us, because when I was SEO for MSN, it was at vast scale. So, if I had an indexation problem, it was a magnitude of orders. Now, actually everybody who has access to Bing Webmaster tools sees a version of that, applicable to their own domains.

Rand:    So this is like the internal tool pointed externally and you can see the stuff that applies to you.

Duane:    Right.

Rand:    So, I can go in, I mean we just did this with SEOmoz.

Duane:    Yeah, exactly.

Rand:    We looked at, here's SEOmoz.org and you click this little drop down and it's got all the folders in there. So now I can see slash blog. Then I can see any individual page, for example, post.html. That's not actually our structure. Then if I click on this, it pops up a little box and I've got links and I have anchor text.

Duane:    Exactly, yep.

Rand:    I can export that.

Duane:    There are actually a couple of really neat features in here. So, what we do is in this area we give you the ability to come in and take a look at something. Maybe you're looking at and you're saying, "Jeez, you know, I had a duplicate content issue there, and I've since installed a rel=canonical to solve my issue. But that's still in the index, so I need to remove it." You can actually click a button right here and block that. That tells us, "Hey, you know what? You shouldn't bother with this anymore." Thank you very much. We move on from there.

Rand:    How does that act? Does that act like a robots.txt blocking?

Duane:    Essentially, it basically tells us that, okay, if you, the site owner, are saying don't go there, then we're going to honor that, because, quite frankly, if everyone took that kind of care and attitude toward maintaining the website, it lessens the resource load on us.

Rand:    Cool.

Duane:    By allowing this little button, this little button . . .

Rand:    That little button right there.

Duane:    Now orange. It makes a big difference for us. And we give you the option, you can block an individual URL, or you can block a folder if you want. You may look at that and say, "Oh, you know what? I don't need anything in this print folder. Block that."

Rand:    And now I don't have to write to robots.txt if I don't have access?

Duane:    You still should be writing to robots.txt. However, there are cases where people won't have access to it, and this is an opportunity for them to still communicate the need.

Rand:    Sure, absolutely.

Duane:    Another area that's in here that's really cool is we're going to show you how many links there are to this particular URL. You'll see a little number here. The one we looked at was 198. And then if you actually click on where it says "pages linking to this page," click on that, it opens up this really nice, beautiful pop-up, and that actually contains all of the URLs, the domains that are linking to you, the URL that it's on, and the anchor text that's being used to provide all those 198 links to this individual URL on your website.

Rand:    And you're showing these, if I recall here, you're showing them in sort of a date order of crawling . . .

Duane:    Right.

Rand:    . . . and you're showing up to 20,000 per URL.

Duane:    Exactly, exactly.

Rand:    That's a lot of link data.

Duane:    That is a lot. For most small, medium, and even a lot of large websites, that is going to be far in excess of what they're going to need. That is on a per URL basis, so it's not 20,000 overall. It is 20,000 applied to this individual URL. The next URL gets another 20,000, and another 20,000 and so on.

Rand:    This is potentially a lot more data than I can see from any existing source at least about my own site.

Duane:    Exactly.

Rand:    Because Webmaster tools in Google has a sort of a limit on, a smaller limit and it's across the whole site.

Duane:    Right, exactly. This right here, I am super excited about Index Explorer simply because of the detail it lets you get into. So, now let's say, you're really trying to figure out how to build out a proper link building program, and you're looking at this going, "All right. We have good links. How do we maintain this? How do we optimize these things?" This is a blueprint for who's linking to you and what they're saying about you. This is an opportunity now for you to contact the websites and say, "Hey, I notice you're using this anchor text to link to me. Instead of click here, can you actually put my product name in there? Here's a sentence I've written for you that incorporates that. All you have to do is copy and paste it in place for me. Thank you very much." If people are wondering how you tracked it on the website . . .

Rand:    How much do you have to pay these people to have them do that for you?

Duane:    Oh, dude, that's between you and them, right? Personally, I don't pay anybody anything. My own website? If you're going to do it, I love you for it, and I will show you the love later on. If you're going to ask for a handout for it, it's not really how it works.

Rand:    Right, yeah. I was going to say, and Bing has been pretty good about penalizing a lot of the links that look manipulative on the Web too.

Duane:    Yeah. It's a natural part of keeping things clean, right? At Bing, we are very keen on having a quality driven index. So, the main focus we have is making sure that everything that gets in is a good resource, when someone makes a query they get a realistic answer that is actually an answer to their query. Not, here's some shallow depth data. I'm going to click on it, and then oh, it's not really what I want. I go back and I try it again. We're trying to shorten that number of searches to get to the final answer.

Rand:    So, a question that a lot of people have around Bing is often, I've launched my site and I've seen maybe some other search engines pick it up, but I haven't yet been crawled as deeply, or I've been crawled but I haven't indexed. Can this help to answer that question of why that's happening?

Duane:    Well, what it will do is, over time, first off you've got to get in the index. If you're not in the index, nothing's going to show here. So what you want to do is make use of the submit sitemap feature we have in here. You know what, I was going to do a blog post on this on the Webmaster Blog but I'll just tell Mozzers, you guys are hearing it here first. We have a quality threshold on our sitemaps. When you build a site map for us, we want it to be clean. When you put a URL into our site map, what I don't want to see in there is any URL that's a 404, 302, 301, anything at all. I want the end state URL only.

Rand:    You don't want rel=canonicals.

Duane:    Only end state URL. That's the only thing I want in a sitemap.xml. We have a very tight threshold on how clean your sitemap needs to be. When people are learning about how to build sitemaps, it's really critical that they understand that this isn't something that you do once and forget about. This is an ongoing maintenance item, and it has a big impact on how Bing views your website. What we want is end state URLs and we want hyper-clean. We want only a couple of percentage points of error.

Rand:    The best of the best 200s.

Duane:    Right, because if you start showing me 301s in here, rel=canonicals, 404 errors, all of that, I'm going to start distrusting your sitemap and I'm just not going to bother with it anymore. If the way that you're communicating to me that you have new content is to submit the sitemap through the functionality in Webmaster tools, instantly you're submitting me something that I've learned not to trust because its cleanliness is in question. It's very important that people take that seriously. It's not a fire and forget. Don't just go and grab some random tool when you do a quick search and saw, oh, here's a sitemap generator. It will go crawl my site. Blah, there you are. Forget how many links that actually misses. Seriously, be thoughtful when you build your sitemap. We don't want every single page from every single website. We want your best quality pages and content. So, you as a site owner . . .

Rand:    Are there content thresholds that I should be thinking about around this too?

Duane:    There are probably are, but those are buried so deep in so many different layers and there's a lot of other influences too. I mean, you can have variations and orders of magnitude and still rank well.

Rand:    Okay.

Duane:    It's not something that I would really say to folks, look you need to lose sleep over that. This, you should be thinking about and investing in.

Rand:    So any of these codes, you really need to worry about.

Duane:    Right, exactly. I love this idea, Rand, this whole pick your top 200, whatever the number happens to be for you, pick it and run with it. You don't need everything indexed. Pick your best stuff and make sure that's in there. Make sure your quality content is in there, right? Be sure that you look at the site and say, "What's the goal of this page? Is it to monetize ads? Is it to convert somehow? What is the goal of it? Is it optimized properly to do that? If it is, I want that indexed in the search engine ranking well."

Rand:    Duane, are you telling me that we need SEOs?

Duane:    Funnily enough, it works.

Rand:    Along with this, there's another really cool tab and we're not going to go all through it, but I want to talk about the traffic tab because there's cool stuff in there right now. It will show the rankings data for Bing.

Duane:    Exactly.

Rand:    It shows something called average rank and average impression rank.

Duane:    Exactly.

Rand:    So per-click rank and impression rank, what are the difference between the two?

Duane:    The way it works out is, because of the volumes that a search engine deals with, like millions of things every minute, essentially, what we're really showing you here is we're saying, when someone did query, the average impression -- where you showed -- is this position. It could be that the average works out to 3.2. So you were roughly the third position for all these queries. The next line over will show you what the click-through rate was. The average click-through rate for you may have been 9.8%, which pretty much falls in line with what we kind of all know and understand.

It's a realistic thing, right? Then the next column over is actually going to show you the average position you were in when that click happened. Now, here's where it gets really exciting for an SEO. If you know that you're in third place most of the time and your click-through rate was 10%, we'll say, but the clicks happen when you're in the first position, how does that 10% that you're getting being in the first position potentially compare with other people who may be in the first position? Now, we don't show you the competitive data, but it should get you thinking about this. Is 10% for me in the first position on this query a realistic amount?

Rand:    So, I can look at those numbers, and then I can say to myself, "Wait a minute. This doesn't match up with some of my better click-through rates.

Duane:    Right, exactly.

Rand:    I should be thinking better title . . .

Duane:    Meta description, title, all that, exactly.

Rand:    URL string, rich snippets.

Duane:    Totally. Speaking of rich snippets . . .

Rand:    The stuff that Stefan was showing us, and it just rolled out is pretty slick. You've got that nice sort of box, and there's the guy and he's cooking up some piaya in there, whatever he's got. Then there's the title listing and the meta here.

Duane:    Yep.

Rand:    I mean that looks really slick.

Duane:    It is. I don't know what to say, other than if you're thinking about rich snippets, do it. It's very valuable to a search engine, which means it's very valuable to you and your content.

Rand:    What's the how of this? Is there stuff in Webmaster tools now or will there be?

Duane:    Not yet. Just as we were prepping for the session, we were talking about future looking things. Rich snippets is one of those still kind of floating for me ideas. I have to find the space for it. I have to understand what the value prop is, what the likely cost is to you, as a business owner. It's one thing if somebody has . . . if there's anybody out there who does plug-ins for WordPress and wants to make a rich snippet plug-in, might be useful to people.

Rand:    All right. Rich snippet plug-in . . .

Duane:    Because, I mean, you think about the plug-ins we have for WordPress already . . .

Rand:    Is Joseph watching this?

Duane:    I'm guessing there's already one out there, because rich snippets is a concept that's been around for a while now. So my money is on there's already one there.

Rand:    The question is, is the format that you're using the same format that I would use when I am submitting rich snippets to Google, or is this slightly different?

Duane:    It's a little bit different, but we're essentially looking for the same kind of points, right? We want this meta markup data to be able to help us understand exactly what this piece of content is. In a lot of cases, it's not going to matter because it's a regular content page . . .

Rand:    What is this image? How does it related to this page?

Duane:    Right, for that kind of thing, that's really important to us, because, yet still, even though it's 2011 and we are technology advanced, although we're still flying the space shuttle today, search engines still can't actually look at a picture and say, "Ah, that is a fat chef with piaya."

Rand:    Must be good.

Duane:    Right, exactly. Eats well.

Rand:    Awesome. Before we wrap up, there are three questions that I know webmasters should be curious about. You may not be able to give us a ton data about what's happening with Yahoo Site Explorer.

Duane:    I'm actually going to not quite pull a no comment on this one, but Yahoo Site Explorer is a Yahoo product, and we don't comment on their product pipeline or things they're working on. What I will tell you is, if you're looking for external link data, it's right here. So we have it for you, right? It's a similar product. We power it.

Rand:    Is Bing thinking about some way of showing competitive linking, so like I can go see the links to anyone? Or is that not a product that you're interested in at this point?

Duane:    I, personally, have a great deal of interest in it. Bubbling that up to what we can actually bring forward, there's a lot of layers to get through on that. Conversations like that, very nascent at this stage, meaning it's on my whiteboard. However, I am influenced by the greater user population. So, as people have feedback, I'm going to be at SMX in a couple of weeks, I'll be at South by Southwest, SES New York, specifically looking for feedback from people.

Rand:    Fantastic and in the blog comments.

Duane:    Exactly. If we have like . . . you mean I'm supposed to come to the blog. Oh, you didn't tell me that.

Rand:    What? You give up SEO and now you don't come and visit anymore. What's up with that?

Duane:    No. Seriously, if people do have feedback for it, right, I capture all of that data because that is a tool that I can use with our product planning folks to say, hey, look, we reached x number of thousands of people with this and the percentage that got back to us was like 18% said they want "A"'.

Rand:    So, you're telling me if I throw up a little survey on the blog and I ask people what they most want from Bing's Webmaster tools people . . .

Duane:    I will buy you a martini.

Rand:    All right. It's done. It's going to happen.

Duane:    There you go. There we go.

Rand:    Then, static rank, you know people . . .

Duane:    Yeah, it's pretty cool.

Rand:    Well, MSN and then Bing had this for years, this static rank rate, which my understanding is it has some of the logic of page rank, but a bit more advanced in terms of what it analyzes and what it looks at.

Duane:    There are a lot of signals that goes into calculating that, as I am sure there are for page rank. Now that I've kind of come inside . . .

Rand:    You can see those.

Duane:    . . . I get it now.

Rand:    So static rank, we sort of talk about like, hey, Bing wants more webmasters paying attention. They want more people downloading and installing their toolbar. What do you think about putting static rank in a toolbar or in Webmaster tools?

Duane:    Personally, I see a great deal of value for people in it. There's even the entire conversation about gaming and all that. We're kind of at the stage now where we're kind of really getting beyond all those things. Like the ability to deal with people trying to game something has evolved immensely. It's . . .

Rand:    Showing them a little one through twenty radiated bar isn't going to make them more . . .

Duane:    From the company's perspective, however, there's a lot of personal or I should say proprietary investment in this concept. So, what would make it out is got to go through a lot of layers again. However, in your poll . . .

Rand:    Put in static rank.

Duane:    Why not?

Rand:    All right. It's in there.

Duane:    I mean, seriously, if there's any tools people think they might want, let us know. I'd be surprised if we didn't already have a version of it floating around the ecosystem somewhere. Part of my job is to bring that all to one spot that's useful.

Rand:    I was going to say, you've done some cool stuff to bring Index Explorer into the public facing tools.

Duane:    Exactly.

Rand:    Last question, and this is around less Bing focused stuff or tool focused stuff, but we have this big content farms update, the farmer update that's coming out from Google, and there's been this discussion ongoing for a while around, hey what's up with people like Mahalo and eHow and Answers.com, who are essentially producing a page for every search term they can possibly ever find. Sometimes of okay quality, other times of really low quality. What's your opinion of how, if you were in charge of the algorithm of Bing and how it got handled, what would you do?

Duane:    I'd be looking, and this is the toughest part of it, is separating the wheat from the chaff. These guys seriously have some depth in areas that are legitimate answers to questions. How do you, you can't look at a domain level solution and say, okay, if you're this domain, there you go. It's incredibly hard to crack it. I'd be seriously looking at talking with these businesses and making sure they understand the value and what their role is in the ecosystem.

Rand:    I was going to say, could the same thing that you were talking about with sitemaps apply here, where it's like, hey, you guys don't do a good job of curating the content you produce. You're trying to game things. We don't like that.

Duane:    I'm working, right now, on my whiteboard, it's this size and it's absolutely full, chock full with content that I have to write, I have to produce. If people who were actually producing shallow and non-relevant content read the basic, the top five points of it and just adhered to that, they wouldn't have an issue. This is my biggest takeaway. Having run the SEO side of something and then come over to Webmaster and I'm kind of looking at it from another point of view now, is seriously sweat your content, sweat being an authority. That's what you have to invest in. If you think there's a short cut to get there, I can almost guarantee you there's not. It takes hard work.

Rand:    And it's weird too because I think that a lot of these businesses look at what the algorithms are doing and they say, "But I'm clearly getting away with it. Why wouldn't I take advantage of this in the short term?" Well, maybe you can bring it back to your team. But I would love to hear maybe some content from you guys in the blog in the future like, look, we gave you another 90 days to get your crap out of our index before we do it for you and you're not going to like what we do.

Duane:    That's a legitimate approach too. It's our index. We've got to keep it clean and keep the users happy.

Rand:    Duane, this has been fantastic. I think folks have likely learned a lot. We're going to grab some screen shots from some of the things that we talked about, put them in here. We're going to run a poll next week and ask people for some suggestions on Bing.

Duane:    Awesome.

Rand:    We hope that you'll come back and join us again.

Duane:    Absolutely.

Rand:    Thank you so much.

Duane:    Great. Thanks for having me.

Rand:    Take care everybody.

Duane:    Thanks Mozzers.

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Seth's Blog : broken link, fixed

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broken link, fixed

Sorry guys, here's the correct link from the previous post: http://www.thedominoproject.com/2011/03/poke-the-box-the-workbook.html

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Seth's Blog : Initiators #2 [and a free workbook]

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Initiators #2 [and a free workbook]

[There's now a free digital workbook to go with Poke the Box. Subscribers to the Domino blog got it already. You can find it here.]

For thousands of years, restaurants were dull. Feeding the public is hard work, and being a chef was perhaps a craft, but not often an art.

Consider, then, the case of Grant Achatz, founding chef at the groundbreaking restaurant Alinea and his new restaurant, Next. Every three months, the restaurant is going to abandon its entire menu and start over. First up is a recreation of nineteenth century French food. Then, a futuristic Thai menu. Set it and forget it is precisely not the point. Given all the places you could go for dinner in Chicago, surely this one is now on the list... iniative is the reason.

Or David Chang, raised in Virginia, of Korean descent, who started a career in New York by building an homage to a Japanese noodle bar that may or may not be named after the inventor of dried ramen noodles. Chang is an iconoclast (he adds bacon to his broth, just because he can) and is on a tear, piling up one innovation after another. Failures along the way? Definitely. That's part of what it means to move forward.

And finally, Sarma Melngailis, a chef and entrepreneur who continues to redefine what a chef is supposed to do all day. She found a niche and started poking, building, launching and learning. Is a juice made from yuzu and dandelion for everyone? Of course not. That's part of the point.

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West Wing Week: Green Eggs and Governors

Your Daily Snapshot for
Friday, March 4, 2011

West Wing Week: Green Eggs and Governors

West Wing Week is your guide to everything that's happening at 1600 Pennsylvania Avenue. It was a busy week on the 18 acres, with President Obama welcoming the nation's governors, UN Secretary General Ban Ki-Moon, and Mexican President Felipe Calderón to the White House. The First Lady and Education Secretary Arne Duncan also helped kick off Education Month at the Library of Congress.

Watch the video.

Seth's Blog : The worst moments are your best opportunity

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The worst moments are your best opportunity

That's how we judge you and how we remember you.

You are presumed to be showing us your real self when you are on deadline, have a headache, are facing a customer service meltdown, haven't had a good night's sleep, are facing an ethical dilemma, are momentarily in power, are caught doing something when you thought no one else was looking, are irritable, have the opportunity to extract revenge, are losing a competition or are truly overwhelmed.

What a great opportunity to tell the story you'd like us to hear about you.

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joi, 3 martie 2011

Mish's Global Economic Trend Analysis

Costa Mesa to Lay Off 43% of City Workforce, Outsource Services; Nearly Half-Way There; The Ideal Number of Public Employees is Zero
Goldman's Blood-Sucking Leeches Model, Money Multipliers, Macroeconomic Dark Ages, the Taylor Rule, and Nonsense from Trichet
Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You!

Costa Mesa to Lay Off 43% of City Workforce, Outsource Services; Nearly Half-Way There; The Ideal Number of Public Employees is Zero

Posted: 03 Mar 2011 05:11 PM PST

The City of Costa Mesa, with a population over 100,000, is about to become 43% closer to the idealized goal of no city workers.

In a massive step in the right direction, Costa Mesa to lay off nearly half of city workforce, outsource services.

The city of Costa Mesa plans to lay off more than 200 employees and outsource 18 city services by the fall.

The layoffs would cut the city's municipal workforce by 43%. The City Council approved the layoffs in a 4-1 vote late Tuesday night, despite nearly unanimous opposition from the audience.

City officials said pink slips will go out in the next six months. The mayor blamed years of missteps by city staff and rising pension costs.

Almost half of city work force gets pink slips

The Daily Pilot has more details in Almost half of city work force gets pink slips

About 203 city employees will be receiving the six-month notice in the City Council effort to correct the budget.

City officials have crunched the numbers and determined that more than 200 Costa Mesa employees — or 43% of Costa Mesa's municipal workforce — could be laid off through outsourcing.

Of the 472 full-time positions, 203 city employees, give or take one or two, will get pink slips notifying them that they could be laid off in six months, said Administrative Services Director Steve Mandoki.

Tuesday's move is part of a dramatic restructuring of a city that faces potentially skyrocketing pension costs in the coming years.

Costa Mesa's own projections show that in the next few years, it will be expected to pay more into the state's public pension fund, CalPERS. It's a situation being replayed up and down the state: When the CalPERS pension fund was flush in the early 2000s, Costa Mesa did not have to pay much to the state to cover its employees' retirement costs. Now that CalPERS investments are hurting, cities have to cover the difference.

That pattern looks to continue for at least the next five years, city officials project.

Laying off hundreds of employees and their accumulating pensions by the fall would help to balance the city's budget in years to come, council members reason.

"We're going to run out of money sometime this year if nothing changes," said Councilman Eric Bever.

Costa Mesa Half-Way There

The best way to deal with public employees and their overly generous pension contracts is to not have public employees at all.

I commend Costa Mesa for a huge but incomplete step in the right direction.

Other than a small number of elected officials and a few administrative assistants, the correct number of public employees is zero.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Goldman's Blood-Sucking Leeches Model, Money Multipliers, Macroeconomic Dark Ages, the Taylor Rule, and Nonsense from Trichet

Posted: 03 Mar 2011 12:40 PM PST

Caroline Baum has an excellent column on Bloomberg today regarding money multipliers and a Goldman Sachs projection of what Republican budget cuts may do to the economy.

There were so many things in her post I wanted to reference that I asked Caroline if I could use her entire post. She graciously replied "Let 'er rip".

Goldman's Model Evokes Blood-Sucking Leeches: Caroline Baum

Macroeconomics really is stuck in the Dark Ages.

Take "fiscal stimulus," for example, the idea that the government can step in to fill the void when the private sector isn't spending and boost economic growth in the process.

Economists have been debating the pros and cons of fiscal stimulus since the 1930s, when John Maynard Keynes diagnosed the problem as one of inadequate private investment and prescribed public spending, financed by borrowing, as the cure.

The discussion hasn't advanced very much in eight decades. Sure, economists have devised elegant mathematical models that purport to show that $1 of government purchases translates into -- take your pick -- no increase in gross domestic product (the multiplier is zero, according to Harvard's Robert Barro) or $1.50 of GDP (a multiplier of 1.5, according to Berkeley's Christina Romer, who was chairman of President Obama's Council of Economic Advisers when the $814 billion stimulus was crafted in 2009). They haven't really proven anything.

Keynesian economics went into hibernation in the latter part of the 20th century following an array of stimulus failures on the part of both Democratic and Republican administrations in the 1970s. The only thing the spending stimulated was stagflation.

In the 1980s, inflation came down, the Berlin Wall came down, economists thought the volatility of the business cycle had come down, and the notion of government as the solution went out of vogue.
Keynesians All

All it took was a good financial crisis for the Keynesians to come out of the woodwork.

The debate over fiscal stimulus went viral last week (at least in the geek world) with an economic forecast from Goldman Sachs Group Inc. (GS), a counter from Stanford University economist John Taylor (he of the Taylor rule), and an addenda from Goldman yesterday.

The Goldman gang projected an economic drag (that would be the opposite of stimulus) on GDP growth of 1.5 to 2 percentage points in the second and third quarters if House-passed budget cuts of $61 billion for the remainder of fiscal 2011 become the law of the land.

Asked about the Goldman forecast Tuesday following testimony to the Senate Banking Committee, Federal Reserve Chairman Ben Bernanke demurred.

"Our analysis doesn't get a number quite like that," he said. "Two percent is an enormous effect."

He could have added: "especially when the rest of government is growing."
Wrong on Everything

"Total government spending is up 6.7 percent in 2011 from 2010," Taylor told me in a telephone interview.

Defense spending is rising, as are non-discretionary outlays for programs such as Medicare and Social Security that are on automatic pilot.

The proposed cuts would reduce non-defense non-security discretionary spending, a teensy share of the federal budget, back to 2008 levels.

In a Feb. 28 blog post, Taylor said Goldman's analysis was "wrong." He criticized it for failing to consider the beneficial effects that expectations of lower future deficits and smaller tax increases would have on the economy. He criticized the methodology for relying on the same "large multiplier theory" used to justify the 2009 stimulus. And he criticized the assumption that proposed spending equates with actual spending, which trickles out over time.

Aside from that, Mrs. Lincoln, the Goldman analysis was spot on.

'Alchemists and Quacks'

This fundamental disagreement among professional economists about whether government spending helps or hurts represents the state of the art, or science, today. In what other science do practitioners design a treatment plan based on inconclusive proof that the medicine does any good?

There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out. Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as "alchemists and quacks."

A bit harsh, perhaps, but he'd probably hold macroeconomic models in the same high regard.

Whenever oil prices spike, modelers instantly project how much the increase will subtract from GDP growth. No mention of why prices are rising. Is it the result of a supply shock, which results in higher prices and reduced quantity demanded, or an outward shift in the demand curve, which equates with higher price and quantity demanded? There is a difference.

Known Knowns

In microeconomics, which is the study of how individuals and firms interact in specific markets, certain truths are self-evident. Which doesn't mean economic planners can see them. Governments across Asia right now are using subsidies and price controls to ease the pain of higher oil and food prices even though their actions will exacerbate the crisis.

Goldman countered Taylor's critique with a clarification. The projected 1.5 to 2 percentage point hit to GDP was to the quarterly annualized growth rate, not to the level. Thanks for that.

As I said before, we entered the 21st century with macroeconomics still looking for an Age of Enlightenment.

Five thousand years ago in ancient Egypt, medics used leeches to suck the blood of ill patients, believing the practice could cure everything from fevers to food poisoning.

Today's physicians have largely forsaken bloodsuckers for modern medicine. It's about time macroeconomics emerged from the Dark Ages as well.

Caroline Baum, author of "Just What I Said," is a Bloomberg News columnist. The opinions expressed are her own.)

Dark Ages Indeed

I am wondering "How many times does an economic model have to be discredited before it is discarded?"

This idea that government spending can stimulate the economy is total nonsense. If it worked, we would see something more than 2.8% economic growth for a deficit of $1.4 trillion dollars.

The Fed purchasing Trillions of Fannie Mae and Freddie Mac bonds did nothing for housing, nor did several rounds of housing tax credits.

Government spending accounts for an ever-increasing share of GDP. Moreover, the only reason GDP is up at all is that by definition, government spending adds to GDP. The multiplier is actually negative. It takes an increasing amount of "stimulus" spending just to say in the same spot.

Taylor Model Nonsense

Taylor criticizes the Goldman multiplier model and rightfully so.

However, his own economic model is fatally flawed. He believes all the Fed needs to do is go on autopilot, hiking or lowering interest rates in accordance with the Taylor Rule.

In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank would or should change the nominal interest rate in response to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP. It was first proposed by the U.S. economist John B. Taylor in 1993. The rule can be written as follows:
$i_t = \pi_t + r_t^* + a_\pi ( \pi_t - \pi_t^* ) + a_y ( y_t - \bar y_t ).$
In this equation, $\,i_t\,$ is the target short-term nominal interest rate (e.g. the federal funds rate in the US), $\,\pi_t\,$ is the rate of inflation as measured by the GDP deflator, $\pi^*_t$ is the desired rate of inflation, $r_t^*$ is the assumed equilibrium real interest rate, $\,y_t\,$ is the logarithm of real GDP, and $\bar y_t$ is the logarithm of potential output, as determined by a linear trend.

Unmeasurable Economic Gibberish

The idea that interest rates can be set by mathematical modeling when the variables themselves are subject to debate as to how to measure them is preposterous.

Take the CPI for example. I believe home prices should be in the CPI. They used to be.

Somewhere along the line some theorist decided "owners' equivalent rent" (OER) was a more valid concept. What is OER? It is the amount one would pay himself if renting a house from himself. It is the single largest component of the CPI. The measure of inflation from 2002 to now would be wildly different if one used actual home prices instead of OER.

Which model is more accurate? Look at the Fed's chasing-its-tail actions hiking in baby steps on the way up, then lowering interest rates to zero when the economy collapsed.

ECB President Jean-Claude Trichet, a Keynesian Clown Too

Just today, Jean-Claude Trichet is talking about hiking rates in Europe.

His concern is pass-through inflation as noted in the Bloomberg article Trichet Says ECB May Raise Rates, Show `Strong Vigilance'

"There is a strong need to avoid second-round effects," Trichet said, calling for moderation from wage and price setters. The ECB is "prepared to act in a firm and timely manner."

This whole idea of pass-through inflation and second-round effects is yet more Keynesian claptrap. If someone pays more for gasoline, they have less to spend on clothes. It is as simple as that, but not to those purposely hiding behind economic models and their multiplier effects.

Alchemists and Quacks Galore

Making decisions on flawed models is bad enough in closed economic society.

Errors in every model are exacerbated by the fact we have a global economy subject to economic pressures of all kinds from countless places.

Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as "alchemists and quacks." There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out.

On that basis, the analyst from Goldman Sachs, Taylor, Bernanke, Krugman, Greenspan (and countless others) are all quacks.

Why Model at All?

There are no control studies because it is impossible to do them.

The real world is constantly changing, while mathematical models, Goldman's and Taylor's alike sit there as unmeasurable economic gibberish, when every component is subject to measurement errors and debate about what needs to be measured in the first place.

End the Fed

The free market could not possibly have done a worse job in setting interest rates than the perpetual chasing-their-own-tail central bank tactics that continually create boom-bust bubbles of ever-increasing amplitude in both directions.

If central bankers knew where interest rates should be we would not be in this mess, or at least the mess would be smaller. For further discussion about what the Fed does and does not know, I strongly encourage you to read the Fed Uncertainty Principle.

Ironically, the one thing the Fed never mentions and the ECB seldom mentions is money supply.

Here's the deal: Inflation is a direct result of the cheapening of money. Strike that, inflation IS the cheapening of money and central bank policy in conjunction with fractional reserve lending is the cause.

Central bankers do not talk about such things because they are at the root of the problem.

The solution of course is to not only get rid of the Taylor rule, but to get rid of the Fed, the ECB, and central bankers around the globe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You!

Posted: 03 Mar 2011 03:09 AM PST

A large number of people have recently come out in support of extortion, bribery, coercion, and even slavery. They don't realize it, but I can make a rock-solid case.

Here is a partial list of prominent names willing to support or ignore slavery for political reasons.

Paul Krugman, a Nobel prize winning economist and writer for the New York Times
Bill Maher, an extremely popular stand-up comedian and host of HBO Real Time with Bill Maher
Stephen Colbert host of Comedy Central's The Colbert Report
Harold Meyerson, a columnist for the Washington Post.
Yves Smith author of the site Naked Capitalism and one of the most popular economic bloggers country
Rick Ungar, a writer for Forbes magazine.

Of course, no one on the above list has actually stood and said "I support slavery", yet they all do. I will build the case piece by piece, ending with a charge of slavery from two different angles, from the point of view of the employer and the employee.

Coercion, Bribery, Threats

In Workers toppled a dictator in Egypt, but might be silenced in Wisconsin Harold Meyerson at the Washington Post compares the Wisconsin union protesters to Egyptian freedom fighters.

I think it is more like Grecian protests and coercion. Here are a couple of YouTube videos to consider, showing typical public union thug tactics.

Give up the Bucks

Link if the above video does not play: Give Up the Bucks

SEIU Spokesperson Threatening California Lawmakers with Union Retaliation

Link if the above video does not play: SEIU Retaliation

Meyerson supports collective bargaining as a "right". I suggest something different.

Collective Bargaining is Extortion

Collective bargaining is not what its name indicates. In fact, it means exactly the opposite of what you'd guess. Collective bargaining refers to the obligation of an employer to recognize the elected representatives of a group of workers and his further obligation to negotiate with those representatives. This last part is what makes 'collective bargaining' extortion.

Under collective bargaining laws, employers have to recognize an elected union and have to negotiate with them.

Over time, the repetitive process of extortion, coercion, and bribery (shown in the above videos), results in politicians taking bribes (votes or cash) in return for legislation unions want. No one speaks for the taxpayer any step of the way.

Businesses do not have a choice other than to move their business to another state. Then when they do, the workers cry foul. Those businesses unable or unwilling to move are slaves to the system.

The right to terminate the employer-employee relationship is a fundamental right of both employer and employee. Employment should be mutually beneficial to employer and employee and open to termination by either when it becomes non-beneficial (limited of course by any voluntary contractual agreements).

Collective Extortion

Meyerson's comparison to Egypt is 180 degrees reversed. Those Madison protesters were not fighting for democracy but rather to preserve a system of collective extortion.

Unions threaten, bully and bribe their way into power and want more every step of the way.

Convenient Nonsense

Yves Smith at Naked Capitalism takes a different tack in Wisconsin Union Battle: A Convenient Distraction From the Real Culprit in State Budget Woes.

She approaches the situation from the angle that public union workers are not overpaid, citing self-serving studies by union sympathizers at the Economic Policy Institute.

Her most preposterous claim is "The one group in which public sector workers are modestly more highly paid is non-high-school graduates, which one assumes include sanitation workers and janitors. Even then, the premium is not large."

For starters, no one in the private sector gets benefits like those in the public sector. Those who did (GM, Ford, Airlines) all went bankrupt.

Job by Job Comparison

Union apologists frequently claim that stats that show union workers make no more than their exact non-union counterparts. In some cases that may be true, but when so, it's primarily because of prevailing wage laws.

If states have to pay a "prevailing wage" and that "prevailing wage" is a union wage, then by definition non-union wages will be as high, by mandate. Is that a valid comparison?

Prevailing wage laws not only rip off taxpayers, they also discriminate against businesses who can do the job better, for less money.

Education Red Herring

The most frequently used reason for the preposterous claim that public workers are underpaid is an assertion that public workers are better educated.

Please consider prison guards, transit workers, police, janitorial services, etc., most with nothing more than a high school education plus a little training. Many of those groups have 6 figure pensions.

Nonetheless, let's pretend for a moment public sector workers are better educated. Certainly teachers are likely to be better educated than the average person in general. I will grant you that, and there certainly are a lot of teachers.

However, what would those degrees be worth in the private sector? What is an English degree worth? Art? Poetry? PE?

Let's now consider highly educated persons working for the BLS on unemployment statistics. What are those employees really worth given a Gallup survey produces comparable results for free?

Do we need the Department of Education? The Department of Energy? The BLS?

Look at all the highly educated people in the department of education. Then look at US test scores. Then look at the failure of "No Child Left Behind".

Should the Department of Education exist at all? The Department of energy? HUD?

Why?

I would fire every one of them tomorrow, regardless of their education.

All of the people in those bureaucracies may very well be highly educated, but how many of them do anything useful that the private sector would not do better, faster, and cheaper?

To be fair, I am quite sure that there are a small percentage of workers who would make far more in the private sector. However, many of them, if not most of them would struggle to find a job at all.

We should cast them all free. Then we can see what they are worth. Instead we tax everyone to death via a combination of income taxes, sales taxes, and property taxes on the assumption public workers are worth more.

Public Unions Have Bankrupted Cities and States

State pension plans are $3 trillion in the hole, and that does not count city and county plans that are likely another $3-5 trillion in the hole. Public unions have bankrupted hundreds of major cities. The day-of-reckoning is upon us.

Gina Raimondo, a Rhodes Scholar and treasurer of Rhode Island is one of few politicians willing to admit the true score. While most politicians cite underfunded liabilities of $1 trillion, the true score is $3 trillion on an actuarially sound methodology. And that is just for state pensions. It does not include cities.

PBS News Hour Interview

Please consider a recent PBS News Hour interview In Tiny Rhode Island, a Massive Public Pension Crisis Looms

GINA RAIMONDO: Today, Rhode Island has a $5 billion unfunded liability, which is the highest unfunded liability per capita of any state in the country.

In 1998, our budget was paying $145 million into the pension. This year, we will be $335 million. And five years from now, it will double again.

PAUL SOLMAN: In Rhode Island, as elsewhere, the root cause is plain and simple: Governments gave workers benefits instead of raises, salting away a pittance to pay for them.

GINA RAIMONDO: So, I could promise you today, in 25 years, when you retire, you will have a very rich benefit. And by the time you come to collect, I'm long gone. I'm no longer in office.

PAUL SOLMAN: But without dramatic changes to the pension system, Rhode Islanders face dramatically higher taxes and/or austerity.

GINA RAIMONDO: This problem of the pension, Rhode Island faces it; every state in the country faces it.

The unfunded pension liability nationwide is a $3 trillion problem. TARP, we were prepared as a country to put aside $700 billion. The bailout of Fannie and Freddie was $400 billion. They all pale in comparison to the enormity of this financial challenge.

And marginal change won't fix it. Tinkering won't fix it. Pretending we don't have a problem won't fix it. Looking in the eye of this enormous financial problem honestly and recommending fundamental changes to a system, I believe, is the solution.

How Badly is Your State Underfunded?

For a state by state look at the pension problem, please consider Interactive Map of Public Pension Plans; How Badly Underfunded are the Plans in Your State?

Promises Cannot, Will Not Be Met

Union members say it would be unfair to renege on promises. Actually it wouldn't. The reason is the contracts are fraudulent. Benefits were "guaranteed" via a process of extortion, threats, bribery, and coercion.

There is no legitimate need to honor fraudulent contracts. Secondly, it is less fair for those just out of college with low paying jobs and no chance of huge benefits to bear the brunt of the burden.

Nor is it remotely fair to tax high income wage earners for this purpose. If there is a tax on high wage earners, it should go towards reducing the deficit, not to a collective group of extortionists.

Proposed Pension Underfunding Solution

My solution would be to tax public union benefits above a certain amount at an extremely high penalty rate of say 90%. Those taxes could be fed back into the pension system to guarantee wages and benefits for those under the threshold.

The vast majority of union member should support my plan because it would guarantee their benefits. Should it come down to a bankruptcy or default situation instead, a bankruptcy court may not be as beneficial to those on the bottom of the totem-pole as my proposal.

Colbert Report and HBO Real Time with Bill Maher

Both Stephen Colbert and Bill Maher have had numerous segments lately in support of public unions. I think Colbert is one of the funniest guys on the planet. It is one of the few shows I enjoy watching.

However, the following union-suck-up was out of character as to how challenging he normally is on guests.

In the above clip, Randi Weingarten, the president of the American Federation of Teachers, talks about "people's rights" and Colbert not only goes along with it, but feeds her powder-puff pitches all along the way.

The fact of the matter is there are indeed rights, such as the right to not belong to a union and still have a job, the right to not have union dues go to things you do not support, and the right to start a business and hire who you want as long as you do not discriminate by race, religion, etc.

In one recent episode of Real Time, Maher said he does not understand the negative sentiment towards public unions.

Perhaps Maher would "get it" if HBO bumped his show off the air with a statement "I am sorry Bill. You have a popular show, but we need to cut programming. Based on union seniority rules your show is next to go".

Lies Exposed

Rick Unger writing for Forbes talks about The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Employee Pensions

Unger makes the preposterous claim that public unions pay their own way via deferred compensation.

Unger is another one who simply does not understand exponential math and what it means when pension benefits need to accrue at 8% a year to stay solvent. Nor does he seem to understand how deep in the hole these pensions are, and that unions getting in bed with politicians is the problem.

Enormous numbers of public union workers can retire at age 55, collecting more years in benefits than they ever worked, especially if they are in the public safety sectors. They make more in retirement than they do working.

Unger has no idea how much one would have to contribute to collect the benefits actually promised. However, that point is actually moot because ....

Public Union Members Contribute Nothing

Regardless of what public union workers or their supporters claim to contribute, they actually do not contribute a dime. Their salaries are taxpayer funded. Taxpayers pay those benefits.

Think of it as a highway robber holding you up at gunpoint, demanding your wallet, and then claiming he funded his retirement with it.

Once again, to be fair, most public workers do some work. However, pay scales are totally distorted by extortion, bribery, and coercion compounded over the years.

And, as I have pointed out, many of those jobs should not exist at all. In those cases it is exactly like highway robbery.

Executive Pay Distributed

One seriously misguided economic blogger went through a hypothetical example that took $150 billion in bonus money of executives to $500 to every man woman and child in the country. Supposedly that would fix things.

Here are a couple simple questions:

Exactly how would giving everyone in the country $500 fix a $6 trillion (or whatever) pension hole?
Exactly how would it fix the problem of union extortion, bribery, coercion?

Preposterous Math

Numerous union apologists cite preposterous math that says TARP recipients got $12 trillion. They fail to point out those were loans not gifts. To be sure, taxpayers are on the hook for AIG, Fannie and Freddie, GM and numerous other things but it is absurd to present this as if was a gift of $12 trillion.

Even if it was, how would it excuse bribery, coercion, and fear-mongering by public unions? Since when do two wrongs make a right?

Even FDR Understood the Problem

Public unions get into bed with management and politicians and work out sweet deals for themselves at taxpayer expense. No one looks out for the taxpayer. Even FDR understood the problem.

Message from FDR

Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937.

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.

The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.

A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.

Political Power Play

Paul Krugman attacked the issue from a political point of view in Wisconsin Power Play and a second time in Shock Doctrine, U.S.A.

To Krugman, this is all about Republicans trying to stick it to Democrats.

The ultimate irony in Krugman's rant is that he is willing to overlook extortion, bribery, coercion and slavery as long as it suits his purpose.

Such is the "Conscience of a Liberal".

Bear in mind, he did raise a second issue, as have other bloggers, about language in the bill that would allow Wisconsin to "sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state."

Krugman is entirely correct on that provision. There is absolutely no excuse for un-bid contracts of that scope. That "un-bid" provision should be stricken from the proposed law.

Union Intimidation Tactics Harm Public Safety

Last week I received an email from the wife of volunteer firefighter Chris Olbu. Chris is a firefighter in the state of Washington. If ever there was a set of true public servants, it is volunteer fire department workers.

I salute public hero Chris Olbu, and all those in his shoes.

Olbu also works for Boeing, as a firefighter. He does not want to be in the union, but he has to be in the union to work for Boeing in his current position. Moreover, as a result of being in the union, he can no longer be in the volunteer fire department for his city.

You can read about Olbu in Island residents worried union intimidation tactics may harm public safety.

Chris Olbu's Story

To get employment Chris has to be in a union he does not want to be in.
Chris has to pay union dues for causes he does not support.
The International Association of Fire Fighters (IAFF) union (not Boeing), forced Chris to resign from the volunteer fire department.
His resignation harms public safety

Chris is a Slave

Notice the cascade of events. Chris has no choice as to whether or not to belong to a union. To get a job at Boeing as a firefighter he has to belong to a union. This came about in the usual way of course, which is to say extortion, bribery, and coercion.

As a result of that involuntary servitude, the International Association of Fire Fighters (IAFF) is now telling Chris what he can or cannot do with his free time.

I am looking for free legal assistance from lawyers in the state of Washington willing to pursue this case for Chris, all the way to the Supreme Court of the United States if necessary. I am also looking for similar volunteers in other states for those in a situation like Chris.

Corporations are Slaves Too

Boeing would gladly hire Chris as a non-union employee, but it can't. Instead Boeing is pondering moving various operations to states that do not support slavery.

There is one other point as well. Promotion in unions is not based on seniority but rather longevity. No matter how much better Chris may be at his job, he will always play second fiddle to anyone with higher seniority.

Both corporations and talented employees suffer at the hands of slavery.

President Obama is the Slave Master

Please consider the following quote heard recently at a tea party in Denver.

... They are trying to distract you to make you think that what they are all about is the right thing. In reality you're just a pawn to them, a pawn that the Democratic Party and Barack Obama are using to keep them in power. This is a form of slavery. Liberals are enslaving themselves. Barack Obama is their slave master and they are doing his bidding for him. They don't see it that way but that's how it is.

Was it a white racist who said that?

No it wasn't. It is the man waving the Gadsden flag in the following image.

That is Leland Robinson, 51, a Denver native. He was hounded and harassed in Denver by an aggressive woman in a purple SEIU shirt who told him ...

"You're an entrepreneur, so you don't work. You don't know what work is until you get into an educational area. … You're uneducated, unethical, immoral, and you don't know what life is. That's your problem. Why don't you go behind that fence where you belong? Why don't you go back with your own kind?"

Another woman in red made further racial comments "I asked you a question: Do you have any children? That you claim, that you claim."

A bystander asked "What did you mean when you said does he have any children that he claims?"

To which the lady in red replied: "Because he's such a free spirit and an entrepreneur, I would assume that he's not supporting children."

Racism and Incivility

The above are clips from Racism and Incivility Aimed at Tea Party in Denver. Inquiring minds will want to give it a closer look.

Slave States

The above map courtesy of Talking Points Memo.

Willingness to Overlook Slavery

Paul Krugman, Bill Maher, Stephen Colbert, Yves Smith, Harold Meyerson, Rick Ungar, and countless others are all willing to overlook slavery because it suits their political and socialist agenda.

The blatant hypocrisy of it all is they accuse others of playing politics.

Challenge to Stephen Colbert

I would like to see Leland Robinson or Chris Olbu on the Colbert Report to discuss these issues, and I would gladly take on Bill Maher myself.

Numerous Problems

To be sure there are numerous other problems. The budget deficit is $1.4 trillion. We waste far too much money on warmongering. I would slash military spending an enormous percentage if I could decide.

We certainly have a situation of income inequality. The root of that problem is perpetual Fed bubble blowing with bank bailouts after every crisis. Too big to fail needs to stop, and it needs to stop now.

The irony of executive pay and banker bailouts is they are a result of Fed policies, not a result of lack of regulation. The solution is to end the Fed.

Unfortunately, people want to tie numerous problems together. I have received many misguided responses from people saying they would support reining in the unions if we would put bankers in jail.

However, attempts to turn this into a collective finger-pointing exercise or stacks of red herring issues cannot and will not fly. The key point is regardless of what one thinks of Walker's motivation, the fact remains he is on the right side of the issue.

Please play the following video to the end. It's depicts an extremely important concept about liberty.

Philosophy of Liberty

Link if the above video does not play: Philosophy of Liberty

Inquiring minds are reading The Adventures of Jonathan Gullible: A Free Market Odyssey

The Philosophy of Liberty is a flash animation created by Kerry Pearson based on the prologue of Ken Schoolland's book, "The Adventures of Jonathan Gullible: A Free Market Odyssey".

It's a basic summary and introduction to the theory of individual rights.

"It certainly presents basic economic principles in a very simple and intelligible form. It is an imaginative and very useful piece of work."

--Milton Friedman, Nobel Laureate in Economics

Slavery is the Issue

The motivation of Governor Walker or any other governor, is not the issue here. Slavery is the issue, and forced union membership and forced collective bargaining are nothing more than slavery imposed via campaigns of extortion, bribery, and threats, for the benefit of the slave masters.

Somehow things are so twisted that slavery is now seen as a "right" even though collective bargaining and forced union membership robs businesses of their rights to hire, robs workers of their right to seek employment, and robs workers of their right to do what they want with their free time.

There is no excuse for slavery no matter how hard union apologists try, or how many red herrings they throw. To end this form of slavery, we need a set of national right-to-work laws, an end to collective bargaining by public unions, and an end to Davis-Bacon and all prevailing wage laws.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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