Tuesday, November 24, 2009
October 3, 1863
By the President of the United States of America.
The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God. In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union. Needful diversions of wealth and of strength from the fields of peaceful industry to the national defence, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consiousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom. No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy. It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquillity and Union.
In testimony whereof, I have hereunto set my hand and caused the Seal of the United States to be affixed.
Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the Unites States the Eighty-eighth.
By the President: Abraham Lincoln
William H. Seward,
Secretary of State
. . . We've heard a lot--and I suspect more than enough . . . about reverse discrimination, where the law distinguishes unfairly between blacks and whites. But we've heard far too little about sideways discrimination, where the law distinguishes unfairly between, say, landlords and tenants.
Steven E. Landsburg has argued in his book Fair Play and now on his new blog that it’s generally acceptable (morally and legally) for tenants to discriminate against landlords, and workers to discriminate against employers, but not vice-versa. Here's how he explains it in Fair Play:
Let me illustrate with a stylized example economists love so much. Mary owns a vacant apartment; Joe is looking for a place to live. If Joe disapproves of Mary's race or religion or lifestyle, he is free to shop elsewhere. But if Mary disapproves of Joe's race or religion or certain aspects of his lifestyle, the law requires her to swallow her misgivings and rent the apartment to Joe.
Or: Bert wants to hire an office manager and Ernie wants to manage an office. The law allows Ernie to refuse any job for any reason. If he doesn't like Albanians, he doesn't have to work for one. Bert is held to a higher standard: If he lets it be known that no Albanians need apply, he'd better have a damned good lawyer.
These asymmetries grate against the most fundamental requirement of fairness--that people should be treated equally, in the sense that their rights and responsibilities should not change because of irrelevant external circumstances. Mary and Joe--or Bert and Ernie--are looking to enter two sides of one business relationship. Why should they have asymmetric duties under the anti-discrimination laws?
When the law is so glaringly asymmetric, one has to suspect that the legislature's true agenda is not to combat discrimination on the basis of race, but to foster discrimination on the basis of social status. By holding employers and landlords to a higher standard than employees and tenants, the lawmakers reveal their underlying animus toward employers and landlords. . .
If you don’t want to live in an Albanian-owned building or an work for an Albanian employer, that’s your right (no matter how strongly we might strongly disapprove of your attitude). By analogy, then, it might seem that landlords and employers should have the same right to discriminate.
Now clearly the situation is not that simple; landlords and employers are not the same as tenants and employees. But the question is: Are they not the same in any way that is morally relevant? The most frequently cited difference (in my experience) is that landlords and employers tend to have more market power than tenants and workers. Putting aside the question of whether that’s true, it can’t possibly be a full justification for treating landlords and employers differently, and here’s why: There are plenty of instances where we don’t think that market power takes away your right to discriminate. Extremely attractive people have a lot of power in the dating market, but I think it’s safe to say that almost nobody thinks the most beautiful among us should be forced to date Albanians, or to prove that they choose their partners according to some objective criterion other than national origin.
So if you think it’s OK for tenants to discriminate but not landlords, you’ve got to face the question: What is the ethically relevant distinction here? It’s clearly not market power, so what, if anything, is it? I do not deny that there might be a good answer to that question, but I must admit I can’t imagine what it would be.
. . . By what authority, after all, could Congress force all Americans to buy health insurance?
In a recent press release, House Speaker Nancy Pelosi, D-Calif., argues that constitutional objections to the individual mandate are "nonsensical," because "the power of Congress to regulate health care is essentially unlimited."
In answer to the question "by what authority?" Reid's bill offers the Commerce Clause — the go-to provision for friends of federal power. That clause gives Congress the power "to regulate Commerce ... among the several states."
It was a modest measure designed to regularize cross-border commerce and prevent interstate trade wars — so modest, in fact, that Madison described it in the Federalist as a clause that "few oppose, and from which no apprehensions are entertained."
The Founders would have worried more had they known that the Commerce Clause would eventually become a bottomless fount of federal power. In 1942's Wickard v. Filburn, the court held that the Commerce Power was broad enough to penalize a farmer growing wheat for his own consumption on his own farm.
That farmer, Roscoe Filburn, ran afoul of a New Deal scheme to prop up agricultural prices. The fact that he wasn't engaged in interstate commerce — or commerce of any kind — was quite beside the point. If "many others similarly situated" engaged in the same behavior, it would substantially affect interstate commerce, and frustrate Congress' designs.
In its "Findings" section, Reid's bill hits all the jurisprudential buzzwords: The individual mandate "substantially affects interstate commerce," and regulates "activity that is commercial and economic in nature." Activity like standing around without health insurance? Apparently so.
Yet, as the Congressional Budget Office noted in a 1994 evaluation of Clintoncare, an individual mandate would be "unprecedented. ... The government has never required people to buy any good or service as a condition of lawful residence in the United States." . . .
The U.S. Constitution can rescue us from the Obama administration's latest push toward "remaking America." Our Constitution is on the people's side to stop Obama from turning the judiciary into a platform for America's sworn enemies to spread their propaganda and even use our own laws against us.
Our Constitution's framers foresaw the probability that power-hungry men would try to take over the judiciary. So, they gave us the tools to maintain a government based on the separation of powers
The Constitution gives Congress the power to override this Obama-Holder outrage. Congress can and should prevent this travesty, and the sooner the better.
We don't need any 2,000-page legislation -- a single sentence will suffice. "Federal district courts shall have no jurisdiction over any case involving unlawful enemy combatants, as that term is defined in the United States Code (Title 10, Section 948a)."
Constitutional authority is clear. Article III, Section I, states, "The judicial power of the United States, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish."
Nothing is new or irregular about Congress prescribing or limiting the kinds of cases that federal courts are permitted to hear. A long historical record conclusively proves that Congress has the power to regulate and limit court jurisdiction, that Congress has used this power repeatedly, and the courts have accepted it.
The great Chief Justice John Marshall asserted in an 1807 Supreme Court case that "courts which are created by written law, and whose jurisdiction is defined by written law, cannot transcend that jurisdiction."
With Thanksgiving just around the corner, encouragement may come from an unexpected source: the Puritans.
Often misunderstood and perennially maligned, the Puritans—tested first by religious persecution and later by the elements in their primitive surroundings—grew not into the fuddy-duddy party-poopers of modern history books, but into a tenacious and stalwart people. They developed by sheer necessity one of the most highly defined and well-honed work ethics in history. If anyone knew a trick or two about surviving hard times, they did.
Defined primarily by their religious separation from the Church of England, the Puritans (not surprisingly) had a view of work in which God looms large. Living according to the Westminster Shorter Catechism, which states that "Man's chief end is to glorify God and enjoy Him forever," the Puritans believed that all of life, including their work, was God's, and, as such, infused with purpose and meaning. They saw hardship not as a sign of failure, but as a path to growth and maturity, a mind-set that kept them from the kind of work-related despair seen in today's news.
Reformer and forefather of much Puritan theology, Martin Luther, in his doctrine of vocation, taught that God gave each individual an occupational "calling." Man's vocation was not seen as impersonal and random, but as from a loving and personal God who bestowed each individual with natural talents and desires for a particular occupation. This thought further deepened the Puritan's sense of purposefulness, fortifying him in difficult times.
Much like modern work is separated into white and blue collar, 17th-century tradition held that sacred occupations (like priest or monk) trumped secular ones (like farming or blacksmithing). The Puritans, however, rejected such a distinction. Holding to "Whatever your hand finds to do, do it with your might" (Ecclesiastes 9:10), the Puritans sanctified the common, believing that all work, however lowly, if done for the glory of God, was good. Christ Himself "was not ashamed to labor; yea, and to use so simple an occupation," said Puritan Hugh Latimer. The farmer's plow became his altar, his tilling an act of service to God every bit as holy and valuable as the priest's, reminding the unemployed that temporarily taking a step down in pay or status does not equate to failure.
Long before the days of therapists and career coaches, the Puritans learned how to cope with depression. They scorned idleness, believing it was indeed the devil's workshop, bogging down the body in inertia, and leading to brooding. Luther had promoted the opposite, a life of diligence, saying "God . . . does not want me to sit at home, to loaf, to commit matters to God, and to wait till a fried chicken flies into my mouth." Long before endorphins were discovered, the Puritans knew that moving and tiring the body in manual labor (even if that labor is the unpaid kind that paints the house and organizes the garage) proved a talisman against a host of mental ills. . .
More than just an annual turkey fest, the Puritans gave America a pedagogy of work and an attitude toward life that upsets the modern notion that a person's occupation equals his value.
Monday, November 23, 2009
A North Dakota judge will hear arguments next month in a case of political correctness that has embroiled the state university for a number of years.
In 2005, the National Collegiate Athletic Association announced a complete ban on hosting post-season competition by 18 colleges that were using Indian mascots, logos or nicknames. The ban was to become effective in February 2006.
The NCAA made an assumption, jumped to a conclusion and adopted the politically correct viewpoint that using Indian heritage in such a manner was "hostile and abusive." The problem, it appears, is that no one bothered to check with the assumed aggrieved parties to determine if they were truly offended. . .
The NCAA signaled moral outrage at the University of North Dakota's Fighting Sioux nickname. Yet the association has remained silent on the fact that the school is (as are both the states of North and South Dakota) named after the Dakota tribe.
The NCAA's battle with UND has been raging for more than four years. Criticizing the Fighting Sioux nickname as racist, offensive and derogatory have been groups such as the school's faculty Senate and the state Board of Higher Education. They are seemingly undeterred by one significant group that wants the university to retain the nickname and logo. That is the Spirit Lake Sioux tribe, the nearby tribe from whom the school nickname is derived. The most absurd aspect of this politically correct ruckus is that non-native Americans are lecturing Native Americans on what should offend them. A hearing on the matter is scheduled in a county courtroom in early December. . .
Social Justice: Who Gives, Gets, Decides? by Bill Frezza
Do you have friends and colleagues who invoke the principle of "Social Justice" to justify new entitlement programs like the trillion dollar health care bill? Do their explanations of what constitutes Social Justice sometimes sound vague or situational, a bit like Justice Potter Stewart's infamous definition of what constitutes pornography? I can't define it but I know it when I see it.
The phrase Social Justice was coined by a Jesuit priest named Luigi Taparelli in the 1840s. The economic inequalities generated by the industrial revolution deeply troubled him. Reaching back to St. Thomas Aquinas, Taparelli tried to codify the moral obligations of good Catholics to share the bounty generated by new means of production. His work influenced Pope Leo XIII, who penned the Papal Encyclical Rerum Novarum (On Capital and Labor). While endorsing the right of workers to form unions, the encyclical is clear in its support of private property. "Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless wages ought not to be insufficient to support a frugal and well-behaved wage-earner". Social Justice, then, was born as a call to render unto God, not Caesar.
This state of affairs was not to last. An outspoken advocate of Social Justice during the 1930s and early 1940s was another priest named Father Coughlin. Anticipating Rush Limbaugh by more than half a century, Father Coughlin had a regular radio audience estimated at nearly one third of the American public. An early advocate of FDR's New Deal, Coughlin elevated the principle of social justice from a moral imperative to a political demand. As the Depression dragged on, a disaster he blamed on "an international conspiracy of Jewish bankers," Coughlin turned on FDR and began extolling more aggressive leaders promising hope and change. "We maintain the principle that there can be no lasting prosperity if free competition exists in industry!" Coughlin cried. His exemplars? Benito Mussolini and Adolf Hitler. . .
Friday, November 20, 2009
Forget about saving the environment for the sake of your children. It turns out that if you really care about the planet, you probably shouldn't have any children to begin with.
That's the thrust of the 2009 report from the U.N. Population Fund . . . The Fund has long believed that more people are a burden, not a boon, to human welfare. The idea is not new, and over the centuries has taken form in the view that too many people consume too many natural resources, or that more people necessarily means more poverty, or (much more sinisterly) that people prone to having many children are somehow the wrong kind of people.
Now the Fund has gone a step further, arguing that the scourge of reproduction is not just a question of raw numbers, but that humanity itself is destructive. "No human is genuinely 'carbon neutral,' especially when all greenhouse gases are figured into the equation," the report tells us in a section entitled "At the brink." "Therefore, everyone is part of the problem, so everyone must be part of the solution."
That sounds like a somewhat totalitarian formulation to us, even if the Fund goes out of its way to shed its image as a eugenics-advocacy group by swapping the term "population control" for "population dynamics." Indeed, the Fund—unusually for a U.N. organ—favors efficiency when it comes to culling our ranks, citing one finding that "dollar-for-dollar, investments in voluntary family planning and girls' education would also in the long run reduce greenhouse-gas emissions at least as much as the same investments in nuclear or wind energy." Even better, the report says other studies indicate that avoiding one billion new babies by 2050 would save as much energy as building two million one-megawatt wind turbines. The environmental argument extends equally to human welfare—the report notes that "the use of voluntary family planning directly decreases child mortality."
It's hard to argue with that logic: Eliminating life surely is the most expedient way to avoid the problems it brings. Of course this rationale ignores the possibility that one of those "prevented" lives might have been the one to cure cancer or HIV. Then again, why cure disease if human life itself is a cancer on the planet?
Thursday, November 19, 2009
How come on the one hand were told that our court system is the envy of the world because justice is always conducted fairly to those who are "innocent until proven guilty;" while on the other hand guarantee a conviction and death sentence in a trial yet to be held?
As such, our system must not be "fail safe" and thus the terrorist trials in U.S. courts are inherently flawed from the start and unjust.
. . . we can contrast Jamaica and Singapore. Both are relatively tiny states, with under 5 million residents apiece. Upon Singapore’s independence in 1965—three years after Jamaica’s own establishment as a nation—the two nations were about equal in wealth: the gross domestic product (in 2006 U.S. dollars) was $2,850 per person in Jamaica, slightly higher than Singapore’s $2,650. Both nations had a centrally located port, a tradition of British colonial rule, and governments with a strong capitalist orientation. (Jamaica, in addition, had plentiful natural resources and a robust tourist industry.) But four decades later, their standing was dramatically different: Singapore had climbed to a per capita GDP of $31,400 (2006 data, in current dollars), while Jamaica’s figure was only $4,800.
What accounts for the amazing difference in growth rates? There are many explanations: soon after independence, Singapore aggressively invested in infrastructure such as its port, subsidized its system of education, maintained an open and corruption-free economy, and established sovereign wealth funds that made a wide variety of investments. It has also benefited from a strategic position on the key sea lanes heading to and from East Asia. Jamaica, meanwhile, spent many years mired in political instability, . . . Dramatic shifts from a market economy to a socialist orientation and back again, with the attendant inflation, economic instability, crippling public debt, and violence, made the development and implementation of a consistent long-run economic policy difficult.
The latest hype is based on the new Centers for Disease Control and Prevention (CDC) estimate that 22 million Americans have been infected with H1N1 swine flu from the outbreak’s early-April beginning through October 17. (Though the word “sickened” hardly applies, since about a third of cases are wholly asymptomatic.) Of those, the agency says 4,000 have died.
Put in perspective, through a comparison with garden-variety seasonal flu, these figures aren’t at all alarming; and the CDC’s report indeed provides seasonal-flu data. But perspective is the alarmists’ enemy. . .
The CDC estimates 5 to 20 percent of the population (15 to 60 million people) gets the flu in a typical year, with almost all cases occurring from January through April. That’s as many as 15 million a month, compared to 22 million spread over half a year.
What’s truly unprecedented about this swine flu is its incredible mildness. The CDC estimates seasonal flu annually kills 36,000 Americans, again spread over four months. That compares to 4,000 swine-flu deaths in the current cycle. The seasonal-flu death rate therefore ranges from 0.06 percent to 0.24 percent, while the CDC estimate puts it at only 0.0182 percent for swine flu. So seasonal flu is three to twelve times deadlier per case. . .
Even more telling, though, is that the bottom has fallen out of new infections. Test samples doctors have submitted to CDC-monitored surveillance laboratories went from 26,000 two weeks ago to 21,000 last week to just 13,000 at present. Further, progressively fewer of those samples have actually shown flu. Overall, the number of positive samples has plunged over 60 percent in just two weeks.
But could these indicators start to shoot up again? Not likely. According to Farr’s law, named after 19th-century epidemiologist John Farr, infectious disease patterns follow a bell curve. . .
And that should actually prove to be good news. Consider that even without a vaccine, Australia along with New Zealand reported significantly fewer flu deaths than in normal years. Why? As I mentioned above, the newly released CDC estimate of infections and deaths in the U.S. indicates that seasonal flu is anywhere from three to twelve times deadlier than swine flu. Other data, including data from New York City, also indicate that swine flu is far milder. Yet swine flu spreads more easily, essentially outcompeting seasonal flu. In doing so, it’s essentially acting as a vaccine against its far deadlier cousin. (The father of vaccinations, Edward Jenner, observed something similar: Cowpox protected dairy workers from the often-deadly and horribly disfiguring smallpox.)
Swine flu, therefore, prevents more flu deaths than it causes.
Our dollar is crashing, while the price of gold is soaring. The budget deficit has never been worse — and the president wants to float even more debt for health-care and energy initiatives.
By the end of this presidential term, we may add another $9 trillion to our already astronomical $11 trillion debt. Unemployment has already topped 10 percent. This quarter’s trade deficit reached a near-historic high. Our debtors and oil exporters talk of scrapping the dollar as the common international currency.
American hesitation abroad reflects the shaky economic news. In Afghanistan, we can’t decide whether to seek victory or admit defeat — or simply vote present by keeping the status quo. President Obama reached out to enemies such as Mahmoud Ahmadinejad of Iran and Hugo Chávez of Venezuela. But so far they remain unimpressed, despite his apologizing for an assortment of supposed past American sins.
The Chinese don’t listen all that much anymore to our sermons on their human-rights, coal-burning, and free-trade abuses — not when they hold $1.5 trillion in U.S. assets. The president took a lot of flak for bowing to Saudi royals and the Japanese emperor. But why wouldn’t he show deference — given America’s huge dependence on foreign oil and Japanese imports?
France, of all nations, is now warning us to get a backbone with the Iranians. So far the theocracy has snubbed our new outreach efforts aimed at stopping its nuclear proliferation. Iran’s Russian patrons now talk more nicely to us — but mostly because we caved on land-based missile defense in Eastern Europe, and got nothing really in return.
The Norwegians gave Obama the Nobel Peace Prize after less than a year in office and without any real accomplishments. They must suspect that such global recognition will flatter Obama to push a now-unexceptional America toward a more multilateral perspective in tune with the thinking at the United Nations.
The Obama administration announced a kinder, gentler approach to the War on Terror. It serially promised to the world to shut down Guantanamo and loudly derided much of the Bush-era anti-terrorism protocols. We may put on trial former CIA interrogators, while we give civil trials and full American legal protection to the terrorist detainees who planned the 9/11 attacks.
Obama himself has praised the history and culture of the Islamic world, and even fudged the historical record to magnify its achievements.
Yet, so far this year, authorities broke up three radical Islamic terrorist plots inside the United States. And we lost twelve soldiers and one civilian (with others wounded) at Fort Hood; the accused, a member of our own military, has shown himself to be a Muslim extremist. Al-Qaeda promises more attacks, and the Taliban feel that American commitment to a free Afghanistan is weakening.
Add it all up and there is a growing sense that America is in fact hemorrhaging — as both friends and enemies abroad smell blood in the water.
Wednesday, November 18, 2009
"The economic categories we are concerned with refer to purely integrated functions, the ideal types refer to historical events. Living and acting man by necessity combines various functions. He is never merely a consumer. He is in addition either an entrepreneur, landowner, capitalist, or worker, or a person supported by the intake earned by such people. Moreover, the functions of the entrepreneur, the landowner, the capitalist, and the worker are very often combined by the same person."
"Entrepreneur means acting man in regard to the changes occurring in the data of the market. Capitalist and landowner mean acting man in regard to the changes in value and price which, even with all the market data remaining equal, are brought about by the mere passing of time as a consequence of the different valuation of present goods and of future goods. Worker means man in regard to the employment of the factor of production human labor. Thus every function is nicely integrated: the entrepreneur earns profit or suffers loss; the owners of means of production (capital goods or land) earn originary interest; the workers earn wages."
Tuesday, November 17, 2009
Questions: 1. What is "enough to eat?" 2. If these statistics are true, how can America's population be increasing and the primary health issues of heart disease and diabetes be caused from obesity?Forty-nine million people in American households — one in six — went hungry or had insufficient food at some point in 2008, the highest number since the government began tracking the problem in 1995. . .
The report, issued by the U.S. Department of Agriculture, found that 17 million people in the U.S. went hungry or did not eat regularly for a few days of each month over seven or eight months last year. That's a 45% increase from 12 million people in 2007. In 2008, 16.7 million children did not eat regularly at some point, up from 12.4 million in 2007. . .U.N. officials say 1 billion people — one in six globally — don't get enough to eat.
Somebody is not telling the truth
Monday, November 16, 2009
Ayn Rand on the Economic Crisis: The Objectivist philosopher forecasted today's government "stimulus,"By Adam Summers, From the Reason Foundation
. . . I wonder how many people know the origin of the term laissez-faire?
France, in the seventeenth century, was an absolute monarchy. Her system has been described as "absolutism limited by chaos." The king held total power over everyone's life, work, and property—and only the corruption of government officials gave people an unofficial margin of freedom.
Louis XIV was an archetypical despot: a pretentious mediocrity with grandiose ambitions. His reign is regarded as one of the brilliant periods of French history: he provided the country with a "national goal," in the form of long and successful wars; he established France as the leading power and the cultural center of Europe. But "national goals" cost money. The fiscal policies of his government led to a chronic state of crisis, solved by the immemorial expedient of draining the country through ever-increasing taxation.
Colbert, chief adviser of Louis XIV, was one of the early modern statists. He believed that government regulations can create national prosperity and that higher tax revenues can be obtained only from the country's "economic growth"; so he devoted himself to seeking "a general increase in wealth by the encouragement of industry." The encouragement consisted of imposing countless government controls and minute regulations that choked business activity; the result was dismal failure.
Colbert was not an enemy of business . . . Colbert was eager to help fatten the sacrificial victims—and on one historic occasion, he asked a group of manufacturers what he could do for industry. A manufacturer named Legendre answered: "Laissez-nous faire!" ("Let us alone!")
Apparently, the French businessmen of the seventeeth century . . . knew that government "help" to business is just as disastrous as government persecution, and that the only way a government can be of service to national prosperity is by keeping its hands off. . .
Regardless of the purpose for which one intends to use it, wealth must first be produced. As far as economics is concerned, there is no difference between the motives of Colbert and of President Johnson. Both wanted to achieve national prosperity. Whether the wealth extorted by taxation is drained for the unearned benefit of Louis XIV or for the unearned benefit of the "underprivileged" makes no difference to the economic productivity of a nation. Whether one is chained for a "noble" purpose or an ignoble one, for the benefit of the poor or the rich, for the sake of somebody's "need" or somebody's "greed"—when one is chained, one cannot produce. There is no difference in the ultimate fate of all chained economies, regardless of any alleged justifications for the chains. -Ann Rand, Let Us Alone!
Friday, November 13, 2009
The diaries of a British reporter who risked his reputation to expose the horrors of Stalin's murderous famine in Ukraine were put on public display for the first time Friday.
Welsh journalist Gareth Jones sneaked into Ukraine in March of 1933, at the height of a famine engineered by Soviet dictator Josef Stalin. Millions of people starved to death between 1932 and 1933 as the Soviet secret police emptied the countryside of grain and livestock as part of a campaign to force peasants into collective farms.
Jones' reporting was one of the first attempts to bring the disaster to the world's attention.
"Famine Grips Russia — Millions Dying" read the front page of the New York Evening Post on March 29, 1933. "Famine on a colossal scale, impending death of millions from hunger, murderous terror."
As starvation and cannibalism spread across Ukraine, Soviet authorities exported more than a million tons of grain to the West, using the money to build factories and arm its military. Historians say that between 4 million and 5 million Ukrainians perished in what is sometimes referred to as the Great Famine.Walking from village to village, . . .
"They all had the same story: 'There is no bread — we haven't had bread for two months — a lot are dying,"' Jones wrote in one entry. "We are the living dead," he quoted a peasant as saying.
Jones' eyewitness account had little effect on world opinion at the time. Stalin's totalitarian regime tightly controlled the flow of information out of the U.S.S.R., and many Moscow-based foreign correspondents — some of whom had pro-Soviet sympathies — refused to believe Jones' reporting. The New York Times' Walter Duranty, a Pulitzer Prize-winning journalist, dismissed Jones' article as a scare story. "Conditions are bad, but there is no famine," Duranty wrote. Other correspondents chimed in with public denials, and with his colleagues against him, Jones was discredited.
Eugene Lyons, an American wire agency reporter who gradually went from communist sympathizer to fierce critic of the Soviet regime, later acknowledged the role that fellow journalists had played in trying to destroy Jones' career. "Jones must have been the most surprised human being alive when the facts he so painstakingly garnered from our mouths were snowed under by our denials," Lyons wrote in his 1937 autobiography, "Assignment in Utopia."
Thursday, November 12, 2009
Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.
No third party is involved when we shop at a supermarket. We pay the supermarket clerk directly: the same for gasoline for our car, clothes for our back, and so on down the line. Why, by contrast, are most medical payments made by third parties? The answer for the United States begins with the fact that medical care expenditures are exempt from the income tax if, and only if, medical care is provided by the employer. If an employee pays directly for medical care, the expenditure comes out of the employee’s after-tax income. If the employer pays for the employee’s medical care, the expenditure is treated as a tax-deductible expense for the employer and is not included as part of the employee’s income subject to income tax. That strong incentive explains why most consumers get their medical care through their employers or their spouses’ or their parents’ employer. In the next place, the enactment of Medicare and Medicaid in 1965 made the government a third-party payer for persons and medical care covered by those measures.
We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?
~Milton Friedman in his 2001 article "How To Cure Health Care."
From Mark Perry's Carpe Diem Blog.
States are jockeying for a new $5 billion pot of education money even before the contest has begun. . .
Fewer than half the states are likely to win the money, and several already have rewritten education laws and cut deals with unions to boost their chances.
"I think you've got the right intentions, and you've got some positive movement," Allen said. "But unless you're willing to be strict and firm about your expectations and leave nothing up to interpretation, a lot of people will get money without having done very much."
The Department of Education reported the other day . . . Washington spent almost $68 billion more on education in fiscal 2009 . . . What has all that extra money actually bought? The main answer, trumpeted by the Obama administration in a new 250-page document, is jobs, jobs, jobs. . . It’s a fact that employment was an explicit purpose of stimulus funding . . .
Primary- and secondary-school enrollments have risen by about 10 percent since 1970, but the teacher rolls grew by 61 percent during the same period — an addition of some 1.4 million instructional personnel. . .
Let’s at least acknowledge that all these added employees have not boosted the performance of our schools and colleges. . . Eric Hanushek estimate that substantial gains in pupil achievement would follow from (permanently) ridding K–12 education of the weakest 10 percent of today’s teachers — even if that means adding a few pupils to the classrooms of those who remain.
To be sure, the $4.5 billion in “Race to the Top” money that remains to be committed in 2010 . . . could yet disintegrate into superficial compliance, canny grant-writing, and political arm-twisting . . .
The teachers who are beneficiaries of the grants are surely grateful. Their unions are undeniably pleased. But this is not the audacious change that was promised — and that is needed. Indeed, the 50 million young people who will end up repaying these 97 billion borrowed dollars might want to inquire about a refund.
The Fort Hood murders fit into a now familiar pattern of radical Islam-inspired violence that manifests itself in two principal ways.
First are the formal terrorist plots that radical Muslims have attempted, in coordinated fashion:
1. Blow up a bridge
2. Explode a train
3. Assault a military base
4. Topple a high-rise building
5. Najibullah Zazi was indicted for plans to set off a bomb in New York on the anniversary of 9/11.
6. Daniel Patrick Boyd and Hysen Sherifi were charged with conspiring to murder U.S. military personnel at the Quantico, Va., military base.
7. Hosam Maher Husein Smadi was arrested after being accused of placing what he thought were explosives near a 60-story office tower in Dallas.
8-27. More than 20 other domestic terrorist plots have been stopped by law enforcement agencies since 9/11
This means, on average, in the 98 months since 9/11, a radical Islamic-inspired terrorist plot has been uncovered every four months.
Second, there have also been “lone wolf” mass murders in which angry radical Muslims sought to channel their frustrations and failures into violence against their perceived enemies of Islam.
28. The just-executed sniper John Allan Muhammad voiced approval of Osama bin Laden and radical Islamic violence.
29. Naveed Afzal Haq, currently on trial for going on a murderous rampage at the Jewish Federation of Greater Seattle building. A survivor said Haq stated his attack was a “personal statement against Jews.”
30. Mohammed Reza Taheri-azar ran over nine students at the University of North Carolina. Officers said he told them afterward he wanted to avenge the deaths of Muslims worldwide.
31. Omeed Aziz Popal struck 18 pedestrians with his car near a Jewish center in San Francisco. Witnesses say he said, “I am a terrorist,” at the scene.
The facts of at least 31 acts of terror since 9/11 on American soil reveal an undeniable reality.
Every few months either an Islamic-inspired terrorist plot will be foiled, or a young Muslim male will shoot, run down, or stab someone while invoking anger at non-Muslims.
In other words, the attack on Fort Hood happened on schedule. It was the rule, not the exception. And something like it will occur again — soon.
Source: This was a re-write of: Same Old, Same Old at Fort Hood,This attack was the rule, not the exception, By Victor Davis Hanson in National Review
Wednesday, November 11, 2009
From Practical Economics,
Of all the economic delusions maybe the most dangerous is political correctness (PC). The idea that what sounds politically and socially palatable must be the best solution to a problem is thinly veiled intellectual thought. In other words, political correctness is a position based solely on what sounds good and feels right. Political correctness spreads because of the “parroting effect” where, for lack of analysis and cognitive exercise, people just repeat what they hear as truth. This is not to say that all PC thought is wrong as it applies to social, political and economic decision making, only that blind political correctness can lead to detrimental and, as history has shown, dangerous policy.
Conventional morality, secular humanism, moral relativity, or moral equivalencies are all similar principles that guide modern political correctness. These visions ignore basic principles of scarcity and cost leading to policies that are more concerned with doing what feels right than what is correct based on sound economic principles. Friedrich Hayek explained the problem of moral busybodies who base their actions on feelings when he said, “It is indeed probable that more harm and misery have been caused by men determined to use coercion to stamp out a moral evil than by men intent on doing evil.”
The PC crowd sees the world and its workings from the realm of what they believe to be common sense and conventional wisdom. As such, their analysis of problems and possible solutions only look to what can be seen in the here and now. Unfortunately, what sounds right or correct is often, as we have seen, the exact wrong thing to do in terms of economics. Because feelings and an emotional divining rod is substituted for empirical evidence and analysis, most people are easily swayed by inaccurate economic arguments. When sound bites generate a disingenuous picture that is easy for the public to digest, the roots of the PC problem take hold.
As an American, I am embarrassed that the U.S. House of Representatives has 220 members who actually believe the government can successfully centrally plan the medical and insurance industries. I'm embarrassed that my representatives think that government can subsidize the consumption of medical care without increasing the budget deficit or interfering with free choice. It's a triumph of mindless wishful thinking over logic and experience.
The 1,990-page bill is breathtaking in its bone-headed audacity. The notion that a small group of politicians can know enough to design something so complex and so personal is astounding. That they were advised by "experts" means nothing since no one is expert enough to do that. There are too many tradeoffs faced by unique individuals with infinitely varying needs. . .
Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:
First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it. Second, this "data" is dynamic: It changes without notice.
No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.
Speaker Pelosi's constitutional contempt, perhaps ignorance, is representative of the majority of members of both the House and the Senate. Their comfort in that ignorance and constitutional contempt, and how readily they articulate it, should be worrisome for every single American. It's not a matter of whether you are for or against Congress' health care proposals. It's not a matter of whether you're liberal or conservative, black or white, male or female, Democrat or Republican or member of any other group. It's a matter of whether we are going to remain a relatively free people or permit the insidious encroachment on our liberties to continue.
Where in the U.S. Constitution does it authorize Congress to force Americans to buy health insurance? If Congress gets away with forcing us to buy health insurance, down the line, what else will they force us to buy; or do you naively think they will stop with health insurance? We shouldn't think that the cure to Congress' unconstitutional heavy-handedness will end if we only elect Republicans. Republicans have demonstrated nearly as much constitutional contempt as have Democrats. The major difference is the significant escalation of that contempt under today's Democratically controlled Congress and White House with the massive increase in spending, their proposed legislation and the appointment of tyrannical czars to control our lives. It's a safe bet that if and when Republicans take over the Congress and White House, they will not give up the massive increase in control over our lives won by the Democrats. . .
If you asked the questions: Which way is our nation heading, tiny steps at a time? Are we headed toward more liberty, or are we headed toward greater government control over our lives? I think the answer is unambiguously the latter -- more government control over our lives. Are there any signs on the horizon that the direction is going to change? If we don't see any, we should not be surprised. After all, mankind's standard fare throughout his history, and in most places today, is arbitrary control and abuse by government.
Home of the Brave by Ben Stein
The Supreme Court's 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo's land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.'s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.
The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other "desirable" elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.
That's especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan "comprehensive," while Justice John Paul Stevens insisted that "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." So much for that. . .
If there is a lesson from Connecticut's misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth.
Excerpts from- The Real Threat to Fed Independence: Unless we shrink large financial conglomerates, we will end up with a socialized banking system, By henry Kaufman in the Wall Street Journal
The Federal Reserve in coming years will probably become highly politicized and thus lose its quasi-independent status. This is because of past shortcomings in its policies and, more importantly, of difficult decisions that face it in the year just ahead. . .
So, why should we be concerned that the Fed will become highly politicized now? First, there is the Fed's legacy of its inability to limit past financial excesses. By failing to be an effective guardian of our financial system, it has lost credibility. . .
Taken to its logical conclusion, our market-based system of credit allocation would be replaced by a socialized financial system, and the Federal Reserve would become part of it.
Our financial system is at a crossroads. We can either succumb to the forces that are shifting markets toward greater government back-stopping and socialization. Or we can create a structure in which no institution is too big to fail, and a financial system that is supervised effectively by a modernized central bank.
Tuesday, November 10, 2009
A quote widely credited to Albert Einstein is that insanity is doing the same thing over and over and expecting different results. If that is true, the politicians and Federal Reserve governors who craft economic policy qualify as certifiable. Certain policies have been proven to produce inferior economic results, yet every few generations our collective memory seems to fail us. Apparently some economic lessons can only be learned through first hand experience. Sometimes, it doesn’t even take that long and we repeat the same mistakes during the course of one generation. The Baby Boom generation seems particularly vulnerable to memory lapses when it comes to economic policy. Well, they told us the sixties would have side effects….
By my count the financial crisis that brought the economy to its knees last fall was at least the ninth since the founding of the republic. While there are differences in the causes and effects of these crises, there are also common elements, the most prominent of which is the centrality of the banking system to nearly every economic crisis in our history. One would think that somewhere along the way someone in power would have put an end to the financial industry’s penchant for self destruction, but the financial oligarchy and its influence over government has a long history in the US.
Since the formation of the first Bank of the United States, the financial industry has sought - and usually gained - privileges and advantages not enjoyed by the rest of the citizenry. These special privileges, when combined with other government policy, tend to produce booms and busts. In this crisis we can point to the role of the Federal Reserve, Fannie Mae, Freddie Mac, CRA and HUD. In the panic of 1819 the culprits were the Second Bank of the United States and the sale of public land by the government. Credit expansion and government endorsed liberal borrowing terms had the same effects then as now and eventually the boom of the post war (of 1812) period turned to bust. It should not surprise anyone that the boom period also saw the establishment of the New York Stock Exchange and a rapid rise in commodity prices. Speculation, whether in real estate, stocks or commodities, is a direct consequence of monetary expansion.
The difference between the current episode and the earlier versions is the development of the systemic risk, too big to fail doctrine. In older times, banks that got into trouble were allowed to fail and the system generally healed itself fairly quickly. And while there were often calls for debtor relief as there are today, these calls generally fell on deaf ears. Debtors were forced into bankruptcy and debts were written off as banks failed. Depositors, bond and stock holders were forced to take their losses. And, purged of the excess debt, the economy recovered primarily of its own accord. That isn’t to say the recoveries were painless; unemployment was high during the depressions and there was essentially no social safety net outside private charity. But despite the pain, the economy recovered every time even though the Keynesian prescription of government spending was rarely if ever employed prior to the Great Depression. Capitalist economies, when left to their own devices, are amazingly resilient.
So we go through these excess exuberance episodes, crash and recover and then promptly forget what caused the whole mess. It doesn’t take great insight to determine the common factor. Excess money creation, generally in the form of excess credit creation, is the root cause of all the financial panics in the history of the US. The crash generally comes as the excesses are finally recognized and the political authorities attempt to force a return to sobriety. The specific circumstances of the series of crises that started with the panic of 1819 may differ, but the common feature, in one form or another, is inflation of the money supply. It really is that simple and if we want to prevent future crises, that is the one item we have to address. Systemic risk regulators and consumer financial protection agencies are just window dressing if the reforms enacted as a result of the panic of 2008 don’t include measures which prevent excessive credit creation by the banking system and excessive money creation by the Federal Reserve. . .
Since Alan Greenspan assumed the reins of the Federal Reserve, our economy has seen a series of bubbles caused and burst by the Federal Reserve. Volatile monetary policy in the 1980s, which is obvious from the extreme fluctuation in the value of the dollar, produced a stock market and real estate crash. The result was the S&L crisis which produced the easy monetary policy of the early 90s which directly led to the stock boom of the late 90s. The stock market crash of 2000 produced the easy monetary policy of the early 00s and the subsequent real estate bubble. And now, after the financial implosion of last fall, the Federal Reserve is once again pursuing the same loose policy which produced all these previous problems.
What caused the Great Moderation was not superior monetary policy. The Great Moderation could be more accurately called the Great Leveraging. Every economic hiccup was met with another dose of credit. As the debt level rose, each cycle took more debt and lower interest rates to cause a recovery in GDP.
So now we find ourselves in a situation where the Fed can’t lower rates any more and individuals can’t take on more debt. For now, the government has assumed the role as borrower and spender of last resort and the Fed has resorted to extraordinary measures to increase the supply of credit, but this is not a serious long term solution. We are rapidly approaching the point where we will not be able to increase our debt level. We can either wait until that point is reached and a solution will be forced on us by our creditors or we can start to really solve our debt problems now. It is time for the Great Deleveraging.
It needs to be said that there is no painless solution for our economic problems. There are a number of paths we can choose from here but all of them involve pain. Like everything else in economics the choices we face will involve tradeoffs. If we choose to pursue policies which reduce the economic suffering in the short term, the duration of the suffering will be extended. If we choose to pursue policies which quickly solve the problem, the short term suffering will be severe.
What are our choices? Well, as most of you know, I consider myself a libertarian so my solution is stop doing the things that cause us economic pain. Excess debt and easy monetary policy are what got us here. If we cut government spending to balance the budget and stabilize the value of the dollar, I think real growth - as opposed to the false growth of last quarter - will be restored fairly quickly. It would be even better for growth if we could cut taxes as well, but I think it is more important to show that we have a credible plan for reducing our debt and cutting taxes would send the wrong signal right now.
No country with an excess debt problem has solved it by borrowing more and neither will we. We will not default and inflation is not really an answer. We may be able to engineer another recovery based on more debt, but that will ultimately just make the debt problem larger. It is time to face the music and finally solve our debt addiction. If doing something repeatedly hurts….stop.http://alhambrainvestments.com/it-hurts-when-i-do-this/
Monday, November 9, 2009
It wasn't Colonel Mustard in the library with the candelabra. And contrary to recent press reports, it wasn't Prince Alwaleed in the desert with a cartel. It was, in fact, Dr. Bernanke in the temple with the printing press. And since Dr. Bernanke is, in effect, the dollar incarnate — the walking embodiment of the soundness of our currency — if the dollar does die, it will not have been murder. It will have been suicide.
Funeral services are already being held for the dollar, and to be fair, they are a bit premature. The dollar is not dead yet. It hasn't even reached the point of no return. Today it's in the ICU, and if the bleeding is staunched, it will pop right out of bed and begin traveling the world as it has in the past — bearing heavy burdens, storing value, and moving with great velocity into everynook and cranny of our lives.
We've added roughly $1 trillion to the banking system across the financial crisis. And dollars are just like works of art: The more copies there are relative to demand, the less each one is worth. As with Monet, so with money — only Monet has remained scarce and valuable. As the U.S. money stock has continued to explode, the exchange value of the dollar has tumbled.
I've heard that the difference between a genuine suicide attempt and a "suicidal gesture" is in the cutting. If a man slashes deep into his wrists, he really means it, and if he merely scratches the surface, he's only crying out for help. In the case of Dr. Bernanke, the dollar incarnate, we might be witnessing yet another shade of suicide, the kind where the blade goes deep, but there's no recognition of the damage being done. Call it an absent-minded suicide, and call it lethal.
Pro-bailout economists talk about “the multiplier” effect. Spend some government (taxpayer) money, and the effects “multiply” in the economy, as if the Invisible Hand were on speed. Some day some young genius is going to earn a Nobel explaining “the divider” effect. Create a government job and the productivity in the marketplace “divides” as a result of the increased taxes needed to support the jobs . . . down the road. Mathematize the notion, and you’ve got your Nobel. (Of course, there’s nothing in the idea that Bastiat or Mises or Tullock hasn’t explained — but add that math and you’ll really get somewhere.)
- Chortlenomics, by Paul Jacob, in Townhall.
Who Are ‘They’? To Obama, “they” are responsible for all our troubles. Problem is, “they” are most of us. By Victor Davis Hanson in National Review
On the Obamist reading, the record federal deficits are not due to waste and fraud. Nor are unnecessary government spending and excessive entitlements the culprits. A bankrupt Medicare and soon-to-be-bankrupt Social Security, congressional pork-barrel projects, and interest due on past profligate spending did not cause our budget crisis. Instead, the red ink is almost entirely due to a shortage of revenue, and brought on by the greedy who have the capacity, but not the caring, to fork over more.
. . . Who are “they,” who have raised the bar on everyone else?
First, of course, “they” are the rich in perpetual war against the poor. “They” made out like bandits under Bush, so “they” should have their federal income taxes raised to make “them” “pay their fair share” in “patriotic” fashion. Forget that currently about 5 percent of taxpayers shoulders nearly half the federal income-tax burden. It matters little that a greater percentage of households (well over 40 percent) now pays no federal income tax whatsoever.
“They” should be targeted as well by the states, many of which have rightly raised their tax rates — in California, to over 10 percent. “They” are easily able to pay a new health-care surcharge, the greedy few lending a helping hand to the virtuous many. “They” surely have enough to pay the full 15.3 percent FICA tax on most of their income over the current $106,000 cap. Add it up, and soon state, federal, FICA, property, and sales taxes will reach 60 to 70 percent of “their” incomes.
But that is a tolerable bite since income is now seen as inherently arbitrary and rigged. How compensation is calibrated is somehow illegitimate in the first place — and thus it cannot properly belong entirely to the earner. At least, I think that conjecture reflects the president’s own past unguarded references concerning the need for “redistributive” change and his exhortations to “spread the wealth.”
Excerpts from President Obama's Foreign Policy: An Assessment, by John Bolton, a speech adapted by Imprimus, Hillsdale College's monthy newsletter,
I THINK it is important, on the eighth anniversary of the 9/11 attacks, to take a look at our foreign policy and to judge whether or not we're on a path to becoming safer. In doing so, we should not be intimidated by those who say that criticism of foreign policy--criticism that suggests we're less safe as a consequence of certain policies--is somehow disloyal or hyper-partisan. It is the essence of political debate over foreign policy to judge whether the interests of the United States are being protected and advanced. If we believe they are not, it is our responsibility to speak out.
For the last eight months, we've had a different kind of president than we've had in the past. Barack Obama is the first post-American president. And by this I don't mean he's anti-American. What I mean by post-American is suggested by a response the president gave to a reporter's question during a recent trip to Europe. The reporter asked about his unwillingness to discuss American exceptionalism--the notion that the United States has a unique mission, that it's "a shining city on a hill" as Ronald Reagan liked to say (echoing our pilgrim fathers). Mr. Obama responded that he believes in American exceptionalism in the same way that the British believe in British exceptionalism and the Greeks believe in Greek exceptionalism. Given that there are 192 member countries in the United Nations, I'm sure he could have gone on naming another 189 that believe in their own exceptionalism. But in any case, the idea that all countries believe themselves to be exceptional in the same way leads to the unmistakable conclusion that none are truly exceptional. In other words, the president's response reflects his belief that America is not so different from other countries.
Mr. Obama's supporters in the mainstream media share this view. Newsweek editor Evan Thomas, for example, delivered this revealing comment when previewing the president's speech on the anniversary of D-Day last June:
Reagan was all about America . . . . Obama is 'we are above that now.' We're not just parochial, we're not just chauvinistic, we're not just provincial. We stand for something--I mean in a way Obama's standing above the country, above--above the world. He's sort of God.
This image of President Obama standing above his country and above the world sums up the post-American way of thinking. The practical point it makes is that America's interest is no different or better than any other country's interest. But is that true? Is America's interest not superior to Sudan's or Cuba's or Zimbabwe's?
In line with this way of thinking, the Obama administration is pursuing a policy that can accurately be described as neoisolationist--a policy characterized by an unwillingness to be assertive in the world in defense of America's interests and those of our friends and allies. . .
Friday, November 6, 2009
I'll borrow an analogy from Peter Schiff. Imagine if you will a victim at the unfortunate end of a Brock Lesnar knuckle sandwich. The blow has knocked him out cold and the medics try to revive him. The best suggestion they can come up with is to have Lesnar pound the man's head even harder with his fists. When the man has seizures from the repeated pounding, a medic (coincidently named Bernanke) screams gleefully "Hurray, he's moving."
Sadly, such is the response to our present crisis by the policy makers in Washington, DC. To solve a problem caused by malinvestments resulting from easy credit at 1 percent interest rates, the Fed is supplying even more easy money at 0.25 percent. None of the malinvestments have been allowed to be liquidated.
Housing prices have been propped up, banks and auto companies have been bailed out, regulations have been increased, debt covenants have been violated, unemployment insurance has been extended. In addition, there's the cap-and-trade bill, the healthcare bill, and a "czar" around every corner.
All of these increase the already-humongous burden on wealth creators. In short, the problems that caused the Great Recession have been compounded. Real output must then necessarily decline. How can anyone logically assert that we are in the beginning of a recovery?
Declining output is not the answer to keep a system with a debt-to-GDP ratio nearing 400 percent (800 percent if you include Social Security and Medicare obligations) solvent. From this vantage point, one can conclude that the real recession is ahead of us, not behind us.
One then must decide whether it will be a deflationary recession or an inflationary recession. Intelligent people can disagree on this, but my take is inflationary. . .
If you happen to catch a NASCAR race on TV, you might hear a driver screaming over his radio, "Tight, tight, tight … LOOOSE!" This cry is followed invariably by a crash.
What the driver is referring to is his race car's inability to turn the corner. A "tight" condition means the car doesn't want to turn and is heading straight for the wall. A "loose" condition means the car turns too readily and wants to spin out. When a car is difficult to turn, the driver ends up putting so much wheel into it that when the car eventually does turn, it overshoots, spinning out of control; and the driver rear-ends the car into the wall.
This is exactly the scenario I envision for the impending price inflation. Bernanke and company are screaming that there is deflation everywhere they look. To combat this deflation, the Fed will keeping printing money and adding reserves by buying all kinds of assets. This will continue until general prices violently overshoot on the other side, causing runaway price inflation. . .
So why is it said? This is a cover ploy by Krugman to provide cover to those who touted the stimulus. Because when it fails, they have a built in excuse, in lieu of actually telling or understanding the truth. Krugman, in order to protect his cognitive "house of cards" must demand more stimulus and create the impossible senario in order to maintain any sense of self. This is a classic case of cognitive dissonance.
The excuse will be the stimulus did not go far enough, and its not our (the democrats) fault as we wanted to do more but were unable to do so because our efforts were blocked- of course by the GOP.
Machiavelli would be proud. As for me, it just makes me sick.
While a slight improvement over last month's numbers, today's employment update from the Bureau of Labor Statistics presents a dismal picture for American workers. As policy makers
search for the best remedies to strengthen our economic performance, they can't afford to overlook new firms and young firms.
Unfortunately, in troubled economic times the language of recovery is too often tilted toward large, established companies or to "small businesses," a broad term that traditionally applies to businesses with fewer than 500 employees. The conventional wisdom is that such businesses account for half of the labor force and are therefore the engine of future job creation.
That's not quite the case. The more precise factor is not the size of businesses, but rather their age. According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years.
Thursday, November 5, 2009
From Fox News
Clunkers' Saw Many Pickups Traded for Many Pickups
The most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.
The single most common swap — which occurred more than 8,200 times — involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.
Owners of thousands more large old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP's analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford F150 and Chevy Silverado — along with Ford's Escape midsize SUV — climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins
Design and effectiveness of fiscal-stimulus programmes by Robert Barro Charles Redlick
Abstract: The recent global recession has made the efficacy of fiscal-stimulus packages one of the most prominent policy debates in economics today. This column finds that the multiplier of defence spending falls in a range of 0.6 to 0.8 and argues that non-defence multipliers are unlikely to be larger. It says we should be sceptical when policymakers claim government-spending multipliers in excess of one and suggests tax cuts may be preferable to spending increases.http://online.wsj.com/article/SB10001424052748704013004574515760395040146.html#printMode
Our bottom line from this research is that a healthy scepticism is warranted when policymakers claim government-spending multipliers in excess of one. Our estimates suggest that the multiplier effect of defence spending falls more in the range of 0.6 to 0.8, and we find it unlikely that non-defence multipliers would be larger. Therefore, our conclusion is that total economic output increases less than one-for-one with increased government purchases. However, we do find evidence to support the view that tax cuts stimulate total output, with a one percentage point decrease in the average marginal tax rate leading to an increase of about 0.6% in the growth rate of real per capita GDP. As such, our preference in the design of fiscal stimulus packages would be for more tax cuts and less reliance on increased government spending.
Excerpts from: Money on Autopilot The Fed keeps its eye on employment, not on the dollar.From the Editors of the Wall Street Journal
Yesterday's Federal Open Market Committee statement after its two-day meeting declared that the economy has improved but that this is still no reason to stop driving its monetary engine like an Indy race car.
The Fed has been running full throttle for an entire year, while the financial panic has subsided, credit markets are healing, and third quarter GDP growth was 3.5%. . .
English translation: The Fed is going to maintain zero interest rates for as long as the political eye can see. . .
The Fed's irrationally exuberant ease is clearly showing up around the world in a very weak dollar, asset bubbles in the likes of Asian property, and rising commodity prices that include $80 oil despite weak global energy demand. This risks creating new monetary excesses that will eventually have to be corrected in ways that could jeopardize the global and U.S. recovery.
Wednesday, November 4, 2009
Wonder why the politicians play the class warfare game if the vast number of American's are in the same economic boat? Survey says "for power!"
Statistics as seen in Practical Economics
91.669% of Americans make less than $100,000 a year.
Only 1.856% makes over $200,000 a year.
Only 13/100ths of 1% (.13%) earn over $1,000,000 a year.
Source: Glen Lipka; 2002 IRS Income Tax Statistics
Quite possibly the most important, yet most difficult, lesson in economics is the idea that wealth saves lives. Although it is tough to wrap your mind around such a statement, cognitive awareness and recognition of its constructs will allow you to see the scarcity question and its solution, efficiency, in an entirely new light.
First we need to define the parameters of how lives can be saved. The higher the standard of living, the greater the quality of life, nutrition and health care; this increases the life expectancyof the population and thus lives are saved.
Second we can add a formula to the explanation. If X amount of economic growth raises the standard of living Y amount, then Z number of people are saved who would have otherwise perished as a result of the previously lower standard of living. In turn, any economic inefficiency that prevents economic growth to Y will cost Z lives. In short, economic growth creates wealth which saves lives.
Tuesday, November 3, 2009
Infant mortality rates and GDP then Life expectancy and GDP
© 2006 by The University of Chicago.
The Value of Health and Longevity
Kevin M. Murphy and Robert H. Topel
University of Chicago and National Bureau of Economic Research
We develop a framework for valuing improvements in health and apply it to past and prospective reductions in mortality in the United States. We calculate social values of (i) increased longevity over the twentieth century, (ii) progress against various diseases after 1970, and (iii) potential future progress against major diseases. Cumulative gains in life expectancy after 1900 were worth over $1.2 million to the representative American in 2000, whereas post‐1970 gains added about $3.2 trillion per year to national wealth, equal to about half of GDP. Potential gains from future health improvements are also large; for example, a 1 percent reduction in cancer mortality would be worth $500 billion.
The Value of Life: Estimates with Risks by Occupation and Industry
by W. Kip Viscusi*
John F. Cogan, Jr. Professor of Law and Economics, Harvard Law School
The worker fatality risk variable constructed for this paper uses BLS data on total worker deaths by both occupation and industry over the 1992-1997 period rather than death risks by occupation or industry alone, as in past studies. The subsequent estimates using 1997 CPS data indicate a value of life of $4.7 million for the full sample, $7.0 million for blue-collar males, and $8.5 million for blue-collar females. Unlike previous estimates, these values account for the influence of clustering of the job risk variable and compensating differentials for both workers’ compensation and nonfatal job risks.
I am not a convert just yet to this theory. My concern is if you get rid of the government institution because the free market will do a better job, then would it also be beneficial to get rid of the other institutions: religion, education, family and economy? Seems to me human nature would show its barbaric roots pretty quick. Where would the incentives be to act in ways beyond our nature?
Monday, November 2, 2009
The simple fact is that economic incentives matter; and that tax rates either explicit or implicit create inefficiencies in moving scarce resources to their most efficient use in meeting unlimited demand.
Professor Mankiw of Harvard states:
A family of four with an income, say, of $54,000 would pay $9,900 for health care. That covers only about half the actual cost. Uncle Sam would pick up the rest.
Now suppose that the same family earns an additional $12,000 by, for example, having the primary earner work overtime or sending a secondary worker into the labor force. In that case, the federal subsidy shrinks, so the family’s cost of health care rises to $12,700.
In other words, $2,800 of the $12,000 of extra income, or 23 percent, would be effectively taxed away by the government’s new health care system.That implicit marginal tax rate of 23 percent is a significant disincentive. And it comes on top of the explicit marginal tax rate the family already faces from income and payroll taxes. Altogether, many families would face marginal rates at or above the 50 percent level that animated the Reagan supply-side revolution.
- 1,990-page bill
- The House program will cost $1.055 trillion over a decade
- Most of the money goes into government-run "exchanges" where people earning between 150% and 400% of the poverty level—that is, up to about $96,000 for a family of four in 2016—could buy coverage at heavily subsidized rates, tied to income
- The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth
- It "pays for" about six years of program with a decade of revenue, with the heaviest costs concentrated in the second five years
- The House also pretends Medicare payments to doctors will be cut by 21.5% next year and deeper after that, "saving" about $250 billion
- ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow more after that
- Unfunded liabilities of Medicare—now north of $37 trillion over 75 years
- Steal $426 billion from future Medicare spending to "pay for" universal coverage
- Gutting Medicare Advantage to the tune of $170 billion
- As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level
- Some 15 million new people will be added to Medicaid the rolls as private insurance gets crowded out at a cost of $425 billion
- A decade from now more than a quarter of the population will be on a Medicaid program originally intended for poor women, children and the disabled
- Even though the House will assume 91% of the "matching rate" for this joint state-federal program—up from today's 57%—governors would still be forced to take on $34 billion in new burdens
- The House favors $572 billion in new taxes
- Imposing a 5.4-percentage-point "surcharge" on joint filers earning over $1 million, $500,000 for singles
- Raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions
- This surtax still won't be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion
- Under another new tax, businesses would have to surrender 8% of their payroll to government if they don't offer insurance or pay at least 72.5% of their workers' premiums
- The U.S. already has one of the highest corporate income tax rates in the world
- Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won't buy insurance in 2019