November 28, 2013
I set this article aside in 2009 (!!) meaning to blog it, and I just found it now. It is as timely now as it was then. Maybe a little more now to me, because although I'm very impressed with Papa Frank's new document, Evangelii Gaudium, I think his economic thoughts are defective.
As the world approaches the 20th anniversary of the fall of communism, it is worth investigating the costs borne by countries like India that did not become communist but drew heavily on the Soviet model. For three decades after its independence in 1947, India strove for self-sufficiency instead of the gains of international trade, and gave the state an ever-increasing role in controlling the means of production. These policies yielded economic growth of 3.5 percent per year, which was half that of export-oriented Asian countries, and yielded slow progress in social indicators, too. Growth per capita in India was even slower, at 1.49 percent per year. It accelerated after reforms started tentatively in 1981, and shot up to 6.78 percent per year after reforms deepened in the current decade.
What would the impact on social indicators have been had India commenced economic reform one decade earlier, and enjoyed correspondingly faster economic growth and improvements in human development indicators? This paper seeks to estimate the number of "missing children," "missing literates," and "missing non-poor" resulting from delayed reform, slower economic growth, and hence, slower improvement of social indicators. It finds that with earlier reform, 14.5 million more children would have survived, 261 million more Indians would have become literate, and 109 million more people would have risen above the poverty line. The delay in economic reform represents an enormous social tragedy. It drives home the point that India's socialist era, which claimed it would deliver growth with social justice, delivered neither....
July 15, 2013
Kill the statistics to kill the planners...
David Warren, Truth & numbers:
...Once upon a time I studied demography, at first for the purpose of excoriating the “population bomb” scaremongers back in the 1970s. The subject struck me as boring, until I was sidelined into historical demography, & discovered such authorities as Thomas Henry Hollingsworth. And while his Demografia Historica will by now be dismissed as a little dated, it is permanently astute. No one could read it without having his confidence in all past & present estimates of population profoundly shaken. And while modern census-takers have devised very extravagant methods by which to corral heads for a headcount, they rely on a ludicrously complex pile-up of crude assumptions to invent every confidently-reported fact about these people. The demographers flourish nonetheless, as prized servants of bureaucratic tyranny, which has found the number crunching of “democracy” very much to its liking.
(A correspondent in email serendipitously supplies this explanatory note from C.S. Lewis: “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”)
My libertarian hero in this regard was Sir John Cowperthwaite KB CBE, financial secretary to Hong Kong through the 1960s, & perhaps the most significant figure in the recovery of the old Crown Colony from its condition at the end of the last World War. He pointedly refused to collect economic statistics. His reasoning was that, without numbers to play with, the “economic planners” would be at a loss. They were, & Hong Kong boomed.
But to mention him is to stray into questions of economic policy, which, like Cowperthwaite, I am against. How we live our lives is God’s business, & none of the government’s until we are reasonably suspected of a crime. Their job is to provide for our defence against rapine & massacre by foreign powers & domestic criminals, in return for modest taxes. It is an important job, from which they should not be distracted by their own alien & criminal propensities. Let it be added that Hong Kong was remarkably free of crime throughout the period in question, comparing favourably even to booming yet placid Tokyo....
March 21, 2013
Some balunky debunked...
Among the most pervasive, and arguably pernicious, notions of the past decade has been that the “creative class” of the skilled, educated and hip would remake and revive American cities. The idea, packaged and peddled by consultant Richard Florida, had been that unlike spending public money to court Wall Street fat cats, corporate executives or other traditional elites, paying to appeal to the creative would truly trickle down, generating a widespread urban revival
Urbanists, journalists, and academics—not to mention big-city developers— were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. And Florida himself has prospered through books, articles, lectures, and university positions that have helped promote his ideas and brand and grow his Creative Class Group’s impressive client list, which in addition to big corporations and developers has included cities as diverse as Detroit and El Paso, Cleveland and Seattle.
Florida himself, in his role as an editor at The Atlantic, admitted last month what his critics, including myself, have said for a decade: that the benefits of appealing to the creative class accrue largely to its members—and do little to make anyone else any better off. The rewards of the “creative class” strategy, he notes, “flow disproportionately to more highly-skilled knowledge, professional and creative workers,” since the wage increases that blue-collar and lower-skilled workers see “disappear when their higher housing costs are taken into account.” His reasonable and fairly brave, if belated, takeaway: “On close inspection, talent clustering provides little in the way of trickle-down benefits.”...
What we need are conservative Christian hipsters! The current sort of self-indulgent nihilistic hipsters are not going to produce any lasting fruit.
January 9, 2013
"Swimming in surpluses."
According to the Congressional Budget Office, the federal government posted a $293 billion deficit in the first fiscal quarter of 2013, setting the Obama administration up for a record fifth-year of trillion dollar deficits. But while the fiscal condition of the Democratically controlled federal government is still atrocious, Republican controlled states are now swimming in surpluses.
Thanks to a Republican governor committed to developing its natural resources, not punishing entrepreneurs who do, Texas legislators are facing an $8.8 billion surplus over the next two years. To the east, Republican governors Bill Haslam of Tennessee and Rick Scott of Florida have also turned recession deficits into budget surpluses. Moving north, Michigan’s Gov. Rick Snyder, Iowa’s Gov. Terry Brandstad, and Indiana’s out-going-Gov. Mitch Daniels, also can now all boast surpluses in the hundreds of millions of dollars. All of these governors managed to turn their state’s fiscal situation around through spending cuts, not tax hikes. Now their budgets are in the black and their economies are growing.
Things do not look as good in Democrat-controlled states. Illinois, who massively raised taxes on the rich, still has a $5.9 billion stack of unpaid bills. California, who also raised taxes on the rich, was supposed to post a small surplus this year. But tax collections are coming in at 10.8 percent below budget projections. As a result, the state is now projected to be $1.9 billion in the red by the end of this fiscal year....
No comment needed. Except that rich people are the one thing that poor people need most...
November 27, 2012
Time for tough hate...
...Businesses are worried about profits? How greedy can these people be? Why can’t they be like the government, which has never once worried about profits? Look at what a finely-tuned, well-oiled machine it is — and it only costs a trillion dollars more per year than we can afford.
So what should we do? Republicans say we should coddle businesses. “Oh, poor job creators, can we cut your taxes some more? How about we get these regulations out of your way? And would you like a foot massage?” It’s disgusting.
No, it’s time for tough love. Or better yet, tough hate.
What the unions did to Hostess was a good start. When that company wouldn’t provide the benefits the union wanted (once again because of some nonsense about “profitability”), they just went ahead and shut the company down.
Sure, it may be hard for the 18,500 employees who are going to be laid off, but they’ll find new jobs in a year or two. Anyway, we can’t let the prospect of job losses keep us from going after businesses owners where it hurts them the most: their companies.
And that’s the tough line the government needs to take with job creators: You will spit out those jobs we demand — and good ones with health-care benefits! — or we will destroy you and your businesses...
Both Charlene and I have our one-person businesses in San Francisco. So we know this evil of old. And neither of us has any intention of hiring anybody ever. If we lived in a more business-friendly place, we might.
October 21, 2012
A "modern iteration of the Cultural Contradictions of Capitalism"
This is just an odd bit of something plucked from the Internet torrent that goes pouring by my porch. Link from Instapundit. I post it because it echoes many of my thoughts. "Narcissism that results from the focus on personal gratification" sounds a lot like the nihilism that I go on about. And it is the Information Age that has unleashed it--the Industrial Age with its strong propensity for stability helped to reinforce and preserve traditional faiths and habits of mind, though they were slowly eroding all the while. Once the Info Age hit it was Katie bar the door!
Charles Hugh Smith, Narcissism, Consumerism and the End of Growth:
...In the modern iteration of the Cultural Contradictions of Capitalism, the narcissism that results from the focus on personal gratification via consumption cripples the person in the workplace. Ironically, the flattening of corporate management and the demands for higher interpersonal skillsets has eroded the security provided by the strict hierarchy of previous eras.
Instead of working less and doing easier work--the implicit promise of "endless growth"-- the work is becoming more challenging and insecure even as compensation declines.
If there is any personality that is unsuited for the "New Normal" workplace, it is the narcissistic consumer--the very type of person that our consumption-dependent economy creates, nurtures and demands. That is the new Cultural Contradiction of Capitalism.
"Personal gratification" is the driver of narcissism and consumerism, which are two sides of the same coin. Consumerist marketing glorifies the "projected self" as the "true self," encouraging self-absorption even as it erodes authentic identity, self-esteem and the resilience which enables emotional growth--the essential characteristic of adulthood.
Personal gratification is of a piece with self-absorption, fragile self-esteem and an identity that is overly dependent on consumerist signifiers and the approval of others.
No wonder Japan's "lost generations" are lost: not only are expectations of secure, high-income jobs diminished, the work is more demanding and the security and pay are too low to support the consumerist lifestyle that society has implicitly promised everyone who goes to college and works hard as a birthright....
And this piece is perfectly appropriate as one of my Sunday thingies. Jesus taught that that "focus on personal gratification " was exactly the wrong path to take. And in the Information Age it's going to be ten times as bad. Because navigation is at least ten times as difficult. To try to guide yourself while looking at yourself is folly. If you fill your "self" with consumer rubbish.... Oh brother.
...Anyone who thinks he already has it all, so he can take what he wants and center everything on himself, is depriving himself of giving what he otherwise could. Man is not there to make himself, but to respond to demands made upon him. We all stand in a great arena of history, and are dependent on each other. A man ought not, therefore, just to figure out what he would like, but to ask what he can do and how he can help. Then he will see that fulfillment does not lie in comfort, ease, and following ones inclinations, but precisely in allowing demands to be made upon you, in taking the harder path. Everything else turns out somehow boring anyway. Only the man who "risks the fire", who recognizes a calling within himself, a vocation, an ideal he must satisfy, who takes on real responsibility, will find fulfillment. As we have said, it is not in taking, not on the path of comfort, that we become rich, but only in giving.
-- Josef Cardinal Ratzinger
August 3, 2012
The headlines from across the pond read "Europe Rejects Austerity" as the French and Greeks elected socialists and even some neo-national socialists to office. These new officials have promised tax rates as high as 75 percent on millionaires, and have vowed to continue government spending unabashed in the wake of staggering levels of debt and anemic economic growth and persistent double- digit unemployment. However, there is one finance minister in one European nation that is bucking the trend, and, instead of ridicule and failure, he's been named Europe's best finance minister by the Financial Times. He's not from Britain or Germany and certainly isn't Greek. He isn't some old fat cat in a suit either. In fact he's famous for rocking a pretty awesome ponytail and gold earring. His name is Anders Borg and he's Swedish.
That's right, the European nation famously stereotyped for having aggressive taxation to fund an omnipresent state has actually decided that in response to the Eurozone crisis and the continued effects of the global economic downturn, or "Great Recession", that it's time to ease up on taxes and reduce the size of government. While Sweden is not technically in the Eurozone, as it does not use the Euro as currency, it has been drawn into the financial mess of the Eurozone by sheer proximity. Unemployment in 2011 was north of 7.5 percent and GDP growth was anemic at .4 percent projected for 2012.
While the rest of Europe and the United States have gone on massive spending sprees fueled by government borrowing and tax hikes, Sweden took a different approach. In the Spring 2012 Economic and Budget Policy Guidelines, the Swedish Government and its Finance Minister, Anders Borg, have laid out a plan that is focused on lowering taxes. Their rationale? "When indviduals and families get to keep more their income, their independence and their opportunities to shape their own lives also increase."...
Gee, do ya think?
July 6, 2012
We ae being manipulated by taxes all the time...
This, from Sean Trende, Roberts Didn't Expand Government's Taxing Power, is the same argument AOG made in a recent comment...
...Second, that Congress would have the power to pass the mandate pursuant to its power to tax makes eminent sense. John Yoo wrote in last week's Wall Street Journal: "Congress may not be able to directly force us to buy electric cars, eat organic kale, or replace oil heaters with solar panels. But if it enforces the mandates with a financial penalty, then suddenly, thanks to Justice Roberts's tortured reasoning in Sebelius, the mandate is transformed into a constitutional exercise of Congress's power to tax."
This is odd, given that Congress already does provide a tax penalty for not buying electric cars. Consider the following hypothetical scenarios:
(a) Two people make $100,000. There is a 25 percent flat tax imposed, with one exception: a $7,500 credit is allowed for buying a Chevy Volt. A buys a Volt, B does not. A therefore pays $17,500 in taxes, while B pays $25,000 in taxes.
(b) Two people make $100,000. There is a 17.5 percent flat tax imposed, with one exception: a $7,500 surtax is imposed for not buying a Chevy Volt. A buys a volt, B does not. A therefore pays $17,500 in taxes, while B pays $25,000 in taxes.
I honestly may be missing something here, but I can't see how option (a) -- an oversimplified statement of present law -- is acceptable, but (b) offends either the conscience or the Constitution. The simple fact is that almost all of us pay higher taxes each year than we otherwise would on the basis of things we forgo: whether it is not buying an electric car, not installing energy-efficient windows in our house, or not having that third kid. There's no new ground being broken here....
May 30, 2012
"How big and ugly is the lie?"
...That is for a seven percent return; some pension funds are still assuming eight percent, a figure which Bloomberg calls “absolutely hysterical” and “laughable.”
We’ve been warning readers for some time at Via Meadia that the politicians and union leaders in this country have been engaged in a systemic lie of epic proportions. How big and ugly is the lie?
Very. Private pension funds assume a standard of 4.8 percent return on their pension funds. As the Times notes, governments also use various tricky accounting loopholes not available to private companies to hide their liabilities. As far as we can make out at Via Meadia, if you tried to run a private pension fund the way unions and government-appointed trustees run public ones, you could go to jail for fraud.
But while lies can win elections, they can’t pay bills, and as the unsustainable commitments to municipal and state pensions come due, services will be cuts, taxes raised and benefits to retirees will be slashed as reality sets in.
Already New York City pays more than $7 billion (and more than a tenth of its total budget) towards pensions to retired workers; cutting the assumed return from the absolutely hysterical current level of eight percent to the laughable level of 7 would add almost $2 billion more to the annual bill. To make a sensible and conservative long term assumption like the one used by most private companies would cost about $4 billion more. (Walsh and Hakim identify another $2 billion plus in liabilities due to rising life expectancies and growing disability claims among public sector workers and retirees.)
This means that fully funding its pension obligations in a responsible way would mean cuts of $6 billion per year from schools, firefighting and police on top of the $7 billion they already get. Note to retirees: that isn’t going to happen. Voters won’t stand for it — and they shouldn’t. It’s not fair and it’s not sustainable, and it’s not right.
Today we are seeing what happens when Big Lies come unglued: all over Europe people who believed those sweet delicious stories politicians told them about their pensions and their futures are waking up to one horrible shock after another. Somehow we’ve come to the point in this country also where it’s considered “liberal” and “progressive” to lie like rats to the voters and to government workers about how solid their futures are.
Listen up, blues. The mother of all wedge issues is knocking on your door: when the pension crunch comes, who will you throw to the wolves: the retirees, the unions and the producers of government services — or the schoolchildren, the poor and the consumers of government services?...
"Who will you throw to the wolves?" Probably the children, since these are "liberals."
If I were running the circus, I'd verify my gut suspicion that this crazy cancerous government growth started roughly around 1980. I think that, for thousands of governmental units, the line on the charts of increasing wealth and population ran at roughly the same angle as increasing government spending and size... until about 1980. Then the lines diverged, with government growing at a steeper angle. Now we come to the crunch.
And then, if I were in charge, I'd pare it all back. Back to whatever it would have been if those lines had continued to run together. And I'd ruthlessly favor the young over the old. they are the future.
San Francisco is so blankety blank broke. It's heartbreaking. A few years ago our pension fund was claiming about 1billion of unfunded pension liability, assuming 7% growth. The Adachi Commission made an assumption of 6% growth, and said the unfunded liability was really 6 billion! I was appalled. But it's got to be tons worse than that. Nobody is earning 6% now. And pensions are only part of the problem; the are huge health-care liabilities. There's no possible way to avoid a catastrophic crash.
But the really interesting question is, for me, is that this has been developing for decades! And this is a city inhabited overwhelmingly by liberal Democrats. Which is to say, the people who favor government. There is no effective Republican Party, no evil Republicans oppressing the poor. So it's their baby. Their playground. And they have sat there and watched a governmental slow-motion train wreck...... and done nothing.
What does this mean?
May 12, 2012
Things could be tons worse here... Three cheers for political inaction... and fracking!
.Global-warming-related catastrophes are increasingly hitting vulnerable populations around the world, with one species in particular danger: the electricity ratepayer. In Canada, in the U.K., in Spain, in Denmark, in Germany and elsewhere the danger to ratepayers is especially great, but ratepayers in one country — the U.S. — seem to have weathered the worst of the disaster.
America’s secret? Unlike leaders in other countries, which to their countries’ ruin adopted policies as if global warming mattered, U.S. leaders more paid lip service to it. While citizens in other countries are now seeing soaring power rates, American householders can look forward to declining rates.
The North American exemplar of acting on the perceived threat of global warming is Ontario, which dismantled one of the continent’s finest fleets of coal plants in pursuit of becoming a green leader. Then, to induce developers to build uneconomic renewable energy facilities, the Ontario government paid them as much as 80 times the market rate for power. The result is power prices that rose rapidly (about 50% since 2005) and will continue to do so: Ontarians can expect power prices that are 46% higher over the next five years, according to a 2010 Ontario government estimate, and more than 100% higher according to independent estimates. The rest of Canada may not fare much better — the National Energy Board forecasts power prices 42% higher by 2035, while some estimates have Canadian power prices 50% higher by 2020.
The story throughout much of Europe is similar. Denmark, an early adopter of the global-warming mania, now requires its households to pay the developed world’s highest power prices — about 40¢ a kilowatt hour, or three to four times what North Americans pay today. Germany, whose powerhouse economy gave green developers a blank cheque, is a close second, followed by other politically correct nations such as Belgium, the headquarters of the EU, and distressed nations such as Spain.
The result is chaos to the economic well-being of the EU nations. Even in rock-solid Germany, up to 15% of the populace is now believed to be in “fuel poverty” — defined by governments as needing to spend more than 10% of the total household income on electricity and gas. Some 600,000 low-income Germans are now being cut off by their power companies annually, a number expected to increase as a never-ending stream of global-warming projects in the pipeline wallops customers. In the U.K., which has laboured under the most politically correct climate leadership in the world, some 12 million people are already in fuel poverty, 900,000 of them in wind-infested Scotland alone, and the U.K. has now entered a double-dip recession.
The U.S., in contrast, will see power rates decline starting next year, according to the U.S. Energy Information Administration, dropping by more than 22% by the end of the decade and then staying flat to 2035. Why the fall? Mainly because the U.S. will rely overwhelmingly on fossil fuels in the years ahead, not just coal, which dominates the current power system, but increasingly natural gas, which is expected to account for 60% of all new generating capacity in the future. Thanks to fracking, the U.S. effectively has limitless amounts of inexpensive natural gas to add to its limitless coal....
April 3, 2012
I bet I could do a better job myself...
From Daniel Jalkut, of Red Sweater Software. (I'm writing this post on his excellent blogging client, MarsEdit.) Red Sweater Blog – The End Of Advertising:
...In the history of the world so far, there has been considerable opportunity for advertisers to misguide customers, and to lure their money toward products or services that can be framed as perfect for them, even when they are not. That’s the art and the holy grail of advertising. [I don't agree that advertising is aimed at misleading. That's reflexive lefty malarky. But it is usually poorly designed, truth-wise.] But going forward, technology will offer customers and companies the tools to connect effortlessly, optimizing for compatibility without the help of the bogus, outdated advertising system.
Most of us base purchasing decisions on vague hunches derived from a mix of advertising influences, word-of-mouth, and the relative trendiness of a product. But more and more as customers we are cutting out the advertising middle-man, in favor of systems based on education and trust. Amazon is a good example of this. With the notable exception of their Kindle line of products, they have little concern about which products their customers buy. It only matters that they buy things, and that they buy things often. They provide detailed product information, and allow honest, often scathing reviews. The goal is for customers to make self-serving decisions. In this case, defying the advertisers’ best interests is in Amazon’s best interest as well.
Extrapolate the technology-assisted consumption process out over the next 10, 50, 100 years, and I have a hard time imagining a meaningful role for conventional advertising. If I search Google for “lawnmower,” it’s not interesting that some tractor company has paid Google for the privilege of putting their brand’s information at the top of the list. At some point in the future, customers will assume that companies who choose to advertise conventionally are afraid of the outcome when consulting various self-empowering resources. Where am I more likely to search for “lawnmower?” If I want to know what a lawnmower is, Google. If I want to know which lawnmower to buy? Amazon, or another site that strives to empower customers, not advertisers.
I do worry about what happens to some of our beloved, advertising-driven services. We’ve all grown accustomed to the subsidization of news reporting and analysis. In recent decades, advertising has crept further into our lives, even subsidizing municipal infrastructures such as public transit. What impact will the end of advertising have on these important services?
In the old world, technology for connecting customers directly to companies did not exist, so companies were satisfied in buying advertising. It is tool that serves to expose customers to the concept of a product, and to crudely attempt to educate them about the suitability of the product for their purposes.
In the new world, mass-exposure will be replaced by social networking, and education will be not only replaced by, but massively bolstered by trusted systems such as Amazon’s review database, Consumer Reports, and other much better stuff that is presumably coming in the future. Presumably? It has to be coming, and it has to be better, because everything’s riding on it....
Me, I don't think advertising is dying. Or, rather, I think it doesn't have to die. It needs to be re-invented. This is a subject that bugs me a lot, because I'm frequently frustrated by advertising that doesn't give me what I need to know. I have often been in the position of having a need, and having money to spend to satisfy the need...... and not being able to find the information I need to make a purchase.
Problem is, most products are usually advertised as being, as Mary Poppins put it, "practically perfect in every way." Of course that's absurd. Most products are good within some particular niche. My chain saw gets used once or twice a year. So I don't want a super chainsaw. I bought the inexpensive consumer-grade saw that merely does an adequate job, and would die if used daily.
But no ad will tell you that. It's taboo. Maybe I'm crazy, but I think I'd react very positively to an ad that said that "Product X will do A, B and, in a pinch, C. But it's NOT designed to do E, F, or G. We think X is a good compromise between affordability and number of features."
If you find a good review of an intended purchase, you are delighted. Right? The reviewer gives you pluses and minuses. He tells you what the product feels like. It's charms and its warts. SO, tell me, brothers and sisters, why can't ads be written in the same way???
I've been asking that question for a long time, and I never get an answer. (And yes, of course there are products that need to be sold by the sizzle, not the quality of the steak. You don't sell perfume or soda pop or wedding dresses with plusses and minuses. But still, there are tons of things where what I want is just some simple information. Some straight talk.
Much of the problem, I think, is that an advertising agency is an Industrial Age organization. Much like a newspaper. The idea of a "reporter" was always flawed, because in most cases the guy can't know enough about whatever situation he's reporting on at the moment. We used to have to rely on reporters, but now, if, say, a legal issue is in the news I can read the blogs of a multitude of law professors. How many reporters can compete on that playing field? Most reporters just look like fools.
It's the same with advertising. Suppose you hire a advertising agency to sell a Vertical Panel Saw to me. That's crazy, because I, a cabinetmaker, know more about the subject than 99.9% of advertising people. They will just write up some puffery and pretty pictures—because they don't know enough.
If you hired me to write that ad, I would go to real shops that use those tools, and interview them. And then I'd write ads that are like mini-articles, where real people talk about the plusses—and yes, the minuses—of machines they work with every day. About the gritty reality of using them. I bet people would just eat that up.
March 29, 2012
Just a bit of sneaky BS...
...Because oil and gas prices are likely trending upward for an excellent fundamental reason, meanwhile—increasing demand from emerging economies like India and China—the only way to bring them down permanently is to diversify the country's sources of energy and reduce the country's consumption of it. [So, you are advocating nuclear power?]
And President Obama is actually doing that. [Baloney. He is at war with all practical forms of energy, because he's a leftist and hates the idea of a strong America.]
U.S. oil production has increased over the last four years, from about 5 million barrels a day to close to 6 million barrels. [Why not be a reporter instead of a lefty liar, and mention that energy production that is under control of the Federal Government has declined by 40% under the Obama regime. All the increased production is from places where Democrats can't kill it.] Natural gas has become so plentiful that prices have crashed. [And leftists are trying hard to kill new production with phony environmental concerns about franking.] And, in part as a result of high gas prices, Americans are driving less and using less fuel. [We are poorer and weaker—ain't that Progressive.]
So the U.S. is actually making progress toward curing its foreign oil addiction. There's a long way to go, of course, and there's no quick and lasting fix to today's high prices, [I bet a President Palin could show you some stuff.] but we're making progress. And Americans frustrated with that progress should probably lay at least some blame at the feet of the Presidents and Congresses that have ignored the finite oil problem for the past 40 years [No, they should lay the blame at the feet of Democrats and fake-environmentalists.]....
March 14, 2012
...Carlsen hired Limbaugh to read his radio ads back in 1986, when Sleep Train owned just two stores and Limbaugh was trying to kickstart a not-so-successful radio career.
"He started doing the spots and it took off right away," Carlsen told The Bee in 1997.
The relationship with Sleep Train continued after Limbaugh moved to New York and became one of the biggest stars in radio. In a 2005 interview with The Bee, Carlsen recalled what Limbaugh told him as he was moving to New York. "When he left town he said, 'The people you meet on the way up are the people you meet on the way down. I'll always take care of you.' "
Me I'm old fashioned. To betray an old friend is unforgivable. To do it casually, out of vague mushy political correctness, and the desire to be bland... I spit upon them!
And thinking a little more about this... Rush stayed the same person as he went from poor to very rich and famous. But I can just imagine the Sleep Train execs, as they move up the ladder of success. You shed the awkwardness of your beginnings, and become smother and sleeker. Your suits cost $600. You move to the fancy neighborhood. Your wives want to be involved in tony fund-raisers. You might get asked to be on the board of some museum or dance company.
And chic society is always liberal! So all the while, as you move among the voguish folk, you wonder if your connection with Rush is like having a bit of dog poop on your shoe. And your wives squirm when little jabs are made about Rush.
So you try to pretend your old unfashionable friend doesn't exist.
I bet the Sleep Train honchos have been betraying their friend for years.
February 3, 2012
It's not unemployment, it's a lockout...
Spengler puts clearly what I'm sure you already know, Obama, the Great Divider — Literally:
...One one hand, we have nearly a fourth of working-age Americans without jobs, the worst proportion since the early 1980s. On the other, we have $2 trillion of cash sitting idle on corporate balance sheets, as President Obama complained in a February 2011 speech to the U.S. Chamber of Commerce. We have investors languishing for lack of returns, and unemployed people languishing for lack of work...
...To put this in perspective, $2 trillion of idle cash represents two years' worth of American investment in equipment and software. Why would corporations rather earn rounding-error levels of interest at the bank than put their money to work in profitable ventures?
First, because U.S. corporate taxes are the highest in the industrial world, and Obama wants to keep them high; second, because trillion-dollar-plus budget deficits imply higher tax rates in the future, and Obama will do nothing to reduce the deficit; third, because ObamaCare sets a high threshold of labor costs for startups with more than 55 employees; fourth, because regulatory costs across the board make numerous projects uneconomical; and fifth, because the arbitrary intervention of the federal government in regulatory affairs multiplies the risk associated with any investment decision.
That's why the Keystone Pipeline cancellation was so devastating. High energy prices and vulnerable foreign supplies make North American energy alternatives a no-brainer investment, with high prospective returns (as opposed to the wind-and-solar boondoggles pushed by the Obama administration). If you arbitrarily cancel the flagship project, what message does that send to investors?
This isn't an investors' strike, but a lockout. This isn't unemployment, but a government shutout. If Republicans win the presidency and both houses of Congress in November, 2013 will be the hottest year the U.S. economy and stock market have had since 1994....
January 19, 2012
Before we all rush off to revive the manufacturing sector....
...As you can see the two largest inputs are materials and Apple's own profit margin. Despite the machine being assembled in China it's still true that the value of that labour is trivial: 2% or so of the cost of the machine...
....But here's the real takeaway point from these numbers. Basic manufacturing, electronics assembly type manufacturing, simply isn't a high value occupation any more. And the level of wages that can be paid in any particular occupation depend, inexorably, on the amount of value that occupation adds. So if electronics assembly adds little value then there simply cannot be high wages for those doing that work for it just isn't a high value added occupation.
So quite why there are those insisting that bringing all this manufacturing "home", to the UK or US, will lead to lots of well paid jobs in manufacturing I'm just not sure. There are indeed high paid jobs in manufacturing, as the onshoring of Samsung's chip plant for Apple shows. But that's producing 1,100 jobs to produce all of the processing chips for all of Apple's products.
If you like, the end lesson here is that you can have lots of manufacturing jobs, sure, as Foxconn does, but they pay $400 a month maybe. And you can have high paying manufacturing jobs like at that Samsung plant in Texas, but you're not going to get very many of them.
Manufacturing is going to become like farming. American agriculture is stunningly efficient, but it doesn't need many people. Only about 2% of Americans are now on the farm. It's interesting (to me at least) that the Industrial Revolution "solved" agriculture. There were, for instance, no more famines in industrial regions after about 1800. And the key to winning wars became industrial output and advanced weapons, not masses of peasant recruits.
Now as we enter the Information Age, manufacturing is likewise being "solved." It will not be a big problem in the future, and it won't employ many people. Any manufactured goods that are needed will pretty much just appear.
January 14, 2012
"the American economy runs from the bottom up"
...There are plenty of things about which I disagree with Mitt Romney; I entirely agree with Governor Huntsman's warning that Romney's rhetorical blasts against China would lead to a trade war, and I also agree with Newt Gingrich's sensible views on immigration against Romney's hard line. In both cases, it seems to me that Romney is pandering to prejudice. But there is no question that his record at Bain Capital qualifies him to make better economic policy. Obama's economic advisers, by contrast, think in terms of such abstractions as "aggregate demand," and blundered into a stimulus program that failed to stimulate. Romney understands that the American economy runs from the bottom up — that risk-taking and innovation and the stubborn desire to win are what make companies succeed.
One wonders at the pettiness of Romney's opponents. One of the problems that Republicans have in the primary is that the Reagan consensus — cut taxes and roll back regulation — holds sway over all the contenders, except, of course, for Ron Paul, who is a throwback to an ugly era of American isolationism — Charles Lindbergh without the airplane. In 1980, the differences between Reagan and the establishment candidates were enormous — "voodoo economics" against conservative Keynesianism. Now that supply-side has become the mainstream Republican doctrine, the practical differences between Romney and a Gingrich or Perry are small in economic policy. Perhaps the reliance on personal attacks stems from lack of substantive differences. If that is true, there is hope that once Gingrich and Perry come to understand that they are not going to be the Republican candidate, then the party will unite behind its candidate and this whole miserable discussion will be forgotten....
Good stuff. But why do we have to get this from Spengler, and not from Romney himself? This just mystifies me. He's been running for President for six or eight years, maybe more. And the OBVIOUS criticism to make of him is that he's a heartless capitalist who fires the little people (preferably on Christmas Eve) and then returns to the 42nd Floor to mingle with light his cigars with hundred-dollar bills. So why is he not ready with a good answer? I could write better answers than he's giving. With one hand tied behind my back.
And why can't our people understand and express it, that jobs too come from the bottom up? From a million decisions, like... "Should we hire another person? Or invest in a better machine? Or just muddle along the way we are?"
January 3, 2012
Why do the hard stuff?
This seems to make sense to me...
There is only one valid definition of a business purpose: to create a customer...."In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called "the dumbest idea in the world", the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.
-- Peter Drucker, The Practice of Management
The "real market," Martin explains, is the world in which factories are built, products are designed and produced, real products and services are bought and sold, revenues are earned, expenses are paid, and real dollars of profit show up on the bottom line. That is the world that executives control—at least to some extent.
The expectations market is the world in which shares in companies are traded between investors—in other words, the stock market. In this market, investors assess the real market activities of a company today and, on the basis of that assessment, form expectations as to how the company is likely to perform in the future. The consensus view of all investors and potential investors as to expectations of future performance shapes the stock price of the company.
"What would lead [a CEO]," asks Martin, "to do the hard, long-term work of substantially improving real-market performance when she can choose to work on simply raising expectations instead? Even if she has a performance bonus tied to real-market metrics, the size of that bonus now typically pales in comparison with the size of her stock-based incentives. Expectations are where the money is. And of course, improving real-market performance is the hardest and slowest way to increase expectations from the existing level."...
If I own some shares in a company, technically I'm an owner. But in most cases that's just unrealistic. Shareholders mostly don't act like owners. Buying shares is kind of like loaning money with an element of making a bet. Imagine you loaning money to my company. But instead of a fixed 4% interest, we will make a bet. If my company is successful, you get 12% interest. If I flop, you get nothing. That's sort of what being a shareholder is like.
Treating the shareholder as an owner when he's really a lender doesn't make a lot of sense. Better to just build the business, and there will be more for everybody.
So who owns the publicly-held corporation? Who cares? It doesn't really matter. Businesses happen. They benefit us all. If they end up being like some sort of Quantum particles that are there but don't really exist, I'm not going to sweat it.
December 22, 2011
Not all problems go unsolved...
Most of you won't be interested, but I got an e-mail that made me feel better about the world:
Dear Quicken Mac Customer:
As a fellow Mac fan and customer, I wanted to personally introduce myself, and share some highlights of our Apple-related efforts with you.
I recently became General Manager of the Personal Finance Group at Intuit, responsible for Quicken and Mint.com. Intuit's 25 years of leadership in personal financial management software makes me excited to lead this team and I am committed to creating products to help you reach your financial goals.
I recognize, however, that we have not always delivered on this promise to Quicken Mac customers.
As you may know, Quicken for Mac 2007 does not currently work on Apple's latest operating system, Mac OS X 10.7 (Lion). I understand the frustration this may have caused you and have put a team in place to address this issue. I am happy to announce that we will have a solution that makes Quicken 2007 for Mac "Lion-compatible" by early spring. There are still details to be worked out, so I ask your continued patience as we work through these. In the meantime, you can find more information on our Mac FAQ page...
General Manager, Intuit Personal Finance Group
It's not that I love Quicken, it's more that the other ones are worse. As I discovered when I upgraded to Mac OS 10.7, and couldn't use Q. Mostly I had Q all down-pat for those particular reports and such I needed, and I've hated starting over.
And this development is interesting from a business management perspective. Intuit stopped Mac development just at the moment (2007) when anybody with sense should have seen that the Apple platforms were heading in exciting directions. The first iPhone was unveiled on January 9, 2007. The Apple Stores were by then a clear success, iTunes and the iPod were king in music, Mac OS-X was clearly a winner.... So of course that's the right moment moment to put all your chips on Microsoft. I bet Intuit was full of those faux-manly tech types who dismiss Apple customers as "fanboi" who have "drunk the Steve Jobs Kool-aid."
December 17, 2011
Now for what's wrong with Stiglitz's article...
In my previous post I praised the insight in this article on the underlying cause of the Great Depression, that due to advances in agriculture we had far too many people on the farm, and needed to move a lot of them to manufacturing. And that, analogously, we now have too many people in manufacturing, and need to move them to services. I think there's a lot of truth in that.
However the author's prescriptions, his fixes, are beyond stupid. So I'm going to indulge myself in a bit of fisking.
...The private sector by itself won't, and can't, undertake structural transformation of the magnitude needed—even if the Fed were to keep interest rates at zero for years to come. [We don't know that, because the private sector is tied down, like Gulliver, by a thousand threads of regulation and uncertainty.] The only way it will happen is through a government stimulus designed not to preserve the old economy but to focus instead on creating a new one. [This is insane dreaming, because government is currently obsessed with preserving the old economy. And it is unlikely that any government, Rep or Dem, could be visionary enough to not put its efforts into the known and familiar.] We have to transition out of manufacturing and into services that people want—into productive activities that increase living standards, not those that increase risk and inequality. [That's so vague as to be platitudinous.] To that end, there are many high-return investments we can make. Education is a crucial one [The current world of education is utterly poisoned with statist and reactionary thinking. Pouring more money into it will make things much worse.]—a highly educated population is a fundamental driver of economic growth. [This guy should be reading Goldman's book, How Civilizations Die.. In most parts of the globe increasing education has been accompanied by catastrophic declines in birthrates. (Not catastrophic in America, so far, but bad.) We are educating people to nihilism. Civilizational suicide.]
Support is needed for basic research. Government investment in earlier decades—for instance, to develop the Internet and biotechnology—helped fuel economic growth. [No, government did NOT develop the Internet. (See my post here.) Most government-directed research is ineffective.] Without investment in basic research, what will fuel the next spurt of innovation? [Hey, wait a minute? I thought this was about moving people from manufacturing to services? But this is just the usual Big-Government-Liberal laundry-list.] Meanwhile, the states could certainly use federal help in closing budget shortfalls. [Clueless. Governments aren't suffering "budget shortfalls." They have gone INSANE. All the Blue states and cities have made promises they can't possibly keep, even if the entire Federal treasury is handed over to them. They are bankrupt. They must die in their present form.] Long-term economic growth at our current rates of resource consumption is impossible, so funding research, skilled technicians, and initiatives for cleaner and more efficient energy production will not only help us out of the recession but also build a robust economy for decades. [Green bullshit. All untrue. And the smart money has already realized it!] Finally, our decaying infrastructure, from roads and railroads to levees and power plants, is a prime target for profitable investment....
There's more, but you get the idea. This is so pathetic, because the Mr Stiglitz has had one sterling insight, and yet is unable to imagine (or maybe endure) the possibility that a lot of other things he's been taught are wrong. He is utterly stuck in Industrial Age thinking, and is seemingly unaware that we are in the Information Age. Where things work very differently. He is trapped in the thinking of the Blue Model.
There is another underlying cause of our present problems. That is, that while the private sector has been brutally wrenched into the Information Age, government and quasi-governmental institutions are still working on an Industrial Age paradigm. They have become disconnected with reality, and that's another way of saying, crazy. All around us we see governments and schools and hospitals and NGO's that are dysfunctional. That are bloated and sclerotic. That are stuck in the ideas of the past.
I guess universities are part of the "service sector," but we should be moving people OUT of them, because they have become horrible drags on our world. The UC system and the Calif State University System now have more administrators than faculty. That's not just bad management, it is insane! And I doubt that even Stiglitz is arguing that they are producing graduates ready to do great things for our economy.
Poor Mr Stiglitz can only offer us the usual tired lefty list of desiderata. How will building bridges move people into the service sector? Huh? Levees? Or pouring money into bankrupt local governments? (Well, we've been doing that. With no results.) Stiglitz considers WWII to have been a "Keynsian stimulus." That just renders the concept meaningless. And he has no clue as to what a new "WWII" might be. Nor can he tell us what IS the "basic research" that might help here. He has nothing to offer. He should be reading Random Jottings!
Actually, things in the Information Age morph and change so rapidly that the whole concept of experts deciding what must be done has become an absurdity. In a mere decade or so Blockbuster invented a new way of distributing video, and then was blitzed when Netflix came up with a better way, and now Netflix is floundering in the new world of direct downloads and YouTube. SO, imagine that government had wanted to "stimulate" video distribution! Imagine bureaucrats intervening, or writing regulations to improve all this! Ugh! We'd just now be asking for comments on drafting protocols to prepare to subsidize basic research in VHS tape technology.
Clue-bat to Mr S. We need to be moving towards systems that are self-regulating. I can give some hints if anyone is interested.
December 16, 2011
"An alternative theory of the Depression"
I recommend this piece By Joseph E. Stiglitz, A Banking System is Supposed to Serve Society, Not the Other Way Around". Both as insight into the Great Depression, and the depression-like-thing we are in now. It's a thought-provoker...
...The trauma we're experiencing right now resembles the trauma we experienced 80 years ago, during the Great Depression, and it has been brought on by an analogous set of circumstances. Then, as now, we faced a breakdown of the banking system. But then, as now, the breakdown of the banking system was in part a consequence of deeper problems. Even if we correctly respond to the trauma—the failures of the financial sector—it will take a decade or more to achieve full recovery. Under the best of conditions, we will endure a Long Slump. If we respond incorrectly, as we have been, the Long Slump will last even longer, and the parallel with the Depression will take on a tragic new dimension...
...For the past several years, Bruce Greenwald and I have been engaged in research on an alternative theory of the Depression—and an alternative analysis of what is ailing the economy today. This explanation sees the financial crisis of the 1930s as a consequence not so much of a financial implosion but of the economy's underlying weakness. The breakdown of the banking system didn't culminate until 1933, long after the Depression began and long after unemployment had started to soar. By 1931 unemployment was already around 16 percent, and it reached 23 percent in 1932. Shantytown "Hoovervilles" were springing up everywhere. The underlying cause was a structural change in the real economy: the widespread decline in agricultural prices and incomes, caused by what is ordinarily a "good thing"—greater productivity.
At the beginning of the Depression, more than a fifth of all Americans worked on farms. Between 1929 and 1932, these people saw their incomes cut by somewhere between one-third and two-thirds, compounding problems that farmers had faced for years. Agriculture had been a victim of its own success. In 1900, it took a large portion of the U.S. population to produce enough food for the country as a whole. Then came a revolution in agriculture that would gain pace throughout the century—better seeds, better fertilizer, better farming practices, along with widespread mechanization. Today, 2 percent of Americans produce more food than we can consume...
...The cities weren't spared—far from it. As rural incomes fell, farmers had less and less money to buy goods produced in factories. Manufacturers had to lay off workers, which further diminished demand for agricultural produce, driving down prices even more. Before long, this vicious circle affected the entire national economy.
The value of assets (such as homes) often declines when incomes do. Farmers got trapped in their declining sector and in their depressed locales. Diminished income and wealth made migration to the cities more difficult; high urban unemployment made migration less attractive. Throughout the 1930s, in spite of the massive drop in farm income, there was little overall out-migration. Meanwhile, the farmers continued to produce, sometimes working even harder to make up for lower prices. Individually, that made sense; collectively, it didn't, as any increased output kept forcing prices down...
...Government [war] spending unintentionally solved the economy's underlying problem: it completed a necessary structural transformation, moving America, and especially the South, decisively from agriculture to manufacturing. Americans tend to be allergic to terms like "industrial policy," but that's what war spending was—a policy that permanently changed the nature of the economy. Massive job creation in the urban sector—in manufacturing—succeeded in moving people out of farming. The supply of food and the demand for it came into balance again: farm prices started to rise. The new migrants to the cities got training in urban life and factory skills, and after the war the G.I. Bill ensured that returning veterans would be equipped to thrive in a modern industrial society. Meanwhile, the vast pool of labor trapped on farms had all but disappeared. The process had been long and very painful, but the source of economic distress was gone...
The current problem is similar, according to the authors. Now we have too many people in a declining industrial sector, who need to move with the jobs to the service sector. (I don't think industrial output is declining, rather industry needs fewer people.)
December 13, 2011
The Blue Model
I've referred often to Walter Russell Mead's concept of the Blue Model. But I don't think I've ever blogged his original post wherein he explains it. So I'm putting the link and an excerpt here, just so I can easily find it when I need it. It's definitely worth reading; its explanatory power is great.
...it is sometimes hard to believe, but out there in the workaday world the long and graceful decay of the American social model is accelerating into a more rapid and dangerous decline. The core institutions, ideas and expectations that shaped American life for the sixty years after the New Deal don’t work anymore, and the gaps between the social system we’ve inherited and the system we need today are becoming so wide that we can no longer paper them over or ignore them.
In the old system, both blue collar and white collar workers hold stable jobs, a professional career civil service administers a growing state, with living standards for all social classes steadily rising while the gaps between the classes remain fairly stable, and with an increasing ‘social dividend’ being paid out in various forms: longer vacations, more and cheaper state-supported education, earlier retirement, shorter work weeks and so on. Graduate from high school and you were pretty much guaranteed lifetime employment in a job that gave you a comfortable lower middle class lifestyle; graduate from college and you would be better paid and equally secure.
Life would just go on getting better. From generation to generation we would live a life of incremental improvements — the details of life would keep getting better but the broad outlines of our society would stay the same. The advanced industrial democracies of had in fact reached the ‘end of history’: this is what ‘developed’ human society looked like and there would be no more radical changes because the picture had fully developed.
Call this the blue model, and the chief division in American politics today is between those who think the blue model is the only possible or at least the best feasible way to organize a modern society and want to shore it up and defend it, and those who think the blue model, whatever benefits it had in the past, is no longer sustainable. That division is going to begin to erode in the next few years because the blue model is breaking down so fast and so far that not even its supporters can ignore the disintegration and disaster that it entails....
November 18, 2011
"The abject lawlessness and contempt for humanity of the Marxist Obama regime..."
I have nothing to add to this. It speaks for itself all too well...
...Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,
It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.
The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.
The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.
Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let's not sugar-coat this or make this crime seem "complex" and "abstract" by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.
I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG's leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn't that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm...
(There's more, if you can stomach it.)
November 14, 2011
Here are just a few things I've been meaning to blog...
So, will Lefties apologize to George W Bush?
...The trial by military commission of top al Qaeda operative Abd al Rahim al Nashiri is set to commence today at Guantanamo. Nashiri's time in U.S. detention has been controversial because he was one of only three senior terrorists waterboarded by the CIA. Nashiri was subjected to other so-called enhanced interrogation techniques (EITs) as well....
... Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D.
You probably have never heard of System D. Neither had I until I started visiting street markets and unlicensed bazaars around the globe.
System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise." Or, sweetened for street use, "Systeme D."...
... In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world -- close to 1.8 billion people -- were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes.
No big surprise here....
...But what if government encouraged, even invented, those "abusive practices"?
Rewind to 1994. That year, the federal government declared war on an enemy -- the racist lender -- who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.
At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties....
October 26, 2011
I may have made a mistake. I was curtly dismissive recently of comments by "Gian" about "fiat money." It's not a subject I've thought about much, and since his comments lack the courtesy and fellow-feeling that ought to obtain among readers of RJ, I brushed them aside.
I assume he was referring to money not backed by gold or a similar store of value. This may be a blind spot on my part—I've never delved into the issue, never given it much thought. But did we not go off the Gold Standard in the late 60's? At the very moment when almost everything else was turning squirrely? When growth of government stared diverging in a bad way from growth in general? Have I missed a clew?
My real interest is in what's inside the hearts of men, but those things are always revealed in outward signs and trends. The shoes and hats we wear reveal what is in our souls, so why should money be any different?
October 24, 2011
If I were starting over again... Texas.
Voters around the country are concluding it's better to be red than dead—applying a whole meaning to an old phrase. If you do not currently live in a red state, there's a good chance you will be in the near future. Either you will flee to a red state or a red state will come to you—because voters fed up with blue-state fiscal irresponsibility will elect candidates who promise to pass red-state policies.
According to the National Conference of State Legislatures (NCSL), 25 state legislatures are controlled by Republicans and 16 by Democrats, with eight split (i.e., each party controlling one house). There are 29 Republican governors and 20 Democrats, with one independent. And there are 20 states where Republicans control both the legislature and governor's mansion vs. 11 Democratic, with 18 split (one party controls the governor's office and the other the legislature).
And though we are a year away from the 2012 election, generic Republican vs. Democratic polls have given Republicans the edge for more than a year. If that pattern holds—and if blue-state leaders refuse to learn from their policy mistakes, just like their true-blue leader in the White House—it likely means there will be even more red states in 2013...
And when the Blue States and cities are going bankrupt, and come begging a Red congress for bailouts... I hope we are compassionate. I'd suggest we give 'em a helping hand. Including ridding them of burdensome public employee unions, cutting public employee pensions and benefits back to private-sector norms, setting limits on the ratio of supervisors to actual workers, ending gerrymandering... We could help them out by privatizing education, and a lot of other things.
It would be the kind-hearted thing to do...
September 30, 2011
I'm looking forward to seeing conservatives driving Volvos, with Palin stickers...
It's surprising—and very pleasing—how often one hears these days of wisdom coming from odd corners of the planet. It gives me a sort of "world turned upside down" feeling. My belief is that the US will catch up, once the zombie corpse collectivism currently stomping about here has toppled into the dust. Say, maybe, around January 20, 2013. If there's hope for the Swedes, there's hope for us!
(In honesty, I don't really think there's long-term hope for Sweden, because Sweden has no purpose. No higher cause, no dream, no ennobling philosophy. No vocation. You can't go very far on a dream of just muddling through without too many problems.)
...Facing severe economic stagnation, Sweden began implementing several rather un-social democratic measures in the early 1990s. This included curtaining its public sector deficit and reducing marginal tax-rates and levels of state ownership. Another change involved allowing private retirement schemes, a development that was accompanied by the state contributing less to pensions.
These reforms, however, proved insufficient. In the early 2000s, according to James Bartholomew, author of the best-selling The Welfare State We're In (2006), more than one in five Swedes of working-age was receiving some type of benefit. Over 20 percent of the same demographic of Swedes was effectively working "off-the-books" or less than they preferred. Sweden's tax structure even made it financially advantageous for many to stay on the dole instead of getting a job.
But with a non-Social Democrat coalition government's election in 2006, Sweden's reform agenda resumed. On the revenue side, property taxes were scaled back. Income-tax credits allowing larger numbers of middle and lower-income people to keep more of their incomes were introduced.
To be fair, the path to tax reform was paved here by the Social Democrats. In 2005, they simply abolished -- yes, that's right, abolished -- inheritance taxes.
But liberalization wasn't limited to taxation. Sweden's new government accelerated privatizations of once-state owned businesses. It also permitted private providers to enter the healthcare market, thereby introducing competition into what had been one of the world's most socialized medical systems. Industries such as taxis and trains were deregulated. State education and electricity monopolies were ended by the introduction of private competition. Even Swedish agricultural prices are now determined by the market. Finally, unemployment benefits were reformed so that the longer most people stayed on benefits, the less they received.
So what were the effects of all these changes? The story is to be found in the numbers. Unemployment levels fell dramatically from the 10 percent figure of the mid-1990s. Budget-wise, Sweden started running surpluses instead of deficits. The country's gross public debt declined from a 1994 figure of 78 percent to 35 percent in 2010. Sweden also weathered the Great Recession far better than most other EU states. Sweden's 2010 growth-rate was 5.5 percent. By comparison, America's was 2.7 percent.
Of course Sweden's story is far from perfect. Approximately, one-third of working Swedes today are civil servants. Some of the benefits of tax reform have been blunted by Sweden's embrace of carbon taxes since the early 1990s. That partly reflects the extent to which many Swedes are in thrall to contemporary Western Europe's fastest growing religion -- environmentalism.
High unemployment also persists among immigrants and young Swedes (25.9 percent amongst 15-25 year olds). This owes much, Bartholomew observes, to "the high minimum wage imposed on the various industries by the still-powerful unions. Those who cannot command a good wage are not allowed to work for a lower one." On the income side, average Swedish wage-earners in 2009 still took home less than 50 percent of what they cost their employer. The equivalent figure for Britain was 67 percent....
September 24, 2011
How to prevent people from thinking about your product...
This is something that just totally bugs me. The epic STUPIDITY of giving products awkward names that are hard to remember or use. A few years ago we were looking at cars, and we looked at a CRV and an RAV and an MDX!. All of which started to blur together in my mind almost immediately. (We bought a 2001 Honda CRV, which we love! Recommended.)
Or go to amazon.com and look at digital cameras. You see names like Samsung EC-ST65, or Casio EX-S200SR. STUPID. How long are those names going to stick in your head? Probably the people who own those cameras don't remember their names.
But this new phone truly takes the prize. (I'm not knocking the product, just the name. It sounds like a pretty cool machine. I wish my iPhone had such a big screen.)
...It's time to add fast to those superlatives. OK, how about faster. That's really the bottom line with the Samsung Galaxy S II, Sprint Epic 4G Touch. That's its entire, official name, punctuation and all, depending on who you ask. It's a little ridiculous, to be sure. But a big, fast phone perhaps deserves a bombastic name.
The SGSIISE4GT, which is how we're abbreviating it at least one time, is the first version of Samsung's Galaxy S II to be released in the United States....
What was the very first thing Steve Jobs did when he returned to Apple? He simplified the product line, and simplified the names. I remember scratching my head over choices like Performa 5300 and Performa 5400 and Performa 6300. Bigger numbers did not mean newer or more powerful, so it was perplexing. And frustrating.
Jobs slashed the Mac line to just four things. One each consumer and pro desktops, and consumer and pro laptops. (The laptops were called iBooks and PowerBooks, two all-time great names.)
You would think other companies would learn this trick, wouldn't you?
"Samsung Galaxy S II, Sprint Epic 4G Touch." A name to conjure with! A sexy name. A name that rings like a bell. A name that stirs our deep subconscious longings for romance and poetry and adventure...
September 22, 2011
I have to agree with Mr Drum on this one...
...So did DOJ really pay $16 for muffins? Of course not. In fact, it's obvious that someone quite carefully calculated the amount they were allowed to spend and then gave the hotel a budget. The hotel agreed, but for some reason decided to divide up the charges into just a few categories instead of writing a detailed invoice for every single piece of food they provided.
This is unremarkable. In fact, I'm here to tell you that this happens All. The. Time. I've been involved in what feels like a thousand conferences of this kind, and I'd be shocked if it happened any other way. Hell, I'm surprised DOJ even got that much of a breakdown. Far more commonly, your event person negotiates what kind of refreshments you'll get, and the invoice ends up looking something like this:
Refreshment table (bev/morn/aft) — 5 days....................$39,500...
Yeah. I never go to conferences, but I know enough to know how it works. If you ask the hotel to provide refreshments, they don't just bring out a bowl of muffins. There's a sort of buffet, with coffee and tea and OJ and cream cheese and fruit and cookies and bagels... etc etc. And there's at least one staff person refilling the coffee urns. And extra work done in the kitchen putting it together. And people have to clean up the mess. And supervisors drop in to check up, and also spend time talking to the conference organizers. And you are using hotel equipment, the cost of which you are partly paying.
That's all paid for in the "cost of refreshments."
August 2, 2011
As someone who has employed others in the past...
...this looks like just what one might expect to happen. And a good reason why tying health insurance to employment was always a bad idea.
By the way, no one ever thought-through or voted on the idea that health insurance should go along with employment. It was an accident. During WWII employers were forbidden from raising wages to attract scarce workers. But they could offer health care plans, and that quickly became widespread. And it just "stuck."
The system was less destructive in the Industrial Age, when many people had lifetime work in large stable companies. It's an absurdity in the Information Age, when flexibility is king.
July 22, 2011
...The Heritage Foundation's James Sherk writes, "Private-sector job creation initially recovered from the recession at a normal rate, leading to predictions last year of a "Recovery Summer." Since April 2010, however, net private-sector job creation has stalled. Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring."
Sherk writes that Obamacare "discourages employers from hiring in several ways:�...
I'd add all sorts of comments, except that I have a bit of my work in hand right now, and have to go all-out. Who knows when there will be more? But really, there's not much to say, at least to people who understand how business works. The government is doing everything in its power to kill jobs.
And for the people who don't understand how business works, it's probably hopeless to try to get through to them...
July 5, 2011
President Lyndon Johnson and the "best and the brightest" who staffed his administration led this country into three quagmires. By far the most famous, but perhaps not the most expensive and dangerous resulted from LBJ's escalation of the Vietnam War. More than 50,000 Americans and many more Vietnamese died as a result of that policy; our country was bitterly divided in ways that still weaken us today, and the economic cost of the war was immense. It contributed to the wave of inflation that shook the country in the 1970s and in addition to the interest on the debt from this ill-starred venture we are still paying (as we certainly should) pensions and medical costs for the vets and their spouses.
The Second Great Johnson Quagmire now destroying the nation is the Medicare/Medicaid complex. These entitlement programs are the biggest single financial problem we face. They dwarf all the Bush-Obama wars; they make TARP look like small change. They not only cost money we don't have — and are scheduled to cost inexorably more until they literally ruin the nation — they have distorted our entire health system into the world's most bloated and expensive monstrosity. Thanks to these programs, we have a health system that marries the greed of the private sector to the ineptitude of government, and unless we can somehow tame these beasts America and everything it stands for could be lost. (Note, please, that by comparison Social Security can be relatively easily reformed to be solvent for the next 75 years. The New Deal, whatever its shortcomings, was almost infinitely more realistic and sustainable than the Great Society.)
But that is a subject for another day. The third Johnson Quagmire is the War on Poverty, and specifically the attempt to treat inner city poverty primarily as a racial problem. After the Medicare/Medicaid catastrophe the single greatest policy failure of modern America is urban policy. ...
In the Seventy-Year Cycle theory of American politics something like this was to be expected. The first generation of the cycle was raised in the previous cycle, and is grounded and limited by it. (In this case the New Dealers.) The second generation was raised amidst the successes of the first generation, and imagine that the sky's the limit. Johnson and his cohorts were youths during the Roosevelt era, and became drunk on the possibilities they saw...
June 9, 2011
Just stating obvious truths well...
...After that, it's useful to get back to the basics. An economy is not a living, breathing blob, rather it's a collection of individuals acting in their individual self interest. In that case, to stimulate ours or any economy, it's really quite simple. Remove the roadblocks to economic activity which are taxes, regulation, barriers to trade, and cheap, unstable money.
Right now Washington is violating all four basics, thus making our limp economic outlook a present and future inevitability. Government spending is rising and it's a tax like any other for every dollar consumed by government one less dollar meant to fund real productivity. Tax rates, though not historically high in the 20th century sense, are uncertain, and with them uncertain, the economy's vital few must produce with the future possibility that the fruits of their efforts will be penalized at much higher rates. Beyond that, regulations are increasing at a horrifying pace, trade agreements that would foster the work specialization necessary for economic advancement are on hold, and the dollar, as mentioned, continues to decline.
The answer to all of this is a very simple one. An economy is once again just a collection of individuals, and when the barriers to production are removed, the individuals that drive our advancement will start producing again. Of course until the aforementioned roadblocks to growth are reduced, productive activity will decline, and what we call an economy will continue to crawl.
March 8, 2011
"Water, water, everywhere, Nor any drop to drink"
Hugh Hewitt, The Marcellus and Utica Shale Reserves:
The Wall Street Journal this morning reports on the Utica shale reserves underlying Ohio.� Along with the reserves of the Marcellus shale formation, the energy future of the U.S. is looking much much brighter than it did even five years ago.
If producers are allowed to explore, drill and transport the reserves. I am going to talk with Kathryn Zuberbuhler, president and executive director of the Marcellus Shale Coalition about the importance of these reserves and the attempts by the New York Times and others to use standard issue scare tactics to stop the utilization of this immense resource.
UPDATE: Learned from the interview that V�& M Star is building a significant new steel plant in Youngstown connected to the shale exploration and development. That is just one example�of what these recourses mean and why serious federal and state energy policies will support drilling and pipeline projects across the region.
And I hear gas is hitting $5 a gallon. "Water, water, everywhere, Nor any drop to drink" Gee, if only we had a Republican presidential candidate who was strong on energy policy, to take advantage of this situation.
November 1, 2010
Time of transition...
...In post-World War II America, voters regularly moved toward the Democrats in recession years.
There's a difference, however, that has escaped Obama Democrats but perhaps not ordinary voters.
In recessions caused by oscillations in the business cycle from the 1940s to 1970s, voters were confident that the private-sector economy could support the burden of countercyclical spending on things like unemployment insurance and public works projects.
That spending would stimulate consumer demand, the thinking went, and once inventories were drawn down manufacturers would call workers back to the assembly line. The recession would be over.
But it's been a long time since we've had a major business cycle recession. The recession from which we've technically emerged, but which seems to most voters to be lingering on, is something different, the result of a financial crisis.
And financial crisis recessions tend to be a lot deeper and more prolonged than business cycle recessions, as economists Carmen Reinhart and Kenneth Rogoff argue in their 2009 book "This Time is Different: Eight Centuries of Financial Folly." "The aftermath of systemic banking crises," they write,"involves a protracted and pronounced contraction in economic activity and puts significant strains on government resources."
The very able economists in the incoming Obama administration seem to have ignored the difference between these two kinds of recessions. Council of Economic Advisors head Christina Romer was surely sincere when she promised that passage of the stimulus package would hold unemployment under 8 percent.
Similarly, administration economists evidently thought the private-sector economy could bear the burden of a national debt that doubled over a decade. It would bounce back like it usually does in a business cycle recession.
Tea Partiers took a different view -- and before long so did most voters. They seem to believe that permanent increases in government's share of GDP will inflict permanent damage on the private-sector economy -- and won't do much if anything to move us out of this prolonged financial crisis recession. The evidence so far seems to support them....
My belief is that the cause of the recession is deeper than just the financial crisis. That crisis is itself a symptom of deeper problem, which is that part of our world has made a transition to the Information Age, and part—government and quasi-governmental organizations —have not.
and one part of the transition that needs to be made is the realization that government regulation of financial institutions doesn't really work anymore. The complexity and wierdness of financial instruments that it is possible to create when computers can manipulate millions of variable is beyond the power of man to even understand, much less regulate.
The better way to regulate finance is just to require that financial institutions and their top employees themselves invest in whatever they sell, and hold the investments. Then the system would become self-regulating.
September 8, 2010
Moving into into unexplored terrain...
Walter Russell Mead, Buck Up, America:
...And there's something else.
The problems we face today are urgent and complex, but they are not the problems of failure. We are suffering the consequences of success.
We are not like Pakistan, Egypt, Russia, or dozens of other countries who are struggling with the consequences of decades and even centuries of failures to keep up with a changing world. America's failures are the failures of a country on the cutting edge.
Countries like China and India are doing some amazing things, but they are playing catch-up. They are trying to get where we are, while the United States is moving forward into unexplored terrain. They are building industrial societies; we are seeing what comes next. They have a clear idea of the target in mind: a country where people are as rich as Americans. Our quest is different — harder, but perhaps also more rewarding.
We aren't trying to recreate somebody else's achievement or to replicate an already existing model. We are trying to do something new and different — we are making up a new kind of society as we go along. The challenges of America's today are the challenges of everyone else's tomorrow. We were the first "Fordist" society, where mass affluence was built on mass production in the factories of the twentieth century. We are now trying to be the first successful post-Fordist society, trying to work out a way to have a prosperous country that depends on something other than mass employment in manufacturing....
We are mostly suffering the consequences of moving from the Industrial Age to the Information Age. Especially the problem that government and quasi-governmental institutions have not made the transition, and have become cancerous, growing at a rate that will certainly kill the body. (I wrote more here.)
August 28, 2010
Deflation may be the new normal...
...Most high-tech companies have a business model that incorporates a sort of 'bizarro force' that is completely the opposite of what old-economy companies operate under: The price of the products sold by a high-tech company decreases over time. Any other company will manage inventory, pricing, and forecasts under an assumption of inflationary price increases, but a technology company exists under the reality that all inventory depreciates very quickly (at over 10% per quarter in many cases), and that price drops will shrink revenues unless unit sales rise enough to offset it (and assuming that enough unit inventory was even produced). This results in the constant pressure to create new and improved products every few months just to occupy prime price points, without which revenues would plunge within just a year. Yet, high-tech companies have built hugely profitable businesses around these peculiar challenges, and at least 8 such US companies have market capitalizations over $100 Billion. 6 of those 8 are headquartered in Silicon Valley.
Now, here is the point to ponder: We have never had a significant technology sector while also facing the fears (warranted or otherwise) of high inflation. When high inflation vanished in 1982, the technology sector was too tiny to be considered a significant contributor to macroeconomic statistics. In an environment of high inflation combined with a large technology industry, however, major consumer retail pricepoints, such as $99.99 or $199.99, become more affordable. The same also applies to enterprise-class customers. Thus, demand creeps upwards even as cost to produce the products goes down on the same Impact of Computing curve. This allows a technology company the ability to postpone price drops and expand margins, or to sell more volume at the same nominal dollar price. Hence, higher inflation causes the revenues and/or margins of technology companies to rise, which means their earnings-per-share certainly surges.
So what we are seeing is the gigantic amount of liquidity created by the Federal Reserve is instead cycling through technology companies and increasing their earnings. The products they sell, in turn, increase productivity and promptly push inflation back down. Every uptick in inflation merely guarantees its own pushback, and the 1.5% of GDP that mops up all the liquidity and creates this form of 'good' deflation can be termed as the 'Techno-Sponge'. So how much liquidity can the Techno-Sponge absorb before saturation?
At this point, if the US prints another $1 Trillion, that will still merely halt deflation, and there will be no hint of inflation at all. It would take a full $2 Trillion to saturate the techno-sponge, and temporarily push consumer inflation to even the less-than-terrifying level of 4% while also generating substantial jumps in productivity and tech company earnings. In fact, the demographics of the US, with baby boomers reaching their geriatric years, are highly deflationary (and this is the bad type of deflation), so the US would have to print another $1 Trillion every year for the next 10 years just to offset demographic deflation, and keep the techno-sponge saturated...
August 23, 2010
You've probably already seen this chart...
... of "Deficits with and without Iraq War." Either way it is damning for Dems, but especially it demolishes the Democrat claim that our fiscal problems can be blamed on the Iraq Campaign. Or on the the Bush tax cuts...
The chart is from a great piece in American Thinker by Randall Hoven, Iraq: The War That Broke Us -- Not. A quote:
...Just for grins, use the above chart to dissect Christopher Hayes' statement that our current and future deficits are caused by "three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession."
Two of those three things -- the wars and tax cuts -- were in effect from 2003 through 2007. Do you see alarming deficits or trends from 2003 through 2007 in the above chart? No. In fact, the trend through 2007 is shrinking deficits. What you see is a significant upward tick in 2008, and then an explosion in 2009. Now, what might have happened between 2007 and 2008, and then 2009?
Democrats taking over both houses of Congress, and then the presidency, was what happened. Republicans wrote the budgets for the fiscal years through 2007. Congressional Democrats wrote the budgets for FY 2008 and on. When the Democrats also took over the White House, they immediately passed an $814-billion "stimulus." (The $814 billion figure is from the same CBO report as the Iraq War costs. See sources at end of article.)...
July 31, 2010
Warren Meyer, Forbes.com:
...My training is not in economics, but in business and management. Perhaps I am biased by my background, which includes 15 years of strategy and planning at large corporations and 10 years running my own business. But my framework for economic growth is a simple one: For growth to occur, someone has to make an investment.
When I use the term "investment," I am using it rather broadly. Clearly building a new steel mill is an investment. But hiring an additional employee and paying his or her salary ahead of any new revenues is an investment too. Quitting one's job and giving up a regular salary with a large company to start a new business represents an investment as well.
Here is my first law of economic growth: When we encourage more investment, and ensure this investment is being channeled to the most productive uses, growth will follow.
For all the talk about fiscal stimulus and jobs creation at the federal and state level, almost no one in government is doing anything about reducing the roadblocks to investment. For example, millions of people are newly unemployed, and in past recessions a large number of these folks have eschewed looking for a new corporate job and have started businesses of their own. Unfortunately, such prospective entrepreneurs will face a tangle of registration, regulatory and licensing hurdles, many of which have been backed by established businesses that want to avoid just this kind of new competition. Even steps like the extension of unemployment benefits tend to discourage such entrepreneurship by increasing the opportunity cost of working for oneself.
No one in government, that I have heard, has even suggested any sort of regulation holiday as a potential economic stimulus program....[my emphasis]
I really like his broad-brush use of the term "investment." Most of what the "financial sector" does is not investment, it is selling capital to the person who is making an investment. Capital always has to be paid for, just like labor and materials.
July 30, 2010
Keynesian economics 101...
I liked this little story, posted by Doug Brady, at C4P....
Shortly after class, an economics student approaches his economics professor and says, "I don't understand this stimulus bill. Can you explain it to me?"
The professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.
At the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.
They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.
The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told.
The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.
The confused student asked, "Excuse me, but why are we doing this?"
The professor matter-of-factly stated that he was trying to make the shallow end much deeper.
The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough.
However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits.
Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could have been truly productive action!"
The professor put down his bucket and replied with a smile, "Congratulations.You now understand the stimulus bill."
July 22, 2010
do ya think they are capable of learning?
Jay Tea, Hey, Young Voters!:
...You voted for Obama in overwhelming numbers, didn't ya? How's that working out for you?
When Congress was getting ready to raise the minimum wage, a lot of us said that this would kill the job market for youth. Because, quite frankly, young workers aren't worth $7.25 an hour. The businesses that traditionally take on the newest members of the work force have very low expectations and, usually, very low profit margins. When the minimum wage shot up, most of them they didn't just bump their payroll proportionately -- they simply made do with fewer workers.
Further, when the economy started tanking, a lot of us noted that this would result in workers taking lower-paying jobs. This had the effect of shifting the workforce down the pay scale -- and the people at the bottom would just get shoved off. Teenagers seeking out the traditional jobs find themselves now competing with applicants in their 20s, 30s, even 40s and up.
And when given a choice between an 18-year-old rookie and someone older, with more experience, maturity, and skills, employers more often than not do the smart thing.
So, kids, can't get a job flipping burgers because Uncle Bob beat you to it? Landscapers ain't interested in someone who hasn't been doing it for several years? Movie theaters choosing Mom and Dad instead of you to sweep the aisles?
That's what you voted for, kids. Elections have consequences...
July 16, 2010
More skin in the game...
I liked this guy's ideas. 6 simple steps to fix the financial system, By Allan Sloan...
...1. Demand more skin in the game. Any reform plan worth its salt should greatly increase capital requirements -- the amount of money that stockholders have at risk, relative to an institution's assets -- for financial institutions. This is what people mean when they talk about reducing leverage. Lower leverage would make institutions less likely to fail, and any bailout of them less expensive.
Our most recent financial crisis, in which a relative handful of U.S. mortgages metastasized into a worldwide financial cancer, started with loans in which borrowers had nothing or almost nothing at risk. Neither did the companies that made the loans and sold them to other companies that bundled them, turned them into securities, and sold the securities to investors. At the end, these players walked away at little or no cost to themselves from the mess they had created, and stuck investors -- and society as a whole -- with a huge cost.
The fix? First, require any institution that turns loans into securities to keep at least 5% of each issue in its portfolio. Second, require a cash down payment from the homebuyer's own resources of at least 10% for any mortgage that's sold as part of a security or package of loans. (Lenders could make and hold lower-down-payment loans, but not sell them as securities.)...
...2. Increase the Fear Factor. If any financial institution fails or needs extraordinary help from the government, the government should be able to claw back five years' worth of stock grants, options profits, and cash salaries and bonuses in excess of $1 million a year. That would apply to the 10 top executives, current and former, with a five-year look-back period. It would also apply to board members, present and past. (People brought in by regulators for rescues that ultimately fail would be clawback-exempt.) ...
These are basically ideas that work by giving people very good reasons to police themselves. Instead of creating more bureaucrats to police them. They are a sort of marketplace-type incentive.
June 28, 2010
From those wonderful folks who brought you...
...Since the beginning of the recession (roughly January 2008), some 7.9 million jobs were lost in the private sector while 590,000 jobs were gained in the public one. And since the passage of the stimulus bill (February 2009), over 2.6 million private jobs were lost, but the government workforce grew by 400,000.
I will leave it up to you to draw conclusions....
June 20, 2010
Number for the day....
...Consider this: American companies are sitting on an astonishing pile of $1.5 trillion in unused cash. Why aren't they investing to create new jobs? Well, it's because massive tax and regulatory threats coming out of Washington have created a tall barrier of disincentives and uncertainty that is blocking the normal efficiency of the free-market capitalist system.
The instincts of our free economy are to promote growth. But when government blunts these instincts, the system ceases to work efficientl...
1.5 trillion will capitalize a lot of pop stands...
June 2, 2010
The Blue Beast...
(I wrote this a month or two ago, and got busy and never posted it. I actually start a lot more things than I post.)
Jim Geraghty, History Is Calling, but the Phone Keeps Ringing at 3 a.m.:
...It's not sustainable. Of course, as I said earlier this month, "unsustainable is the new normal." We're having a reckoning, but President Obama isn't all that interested in it; he wants to believe that a full, thriving economic recovery, along with rejuvenated tax revenues, is just around the corner.
I'm willing to bet that Walter Russell Mead's grocery list is full of fascinating historical allusions, but he's hit some similar notes in a few lengthy posts about what he calls "the blue beast" — a social model that defined our country for much of the last century, based upon large, stable entities — unionized oligarchies, big corporations, an ever-growing civil service, lifetime employment, etc. But that era has come to an end, and much of our political debate in the past decades is about trying to artificially extend the lifespan of the blue system by taking from the non-blue parts, or moving on to some other way of doing things:Democratic policy is increasingly limited to one goal: feeding the blue beast. The great public-service providing institutions of our society — schools, universities, the health system, and above all government at municipal, state and federal levels — are built blue and think blue. The Democratic wing of the Democratic Party thinks its job is to make them bigger and keep them blue. Bringing the long green to Big Blue: that's what it's all about...
(There's more. I recommend reading it.)
"Based upon large, stable entities." That was the model of the Industrial Age. The reason was to have an organization that could transmit information reliably. Industrial Age organizations all worked vertically. Information was gathered at the bottom, and passed to the next layer to be organized and consolidated into reports, which were then passed up to the next layer. The retail level reported to the district, which reported to the region, which reported to headquarters, which reported to the top brass. Then instructions went back in the other direction.
In the old days the people on the sales floor might discover something important. Perhaps "Housewives are bored with pastels this Spring; they are asking for bright solid colors." But it could take a month for the news to pass up the levels. And then months for instructions to be pondered and then passed down to buyers and designers and the advertising agency. And months more before that resulted in finished goods and ads.
Today the private sector is increasingly horizontal, and the decision makers are, or should be, scanning blogs and forums, and noticing new trends quickly. And being closely in touch with their own workers, who know a lot. Designers can now send CAD or graphics files to factories, which may be able to shift production immediately. And the elements can be anywhere. The designer might be in San Francisco, the ad agency in London, the factory in Indonesia. UPS might contract for warehousing and fulfillment. And if the company is a lively one, every part of it will be able to simply vibrate with the moods of the market, and change instantaneously if needed.
But that's only where competition forces people to move quickly. Few of us act that way naturally. In the public and quasi-public sectors the Industrial Age model still prevails. And as the pubic sector has become cut-off from the spirit of the age, it has become cancerous. [link]
If you are aware of these changes you start to see them everywhere. For instance in the way David Brooks or Peggy Noonan whine about the loss of respect for elites and grand old institutions. But the "blue-blood establishment" of old was just another of those "large, stable entities." It was like GM, but the product was not cars, it was elite members of the "top brass." And its product, in the form of Ivy League grads, might be slotted into leadership positions in government, or industry, or the academy, or the press, or the "mainline" churches. Even unions! Those were all among the "large, stable entities" of the Industrial Age.
One of the biggest challenges of our age is to somehow transform all the public and quasi-public institutions into Information Age organizations.
May 21, 2010
To be a Democrat is to swim in a sea of lies...
Hugh Hewitt, The True Costs and Consequences of Obamacare:
Today's Politico carries word that Nancy Pelosi and Harry Reid will soon try to rush through the "doctors' fix"--the long anticipated reversal of the pay cut for doctors on which the budget of Obamacare was balanced.
The price tag of the "fix" is $20 billion a year --which will no doubt grow in future years, so the cost of Obamcare is already $200 billion out of whack over ten years despite all the claims made when the bill was jammed through the House.
But that is not all. There's another $2.4 billion per year for hospitals in the new bill --another $24 billion to be added to the tab for Obamacare.
All of this was known --and denied by Obamacare boosters-- at the time of the jam down. And this is just the first wave of the costs of reality catching up with the rhetoric of "bending the cost curve" nonsense that was on the lips of every Obamacare proponent.
Other consequences loom. John Goodman writes in today's Wall Street Journal about the calculations now being done in every corporate office in America:...
May 16, 2010
Today's bitter laugh—Greece required to privatize health care system...
Tim Murphy put this gem in a comment at Alan Sullivan's blog, RealClearMarkets - Guess What Greece Has To Jettison?:
Policy Failure: Greece was told that if it wanted a bailout, it needed to consider privatizing its government health care system. So tell us again why the U.S. is following Europe's welfare state model.
The requirement, part of a deal arranged by the IMF, the European Union and the European Central bank, is a tacit admission that national health care programs are unsustainable. Along with transportation and energy, the bailout group, according to the New York Times, wants the Greek government to remove "the state from the marketplace in crucial sectors."
This is not some cranky or politically motivated demand. It is a condition based on the ugly reality of government medicine. The Times reports that economists - not right-wingers opposed to health care who want to blow up Times Square - say liberalizing "the health care industry would help bring down prices in these areas, which are among the highest in Europe."
Of course most of the media have been largely silent about the health care privatization measure for Greece, as it conflicts with their universal, single-payer health care narrative....
April 19, 2010
Planning for a future that isn't there...
...The point Bill Clinton is missing is that the danger doesn't come from right wing 'anger.' The anger is just a byproduct. The voices he hears from the Tea Party crowds aren't threats; they're warnings. The real peril is coming from somewhere else: the demographic decline in industrial world working populations, the increasing cost of energy and the international movement in the factors of production. A whole generation of failed policy from both parties is coming to a head and it probably means that the welfare state, the European Union and by consequence the Chinese economy are heading for a cliff.
What's driving the Tea Parties isn't amorphous hate. It is concrete fear: worry that pensions have been devalued; medical care will become unaffordable; taxes are too high and jobs are gone, never to return. And a look around the world shows there's no place to hide. When the wave hits it will be global. In the UK membership in political parties is at near historic lows. In America Congress's popularity is lower than whales**t. The Eurozone is cracking up under its weight of debt. First Greece, now Portugal are being ripped off the cliff face like a zipper – and all the climbers are roped together. Japan is like a kamikaze sub heading for the depths and tapping out a sayonara. Russia was history long ago. And China, when it has used up its flowering moment, will face the consequences of its one-child policy. And Middle Eastern potentates, stuck in the same old, same old, are warning about a Summer War. The Tea Parties aren't about putting some country club Republican in the White House, though Bill can't help hearing it like that.
The cheese-paring scene at the White House Press Corps is just as indicative of the coming storm as the Tea Parties. It is yet one more sign that the old institutions are making plans for a future that isn't there; moving trillions of dollars in projected revenues around a five year plan like Hitler's fictive armies were moved around a map in 1945. When you hear Gordon Brown describe the billions he's going to spend to save the world and heal the planet; when you read news about the proposed legislation on "cap and trade"– the issue isn't the "right wing hate" but where's the money going to come from? The most telling fact about Bill Clinton's speech is that 2010 reminds him of 1994. If he – or the political establishment – can't tell the difference between the decades, that's your problem right there.
But the average Joe can. His pocketbook talks to him as loud as his cell phone; he has to live in a world where five bucks is a lot of money. So the man in the street can see things that are invisible from Olympian Washington....
My suspicion is that the money is in existence, but that it is fleeing from the "large stable entities" that were the building blocks of the Industrial Age. (I wrote about this here.) What's happening to governments (and unions, universities, newspapers, TV networks) is what happened to big "blue chip" businesses a couple of decades ago. Pan Am, GM, AT&T, IBM, NCR, DEC, GE.... They've all had to morph, change, downsize, become more nimble... or die. No one even talks about "safe investments in blue chips" anymore. The idea has become absurd.
The "large stable entities" that have not been forced by the market to become nimble are now deprived of their Industrial Age "ecosystem," of a world where they made sense to everyone, and were held in check by the common sense of that age. Now they have grown cancerous, and are killing their hosts. (See for example: How public-sector unions broke California, by Steven Malanga)
April 11, 2010
We need a phrase to articulate this subtle concept...
...Still, patients' voluntarily forgoing treatments whose costs outweigh the benefits may not be enough. Having taken on, over the objections of the public, the responsibility for everyone's medical care, the federal government may not be able to keep its promise: "Eventually, we may well have to decide against paying for expensive treatments with only modest benefits."
Oops, sorry about that, Gramps!
It seems as though this is a pretty strong argument against ObamaCare. But we need to encapsulate it in a pithy phrase. What would you call governmental institutions that empower bureaucrats to decide when to deny medical treatment--panels, as it were, that have the authority to determine when a patient's death is necessary for the health of the fisc?
Coming up with a suitable term is a high-powered intellectual challenge. Our thinking cap is on, and we'll get back to you as soon as something dawns on us...
(Thanks to Monsieur Hoy.)
Sarah sure nailed that one! I think the claims that she is not intelligent are ludicrous, but even if she is, it's better to be wise than smart. Far better, especially for a president.
And there's a more subtle point here, which i have little doubt Sarah "gets," even if she doesn't articulate it. Imagine a person is made a slave because our law allows it. And another person is made a slave because he's kidnapped by someone who is breaking the law. Are these two things equivalent? No, clearly not. An indvidual criminal act is not the same as a wrong sanctioned by our laws and our government.
Or, imagine that one woman loses her unborn baby because she can't afford medical treatments. And another woman gets a legal abortion. Are these two things equivalent? If the Christian view of abortion is true, then, no. The second is far worse, spiritually, for our society, because we all become complicit in the crime.
The same thing is true of health care. A utilitarian might say that a person dying because he could not afford care is no different than a person dying because a bureaucratic committee has decided not to purchase some piece of medical equipment. I say, not at all. The latter is far worse, because our government is cold-bloodedly deciding that some people are expendable.
April 7, 2010
Kick the little guy, bow to the bully...
In reference to this:
...April 4 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner delayed a scheduled April 15 report to Congress on exchange-rate policies, sidestepping a decision on whether to accuse China of manipulating the value of the yuan....
Charlene passes this on to you...
(Thanks to Hope n' Change Cartoons)
March 14, 2010
Maybe the workers will rise up against their oppressors... Oh, and the shareholders! A failing company is being looted, to the detriment of its real owners...
Top executives at the beleaguered New York Times Company reaped hefty rewards last year, with Chairman Arthur "Pinch" Sulzberger more than doubling his total compensation to $6 million.
CEO Janet Robinson got even more, reaping $6.3 million, a 31.9 percent hike.
The pay numbers were disclosed in Securities and Exchange Commission filings yesterday.
The increases come against a backdrop of declining ad revenue, layoffs, frozen pension plans, unpaid vacations and a 5 percent pay cut for most of the rank-and-file workers last year.
"Our members are really unhappy with what is happening," said Bill O'Meara, president of the Newspaper Guild of New York. "They made a voluntary sacrifice to give up some of their pay to help the company out. People are losing their jobs still."...
Suckers. Ha ha. You trusted liberals? You trusted a bunch pious frauds because they told you they are better than those horrid right-wingers? You probably trusted them because you read the NYT, and you believed your own lies.
February 13, 2010
...But first, I must add that every time you step up to the microphone -- for example, your impromptu presser on Tuesday -- the painful decision to shut down my business of eighteen years is validated by your words. And I should thank you for that.
For the record, that decision was formalized on November 5, 2008. Check your calendar.
Some fifteen months later, I can say that it was the best business decision I have ever made. With your hands on the levers of the government and the economy, I wanted to have as little at risk as possible.
Don't get me wrong -- it was a torturous and gut-wrenching decision that went against every fiber of my being. I had to betray deeply rooted entrepreneurial instincts and set some more mundane material goals. And while it might seem extreme, I think my mindset speaks to the real reason businesses are not hiring now.
So what is that mindset?
It's not complicated. I am neither a swooning David Brooks enamored of your pant crease nor a silver-spoon trust-fund baby like Christopher Buckley. I've simply had some twenty-five entrepreneurial ventures -- with a good number of strikeouts to be honest -- and real-world experience told me exactly who you are and exactly what the business climate under your rule would be like....
This piece is just dead-on right. I can say that as one who grew up in an entrepreneurial family and worked in the family business. And Charlene and I are both small business owners (very small, to be sure). And both of us are averse to hiring people, for various reasons that mostly have some connection with government.
One of the structural weakness of the modern world is that many businesses are so big that the people who work in them have little sense of being "in business." They are just doing a job in a big organization—many of could easily move to government or a non-profit or a university and do the same job. A file clerk at Microsoft does not think of herself as part of free enterprise or capitalism; probably does not even make the connection.
February 6, 2010
You don't have to be smart to get the best deal...
You benefit from Wal-Mart whether you shop there or not.
In most goods and services there are very few active consumers. What happens is, everybody selling a good is affected by Wal-Mart. You benefit from that wherever you are. So many of those who oppose consumer-driven health care use the perfect as the enemy of the good. You're not going to shop for health care if you're hit by a bus. That's not the point. The point is you're served in a health-care system that's been tightened up, both from a cost and quality point of view, by the fact that some consumers, for many procedures, are shopping around, and not just on price.
The reality is that if I'd known what I know about this hospital, it's not where I would have put my father. It's not that I would have been able to discover that when he got sick. It's that in the same way that I can find out about almost any business that I choose, their quality record and their pricing, I want the same thing for health care. It doesn't mean that if you're hit by a bus you pick up the phone and call ten hospitals.
And I think this misunderstanding of how consumer economies actually work is crucial to a mistake that's made a lot, which is that it's much better to have some big, financially interested institution make a decision on your behalf because you're not smart enough. You don't have to be smart enough to get the best deal on most things in our economy, because some people care enough to create the Wal-Marts of the world. And that's all that happens, is that once there's a Wal-Mart, you'd better be competitive with Wal-Mart, or you're out of business.
It's a simple point that somehow people have a hard time grasping. If only 10% of the people are careful shoppers, then all prices (or the price/service combo) will tend towards those of the most appealing outlet. When I shop at Target I don't worry about comparative prices, because I know that there are people at Target who do nothing but watch that prices are comparable with the competition. They make sure I'm not going to buy pork rinds for 4.99 and then later feel cheated and angry when I discover that everybody else sells them for 2.99! Therefore I don't have to think much about the issue.
February 5, 2010
Jay Nordlinger has a good quote from a reader...
Way back in the '70s, Ralph Nader gave a speech to students at my university in which he urged us not to go to work in corporate America after graduation because doing so would serve only to "make AT&T a little bit bigger." Instead, he challenged us to do something "more meaningful" with our lives.
I was all ready to sign up for the Peace Corps when it occurred to me that AT&T employees were doing more than just making their company a bit bigger. They were enriching lives by enabling loved ones to talk to one another. They were creating wealth by providing a fast and inexpensive way to transmit information. They were saving lives by enabling people to call fire departments and hospitals.
It then occurred to me that if all of AT&T's employees were marooned on a desert island, people throughout the world would be hurt. On the other hand, if all of the world's consumer advocates were marooned...
December 2, 2009
If you prefer spoken to written...
This video is good on how consumer-driven health care can reduce costs is pretty good. To their examples of falling prices and improved quality in laser eye surgery and hair-transplants (not covered by insurance, and thus paid for out-of-pocket) I would add optometry, which you can now get at Costco!
I'd guess that if a hundred million people were paying for routine health care out of their own HSA's, we would quickly see the advent of the medical equivalent of the personal computer. Machines that could take and analyze tiny blood samples and analyze urine samples, and check blood-pressure and heart-beat. Then give rapid feedback on possible problems, or recommend dosage changes for medications. And send the info to your physician, along with alerts if anything is out of the ordinary. Maybe include video-conferencing with your doc...
September 29, 2009
Ignore that elephant...
The latest Orwellian* garbage from the usual suspects seems to be that we "already have" health-care rationing, so why not put it in the wise hands of government?
...A dirty word in health-care reform is "rationing," a term that conjures up the image of faceless government bureaucrats denying lifesaving therapies in the name of cutting costs.
But what if the real issue is not the specter of future rationing, but the haphazard, even illogical, way in which care is delivered today?
Medical professionals say the fundamental problem in the nation's health-care system is the widespread misuse and overuse of tests, treatments and drugs that drive up prices, have little value to patients, and can pose serious risks. The question, they say, is not whether there will be rationing, but rather what will be rationed, and when and how....
"Haphazard and illogical" are code words for "not controlled by government experts." Of course there's not one of us who has not experienced "haphazard and illogical" treatment by bureaucrats, eh? BUT, this time socialism is going to work! Experts will be in control. What could go wrong?
The big stupidity of the article is to completely ignore the reason WHY the current system is wasteful. It mentions people asking for CT scans because they have a headache. But it doesn't mention that those people aren't paying for their scan! Their "plan" is paying. If they had to pay out of their own pockets for routine care, their behavior would be different. A possible answer to these problems is consumer-driven health care. But that isn't even mentioned.
And of course tort reform isn't considered as a possible way to reduce costs. The trial lawyers bankroll the Dem Party, so that's off the table....
*It's Orwellian, because the intent is to destroy the meaning of the word, in order to prevent thought. In this case it's like saying the we have "rationing" of caviar, since some can't afford it, and some live where they don't even sell the stuff! If that's rationing, then the word has become meaningless.
September 15, 2009
None Dare Call Them Death Panels...
I recommend this piece by Fred Barnes, An Unnecessary Operation:
...Even if you're not seriously ill, American doctors have more to offer. The two most significant innovations for patient care in the past decade are magnetic resonance imaging (MRI) and computerized tomography (CT), according to Dr. Scott Atlas, chief of neuroradiology at Stanford University Medical School. The United States has 27 MRI machines per million Americans. Canada and Britain have 6 per million. The United States has 34 CT scanners per million. Canada has 12 per million, Britain 8.
And utilization of MRI and CT technology has become routine in America. My wife had an X-ray after injuring her ankle last spring and the diagnosis was she'd broken a bone. When it was slow to heal, she had an MRI, which revealed she'd actually torn a tendon. Now her ankle is healing.
Our share of the cost was minimal. Health insurance pays for tests, and you don't need a Cadillac policy to be covered. A little-known fact: Out-of-pocket expenses by American patients amounted to 12.6 percent of total national health spending ($2.24 trillion) in 2007.
That's one of the lowest percentages of private out-of-pocket spending among the world's advanced countries--lower than Germany, Japan, Canada, and most countries in Europe, including those with government-run health care systems. Why do Americans get more and pay less? Because their insurance policies provide broader coverage than most government plans, says Tom Miller of the American Enterprise Institute....
Remember those stats: "The United States has 27 MRI machines per million Americans. Canada and Britain have 6 per million." Who decides how many MRI machines there will be in the US? Can anyone tell me that? (We know who decides in Canada and Britain; death panels.) Of course there is no easy answer for the US, because there is no "central command." That's how markets work. They self-organize. (Yes, I know, health care is far from a perfect free market. But market forces are at work.)
And that's a lot of why Leftists always want "single payer." They don't care about human beings, they want the power.
September 13, 2009
Having an appendix removed should be like buying a refrigerator....
You can already get your eyes checked or your prescriptions filled at Costco. The possibilities for cheaper medical care are enormous, if people are buying it themselves, rather than having it bought for them by insurance companies. (And if we could have tort reform, that would shave 20% off right there.)
Washington is in the midst of yet another scandal -- but not the kind you'd read about in a gossip rag. Congressional dilettantes are willfully ignoring health-care reform ideas that would cut costs and provide high-quality care to all.
Sound nuts? It shouldn't. By refusing to even consider consumer-driven health care (CDHC), congressional leaders are proving that they're more interested in putting the government in charge of Americans' health care than in actually improving patient outcomes. Decades of evidence show that CDHC-style reforms can achieve the stated goal of would-be health reformers: high-quality care at low cost.
All the reform plans under consideration in Congress fail to address the biggest problem with our health-care system: third parties, like insurance companies or the government, pay for just about everything. Consequently, Americans have no idea how much the medical services they consume cost.
How much is a visit to a primary care doctor? Or a trip to a specialist? The average patient has no idea. Third-party payment shields people from the truth about how much they're spending at the doctor's office. As a result, most folks have no incentive to manage their health-care expenditures, so make little effort to do so.
Consumer-driven health plans address this problem by putting medical decisions in the hands of patients and doctors, not insurers or the government. Typically, CDHC arrangements couple high-deductible insurance plans for catastrophic care with either health savings accounts or employer-funded health reimbursement accounts....
July 16, 2009
Go here, click on chart....
I caught a bit of Rush this morning. He mentioned this New York Post piece, DEMOCRATS HEALTH CARE PLAN FUNDING MAY TAX NEW YORK WEALTHY 57%. I'm sure you agree with all sensible people that the wealthy are parasites who should be relieved of the riches they have stolen from the little people, but, um, there IS the teensy little fact that NYC's economy is dependent, much more than most big cities, on........wealthy people. Get rid of them and the city dies.
...Congressional plans to fund a massive health-care overhaul could have a job-killing effect on New York, creating a tax rate of nearly 60 percent for the state's top earners and possibly pressuring small-business owners to shed workers.
New York's top income bracket could reach as high as 57 percent -- rates not seen in three decades -- to pay for the massive health coverage proposed by House Democrats this week....
The chart that accompanies this article makes things veddy clear. It's no wonder such a bill gets crafted behind closed doors, and that Dems are trying to rush it through.
Rush was also commenting on a poll that showed Sarah Palin with a 72% approval rating among Republicans. And on just how amazing that is, considering the year of non-stop trashing she has received from the media.
Not to mention attacks and sneers by what he called, charmingly, low-wattage looking-down-the-nose elitists on the Republican side.
June 19, 2009
This approach actually works... So of course Dems are not interested...
Greg Scandlen, More choice for consumers is always healthy - BostonHerald.com:
...Meanwhile there is an approach that has proven to work after six years of testing by millions of people nationwide. Consumer-driven health (CDH) plans empower individuals by taking money away from third-party payers and putting it in the hands of consumers to spend as they wish.
Now that one out of five Americans under age 65 is paying some of his or her own bills through health savings accounts (HSA), high deductible plans and similar consumer-driven plans, policymakers are beginning to see a profound effect on the service side of the ledger. Consumer-driven health (CDH) plans cost 25 percent to 40 percent less than preferred provider organizations (PPO) and health maintenance organizations (HMO), and their rate of annual cost increases is one-third of that of the two other plans.
It isn't just vendors with a vested interest that are capturing these results. Last fall the Kaiser Family Foundation found the average family premium for an HMO totaled $13,100 while an HSA cost only $9,100. The premiums for CDHs at WellPoint and Cigna actually fell over a two-year period, while premiums for their HMOs and PPOs rose about 10 percent.
Costs for CDH plans are falling because people are becoming more invested in their own health - something policymakers have long been trying to achieve without success. Consumers with a CDH participate in wellness/prevention programs at a higher rate than others, and they choose generic drugs over name brands, avoid using emergency rooms in favor of retail clinics or their own doctor, and comply better with recommended treatment programs.
By any measure, CDH is a success, confirmed last year by the Centers for Disease Control and Prevention. It found 20 percent of the under-65 population is now in some version of a CDH.
So, why isn't Orszag jumping for joy? His hope for a more efficient, better quality health care system that actually lowers costs is being realized right before his eyes. He either is not paying attention or he prefers to hope for complicated, government remedies that may never work....
Of course he does. Dems want to run the circus, and are only interested in "solutions" that involve bigger government.
Well, thank you Republicans, for getting HSA's passed after decades of Democrat obstruction. And thank you George W. Bush!
April 10, 2009
"globally consistent, computer-readable format"
...It didn't get much attention, but earlier this month Congress got a lesson on the potential of better disclosure. "Today's financial crisis was driven in part by a lack of accurate, easily usable information to give investors what they need to make informed, responsible decisions," testified Mark Bolgiano, chief executive of a nonprofit technology and accounting consortium called XBRL US. "The value of toxic asset-backed securities remains a mystery because information on the underlying loans and ongoing viability of those loans and the securities themselves was not collected consistently and even if it had been, it would not have been in a usable, portable form."
XBRL sounds complicated, but eXtensible Business Reporting Language is simply a new technology language that allows data to be easily extracted, searched and analyzed. XBRL is already being used for some equity disclosures, tagging financial information into a globally consistent, computer-readable format.
Philip Moyer, who runs the Edgar Online service that distributes SEC data, studied more than 500 mortgage-backed securities priced between 2006 and mid-2008. He found there were only 600 relevant data points needed to assess the risk of a mortgage, which is many fewer than the tens of thousands of factors used to report on stocks. "This crisis has proven that lack of transparency ultimately destroys a market," Mr. Moyers said.
The good news is that with the innovation of XBRL, tracking debt instruments is no longer a technological challenge. Instead, it's a political challenge....
It's a political challenge, and unfortunately our biggest deficit is in political leadership. This is an area where a crisis shouldn't be wasted. Perhaps if XBRL were re-packaged as something that might destroy capitalism?
April 2, 2009
Now this is customer service!
Charlene is starting to use a new legal billing program, The Tussman Program. She's really happy so far. Because of the complexity and unfriendliness of her old software, she had an expert coming in to do her billing every month. Now she's just doing it herself.
She sent them a question today...
Hi there: I bought the program and started using it yesterday and everything is mostly going quite well. One thing (I'm sure there's an easy answer to this one but I can't find it in the tutorials): I'm a solo and the only person who will be billing in the program. Can I set it so that every time I open a charge slip it will automatically put me in as the "staff member?"...
And got a quick answer...
From David Tussman: ...No way to specify a default staff member but I will add that feature. Check with me in a few days and I should have it ready...
March 31, 2009
Another day, another lie...
...Inspired by a Boston Globe story and aroused by the indignant yet underinformed Josh Marshall, lefties are aghast that the Pension Benefit Guaranty Corporation switched "much of" (per the Globe) or "most" (per the unflappable Josh Marshall) of its portfolio from safe bonds to risky stocks last February, prior to the stock market wipe-out (see "FEEL THE RAGE", below). However, our friends on the left are so intent on bashing Bush and his appointees that they have overlooked some good news, which I will bury for a while....
In fact it was just a proposal; nothing was done about it. The whole story is bullshit.
But you can depend on it that you will be hearing the lie decades from now as an example of the abhorrent horridness of the Bush Administration. (And of course if the PBGC had done something smart, something that increased their portfolio, that would have nothing to do with Bush and his greedy minions. In that case the agency would have been independent!)
March 27, 2009
"Obama's question deserves an answer"
As Schiller's saying goes, "Against stupidity the gods themselves contend in vain." One example that especially bugs me is the refusal of my young liberal friends to SEE Social Security. They are working hard at low-paying jobs, and giving a lot of their paychecks to the government in exchange for a promise of some crummy future payments by the government. They are just clueless about what the same money could do if we had private SS accounts. They are being robbed of millions of dollars, but don't have the education and the imagination to see it. They can't see the lines extending on the graph to, say, the year 2050.
[That's just ignorance. What's vile and evil are the older liberals who are putting their own money in 401-k's and IRA's while doing all they can to deprive the little people of similar benefits.]
Now the current economic crisis will give lefties a chance to say, "See, we told you private accounts wouldn't work." But that's just wrong. (My guess is that they would have made sense even during the Great Depression.) Here's someone who has actually run the numbers...
During the election campaign Barack Obama told prospective voters, "If my opponent had his way, millions of Americans would have had their Social Security tied to [the] stock market this week. Millions would have watched as the market tumbled and their nest egg disappeared before their eyes. ... Imagine if you had some of your Social Security money in the stock market right now. How would you be feeling about the prospects for your retirement?"It's the last simulation that's the kicker...
Obama's question deserves an answer. How would personal Social Security accounts have fared in the current market? Surprisingly, careful analysis shows that even individuals retiring today would have increased their total Social Security benefits by holding a personal account. Here's why...
...Of course, not every worker would hold an account his whole life. If President Bush's 2005 reform plan had passed, many workers would enter the markets precisely as they began to decline. Surely these workers would see big benefit reductions? Under the Bush plan, only workers under age 55 as of 2005 would have been eligible for accounts, so no current retirees would have held accounts. Nevertheless, I ran a third simulation: workers would retire today but begin accounts at different ages. What would have happened to the worker who started an account at age 62, then retired only three years later? At last, we find someone who lost money: Total benefits for such an individual would have declined by 0.1%.
The point here isn't that stocks are a free lunch. In an efficient market the higher returns paid to stocks are nothing more than compensation for their higher risk, and we don't know that future market returns will be as good as those in the past. But accounts do provide a valuable tool to prefund future retirement income and reduce cost burdens on tomorrow's workers. And these numbers put the lie to President Obama's exaggerations of the risks of investing retirement savings in the market....
March 13, 2009
...The collapse of the newspaper industry continues apace; now it's the San Francisco Chronicle that is likely to be sold or even closed down in a matter of months. This follows Sunday's bankruptcy filing by the Philadelphia Inquirer and the Philadelphia Daily News, just two and a half years after investors paid more than $500 million for the company.
We've known for a while that the newspaper industry is in desperate trouble, but it didn't occur to us until recently that it may be a leading indicator....
Mostly the dying of the newspapers is about the simple fact that the Internet kills middlemen. Newspapers are "middlemen" who gather up news from all about and package it for resale. But most people don't really want to buy 100 pieces of news to get the one that really interests them. We did it that way for centuries because there was no alternative, but it was always grossly inefficient.
Even if the paper goes "online," the same problem remains. Plus, the job of the "journalist" was always a kludge. Most of the time the reporter is writing about things he knows little about--he or she can't be an expert in more than a tiny fraction of the things covered. So everyone has had the experience of reading an article on the particular industry one works in, or the church you belong to--and cringing because the reporter is wrong on various details. And there are now some bloggers covering things who know a hundred times as much as any reporter about their specific subject.
I was sitting in an auto-body shop recently, and picked up an auto-body shop magazine, and there was mention of some controversy raging amongst the auto-body shop BLOGS! Too crazy!
Many of us conservatives like to opine that the Gasping Media is dying because they cold-shoulder conservatives, and generally publish a pack of lies to help Democrats and the general cause of nihilism. They do, and the bloodsucking parasites richly deserve to have Mr Pointy driven through their hearts. But, I have to guess that even if they were not despicable lefty frauds, their general decline would be much the same...
March 3, 2009
I think the economy may be in trouble...
I went to Home Depot for some trifles, and I must have had a dozen or more salespeople greet me or ask to help me. Scary.
It reminded me of the old yarn from the 30's, where the farmer tells his wife that there must really be a depression, because the Saturday Evening Post just blew off the front porch! (For the historically challenged, the Saturday Evening Post was once the most popular American periodical by far. Since it was purely a source of entertainment, rather then news or information, it died soon after television arrived.)
February 27, 2009
Notgeld - "emergency currency"
You might want to take a look at these pictures of "private money" used in Germany in the 30's. It's interesting both historically and artistically... (Thanks to Shrine of the Holy Whapping.)
My wife's family lived in Germany until 1936, when they were lucky enough to leave. My wife's grandfather collected thousands of bills produced by the different towns and companies to make front to deflation first and inflation later and provide certain stability to workers and residents."Notgeld" (emergency currency) was provided by cities, boroughs, or even private companies while there was a shortage of official coins and bills....
...Some companies for example couldn't pay their workers (cashless pay wasn't very popular back then...) because the Reichsbank just couldn't provide enough bills. So they started to print their own money - they even asked the Reichsbank beforehand. As long as the Notgeld was accepted, no real harm was done and it just was a certificate of debt. Often it was even a more stable currency than the "real" money, as sometimes the denomination was a certain amount of gold, corn, meat etc.
And they made it very pretty on purpose: many people would start to collect the bills, and the debt would never have to be paid. Also it was printed on all kinds of material: leather, fabric, porcelain, silk, tin foil...
I will try to slowly scan an extensive collection of these bills in the coming months (I have several thousand of them!).
It may also seem timely, at this time of massive deficits and stimulus spending with no end in sight, to look at some of the possible effects of our actions from a historical perspective. Scrip can be marvelous stuff, and was also used in some cities in the US during the Great Depression. Importantly, it is not legal tender, so the only people who deal in it are those that want to. It is very stable and debt free. To keep it flowing, sometimes it is set up to lose 2% of its value every month, which keeps people from hoarding it....
February 20, 2009
Leftism is murder...
You've probably already seen this video from Reason TV, Slumdog Thousandaire, since it was just posted by Glenn. If you haven't, it is worth a look...
We think of the victims of socialism in terms of people being shoved into boxcars bound for the Gulag, or Auschwitz, or the Chinese Laogais, or to Castro's labor camps. But another batch of victims--surely to be counted in the tens-of-millions--are the countless poor people in India. How many of them have died because of poverty? There's no way to know, but the number must be huge. The founders of the state of India were socialists. And the explosion of wealth and growth and middle-class status we have seen since India's economy was only partially liberalized in the 90's is clear evidence that vast numbers have died from poverty that was completely unnecessary!That could have been ended decades earlier.
If you are a socialist of any sort, you are a murderer.
January 3, 2009
We need to squeeze more money out of the greedy corporations...
Steve Forbes, Ireland Gets It :
If the incoming Obama Administration is serious about squeezing more money from businesses, it should follow the example of Ireland and slash corporate tax rates. The U.S. has one of the highest profits levies in the developed world: 35% at the federal level, with another average of 5% from state and local taxes. Only Japan has worse. In contrast, Ireland's rate is a mere 12.5%. Imagine the howls from congressional Democrats if Barack Obama were to suggest enacting such a low corporate tax rate in the U.S.
But the accompanying table tells an eye-opening tale: Ireland's corporate tax take as a portion of its economy is higher than that of the U.S. High rates breed pressure for ever more complicated exemptions and ever more ingenious ways to avoid Uncle Sam's tax bite. But an Irish-like rate leaves companies to focus brainpower on growing their businesses instead of on jousting with tax collectors. A general flat tax, such as Yours Truly has been advocating for decades, would give just such a benefit to both individuals and businesses. Alas, misbegotten populist ideology still trumps fairness and common sense.
The Obama White House is pushing a massive stimulus plan that will do little to reinvigorate the recessed economy. Government spending does not create prosperity. If it did, the Soviet Union would have won the Cold War. Low tax rates positively change incentives: Entrepreneurs, venture capitalists and investors are induced to take more risks; businesses become more expansion-minded; and individuals positively adjust their own behavior, knowing that they can keep more of what they earn and that success will not be punished....(Thanks to Orrin Judd)
The phenomon of people paying more taxes after their rates are lowered is a common one. The question that nags me is whether our "liberals" are psychologically incapable of seeing this, or whether they are just liars.
For instance, after both the Reagan and Bush tax-cuts, the percentage of income tax paid by the wealthy increased. I've never heard of a case where pointing this out to a leftist made the slightest difference. Have you? The mantra remains that Bush gave "tax cuts for the rich."
December 31, 2008
So, If high gas prices meant that were being ripped off by Big Oil...
...do low gas prices mean the oil companies are doing something good? Just kidding; of course all oil companies are always horrid. Just ask a Democrat.
...CNBC's Mary Thompson broke down the numbers she received from Kloza Friday: when gasoline peeked on July 11, we were spending $1.613 billion a day to fill our tanks. The combination of lower prices and lower consumption brings that down to $611.5 million today.
And, the news might get better because wholesale gasoline is currently trading around $0.80/gallon, which means that some parts of the country could see prices at the pump approaching $1 in the next few weeks.
Of course, we shouldn't ignore huge declines in what we'll all pay to heat our homes this winter. Heating oil a year ago was $2.64/gallon. Now it's $1.25, or down over 50 percent.
Maybe more important, this is down from a July peak of $4.15. And, natural gas has plummeted from $13.60 in July to $5.80 today, which means we're all getting a HUGE cut in heating costs not only from last year, but also based on what was being forecast just five months ago.
This seems worthy of some holiday cheer, although it's likely most media outlets won't care until after Inauguration Day when they'll be able to give the new president all the credit....
Actually, what's really silly about the lefty evil-oil-companies paranoia is the WE own them. Ordinary people. As Peter Drucker pointed out long ago, the majority of shares of publicly traded American companies are held by pension funds and mutual funds, which are middle class investment vehicles. (The Unseen Revolution: How Pension Fund Socialism Came to America)
Most of the "progressives" who were bellyaching about Dick Cheney and oil companies are really capitalists whose 401-k's and pension funds depend on companies like Haliburton making profits. And you can bet they wouldn't like it one little bit if their slice of capitalism were socialized.
December 9, 2008
The big moment! The turnaround! What we've all been waiting for...
Rob Walker, at Slate, writes about the current ad campaign by GM to persuade us that they have really "turned the corner" this time. And notices that it all sounds familiar...
....GM says that campaign is aimed at the apparently large segment of the car-buying public that simply won't consider its models. The company's North American president calls it 'a unique effort to reach those consumers whose perceptions of GM are out of step with today's reality.' I suppose that's reasonable, but let's say you're one of the thousands who did buy a GM car in the 1980s and 1990s. You, apparently, were a sucker. Your vehicle was not put together by a company with 'a true culture of quality in every division.' That's not what I'm saying--it's what GM is saying. Or at least, it's what GM is saying now. Twenty years ago, as it happens, GM's then-chief executive was calling 1983 'the turnaround year we have been working for.' That was Roger Smith. Six years later he and GM President Robert Stempel reiterated that a 'turnaround' in 'product quality' and 'customer service' had been underway for 'some time.' When Stempel assumed the top slot alone a year later he assured us that GM's 'entire focus' was on customer satisfaction. Meanwhile GM's share of new-car sales fell from 44 percent of the U.S. market to about 35 percent. Stempel was run out of Dodge (as it were) by the company's board about two years later, and GM announced that 'fundamental changes' in its business were underway. Market share dipped below 30 percent, but not to worry. In late 1994 the New York Times reported that the new president and CEO was saying that GM's North American operations 'had 'absolutely' turned the corner.' Another GM executive noted the carmaker's focus on the consumer ... and so on. Last year, for what it's worth, GM had about 28 percent of the domestic vehicle market...
Either they are making exciting, appealing cars, or they are not. That's the only question.
All the rest is meaningless if they can't do that. Improving "product quality" or "customer service" is management, and any company can make such improvements if it tries hard. But for a giant company to come up with that mysterious something that generates excitement...that requires something like generalship. Like Marlborough* calmly watching hours of inconclusive carnage on the battlefield, waiting for the wavering he expects in the French line as the redcoats grind them down, and then committing his reserves at the exact moment.
GM had a moment of opportunity when Saturn was launched. I remember how there was real buzz about a GM line of cars, and people were eager to show off their new Saturns to the neighbors. That was probably a moment for GM to ruthlessly sacrifice a couple of moribund older car lines, and fling its resources into the new models. But to do that the leader has to be a killer. Thousands of decent people--his own friends maybe--have to be thrown out of work. And the opprobrium that would fall on the guy who scrapped, say, Pontiac! Wow! Painful. (By the way it is the moral thing to be a "killer" at such a time. Inaction would be morally wrong. Like a doctor too soft-hearted to amputate a limb to save a life.)
[*I know, I know, nobody thinks about the Duke of Marlborough anymore. Or even smokes his cigarettes. "Will the last person who cares about history please lock the door? Mr Weidner?" I recall it was Voltaire who wrote something like: "Who has not heard of the Siege of Malta?" Pretty soon it will be: "Has anybody here heard of Voltaire?"]
November 27, 2008
Thankful for the little things...
From Barack Obama, Supply-Sider? by Kevin A. Hassett...
If you paid attention to the political rhetoric that President-elect Barack Obama engaged in during the Democratic primary, then you probably expected his economic team to be made up of left-wing ideologues. When Obama took a rare holiday from blaming all of America's problems on NAFTA and deregulation, he bashed Hillary Clinton for her cozy relationship with that corporate symbol of evil incarnate: Wal-Mart.
But that rhetoric was, we now know, just that. How "sensible" is Obama's economic team? So sensible, that one can construct a pretty stirring defense of supply-side economics relying solely on their work...
Pretty funny, (especially for one like me who stood firm on Reaganomics at the time of David Stockman's apostasy, and has been vindicated by history). Of course I suspect it would be better for the country if the administration was overtly socialist, and was for that reason tossed out in 2010. (My guess is that they will be overtly moderate and Clintonian and probably popular, while covertly doing everything possible to subtly undermine traditional American culture and morals, secure in the knowledge that that will get them where they want to go in the long run.)
But one must be thankful for life's little pleasures, and one of them right now is thinking about the duped Leftizoids who just assumed that hope-n-change meant their policies, and that Obam would be listening to them! Ha ha ha...
And the following part of the article is well worth reading, because one occasionally encounters a certain argument that correlates tax-cuts with poor economic growth or stock market values. Or tax increases with economic growth...
...Incoming head of the Council of Economic advisers Christina Romer also has made numerous significant contributions toward our understanding of supply-side economics. Most importantly, she, along with her husband, David Romer, wrote perhaps the most important paper in the area in the last decade.
One problem hampering the study of tax policy is that it is endogenous. When the economy is bad, politicians tend to reduce tax rates. That means tax reductions tend to be associated with worse than average growth. Given that set up, it is easy to make the mistaken conclusion that tax policy is ineffective.
But the Romers had the brilliant insight that tax policy occasionally happens for reasons that are unrelated to the business cycle, that is, some tax changes are exogenous. If taxes change in 2010, for example, they will do so because the Bush tax cuts expire, something that was set in motion a decade earlier, when policymakers had no clue what the 2010 economy might look like. By isolating episodes when changes are exogenous, the Romers were able to better identify their impact than has been done in the past.
Their conclusion is striking and worth quoting, "The resulting estimates indicate that tax increases are highly contractionary. The effects are strongly significant, highly robust and much larger than those obtained using broader measures of tax changes."....
October 29, 2008
A "propaganda arm of the left" going down in flames. Ha ha.
Thanks to AOG. A fascinating piece at Winds of Change, by Tim Oren, on the decline of the newspaper industry, The Newspaper Crash of 2009... And How You Can Help...
There are three reasons the newspaper industry is going down. Perhaps more quickly than we hoped... (Besides the obvious reason that who wants a pile of inky paper when you can read blogs?)
1. The subscription-based economic model is very attractive, but only assuming that the subscriber base is stable or growing. If it is shrinking, and the cost of acquiring new subscribers is growing, you still have the expenses of putting out the paper every day. It's not like a factory you can close until times get better.
2. The newspapers have heaps of debt. Often including billions spent to "aquire" subscribers by buying other papers. Now is not a good time to be trying to refinance.
And #3, my favorite...
...One of the reasons that churn is up for the newspapers is the political bias. I'm with Orson Scott Card on this. The industry has abdicated its social function to support a well-informed electorate, and become a propaganda arm of the left. In so doing, they have sullied their brands and lost the trust of their readers. The economic consequences of this default of their value proposition are now becoming apparent. The Internet and an economic crisis together would be bad enough, but the industry has only itself to blame for the egregious behavior on display for the last few years, and at its worst right now.
This is a blog, and I make no vacuous claims to freedom from bias. You can check everything said above from public records, but I do have a dog in this fight. These people deserve to lose, and if the newspaper industry crashes as a byproduct of the economic crunch, then it's a silver lining for a dark cloud. They have done their level best to trash the political system of my country, and I will dance on their grave when they go.
Is that clear enough?...
October 10, 2008
More stuff I've stumbled upon...
I present this without comment---I don't know enough to say more than that it sounds not unreasonable...
Summary: Here is a brief report with conclusions only. The situation is moving too rapidly and become too complex for explanations. This post describes the natural evolution of the trends I have written about for the past year, which are now reaching a climax. Not yet, but soon we will be able to see the shape of the new world ahead in the fog. As always, we lack the data or reliable economic theory to do more than speculate about these things. See the archive at the end for posts over the past year describing how we arrived at this difficult spot.
An economic downturn has 3 stages, each with a different goal.1. First Aid � prevent the economy from sliding into a depression.Yes, 2010 is the earliest reasonable date for a recovery IMO from the most severe global downturn since WWII. Policy errors could length the downturn, of course.
2. Treatment — mitigate suffering during the recession, achieve a global recovery in 2010.
3. Recovery � restructuring and reforms to prepare for the expansion after 2010, and the new world beyond that.
This is a worldwide problem, due to two long-term factors.1. Globalization has locked us together into the same business cycle, instead of some regions being strong while others are weak.The result is like a monoculture agricultural system, vast fields planted with a generically identical crop. It is uniformly vulnerable to the same diseases and pests. We have all contracted the same infection....
2. We all run our economies by the same body of economic theory, Keynesian economics. No commies (except fringe states like N. Korea), and few socialist ones.
"..and the new world beyond that." So who is thinking ahead? Thinking about the new world we will be shaping, just by meddling with the world's economies? I wish I could say it was Republican leaders, but I don't see any signs of it.
October 8, 2008
Fell off the cliff a couple of years ago, now most of the way down...
The economics blog CalculatedRisk has some interesting thoughts. I'm not enough of an economist to say anything about this, but it's intriguing....
....I'm frequently asked if I'm more concerned today than I was in 2005. There are reasons for concern: the credit markets have seized up, many financial institutions are insolvent, consumer spending and investment in commercial real estate is starting to decline, export growth appears to be slowing, the unemployment rate is rising ... and the economy is clearly in a recession.
There are huge and scary downside risks today, but I'm actually more sanguine now than I was in 2005. If you think back to 2005, we were standing at the precipice, and there was no where to go but over the cliff.
Here is a look at some of the data. Where would you rather be?...
He has a number of charts showing things that have declined since 2005. Housing starts for instance are less than half of what they were in 2005/6. New home sales are down even more.
His point is that adjustment was badly needed from the overheated situation of a few years ago. But that we are already a fair ways toward the bottom. Let's hope so...
October 3, 2008
"The ensuing 218 years have gone pretty well..."Jerry Bowyer, in Forbes... (Thanks to Orrin)
Ron Paul says that the Paulson plan is unconstitutional. So does Michele Malkin...
....I think they're wrong. Don't believe me? Then ask Alexander Hamilton.
You see, we've been here before. As George Washington was taking the oath of office, U.S. credit markets were in full meltdown. America faced a credit crisis in which debt obligations were being purchased by banking houses at 25 cents on the dollar. Paulson's predecessor was a guy named Hamilton, and Bush's predecessor was a guy named Washington. Hamilton wrote up a plan (called "Report on the Public Credit") in which he proposed that the Treasury department buy the troubled securities from the private sector, thus restoring the collapsing credit market.
Jefferson was opposed. He hated financial markets and manufacturing, which he thought were the industries of the past, associating them with Europe from which America had just broken away. He believed the future lay in small farming. Jefferson also believed that the Hamilton bailout plan was unconstitutional, and he talked Madison into fighting the plan in the House. Populists in the House said that since the debt was not created by the federal government, the federal government ought not to put itself on the hook.
Hamilton's case was simple. When any part of a nation participates in a massive repudiation of debt, the creditworthiness of the whole nation is damaged. Hamilton saw this as a national problem in need of a national solution. He argued that the whole nation would benefit from a return to a well-functioning credit market, with low interest rates fueling growth.
Hamilton believed that if the Constitution gave executive power to the president, then that included the authority to create specific institutions and programs necessary to exercise that power.
Jefferson's brand of suspicious populism held sway in the lower House and the bill was defeated. Credit markets reacted with panic.
Finally Hamilton and Jefferson sat down together and hashed out a compromise. Jefferson traded his support for the ultimate piece of political pork--the District of Columbia. The nation's capital was to be moved south, from New York to northern Virginia. The Washington administration agreed; Jefferson told Madison to support it. It passed; the Treasury bought up the paper, America's credit markets were restored quickly, and although we've had a few rough patches, the ensuing 218 years have gone pretty well so far....
October 2, 2008
Some economic thoughts...
Mike Plaiss e-mails:
Thought you might like to see this in response to your fisking of the Spiegel article. What you are looking at is the US Dollar Index. It is an average of the exchange rate of the dollar and six major world currencies. The dollar is surging. The US economy is struggling but everything is relative. Europe is in just as big of a mess as we are, and investors worldwide are voting with their pocketbooks.
Capital is flowing into the United States, not out. And to buy US assets one needs US dollars. The Dow is down about 20% year to date, and the S&P a bit more (about 22%). Below is a list of major stock indexes from around the world over the same time period:
Dow Jones European Index -30.63%
United Kingdom -23.70%
Italy - 33.90%
Hong Kong -34.52%
Yes, a lot of this capital has flowed into US Treasuries as a safe haven, and that has something to do with the surge in the dollar, but a comparison of these stock indicies tells you there is a little more to the story.
And Richard Fernandez (Belmont Club) posts this, by a reader:
...In engineering there is a concept called "design margin" in which extra strength, power, capacity, capability is built into things to account for wear and tear as well as unknowns about the environment.
I think that the reason so many things seem to be "breaking" today is that over the last 20 years we have used up our "margin." Not pumping oil from our own known reserves ate into that margin. Cutting the military back by almost 50% - and then deploying it more than before - cut into that margin. Insisting on environmental, legal, racial, considerations in everything ate into that margin. Political correctness ate into that margin.
No one thought that a number of bad loans made to people who could not repay them would sink the economy - indeed it is not clear that it will even now - but eventually that “margin” in the financial system got eaten away. A single massive award in a lawsuit by a woman who spilled coffee in her lap ate into that margin in its own way, as did innumerable other lawsuits, silly or not.
October 1, 2008
Silly stuff, but I can't resist fisking...
The banking crisis is upending American dominance of the financial markets and world politics. The industrialized countries are sliding into recession, the era of turbo-capitalism is coming to an end and US military might is ebbing. [No, our military is growing in cunning and power. Because we fight. It's YOUR might that is ebbing rapidly.] Still, this is no time to gloat. [You are not just gloating, you are drooling with pleasure.]
There are days when all it takes is a single speech to illustrate the decline of a world power. [I'm old enough to have heard this before. And maybe we're gonna get a new black-face Jimmy Carter. But do you remember who followed him?] A face can speak volumes, as can the speaker's tone of voice, the speech itself or the audience's reaction. Kings and queens have clung to the past before and humiliated themselves in public, but this time it was merely a United States president.
Or what is left of him. [Enjoy it now, suckas. Wait'll you get a dose of President Palin...]
George W. Bush has grown old, erratic and rosy in the eight years of his presidency. Little remains of his combativeness or his enthusiasm for physical fitness. On this sunny Tuesday morning in New York, even his hair seemed messy and unkempt, his blue suit a little baggy around the shoulders, as Bush stepped onto the stage, for the eighth time, at the United Nations General Assembly. [He's grown old honorably, fighting the world's battles, while you've grown old in nihilism, attempting nothing.]
He talked about terrorism and terrorist regimes, and about governments that allegedly support terror. He failed to notice that the delegates sitting in front of and below him were shaking their heads, smiling and whispering, or if he did notice, he was no longer capable of reacting. The US president gave a speech similar to the ones he gave in 2004 and 2007, mentioning the word "terror" 32 times in 22 minutes. At the 63rd General Assembly of the United Nations, George W. Bush was the only one still talking about terror and not about the topic that currently has the rest of the world's attention. [Until something goes Ka-Boom! THEN you will remember terrorism.]
"Absurd, absurd, absurd," said one German diplomat. A French woman called him "yesterday's man" over coffee on the East River. There is another way to put it, too: Bush was a laughing stock in the gray corridors of the UN. [It doesn't matter what the UN thinks. The UN is old, erratic, utterly corrupt, and totally irrelevant.]
The American president has always had enemies in these hallways and offices at the UN building on First Avenue in Manhattan. The Iranians and Syrians despise the eternal American-Israeli coalition, [We should f---ng CARE about the enmity of Iran and Syria? I'm proud of it.] while many others are tired of Bush's Americans telling the world about the blessings of deregulated markets [So, how's that EU economic dynamo workin' out?] and establishing rules "that only apply to others," says the diplomat from Berlin. [And your alternative plan, Herr Berlin? Your counter-offer? I'm waiting with abated breath to hear how you are going to step on stage and make the trains run on time.]
But the ridicule was a new thing. It marked the end of respect. [Oh yeah, all that euro respect we've been used to. You've been hating Americans since at least 1830. Big deal. Ho hum. Dirty little hooligan children always hate the grownups.]
....Is it only President George W. Bush, the lame duck president, whom the rest of the world is no longer taking seriously, or are the remaining 191 UN member states already setting their sights on the United States, the giant brought to its knees? UN Secretary General Ban Ki Moon referred to a "new reality" and "new centers of power and leadership in Asia, Latin America and across the newly developed world." [So step up to the plate, wise-guys. Show us yer leadership.] Are they surprised, in these new centers, at the fall of America, of the system of the Western-style market economy?... [Well, we'll see how that goes. But here's the brute fact, Huns. If we go down, you go down too---that's what globalization is about. And when we come back up, you will come back up too. Eventually. Which means our relative positions won't change! You will still be behind, and your stagnant economies will continue to slip farther behind...]
September 26, 2008
"The long-winded version"
Here's Mike Plaiss's follow-up....
Since you invited me, you've opened yourself up to the long-winded version. First, I'm afraid, it is important to understand the role of capital in a bank. Here's the short version. A bank must maintain a certain percentage of their assets in capital. So if a bank has $1 billion of assets (loans, investments, etc.) then they have to have, say, $50 million in capital -- their own money, not borrowed funds. This is a gross oversimplification, but you get the idea. So a shareholder group could raise $50 million in capital (real money), borrow $950 million, and they'd be fine running a $1 billion bank. Understand that a lot of that $950 million would be in the form of good old fashioned savings accounts, CD's, etc.
You may be surprised at the amount of leverage (borrowing) that banks are allowed to employ and this is the first of two problems that the financial sector is facing right now. Banks have never been more leveraged, especially investment banks. They can leverage even more, and it is no accident that they were the first to die.
The second problem is that banks have suffered a very real decline in asset quality. Nearly every bank is struggling with an increasing number of bad loans. Imagine a developer who borrowed money to build a new subdivision in 2006 with plans on having the first phase complete in 2008-09. He is likely bankrupt-- and the value of that land, the collateral, to the bank now? Not good.
Asset quality issues inevitably impact capital. Bad loans have to be written off, investments that have depreciated significantly in value have to be written down, etc. All of this decreases capital. Let's use the numbers in the example above and assume that the bank is looking at loan losses (or investment write-downs) of just 1.5% of those $1 billion in assets. Well, that's $15 million in capital that's gone, but remember they are required (by some quite determined regulators) to have $50 million in capital.
The bank now has two choices. Raise $15 million in capital (In this environment!? Good luck), or shrink the balance sheet. If they shrank their assets from $1 billion to $700 million, they'd be OK with only $35 million of capital.) So the bank in this example is looking to sell $300 million worth of loans or securities -- preferably by the end of the quarter.
If it were only a few banks in this predicament, it would be no big deal, but the reality is that many if not most banks are in this same boat, and that is the crux of the problem. Everybody is looking to de-leverage, to shrink their balance sheet by selling assets, at the same time. It only takes a moment of thought to realize where that gets you.
And if it were just the banking world it might not be such a big problem. But nearly everybody is looking to de-lever (sell assets) right now. Hedge funds? They borrow money to buy their assets too. Who's going to lend it to them now? They are under even more pressure than the banks to sell. Private equity? Yes, that's coming on line (and what a great time to have access to private equity) but frankly it's a drop in the bucket. Thus, we have maybe 5 sellers (of all assets) for every one buyer and therein lies the "opportunity" as Kessler sees it.
None of this is really a defense of the plan, only its cost. If the government buys these assets they aren't "out" $700 billion. The treasury can borrow at, say 4%, buy assets that are going to return north of 8% (even with the losses factored in) and make a killing. It is certainly reasonable to argue that this is simply not something that the government should be in the business of doing. I have thoughts on that, but again I'll save them for later.
September 25, 2008
The numbers work...Mike Plaiss posted a comment to the earlier post A safe haven for capital. I think it's worth posting on its own...
Well, I do know enough to know if the numbers work, and they do. Let's take an example of something a little less exotic than a sub-prime CDO. Imagine just a large pool of mortgages (not insured by Fannie or Freddie) that is currently suffering from a relatively high level of delinquencies -- say, 10% of the pool is 90 or more days past due on their monthly payment. Now let's say that fully one half of the mortgages in the pool will eventually default -- a number that far exceeds what just about anyone is predicting. That means half your money is good. But what about the other half? Well, eventually the house will be sold, likely at auction, and the proceeds of that sale go to...the holder of the mortgage. If the loss that is taken on the mortgages that do default is 50% (again higher than anyone is predicting and higher than we are presently seeing), then the mortgage holder has lost 50% of 50% or 25%. Thus, at the end of the day, the mortgage holder will get back 75 cents on the dollar."There is a very good answer to that question..." Well, send it on Mike, and I'll post it! I bet I could answer it, but not clearly.
I can tell you from personal experience that the mortgage described above may well be trading right now at 50 or 60 cents on the dollar, and if the government were to offer a bank 75 to 80 cents on the dollar for the mortgage pool, the bank would likely jump all over it with both feet.
But wait, the numbers get better. Remember that there is a monthly interest payment that the mortgage holder collects, so if I get 75 cents of the principal back, plus interest, then the thing has to ultimately be worth, if held to maturity, something north of 75. And this is all assuming truly depression era levels of default and loss severity.
So if all of that is true, and it's that simple, why are the bonds trading at 50 or 60 cents in the first place? Why aren't there buyers at 75. There is a very good answer to that question, but I'm afraid it's at least as long as everything I've written so far.
The point is that Mr. Kessler's numbers are correct. If done right (and the likes of Bill Gross have stepped up to say they'll help to see that it is done right) the Paulson plan will not cost taxpayers money, and could in fact add to the treasury over the next several years. This all doesn't mean that I'm thrilled with the plan. But I do believe it is the least bad option out there, and the cost, at least in dollar terms, will almost certainly be negligible.
I think we need to bail-out pronto, and I think the arguments of "Why should the taxpayers bail out Wall Street?" are silly. As if Wall Street is something separate from the rest of us, not joined at the hip with everybody's pocketbook. (Bad metaphor but you know what I mean.)
And my main objection to the plan(s) is that no one seems to be shaping them to shape the financial sector to create a better future. No one seems to be planning with an underlying philosophy. I hope I'm wrong. But the main thing is just to pass some hocus-pocus to preserve confidence in our markets. If we do, the basic robust good health of the patient will ensure recovery...
Clueless about ordinary Americans...(refers to Obama, natch.)
From Obama's Revealing Disconnect by Hugh Hewitt....
....Hank Adler has written on the Obama's 2004 tax returns and what they reveal about his economic life. In a nutshell, the Obamas were like many classic Yuppies that rose quickly from very modest means and saved little along the way, an analysis that tracks closely Michelle Obama's frequent campaign trail references to how strapped the young couple was by student loans and the costs associated with a young family until the big book deals came along after Barack Obama's 2004 keynote address. It appears, in fact, that the Obamas had little in the way of savings or investments prior to his big publishing scores, though their combined incomes were quite high. Nor does it appear that either had inherited anything from their families as their tax returns show no interest or dividend income or distributions from inherited IRAs.
Combine this inability to save prior to the windfall years with the well known accounts of Obama's rather modest circumstances growing up and the picture emerges of a young professional who is essentially clueless about savings and investment growth. Of course he has never started much less grown a business, and there is nothing in his background to indicate he grasps what it means to need and responsibly use business credit, or to spend decades patiently accumulating mutual fund assets through regular payroll deduction.....
My dad once told me that his dad said to him: "If a man doesn't save when he's earning $20 a week, he won't save when he's earning $200 a week." Adjusted for inflation, that's still a basic truth about human nature. With the added problem now that he's likely to say, "Why isn't the government helping me?"
....Obama's inability to understand the genuine fear in the middle class and to respond appropriately and with a priority on protecting the long-and-painfully accumulated assets of the savings culture should be a huge warning flare to the electorate.
Obama just doesn't get it, and really cannot be expected to get it. He comes out of a career in the professional liberal-to-leftist political class spent tending to the needs and crises of the urban poor and the academic elites and special interest groups of the Chicago machine. His life growing up was not spent among the small business owners and white collar savers that mark so much of suburban, small town and rural America. He has zero experience with real business, and he's not worried about the college funds of his girls.
Obama revealed a great deal yesterday beyond his obvious inability to react quickly to unanticipated events. He showed us a profound ignorance not just of the financial crisis but of the people it threatens to injure and injure deeply....
A safe haven for capital...I don't know enough to know if the numbers really work, but this WSJ article by Andy Kessler, The Paulson Plan Will Make Money For Taxpayers, is quite intriguing.
...Firms will haggle, but eventually cave -- they need the cash. I am figuring Mr. Paulson could wind up buying more than $2 trillion in notional value loans and home equity and CDOs for his $700 billion.
So the U.S. will be stuck with a portfolio in the trillions of dollars in bad loans and last-to-be-paid derivatives. Where is the trade in that?
Well, unlike Mr. Buffett or any hedge fund, the Treasury and the Federal Reserve get to cheat. It's not without risk, but the Feds, with lots of levers, can and will pump capital into the U.S. economy to get it moving again. Future heads of Treasury and the Federal Reserve will be growth advocates -- in effect, "talking their book." While normally this creates a threat of inflation and a run on the dollar, and we may see dollar exchange rates turn south near term, don't expect it to last.
First, with Goldman Sachs and Morgan Stanley now operating as low-leverage bank holding companies, a dollar injected into the economy will most likely turn into $10 in capital (instead of $30 when they were investment banks). This is a huge change. Plus, a stronger U.S. economy, with its financial players having clean balance sheets, will become a safe haven for capital.
Europe is threatened by an angry Russian bear. The Far East, especially China, has its own post-Olympic banking house of cards of non-performing loans to deal with. Interest rates will tick up as the economy expands -- a plus for the dollar. Finally, a stronger economy driven by industry instead of financials means more jobs, less foreclosures and higher held-to-maturity payouts on this Fed loan portfolio.
You can slice the numbers a lot of different ways. My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion -- the greatest trade ever. Every hedge-fund manager will be jealous. Mr. Buffett is buying a small piece of the trade via his Goldman Sachs investment.
Over 10 years this could change the budget scenario in D.C., which can also strengthen the dollar. The next president gets a heck of a windfall. In the spirit of Secretary of State William Seward's purchase of Alaska for $7 million in 1867, this week may be remembered as Paulson's Folly.
Mr McCain was laughed at by lefty retards for suggesting that our economy is fundamentally sound. But it IS fundamentally sound. In fact, it's the wonder of the world, and has been since the Reagan tax cuts (With an assist from the Bush tax cuts.) Last quarter it grew at a 3.2% annual rate, even as the press was begging people to believe we are in a recession. Most European countries would kill to get their economies growing at 1%.
The financial sector has tied itself up in knots with derivatives, but the underlying asset is the USA. And to give you an example of how strong we are, our current military budget is about half the planet's total military military expenditure, and yet, as a % of GDP our defense budget is about half what it was in the Reagan years...
September 11, 2008
I'm sorry, but this is just crazy. People in 1800 were more sane than we are, at least architecturally and acoustically....
Being one of the busiest retail chains in the United States, and being lined with stainless steel, the noise level in Apple's stores can rise to an uncomfortable level. The noise has apparently become so bad that it affects One-to-One personal training sessions that occur on stools near the back of the store. So some stores are now using a headset-based intercom system during training to allow clear communications between the presenter and student even as they sit side-by-side, less than 18 inches apart. See a photo after the break. [link]
Clean crisp modern design is appealing in a certain way, but it is basically inhuman. Stainless steel rooms are for holding frozen produce, not people.
August 1, 2008
Change for the good...
From The HSA Revolution That’s Already Here, Posted by John Berlau
The new book America’s Health Care Crisis Solved has been praised as providing a detailed, free-market solution for healthcare’s future. This it does, but what’s almost as fascinating about the book is its description of what is going on in the present, with consumer-driven health savings accounts (HSAs). Almost without notice, HSAs have grown dramatically and have solved for millions of Americans the problem of healthcare’s lack of portability.
First, some background. In the 2003 law that was rightly derided for massively expanding Medicare with a new prescription drug benefit was a separate section that let many more working-age people to take advantage of HSAs. This provision allowed any adult under 65 to open a savings account for medical expenses that receives much of the same special tax treatment as employer-based health care.
As a result of this change, you can qualify for an HSA by getting health insurance with at least an $1100 deductible for individuals or a $2100 deductible for families. So long as you don’t have another insurance policy, you can get a tax deduction for contributing up to $2900 for an individual or $5800 for a family to an HSA. Or your employer can contribute some or all of that amount. In either case, the money grows untaxed and can be withdrawn tax-free for health-care expenses....
(It's worth reading the rest.) My belief is that the Medicare prescription drug benefit was going to happen one way or another, but President Bush wisely used it as a bribe to get what was really important, HSA's.
HSA's were blocked for decades by Democrats. I feel about this not only the general contempt I always feel for those who cling to socialism long after history has proved it to be an evil catastrophe, but also personal loathing, since if I'd been able to contribute small amounts to an HSA back when I was young and never got sick, my account would by now have grown tax-free to be a large cushion for the expenses to come in old age.
But no, the @#$%^ collectivists can't endure to have people controlling their own health care. It must be done by big coercive bureaucracies, or not at all. (Charlene and I have an HSA, but it's too late in our lives for it to really grow--the money that goes in soon goes out for this and that. But at least it's pre-tax.)
I think that perhaps anyone who is a registered Democrat should not be allowed to have an HSA. They support the party of evil, so why they should they profit from the good that good men do? Seems fair, hmmm?
Thank you again, President Bush.
July 18, 2008
Like many people who started reading blogs "back in the beginning," I miss Steven den Beste. He used to throw splendid doses of cold water on various areas where fuzzy-thinking is common. One of them is alternative energy sources. He's posted a summary that is worth reading, if you think wind power or some such is in the near future going to take away our need for power generated by coal, oil and nuclear. (den Beste has serious health problems, by the way, that's why he now limits himself to lightweight blogging.)
....I don't blog about that kind of thing anymore. I never enjoyed blogging about energy, anyway, because for too many people "alternate energy" is more about religion than about physics. They believe that if we are just creative enough, we can overcome fundamental physical limitations -- and it's not that easy.
In order for "alternate energy" to become feasible, it has to satisfy all of the following criteria:
1. It has to be huge (in terms of both energy and power)
2. It has to be reliable (not intermittent or unschedulable)
3. It has to be concentrated (not diffuse)
4. It has to be possible to utilize it efficiently
5. The capital investment and operating cost to utilize it has to be comparable to existing energy sources (per gigawatt, and per terajoule).
If it fails to satisfy any of those, then it can't scale enough to make any difference. Solar power fails #3, and currently it also fails #5. (It also partially fails #2, but there are ways to work around that.)
The only sources of energy available to us now that satisfy all five are petroleum, coal, hydro, and nuclear.
My rule of thumb is that I'm not interested in any "alternate energy" until someone shows me how to scale it to produce at least 1% of our current energy usage. America right now uses about 3.6 terawatts average, so 1% of that is about 36 gigawatts average.
Show me a plan to produce 36 gigawatts (average, not peak) using solar power, at a price no more than 30% greater than coal generation of comparable capacity, which can be implemented at that scale in 10-15 years. Then I'll pay attention.
Since solar power installations can only produce power for about 10 hours per day on average, that means that peak power production would need to be in the range of about 85 gigawatts to reach that 1%.
Without that, it's just religion, like all the people fascinated with wind and with biomass. And even if it did reach 1%, that still leaves the other 99% of our energy production to petroleum, coal, hydro, and nuclear.
The problems facing "alternate energy" are fundamental, deep, and are show-stoppers. They are not things that will be surmounted by one lone incremental improvement in one small area, announced breathlessly by a startup which is trying to drum up funding...
It's impossible to argue with most of the people who talk about "alternate energy;" They want to believe, and just don't hear anything like this. Plus, most people can't think. The average person, even with a university degree, can't think clearly about these things, and doesn't want to. For instance, the concept of scaling is basic to all technical discussions. But how many people will even understand, not to mention respond intelligently, if you tell them their favorite scheme "won't scale?" (It doesn't have to be a technical subject; there are things that work in small groups but not in large groups. Or small countries, but not large or diverse countries.)
July 15, 2008
Pretty darn strange recession we're having....
Trade Data Boost Second Quarter GDP Estimates
Today’s data on May international trade prompted several economists to boost their tracking estimates of second quarter GDP growth. Macroeconomic Advisers boosted its estimate to 3.3% (annual rate) from 3% as did HSBC. Morgan Stanley raised its estimate to 3.9% from 3.8%. GDP grew just 0.7% in the first quarter.
Although the trade deficit rose to $60 billion in May, as expected, from $58.5 billion in April, the real trade deficit — which adjusts for changes in prices and is what affects real GDP, was flat. That suggests the real deficit will be narrower in the second quarter from the first, implying a significant contribution to second quarter growth after subtracting from it in the first.
June 19, 2008
I was reminded of something when I saw this piece, on how companies are investing less in China, because costs have become too high. (Or, delicious irony, "building highly automated factories" in China!)
A commenter on my recent post "The libertarian dream turns into the totalitarian nightmare..." wrote: "...I am concerned for this wonderful country. Why can't I find "American Made" on the market shelves? Why are the companies moving to other countries?.."
My hasty answer:
....I suspect your definition of "American made" is out of date. Suppose you buy a kid a plastic toy for $10, and it says "Made in China."
What probably happened is that China got a crummy 50¢ for the object. and American workers got $9.50 for adding value of a more intangible sort. For advertising, for the entertainment industry that lives of advertising, for insurance and legal work, for trucking, for sales clerks and store managers, for government regulators. For a zillion jobs that go into getting that Barbie Doll into your hands.
It's really 95% "American made;" we just exported the low-end low-pay jobs, and kept the better ones. And the Chinese got money to buy our movies and software and Boeing jets, (if we do a good job making and selling them.)
I'm always intrigued by the way, in the Information Age, intangible things tend to become more "real" than actual physical objects. If a factory in China burns down, (or just loses favor with foreign companies) information can can be sent immediately to companies in Vietnam or Malaysia, and soon containers full of Barbie Dolls or shoes or tools will be flowing towards America, and no one will notice the difference. But if the designers, and the designs, and the CAD/CAM files were lost, then there would be big problems....
It's the same here. When the World Trade Center towers were destroyed on 9/11, most of the companies with offices there had good back-up systems, and the business they were doing was switched to other locations. In some cases offices on the other side of the planet. And all the physical stuff regenerated almost immediately. That is, new offices were leased, truckloads of cubicles and computers and fax machines were assembled, and Dilbert's world is made anew within a week or two....
Big buildings take a little longer, but the essence is the same. The irony is that the 9/11 attackers thought they were dealing us a big blow, but, except for the symbolism of it (another intangible) they destroyed phantasms. The real stuff was much too tough and resilient to be hurt by bombs!
June 5, 2008
If you really want to be of public service...
Thomas Sowell writes...
EVERY YEAR ABOUT THIS TIME, big-government liberals stand up in front of college commencement crowds across the country and urge the graduates to do the noblest thing possible -- become big-government liberals.
That isn't how they phrase it, of course. Commencement speakers express great reverence for "public service," as distinguished from narrow private "greed." There is usually not the slightest sign of embarrassment at this self-serving celebration of the kinds of careers they have chosen -- over and above the careers of others who merely provide us with the food we eat, the homes we live in, the clothes we wear and the medical care that saves our health and our lives.
What I would like to see is someone with the guts to tell those students: Do you want to be of some use and service to your fellow human beings? Then let your fellow human beings tell you what they want -- not with words, but by putting their money where their mouth is.
You want to see more people have better housing? Build it! Become a builder or developer-- if you can stand the sneers and disdain of your classmates and professors who regard the very words as repulsive.
Would you like to see more things become more affordable to more people? Then figure out more efficient ways of getting thousands of things from the producers to the consumers at a lower cost. That's what a man named Richard Sears did a century ago. In the process he rose from near poverty to become one of the richest men around....
Thinking about commencements, the last of our three children just graduated from High School. One naturally feels both pride and sadness at these milestones, and at having our kids grow up and become more independent. (She will start at UC Santa Cruz in September—she's very excited!)
But one aspect of their youth that none of us Weidners will miss at all is school-mandated "community service." It grated upon all of us. And I don't think that we are any less inclined to want to want to help people than other Americans. But involuntary voluntarism is offensive. And the treacly sentiments that go with it are doubly offensive.
And most irritating of all is that the whole process assumes that one has bought-into various liberal pieties. Which you are never allowed to question. Or, actually, saying "never allowed" puts things too clearly. Think of a world where the entire concept of questioning underlying liberal assumptions doesn't exist, and any attempt to do so would be seen as crazy. Not to mention jeopardizing ones chances of getting into college!
Charlene asks, "When did this community-service thing start? I never heard of it when I was in school." These things are fads; they just grow. Why are so many women wearing incredibly-unflattering hip-hugger pants now? Do you think they did any thinking? Of course not. As well ask a school of minnows how they plan their route. Unconsciously I think educators, like leftist politicians, know that the poor and hapless are a precious resource, which needs to be conserved and nurtured, so as to justify big government and anti-Americanism. If one could help homeless people get jobs and get off the street, that would not be "community service."
June 4, 2008
If this be failure, make the most of it...
Orrin Judd, writing about someone who claims: "...The main idea that propelled the conservative movement's political success -- that replacing the government with free-market forces would make everyone better off -- simply hasn't worked in practice..."
...Household net worth at the end of 2007 was $57.7 trillion and, as we avoid this supposed recession too, the American economy will have grown for 25 uninterrupted years since the conservative movement's success began. In addition, abortion has been significantly curtailed, we've added almost a hundred million new Americans, life expectancy is at record levels, crime rates have fallen precipitously, etc., etc. etc.. And not only have we liberated scores of nations but we are in one of the most peaceful epochs in human history and global GDP is growing at 4 or 5%. Little wonder that every country in the Anglosphere and nearly every party (with the conspicuous exception of the post-Bill Clinton Democrats) has adopted Third Way politics.
If this is what failure looks like, six billion folks need a whole lot more.
May 19, 2008
"The Europeans are paying for their own nihilism..."
Spengler, on German President Horst Koehler's bewilderment at the world financial markets...
....The monster is not the financial system, crooked and stupid as it may have been. The monster is the burgeoning horde of pensioners in Germany and other industrial countries. It is easy to change the financial system. The central banks can assemble on any Tuesday morning and announce tougher lending standards. But it is impossible to fix the financial problems that arise from Europe's senescence. Thanks to the one-child policy, moreover, China has a relatively young population that is aging faster than any other, and China's appetite for savings vastly exceeds what its own financial market can offer.
There is nothing complicated about finance. It is based on old people lending to young people. Young people invest in homes and businesses; aging people save to acquire assets on which to retire. The new generation supports the old one, and retirement systems simply apportion rights to income between the generations. Never before in human history, though, has a new generation simply failed to appear.
As the above chart makes clear, America's population profile is far more benign than Germany's, but it is aging nonetheless. There simply aren't enough young people in America to borrow money from Europe's and Japan's aging savers...
....Koehler's indignation is understandable, but it is pointless to blame the sausage-maker. Economics simply does not offer a solution to a lapse of the will to live among some of the world's richest economies. The Europeans are paying for their own nihilism. Having invented the perfect post-Christian society with cradle-to-grave services, they have not found anyone willing to live in it, except for the immigrants who well may inherit it from the disappearing locals.
It's is good to keep in mind that despite our gross faults, the Republicans are the party that tends to oppose imitating Europe, and the Democrats are the party that wants us to be Europe. And Europe is DYING.
Euro-style social democracy and secularism is perhaps the biggest "experiment" ever run on this planet, and it has failed calamitously. No European country is reproducing at the replacement rate. All European countries are in demographic collapse. (Population collapse will hit when their "baby-boom" generation starts to die off.) Equally important, Europe is no longer producing new ideas, new movements, new inventions. To a person like me who reads history, this change is shocking. (That's one of the many reasons liberals discourage the study of history.)
The death of Europe (and some other developed lands, such as Japan) is the biggest "fact" we have to deal with in our time. The biggest QUESTION. What does it mean for the human race? What does it mean for us? For me?
In my opinion, if you are not chewing on this problem, and wondering if your current ideas need to change because of it, you are not a serious person.
[Me, I think St Anthony got it right: "After the deluge, only the fishes will survive."]
Update: Actually, there is still one European leader who is also a world leader. And one European state�a very small one�that still produces exciting new ideas that the world debates and takes seriously....
May 17, 2008
This one's for Andrew Cory...
Here's a little brain food for ya, punster pal. This is how us evil Republicans want to destroy Social Security....
By Richard W. Rahn - BERLIN, Germany.
If you were asked to name one person who has enabled more people to gain wealth and security than any other person on the globe, who would you name?
In 1881, here in Berlin, Otto von Bismarck started the world's first modern pay-as-you-go social security system which served as the model for the U.S. Social Security system and that of many other countries, including setting the retirement age at 65. No, Bismarck is not the answer to the opening question, the answer is Jose Pinera, and here is why.
Bismarck's social security system was basically a Ponzi scheme whereby young workers pay taxes to support the retirees. It only works over the long run where the population is growing and where most retirees do not live very long.
These conditions no longer exist in the high-income countries. And even in low- and middle-income countries, population growth has slowed, and lifespans increase rapidly. As a result, many of the world's social security systems have become retirement insecurity systems as they head toward bankruptcy.
Thirty years ago, a young Jose Pinera, who had earned a Ph.D. at Harvard, was Chile's labor minister. He saw the coming disaster in the government old-age pension system.
Inspired by an idea from the late Nobel Prize winning economist, Milton Friedman, he developed a solution that empowers workers and gives them real financial security. Pinera-type social security systems have now been adopted by more than 30 countries and cover several hundred million people — for a very simple reason — it works! ...
Under the Pinera-type social security systems, workers are required to invest in highly diversified, qualified funds. Because they actually own their pension funds (like 401(k) funds in the United States), workers can choose their age of retirement, whether it is age 50 or 80. The longer they work, the more money they will have — but again each individual determines his or her own retirement age. (The very poor and those unable to work are still covered by a government system.)
Mr. Pinera is here in Berlin, selling his concept to German opinion leaders, as part of a multi-country "Free Market Road Show" sponsored by the European Center for Economic Growth and the Hayek Institute of Vienna, Austria.
The Chilean privatized system began in 1981, exactly 100 years after Bismarck instituted his system in Germany. It has been 29 years since the system went into effect in Chile so Mr. Pinera now can answer his critics, not only with theoretical arguments, but with hard data.
The results are remarkable. Chile's citizens have on average experienced a 10 percent per year, above inflation, compounded growth rate in their pension funds for the last 29 years. The result is most Chileans are no longer poor, but are, in fact, "small capitalists."
The Chilean government, increasingly freed from paying pensions out of tax funds (almost all Chileans have moved into the private accounts, though they could have stayed in the old government system), is now running a budget surplus of 10 percent of gross domestic product (GDP), which could pave the way for the abolition of the income tax.
The new Chilean system has provided so much investment capital that Chile moved from being a poor country to being a solid middle-income country with the highest per capita income in South America. Critics in the U.S. and elsewhere claim investing pension funds in stocks and bonds is risky, but the real risk to the elderly is being trapped in government social security schemes headed toward insolvency.
In 1981, the Dow Jones stock average stood at about 800. Despite all the ups and downs over the years, and the turmoil of this last year, the Dow Jones average stands about 12,800 or about 16 times where it was in 1981. Those Americans now retiring on Social Security will unfortunately receive only very modest payments in relation to what they could have received if their political leaders had not kept them locked into a fiscally unsustainable government system...
April 14, 2008
I needed a good laugh...
[link] Movie rental house Blockbuster has made an unsolicited takeover bid for struggling electronics retailer Circuit City, a move that aims to combine the stores of both companies into "a game-changing retail concept" akin to Apple Inc.'s widely successful international retail operation...
You can just smell the synergy crackling and smoking!
And to really make a man giggle...
...Blockbuster isn't the only technology player looking to replicate the success of Apple's retail business. Last week it was reported the Microsoft is also mulling the prospect of opening a self-branded chain of retail stores to promote its Windows franchise...
"Microsoft" What a concept!
April 4, 2008
I still have my disagreements with McCain, but this is VERY cool.
And you can bet that Mr elite-white-liberal-writer here has his own retirement bucks in a 401-K, or IRA....or wishes he did. But he hates the thought of the little people getting the same "risky" opportunity.
Oh how I wish I could be a sort of Robin Hood, and take the retirement $ of every one of these lefty frauds and "invest" them in Social Security. And see how they like the returns.
He's 'McSame' on Social Security, Too
By Joe Conason
The most puzzling aspect of John McCain's political persona is his habitual attraction to George W. Bush's bad ideas. Their shared enthusiasm for invading Iraq [and our side's winning--not yours!] and then escalating the war [of course al Qaeda never did any escalating...for leftists, only America is real, only american can "escalate".] is why "McSame" will soon become the new shorthand for the Arizona Republican, replacing "maverick" -- but that isn't the only reason. He doesn't just endorse the disastrous foreign policy initiatives; he loves the failed domestic policy schemes, too.
Specifically, McCain is a longtime supporter of President Bush's Social Security privatization initiative, last seen descending into oblivion only months after its introduction in 2005. He played a cameo role in the promotion of that notion (which never became an actual plan or bill in Congress) when the White House trotted him in for one of the President's staged public "conversations" on the subject. Back then his pleas for everyone to sit down and negotiate the surrender of Social Security to Wall Street were universally ignored, yet that scarcely seems to have discouraged him. [If Wall Street is so bad, I'm sure Mr C puts his own investments in the Cuban market.]
Actually, McCain supported Social Security privatization before it was uncool, when he first ran for president eight years ago. The Wall Street Journal reported recently that a proposal to divert a portion of payroll taxes to finance private accounts, like the Bush scheme, was "a centerpiece of a McCain presidential bid in 2000." Both he and Bush have wanted to dismantle [ie: Make it actually work] Social Security for many years, in fact, and he has indicated that will be an important goal for a McCain presidency....
Notice that, even if you read the whole piece, this lefty does not make a single factual or economic argument against SS reform. It's pure politics, winning or losing, for him. He does not dare argue his case on its merits, nor does he care what's actually the best policy.
And "McSame" won't fly. Not with McCain. Not after the lefty news-media have spent 8 years eagerly pointing out his differences with Bush.
March 28, 2008
Extraordinary delegation of authority....
Here's a cool piece on how WalMart (and other big-box retailers) performed prodigies of disaster-relief during Katrina...while Federal (and in Democrat areas, local) government did poorly. The secret was pushing authority into the hands of those on the scene.
President Bush missed a big fat opportunity, when things were being changed after 9/11, to strengthen local emergency-response agencies, instead of adding more federal bureaucracy.( I think he was rendered short-sighted from spending too much time in government, despite his successes in the private sector.)
Shortly before Hurricane Katrina made landfall on the U.S. Gulf Coast on the morning of Aug. 29, 2005, the chief executive officer of Wal-Mart, Lee Scott, gathered his subordinates and ordered a memorandum sent to every single regional and store manager in the imperiled area. His words were not especially exalted, but they ought to be mounted and framed on the wall of every chain retailer -- and remembered as American business's answer to the pre-battle oratory of George S. Patton or Henry V.
"A lot of you are going to have to make decisions above your level," was Scott's message to his people. "Make the best decision that you can with the information that's available to you at the time, and above all, do the right thing."
This extraordinary delegation of authority -- essentially promising unlimited support for the decision-making of employees who were earning, in many cases, less than $100,000 a year -- saved countless lives in the ensuing chaos. ...
...This benevolent improvisation contradicts everything we have been taught about Wal-Mart by labour unions and the "small-is-beautiful" left. We are told that the company thinks of its store management as a collection of cheap, brainwash-able replacement parts; that its homogenizing culture makes it incapable of serving local communities; that a sparrow cannot fall in Wal-Mart parking lot without orders from Arkansas; that the chain puts profits over people. The actual view of the company, verifiable from its disaster-response procedures, is that you can't make profits without people living in healthy communities. And it's not alone: As Horwitz points out, other big-box companies such as Home Depot and Lowe's set aside the short-term balance sheet when Katrina hit and acted to save homes and lives, handing out millions of dollars' worth of inventory for free.
No one who is familiar with economic thought since the Second World War will be surprised at this. Scholars such as F. A. von Hayek, James Buchanan and Gordon Tullock have taught us that it is really nothing more than a terminological error to label governments "public" and corporations "private" when it is the latter that often have the strongest incentives to respond to social needs. A company that alienates a community will soon be forced to retreat from it, but the government is always there. Companies must, to survive, create economic value one way or another; government employees can increase their budgets and their personal power by destroying or wasting wealth, and most may do little else. Companies have price signals to guide their productive efforts; governments obfuscate those signals.
Aside from the public vs. private issue, Horwitz suggests, decentralized disaster relief is likely to be more timely and appropriate than the centralized kind, which explains why the U.S. Coast Guard performed so much better during the disaster than FEMA. The Coast Guard, like all marine forces, necessarily leaves a great deal of authority in the hands of individual commanders, and like Wal-Mart, it benefited during and after the hurricane from having plenty of personnel who were familiar with the Gulf Coast geography and economy.
There is no substitute for local knowledge -- an ancient lesson of which Katrina merely provided the latest reminder....
March 8, 2008
Standing up to the hoodlums...
Heartening news in the WSJ about the biggest scam in the world, the asbestos litigation quagmire. A judge and a defendant are actually standing up to those vile thieves! Charlene was involved in the litigation when I first met her, so I've learned a lot about that criminal enterprise.
....A building materials company, W.R. Grace was among the firms swept up in a second round of asbestos litigation in the late 1990s. Having chewed their way through asbestos manufacturers, trial lawyers went after companies that had only a marginal asbestos link. By blanketing these firms with an avalanche of claims they recruited, the tort bar pushed at least 30 of these second-tier players into bankruptcy.
Most companies then followed the usual asbestos bankruptcy script. They cut a deal with the plaintiffs attorneys, handing over a big sum to pay current and future claims. Federal bankruptcy judges happily went along, because most view their jobs as getting companies out of bankruptcy quickly and few want the hassle of investigating tens of thousands of individual asbestos claims.
Enter W.R. Grace, and its lead attorney, David Bernick, a veteran of the tobacco and breast-implant wars. Mr. Bernick has taken the unheard-of position that federal rules of evidence apply even in bankruptcy court. He has argued that the only way Judge Judith Fitzgerald can make a legitimate ruling on Grace's liability is for her to decide first how many claims have scientific merit. This is revolutionary stuff.
To her credit, Judge Fitzgerald has allowed Grace to investigate those claims, and present her with its results. The stakes are enormous. At the end of this process, Judge Fitzgerald will make a finding on W.R. Grace's ultimate liability. The plaintiffs claim it is as much as $6 billion, a figure that would make Grace insolvent. The company claims the money necessary to cover legitimate claims is closer to $500 million, a number that would allow it to rejoin the land of the living...
March 3, 2008
Tax the rich!
Kruse Kronicle has a nice piece, based on Congressional Budget Office data, graphing how the Bush tax cuts resulted in the rich paying more taxes. And the poor paying less.
You probably already knew that, but he's got nice charts, and it is worth saving the link to use in arguments against Bolshies who claim that Bush "cut taxes on the rich."
....The 2005 total effective federal tax rate as a percentage of the 1979 rate:
- Top Quintile = 101.2%
- Fourth Quintile = 85.0%
- Middle Quintile = 76.8%
- Second Quintile = 60.1%
- Bottom Quintile = 14.3%
As I showed in a post last month, the top 1% of taxpayers pay 40% of federal income taxes. The top 25% of taxpayers pay 86% of income taxes.
Finally, keep in mind the New York Times article two weeks a ago that pointed out that while the bottom quintile has $9,974 in income per household a year it spends $18,153. That means non-cash assistance (as well draws on savings in the case of retired or unemployed payers) nearly doubles the actual income of the bottom quintile.
Rather than populist outcry over "tax cuts for the wealthy," maybe we need to look at the whole package of consequences that come from tax policy. Is the final objective really to have all taxes paid by the top 1% of society?
February 18, 2008
At The Corner, Larry Kudlow has a long post on the economy...
A number of economists on and off Wall Street are ringing the recession bell, as they have so many times in recent years. But the Goldilocks economy has proven to be more durable and resilient than her critics appreciate.
Goldilocks dodged two potentially recessionary bullets this week. While modest gains in retail sales and industrial production suggest temporarily slower growth for the U.S. economy, these indicators are not signaling recession. In particular, Friday’s 0.1 percent production increase — which comes to 2.4 percent at an annual rate over the past 3 months and 2.3 percent over the past 12 months — removes the recession scenario. It’s slow growth, but it’s growth nonetheless.
To get a true recession reading, the production index would have to fall for 4 to 6 months in a row. That’s not happening. Despite some monthly declines over the past half year, the production reading for January was 114.2 — exactly where it was in July and September of last year. Looking inside the January index, there was a 0.3 percent increase for consumer-goods production and a 0.4 percent rise for business equipment. Both are solid numbers.
Meanwhile, the just-released January retail sales report defied the recessionistas with a better-than-expected 0.3 percent gain. Retail sales are climbing at a 2.7 percent annual rate over the past 3 months and a 3.9 percent rate over the past year.
Trade exports also continue strong, with the new December number showing a huge $144 billion gain. Out on the campaign trail, Hill-Bama mutters protectionism at every stop. But export trade has grown by nearly 50 percent — or 9 percent yearly after inflation — for the past four years. The real export sector now accounts for nearly one-third of U.S. gross domestic product, yet more proof that the global economic boom is alive and well.....
(There's more to read.) My guess is that this is about right. Just a guesstimate, of course. Just what my nose tells me. Plus the owner of the garage we use tells me that business is lousy for mechanics all over the area. So, if the economy was really bad, wouldn't people be repairing their old cars rather than buying new ones?
January 29, 2008
Competitive in the $50-a-barrel range...
...In light of this, a top priority of U.S. national security policy should be to break the oil cartel. This imperative has been apparent since the 1973 oil embargo, but nothing effective has been done. However there is now a way to break OPEC.
What is needed is for the Congress to pass a law requiring that all new cars sold in the United States be flex-fueled - able to run on any combination of alcohol or gasoline fuel. Such cars are existing technology - in fact about 24 different models of flex-fuel cars were produced by the Detroit Big Three in 2007, and they only cost about $100 more than the same car in a gasoline-only version. But, since alcohol fuel pumps (such as E85, a fuel mix that is 85 percent ethanol, 15 percent gasoline) are nearly as rare as unicorns, flex-fuel cars only command about 3 percent of the new-car market.
The reason E85 pumps are so rare is that gas station owners don't want to dedicate one of their pumps to a kind of fuel that only a few percent of the cars can use. If we had a flex-fuel requirement, however, then within three years of enactment there would be 50 million cars on the road capable of running on high-alcohol fuels. Under those conditions, E85 and M50 (a 50 percent methanol, 50 percent gasoline fuel mix; flex-fuel cars can use any alcohol, including methanol) pumps would start appearing everywhere.
But most important, this would not just be happening here. By requiring that all new cars sold in the United States be flex-fueled, we would be forcing all the foreign car manufacturers to switch their lines to flex-fuel as well, effectively making flex-fuel the international standard. So there would be hundreds of millions of cars worldwide capable of running on alcohol, forcing gasoline to compete everywhere against alcohol fuels that can be produced from numerous sources. This would effectively break the vertical monopoly that the oil cartel currently holds on the world's fuel supply and keep prices in the $50-a-barrel range, because that is where alcohol fuels become competitive.....
I'm a bit doubtful, myself. There's no mention of how much energy, perhaps from petroleum, it will take to make the alcohol. And what this might do to food prices. What's the per-barrel price of alcohol now?
January 16, 2008
Is this the biggest flip-flop since the Hitler/Stalin Pact?
(Hey Democrats, if you didn't receive the new orders, get your tooth-fillings checked.)
From the Wall St Journal...
If our Washington, D.C., readers noticed a cortege of blue suits carrying a casket in front of the Brookings Institution last week, be not mournful. You were merely watching the leading economists of the Democratic Party burying the faith once known as Rubinomics. May it rest in peace.
Rubinomics is the concept of "deficit reduction" as growth policy: Lower the federal budget deficit and, as dawn follows night, interest rates will fall and prosperity will break upon the land. Named for former Treasury Secretary Robert Rubin, and much celebrated in the 1990s, the concept was embraced as gospel by nearly all Democrats as recently as a few weeks ago. But last week it officially expired, as those same Democrats reconverted to Keynesian deficit spending in the name of "economic stimulus."
Mr. Rubin's successor at Treasury, Larry Summers, started the bidding with a $65 billion tax rebate and spending plan. Hillary Clinton saw that and raised, and now wants $40 billion in tax rebates and $70 billion in new spending for unemployment insurance, housing assistance, home heating subsidies and green technologies. Barack Obama joined the fray Sunday, proposing a $75 billion "stimulus" that would have the government send millions of Americans a check for $250, plus another $250 in bonus Social Security payments.
But wait, what about those evil Bush deficits? Only weeks ago, Democrats claimed those were the road to perdition, even if the deficit had shrunk to 1.2% of GDP last year thanks to booming revenue growth. Remember the imperative of "pay as you go" budgeting? Ah, that was all before Iraq faded as a political winner and the economy became their favorite issue for regaining the White House. Now, all of a sudden, their motto is tax cut and spend...
The maddening thing is that you won't get the slightest bit of satisfaction from chiding Dems about their sudden change of policy. They won't even understand what you are saying. Once they pick up the new line, they will think that they've been in favor of tax cuts all along, against the resistance of those "greedy" budget-balancing Republicans.
December 12, 2007
People are still buying homes
Mike Plaiss e-mails...
Thought you may enjoy these two graphs relating to the second of the �two good stories� you posted.
The first shows the Mortgage Bankers Association "Purchase Index" for the past 18 months. (MBA is the same group referenced in the article.) The second shows the same association's "Refinance Index". The source for all of the data is Bloomberg.
As you can see, people are still buying homes, and at a pace indistinguishable from the recent, pre-mortgage-crisis, past. In my mind the Refi index is just as interesting. The first thing one needs to get a refi done is a bank willing to do the refi. In other words, the bank is getting a second look at the collateral, and the creditworthiness of the borrower. If one is worried about the consumer, then the surge in refi activity is very good news. People pretty much refi for one reason only � to lower their monthly mortgage payment. A successful refinancing truly increases their wealth and helps maintain their buying power.
It should be noted that the index shows applications for a refi, not closed deals. But consumers are not stupid, and would likely not go through the trouble of completing an application unless they had good reason to think they would be successful.
December 11, 2007
Two positive stories...
(Thanks to Orrin)
Triumphs for Democracy, By MICHAEL BARONE
The world looks safer, friendlier, more hopeful than it did as we approached Christmastime last year.and from Donald Lambro, in the Washington Times...
Then, we were on the defensive, perhaps on the verge of defeat, in Iraq. The Europeans' attempts to persuade Iran to renounce nuclear weapons seemed to have failed. Hugo Chavez was using his near-dictatorial powers and the oil wealth of Venezuela to secure the election of opponents of the American "empire" in Latin America.
Today, things look different. And they suggest, to me at least, that the policies of the Bush administration, pilloried as bankrupt by the Democrats after their victory in congressional elections in November, have served American interests better than most Americans then thought....
It will probably come as a shock to most people, even to those who follow the economy, that mortgage applications rose last month as a result of declining interest rates.
In the midst of the hysterical media-fed notion that a tidal wave of subprime-loan foreclosures was going to plunge the country into a recession, the fact is that the economy is still growing and Americans are still buying homes.
The torrid pace of recent years has slackened, but homes are being sold, banks are lending money and most Americans — even those saddled with subprime mortgages — are paying their mortgages on time.
Not everybody realizes this, however. The Washington Post, in a story about the administration's mortgage-relief plan, reported last week that, "Lending, which had boomed for years, ground to a halt." That has been the myth reported ad nauseam on the nightly network news shows, and apparently it has been accepted as a God-given fact....
I kind of imagine the people at the Washington Times just relishing any chance to poke a pin in the fraudulent pomposity of the Washington Post. Thank you!
December 1, 2007
Kindles at Fahrenheit 451
Here's a different view of the Kindle...
Kindle can light up your life November 29, 2007 BY ANDY IHNATKO
So here's what Amazon went and did. Metaphorically, the company invented a humanoid robot capable of autonomous action. Every day at 4 a.m., it gets in your car and drives all over the state, buying fruit, milk, butter, eggs and other staples straight from the farm. By the time you wake up and trudge into the kitchen, there's a steaming plate of waffles waiting for you, made from scratch, and topped with fresh-picked strawberries and whipped cream.
It's one of the most awesome consumer products ever. It might even be a landmark moment in technology. ... and Amazon is promoting it as a $399 waffle maker....
Sounds like it might be cooler than I imagined. Apparently the Kindle includes unlimited free web browsing over Verizon's EVDO network! (Odd. So what do the people who are paying Verizon for data access think about this?)
If, by the way you are thinking of buying one (Or anything else from amazon.com) do click one of my links, such as the link below...So Random Jottings will get a little baksheesh!
November 5, 2007
A friend sent the link to this NYT article by N. Gregory Mankiw , and remarked: "You might want to blog this if it doesn't pick up more circulation. I haven't seen anything yet. He refutes at least 50 Krugman columns on health care in about 5 or 6 hundred words."
STATEMENT 2 Some 47 million Americans do not have health insurance.
This number from the Census Bureau is often cited as evidence that the health system is failing for many American families. Yet by masking tremendous heterogeneity in personal circumstances, the figure exaggerates the magnitude of the problem.
To start with, the 47 million includes about 10 million residents who are not American citizens. Many are illegal immigrants. Even if we had national health insurance, they would probably not be covered.
The number also fails to take full account of Medicaid, the government's health program for the poor. For instance, it counts millions of the poor who are eligible for Medicaid but have not yet applied. These individuals, who are healthier, on average, than those who are enrolled, could always apply if they ever needed significant medical care. They are uninsured in name only.
The 47 million also includes many who could buy insurance but haven't. The Census Bureau reports that 18 million of the uninsured have annual household income of more than $50,000, which puts them in the top half of the income distribution. About a quarter of the uninsured have been offered employer-provided insurance but declined coverage.
Of course, millions of Americans have trouble getting health insurance. But they number far less than 47 million, and they make up only a few percent of the population of 300 million....
Mr Mankiw, I note, is a Romney advisor. I'd call that a good sign....
October 10, 2007
Unh huh, right, yeah....
From NBC’s Athena Jones
Clinton will lay out a proposal to provide a universal 401K plan for everyone, at a speech today in Webster City, Iowa. Her staff is calling it the second-biggest policy rollout of the campaign in terms of cost and the number of people it would cover.
Under the plan, everyone would have access to a 401K and would be able to get matching funds from the government. It is part of Clinton's effort to increase retirement security by promoting savings and investment. Clinton's policy advisors will explain the plan in detail after the speech...
SO, the ordinary worker is going to put money in 401-K's. To his or her great advantage, obviously. How, may I ask, is this different from what Bush wanted to have them do with some of their Social Security money? Hmm? I'll just sit here and wait while all the 100%-fake liberals who bombarded me with 100%-fake outrage over how Bush was trying to "destroy Social Security" explain the discrepancy...
But this is a good chance to explain the difference between principled and unprincipled politics. Principled = If Hillary were elected president, and were to propose this, and if seemed like a good plan to me (I don't have any opinion yet) I would say that Republicans should support it. Or if she were to revive Bush's Social Security plan, and call it her own, I would be just as much a supporter of the plan as I was in 2005. (In the same way, Congressional Republicans supported Bill Clinton on NAFTA and Welfare Reform.)
Unprincipled = all those prosperous liberals who have their own retirement funds in IRA's or 401-K's, but who, out of pure partisan venom, did everything they could to block a Republican plan that would give that very same advantage to ordinary Americans. To the workers they claim—filthy liars that they are—to care about so much more than greedy capitalist Republicans.
October 8, 2007
"That's their money..."
...Five years ago, the Whole Foods grocery chain switched to a high-deductible plan. If an employee has a sore throat or a sprained ankle, he pays. But if he gets cancer or heart disease, his insurance covers it.
Whole Foods puts around $1,500 a year into an account for each employee. It's not charity but part of the employee's compensation. It's money Whole Foods would have otherwise spent on more-expensive insurance. Here's the good part for employees: If they don't spend the money on medical care this year, they keep it, and the company adds more next year.
It's called a health savings account, or HSA.
CEO John Mackey told me that when he went to the new system, "Our costs went way down."
Yet today, some workers have $8,000 in their accounts.
"That's their money," Mackey said. "It builds up over time because the money is compounding for them."
It will cover all sorts of future out-of-pocket expenses.
Most important, since employees control the money, their behavior changed. Whole Foods workers started asking "how much things cost," Mackey said. "They may not want to go to the emergency room if they wake up with a hangnail in the middle of the night. They may schedule an appointment now."
There was no need to ask about costs before because the insurance company seemed to pick up the tab. But that drove up costs for everyone. Now, saving money makes sense to employees because the money belongs to them.
HSA critics ask whether individual accounts will encourage people to save money at the expense of their health.
Mackey has the right response. "The premise in those kinds of questions is that people are stupid. They're not smart enough to make these decisions for themselves. It's sort of an elitist attitude....
Some of my animus towards leftists is personal and practical. If, when I was young, I had been in the position of those Whole Foods workers, I would have built up by now a really big HSA. Because I don't think I ever once went to a doctor during my 20's and hardly ever during my 30's. So my contributions would have grown, tax-free, for decades!
But HSA's have been blocked by Democrats ever since they were proposed in, I think, the late 70's. They hate them because they allow individuals to make their own decisions, instead of bureaucrats both public and private.
SO, thank you, President Bush! All conservatives owe you many debts of gratitude for things like HSA's, though most of them won't admit it. It's too late for me to get the real benefits from my HSA, but the young workers of today will be much better off when they reach my age.
AND, I spit upon the "Democrat" Party with the utmost contempt. Your socialism is worthless and evil, and you cowardly dogs don't even have the guts to admit to it, or defend it in debate.
October 6, 2007
Actually it was bright all along...
The US Labor Department said the economy added 110,000 new jobs in September, higher than the 100,000 figure predicted by economists.And rather than shedding 4,000 jobs in August as initially estimated, 89,000 new jobs were actually created...
It was just the statistics that lagged...
And haven't we heard this story a bunch of times over the last few years? And in the Reagan years? Republican President cuts taxes, bad economic stats are savored like fine wine by certain people, and then later the statistics are revised, with little fanfare? I forget the details, but there was some economist who predicted x amount of growth following Reagan's tax cuts. And he was just ridiculed. And the a couple of years later it turns out he was right on the money with his prediction, but somehow nobody noticed or nominated him for any prizes...(Thanks to Orrin)
October 1, 2007
Just some dry statistics....
Rich Lowry writes on how a strong global economy means there are a shrinking number of poor people in the world. Yes, yes, I know there are still a lot of them, and their plight can be be dire. But it isn't aid programs that are going to help them. Capitalism is the only answer. (Capitalism is not without a drawback or two, but it sure beats starvation!)
GLOBAL capitalism has long lacked for a ringing slogan like "workers of the world unite." It's never too late to find one, and a good candidate - with apologies to the international charity of the same name - might be "save the children."
The United Nations Children's Fund just announced that deaths of young children worldwide hit an all-time low, falling beneath 10 million annually. Better practices to protect against disease and to enhance nutrition - more vaccinations and mosquito nets, more breast-feeding and vitamin A drops - played a role, but the most important factor in this global good-news story is economic growth.
Tt is no coincidence that as UNICEF was reporting the drop in child mortality, the World Bank was reporting global poverty rates had fallen as part of an extraordinary worldwide economic boom. Treasury Secretary Henry Paulson calls it "far and away the strongest global economy I've seen in my business lifetime."
The global economy is growing at a 5 percent clip, higher than the 3 percent of the period from 1960 to 1980 and the 4.7 percent from 1960 to 1980. As U.S. News & World Report points out, "Gross global product is three times as big as it was in 1970 so the global economy is not only growing faster, but there's more to grow.
In a worldwide instance of trickle-down economics, the growth is diminishing the ranks of the poor. According to the World Bank, developing countries have averaged 3.9 percent growth since 2000, contributing "to rapidly falling poverty rates in all developing regions over the past few years." In 1990, 1.25 billion people lived on less than $1 a day. In 2004, less than a billion did, even though world population increased 20 percent in the interim...
September 22, 2007
THE ultimate strategic effect of the Iraq war has been to hasten the arrival of the Asian Century.
While the American government has been occupied in Mesopotamia, and our European allies continue to starve their defense programs, Asian militaries — in particular those of China, India, Japan and South Korea — have been quietly modernizing and in some cases enlarging. Asian dynamism is now military as well as economic.
The military trend that is hiding in plain sight is the loss of the Pacific Ocean as an American lake after 60 years of near-total dominance. A few years down the road, according to the security analysts at the private policy group Strategic Forecasting, Americans will not to the same extent be the prime deliverers of disaster relief in a place like the Indonesian archipelago, as we were in 2005. Our ships will share the waters (and the prestige) with new “big decks” from Australia, Japan and South Korea.
Then there is China, whose production and acquisition of submarines is now five times that of America’s. Many military analysts feel it is mounting a quantitative advantage in naval technology...
Yeah, well, the Soviets built a lot of ships and subs too, and how did that work? I'm not buying this stuff. I would change the headline to: The ultimate strategic effect of the Global War on Terror has been to hasten the arrival of the Axis of Good. I mean, how crazy is this? All the countries mentioned above except China are our friends and allies. Lefties have all been moaning about how Bush is a unilateralist cowboy, and yet here he is drawing Australia, India, Japan and South Korea into building up their navies and joining us in keeping the world free and the sea lanes open.....and are they happy? No, the NYT complains that we are no longer the only boat in the bathtub! Well, this isn't a problem.
The truth is brutally simple. To build big decks, you gotta have a LOT of shekels. To get them, you gotta swim to the top of the foaming torrent called globalization. To do that, you must become more like the United States of America. That's what globalization is. We are the pattern, we are the model, we are the best at it. There is no other way. Australia, India, Japan and South Korea are following that path, not that they have much choice.
And growth works in stages, and at any one of them countries can stall, unless they change. And the changes always consist of becoming more like nasty ol' USA. SO, the fact that China is growing fast right now does NOT mean that she has solved the problem of growth, or can continue being a commie country with partial economic freedom.
And anyway it does not matter how many subs China builds. They are useless, unless the Axis of Good loses its nerve. Why? Because China's wealth is totally dependent on trade, and we can stop her trade at will. She cannot go to war, because a handful of naval mines will close her ports.
September 7, 2007
by Dean Takahashi Mercury News [link]
I know that Shu Wong of San Jose hasn't received the $3.50 mail-in rebate for a Vastech computer networking USB hub purchased at a Fry's Electronics in May. Richard Louie of Austin, Olivia Sattaypiwat of Saratoga and Buu Duong of San Jose haven't received their rebates, either.
I know this because they told me so, and because I am staring at more than 1,300 rebate requests sent to Vastech on Bonaventura Drive in San Jose. The envelopes were tossed - unopened - into a garbage dumpster near Vastech. I have two boxes of envelopes that were thrown out without being processed. In all of my years of reporting, I have never encountered such outrageous behavior against consumers.
An employee of nearby Dominion Enterprises found the letters, along with hundreds of others addressed to Vastech, at his company's dumpster. He turned them over to his boss, Joel Schwartz, who gave them to me. All of the letters were addressed to UR-04 Rebate or some variation of the product name at the Vastech address...
(Thanks to Rand Simberg)
Of course the really big scam is that the manufacturers know that most rebates never get sent in at all. People process the low "after rebate" price, buy the product and think they got a good deal, and then lose the form or never find the time and energy to send it in.
August 29, 2007
decline and undecline...
I liked this piece, The Decline and Fall of Declinism... I've been hearing all my adult life about how America is soon to be outstripped by this or that more organized and efficient (ie: more socialist) alternative. Remember MITI? Remember�this will date me�"We will bury you"? Ha ha.
..Under the heading “The end of a U.S.-centric world?” the PostGlobal section of The Washington Post website recently declared that “U.S. influence is in steep decline.” It was just the latest verse in a growing chorus of declinist doom-saying at home and abroad.
In 2004, Pat Buchanan lamented “the decline and fall of the greatest industrial republic the world had ever seen.” In 2005, The Guardian’s Polly Toynbee concluded that Hurricane Katrina exposed “a hollow superpower.” In 2007, Pierre Hassner of the Paris-based National Foundation for Political Science declared, “It will not be the New American Century.”
And the dirge goes on....
...But the declinists were wrong yesterday. And if their record—and America’s—are any indication, they are just as wrong today.
Any discussion of U.S. power has to begin with its enormous economy. At $13.13 trillion, the U.S. economy represents 20 percent of global output. It’s growing faster than Britain’s, Australia’s, Germany’s, Japan’s, Canada’s, even faster than the vaunted European Union.
In fact, even when Europe cobbles together its 25 economies under the EU banner, it still falls short of U.S. GDP—and will fall further behind as the century wears on. Gerard Baker of the Times of London notes that the U.S. economy will be twice the size of Europe’s by 2021.
On the other side of the world, some see China’s booming economy as a threat to U.S. economic primacy. However, as Baker observes, the U.S. is adding “twice as much in absolute terms to global output” as China. The immense gap in per capita income—$44,244 in the U.S. versus $2,069 in China—adds further perspective to the picture....
All you have to realize about those China-is-the-next-superpower screeds is that these things are not linear. The techniques that will get you from per capita $500 to $2,000 are not the same as those needed to get from $10,000 to $20,000, etc. To keep growing a country must learn a new game at every stage, and each one is harder....and....less amenable to centralized control or stimulation.
There's another thing that we all should be aware of, and that leftists don't want to know about...
...While the declinists routinely remind us that the U.S. spends more on defense than the next 15 countries combined, they seldom note that the current defense budget accounts for barely four percent of GDP—a smaller percentage than the U.S. spent on defense at any time during the Cold War. In fact, defense outlays consumed as much as 10 percent of GDP in the 1950s, and 6 percent in the 1980s.
The diplomats who roam the corridors of the UN and the corporate chiefs who run the EU’s sprawling public-private conglomerates dare not say it aloud, but the American military does the dirty work to keep the global economy going—and growing. “The hidden hand of the market will never work without a hidden fist,” as Thomas Friedman observed in 1999...
Despite the crap you hear to the contrary, America provides by far the biggest and most important slice of the world's "foreign aid." Our 12 Carrier Strike Groups, and all the rest of our peerless military, are what make growth and prosperity possible for China and everybody else.
The world's economy runs on trade, to an extent far beyond that of any other time in history. In the past, foreign trade was, for most countries, just frosting on the cake. 5% or 10%. Not any more. If someone mined China's ports now, their whole economy would go "poof!" and vanish.
We donate the cost of world peace. And world peace is exactly what we have, by the standards of those past time when nations went to war with each other. That doesn't happen any more; the "wars" we have now are internal conflicts and genocides within failed states. And the involvement of the US and her Anglosphere allies is in the nature of cops breaking up gang wars. The "War on Terror" has claimed less than 4,000 American lives. [Insert boiler-plate statement yes-every-death-is-a-tragedy blah blah blah.] In a REAL WAR you can lose that many in a single DAY.
And when (rarely now) nations actually do threaten war, as India and Pakistan were doing a few years ago, we lean on them. In fact, we don't allow them to go to war. We are the grown-ups, they are the teen-agers, and we are teaching them how we expect them to behave.
August 13, 2007
Thank you, President Bush!
AP, WASHINGTON - The federal deficit this budget year is running sharply lower, driven by record revenues pouring into government coffers.
The Treasury Department reported yesterday that the government produced a deficit of $157.3 billion for the budget year that began Oct. 1. That's a substantial improvement from the red ink of $239.6 billion produced for the corresponding 10-month period last year.
The lower year-to-date deficit was the result of a record $2.12 trillion in revenues. Spending, however, was higher - $2.27 trillion, which also marked an all-time high.
The White House predicts that the deficit this year will drop to $205 billion.
But the nonpartisan Congressional Budget Office predicts that the government will produce even less red ink this year. It recently said the deficit will be "toward the lower end" of a range of $150 billion to $200 billion...
Who did this? The American people, who will always work wonders if only they are allowed to. And the big moment of the current chapter was in the year 2001, when George W Bush was first elected. A contested election, with Democrats controlling the Senate, with the economy heading south in the ruins of the Clinton dot.com bubble...well...I certainly didn't expect much of anything to happen!
And what happened? George Bush said, "I'm the President. And we need tax cuts. Congress, get busy and pass them." Right then, like the first week he was in office. And they did! The poor booby Dems were so unused to someone who believed in something that they just did what they were told. Truly I tell you, that was the peak (politically speaking) moment of my life. And there were more tax cuts to come. And they worked! And now we have one of the best economies in history. with years of steady growth , low unemployment, almost nonexistent inflation....So good that the slime-animals of our press have to stay up late thinking of ways to talk down our prosperity. "The Dow hit new highs today, but some analysts expressed concern that weak demand for pillow feathers means a housing slow-down is on the horizon."
July 12, 2007
Couldn't happen to a nicer bunch...
One of the maddening, infuriating things about contemporary life is that in most ways this country is majority conservative, and leaning towards majority Republican. And yet liberals sit smugly in many legacy enclaves and act as if their ideas were not only the majority view, but the only sensible and "normal" and "modern" view---so much so that they need never engage in principled debate. (Which they would lose.)
I live in one of those enclaves, which adds to my ire. And another enclave is the "mainstream media," (MSM) which is almost entirely liberal and Democrat, and usually covers conservative or "Red State" or Christian matters like anthropologists visiting the Cannibal Isles. (The emblem of this was the decision at the NYT a couple of years ago to assign a reporter—one reporter—to cover all conservative matters. He was of course a liberal.)
The New York Times is the central spider of the MSM, in a very literal way, since all the local papers and TV news stations key off of the NYT, which gets to frame the stories and often decides what is "news" and what is not. When you watch the TV news (except perhaps Fox) you might imagine that all those glossy people study what is happening in the world and decide what is important. Nuh uh. Mostly the decisions are made by the NYT, and the WaPo and the AP. And none of them will never DEBATE, they just take it as read that they are at the the center of opinion, and have the intrinsic right to decide what we will know.
So it is with the utmost pleasure and pure delight that I read in Michelle Malkin that the NYT's credit rating has been lowered—yet again—and is barely above the level of junk bonds!!! It couldn't happen to a more deserving bunch of pompous frauds. Go boys, lead your whole vile treasonous industry down into the bone yard!
S&P Lowers New York Times Ratings To BBB/A-3; Off Watch 2007-07-11 12:18 (New York)
On July 11, 2007, Standard & Poor’s Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on The New York Times Co., to ‘BBB’ from ‘BBB+’. The short-term corporate credit and commercial paper ratings on the company were also lowered, to ‘A-3′ from ‘A-2′. All ratings were removed from CreditWatch, where they were placed with negative implications on March 23, 2007, following the company’s announced plan to increase its dividend to shareholders. The rating outlook is negative....
Among the many reasons the NYT gang deserves to suffer is that the NYT is a business. With shareholders. The editors of the NYT have decided that their ideology is more important than anything else, including profits, and is worth excluding at least 60% of the population from their potential readership. But they don't OWN the paper! They have a duty, a responsibility to the owners to try to make a profit. They are in effect stealing from their shareholders.
July 5, 2007
From a NYT article on airline delays. Very bad. Just stay home.
...As anyone who has flown recently can probably tell you, delays are getting worse this year. The on-time performance of airlines has reached an all-time low, but even the official numbers do not begin to capture the severity of the problem.
That is because these statistics track how late airplanes are, not how late passengers are. The longest delays — those resulting from missed connections and canceled flights — involve sitting around for hours or even days in airports and hotels and do not officially get counted. Researchers and consumer advocates have taken notice and urged more accurate reporting....
..Moreover, in addition to crowded flights, the usual disruptive summer thunderstorms and an overtaxed air traffic control system, travelers could encounter some very grumpy airline employees; after taking big pay cuts and watching airline executives reap some big bonuses, many workers are fed up.
Some other airline delay statistics, meanwhile, are getting a fresh look, as well. After thousands of passengers were stranded for hours on tarmacs in New York and Texas this past winter, consumer advocates began complaining that Transportation Department data does not accurately track such meltdowns.
If a flight taxies out, sits for hours, and then taxies back in and is canceled, the delay is not recorded. Likewise, flights diverted to cities other than their destination are not figured into delay statistics...
Another factor not mentioned is that software now makes it possible to make schedules that use planes much more efficiently. That is, with planes spending less time on the ground. This helps make flying cheaper, but also makes the whole system more "brittle," because there are fewer planes sitting around airports that can be pressed into service if one breaks down.
May 30, 2007
...to the rubbish one hears about the rich getting richer, etc. (That can happen too, but that story is never accompanied by the fact that it is usually a correlative of strong economic growth. And that those happy places with less income disparity usually suffer from economic stagnation.)
The Rise Of the Bottom Fifth, How to Build on the Gains Of Welfare Reform
By Ron Haskins, WaPo
Imagine a line composed of every household with children in the United States, arranged from lowest to highest income. Now, divide the line into five equal parts. Which of the groups do you think enjoyed big increases in income since 1991? If you read the papers, you probably would assume that the bottom fifth did the worst. After all, income inequality in America is increasing, right?
Wrong. According to a Congressional Budget Office (CBO) study released this month, the bottom fifth of families with children, whose average income in 2005 was $16,800, enjoyed a larger percentage increase in income from 1991 to 2005 than all other groups except the top fifth. Despite the recession of 2001, the bottom fifth had a 35 percent increase in income (adjusted for inflation), compared with around 20 percent for the second, third and fourth fifths. (The top fifth had about a 50 percent increase.)
Even more impressive, the CBO found that households in the bottom fifth increased their incomes so much because they worked longer and earned more money in 2005 than in 1991 -- not because they received higher welfare payments. In fact, their earnings increased more in percentage terms than incomes of any of the other groups: The bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups...(Thanks to Jimmy).
I don't mean to wave away the difficulties of those people in the bottom fifth. Their lives are very hard. But unlike any time in history before the 20th Century, the poor in places like America are not doomed to poverty. Actually, as has been said before, if you do three things, you won't be poor. Period. Those are: finish high school, delay having children until age 25, and be willing to work.
( Also, one should keep in mind that the statistics are deceiving, since we have a constant influx of new immigrants, and new young people, many of whom start out poor and gradually move up. The statistics might show the "bottom fifth" stuck where it was decades ago, but many of the individuals will have risen into another level.)
As a Christian, I must care about the poor. (And I do, more than most people seem to, although I'm not sure caring for them as a category counts!) But I have to say that I feel somewhat out of step with Christian thinking. To me it looks like we are "fighting the last war." We know how to defeat poverty, and, globally, poverty has been steadily decreasing. There is a bigger problem that's hardly on the radar.
I think that prosperity is killing far more people than poverty, and is creating far worse problems. If you think this is a kooky thing to say, you haven't looked at the demography of Europe, or Japan, or Canada. Or the church-attendance statistics. Prosperity has created two evil "Siamese-twins, the Culture of Death, and an insidious nihilism that seeps into everything. (And no, I am not saying we would be better off poor. Prosperity is our fate, and the only path we can take is straight on through.)
I could go on about all this, but it's time for me to get to work....
April 24, 2007
Good good good....probably won't happen
This is not only a stunningly good idea, but a fascinating psychological test. I bet you could show this to 100 Bush-haters, and not one of them would say, "Hmmm, maybe I'm a bit off about this guy." And you could show it to a hundred NRO-type conservatives, and none would say, "Hmm. This is a profoundly conservative idea." When it comes to Bush, minds are closed!
[IHT]....It was here in Kansas City, at the 2005 food aid conference, that the Bush administration pushed for a fundamental change that would have diminished profits to domestic agribusiness and shipping companies. It proposed allowing a quarter of the Food for Peace budget to be used to buy food in poor countries near hunger crises, rather than buying only U.S.-grown food that had to be shipped across oceans.
And Secretary of Agriculture Mike Johanns spoke at the conference on Wednesday to make the administration's case for the same idea, contending that such a policy would speed delivery, improve efficiency and save many lives.
Congress in each of the past two years killed the proposal, which was opposed by agribusiness and shipping interests who stood to lose business, even as it won support from liberal Democrats like Representatives Barney Frank of Massachusetts and Earl Blumenauer of Oregon....
Of course a "conservative idea" that appeals to Barney Frank sounds a wee bit paradoxical. That's because the traditional conservative position would be that we should not be giving charity to poor countries or people at all, because it will weaken them and make them dependent. Which is true, and it's likely that one of the reasons Africa needs so much food aid is because it gets so much. [Good read: For God's Sake, Please Stop the Aid! by Kenyan economist James Shikwati.]
BUT, we are not going to stop giving food aid as long as there are horrible famines in the world. It ain't gonna happen. So the next best thing is to buy food in Uganda for the famine in Kenya. That makes agriculture in Uganda more profitable, keeps prices up, which leads to investments that make future famines less likely. It rewards productive farmers, rather than penalizing them by dumping cheap food on the market.
By the way, there is no place in the world that suffers famines because it is overpopulated. That is a lie spread by the Culture of Death. The world has enough arable land to feed far more than its present population. If I had more time it would be fun to find the average output of farmland in the US, and then find out the total acreage of farmland on the planet, and extrapolate how many people the world could feed, at present levels of farming technology. I bet it would be surprisingly large.
As for my own feelings about Bush, I just want to scream because he isn't doing more! Especially, asking the American people to realize that we are in an information war, and that they should be making sacrifices in wartime—not in this case material sacrifices, but the psychological sacrifice of swimming against the current of lefty defeatism, and against the torrent of falsehoods that the news media broadcast. BUT, on the other hand, there is hardly a month goes by that I don't see some story like this one, of transformative things being tried by this administration. Ideas that, if they take hold, will bear fruit over generations.
Which is the real reason that brain-dead lefties and Quakers hate Bush. The tectonic plates are shifting under their feet, and Bush is the symbol of change. They have no beliefs that will give them traction when the floor starts tilting, so they turn their angry bewilderment on a symbol...
April 16, 2007
Results of experiment are in...
Case Closed: Tax cuts mean growth. By Fred Thompson
...but there is reason to smile this tax season. The results of the experiment that began when Congress passed a series of tax-rate cuts in 2001 and 2003 are in. Supporters of those cuts said they would stimulate the economy. Opponents predicted ever-increasing budget deficits and national bankruptcy unless tax rates were increased, especially on the wealthy.
In fact, Treasury statistics show that tax revenues have soared and the budget deficit has been shrinking faster than even the optimists projected. Since the first tax cuts were passed, when I was in the Senate, the budget deficit has been cut in half.
Remarkably, this has happened despite the financial trauma of 9/11 and the cost of the War on Terror. The deficit, compared to the entire economy, is well below the average for the last 35 years and, at this rate, the budget will be in surplus by 2010.
Perhaps the most fascinating thing about this success story is where the increased revenues are coming from. Critics claimed that across-the-board tax cuts were some sort of gift to the rich but, on the contrary, the wealthy are paying a greater percentage of the national bill than ever before.
The richest 1% of Americans now pays 35% of all income taxes. The top 10% pay more taxes than the bottom 60%....
Tax cuts result in the rich paying a bigger share. And the maddening thing is that it's impossible to 'tell" this to most people. They just can't hear it. Their little brains reject the alien idea.
It was the same thing with the Reagan tax cuts. The percentage of taxes paid by those in the upper brackets increased. But my efforts to communicate this fact to others was hopeless...
April 7, 2007
Just keeping it for when I need it...
PowerLine had this post on how the "Bush Economy" is doing, and I'm quoting it here partly so I'll have the figures at hand when needed. To use in combat, in the un-ending and almost-hopeless fight against LIES.
The Department of Labor has just announced this month's job figures, and it's more good news. March saw the creation of 180,000 new jobs. This means that since August 2003, more than 7.8 million jobs have been created, with nearly 2 million jobs created over the last 12 months. The economy has now added jobs for 43 straight months, and the unemployment rate remains at 4.4 percent, which is low by historical standards.
The news is also good on the pay and productivity fronts. Specifically:
Real after-tax income per person has risen by 10 percent since President Bush took office.
Real wages rose 1.8 percent over the past 12 months through February, which is substantially faster than the average rate of the late 1990s economy.
The economy has now experienced more than five years of uninterrupted growth, averaging 3.0 Percent a year since 2001.
Since the first quarter of 2001, productivity growth has averaged 2.8 percent, which is well above average productivity growth in the 1990s, 1980s, and 1970s.
What seems to me important here is that this is not just about material prosperity, but about things of the spirit. For instance, Welfare Reform has resulted in millions of people escaping welfare-dependency, and becoming able to hold jobs and provide for themselves. Quite possibly many of them have not actually improved their material condition much, but their psychological situation is vastly different. And this will tend to help their children and grandchildren as well. I could not happen in France.
BUT, it wouldn't work if America didn't have a strong economy that can provide lots of jobs. Basically we have enjoyed strong growth since the Reagan tax cuts. With what seems like a much-needed booster shot from the Bush tax cuts.
April 5, 2007
Insanity is when you make the same mistake over and over and.....
Surprise, surprise. Yet another pension-fund-gonna-go-bust story. It's a bore; there are so many of them. States, countries, organizations, companies of all sorts and colors.
The INSANITY is that it just goes on and on. Decade after decade. Although many individual organizations have learned better, we don't learn as a a society.
This Jersey thing is a "defined benefit" plan. That is, you define how much the retirement benefits will be, and then try to keep putting enough money in to make that happen. (Sort of like making a New Years resolution about what your weight will be next Christmas, and promising to eat so as to make that happen.) The alternative is a "defined contribution" plan, which says "We will take X dollars each month and put it in your 401-K, and you will have whatever retirement benefits your investments yield."
In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero.
The phantom contribution is just one indication that New Jersey has been diverting billions of dollars from its pension fund for state and local workers into other government purposes over the last 15 years, using a variety of unorthodox transactions authorized by the Legislature and by governors from both political parties.
The state has long acknowledged that it has been putting less money into the pension fund than it should. But an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.
The discrepancies raise questions about how much money is really in the New Jersey pension fund, which industry statistics show to be the ninth largest in the nation’s public sector, with reported assets of $79 billion.
State officials say the fund is in dire shape, with a serious deficit. It has enough to pay retirees for several years, but without big contributions, paid for by cuts elsewhere in the state’s programs, higher taxes or another source, the fund could soon be caught in a downward spiral that could devastate the state’s fiscal health. Under its Constitution, New Jersey cannot reduce earned pension benefits....(Link. Thanks to Orrin)
Just read the story, and THINK a bit. (I'm talking to YOU, Mr Democrat loyalist.)
The big lesson of the 20th Century (besides that one about Revolutions that are going to help the Workers and Peasants) is that defined-benefit plans don't work. But the madness goes on and on. And the biggest insane-rip-off of all is called Social Security. And when President Bush proposed a mere small start at ending the insanity, every brain-dead lefty in the country opposed him, and conservatives gave him only tepid support. (And then they have the nerve to say that Bush is betraying conservatism! When the sums he was trying to get out of the hands of government, and into the control of ordinary people make all our recent budget deficits look like pocket change.)
February 7, 2007
compassion for the poor.
You guys probably already know this, but I will post it just to feel smug while thinking about the millions of economic illiterates who claimed (and some still do) that the Bush deficits were going to sink us nose-deep in quicksand. Yeah, right. Just like the Reagan deficits did.
From OpinionJournal, Fiscal Revelation, The federal budget deficit just keeps shrinking...
...The news Mr. Conrad won't broadcast is that over the past three years the federal deficit has shrunk by 58%. The Congressional Budget Office--not the White House--is estimating that the current year's deficit (for fiscal 2007) will fall to $172 billion....
....We don't put much stock in future budget forecasts because they depend on so many variables. But even CBO predicts the deficit should remain near or below 1% of GDP for the rest of the Bush Presidency. That's well below the 40-year average of 2.4% of GDP.
This also means that the federal debt burden will continue to fall. Alarmists point to the $1.4 trillion rise in total federal debt from 2003-2006, but that amount is dwarfed by the $14 trillion in new household wealth created over the same period. And for all the international scolding of an allegedly profligate America, U.S. federal debt as a share of GDP is falling again. At 37% in 2006 and heading south, the U.S. figure compares to 52% in Germany, 43% in France, and 79% in Japan. Once again rising total "debt" is a scare word used to justify higher taxes....
As I've explained before, adding debt is good, if you are investing in something that will increase your wealth. Primarily by cutting taxes, which puts money in the hands of those best motivated to make the economy grow---us ordinary Americans. And keeps it out of the hands of those who want to squander it unproductively---politicians. This helps the poor, by creating jobs. The number of jobs has been growing strongly for several years now, although the press does not mention it.
The really painful fact is that the best thing we can do for the poor is give tax cuts to the rich. George W Bush has consistently shown compassion for the poor. The Democrat frauds who want to raise taxes hate the poor. (Or rather, they love them so much they want to keep them the way they are forever.)
January 6, 2007
C'mon Nancy, repeal those "Tax Cuts for the Rich"
Intl Herald Tribune: U.S. businesses added many more workers to their payrolls last month than economists expected, and workers' pay rose at a healthy clip — further evidence of strength in the job market despite a slowdown in the economy.
The U.S. Labor Department reported Friday that nonfarm employment grew by a seasonally adjusted 167,000 jobs in December, more than enough to absorb natural growth in the number of workers. The figures for October and November were revised upward as well. Wall Street had been expecting a gain of only 100,000 jobs in December.
The U.S. unemployment rate remained unchanged at 4.5 percent. Those who were unemployed in December were out of work for a shorter period of time, on average. And the percentage of the total U.S. population holding jobs rose to 63.4 percent, the highest level in more than five years....
....Tightness in the job market has been driving wages upward, economists say. With unemployment so low — the 4.4 percent reading in October was the lowest in five years — employers have found themselves having to increase pay a bit to fill vacancies
Compared with the December 2005, average hourly wages were up 4.2 percent, the government reported. The figure for November was revised up slightly to the same rate; they are the highest readings since February 2001....(Thanks to Orrin)
The poor are getting poorer, the rich are buying poor babies and sucking out their blood....there's no time to waste implementing the superior economic policies of the EU!
December 18, 2006
a moonbat among moonbats...
An economist friend has sent me some thoughts on Pinochet, responding to the comment thread here. I'm keenly grateful—thanks!
First of all Greg Palast is a moonbat among moonbats. He used to write for the UK’s Guardian and was a lefty even by their standards. His most recent claim to fame is arguing that Kerry won Ohio because if you count 100% of the Ohio ballots that were disallowed as votes for Kerry, he would have squeaked out a win. ‘Nuf said.
His comments on Pinochet are a combination of omissions, selective dates for comparisons and various other distortions. Notice that one economic term Palast never uses is “inflation.” When Pinochet took power from Allende in 1973 inflation was between 120 and 200 percent per year. The economy was in collapse. He cites the low unemployment rate of 4.3% in 1973 when Pinochet came in compared with 22% 10 years later. First of all it is easy to have low unemployment when everyone works for the government, but beyond that, his comparison date, 1983, was chosen to correspond to an international recession/debt crisis (not unlike the Asian crisis 10 years ago) in which Chile was entangled. No doubt they were excessively vulnerable (too much domestic debt denominated in foreign currencies) and they had to do things differently in the future. But they learned and did do a better job of controlling international debt. As a prime example, they came through that late nineties debt crisis which impacted Brazil and especially nailed Argentina in good shape.
The closest analogy I can think of to a Pinochet following an Allende in Chile was Reagan following Carter in the US. And we have the advantage of an established institution, the Federal Reserve Bank that, if properly run, can do much of the heavy lifting. But even then it was a struggle getting Carter’s 18% inflation down to the middle single digits in 10 years. As you may recall things were pretty ugly here in the early 80s. So imagine what it was like to tackle inflation of 150% plus the rest of a screwed up list of socialist initiatives. Pinochet didn’t get it all right all the time and he certainly broke quite a few eggs to make his omelet, but as Frank Perdue used to say (to mix a metaphor) “it takes a tough man to make a tender chicken.”...
...Meanwhile, back on the chicken farm, Pinochet instituted a land reform package that was enormously successful. Allende had wanted to use the land confiscated earlier from large landowners (about one-half Chile’s arable land) to start a Soviet style large state-farm system. Pinochet used the land to establish family farms and solidify property rights. To me property rights are the bedrock of a market economy.A Soviet style large state-farm system! Oh yeah, that's "compassion for the poor" all right...and I well remember the bloodbath it took for Reagan to wring-out inflation. And Thatcher too. You could probably cherry-pick statistics from back then and "prove" that they were disasterous leaders. But in fact the result was superb economic growth, and we are still cruising on the momentum that Reagan started.
It’s probably true he moved too fast on banking reform and that led to some of the hot money inflows that contributed to the vulnerability in 1983. But, as I said, he didn’t always get it right the first time, but banking reform had to be tackled sooner or later for Chile to enter the global economy. And indeed it has entered.Like all dictators Pinochet overstayed his “welcome” and was either kicked out or persuaded to resign (I don’t recall the details). Nevertheless, the subsequent democratically elected governments seem to have kept most of his reforms. If there is a more robust, freer and faster growing country in SA I don’t know what it is. As for the Palast claim that poverty doubled under Pinochet I find that hard to believe. Maybe they did what welfare agencies do in this country when they begin to run low on poor people, just change the definition and create some more of them.
Finally, there has been a debate for years over whether you can have economic freedom without political freedom (think Singapore). Milton Friedman thought it was economic freedom that was the prerequisite and that political freedom would eventually follow. Seems to have worked in Chile. It also seems to be working in Eastern Europe and much of the Former Soviet Union. Palast should have been with me in the mid-nineties when I was in Eastern Europe accompanying a friend working on a library project. The number of books on scientific socialism that were being swept out the doors was amazing. They were stacked high in corridors awaiting disposal – not for doctrinal reasons, but for disinterest and irrelevance.
Greg! It’s never worked. It will never work
December 11, 2006
Good guys in the machine.....
I really liked this post by Glenn Reynolds...
A GUY WHO WORKS AT PFIZER wrote me about my book -- nothing really relevant here -- but in my reply to him I wrote:
BTW, we love Pfizer in my house because your exotic anti-arrhythmic drug Tikosyn has changed my wife's life. It's genuinely a miracle drug for her.He emailed back:
I will pass your thanks along to the guys in the lab. You have no idea how much this kind of message matters to them --and to all of us. We KNOW there's a pony in there somewhere but some days it's not easy to remember that.
It's kind of sad that such a small email means so much, but I suppose that these guys get a lot more criticism than praise, despite the miracles they produce. But it occurs to me that -- while so-called "Big Pharma" may not be perfect -- drug companies have done a lot more to make my life better than their critics have. Maybe someone should point that out more often.
UPDATE: Related thoughts from TigerHawk.
How sick I get of leftist hate-mongering, such as the ritualistic portrayal of big oil or pharmaceutical or defense companies as "greedy" and evil and corrupt. That stuff is just stupid shit, and the people who come out with such blather are living in lies. (It is of course possible to make reasoned criticisms, with evidence and logic. But those are few and far between on the Rive Gauche.)
Those companies are all just collections of people, who by and large are trying to do a good job and leave the world a better place. Their profits, averaged over time, are reasonable, and comparable to those of, say, hippie save-the-earth-and-pat-ourselves-on-the-back companies like Ben and Jerry's or your local organic-food supermarket. (Actually, the whole idea of "profits" as the left sees them is a delusion--Peter Drucker explained this long ago. Read and learn.)
October 9, 2006
I always feel a bit redundant, posting something that Glenn Reynolds has posted. But this is too peasant to pass up. From WSJ:
The Labor Department released its September jobs report on Friday, and some wags are calling it the "whoops" report. The "whoops" is a reference to the upward revision of 810,000 previously undetected jobs that Labor now says were created in the U.S. economy in the 12 months through March 2006.
So instead of 5.8 million new jobs over the past three years, the U.S. economy has created 6.6 million. That's a lot more than a rounding error, more than the number of workers in the entire state of New Hampshire. What's going on here?
Our hypothesis has been that, due to the changing nature of the U.S. economy, the Labor Department's business establishment survey has been undercounting job creation from small businesses and self-employed entrepreneurs. That job growth has been better captured in Labor's companion household survey, which reported 271,000 new jobs in September after 250,000 new jobs in August, and a very healthy total of 2.54 million new jobs in the past year...
...Most of the media has ignored all this and instead focused on the disappointing 51,000 "new jobs" number from the establishment survey for September. But even in that survey, the jobs number for August was revised upward by 62,000 and the U.S. jobs machine continues to roll out an average of about 150,000 additional hires each month. Even the loss of residential construction jobs in September, due to the housing market slowdown, was nearly matched by payroll gains in commercial construction.
This boom in employment started in August of 2003, roughly coincident with the economy's growth acceleration in the wake of the Bush Administration's 2003 tax cuts on dividends, capital gains and in the top marginal income rate on the highest earners. Yet on the same day that the Labor Department discovered 810,000 new jobs, Nancy Pelosi promised that if she becomes Madam Speaker next year, within 100 hours of taking the gavel the House will vote to repeal those tax cuts and raise the minimum wage....
If you love the poor, vote Democrat. They promise to preserve the poor, as a national resource.
September 2, 2006
Mike Plaiss sent a link to this article, about emigration from Germany...
..."People say things aren't getting better in Germany, and nothing's going to change any time soon,'' said historian Simone Eick, director of the German Emigration Center in the northern port city of Bremerhaven. Indeed, "some indicators suggest that this may be the start of mass emigration.''
That's reflected by the 630 postings recorded since Aug. 10 on an Internet forum on emigration hosted by Germany's Spiegel magazine. Germany doesn't have much of a future, a 40 year-old German teacher who moved to France said Aug. 26 in a typical posting. The teacher, writing under the alias "Kritischer Leser,'' meaning Critical Reader, said he's working fewer hours and making more money than his sister, a doctor in Germany...
...Other German expatriates cite what they say is the over-regimentation of the labor force. "Life in Germany is totally over-regulated,'' said Christian Kaestner, 38, an attorney who moved from Munich to Cape Town, South Africa, in 1997. "There are hardly any freedoms left, and you keep bumping into regulations and prohibitions.''...
I would agree that "Germany doesn't have much of a future..." Partly because the very people who are likely to demand change are the ones who leave. It's sort of like the way a pot of boiling water stays at 212°. Because every time a molecule gets hotter than that, it turns to gas and emigrates!
This is also a good example of what Tom Friedman pointed out a few years ago, in The Lexis and the Olive Tree, that with globalization countries are becoming like US states have long been. That is, they don't have much freedom to pursue bad economic policies, because it is too easy for money and capital to flee elsewhere, and because bond ratings react very quickly. You can still do it, but you can't insulate yourself from punishment as countries once did.
David R. Henderson takes apart two articles (WaPo, NYT) whose numbers were deliberately selected and crafted to give a false impression of the state of the US economy, to help liberals retain their hate-America worldview against the cold winds of reality. In other words, lying with statistics...
...The basic message Greenhouse and Leonhardt deliver is that "wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's." That is literally correct, according to the federal government's measures. But it's also misleading, for two main reasons, in order of importance.
First, as marginal tax rates have increased for most people except the highest-income people, due mainly to rising Medicare and Social Security tax rates over the last 40 years, employers have paid a higher and higher percent of compensation in the form of untaxed benefits. So a more-relevant measure is not wages and salaries but total employee compensation. ...
- - - - - - - -
...The Washington Post's "Devaluing Labor" by Harold Meyerson, credulously quotes the New York Times piece to buttress his case. And what is Meyerson's case? He hearkens back an America from 1947 to 1973 when "More Americans bought homes and new cars and sent their kids to college than ever before" and writes, "That America is as dead as a dodo." He doesn't present data to make his case, which is understandable because the America of today is even in better economic shape than the America of his golden era. Let's take his own criteria -- home ownership, car ownership, and the percent of the population with college degrees. In focusing on these data, I'm assuming that Meyerson cares about whether Americans own homes, own cars, and have college degrees, not whether they bought houses, bought cars, and went to college last year..
Take home ownership. In the first quarter of 1965, the first date I could find quickly, 62.9 percent of American households owned their homes. That was during Meyerson's golden era. In the second quarter of this year, the "dead middle-class era," it was 68.7 percent, an all-time high. Cars? What's relevant, as with homeownership, is the percent of the population that owns cars. And this has boomed. In 1970, presumably near the peak of Meyerson's golden era, there were 108.4 million vehicles registered in the United States; by 2003, this had soared to 231.4 million, an increase of 113.5 percent, while the population had risen by only 42.4 percent.....(Thaks to Orrin)
It is to be hoped that lefties will believe the poppycock in the two articles, and base their election plans on it. How's this for a catchy slogan: "Worst economy since Herbert Hoover!"
...So what did happen to corporate profits? They rose, from 7.8 percent of GDP to 12.1 percent of GDP. That is a large increase, and percentage-wise it's huge. So why didn't Greenhouse and Leonhardt report this number? I think it's because they didn't want their readers thinking that only 12 cents out of every GDP dollar went to profits...
There's a much-cherished illusion among leftists and the ignorant that big business rakes in huge profits while the workers get crumbs. If you know anything at all about business you know this is twaddle. For most businesses, employee compensation is by far the biggest cost.
August 11, 2006
Off the cliff...
Mike Plaiss sent a link to a good Bloomberg editorial, If a Deficit Falls in the Forest, Do You Hear It?, by Amity Shales...
...This year, the new report says, the deficit will be $260 billion, or $111 billion less than the CBO estimated in March. For 2006, the government deficit will be 2 percent of gross domestic product, down from the old baseline prediction for 2006 of 2.6 percent. On Aug. 17, when the more extensive annual Update of the Budget and Economic Outlook appears, that 2 percent figure is likely to show up more definitively. But neither the budgeteers' news nor the prospect of a confirmation of it is generating much discussion.
This is surprising. The Economic Report of the President shows the federal deficit for 2004 was 3.6 percent. A narrowing of more than 1 1/2 percentage points in such a short time is itself a story.
The U.S. deficit is worth comparing, for starters, with the data for European nations. In the Maastricht Treaty of 1992, European leaders set a deficit goal of 3 percent of GDP. EU member countries have had trouble meeting that target since...
Indeed, they have had trouble, and will continue to do so. And the people who claim that Bush's deficits are sending us over a cliff will continue to ignore this. But more importantly, figures like deficits are only meaningful in the context of the economy as a whole. (It's insulting to explain this in baby-talk, but there may be liberals in the audience.) If my debts are increasing, but my assets are growing even more rapidly, I'm probably in good shape, as long as I can service the debt. (And if my assets are increasing because of the investments for which I incurred that debt, I'm probably making some smart moves!)
On the other hand, if my assets are not growing, if my income is not increasing, but my debts are increasing, I may be in bad shape!
Situation one is USA. Situation two is EU. Who goes off cliff?
July 9, 2006
A disproportionate share of income taxes...
PowerLine has a lot of fun with this NYT article, Surprising Jump in Tax Revenues Is Curbing Deficit, which tries to diminish any foolish tendency people might have to think that that title might be good news.
One thing that caught my eye:
...One reason for the increased volatility may be that, contrary to a popular assumption, a disproportionate share of income taxes is paid by wealthy households, and their incomes are based much more on the swings of the stock market than on wages and salaries. About one-third of all income taxes are paid by households in the top 1 percent of income earners, who make more than about $300,000 a year. Because those households also earn the overwhelming share of taxable investment income and executive bonuses, both their incomes and their tax liabilities swing sharply in bull and bear markets...[My emphasis].
In simple terms: If you cut tax rates, the rich pay more of the taxes. You might define "liberal" as someone whose immune system rejects that fact like an alien infection. I remember trying to tell this to a squashy liberal after Reagan's tax cuts, more than 20 years ago. Without success. I bet the dear girl still thinks the rich are escaping their "fair share," and are paying less and less.
And statistics like this are something one often hears from Rush Limbaugh. To which liberals have no (logical) reply. When you hear that Rush is a "hatemonger," this kind of stuff is what they are really complaining about.
May 28, 2006
One of the many loathsome aspects of Hollywood is its eagerness to portray white male businessmen as crooks and killers. And I've long suspected that this is not only trendy leftism, but is also a reflection of the sort of people you encounter if you are in the movie business. They are just telling it like it is, to them...Here's some evidence:
NYT: LOS ANGELES, May 21 — Three months after the indictment of Anthony Pellicano, the private detective who prosecutors say routinely wiretapped enemies of the rich and famous, a fraternity of high-priced lawyers who do Hollywood's business from glass towers in Century City are waking to a grim truth: the government believes they are the problem.
This town has been increasingly consumed by the spectacle of a prosecution that has touched dozens of show business figures since it began to unfold with Mr. Pellicano's indictment in February. So far, an unlikely sheriff — a 43-year-old prosecutor without a single large-scale case under his belt — has studio chiefs, agents, producers and movie stars all waiting to see if they will join those who face criminal charges, be called as witnesses or merely have their ugliest personal and business secrets revealed in court and reported in the newspapers.
But it is only now becoming clear that powerful businesspeople and stars are just collateral damage in a hunt for the real target: what government lawyers see as corruption in a legal system that is suddenly being policed after decades of neglect....
....While some Hollywood people joke that all the good criminal defense lawyers are taken, some top Los Angeles lawyers say that the best ones were avoiding taking clients now, betting that more indictments are coming and will land even bigger fish.
Any further indictments are almost certain to take aim at the lawyers — something Mr. Saunders signaled after announcing charges against Mr. Christensen. The lead partner of one of Century City's biggest law firms, Mr. Christensen, who pleaded not guilty to wiretapping and conspiracy, was caught on tape discussing with Mr. Pellicano wiretapped recordings the private detective had made of Mr. Christensen's legal adversaries talking about their strategy and other sensitive subjects. "No attorney should stoop to such levels to gain a tactical advantage," Mr. Saunders said at the time....
....Pellicano did work directly with one president: during Bill Clinton's first presidential campaign Pellicano was hired, reportedly by Hillary Clinton, to discredit Gennifer Flowers, the woman who alleged that she had maintained a 12-year affair with the candidate. Six years later, with Clinton into his second term, the White House, according to the New York Post, hired Pellicano, considered a respected forensic audio specialist, to look into Monica Lewinsky's background....
May 26, 2006
Should have 'fessed up long ago...
From USA Today:
....Mounting research shows employees are cautiously optimistic as salary freezes thaw and companies play tug-of-war over skilled job candidates.
Workers reported high confidence in their job security, with more than 80% predicting little or no chance they could lose their jobs in the coming year, according to a May survey of 1,000 full-time employees by Philadelphia-based Right Management.
That's a big jump from six months ago, when nearly a quarter of employees said they might leave their jobs....
Leftist obfuscators have been amazingly successful in covering up the superb condition of our economy, and the success of the Bush tax cuts. BUT, reality creeps in, and the hilarious thing is that their holding back the truth means that, for many people, the good news will be new and fresh just in time for the 2006 elections!
If they had been honest, the strong economy would be old news by now...
May 19, 2006
Sweet good news...
Charlene, of course, caught this one:
FoxNews: A federal grand jury has indicted a top class-action law firm in a scheme that paid more than $11 million in illegal kickbacks to get people to take part in shareholder lawsuits.
The charges follow years of investigation into the way New York-based Milberg Weiss, Bershad & Schulman conducts shareholder lawsuits against major corporations.
Click here to view the indictment (FindLaw PDF).
Lawsuits by the firm, the lead plaintiff in more than half the federal shareholder suits settled from 1997 to 2004, generated hundreds of millions of dollars in attorneys' fees, the indictment said.
"The conduct alleged in the indictment is particularly troubling because it represents a pattern of deception that spans 2 1/2 decades," said U.S. Attorney Debra Wong Yang....
Take their cars and houses, and send 'em up the river....
May 16, 2006
Goals met, bonuses paid...
I saw this in the NYT a few weeks ago:
Raytheon directors punished the chief executive, William H. Swanson, by taking away almost $1 million from his 2006 compensation yesterday because he failed to give credit for material that was in a management book he wrote...
OK, I guess you have to take firm steps to combat the evils of plagiarism. But I don't recall ever hearing of a board taking away part of a CEO's compensation because he failed to keep the business profitable and growing...Whereas (and this may be press bias) you often hear of bosses getting their bonuses even as the company is being downsized, divisions axed, workers laid-off, and the stock heads south...
Hmmm. And speaking of the New York Times....I wonder...
April 19, 2006
Who are the owners, and what do they think?
I've been wondering why we haven't seen more things like this:
Morgan Stanley Investment Management said Tuesday it withheld votes for the Times' director nominees because it believes the company's board and management have become unaccountable to shareholders.
The firm, which says it owns more than 5% of the Times' Class A stock, called for the elimination of the dual-stock structure that leaves control of the board with minority shareholders led by the founding Sulzberger family. The Times and a number of other big media outfits have left voting control in the hands of founders, under the rationale that long-term owners look after the long-term interests of the business rather than chasing short-term profit. But Morgan Stanley said the company has failed to keep up its end of the bargain..(Thanks to Michelle Malkin).
What was the bargain? The Sulzberger family sold shares of their company to the public. Their duty, as managers, is to act in the interests of those owners. By treating the Times as their own little political toy, they are guilty of fraud..
....Morgan Stanley added that it believes that "other long-term institutional shareholders have also withheld their votes for the company's Class A director nominees." The Times couldn't immediately be reached for comment....
Couldn't be reached for comment? Maybe The Times is out of the office today...How indignant those clowns would be if some Republican "couldn't be reached for comment."
...New York Times Co. stock has dropped 52% since its peak in June 2002, Morgan Stanley says. But "despite significant underperformance, management's total compensation is substantial and has increased considerably over this period," Morgan Stanley says....
I'll bet the NYT has run articles or editorials criticizing various big businesses for giving management fat raises even as profits are falling. I'd also guess the Sulzbergers don't think of themselves as capitalists, but more like caretakers of a shrine or church...
February 28, 2006
A friend e-mails, concerning the ports controversy:
Anyway, something that's bugged me in Michelle Malkin's posts on this has been her hang-up on the "sukuk." For example, in this post she says, "The supporters of, and retreaters on, the deal are also silent about the unprecedented, Islamic law-compliant funding scheme that allowed state-owned Dubai Ports World to force its more experienced rival to drop its bid for P&O. (The underwriters of Dubai Ports World's $3.5 billion Islamic financing instrument called a "sukuk" --Barclay's and Dubai Islamic Bank--were both cited as probable conduits for bin Laden money.)" Now, regarding Barclay and the Dubai Islamic Bank, I don't know anything - I doubt they're a shady operation devoted to bringing down the global economy and turning the world into an agrarian Caliphate, but I can't say for sure. But she portrays the sukuk as though it's some creeping sharia scheme or some such, which is just nonsense. In fact, I think the financing the best part of the whole deal.
Observant Muslims are not permitted to loan money at interest, and aren't supposed to borrow money at interest either. That can make buying a home problematic. There are different ways to get around this - for instance, in my city there's an Islamic Co-op—you put down a down payment, and the co-op buys the house. Then you pay down the loan interest free—however, you also pay them rent on whatever proportion of that home they own. As you pay down the loan, the less of your monthly payment that goes to rent, and the more that goes to pay down the loan.
Now, I'm sorry, but I think it's just a linguistic game - it's just putting a different name on interest. Which is fine - they see this as rent and as being acceptable, and I certainly don't begrudge them that. It's a solid investment for members of the co-op, returning 5%-7%, helping their community, every borrower is also an investor - it's exactly the kind of help-yourself thing we encourage in America.
But the point is, investment options are hard to find for the diligent Muslim. One person I know works at Fidelity, and he can't invest in any of the products his company sells, because all of the funds and companies are investing money in interest-bearing vehicles somewhere along the line. He's said scholars agree that as long as no more than X% of the returns (5%, 8%, something like that) are from interest, that it's alright, as long as it also avoids liquor, pornography, gambling, etc. There are specific Halal mutual funds, but the options are pretty scarce.
Michelle posts that Dubai has started its own stock exchange, and that this $3.5B sukuk is its crown jewel - here's a Halal investment, backed by this amazingly solid, safe asset - leases on US and other international ports. If you're observant and need to park a couple million dollars in something safe, and bonds are forbidden, and treasury bills and money market funds are out of the question, and suddenly this opportunity comes along - hell, this is a god-send.
So here's $3.5B, which is publicly traded - it's owned by investors large and small all across the Muslim world. I saw someone say that the UAE has 3.5 billion reasons to keep our ports safe and secure. But the larger point is that these 3.5 billion reasons will be shared across the middle and upper classes of the entire Islamic world. The sukuk makes these assets more valuable to a Muslim than they are to anyone else, simply because it now serves a market that it couldn't before.
Sukuk's are apparently becoming an important investment instrument in the world. That's good. We should encourage the Moslem world to buy more of America, and to think of us as an asset! Also, there's no Moslem "Vatican" to make the rules, so opinions on what's halal vary from one place to another. here's a piece on the Dubai sukuk financing the P&O purchase.
Keep in mind that Christianity also used to forbid usury, that is, loaning money to other Christians at interest. And these prohibitions probably arose for good reasons. In earlier eras money lending was often very destructive. In Low-Trust cultures you get very high interest rates and terrible punishments for default, often slavery. It tended to be what we call mafia loan-sharking.
Credit is necessary, and Christians got around the prohibition in various ways, just as Moslems do now. (Having Jews do the lending turned out to be a bad way around the problem, and led to much anti-Semitism.)
February 12, 2006
"A Barbie doll costs $20, but China only gets about 35 cents of that."
It's important to keep in mind that lots of things that are "Made in China" are really just assembled in China.
NYT...But often these days, "made in China" is mostly made elsewhere — by multinational companies in Japan, South Korea, Taiwan and the United States that are using China as the final assembly station in their vast global production networks.
Analysts say this evolving global supply chain, which usually tags goods at their final assembly stop, is increasingly distorting global trade figures and has the effect of turning China into a bigger trade threat than it may actually be. That kind of distortion is likely to appear again on Feb. 10, when the Commerce Department announces the American trade deficit with China. By many estimates, it swelled to a record $200 billion last year.
It may look as if China is getting the big payoff from trade. But over all, some of the biggest winners are consumers in the United States and other advanced economies who have benefited greatly as a result of the shift in the final production of toys, clothing, electronics and other goods from elsewhere in Asia to a cheaper China...
..."Basically, in the 1990's, foreign firms based in America, Europe, Japan and the rest of Asia moved their manufacturing operations to China. But the controls and therefore profits of these operations firmly rest with foreign firms. While China gets the wage benefits of globalization, it does not get to keep the profits of globalization."
..."The biggest beneficiary of all this is the United States," said Dong Tao, an economist at UBS in Hong Kong. "A Barbie doll costs $20, but China only gets about 35 cents of that."
Because so many different hands in different places touch a particular product, Mr. Dong said, you might as well throw away the trade figures.
"In a globalized world, bilateral trade figures are irrelevant," he argued. "The trade balance between the U.S. and China is as irrelevant as the trade balance between New York and Minnesota."....(Thanks to Orrin)
Trade is confusing because we still think in Industrial Age terms. We still think of a Barbie Doll as the plastic figure in the box. But most of what a Barbie is is not a thing, but a collection of ideas. Ideas created by advertisers and designers and marketers and TV producers. The person who negotiates with Target about how many inches of shelf-space the newest Barbie will get at Christmas time probably is paid more than a thousand assemblers in China.
"In a globalized world, bilateral trade figures are irrelevant," Yes. As a person with an interest in Apple Computers, I occasionally notice brief mentions of this or that Korean or Taiwanese firm being chosen to build the latest machine. But no one remembers their names, because they are not very important. iPods and Macs are mostly "made" in Silicon Valley and other high-tech neighborhoods around the globe. And in the offices of designers and advertisers in trendy enclaves in New York or London or Los Angeles.
And the chip sets are mostly "made" by engineers staring at computer screens, laying out patterns of wires and transistors, and watching how they "work" in emulations that only "exist" on computers. And "made" by the engineers who design chip fabs. The actual manufacturing is almost an afterthought.
This is especially true in the case of small batches of specialty chips. The design is sent to the manufacturer via the Internet, then sent to the chip fab from there, and soon an air-freight package of chips shows up wherever the gadget is being assembled, which is then sent to company that specializes in distribution...And possibly the people who are designing and selling the gadget don't even know where on the planet any of these steps are physically located.
February 9, 2006
This is from an interview with Milton Friedman.
NPQ | The US Treasury debt is held mainly by China, Japan and South Korea. Is the huge foreign balance of payments deficit a problem for the US and world economy?
Friedman | I don’t think so. It may well be a statistical mirage. If you look at the balance sheet, the US is heavily in debt. If you look at the income account—the amount of interest the US pays abroad—it is almost exactly equal to the amount of interest that it receives from abroad. American assets held abroad are earning a higher rate of return than foreign assets held here.
That is understandable because what is most attractive about the US to people and countries with wealth is that it can provide security, insurance really, against political instability. Nobody is afraid that the money they place in the US is at risk of expropriation or of in some other way being taken away. For this safety, the wealth holders of the world are willing to accept a lower rate of return. US assets abroad, in contrast, are riskier and thus yield a higher rate of return.
This explains why there is a rough balance in real terms. It is not clear there really is a debt. It looks like the imbalance concerns are misleading. It doesn’t worry me a bit that China and Japan hold so much US debt. In a way, it seems foolish for them to do it because they get lower returns than they might elsewhere. But that is their business...(Thanks to Orrin Judd)
I've probably mentioned Thomas Barnett's point, that we are "exporting security," and that countries like China loaning us money is actually payment for our keeping the world secure. We, for instance, have assumed the task that Britain used to hold, of keeping the world's sea lanes open and safe. And China especially benefits hugely from our military dominance, because it does not have to carry through on its bellicose threats! People say, "If China stopped loaning us money, we'd be in a terrible fix! But China would be in an even bigger one if an injured US pulled back on our defense commitments, dependent as they are on trade and exports and the movement of oil tankers.
Friedman's point is similar. Other countries buy our bonds because they are willing to pay for security, in the form of lower returns, like granny nervous about her nest egg. We are like a strong young person who can make riskier investments that pay more.
Being in debt to China is a good sign. When China starts investing its money in China, or when we have to pay what other countries pay for loans, then we can worry.
February 3, 2006
John D. Rockefeller is long gone...
From a good piece by Ben Stein..
...Meanwhile, why is it so bad for oil companies to make a profit, even a big profit? That profit doesn't go into the pockets of Dr. Evil. It doesn't go to Saddam Hussein (not anymore). It goes to tens of millions of stockholders who use the dividends and the increase in share price to pay for their RV's and retirements and their (ungrateful) kids' college education. John D. Rockefeller is long gone. Anyone in America with a few twenties in his pocket can become a shareholder of a big oil company and share in those profits. Those profits go to teachers' unions and policemen's unions and to any person on this earth who cares to speculate that the big profits will continue. Or, as my father once said to me, and I have said before, "If you think oil company profits are obscene, buy stock in the oil companies."
Then a huge slice of the profits go to federal and state taxes, running into the tens of billions of dollars. Oil companies in general pay between 30 and 40 percent of their profits in tax. That pays for a lot of textbooks (that no doubt teach how bad oil companies are) and a lot of hospitals for rehabilitating wounded Marines...(Thanks to Dean)
A lot of people are simply not sane when the subject is oil. People who happily pay $3 for a quart of drinking water (which probably flowed out of the ground ready-to-drink) think they are being plundered by ogres if they pay $3 for a gallon of gasoline (which may have been extracted from deep beneath the ocean floor by a billion dollar drilling platform, transported in a $100 million ship, re-made in a $500 million refinery.)
And we all own the oil companies. The lefties who denounce "big oil" almost certainly own oil stocks as part of their pension plan or retirement investments.
But though they endure the profits as a necessary burden for themselves, at least liberals want to help others! That's why they blocked Social Security Reform. They didn't want ordinary workers to be tainted by the evil of high profits and corrupted by the the sordid riches of capitalism. Better they should stay in their proper place, dependent on government and the leadership of the wise...
(Dean also provided a link to a breakdown in who owns Exxon shares. Very interesting. We own some, via the Fidelity Contrafund.)
January 27, 2006
Focused on job losses, not gains...
The Free Market Project (FMP) report, Hit Job, is the result of a detailed analysis of job and employment coverage by all three broadcast networks -- ABC, CBS and NBC. The study examined 151 stories on the 2005 evening news shows to assess how they had reported on both job losses and gains during a year of strong employment growth...
..."More than 4.6 million jobs have been added since May 2003 -- 31 straight months of positive job growth," Gainor added. "Unemployment dropped down to 4.9 percent, lower than the average of all three recent decades."....
You would never know it from watching TV "news."
...-- Job losses, not gains: The networks focused on job losses in slightly more than half the reports (76 out of 151). Just 35 percent of the stories addressed job gains (53 out of 151). In one typical report, Jim Acosta of the "CBS Evening News" left his viewers with a memorable image of the 8,700 job cuts at General Motors in his Nov. 21 story: "Just three days before Thanksgiving, GM is carving up its work force like a Butterball turkey."
-- Government spending promoted: Two of the big Washington stories -- the transportation bill and cutbacks at military bases -- showed how hypocritical the media were. The $284 billion transportation bill was filled with pork but created thousands of new jobs that news reports barely mentioned. However, when military bases were cut to save $48 billion over 20 years, the news shows did more than three times as many stories bemoaning the job losses...
This is particularly egregious. Base closures have almost always created more jobs than they destroyed. And the base-closing program is in fact a triumph by the US political system, where, as with all governments, it is almost impossible to end established government programs. I suspect the news people are trying to fool themselves as much as the public; they are clinging to Lefty zero-sum economic ideas.
-- 283,000 jobs ignored: Initial unemployment reports were later revised, but the networks ignored those revisions. In 2005, most of those changes involved the addition of jobs, so network news ignored nearly 300,000 jobs in all of the stories, except those few that included cumulative totals...
Economic reports are routinely revised, as more data come in. And routinely ignored by the media, if the revisions make Republicans look good. I remember the same thing in the Reagan years. (Or rather, I learned the same thing after the Reagan years, just reading this and that. There was no easily accessible Internet back then, so you had to stumble on the right article...
--CBS the worst: By embracing the highest percentage of job-loss stories and the lowest percentage of stories about job gains, CBS presented a skewed picture of employment.
Reporter Trish Regan's July 20 broadcast on the "CBS Evening News" was one of the year's worst, according to FMP. After airing a quote from Federal Reserve Board Chairman Alan Greenspan about "sustained economic growth," Regan allegedly undermined it. "But his sunny forecast isn't being felt on the factory floor -- Kodak cutting up to 10,000; Hewlett-Packard 14,500 layoffs -- or on the streets, where reality trumps forecasts."
Regan had opened her segment with the following: "Twenty-five thousand layoffs and more on the way. I'm Trish Regan with why the jobs picture is looking very 'pink' these days."...
Most new jobs are created by new and small companies. Job cuts, especially the big ones, tend to be in mature industries, where companies compete by becoming more efficient, or where they are being battered by economic change. If General Motors lays off 10,000 people, and a thousand small companies add ten people each, guess which makes a dramatic news story? Or which is even visible without poring over dry statistics?
Also, lay-offs can be a sign of economic strength. Boeing can hire 20,000 people at a busy time because it knows it can lay them off if they need to. European companies are always very reluctant to hire anybody, because of laws that "protect" workers from being fired by ogre capitalists. That "protection" is a disaster to the many people who would like to become workers, but can't find jobs. (And those "protections" are what liberals would like to have here. Voting Democrat is voting against workers.)
January 16, 2006
This SF Chronicle piece is interesting to me for a couple of reasons.
Anti-abortion ad on BART angers activists. Many placards have been defaced or destroyed. (BART is our local transit system)
One is that it's a good example of the bubble that leftists are in, at least those who live in trendy coastal enclaves. They are not only angry that they should be exposed to ads criticizing the Roe decision, they are shocked and surprised!
My other thought is, what a perfect place public transit is for ads that try to make people think. If your ad is on the inside of a bus, you have a captive audience of bored people who will almost have to read it.
It always amazes me, when riding public transit, how few people bring a book or magazine along. Most passengers stare blankly at the walls. Perhaps they have a rich interior intellectual life to sustain them, but they sure look stupefied.
Transit is the one place where ads do not need to be simplified to catch a fleeting attention-span. It's the one place you can put a wordy ad, and be sure that it will be read. But almost no one takes advantage of this.
December 12, 2005
Even NY City is in the black...
OpinionJournal repeats an important fact: Our economy is strong and growing steadily, and this started with the Bush tax cuts. Especially important because we are bombarded with fatuous propaganda stating the opposite. A large percentage of drooling idiots (which, when it comes to economics, is a large percentage of the populace) actually believe that Bush "is bankrupting the country with a combination of aggressive military spending and reduced taxation of the rich." Believing such stupidity should automatically remove a person from the voting rolls, (and from the ranks of Republican Congressmen) but alas does not...
...The very fact that it is proving so difficult to secure a mere two-year extension of President Bush's most notable first-term domestic-policy achievement underscores how far Republicans in Congress have stumbled of late. The 2003 tax cut is about as clear a policy success as has come out of Washington in many years:
Finally, we wonder if any of the faux debt-hawks in Congress noticed that thanks to the sizzling economy, states and localities are now running hefty budget surpluses, reversing years of red ink and painful service cutbacks. Even New York City--which for years looked like the U.S. version of debt-plagued Argentina--is back in the black....(Thanks to Betsy Newmark)
- The stock market has risen by about $4 trillion in value, and an estimated 40% of that gain is directly attributable to increases in the after-tax return on equities, thanks to the tax cut. (If the tax cut expires, the market will instantly give back those gains.)
- Housing values have soared so rapidly that the fear is we now face a bubble. Household net wealth has climbed by $10 trillion.
- Business investment--which had sunk into the abyss during the recession, falling by 21% between 2000 and 2002--has roared back to life. Spending is up nearly 25% over the past 30 months.
- Dividend payments to shareholders have doubled in two years, according to data gathered by the American Shareholders Association. The cumulative impact of the tax cut and the higher dividend payments has put $100 billion into the pockets of America's burgeoning investor class. The macro-economic signs all point to a solid, sustainable expansion.
- Employment is up 4.4 million and real GDP growth has averaged 4%--or twice the OECD average--since 2003. Today's unemployment rate of 5% means there are now roughly one million more Americans working than were projected before the tax cut.
- Oh, and yes, there was a $120 billion reduction in the budget deficit in 2005. That's because tax receipts rose by more than in any previous year in U.S. history, even adjusting for inflation. Receipts were up by $55 billion above projections in 2004; $122 billion above projections in 2005; and are already running well ahead of projections so far in fiscal 2006 (which began in October).
By the way, the percentage of taxes being paid by the upper brackets of income has been increasing for decades. Starting at least with the Reagan tax cuts. (I strongly suspect the Kennedy tax cuts had the same effect.) In fact, whenever you cut tax rates across the board, the "rich" end up paying more! (It's insulting to the high intelligence of RJ readers to explain why, but the reason is that, the higher your tax rate, the more incentive you have to eschew productive investment in favor of tax-avoidance schemes...or to just spend your money instead of investing it.)
Lower the tax rates, and investment is more attractive. And it is the poor who benefit most from this. The rich will still be rich either way, but the poor stand to gain jobs, raises, self-respect, and a chance to rise in the world, and to shed the welfare-dependency and weakness that results from "Democrat" policies..
October 8, 2005
Speaking as an oil tycoon...
Duane D. Freese at TechCentralStation dissects the economic ignorance of Bill O'Reilly, who blames high gas prices on "gouging" by oil companies, who should give up part of their profits. I won't repeat Duane's arguments, but here's one point he makes to keep in mind...
...Think about it. Who owns oil companies? It isn't just the John D. Rockefellers or oil sheiks anymore. It's also investors with money in mutual funds and pension funds and retired people. Consider that CalPers, the giant public employee retirement system, had such a presence in energy giant Shell last year that it pressured the company for an independent audit of reserves...
Charlene and I own shares of a mutual fund that specializes in energy stocks. We own the greedy oil companies!
And speaking as an oil tycoon, I would like to mention that there are times when oil prices FALL (hopefully after we've moved into a different Fidelity Fund) and oil companies that have purchased high-priced oil futures, or invested in high-cost oil fields, or ramped-up exploration and drilling....get killed. SO, Mr O'Reilly, would you say that we should be able to increase our profit margins then, to help cover those losses? Hmmm?
Of course these populist types never want it to go both ways. When profits are high, then companies are stealing from the little guy. But when losses occur, they never care that the little guys are "stealing" from the companies. Both ideas are silly; over the long run, and if competition is unhindered, oil companies make the amount of profit necessary, and no more.
And it IS necessary. Profit is just one of the costs of a business. It's the cost of capital. It is a necessary cost, just like labor and materials are costs. Peter Drucker pointed this out long ago (Here's a re-print of a 1975 article, thanks to Alan) Every business has capital investment. Even a kid's lemonade stand has a table and a pitcher tied up for a period of time. Even in the Soviet Union there were profits, because the state enterprises kept part of what they took in to pay for buildings, equipment, etc. In fact, their profit-margins were much higher than in the West, because they used their capital less efficiently!
Reading that was one of the ah-ha! moments of my youth. As was Drucker's point that America is now a socialist country, because the majority of shares in its big businesses are owned by pension funds and mutual funds, which are the investment instruments of ordinary folk, not the rich.
Once you know that stuff, the lefties who ascribe all ills to profits are seen for the drooling idiots they are.
September 9, 2005
Washington Post: President Bush yesterday suspended application of the federal law governing workers' pay on federal contracts in the Hurricane Katrina-damaged areas of Alabama, Florida, Louisiana, and Mississippi. The action infuriated labor leaders and their Democratic supporters in Congress, who said it will lower wages and make it harder for union contractors to win bids.Excellent conservative move. The sort of laws that are supposed to keep wages high and protect workers from wicked capitalists always have one teensy-weensy unintended little side-effect...I'm sure I don't need to tell you what it is...
The Davis-Bacon Act, passed in 1931 during the Great Depression, sets a minimum pay scale for workers on federal contracts by requiring contractors to pay the prevailing or average pay in the region. Suspension of the act will allow contractors to pay lower wages. Many Republicans have opposed Davis-Bacon, charging that it amounts to a taxpayer subsidy to unions....
I'd just put it that President Bush cares about the poor and brown-skinned people of the region. And John J. Sweeney and the Democrats do not.
August 30, 2005
You know that picture of "Che?" The one that forms such a large part of the intellectual underpinnings of Left-wing thought?
Well, my son Rob sent this link, and said it sent his Irony Meter off the scale.
Apparently the Guevara family is mounting a world-wide legal campaign to gain control of the image, and the revenues thereof...(which are huge)
August 10, 2005
'nother win for Arnold...
From the LA Times
...Since July 2003, when the state began overhauling a program that is routinely listed by employers as the most onerous aspect of doing business in California, premiums on workers' comp policies now have fallen an average of 26.5%.
"Do I believe we've turned a corner? Hugely," said Seth Marshall, vice president of Santa Monica Seafood Co. Marshall's Rancho Dominguez firm, which employs about 200 people, saw its workers' comp insurance bill fall by about 45% in July.
The big reason is increased competition among insurers. Many had fled the state or gone out of business since the late 1990s as the state's system for treating victims of workplace injuries was hamstrung by rising costs and skyrocketing premiums.
Stabilizing the $24-billion-a-year program through legislative cost cutting and streamlining has attracted 15 new insurers to the California market in the last two years...
...The decline in rates, combined with another cut of at least 5% expected in January, fulfills a pledge made by Gov. Arnold Schwarzenegger, who predicted that the workers' comp bill he shepherded through the Legislature in April 2004 would lower premiums by 30%....
August 5, 2005
keeps the doctor away...
Interesting piece on changes in the apple world...
...Consider the fate of America's favorite apple. It emerged from an Iowa orchard in 1880 as a round, blushed yellow fruit of surpassing sweetness.
But like a figure in a TV makeover show, it was an apple that its handlers could not leave alone. They altered its shape. They made it firmer and more juicy. They made it so it could be stored in hermetically sealed warehouses for 12 months. Along the way, they changed its color and hence its name -- to Red Delicious.
The only problem was the American consumer, whose verdict on the made-over apple has become increasingly clear: Of the two words in the Red Delicious name, one can no longer be believed...
...In the 1980s heyday of the Red Delicious, it represented three-quarters of the harvest in Washington state, epicenter of the apple industry. By 2000, it made up less than half, and in 2003, the crop had shrunk to just 37 percent of the state's harvest of 103 million boxes. Red Delicious remains the single largest variety produced in the state, but others are ascending in market share as rapidly as Red Delicious is dropping, notably Fuji and Gala...(Thanks to Betsy N)
Golden Delicious are also a bore. I think Fuji's and Gala's are what we buy.
August 2, 2005
Say it ain't so, Joe!
I've several times heard the story about Cisco making special routers that help China's government censor the Internet...and they made me so mad I could spit. How could they DO such a thing? So I was very interested in this news story, Critics Squeeze Cisco Over China: (Thanks to Glenn)
Internet equipment maker Cisco Systems is fighting a shareholder action that urges the company to adopt a comprehensive human rights policy for its dealings with the Chinese government, and with other states practicing political censorship of the internet...
But what does Cisco say?
...But Cisco's Terry Alberstein, director of corporate affairs for the Asia Pacific region, says the company has never helped the Chinese government suppress free speech.
"Cisco does not participate in any way in any censorship activities in the People's Republic of China," Alberstein says. "We have never custom-tailored our products for the China market, and the products that we sell in China are the same products we sell everywhere else."...
So what I'm wondering is, is the whole story an urban legend? The article includes this:
...Cisco's routers, the report noted, form the backbone of China's internet access, and include the power to identify and filter packets based on keyword matches -- a tool typically used for fighting viruses and denial-of-service attacks that also makes internet censorship easier for repressive governments...
I suspect that what we have here is an example of the way most advances in crime-fighting have the potential to help repressive governments fight the "crimes" of free-speech or dissidence. The tools that fight spam could easily be used to fight democracy. One wonders if Chinese bloggers are using the same tricks that spammers use to try to fool my spam filter? I get e-mails from "B7e on line P`H A`R M`A C`Y T2O" So maybe Chinesians are blogging about D`E`M`0"c/R"A.cY ?
July 18, 2005
worked then, works now...
Michael Barone is always worth reading. His latest is: Bush well on way to meeting deficit promise.
So the deficit—the federal budget deficit—is declining sharply, more sharply than just about anyone in mainstream media anticipated. According to figures from the Office of Management and Budget, the deficit is projected to decline from $412 billion in 2004 to $333 billion in 2005, a 19 percent decline. OMB further projects, obviously with less certitude, that it will decline to $162 billion in 2008.
If so, that will mean that George W. Bush will have more than kept his promise to cut the deficit in half in his second term. Back in February, OMB projected a 2005 deficit of $427 billion...
Well, we told you so. But intentional blindness on this subject is still alive and healthy. I remember back in the 1980's conservatives pushing the Laffer Curve, and liberals plugging their ears and saying "La la la I can't hear you." As Orrin said somewhere, "We laffered all the way to the bank."
Of course it worked then. (Remember how the Reagan deficits were going to crush America, and leave our children in poverty?)
And it worked for JFK. (Funny thing, how when Dems are in the WH, prosperity gets happy names. The "Go-go Years?" Remember? If it's a Republican, then you have "Decade of Greed." The prosperity Reagan brought us actually continued into the 90's, but a Dem got into the WH, so instantly "greed" disappeared.
I shudder to think what the coming prosperity will be named, once the libs reluctantly acknowledge that it exists...
July 14, 2005
I was writing recently about the importance of names, (here, and here) and how Verizon ought to lock-in a cool name for EV-DO before some competitor does it. (How awkward it would be if the name were "Sprinter!") John Gruber has a detailed post on how Apple has moved very nimbly to add podcasting capabilities to their iPod/iTunes/ITMS constellation. They did not invent the name "podcasting," but it's perfect for them, and they've moved with surprising speed to lock-in the advantage...
...But names do matter. And what makes this so delicious for Apple is that the more popular “podcasting” becomes as the name for publishing audio via RSS, the less likely it will be that a new name will ever take hold. Which leaves Apple’s competitors — including Microsoft, Sony, and the various other gadget-makers producing Windows Media-based players — in the extremely uncomfortable position of choosing from the following courses of action:
1. Embracing the word “podcasting”, even though it contains the name of the competitor they’re chasing, and which name subtly implies that podcasting is meant for use with iPods, which implication sort of further implies that every other digital music player is just an iPod knock-off. I mean, can you imagine Apple using a term like “walkmancasting”, “dellcasting”, or “wincasting”? It’s embarrassing.
2. Devising and using a new term for “podcasting” that doesn’t use “pod”. Good luck with that, considering that everyone — everyone — who is publishing podcasts is already calling them “podcasts”.
[Update: According to this story in the Seattle Post-Intelligencer, Microsoft employees are pushing “blogcasting” as a “pod”-free alternative.]
3. Ignoring the whole podcasting phenomenon.
There are no other options. The best-case scenario for Apple’s competitors is for this whole podcasting thing to turn out to be nothing more than a fad. That makes #3 a reasonable course of action. But if it isn’t a fad, they’ve got to choose between #1 and #2, both of which are marketing nightmares. And these guys are all already in a deep hole, marketing-wise, versus Apple and iPod...
"implies that every other digital music player is just an iPod knock-off..." Exactly. And once a name "sticks," you pretty much can't change it.
July 7, 2005
"Unfortunately, the Europeans' devastating urge to do good can no longer be countered with reason..."
Don't miss this interview with Kenyan economist James Shikwati, For God's Sake, Please Stop the Aid! An amazing blast of good sense...
....SPIEGEL: If the World Food Program didn't do anything, the people would starve.
Shikwati: I don't think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders -- drawn by the Europeans by the way -- more permeable. It would also force us to establish laws favoring market economy.
SPIEGEL: Would Africa actually be able to solve these problems on its own?
Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there's a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn't do all that poorly either.
SPIEGEL: But AIDS didn't exist at that time.
Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It's not three million Kenyans that are infected. All of the sudden, it's only about one million. Malaria is just as much of a problem, but people rarely talk about that.
SPIEGEL: And why's that?
Shikwati: AIDS is big business, maybe Africa's biggest business. There's nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.
SPIEGEL: The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.
Shikwati: I am afraid, though, that the money will still be transfered before long. After all, it has to go somewhere. Unfortunately, the Europeans' devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected -- a leadership change that ended the dictatorship of Daniel arap Mois -- the faucets were suddenly opened and streams of money poured into the country....
Unfortunately, that "urge to do good," like most welfare systems, is mostly about feeling good, and feeling like a superior being who gets to help the inferiors. The real design is keeping the poor in dependency, so the donor can continue to feel superior indefinitely.
June 16, 2005
Falling back to the next line of trenches...
The continuing drama of my whole lifetime has been watching left-leaning types repeatedly fall back from one position to another, in their quest for an alternative, any alternative, to the marketplace. Of course there have been the actual socialist revolutions that have come one after another, each with it's cohort of romantically-garbed young westerners going off for a few weeks to "work with the peasants," or to be in "solidarity" with the workers, or some such crap. Then all of them coming back to scorn the corruptions of capitalism while sitting around smugly in some gourmet restaurant in Berkeley or Ann Arbor. (Berkeley, if you are not aware, is now a notable center of gourmet cuisine...all "natural" and organic, of course. Berkeley lefties demonstrate their superiority to mere Americans by eating lettuces no one else has even heard of.)
Besides the 'revolutions," there have also been a series of experiments in government control and "guidance" of capitalism. Each one of which has been ballyhooed by those who hate free markets. Each one of which was certain to doom the disorganized and selfish American variety of capitalism to second-rate status within a decade or two. Remember Japan Inc, and the wise mandarins of MITI? Remember the "German economic miracle?" And supposedly China is going to be next--ha ha, I'm SO worried. AND, just a couple of months ago the EU, with its strong Euro, was the coming powerhouse.
And guess who pushed his chips onto the table, and bet against America? Warren Buffett:
...Buffet, who reportedly lifted his bet against the buck to a position of $22 billion and counting in the first quarter this year, isn’t sounding quite so smug anymore. Normally an equity investor with liberal social views who rarely made forays into the foreign exchange markets, he has had his head handed to him by more experienced currency players. Although his anti-dollar attack worked from 2002 through 2004, since then he has been forced to pay for attempting to mix politics and money...(Thanks to OJ).
Life can be frustrating, but these last few years have been giving me a lot of sweet moments...
Update: Here's PowerLine on some of the books predicting that the EU was the coming superpower. From last year! Look for them on remainder tables everywhere...
May 26, 2005
Up and down...
So where are all those people who were telling us that the weak dollar meant something profound? Empire on the edge of collapse, etc, etc?...... [Thanks to Orrin]
May 8, 2005
Follow-up to critics...
John Tierney has written a follow-up column to answer critics of his earlier one, where he compared his Social Security return with that of a Chilean friend. Chile has "private accounts." The critics piled on him about the "risks" of the stock market, and he responds with the political risks of leaving your retirement in the hands of politicians, who can change things in the future...
...You can call the Democrats irresponsible obstructionists, but they're just following the first rule of politics: get re-elected. It's the same rule followed by the politicians from both parties who have spent the baby boomers' retirement money. Why set aside money for 2017 if it could be used to woo voters and campaign contributors for the next election?
I can't protect my pension against political risk, but Pablo can help protect his against the risks of the stock market. As he approaches retirement, he can gradually shift his money out of stocks and into bonds, like the ones that financed the private road between Santiago and the port city of Valparaiso, which will be paid off by tolls. The Chilean pension system has billboards along the road proclaiming, "Your savings are financing this highway, and this highway is financing your retirement."
Those billboards have been on my mind. My pension depends on 535 politicians who will be asked to vote for steep tax increases or budget cuts that they fear could cost them their jobs. Pablo's pension depends on people driving between Chile's two largest cities. (Thanks to Betsy N)
The talk of the risk of the market is mostly BS. Short-term there is risk. Long-term, if you have a good broad-based portfolio, you do not have risk, unless the entire economy goes into long-term decline, in which case there will also be greatly increased political risk, since the money simply won't be there to pay for political promises.
Either way, it all really depends on the economy, and what's the biggest risk to that (apart from things like asteroids)? Bad political decisions, that stifle growth with taxes or regulations or confiscations. And what's the best way to prevent them? Make everybody into owners, so they start to get a clue, that "the corporations" aren't evil parasites sucking their blood, as certain political flavors would like us to believe, but businesses that they are part-owners of...
May 6, 2005
fewer workers supporting same number of pensioners...
From the NYT:
Many investors knew it was coming, but they did not expect that two of the nation's biggest issuers of bonds would be reduced to junk status so soon.
As a result, Standard & Poor's announcement at midday yesterday that it was cutting its credit ratings for both General Motors and the Ford Motor Company set off a selling spree in the corporate bond market....
Hmmm. How about a little thought experiment. Why are GM and Ford in trouble? Because of the overwhelming burden of promised benefits, pensions and healthcare, made to retirees.
Suppose, instead of promising things, they had put part of each employee's paycheck into something like, oh, a 401-K? (401-K's didn't exist when GM's and Ford's pension plans were started, so let's give this a different name. Er, maybe "private accounts?") If they had done that, they wouldn't be broke right now!
They'd still have problems, but much smaller ones, and they would have flexibility. If the company shrank, it wouldn't be in the position of having it's liabilities grow in proportion to its size (fewer workers supporting same number of pensioners).
You can see where I'm headed. Social Security is the same sort of mess. (And tens-of-thousands of other schemes around the globe.)
You don't need abstruse theories to explain why I like President Bush. I've got a long list of reasons, and being the first president to dare to tackle the SS debacle is high among them...
May 1, 2005
Paint your home every summer?
From Just One Minute, a bit of clarity...
...To illustrate my concern with an example - homeowner's insurance covers catastrophic losses because they are infrequent and (for most of us) unaffordable. An easy way to think about it - homeowners each put aside a small amount in a reserve which is paid out to the rare unfortunate who experiences a fire. This turns a large, unpredictable, unaffordable expense into a small, predictable one.
But homeowners insurance does not cover the cost of re-painting the home - that expense is predictable and affordable (or not). Furthermore, if it were covered by insurance, there would be a tendency to "overconsume" - some people would change the color of their home every summer at the expense of the other participants in the "paint insurance" pool.
Similarly, auto insurance covers accidents but not oil changes.
Yet health insurance is in crisis if folks don't have coverage for routine visits to the doctor?....
March 18, 2005
That's NOT what the judge said...
Nina Yablok is a lawyer/blogger (and wife of blogger Ed Driscol) and has a good post on the Apple trade secrets case, which I think is generating a lot of misinformed comment. In response to Jeff Jarvis's contention that the judge had ruled that bloggers are not journalists, she writes:
No, that is NOT AT ALL what Judge Kleinberg said.
In fact, he said quite the opposite. He specifically (and clearly to anyone who bothered to read the decision) did not decide whether Bloggers are Journalists! First, in his introduction, Judge Kleinberg states:
The order of this Court does not go beyond the questions necessary to determine this motion... and it cannot and should not be read or interpreted more broadly."
And later, the Judge clearly states it is not necessary to decide whether the bloggers (Movants in the decision) are journalists. He says:
Defining what is a "journalist" has become more complicated as the variet of media has expanded. But even if the movants are journalists, this is not equivalent of a free pass. The Journalist's priviledge is not absolute."
Judge Kleinberg proceeds to make his ruling without deciding the "are bloggers journalists" issue because it is not relevant to the narrow question he was asked to decide....(there's more)
I don't think the rumor-site Think Secret should even be called a blog. I don't think there is any legal definition of what constitutes a blog. But, if you called an expert witness to the stand--such as ME--I would testify that I've been blogging since 2001, and occasionally reading Think Secret for at least that long, and I NEVER ONCE thought to call it a blog, or put it in my folder of Apple-related weblogs.
She also has a good post on those ads urging you to form a Nevada Corporation. Not a good idea.
Update: More from John Gruber.
March 1, 2005
It will be fatal! Fatal, I tell you! Aaaugghhhh.....
Matthew Hoy has created this little item, just for folks like me to post.
Of course he doesn't have a plan. If Bush were not focused on Social Security, Kruggie would be castigating him for doing nothing while the Social Security crisis grows.
Actually Krugman's face makes me want to have a caption contest, rather than think about economics.
How about:"Look into my eyes. You are growing drowsy. Drowsy. Drowsy. Bush's plan is fatal. You are getting sleepy.....sleeepy......the economy is imploding.....sleeepy....."
February 15, 2005
if the Slovaks can, then why can't we?
Looks like Romania is the latest country to adopt a Flat Tax....
...A costly bid for popularity—or the new orthodoxy? Once upon a time, the "flat tax" was just a pet cause of free-market ideologues, spurned by practical politicians. No longer. Romania joins a lengthening list of converts among the post-Communist states of Eastern Europe. Estonia began the trend back in 1994, to be followed by Latvia, Lithuania, Ukraine, Russia and Serbia. Last year Slovakia fixed a universal rate of 19 percent. Opposition parties are pressing for similar deals in Poland and the Czech Republic. Even fiscally orthodox Old Europe is taking note. "There is discussion all over the EU," says Katinka Barysch, of the Centre for European Reform in London. "People are asking, if the Slovaks can have such a beautiful and simple system then why can't we?"...
It is surely no accident that the flat tax is so popular in countries that have suffered under socialism. They understand all too well that governments strive to control their economies because that's the most effective way to control people. The same thing happens here, but because it is milder and more subtle many people remain hoodwinked by promises that regulation is intended to help them (and punish the bad people who have gotten rich [unless they are good rich people who give to the Democrat Party]).
Our politicians will not be enthusiastic about a flat tax, because they use the Tax Code to mete out punishments and rewards...
January 20, 2005
the full assault treatment...
I like this thought, by TM Lutas:
...I'm starting to suspect that Social Security reform is the domestic version of Iraq and Medicare is the domestic version of N. Korea as far as Bush policy goes. Social Security is going to get the full assault treatment because it's strategic, people understand it well, and it's about the biggest problem we can handle with that approach. Medicare is too tough, too confusing, and much more susceptible to a quiet "python" approach...
I think a lot of the opposition to SS reform comes from people who just don't understand the concept of striking at the most brittle problem first, so that success there can provide a template and an inspiration for solving the messier problems. If you've climbed a mountain that is two miles high, then it becomes much easier to organize an expedition to climb a three mile-high peak.
Of course, just as with Iraq, some of the opposition comes from people who DO understand how these things might work.....
You will have to read his post to find out what the "python approach" might be...
January 18, 2005
Sawicky v Kling
Here's an interesting debate in WSJOnline between bloggers Arnold Kling and Max Sawicky on SS reform. To my mind, Sawicky isn't very persuasive. Too much: "there isn't really a problem," plus too much: "there are other big problems, so how can you justify tackling this one and not them?" (Hmmm. Where have I heard that line before?) Arnold has a good response:
...OK, Max, let's get back to one of the points in your first post. You wrote that "the right-now budget crisis stems from tax cuts, military spending increases, and unsustainable, double-digit growth in Medicare and Medicaid."
The way I would put it is that politicians have three credit cards -- three ways of buying votes today and paying later. This involves making promises that will have to be redeemed by taxes collected in the future. Those three credit cards are the general budget, Social Security and Medicare.
Changing Social Security from a transfer scheme to one with personal accounts serves to take away the politicians' Social Security Credit Card. They no longer would have the authority to promise benefits out of future Social Security taxes...
Of course you can't solve every problem at once. Duh. But when you have several problems of a similar sort, then solving ONE of them can create the momentum and believability that make solving the others possible later. And it makes sense to pick the one that's the most brittle and hit it first. (Reason#2 on my List of Ten Reasons for Invading Iraq. That's where I've heard that line before. "We can't solve ALL the world's problems!")
To generalize: If a Republican tries to solve a problem, then 1. It's not a problem. 2. It's the wrong problem. 3. Our problems are too overwhelming, we dursn't do anything.
I do NOT, by the way, agree that there is a "right-now budget crisis." The deficit is decreasing right now, beause our economy is growing strongly and tax revenues are going up. All of which has, I suspect, some mysterious karmic connection with them tax cuts Max Sawicky doesn't like.
Also, part of our budget problems come from the need to buy necessities from Congress, which should decrease as the Republican majority grows with each election. The President bought HSA's by agreeing to the Prescription Drug benefit. I think it was a smart trade, an increase in the welfare state that was probably going to happen no matter what, balanced by a plan that will start teaching people a better approach to paying for health care. Our only hope is for people to become wiser--this is a democracy, and people are going to get what they want in the end. Of course the same point goes for SS private accounts. More important than the direct economic effect is that they will teach people to think like investors and owners, instead of like helpless clients of the state.
January 14, 2005
Private-sector jobs same as 1950...
My idea is we arrest all the leftizoids and not let them go until they memorize this article:
When considering the Swedish model, one can be forgiven for thinking of a comely statuesque blond with blue eyes. However, to economists and policy junkies, the Swedish model refers to the "third way" between socialism and capitalism many on the American left laud as the ideal.
Does the Swedish model work as advertised? According to a new paper by the highly regarded Swedish economist, Nils Karlson, the "model has become quite different from what was intended and to what many people still believe to be the case."
The extent of the failure of the Swedish model are both shocking and little known. For example, no new net jobs have been produced in the Swedish private sector since 1950. (By contrast, the U.S. created more than 60 million new private-sector jobs during the same period, from 52 million in 1950 to about 115 million in 2002.) "None of top 50 companies on the Stockholm stock exchange has been started since 1970."
Again, contrast this with the U.S. where many of our biggest companies had not been born or known of in 1970, such as Microsoft, Intel, Wal-Mart, Home Depot, Cisco, etc., Mr. Karlson's litany of failures of the Swedish model include: "Sweden has dropped from fourth to 14th place in 2002 among the OECD countries (i.e., affluent industrialized countries) in terms of GDP per capita since 1970."....(thanks to Pedro)
What's really frustrating is that countries like Sweden (Germany's another) developed their mighty industrial economies while they had LOW TAXES and a lot of capitalist freedom. Then the Socialists take over, the economy plateaus, but all the leftniks get to spend the next 40 years saying "Look how well Sweden works. We should emulate their success."
I suspect one reason the lefty caterpillars are acting so demented these days is because that claim is almost exhausted. Because ALL the economies that are supposedly more successful than us brutal free-enterprise types are looking like beached whales.
January 5, 2005
Time is money...
I stumbled on this in a post by Alex Tabarrok:
...Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and... laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is $1350, that's a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.
Why the price decline in this market and not others? Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated? Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases. I'm seeing things more clearly already...
Yes. And that's what HSA's are all about. If you are spending your own money on medical care, you spend it carefully. And providers have a big incentive to merit your trust and to keep prices down.
There is another area where medicine has become more efficient because it is market driven. I have several times heard of hospitals that specialize in just one type of operation. I remember reading about one that only repairs hernias. Busy people, especially businessmen, find it worthwhile to travel large distances to use that hospital because recovery time is much shorter than average. I don't remember if it was actually cheaper, but the savings in time is worth money to high-paid individuals.
One of the ways most medical care is costly is in the infuriating amount of our time it wastes. They is no incentive to do otherwise, so the simplest procedure takes hours. I predict that as HSA's become more popular, we will see medical providers coming up with new ways to save our time, and then advertising that to bring in more customers.
December 21, 2004
"the risk-taking verve of a Denmark!"
Rich Lowry writes about how the main characteristic of those idealistic reformers of the Left is now resistance to reform and change. Including, of course, reform of Social Security...
...Reactionary liberalism will be the order of the day in President Bush's second term. Take Social Security. The program was started in the 1930s. Back then, there were 41 workers for every retiree. Now, there are three workers for every retiree. Back then, life expectancy was significantly shorter than its current 78 years. In other words, in 70 years the world has changed, but the structure of Social Security hasn't — and liberals desperately want to keep it that way.
Never mind that dozens of countries have implemented some version of the Bush-proposed private retirement accounts. "It's just too dangerous" will be the mantra. We don't have the reform acumen of a Kazakhstan! We don't have the risk-taking verve of a Denmark! We don't have the keen governmental competence of a Chile! We don't have the reckless faith in markets of a Sweden! No, no. We are Americans, and all we can manage is a defensive huddle around the status quo...
Private accounts are not rocket engineering. Though I think the recent debates about whether or not they can "save" SS are missing the point. What they are meant to save us from is the pernicious notion that we are weak creatures who need to be cared for by big government. The payoff of private accounts will simply be when people notice that the heavens haven't fallen, and start to think of things like this as normal. After that, bigger reforms will be possible, perhaps a task to give the next generation of Republicans something to get their teeth into...
December 1, 2004
Get ready for misinformation...I happened to notice this morsel at The Corner, by Peter Robinson
Just had a conversation with my Hoover colleague John Cogan, a distinguished economist who served with Pat Moynihan on the President’s Social Security commission. Ramesh [NRO writer Ramesh Ponnuru] no reader of the Corner will be surprised to learn, is entirely correct: Any new borrowing would simply shift forward, to the present, a portion of the liabilities that the Social Security system has already incurred. Net increase in costs? Zero.That's a very important point to keep in mind, because we are going to hear, ad nauseam that reforming Social Security will be very costly.
NO! We already owe ALL the money that's been promised to SS recipients. It is effectively part of the National Debt. We are also expecting to receive future taxes (the deductions from your paycheck for SS) to cover a lot (but not all) of that debt.
The reforms proposed will take part of the taxes and put them in private accounts of younger workers. We will then have to borrow money to pay the benefits that would have been paid by those taxes. But we are borrowing to pay obligations that WE ALREADY OWE.
If I owe Peter $1,000, and I borrow $1,000 from Paul and pay off Peter, I still owe exactly $1,000. I haven't increased my debts at all. (Sorry to put this in baby-talk, but the human ability to not-understand economics is amazing.)
The point of the reforms is that those private accounts are investments, and will grow over people's lifetimes. In the long run there will be a lot more SS money, and that will keep the system solvent, and provide larger benefits. (If all the money I've paid into SS over my lifetime had been invested tax-free, I could probably retire right now with comfort.)
Social Security, by the way, was not created to be anybody's retirement plan. It was supposed to be just a safety net, to keep old people from destitution if they had no retirement income. BUT, benefits and taxes have been increased over the years, until the thing has turned into what is effectively a really crappy retirement system. It's not going away, so it's time to fix it.
November 15, 2004
"to fight for jobs without knowing what they are"
A quote from Reason:
...The quest for efficiency—whether with machines or foreigners—will continue to create more than it destroys. But since destruction will always remain a part of the process, there will always be another Pat Buchanan or John Kerry. Free markets will continue to be a tough sell because the tradeoff will always be the same: exchanging some of today's jobs for more and better jobs that often don't yet exist. Protestors rarely wave angry signs at protectionist politicians who would jeopardize future jobs, but it's not fanciful to fight for jobs without knowing what they are. After all, when they were in third grade, today's 30-something web designers could not have dreamed of what they would end up doing. Likewise, today's third graders have no idea what's in store for them...
November 10, 2004
Wee little line-items
From the President's press conference:
...Asked about the growing budget deficit, he said he would like to revive the so-called line-item veto....A line-item veto would be a splendid reform. Most state governments have them, and all those governors are glad they do. Go George!
...He also said the key to controlling the deficit was to have "spending discipline" and an effort to "grow the economy." He added, "As the economy grows, there will be more revenues coming into the Treasury. That's what you have seen recently. If you notice, there's been some write-downs of the budget deficit. In other words, the deficit is less than we thought because the revenues is exceeding projections.... The revenues ARE exceeding projections. Sometimes I mangle the English language, I get that."...One of the problems with discussing economic matters is that most people are CLUELESS!
They hear that taxes have been cut and the deficit is increasing, and their response is: We're gonna CRASH! Aaaaauuuuggghhhhhhhh!!!!
It's useless to try to explain that our economy is growing more rapidly because there is less of a tax-burden clinging to its ankles, and that the debts will end up smaller as a percentage of our total wealth. That we are in effect borrowing money to buy stocks in a rising market. And also that a larger economy means higher tax revenues, which will shrink the deficit in absolute terms. Both these things are already happening.
It's not that they argue cogently against these ideas, they just don't want to hear them at all. In fact they don't even want to know that our economy IS growing. There seems to be a strong correlation with this sort of obtuseness and support of John Kerry and other Democrats. If a person of moderate intelligence wants to be a Democrat, they must cultivate economic ignorance.
(Thanks to BroJudd)
September 29, 2004
They line up before dawn...
[from CSM] HOUSTON – Every Friday and Saturday, they line up before dawn: people from around the country who, despite recent news reports, still want to work in Iraq.One of the things that is most disgusting about this time in politics is the smearing of the Halliburton Corporation. O'my'God, it's connected with War, Oil and Dick Cheney--it's EVIL. What lying crap, When the same company was doing the same kinds of things for Clinton in Bosnia, Al Gore gave them one of his "Excellence in Government" awards. Now they are the Forces of Darkness. How I hate that kind of brainless reflexive LeftThink. STUPID. Of course, if you don't have any positive message, stupid talk is all you can do.
The beheadings haven't swayed them, they say, as they wait to find out what openings are available with Houston-based KBR, the subsidiary of Halliburton, which won a $4.5 billion government contract to provide support to the US military.
There are spots for cooks, carpenters, truck drivers, even entertainment specialists - and plenty more open up every day as those who thought they could make it come home.
While last week's beheadings of two American contract workers sent shock waves through communities from Hillsdale, Mich., to Marietta, Ga., remarkably it didn't shorten the lines at recruiting fairs...
Thank you, men and women of Kellogg, Brown and Root! Thank you for doing the hard and dangerous stuff while people not fit to clean your boots sit home in comfort and sneer and call you "war profiteers."
August 26, 2004
a quiet little study...
The jobs numbers that you're not hearing about By Timothy Kane and Andrew GrossmanThe BLS has that other survey, of households. That one says there are "2 million more working Americans under President Bush than ever before.."
The U.S. Bureau of Labor Statistics (BLS) recently snuck out a telling confession beneath everyone's radar: Its flagship payroll survey is likely undercounting hundreds of thousands of jobs.
Most economic observers were too busy fretting over the lackluster gain of 32,000 payroll jobs in July to take notice of the other positive indicators, let alone the quiet little study that acknowledges payrolls have a problem.
The study describes how job-changing can inflate the payroll survey's numbers artificially. When worker turnover is brisk, as in the late 1990s, millions of workers are counted twice when they switch jobs. About 3.9 million people changed employers during a typical month during the 1990s, but only 3.1 million do so now....
(Thanks to Pejman)
August 21, 2004
"The rich" are paying more now...
Just in case you were actually tempted to believe the Demagogues when they wail about Bush's "tax cuts for the rich," read this piece by Stephen Moore in NRO:
...The Treasury data confirm that the real impact of the tax cuts on the rich has been precisely the opposite of what the CBO study suggests. By resuscitating the economy and spurring a turnaround in income growth, the tax cuts have increased the share paid by the rich. Real income growth has increased significantly since the 2003 tax cuts were passed, increasing at faster than a 6 percent rate in the first two quarters of 2004. With the economy now growing more quickly, we can expect the tax shares paid by high-income groups to increase.
There is another reason to suspect that as the Bush tax cuts continue to kick in, they will increase tax payments by the wealthy. People are much more likely to work harder, engage in entrepreneurial activity, and make investments when the government is confiscating less of the monetary rewards for these activities. When you tax something, you get less of it...
August 11, 2004
" turned over the entire gross domestic product every three days..."
Jonathan Rauch has a great piece on the DTCC, the Depository Trust & Clearing Corporation, and its preparations for disaster.
...In the 1970s, the financial sector set out to centralize and automate settlement. Today, a single private clearinghouse settles U.S. securities trades, with as many as 4.5 _billion_ shares changing hands on a peak day. That clearinghouse is DTCC.The DTCC managed to keep going on 9/1, but there was luck involved. And the only backup was also in Manhattan. If DTCC were knocked out, our economy might just be toast. Since 9/11 it has radically decentralized itself.
Centralization is efficient but carries risks of its own. ....Something to think about: DTCC settled $923 trillion in securities transactions last year. In other words, it turned over the entire gross domestic product every three days...
..."Before 9/11," says Paretti, "this room was full, because we had all the bodies here." Where are they now? He points to a large-screen TV. It shows video feeds from three command centers. One is where we're standing. The others are -- well, somewhere. DTCC now runs several remote command centers, all of them in secret locations, some more than 1,000 miles away, and each fully staffed and capable of running the whole settlement system. Any center can independently take control if others cease to respond...One of the interesting things about 9/11 is that, due to the Y2K worries, most of the financial institutions that were affected had pretty good back-up systems, and could switch operations to branch offices. And I'm sure they have all improved on them since.
... "It's been an entire culture change," Considine says. Throughout the company, systems that for decades relied on central control are being reorganized for independent movement and judgment. Hubs are giving way to networks. It is not just terrorists who are adopting cell structures...(Thanks to Jay Manifold)
July 16, 2004
Measure five times, cut once...
I often build cabinets to fit within a particular opening or into a niche. I measure very carefully, cut and assemble with great care, and should be confident of the result. But every time, I breath a sigh of relief when the piece fits, and think, "Wow. It actually worked!"
Same here. I knew tax cuts would lead to greater strength in our economy, which in turn would increase tax receipts. But it's sure nice to see it in black and white:
... "What we are seeing is the impact of a good economy, the impact of extraordinarily strong corporate profits, and likely the impact of more people being caught in the alternative minimum tax," Drew Matus, financial markets economist at Lehman Brothers in New York, said in response to the report.Thank you President Bush. Our economy is going to keep growing, and its future size will dwarf the current deficits. I know that.
"Surprisingly strong receipts are really helping out a great deal here. There is no reason to suspect, given the employment growth we have seen, that this trend will change any time soon," he said.
The June result exceeded Wall Street forecasts of a $16.50 billion surplus, as well as a $16 billion surplus projection from the nonpartisan Congressional Budget Office...[thanks to Dean]
Of course, if the stupid lies were true, and we really had had "massive tax cuts for the rich," the beneficial effect on the economy would probably be far greater, and we'd all end up better off in the long run. There's no way that will happen. The stupid idea that if my income goes up, but my neighbor becomes a billionaire, then I've been "cheated," that I've been "hurt," is too deeply embedded, both in human nature and leftish propaganda. So taxes will continue to be progressive, a faux "solution" to the "problem" of income inequality.
July 14, 2004
Here's a post abut an amusement park that used to offer free admission to the severely handicapped...but no more.
...Effective January 01, 2004, we will not be able to offer free or discounted admission to anyone based on their disability or level of disability. From a legal standpoint, our staff is not qualified to make decisions on who should or should not be given free admission to the park based on their level of disability. For those reasons we regret to inform you that individuals who have been admitted under our previous disability policy will no longer be allowed to enter free of charge.They don't say why explicitly, but it's easy to guess. The ADA has conjured up yet another army of parasite lawyers who do nothing but file shakedown lawsuits.
Charlene's involved in a case like that. Nice, expensive apartment house, being sued by a guy with no income, who claims he had no wheelchair access to the rental office. Represented, of course, by a firm that files such lawsuits routinely. Who really pays? You do, if you are a renter...
July 13, 2004
Running out of gas...
...In other words, China's leaders had better create a self-sufficient economy because Beijing will have to find about a half trillion dollars to fix the banks. And he will have to do that while repairing the financial condition of the central government. Official figures say that the annual deficit to GDP ratio is now 2.7 percent, just below the 3.0 percent international alarm level. Others put the number at 3.5 percent, and it is probably higher than that, perhaps 10 percent or more. According to official numbers, the ratio was just 0.75 percent in 1997. China has been running large budget deficits even though the economy is growing at a fast pace according to official statistics. That's unusual, to say the least. And disturbing.
What's more disturbing is that deficits eventually turn into debt. Beijing claims that its debt-to-GDP ratio is in the teens, well below the 60 percent alarm level. Yet once you add debt that is not officially counted and the "hidden obligations" like bad bank debt and unfunded social welfare liabilities, the ratio goes up to perhaps 170 percent.
Experts, ignoring China's debt problems, keep on saying that the country will have another banner year for gross domestic product. True, the People's Republic can continue to create growth for a few more years, but increasing levels of deficits, debt and non-performing loans indicate that the productive capacity of the economy is, in reality, weak. On its own, the Chinese economy is running out of gas...
July 11, 2004
Where to place your bribe...
The Biggest Bang for Your Bribe, By Richard Morin, WaPo It's tough being corrupt. You know you probably need to bribe lots of people to achieve your ignoble goals. But where, exactly, do you put your money? Do you invest more heavily in payoffs to politicians, to the police or to judges? Or would it be more effective to bribe the news media to ignore scandals and produce monotonously favorable coverage?
The answer is to invest in the news media, claim economist John McMillan of the Stanford University's Graduate School of Business and graduate student Pablo Zoido in a paper to be published in the fall by the Journal of Economic Perspectives.
They based their conclusion on a detailed study of an unusual data set: Records of bribes kept by Vladimiro Montesinos, the former head of Peru's secret service. Montesinos's goal was to protect his patron, then-President Alberto Fujimori....
July 8, 2004
AOG scoffs at the idea that we have (or should have) an American Empire:
...However, I think this analysis is fundamentally flawed. When one looks at previous empires, they existed because it was economically beneficial to the conquerors. Conquest or economic activity in foreign lands (the latter the basis of the British Empire) was a way for the not well off to become wealthy. The homeland was relatively static in its economic and class structure, but the hinterlands were the place of opportunity and self advancement. It was where the action was...I think empires stopped making economic sense with the Industrial Revolution. The wealth that could be extracted from a pre-industrial colony was trivial compared to what started pouring out of Manchester, or Chicago. The British empire seems to have mutated into a welfare scheme for the British middle class, providing cushy jobs without the need to "go into trade." Bad move.
...This difference makes an American empire unsustainable. The talent (imperial and native) required to run the imperial domains will leak away back to the homeland. The only hope of a place like Iraq to be competive with the USA is to become a self-ordered society. But in that case it’s not an imperial possession anymore, but a sovereign nation. Those who support an American empire have not come to grips with the End of History, which spells the end of Empire as well...
The Chinese Century?
I highly recommend this article, in the NYT Magazine, on the stunning growth of China's economy. (Sent by Frank. Thanks!)
To me, the big question is the extant to which the Chinese, and other developing nations, will adopt the "rule-sets" of the US and the Anglosphere. They will, inevitably, as incomes rise and the middle-class grows, become more democratic. BUT perhaps they will develop more along the lines of France or Germany and the EU? Or some similar elite-run pseudo-democracy. That would be the less-happy outcome for the world. To be blunt, we have the best culture of political freedom. We have what they need.
And the poisonous hatred evoked by the US and its traditions in much of the world, (and much of the US) is evidence of the power of what we have to teach. Elitists everywhere instinctively know who their enemy is. (One good thing about the Iraq campaign is that it has exposed their disguise of being "anti-fascist" for the pathetic sham it has always been. I'll add that to my list of reasons why the liberation of Iraq was a move of pure genius. I'm up to about 13.) One good sign is the growth of Christianity in China.
...Look, China is the most exciting place in the world right now to be a manufacturer,'' says Mark Wall, president of the greater China region for G.E. Plastics. His operation sells the plastic pellets used to make everything from DVD's to building materials. Within two years G.E. will sell $1 billion in advanced materials, including plastics, in China. Wall, who came to China from G.E. Plastics, Brazil, describes a country in love with manufacturing like no other, where engineers come in excited and readily work long days. Where university students clamor to get into engineering and applied sciences. Like many American manufacturing executives in China, Wall talks about working in China with the delight that young computer whizzes felt when they found cool in Silicon Valley. There's no going to a cocktail party and then trying to talk around the fact that you make things in factories. Wall says he feels at home. He loves it. G.E. has every plan to capitalize on the local zeal for manufacturing. It recently opened a giant industrial research center in Shanghai, and by next year will it employ 1,200 people in its Chinese labs. The company has also set up scholarship programs at leading Chinese technical universities. It will have no shortage of good candidates.
The government is pouring resources into creating the world's largest army of industrialists. China has 17 million university and advanced vocational students (up more than threefold in five years), the majority of whom are in science and engineering. China will produce 325,000 engineers this year. That's five times as many as in the U.S., where the number of engineering graduates has been declining since the early 1980's. It is hard to imagine Americans' enthusiasm for engineering sinking lower. Forty percent of all students who enter universities on the engineering track change their minds...
July 6, 2004
Decreasing Healthcare Costs....
Here's a useful article on Health Saving's Accounts (HSA's). Yet another good reason to vote for Bush and Cheney. Democrats like Kerry and Kennedy have battled for years to prevent you from having these.
(Thanks to O Judd. Amazing how he finds all these things. This one is from "Industrial Distribution.")
July 3, 2004
"...U.S. affiliates reported record quarterly earnings in 14 countries."
This is an interesting piece on trade, Forget About the U.S. Trade Deficit?:
...One of the most dangerous deficits today is not one of trade — but rather a deficit in understanding how U.S. firms compete and sell products in the world marketplace.I'm not enough of an economist to judge this, but it sounds promising... (via Judd)
Simply put, American firms compete more through foreign direct investment — they establish a local presence in international markets by operating on the ground — than through arm’s-length trade.
In 2001, for instance, the last year of available data, U.S. foreign affiliate sales topped nearly $3 trillion — roughly three times larger than U.S. exports of goods and services. Because foreign affiliate sales are not included in U.S. exports, a great deal of global commerce is missing from the reported trade figures...
July 1, 2004
...can we please please please please please please PLEASE!! stop talking about Bush's "tax cuts." There are no tax cuts. There's a tax shift--current taxpayers pay less, and future taxpayers pay more. Only by pretending that nobody has to service and amortize the growing federal debt can you talk about Bush's "tax cuts." They aren't there, any more than a $5,000 increase in your VISA limit is an increase in your income.Dave, I think Mr DeLong has let partisan rancor trump his usual knowledge and intelligence. His statement assumes that the economy, and tax revenues, are static. Which is sort of like you assuming that your company's sales will be the same whatever the price you charge.
By his reasoning, you gained nothing by buying your first house, since you burdened your future with both interest and principal payments. But in fact, your income grew, your net worth grew, the value of the house and the whole neighborhood grew, and mortgage payments did not blight your life and turn you into a shriveled old man.
Same thing happens in the big world. Remember what they said about Reagan's tax cuts? That our children and grandchildren will have to slave in poverty to pay off the 1.3 trillion he added to the National Debt? The critics carefully didn't burden our tiny brains with the fact that his term in office added $17 trillion to the national wealth. Sort of like borrowing 1,300 to make an investment that earns 17,000. Not bad.
And our economy has been growing in almost every quarter since. The national wealth is now something like $450 trillion. So the "crushing burden" left by Reagan has now shrunk to a rounding error. Of course I can't prove that Reagan's tax cuts and monetary policies led to our present wealth, but the tax cuts were done according to a theory, and the results fit what the theory predicted.
What's the theory? Suppose when you first bought a house you had also owned stock in a promising young company, maybe something like, oh, Microsoft. And suppose you could have sold the stock and bought your house for cash. Would that have been a good move? Of course not, better to have added some debt. The theory behind the tax cuts is that leaving money in the pockets of the American people is a good investment, much like keeping that Microsoft stock. The theory is that the payoff will be much bigger than the cost of the debt.
Of course that theory won't appeal to Mr De Long, since it assumes that the other theory is wrong. That one says that the money is best put in the hands of "experts" in government and the academy, (which is to say, people like Brad DeLong.) One of the ironies here is that if a Democrat were in the White House, DeLong would almost certainly agree that a wee bit of deficit spending is just what the doctor ordered for a slowed-down economy.
These are the nasty capitalists Democrats want to protect us from...
41 Halliburton Employees Killed in IraqI had no idea the death toll was so high. Well, of course I didn't, it doesn't get any news coverage, because that wouldn't fit the Party Line.
[From NewsMax]Forty-one employees of the embattled energy services company Halliburton have been killed in Iraq and Kuwait since the company became the U.S.'s primary contractor in the Iraq rebuilding effort last year.
Halliburton's sacrifice in human terms is higher, for instance, than the entire British army's - which has the second largest military presence in Iraq. Twenty-seven British soldiers have killed since the occupation began on May 1, 2003.
Despite suffering a staggering death toll, Hallburton's contribution to the war effort has been derided by the Democratic-media complex as war profiteering. When a Halliburton employee is killed, kidnapped or injured in Iraq, it seldom generates any news coverage.
On the other hand, when a reporter dies covering the war, the media is awash in reports praising his courage and dedication....
Well, people of Halliburton and our other contractors, Americans thank you. I thank you. You are heroes, and the Michael Moore crowd isn't worthy to clean your boots.
June 30, 2004
What we get paid for...
I was just reading this new piece by den Beste, which is about almost everything, but included this:
Which usually means the US, which has had a chronically high trade imbalance for a hell of a long time, causing some to predict that we're heading at high speed for a cliff.One of the things I found most interesting in Thomas PM Barnett's book The Pentagon's New Map was an explanation of why the US can get away with a chronic trade deficit. We cover it in the short term by borrowing—we exchange our "paper" for BMW's and DVD players and Barbie Dolls. But it seems to go on forever, a perpetual free ride, a VISA Card with no limit. Why no crash?
I don't know. I don't think it's possible for us to maintain a huge trade deficit forever. But I'm not so sure that the situation is quite as straightforward as those doomsayers claim...
Barnett says the world is essentially paying us to be its policeman. If China "tests" missiles right next to Taiwan, Asia's economy doesn't come to a panicky halt. Because the US will just happen to "test" a Carrier Battle Group in the neighborhood soon after. Both China and Taiwan can keep their factories churning out widgets instead of guns because they know darn well we are not going to tolerate any foolishness. Both China and Taiwan are content to keep buying our debt, to keep piling up mountains of it, because any big US economic contraction might force them to build their own aircraft carriers. Much of the world gets to concentrate on trade because we are handling their defense burden.
Barnett says Globalization is a system that benefits the US more than any other nation, because it is a sort of rebuilding of the world in our image. It's an expansion to global size of the freedom and opportunity and "rule sets" we have in the US. The game of globalization is rigged in our favor, but we "pay" for that advantage by assuming many adult responsibilities and burdens.
I was glad to learn that we aren't running a scam....
June 6, 2004
More on the New Map...
I have not read the book, but I find some of the author's reported conclusions to be unlikely; the major threats of the twentieth century came from modernized, "core" nations: Japan, Germany, (and to a lesser extent) Russia.It wasn't modernization that changed things, but globalization. The first blooming of globalization was squelched in the 1930's by economic nationalism, by the high tariffs thrown up to protect against the Depression. If the developed nations had lowered tariffs after 1929, the Stock Market Crash probably would have been just another business cycle, and Naziism would have fizzled out. Russia was cut off from the flows that globalization brings until the 1990's.
Also, many of the 9/11 hijackers were from the more "connected," educated, and wealthy parts of their societies. Take Mohammed Atta, for example; he had a degree in urban planning from a German college.
The modern world still provides as fertile soil for the true-believer fanatic as it ever did; if it didn't, Berkeley would look a lot different.
The big by-product of our involvement in the world during the Cold War was to allow globalization to happen. In fact that's probably the real story. First Europe and Japan, then a variety of other nations grew strong economically because we shouldered most of the defense burden. (It was our best investment ever. No need to thank us; globalization is really America's Operating System adopted by the world, and we profit the most out of it.)
Think of what happens today when a country gets into a financial crisis. Remember Mexico in 1994? A large part of a country's wealth can evaporate in HOURS as traders around the world dump their stocks and bonds. (And the money can flow back to a place like Mexico just as fast. Make reforms and you get instant gratification. Very educational.) Any threat of war would be much worse. Or imagine a US vs Mexico war. A huge chunk of "our" industry is across the border. A big portion of "their" population lives here. Because of NAFTA, Mexican trucks roll freely on our highways. We are entangled with them. And either country would be economically crippled if its ports were mined or airports shut down. Or communications lines were cut or satellite access blocked.
War would be ridiculous. But more important to our current situation, a terrorist movement (or a war-mongering nationalist movement) in Mexico will never grow big enough to really threaten us, because it would be squelched as soon as the threat to Mexico's wealth and trade became obvious. Most Mexicans are now well aware of how important trade and stability are to their hopes of buying a new car or wide-screen TV. Same goes for Berkeley. There are lots of wackos there, but they trek to gourmet natural foods restaurants, not to terrorist training camps. And they probably have jobs in the next-door capitalist haven of Emeryville. Any slow-down in the world's economy would be felt painfully in Berkeley too.
Almost all our military interventions during the 1990's were in places with a per-capita income less than $3,000. That seems to be a threshold. Above there the crazy violence mostly stops. (But it needs to be real wealth—not just having a lot of oil.) Mohammed Atta was "modernized," but the Arab region is not. They still have monarchies! Ludicrous. The desire of wealthy Saudis to fund terrorists was never counterbalanced by cabinet ministers worried about foreign investment drying up if there was a climate of disorder. Developed countries worry intensely about their bond ratings, and if those are threatened, action is taken. Corrupt left-leaning sleaze-ball demagogues are tossed out in favor of reformers who promise a favorable business climate. (Think Schwarzenegger!)
Phil, read the book! Then tell me if I'm on the wrong track.
May 22, 2004
Rising prices tend to self-correct...
Steve Chapman in The Washington Times:
...The market economy's beauty is rising prices tend to self-correct. They stimulate investment, which in time raises output. But if the government threatens to step in every time prices jump, oil companies will see no point trying to expand reserves or boost production.Not long ago I quoted the Washington Times and some troll commented that, since Sun Myong Moon was one of the founders of the paper, it was tainted, and it should be presumed to be a sinkhole of lies and absurdity, (and also that I was tainted for quoting it.) That was just a bit of the lunacy certain people exhibit at the thought of losing their monopoly on public discourse.
The paradox is this: The surest way to get lower prices tomorrow is to put up with higher prices today, The surest way to get higher prices tomorrow is to insist on lower prices today.
This is a matter not of theory but experience. When Ronald Reagan scrapped oil and gasoline price controls in 1981, critics said prices would soar. They did, but not for long. Supplies rose, consumption fell and prices began a long decline, which left us all swimming in cheap gas and spoiled beyond belief.
In reality, today's prices aren't so high. Two dollars a gallon may sound onerous, but after adjustment for inflation, it's less than we paid from 1979 through 1985....(via Betsy Newmark)
Thinking about it, I would tend to turn the "tainting" around. The frequent good-sense one sees in the Washington Times makes the Moonys, by association, seem a bit less flaky.
by Jayson at Polipundit:
I say we take our own job market survey.My suspicion is that the Household Survey is in fact closer to the truth than the Payroll Survey. And the fact that the press pushes the bad news and ignores the good is good for Bush. They are trying to help Kerry, but they are doing just the opposite. Why? 'Cause the truth will emerge eventually. And if the situation is as good as I think it is, they won't be able to keep the lid on through the election.
First rule, be honest. And no spinning. Leave that to the Paul Krugmans of the world.
Up until May 7th, I worked for a national law firm. I then started my own business. I'm single and unattached. [Hint, hint, ladies ;-)] I've gone from being an unhappy lawyer who literally banged his head against a wall each day, to being a happy business owner.
So, on a household survey basis, I'm a wash. On a payroll basis, I'm a minus-1. On a job satisfaction basis, well, let's just say that you'd need a hack saw to get the smile off my face.
In fact, they are engineering an "October Surprise" for Bush. Same for Iraq. The press/Democrat/jihadi alliance (The Axis Of Entropy: Putting sand in the gears wherever reform is attempted!) timed their move wrong. They threw what I suspect is their worst at us in May! Is that stupid or what?
May 7, 2004
Oooops, now Peru's getting ahead of us, too..
Interesting article on a successful tax reform in Peru:
...The first phase of the reform focused on simplification, with 50 different taxes reduced to four. Employees were taxed at a flat rate, deducted by their employer, and banks were enlisted to help with collections....These things spread. Peru is next door to Chile. They can see this kind of stuff working. They can watch lower tax rates and simpler systems leading to economic growth and actually more tax money collected...(Same mix is cooking in Iraq. Call it the Bremer Revolution. It's no wonder Democrats and Ba'athists and Al Qaeda all agree that what's happening there is a catastrophe.)
April 19, 2004
“But you killed all those jobs!”
This is fascinating, on governmental reform in New Zealand:
...When we started this process with the Department of Transportation, it had 5,600 employees. When we finished, it had 53. When we started with the Forest Service, it had 17,000 employees. When we finished, it had 17. When we applied it to the Ministry of Works, it had 28,000 employees. I used to be Minister of Works, and ended up being the only employee. In the latter case, most of what the department did was construction and engineering, and there are plenty of people who can do that without government involvement. And if you say to me, “But you killed all those jobs!” – well, that’s just not true. The government stopped employing people in those jobs, but the need for the jobs didn’t disappear. I visited some of the forestry workers some months after they’d lost their government jobs, and they were quite happy. They told me that they were now earning about three times what they used to earn – on top of which, they were surprised to learn that they could do about 60 percent more than they used to! The same lesson applies to the other jobs I mentioned...(via BrothersJudd Blog)You Big Government lovers ought to stop bitching about Bush. Things could be much worse for you...
Actually, the article is so amazing, I'm wondering if it's true! Maybe it's a utopian fantasy...anybody know? I should Google it, but I'm feeling lazy...
April 3, 2004
Excellent news from Egypt
Egypt is making some very big and important reforms.
From an article by Steve Forbes:
...The catalyst is something that's prosaic yet absolutely essential for a sustained, innovation-oriented economic takeoff: property rights...There's a lot of this sort of thing going on in the world right now. (Here's one.)
...Most development experts ignore the elephant in the room--the fact that most people in the world operate outside their country's formal legal systems. In Egypt's case, 88% of all enterprises are extralegal, as is 92% of the country's housing. Egypt and other developing countries do not lack for entrepreneurs; they lack institutions and legal structures that would enable theirentrepreneurs to expand and truly flourish. The Peru-based Institute for Liberty and Democracy, which spurred this project and is headed by economist Hernando de Soto, estimates that Egypt's shadow economy has accumulated $248 billion in assets. But as De Soto notes, "All this activity and all the assets in the extralegal economy are dead capital--assets that cannot be leveraged to obtain credit and investment. To convert all of this dead capital into live capital requires the two cornerstones of a market-based rule of law: legal property rights that cover all of Egypt's assets and good business law for entrepreneurs."...(Thanks to Brothers Judd)
And it's the power of ideas at work. Even a decade ago you would have heard that Egypt needed "investment in infrastructure," or some such.
March 26, 2004
If you are tempted to believe the insinuations of certain politicians that Americans are getting poorer, take a look at this graph, at EconoPundit. He writes:
Out of curiousity I graphed the census data cited by Kaus. If you accept these data as at all valid, the results are striking. It looks like there were two distinct periods of poverty decline in the US, one ending at the point Lyndon Johnson's "War on Poverty" began, the other starting just at the starting point of Clinton era welfare reform. Go figure.
March 21, 2004
"Private affluence and public squalor"...a positive indicator
Thomas Friedman has an interesting op-ed, which I think has things exactly wrong:
"But it will require some radical changes in politics: While India has the hardware of democracy — free elections — it still lacks a lot of the software — decent, responsive, transparent local government. While China has none of the hardware of democracy, in the form of free elections, its institutions have been better at building infrastructure and services for China's people and foreign investors.The infrastructure ploy is a fall-back position for leftizoids who have been forced to concede that government can't actually build an economy. So their position is "The economy can't grow until after we raise taxes and build roads and airports..." Or "until after we build a new City Hall to house the better government that we need before the economy can grow."
When I was in Bangalore recently, my hotel room was across the hall from that of a visiting executive of a major U.S. multinational, which operates in India and China, and we used to chat. One day, in a whisper, he said to me that if he compared what China and India had done by way of building infrastructure in the last decade, India lost badly. Bangalore may be India's Silicon Valley, but its airport (finally being replaced) is like a seedy bus station with airplanes.
Few people in India with energy and smarts would think of going into politics. People don't expect or demand much from their representatives and therefore they are not interested in paying them much in taxes, so most local governments are starved of both revenues and talent."...
India is doing it right, Doing what the US did. What was Galbraith's phrase, "Private affluence and public squalor?" That's a good sign. Buy India, sell China.
Your High School history book probably made a lot of hay with the Erie Canal. But mostly America grew by starving a fairly corrupt public sector and letting the private sector boom with low taxes and few regulations. The museums and universities and national parks and highway systems came after economic growth. Often paid-for or led by "robber barons" or their heirs. They were pulled into existence by rising expectations and prosperity. Rather than being pushed by government in the expectation that these amenities would somehow spark growth.
Likewise the demands for good government came after the great explosions of wealth. Your history book probably implied that "The Gilded Age" and its plutocrats caused corruption and bad government. To which reformers responded with things like the Progressive Movement. But the corruption was there all along. It was increased national wealth that stimulated us to indulge in luxuries like reform movements.
"Few people in India with energy and smarts would think of going into politics.." That was just how things once were in America. Or rather, how they would have looked to a NYT columnist of 100 or 150 years ago. Actually, men with "energy and smarts" were entering politics, but they were poor and hungry ruffians that a Thomas Friedman would have disdained. When the wealthy and elegant young Theodore Roosevelt decided to enter the mire of New York politics, his social equals thought he had gone mad.
(Even the Erie Canal was not one those "highways to nowhere" that get built in Infrastructure-Land. It was a fairly visionary public project, but the need, the demand, the wealth to build it, all existed prior. The canal was busy from the moment it opened. The histories tend to imply that the world stood still until the canal was built. That suddenly, with the opening of the canal, settlers started heading West. No way. "In nine years, Canal tolls more than recouped the entire cost of construction..." That's the tip-off. )
(via Orrin Judd)
March 12, 2004
Taking in each other's washing...
While I liked this Kerry-scorching column, I think one criticism is possibly unfair.
...What Mr. Kerry likes to call "Benedict Arnold companies that ship American jobs overseas" rank a nasty second, but not enough to rate a pin. (Can't wait to hear Candidate Kerry denounce HJ Heinz, his and his wife's own Benedict Arnold company. As columnist James Glassman has written to inexcusably scant notice, "Of the 79 factories that the food-processor owns, 57 (felicitous number!) are overseas." That ships plenty of "American jobs" to Botswana, Thailand, China, India and elsewhere.) ...I don't have any specific knowledge here, but I'd guess the HJ Heinz also sells in those countries. If catsup is made in India and sold in China, those aren't "American jobs."
And there's probably a lot of in-sourcing going on that politicians aren't interested in. If Heinz ads written on Madison Avenue are used to sell catsup in Thailand, that's in-sourcing. Some ad-man in Thailand doesn't get a job because the work is being done in New York. And probably those foreign factories don't set up their own accounting and inventory systems, but use those of the parent company. So IT jobs are being in-sourced. (With some of the programming being out-sourced to India...)
In a globalized world, these questions start to lose their meaning in tangled recursions...
February 21, 2004
I came up with a great money making idea, for anyone out there looking to score some cash.What's needed is a disadvantaged ethnic group with blonde hair and blue eyes...
In corporate America today, there are plenty of �diversity� programs that attempt to hire more minorities of various types. The key question is, what makes some one a member of these minorities? It seems to be the case that it�s primarily self-identification: if you tell the corporate recruiter that you�re [ethnic], then you are as far as the corporation is concerned. I�ve looked for years and never found any legal basis for determining or disputing such a claim. However, the problem is that the recruiter can�t ask you and it seems a bit awkward to blurt it out. The standard technique is to have a key award on your resume that indicates your ethnicity.
Here�s the idea - sell those awards! You set up a website as an institute or foundation, make up some blather (or copyright infringe it from some other website). Once you�ve got that set up, you charge people an �entrance fee� for participating in a contest for an ethnic award. Oddly, it turns out that every one who applies wins! Then the participant can honestly put on their resume �won Best [ethnic] Rising Star Award, 2004�. Of course, you�d need a set of stock phrases for the award, with a few web pages for each. Charge $20 or $50 for the entrance fee and go....
February 19, 2004
There's also "Insourcing"
This editorial points out something very important....
While outsourcing has captured current attention, it is not a new phenomenon. If the term is defined as jobs operated by U.S. companies in foreign countries, the current total is 10 million positions, or 7 percent of domestic U.S. employment. Further, there's been an upward trend in the number of outsourced jobs since the mid-1990s, when trade barriers were significantly reduced following the signing of the NAFTA and GATT agreements.(Thanks to Daniel Drezner)
What is less well publicized and understood is that "insourcing" also occurs in our economy. Insourcing happens when foreign companies establish jobs in the United States.
The latest statistics show insourcing accounts for over 6.5 million jobs nationwide. Although this is less than the number of outsourced jobs, the gap has actually narrowed in the past quarter century. That is, there's been a recent trend of foreign companies adding jobs in the U.S. faster than U.S companies have increased jobs in foreign countries....
February 14, 2004
singles, young people, homosexuals, sophistos, and trendoids...
Richard Florida caused quite a stir with The Rise of the Creative Class , his theory that economic growth was strongest in hip and bohemian places that attracted creative people. Trouble is, though the media loved it, it's pure malarky, as shown in Paths to Prosperity, by Joel Kotkin...
....Today, economic growth is more likely to be found in areas dismissed by Richard Florida and his media supporters as barely worth living in. It�s not likely that this correction will be trumpeted with anything like the fervor of Florida�s original claims, however, because many journalists prefer his original perspective. In fact, a whole industry has arisen over the last decade to promote the premise that economic growth directly follows �quality of life� factors that appeal to singles, young people, homosexuals, sophistos, and trendoids. What really matters are dance clubs, cool restaurants, art museums, and hip shopping districts, many writers agreed.If Richard Florida were right, this town would be a roaring bonfire of entrepreneurial energy. But he's wrong.
If you go to today�s new growth hot-spots, however, you will find few of those supposed prerequisites of prosperity. Instead, in a land like the Inland Empire you will see single-family homes, churches, satellite dishes, and malls. These are places where households, not singles, dominate the economy. These are cultures attractive to ordinary families. And therefore to business people....
(thanks to Brothers Judd Blog)
February 11, 2004
increasingly perilous fiscal future
For the umpteenth time, Andrew Sullivan bugs me by telling us we are on the edge of disaster...
One more reason to be worried about the U.S.'s increasingly perilous fiscal future is that it could well jeopardize the war on terror - which will need real resources for the foreseeable future....I don't think Sullivan here is coming from any realm of rational calculation. He reminds me of people of my parent's generation who were scarred by the Depression. (Or a man I met once who had been in a Japanese POW camp, and kept piles of canned food in places like behind the sofa). Truth is, by current world standards, neither our deficits nor our national debt are excessive. And while our debt is growing, our assets are growing apace. And our assets are much larger than our debts. I recently noticed a figure for the amount of money just in American mutual funds�it was about a trillion dollars more than the national debt...
Charlene and I have a mortgage, and other debts, and some worrisome obligations, like putting kids through college. Sometimes it seems like we are being crushed with debt. But in fact, we could cash in our IRA's and pay off all our debts tomorrow. Or sell our house and pay off our debts and have a large sum left over. And part of our debt comes because we are investing in our businesses. This involves risks, but will likely leave us better off in the long run.
That's where this country is. We borrow money to be able to do more things. Some frivolous, some good investments, such as the War on Terror, the winning of which will pay off hugely in the future as the world becomes more stable and prosperous and more able to buy our products. And we can borrow money because many people both here and abroad think the US is a good investment and not likely to ever default.
NOTE: This is not an argument in favor of big government. We could be even more prosperous than we are without the burden of an obviously overweight public sector.
February 3, 2004
They are going to make it explicit...
Natalie Solent blogs about how Ryanair was sued because they charged a passenger for the use of a wheelchair.
The usual stupid mess, neither side looks very good, we all know the story... But here's the kicker:
...Ryanair lost. However it has taken a sweet little revenge: they are to impose a 50p levy for wheelchair provision on every ticket and, crucially, they are going to make it explicit. You know if I didn't hate Ryanair so much I'd quite like them sometimes. The BBC says, "By so publicly linking the cost of assisting disabled travellers to increased ticket prices, it is a decision that is likely to anger disability campaign groups. " Indeed, though disability campaign groups might feel a certain embarrassment when stating their exact objection to Ryanair's small gesture towards educating the public on costs and stimulating better-informed debate...Oh, the possibilities. The price of this ladder includes approximately $2.00 for insurance against frivolous lawsuits and $1.50 for government-mandated paperwork.