Caught Stealing

The Divider vs. the Thinker

2011-10-27T19:34:00.000-04:00

"Barack Obama is a dream. In 2008, the dream was hope and change. In 2012, it is progress, thwarted by evil partisans and selfish greed. As Gertrude Stein said “there is no there there.” He needs enemies to draw attention from his lack of depth, for he is truly a mile wide and an inch deep. He is an illusion; always appearing to be more than he is, always, more promise than reality. In the end, America suffers most from the machinations of the man who was never there."

- William L. Gensert

Understanding the Deficit Numbers

2011-08-03T08:17:00.000-04:00

Even if you think that you understand the budget, deficit and debt crisis, I urge you to read this. It will reinforce your understanding dramatically and I hope make an impact . The Jones family Federal Budget 101. The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:

• U.S. income: $2,170,000,000,000
• Federal budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family:

• Total annual income for the Jones family: $21,700
• Amount of money the Jones family spent: $38,200
• Amount of new debt added to the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Amount cut from the budget: $385

So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending? It is a start, although hardly a solution. Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt). You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress.

The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home state. To effect budget change, we need to change the job description and give Congress new marching orders. It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now.

In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab.
http://usdebt.kleptocracy.us

Thanks to Professors Obama, Pelosi, Reid, Dodd, Frank, and Schumer

2011-07-31T21:16:00.002-04:00

I don’t understand how you can be so hard on President Obama? Weren’t any of you here for the schooling of 2011? That year, thanks to professors Obama, Pelosi, Reid, Dodd, Frank, and Schumer, was the most explosive period of intellectual growth in my life. In that short year I came to understand some basic and fundamental truths of our new fundamentally changed America:

• Hard work is for suckers. Wait for someone else to produce something, find a way to cast yourself as their victim, and then take what you want.

• Successful people are evil because they show others that innovation, risk taking, and hard work leads to success. The people MUST believe that the government is COMPLETELY in control of each person’s success.

• Only idiots think that living within a budget is possible or practical. Intelligent people know that the federal budget is just part of a highly sophisticated system that must be ratcheted up from time to time. Passing legislation to limit the debt is just a polite custom that soothes that silly part of the public that still hold onto quaint ideas about the value of promises.

• If you are white, you should be ashamed. If you are also a male, you should be doubly ashamed. If you are also a small business owner who has the audacity to believe that what you earn is yours, you should just nip off and hang yourself.

• Children have no business being exposed to the teachings of their parents. It takes too long for professional teachers in our fine public schools to undo all the indoctrination received at home. The endless drivel spouted by parents about compassion, honor, responsibility, courage, kindness, and most importantly individual achievement would certainly ruin our culture if it were not for the tireless efforts of our public school teachers and especially their unions.

• There are two kinds of Americans: Democrats and racists.

• Christians are bad.

• 9% unemployment is a very good thing because it could have been 90% unemployment. The stimulus kept the unemployment to an unbelievably low rate. We should all be very, very thankful.

• The American Experiment is a very bad idea because it naturally discriminates against people with deficits of knowledge, energy, courage, honor, and tenacity. These are the VERY people that geniuses like John Rawls say that society should advocate. The American Experiment may create an incredibly high quality of life for society at large, but people in the lower socio-economic rungs naturally feel envy - no human should ever feel bad about their station in life or their accomplishments. The American Experiment is brutal idea from a brutal time.

• America has caused the world so much damage that we should just say we are sorry, tear up our completely outdated constitution, and beg the Muslim Brotherhood for guidance.

I can’t believe I was able to live with myself prior to 2011 – back then I was intellectually and morally bankrupt. But now I get it. Now, I am at peace. Now I can finally enjoy Bill Maher.

I really wish all of these unenlightened journalists would just lease a clue.

DOWNSIZING THE FEDERAL GOVERNMENT

2011-04-30T22:26:00.000-04:00

A department-by-department guide to cutting the federal government's budget. http://bit.ly/efAW45
cedwards@cato.org, tdehaven@cato.org

Agriculture spent $142 billion in FY2010, $1,200 for every U.S. household;237 subsidy programs, 96,000 workers http://bit.ly/hlIQsL

Farm Subsidies: Sacred Cows No More http://on.wsj.com/eCkSle

Commerce spent $17 billion in FY2010, $140 for every U.S. household;53,000 workers, 97 different subsidy programs http://bit.ly/hu6E2n

Defense spent $677 billion in FY2010, $5,900 for every U.S. household; 2.3 million people, $240 billion on PRC http://bit.ly/frQmQ2

Education spent $107 billion in FY2010, $900 for every U.S. household; 4,100 workers, 169 different subsidy programs http://bit.ly/ijffg3

Energy spent $38 billion in 2010, $320 for every U.S. household;16,000 + 100,000 contractors, 35 subsidy programs.http://bit.ly/fJSXDI

HHS spent $869 billion in FY2010, $7,400 for every U.S. household; 65,000 workers and operates more than 400 programs http://bit.ly/ephnas

HUD spent $63 billion in FY2010, $530 for every U.S. household; employed 9,500 workers, 108 different subsidy programs http://bit.ly/gJFX6c

FY2011 Budget Chart for Selected HUD Programs (figures in millions)http://bit.ly/fenFjj

Transportation spent $91 billion in FY2010, $770 for every U.S. household;58,000 workers, 85 subsidy programs http://bit.ly/dSniFt

Coming Soon Homeland Security $55 billion

Interior $12 billion, employs about 70,000 people in approximately 2,400 locations with offices across the United States

Justice $26.7 billion, 111,464 positions

Revealing Data on Poverty

2009-04-13T15:10:00.002-04:00

Interesting data on poverty in the city, state, and percent of people below the poverty level:

1. Detroit, MI 32.5%
2. Buffalo, NY 29.9%
3. Cincinnati, OH 27.8%
4. Cleveland, OH 27.0%
5. Miami, FL 26.9%
6. St. Louis, MO 26.8%
7. El Paso, TX 26.4%
8. Milwaukee, WI 26.2%
9. Philadelphia, PA 25.1%
10. Newark, NJ 24.2%

U.S. Census Bureau, 2006 American Community Survey, August 2007

What do the top ten cities (over 250,000) with the highest poverty rate all have in common?

Detroit, MI (1st on the poverty rate list) hasn't elected a Republican mayor since 1961;
Buffalo, NY (2nd) hasn't elected one since 1954;
Cincinnati, OH (3rd)...since 1984;
Cleveland, OH (4th)...since 1989;
Miami, FL (5th) has never had a Republican mayor;
St. Louis, MO (6th)....since 1949;
El Paso, TX (7th) has never had a Republican mayor;
Milwaukee, WI (8th)...since 1908;
Philadelphia, PA (9th)...since 1952;
Newark , NJ (10th)...since 1907.

Einstein once said, 'The definition of insanity is doing the same thing over and over again and expecting different results.'
It is the poor who habitually elect Democrats---yet they are still poor...

You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them, what they could and should do for themselves.
- Abraham Lincoln

Ron Paul On Fox Business News 03/25/09 Part 1

2009-03-31T09:30:00.001-04:00

Where Are You Milton, When We Need You?

2009-02-25T17:37:00.003-05:00

After last night's speech by BHO it is pretty clear America in on the decline. He is a fool. The Democrats, Republicans, and media are a club of economic illiterates. Here's a clip for those of you who need inspirational words.

The Stimulus Package Is More Debt We Don't Need

2009-02-04T11:56:00.002-05:00

"Less than 10% of the bill could be considered true stimulus, if one assumes tax credits and infrastructure spending will jolt the economy. The other 90% of the bill represents one of the most egregious acts of generational theft in our nation's history, with taxpayer money going to special-interest earmarks, an ill-conceived bailout to states, and permanent spending increases that expand government's reach in areas like health care and education."
More ... (Source: The Wall Street Journal)
____________________________________________________________________

Watching Our Rulers Destroy Our World
"Our rulers are destroying the economy. Not little by little, as they usually do, but in huge swaths. Each great assault on the free market, whether it be denominated a bailout, a stimulus, or some other species of purported salvation, brings us visibly closer to the complete ruin of an economic order that required centuries to build. Awestruck, as if we were observing a tsunami sweep across an island, we can only watch the rulers' devastating actions, for which, strange to say, they expect the public to be grateful - and truth be told, most people are grateful, and clamor for more of the same. We listen to the kingpins' lunatic ravings as they describe their perceptions of the current situation and solemnly declare their determination to "do something" to restore the prosperity that they themselves have demolished by previously "doing something" of the very same kind. They gaze out at a financial debacle rooted in various government policies that induced lenders to do business with millions of borrowers who had no realistic prospect of repaying the loans."
More ... (Source: LewRockwell.com)
____________________________________________________________________

More Economic Illiteracy from a Princeton Economist
"Not content to let Krugman be the only Apostle of Ignorance from Princeton, Alan Blinder has checked in with a 'wish list' for the "stimulus," and on the pages of the Wall Street Journal, no less. Indeed, I think we can rename this piece of economic illiteracy, 'The Blinder leading the Blind.'"
More ... (Source: The LRC Blog)

Related:

My Economic Wish List (Source: The Wall Street Journal)
____________________________________________________________________

Financial Crisis: The Failure of Accounting Reform
"In short, the greatest error of the accounting reform recently introduced worldwide is that it scraps centuries of accounting experience and business management when it replaces the prudence principle, as the highest ranking among all traditional accounting principles, with the "fair-value" principle, which is simply the introduction of the volatile market value for an entire set of assets, particularly financial assets."
More ... (Source: Ludwig von Mises Institute)

Books To Burn

2009-01-19T15:04:00.004-05:00

American liberals have long been aggressively uninterested in the darker elements of their own tradition. A in-depth read of these books would make them interested again. Brown and Red socialism -- the national and international types -- had far more in common with each other, in their grim statism, than with liberal democratic capitalism. They were both organized around the principle that parliamentary democracy was a fraud -- that the working class, unable to grasp its own predicament, was best served by an elite that knew what was best for it.
The socialist pedigree that both authors display is important to understanding the kind of "liberal fascism" that made its way to America decades ago. American progressives -- including Teddy Roosevelt and Woodrow Wilson -- Bismarck's Prussia was a lodestar: It featured a welfare-state apparatus and authoritarian control over society and culture. "Progressives," -- self-consciously borrowing the rhetoric of Marxists -- "did many things that we would today call objectively fascist, and fascists did many things they would today call objectively progressive."

We see in Ms. Klein's and Mr. Galbraith's impulse a presumptive right to ensure the overall well-being of the populace -- with intrusive and potentially dangerous results. Let us observe, at the beginning of the progressive state in the 1930s that Hugh Johnson, the head of FDR's ill-fated 1934 National Recovery Administration -- which proposed a corporatist solution to the ills of the Depression -- was an ardent admirer of Mussolini and hung a looming picture of Il Duce in his NRA office. Going back to the late 1920s, Herbert Croly of The New Republic, whose book "The Promise of American Life" was a founding document of modern statist liberalism, defended Mussolini by comparing fascist violence to the (implicitly justified) martial means by which Lincoln preserved the Union.
Croly was also something of a eugenicist, saying that the state needed to "interfere on behalf of the really fittest." And indeed, American liberalism once had a strong eugenicist strain. Margaret Sanger, the founder of Planned Parenthood, was a close ally of the white supremacist Lothrop Stoddard, the author of "The Rising Tide of Color Against White World Supremacy." Eugenics was at the time the natural expression of the Progressives' public-health movement. Some authors note that it proved to be an inspiration for the Nazi Party.
In short, liberalism in America is an unstable mix of statist and collectivist tendencies. Sizable government, even in moderate forms, is always about to roll down a slippery slope or take the road to serfdom.
If lawmakers around the world take these books seriously it will lead to more folly and violence. Only deregulation, elimination of most taxation, and other Libertarian type policies will create a world of peace and plenty.

Avoiding Health-Care Chaos

2008-12-31T11:50:00.003-05:00

"In reality, reform could crater for the same reasons it did in 1994: The leading Democratic plans include radical changes that would tax and disrupt the health care of millions. With a minimum price tag of $120 billion, universal health insurance coverage will require taxing the middle class during a recession, further expanding a $1 trillion deficit, or having the government deny medical care to patients. An estimated 30 million Americans would lose their current coverage under Barack Obama's plan. Millions could lose established relationships with their doctors."
More ... (Source: CATO Institute)

Related:

Obama Will Ration Your Health Care (Source: The Wall Street Journal)
Orszag's Health Warning (Source: The Wall Street Journal)
____________________________________________________________________

From 2005 to 2007, New York, New Jersey Counties Rank Highest in Property Tax on Homeowners; Louisiana Parishes Rank Lowest
"New data released today by the Census Bureau show that over a three-year period (2005, 2006 and 2007) average homeowners in New York and New Jersey counties paid the most in property taxes while those in Louisiana parishes paid the least."
More ... (Source: Tax Foundation)

Related:

New Jersey Is the Perfect Bad Example (Source: The Wall Street Journal)
____________________________________________________________________

2008 Pig Book Summary
"If Washington, D.C. were to export a commodity, it would be rhetoric. Politicians especially love to talk about fiscal responsibility. On March 13, 2008 the Senate had an opportunity to test that rhetoric when Sen. Jim DeMint (R-S.C.) offered an amendment to impose a one-year moratorium on earmarks. Pork beat talk as the measure failed by a vote of 29-71. ... The 2008 Congressional Pig Book Summary gives a snapshot of each appropriations bill and details the juciest projects culled from the complete Pig Book (.pdf)"
More ... (Source: Citizens Against Government Waste)
____________________________________________________________________

The End of the Global Warming Frenzy
"Alas, the indefatigable Christopher Booker suggests that 2008 may be the year that the global warming scare died. And here I was planning on summer in December. The alarmists aren’t yet ready to go away, but their ability to convince humankind to collectively jump off the economic cliff may be disappearing."
More ... (Source: OpenMarket.org)

Zardari And Uribe Have A Lot In Common

2008-12-17T20:20:00.006-05:00

The challenges before Pakistan President Asif Ali Zardari are strikingly similar to the problems Columbia faced (and in many regards still faces) before 2002: For decades, insurgents and paramilitary vigilante groups were killing and marauding throughout much of the countryside. The insurgents reject government authority on ideological grounds. There is also aggression from neighboring countries. The paramilitary groups operate within the government's law enforcement agencies and military units. There is wide-spread poverty and limited economic opportunities. Stifling government bureaucracy does not help.
In 2002, as the insurgent group, FARC, lobbed mortar rounds into the capital of Bogota, incoming Columbian President Alvaro Uribe was sworn into office. Uribe, who won on promises of cracking down on violence and poverty, was not deterred from this form of intimidation. The fact that the FARC was knocking at the front door of the nation's capital and controlled large swaths of the country-side was telling of the crisis Columbia faced. Roughly six years later, Uribe has FARC on the ropes and in control of little Columbian real estate. Often, Communist rebels have to seek sanctuary in Venezuela and Ecuador.
How did Uribe bring the FARC to its knees, ending violence and kidnappings, while stimulating the Columbian economy to new heights?
As President, he led a program of government he called the “Policy of Democratic Security.” During his presidency, the paramilitary groups agreed to follow a peace process and gave up their guns. Because of an increase in defense expenditures from a level of about 3.6% of GDP to 6% of GDP by 2006 the Communist guerrillas faced a renewed, better equipped Columbian military. May be most importantly Uribe spearheaded several Free Trade Agreements with different countries.
In an April 7, 2008 editorial in The Wall Street Journal, Secretary of State Condoleezza Rice wrote "Today, as war has given way to growing security, Colombians who once fled their homes in fear are returning by the thousands. Democratic institutions and the rule of law are growing stronger and more inclusive. Unemployment and poverty are at their lowest levels in over a decade and a growing economy is creating good jobs for Colombians in their own country. In short, Colombia is becoming a normal nation again."
Uribe, re-elected by a landslide in May 2006, has ended years of fruitless appeasement and is enforcing the law against both rebels and paramilitaries. He has also moved to demobilize illegal rural armies. The lives of ordinary Colombians have improved dramatically, and a safer business environment has helped to cut unemployment by at least 5 percentage points in the past five years. Uribe's next challenge is to reduce the burden of government so that the economy can grow faster. Currently, it is heavily dependent on exports of petroleum, coffee, and cut flowers. A pending trade agreement with the U.S., if approved, should encourage economic diversification and stimulate growth.
Half way around the world Pakistan's Zardari faces almost insurmountable problems. Like Uribe, violence marked Zardari's rise to power when religous fundamentalists or paramilitary units murdered his wife, the late Prime Minister Benazir Bhutto, on Dec. 27, 2007.
Pakistan remains poor, and political risk deters most foreign investment. There is ongoing political unrest and terrorism, especially in provinces bordering Afghanistan. A likely hiding spot for Usama Bin Laden, the northwestern area of Pakistan is a hotbed of Islamist militants who are besieging the country. Also, for decades Pakistan was ruled by the military, especially the Inter-Services Intelligency (ISI) agency, which has ties to Islamist militants. Also, Zardari must deal with his powerful and aggitated neighbor, India, and must tread carefully after the Mumbai attacks.
However, in true Uribe fashion, security and economic liberalization are at the heart of his reforms. Zardari has promised to hunt down those responsible for the Mumbai attacks while discussing the posibility of arranging a free-trade zone between India and Pakistan in order to rev up the economy. He has even offered to withdraw Pakistan's first strike nuclear weapons doctrine against India. Also, Zardari has removed the political arm of the ISI in order to curb the spy agency's influence in domestic affairs.
Despite these efforts there is still much to do. Pakistan has weak trade freedom, investment freedom, financial freedom, property rights, and freedom from corruption. Imports are subject to a high average tariff rate and burdensome non-tariff barriers. The judicial system does not protect property rights effectively because of a serious case backlog, understaffed facilities, and poor security. Serious corruption taints the judiciary and civil service, making Pakistan one of the most corrupt nations in the world. Pakistan's financial market, though advanced for the region, is constrained by regulation and bureaucracy.
The world awaits to see if Pakistan can make a Columbian-like turnaround.

Getting Out of the Credit Mess

2008-12-09T19:03:00.001-05:00

"To begin to understand today's problem, we have to have a sense of how we got there. Between 1994 and second quarter 2008, the U.S, housing stock more than doubled in value from $7.6 trillion to $19.4 trillion. Almost three quarters of that increase was due to a speculative bubble, the root cause of which was government policies designed to increase home ownership, largely among people who would be considered nonprime borrowers -- i.e., people without sufficient documented income or employment history and little or no savings or credit history. The intellectual start of this mess was in a flawed Boston Federal Reserve study published in 1992 that purported to show that minorities were treated less well than whites. That study led to increased political pressure on banks to modify their standards with increased emphasis through the Community Reinvestment Act, and aided by U.S. Department of Housing and Urban Development regulations in the Clinton administration that required parity of outcomes in the lending process. The effect of all of this meddling was compounded by the lax or incompetent supervision of Fannie Mae and Freddie Mac. All in all, the government got into the business of encouraging and then forcing lending institutions to make mortgage loans to people who could not pay them back. What we ended up with is a failure of government, which we have erroneously termed a failure of capitalism."
More ... (Source: The Wall Street Journal)

Our Semi-Soviet Surveillance State

2008-12-07T11:25:00.002-05:00

"See, what's happened is that we are ruled by an incestuous bridge club clucking to itself in what amounts to a thermos bottle. Hillary is SecState because Precedent O'Bama wants to heal rifts within the Democratic Party. It would make more sense to poison the lot, but never mind. Everything is about domestic politics. And these dismal retreads promote each other in circles. Hillary goes from governor's wife to First Basilisk to senator to SecState. Oh help. ... How did it sink to being a proto-Soviet surveillance state that builds vast awful Visitor Centers in the style of a Hitlerian mauseoleum? You can't go to the john without a photo ID anymore. Something ain't right."
More ... (Source: LewRockwell.com)
____________________________________________________________________

Should We Privatize Airports?
"... proponents of the Airline Deregulation Act knew at the time that it was incomplete. Congress deregulated the airline sector but left the government-run aviation infrastructure intact. As deregulation guru Alfred E. Kahn said in 1978, “There is no guarantee that freer competition on the airline side of the equation—that is the part that creates the demand for airports—alone will solve these problems. On the contrary, it will stimulate more air travel.” Competition unleashed a torrent of demand for flying, but the infrastructure has not been able to keep up. Airports are still largely owned and operated by the government. They serve as chokepoints in the aviation system, and their capacity has been constrained by the Federal Aviation Administration (FAA), which has been slow to implement new air-traffic control technologies."
More ... (Source: The American)
____________________________________________________________________

A Chapter for Detroit to Open
"The Big Three U.S. automakers need more than an injection of $25 billion from the federal government. Because of their ongoing losses, they would burn through that money in less than a year and would soon be back for more. General Motors, Ford and Chrysler can make excellent cars, but they cannot sell them at prices that are competitive with the prices of cars produced in the United States by Toyota and others or with the prices of cars imported from Europe and Asia. The basic reason is the labor costs imposed by union contracts. ... The claim that bankruptcy would mean the loss of millions of jobs is nonsense intended to scare the public and force legislators to throw money at the auto industry's problems." More ... (Source: American Enterprise Institute)
____________________________________________________________________

Four Good Steps To Ease The Pain Of The Market Meltdown
"A bipartisan bill to promote investment and to deal with some of the worst consequences of the market meltdown has been offered by the leadership of the Senate Finance Committee (Chairman Max Baucus, D-MT; and ranking Member Chuck Grassley, R-IA;) and the Senate Committee on Health, Education, Labor, and Pensions (Chairman Ted Kennedy, D-MA; and ranking member Michael Enzi, R-WY). The bill would (1) Extend the 50% 'bonus expensing' provision of the 2008 stimulus package for one more year, applying to property placed in service by the end of 2009; (2) Extend the enhanced small business expensing provision (Section 179) of the 2008 stimulus package until the end of 2009 (allowing immediate expensing of up to $250,000 for property placed in service by year-end 2009); (3) Suspend the forced minimum withdrawls from IRAs for people age 70 1/2 or older; (4) Delay the new pension funding requirements of the Pension Protection Act."
More ... (Source: Institute for Research on the Economics of Taxation)

The Krugman Recipe For Depression

2008-11-30T13:38:00.002-05:00

"Paul Krugman of the New York Times has been on the attack lately in regard to the New Deal. His new book "The Return of Depression Economics," emphasizes the importance of New Deal-style spending. He has said the trouble with the New Deal was that it didn't spend enough. ... Mr. Obama said in a Thanksgiving talk that he wanted to "create or save 2.5 million new jobs." People who talk about saving new jobs are usually talking about the private-sector's capacity to generate jobs in the future -- not about the public sector alone. We know that the new administration is going to spend. But how? It can try to figure out a way to do that without hurting the private sector. Or it can just spend, Krugman-wise, and risk repeating the very depression we seek to avoid."
More ... (Source: The Wall Street Journal)

Baucus's Bad Bill

2008-11-23T12:30:00.002-05:00

"Sen. Baucus would require every American to buy health insurance, but not just any insurance. A panel of government bureaucrats, the Independent Health Coverage Council, would get to define what benefits your insurance should have. You may be perfectly satisfied with the insurance you have today, but that wouldn’t matter. If the bureaucrats didn’t think it was good enough, you would have to give up your current policy, and buy the one they wanted—even if it was more expensive or contained benefits you would never use and didn’t want."
More ... (Source: CATO Institute)

Related:

How to Fix America's Health Insurance Crisis (Source: Reason Foundation)
The Obesity Epidemic and the Rise and Fall of Public Health (Source: Manhattan Institute)
Why I Choose Low-Quality Healthcare (Source: Ludwig von Mises Institute)
What Do We Really Know About the Uninsured? (Source: The Wall Street Journal)
____________________________________________________________________

The Dollar and Other Key Currencies
"The foreign exchange value of the dollar has to substantially decline to make a serious dent in the record US current account deficit of nearly $800 billion, almost 7 percent of US GDP."
More ... (Source: Peterson Institute for International Economics)

Related:

A Free-Market Monetary System (Source: LewRockwell)
Did the Fed, or Asian Savings, Cause the Housing Bubble? (Source: Ludwig von Mises Institute)
____________________________________________________________________

Oppose Tax Increases in the "Gang of 20" Energy Bill
"The so-called "Gang of 20" Senate energy compromise will raise taxes on domestic energy production, and will cost America more than 600,000 jobs. That's not all, because the bill raises corporate income taxes, it is a violation of the Taxpayer Protection Pledge."
More ... (Source: Americans For Tax Reform)

Throwing Support Behind Wisconsin Rep. Paul Ryan

2008-11-15T11:39:00.003-05:00

"We need to be honest about the root causes of our current financial crisis: loose money, crony capitalism and a lack of market transparency and information. We need to adopt a policy of sound money by requiring the Federal Reserve to focus exclusively on keeping inflation in check. ... The greatest threat to our nation's future prosperity is the explosion of entitlement spending. Our entitlement programs are headed for a painful collapse that will bankrupt this nation and leave our children with an inferior standard of living. If we don't tackle these problems, they will tackle us. ... Absent reform, our federal government will double in size within a generation. We must change course from this path of stagnation, and we must have leaders willing to provide a path that keeps alive the American ideal and keeps our government limited."
More ...
____________________________________________________________________

Ryan For The Republicans
"The 38-year-old (Wisconsin Congressman Paul) Ryan cares about free markets and economic growth and can talk about those subjects in a way that makes sense without falling back on ideology, bromides or oversimplification. ... Mr. Ryan is also an effective communicator on television, which will be an important outlet for reaching the American people and presenting an alternative to the economic ideas of Barney Frank, Nancy Pelosi and Charlie Rangel. ... More generally, the Republican Party needs a prominent figure who can discuss the full range of economic issues -- growth, the dollar, global trade and monetary policy included."
More ...
____________________________________________________________________

H.R. 6053: Price Stability Act of 2008
"To require the Board of Governors of the Federal Reserve System to focus on price stability in establishing monetary policy to ensure the stable, long-term purchasing power of the currency, to repeal the Full Employment and Balanced Growth Act of 1978, and for other purposes."
More ...
____________________________________________________________________

Other Politicians To Rally Around (No Democrats Made The List):

S.C. Governor Mark Stanford
S.C. Senator Jim DeMint (R)
Georgia Rep. Lynn Westmoreland (R)

Ohio Rep. Jim Jordan (R)
Georgia Rep. Nathan Deal (R)
Arizona Rep. Jeff Flake (R)
Indiana Rep. Mike Pence (R)
Arizona Rep. Trent Franks (R)
Colorado Rep. Tom Tancredo (R)
Arizona Rep. John Shadegg (R)
Colorado Rep. Doug Lamborn (R)
Texas Rep. Jeb Hensarling (R)
California Rep. Ed Royce (R)
Tennessee Rep. Marsha Blackburn (R)
Texas Rep. Ron Paul (R)
S.C. Rep. J. Gresham Barrett (R)
Wisconsin Rep. James Sensebrenner (R)

SCREWED

2008-11-08T09:46:00.006-05:00

Barack Obama and The Taxpayer
"If millions more voters become accustomed to paying nothing for government (not even for their own Social Security benefits), and instead to receiving a bundle of Treasury checks, it will become almost as difficult for any future president to end those programs as it will be for taxpayers to pay for them."
More ...
____________________________________________________________________

Soviet Unions
"Unions, still giddy over putting their man in the White House and consolidating Democrat power in Congress, see 2009 as a year of effort-free labor organization. Expect them to push for quick passage of the Employee Free Choice Act. Also called card-check legislation, the bill would eliminate secret ballots and allow unions to be certified when a majority of employees sign the cards now used to gauge interest in voting on union participation. ... But under the card-check system, the potential for intimidation is limitless. Pressure to sign by union organizers could wilt even the strongest man who doesn't want to be a member of the collective."
More ...
____________________________________________________________________

The Great Tax Revolt of 2012
"I predict the 1970s will play out again. Revolt against bracket creep will re-emerge as a top political issue soon after the economy recovers, the Fed’s easy money will spill out as high single-digit inflation and Obama will fulfill his election promise to hike taxes on the "rich." Upper-middle-class professional households earning $100,000 to $250,000 a year in 2008 dollars will find themselves inflated into higher incomes and then taxed like Swedes: Their income, payroll, state, sales, dividends and capital gains taxes will all go up--and keep going up, up, up because of inflation."
More ...
____________________________________________________________________

Never Give In
"Never give in - never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honor and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy. ... Let me say in print what so many of us believe in our hearts: the present generation of conservative leaders has failed us miserably. For the most part, congressional republicans are a village of pygmies. Few have genuine leadership qualities. Fewer still can compose a clear English sentence in defense of our ideas. ... History has handed us the founding fathers' worse nightmare: a hyper-articulate, hyper-charismatic man who has a low view of the constitutional limits of government. It's going to take the founding fathers' best dream, a citizen-soldier of wisdom and achievement to get us back on track. He (or more likely, she) is out there already."
More ...
____________________________________________________________________

No He Can't
"I am black; I grew up in the segregated South. I did not vote for Barack Obama; I wrote in Ron Paul’s name as my choice for president. Most importantly, I am not race conscious. I do not require a black president to know that I am a person of worth, and that life is worth living. I do not require a black president to love the ideal of America. ... I cannot join you in your celebration. I feel no elation. There is no smile on my face. I am not jumping with joy. There are no tears of triumph in my eyes. ... I would have to abnegate my certain understanding that you have chosen to sprint down the road to serfdom that we have been on for over a century. I would have to pretend that individual liberty has no value for the success of a human life. I would have to evade your rejection of the slender reed of capitalism on which your success and mine depend. I would have to think it somehow rational that 94 percent of the 12 million blacks in this country voted for a man because he looks like them (that blacks are permitted to play the race card), and that they were joined by self-declared "progressive" whites who voted for him because he doesn’t look like them."
More ...

Obama and Acorn

2008-10-19T12:19:00.001-04:00

"Acorn uses various affiliated groups to agitate for 'a living wage,' for "affordable housing," for 'tax justice' and union and environmental goals, as well as against school choice and welfare reform. It was a major contributor to the subprime meltdown by pushing lenders to make home loans on easy terms, conducting 'strikes' against banks so they'd lower credit standards. But the organization's real genius is getting American taxpayers to foot the bill. According to a 2006 report from the Employment Policies Institute (EPI), Acorn has been on the federal take since 1977. For instance, Acorn's American Institute for Social Justice claimed $240,000 in tax money between fiscal years 2002 and 2003. Its American Environmental Justice Project received 100% of its revenue from government grants in the same years. EPI estimates the Acorn Housing Corporation alone received some $16 million in federal dollars from 1997-2007. Only recently, Democrats tried and failed to stuff an 'affordable housing' provision into the $700 billion bank rescue package that would have let politicians give even more to Acorn."
More ...

The Decline Of America (& How Ignorant Voters Made It Possible)

2008-10-04T14:28:00.005-04:00

"The next president promises to be Obama, and his agenda includes very substantial tax increases. Implementing that agenda will surely drive the economy further downwards. We can expect stock markets to anticipate and reflect any tax increases proposed by Obama by going down further. ... Congress and the Fed caused the problems that the economy faces and that have a focal point in the bad loans that many banks and other financial institutions now hold. They should not be taking any new measures as they have been doing and are now contemplating that add on new taxes designed to rescue and otherwise keep afloat these institutions. Tax increases harm economic activity without solving the problems. They only make matters worse."
More ...

Related:
The Month When Reality Invaded
"There is enormous faith by the public in the ability of bureaucrats to collect data, interpret data, make accurate predictions, establish incentives that encourage growth, and enforce these incentives without bias."
Panic
McCain vs. Obama on Taxes
Market Down On Bailout - Don't Compound Damage With Overregulation of Main Street
"But the proposed new regulations, ironically and unfortunately, will likely reach far beyond the big stodgy firms participating in the bailout and hit entrepreneurs throughout the country outside the “Wall Street” financial system who are vital to reinventing how investment banking and brokerage works."
Worse Than Pork: H.R. 1424 Gives IRS New And Extended Powers
How Government Stoked The Mania
"Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis."
Hardly Unfettered
"Sooner or later, markets punish voracious and imprudent risk taking, loose money, misdirected or inadequate regulation and lax oversight, all of which played a role in the current debacle. ... The large Office of Federal Housing Enterprise Oversight bureaucracy was incapable of reining in Fannie and Freddie, and Congress ignored warning calls from the then secretary of the Treasury and Fed chairman. In September 2003, John Snow proposed legislation to tighten oversight of Fannie and Freddie, but he was rebuked by Barney Frank for conjuring frightful scenarios about GSEs that were 'fundamentally and financially sound.' In 2005, Alan Greenspan warned that Freddie and Fannie could put the 'total financial system of the future at risk' but Chuck Schumer insisted that 'Fannie and Freddie have done an incredible job.' ... Yet opponents of deregulation conveniently overlook the bevy of new regulations that were enacted roughly at the same time. The adoption of Basel I and II rules, for example, granted excessive power to the oligopoly of rating agencies who, in turn, were paid generously for underestimating risk. No competitive free market there. The adoption of market-value accounting exacerbated the credit crunch and blurred the real value of performing, albeit illiquid, loans. Compensation rules that require asset managers to be paid according to the size of their portfolios probably caused them to take excessive investment risks rather than return funds to their investors. Finally, loose monetary policy exaggerated a global savings glut."
Obama: The Audacity of Socialism
Stop Worrying About The Election

Understanding The Crisis

2008-09-20T11:40:00.004-04:00

What caused this? It is a simple question, and yet answers are all over the map, as you might expect. Here's mine in two words: fiat money. The word fiat means: out of nothing. Money out of nothing is money that is eventually worth nothing. The possibility of precisely that happening emerged on August 15, 1971. Since Nixon severed the last tie of the dollar to gold, the world's monetary system has not been restrained by anything physical. We've depended on the discretion of central bankers. We can't trust that, and this crisis shows precisely why.
More ...

Related:
When The Bust Comes
What The Candidates Can Do
How To Save The Financial System
Surviving The Panic
How Low Interest Rates Contributed To The Credit Crisis
What Price Stability?
____________________________________________________________________

CATO Institute
"Economic freedom around the world remains on the rise but it has declined notably in the U.S. since the year 2000, according to an authoritative study released today by the Cato Institute and Canada's Fraser Institute. ... In 2000 the U.S. was the second-freest economy listed in Economic Freedom of the World, an annual report written by James Gwartney from Florida State University and Robert Lawson from Auburn University. This year the U.S. has fallen to 8th place, behind Hong Kong (ranked in first place), Singapore, New Zealand, Switzerland, the United Kingdom, Chile, and Canada."
More ...
____________________________________________________________________

Tax Foundation
"KPMG, a well-known international accounting firm, released its annual survey of corporate and indirect tax rates for 2008, showing that the U.S. corporate income tax rate was higher than all other global regions, 14.1 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations."
More ...

The Union Campaign Against Secret Ballot Elections

2008-09-13T09:44:00.003-04:00

Union Facts
"Facing declining membership, union officials have turned to a highly questionable practice of organizing new members through a process called "card check." With card checks, paid union organizers try to persuade workers to sign cards saying that they favor union representation. This persuasion is documented as frequently including deception, coercion, and harassing visits to workers' homes."
More ...

Related:
One Union's Record
The Next Financial Crisis Is Already Here
The New Labor Activism
____________________________________________________________________

CATO Institute
"The evidence suggests that the Federal Reserve is a major culprit in the commodity inflation story. But you wouldn’t know it from reading the press or listening to officialdom and the political chattering classes. This isn’t surprising. After all, economic history is written, to a large extent, by central bankers. In consequence, one should take official accounts with a large dose of salt."
More ...
____________________________________________________________________

CATO Institute
"At heart, Fannie and Freddie had become classic examples of "crony capitalism." The "cronies" were businessmen and politicians working together to line each other's pockets while claiming to serve the public good. The politicians created the mortgage giants, which then returned some of the profits to the pols - sometimes directly, as campaign funds; sometimes as "contributions" to favored constituents."
More ...

Guardians of Crony Capitalism:

Senator Christopher Dodd (D), chairman of the Senate Banking, Housing, and Urban Affairs, and Rep. Barney Frank (D), chairman of the Financial Services Committee

Related:
Fannie Mae's Patron Saint
The Fannie Mae Gang
____________________________________________________________________

The American Consumer Institute Center for Citizen Research
"Mounting evidence shows that onerous state-based price regulation has adverse consequences on insurance markets - increasing industry costs, discouraging market entry and competition, and creating price distortions. This ConsumerGram provides additional evidence that state-based price regulation of automobile insurance tends to increase consumer prices, thereby reducing consumer welfare. These studies suggest that state-based price regulation of insurance services is not in the public's interest and that reforming regulation, such as the reduction and harmonization of state-based regulations or the adoption of an Optional Federal Charter, would significantly benefit consumers."
More ...

The Empire Strikes Back

2008-09-07T10:41:00.002-04:00

Forbes Magazine
"Doing Business, an annual world bank publication, has been the institution's most effective program promoting economic development. ... But the backlash against the pro-market leanings of the report is growing, which is no surprise given the big-government mentality of most World Bank apparatchiks and the similar outlook infecting so many nations around the world. Doing Business is now under fierce attack from within the World Bank."
More ...

Related:
Doing Business (ranks countries by various criteria. The U.S. was given a 76 on paying taxes. Business owners found it easier paying taxes in Iraq and Afghanistan than in the U.S.)
____________________________________________________________________

CATO Institute
"Senator Obama's approach relies heavily on government mandates, regulations, and subsidies. He would mandate that employers provide health care coverage for their workers and that parents purchase health insurance for their children. He would significantly increase regulation of the insurance industry, establishing a standard minimum benefits package, and requiring insurers to accept all applicants regardless of their health. He would offer a variety of new and expanded subsidies to middle- and low-income Americans. ... In contrast, John McCain emphasizes consumer choice and greater competition in the health care industry. He would move away from our current employment-based insurance system by replacing the current tax exclusion for employer-provided insurance with a refundable tax credit for individuals. At the same time he would sharply deregulate the insurance industry to increase competition."
More ...
____________________________________________________________________

Ayn Rand Institute
"The Katrina tragedy should have called in question the so-called safety net composed of government policies that actually encouraged people to embrace risks they would otherwise shun - to build in defiance of historically obvious dangers, secure in the knowledge that innocent others will be forced to share the costs when the worst happens."
More ...
____________________________________________________________________

Reason Foundation
"After promising to fix California's structural budget deficit and reform government not merely by thinking outside the box, but rather by "blowing up the boxes" of state government, Gov. Arnold Schwarzenegger has, during his tenure, offered such innovative solutions as more borrowing, more taxes, and more fees. Gov. Schwarzenegger has now proposed increasing sales taxes across the state one additional percent. (This, on top of more than $8 billion in tax increases that Democrats in the legislature have already proposed.) This "temporary" tax increase would be scheduled to last three years, after which time it would be reduced 1.25 percent to a minimum of 7 percent (the sales tax rate is higher in some counties that have approved additional local sales taxes on top of the state rate). Nobel Prize-winning economist Milton Friedman once said, "Nothing is so permanent as a temporary government program." That goes double for "temporary" taxes."
More ...
____________________________________________________________________

Libertarian Party
Should Libertarians be happy with Sarah Palin, the current Alaskan governor and now Sen. John McCain's running mate in his presidential bid? The gut reaction is yes, Libertarians should be excited about Palin. Palin has a reputation for fighting government corruption, wears fur, shoots guns, eats moose and has earned the respect of our state affiliate in Alaska. ... But like the permafrost that lies a few inches beneath Alaska's soil, is there a troubling layer to Palin that has yet to be exposed?"
More ...

Why Taxes Don't Matter Much Anymore

2008-08-30T09:00:00.003-04:00

I would like to thank Joe Salzone, host of The Blog Bunker on Sirius Satellite Radio, for having me on his show on Friday, Aug. 29. A very rewarding experience. We discussed the damaging effects of wreckless Federal Reserve policies. Talk radio being what it is, I only had a few minutes to discuss a topic that is very complex and confusing to the average citizen. Below is an article that breaks down why politicians can spend like drunken sailors without facing the consequences.
____________________________________________________________________

Ludwig von Mises Institute
"If not through taxes, and if not through infinite debt, how is it that the US government gets the money it wants regardless of other constraints? The answer here comes down to the monetary regime, a topic that causes eyes to glaze over but which is central to why the government seems completely out of control. It is not difficult to understand if we think of how a criminal with a counterfeiting machine might behave. Would we see fiscal restraint? Of course not. ... What is the downside of this type of regime? The bills are ultimately paid by you and me in the form of price increases for goods and services."
More ...
____________________________________________________________________

American Council For Capital Formation
"Mr. Obama wants to hike the tax on the long-term gains Americans make from selling stocks, homes or other assets. Today, that rate is 15 percent on such sales, which affect the millions of Americans who own stock and the millions of seniors who have life savings tied up in their homes."
More ...

Related:
Tax Rebates Redistribute Wealth
____________________________________________________________________

National Center for Policy Analysis
"New taxes to support Dirigo Care, the Maine state government's attempt at providing universal health care, have so angered Maine residents that a coalition dedicated to repealing the tax increases was able to collect nearly twice as many signatures as required to put a repeal referendum on the state's ballot for November. ... Although its intended purpose was to insure 128,000 people who had no health coverage, only four percent of that total, or just over 5,000 individuals, have been successfully removed from the rolls of the uninsured and into that state program. Moreover, taxpayer are footing the bill, as the state levied a 1.8 percent tax increase on paid insurance claims, raised taxes on alcohol and increased tax rates on tobacco."
More ...

Georgia: Epicenter of Strategic Confrontation

2008-08-16T09:48:00.003-04:00

Center for Strategic and International Studies
"The war over Georgia, whatever its precise trigger, has been brewing for several years. Calculating that the Western reaction would be weak, divided, and distracted, the Vladimir Putin–Dmitri Medvedev administration concluded that forceful action against Tbilisi’s attempt to regain the secessionist territory of South Ossetia would serve three strategic goals. ... (1) undermine its military capabilities, weaken the pro-Western government, and disable Tbilisi from moving forward toward NATO membership ... (2) sends a powerful signal to other states neighboring Russia that their strategic orientation will not be a sovereign decision ... (3) Russia is reasserting its trans-regional reach by actively stemming the further expansion of the Western or Euro-Atlantic zone and seeking to reverse the influence of the United States in the Caucasian, Caspian, and Black Sea regions."
More ...
____________________________________________________________________

The Tax Foundation
"The OECD study shows that for the 17^th consecutive year, the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result of the U.S. failure to lower its corporate tax rate for more than two decades while other major trading nations lowered theirs, the U.S. corporate tax rate is now 50% higher than the OECD average. Nine key trading partners cut their rates during 2007."
More ...
____________________________________________________________________

The Club for Growth
"... the South Carolina GOP convention in May, in which [Gov. Mark Sanford] out why the Republican Party has found itself in the minority in Washington. In it, he says: 'The crisis of what's happened in Washington, D.C. is born not because of the rank-and-file not knowing what they believe, but because of its political leadership, at times, being completely disconnected from the core beliefs of what the party is all about.'"
More ...
____________________________________________________________________

Libertarian Party
"Federal finances are in a catastrophic condition and are getting worse. The deficit next year will run a half trillion dollars. Congress just approved a housing bail-out that could end up sticking taxpayers with as much as $1 trillion in losses by two government-created housing agencies, Fannie Mae and Freddie Mac. The current national debt is $9.5 trillion, and the debt ceiling was recently raised to $10.6 trillion to give congressional spenders a little 'breathing room.' Total unfunded liability for America’s two big retirement programs, Social Security and Medicare, is more than $100 trillion."
More ...

Fannie and Freddie Make A Fool of All of US

2008-08-02T11:41:00.002-04:00

CATO Institute
"There are more general economic reasons for liquidating Fannie and Freddie, the biggest being that it is very dangerous to maintain such a large role in any market for only two operators. ... Some believe that tighter regulation is the answer. I am skeptical of that because I know the extent to which the regulatory system is tied up in Fannie's and Freddie's political activities. ... But if they insist on coming back to life as public-private hybrids with all sorts of unfair federal advantages, we'll only be setting ourselves up for more disasters. The wisest move, in the end, is to carefully let them wither away."
More ...
____________________________________________________________________

The Friedman Foundation
"Results from a new public opinion survey taken in Oklahoma in late April indicate that more than 4 of 5 voters – 83 percent – would send their children to private, charter, or virtual schools, or educate their children in a home school setting."
More ...

The Fed Plays With Fire

2008-07-26T13:43:00.002-04:00

Cato Institute
"By my calculation, approximately half the price increase in crude oil since 2003 and 55% of the increase in corn since 2001 can be accounted for by the dollar's decline. Federal Reserve Chairman Ben S. Bernanke doesn't concede this point. In Capitol Hill testimony on July 15, he declared that the weak dollar contributed in only a small way to the spike in oil prices."
More ...

______________________________________________________________________

Starving The Poor By Pandering To Big Ag

2008-04-21T20:54:00.002-04:00

Investor Business Daily
"We can and must stop the madness of ethanol at any cost. It is a pernicious fraud driven by naked, subsidy-fattened corporate greed that's good at staying in the shadows."
More ...

Sith Lord Of The Far Left Rakes In $2.9 Billion

2008-04-16T10:37:00.004-04:00

Alpha Magazine
"John Paulson earned a record $3.7 billion last year to top Alpha's ranking of the 50 most highly paid hedge fund managers. The Paulson & Co. chief surpassed perennial powerhouse George Soros and James Simons, who ranked second and third, at $2.9 billion and $2.8 billion, respectively. The top 25 on the list earned an average $892 million, up from $532 million in 2006."
More ...

Related:

Who is George Soros (because it's important to know!)
George Soros: The Man, The Mind And The Money Behind MoveOn
Axis of Soros

Notable organizations George Soros supports:

Center for American Progress ($5 million during the '04 elections)

MoveOn.org ($1.4 million and $3 million during the '04 elections)

Democracy Alliance (Its members have given away more than $100 million to date to liberal nonprofit groups. See list here.)

Open Society Institute (Soros has given his own statist umbrella organization $5 billion)

Any many more groups that look to bring down free markets

Drilling The Future

2008-04-15T11:02:00.002-04:00

Investor's Business Daily
"Conventional wisdom is that the U.S. has just 30 billion barrels of oil left, enough for just 10 years of pumping at current rates. Sounds pretty bleak, but that figure is ludicrously low. Just last week, a new report concluded that the Bakken oil basin, stretching from North Dakota and Montana into Canada, contains an estimated 4 billion-plus barrels of oil. Colorado and Utah are estimated to contain as much as 1.2 trillion barrels of oil trapped in shale below ground. They're not counted as 'recoverable' reserves because until recently they weren't economical. Today they are."
More ...
____________________________________________________________________

Americans For Tax Reform
"On behalf of Americans for Tax Reform, I am writing to express concerns with the 'America’s Climate Security Act' (S. 2191), sponsored by Senator Lieberman and Senator Warner, a proposal which would increase taxes and raise energy prices for American consumers by putting a mandatory cap on greenhouse gas emissions. At a time when consumers are struggling with high prices for energy and energy intensive products, it is puzzling that Congress would pursue a policy that can only raise energy prices further. ... The reported concluded that a cap and trade proposal would amount to a $1.2 trillion tax increase over the next ten years."
More ...
____________________________________________________________________

Better Business Bureau
"As the credit crunch bears down on the U.S., small businesses are forced to search for alternative sources of funding and Better Business Bureau (BBB) warns that business owners are becoming victims of fraud when turning to the Internet for loans and grants."
More ...
____________________________________________________________________

Tax Foundation
"Maryland Governor O'Malley signed into law (April 9) the final piece of the state's major tax overhaul, an eighth tax rate and bracket on personal income. 'We see no record of any state having raised all three of its major tax rates in one fell swoop, but Maryland has done just that,' said Bill Ahern, referring to the hikes in the sales tax, the corporate income tax, and the personal income tax that received its final change today. The study is Tax Foundation Fiscal Fact, No. 124, 'Maryland Flouts Regional Tax Competition with Historic Tax Hike.' The study points out that middle-income people in Maryland were and still are paying higher income taxes than in any border state, and that in only five U.S. states—California, Hawaii, Iowa, Maine and Oregon—could a couple with $75,000 in taxable income be in a higher tax bracket than an average Maryland couple. The Maryland rate for middle-income workers is about 7.5 percent (4.75% state plus 2.73% local)."
More ...

Related:

Maryland Flouts Regional Tax Competition with Historic Tax Hike
____________________________________________________________________

The Claremont Institute
"Utterly missing in this election season is a serious focus on limited or constitutional government. The Democrats, generally speaking, want more government, not less, so their neglect of the issue is to be expected. But the Republican dereliction is more troubling. It represents a falling away from the standards of Ronald Reagan’s conservatism —a decline already reflected in the “compassionate conservatism” of George W. Bush. After 9/11, many prominent conservatives—e.g., George Will, David Brooks, Fred Barnes —pronounced that small government conservatism is dead. That awful reminder of the dangerous world we live in, and of the need to defend ourselves, somehow meant that big government conservatism, as they called it, was now the only game in town. Conservatives would need to make their peace with this idea, they argued, in order to win future elections. Were Will, Brooks, and Barnes wrong?
For the most part, I think they were. To show how and why, I want to talk about seven propositions related to the problem of limited government in our day."
More ...

Economy Faces More Woes

2008-04-14T08:58:00.003-04:00

Securitization.net
"Another major wave of CDO liquidations is set to hit the market this week, when at least $2.8 billion of high-grade CDO transactions referenced to auto, credit card and even airplane ABS are set to liquidate because they will have hit their events of default. The total amount of assets to be liquidated is much greater than that, according to market sources. 'Between now and April 15, at least $8 billion of CDOs will be liquidating," said one market source. "I can't say for certain that this has been the first [high-grade CDO liquidation ever], but I know it's the first time I've seen it en masse.'"
More ...

Related:

What's a CDO?
What's an ABS?

Nancy Pelosi to Columbia, Prosperity, American Consumers, and U.S. Allies: "Go to Hell!"

2008-04-12T12:54:00.004-04:00

American Enterprise Institute
"On Thursday, Speaker Nancy Pelosi orchestrated a procedural vote that will now delay the Columbian Free Trade Agreement vote indefinitely. In an interview with the Wall Street Journal last week, Colombian president Alvaro Uribe described the possible failure to pass it as "very serious," noting that he could not understand why Congress would balk given the historic ties between his country and the United States and Colombia's cooperation in fighting terrorism."
More ...

Related:

Wasting a Golden Chance
Columbian Trade Pact
Implementing the KORUS FTA
Prospects for the Doha Round
____________________________________________________________________

The Martin Prosperity Institute
"This paper uses a global dataset of nighttime light emissions to produce an objectively consistent set of mega-regions for the globe. We draw on high resolution population data to estimate the population of each of these regions. We then process the light data in combination with published estimates of national GDP to produce rough but useful estimates of the economic activity of each region. We also present estimates of technological and scientific innovation. We identify 40 mega-regions with economic output of more than $100 billion that produce 66 percent of world output and accounts for 85 percent of global innovation."
More ...
____________________________________________________________________

Institute for Research on the Economics of Taxation
"The Senate is debating changes in the individual and business portions of the Administration/House stimulus package. The House investment incentive is worthwhile, and is better than the Senate version. Nothing else in either version of the package would do much economic good. It would be better to scrap the stimulus package and extend the 2003 tax cuts. That would do more to boost investment and employment, both in the short run and in the longer run, than the stimulus plans now being proposed."
More ...
____________________________________________________________________

The Vancouver Sun
"An Ontario-government funded economic think tank is echoing federal Finance Minister Jim Flaherty's controversial call on the provincial government to cut its corporate taxes. High provincial tax rates on business investment, including in Ontario, are among the reasons Canadians are less productive and less prosperous than Americans, the Institute for Competitiveness & Prosperity said."
More ...
____________________________________________________________________

Peterson Institute for International Economics
"The foreign exchange value of the dollar has to substantially decline to make a serious dent in the record US current account deficit of nearly $800 billion, almost 7 percent of US GDP. Asian currencies that have not yet appreciated significantly against the dollar, especially the Chinese renminbi, will need to rise sharply. Asian and other central banks must cease intervening in the exchange markets and accumulating massive amounts of dollar reserves to permit the market to begin the needed exchange rate corrections. An Asian Plaza Agreement to coordinate exchange rate realignments in that region may be necessary given the reluctance of the individual countries to appreciate sharply and lose competitiveness."
More ...

Taking Leave In Trenton

2008-04-09T11:09:00.002-04:00

The Star-Ledger
"An arduous 12-year legislative battle ended yesterday when the Senate approved a bill that grants six weeks of leave at reduced pay to workers who stay home to care for a new child or sick relative. ... 'Why now?' asked Sen. Christopher 'Kip' Bateman (R-Somerset). 'This is the wrong time to pass this bill that will send more businesses out of New Jersey.'"
More ...

Related:
Chamber faults state on family leave bill
____________________________________________________________________

CATO Institute
"So why force most D.C. children into often dilapidated and underperforming public schools when we could easily offer them a choice of private schools? Some would argue that private schools couldn't or wouldn't serve the District's special education students, at least not affordably. Not so."
More ...
____________________________________________________________________

The Wall Street Journal
"America's political leaders are so fixated on illegal immigration they've barely noticed that the U.S. is losing the race for the best high-tech minds. This country won't keep its edge in the global economy until legislators stop behaving like border sentries and start acting like international recruiters – a switch virtually every industrialized country is making. ... A good way to begin is for Congress to pass pending legislation to scrap the cap on skilled worker (H1-B) visas. This cap is currently so low (65,000) that in April last year it got used up within a day of these visas becoming available, leaving thousands of left over engineers to be scooped up by America's competitors."
More ...
____________________________________________________________________

The Arizona Republic
"In November, Americans will have on the presidential ballot a candidate advocating bold ideas for health-care reform. Hillary Clinton? Barack Obama? Think again: John McCain. The Arizona senator's health-care plan may be the last, best hope to prevent a Europeanization of American health care. ... The problem, of course, has deep roots. Our present system, rising out of World War II-era wage-and-price controls, allows employers but not families to pay premiums in pre-tax dollars, leading to an employer-centered system in which people pay directly just 13 cents of every health dollar. McCain would scrap 60 years of bad tax policy and get employers out of the health-insurance game by giving every family a tax credit to purchase its own insurance."
More ...
____________________________________________________________________

Hoover Institute
"Did you know that over the past fifty-five years, the share of renewable energy as a proportion of total energy consumed has declined. In 1950, renewable energy sources accounted for 9 percent of total energy consumed in the United States; fossil fuels accounted for the other 91 percent. By contrast, in 2006, the share of both renewable energy and fossil fuels as a proportion of total energy consumed fell slightly, while the use of nuclear power as a source of energy, negligible in 1950, increased to offset this decline. In 2006, renewable energy accounted for 7 percent of total energy, fossil fuels accounted for 85 percent, and nuclear power accounted for 8 percent. Energy sources vary widely from state to state."
More ...

Tax Misery

2008-04-08T18:03:00.003-04:00

Forbes
"The latest Forbes Misery & Reform Index shows substantial movement toward tax cuts since 2000, but with room to go. Just how much room exists at the low end of the tax burden is shown this year in the leapfrogging of Qatar to prizewinning position on our list. With a planned major reduction in its only significant levy, on corporate income, the Persian Gulf state will best nearby Dubai as an enticing spot for entrepreneurial wealth creation. Both will now best longtime low-tax champion Hong Kong--despite that territory's admirable round of one-time levy reductions in its latest budget."
More ...
____________________________________________________________________

Taxpayers for Common Sense
"Essentially unchanged since being established over 70 years ago as temporary assistance measures during the Great Depression, current farm policies no longer reflect the needs of America's farmers, rural communities, consumers, or the tax paying public. Billions of dollars are funneled each year to an increasingly small number of large farming operations, while the majority of farmers and rural residents see little. In the 1930s farmers accounted for 20 percent of the US population and agriculture made up nearly 8 percent of Gross Domestic Product (GDP). Today, farmers make up less than 2 percent of the US population and agriculture accounts for less than 1 percent of GDP. Farms that once averaged nearly 200 acres now average close to 500 acres per farm."
More ...
____________________________________________________________________

Citizens Against Government Waste
"Citizens Against Government Waste (CAGW) and the Illinois Policy Institute (IPI) will release the 2008 Illinois Piglet Book, the definitive guide for reducing waste, fraud, abuse, and mismanagement in the state government, on April 9. The 2008 Illinois Piglet Book combines elements of two perennial CAGW publications, the Congressional Pig Book and Prime Cuts, with the Illinois Policy Institute’s knowledge of the state budget. The report exposes areas in the state budget where wasteful spending can be eliminated, providing a valuable resource to legislators and taxpayers."
More ...
____________________________________________________________________

LewRockwell
"Since it is presidential campaign season, we will inevitably be treated to the usual discourse about tax cuts. Some candidates will call for tax cuts, undoubtedly as a way to bribe voters into voting for them. Others will resist the call, undoubtedly in fear that their favorite government program might not receive desired funding. In actuality, all the tax-cut talk will be rather meaningless, especially for advocates of liberty. ... Prior to the income tax, the citizen was sovereign by virtue of the fact that he was free to earn unlimited amounts of money and there was nothing the government could do about it. Like it or not, it was his money, to do with as he pleased."
More ...
____________________________________________________________________

The Club For Growth
"Many of the congressmen supported by Club for Growth members in previous elections scored at the top of National Taxpayers Union’s 2007 scorecard (PDF), released today. National Taxpayers Union grades congressmen based on how they voted on all measures affecting taxes, spending, debt, free trade, and federal regulation. In total, the 2007 scorecard used 427 House and 182 Senate roll call votes. These votes measure the extent to which a member of congress supports policies that lower taxes and reduce government spending and regulation of private enterprise. A grade of A indicates that the representative or senator is a Taxpayer Friend."
More ...

Christos Anesti

2008-04-03T13:08:00.002-04:00

TCS Daily
"For over a half of a millennium, Israel had been passed from empire to empire. Each new world power treated Jerusalem as a cash cow - diverting its wealth into imperial coffers in order to finance imperial ambitions. First there was Assyria, then Babylon, Persia, and Macedonia. Then finally Rome was given its turn. It was at this time that Jesus of Nazareth came into the world."
More ...

A Look At The Budget

2008-03-30T14:31:00.008-04:00

Just for kicks, here is a look at the proposed 2009 Federal budget. Take notice of my cheap remarks.

Department of Agriculture = $94.7 Billion
My recommendation: Eliminate
The department is useless due to the fact that government has no business being involved in agriculture.

Department of Commerce = $8.2 Billion
My recommendation: Reduce
The department should be downsized due to the fact that its only function should ensure state regulation does not interfere with cross-border transactions and business.

Department of Defense = $651 Billion
My recommendation: None

Department of Education = $63.5 Billion
My recommendation: Eliminate
The department is useless due to the simple fact that it has never educated ONE child in its existence. All it does is create red tape and increase costs for local districts.

Department of Energy = $24.7 Billion
My recommendation: Eliminate
The department is useless due to the fact that government has no expertise or business regarding energy.

Department of Health and Human Services = $736.8 Billion
My recommendation: Eliminate or severely reduce and reform
Medicare and Schip costs are growing and show no sign of slowing. Both should be eliminated. This department should be greatly downsized so it only has to deal with pandemics in the U.S.

Department of Homeland Security = $44.3 Billion
My recommendation: Eliminate
The department creates extra red tape and confuse the country's efforts in battling fundamental extremism at home and abroad. To battle this nemesis government has to be nimble and surgical. To add to the military and security-service bureaucracy only further complicates the governments most fundamental function of protecting its citizens.

Department of Housing and Urban Development = $45.6 Billion
My recommendation: Eliminate
The department has failed miserably in providing quality living conditions for the working poor. In fact the department's policies have lowered the standard of living in many communities across the U.S.

Department of the Interior = $10.5 Billion
My recommendation: Reduce
With the elimination of the EPA, some of its functions can be shuffled into the Department of the Interior.

Department of Justice = $26.6 Billion
My recommendation: Reduce
The department can be downsized due to the fact that the DEA ($2.2 Billion) should be eliminated with the legalization of drugs.

Department of Labor = $54.2 Billion
My recommendation: Eliminate
The department is useless due to the fact that people can conclude for themselves which companies and organizations have sound working environments and fair practices. Any enforcement issues should be delegated to the Department of Justice.

Department of State and Other International Programs = $39.3 Billion
My recommendation: Reform
Some programs should be eliminated (e.g., Export-Import Bank should be eliminated because of the unfair market practices it breeds. Think Enron) while others should be boosted, such as providing military aid to U.S. allies (e.g. Columbia and India).

Department of Transportation = $71.1 Billion
My recommendation: Eliminate
The department's transportation responsibilities, such as road maintenance and infrastructure, can and should be delegated to the states.

Department of Treasury = $67.2 Billion
My recommendation: Reduce
The department creates undue, burdensome regulations for business. With the elimination of the Federal Reserve System, some of its functions should be incorporated into the Treasury Department.

Department of Veterans Affairs = $91.8 Billion
My recommendation: None

Corps of Engineers - Civil Works = $8.8 Billion
My recommendation: Eliminate
The engineers' services can be privatized.

Environmental Protection Agency = $8 Billion
My recommendation: Eliminate
The agency creates undue, burdensome regulations for business and has proven to be incompetent in executing its mission of protecting the environment. Its $8 billion cost is greatly deceptive because the regulations it imposes on businesses increases costs for consumers with no direct beneficial trade-off. All environmental enforcement issues can be delegated to the Justice Department.

National Aeronautics and Space Administration = $18.1 Billion
My recommendation: Reform
I can think of other departments that are more wasteful of tax dollars.

National Science Foundation = $6.4 Billion
My recommendation: Eliminate
Government is NOT in the business of getting involved in scientific study. The foundation imposes politics in labs, rather than science (i.e., the global warming debate).

Small Business Administration = $825 Million
My recommendation: Eliminate
However, the administration should only be eliminated if other departments are expired by lawmakers. Otherwise, the small business community will need its voice heard through the administration in order to combat bad ideas coming out of other departments.

Social Security Administration = $694.8 Billion
My recommendation: Eliminate
The administration is useless due to the fact that workers can find better retirement savings and plans in the private sector. The administration also serves as a slush fund for politicians pet projects and also adds to employers' costs of labor.

With the elimination of the departments above, the federal government would reduce its overhead by roughly $1,853,725,000.00 trillion for 2009, or $18 trillion over 10 years. Of course these eliminations could not be done over night and would probably need a decade to execute. Medicare and Social Security would take longer to eliminate.

Eternal Battle Between Faith And Reason

2008-03-29T15:41:00.002-04:00

The Ayn Rand Institute
"Truth cannot contradict truth," they declare, implying that the truths discovered by reasoning from sensory evidence cannot clash with the "truths" of religious dogma. ... A closer look, however, reveals the long history of the hostility of faith towards reason--which continues to this day. Violent clashes between the two are not only possible but unavoidable, and the notion that religion can coexist on friendly terms with science and reason is false."
More ...
____________________________________________________________________

The Weekly Standard
"This interpretation of the Depression is held by no less a figure than Ben Bernanke, the current chairman of the Federal Reserve Board and a careful student of the crisis. At a testimonial occasion to mark Milton Friedman's 90th birthday, Bernanke went so far as to say to the economist: 'Regarding the Great Depression, you were right. We [the Federal Reserve Board] did it. We're very sorry. But thanks to you, we won't do it again.'"
More ...
____________________________________________________________________

National Libertarian Party
"Mike Gravel, a former Alaskan Senator and Democratic candidate for president, has joined the Libertarian Party. ... 'I'm joining the Libertarian Party because it is a party that combines a commitment to freedom and peace that can't be found in the two major parties that control the government and politics of America," says Gravel. "My libertarian views, as well as my strong stance against war, the military industrial complex and American imperialism, seem not to be tolerated by Democratic Party elites who are out of touch with the average American; elites that reject the empowerment of American citizens I offered to the Democratic Party at the beginning of this presidential campaign with the National Initiative for Democracy.' ... Gravel served in the United States Senate from 1969 to 1981. Most recently, Gravel was a Democratic presidential candidate, though forced out of national debates by Democratic Party leadership and the media. Gravel officially became a member of the Libertarian Party today."
More ...
____________________________________________________________________

Rand Corporation
"As NATO heads toward its summit meeting in Bucharest on April 3-4, the question of NATO enlargement — especially whether to give Membership Action Plans, or MAPs, to Georgia and Ukraine — has re-emerged as a contentious issue."
More ...
____________________________________________________________________

Financial Armageddon
"Once again, Wall Street's best and brightest [note: that was meant to be funny] are out of sync with reality. Last week, they piled into the market amid talk of 'bottoms' and 'buying opportunities.' This week, they bailed out of their positions, apparently 'surprised' by data that suggests economic conditions are worsening and by news that companies like Oracle and JC Penney are beginning to feel the effects of a slowdown in spending."
More ...

The Truth About Our Neighbors

2008-03-27T12:29:00.003-04:00

Center For Strategic & International Studies
"Quite apart from the fact that the United States profits overall from the North American Free Trade Agreement (NAFTA), an important consideration lost in the bad-mouthing of the agreement by Senators Barack Obama and Hillary Clinton is that we are fortunate in our two land neighbors. Canada and Mexico are peaceful countries and troops are not needed on either side of the two U.S. borders for purposes of keeping the peace. Neither of the two countries is politically extreme. Both are democracies, and NAFTA gave a push toward reaching this outcome peacefully in Mexico. Comparing North America with other regions of the world brings out this fortuitous situation; it is the antithesis of the enmity, and often bloodshed, that prevailed between Germany and France for centuries, between India and Pakistan, Russia and China, and Venezuela and Colombia today."
More ...
____________________________________________________________________

Friedman Foundation
"A new empirical study examines Florida's A+ Program finds that the loss of vouchers has reduced the program's beneficial effects on public schools. Greg Forster, the study's author, says "The academic performance of failing public schools in Florida responded to changes in the status of vouchers in the A+ Program." Forster's research offers the first scientific analysis of the post-2002 voucher effects in the A+ Program."
More ...
____________________________________________________________________

Investor Business Daily
"The first of 3,000 new automated ocean buoys were deployed in 2003. They amounted to a significant improvement over earlier buoys that took their measurements mostly at the ocean's surface. ... The new buoys, known as Argos, drift along the ocean at a depth of about 6,000 feet constantly monitoring the temperature, salinity and speed of ocean currents. ... The Argos buoys have disappointed the global warm-mongers in that they have failed to detect any signs of imminent climate change."
More ...
____________________________________________________________________

Hudson Institute
"Entrepreneurs are forgotten Americans, forgotten by much of Wall Street if not by their neighbors on Broadway, Queens Boulevard, and Flatbush Avenue. Chief executive officers of investment banks all too often focus on big government solutions to help big companies, ignoring the small entrepreneurs of America."
More ...
____________________________________________________________________

Reason Foundation
"Sen. Barack Obama (D-IL), Sen. Sam Brownback (R-KS) and Rep. Ron Paul (R-TX) have signed oaths declaring that, should they win the presidency in 2008, they will issue an executive order during their first month in office instructing the entire executive branch to put into practice the Federal Funding Accountability and Transparency Act of 2006, a Google-like search tool will allow you to see how your tax dollars are being spent on federal contracts, grants and earmarks."
More ...

Jersey Turns To The Titans Of Wall Street

2008-03-26T22:52:00.003-04:00

FINalternatives
Well known fact that unions love attacking private equity firms and hedge funds for obvious reasons. In New Jersey, where unions have plenty of sway, leftist politicians have ignored their reliable organized labor supporters and looked to alternative investments as a way of shoring up state promises to its public workers.
"The $77.7 billion New Jersey Division of Investment is looking to allocate a further $1 billion to a pair of hedge funds and five private equity funds. The Garden State’s investment council is considering a $100 million commitment to activist hedge fund Knight Vinke Institutional Partners II and $100 million to Marathon Special Opportunities Fund, a low-volatility global distressed-securities offering."
More ...
____________________________________________________________________

TCS Daily
"These are the latest steps taken by the U.S. government to solve a problem created in large measure by the government itself. We have seen this movie before.
As a reaction to the bursting of the dot-com and telecom bubbles at the end of the 1990s, the Fed inflated the currency through the actions of its Open Market Committee. By June 2003, the policy of easy money was reflected in the drop of the federal funds rate to 1 percent. The loose monetary policy was maintained, with variations, for almost five years. The result was a fiction economy in which millions of people borrowed and consumed too much. The fact that mortgage loans were turned into sophisticated securities traded internationally made the fiction global."
More ...
____________________________________________________________________

Goldwater Institute
"It’s going to take a lot of hard work to address the state’s growing general-fund budget shortfall. Earlier this year, the Goldwater Institute issued 100 ideas for Arizona lawmakers to consider. Here are some that address the state’s financial health: ..."
More ...
____________________________________________________________________

American Enterprise Institute
"Through much of the presidential campaign, Obama was the most engaged and responsible of the Democratic presidential aspirants when it came to Social Security reform. ... This seeming moderation on Social Security prompted a backlash from the liberal blogosphere and opponents in the Democratic presidential primary, and today the senator is reverting to old-line liberal remedies."
More ...

Government-Run Health Care Coming To A State Near You

2008-03-25T21:36:00.003-04:00

The Star Ledger
"Those promises must contend with the reality of MassCare. For one thing, the program has exploded in costs, now 85 percent over budget. Health insurance premiums rose 12 percent last year; individuals complain of being left with a choice of just seven government-approved health policies; clinics and hospitals feel squeezed by reimbursement rates; the total number of uninsured has moved down slightly."
More ...

Related:
Stop New Mexico from Adopting a Socialist-Style Healthcare System
____________________________________________________________________

Lexington Institute
"The growing rift between the Bush Administration and Pakistan’s new government over how to deal with militants operating in tribal areas along the Afghan border is a reminder that America’s global war against terrorists depends heavily on the forbearance of host nations. If Pakistan decides it has had enough of America’s presence in the region, conducting military operations in Afghanistan will become much harder. Not only would U.S. forces be unable to reach the landlocked country from the Indian Ocean -- the only alternative to crossing Pakistan is to transit Iran -- but Pakistan’s loosely ruled tribal areas could become a permanent sanctuary for Taliban insurgents."
More ...
____________________________________________________________________

Competitive Enterprise Institute
"A new anti-Gore ad produced by the Competitive Enterprise Institute has been censored by the National Rural Electric Cooperative Association. The association claims copyright infringement over seven seconds of footage in the ad—footage which was taken from a documentary that the Association itself posted on YouTube. A “takedown” notice by the association led to the ad being yanked off YouTube over the weekend. CEI has since put the ad on its own website."
More ...
____________________________________________________________________

The Federalist Society
"My purpose here is to simply suggest some potential judicial frontiers as we once again debate the role of the Wisconsin Supreme Court in the midst of an election."
More ...

Paid Not To Teach

2008-03-24T09:19:00.003-04:00

UnionFacts.com
"This morning’s New York Post features an editorial on New York City’s “rubber rooms” for teachers and school administrators who are too wretched to work but too unionized to be fired. We covered the “rubber-room teachers need respect, too” campaign last week, but the Post has since turned up some examples of the remarkable union-defended teachers that the district hasn’t yet been able to fire ..."
More ...
____________________________________________________________________

Reason Magazine
"The most important voting bloc now are libertarians who "like gays and guns, low taxes and free speech. They are pro-globalization and antiwar. They are at the center of American politics. Win them over and you'll win every national election for the next several decades."
More ...
____________________________________________________________________

Lewrockwell.com
"The credit markets were reeling and people across the globe had lost confidence in the dollar. ... Furthermore, U.S. armed forces were bogged down in an unpopular war overseas, and the U.S. economy seemed to be moving into a recession. ... I am not describing the current economic scene in the United States; instead, this is a description of the crisis of August, 1971, ...
More ...
____________________________________________________________________

Hedgeworld
The five "Ps" of crisis communication. "In my coaching experience, it is normal for financial professionals—even sales professionals—to resist client communication in down markets. In a crisis, the natural propensity is to stick one's head in the sand, far, far away from the phone."
More ...
____________________________________________________________________

Property & Environment Research Center
"CEO of GE, Jeff Immelt, was repeatedly assailed by ideological conservatives angry over his involvement in the U.S. Climate Action Partnership, a coalition of large businesses lobbying for a carbon cap-and-trade system ..."
More ...

Japan Edges Out The U.S. For The Highest-Tax Location In World

2008-03-20T11:21:00.006-04:00

"This is startling news for America's businesses and workers," said Tax Foundation president Scott Hodge, the study's author. "Tax competition for jobs and investment is fierce, and the U.S. continues to fall further and further behind. Our states should be the world's leaders in many things, but high taxation should not be one of them. The high federal corporate tax rate is literally crushing states' competitive abilities. That means fewer jobs for American workers." ... This new study breaks the tax down state-by-state, adding each state's corporate tax rate to the federal corporate tax rate. The results show that 25 states impose, when combined with the federal rate, a higher business tax rate than any other nation.
More ...

Related:
Spending as if There Was No Tomorrow
Why Tax Havens Are a Blessing
Are taxes equivalent to theft?
Taxation
The Masters of Earmarks
____________________________________________________________________

Sponsored by the Department of Defense, the latest study examined U.S. counterinsurgency efforts from 2003 to 2006. It found that funding in Iraq during this period was focused heavily on safeguarding U.S troops – such as for improved vehicle armor and electronic detection and jamming equipment – while less attention was paid to protecting Iraqi citizens. As a result, civilians were often led into a Faustian bargain in which they sought the help of sectarian extremists they otherwise might have avoided. "The failure to protect the Iraqi population contributed significantly to the increase in insurgency and sectarian violence," said co-author Edward O'Connell, a senior defense analyst at RAND who undertook three assignments in Iraq from 2004 to 2007.
More ...

Related:
Learning the Right Lessons from Iraq
Iran Upstages U.S. in Iraq
Sustaining the Military Effort
____________________________________________________________________

We all want to live well and no one wants their living standard to decline. That makes sense, right? It's just the way we are made. What does not make any sense is the strange article of faith that has descended over Washington, DC, that says that no price must ever be permitted to decline due to recessionary pressures. All resources in the national treasury, every conceivable monetary manipulation, all efforts of every regulatory body must be marshaled toward the great national goal of re-pumping the economy, which must never ever be permitted to fall even a tiny bit. Welcome to the War on Recession ...
More ...
____________________________________________________________________

It is incredible to see the rampant devaluation of the U.S. Dollar. ... If this type of market activity continues the U.S. Dollar will have no value in a few months. While it is probably unlikely that we will see a hyper-inflationary collapse of the U.S. Dollar within the next few months, these policies are entirely unsustainable. If the Federal Reserve does not move to defend the value of the U.S. Dollar we will eventually see hyper-inflationary collapse and worldwide financial turmoil.
More ...
____________________________________________________________________

When the U.S. Navy and Marine personnel fill up at their local Navy Base Exchange, they're buying their gasoline from a company owned by Venezuelan dictator Hugo Chavez. Citgo has a $60-million-a-year contract to supply the Navy Exchange with gas through 2010. Venezuela is using money from its oil exports to the U.S. to buy $3.4 billion worth of Russian weaponry, including 100,000 AK-103 and AK-104 assault rifles, a dozen Mi-17 military helicopters and 24 SU-30MK fighter jets. The irony is that it's also negotiating a multibillion-dollar, multiyear contract to buy four Kilo-class diesel submarines and four state-of-the-art Amur submarines. They're intended to confront the U.S. Navy in the Caribbean and try to sink the ships those sailors and Marines sail on.
More ...

Ron Paul Schools Ben Bernanke Yet Again 2-27-08

2008-03-19T22:00:00.001-04:00

The Blundering Bear

2008-03-19T15:16:00.002-04:00

"The whole credit crisis largely reflects a lack of good information. Mortgage originators and underwriters shoved their underlying securities into structures so complicated that investors pretty much took it on faith that they were AAA-rated. These same investors now have to take someone else's word that the securities are worthless. Ratings agencies still don't seem to know what's going on. A spectacular bankruptcy would shine a bright line on this mess. To start, Bear's trading counterparties and other creditors would have to show themselves and explain their positions to a public examiner," writes Nicole Gelinas, a chartered financial analyst and a contributing editor to City Journal, for this morning's WSJ. "No doubt these newly protected traders and other creditors are happy, at least for now. But they should realize that, along with government protection, could come all kinds of unwelcome new regulations so that the Fed can protect itself."
More ... (Subscription needed)
____________________________________________________________________

There are now two South Americas,” says Chilean economist Rolf Lüders, a former prime minister under Augusto Pinochet. The old South America, which remains mired in populism and Marxist rhetoric, includes Argentina, Bolivia, Ecuador, Nicaragua, and Venezuela. The new South America is democratic and free-market-oriented, and includes Brazil, Chile, Colombia, Costa Rica, Paraguay, Peru, and Uruguay. Chile is undoubtedly the most prosperous and stable country in the group, with an annual real growth rate averaging 5.5 percent over the last 15 years and a per-capita annual income of $12,000, the highest in Latin America. The country owes its unqualified success to an oft-vilified group of U.S.-educated free-market economists known as the “Chicago boys,” of whom Lüders, a former student of Milton Friedman at the University of Chicago, is one.
More ...
____________________________________________________________________

Right to bare arms - "There is no exception for self-defense. Washington, often known as the 'murder capital of the nation,' cannot defend its citizens and will not allow them to defend themselves. ... It is inconceivable that the framers - seeking to provide Americans with a means to resist tyrannical government - would fashion a right that can be exercised only in the context of a militia that is under government control."
More ...
____________________________________________________________________

Although no country with a national health care system is contemplating abandoning universal coverage, the broad and growing trend is to move away from centralized government control and to introduce more market-oriented features. The answer then to America’s health care problems lies not in heading down the road to national health care but in learning from the experiences of other countries, which demonstrate the failure of centralized command and control and the benefits of increasing consumer incentives and choice.
More ...
____________________________________________________________________

The expected election of Alejandro Encinas as leader of Mexico's leftist PRD party this week brings the most extreme and isolationist elements of Mexican politics to the fore. ... Mexico has likely shut the door on new oil development just as its biggest fields approach depletion. Pay heed: That's our third-biggest supplier. Now we'll have to find and develop new oil — or else.
More ...

Global Warming Insanity

2008-03-14T11:38:00.010-04:00

America's Climate Security Act of 2007 (S.2191) aims to reduce total U.S. greenhouse gas emissions with the goal of lowering emissions 63 percent below their 2005 levels by the year 2050. These reductions would be achieved through a system that would call for companies to cap their emissions, and then to have them trade emissions rights with each other.
The conclusions of the National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) report indicates that the legislation, if passed into law, would have a profound economic impact on U.S. businesses, consumers and governments nationally and in all 50 states. A sampling of the national findings includes:

Gross Domestic Product (GDP) losses of $151 billion to $210 billion in 2020 and $631 billion to $669 billion per year in 2030.
Employment losses of 1.2 million to 1.8 million jobs in 2020 and 3 million to 4 million jobs in 2030
Household income losses of $739 to $2,927 per year in 2020 and $4,022 to $6,752 per year in 2030
Electricity price increases of 28% to 33% by 2020 and 101% to 129% by 2030
Gasoline price increases (per gallon) of 20% to 69% by 2020 and 77% to 145% by 2030

More ...

Now, Greenpeace thinks this measure does not go far enough:
"To address the climate crisis, the bill's emission targets must be science based and therefore achieve global warming emission reductions of at least 80 percent below 1990 levels by 2050. Near term targets should be strengthened significantly to 30 percent below 1990 levels by 2020."
More ...

Why are these people so out of touch with reality? Also, why do they feel they need to get government involved rather than working with the private sector? Answer: because no one else will listen to their garbage.
____________________________________________________________________

To Austrian economists, the so-called international credit market crisis is a prima facie case of the inherent destructive tendency of government-controlled paper money: it is the consequence of an excessive expansion of credit and money, which encourages uneconomic investment and leads to unsustainable debt burdens. The inflation-provoked cluster of errors (this time in the financial sphere) eventually triggers an economic and political disaster.
More ...
____________________________________________________________________

The incarceration rate is defined as the number of people in local jails and state and federal prisons per 100,000 people in the population. At the end of 2006, the incarceration rate for the United States was roughly 751 people per 100,000 U.S. residents. This works out to 1 in every 133 people in the United States in prison or jail. During the past ten years, the incarceration rate has grown by 22 percent.
At 2.3 million people, the United States also had the highest incarcerated population in the world, followed by China and Russia.
More ...
____________________________________________________________________

"Why Obama Should (NOT) Be President"
The highly reputable International Brotherhood of Teamsters elite recently put out this garbage:
"Sen. Barack Obama is the only presidential candidate who can right the destructive wrongs of the past eight years. ...Looking at Obama's impeccable record on trade issues and issues dear to working families..."
More ...
I'll let you form your own opinion.

Time To Address The Attorney General Problem

2008-03-13T10:34:00.004-04:00

The fiasco surrounding former NY Gov. Eliot Spitzer's resignation has brought attention to an even larger problem the country faces: activist Attorneys General.

There is a joke floating around Washington DC circles that suggests the National Association of Attorneys General (NAAG) should be called the National Association of Aspiring Governors. That should send warning signals to the American people that AG's are willing to bend the law to their will to score political points.

Yesterday, John Fund of The Wall Street Journal wrote, "His career as a prosecutor provided plenty of warning signs he was destined for trouble, and each of his political campaigns featured clear attempts to circumvent campaign-finance laws. ... And he used New York's Martin Act, a uniquely harsh law allowing prosecutors to declare almost anything a "fraud," and no requirement on their part to prove criminal intent, to trample the due-process rights of anyone blocking his path to the TV cameras."

In the same publication, Kimberley Strassel said news reporters failed to report on Spitzer's notorious tactics out of fear of losing his insider information. "He knew, too, that as financial journalism has become more competitive, breaking news can make a career. He doled out scoops to favored reporters, who repaid him with allegiance. News organizations that dared to criticize him were cut off. After a time, few criticized anymore," she wrote yesterday.

John Whitehead, A respected Wall Street figure, dared to criticize Spitzer for his unscrupulously zealous pursuit of American International Group CEO Maurice "Hank" Greenberg. The AG later threatened Mr. Whitehead, telling him in a phone call that "You will pay the price. This is only the beginning and you will pay dearly for what you have done."

Spitzer is not alone in this activist AG crowd. Mississippi Attorney General Jim Hood was asked recently why his office wasn't prosecuting several tort lawyers, who were alleged bribers trying to influence a state judge in swaying the outcome of a corporate case. He admitted that his connections to the accused meant that going after them would be "like prosecuting a relative." Those ties include lucrative contracts that he's awarded to those lawyers, who in turn have lavished him with campaign donations.

Oklahoma’s Drew Edmondson, Connecticut’s Richard Blumenthal, Illinois’ Lisa Madigan and Michigan’s Mike Cox are other AGs people should be keeping an eye on.

The recent cry for consumer protection against dangerous Chinese goods has inspired Democrats to propose expanding the Consumer Product Safety Commission. The bill would distribute enforcement power among the nation's dozens of state Attorneys General, among other things. In lieu of consistent national standards, the newly empowered state AGs would be given the green light to file lawsuits and enforce rules against manufacturers based on their own interpretation of consumer product safety laws. You know where this is going.

In May 2005 the American Enterprise Institute released a study that found adverse consequences of activist AGs would create (1) re-regulation of major sectors of the U.S. economy; (2) The cartelization of major American industries; (3) The increased dominance of the plaintiffs’ bar over American politics; and (4) Substantial wealth transfers from productive enterprises to plaintiffs’ lawyers and advocacy organizations with an aggressive agenda to re-regulate the economy. Scary stuff considering the mountain of new regulations and taxation the Democrats will impose if they win the White House in November.

The Spitzer tragedy is ironic. It was Spitzer himself who used text messages, phones and money transfers to arrange his trysts with call-girl Ashley Alexandra Dupre (in which I learned today she used to live in the next town over from me), alerting bank employees who in turn reported the suspicious pattern of behavior to investigators. We reap what we sow.

It is time to mount an offensive against out-of-control AGs, who know of no limits of government power and their own personal behavior. These are people to be feared, not celebrated or even elected into office. This is the reason why the Founding Fathers created the U.S. Consititution, to constrain the likes of Eliot Spitzer to the most meager of tasks of public office.

Look At All That Money

2008-03-12T11:21:00.002-04:00

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements (Thank Financial Armageddon for info). To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

U.S. annual gross domestic product is about $15 trillion
U.S. money supply is also about $15 trillion
Current proposed U.S. federal budget is $3 trillion
U.S. government's maximum legal debt is $9 trillion
U.S. mutual fund companies manage about $12 trillion
World's GDPs for all nations is approximately $50 trillion
Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion
Total value of the world's real estate is estimated at about $75 trillion
Total value of world's stock and bond markets is more than $100 trillion
BIS valuation of world's derivatives back in 2002 was about $100 trillion
BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

More ...
____________________________________________________________________

The Friedman Foundation for Educational Choice today releases the 2008 edition of its annual publication ABCs of School Choice. It provides detailed facts on all 21 school choice programs available in 13 states and the District of Columbia. These programs currently allow almost 190,000 students to attend private schools using public funds, representing the significant growth of both the number and size of school choice programs over the past several years.
More ...
____________________________________________________________________

With the specter of $5 and even $10 or $15 gas looming, the wheels will not turn as freely. Fortunately, while transportation may become quite expensive, communication of words, data, and drawings becomes ever cheaper, creating opportunities for artisans, craftsmen, and many professions. This has powerful social and business implications for places like Gallatin Gateway; revitalization could occur. How might its residents guide their town’s future?
More ...
____________________________________________________________________

Today the Competitive Enterprise Institute launches a national advertising campaign, focusing on the threat to affordable energy posed by Al Gore’s global warming agenda. The ads contrast Gore’s energy-consuming lifestyle with the life-and-death need for energy in developing countries.
“Global warming activists warn us about the alleged threats from global warming, but are usually silent about the much more immediate threats from global warming policies,” said CEI General Counsel Sam Kazman, also the ad co-creator. “Restricting access to affordable energy is a sure recipe for increasing poverty, disease and human misery around the world.”
More ...

Ban on Earmarks?

2008-03-11T20:02:00.003-04:00

House Speaker Pelosi is considering a[n earmark] ban and could make an announcement as early as Wednesday, the Club for Growth is reporting.
More ...
____________________________________________________________________

"The current U.S. policy towards Cuba hurts American businesses by denying them access to the Cuban market, which in turn hurts the Cuban people by denying them the benefits of trade with the United States," says William Redpath, national chairman of the Libertarian Party.
More ...
____________________________________________________________________

London - It's been interesting to follow the American elections from here in London, where it is the number one topic of conversation at dinner parties, at think tank meetings, and in taxicabs.
More ...
____________________________________________________________________

Of course I have to devote some coverage toward my favorite governor, Eliot Spitzer. New York Gov. Eliot L. Spitzer's political future was thrown in doubt yesterday after he was identified as an anonymous client heard on a federal wiretap arranging to pay money and buy train tickets for a high-priced New York prostitute to meet him at a downtown Washington hotel.
More ...

News Roundup

2008-03-10T10:54:00.003-04:00

Jim Harper, of the Cato Institute, writes about the solution to illegal immigration:
"Broad immigration reform failed before Congress thoroughly considered national EEV, but the lines of debate have been drawn. Advocates in Congress will try to attach a nationwide worker registration system to any immigration bill Congress considers, and the Bush administration recently announced steps to promote such a system."
More ...

Adam Summers, of Reason Foundation, writes about how California's state deficit keeps growing despite revenue increases:
"It should come as no surprise that the politicians in Sacramento are resorting to the usual tricks to try to paper over the growing budget gap another year without doing anything to solve the underlying problem: runaway spending. Government spending has significantly outpaced inflation plus population growth for years, and has even exceeded the profligate spending of recalled Gov. Gray Davis under Gov. Arnold Schwarzenegger's tenure."
More ...

A pretty interesting report appeared on the Adam Smith Institute's website on Friday. It is written by Gordon Hector:
"The Waste of Nations argues that pay-as-you-throw (PAYT) waste charges are the best way to encourage recycling and to boost profitable waste businesses. However, the report stresses that PAYT must not be used as a 'dustbin tax' and that its introduction must be accompanied by a corresponding fall in council tax."
More ...

Last week Tax Foundation Tax Counsel Joseph Henchman testified before the Pennsylvania House Republican Policy Committee on Governor Rendell's proposal to stimulate the state's economy:
"Pennsylvania's corporate income tax rate is 9.99 percent, the second highest in the United States. This is not very competitive either at home or internationally, where everyone is cutting corporate tax rates to 25, 20, even 12.5 percent. Businesses doing business in Pennsylvania must pay the 10 percent state tax, plus the 35 percent federal rate. Any plan that purports to stimulate Pennsylvania's economy and invest in the future which does not cut the corporate income tax rate just isn't serious."
More ...

About That Middle Class Squeeze

2008-03-09T23:20:00.001-04:00

Democrats seem unable to stop themselves from promoting higher taxes for the wealthy and lower taxes for the poor. But if the public knew the facts, their rhetoric would have no resonance, says Investor's Business Daily (IBD).

The poor in America pay virtually no taxes at the federal level. What taxes they do pay have been falling for decades:

The total effective federal tax rate -- for income, payroll and excise taxes -- for the bottom 20 percent of U.S. households was halved from 1979 to 2005.
From 2000, the year before President Bush took office, to 2005, after his tax cuts had fully kicked in, their total effective federal tax rate fell by nearly a third.

More ...

Free Trade Under Attack

2008-03-08T12:06:00.003-05:00

Democrat candidates Hillary Clinton and Barack Obama are attacking free trade to appeal to anti-trade voters in Ohio and elsewhere. Their claims do not support the facts, which is free trade has created millions of jobs and kept goods and services affordable. Daniel T. Griswold writes for the Cato Institute about the real impact free trade has on the U.S. - something the Democrats are loath to admit during these protectionist times:

"But tinkering with a 14-year-old trade agreement will not bring an industrial renaissance to Youngstown and other Rust Belt cites. The relative decline of those regions dates back to the 1960s and 1970s, when the American economy began a transition from heavy industry toward an information-based service economy."

More ...

Biofuels Bet

2006-10-23T19:14:00.000-04:00

Venture capitalist Vinod Khosla explains why he’s betting on biofuels. He writes for wired.com:

"The ethanol made here is not only clean but also cheap – this is perhaps the first ethanol plant to achieve both. More important, it is an early demonstration of the great potential of biohols – liquid fuels derived from biomass for internal combustion engines. The facility is the first data point in what I call the biohol trajectory. (See “March of the Biohols,” page 143.) Like Moore’s law, this trajectory tracks a steady increase in performance, affordability, and, importantly, yield per acre of farmland. A number of biohols appear along this performance curve, among them corn ethanol, cellulosic ethanol, higher-energy-content butanol, and other biomass-derived fuels that are even more energy-rich than butanol. We’ll see fuels with higher energy density and better environmental characteristics, and we’ll develop engines better optimized for biohols. Ethanol and the newer fuels will yield better fuel efficiency as innovations like higher compression-ratio engines make their way into vehicles. In addition, we can count on the emergence of complementary technologies like cheaper hybrid vehicles, better batteries, plug-in hybrids, and more efficient, lighter-weight cars."
More ...

From Far Left to Libertarian

2006-09-28T18:34:00.000-04:00

TCS Editor Arnold Kling writes about the connection between those on the far left and those of us who know better. He says:

"[The two are connected by:] A passion for social and political issues. I grew up in a household where the dinner conversation often was politics. Far Leftists and libertarians both care more than the average person about what goes on in public policy. Frustration with political incumbents. Far Leftists and libertarians both have a tendency to exaggerate the flaws in Presidents while in office and to overstate the virtues of past leaders. For example, Presidents Clinton and Kennedy are much more popular with the Far Left today than when they were in office. Similarly, during his Administration, President Reagan was considered a disappointment by libertarians. Anti-elitism. Both Far Leftists and libertarians are willing to reject what they see as elitist views among politicians and political pundits."
More ...

Venezuelan oil pimp

2006-09-21T14:50:00.000-04:00

Here is a great one from a New York Daily News editorial that calls Hugo Chavez a "Venezuela oil pimp." Great stuff. Not sure who the author is but deserves a lot of credit. Whoever writes:

"May your prayers be answered, Señor Chavez. May the United Nations leave New York for residence in Venezuela, so very far from the diplos' lush and cushy berth on the East Side. The sorry organization isn't worth the gridlock. ... And you can shove the fuel oil you are offering at a discount to some poor Americans, including folks here in New York with the aid and comfort of the moronically misguided Rep. Jose Serrano. This is nothing but a public-relations stunt by a populist poseur on the order of, well, Fidel Castro."
More ...

No difference betweeen GOP and Dems

2006-09-15T18:59:00.000-04:00

Writing for Bloomberg Brian Faler discovers why there is no difference between the GOP and Democrats. Both are spend thrifts and are hopeless. He writes:

"OMB data show that non-security discretionary spending, excluding emergency funding measures, has increased every year since 2002: by 6 percent that year, 5.7 percent the next, 4.3 percent in 2004, and 2.8 percent last year. This year, it is projected to increase by 0.5 percent.
Republican lawmakers say they are confident their constituents will stick with them because the Democrats are even less committed to restraint.
'They may have some concerns with some of us,' said Senator John Cornyn, a Texas Republican. 'But I think they'll understand that things will be much worse, not better, if they elect our friends on the other side.'"
More ...
Just one question then Mr. Cornyn, why should I bother to vote for either one of you?

Big oil conspiracy

2006-09-10T12:46:00.000-04:00

Writing for Tech Central Station Pejman Yousefzadeh dispells the conspiracy surrounding gasoline prices. He reports:

"Needless to say (you'd think), the arguments alleging oil company manipulation of the market value for gasoline are fundamentally flawed ... supply is increased because "federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import." The Reuters story linked above reports a further reduction of demand fears with speculators and observers betting that there will not be any political conflicts with Iran in the near term that will reduce supply. we will continue to be plagued by myths that gas prices are somehow capriciously and artificially set by businesspeople bound and determined to rob consumers of their hard-earned dollars so these self-same capitalists can line their filthy pockets. But the merest bit of Googling brings up excellent rejoinders demolishing these myths."
More ...

Economic Freedom of the World Report 2006

2006-09-07T19:00:00.000-04:00

Not surprisingly Hong Kong registered the highest in the economic freedom index, which as many calculations. The Cato Institute along with over 70 other think tanks around the world released the report this week:

"Economic freedom has a greater impact than foreign aid in helping people in poor nations escape poverty ... Hong Kong retains the highest rating for economic freedom, 8.7 out of 10, followed by Singapore at 8.5. New Zealand, Switzerland, and the United States tied for third with ratings of 8.2. The United Kingdom and Ireland are tied for the 6th place, Canada ranks 8th, and Iceland and Luxembourg are tied for 9th place. The rankings of other large economies are Germany, 17; Japan, 19; France, 24; Italy, 45; Mexico, 60; India, 53; China, 95; Brazil, 88; and Russia, 102. Chile ranks as the freest economy in Latin America (20), while Botswana ranks as the freest economy in Africa (35). ...
Nations that have made substantial gains in economic freedom since 1985 are Hungary, Iceland, El Salvador, Zambia, Poland, Bolivia, Israel, Ghana, Uganda, Peru, and Nicaragua. Nations that have registered significant losses in economic freedom since 1985 are Myanmar, Venezuela, and Zimbabwe. The bottom ten nations were the Central African Republic, Rwanda, Burundi, Algeria, Guinea-Bissau, Venezuela, Democratic Republic of Congo, Republic of Congo, Myanmar, and Zimbabwe."
More ...

The not-so-Golden State

2006-09-04T18:13:00.000-04:00

"Plenty of California's 36m residents are living the American dream—the McMansion in a gated community, the children at private school, even, for some, the yacht moored in Marina del Rey. But plenty more will never get near the dream. According to a new report by the non-partisan Public Policy Institute of California (PPIC), America's most populous state is now the third-poorest in the nation, behind Washington, DC, and New York, with almost 6m Californians living below the poverty line ..."

The following was taken from The Economist. If that is the situation why the hell would any state, or the nation for that matter, follow anything California politicians say or do. At times they have been called "trailblazers" in environmental laws and "social justice." I wonder what the poor would say about that. I think they would say California only leads the way in how to make people poor and keep them that way. Pity the poor, middle class and business community if Congress is stupid enough to mimac failure. http://www.ppic.org/main/home.asp

A shred of hope

2006-09-03T21:33:00.000-04:00

Reason Foundation's Brian Doherty writes about the Libertarian Party's first chance to win a seat in Washington D.C. Those hopes rest on Bob Smither. He explains:

"The Texas courts won't let the Republican party simply replace DeLay on the ballot ... So now Bob Smither, who glommed on to the Libertarian Party in its first year of operation, 1972, has the weight of decades of party expectations on his shoulders ... But the LP's supporters are going to need to rise above fears of disappointment to take advantage of them. Overly excitable and unrealistic expectations can be unhealthy for a third party. But lack of excitement can be fatal as well, Bob Smither, with only $10,000 to spend as the election draws near, can attest."
More ...

Another media failure

2006-09-03T21:31:00.000-04:00

The Weekly Standard's Paul Marshall explores how the main stream media of the west is poorly equipped to understand the Islamic religion. He writes:

"We know already that some "journalists" are simply propagandists, such as photographer Adnan Hajj, eventually fired by Reuters after his doctoring of photos from Lebanon was exposed. ... a larger problem is that honest local reporters have their lives threatened if they tell the truth. Palestinian journalists have been killed for reporting that reflects adversely on Hamas or Fatah. Many denounced the Fox duo's kidnapping, and two days after their release, dozens of journalists in Gaza demonstrated outside the Palestinian Legislative Council offices, demanding an end to the intimidation that cripples their work."
More ...

Minimum wage law is a joke

2006-09-02T14:39:00.000-04:00

Adam Summers of the Reason Foundation explores why the minimum wage law hurts the people it is intended to help. The law is a sham and purely a talking point to make statists look good during election time. He reports:

"... the last federal minimum wage increase led to the loss of 146,000 entry-level jobs ... restaurants postponed adding another 106,000 positions ... 42 percent of respondents said they increased menu prices ... layoffs and foregone hirings, job seekers who lack experience or education are doubly hurt because the minimum wage makes it even more difficult for them to find a job. ... most minimum-wage earners are part-time workers, young people new to the labor market, or other family members trying to provide some supplementary income. Moreover, they don't stay minimum-wage earners for long."
More ...

A vapid NFL

2006-09-02T12:32:00.000-04:00

ESPN's John Clayton writes about the NFL's lousy new rules:

"The big rule changes this offseason involve taunting and celebrations. Don't even think of showing up a player by getting in his face after a tackle. That's a 15-yard penalty. Chad Johnson's end zone celebrations will cause fines or penalties unless he totally scales them down. That's a shame. It is the No Fun League. Spikes are still OK. Lambeau Leaps are OK. Some dances are permitted, but not much."

Times and Post fudge the numbers

2006-09-01T16:47:00.000-04:00

David R. Henderson writing for TCS Daily chides The New York Times and Washington Post for skewing economic statistics put out by the government recently. He investigates how those reporters misinterpreted wages, compensation and wealth in general. He states:

"The New York Times and Washington Post did their readers a huge disservice ... the problem is that the data was presented in a way that will surely leave an incorrect impression in their readers' minds. Indeed, their article is a model of how to write a news story to mislead your reader or, alternatively, a model of how not to write a news story if you want to inform your reader."
More ...

Marijuana controversay

2006-09-01T15:30:00.000-04:00

Dr. Henry I. Miller writes for TCS Daily that marijuana's legalization is unjustified on medical grounds. May be. Some would argue is it. Who is right? Does it matter? Probably not. Even if it medically unuseful does it still justify being branded as a "controlled dangerous substance," and punishable under law if used. No, just another irrationale government policy. Dr. Miller writes:

"The FDA weighed in several months ago by endorsing a multi-agency study that found 'no animal or human data supported the safety or efficacy of marijuana for general medical use.' This enraged those who claim that cannabis is an appropriate treatment for ailments from nausea and vomiting to muscle spasticity and intractable pain. They accused the FDA of elevating politics over science -- more specifically, over the conclusions of a 1999 report from the Institute of Medicine (IOM), a branch of the prestigious National Academy of Sciences."
More ...

Peak Oil Panic

2006-08-31T22:00:00.000-04:00

Reason Foundation's scientific reporter Ronald Bailey talks how to lower the price of gasoline. He writes:

"If ChevronTexaco, ExxonMobil, or other private companies actually owned the reserves, the world would be in a much more secure position with regard to oil production. Instead, we are subject to the whims of figures like Chavez, Russia’s Vladimir Putin, and Iran’s Mahmoud Ahmadinejad, and must worry about the doubtful stability of their personalities and regimes. (To be sure, even a private reserve under such a regime would face the constant threat of nationalization or other interference.) In the mid-1990s, the world had more than 10 million barrels per day of spare production capacity. That figure has fallen to between 1 and 2 million barrels, which means that any significant disruption in supplies can cause prices to soar."
More ...

Chinese and American blunders

2006-08-30T17:58:00.000-04:00

Doug Palmer writing for Boston.com portrays a very sad situation in the U.S. Senate and Beijing. Once again people are left out of the equation here while statists play politics. He reports:

"The senators contend China's currency is undervalued by 15 to 40 percent. Their bill directs the White House to impose a 27.5 percent tariff on goods from China if Beijing does not significantly raise the value of its currency within six months. That punishment could be delayed for 12 more months if China has begun implementing a plan to revalue its currency."
More ...

The sun causes earth's climate change?

2006-08-30T17:48:00.000-04:00

Some striking news about global warming. Tim Hames writes for TimesOnline that the Solar Terrestrial Relations Observatory (Stereo), which NASA is launching next month, could cause some environmental fascists to demand the government blot out the sun in the following years. He writes:

"There has long been a minority school of thought that is deeply sceptical about the extent to which rising temperatures on this planet can be explained, and blamed, on human activity. The most persuasive subsection of this community is convinced that the principal cause of climate change on Earth is the intensity of solar activity."
More ...

An idiot poised to become NY Gov.

2006-08-29T18:52:00.000-04:00

David Weigel writes for the Reason Foundation why New Yorkers, and even the rest of the country, has plenty to fear from Eliot Spitzer [all future posts about the statist will refer to him as Idiot Spitzer]. He writes:

"But no book, no bad press, nothing short of an asteroid can knock out Eliot Spitzer right now. ... Spitzer is as messianic as his worst foes dreamed. On summers off from college, he worked for Ralph Nader ... Spitzer encountered the Federalist Society and found them racist and 'economically impractical.' ... If a court was to do what Spitzer does, or state legislature was to do it, they would be violating the interstate Commerce Clause. ... Spitzer's settlements have stepped up burdens on consumers and scared small investment firms out of the racket. Newsday columnist Raymond J. Keating summed it up in one phrase: 'Spitzerism leads to more regulation and higher costs.' ... Some New Yorkers know this; most of them don't, or don't care. "
More ...

Lesson in public forest management

2006-08-29T18:25:00.001-04:00

Alison Berry, a research fellow for the the Property and Environment Research Center, writes how market forces serve the environment better than the fickle nature of government protection. She writes:

"Although the forests of British Columbia, Canada, are 96 percent government-owned, the management of the forests is far more market-driven than in the U.S. Forest Service ... the government of the province transfers management responsibilities for most of its forests to the private sector through long-term agreements called tenures, some of which extend for 25 years or more. Some of these tenures resemble private property and provide incentives for reforestation, investment in silviculture, and environmental protection."
More ...

Read the Bills Act

2006-08-28T22:33:00.000-04:00

Now here is an interesting idea cooked up by the people at DownsizeDC to slow the growth of government. The "Read the Bills Act" would hopefully cause:

"Congress to slow down. This means the pace of government growth will also slow; Bills will shrink, be less complicated, and contain fewer subjects, so that Congress will be able to endure hearing them read; Fewer bad proposals will be passed due to “log-rolling;” No more secret clauses will be inserted into bills at the last moment; Government should shrink as old laws reach their sunset date; and have to be read for the first time before they can be renewed."
More ...

Big trouble in Sweden

2006-08-28T01:36:00.000-04:00

If Democrats and some Republicans get their way they will turn America into just another European country - a hive for statists, government corruption and an ever shrinking productive workforce. Nima Sanandaji & Tino Sanandaji writing for the New Neolibertarian's web site examine the dangers of Sweden's welfare state, hostility to business, and attack on civil liberties. They write:

"The problems with high unemployment, low working morals, lack of entrepreneurship and dependence on government programs are not unique for Sweden, but shared with other European welfare states such as France and Germany. In all three countries, voters are dissatisfied with the ruling political parties, but as many are dependent on government handouts, few are willing to accept reforms that scale down the size of government benefits.
International policy experts should be made aware of the problems in countries such as Sweden, where government figures constantly hide the true economic performance and try to give an overly rosy picture of the economy."
More ...

Runaway medical costs

2006-08-26T12:25:00.000-04:00

With news and analysis like this the American welfare state is here to stay until the middle class goes bust. Hans F. Sennholz writing for the Ludwig von Mises Institute expounds on spending for Medicade and Medicare:

"Medical expenses are rising faster than the costs of any other service. They are climbing at rates that exceed not only those of inflation and dollar depreciation but even the Federal government itself. ... Some 40 years ago American medical spending was estimated at 5 percent of national income; today it is calculated at some 16.5 percent and rising continually. Several reform proposals in Congress would boost the share ever higher."
More ...

Columbia free-trade deal in the works

2006-08-24T18:38:00.002-04:00

A free trade deal with Columbia is in the works, however the administration must convince Congress to support the move [I wish Congress did not have to be a part of the approval process]. The Associated Press reports:

"... the deal would benefit Colombians by expanding economic opportunity and strengthening democracy. ... it would generate export opportunities for U.S. farmers, ranchers and companies. ... a free trade deal with Colombia would help create jobs in the United States and help U.S. consumers save money while offering them more choices."
More ...

Golden State woes

2006-08-23T23:30:00.000-04:00

Adam Summers writes for the Business Life Magazine and Reason Foundation that burdensome taxes, regulation, gross overspending and welfare are contributing to California's downfall. Sounds like problems facing a lot states right now, especially the blue states. He writes:

"California's taxes are overly burdensome and are stifling economic growth in the state. Even when they do not drive people and businesses out of the state altogether, they take away resources that would otherwise have been invested in new jobs, new businesses, and better products. If the state does not reverse course, its tax and regulatory policies will continue to bleed its most productive, entrepreneurial residents and its economic growth."
More ...

Japan propose's 3 billion person free trade zone

2006-08-23T22:53:00.000-04:00

Japan proposed yesterday to create a free trade zone that would encompass several Asian nations that make up more than half the world's population. It is good to see Eastern nations are beginning to pickup the West's slack when it comes to promoting freedom and individual liberty. The Assoicated Press reports:

"Japan on Wednesday proposed creating a 16-nation free trade area including itself, China, India and Australia and covering more than half the world's population."
More ...

Good Riddance To Welfare

2006-08-22T21:52:00.000-04:00

Aug. 22 represents the 10th anniversary of the welfare reform act. Statists at the time said the reform bill would cause an American meltdown. However they were proven wrong - extremely wrong - writes Michael D. Tanner for the Cato Institute and the San Francisco Chronicle:

"Most of those who left welfare found work, and of them, the vast majority work full-time. It is true that most of their first jobs were entry-level positions, paying on average $16,000 per year. That’s not much, but for many, it’s an improvement. As you would expect, studies show that as these former welfare recipients gain work experience, their earnings and benefits increase. And, for better or worse, many continue to receive other forms of government assistance."
More ...

Iraq Insurgent Leaders Caught

2006-08-21T21:50:00.000-04:00

There was a measure of good news in Iraq recently. The American Forces Press Service reported:

"Iraqi forces captured two key insurgent leaders in Baghdad yesterday and rescued five kidnap victims in separate operations Aug. 18 and 19 in different areas of Iraq, U.S. military officials reported."
More ...

Congressional Fiat

2006-08-17T19:15:00.000-04:00

Dr. Walter E. Williams, Professor of Economics at George Mason University in Fairfax, Va., had a story posted on the Competitive Enterprise Institute about dangers posed to citizens from "congressional fiat." He writes:

"A major part of the knowledge problem Congress faces, and, for that matter, any of us, is what's seen and what's unseen. In the case of Social Security, what's seen are the beneficiaries with a monthly check. What's not seen are the outcomes that might have been had people not been taxed for Social Security. According to the National Council for Capital Formation, Social Security lowers private saving and investment and, as a result, GDP is at least 5 percent lower than it otherwise would be. Moreover, had people been able to use the money for private retirement plans, they'd earn much more than the paltry sum Social Security pays out."
More ...

2006-08-16T23:03:00.000-04:00

Stephen Schwartz writing for TCS Daily explores the rise and nature of Islamofascism:

"Islamofascism similarly pursues its aims through the willful, arbitrary, and gratuitous disruption of global society, either by terrorist conspiracies or by violation of peace between states. Al-Qaida has recourse to the former weapon; Hezbollah, in assaulting northern Israel, used the latter. ... Hezbollah showed fascist methods both in its kidnapping of Israeli soldiers and in initiating that action without any consideration for the Lebanese government of which it was a member. Indeed, Lebanese democracy is a greater enemy of Hezbollah than Israel."
More...

US Says Could End Trade Benefits For India, Brazil

2006-08-07T23:20:00.000-04:00

Disaster could strike soon with the monkeys on Capital Hill getting restless:

By Doug Palmer

WASHINGTON (Reuters) - The United States will review whether to withdraw longtime trade benefits for India, Brazil and 11 other advanced developing countries, U.S. trade officials said on Monday.
The decision follows the recent collapse of world trade talks, which many members of Congress blame on the reluctance of large developing countries like India and Brazil to open their markets to more foreign goods.
"One of the concerns that Congress has raised is that GSP (Generalized System of Preferences) benefits go largely to a few countries, while many developing countries are not trading much under the program," U.S. Trade Representative Susan Schwab said in a statement.
"The review I am announcing today, the first in 20 years, will help make certain that we are administering the program consistent with statutory criteria," Schwab said.
The United States imported $26.7 billion worth of goods from under the GSP program in 2005. The 32-year-old program waives import duties on thousands of products from 133 developing countries and expires at the end of the year unless renewed by Congress.
With that deadline looming and many key lawmakers opposed to renewal, the Bush administration will review whether to "limit, suspend or withdraw" the eligibility of 13 countries that shipped more than $100 million worth of goods to the United States under the program in 2005 or accounted for more than 0.25 percent world goods exports, Schwab's office said.
The targeted countries include Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela, USTR said.
The Bush administration will also consider whether to withdraw presidential waivers that give those 13 countries and six others unlimited duty-free access for certain products.

Indian Commerce and Industry Minister Kamal Nath told Reuters in New Delhi he could not comment on the possible loss of GSP benefits until getting full details. India is one of the biggest beneficiaries of the program.
Brazilian Trade Minister Luiz Fernando Furlan told journalists in Sao Paulo the move was at odds with a recent U.S.-Brazilian initiative to increase bilateral trade.
"Unilateral measures are always a bad option ... (They) will hurt the companies that operate in both countries and create an unfavorable climate for the evolution of bilateral relations," Furlan said.
A coalition of business groups, think tanks and activist organizations are expected to push for renewal of GSP. The program saved U.S. businesses an estimated $923 million in 2005, while helping provide jobs in poor countries.
"If you don't renew it, you're going to have some adverse consequences" for U.S. allies such as Iraq, Afghanistan, Turkey and Sri Lanka, said Viji Rangaswami, a trade associate at the Carnegie Endowment for International Peace.
Also, expelling India from the program would mostly hurt "very small, family-based operations" that export jewelry to the United States under GSP, Rangaswami said.
Schwab said in her statement the program should be continued and expanded for many developing countries even if benefits for others are reduced or withdrawn.

Israel’s Moment, The Free World’s Gain

2006-07-18T01:14:00.000-04:00

By Larry Kudlow

All of us in the free world owe Israel an enormous thank-you for defending freedom, democracy, and security against the Iranian cat’s-paw wholly-owned terrorist subsidiaries Hezbollah and Hamas. Israel is doing the Lord’s work. They are defending their own homeland and very existence, but they are also defending America’s homeland as our frontline democratic ally in the Middle East. Commentary’s Norman Podhoretz was exactly right when he coined the term World War IV to describe the global terror conflict. Repeatedly hostile actions by the totalitarians in Iran, Syria, Hezbollah, Hamas, and North Korea are all connected. So are the recently foiled terrorist-cell-block plans in Canada, the U.S., London, and elsewhere around the globe. We are fortunate to have a staunch ally like Israel to assist us in this fight.

As Ben Stein recently put it, “God bless Eretz Israel. God bless Israel for having the cojones to stand up for herself.” But supporters of freedom and democracy must also say a prayer for President George W. Bush, who has steadfastly stood up for Israel. He outright refuses to publicly ask Israel to stand down.
As expected, France, Spain, and Italy have responded to recent events with pacifist posturing. In the smoking rooms of Western Europe and around the coffee tables of the United Nations, we hear more lofty calls for restraint. But the terrorist groups that started this fight have shown no restraint. Rather than pull back, Israel should move forward, cleaning out all the terrorist sanctuaries, training camps, weapons caches, and missile systems it can find.
Remember, it was Israel that pulled out of southern Lebanon and Gaza. Later, when terrorist gangs kidnapped Israeli soldiers, Israel appropriately fought back. That is what sovereign nations do, and Israel’s recent military actions deserve our unyielding support. Israel has the right to put the terrorist armies of Hezbollah and Hamas out of business.
Importantly, so called moderate Arab governments Egypt, Jordan, Saudi Arabia, Bahrain, Dubai, and the United Arab Emirates are not taking the Hezbollah or Hamas side. This is undoubtedly a function of the American effort in Iraq, where a forward beachhead has been established for liberalization and representative government. No matter how difficult that effort remains, the center of gravity in much of the Middle East is shifting away from totalitarianism and toward some form of homegrown democracy.
And we cannot delude ourselves about the role of Iran in recent Middle East events. Iran sent Hamas and Hezbollah to attack Israel in the hope of inflaming the Middle East against Israel and the United States. The plan was to divert attention away from G-8 and UN sanction efforts to derail Iran’s nuclear weaponization program. Iran miscalculated.
Israel’s next front may indeed be Syria, which is also directed by Iran and is a safe haven for terrorists — including former Saddam Baathists and others who move freely between Syria and Iraq in order to cause trouble. Many experts still believe that Syria is safe-harboring Saddam’s unfound inventory of weapons of mass destruction.
According to news reports out of London, senior Pentagon sources say Israel has given Syria 72 hours to bring about the release of the IDF troops kidnapped by Hezbollah. Many strategists also believe Israel should clean out the numerous missile sites, military camps, and terrorist sanctuaries that exist in Syria. It is doubtful the U.S. will interfere. Now is the time to really put the squeeze on Syria’s dictator, Baby Assad.
Back at home, doomsayers are virtually blaming Israel for higher oil prices, slumping stocks, and a potential recession. But there will be no recession. The jittery oil-price jump is a short-term event, and when military actions are completed in the Middle East, prices will plummet. If need be, the U.S. can tap into 688 million barrels of strategic oil reserves, at least two months of import protection. And if Iran attempts to stop the oil flow in the Strait of Hormuz, it will take the U.S. and Israel about 35 minutes to knock out the entire Iranian navy and air force.
Recession? American businesses have never been healthier or more profitable. Lower tax rates have spurred a tremendous boom in private investment, while new job hires continue to lift family incomes. Today’s wartime uncertainty and geopolitical risk will not turn these fundamentals around. Indeed, strong world economic growth will continue, spurred by the spread of the very-American-style free-market capitalism that the Axis of Evil and its terrorist divisions are unsuccessfully trying to overthrow.
When the dust clears the world will applaud Israel for its courage. Sensible freedom-loving people everywhere will realize that Israel’s furious response in the face of senseless terrorist attacks will have made the world a better place.
In fact, we are all Israelis now.

The Rogues Strike Back

2006-07-16T00:08:00.001-04:00

By Robert Satloff

Iran thumbs its nose at Western diplomats and continues nuclear enrichment. Hamas's chief, speaking from Damascus, boasts about kidnapping an Israeli soldier. Hezbollah launches a cross-border raid, prompting Israeli retaliation in Beirut and a return volley of rockets on northern Israel. Just another bleak week in the hopeless Middle East? Regrettably, no. This one was different. This was the week the Dark Side went on the offensive.
Iran, Syria, Hamas, and Hezbollah: These are not marginal fringe groups. The first two are sovereign states, the third forms the elected government of the Palestinian Authority, and the fourth holds 25 of the 128 seats in the Lebanese parliament and, effectively, two ministerial portfolios. This was the week that the rogue regimes of the "Old Middle East"--as opposed to the shadowy, faceless terrorist groups of the "New Middle East"--reminded the world that they too have the potential to grab headlines and wreak havoc.
Here's a recap: On Monday, July 10, Khaled Meshal, head of the political bureau of Hamas, held a news conference in Damascus in which he took full responsibility for the kidnapping of Israeli soldier Gilad Shalit, whom he called a "prisoner of war."

On Tuesday, July 11, Ali Larijani, Iran's top nuclear negotiator, told European Union envoy Javier Solana that Tehran was in no hurry to respond to a U.S.-European offer of incentives to end its nuclear enrichment program and would not give a formal reply until late August. Larijani then flew to Damascus, where he praised Hamas for its noble resistance to Zionist occupation.

On Wednesday, July 12, militiamen belonging to the Iranian-backed Hezbollah crossed the internationally recognized Israel-Lebanon frontier and attacked an Israeli position, killing eight soldiers and capturing two. This was "an act of war," said Israeli prime minister Ehud Olmert, who authorized airstrikes on Beirut airport and Hezbollah facilities. Later that day, the United States and other permanent members asked the U.N. Security Council to compel Iran to suspend its nuclear enrichment activities. "We called [Iran's] bluff today," a senior State Department official told the Los Angeles Times.
On Thursday, July 13, Hezbollah rockets--supplied by Iran, via Syria--fell on major cities in northern Israel, including Haifa, Safed, Karmiel, and Nahariya, killing two, injuring dozens, and sending thousands to shelters. Israeli shelling shut down all civilian and military air access to Lebanon, as Israel continued bombing Hamas targets throughout Gaza, too. "All operations are legitimate to wipe out terror," said Israel's northern front commander Major General Udi Adam.
That's a lot of tough talk about war, face-offs, and showdowns, even for the Middle East, but what makes this train of events more worrisome than a typical week in the region is that these events--and their perpetrators--are all connected. No, this is not another Middle East conspiracy theory; to paraphrase Henry Kissinger's line about paranoids, sometimes bad guys shooting at you from all directions just might be in cahoots. In fact, the quartet of Iran, Syria, Hamas, and Hezbollah constitutes a better oiled, more cohesive unit than the diplomatic quartet of the United States, the U.N., the E.U., and Russia. Indeed, the rogue foursome is linked ideologically and operationally in a much more organic way than the charter members of the Axis of Evil ever were.

The key, it is important to note, is not religion. Iran and Hezbollah are led by Shiite extremists; Hamas is the Palestinian branch of the Muslim Brotherhood, an international Sunni movement; and Syria is governed by the world's only remaining Baathist, a secular chieftan of the Alawite sect, which reviles (and is reviled by) Syria's majority Sunni community. A feverish brand of radical Islamism certainly inspires some of these actors, but what drives them together is politics.
A generation ago, before Hamas and Hezbollah ever existed, Hafez al-Assad's Syria and Ayatollah Khomeini's Iran forged an alliance born of their common fear and loathing of Saddam Hussein. When the collapse of the Soviet Union deprived Syria of its superpower patron, leaving it surrounded by NATO-ally Turkey, pro-West Jordan, and the same thug in Baghdad, Assad continued to reach out to Tehran to avoid isolation. For their part, the Iranians exploited the situation, using Syria as the staging ground from which to build Hezbollah into their instrument for exporting the Islamic revolution.
In recent years, Hamas's success has been manna from heaven to the Iranians, Syrians, and Hezbollahis. Though these Palestinian Islamists fought and won their own battles against the more secular Fatah, Hamas's partners in the rogue quartet were perfectly happy to reap the benefits of a new front in their proxy war against Israel.
Today, these four--two states, one near-state, and one state-within-a-state--are collectively motivated by opportunity, not fear. The opportunity arises partly because the hated Saddam Hussein is gone, replaced by a weak, terrorist-wracked Shiite-led Iraqi government, propped up by a bleeding America. But each of these actors has its own reasons for exultation and brinkmanship.

Through Iranian eyes, the fact that the West has imposed no price for twenty years of lying about its nuclear program, but instead is still willing to offer ever-greater incentives, must seem remarkable. Only a preening sense of self-confidence can explain Iran's insouciant attitude toward the U.S.-E.U. offer. Indeed, U.S. and other Western diplomats who were dismayed at Iran's failure to respond to the package of carrots failed to recognize that Iran did respond, through what Clausewitz would have called diplomacy by other means: upping the ante via Hezbollah. With the threat of any meaningful U.N. sanctions months away, the Iranians took the initiative. Their goal is to make Israel just another item on the nuclear bargaining table with the West.
Through Syrian eyes, the fact that the West, operating through the U.N., appears less likely today than at any point in the past year to impose a price on the Assad family for its role in murdering former Lebanese prime minister Rafik Hariri must seem similarly stunning. Only a robust sense of optimism can explain Syria's brutal crackdown on secular reformers and liberal dissidents at home and its ongoing efforts to silence critics--like the courageous journalist Gibran Tueni, assassinated in December 2005--in Lebanon next door. Last week, Syria's accidental president, Assad's son Bashar, evidently looked at the rising price the West was willing to pay Iran to stop its objectionable behavior and decided he wants to get into the game. But, lacking significant oil revenues, he chose the poor man's blackmail of terrorism. Hence Syria's brazen decision to break the fiction of its nonsupport to terrorists by providing Khaled Meshal with a Damascus soapbox to boast of his terrorist deeds.
Through Hezbollah's eyes, the failure of the West to implement U.N. Secu rity Council Resolution 1559--which demands the disarmament of all militias in Lebanon and calls on the Lebanese government to exercise sovereignty up to the border with Israel--nicely fits its view of the Jewish state as weak, brittle, and impotent. Hezbollah leader Hassan Nasrallah has likened it to a "spider web." Only an unswerving sense of ideological purpose can explain Hezbollah's willingness to ridicule its own role as a Lebanese political party serving in the Lebanese government by taking actions that rain Israeli retaliation down upon the heads of fellow Lebanese.
And through Hamas's eyes, the fact that the West, including Israel and the United States, permitted a terrorist organization committed to the destruction of the Jewish state to take over the reins of government in the Palestinian Authority--an entity whose only raison d'être is to be an instrument of peacemaking--is surely proof of divine intercession. Hamas's attack against the Israeli position at Kerem Shalom occurred just before the Europeans were set to launch a humanitarian aid program that would have dulled the impact of the U.S.-led financial quarantine on the PA, and just after Palestinian president Mahmoud Abbas fell into the trap of endorsing a political platform, known as the Prisoners Document, that in large respects mirrored Hamas's own "solution" to the Israeli-Palestinian conflict. Only a steadfast conviction in the rightness of the battle against the Zionist entity could compel Hamas leaders to forgo these advantages in exchange for the Israeli reoccupation of parts of Gaza.
Virtually overnight, an audacious Hamas raid has metastasized into a crisis that holds the greatest potential for regional conflagration in years. On a strategic level, the rogues' goal is almost surely to fuse the disparate crises into one--merging either the Hamas or Hezbollah front with Iran's nuclear standoff with the West, perhaps by the transfer of the captive soldiers to Iranian control, by direct involvement of Iranian Revolutionary Guards in the rocket fire against Israel, or by some other means.
If that happens, then Hamas and its fellow quartet members may achieve what Yasser Arafat was not able to accomplish with two intifadas--to regionalize the Israeli-Palestinian conflict and thereby radically alter the strategic balance. And if Iran is able to exploit this crisis to show that its nuclear program earns it and its allies special treatment on the terrorism front, Tehran will have proven precisely how beneficial the decision to invest in a nuclear program really was. As the Iranian newspaper Kayhan, close to Supreme Leader Ali Khamenei, editorialized last Thursday, "Nuclear Iran is eradicating the nuclear prestige of Israel." That's the sort of rising star to which Syria would like to be hitched.
In Gaza and Lebanon, a battle between Israel and two of its enemies has now been joined. Its spread to two other enemies--Iran and Syria--is a stark and urgent possibility. Let us not mistake this conflict for a local skirmish, a pesky diversion from more serious business, like stopping Iran's nuclear program or building a free, stable Iraq. On the contrary, it is all of a piece.
Defeat for Israel--either on the battlefield or via coerced compromises to achieve flawed cease-fires--is a defeat for U.S. interests; it will inspire radicals of every stripe, release Iran and Syria to spread more mayhem inside Iraq, and make more likely our own eventual confrontation with this emboldened alliance of extremists. Victory--in the form of Hezbollah's disarmament, the expulsion of the Iranian military presence from Lebanon, the eviction of Meshal and friends from Damascus, and the demise of the Hamas government in Gaza--is, by the same token, also a victory for U.S. (and Western) interests.
Achieving those successes--and avoiding those setbacks--will take time, persistence, and leadership. While military force is essential, nonmilitary measures are needed too. These include organizing transatlantic consensus on economic and political pressure on Syria, devising a fast-executing international mechanism to disarm Hezbollah, and expediting the Security Council process on Iran. As enervating as it must be to an administration whose policy plate already overflows with tough problems, none of this can happen without America taking the lead.
Robert Satloff is executive director of the Washington Institute for Near East Policy

Teaching Basic Economics To Fifth Graders

2006-06-22T14:55:00.000-04:00

By Arthur E. Foulkes

"But when are you going to get to the economics?"
It was the end of my first day volunteering to teach "basic economics" to a group of fifth graders. The teacher looked bemused as she asked the question.
"That's what I'm doing," I whispered a little curtly in reply.
Realizing her offense, she quickly explained her meaning: "You know, with all the graphs and big words and stuff."
I realized this teacher was under the common misperception (perpetuated by most economics professors) that economics is about math, models, and strange lands where a complete lack of real competition is called "perfect competition" and it is possible to visualize (and measure) human happiness using "utility curves."
But I had no intention of subjecting these students to economics of this sort. My goal was far more ambitious. I wanted to show them that economics stems from ordinary human behavior in the real world we face every day. So here is what we did.
My approach was painfully modest. I simply introduced the students to one economic concept per week.
Lesson 1: "Trade"
The first week's "word for the day" was trade.
To illustrate trade, I gave each student a very small, inexpensive gift I had purchased at a Dollar General nearby. I distributed the gifts randomly, then told the students they could trade their gifts (if they wanted to) with their immediate neighbors. Some did. Then I opened the class up to unrestricted trade and said they could trade with anyone in the whole classroom. Many more now traded. When they were finished I asked how many of them had traded because they believed by trading they would be better off. All said they had.
Once they settled down again, we talked about the concept of trade in general. I was impressed with how well they already understood this concept; they seemed to clearly understand that exchange involves giving up something you value less for something you value more and finding someone else with opposite valuations. For good measure, I ended the day by snatching away the gifts of two students and forcing a trade where none had been performed. One student was happy with the exchange, the other unhappy. This allowed us to discuss the idea of a "fair" trade — which I defined as a trade where both parties voluntarily take part. Again, I was impressed with how easily they seemed to grasp this idea as I replaced the items I had snatched away for my "forced" trade.[1]
Lesson 2: "Money"
The second week our economic concept was money — something all of the students had a keen awareness — if only a shadowy understanding — of. To illustrate the nature of money I wrote a short play and gave the students different roles. (There was no shortage of volunteers.)
The play was the story, familiar to students of Austrian School economics, of a long-ago egg farmer who had plenty of eggs but desired shoes. Unfortunately, the shoemaker in his town did not like eggs, but often wanted wheat. Fortunately, there was a wheat farmer nearby who wanted eggs and was willing to exchange wheat for eggs, which he did. This gave the egg farmer a supply of wheat that he did not wish to consume but rather to employ as a "medium of exchange" to allow him to obtain shoes. In other words, he used wheat as a form of money.
Of course the play was embellished with some (attempted) humor and silly characters, but the story was basically quite simple and the students seemed to understand its meaning well.
We then talked about what makes some goods better suited as money than others. For instance, wheat is better than eggs or fish because it lasts longer and is more easily divisible into units of equal quality. We then discussed things even better suited as money, such as gold or silver.
That was as far as we got, but by the end of the hour, I was at least satisfied that my students had a basic understanding of the nature and origin of "money" — something I was fairly certain none of them had heard before nor perhaps would hear again.[2]
Lesson 3: "Savings"
On the third week of my class the economic concept of the day was savings. In this day's activity we divided the class into two "villages" — one made up of people who "live for the day" (believing with Keynes that, in the long run, we're all dead) and the other village made up of savers. Every day the kids in both villages went fishing with their bare hands and caught two fish each. In the first village each person would eat both fish at a big party and feast. In the second village, each student just ate one fish and put the second in a small pond located in their village. Soon an intelligent villager came up with the idea for a net to help catch fish. The trouble was the net would take a lot of time and effort to make. Since several days were required, only the kids in the savers' village had the resources available to abandon daily fishing to devote time to making a net. Once they had a net, fewer "savers" were required to catch fish, freeing up other villagers to make bows and arrows, huts, and so on. The "quality of life" in the savers' village seemed to take off geometrically while life in the other village remained the same.
Interestingly, while at first many students had said they would prefer living in the "party" village, by the end of the class, most said they would prefer living in the savers village. We ended the class period talking about the role of savings in allowing people to do things aimed at improving their lives: pursuits that also require time, such as attending school or changing jobs.
Lesson 4: "Competition"
During the fourth week's class the word for the day was competition and we played a game I call the "gas station game." Several students play the role of commuters and, at first, one student plays the role of a filling station owner. In the first round of the game, the commuters travel from one side of the classroom to the other, but they require gasoline to make the full trip. I allow the gas station owner to buy a supply of gasoline and then sell it at whatever price he wishes. The commuters are free to car pool if they want, but must otherwise purchase some gasoline. During round one, the station owner sold her gasoline for $2 per gallon, giving her a healthy profit of $1 per gallon sold. In round two, I allowed a volunteer from the class to open a second gas station and charge whatever price he wanted. This was repeated a third time until three competing stations were jockeying for the commuters' dollars and gasoline was selling for an average of $1 per gallon (one student was selling at a loss). When the game was over we talked about what happened to the price of gasoline when competition occurred and even discussed how things would have been different if the "rules of the game" had prevented new competitors from coming along.
Lesson 5: "Price"
At our final meeting, we talked a little about career choices. I had the kids take a career-interest test and then discuss jobs they might want to some day have. We then changed gears completely and discussed the economic concept of price.
To illustrate "prices" we held an auction. Again I brought small gifts to the class and gave the kids pretend money (in exchange for points they earned from the previous weeks' activities). Some kids had a lot of money; others had less. Still, each item was auctioned off to the highest bidder. Items that had several bidders sold for higher prices than items with few bidders — establishing a role for "demand," and when only one or two units of a particularly appealing item, such as chewing gum, remained, its price had a tendency to sky-rocket, showing that the physical quantity of a good matters in light of the human demand imposed on that quantity.
After this exhilarating exercise we discussed how what we had just learned about prices for goods might apply to salaries for the different careers they had discussed at the beginning of the hour. We found that the same rules that established prices for the goods in the auction would also establish salaries or wages for different careers.
Demand for a labor service — acting on the available supply of people who can perform that service — will set the "wage" for that service. Thus supply and demand, we found, could explain both the price of goods and the price of the human factors supplying those goods.
Conclusion
My goal with these fifth graders was not just to introduce them to the basics of economic science, but to inoculate them against future attempts to teach them bad economics. By showing them that trade, money, savings, competition, and prices all have distinctly human origins and purposes, I hoped to help them make better sense out of the "economics" they will some day be exposed to.
Indeed, the concepts we discussed can easily be shown to relate quite directly to other economic concepts; for instance, trade is related to opportunity cost as well as profit and loss; money facilitates trade as well as economic calculation, savings is tied to investment, capital, and production, while competition and prices are related to demand, supply, and relative scarcity.
The constant animating force behind all human action, and the creativity it unleashes, cannot be captured in predictive models or in mathematical formulas. It is precisely this fact that precludes employing the methods of the natural sciences to solve problems of human action.[3]
The fifth-grade teacher may have struggled with this understanding of economic science, but fortunately, her students had no trouble with it.
Arthur E. Foulkes is a freelance writer and teacher in Indiana. Send him mail. Comment on the blog.
Notes
[1] According to some economists, we could have determined the appropriateness of this "trade" by subtracting the unhappy student's loss of utility from the happy student's increase in utility. If we reached a positive number, the forced trade should have been allowed to stand.
[2] Mainstream economics treats money as a "store of value" and a thing whose quantity can be manipulated by monetary authorities in order to maintain "appropriate" interest rates, full employment, consumer confidence, etc.

The Star Ledger Overlooks Real Reason For Migration

2006-06-21T20:14:00.000-04:00

From a Wednesday, June 21 The Star Ledger article:

living in an idyllic small town far from New Jersey's employment centers has its downside, he added: "You sit in traffic."
So far this decade, the ranks of New Jerseyans willing to make that trade-off have swelled, according to census data released yesterday.
The new numbers are population estimates for the state's 566 towns, and they show that most of the state's meager population growth occurred in small communities like Hamburg.
In fact, when towns are grouped by size -- from the smallest tenth to the largest tenth -- the fastest-growing segment is those in the third group from the bottom, with populations between 2,771 and 4,287 in 2000.
These 56 towns saw a nearly 9 percent increase in population -- more than twice the rate of the state as a whole. Put another way, this group of small towns, comprising 2 percent of the state's population, has garnered 6 percent of the state's population growth over the last five years.
"This is a reflection of two forces," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "There's the issue of housing affordability and the receptivity in many of these towns to growth."
While New Jersey is famous for its congested highways, "the new congestion is on the two-lane county roads," such as Routes 206 and 15, he said.
William Frey, a demographer at the Brookings Institution, a Washington, D.C.-based think tank, said middle-class Americans are endlessly seeking the next undiscovered quiet place to raise their families.
"This is occurring in all parts of the country," Frey said. "I see this as a micro-dispersion of the population to smaller-sized communities that are more affordable, have more community control and are safer."
The state's fastest-growing town is Woolwich, a once rural Gloucester County town off Exit 2 of the New Jersey Turnpike that has more than doubled in size since 2000, from just over 3,000 residents to more than 7,500. Thirteen of the 20 fastest-growing towns are classified as rural by state planners.
New Jersey's largest cities, while experiencing a construction boom, are not seeing a population explosion, according to the census figures. Newark is up 3 percent this decade, while Jersey City is down slightly.
Hughes said there won't be a definitive explanation for that trend until the 2010 Census goes door to door and counts residents. But he said theories include a slow-down in immigration, the flight of established immigrant communities to the suburbs and the general decline of older housing stock in the cities -- all of which might offset any new population brought in by construction.
REVERSAL OF FORTUNE Many of the small, fast-growing towns in New Jersey are sprawling townships, places once considered undesirable for development because of their remote locations or lack of traditional suburban amenities, such as shopping centers and sewer lines.
Yet as real estate prices soared this decade, home buyers began to view places like White Township and Lopatcong in Warren County as bargains -- towns where they could get much more for their money. Both towns now rank among the 10 fastest-growing in the state.
Hamburg has a slightly different story. The community is a relatively small borough surrounded by larger, sprawling townships.
Yet the population has risen 15 percent so far this decade. The overall Sussex County growth rate is 6 percent.
The profile of a Hamburg transplant: "They're a young, professional couple," said Bill Semmens, who has sold real estate in the area for three decades. "Both of them are working, one or both are commuting, most likely down Route 23."
And therein lies the dark underside of small-town life in New Jersey: To get away from it all, people really get away from it all.
"We and parts of Warren County are about the last moderately priced frontier," said Eric K. Snyder, the Sussex County planning director.
"And it's only perceived economics that brings people here, not real economics. It requires that you discount the value of your time to nothing, and that you are willing to put up with spending all your free time in traffic," he said.
The rush-hour drive from northern Sussex County to Route 80 can take 45 minutes to an hour -- and that doesn't include the time it would then take to get to the ultimate destination.
Semmens said his clients believe it's worth it because they can buy a house in Hamburg for $100,000 less than a comparable one nearer the interstate system in Morris County.
Those who live in northern Sussex County view the state this way: Where they live is home, and everybody else lives "down below."
"Everybody works down below because they get a good paycheck," said Williams, who hopes in a few weeks to open a deli that will cater to long-distance commuters. "But then they have to commute. People are just sick of the traffic down below. But they're bringing the traffic with them up here."
Lorie Willison, who moved to Hamburg 30 years ago from Moonachie in Bergen County, said the town has managed to maintain its small-town character in every way but one -- the cars.
"When we first moved up here, everything was great," she said. "Now that they've expanded so much, the traffic is horrendous. The town hasn't changed. The traffic has changed."

Funny how the reporters, Robert Gebeloff and Jim Lockwood, neglected to mention New Jersey's regressive tax system, unfriendly business environment and crazy regulation scheme has seriously contributed to why a lot of people are leaving the Garden State or at least its cities and townships. Its also interesting to note that they used the Brookings Institute, a policy group that is basically a mouth piece for big government politicians, as a source for the article. This irresponsible reporting has failed to show Jersey residents how their elected "leaders" have failed them for the past 30 years.

"No Poop To Scoop...What Will We Do?"

2006-04-24T22:48:00.000-04:00

By Tim Worstall

Globalization has its downside. There is nothing that humans do (or don't do) that doesn't have a downside. But I often find myself amused by how people misidentify precisely which parts of the process it might be that are so awful.
To take just one example there are those who decry the onward march of MacDonald's in bringing the Big Mac to unwary natives across the globe. What the critics seem not to know is that there are places where the patty in a bun is a considerable step up from the indigenous cuisine: Scotland for example, where they are known to batter and deep fry both pizzas and Snickers bars. Even the older delights are questionable in their addition to the must-try lists of gourmets worldwide. Haggis, for example, is the bits of a sheep you can't use any other way stuffed into the animal's stomach along with oatmeal then boiled. For hours. Served with turnips. It should come as only a small surprise that Burns Night, a commemoration of the national poet and an occasion when this gustatory delight is served to all present, is marked by everyone getting thoroughly drunk on the national drink -- something they have got right -- first.
There's a similar disconnect seen by the economist within me (amateur though he is) when we see people discussing the impact upon employment (or add the un- to taste) of globalization. Call it the Lou Dobbs argument if you wish -- i.e. this idea that if all those jobs go overseas then there'll be nothing left for Americans to do. If the Chinese end up making everything and the Indians write all the software, manning the call centers and reading the X-Rays, then what is it that Joe Sixpack will find to do to while away the weary hours? More importantly, what will he do to support himself?
To the economist, the effects upon employment and what Joe Sixpack will or won't do with his time, of changes in trade are exactly the same as the effects of changes in technology. This shouldn't be all that surprising, a factory in China operated by low-paid people just off the paddy fields is indeed a technology just as much as a super sparkling new machine sitting in a factory in Ohio is. If you prefer, 100,000 people flicking at abaci is a machine just as a computer running a spreadsheet is.
Accepting this point in general -- that the effects of trade and technology are the same -- what can we then say about what Joe is actually going to do in the future? If trade displaces the old way of doing things in the same way as technology does (and has), can we look to history for an answer? Actually, yes, via this interesting little paper from the Bureau of Labor Statistics, Occupational Changes During the 20th Century.
The detailed answer is that we have absolutely no idea what people are going to do. We can make some educated guesses about parts of the future: bureaucracies will continue to expand, people will die, taxes continue to be collected, but we're not able to state with any finality what the labor market will be like in 50 or 100 year's time. What we are able to state is that people will be doing something and that if markets are allowed to operate they will be doing the things at which they are least bad. Jobs will migrate from low-productivity activities to higher productivity ones, just as they have for the past century.
Imagine that you were back in 1900. You were somehow aware of some of the technological changes that the new century would bring (and not aware of others). You, via some wormhole in the space-time continuum, were aware of the changes in agriculture that were going to happen:
"The two occupation groups of farmers (including farm managers) and farm laborers (including foremen) combined declined 96 percent as a proportion of total employment between 1910 and 2000, from 33 percent to 1.2 percent. Employment declined from 12,809,000 to 1,598,000 between the 2 years."
Nearly 32 percent of the entire workforce is to be thrown onto the scrapheap of unemployment as a result of the new technologies! (It's worth noting that over the same period farm production more than doubled). Add what happened to domestic servants:
"Private household workers fell 92 percent as a proportion of total employment, from 6.0 percent in 1910 to 0.45 percent in 1990."
No, 37 percent! More than a third of all workers will have nothing to do as the old industries use less labor. Clearly, a massive problem -- one that requires that we put up barriers in the way of new technologies that will cause all this, right? Ban tractors so as to leave jobs for mule skinners; stop Messrs. Spangler and Hoover from putting housemaids out of work; keep that nasty Mr. Ford from putting the horse pooper-scoopers out of business!
The logic of that argument is exactly the same as that of placing barriers in the way of trade so as to stop the labor market from changing now. For what did happen to all of those displaced workers from 1900? Well, leaving aside the obviously true statement that they'll all dead now (Greenpeace is right. Technology Kills!) you can have a look through that paper to see where people are working right now. Computer specialists grew from 0.02 percent of the workforce in 1960 to 1.92 percent now. Teachers from 1.6 percent in 1900 to 3.8 percent now. Whatever my (fairly sulphurous) opinions of the Teacher's Unions I am willing to believe that at least attempting to teach children to read is of more value to society than staring at the south-end-of-a-horse-going-north working as a ploughman.
Health care workers went from 1.2 percent to 7.0 percent of the workforce. Service workers (which may or may not include the Spearmint Rhino operatives) grew from 3.5 percent to 13 percent. Bartenders, to my surprise, stayed fairly static at 0.25 percent or so for the 1900 and 2000 dates, although there was a well-publicized drop to 0.06 percent around 1920. Of possibly less value is the rise in lawyers and judges from 0.29 percent to 0.71 percent although that figure seems very low to me. I thought it was actually mandatory to have at least three lawyers chasing each and every ambulance?
But I think you can see the basic point. If people stop pushing horses they don't then do nothing, they go and do something different. Yes, it might very well be true that they should be aided during that transition but that is very different from stating that we prevent someone from inventing something to replace the horse. Just as with technology, so also with the trade. We might well (and most economists from Milton Friedman to Paul Krugman would replace might with should) aid in that transition period, perhaps with training or other help, but trying to prevent the changes from happening by placing protectionist barriers in the way won't help. The changes will eventually happen anyway and we will have lost the wealth that the trade would have given us in the interim.
Can this process go on forever though? Will it really be true that new industries, occupations and jobs will keep on cropping up fortuitously to absorb the labor available? Well, forever is a long time and I certainly won't be around to see how it plays out but here's at least part of an answer. There're currently some 6 billion people on the planet and we expect it to rise to 8 billion odd and then decline gently. There's a lot more than 8 billion things that need to be done, for it is a simple truism that human desires and wants are unlimited while the resources to satiate them are not. As long as such remains true, there will be work to be done by anyone ready to do it.
Tim Worstall is a TCS contributing writer.

A Time To Act

2006-03-22T22:35:00.000-05:00

Holding onto my set of political and social beliefs is often difficult at my age. Peers quickly dismiss it as aristocratic posturing or some even view it as an inconceivable abstraction.
I ask what is the alternative? A call for increased government intervention into our personal lives and into the natural affairs of people in order to produce a desired outcome. Perhaps, if one were to follow this line of argument they would ultimately abhor that outcome as something that was unintended.
Ah yes, the situation we have seen so many times with socialist revolutions during the the mid-20th Century in China, Cuba, Russia and other nation-states where demagogues promised the dissolution of self-interest and in its stead a new modern man who would place the community above all else.
We can go back even further in history when the agonizing chains of government were so unabashed that royalty, in the name of divine proclamation, convinced man to fetter himself to the land and produce wealth for the state.
It had taken brilliant men, often poor and prosecuted by their meager-minded peers, centuries to overthrow the yoke of monarchy. This first started 500 to 700 years ago in Europe with the Renaissance when men forged a middle class revolution out of blood and struggle. At that time politics, science, art, business, religion and other pursuits were allowed to evolve where people could gather, discuss and think together to improve their lot in life.
This middle class revolution culminated more with the American Revolution than it did with the French version little over 200 years ago.
In North America the idea of the individual being sovereign eclipsed other notions of rule and that self-governance had created an unparalleled period of prosperity for poor and rich alike.
However, as many scholars and intellectuals have said democracies cannot help but tear at their own flesh from fear of inherited weaknesses. I do believe at times that most humans do not fully understand, or are unable, of how to live free.
For over the last 70 years citizens have invoked the demons of government to once again cast its ominous shadow upon society. Indeed it is a sad era, especially after it took almost a millennium for men to wrestle and arrest such powers.
Now is the time for descent men and women to fight the good fight and to remember our worst enemy is our own silence.

The Stone Age Trinity

2006-03-07T22:56:00.000-05:00

By Max Borders

The late philosopher Robert Nozick pointed out that when people compare themselves to one another, they are disposed to feel one of two emotions -- guilt or envy. Guilt when someone has a lower station than you; envy when someone has a higher station than you. I would add a third to this mix: indignation. That's when you compare someone of a higher station to someone of a lower station, and feel that something is wrong. I refer to this complex of emotional responses to unequal life-stations as the "Stone Age Trinity."
Egalitarian Hard Wiring
Why do we have these egalitarian emotions? Religious folks would say we have egalitarian feelings because a benevolent God wants us to be charitable; or that greed is a sin. Moral philosophers might give us grand theories about guilt, envy and indignation that have to do with the "moral law" or some other high-falutin' rationale -- arguing, perhaps, that these feelings are a psychological complement to more enlightened reflection.
But I (and some others) think it has to do with the wiring of the brain -- a neural circuitry configured over millennia in our evolutionary past. In other words, I agree with the likes of some of the original evolutionary anthropologists Leda Cosmides and John Tooby who, in their Primer on Evolutionary Psychology, write:
"The environment that humans -- and, therefore, human minds -- evolved in was very different from our modern environment. Our ancestors spent well over 99 percent of our species' evolutionary history living in hunter-gatherer societies. That means that our forebears lived in small, nomadic bands of a few dozen individuals who got all of their food each day by gathering plants or by hunting animals. Each of our ancestors was, in effect, on a camping trip that lasted an entire lifetime, and this way of life endured for most of the last 10 million years."
Hence: "Stone Age."
Cosmides and Tooby go on:
"Generation after generation, for 10 million years, natural selection slowly sculpted the human brain, favoring circuitry that was good at solving the day-to-day problems of our hunter-gatherer ancestors ... Those whose circuits were better designed for solving these problems left more children, and we are descended from them."
We carry with us all the equipment required to survive on the ancient steppe. Which brings us to egalitarianism: think of how it might have been important for our ancestors to behave in terms of hoarding and sharing. From an evolutionary perspective, it made perfect sense to behave in an egalitarian manner within the tribal band. For in the absence of refrigeration or other preservation practices, food spoiled, so hoarding made little sense. Most hoarders would have failed to pass on genes. Agriculture was absent until about 10000 years ago, so survival of the Stone Age group rested on sharing, reciprocity and division of labor.
In The Origins of Virtue, Matt Ridley writes:
"Private property or communal ownership by a small group is a logical response to a potential tragedy of the commons, but it is not an instinctive one. Instead, there is a human instinct, clearly expressed in hunter-gatherers, but present also in modern society that protests any sort of hoarding. Hoarding is taboo; sharing is mandatory."
Again, hoarding behavior would probably have been a disadvantage to survival in the environs of our ancestors.
One Hundred and Fifty
Now, folks who've encountered Malcolm Gladwell's The Tipping Point may recall the "Magic Number 150." This number seems to be a kind of cut-off point for the simpler forms of human organization. Gladwell reminds us that communal societies -- like those our ancestors lived in, or in any human group for that matter -- tend to break down at about 150. Such is perhaps due to our limited brain capacity to know any more people that intimately, but it's also due to the breakdown of reciprocal relationships like those discussed above -- after a certain number (again, around 150).
A great example of this is given by Richard Stroup and John Baden in an old article about communal Hutterite colonies. (Hutterites are sort of like the Amish -- or more broadly like Mennonites -- but settled in different areas of North America.) Stroup, an economist at Montana State University, shared with me his Spring 1972 edition of Public Choice, wherein he and political scientist John Baden write:
"In a relatively small colony, the proportional contribution of each member is greater. Likewise, surveillance of him by each of the others is more complete and an informal accounting of contribution is feasible. In a colony, there are no elaborate systems of formal controls over a person's contribution. Thus, in general, the incentive and surveillance structures of a small or medium-size colony are more effective than those of a large colony and shirking is lessened."
Interestingly, according to Stroup and Baden, once the Hutterites reach Magic Number 150, they have a tradition of breaking off and forming another colony. This idea is echoed in Gladwell's The Tipping Point, wherein he discusses successful companies that use 150 in their organizational models.
Had anyone known about this circa 1848, someone might have told Karl Marx that his theory could work, but only up to the Magic Number. Turns out, we had to go through 150 years of misery, totalitarianism and broken humanity to learn the limits of communism. And even though we've grasped many of these intellectual and practical lessons, Folk Marxism persists -- and so also does the Stone Age Trinity. And these likely reinforce each other.
The truth is; we live in highly complex societies of millions, not bands of 150. Agriculture, the division of labor, and other human developments have changed our social arrangements faster than we can evolve.
Liberal Societies and Stone Age Baggage
So what does all this mean for a truly liberal society? A society of freedom, private property, and markets? Of complexity, pluralism, and personal responsibility?
It means we are likely to remain in a protracted struggle against Paleolithic instincts -- which, of course, translate into the zigzag of everyday politics. None of this is to argue that guilt, envy, or indignation are emotions we would always be better off without in contemporary Western society. But I would suggest that we'd all be better off localizing these urges in the confines of family and community. And we should continually ask ourselves in precisely what contexts these emotions are appropriate.
Given the tremendous good that is brought about by self-interested market exchange, it seems we'll have to teach ourselves time-and-again the intellectual lessons of prosperity in a complex economic order. We will also have to fight turf wars with those who think the sentiments of Stone Age Trinity can be wrapped up in intellectual claptrap (like Marxism), force fed to our students in the ivory towers, sold to us on the evening news, or foisted upon us inside marble domes.
Max Borders is Managing Editor of TCSDaily.com.

Political Boundaries Are Not -- And Ought Not Be -- Economic Boundaries

2006-02-27T22:52:00.000-05:00

By Donald Boudreaux

What is the American economy? It is conventionally identified as that mix of industrial and commercial activities carried on within the borders of the United States. Its participants are people living within these borders and its resources are the natural and man-made inputs found there.
People outside of these borders (except the tiny handful of Americans living abroad) belong to other economies, not America's. Resources in other locations are part of other countries' economies, not America's. Investments made elsewhere become part of other economies, not ours. Savings done by persons living in Ukraine are Ukrainian savings, not American savings. We speak of America enjoying a comparative advantage at producing this and Ireland having a comparative advantage at producing that. We talk about "China" trading with "America."
Thinking of economies as national phenomena, we measure them as if they are so. We measure Gross Domestic Product of the United States and compare it to the GDP figures of other nations. We calculate America's trade deficit. These statistical exercises reinforce the presumption that the salient economic unit is the nation-state.
But as Arnold Kling argues, this practice of using political boundaries to define economic boundaries is troublesome. In fact, the term "American economy" is more misleading than useful. To see why, consider the following examples.
My next-door neighbor in Virginia agrees to mow my lawn for $25. He mows and I immediately give him $25 in greenbacks. Rather than spend his earnings on beer or a back massage, my neighbor uses the $25 to by a share of Microsoft.
Everyone applauds. An American earns money and invests it, making "our" economy stronger.
Now consider a slightly different example in which I live, not in Virginia, but in Maine on the U.S. side of the Canada-U.S. border. My neighbor is a Canadian living in Canada. He mows my lawn; I pay him 25 U.S. dollars.
While my neighbor and I are just as pleased with our transaction in this example as we are in the previous one, pundits and politicians regard the second case with much more suspicion.
First, by spending his dollars on a share of Microsoft rather than on U.S-made goods and services, my Canadian neighbor increases the U.S. trade deficit. The reason is that statisticians count my purchase of his lawn-mowing services as a U.S. import but, because my neighbor doesn't spend his earnings on goods or services made in the U.S., these statisticians find no U.S. exports to "balance" my imports.
So we cheer when the American saves and invests in America, but quake with anxiety when the Canadian does so, fretting about the "imbalance" in American trade. But no economically significant differences separate these two scenarios.
Second, because my Canadian neighbor doesn't spend his $25 on U.S. goods and services, this $25 is regarded formally as U.S. debt. This statistical classification is what permits Warren Buffett and talking heads such as Lou Dobbs to get away with calling the U.S. trade deficit "debt." But there's no more debt created in the example in which my neighbor is Canadian than in the example in which he's American. In both cases I get my lawn mowed and pay for it fully and immediately. In both cases my neighbor invests his earnings in dollar-denominated equity. In neither case does anyone incur any obligation to repay anything to anyone.
Of course, my neighbor might instead lend his $25 to Uncle Sam. If he does so, debt is created. Uncle Sam now owes him $25 plus interest. But why should anyone care if the creditor is a foreigner or an American? The debt must be repaid by American taxpayers regardless.
"Gotcha!" I hear a skeptic shout. "It's better that an American rather than a foreigner receive this repayment."
"Not so," I reply. It's true that the holder of the debt -- because to him it's an asset -- is wealthier than he would be without this asset. But how is my life affected if the bondholder who receives repayment of this debt lives in Tulsa, Toronto, or Timbuktu?
Obviously, I would be better off if I or someone in my family were the bondholder. But my being an American doesn't mean that I benefit if the bond is owned by another American -- or that I suffer if the bondholder is not American. To imagine the contrary is to mistake the nation for the self or the family. It is neither.
Indeed, the nation isn't even the economy -- a fact that explains my indifference to the nationality of economic actors. Our economy isn't American; it's global. It should be reckoned as such.
The author is Chairman, Department of Economics, George Mason University

Good For America

2006-02-26T18:38:00.000-05:00

By James K. Glassman

Just last week, the shareholders of P&O, that venerable relic of the British Empire, agreed to sell their company to a group called Dubai Ports World, for $6.8 billion. DP World won a bidding war with another company from a developing country, Temasek Holdings of Singapore.
Pacific & Oriental Steam Navigation was created in the 1830s and, by 1868, had the largest steamship fleet in the world. But the days of Kipling and Maugham (who, by the way, wrote a wonderful short story called "P&O") are over. Today, four-fifths of P&O's revenues come not from ships but from ports.
The irony is that, while the British understand that empire has given way to globalization, many Americans -- especially protectionist politicians like Sens. Charles Schumer (D-NY) and Lindsey Graham (R-SC) and xenophobic TV hosts like Lou Dobbs -- do not.
DP World is a firm based in Dubai, in the United Arab Emirates, next to Saudi Arabia and just across the Persian Gulf from Iran. It is a company that knows this business well, currently running what The Guardian, the British newspaper, calls "one of the most efficient port organizations in the world," including deepwater facilities in Turkey, Hong Kong, three ports in mainland China, Australia, Germany, the Dominician Republic, Venezuela and South Korea. "Its port operations are breathtakingly fast and efficient." Meanwhile, Dubai itself is building a freeport hub, "so vast that approaching a fifth of the world's cranes are now to be found at work there."
And Dubai -- I don't have to tell you -- is an Arab nation. Yes, two of the 9/11 hijackers were citizens of the UAE, but, then again, as Ivan Eland of the Independent Institute notes, Richard Reid, the attempted "shoe bomber," was a British citizen, and Jose Padilla, among others, is an American citizen (as was Timothy McVeigh). The UAE has been a staunch ally in the war on terror, training security forces in Iraq and helping to cut off the flow of money to al Qaeda.
Isn't this precisely what the United States preaches? Don't we want places like Dubai to fight terror and to grow, to invest, to buy, to trade, to adopt Western commercial practices, to expose themselves to the rest of the world and thus become tolerant and moderate?
Instead, congressional leaders are trying to kill the deal, which is set to go into effect next week. Why? "Outsourcing the operations of our largest ports to a country with a dubious record on terrorism is a homeland security and commerce accident waiting to happen," says Schumer.
This is rank racist nonsense. Schumer knows very well that responsibility for port security in the United States lies not with DP World or any other operator, but instead with the U.S. Coast Guard and U.S. Customs. "Nothing changes with respect to security under the contract," said Defense Secretary Donald Rumsfeld. "The Coast Guard is in charge of security, not the corporation."
Using Schumeresque logic, the U.S. should ban flights into the U.S. by airlines from Arab countries, and we should certainly bar any cargo from being loaded in Arab ports and bound for the U.S. ("If you are worried about a bomb in a box going off in New York, you need to worry about who loads the container overseas rather than the terminal operator who unloads it in the U.S.," says someone who actually knows something about port security, Theodore Price of Optimization Alternatives, a Texas company that provides terminal-operating software.) In fact, one would suppose that Dubai, with billions at stake, would be more careful -- not less -- about assisting in anti-terror activities at U.S. ports if it is actually operating them.
This is not to make light of national security. It is the top consideration in such a transfer, which is why the sale underwent scrutiny by experts on the Committee on Foreign Investment in the U.S., as mandated by Congress. The DP World deal passed its CFIUS investigation. Now, we have folks like Chuck Schumer second-guessing the security experts. No thanks.
President Bush, to his great credit, says he will veto any legislation that would hold up the transfer of P&O's U.S. businesses to DP World.
You can fault this administration for many of its actions, but in one area its success is immense and undeniable: George W. Bush has kept America safe. It is now close to four and a half years since 9/11 and, still, no attacks on U.S. soil. "If there was any chance this transaction would jeopardize the security of the United States," Bush said Monday, "it would not go forward." Whom do you trust on security, Schumer or Bush?
But, of course, this is far from just a security matter. In the same way it prevented the sale of Unocal to CNOOC, a Chinese company, last year, this protectionist Congress can't seem to imagine that non-Europeans -- people not like us, not like Kipling or Maugham -- would be owning companies that maintain facilities at our ports.
Globalization, according to Dobbs, Schumer & Co., is a one-way street. We can buy you (that is, your businesses, your oil, your toys, your electronics), but you can't buy us. National security in this case is a very bright red herring.
The world has changed since Rudyard Kipling took P&O steamers back and forth to colonial India. It has changed vastly for the better -- and not just for Indians. For example, if the deal goes through, DP Ports will become the third-largest port operator in the world. Numbers one and two are based in Hong Kong and Singapore and number-five in Beijing.
Developing nations are selling things to developed nations. That's very, very good. The U.S., for example, buys such things with dollars, and the developing nations then use those dollars for investment in U.S. assets. Lately, those assets have mainly been Treasury bonds -- thus allowing the U.S. government to maintain its profligate ways at little cost in higher interest rates (rates that determine what you pay for your mortgage). But now, developing nations are making equity investments and direct purchases. In my view, that's even better.
The reason is that the United States has been a great place to invest -- not just for its commercial market but for its relatively unfettered investment environment. With CNOOC and now with DP World, the virtuous circle may be interrupted. As a Wall Street Journal news story put it, "A successful move to block the deal could send a chilling signal about some foreign investment in the U.S. at a time when such investment has been critical in sustaining growth."
That is the real danger here. We shouldn't flatter ourselves. We aren't the center of the world. P&O operates 29 ports, only six of which are in the U.S. The real growth terminals are in Asia. PSA International, owned by Temsaek, runs the world's largest hub, and it's not in New York or Los Angeles. It's in Singapore.
Absolutely, keep our ports safe. Trust no one to do that -- not the Brits, not the Singaporeans, not the Arabs -- but our own law enforcement and military. Their job is to keep the lanes of commerce and communication and travel open, and, so far, they have done a spectacular job. That's the way the system works now, and it won't change when P&O hands over operations to DP World.
The United States benefits mightily from a globalized world. Our ties through trade, in fact, have made us more safe as our trading partners become more prosperous, open and democratic. But our politicians and pundits should know that we can't pick and choose. If we decide to deny firms from developing nations -- Arab, Asian or otherwise -- from investing in the United States, those firms will go elsewhere. And we will pay the price -- in higher interest rates, higher inflation, lower stock prices, less participation in a world growing more and more exuberant, creative and exciting.
James K. Glassman is resident fellow at the American Enterprise Institute and Founder of TCS Daily.

Dubai And Our Sailors

2006-02-26T18:33:00.000-05:00

By Will Ball

The current dust-up over whether or not a firm from the United Arab Emirates should be permitted to manage ports in the United States looks very different from the perspective of US sailors in the Persian Gulf than it might to members of Congress back in their offices far away on Capitol Hill.
Making her way to her home port this week from a long and arduous deployment to the Gulf is the USS Theodore Roosevelt, CVN71, whose captain and crew soon will be received happily by family and friends in Norfolk, with salutations from the Navy brass for another job well done. The time spent in the Gulf conducting round-the-clock air operations in support of Operation Iraqi Freedom adds to the ship's log the completion of a sixth long deployment since her commissioning over twenty years ago. Most of those voyages have been to the waters of the Gulf, where American seapower and American sailors do the indispensable and oft-overlooked work of backing up soldiers and Marines on the ground in Iraq, keeping track of movements in the air and at sea, and helping our allies.
Perhaps the TR's returning sailors will be permitted to add their voice to the current debate over ports and dockside services. After all, sailors have been keen judges of harbors, their good and bad aspects, for centuries. And American sailors from the days of Decatur to Perry to Nimitz have called on practically every port there is, forming clear opinions as to the characteristics and qualities of each, from the view across the harbor to the view across the waterfront bar.
And on this point, our sailors could speak clearly and emphatically to the flip side of the debate on Capitol Hill. They could observe that after weeks of hard work at sea, the welcome given to them and their shipmates in Port of Dubai is just about as good as it gets. In a region of the world not previously known for "liberty ports" that compete with their Mediterranean and Western Pacific counterparts, the new Dubai is fine, fine indeed, according to the sailors of today. Harbormasters, citizens and yes, even port security officials there afford an especially warm welcome to American warships -- aircraft carriers in particular.
Our sailors today know the meaning of allies in the war on terror, and they know from the reception they receive time and time again when ashore in Dubai that the government and people there are on our side. A keystone of American foreign policy in the Gulf region since 1980 has been to strengthen ties and security relationships with the Gulf emirates, and the fruits of that successful engagement can now be seen readily in Dubai, Doha, Bahrain, and all along the coast of the Gulf. Following a quarter century of effective diplomacy and building on opportunities for strong ties in the region with all components of the U.S. military, Washington has opened doors with its presence for economic growth and development that has benefits extending far from the Gulf's shores.
Little heed has been paid to this dimension of how Dubai not only is an important player in the region strategically, but also how in a more basic way it is important to those who serve in uniform at sea, a long way from home.
Some in Congress who display an eagerness to vote against Dubai Ports World in the pending transaction will choose to ignore the facts that are relevant in an objective security and economic analysis.
But surely they can pause a moment to consider the views of the captain of the USS Ronald Reagan, newly arrived on station in the Gulf beginning her maiden deployment as the aircraft carrier relieving the TR. For soon will come the moment when, after many days and nights underway, he will get his aircraft safely back aboard, turn away from the wind and put his big ship's bow toward the south and the long carrier pier over the horizon. And surely the question then will cross his mind -- a consequence of this week's argument on Capitol Hill -- as to how his ship with her namesake and her extraordinary crew will be received, once the mooring lines are over and all is secure and the sailors hit the beach in Dubai.
Will Ball served as Secretary of the Navy; Assistant Secretary of State; and White House aide in the Reagan Administration.

Bipartisan Hysteria Is Not Security

2006-02-26T18:29:00.000-05:00

By Veronique de Rugy

The bipartisan hysteria over the pending $6.8 billion deal allowing the company Dubai Ports World to oversee operations at key U.S. ports demonstrates how misguided Congress is in matters of homeland security.
The fear over this deal is that Arab control would make it easier for terrorists to smuggle a dirty or nuclear bomb inside one of the approximately 9 million containers that enter U.S. ports every year, blowing up a port and shutting down commerce. Sen. Charles Schumer (D-NY) and Rep. Peter King (R-NY) introduced emergency legislation Tuesday to "suspend the handover" of our port operations to Arabs.
Yet, the idea that this deal somehow means turning over the ownership of American ports to foreigners makes no sense. In the age of globalization, foreign ownership is commonplace. Most of the maritime infrastructure that sustains American trade -- the ships, the containers, the loading equipment, and the facilities -- is owned by foreigners. As the Baltimore Sun pointed out earlier this week, you can see a Greek-owned ship flying a Liberian flag, employing a Filipino crew and carrying cargo from China into a U.S. port terminal managed by a British company that hires American longshoremen.
At least 30 percent of terminals at major U.S. ports are operated by foreign governments and businesses. At the port of Los Angeles, the busiest in the country, it's 80 percent. And let's not forget that the current owner of the port terminals in question is the British company P&O. In fact, very few port terminals are operated by Americans: 24 of the top 25 ship terminal operators worldwide are foreign governments or foreign-based companies.
Furthermore, the notion that this deal will outsource our port security to foreign companies is absurd. The U.S. Coast Guard and U.S. Customs and Border Protection officials provide security independent of who is operating the terminal. The operator's job is to manage the incoming and outgoing shipments at their facility. This involves scheduling the pick up and delivery of shipments, loading containers on and off the right vessels, and providing storage space for cargo. Like P&O before it, the employees of Dubai Ports World would be local longshoremen who belong to the International Longshoremen's Association, an AFL-CIO-affiliated union. In short, Dubai Ports World would simply be a manager directing American longshoremen to load and unload cargo that is secured by American homeland security officials.
But none of this should matter. Our nation's port security shouldn't rely on who owns what in our ports. Effective port security should keep terrorists and their bombs as far as possible from U.S. shores. In other words, securing U.S. ports at home should be our last line of defense. Not our first.
Our first line of defense should be to make sure that terrorists do not get the dangerous materials necessary to build a bomb. The most cost effective solution would be to keep close tabs on fissile materials. It is easier to monitor a lump of uranium at a known location than to detect uranium smuggling. Part of this exercise might include buying foreign stockpiles or helping foreign governments protect or destroy their stockpiles.
Our second line of defense should be security mechanisms to prevent nuclear devices from arriving in the United States. For instance, we should help officials abroad to tighten security at the foreign ports that feed shipments to the U.S. These efforts could include helping fund systems to bolster foreign countries' ability to detect nuclear material in their ports or placing U.S. agents on site in foreign ports.
Another cost-effective strategy would be to create partnerships with foreign manufacturers and importers. Partners would agree to meet "supply chain" standards establishing a secure chain of custody for every unit of cargo traded overseas. This would ensure that their shipment methods repel potential terrorist attempts to use those shipments for introducing weapons of mass destruction into our ports.
Finally, our last line of defense should be direct on-site protection at local ports. Security measures could include fencing, surveillance cameras, and thorough background checks for foreign companies operating ports in the U.S. Of all defense strategies, on-site port protection is the least cost effective. It is hard to detect highly enriched uranium and almost impossible to detect anything if it is shielded. As such, the effectiveness of the detection devices in use now is dubious. And even if the detection devices were capable of detecting dangerous material, it would still be riskier than the other solutions because the stakes are so high: if the system fails, the illicit material ends up inside the country.
Our current policy focuses on local ports while overlooking the most cost effective security measures. Out of a $2.03 billion port security budget, only $200 million is spent on programs to secure foreign ports. And according to experts, we barely spend $250 million protecting stockpiles of fissile material abroad.
By obsessing about the nationality of a respected ports operator, instead of thinking about what would actually make our nation safer, members of Congress are not enhancing American security.
The author is resident fellow at the American Enterprise Institute and has testified before the House Select Committee on Homeland Security.

Kennan's Comeback

2006-02-23T18:32:00.000-05:00

By James Pinkerton

Sixty years ago, on February 22, America faced a difficult geopolitical situation. We had just won World War II against Nazi Germany and Imperial Japan, but the smoke had barely cleared from those conflicts when we realized that a new enemy loomed dead ahead: Soviet Russia. Confronted by an increasingly ominous Stalinist threat, Americans, who had been hoping for peace, found themselves preparing yet again for war. And so it is today. We won in Iraq, but now we must face Iran.
And yet that coming confrontation with Tehran is likely to produce a new alignment of forces in the greater Middle East, as new actors get into the game. Indeed, it is likely that our face-off with Iran will begin as an easy "hot" war -- and then become yet another difficult and protracted cold war.
A look back at the policy debate of 1946 might help us better understand our choices today. Then as now, the new adversary to the east seemed motivated by an extremist and expansionary ideology. Then as now, gaps of cultural and linguistic understanding, piled upon historic grievances felt by both sides, made any sort of accommodation less likely. Then as now, the emerging enemy was not a nuclear power, but it was getting there fast.
In '46, three schools of thought emerged; we can dub them the Conciliators, the Rollbackers, and the Containers.
The first school was Conciliators, although some would call them appeasers, or even worse. Back then, many Americans, mindful of the USSR's role as an ally in the war against fascism, refused to regard the Reds as an enemy. And of course, more than a few Americans were "fellow travelers"; some were avowedly pro-communist. Somewhere in that pinkish mix was Henry Wallace. Wallace is obscure now, but he was a giant in those days; he had been Franklin Roosevelt's Secretary of Agriculture from 1933-40, when New Deal-style rural development was at the popular center of the national agenda -- no wonder FDR promoted Wallace to the vice presidency in 1940. Yet during the war, Wallace's obvious pro-Soviet sympathies became a source of concern to Democrats, and he was dropped from the national ticket in 1944, replaced by Harry Truman. Yet even so, Wallace was powerful enough to command another top job in government -- Truman reluctantly made him Secretary of Commerce in 1945. And it was from that Cabinet post that he urged "friendship" with the Soviets, to the loud huzzahs of many intellectuals and Hollywood types.
The second school was just the opposite: These were the Rollbackers. One early Rollbacker was Gen. George S. Patton, the legendary World War II commander, who made no secret of his belief that the US would be better off fighting the Soviets sooner rather than later. Patton was so outspoken that he was relieved of his post-war occupation command, even before his life was cut short by an accident in December 1945. But plenty of others also wanted a pre-emptive strike of some kind against the Soviets. One prominent Rollbacker was James Burnham, the ex-Trotskyite turned prolific author and would-be "liberator" of Soviet Russia. Although dead for nearly two decades, Burnham remains a significant figure; he was the subject of a highly regarded biography just four years ago, in which author Daniel Kelly, noting Burnham's approach to issues -- a combination of secular intellectualism and vaulting romantic ambition -- referred to his man as "the first neoconservative." And as we shall see, many decades later, the neocons retain their taste for world-historical machtpolitik. In Burnham's time, enthusiasm for rolling back the Russians started to fade after 1949, when Stalin exploded his own A-bomb, but the idea lingered. The cover of the October 27, 1951 issue of Collier's magazine screamed the words, "Preview of the War We Do Not Want," but in fact, the mag did kinda want the war -- the triumphalist text glossed over the millions of American casualties and celebrated, instead, the bright prospect of post-nuked Americans befriending post-nuked Russians.
The third school was in the middle, between the Conciliators and the Rollbackers. These were the Containers. The concept of "containment" began with the American diplomat George F. Kennan. On the night of February 22, 1946, Kennan was in Moscow, having seen enough of Stalin's Russia to reach some blunt, even bleak, conclusions. The result of his ruminations was a top secret missive, which came to be known as the "Long Telegram", which he sent off to his boss, Secretary of State James F. Byrnes.
In his text, Kennan got right to the point. The Soviets, he asserted, were "neurotic." Inhabiting the Kremlin mindset for a moment, Kennan wrote, "Everything must be done to advance relative strength of USSR as factor in international society. Conversely, no opportunity must be missed to reduce strength and influence, collectively as well as individually, of capitalist powers." Kennan accurately described Russia's cautious geo-ambitions in such nearby places as Turkey, Iran, and the Baltic Sea, suggesting that more such small-bore aggression was to come. "We have here," he concluded from his Moscow observation post, reverting to his American point of view, "a political force committed fanatically to the belief that with US there can be no permanent modus vivendi that it is desirable and necessary that the internal harmony of our society be disrupted, our traditional way of life be destroyed, the international authority of our state be broken."
Yet if Kennan's diagnosis was hot, his prescription was cool. He argued for a patient strategy for this "neurotic" Soviet patient: "We must study it with same courage, detachment, objectivity, and same determination not to be emotionally provoked or unseated by it, with which doctor studies unruly and unreasonable individual." The only solution, Kennan concluded, was steady and yet steely resolve. Speaking of which, Winston Churchill reinforced Kennan's behind-the-scenes argument with his own very public "iron curtain" speech just two weeks later.
Kennan never used the word "containment" in the Long Telegram, but he did use the "c-word" in a follow-up article, "The Sources of Soviet Conduct," published in Foreign Affairs the following year: "The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies." But even as Kennan saw the Soviets as a threat, he also saw the risk of America's overplaying its hand; in the very next sentence, he added, "It is important to note, however, that such a policy has nothing to do with outward histrionics: with threats or blustering or superfluous gestures of outward 'toughness.'" So Kennan's keep-cool "containment" led, naturally, to the Cold War.
The slow-chill strategy carried the day, both as a foreign policy and as a political platform. President Truman laid out the architecture of the Cold War -- the Marshall Plan, military aid to Greece and Turkey, NATO -- even as he withstood a left-wing third-party challenge from the same Henry Wallace in the 1948 presidential election. And while occasional hot wars broke out in the decades to come, as we all know, the mighty Soviet Union eventually collapsed without a shot being fired.
Indeed, Kennan's legacy resonates to this day. Reacting to the news of his death in 2005, Secretary of State Condoleezza Rice was moved to say:
"First of all, let me take the opportunity to say what a great loss George Kennan is to our country and to the world. I was personally inspired by him and by his work. I had the opportunity to meet him on a couple of occasions. He was one of the great architects of an American foreign policy at the end of World War II that is largely responsible for the great gifts of freedom that many people enjoy today, that is largely responsible for many of the alliances that the United States enjoys today, and that is largely responsible for the policies which led ultimately to the collapse of the Soviet Union. And George Kennan had a particularly brilliant way of putting this. He said the United States and its allies had to contain the Soviet Union until it had to turn to deal with its internal contradictions. And, when you think about it, that is exactly what happened in the 1980s."
Some might object that Rice, as one of the architects of Operation Iraqi Freedom -- a hot war for nearly three years now, with no end in sight -- is hardly in a position to talk about the virtues of Kool Kennanism. But in fact, as The Times of London's Gerard Baker noted in a perceptive column, "The Wild Ride is Over," the frustrations of Iraq have "aborted" George W. Bush's neoconservative "revolution"; that is W. is becoming a "normal" president once again. And so, Baker concluded, "America is back to where it was before Iraq, before 9/11, before Bush v Gore: an upstanding member of the multilateralist diplomatic community, piously mouthing the familiar platitudes of international co-operation and stability."
Not everyone will agree with Baker's judgment. But all of us will learn, soon enough, if the Times-man is correct.
The test case will be Iran. As everyone knows, the Iranian regime is self-parodistically hostile to "The Little Satan," Israel, and "The Great Satan," the United States. And one other thing -- they want nuclear weapons in the worst way.
So what to do? As in 1946, the policy options are sorting themselves into three broad categories: the Conciliators on the dovish end, the Rollbackers on the hawkish end, and the Containers in between.
The Conciliators have been the United Kingdom, France, and Germany -- the so-called EU-3, which has tried and failed, over a number of years, to negotiate an end to Iran's nuclear program. In fact, during the course of these talkathons, the Iranians elected, if that's the right word, Mahmoud Ahmadinejad to be their president. And Ahmadinejad seems eager, with frat-boy-like glee, to give the West the finger. So the EU-3 has given up; even the French seem to understand by now that the Iranians are a no-kidding serious threat.
Meanwhile, the Rollbackers are a noisy presence on the contemporary scene. Rollback didn't work out as planned in Iraq, but the neo-Burnhamites -- oops, neoconservatives -- are still gung ho for mo' military action; a recent editorial in The Weekly Standard exhorted, "And Now Iran".
Indeed, it's a pretty good bet that the US or Israel will strike at Iran's nuclear facilities sometime relatively soon. Just as when there's smoke there's usually fire, so it's the case that when there's this much war-planning, there's usually some war-fighting, too.
But in fact, the true essence of rollback, as "Burnham the Liberator" would have insisted, is not just toppling the enemy regime, but replacing it with a new friendly government. And yet such confident talk is conspicuously absent from current discussions of Iran. Three years ago, in the run-up to the Iraq war, the Bush administration assured Americans that US forces would be greeted as "liberators," and most Americans believed it. But that's a hard argument to swallow a second time.
Indeed, the emerging reality is that Muslims don't like the West. That's true inside Iraq, where a seemingly endless skein of Abu Ghraib photos, compounded by video footage of British troops abusing Iraqis, has undercut the proposition that the Anglo-Americans were artful enough to invade a country and make the invadees like it. And the larger context, of course, is that the Ummah-wide violence over the Mohammed-mocking cartoons is evidence that the "clash of civilizations" is already here.
If so, then knocking over the Ahmadinejad government might not help us much, even if we knew how to do it, because the new bosses would be about the same as the old bosses. (Yes, we succeeded at "regime changing" Iran once, back in 1953, but that was a different era, when covert operations were actually covert.) So the $75 million that Washington wants to spend on "democratizing" Iran isn't likely to accomplish much. And of course, if we do end up bombing Iran -- presumably just using conventional ordnance to destroy their nuclear sites -- it's darn hard to see the people there warming up to us.
Of course, many Americans won't care whether or not the Iranians are friendly, so long as they are denuclearized. Indeed, the standard neocon scenario for the Middle East these days is that the US/Israel will maintain a sort of hovering presence over the entire region, ready to smack down eruptions of Islamic nuclearism.
This scenario might be called a hybrid combo of "rollback" and "containment." That is, we would love to roll back a lot of extant governments, and put an Ahmed Chalabi or King Abdullah in charge of each new puppet regime, but we can't seem to make that work. So we will settle for rolling back just their nuclear/WMD ambitions, as they become visible to us, leaving the populations to stew in their increasingly Salafist juices.
Here's a prediction: this particular neocon scenario won't work.
And here's why: The countries we are seeking to influence, via sanctions, subversion, and cruise missiles, will eventually develop an antidote to our "medicine."
Let's take Iran. Right now, bluster aside, they can't really defend themselves against a US/Israeli attack. So if we choose to, we can bomb them with near-impunity. (And if we don't, well, Iran goes nuclear for sure, which would in turn probably guarantee them the attack-proof status of, say, North Korea.)
But if we do bomb, nobody can know what the Iranian reaction might be. Some reports hold that Ahmadinejad looks forward to "the creation of chaos on Earth", perhaps because he yearns for martyrdom, perhaps because he looks forward to unleashing asymmetric warfare on the West. But eventually, after they get bombed enough, with or without Ahmadinejad, the Iranians will sober up and realize that they need a Big Friend, to protect them from us.
What Big Friend? Maybe Pakistan, where everybody in that country of 145 million who is not named President Pervez Musharraf seems to regard Uncle Sam as an enemy. And by the way, the Pakistanis have nukes -- and they are broke. So oil-rich Iran might have the wherewithal for a deal that would obviate the need for all that iffy nuclear R&D.
Speaking of nuclear-rich and cash-poor, there's also Russia. Today's Muscovite regime is a shadow of its Soviet or Tsarist predecessors, but Putin has political ambitions equal to any Kremlin leader, and he seems perfectly willing to work counter to US and Israeli interests -- to wit, his decision to welcome Hamas to Moscow.
And the biggest potential Friend of all is China. The Chinese aren't poor anymore, but they are thirsty -- thirsty for oil, including Iranian oil. At the same time, the PRC continues to soup up its nuclear arsenal.
Already, the possibility of a pro-Iranian combination of these countries -- Pakistan, Russia, China -- is coming into view. Looking ahead to possible United Nations Security Council action against Iran, one US Senator, Sam Brownback of Kansas, says flatly that the Iranians have "bought" the vetoes of Russia and China.
Of course, as America proved in 2003, we are willing to go to war against an "I" country without the go-along of the Security Council. But if, in the indeterminate future, America simply bombs Iran, as opposed to occupying it, it's likely that soon thereafter, the surviving Iranian government will call in a Big Friend to come to its aid. The self-interest of the Iranians is obvious enough, but so is the interest of the Friend. No other great power, not even the EU, is going to feel good about the US completely dominating the Middle East and Central Asia, which account for perhaps half the world's oil and natural gas; throughout the history of power politics, as one country achieves hegemonic status, a counter-coalition has always sprung into being. Enter Pakistan/Russia/China -- and we can't forget India, either.
And that's how Hot will become Cold. That is, the recent spate of American hot wars in the Middle East will end, as a New Cold War begins. The US might well take its best air-power shot against Iran in the next few years, and then the Iranians will decide that enough is enough. So they swallow their pride and bring in a "senior partner" who will protect their country, implicitly or even explicitly, from future American attack. That is, if the US comes to realize that Iran's target zones are cluttered with foreigners, and possibly foreign, er, equipment, we would know that we couldn't strike Iran again without risking a world war.
At which time, "rollback," in any form, ceases to be an option for Washington. Our "window of opportunity" will have closed. That's what happened between the US and the new People's Republic of China in 1950. Mostly by accident, we found ourselves in combat with Chinese "volunteers" during the Korean War. And although plenty of Americans wanted to "take out" Manchuria in retaliation, the Soviets, and their new a-bomb, blocked such an American strike. Thus the Korean War, while plenty hot, stayed limited; we never ventured a broader rollback against Mao Zedong's government in Beijing. And ditto for Vietnam, where fear of the reaction from the USSR and also of a by-then-nuclear China kept us from rolling back Ho Chi Minh at home.
As noted earlier, it was Kennan's prescient insight of 1946 that containment was the optimum option. But just a few years later, after the Russians got the bomb, containment was the inevitable conventional wisdom. So too in the future Middle East: probably by default, we will end up embracing a different sort of "neocon" worldview -- "neo-containment."
So what happens then? What happens if the US, Israel, and Iran are all, in effect, nuclear players in the Middle East? And maybe, because it's a tough neighborhood, another "wild card" country will go nuclear, too? Under such tense circumstances, the best outcome that we could hope for is that the warring will stay cold, as opposed to getting hot.
In which case, the wisdom shown by the Kennanesque Containers of the past will be at a premium in the future. Once again, we will need all the skills we showed 60 years ago: patience, the vision to create sturdy defensive alliances, and also the ability to generate economic and technological growth, so as to gain the upper strategic hand over the course of cold decades.
Containment is not the foreign policy vision we've followed in the past few years. But as Rollback rolls away as a feasible option, we will have to fall back on what's available -- and it did work in Kennan's day. And it's always better to build on past success, as opposed to recent failure.

Libertarian Paradise

2006-02-23T00:23:00.000-05:00

By James H. Joyner Jr.

I recently spent a few days in what a friend referred to as "the land of debauchery." Amsterdam, capital of the Netherlands, is probably as famous for its openness toward prostitution and drug consumption than for wooden shoes, canals, or world class museums. Yet, strangely, it nonetheless seems to be a clean, functioning society.
While Holland has an exceedingly redistributionist economic policy, it is a libertarian's paradise on the social front. Recreational drug use is technically illegal but use of marijuana and hashish is tolerated and quite open in "coffee houses" throughout Amsterdam. The city's red-light districts, where prostitutes sit in windows on open display, are famous the world over. Civil unions were introduced in 1998 and gay marriage and adoption rights followed in 2001.
It's not just the more illicit vices, either. Amsterdam is one of the best cities in the world for beer lovers. The longtime (although now former) home to the Heineken-Amstel brewing empire, there are pubs on virtually every street corner selling dozens of Dutch and Belgian microbrews. Most of these are high in alcohol content compared to their American counterparts. And, as I can attest from extensive personal research, the pubs are all crowded even at mid-day during the tourist off-season.
The Netherlands is bucking the trend of the United States and the rest of Western Europe on tobacco, too. A third of the locals smoke cigarettes and it is permissible -- indeed, seemingly mandatory -- to do so virtually everywhere. Most bars and restaurants are filled with cigarette fumes. This is particularly true of those that cater more to locals than tourists, notably the so-called "brown cafes."
So, how is this working out for them? Is it indeed "the land of debauchery?" Not as far as I could tell.
Objectively, the life expectancy is in the median range for Western Europe, above that in Germany, the U.K., and the United States. Anecdotally, the vices struck me as much more contained than in other major cities I have been to.
I didn't observe any illicit drug use or strung out junkies lying about the place. Despite the pubs being crowded and the beer flowing freely, there weren't a lot of people staggering about the streets. Or, indeed, evidence of vagrants of any sort. My wife and I probably averaged ten miles a day walking and yet I was panhandled precisely once, at an ATM. This was certainly different than my experiences in D.C., Atlanta, New York, Paris, or Cairo.
Prostitutes were in abundance but confined to designated areas. I was surprised two or three times to see relatively unattractive women in lingerie sitting in basement windows in places where they were unexpected but I didn't exactly have a map of the red light districts memorized. Still, they were more-or-less clothed and indoors, not outside hustling customers on street corners.
As indicated earlier, cigarette smoking was an exception. As anyone who goes to bars in the decreasing number of cities in the United States where smoking is permitted knows, this is a case where a minority is able to restrict the freedom of a majority, as even one or two smokers in a small room can make it noxious.
As a non-smoker used to being able to go into restaurants with the expectation of clean air, it was somewhat unpleasant. (Not unexpected, however, as the guidebooks had forewarned me.) Still, a number of establishments catered to the needs of non-smokers and did not permit tobacco use. Larger restaurants that did permit smoking were also accommodating when asked to be seated as far from smokers as possible.
The modern impulse to have government regulate everything is understandable. We live in close proximity to our fellow man and yet there is little sense of community as we move constantly and retreat to the comfort of our homes. Social pressure against bad behavior are relatively ineffective in such an environment.
Now, granted, I was there in the winter. Much of the activity could have moved underground or indoors. But I doubt it.
My guess is that the number of people who are likely to be hard core drug users, alcoholics, or regular customers of prostitutes is relatively inelastic. Decriminalizing such behavior may lead to more experimentation but, then again, it takes away the joy of "forbidden fruit."
Yet, when we regulate behaviors we consider vices, we trade substantial freedom for very little gain. Despite huge resources devoted to drug enforcement, we still have a substantial number of users, with "12% report[ing] illicit drug use during the past year and 41.7% report[ing] some use of an illicit drug at least once during their lifetimes." This despite the fact that, 28 percent of all Federal arrests and 11.6 percent of all state and local arrests were for drug offenses.
A policy of social tolerance combined with public education may well be a saner approach. I wouldn't want to emulate Holland's social welfare system or tax rates. But we may have something to learn from their attitude toward vice.
James H. Joyner, Jr., Ph.D. writes about public policy issues at the Outside the Beltway weblog.
Disclosure: Transportation and hotel accommodations were provided by Holland.com in conjunction with BlogAds as outlined here. Food and copious amounts of beer were at my own expense.

If You Can't Have Bread, At Least Have A Circus

2006-02-13T22:22:00.000-05:00

By Peter F. Schaefer

Recently the front page of the Washington Post had a headline which said: "The Realities of Exporting Democracy, A Year after Bush Recast His Foreign Policy, Progress Remains Mixed."
A week later in his State of the Union speech, the President said:
"So the US supports democratic reform across the broader Middle East. Elections are vital, but they are only the beginning. Raising up a democracy requires the rule of law, and protection of minorities, and strong, accountable institutions that last longer than a single vote."
Mr. Bush obviously understands the essential elements of a real democracy, so our problem must be in the execution -- because Muslim terrorists have just been elected in Palestine in a landslide. As a result alarmists all over the world are intoning that democracy has failed. But democracy didn't fail in Palestine. As with capitalism in Latin America, real democracy wasn't tried. Our models failed, our analyses failed, and our assistance programs failed. But democracy didn't fail.
Recent "elections" in the Middle East have given us a mullah who is truly mad, an autocrat getting another term (his fifth or sixth, but who's counting?) and, sadly, in Iraq another government where the Shi'ite clerics will hold the real power.
But our disquiet should not send us back down the road to paternalism or pragmatism -- especially since those tendencies are what got us in trouble in the first place. In October 2003, Newsweek's cover article said:
"[T]he main source of rising unemployment and stagnant economies in the Arab world…is chronic illiquidity…a lack of modern … financial tools to lure cash out of burgeoning black markets. . . The challenge today is how to revitalize those dormant financial systems and harness the Arab world's huge reservoir of unreported capital."
Today's political problems in the Middle East have their root in economics. Removing these twin roadblocks is a huge challenge.
Should we then return to realpolitik and the notion that nations have interests, not friends? Or should we just let Mr. Carter carry on counting votes and hope things will sort themselves out in time? Unfortunately, voting alone can lead to what Fareed Zakaria calls an "illiberal democracy" – one that fetishizes voting without ensuring true representation.
Mr. Bush must insist that his vision of true democracy be reflected in our aid programs, because having the right idea is not enough. Our strategies to help poor countries become democratic and capitalist have not yet been translated into effective programs. We know this because our tactics have not produced many stable, liberal democracies or capitalist market economies.
Any complex process -- promoting democracy or economic growth for instance -- tends to be chopped up into discrete parts for purposes of management. What then happens is that experts in, say, the process of voting tend to work independently of experts in political party building. Even if someone has the big picture, no one can implement it. So even on a strategic level, vital political and economic components are stove-piped into their distinct bureaucracies.
To draw these parts back together in our planning and implementation, we need to return to first principles. The purpose of government, according to Locke and the Founders, is to "protect life, liberty and property." In fact Locke says, "The great chief end, therefore, of men's uniting into commonwealths, and putting themselves under government, is the preservation of their property." A century later Alexander Hamilton said, "The preservation of property is the primary object of the social compact." The rule of law is the foundation for all modern political economies and essential to the protection of even the most basic rights.
In poor countries the people have already saved trillions of dollars. But they keep every penny of it frozen in property, mainly their homes and businesses. Now, even the World Bank acknowledges the fundamental nature of defending property through law -- because, if there is no supporting web of property and contract laws, titles are meaningless. And if there is no meaningful connection between the people and their elected leaders, a modern nation cannot emerge because elected officials, no matter how well-intentioned, cannot touch the lives of the overwhelming majority of the poor without good law. By itself, voting just ends up swapping one crooked autocrat for another.
This undertaking is crucial to our long-term survival since the so-called "South" has nearly five billion poor people none of whom lives in capitalist democracies. So they are unlikely ever to develop. The history of the last half century of Western "help" is not comforting. There isn't enough money in the West to buy economic development, nor can elections alone sustain a democracy. The North has transferred over $2 trillion dollars to the South and none of the countries at the end of the aid spigot have developed democratic capitalism.
It is true that a few have progressed a bit, but most countries in Africa, for example, have actually experienced declining living standards since independence. A recent UN FAO report says that there are more deaths in Africa from malnutrition now than in the 1990s and one need go no further than looking at elected President Mugabe in Zimbabwe to see why.
If we measure success by equating democracy with voting, and prosperity with money, the logic of our actions compels us to arrange elections and to give poor people those things which mark a modern society; roads and bridges, schools and clinics. But a modern society is not simply the GDP -- it is the institutions of capitalism and democracy. And only good laws can create these institutions. If we want to poor countries to modernize, we have to help them establish the underlying legal structures of modernity.
Of course electoral commissions, safe polling places and other election machinery are critical, but for a true democracy to be "raised up" such isn't nearly enough. What one votes for must be connected to the person's daily life. For aid officials worried about "optics," good legal systems are less visible than the things associated with modernity. Officials can cut a ribbon at a clinic, for example. Elections are normally quite dramatic. Both make good press (especially when President Carter flies in to bless the outcome, as he did in Palestine). But most voters don't care. If voting were all that mattered, Haiti would be a thriving democracy not the hemisphere's perennial basket-case.
This is not to suggest that democracy be put on hold while the country becomes prosperous. Capitalism and democracy can run in parallel. But timing matters. One cannot rush democracy and slow-walk economic reform. Since electoral politics tends to be a game of preserving the status quo, it is important to establish the basic legal and economic system before the political system solidifies. I would even argue, reluctantly, that in Iraq had we rushed real, meaningful economic reforms based on law, and then slow-walked democracy, the country would be a calmer place that was well on the road to real nationhood. People with jobs don't become insurgents, and people with homes and businesses -- protected by government -- don't turn around and attack those self-same interests. A direct connection between voting and economic security, should result in representatives with a mandate to protect individuals' interests, not to provide handouts or accrete power around a faction.
Last summer the Washington Post ran a piece explaining that the current problems of the political leadership in the Philippines were not important to the lives of the poor. But in fact, the entire political process has never been of much concern to poor Filipinos. This is so because a large majority of them don't live or work under the rule of law and so political leaders have no legitimate means to connect to them. The country is, quite literally, ungovernable.
If a poor person in Manila wanted his neighbor's house and killed him to get it, he would face jail because most countries -- democracies and dictatorships -- do a pretty good job of keeping the streets safe. But if he just threw his neighbor out on the street, there is really little that the law could do because most poor Filipinos have no title that proves to authorities that the house is theirs. So many of them hold their property and businesses informally. Thus Filipinos have few options for justice.
After former grade-B actor Josef Estrada was elected president in 1998, the international press was shocked. "Why," they all asked, "would Filipinos elect a crooked, drunken, philandering buffoon as president?" But the honest answer was, "Why not?" If you can't have bread, at least have a circus. The sad truth is that Philippine presidents can do little but entertain, so in 1998 they elected an entertainer. Elections in the Philippines are little more than a chance for poor people to sell their vote for a few bucks.
But when the law protects a person's home and his life, the political equation changes dramatically. Then, those who make and administer the law directly affect the lives of the poorest voters. Elections will actually matter to the people. Only at that point will they tend to select leaders rather than entertainers. Economic opportunity fertilizes the growth of a civil society, which is the only real support for an electoral democracy. Votes alone are bricks along the Yellow Brick Road. Behind the curtain of electoral democracy, we'll find no wizards, only men.
Peter Schaefer was a senior official at the U.S. Agency for International Development during the Reagan and George H.W. Bush administrations.

Rudy Giuliani President In 08?

2006-02-11T11:25:00.000-05:00

The following was taken from columnist Norm Clarke's "Vegas Confidential" which appears in the Las Vegas Review Journal:
Former New York City Mayor Rudy Giuliani, addressing the National Grocers Association convention Tuesday at Paris Las Vegas. At the end of his speech, the first question he got during a Q&A was whether he would run for president in 2008. Giuliani said he would let everyone know next year. When someone asked whom Giuliani saw as the front-runner for the Republican nomination, he looked around and said, "Besides meá"

Stop Worrying About The Trade Deficit

2006-02-11T10:56:00.000-05:00

By Donald Boudreaux

America's trade deficit -- in December reaching a near-record $64.7 billion -- is unfortunate, right?
Wrong. Contrary to popular opinion, this so-called "deficit" is a blessing.
Consider that if Americans export lumber, sheetrock, and architectural blueprints to China so that people build a factory there, we're gleeful. "Wonderful!" we proclaim. "Exports are up and our trade deficit is down!"
But if those very same building materials are assembled by Americans into a factory situated and operated in, say, Utah and then bought by Chinese investors, we complain -- led today by the likes of Senators Charles Schumer and Lindsey Graham -- that "Something's wrong! Our trade deficit is higher!"
Truth is, though, that nothing economically important separates the first scenario from the second. In each case the world's stock of productive capital grows as Americans produce things for sale to foreigners. Those cases appear different from each other only because of the conventions of international commercial accounting, which records investments separately from imports and exports.
This accounting convention creates the false impression that an excess of imports over exports -- called a "trade deficit" -- is an ominous imbalance requiring corrective action. In fact, America's trade deficit is evidence, not of any imbalance, but of the happy fact that our economy is so strong and stable that foreigners invest here eagerly.
When foreigners sell things to Americans they earn dollars. If foreigners then spend all of those dollars on American exports, trade is "balanced." There's no trade deficit or surplus. But if foreigners instead invest some of those dollars in dollar-denominated assets -- say, by purchasing that factory in Utah, houses in Hawaii, or shares of Google -- they obviously must buy fewer American exports. So the trade deficit grows as investment in the U.S. rises.
Although dollars spent by foreigners on investments are not spent on items classified as U.S. exports, these dollars nevertheless are spent in the U.S. They raise the value of American corporations and real-estate, and improve American workers' productivity. In turn, those increases in asset values and productivity enhance Americans' current ability to buy goods and services -- perhaps the same goods and services that foreigners would have bought had they not invested their dollars here.
Isn't it better, though, if Americans do the investing and foreigners the consuming? No. What's important is to have lots of investment to increase worker productivity, which ultimately is the only way to raise our living standards. The nationality of investors is insignificant.
Because savings and investment are indeed so beneficial, we should welcome rather than regret foreign savings invested in our country. If we applaud the guy across the street who forgoes that vacation in Las Vegas in order to save and invest more in the U.S. economy, we should applaud also the guy across the ocean who does the same.
But doesn't a higher trade deficit mean that Americans are sinking more deeply into debt? Not at all. A trade deficit isn't debt. My young son, for example, received for Christmas several Chinese-made toys. These were bought with cash. If the Chinese toymakers invest their newly earned dollars in, say, that factory in Utah, the U.S. trade deficit rises but no debt is created. Neither I nor any other American owes any foreigner anything as a result of my purchase of toys from China and the corresponding Chinese purchase of equity in a company located in America.
More generally, whenever foreigners buy American real-estate or equity, or when they simply hold dollars in their portfolios, our trade deficit rises without creating debt.
Nor is it true that a higher trade deficit means that Americans are selling off assets. Whenever, for example, IKEA builds a new store in the U.S., a new asset is created. No Americans had to part with assets as a pre-condition for this Swedish investment in America.
Of course, part or all of the trade deficit can become debt. This happens whenever Americans borrow dollars from foreigners. As it happens, the most prodigious borrower today is Uncle Sam. But despite self-righteous accusations leveled at foreigners by the likes of Senators Schumer and Graham, the fact remains that U.S. government indebtedness is not caused by foreigners buying Uncle Sam's bonds, but by Congress spending beyond its means. If government debt is a problem, then Congress should stop borrowing. Complaints about the trade deficit are a red herring.
We Americans have many real problems confronting us. The trade deficit isn't one of them.
The author is Chairman, Department of Economics, George Mason University.

The American Social Model

2006-02-07T22:44:00.000-05:00

By Tim Worstall

American capitalism really is a harsh taskmaster, isn't it? Those excessively long hours that everyone works, so different from the ease and leisure that applies in Europe along with our whiskey fountains, lakes of stew and the big rock candy mountain. That last being a product of a misdirected sugar beet subsidy of course. Indeed, there are those who insist that the US should regulate working hours, insist upon a reduction, as a way to bring some of this Euro-nirvana to the west coast of the Atlantic.
There's only one small problem with this idea. It turns out not to be true. I agree, that's never stopped a politician campaigning for something but before we heap ever more legislation onto ourselves perhaps we should work out why it isn't true.
The thing is, for all the complaints about and pointing at the way in which the American work-week has been rising over the decades there's one uncomfortable little fact (or, depending upon how you look at it, hugely comforting one): At the same time as everyone has been working ever harder for The Man -- and getting nowhere according to the doomsayers -- it's also true that Americans have been getting ever more leisure time.
The latest empirical proof comes in a paper from the Federal Reserve Bank of Boston:
We document that a dramatic increase in leisure time lies behind the relatively stable number of market hours worked (per working-age adult) between 1965 and 2003. Specifically, we document that leisure for men increased by 6-8 hours per week (driven by a decline in market work hours) and for women by 4-8 hours per week (driven by a decline in home production work hours). This increase in leisure corresponds to roughly an additional 5 to 10 weeks of vacation per year, assuming a 40-hour work week. We also find that leisure increased during the last 40 years for a number of sub-samples of the population, with less-educated adults experiencing the largest increases. Lastly, we document a growing "inequality" in leisure that is the mirror image of the growing inequality of wages and expenditures, making welfare calculation based solely on the latter series incomplete.
There's an awful lot to pick out of that one paragraph. But before anyone's head explodes over the paradox of how can there be more leisure while we all know that working hours are getting longer, allow me to explain. For women, paid working hours have indeed been getting longer. For men, they have been falling (although largely static for the past decade). But unpaid working hours for both men and women have been falling fast, indeed, faster than women's paid have been rising. So total work has declined and leisure increased.
You might want to quibble a little about the definitions of unpaid work, I'll agree. All those things like cooking, childcare, cleaning and ironing, home repairs and maintenance. Some might argue that this is not work in some sense: you're quite welcome to do so if you want but I wouldn't recommend it in front of a feminist within reach of a sharp object. Indeed, I wouldn't have the courage to make such a statement in front of my own mother if she were within 6 feet of a frying pan.
The second point is a touch more esoteric. You might recall that there are those who tell us we should work shorter hours, have more leisure as this will make us richer in a deep and meaningful manner. They might even be correct (it's certainly the life choice that I myself have made) but note that second-to-last last sentence of the abstract: It is the lower educated, lower income groups that are seeing the greatest expansion in leisure time. So, such lower income groups are in fact getting richer in that very same deep and meaningful manner which, err, rather makes complaining about increasing income inequality somewhat, well, what should we call it, obtuse? Wrong?
The reason this is happening -- why more paid hours are leading to more leisure hours -- seems to be explained by this paper from Harvard's Richard Freeman. Precisely because women are earning -- and then buying in those services which they used to do unpaid -- we're seeing greater specialization of labor (or if you prefer, more trade). And as we know that's the route to greater productivity. The actual paper itself is looking at American and German women and their participation in paid work. While they don't actually put it quite this way, the fact that many German women stay at home to make sauerkraut, while more American women go outside the home to do something they're good at, buying the food at the supermarket on the way home, means that the American women are both richer and have more leisure time.
Further, the high European unemployment rates can be explained (in part) by this as well:
"The smaller number of service jobs per adult in Germany than in the US shows up in both the least skilled service sectors and in high-tech and high skilled service sectors. The conventional explanation of the US-EU employment gap focuses on the relative dearth of low skilled service sector jobs in the EU because of the consequences on joblessness and social exclusion."
That is, if everyone stays home canning there are no simple jobs in the factories for people to do. So they rot on the scrap heap of unemployment, burning cars for entertainment's sake. This European social model doesn't seem to have all that much going for it so far really, does it?
Still, it could be true that while leisure hours are increasing in the US they are still lower than in Europe. Could be true but it isn't. This paper from Ronald Schettkat of Utrecht University explains it:
"The conventional view is that Americans work longer hours than Germans and other Europeans but when time in household production is included, overall working time is very similar on both sides of the Atlantic. Americans spend more time on market work but German invest more in household production."
The actual numbers show that American men work almost exactly the same hours, paid and unpaid together, as German men do; and German women actually 1.5 hours a week more than their sisters across the pond.
No, I think you'll agree, this isn't the basic story we get told about the European social model. We know that incomes are higher in the US but this is usually explained away as not really being higher income, as it's leisure that counts. And as we can see, what actually happens is that Americans get both the higher income and as much or more leisure as the Germans. Oh, and the Germans have problems with social exclusion as well as they're not generating the service jobs that employ the low-skilled.
Hhhhm. You know, I think it might be a bad idea to import the EU model into the US. Vastly better to import the US model into Europe. Higher wages and more time off, what could be wrong with that?
Tim Worstall is a TCS contributing writer and editor of "2005 Blogged."

Saving Social Security (in Slovakia?)

2006-02-06T21:19:00.000-05:00

By Marian Tupy & Jagadeesh Gokhale

When it comes to pension reform, most of the headlines last year went to President George W. Bush's dramatic attempt to overhaul the U.S. Social Security system. Alas, reform opponents stonewalled his initiatives, preventing him from giving us all the choice of investing part of our Social Security taxes in private accounts. Although American decision-makers are refusing to deal with Social Security's massive financial shortfall, other countries are moving ahead with public pension reforms. Slovakia is a case in point.
Like the American pay-as-you-go retirement scheme, the pre-reform Slovak public pension system faced adverse demographic trends and long-term financial shortfalls. In 2003, Martin Chren, a Slovak economist, estimated there were only 132 workers per 100 pensioners in Slovakia. Projections showed that pensioners would outnumber workers by 2040, at which point each worker would have to pay for the retirement benefits of more than one elderly person.
Unlike previous governments that preferred to ignore the inevitable pension crisis, Prime Minister Mikulas Dzurinda's cabinet took the long view and decided to overhaul the entire system. The Slovak pension reform was launched on Jan. 1, 2005. Under the new system, Slovakia's 2.2 million workers received a choice: To remain fully reliant on the current pay-as-you-go system or to invest part of their public pension contributions in a personal retirement account managed by one among a number of alternative investment funds.
Total public pension contributions in Slovakia amount to just under 29 percent of wages. Now, workers can place 9 percent into their personal retirement accounts. Another 9 percent is used to finance the existing system's obligations and the balance is used to cover other types of insurance and administrative costs.
So far, roughly 1.1 million people, or 50 percent of eligible workers, have opted for personal retirement accounts, and another 300,000 to 400,000 people are expected to do so before the deadline expires on June 30. Their cumulative personal account contributions, currently worth about 8.5 billion Slovak crowns (about $275 million), are managed by eight private investment funds created for that specific purpose. Each of these pension companies manages three pension funds, tailored for "growth," "balance" and "conservative" returns. Up to 80 percent of the "growth" fund portfolios may be invested in private stocks, while "conservative" fund portfolios may contain no equities at all. Young workers can choose from all three funds, but older workers who are just 15 (or fewer) years from retirement, can only chose from the latter two fund types. The pension companies are allowed to make a majority of their investments abroad, but 30 percent of all portfolio investments must be made in Slovakia.
The relative ease with which the Slovak pension reform was implemented may be attributed to five factors. First, popular opposition to the government's reform plan was negligible. Public disenchantment with the economic catastrophe bequeathed by Dzurinda's predecessor, Vladimir Meciar, allowed the governing parties to make pension reform a part of their electoral platform — and helped elect them to power. Second, the Slovak people liked the prospect of gaining inviolable private property rights on their personal retirement accounts – safeguarding them from politicians' claws. Third, prior to launching the reform, Dzurinda initiated an extensive media campaign, explaining the reform's potential benefits to the public. Fourth, many of the reform proposals were adopted early on in Dzurinda's term in office, which meant that the new laws have had more time to set in, become more widely accepted, and, in some cases, amended.
Finally, Dzurinda eliminated the dividend tax and many tax exemptions, introduced a 19 percent flat income and corporate tax rate, and repealed many burdensome business regulations. After just 2 years of a sustained reform effort, Slovakia's business environment was ranked among the top 20 in the World Bank's "Doing Business in 2005" report. Cumulative foreign direct investment in Slovakia has risen six-fold since Dzurinda's accession to power in 1998, much of it accruing to the export-oriented manufacturing sector, especially automakers. Those reforms improved the overall business environment, thus making private saving more attractive to the populace.
The long-term success of Slovakia's pension reform will greatly depend on the willingness of that nation's political elite to keep it intact. In September, Slovakia faces one of its most important elections since gaining independence in 1993. The electorate's choice will be between re-electing the current center-right government and opting for a medley of socialist and nationalist parties. The current government is not free of problems, however; some of its members stand accused of corruption. Though he needs to do much more to fight corruption, Dzurinda's pro-market policies have ushered in a period of high economic growth and rapidly declining unemployment. In 2005, the economy grew by 5.6 percent and it is forecast to grow by 6.2 percent this year. Official estimates show that unemployment has fallen to 11 percent in 2005, down from 18 percent in 2000.
Robert Fico, Dzurinda's socialist opponent and the current leader in opinion polls, is to be congratulated for his efforts to keep the current government transparent and accountable. But he appears determined to reverse many of the Dzurinda government's pro-market and pro-business policies, including the flat tax and regulatory reforms that made Slovakia's high economic growth rate possible. Having already undertaken the reforms that the United States eventually will have to face, the Slovak people would be poorly served by a regression to their socialist past. But, on the bright side, successful economic reforms that improve people's lives are generally difficult to roll back.
Mr. Gokhale is senior fellow and Mr. Tupy is assistant director of the Project on Global Economic Liberty at the Cato Institute (www.cato.org).