Monday, August 31, 2009

When is a Budget Deficit a Bad Thing? When It's Caused By That Bad Other Political Party!

If I was Paul, I'd hire someone to remind me what I said to avoid these kinds of errors.

From the Cafe Hayek,

Posted: 28 Aug 2009 02:19 PM PDT
Here’s a letter that I sent earlier today to the Gray Lady:
Noting that "it’s important to have some perspective," Paul Krugman argues that while Uncle Sam’s budget deficit is now large, "we also have a huge economy, which means that things aren’t as scary as you might think" ("Till Debt Does Its Part <> ," August 28). Whew! No cause for much concern, for the size of America’s GDP swamps the size of the budget deficit.
During the Bush years, however, Mr. Krugman preached a different gospel. For example, in his February 11, 2005 column <> – devoted to condemning tax cuts – he insisted that "the deficit is indeed a major problem."
So let’s take Mr. Krugman’s advice and get some perspective. In 2005, when Mr. Krugman insisted that government’s budget deficit was "indeed a major problem," that deficit was 2.5 percent of GDP. Today, when Mr. Krugman no longer is very concerned about the budget deficit, that deficit will be about 11 percent of GDP. Hmmmm….
Donald J. Boudreaux

Friday, August 28, 2009

Are Career Politicians Public Servants?

Or are they indebted to us since they use our money to buy influence, power, and a 'legacy'? The longer I live, the less respect I feel for those who choose a life in politics.

Nick Gillespie, Reason Magazine -- The legislation for which Ted Kennedy will be remembered is precisely the sort of top-down, centralized legislation that needs to be jettisoned in the 21st century. Kennedy was in fact a man out of time, a bridge back to the past rather than a guide to the future. His mind-set was very much of a piece with a best-and-the-brightest, centralized mentality that has never served America well over the long haul.

Bigger was better, and government at every level but especially at the highest level, had to lead the way. In an increasingly flat, dispersed, networked world in which power, information, knowledge, purchasing power, and more was rapidly decentralizing, Kennedy was all for sitting at the top of a pyramid and directing activity. In this way, he was of his time and place, a post-war America that figured that all the kinks of everyday life had been mastered by a few experts in government, business, and culture. All you needed to do was have the right guys twirling the dials up and down. As thoughtful observers of all political stripes have noted, this sort of thinking was at best delusional, at worst destructive. And it was always massively expensive.

Alan Bock (via Cafe Hayek) -- In the hoopla over the death of Ted Kennedy a good deal of nonsense is being spewed about the nobility of "public service." Ted spent his entire life in public service -- he never had a private-sector job nor did he need one, given the money he inherited. So we are supposed to be grateful that he spent his whole life serving others.

No doubt he saw it that way, but the only way a politician can "serve others" is to take money and other resources from some people to give it to others. Government has no money of its own, only what it can take as plunder from people who create value in the world. When they do so, they may actually be of help to those who are benefited, but the price is reducing the amount of wealth in a society, meaning there is less to go around. That's what "public service" as a politician -- as compared, for example, to a philanthropist, who uses his own money and/or skills and time to benefit others -- amounts to.

Don Boudreaux -- While Kennedy didn’t choose a life of ease, he did something much worse: he chose a life of power. That choice satisfied an appetite that is far grosser, baser, and more anti-social than are any of the more private appetites that many rich people often choose to satisfy. Americans would have been much better off had Ted Kennedy spent his wealth exclusively, say, on the pursuit of sexual experiences and the building of palatial private homes in which to cavort, or to take drugs, or to engage in whatever private dissipations his wealth afforded him.

Instead, Mr. Kennedy spent much of his wealth and time pursuing power over others (and of the garish ‘glory’ that accompanies such power). He did waste his life satisfying unsavory appetites; unfortunately, the appetites he satisfied were satisfied not only at his expense, but at the expense of the rest of us. Mr. Kennedy’s constant feeding of his appetite for power wasted away other people’s prosperity and liberties.

Thursday, August 27, 2009

Social Security - What Happened, Why It Matters (will we fall for this one too?)

This is a great summary of how SS has become what it is. Short version - politicians promised to they would hold your money if you asked them to and save it for you if you think you are not smart enough to manage your own money.

Phase 2 - politicians change their mind, and decide to take your money at gun point for your own good, but really, it's for your own good and you'll get it all back - "WE PROMISE!!!"

Phase 3 - a bean counter figures out what a good deal it would be if - instead of holding the social security money that was extracted from the 'free citizens' of this country (at gun point) to give back to them later - the social security trust fund loaned money to the US Treasury, for a very competitive rate no doubt, so that politicians could spent that money to get themselves re-elected. A true WIN-WIN situation! We get interest, politicians spend our money for self promotion! And what could possibly go wrong - SS has brought in more money in revenue than has been required to pay back in obligations every year since inception, surely that will continue forever.

Phase 4 - People live longer, people have fewer children, and now instead of 34 workers for each beneficiary, there are only 3.

Phase 5 - Everyone in the planet with an IQ above room temperature realizes this can't possibly work. The rubber meets the road in 2016 when payments in no longer equal or exceed payments out and the money will have to be removed from the general treasury; or promised benefits will have to be reduced.

Phase 6 - The folks who made the decisions that we are all paying for are dead - no one to blame but us for letting them get away with it.

Phase 7 - Politicians desperately seek a solution to the problem that will not cost them their jobs - finding none, they kick the can down the road.

Phase 8 - We stand back and watch while the politicians promise us they'll do a better job with our health care ... before they fix medicare and medicaid which are - by a 2-1 margin - even more in the red than SS ... will we fall for it this time?

Wednesday, August 26, 2009

Funny Take On Cash for Clunkers

"Ideal Government Program -- Build New Clunkers, Then Immediately Junk Them: Can anyone explain why American taxpayers are being taxed, via the Cash for Clunkers program, to subsidize the destruction of low-mileage cars -- while simultaneously being taxed to support General Motors, which just released a 426-horsepower, 16-mpg Camaro to complement its 556-horsepower, 15-mpg Cadillac? Under the Cash for Clunkers mileage rules, both cars classify as clunkers! Taxpayers are simultaneously paying to destroy old low-mileage cars and build new low-mileage cars. Check the Detroit-manufactured cars listed by the EPA as "worst in class" for fuel waste -- you are being taxed to subsidize the building and promotion of these cars. Plus, the White House and many in Congress want to begin restricting greenhouse gases. I think action against greenhouse gases is scientifically justified. But if greenhouse gas regulation is enacted, you will simultaneously be taxed to reduce greenhouse gases and taxed to support construction of polluting machines such as the 556-horsepower Cadillac, which the EPA says emits 11 tons of greenhouse gases per year, one of the worst global-warming scores of any current passenger vehicle. General Motors has started to build high-quality, good-mileage cars, including the new Malibu and the new fuel-efficient Equinox SUV. That's good news. Why are average people being taxed to subsidize everything General Motors builds, including wasteful, high-polluting rich men's playthings like this?

AP Photo/Michael Dwyer
New clunkers are rolling off the assembly line, subsidized by your taxes.Meanwhile, auto dealers who credited customers with $4,500 for clunker deals are discovering federal rebate checks have not yet arrived. What's the matter, dealers -- didn't you read the fine print? Perhaps auto dealers have fallen for a bait-and-switch! Here, a dealer negotiates with Barack Obama:

AUTO DEALER: Where's my check for $4,500? You said it was in the mail.

OBAMA: [Waves thick contract] Look right here, subparagraph 14d. It clearly states the money will be paid on the third Tuesday of a month that begins with a waning gibbous moon. You read subparagraph 14d, didn't you?

DEALER: No -- I was tired -- you assured me it was just paperwork.

OBAMA: Well! Maybe I can still get you the discount, if you buy rustproofing and splashguards.

DEALER: Your ads didn't say anything about rustproofing.

OBAMA: [Waves printout] Look, I am giving you everything below my cost. See, here's my factory invoice. My revenue is $2.2 trillion, yet I am spending $3.9 trillion. [Note: actual federal budget figures for current fiscal year]

DEALER: Wait a minute -- if you're really selling below cost, how do you stay in business?

OBAMA: We make it up in volume.

DEALER: Just give me my $4,500!

OBAMA: OK. I have to ask my manager. [Disappears into back]

DEALER: I wonder if he's really checking with his manager.

OBAMA: [Returns] Tell you what, you can use the $4,500 as a down payment on the $11 trillion debt your children will owe. While you're here, would you like free health care? It's going to cost you."

Tuesday, August 25, 2009

Obama - Economic Magician?

Stossel, talking about invalid criticisms of Obamacare, does what he does so well - tell a compelling story anyone can understand:

"But even if some conservative Republican critics are wrong about Section
1233, there is good reason to worry about Obama's nationalization
The reason can be found in Econ 101. Medical care doesn't grow on trees.
It must be produced by human and physical capital, and those resources
are limited. Therefore, if demand for health care services
increases-which is Obama's point in extending health insurance-prices
must go up. But somehow Obama also promises, "I won't sign a bill that
doesn't reduce health care inflation."
This is magical thinking. Obama, talented as he is, can't repeal the
laws of supply and demand. Costs are real. If they are incurred, someone
has to pay them. But as economist Thomas Sowell points out, politicians
can control costs-by refusing to pay for the services.
It's called rationing.
Advocates of nationalization hate that word because it forces them to
face an ugly truth. If government pays for more people's health care and
wants to control costs, it must limit what we buy.
So much for Obama's promise not to interfere with our freedom of choice.

This brings us back to end-of-life consultation. As the government's
health care budget becomes strained, as it must-and, as Obama admits,
already is under Medicare-the government will have to cut back on what
it lets people have.
So it is not a leap to foresee government limiting health care,
especially to people nearing the end of life. Medical "ethicists" have
long lamented that too much money is spent futilely in the last several
months of life. Are we supposed to believe that the social engineers
haven't read their writings?
And given the premise that it's government's job to pay for our heath
care, concluding that 80-year-olds should get no hip replacements makes
sense. The problem is the premise: that taxpayers should pay. Once you
accept that, bad things follow.
In the end, perhaps the biggest objection to nationalized health care is
the "principal-agent problem." For whom does the doctor work?
Ordinarily, the doctor is the agent of the patient. But when government
signs the checks and orders doctors to reduce spending, it is not crazy
to think that this won't influence their "advance care planning
Freedom is about self-determination. Obama's health care scheme would
undermine both. "

Lies and Stats - Infant Mortality

"So why does our infant mortality rate exceed that of, say, Canada,
where health care is free at the point of service? One reason is that we
have a lot more tiny newborns. But underweight babies don't fare worse
here than in Canada-quite the contrary.

The NBER paper points out that among the smallest infants, survival
rates are better on this side of the border. What that suggests is that
if we lived under the Canadian health care system, we would not have a
lower rate of infant mortality. We would have a higher one.

A lot of things could be done to keep babies from dying in this country.
But the health care "reform" being pushed in Washington is not one of

Monday, August 24, 2009

Fear over Self Confidence

Bertrand de Jouvenel wrote, "The essential psychological characteristic of our age is the predominance of fear over self-confidence.… Everyone of every class tries to rest his individual existence on the bosom of the state and tends to regard the state as the universal provider. " But this protection costs the public far more than the high taxes that fund its provision: "if the state is to guarantee to a man what the consequences of his actions shall be, it must take control of his activities … to keep him out of the way of risks."[

Fascinating, Concise History of the Welfare State

"A national old-age pension program disguised as insurance but actually … a scheme for transferring current income from working to nonworking people."

Given from the perspective of one who views the State (properly) as the most likely agent to take away an individual's property and liberty.

Another Version of Reform that Does Not Empower the State

I still can't get over the fact that one has to argue that alternatives which do not require the expansion of federal power are, a priori, preferable to those that would. It must have something to do with how the debate has been framed the last 50+ years - "we need the govt to protect those who cannot help themselves and those who oppose this are selfish and ignore the needy."

I frame it:
- give the government the power to hand out health care and we are all dependents of our state, vice those who are entitled to the State's defense of our rights.
- the State has proved it cannot manage large, long term entitlement programs (social security, medicare); why would we believe it can manage the rest of the health care given when it is already failing with the 40% it is currently responsible for?
- State monopoly on health care leads to rationing and 'death panels' like night leads to day. There is no alternative. "What is the demand for health care when the cost at the point of delivery is zero?" Infinite. Thus, health care will be rationed - by political values. The connected will get Ted Kennedy level care - the rest of us will get 'what the State can afford.'

Again from the article: "It will not matter if democratic processes lead us to this destination. As noted above, the making of the welfare state has been from the very beginning a matter of corrupt vote-buying and patronage-dispensing by politicians — democracy in action.

"And one sad servitude alike denotes The slave that labours and the slave that votes.[29]"

We can have a free society or a welfare state. We cannot have both."

Tuesday, August 11, 2009

Interesting Civics Lesson on the Senate and the Great Compromise

To the author: yes, the Founders intended that it be this way. The Founders would say anything that impedes more legislation - which is to say a larger imposition on the rights of the individual - is a good.

Sunday, August 9, 2009

From Harvard's Herzlinger, Liberty Based Solutions

"Right now, most health care reform plans being considered in Congress don't even give consumers a role in controlling costs. Letting them run the system is hardly on anyone's radar screen. So, before Congress puts the government in charge of health care, I have an August recess suggestion: Members who can should visit Switzerland. Members who can't should read "Who Killed Health Care?""

I read this book and it's fascinating in its scope. Herzlinger points a finger at many govt interventions which have served to distort the health care markets and strangle nascent approaches which would reduce costs and increase options. If you'd like to get beyond the hype and understand the issue better, this book will get you there.

Friday, August 7, 2009

Health Care Reform: Simple, Reduces Costs, Increases Liberty

What's not to like?

First, remove existing govt interventions which have been part and parcel of spiraling costs. Demonstrate good faith with voters by trying liberty. Evaluate other liberty based steps. Prove the agenda is more than just creating more dependency on the Federal Govt.

The fact that the Dems won't even discuss these matters tells us their intentions.

Thursday, August 6, 2009

Memories of Iraq

I was reading this post of Michael Yon's,, and thinking of the 30mm cannon which the A-10s fire. I remember a day when I was sitting in Al Faw palace, near Baghdad International Airport, on the second or third deck with an officer who was a groomsman and sword bearer at my wedding. As Drew and I caught up - I was on my way home soon and he was newly in theater - the offensive that GEN Odierno had conceived was kicking in - essentially right out of the gate of our base. The 25mm chain guns from the Bradley fighting vehicles and the Strikers was infreakinpressive. When those things got to work, it was hard to imagine any Al Qaeda mofro who wasn't scared or dead. Whan an awesome thing that must have been to hear if you were toting a rifle in the streets - knowing that the other guys, the bad guys, were on the receiving end of that murderous rain of pain.

I don't know how far away they were - from our vantage point, cigar in hand, feeling really strange to be there but to be so insulated from all the hell the troopers of the US Army were going through each day - but we could see the blasts, intense white flashes, several seconds before we could hear them.

The General's strategy worked - defend the vast majority of Iraqis who were not a threat, fight the insurgents in their stronghold neighborhoods and then occupy them when the AQ were gone. Pursue AQ as they fled; no mercy, no rest, no let up. It was something he could not have done without the surge. It was something he could not have done without GEN Patreus' support from President Bush. It was something he could not have done without the benefit of having found an AQ computer in the rubble of the building that Al Zarqawi was killed in. It worked. AQ was broken, the Iraqi citizenry was protected, and they began to view their govt as legitimate. By having US troops in the Iraqi neighborhoods, the Iraqis associated their safety to the US troopers who were no longer returning the safety of the FOBs each night.

It changed the war, changed two nations. I was just there taking notes, but how grateful I am to have been an infinitesimal part of it.

Unraveling the Mysteries of Economics

Ever wonder who decided a trade imbalance is a bad thing, and why? Ever wonder why no one even tries to explain why a trade imbalance is bad? Did it ever seem funny that we had a 20+ year trade imbalance but were still by far the world's dominant economy? This article explains why that may be so, and that the 'trade imbalance' doesn't mean what we've been told it does.

"These data from the Great Depression suggest that trade surpluses neither help an economy nor are evidence that an economy's fundamentals are sound. Quite the opposite, in fact. As long as the U.S. economy remains in turmoil, foreign investors will be scared away, as they were during the Great Depression -- causing our trade deficit to shrink and possibly even to disappear. Americans will be all the poorer."

I think we should be glad to be able to hire anyone for less/hour, whether or not they live in the same nation I/you live in.

I think we should recognize the cognitive dissonance between 'buy American', the 'trade imbalance' and what it implies, protectionism, the goals of the politically active and extreme environmentalists - and the stated goal, and the desire of most Americans, for third world nations to escape their economic helplessness. These issues are all joined at the hip and the desire to ensure that only Americans get jobs is in direct conflict with all the good outcomes we desire for, say, African nations. The dialogue on these topics is downright schizophrenic.

Tuesday, August 4, 2009

Rest In Peace, Captain Speicher

I remember the night this man died. I was in flight training at the time. When I was launching jets from ENTERPRISE in 98 I wondered if more pilots would share his fate - shed a few happy tears when all jets were safe on deck the next AM. I can't imagine how this will impact his now college age children. Rest is peace, Captain.