Friday, January 29, 2010

Keynes and Hayek, Noted Rappers

Keynes and Hayek
Posted: 27 Jan 2010 04:09 AM PST
"Watch it <> with someone you love. Or someone you don't. Just watch it. We're at 193,383 views at YouTube.

Funny, Fascinating, Tragic
Coulter's a partisan hack but very, very funny and scary smart. Makes the GOP love affair bearable to watch from a distance.
In this piece, she highlights connections I've never known of before between Wall Street and those entrusted with your tax dollars. Coulter of course pins this malfeasance on the Dems, but frankly, if one party can so abuse the public's trust, I take is as a fait accompli that the other party's doing it also.
The genius of the Founders' insight that the Federal Government must be clearly and severly limited or it would inevitable abuse it's own power is highlighted daily. So how to restore the broken limits? Can it be done? That is the question.

Comments on Rep. Ryan's Proposed GOP Roadmap

I'm impressed with this Congressman's consistent, cogent press for a more market based solution to the pernicious issues he addresses. I'm amazed that anyone is allowed to speak without addressing how the
government will correct the unsustainable entitlement programs it birthed and must shepherd. What part of the term "Death Spiral" do they not understand?

GOP Road Map for America's Future
There's still time to rejuvenate our market economy and avoid a European-style welfare state.
In tonight's State of the Union address, President Obama will declare a new found commitment to "fiscal responsibility" to cover the huge spending and debt he and congressional Democrats have run up in his
first year in office. But next Monday, when he submits his actual budget, I fear it will rely on gimmickry, commissions, luke-warm spending "freezes," and paper-tiger controls to create the illusion of budget discipline. Meanwhile, he and the Democratic congressional leadership will continue pursuing a relentless expansion of government and a new culture of dependency.
America needs an alternative. For that reason, I have reintroduced my plan to tackle our nation's most pressing domestic challenges-updated to reflect the dramatic decline in our economic and fiscal condition. The plan, called A Road Map for America's Future and first introduced in 2008, is a comprehensive proposal to ensure health and retirement security for all Americans, to lift the debt burdens that are mounting
every day because of Washington's reckless spending, and to promote jobs and competitiveness in the 21st century global economy.
The difference between the Road Map and the Democrats' approach could not be more clear. From the enactment of a $1 trillion "stimulus" last February to the current pass-at-all costs government takeover of health care, the Democratic leadership has followed a "progressive" strategy that will take us closer to a tipping point past which most Americans receive more in government benefits than they pay in taxes-a
European-style welfare state where double-digit unemployment becomes a way of life.
Americans don't have to settle for this path of decline. There's still time to choose a different future. That is what the Road Map offers. It is based on a fundamentally different vision from the one now prevailing
in Washington. It focuses the government on its proper role. It restrains government spending, and hence limits the size of government itself. It rejuvenates the vibrant market economy that made America the envy of the world. And it restores an American character rooted in individual initiative, entrepreneurship and opportunity.
Here are the principal elements:
* Health Care. The plan ensures universal access to affordable health insurance by restructuring the tax code, allowing all Americans to secure an affordable health plan that best suits their needs, and shifting the control and ownership of health coverage away from the government and employers to individuals.

It provides a refundable tax credit-$2,300 for individuals and $5,700 for families-to purchase coverage (from another state if they so choose) and keep it with them if they move or change jobs. It establishes
transparency in health-care price and quality data, so this critical information is readily available before someone needs health services.  State-based high risk pools will make affordable care available to those
with pre-existing conditions. In addition to the tax credit, Medicaid will provide supplemental payments to low-income recipients so they too can obtain the health coverage of their choice and no longer be
consigned to the stigmatized, sclerotic care that Medicaid has come to represent.
* Medicare. The Road Map secures Medicare for current beneficiaries, while making common-sense reforms to save this critical program. It preserves the existing Medicare program for Americans currently 55 or older so they can receive the benefits they planned for throughout their working lives.
For those under 55-as they become Medicare-eligible-it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical
inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment. The proposal also fully funds Medical Savings Accounts (MSAs) for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs. Enacted together, these reforms will help keep Medicare solvent for generations to come.
* Social Security. The Road Map preserves the existing Social Security program for those 55 or older. For those under 55, the plan offers the option of investing over one-third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to federal employees. This proposal includes a property right, so those who own these accounts can pass on the assets to their
heirs. The plan also guarantees that individuals will not lose a dollar they contribute to their accounts, even after inflation. The plan also makes the program permanently solvent by combining a modest adjustment in the growth of initial Social Security's benefits for higher-income individuals, with a gradual, modest increase in the retirement age.
* Tax Reform. The Road Map offers an alternative to today's needlessly complex and unfair tax code, providing the option of a simplified system that promotes work, saving and investment.  This highly simplified code fits on a postcard. It has just two rates: 10% on income up to $100,000 for joint filers and $50,000 for single filers, and 25% on taxable income above these amounts. It also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four), and no tax loopholes, deductions, credits or exclusions (except the health-care tax credit). The proposal eliminates the alternative minimum tax. It promotes saving by eliminating taxes on interest, capital gains, and dividends. It eliminates the death tax. It replaces the corporate income tax-currently the second highest in the industrialized world-with a business
consumption tax of 8.5%. This new rate is roughly half the average in the industrialized world and will put American companies and workers in a stronger position to compete in a global economy.  Even without the Democratic spending spree, our fiscal outlook is deteriorating. They are only hastening the crisis. It is not too late to take control of our fiscal and economic future. But the longer we wait, the bigger the problem becomes and the more difficult our options for solving it.  The Road Map promotes our national prosperity by limiting government's burden of spending, mandates and regulation. It ensures the opportunity for individuals to fulfill their human potential and enjoy the satisfaction of their own achievements-and it secures the distinctly American legacy of leaving the next generation better off. 
Mr. Ryan, a Republican congressman from Wisconsin, is the ranking member of the Budget Committee.

Thursday, January 28, 2010

Restoring Broken Limits

"Since they have been in full control of the federal purse strings, Democrats have spent a lot of money and got the country into a lot of debt. Hence the two consecutive increases of the debt limit in 3 months. And they aren't the only ones. According to the Office of Management and Budget, the federal debt limit has been increased 98 times since 1940-more than once a year on average. Under President George W. Bush alone, Republicans voted to raise the debt limit by more than $6.4 trillion.
When the statutory debt limit was instituted in 1939, its explicit goal was to limit congressional spending-which is supposedly still its purpose today. Technically, if the debt nears its statutory limit, the Treasury cannot issue new debt to manage short-term cash flows or manage the annual deficit and the government may then be unable to pay its bills.
Obviously, that worked for a while. The chart above shows increases in the federal debt and the statutory debt limit since 1940. From 1940 to the beginning of the 1980s, the debt and its limit grew slowly. However, during the 1980s both the debt and the limit started increasing faster. Almost each year during this period, Congress would pass a new law raising the debt, though it didn't systematically grow the debt to the level capped by the limit.
It took a Republican in the White House and a Republican Congress to change that. In 2005, for the first time in history, the debt limit had to be extended after the debt had already gone $487 billion above the cap. This happened again in 2009, after the debt issued by the Treasury went above the limit by $1.5 trillion. Finally, this year the debt has already outgrown the limit by more than $2 trillion, which explains the need for a second increase of the cap in less than two months."

Doesn't it have to end? How could we change the incentives such that a politician would be rewarded for not bribing the citizenry he represents with the money extracted from them at gunpoint?

Wednesday, January 27, 2010

"But We Have To Have A Coercive Government Monopoly"

So said my cousin, if not in so many words, a bright and enjoyable young man. My answer:

Chris, the 'right' is folks who think it's right to enforce their vision of good/bad at gunpoint using the State. The 'left' is folks who think it's right to enforce their vision of good/bad at gunpoint using the State. I want to be clear - I can't speak for either of those groups. I believe using the coercive power of the State is wrong, morally and pragmatically (based on outcomes).

No room to really make a case here - but yes, I think the govt coercive monopoly on schools is failing miserably and there are far, far better alternatives. The coercive government monopoly looks good only when compared to nothing. The limits placed on the children of the poor by the present public education system makes the whole system a crime agaist humanity - and god bless the poor souls working within that system who actually care about the kids.

Social security is untenable. The math just can't work. The politicians stole the money to spend on re-election. We are left with an IOU to ourselves. It's a scheme Enron or Maddof would be proud of - except at least those two had to convince people to give them their money. SSA takes it at gunpoint.

My question would be, for those who believe that it IS right to try to create good outcomes via coercion through the State: what's the least possible coercion that must be employed to get the outcome you value? Best answer I've seen to date for social security, for example, is "In Our Hands":

Medicare is even more unsustainable - .
Note the date - after the economic downturn the numbers are just looking WORSE. Another way to look at the numbers: - you owe a half million dollars for all of fiscal promises made on your behalf. Who can possibly benefit from that kind of profligate spending of other people's money?

Medicare/medicaid - estimates vary from 10-40% fraud waste and abuse - so is it about compassion? Is it even remotely related to compassion or is it just another bureacratic apparautus making efforts in name only while destroying wealth and hurting every citizen? MC/VISA has a fraud rate under 1%. Show me effective M/M reform and I would have some reason to trust you could manage HC reform in general. I'll hold my breath while you fix the M/M.

The money that is destroyed in these programs, the brakes that are affixed to economic growth, the reduction in money available to invest/create jobs, the mal-incentives which mis-direct resources to undesirable outcomes ... this whole thing is a crime and by comparison, the LT Gov's comments are just prattle. Your focus is on the distraction of the day while ignoring the pickpocket.

The rich can escape the consequences of an over-bearing govt, the poor are fixed in place by it, their opportunity to change their own or their children's circumstance is limited, and as is found in France for example, the further the govt gets into the affairs of the individual the less possible it is for anyone to move out of poverty.


Paul Rubin

"Whenever there's a corporate scandal, it's typically blamed on an increase in greed, but when there's a sex scandal, it's never blamed on an increase in lust."

Tuesday, January 26, 2010


"In the valley of the blind, the one eyed man is king."
"We all make too much of what politicians do and are.  "Let's face it, politics is largely the art of deception, and political rhetoric is largely the art of mis-stating issues."  Thomas Sowell

Admire any politician at your own peril, they are at best a necessary evil, Reagan and Lincoln included. 

The citizens of this nation, you and I, owe far more to people like Corporal Jonathan Yale and Lance Corporal Jordan Haerter and Garrett Peters than to the likes of any politician.  We have liberty because of the former, and in spite of the latter, the majority of whom are continually engaged in auctioning off our rights to create some bogus sense of a political legacy to meet some emotional need only they can understand.

For me, it has been liberating to realize that politicians have no more significance that you, than me, or than some TV talking head or pop star.  It also makes it much easier to see through the ways they practice their trade, which again, is by primarily mis-stating the issues such that we think they are on our side.  It is nothing new, and nothing to despair over, that politicians are not 'great leaders.' 

For me, the "two Americas" issue (and I nominate Mr. Edwards as perhaps the single best example of what a politician is that we've been lucky enough to 'see' of late) boils down to an America which allows itself to believe that government is an appropriate agency to create goodness (in other words, that goodness can be created by coercive force), and those that know otherwise.

Monday, January 25, 2010

Money - The Root of Evil, or Evidence of Virtue?

Ayn Rand tells the tale convincingly. The BLUF of a good book entitled "Your Money or Your Life" is that money is your life energy. That is to say, the money you earn is what you get in exchange for your life energy. What does that make money worth to you? How much of your 'money' is someone else 'entitled to'? What if they are poor or unlucky, does that change the formula?

Saturday, January 23, 2010

That Money Was Already Spent, Sir

In this article,, the author describes the metrics which define the continuing recession. Given the money that was allocated to 'avert this crisis' over the last 15 months, the results are at the least very frustrating.

The author's solution is as follows:
"We must have programs that create some degree of confidence that America can be rebuilt, and jobs can be created, especially since consumer spending will likely decline as a part of GDP for many years. The unemployed have to be supported. But it would be better if the financial support employed labor in rational, long-term, major infrastructure projects, processed by a newly created National Infrastructure Bank.

These wouldn't be entitlement programs, but regeneration programs. Government spending on infrastructure projects-broadband Internet access across the nation, restoring decaying bridges and canals, building high-speed railways, modern airports, sewage plants, ports-has a high multiplier effect for adding jobs to the economy. And we will be fulfilling a desperate national need."

The thing is, even if the government would spend this money rationally instead of as political payoffs to favored constituencies, and even if the result would create some jobs, somewhere, to some degree, there's a real problem; that money's already been spent. We're way past spending what you and I will ever make the rest of our lives. At what point will the politicians admit "we're done, we don't have more to spend, we're admitting it, the spending is over, the money's gone"?? Will they ever? The greatest obligations the Treasury faces are to Medicare, Medicaid and Social Security. We've no where near enough to pay for those in their present form, and frankly there's no serious discussion about how to reduce what we've promised to an amount that we might be able to pay. Building bridges? I wish he was joking.

He continues: "A second avenue for increasing employment would be to enhance technology, the area of our greatest strength. We are depriving ourselves of productive talent by a fearful attitude toward immigration. We make it hard for bright people to come and we make it hard for them to stay, so once they have graduated from our universities they go home to work for our competitors. This is not the way to run a railroad."

The shocker here is that we're still even talking about this one. Hell, we should pay these people to stay here, at least then we'll have their brains at work to pay for some of the stupid spending we see our Government engaged in.

Friday, January 22, 2010

One "Small" Step for a Government, One Giant Step for Health Care Reform

"President Obama’s proposed tax on especially expensive medical benefits, which he last week agreed to modify in response to complaints from labor unions, breaks at least three of his promises. It still may be the best aspect of a health care plan that otherwise does little to control costs, ostensibly one of Obama’s main goals.

As approved by the Senate, the 40 percent excise tax applies to medical coverage costs above $8,500 a year for individuals and $23,000 for families. Although those cutoffs currently are far above average, they would rise more slowly than insurance premiums, and the Joint Committee on Taxation (JCT) estimates the tax would affect nearly a quarter of Americans with employer-provided coverage by 2019."

"Finally, during his campaign Obama vowed to “change the way business is done in Washington” by eschewing special-interest lobbyists. Yet the deal he struck last week with the unions was a blatant payoff to supporters whose interests diverge from those of the general public. In addition to raising the excise tax thresholds, the compromise allows government employees and union members to escape the tax for five years longer than everyone else.

Since those employees are especially likely to have the “gold-plated” medical benefits at which the tax is aimed, the exemption further undermines what was already a timid, needlessly complicated attempt to deal with one of the health care system’s central problems: the separation of consumption from payment. A better approach would be to make all medical benefits taxable while cutting tax rates or providing offsetting credits—something like what Obama’s Republican opponent suggested in 2008.

Obama condemned John McCain’s proposal, warning, “For the first time in American history, he wants to tax your health benefits.” But that was the same speech (the same paragraph, in fact) in which Obama made his “firm pledge” that “no family making less than $250,000 will see their taxes increase.” In the health care debate, Obama’s habit of reversing himself could turn out to be a blessing."

This was also addressed at length in one of my older posts:

Thank Goodness for China

Jim Jubak and others have speculated about (and Thomas Friedman has written about) the prospects of a Chinese bubble and finiancial collapse, or at least a major recession there.  There is talk about shorting some element of Chinese investment to capitalize on the expected events.  I have no idea if you or I should short China or not, but it made me wonder what would happen if the Chinese stopped buying our debt?  Given the seemingly insatiable appetite for debt or government sustains (see next post, I cannot post live links right now), what would we do to attract more investors in our bonds?  Could we pay a high enough rate to attract world wide and US investors away from other investments?  What if the final limit on what the US can borrow comes from a lack of folk willing to buy our debt?  Or, perhaps we'll hit the Death Spiral first.

How Much Better Could It Get With Liberty Leading the Way?
"The typical American might purchase high-deductible insurance policies that cover expensive treatments for chronic diseases such as heart disease, cancer, AIDS, diabetes, and multiple sclerosis, as well as the catastrophic consequences of accidents. Coverage would also include expensive treatments such as heart surgery, organ transplants, dialysis, and radiation therapy. In addition, we'd be able to buy health status insurance that would guarantee that we could purchase insurance at reasonable prices in the future."
"Such policies are available already. The online clearinghouse eHealthInsurance pulls a quote of $131 per month from Anthem Blue Cross Blue Shield for a single 55-year-old male with a $3,000 annual deductible, no co-payment after the deductible, reasonable pharmaceutical benefits, and lifetime maximum benefits of $7 million, with an option for health savings accounts. (With such accounts, consumers make annual tax-deductible contributions, then take tax-free withdrawals to pay for uninsured medical costs.) That was the cheapest plan, but more than 80 other insurance policies were available. As deductibles went down, of course, the prices went up."

Government Sponsored International "Development" Is Morally Wrong

Brooks on the Haiti Earthquake
Posted: 15 Jan 2010 06:20 AM PST
"New York Times columnist David Brooks isn't my favorite pundit, but today - writing about the Haitian earthquake - his wisdom matches his extraordinary eloquence <> . Here are some key passages:"
"This is not a natural disaster story. This is a poverty story. It's a story about poorly constructed buildings, bad infrastructure and terrible public services.  Over the past few decades, the world has spent trillions of dollars to generate growth in the developing world. The countries that have not received much aid, like China, have seen tremendous growth and tremendous poverty reductions. The countries that have received aid, like Haiti, have not.  In the recent anthology "What Works in Development?," a group of economists try to sort out what we've learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn't seem to produce the expected results.  The chastened tone of these essays is captured by the economist Abhijit Banerjee: "It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control.""

Taking money from citizenry by force of arms, and sending it to other countries, when the evidence suggests it will do more harm than good to the citizenry of the receving nation, is unquestionably a moral abomination.

Prof Boudreaux On What Must Happen Next

Avalanching Down the Slope
Posted: 17 Jan 2010 07:16 AM PST
Here's a letter that I just sent to the New York Times:
Writing in support of Mayor Michael Bloomberg's effort to force Americans to eat less salt, Gerald Glasser asserts that "the first and most important step in addressing health care in the United States is to do whatever we can to make Americans healthier so they need less care, thereby reducing the cost of the system" (Letters
<> ,
Jan. 17). This attitude is frightening. If America's current quasi-socialization of health-care justifies government telling us how much salt we may eat, where does such intrusiveness end - especially if
government socializes health-care even further? What's to stop officious politicians tomorrow from enacting other measures that would likely improve Americans' collective health - such as forcing each American to spend a few hours every week in the gym, or outlawing sports such as hang-gliding and rock-climbing, or requiring that all aspiring parents be genetically tested before they are approved for procreating, lest genetic diseases that raise "the cost of the system" be passed on to children? Sincerely, Donald J. Boudreaux

Ohio Professional Geologists Reject Warming Alarmism by Penny Rodriguez, The Heartland Institute

"We are concerned that the bill relies primarily on reports by the United Nations' Intergovernmental Panel on Climate Change (UN IPCC) to support its premise. Our concerns include IPCC reliance on unrepresentative ground-based temperature stations. We note an inability of ground-based data to agree with superior quality temperature values from weather balloons and satellites," the geologists explain.

"We also take concern with IPCC dependence on unreliable climate computer-model simulations. A high degree of model uncertainty was made clear during a recent failure to predict a current cooling trend revealed by NASA satellite data (2008). Dr. Roy Spencer, former Senior Scientist for Climate Studies at NASA's Marshall Space Flight Center, contends that an incomplete understanding of clouds, and water vapor in
its role as the dominant green-house gas, are prime sources of model error," the statement notes.

Sunday, January 10, 2010

The State's Monopoly on Lawful Coercion

"The resort to violence is what makes the question of what kind of things it is legitimate for states to do an important moral concern. It seems to me perfectly reasonable to shove a gun in somebody’s face to stop him murdering, raping, or robbing. It seems to me entirely unreasonable to shove a gun in somebody’s face to extort from him money to fund a project to get monkeys high on cocaine. Those seem to me fairly reasonable distinctions. It is illegitimate for government to use force or the threat of force for projects that are not inherently public in character."
"But I would like to make it clear that I am not indulging in a figure of speech: I think it’s a pretty useful heuristic: If you’re not willing to have somebody hauled off at gunpoint over the project, then it’s probably not a legitimate concern of the state.
This is the sort of talk that gives the (always well informed, excruciatingly sober, generally sensible) folks at The Economist the howling fantods, inasmuch as they seem to operate under a kind of distributed version of the divine right of kings — always asking whether the rulers rule wisely, seldom asking whether they have the right to rule at all, and never asking whether and how much we actually need them. That’s why The Economist is the in-house newsletter of The Establishment. That and those great classifieds."