Friday, April 30, 2010

Energy Sense

So .... what DO we want from an energy policy?!?

The Energy Policy Morass
'Think, Baby, Think'
BY Stephen F. Hayward
April 26, 2010, Vol. 15, No. 30
If you think the health care debate is a tangled mess, try wading into the thickets of the energy sector, which is high on the Obama administration's list of targets to subjugate. Few areas of national policy offer as bad a ratio of blather to substance as energy. It is a field where cliché, wishful thinking, and wince-inducing ignorance dominate the discourse. No matter how patiently or repeatedly the myths and realities of energy are explained, a large portion of the public, along with giddy pundits like Tom Friedman, persist in thinking an energy revolution is one government-sponsored gadget away from being willed into existence. Liberals are the worst offenders, but conservatives have their own energy shibboleths that deserve to be candidly recognized as such. The energy industry itself, meanwhile—including old-line fossil fuel companies, but also rent-seeking manufacturers such as GE and Siemens—contributes to public ignorance and confusion by jumping on the "green energy" bandwagon for mostly bad reasons. Everyone from T. Boone Pickens to Ralph Nader has a plan to "solve" America's energy crisis, while Obama is practicing Clintonian triangulation to see whether Republicans will be cheap dates on an energy bill.
For more than three decades American energy policy has mostly been a muddle, and often a farce. But the time for muddling through is over. As the global economy recovers, oil prices will likely head back over $100 a barrel, with $4 gasoline returning to the United States. American oil production continues its needless long-term decline. Our electricity grid is antiquated and vulnerable to disruptions. As the economy recovers, electricity shortages may begin to appear, even in (or especially in) anemic California. New discoveries of domestic natural gas, however, are revolutionizing our energy outlook, but also complicating ambitions to develop more costly non-fossil fuel energy. Polls reveal significant shifts in long-term public opinion about energy, with majorities now expressing support for more domestic fossil fuel exploration and expanded nuclear power. This is no doubt a large part of the reason for Obama's insincere recent initiatives on oil drilling and nuclear power. But it may be possible to press for more serious steps over the next few years.
The chief reason for the lack of a coherent or serious energy policy is that we've never been able to decide exactly what problem we are trying to solve. At the time of the first "energy crisis" in the early 1970s, the chief concern was the purported scarcity of oil along with worry about securing an adequate supply of electricity for future population and economic growth. The Arab oil embargo of 1973-74 that helped plunge Western economies into recession highlighted the geopolitical risk of dependence on the Persian Gulf for oil. But there was another new force that arose coincident with the awareness of geo-political risk: environmentalism. In the early 1970s we were getting serious about reducing air pollution, predominantly the byproduct of fossil fuels, although the harmful effects of mining and oil exploration on land and oceans were also prominently on the mind of environmentalists and added to their animus against fossil fuels. So from that very early moment the energy debate has broken down along the familiar fault line of whether to emphasize production (more supply) or conservation (less use), with a dollop of "alternative" or "renewable" energy romanticism thrown in.
The first innings of energy policy in the 1970s saw an old-fashioned compromise. We adopted fuel economy mandates for the auto fleet and several other conservation measures (most notably the 55 mile per hour speed limit), but also okayed the Alaska pipeline, enabling the development of the huge North Slope oil field, which went from producing almost nothing in 1973 to nearly 2 million barrels of oil a day by 1988 and accounted for much of the increase in domestic oil production in the late 1970s and early 1980s—the last time American domestic oil production increased. Since then environmentalists have successfully lobbied Congress and several presidents of both parties to bottle up development of major new fields in Alaska or offshore, putting off limits nearly three-quarters of an estimated 112 billion barrels of oil recoverable with existing technology. Obama's recent announcement of expanded offshore oil drilling is largely a sham, despite the howls of protest from environmentalists. Obama's policy involves a very slow rollout for new leases and locks up many areas that were in play with the Bush administration's lifting of the offshore moratorium in 2008.
Here emerges one of the most glaring insincerities of the energy debate: While it is neither realistic nor sensible to attempt to produce all of the oil we need from domestic sources (more on this in a moment), we could easily produce enough additional domestic oil to replace all of our current imports from the Persian Gulf, i.e., the "people who hate us," probably from new fields in Alaska alone. Expand production from the outer continental shelf, and we could nix imports from Venezuela (currently about 10 percent of our oil), too. Drilling opponents often argue that oil from Alaska's Arctic National Wildlife Refuge (ANWR) would amount to only six months' worth of U.S. oil consumption. This is superficial logic, akin to arguing that the farms of Iowa only produce six weeks' worth of food for American consumers, so why bother planting. While no one knows how much oil may be located in ANWR until serious exploration is undertaken, even a "six-month" field would be substantial. The average oil field may represent only a few weeks worth of total oil consumption, but oil fields aren't produced all at once. Rather, they are pumped out over several decades.
We've done it before. The surge in North Slope oil in the early 1980s enabled us to reduce oil imports by 2 million barrels a day. Oil imports from the Persian Gulf plummeted from 2.2 million barrels a day in 1978 to a low of 311,000 barrels a day in 1985. North Slope production has been steadily dwindling since its 1988 peak; today North Slope production has fallen to about 650,000 barrels a day. Since the 1980s oil imports from the Persian Gulf have risen in almost exact proportion as North Slope production has fallen. Today we are back to importing about 2.3 million barrels a day from Persian Gulf nations, about 13 percent of our consumption.
One remarkable fact is that American oil consumption has remained virtually flat over the last 30 years. Today, we use only slightly more oil than we did in 1978, even though the economy has more than doubled in real terms. This is testimony to the steady improvement in energy efficiency over the last generation, including—yes—our cars and trucks. Since 1975, energy consumption per dollar of economic output has fallen 50 percent. Though efficiency and conservation measures are beloved of environmentalists, it is doubtful any of the government's manifold mandates, tax incentives, or direct subsidies have made a significant difference in the overall trend of energy efficiency in the United States. The basic market drivers—higher energy prices and expanding profits through resource efficiency—account for most of the improvement. So when we hear the handwringing about our growing dependence on foreign oil, now over 60 percent of our total oil consumption, we should be clear that this trend is entirely the result of declining domestic production and not any soaring demand for oil. Domestic oil production has fallen by more than 1 million barrels a day over the last 10 years. The United States now produces less oil than it did in 1947. This is pathetic. And unnecessary.
The two main reasons oil and other fossil fuels became environmentally incorrect in the 1970s—air pollution and risk of oil spills—are largely obsolete. Improvements in drilling technology have greatly reduced the risk of the kind of offshore spill that occurred off Santa Barbara in 1969. There hasn't been a major drilling related spill since then, though shipping oil by tanker continues to be risky, as the Exxon Valdez taught us. To fear oil spills from offshore rigs today is analogous to fearing air travel now because of prop plane crashes in the 1950s. Technology has similarly put us on the path to virtually eliminating air pollution from fossil fuel use. Since 1980 we've reduced tailpipe emissions from cars by 98 percent, with corresponding nationwide reductions in ambient ozone (–22 percent), carbon monoxide (–77 percent), and lead (–92 percent). The same is true for coal: Since 1970 we've doubled the amount of coal burned to generate electricity (a consequence of the successful environmental campaign to shut down nuclear power development in the 1970s), but sulfur dioxide emissions have been cut in half, with more improvements to come.
Of course, global warming came along as a handy new reason for opposing fossil fuel use. Although the Supreme Court doesn't get it, carbon dioxide is not analogous to conventional air pollutants that are byproducts of fuel combustion, and it can't be reduced through similar technological means. Confusion about this basic point lies at the heart of the enthusiasm for cap and trade legislation soon to be introduced in the Senate. A favorite cliché of the cap and trade boosters is that because cap and trade worked well to reduce sulfur dioxide (this is actually overstated, but never mind), it will work the same way for carbon dioxide. It was possible to reduce SO2 emissions without reducing fuel use, through scrubbers or the switch to low-sulfur coal. But CO2 is the product of complete fuel combustion. There is no such thing as "low-carbon coal," and there is no economically available CO2 "scrubbing" technology, though the coal industry is happy to try to come up with it as long as the government will provide subsidies. It would surely be cheaper to switch from coal to natural gas or nuclear power than to carbon capture from coal.
The point is, unlike conventional air pollution, which was reduced without any constraint on fuel use, the CO2 in the atmosphere can be reduced only by the use of massively less coal, oil, and natural gas. But even if the case for catastrophic global warming weren't in free fall, the energy ambitions of the climate campaign remain so extreme as to make King Canute blush. The target the climate campaigners have set for the United States—an 80 percent reduction in CO2 emissions by the year 2050—would require replacing virtually our entire fossil fuel energy infrastructure. Substituting natural gas for coal would deliver only about a 15 percent reduction in CO2 emissions, and even if we replaced every coal plant with a carbon-free nuclear plant, we'd still be less than halfway to the policy target. For the United States, the 80 percent reduction target means reducing our fossil fuel use to a level the nation last experienced in 1910. But since our population in 2050 will be nearly five times larger than the population of 1910, on a per capita basis we're talking about going back to the fossil fuel use of about 1875. This is patently absurd.
Fossil fuels will remain preeminent for a simple reason: They are abundant and offer energy superior to so-called renewables or other alternative sources. One pound of gasoline, for example, has 100 times more energy than a one pound lithium ion battery, which is the main reason why electric cars still aren't very practical and aren't likely to be for some time. Renewables—solar, wind, and biomass—are vastly more expensive, often five to ten times more expensive than fossil fuels, and their costs are not coming down very fast. Nuclear power is cheaper than renewables, but still pricier than fossil fuels. And even if renewables fell in price, they couldn't be deployed on a large enough scale to replace fossil fuels completely, which is the professed goal of environmentalists and the Waxman-Markey "cap and trade" bill that passed the House last June. Even if all the mandates and subsidies of Waxman-Markey worked as designed, renewable sources would provide only about 20 percent of our energy needs a generation from now.
For all of the bipartisan talk of developing new energy sources, we're going to exploit most of our available hydrocarbons sooner or later. And one reason this is likely to happen is the nation's fiscal catastrophe. Some estimates of potential government royalties from opening up more fossil fuel production top a trillion dollars. At some point in the future, even liberals will be forced to decide whether they really want to back environmentalists on locking up domestic fossil fuel production and forgo this revenue while finding other means of propping up the welfare state.
Before conservatives and Republicans revive their "drill, baby, drill" chant, however, there needs to be some clarity about the goals of sensible energy policy. Conservatives are not alone in advocating "energy independence"—a phrase that polls well and hence has been invoked by every president since Richard Nixon. But meant literally as energy self-sufficiency—supplying 100 percent of our energy needs from sources within the four corners of U.S. territory—it makes no more sense than total self-sufficiency in textiles, food, autos, or timber. The United States has in recent years imported as much as one-fifth of its wood product, yet there are no calls for "ending our dangerous dependence on foreign timber." The merits of free trade and globalization are just as strong for energy as for any other commodity or economic activity. Energy independence as self-sufficiency is tantamount to energy protectionism and, like all kinds of protectionism, would make us poorer in the end, in part because our costs of production are higher than those of producers in the Middle East and Latin America. (Ironically, one of the many paranoias in the Arab world is that environmentalist opposition to domestic production is actually a cover for the U.S. strategy of using up Arab oil first while it is relatively cheap, while saving our own resources for the time when oil gets more expensive. There is just enough superficial rationality to this to make it plausible.) Dump our Arab suppliers by all means (though it won't hit their pocketbooks at all), but there is nothing economically wrong or strategically dangerous about continuing to import oil from our largest foreign suppliers, Canada and Mexico.
The phrase "energy independence" ought to be retired along with its cousin, "energy security." What we should be talking about is energy resilience, that is, a diversified portfolio of energy technologies and global supplies that minimizes the economic and political risk of disruptions from any particular region or energy source. To a degree little understood by the public or the political class, the United States is actually less vulnerable to oil price or supply shocks than it was in the 1970s, even though we import much more of our oil. The main reason is that oil accounts for a much smaller share of our energy use than it did in the 1970s, and we have developed backstops to short-term supply disruptions such as the Strategic Petroleum Reserve and the International Energy Agency. In fact, it was IEA actions, through its standby Coordinated Emergency Response Measures (CERM), to supply the United States with gasoline after hurricanes Katrina and Rita disrupted Gulf Coast refineries that prevented serious gasoline shortages and severe price increases in the fall of 2005.
Another reason not to overemphasize the potential for increased domestic oil production is that it will not have a significant impact on world oil prices, chiefly because of surging demand from China and other developing nations. Although the "peak oil" panic is probably overestimated, the era of cheap oil is over. Between rising global demand and higher production costs, a diversification of primary energy sources makes sense. Of course, higher global prices will make possible the economic development of America's vast oil shale deposits—as much as 800 billion barrels worth.
And one area where diversification of supply is already happening—where, ironically, we've been "drilling, baby, drilling"—is natural gas. As recently as five years ago, long-range projections from every public and private forecaster expected that the United States would have to import as much as 20 percent of its natural gas by the year 2025. Price volatility and supply worries led some American companies (Dow Chemical in one spectacular case) to locate new plants in the Persian Gulf rather than in the United States. But in the last five years a revolution in directional drilling technology has unlocked huge new natural gas supplies in the United States, chiefly in old coal beds on private land in the east. (This latter point is crucial: The new gas has been developed largely on private land, immune to the political obstacles of drilling on public land. Environmentalists are doing their best to slow this up anyway, with worries about the effects of the "hydraulic fracturing" that is essential to new production techniques.) It is now conceivable that the United States could become an exporter of natural gas over the next few decades. In any event, abundant supply will diminish the severe price volatility that has roiled the natural gas market over the last two decades.
Natural gas may be a serious alternative to gasoline as a transportation fuel, as T. Boone Pickens and others are recommending, but there are some difficulties. To use gas as a transportation fuel requires it to be compressed, which presents safety risks that gasoline and diesel fuel do not have. Some major fleet operators such as Federal Express have already considered and rejected for the time being converting their fleets to natural gas, chiefly because of the safety risk of having to operate large on-site systems for compressing natural gas. A deliberate government policy or mandate to switch to gas might forestall development of hybrid-electric cars or new biofuels. Gas is also a plausible alternative to coal if we are serious about reducing greenhouse gas emissions, yet all of the proposals on Capitol Hill ironically set about to preserve coal-fired power indefinitely.
The resiliency and adaptability of the American energy sector over the last generation, along with the protection of existing energy interests such as coal, raises a fundamental question: Do we need a national energy policy? Yes, but it shouldn't simply double-down on what we've been doing for the last generation—subsidizing severely limited renewable technologies such as solar and wind power and corn-based ethanol, mandating new energy efficiency standards, or trying to force a new technology that can't hope to make it on its own, such as Jimmy Carter's Synfuels Corporation or more recently various hydrogen schemes. (Hey Governator—how's that "hydrogen highway" working out for you in California?) Unfortunately this is what most proposals on Capitol Hill—Republican and Democratic alike—would do.
There are some areas where national policy is essential. In addition to removing barriers to oil and gas production, there is the electricity grid, which the private sector cannot renovate alone, and next-generation nuclear power. Once again, Obama has played bait-and-switch on nuclear power, promising support for new designs of small, safe, proliferation-proof reactors, but with such a tiny commitment of funding that the program could barely get off the ground even if the morass of the Nuclear Regulatory Commission were reformed. There is an easy way around this: Have the Defense Department, which is exempt from the maw of the Nuclear Regulatory Commission when it designs and deploys its own reactors, order up a bunch of small modular plants for use on military bases. If the technology proves itself, it can be scaled up quickly for civilian use.
But the chief obstacle to most sensible changes remains the obstructionist NIMBY mentality of environmentalists, which extends even to modernizing the electricity grid. (Their talk about a "smart grid" is mostly deceptive: Environmentalists have in mind not the expansion of capacity that would aid the efficiency of the overall system, but big-brotherish mechanisms that would allow a central authority to turn off your air conditioner at peak periods in the summer.) Two years ago, $4 gasoline proved to be the threshold at which opposition to more domestic oil production eroded. The prospect of $4 gasoline returning soon is probably why Obama decided to try to get out ahead of the game with an offshore drilling announcement. It may require more blackouts such as the Northeast experienced in 2003 or California in 2000 before lawmakers get serious about upgrading the grid.
Above all what needs to be understood is that energy transitions take a long time. As OPEC's Sheik Yamani once remarked, the Stone Age didn't end because we ran out of stones. Moving beyond fossil fuels will happen eventually for the same reason we moved into fossil fuels in the first place—when a superior and cleaner form of energy is developed and scaled for mass use. Lots of entrepreneurs are working on it—my favorite is Craig Venter's algae biofuels project. But a full-fledged transition to a post-fossil fuel world is still a long way off, and we should stop kidding ourselves that all we need is another bill-signing ceremony at the White House to make it happen.
Steven F. Hayward is the F.K. Weyerhaeuser fellow at the American Enterprise Institute, and the author of the forthcoming Almanac of Environmental Trends.

Thursday, April 29, 2010

Classic Quotes, Taleb

"You can only convince those persons who can benefit from being convinced." @nTaleb

Wednesday, April 28, 2010

Death Spiral Accelerates


State government finances are a wreck. The drop in tax receipts is the worst in a half century. Fewer than 10 states ended the last fiscal year with significant reserves, and three-fourths have deficits exceeding 10% of their budgets.

It's much more likely that we're facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments. 

-During the last decade, states increased their spending by an average of 6% per year, gusting to 8% during 2007-08. Much of the government institutions built up in those years will now have to be dismantled.

-And, unlike the aftermath of past recessions, odds are that revenues will take a long time to catch back up to their previous trend lines—if they ever do. Tax payments have fallen so far that it would require a rousing economic rally to restore them. This at a time when the Obama administration's policies on taxes, spending and more seem designed to produce the opposite result. From 1930 to 2008, our national average annual real GDP growth rate was 3.49%. After crunching the numbers, my team has estimated that it would take GDP growth of at least twice the historical average to return state tax revenues to their previous long-term trend line by 2012.

-Even if Americans wanted to go back to their high-spending, high-borrowing ways, will anyone lend them the funds to spend like it's 2007 all over again? Consumer credit will remain tighter as a matter of both sound business practice and new government regulation. Home equity appreciation is gone as a huge source of collateral, even if lenders were either willing or permitted to loan freely against it.

-The "progressive" states that built their enormous public burdens by soaking the wealthy will hit the wall first and hardest. California, which extracts more than half its income taxes from a fraction of 1% of its citizens, is extreme but hardly alone in its overreliance on a few, highly mobile taxpayers.
-Sadly, the political impulse to protect government largess leads many states to aggravate their dilemma. Already more than half have raised taxes, often on businesses, serving only to chase them and their tax payments away and into the open arms of states like Indiana. 
-Indiana was near bankruptcy five years ago but is relatively solvent today because we have spent the intervening years making hard choices. We've also reduced the number of state employees by some 5,000 from the 2004 level.

-Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration's "stimulus" package in effect shared the use of Uncle Sam's printing press for two years. But after that money runs out, the states will be back where they were. Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning.
Mr. Daniels, a Republican, is the governor of Indiana

Classic Quotes, Barclay

"We will often find compensation if we think more of what life has given us and less about what life has taken away."
- William Barclay

New Jersey Fights the Death Spiral

"He has received some support from the Democratic president of the state Senate, Stephen Sweeney, a leader of a local ironworkers union. This suggests waning solidarity between unionized private-sector workers who are weary of paying ever-higher taxes to enrich unionized public employees.
New Jersey's governors are the nation's strongest -- American Caesars, really -- who can veto line items and even rewrite legislative language. Christie is using his power to remind New Jersey that wealth goes where it is welcome and stays where it is well-treated. Prosperous states are practicing, at the expense of slow learners like New Jersey, "entrepreneurial federalism" -- competing to have the most enticing business climate.
Christie's predecessor addressed a huge unionized rally of public employees, vowing to "fight for a fair contract." Who was he going to fight? The negotiator across the table would be ... himself.
Saying "subtlety is not going to win this fight," Christie notes that New Jersey's police officers, the nation's highest paid, can retire after 25 years at 65 percent of their highest salary. In the state that has the nation's fourth-highest percentage (66) of public employees who are unionized, he has joined the struggle that will dominate the nation's domestic policymaking in this decade -- the struggle to break the ruinous collaboration between elected officials and unionized state and local workers whose affections the officials purchase with taxpayers' money."

Tuesday, April 27, 2010

Predictive Formula of Climate Change

The Cause of the Earth's Climate Change Is the Sun
"Dr. Glassman is the first scientist to show that the modern temperature record is contained in the reconstructed history of solar activity, and to advance a model for how that occurs. In his model, the ocean acts to absorb solar energy and return it to the atmosphere decades to centuries later, causing certain patterns in the Sun’s activity to be suppressed and other patterns to be reinforced as they affect Earth’s climate. The variations in the Sun’s activity are small, but are quickly amplified by clouds. This is a novel model for cloud reflectivity, called cloud albedo, in which increases in solar activity cause decreases in cloud cover by direct atmospheric warming, allowing more sunlight to reach Earth’s surface.

This rapid decrease in cloud cover to solar activity runs opposite to the slow increase in cloud cover caused by global warming, which adds humidity to the atmosphere to increase cloudiness. In this way, he says cloud albedo regulates Earth’s surface temperature in warm interglacial periods, capping Earth’s temperature within a few degrees of the present temperature. This, he says, doesn’t stop the greenhouse effect, but reduces its effect by at least one fourth. In the deep cold of the glacial minima known as ice ages, he notes that the atmosphere will be extremely dry and cloudless, turning off any greenhouse effect. In this condition, Earth’s temperature is controlled by the albedo effect of the surface because it is then covered by ice and snow, turning off the Sun and leaving Earth’s temperature to be the result of its internal heat.
Because the Sun variations match Earth’s temperature extremely well, human activities can be ruled out as a cause of observed global warming. However, the global warming movement, since 1988 headed by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), claims that the “fingerprint” of human activities are found in climate related measurements. Dr. Glassman investigates each of these claims and shows how they are false and scientific error."
I've met and corresponded with Dr. Glassman and he's a fine gentleman.  I'm not just saying that because he's a former Naval Aviator.  He has also been a very generous teacher.  

Monday, April 26, 2010

The Pretense, The Wishful Thinking

Don't you just get sick of being lied to?  Of the pretense that government is going to solve the financial system's issues?  That government is capable of doing anything well?

SEC Incompetence

In one of the reports, the SEC IG found that several of the top staffers at the SEC were spending their days surfing the web for porn, rather than looking for securities fraud.  One senior manager spent almost 8 hours a day looking a porn, getting to the point where he even filled up his government issued hard-drive with porn.  His actions were not some isolated incident.  Over 30 employees were found to have regularly used SEC computers to download and view porn.  Some of the senior employees had salaries as high as $222,000 a year.  Sounds like nice work, if you can get it.
But the porn charges are the least of the SEC’s worries.  Also released was the IG’s report on the SEC’s failure to stop the Stanford Ponzi scheme.  The report shows a clear pattern of incompetence at the SEC.  Given the SEC’s failure to act on the Madoff scheme, and the repeated warnings about Stanford, one has to wonder how good SEC investogators are at discovering fraud if they don’t even pursue the clear-cut cases brought to them.
The IG report does help explain the SEC’s poor track record.  The SEC’s head of enforcement made it very clear that the staff was “to bring more Wall Street types of cases.”  Perhaps ones like the recent Goldman case?  The head of enforcement even goes so far as to ask the staff working on the Stanford case, “What are you bringing these cases for?”  Clearly the SEC only seems to care about fraud if its catches a big headline.  Since the SEC was first warned about Stanford, investors placed about $8 billion more into the Ponzi scheme, far more than the damages alleged in the Goldman case.
If anything should expose the current financial regulatory bill being debated in the Senate as a fraud, it should be the fact that it leaves the SEC still standing.  Even worse, it reduces Congressional oversight of the SEC by removing it from the appropriations process.

Hanson Illustrates Covey Quote

"We judge ourselves by our intentions, we judge others by their actions." Steven R. Covey
In reading the piece that follows, consider it through the lens that Mr. Covey offers. It appears to me that this perspective shapes all politics. "Our" party or "our" president is judged by our perception of his/her good intentions, which is one reason "we the People" put up with so many insults by "our" representatives.
A Postmodern Presidency
Posted By Victor Davis Hanson On April 4, 2010 @ 2:24 pm In Uncategorized | 13 Comments
A Pretentious Word for a World Without Rules
Given thirty years of postmodern relativism in our universities, we were bound to get a postmodern president at some point.
Postmodernism is a fancy word - in terms of culture, nihilist; in terms of politics, an equality of result and the ends justifying the means - that a lot of people throw around to describe the present world of presumed wisdom that evolved in the last part of the 20th century.
"After modernism" or "beyond modernism" can mean almost anything - nihilistic art that goes well beyond modern art (think a crucifix in urine rather than the splashes of modernist Jackson Pollock). Or think of the current English Department doggerel that is declared "poetry" (no transcendent references, echoes of classicism, no cadence, rhyme, meter, particular poetic language, theme, structure, etc.) versus Eliot's or Pound's non-traditional modern poetry of the 1920s and 1930. In politics, there is something of the absurd. The modern age saw life and death civil rights marches and the commemoration of resistance to venomous racial oppression; the postmodern civil rights marches are staged events at the DC tea party rally, as elites troll in search of a slur, or Prof. Gates's offer to donate his "cuffs" to the Smithsonian as proof of his racial "ordeal."
Genres, rules, and protocols in art, music, or in much of anything vanish as the unnecessary obstructions they are deemed to be - constructed by those with privilege to perpetuate their own entrenched received authority and power. The courage, sacrifice, and suffering of past American generations that account for our present bounty are simply constructs, significant only to the degree that we use the past to deconstruct the race, class, and gender power machinations that pervade contemporary American exploitive society. History is melodrama, a morality tale, not tragedy.
Relativism Everywhere
But the chief characteristic of postmodern thinking is the notion of relativism and the primacy of language over reality. What we signify and brand as "real," in essence, is no more valid than another's "truth," even if we retreat to specious claims of "evidence"- especially if our aim is to perpetuate the nation state, or the primacy of the white male capitalist Westerner who long ago manufactured norms in his own interests.
"Alternate" realities instead reflect those without power speaking a "truth," one just as valid as the so-called empirical tradition that hinged on inherited privilege.
The New National Creed
OK, so how does this affect Obama?
He was schooled in the postmodern university and operates on hand-me-down principles from postmodernism. One does not need to read Foucault or Derrida, or to be acquainted with Heidegger, to see how relativism enhances contemporary multiculturalism. Keep that in mind and everything else makes sense.
Try health care. By traditional standards, Obama prevaricates on most of the main issues revolving health care reform - from the fundamental about its costs and effects, to the more superficial such as airing the entire process on C-SPAN or promising not to push through a major bill like this on narrow majoritism. And recall the blatant bribes for votes to politicians from Nebraska to Louisiana. Look also at the enormous borrowing and cuts from Medicare that will be involved.
Well, those were not misstatements or misdeeds at all. You, children of privilege, only think they are, since you use antiquated norms like "abstract" truth to adjudicate the discomforting efforts of a progressive president.
He, on the other hand, is trying to force the privileged at last to account for their past oppressions (insurance companies that gouge, surgeons that lop off legs or tear out tonsils for profit, investors who private jet to the Super Bowl, or the lesser but equally selfish Joe the Plumber types who do not wish to "spread the wealth") by extending care to the underprivileged. Your "Truth" about his past statements is something reactionaries evoke to thwart such progressive change; in fact, the constructed truth of Obama's is that a child will now have regular check-ups. All the other "gotcha" games about abstract truth and falsehood are just semantics.
Mean Speech for Thee, But not for Me
Look at supposed hate speech. An empiricist would ignore Obama's recent warnings about the new wave of right-wing tough talk from Limbaugh and Beck, and determine instead whether the president remembers the novel Checkpoint, or the award-winning film about killing George Bush, or the venom of a Michael Moore or Keith Olbermann.
That is, a traditional inquirer would weigh the furor of the right against left, in ascertaining whether hate speech is at all partisan or simply politics of all stripes. And he would remind the president that it was Barack Obama himself who asked of his supporters to "get in their face"and bragged "if they bring a knife to the fight, we bring a gun," and who used graphic examples in damning his opponents (cf. the taunt to Hannity ("he'll tear him up").
But you see, all this is not so. The postmodernist constructs a different reality. A person of color who is striving to level the playing field against oppressive interests speaks the "truth" to power. Of course, from time to time he draws on emotive language to drive home his points - quite unlike the cool, detached, and deliberate attack narratives of those seeking to protect corporate or entrenched interests.
When Obama attacks Beck, or Hannity, or calls for someone to bring a gun to a fight, or has Rahm Emanuel curse a fence-sitting representative, these protocols seem extreme only to those whose economic interests are threatened. Poor children in Detroit or in the barrios of El Paso don't get the opportunity for tit-for-tat score-keeping, as if millionaires "think" they are entitled to the same "fair" treatment as their victims. When Limbaugh rails, it is to protect his Gulfstream 550; when Obama "distorts," it is the expediency needed to wring from the wealthy salvation for the voiceless.
Racialism - no such thing!
Race is the same. A person of color can hardly, given the history of oppression accorded to non-whites, himself be guilty of dividing people by race.
So if Obama says "typical white person," or entitles his book from the sloganeering of a racist preacher he courted for 20 years, or stereotypes rural Pennsylvanians, or dubs police as acting "stupidly" in matters of supposed racial confrontation, or has an attorney general who damns the country as "cowards" on race, or appoints a Supreme Court judge who thinks a "wise Latina" by virtue of race and gender has superior wisdom, or recruits a Van Jones who characterizes everyone from polluters to mass murderers by race (I could go on), well, all this is not at all racial stereotyping with an intent to deprecate.
Why? Because constructs of language, expression, and reality hinge on status and class. Obama is seeking to dethrone traditional nexuses of power. So when he, from time to time, muses on real racial inequality, reactionaries retreat to "objective" "standards" of reciprocity to thwart his proposed changes.
Take-overs - what Take-overs?
And those "take-overs"? Take-over from what to what?
An outraged managerial and capital laden class feigns victimhood when working folks at last have a say in how the nation's profits are derived and enjoyed, originating from their own labor in banking, insurance, and auto production. All these retreats to "private" income, "my property," "liberty," "The Founders," and the "Constitution" simply can be deconstructed to "don't dismantle a system that is weighted in my favor!"
No wonder "they" construct all sort of scary "narratives" about the Postal Service, Amtrak, Social Security, Medicare, and other shared collective enterprises that are branded "insolvent" and "unsustainable," despite serving the people - the economic gobbledygook talk from those who really mean they are not willing to transfer their own unfairly obtained capital to more deserving working folks through legitimate "redistributive change."
The Voices of the Oppressed
Finally, examine foreign policy. Now many of us are upset that we court enemies and shun friends, and seem to be reaching out to the most authoritarian regimes imaginable, whether Putin's Russia, or Iran, or Venezuela. Well, once again, that is only because you construct reality on the norms predicated upon your own comfortable globalized privilege - that, in fact, as Obama thankfully grasps, is a result of thousands of daily oppressions, both here and abroad, of which you are not even aware.
Consider the trumped-up crisis with Iran. We hold Ahmadinejad to our artificially constructed standards of "civil" discourse and "fair" play - forgetting (but not Obama) the 1953 Western-inspired coup, the profit-mongering of the global oil companies, and the neo-imperialist role of the United States in the Gulf. We hide all that with constructs like "the mullahs," the "theocrats," "Islamofascism" and other demonization rooted in class, gender, race, and religion.
If Iran had been behind a past U.S. coup, if Iranian warships were off the coast of California, if an Iranian coal company were buying and selling our national energy production, then we too might sound somewhat unhinged as we sought to employ language to offset our oppressor's ill-gotten material advantages.
In an American constructed world order, we artificially adjudicate Iran a rogue would-be nuclear menace for wishing five or six small nuclear weapons to protect its vulnerable borders (American troops now abut them); we have thousands of such devices, and have used them, and yet are deemed "responsible" and "peaceful," we of all people, who, as the president once reminded us, have alone used them on real people.
So what Obama has done is "contextualized" the world, and "located," as it were, the seemingly hostile anti-American rhetoric of "enemies" into a proper race/class/gender narrative.
And what he has found is that nationalism and the construct of the state have fooled us into thinking that there are "allies" and "enemies," when, in fact, these are mere labels used by the privileged to "exaggerate" "difference" that only enhances Western entrenched economic, racial, cultural and political hegemonies.
Once, thanks to Obama, we "unpack" that "reality," then we can see that most Americans have much in common with Venezuelans, Russians, Iranians, Syrians and others who likewise struggle against the same enemies that brought us the 2008 Wall Street meltdown and now oppose health care reform, cap and trade, amnesty, and the take over of the automobile, banking, and insurance industries.
So a postmodernist looks at the Falklands and does not rely on archaic notions of "sovereignty" or a "history" of a prior war. Instead, one sees a postcolonial power once more claiming "ownership" of a far distant island, proximate to a Latin American people, with long experience with European and American economic and political exploitation. Presto - we are now "neutral," which means we don't see anything intrinsically convincing in Britain's claims to the Falklands.
Note Israel. What are we to make of the Netanyahu humiliating smack down, the seeming indifference over the Iranian nuclear program, the nominations and appointments on the Middle East front of a Freeman or Power, the reach out to Syria and Iran, the interview with al Arabiya and the Cairo speech, the bow to a Saudi royal, the ritual trashing of George Bush juxtaposed to the praise of a Saudi king, the strange past outbursts of Obama advisor Zbigniew Brzezinski about hypothetically shooting down Israeli planes on their way to Iran, the ranting about Jews from the former spiritual advisor Wright, etc.
In short, the answer is that Israel is a construct of Western privilege - its democratic, capitalist, and Western customs hinge on the oppression of a vast "other" that is far more egalitarian, socialist, and antithetical to Western consumer-capitalism with all of its pathologies of race, class, and gender exploitation.
In that context, in archaic fashion, we struggle to damn any effort to end such hegemony and empower the voices of the oppressed. We are not, in fact, "allied" to Israel, but properly speaking instead should be to the underprivileged in the Gaza slums, to those without health care on the West Bank, and, yes, to the progressive Israelis of noble spirit who are trying to battle the reactionary Likudniks and instead do something about the tentacles of their own discriminatory state, whose capital is derived from exploited labor and resources of a silenced other.
Standards of What?
I could go on, but you get the picture of our first postmodern presidency. For 14 months we have tried to use abstract benchmarks like "did Obama contradict himself?," "did Obama break another promise?," "did Obama really think borrowing another $2 trillion won't help to bankrupt us?," "did Obama indeed think another entitlement 'saves' money?," "did Obama snub another ally and court another enemy?," "did Obama apologize again?" - when, in fact, such linear thinking, such artificially constructed "norms," such "facts" are nothing of the sort at all. To Obama, our first postmodern president, such facts and truth are mere signatures of privilege, and so he is offering us another - a postmodern - way of looking at the world.
URL to article:

Classic Quotes, Twain

Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).
- Notebook, 1904

Classic Quotes, Jefferson

“The natural progress of things is for liberty to yield and government to gain ground.” Thomas Jefferson

More Death Spiral

"That's according to the Center for Retirement Research at Boston College, which earlier this month released a troubling analysis of 126 state and local pension plans. The center's researchers found in the wake of the stock market collapse that measures of pension program solvency hit a 15-year low with no signs of improvement on the horizon. This means taxpayers will be left picking up the tab.  The reason pension plans are headed toward financial disaster is simple. Ever-expanding public-sector unions have flexed their political muscle and larded up with lavish benefits to be be paid out decades from now."

It's going to fall on all us - the pensioners and those paying for the pensions.

Sunday, April 25, 2010

Capitalism Cures Capitalism

Jonah Goldberg: Washington's solution to Wall Street's problems is to get Washington deeply, deeply involved in Wall Street. So involved that the savvier capitalists will recognize -- once again -- that the safest bets are not to be found in the vicissitudes of a fickle marketplace, but in gaming the system run from Washington. The "reform" coming down the pike will put bureaucrats in charge of investors. 

We are fond of saying that the answer to free-speech problems is more free speech. But we seem incapable of grasping that sometimes -- and only sometimes -- the solution to capitalism's problems is more capitalism.

83% of homicide warrants in AZ

83% of homicide warrants in Phoenix, AZ are issued for illegal aliens

That means we should do what?  Keep pretending we can close the borders?

If you want less of something, tax it ...

"At the same time the IRS was harrying Louis for back taxes, it was also effectively stepping into the prize ring itself and determining the way the sport was conducted. The 1950s was the era of the 90 percent top marginal tax rate, and by the end of that decade live gate receipts for top championship fights were supplemented by the proceeds from closed circuit telecasts to movie theaters. A second fight in one tax year would yield very little additional income, hardly worth the risk of losing the title. And so, the three fights between Floyd Patterson and Ingemar Johansson stretched over three years (1959-1961); the two between Patterson and Sonny Liston over two years (1962-1963), as was also true for the two bouts between Liston and Cassius Clay (Muhammad Ali) (1964-1965). Then, the Tax Reform Act of 1964 cut the top marginal tax rate to 70 percent effective in 1965. The result: two heavyweight title fights in 1965, and five in 1966. You can look it up."

Classic Quotes, Joe Louis

"Asked whether the US would win because God was on our side, Louis said "We'll win because we're on God's side." 

"There are a lot of things wrong with this country, but nothing that Hitler can fix.""

Saturday, April 24, 2010

Classic Quotes, Unknown

"Tell the truth, but keep a fast horse saddled."


Rush is the master of what he does.  But it matters not who's on the field in politics, they all have the same job.  Do whatever it takes to get your vote.  Lie, cheat, steal it does not matter - take any other approach and the other side buries you.  We're left with a Darwinian style in which the only ones left standing are the ones who will, as the movie said, "Will do what it takes, whatever it takes" to win.

It's an inevitability of having so much power at stake.

"The Obama/Clinton/media left are comfortable with the unrest in our society today. It allows them to blame and demonize their opponents (doctors, insurance companies, Wall Street, talk radio, Fox News) in order to portray their regime as the great healer of all our ills, thus expanding their power and control over our society.
A clear majority of the American people want no part of this. They instinctively know that the Obama way is not how things get done in this country. They are motivated by love. Not hate, not sedition. They love their country and want to save it from those who do not."

I think Rush is right, in this case, although this analysis could likely be applied to any party.  As Goebbels was reported to have said, there's an easy formula for the State - convince the people of the danger (hunger, poor quality medicine, dangerous foreigners, dangerous immigrants), and then trade them 'just a tiny bit' of liberty for the security/taxation they will so gladly provide.

Thursday, April 22, 2010

Equal Pay - They Don't Want It!

"An important question then for women on Equal Pay Day: Would perfect labor market equality really be worth it if it meant working 280 more hours per year, having a much greater chance of being unemployed during recessions, and being significantly more exposed to work-related injury and death?"

If their production is equal, then are they not bold enough to negotiate for equal pay?  Or are they simply better at work life balance?  The whole notion of "equal pay" is an insult to everyone.  Life is hard, make your choices, live your consequences, respect others enough to assume that they can do the same.

More evidence that women decide differently than men.  Danger?  They seem to rather not, at least not yet.

Wednesday, April 21, 2010

Judging Judges

"According to the story, Senate Judiciary Committee Chairman Pat Leahy's political strategy will be offered up in a simple question: "Do you share our concern about the fact that the court always seems to side with the big corporate interests against the average American?"
"...what Leahy is really asking is this: Do you share our concern that the Constitution, too often interpreted as written, is holding back an empathetic and enlightened progressive agenda?"

"So Leahy, who believes Stevens is a model jurist, likely will ask many piercing questions (How evil is corporate America, Nixon evil or merely Nazi evil?) in defense of average Americans.But I wonder whether the average American believes, like Justice Stevens, that an unelected federal agency, such as the Environmental Protection Agency, should bypass Congress and, by fiat, regulate carbon dioxide, a chemical compound that permeates everything, without any consideration for cost or imposition or the electorate?  Do most average Americans, like Justice Stevens -- who dissented on the landmark Second Amendment case of District of Columbia v. Heller -- believe that once a judge deems something dangerous enough, that judge should empower government to ban it, even though that something happens to be explicitly protected by a constitutional amendment?  Do they believe, like Justice Stevens, that local government should be permitted to throw American citizens off their own property and out of their homes? Do they concur that government should then be able to hand that property over to other private citizens simply because they can pay more taxes? Because, in Kelo v. City of New London, Stevens, writing for the majority, radically expanded the idea of property as "public use."" at April 14, 2010 - 02:57:00 PM

Classic Quotes, Benn

"Politics is the art of looking for trouble, finding it whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy."
--Sir Ernest John Pickstone Benn

Classic quotes who?

"This is stupidity gone to seed."  Author unknown

Taxes and Spending

Reprinted in its entirety.
The Latest from Cafe Hayek <>
Not a Taxing Concept
Posted: 17 Apr 2010 03:18 AM PDT
Here, in full, is Steve Landsburg getting to the bottom of taxing and spending <> :
What a relief. Now that April 15 is out of the way, my tax rate is back to zero for another year.
At least that's the way the President of the United States seems to have it figured-your tax burden, according to him, is measured by what you're paying right this moment as opposed to what you're obligated to pay in the future.
That's the only possible interpretation of his statement last night that Tea Partiers (and others) should be thanking him for cutting taxes. The reality is that President Obama, like President Bush before him, has rather dramatically raised government spending and therefore has raised your taxes. To say otherwise is like saying you got your new swimming pool for free because you put it on your credit card.
Once the money is spent, the bill must eventually come due-and there's nobody around to foot that bill except the taxpayers. We are locked into higher current spending and therefore locked into higher future taxes. The president hasn't lowered taxes; he's raised and then deferred them. To say otherwise is-let's be blunt-a flat-out lie.

Monday, April 19, 2010

California's Death Spiral

Who's this going to be more of a disaster for - the employees who cannot possibly get what they've been promised, or the citizenry who's government will be bankrupted for trying?  I say again - it is a moral abomination for politicians to buy off large sections of a constituency by promising a retirement that cannot be estimated, likely cannot be paid, and will wreck the economy for the citizenry.  The only ones unhurt in the process are the politicians making the unsustainable promises.

"A study by Stanford University's Institute for Economic Policy Research(PDF) finds that California's fiscal problems go well beyond itscatastrophic budget deficit, which today stands at roughly $20 billion.

The state's biggest public pension funds -- those of the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS) and the University of California Retirement System (UCRS) -- are in a lot deeper trouble than they've been letting on.

What's most disturbing is the lack of transparency on the part of the pension funds, as they have reportedly overstated their financial health as a matter of course.

...we estimate the combined funding shortfall of CalPERS, CalSTRS, and UCRS prior to the 2008/2009 recession at $425.2 billion... At the time of this writing, the funds have not released more recent financial reports, but due to the previously mentioned $109.7 billion loss the three funds collectively sustained, we estimate the current shortfall at more than half a trillion dollars.

That figure represents six times the amount of the total California state budget.

The study points out that the huge number of baby-boomers, whose retirements approach by the day, translates to a potential disaster in only a few years.

The chief actuary for CalPERS says the current pension situation is "unsustainable". And the state treasurer, Bill Locke, believes that without reform, these pensions will bankrupt the entire state."

General David Patraeus

Mark Bowden on Patraeus - If you ever cared about the topic, you will enjoy the read. Bowden is as good as ever. I had eye leaks reading several spots.

When in Iraq, I watched the Change of Command from Casey to Patraeus - wondered what it must feel like to have, what felt at the time, the future of his nation in his hands. Right man, right time, and incredible turn of events.  I feel incredibly grateful ... indescribably grateful.  Thank you, Sir.

Sunday, April 18, 2010

More Obamacare Surprises

"By granting amnesty for at least 10.8 million illegal immigrants, the Democrat health care bill will cost $162 billion a year -- or $1.62 trillion, which the CBO never took into account."

Not my favorite blogger, but who could doubt the charges.  This thing will be nasty ...

Excellent Polspeak AKA 'Nonanswer'

"Barney Frank's Fantasy World, Posted: 28 Jan 2010 09:07 PM PST,

At Big Think <> , they used one of my questions in their interview with Barney Frank:  Question: How can Fannie and Freddie be structured to avoid the moral hazard problem and a too-cozy relationship with regulators? (Russ Roberts, Café Hayek)
Barney Frank: Yes, in 2004 the Bush Administration significantly increased those housing goals and particularly ordered Freddie and Fannie to start buying up a lot of low income individual mortgages, and I opposed it at the time.
Interesting answer. Here is the relevant data on the housing goals from my soon (really) to be finished essay:
Starting in 1993, Fannie and Freddie have affordable housing goals―30% of Fannie and Freddie's purchases of loans have to be loans made to borrowers whose income was below the median income in their area. These are interim goals. In 1996, the interim goal becomes firm at 40%. In 1997, the number rose to 42%. In 2001 it rose to 50%. The Bush Administration increased this number to 52% in 2005, 53% in 2006, and 55% in 2007.
So it turns out there was no increase in 2004 and a minimal increase in 2005. The big increase was in 2001, the legacy of Clinton and Andrew Cuomo his HUD chief. Of course Bush embraced the housing goals and did increase them. But "Bush in 2004″ is a red herring.
I'd love to see the evidence that Frank "opposed it at the time."
And none of Frank's answer addresses the moral hazard problem�that people kept lending to F and F as the quality of their portfolio deteriorated because they knew the government stood behind them."

Saturday, April 17, 2010

The Inept Politician's Remedy - Take What They Need

""We need more money. You have more money. We have more guns and prisons than you have. So hand it over." That's the root message that Sacramento is now blasting throughout the Golden State.
This arrogant attitude is not new to those in power. Throughout history, kings, queens, caliphs, czars, parliaments and congresses, being vested with monopoly power over the legitimized use of force, have been naturally inclined to deploy that force to serve their own ends. And to maintain as much support as possible among the productive populace (without whom there would be no wealth to tax or to otherwise confiscate), these sovereigns typically justified their predations as being for the greater good of the people."

Corruption of Science

The scientific method - protecting scientists from themselves since recorded history ... if they use it.

Friday, April 16, 2010

"Second, because the way to encourage people to fund projects is to show evidence that they work , not that they are futile and ineffective. One might almost suspect that these groups would prefer maternal mortality to remain high.

Or, as a prominent climate scientist said in another context,

"If we want a good environmental policy in the future we’ll have to have a disaster.""
(Nicely bird-dogged from

One of the ten rules of economics - incentives matter. If we can't take into account these 'interest group' incentives to keep the news bad, we'll never be able to sort out the facts. This is why we should never assume that because 'a majority of scientists thing human actions are causing climate change' that we're getting some beam of truth from a scientifically sterile laboratory. They have incentives to tell us things they want us to hear, regardless of the truth of the matter.

Unintended Consequences Beget Laws Beget ...

more unintended negative consequences ... begets more laws ....

"The partisans on the left who preach with certainty about the effects of the new health care law -- it will reduce the federal deficit; it will allow you to keep your current coverage; it will lower premiums -- speak from ignorance. No one really knows what the bill will do, including the members of Congress who voted for it."
"A new Congressional Research Service study has found that the law appears to boot members of Congress and their staffers off the Federal Employees Health Benefits Program before the alternative insurance options created by the law will be ready."

What more need anyone say about the folly of politicians running a health care system.  Unintended consequences is a runaway train destined for additional future government intervention, just as the mistakes made by past and mostly dead politicians is what created the conditions leading to this most recent affront to liberty.  The most certain prediction to made is that this bill will not do what they think it will.  They insult our liberty to get who knows what ...

The Death Spiral

Hasn't gotten any better since 2003 ....
"Ride the Death Spiral
Vicious cycles in entitlement spending
Julian Sanchez | December 29, 2003
The Long-Term Budget Outlook, released last week merely puts the Congressional Budget Office's imprimatur on what taxpayers under the age of 40 have known for years: We're fucked.
The CBO's projections indicate that our current spending policies will become unsustainable over the next half century. We face a choice between unprecedented rates of taxation, steep (and politically unpalatable) cuts in government benefits, or simply racking up debt until we've crippled the economy while nevertheless requiring some combination of tax hikes and benefit cuts. The last, most insane option is also the most politically probable.
The source of the problem has been long familiar to policy wonks. The American population is aging (and longer lived), while technological developments drive up health costs even as they extend our lives. The pending mass retirement of the Baby Boom generation threatens to make entitlement spending explode like Tetsuo turning into the amoeba-monster.
As CBO Director Douglas Holtz-Eakin told the audience at a New America Foundation event [Real], that means that public policy "auto-pilot is not an option". But there are obstacles to grabbing the throttle.
One is that there are plenty of interest groups eager to peddle the comforting message that nothing is wrong to a populace squeamish about tough choices. The AARP's John Gist is representative of attempts to persuade us that there's no need to fear those beloved entitlement programs. Gist soothingly coos: "Entitlements overall have grown at virtually the same rate (2.6% per year) as inflation-adjusted GDP (2.57%) since 1975, and only two-thirds as fast as income tax revenues (3.84%)." Strictly speaking, this is true, but it's nevertheless grossly misleading.
In 1967, the first year for which the CBO lists numbers for each program, Medicare, Medicaid, and Social Security together accounted for just under half of all federal entitlement spending, which stood at 6.3 percent of GDP. In 1975, the baseline year chosen by the Gist, total entitlement spending had jumped to 10.9 percent of GDP, but the proportions were about the same. The three programs accounted for a quarter of federal outlays. The same three programs are now up to 71.5 percent of federal entitlement spending, and about 42 percent of total spending. Gist's claim is true because he lumps in those burgeoning programs with other entitlements, such as farm price supports, whose slice of the total economic pie has shrunk. Even leaving that aside, Gist relies on ham handed extrapolations of the sort that prove if you haven't died over the past 25 years, you're immortal.
A 1997 poll conducted by The Washington Post, Harvard University, and the Kaiser Family Foundation found that, by large margins, citizens oppose cutting entitlements to balance the budget. As the Post put it, "more than three-quarters of Americans believe the federal budget can be balanced without touching Social Security and Medicare benefits-despite claims to the contrary by congressional budget experts." The experts are right in this case, of course, but economists lack both the AARP's lobbying heft and the public's seemingly unshakable popular faith in fiscal miracles.
At a November Democratic primary debate in Iowa, John Kerry, backed by Dick Gephardt, developed a full-sentence stutter, asking rival Howard Dean over and over again whether he would dare to "slow the rate of growth of Medicare." Dean hedged a bit, then replied: "We will not cut Medicare in order to balance the budget." This leaves the governor a bit of fudge space, depending on whether one counts a decrease in a program's growth rate as a "cut" (reform opponents typically do), but the need to leave that fudge space suggests that reports of the death of the "third rail" in American politics have been exaggerated.
A recent ABC News poll showed mixed reactions to the new Medicare prescription drug benefits, with 32 percent supporting the reform and 38 percent opposed. You might think that's because, as Reason's Jacob Sullum has persuasively argued, the new bill is massively, irresponsibly costly.
But that seems unlikely, as indicated by the higher opposition to the reform among seniors who, unless seized by a sudden pang of guilt for the hole into which they're tossing their grandchildren, have the most reason to favor more "generous" benefits. It seems, that is, that people oppose the bill because it's not irresponsible enough. That squares with a Harris Poll conducted before the passage of Medicare reform this summer, in which 21 percent of respondents favored passing "current proposals even if the benefits will still leave many seniors with big out-of-pocket costs," while 52 percent wanted legislators to "oppose this bill and fight for a more generous benefit, even if it is unlikely to pass any time soon"
What about the tax end, then? The CBO's "rosier" scenarios assume that the current Alternative Minimum Tax remains unchanged. The AMT, which now accounts for only 2 percent of individual income tax liability, would acount for 20 percent by 2050. During the same period, because the tax isn't inflation indexed, it would begin creeping down the income brackets: Whereas some 2 percent of U.S. households are currently subject to the AMT, it would affect 70 percent by 2050, yielding a de facto tax hike. Federal tax receipts eventually rise to almost 25 percent of GDP under this scenario.
Economist John Maynard Keynes once quipped, in response to critiques of the long-term effects of his policies, that "in the long run we are all dead." In the context of entitlement programs for the elderly, that puts a particularly sinister spin on the phenomenon Milton Friedman called " the tyranny of the status quo." New benefits may be debated when first introduced, but for both psychological and political reasons, become near impossible to eliminate once in place. But the same is true, to a lesser extent, when taxes are at issue. The prospect of a 9 percentage point rise in federal tax reciepts is also unlikely to be popular. But thanks to the corporate fictions we call "countries," politicians can dodge the bullet-for a while-via rising debt. Of course, this only makes matters worse. As the CBO report observed, "The longer that lawmakers delay acting to counter an unsustainable budgetary situation, the larger the spending cuts or tax increases will eventually have to be."
And there's the rub. The more dire the long term problem grows, the greater the cost, and the political resistance, of doing something to fix it now. So, for instance, debate over private account reforms for Social Security stalls on the size of "transition costs," which are much less than the cost of not reforming, but must be borne in the present. The question now is whether we've passed the point of no return: Whether the near-term pain required to fix things will continue to multiply with the long-term cost of inaction at a rate that keeps us locked on course. Perhaps, sometime soon, citizens will be struck with the spirit of civic and intergenerational responsibility, bite the bullet and clean up the mess their predecessors made. Or perhaps, if we're lucky, the scam will last long enough for us to pass the bill on to our kids."

Thursday, April 15, 2010

Choosing, Owing and Liberty

"She Chose
Posted: 06 Feb 2010 10:58 AM PST
Thanks to Andrew Garland for this link <> , which provides details about Melanie Shouse, the St. Louis woman who once worked for the Obama campaign and who died last week of breast cancer.
Contrary to the implication that I drew in my previous post <> , Mr. Obama did not know Ms. Shouse, so I was off-base to suggest that perhaps he should have personally paid for her medical care.  Ms. Shouse should have paid for it.
All the available evidence suggests that she could have afforded to do so. First, - and contrary to what Mr. Obama said - Ms. Shouse did have health-insurance. It was a catastrophic-coverage policy. That is, annually her insurance paid nothing until her medical expenses hit $5,000. So the most that she could have been out of pocket each year is $5,000.  That's not a small sum of money, but nor is it a sum out of reach for most Americans.  Second, Ms. Shouse and her boyfriend, for 12 years, owned their own small business. I have no idea how profitable it was, or is, but because they'd been in business for 12 years I infer that it did not leave them anywhere close to destitution.
Ms. Shouse also found time to volunteer to work for Mr. Obama's presidential campaign. This is time that she could have instead spent working at a job that paid her extra income. But, as reported, she chose to contribute, free of charge, some of her time to a political campaign.  It's quite possible that the value of the hours that Ms. Shouse contributed to Mr. Obama's campaign exceeded the cost she would have incurred had she gone to the MD when she discovered a lump in her breast.
Third, Ms. Shouse knew that she had a lump in her breast and she knew that such a thing put her life in severe jeopardy. Yet she chose not to spend up to a maximum of $5,000 annually (and likely less) to check this malady out with a physician.  Yes, she excused her failure to see a physician because, allegedly, she couldn't afford it - that is, allegedly she couldn't afford to pay up to $5,000 annually to save her life!
Her allegation is not believable. Again, there's no evidence that she was destitute. She was wealthy enough to donate that most valuable of commodities - time - to a political campaign. And her total, out-of-pocket annual expenses had she chosen to visit a physician when she discovered the lump in her breast would likely have been far lower than $5,000 <> .
Fourth, she chose to buy a catastrophic-coverage policy, probably because the higher costs of policies with lower deductibles were not worthwhile for her to pay. Given her choice, surely she and her boyfriend knew - or ought to have known - that each year there is a good chance that one or the other or both of them will require routine (that is, non-catastrophic) medical care. Could they not have saved a small sum of money each year to cover this obvious likelihood?
Here's the bottom line: Ms. Shouse chose not to pay for medical attention when such attention might well have saved her life. If she was unwilling to pay no more than $5,000 annually to save her own life, why should the rest of us be forced to pay for what she, obviously, judged not to be a worthwhile expense for her herself to incur?"

Municipal Death Spiral

The next bubble, financial crisis, or whatever you'd like to term it is ... the Death Spiral.

"Former mayor Richard Riordan has been roiling the civic waters by arguing that the surest -- and perhaps the only -- way out of Los Angeles' fiscal crisis is a declaration of municipal bankruptcy, which he believes ought to come sooner rather than later."
"In a conversation with The Times over the weekend, Riordan argued that bankruptcy may be the only way to attack the structural problem gnawing the heart out of the city budget: unsustainable public employee pension costs. Currently, Riordan says, the city is struggling to meet its pension obligations, and that's assuming it will receive 8% annually on the money invested on retirees' behalf. In fact, the average return over the past decade has been just 4%. Over the next few years, L.A. may be looking at $1.5 billion in pension obligations it can't meet. "We need some adults to come alive in the city and to talk through how to meet that liability," he said. "If that doesn't happen, we shouldn't rule out bankruptcy."

This bit is absolutely fascinating. "Moreover, while federal law lets bankruptcy judges reduce negotiated pension and health benefits in the private sector, it forbids changes in public employees' agreements.
So the Feds have decreed that no matter how badly you are treating the citizenry, or badly their economic lives are affected, you cannot undo the absurd over-promises of long dead politicians to make right the local budget.  Could there be a better illustration of the absurdity of promising to pay municipal, state and local employees a set future amount?  How about a constitutional amendment that politicians can't promise the money of anyone not yet born to anyone else for anything.  How about it further specify that, the incompetence of politicians to manage these things being a given, all government employees have to work for the wages they earn today, and save for their own futures just like the citizens they "serve?"

"This year, the city will need to come up with $423 million to cover those costs. Over the next five years, the annual bill escalates thus: $526 million (2011-12); $643 million (2012-13); $788 million (2013-14); $902 million (2014-15). In 2015-16, Los Angeles will have to come up with more than $1 billion just to pay its retired police officers and firefighters their pensions and to cover their healthcare. As Hansell put it, "Those are astonishing numbers." They're also unsustainable.
"Who wants to live in a city without decent police or fire protection or libraries or parks? Unless we get these pension costs under control, we won't be able to afford any of those things."
"Nobody likes any of these choices, but the question now is whether we want to make the future of this city and its people hostage to the bad decisions of the past."",0,3958891,print.column

Classic Quotes - Jefferson

"If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be."
~ Thomas Jefferson courtesy of

A bit smug for my taste but true nonetheless.

Mathews Headline

"Matthews: GOP Uses Dishonesty To Score Political Points"
This is a headline?
NO! This would be a headline:

In a stunning turnaround to 200 years of precedence, the GOP spoke the unvarnished truth today, with no equivocation, hedging, or clever parsing. Democrats were initially so thrown off, they could muster no response. Their suspicion was reflected in late, terse response: "The GOP clearly will stop at nothing to win elections! We, however, have principles to guide our operations. We will not engage in some 'race-to-the-top' truth telling escalation!"  The initial results show that voters will continue the time tested tradition of only voting for "their" party, truth be damned.

Wednesday, April 14, 2010

Presidential Legacy - Who Cares and Why?

The article linked below asks whether "Bush will be the next Truman." Why would anyone possibly care about the 'legacy' of a president?  Could there be anything less relevant to a free man than how history of a politician will be written?  We already know exactly what will be written by 'history' - anything and everything, as suits the needs of the authors.

There is one group with an interest in gaining our interest on this topic - those who wish to ensnare as participants in 'their' party.  They benefit when we delude ourselves by thinking any political aspirant is serving anything greater than their own ambition.

By our human need to identify with those in power, we seduce ourselves to care about them as if they mattered in some special way.  This does us great disservice by displacing those who really do matter in our lives - our friends, family and those in our circles of influence and/or control.

"Fair Trade" Nudge Nudge Wink Wink Say No More

Question: Hey you libertarians, what's your beef with Fair Trade? It is voluntary!!

Answer: "They're right that Fair Trade is just another form of voluntary free trade and that the hostility some libertarians express toward the idea of paying more for coffee to help poor farmers is distasteful at times. However at the risk of being one of those smug contrarians Henley dislikes so much, I'm going to defend the libertarians on this one. Partially, anyway.

The simplest reason to object to Fair Trade coffee is that it's just a stupid name. It suggests that all other coffee is unfair and exploitative. As a sign at one coffee shop I visited put it, "Fair or Unfair? It's that simple." Well, it's not that simple. And if, as I do, you think the insights of Adam Smith, David Ricardo, and other economists are hard-won intellectual achievements, then a label that implicitly opposes those ideas is going to rub you the wrong way. This could have been avoided if we labeled Fair Trade as something like "Charity Coffee" instead, which would be more accurate and avoid disparaging any economic theories. But then it might not have caught on as well because buying it wouldn't let people signal their opposition to globalization, which brings us back to why so many libertarians dislike Fair Trade in the first place."