Monday, January 31, 2011

Shut 'Em Down

For years we've heard breathless reports about the potential for cyber-attacks to shut down electric grids and transit systems. Even minor cross-border digital incidents have gotten tabloid treatment.

Now we know what a real cyber-attack looks like. And it looks pretty good from here.

This one came at the welcome expense of the Iranian nuclear program. It involved no loss of life, invasion of territory or release of radioactivity. Yet the "Stuxnet" computer virus is said to have set back
Tehran's nuclear arms race by as much as four years.

Geek Squad 1; Rogue State 0.,0,3749516.story


Classic Quote, Penn

I expect to pass through life but once. If therefore, there can be any kindness I can show, or any good thing I can do to any fellow being, let me do it now, and not defer or neglect it, as I shall not pass this way again.~William Penn

Friday, January 28, 2011

On The Wrong Side of Sputnik

Obama says that "none of us can predict with certainty what the next big industry will be or where the new jobs will come from." And by "none of us," he means you. Because Obama proceeded to give a speech that laid out exactly what needs innovating, which sectors will be innovative, where new jobs will be found and how we are going to get to those jobs. Can you say high-speed rail? The president can. He mentioned railroads six times, because how else are we going to win the 19th century back?
Actually, this fixation with building an extraordinarily expensive, outdated and tax-funded rail system is a great example of why central planning undermines progress.
By the time the president's promise of high-speed Internet for everyone comes to fruition, we'll probably be teleporting like Sulu. But at the very least, let's not re-fight the battles of the early 20th century. Someone already invented airplanes and cars, which, unlike trains, can be pointed in any direction we want, whenever we want, as often as we want.

I am glad not to be in the President's shoes.  I'd have to stand up there and say I know what to do, and that I can direct that it be done, but neither thing would be true.  Sad, ugly, and for me, humiliating.  Perhaps the President really thinks that he knows these answers - ?

Yes, the Soviets were the first to send junk and animals into space -- a race they lost in impressive fashion when it was all over. But were we really ever "behind"?
Of course not. The Soviet Union's intense effort to erect a facade of accomplishment was achieved by investing in an unnecessary, costly, symbolic, ideology-driven project that did nothing for the aspirations of its citizens or its stagnant, dying economy.
Let's be sure we're not on the wrong side of the Sputnik moment.

Of Course It Will Fail

So despite committing more than a trillion taxpayer dollars over the next decade to health reform, Obamacare will leave tens of millions uninsured, drive the cost of care up for virtually all Americans, and put the federal government in charge of ever more of our health care decisions.

As the Obama administration grapples with implementing its signature piece of legislation, the case for repealing it is becoming self-evident. Public support for the law continues to erode. Lawmakers should follow the House's lead and repeal this monstrosity.
We are but mortals, and none of us knows even a fraction of what would be required to design and implement a system for delivering health care.  The hubris inherent in such an attempt should be embarrassing.


An additional benefit of a new voluntary bankruptcy law for states is that its mere existence may deter any state from ever availing itself of its provisions. If government employee union bosses know that they could have all their contracts annulled under federal bankruptcy law, either through a plan of reorganization voluntarily entered into by state leaders or by the voters through proposition, they may be far more accommodating with state governments to restructure government employee union workforces, pensions and work rules.

Federal bailouts must come to an end. Federal taxpayers in states that balance their budgets should not have to bail out the irresponsible, pandering politicians who cannot balance their budgets. Congress must allow a safe, orderly way under federal bankruptcy law for states to reorganize their finances.

He proposed huge federal "investments" in transportation (high-speed rail), "green" energy, high technology and other areas. But soon after calling us to rise to our "Sputnik moment," he proposed freezing domestic spending. As The Associated Press noted, either he's serious about the spending increases he calls investments, or the spending freeze, but he can't be serious about both because doing both is impossible.

When moments later Mr. Obama said, "We are the first nation to be founded for the sake of an idea," one felt the ghost of the Gipper hovering nearby. The president called forth more of those spirits, praising "the idea that each of us deserves the chance to shape our own destiny. That's why centuries of pioneers and immigrants have risked everything to come here."

And: "We need to out-innovate, out-educate, and out-build the rest of the world." Yes!

And: "Our free enterprise system is what drives innovation." Oh, yes!

Even an Obama naysayer was thinking, Go for it, Mr. President. Unleash our nation of pioneer entrepreneurs with incentives to work, save and invest. (But why the weird slap at the all-American competitiveness of the Super Bowl?)

For a while Tuesday night, it appeared Mr. Obama would replicate Bill Clinton's almost sci-fi ability to absorb his opposition's best ideas, such as welfare reform, and re-infuse them into the body politic as his own. But no. We got high-speed rail and solar shingles.

"Our budget will make long overdue investments in priorities-like clean energy, education, health care, and new infrastructure." He extolled "new jobs that pay well" such as "installing solar energy panels and wind turbines."

This isn't a vision. It's an obsession.

Sending the completed trade agreements with Colombia and Panama to Congress for ratification should have been a lay-up for a president seeking the center. That's not happening.

What's ahead? Mainly one thing: November 2012.

If the State of the Union disappointed policy wonks, it's because the Obama presidency has entered full campaign mode. His State of the Union was a road map to a second term. Draw the Republican Congress toward the post-November spirit of reform on spending, entitlements and taxes, let these ideas twist in the wind of endless negotiation, pocket the "bipartisan" effort, and run out the clock to a three-point November victory.

Rather than work hard, live within his means and save for the future, a dissolute student decided to invent a system for beating the bank at roulette. After months of experimentation with betting patterns, his quest bore fruit: a foolproof way of creating riches - or so he thought.

The problem was, in order to exploit his genius a bankroll was required. At this point, a credulous father was inveigled into the scheme. Suspending disbelief, the hapless parent signed a six-figure cheque and wished his son good fortune as the boy left for Las Vegas.

After a few days with no contact, Dad started to fret and sent the lad a tentative message: "How are we doing?" No reply.

A week later, he tried again, only this time was rather more panicky: "What's happening?" Still no reply.

Finally, the desperate man sent an ultimatum: "Get in touch - or else!" His delusional offspring eventually replied: "Delighted to inform you system is working. Please send more money."

Greece has barely scratched the surface of a sprawling and corrupt public sector, where standards of book-keeping shame a country that lays claim to the oldest counting board yet discovered (300BC).

Greece is learning the hard way that cutting the budget deficit and reducing overall debt are not the same thing. There comes a point where austerity alone cannot deliver a solution, because the burden of unaffordable obligations is rising faster than savings can be made. Long after the bullet has been bitten, total mortgage arrears continue to deteriorate.

As long as Greece remains locked in a currency that is deutsche mark with only a hint of garlic, its economy cannot recover. A lethal combination of rising unemployment, falling wages and an exodus of talent will force it to confront reality. That will occur when either the voters decide they can no longer stand the hair shirt or the country's creditors run of out patience.

The same will apply to Portugal and, eventually, Spain. Thus the euro, as we know it, is finished.

We cannot have a useful debate on the role of government -- what it should do, for whom and at whose expense -- if Americans are highly misinformed. Obama should have dispelled some common budgetary myths.

The bill would replace the spending levels for 2011 authorized in December in a continuing resolution that expires in March with spending at the 2008 levels, for all lines in the budget except defense, homeland security, and veterans. That would save $80 billion just this year.

Then, the bill would cancel unused spending authority in the 2009 stimulus bill, for a savings of $45 billion. The Republican proposal would privatize Fannie Mae and Freddie Mac, saving $30 billion more.

The largest saving comes from a 10-year freeze at 2006 spending levels for nondefense, discretionary budget programs-agriculture, national parks, medical research, waterways, environmental protection, but not for benefits such as food stamps, social security, and Medicare. This would save $2.3 trillion in the years 2012-2021.

Savings would come from cuts in the federal workforce, both in numbers of workers hired and in pay, as was suggested by Professor Paul Light of New York University . The workforce would be reduced by 15% through attrition, with only one worker hired for every two workers who quit or retire. In addition, existing workers would not be given automatic annual pay increases.

Mr. Jordan should be credited with doing the tough work of going through the budget and identifying specific cuts. The bill lists more than 100 programs slated for elimination or reduction.

Unlike Mr. Obama's plan, transportation is left to the private sector. The bill would cut, annually, $1.56 billion in subsidies for Amtrak, $2.5 billion for intercity and high-speed rail, and $2.5 billion for New Starts Transit. In addition, the federal civilian employee travel budget would be halved, saving $7.5 billion a year.

Many liberal sacred cows would be not just gored, but put down permanently. Who needs the Corporation for Public Broadcasting, with annual subsidies of $445 million, when we have the vast cornucopia of broadcast, cable and Internet offerings? Why do we need the National Endowments for the Arts and the Humanities (together, over $330 million annually in spending) when corporations fund art exhibits and concert series?

International subsidies, such as the International Fund for Ireland and Economic Assistance to Egypt, also get the hatchet, as well as contributions to the Organization for Economic Cooperation and Development and to the Intergovernmental Panel on Climate Change.


When Mr. Obama talks about reducing the deficit, it's almost comical. The changes he proposes are so minuscule in terms of their effect on the budget that it's as if he is saying he can throw a rock to the moon. This country's deficit is spectacularly beyond his control. Only really painful surgery -- drastic, draconian cuts in Social Security and in Medicare, and wildly higher taxes on upper income people -- will come even close to fixing the problem.

Step back for a minute from the day to day policy fights and consider how an economy can grow faster. One way is to get people to work harder or longer. The government can contribute here with policies that reward work and investment, such as lower taxes.

A second route to faster growth is innovation, which means inventions or new processes that increase productivity. Government can help with money for basic research, but private investment, human ingenuity and luck are the main drivers.

The third way is through the more efficient use of capital, both human and monetary. These resources are scarce in any economy, and growth will be fastest if they are allowed to find their highest return. If resources are allocated to less productive uses or create asset bubbles due to bad policy, then overall growth will be slower than it should be.

In our view, this third point has been the largest but least appreciated problem in the U.S. economy in recent years. First the Federal Reserve's subsidy for credit and other policies pushed resources into the financial industry, and especially into real estate. When that bubble burst, triggering the 2008 financial panic and recession, the U.S. responded over two years with a huge expansion of the federal government.

So is this just a public relations gambit designed to win back independents and assuage business concerns to ensure money and votes in 2012?

Of course it is. The real question is will there be any follow-through?

A careful reading of Obama's words suggests he's still stuck in a central-planning mindset. Obama introduces each new appointee as someone who knows how to "grow the economy" and create jobs. The president has been pressing his economic team to come up with job-creating ideas "that excite me," according to Peter Baker's cover story in the New York Times Magazine on Sunday.

Obama doesn't need any more advisers to tell him the U.S.'s 35 percent corporate tax rate, among the highest in the world, puts the nation at a competitive disadvantage. Or that taxing overseas profits when they're repatriated to the U.S. doesn't encourage businesses to bring that money home and invest here.

Bureaucratic Suicide

On the regulatory front, Obama's intention to submit all federal rules and regulations to a cost-benefit analysis sounds nice, but what bureaucrat has ever declared himself redundant and written himself out of a job?

It reminds me of a joke about the tourist who goes to visit the Agriculture Department. As he's walking down a long, empty hallway, he hears the sound of crying coming from an office. The tourist peaks his head in and asks the employee, sobbing at his desk, "What's the matter?"

"My farmer died," the employee replied.

In the 1700s, the U.S. was an agrarian nation with 90 percent of workers engaged in farming, according to Veronique de Rugy, senior research fellow at George Mason University's Mercatus Center in Arlington, Virginia. Today the U.S. economy has highly productive agribusinesses employing less than 2 percent of all (legal) workers. Yet "the federal government continues to subsidize agriculture," de Rugy said. "Spending for the Department of Agriculture in real terms went from $95 billion in 2000 to $142 billion in 2010."

The Republican "Pledge to America" promised to cut "at least $100 billion in the first year alone," notwithstanding "exceptions for seniors, veterans and our troops." This was never a serious proposal, given that defense, entitlements and other mandatory spending consume about four-fifths of the budget. But it was a nice round number that sounded good.

Apparently it was music to the ears of some of the small-government Republicans -- perhaps they should be called no-government Republicans -- in the House majority, because they are pressing the leadership to make good on this reckless promise. According to The Washington Post, affected agencies would suffer a 30 percent cut in funding over the next seven months.

Do Americans really want the effectiveness of, say, food safety inspection to be eroded by 30 percent? What about air traffic control? I didn't think so.
As to this last, who can believe food safety is insignificant enough to allow the government to run it?  I for one think food safety is VERY IMPORTANT, far too important for a bunch of government buffoons to be in charge of it. 

What's That You Say?

This entire pantomime about debt reduction came after the first half of a speech devoted to, yes, new spending. One almost has to admire Obama's defiance. His 2009 stimulus and budget-busting health care reform are precisely what stirred the popular revolt that delivered his November shellacking. And yet he's back for more. It's as if Obama is daring the voters - and the Republicans - to prove they really want smaller government. He's manning the barricades for Obamacare and he's here with yet another spending - excuse me, investment - spree. To face down those overachieving Asians, Obama wants to sink yet more money into yet more road and bridge repair, more federally subsidized teachers - with a bit of high-speed rail tossed in for style. That will show the Chinese.
And of course, once again, there is the magic lure of a green economy created by the brilliance of Washington experts and politicians. This is to be our "Sputnik moment," when the fear of the foreigner spurs us to innovation and greatness of the kind that yielded NASA and the moon landing.
Apart from the irony of this appeal being made by the very President who has just killed NASA's manned space program, there is the fact that for three decades, since Jimmy Carter's synfuel fantasy, Washington has poured billions of taxpayer dollars down a rat hole in vain pursuit of economically competitive renewable energy.

Read more:

Infamous Quotes, Goebbels

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”
Joseph Goebbels, Reich Minister of Public Enlightenment and Propaganda
Courtesy of

Thursday, January 27, 2011

Public Employee Death Spiral
Some 30 states face a structural budget gap, where ongoing expenses are not covered by revenues. California, for instance, projects a structural budget gap of over $20 billion in fiscal 2012, $22.4 billion in 2013, and $20.4 billion in 2014. New York's projected gap is $9 billion in 2012, $14.6 billion in 2013, and $17.2 billion in 2014.
States have shied away from making unpopular cuts in core services and state workforces beyond what they have already done. They sowed the dragon seeds in the fat years by buying off service unions with generous pensions, employee contracts, healthcare, pay, and benefits. According to a study by Daniel DiSalvo, a political scientist at City College in New York, state and local workers now earn an average of $14 more per hour in wages and benefits than their private sector counterparts. In general, the average state government worker reaps retirement benefits several times richer than a counterpart in the private sector, a critical reason why public pension costs have become unsustainable. For example, state and local governments contributed $3.04 per hour toward each employee's retirement in 2007, according to U.S. Labor Department figures, while private employers paid 92 cents an hour.

Even worse, "governments" don't pay for anyone's retirement, the citizenry does.  Private employers don't pay for retiree benefits either, the customers who buy their products do.  Viewed through that lens, it makes perfect sense that government employees are paid more - there's no competitive force holding their pay down.  In a private employers calculus, paying more than the other guy brings a comparative disadvantage in product pricing; the rubber actually meets the road somewhere. 

One might argue that the citizenry are paying for the private employer's retirement benefits also - but the key difference is that the arrangement is voluntary.  I don't have to pay a dime of a private retiree's benefits unless I am willing to pay the market price for the products the retiree's company sells. 

Wednesday, January 26, 2011

Sowell and Perspective

People today who complain about the automobile's pollution have no idea how much more pollution there was before the automobile came along. In New York City, for example, the 40,000 horses that were the backbone of the city's transportation, before the automobile, produced 400 tons of manure per working day, along with 20,000 gallons of urine.
At one time, people like Rockefeller, Edison, Ford and the Wright brothers were regarded as heroes, for having opened vast new possibilities for other human beings. The fact that they got rich doing it was an incidental part of the story.

It's remarkable how good humans are at relativizing progress, assuming the current state is normal, and developing an expectation that things should be better than they are - no matter how much better things have become. 
The article is also a great example of how folks make a lot of money absent government collusion - you have to provide a product or service that a lot of folks are willing to buy at a price that allows for a profit.  In other words, you can only make a lot of money if people choose to give it to you.  It's the pinnacle of cooperative human behavior.

Voodoo - It's the Only Explanation

But then, we were among the few in the media who saw through Obama's facade in 2008, who feared he'd put the U.S. on a path that could only be described as socialist (the day after the Nov. 5, 2008 presidential election, we expressed our concern that "we may be installing the first president who openly favors 'change' that ... can only be described as socialistic") and then watched as it all came to pass.
Based on the polls, however, many Americans are paying no more attention now than they were two years ago. An NBC/Wall Street Journal poll in January found that fewer people — 45% — consider Obama to be "liberal" today than they did during the 2008 campaign, when 56% attached that label to him.

How can folks be confused about the President's political orientation?  Every sentence he says, there's a hidden "with the power of the Federal Government" attached - for example, "We will move forward together (with the power of the Federal Government) or not at all." 

I'm going with voodoo.  It's the only explanation for how so many can continue to miss what is his defining characteristic - he has a seemingly unlimited faith in what can be accomplished through a Euro style application of the coercive monopoly of the state.

Classic Quote, Bacon

"Imagination was given to man to compensate him for what he is not; a sense of humor to console him for what he is." -Sir Francis Bacon

Tuesday, January 25, 2011

Don't Worry, You'll Be Happy


This was a great read, in particular because I'm 46.  Looks it's all gravy from here!

So, we've identified a human pattern.  How long until politicians try and use this data to justify some additional use of the coercive power of the state?

Monday, January 24, 2011

Learning More About the "Lie of the Year"
Ok, so does anyone really doubt that, after implementation of Obamacare, the government holds the tools to eliminate private competitors when it decides to? 

Classic Quote, Roosevelt

"Far and away the best prize that life has to offer is the chance to work hard at work worth doing."
--Theodore Roosevelt

Sunday, January 23, 2011

Classic Quote, Emerson

"As to methods, there may be a million and then some, but principles are few.  The man who grasps principles can successfully select his own methods."  Ralph Waldo Emerson

Saturday, January 22, 2011

We'll Have To Pay For It

But, I ask timorously, if someone says “It’s my life and I’ll eat if I want to”, isn’t that their right? “It is us who’ll pay for it, because that person will get ill,” he retorts. “It isn’t about shape; it’s about being well.”

This is where it will inevitably go - with nationalisation will come the sense that "we" have an entitlement to "their" behaving in ways which are "healthy."  Thus, "we" will be able to justify using the coercive force of the State in unimaginable ways to coerce "healthy" behavior. 

Nevermind the fact that governments know less about what healthy behavior is than virtually anyone.

Friday, January 21, 2011

Classic Quotes, Madison

"I believe there are more instances of the abridgment of freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations." 
- James Madison


Wednesday, January 19, 2011

Joke Becomes Reality

A man of twenty-one with learning disabilities has been granted taxpayers’ money to fly to Amsterdam and have sex with a prostitute. Why not? His social worker says sex is a “human right” and that his client, being a virgin, is entitled to the support of the state in claiming said right. Fortunately, a £520 million program was set up by Her Majesty’s Government to “empower those with disabilities.”

I've been joking with friends about this for months, but didn't think I'd see it come to fruition so fast!  But really, if we're going to use the coercive force of the state to take money from the subjects and apply that money with the benefit of governmental wisdom to alleviate suffering - what greater reduction in suffering could there be than to 'empower' young men to avoid the suffering of sexual deprivation!?! 

Steyn's a genius, if a bit too enamored of using words like 'we' when he means 'the political class with the consent of those who are mesmerized by them'.  But this piece covers a lot of ground and is worth reading more than once, if one can hold off the urge to feel as depressed about things as Steyn seems to.

Tuesday, January 18, 2011

Classic Quote, Thoreau

"If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours."
--Henry David Thoreau

Monday, January 17, 2011

Keynes, An Economist?

Keynes was no brilliant economist, if indeed he can be said to have been an economist at all.  He was instead a brilliant public intellectual who knew just enough economics to enable him to transform a decades- (centuries?-)old mistaken understanding of the economy held by business people into “the new economics.”
This mistaken understanding is an understandable result of being a businessperson: the greater is the demand for your product, the better is your business.  And the better is your business, the more workers you hire and the more of other inputs you buy – thus making your suppliers’ business prospects better, too.

Sunday, January 16, 2011

Dr. Boudreaux is On A Roll This Week

El Hombre
All the posts at Cafe Hayek are on target this week, go read them all!  But this one is my favorite.

"So do tell: why are we supposed to honor such people simply because they are elected to the so-called “highest office in the land”?  Why are we expected to look to such scoundrels to inspire us – to advise us – to comfort us – to govern us – to commit our sons, daughters, and resources to wars – to define us – to rule over us on thousands of matters that touch daily upon our pocketbooks as well as upon some of the most intimate aspects of our lives?
"In no field of human endeavor other than politics is success at cupidity, duplicity, deception, double-dealing, and general depravity positively celebrated and rewarded – and so handsomely to boot."

Monday, January 10, 2011

Classic Quotes, Ford

"Obstacles are those frightful things you see when you take your eyes off your goal."
--Henry Ford

Saturday, January 8, 2011

The costs of doing drug business?

Incredible picture into how far south the prescription/insurance cycle has gone - this kind of system could only be sustained with government interference.  The lady's insurance should know far more about these supplements than Dr. Davis does; at least the new provider seems to be asserting SOME common sense.

Thursday, January 6, 2011

Classic Quotes, Buddha

"However many holy words you read, however many you speak, what good will they do you if you do not act upon them?" -- Buddha

Wednesday, January 5, 2011