Monday, October 31, 2011

Supply and Demand

Last week, McCluskey put out a paper that concluded that when government bestows more aid, institutions benefit far more than students. The College Board figured that real average tuition rose some $5,500 for public colleges and $17,800 at private institutions from 1980 to 2010, while total student aid increased comparably, by $8,165. The phenomenon predates this administration. The College Board reports that for the past decade, college tuition and fees have exceeded inflation by 5.6 percent a year. That's where McCluskey believes increased financial aid goes.
"There is no question," McCluskey wrote, "that colleges and universities have been raising their prices at a very brisk pace in recent decades, and that those increases have largely nullified aid increases."

"Average" student debt is $24,000.  This is the realm of wondering whether a degree is worth what it costs.  Can you get enough technical skill to get a career for half that level of debt?  How much non-debt expense is represented in that $24,000 figure?  What is the purpose of a college degree anyway?  Education?  Technical training?  An experience of transition that is stimulating and enriching and perhaps a bit safer than otherwise being 18-22?  A chance to hobnob with the peers of the wealthy? 

It seems pretty clear that the institutions of education, public and private, will get a day of reckoning when the Federal spigot begins to dry up.  Like airline deregulation and the housing bubble, federal intervation always leaves a hangover.

Students, though, may get it better when colleges can only charge an amount equal to how much their product is valued in the marketplace - vice 5.56% "more" annually.

Thursday, October 27, 2011

In A Battle of Wits ...

Mr. Robinson might be in the hurt locker.  Not that he's wrong in his assessment of politicians:

"...with the blowhards such as .... who, out of ignorance or perceived self-interest, are willing to play politics with the Earth's future. They may concede that warming is taking place, but they call it a natural phenomenon and deny that human activity is the cause."
Here, Mr. Robinson is on unassailable ground.  Being successful in politics quite often implies one is willing to do what it takes, whatever it takes, to get elected to office carrying the banner of any party.

And given that back drop, Mr. Robinson does the only rational thing (OK, not actually rational at all), which is to use assumption to villify those who he thinks uses assumption to arrive at a different conclusions than he does:
"It is true that Muller made no attempt to ascertain "how much of the warming is due to humans." Still, the Berkeley group's work should help lead all but the dimmest policymakers to the overwhelmingly probable answer.  We know that the rise in temperatures over the past five decades is abrupt and very large. We know it is consistent with models developed by other climate researchers that posit greenhouse gas emissions -- the burning of fossil fuels by humans -- as the cause."

Mr. Robinson finishes with a tour de farce:
"Nobody's fudging the numbers. Nobody's manipulating data to win research grants, as Perry claims, or making an undue fuss over a "naturally occurring" warm-up, as Bachmann alleges. Contrary to what Cain says, the science is real.  It is the know-nothing politicians -- not scientists -- who are committing an unforgivable fraud."

The depth of knowledge he displays is shocking for one so certain in their opinion, but I would not expect differently from this writer based on past experience and knowledge of the audience to whom he writes.  No one who understands science and cares about it would read his work anyway (unless, like me, they want to gape at buffoonery, albeit, from a seemingly nice man). 
I've made my opinion on this topic known many times, but the short rebuttal to the claims Mr. Rob makes is as follows.
"A larger question is why so many on who occupy the political space which consistently wants and trusts a larger and more powerful government also finds so many reasons to believe that incomplete, inconclusive science is complete and conclusive and beyond discussion."

Models are of no use in proof of causality, according to the rules and philosophy of science, unless they can predict.  If a model cannot predict, it may be interesting but it must be assumed that it is not sufficiently complete to allow one to know what causes what.  Probably even Mr. Robinson knows that no climate model has predicted temperature changes accurately enough to serve as proof of what causes the inevitable changes in the climate's temperature.  If such a model existed, there would be no controversy.  Controversy exists where there is no proof.  That is why politicians use the topic of global warming to manipulate voters. 

That a anthropogenic climate change "denier" has validated the data sets on global temperatures is newsworthy in a science-ignorant world, but the fact that there's some agreement as to the facts of what the actual temperatures have been does nothing to illuminate why they are what they are or were.
As for the hockey stick diagram, the temps it shows were never the real problem.  The problem with the diagram is that it claims to represent temps which rise prior to increases in carbon dioxide levels.  The truth of that matter is that that CO2 levels rise as a result of increases in temperature levels.  CO2 levels are a trailing indicator of rising temps, and even a non scientist who drinks carbonated beverages knows why.  As oceans or soft drinks warm, they lose the ability to hold gasses in solution, and begin to "off gas."  Colder oceans hold more dissolved gas.

Another unproved matter - to what extent is CO2 a green house gas?  Is it a surprise to know that the assertion that CO2 is a green house gas is a supposition, vice proved?  A strong indicator that it may not be a green house gas, and if it is so perhaps it is just a very weak one, is that temps fell after the 1930s, even as CO2 emissions rose.  I wonder how Mr. R would explain that fact.

A larger question is why so many on who occupy the political space which consistently wants and trusts a larger and more powerful government also finds so many reasons to believe that incomplete, inconclusive science is complete and conclusive and beyond discussion.

Or as Harsanyi puts it:
What irks Robinson, Matthews and others like them is not that people do not accept “science,” but that they won’t accept the statist solutions tied to that science. Moreover, a Luddite opposes capitalism. A skeptic only asks questions.

Another good discussion of the topic:

Updated at 15.56 CDT
Updated 31 October, 2011

Wednesday, October 26, 2011

Creative, Impossible

The answer was suggested a half-century ago by Milton Friedman: replace most social welfare programs with a negative income tax. A minimum wage punishes willing employers and willing employees. In an effort to force employers to pay a "fair" wage to our least skilled, we erect insurmountable barriers to employment for many potential employees.
The reason you can tell the current administration is not sincere about trying creative things, and therefore not interested in genuine change, is that they are stuck on 80 year old socialism, and reject out of hand solutions which have not been part of the socialist platform for the last 80 years.

Monday, October 24, 2011

Tax Policy - Static v. Dynamic Analysis

BLUF:  tax policy influences behavior.  There's no way to know how a tax policy will precisely impact revenue because the changes result from different choices made when there are different tax incentives or dis-incentives.

Thursday, October 13, 2011

Will - Can't Say It More Clearly

Solyndra got to the government trough with the help of a former bundler of Obama campaign contributions who was an Energy Department bureaucrat helping to dispense taxpayers’ money to politically favored companies. His wife’s law firm represented Solyndra. But, then, government of the sort progressives demand — supposed “experts,” wiser than the market, allocating wealth and opportunity by supposedly disinterested decisions — is not just susceptible to corruption, it is corruption. It is political favoritism with a clean (even green) conscience.

Is this even partially arguable?

Getting to 30 Million

My Letter to Ms. Harrop response to this disheartening (pretense of) analysis

Ms Harrop,

Your conclusion represents a false choice between a supposed component of the current free market circumstance and a health care system more than 46% controlled by government.

"The only serious cost-cutting alternative to the free-market jungle is letting government put more order into American health care. Take your pick."

I realize your article is space limited but it left out such huge elements of the current cost drivers of the US health care system that it can't be taken seriously as analysis of the current reality.  I suggest to you Herzlinger's work, or Porter's, as bringing analysis that implicates government interventions which distort the value chain in US health care.  "Prices" for health care have become arbitrary, and are unregulated by market forces which we count on in every non-government enterprise to reward value and punish waste.  There is simply no reason to believe that any government enterprise - the military, transportation infrastructure, and our multiple systems of "welfare" - will ever be efficient or responsive to customer needs.  The experiment has been conducted, and it failed.  From Vallejo, CA (, to Medicare's massive unfunded entitlement, the proof is there for those who have eyes to see it. 

As for the theoretical success of the Euro systems, Canada's cost issues are long standing and serious, and a Canadian dog has access to better medical equipment than a human does.  The dubious successes of single payer/socialized systems result from rationing of care, and that is reflected in the health statistics.  Saying that those in the US spend twice as much on health care completely misses the point - we can!  We have the money to spend because we have more liberty.  The rich always pay more new technology, and in that case the US spending on health reflects the same pattern. 

In short, the current system, although ostensibly 54% "market based", is riddled with well intentioned government interventions which have predictably negative unintended consequences.

You don't trust the government to spend enough via vouchers to support those in need, but the current system can't spend enough to do that either.  At least the voucher approach, and other concepts discussed by the aforementioned authors, can be paid for.  They also have the essential benefit of restoring some market based forces to the pricing system which would allow markets to reward value and punish waste. 

It is a stretch to say that your faith in government's coercive monopoly outcomes is less of a matter of religious faith than those who trust cooperative engagement between citizens, aka liberty.  The political calculus on display every single day in DC makes it clear for any who will pay attention that the system serves many interests, but not those about whom you say you are concerned. 

Even were one to make the enormous leap required to think that government has unfulfilled potential to help transform the circumstance of the poor in this nation, isn't it clear by now that theoretical potential will not be achieved? Sincerely, Paul Eich

Wednesday, October 12, 2011

Death Spiral Nears ...

Acclaimed journalist Michael Lewis’ best-selling 2010 book, “The Big Short,” about the bursting of the housing/subprime bubble, focused on a little-known but ultimately highly influential Wall Street analyst named Meredith Whitney who saw the collapse coming in 2007. Now Lewis is again highlighting a dire warning by Whitney about a coming fiscal catastrophe, this time in U.S. municipal bonds. In “California and Bust,” a massive article in November’s Vanity Fair, Lewis details Whitney’s analysis: While many states are struggling, they’re less vulnerable than cities, because states can always bleed cities for funding. But hundreds of cities – without access to easy ways of raising revenue and with enormous unfunded obligations for pension and retiree health care costs – face fiscal ruin. Where will ground zero be for this meltdown? California, says Whitney.

The unholy matrimony of government employees and unions gives birth to the death spiral ...

It's the Pols Who Enable the Cronies ...

The "Occupy" folks are in the wrong spot.  Wall Street could take nothing from nobody without the aid of DC.

Friday, October 7, 2011

I Pity The Fools ...

Many members of the liberal intelligentsia, that herd of independent minds, agree that other Americans comprise a malleable, hence vulnerable, herd whose “false consciousness” is imposed by corporate America. Therefore the herd needs kindly, paternal supervision by a cohort of protective herders. This means subordination of the bovine many to a regulatory government staffed by people drawn from the clever minority not manipulated into false consciousness.

Will is usually good but is in rare form in this piece.

Ms. Warren, not thinking of herself as one of the fools she pities, thinks she can be trusted to decide how much of who's money should be confiscated and directed to the intended ends of the state she hopes to run.  I hope I will be forgiven for having no such confidence in her.

In the response to Will's post,, the author writes:
What Warren actually said celebrated individual achievement, property and autonomy, while making the completely uncontroversial argument that those things are made possible by a functioning society enabled by a healthy social contract.

Why do liberals continue to use the language of Rousseau as regards a supposed "contract"?  It is utter nonsense - did you inspect and/or sign such?  I have not.  Therefore, no contract exists, and certainly not one which permits those, who think they are so enlightened as to attempt these things, to determine how much of my labor they may extract and spend on their own dubious purposes.  Looking at the messy, near freakish, method by which government spends what it extracts from us at gun point, no one should be upset that we don't hold the process in high esteem.

Here's another gem:
The argument Warren is making is over how much each of us should sacrifice in order to keep that functioning society healthy. We’re running a deficit; someone has to pay to close it. Warren is simply asking the wealthy to sacrifice a bit more in that direction, because if they don’t, a disporprotionately heavy burden for fixing it will fall on the rest of us.
So, no matter how foolishly or how fast politicians spend the money they extract via gun point AND THEN SPEND MORE, it is their perogative decide "how much the wealthy should sacrifice" to "solve" the "problem".  Self evidently, the "problem" is we have a political system which empower politicians to spend boatloads of other people's money!!  What evidence is there that allowing Warren or any other would be politician to decide how much anyone should sacrifice would result in a reduction in the budget deficit?  What sane person thinks that the solution to the budgetary problem is related to raising taxes?  Ms. Warren we're stupid, sure, but not THAT stupid. 

Politicians are going to spend every penny they can, because that is what politicians do - spend other people's money and claim it's for "our own good" and use the well intended legislative effort to burnish their legacy.  In short, it has nothing to do with what anyone has to sacrifice, and everything to do with sorting out how to establish a government that is structurally restrained from spending unlimited amounts of money.  Until limits are established, no one should pretend there's any virtue in the "sacrifice" of the wealthy or the not so wealthy.

Tuesday, October 4, 2011

NFL and Public Schools

Only scratches the surface of what is wrong with public education, but thought provoking at the least.

A thought experiment.  Are monopolies good?  Is coercion good?  Since public schools are built on coercive monopoly, why would anyone be surprised at the less than idea outcome ...