Wednesday, October 31, 2012

Equality Unicorns and Other Mythical Beasts

Unicorns, fairness and equality:
Alike: exist in concept only
Alike: you cannot legislate any of them into existence
Unalike: You can use equality and fairness to justify legal theft based on good intentions

Classic Quote, Franklin

"Those who would give up essential liberty for a little temporary safety deserve neither liberty nor safety."
Benjamin Franklin

Robbery and Waste

"But the results of the program are even worse than these numbers

"First, of those workers who completed the training and entered
employment, 38 percent already had jobs, and got a new job with the same
employer or another one. Unlike other Labor Department training
programs, employed workers are permitted to enroll.

"Second, of all those who completed training, almost half went through
programs of five days or less. That's substantially less than other
Labor Department training programs.

"Third, of all the green-trained workers who got jobs, the largest group,
36 percent, was in the category of "energy efficient building,
construction, and retrofitting." That means jobs such as insulation and
weather stripping, not substantially different from other construction
jobs. The next largest group, 34 percent, was employed in "an industry
not specified as green."

"Relatively few green trained workers got jobs in renewable electric
power (5 percent), the manufacture of sustainable products (4 percent),
energy efficiency assessment (3 percent), energy efficient vehicles (3
percent), deconstruction and materials use (2 percent), or biofuels (1


Awesome summary by the Café: as always, it's about voting for which one scares you the least, or against the one that scares you the most.

"So who is worse? In terms of rhetoric, it's a toss-up. Bigger government vs. a possible trade war with China is an appalling choice. But I don't believe Romney will really bash China once he's in office. I think he's just pandering. So he'll label China a currency manipulator and do little about it, the way that Obama signed an order to close Guantanamo Bay and nothing happened. And the fact is that Obama won't be able to expand government much and may be forced to shrink it if there is a Republican House that is a little more Tea-Party flavored and maybe a Republican Senate.

You could argue that we could get genuine budget cuts with Paul Ryan as VP but of course, that's why Romney chose him, to convince spending hawks like me that he's serious about cutting spending. I think cutting spending will be very hard to do.

You also could argue that Romney can play Nixon-goes-to-China and reduce the political influence of Wall Street. But I've seen no inclination on his part that he might do so."

Tuesday, October 30, 2012

"The (Big Government) Policies (of Bush and Clinton) That Got Us Into This Mess"

Cafe Hayek — where orders emerge

"The government bipartisan push to increase home ownership created the rise in housing prices that created the opportunity for Wall St to use it as a vehicle for leverage.
When Obama relentlessly mentions “the policies that got us into this mess,” I don’t think it’s what he has in mind. But we all should remember it, along with Hayek’s warning:
“The curious task of economics is to demonstrate to men how little they understand about what they imagine they can design.” "

Monday, October 29, 2012

"Reprehensible and Repugnant"

"For every 100 industrial workers in December 2010, there were 73
"workers" receiving disability payments. Between January 2010 and
December 2011, the U.S. economy created 1.73 million nonfarm jobs - but
almost half as many (790,000) workers became disability recipients. This
trend is not a Great Recession phenomenon: In the 15 years ending in
December 2011, the United States added 8.8 million nonfarm private
sector jobs - and 4.1 million workers on disability rolls.

The radiating corruption of this entitlement involves the collaboration
of doctors and health care professionals who certify dubious disability
claims. The judicial system, too, is compromised in the process of
setting disability standards that enable all this."

Why? I Want To Feel Better

Cafe Hayek — where orders emerge
But the method by which they have tried to do good has been basically flawed. They have tried to do good with other people’s money. Doing good with other people’s money has two basic flaws. In the first place, you never spend anybody else’s money as carefully as you spend your own. So a large fraction of that money is inevitably wasted. In the second place, and equally important, you cannot do good with other people’s money unless you first get the money away from them. So that force – sending a policeman to take the money from somebody’s pocket – is fundamentally at the basis of the philosophy of the welfare state.

Or, stated another way, "I think it is OK to take other people's money by force if it is said to have been taken and spent in a way that makes me feel better."

Libya - Incompetence

No contingency for an ambassador in Libya?

Orders given but no follow up reporting required?

Dead Americans and it has to play out in the spotlight of an election - horrifying.

Someone made big mistakes, and should be held accountable. Several brave men apparently put up a daring fight, and were given no aid for many, many hours. Tragic.

Friday, October 26, 2012

Good Company?

"L'état, c'est moi."
— Louis XIV

"This nation. Me."
— Barack Obama, third presidential debate

"Okay, Okay. I'll give you the context. Obama was talking about how "when Tunisians began to protest, this nation, me, my administration, stood with them." Still. How many democratic leaders (de Gaulle excluded) would place the word "me" in such regal proximity to the word "nation"?"

Medicare Efficiency

"But as health-care economist Robert Book explains, "Medicare patients
are by definition elderly, disabled, or patients with end-stage renal
disease, and as such have higher average patient care costs, so
expressing administrative costs as a percentage of total costs gives a
misleading picture of relative efficiency." In other words, Medicare
spends a lot of money on benefits, and these expenditures make its
administrative costs look small in comparison. When administrative costs
are viewed on a per-beneficiary basis, as in Book's evaluation, and not
as a percentage of total costs, Medicare's administrative costs are seen
to be slightly higher than those of private insurance, even though in
private insurance these costs include money spent on non-administrative
functions such as marketing."

Coercion - "Isn't that the greatest!"

Cafe Hayek — where orders emerge

In the quote from the Cafe today, the author beautifully points out that the State has only one tool - a tool that most of us would find repugnant if we encountered it in any other context. 
Is it right to use coercion to make other people behave to your satisfaction?  Is it right to hold a gun to someone's head to force them to stop drinking?  Is it right to use the threat of force to compel people to buy this product verses that one? 
Yet, most who would say "no" to that question are fine with CAFE standards, are fine with taking money from me and you to give to makers of electric cars, and etc. 
Why do we have blinders about the meaning and reality of coercion in "public policy"?

Wednesday, October 24, 2012

Classic Quotes: Locke

"It is one thing to show a man that he is in an error, and another to put him in possession of the truth."
- John Locke

Apparently, The Buck Stops Somewhere Else

"It's not the first time that the intelligence community has been thrown under the bus by an administration trying to paper over a foreign-policy failure, but Biden's move was breathtaking in its brazenness. In front of tens of millions, he squarely blamed the intelligence officials for the administration's pathetic, erroneous claim that an anti-Islam video had sparked spontaneous protests that later turned violent at the Libyan consulate.

"The intelligence community told us that," Biden said during the debate. "As they learned more facts about exactly what happened, they changed their assessment.""

Moderator or Ryan: "Well, then, who have you fired? Who should have told you?"

Pathetic excuse for a top executive.

"But a former senior intelligence official scoffed at that assertion. "The administration designated Benghazi as a terrorist attack within 24 hours while at the same time declaring the attack was a 'spontaneous protest' that 'spun out of control,'" he told me. "They can't get their story straight, so the cover-up is deepening.""

What Does That Mean?

I love Tamny's Libertarian zingers - viewed through the lens of a
liberty lover, these guys both sound like economic clowns speaking in

"Lets bring back manufacturing jobs".  Honestly, how would that be done and who could do it? And what reason would there be to believe it would cause more good than harm?  Idiots.

"...when in fact, a return of those low wage jobs would signal a
weakening a America."

Embarrassingly for Romney, he came back with stock retort that "I know
what it takes to create jobs", brought up his 5 point economic plan,
then made the false assertion that small businesses are the engine of
our economy. In fact they're not. In truth, it's the growth of big
business that fosters the creation of small ones in clusters around the
big ones. Politics is never about the truth. Never.

Never one to let a silly comment go unanswered without an equally silly
reply, Obama responded that "small business creation when you were
governor of Massachusetts was 48th in the country", but as president
"I've reformed education because we're falling behind in math and
science." Judging by the economy, either Obama's reforms haven't been
that great for growth, or education isn't as relevant to our economic
chances as politicians would have us believe. I'll bet on the latter.

Obama then made the howler of an assertion that "If you and me don't pay
more taxes we as a nation won't be competitive." Sorry Mr. President,
but other than a strong and stable dollar, and perhaps open borders to
willing workers, the single most stimulative economic act of any
president would be to reduce the burden on the vital few in the U.S.
whose innovations and investment author much of our economic

Actually Mr. Governor, our rising "trade deficit" with China is a
positive economic sign that we're allowing them to make low value goods
for us that we're able to pay for thanks to massive capital inflows into
the U.S. It's scary what kind of economic damage presidents could do
absent the gridlock blessedly foisted on them by the House and Senate.
Can they really be this illiterate about economics?

Sit Down, Shut Up, Do Nothing, and .... Win?

"Readers can cite the long list of errors made by Obama since his  election, I'll agree with many of their criticisms, but the reality is that absent egregious errors of George W. Bush's own making, there's no President Obama today. Republicans can wail that they don't recognize what the U.S. has become (funny because Obama extended the Bush tax cuts, followed Bush's lead on the bailouts and nosebleed spending,
reappointed Bush's Fed appointee in Ben Bernanke, and doubled down on Bush's weak dollar policies), but the reality is that policies given us by admittedly clueless Republicans gave us Obama. Of course in doubling
down on Bush's policies of dollar debasement, heavy spending and bailouts, along with his own personal disaster in the form of Obamacare, President Obama was disciplined by an all-knowing electorate.

"Unbeknownst to Obama, Bush handed him the opportunity of a lifetime in the form of an economy that was on its back. Here it can't be stressed enough that when economies are recessing, they are healing themselves.

"The greater the downturn the greater the recovery, and that's the case because the greater the downturn, the more the healing that is occurring. If Obama had sat back and done nothing upon arrival in Washington, he would today be presiding over a nice recovery. And then if he'd sat back and done nothing while adopting Reagan/Clinton dollar policies, he'd be presiding over the kind of boom that would have him on the verge of a Reagan style victory circa 1984."

Interesting speculation, but I wonder if "doing nothing" and reversing the soft dollar policy would have been enough.

You Are Above That?

"It was a little much when President Barack Obama said that he was "offended" by the suggestion that his administration would try to deceive the public about what happened in Benghazi. What has this man
not deceived the public about?"

Are there two standards? Do we accept half truths and spin to win  political battles, but expect politicians to start talking strait when it comes to seemingly needless loss of life by those in the service of
our nation's defense?

Don't we all know by now that they are all lying, to some degree, all the time?  Why do we generally accept that?  "It's ok if Politician A is lying, they have to lie to win, and then they'll do what they said they would do."

Yea right.  We're all idiots.

Left Hand Right Hand Problem

"The steady and dramatic decline in the sea ice cover of the Arctic Ocean over the last three decades has become a focus of media and public attention. At the opposite end of the Earth, however, something more complex is happening.

"A new NASA study shows that from 1978 to 2010 the total extent of sea ice surrounding Antarctica in the Southern Ocean grew by roughly 6,600 square miles every year, an area larger than the state of Connecticut. And previous research by the same authors indicates that this rate of increase has recently accelerated, up from an average rate of almost 4,300 square miles per year from 1978 to 2006."

The Dog Ate My Homework

"It’s not the first time that the intelligence community has been thrown under the bus by an administration trying to paper over a foreign-policy failure, but Biden’s move was breathtaking in its brazenness. In front of tens of millions, he squarely blamed the intelligence officials for the administration’s pathetic, erroneous claim that an anti-Islam video had sparked spontaneous protests that later turned violent at the Libyan consulate.

“The intelligence community told us that,” Biden said during the debate. “As they learned more facts about exactly what happened, they changed their assessment.”
But a former senior intelligence official scoffed at that assertion. “The administration designated Benghazi as a terrorist attack within 24 hours while at the same time declaring the attack was a ‘spontaneous protest’ that ‘spun out of control,’” he told me. “They can’t get their story straight, so the cover-up is deepening.” "

The question isn't whether or not a video could have caused it - the question is, like the homework eaten by the dog, is why they bought that line, and then tried to sell it. 

Any school teacher, or foreign policy analyst, should have rolled their eyes at that whopper.

"We Have To Have Pensions"

...said a very good friend, "because people are not that good at looking
after their futures."

A pension is a promise. "If you do the work we ask, we'll pay you a  salary today and give you lots of money in the future. We promise!  It's right here, in writing!"

What could go wrong?

"The city of San Bernardino filed for bankruptcy protection three months
ago, and shortly afterward was reported to be under investigation by the
federal Securities and Exchange Commission, allegedly for hiding
deficits by diverting money intended for sewers, roads and construction
to pay ongoing bills instead.

"Now, the Wall Street Journal reports the Inland Empire city of about
210,000 residents "has stopped making its regular payments to the
California Public Employees Retirement System" and owes $5.3 million
toward its employees' pensions. A San Bernardino official told the
Journal the city needs to be put on a payment plan because it doesn't
have enough cash to pay its bills. "

Excellent Links Today!

Cafe Hayek — where orders emerge

Firearms rights, economic minimalism, and much more - go have a look.

Tuesday, October 23, 2012

The Loser's Game

Electric vehicles might indeed be the wave of the future. That's not the point. The point is that Washington has no business picking winners and losers in the marketplace. An industry that holds great promise doesn't need government handouts. And handouts to industries that can't make it are nothing but a waste.

How easy is it for politicians to take our money at gunpoint, give the money to a third party, and tell us it is for our own good ... and when the dust settles, what is the consequence to those who frittered away the money they stole and gave away ....  nuts.

Why a population will tolerate this behavior is baffling, but I think it is related to economic illiteracy.

Question for the citizen:  Does consent matter? 

Cafe Hayek — where orders emerge

Cafe Hayek — where orders emerge
Is infrastructure a precondition for, or a result of, economic development?

Classic Quote, White

@DarrellWhite: Perfection works better as a target than a goal. The goal, then, is to keep your eye on the target.

Monday, October 22, 2012

The Unspoken Narrative

I can't promise anything, I've already broken every promise

I don't have any reasonable ideas about how to fix what's broken, since if I did, I'd be pressed on why I have not already advocated for them

I will appoint another crazy liberal judge or two.

I will keep the GOP out of power for a bit longer.

I will prevent the GOP from undoing obamacare until it's too late to stop it.

That's it folks, that's all I have.

VDH - The CA Looking Glass

VDH's conclusion:
Open borders, redistributionist socialism, therapeutic and politicized public schools, and public-employee unions finally are proving a match even for Apple, Google, Facebook, the Napa Valley wine industry, Central Valley agribusiness, Hollywood, Cal Tech, Stanford, and Berkeley. In California, it is a day-by-day war between what nature and past generations have so generously bequeathed and what our bunch has so voraciously consumed.

On any given day, beautiful weather, the Pacific Coast, and the majestic Sierra Nevada are trumped by released felons, $5-a-gallon gas, and a 1970 infrastructure crumbling beneath a crowded 2012 state.

There are many lessons from California. One is that the vision of the present administration is already here - and it simply does not work.

I wonder who if anyone, would offer a rebuttal?

Watching the Death Spiral

Equally unclear is how the country can reduce its sovereign debt load to a bearable 120 percent of gross domestic product by 2020. The Greek government's current budget proposal envisions this year ending with a debt load of 169 percent of GDP. In 2013, it will be 179 percent of GDP. "The debt level is extremely high," says Jens Boysen-Hogrefe of the Kiel Institute for the World Economy. "Given current conditions, the country won't likely be able to handle it."

Greece's spiralling debt load is primarily a function of the country's abysmal economy. In the last four years, the Greek economy has shrunk by fully 20 percent with economists expecting a further 6.5 percent drop this year. Athens expects that 2013 will see the economy shrink by an additional 3.8 percent, but most economists are more pessimistic.

The further the economy shrinks, the more difficult it becomes for Greece to pay the interest on its debt. "Thanks to the austerity packages, the Greek budget, minus interest payments, is largely balanced," says Boysen-Hogrefe. "The country requires external aid almost exclusively to service its debt."

The Death Sprial's "Chronicaller"

...he described Washington's infamous unfunded mandates, most of them in
the form of future entitlement spending, as the "federal government's
financial sinkhole"

At the University of North Carolina, to an audience mostly consisting of
certified public accountants, he amplified on the dimensions of this
sinkhole: "It's $70.8 trillion, going up 10 million a minute, a hundred
billion a week," he said. "So the federal financial sinkhole is much
bigger than the politicians admit. It's growing rapidly by them doing
nothing, and they've become very adept at doing nothing."

Dave Walker fashions himself as a non-partisan, which is accurate
enough, but a better way to understand what he's doing is to see his
criticisms as bipartisan -- i.e., they offer no solace for Republicans
or Democrats. The budgetary obligations represented by Obamacare, he
believes, are their own separate sinkhole. Yet defense spending has to
be on the table, he insists, along with every other GOP sacred cow. The
U.S. military budget, he points out, exceeds the combined expenditures
of China, Russia, France, Great Britain, Japan, India and Germany.

He Was What He Is

The problem was Romney, who was commanding, fluent, reasonable, articulate, sharp-witted, warm, occasionally funny, full of ideas, full of facts, full of thoughtful, detailed criticisms of Obama policy (who the hell expected him to bring up, as an afterthought, Dodd-Frank's failure to specify what a "reasonably qualified" mortgage applicant was, and how that chilled lending? Obama sure didn't!), and, therefore, ultimately, full of qualification for the job and yes, full of gravitas.

That's the problem.

Not Obama. I repeat: This is who Obama is. He has never been this brilliant intellect and keen policy analysts liberals have, in their BubbleWorld, dreamed him as.

The problem is not that Obama is or was awful. The problem is that he is what he always is -- adequate and hardly ever more -- and Romney is actually on top of things, an accomplished executive with a winner's thirst for victory an an A-student's understanding of what victory requires.

Great quote from a fantastic movie:
As the heroes of The Man Who Would Be King discovered-- when a God is seen to bleed, things can go pear-shaped pretty quickly.

Buy Imports For Economic Health

Consider, for example, this recent claim by Morici: "(T)oo many of those
dollars were spent on imports that did not return to buy U.S. exports -
the gap between new imports and new exports was lost demand for U.S.
goods and services."

He's talking nonsense.

Dollars that foreigners don't spend on U.S. exports are emphatically not
"lost demand for U.S. goods and services." Instead, these dollars are
invested in the U.S. And being invested in the U.S., they create demand
for U.S. goods and services no less than if they were spent to buy U.S.

The dollars the Chinese invest in U.S. Treasuries become demand for U.S.
goods and services - demand expressed by Uncle Sam or by private
citizens who sell bonds to China and who then spend in America the
dollars they earn on those sales. Likewise, the dollars the Swedish
furniture retailer Ikea invests in building stores in America become
demand for U.S. goods and services - demand for the likes of
construction materials and construction workers in America.

Read more:


Government is all about picking winners and losers and using its
monopoly on coercive force to back up their picks - in this case,
tariffs, the poor suffer from loss of choices, fewer jobs, and decreased
competition for their consumer dollars.

Going Green or Going Down?

"Within a few hours after the nuclear reactor disaster in Fukushima in March 2011, she had transformed herself from a proponent into an opponent of nuclear energy. At the time, most Germans supported the chancellor. But now, more than a year later, they are losing confidence in her ability to get it right. German politician and EU Energy Commissioner Günther Oettinger says that he doubts "whether German consumers will accept rising electricity prices resulting from the energy turnaround in the long term."

The rising cost of electricity is also a burden on businesses. According to Oettinger, energy costs now represent the biggest liability for Germany as a place to do business, especially in light of the marked increase in the number of blackouts and voltage fluctuations in the grid."

Review of the Cafe

"I'd sum up Boudreaux's chief aim as the preservation of liberty, which happens to foster material well-being. A major economic concern of his is the public debt plus unfunded liabilities. He notes the two together are now pegged by one study at something like $84 trillion. This is obviously huge and worrisome, though he warns against crying wolf, saying the issue is too complex for anyone to know how close we may be to disaster. In the middle of the Depression, there was far more reason
to be worried, he said - and yet we survived. I'd sum up Boudreaux's chief aim as the preservation of liberty, which happens to foster material well-being. A major economic concern of his is the public debt
plus unfunded liabilities. He notes the two together are now pegged by one study at something like $84 trillion. This is obviously huge and worrisome, though he warns against crying wolf, saying the issue is too complex for anyone to know how close we may be to disaster. In the middle of the Depression, there was far more reason to be worried, he said - and yet we survived."

WSJ - Bully v Wonk

On nearly every specific issue on which Mr. Biden attacked, he was demonstrably wrong. The Administration's Medicare actuary really does say that 15% of hospitals will take on operating deficits as a result of ObamaCare's cuts in payments to Medicare providers. The American Enterprise Institute study doesn't say that Mr. Romney's plan will raise taxes on the middle class, and Mr. Ryan's Medicare plan doesn't raise costs for seniors by $6,400. Mr. Biden never even tried to offer a
second-term agenda.

But this 90 minutes wasn't about an exchange of ideas or a debate over policies. It was a Democratic show of contempt for the opposition, an attempt to claim by repetitive assertion that Messrs. Ryan and Romney are radicals who want to destroy "the middle class." Mr. Ryan's cool under assault was a visual rebuttal of that claim, and we certainly know who looked more presidential.

Some Links

"Economic growth is the only ingredient that will help pull the country out of its present funk and allow us to solve our pressing issues."

Indeed.  In fact, it's the only elixir that addresses every ill we face.  The parties talk about "creating jobs", but that is child's play.  With unlimited money, anyone could create "jobs."  The question though is whether jobs have anything to do with fiscal improvement for the nation, with restoring a productive economy that "creates jobs" on its own, without having to take money from people at gunpoint in order to "create jobs."  We could pay people to hold up signs on the streets, but would that make for economic growth?  No, in fact, it would make for destruction of wealth.  Growth comes from conditions in which a business can create more wealth from a new hire's labor than the new hire costs the business.

Or, as stated here today:
"The first problem is that Keynesian prescriptions are filtered through a political process being driven by many competing agendas, of which balanced economic growth is only one.  The second problem is that both Keynesian economics and the political process are almost entirely focused on short-run demand-side concerns while largely ignoring the long-run importance of economic productivity.  The result is a political dynamic that has increasingly turned Keynesian economics into a prescription for fiscal irresponsibility that undermines economic growth without promoting economic stability.

This Post at the Cafe is all solid gold.

Hydrogen Cells

Unlike fossil fuels such as petrol or diesel, hydrogen is not a source of energy in its own right. It is merely a means for storing electricity generated in a power station and delivering it to the motor driving the wheels of an electric vehicle-in much the same way as a battery works.
And as free hydrogen does not occur in useful quantities in nature, it has to be made by using electricity to crack water into its constituent elements.

In California, despite the many solar installations and wind farms, the electricity coming out of the plug is neither green nor clean, being derived predominantly (ie, 62%) from fossil fuel. During cheap-rate periods at night-when electric vehicles tend to be recharged andelectrolysis plants are running flat out-most of California's electricity is imported from coal-fired power stations out of state.
Thus, like electric vehicles, hydrogen cars contribute their share of greenhouse gases as well.

Micro nuclear powered hydrolysis stations, anyone?

Fascinating! Nitrogen Engines

Unlike fossil fuels such as petrol or diesel, hydrogen is not a source of energy in its own right. It is merely a means for storing electricity generated in a power station and delivering it to the motor driving the wheels of an electric vehicle-in much the same way as a battery works. And as free hydrogen does not occur in useful quantities in nature, it has to be made by using electricity to crack water into its constituent elements.

In California, despite the many solar installations and wind farms, the electricity coming out of the plug is neither green nor clean, being derived predominantly (ie, 62%) from fossil fuel. During cheap-rate periods at night-when electric vehicles tend to be recharged and electrolysis plants are running flat out-most of California's electricity is imported from coal-fired power stations out of state. Thus, like electric vehicles, hydrogen cars contribute their share of greenhouse gases as well.

Micro nuclear powered hydrolysis stations, anyone?

A growing body of opinion seems to think liquid air is the answer (or, more specifically, the nitrogen component that makes up 78% of air). It is not exactly a new idea. Air was first liquefied in 1883, using essentially the same process as today-ie, compressing it to 200 atmospheres, cooling it to -190ºC, and then letting it suddenly expand and condense. The process turns 1,000 litres of transparent gas into 1.4 litres of light blue liquid.

As long as its storage container is well insulated, liquid air can be kept at atmospheric pressure for long periods. But on exposure to room temperature, it will instantly boil and revert back to its gaseous state. In the process, it expands 700-fold-providing the wherewithal to operate a piston engine or a turbine.

Liquid nitrogen does an even better job. Being considerably denser than liquid air, it can store more energy per unit volume, allowing cars to travel further on a tankful of the stuff. Weight for weight, liquid nitrogen packs much the same energy as the lithium-ion batteries used in laptops, mobile phones and electric cars. In terms of performance and range, then, a nitrogen vehicle is similar to an electric vehicle rather than a conventional one.

Porter To The Rescue

He explained the results in Competitive Strategy, which quickly became the bestselling business book ever up to that time. Every company, he said, is subject to five forces: the competitors it currently faces, the threat of new competitors, the threat of substitutes for its products or services, the bargaining power of its suppliers, and the bargaining power of its customers. Within that environment, every company must choose a strategy, and there are only three: achieving the lowest costs, differentiating its products and services, and dominating a niche.
Trying to do some of each -- getting "caught in the middle" -- prevents a company from realizing the benefits of any of these strategies, and as a result it will lose to competitors who choose just one.

What Is Competitiveness?

The third way business can and should improve U.S. competitiveness is by stopping self-interested actions that weaken the commons. Many such actions involve government relations and corporate lobbying. When firms seek special permits, tax breaks, or regulatory exceptions, they distort
competition and raise regulatory complexity. Each plea seems profitable to the company or industry involved. But taken together, such pleas have created an exception-riddled corporate tax code, a rat's nest of earmarks and subsidies in the federal budget, and delays in crucial legislation. Self-interested efforts by one company make others feel they must do the same. The overall cost and complexity of doing business rises. More important, in the long run, the resulting public cynicism erodes society's support for business. Business should advocate policies that improve the U.S. business environment rather than pursue narrow self-interest, which often backfires.

To understand why that's critical to America's future, we need to be clear on what competitiveness means. The U.S. is competitive to the extent that firms operating here can compete successfully in the global economy while supporting high and rising living standards for the average American. Doing one without the other means we aren't really competitive. A high-wage economy like the U.S. can achieve both only by being a highly productive location, one where firms can create innovative, distinctive products and produce them efficiently.

It's the Death Spiral Math, Stupid

Since the president took office:

* Medicaid is up from 46.9 million to 56 million people.

* Disability beneficiaries are up from 7.5 million to 8.8 million.

* The food stamp program has grown from 32 million Americans to 47

Add to that 80 million beneficiaries 40 million Americans age 65 or older on Social Security and Medicare (9 million of the 49 million on Medicare, including some under age 65, also receive means-tested benefits).

That 120 million does not include the numerous smaller entitlement programs.

Put them all together, and a number approaching half of the country participates in an entitlement program.

Now add in the 16 million new Medicaid beneficiaries, thanks to ObamaCare, plus an estimated 12 million people who enter the health insurance exchanges by 2014, where most will receive federal subsidies.

The budget implications of these programs are huge. For fiscal 2012, America spent $2.2 trillion of its $3.7 trillion budget on entitlement programs - $400 billion less than the $2.6 trillion in gross annual

Oh, and interest on the federal debt was $220 billion.

Read More At IBD:

Thus, the cost of entitlement programs plus interest on the debt are nearly equal to total federal revenues today.

Virtually everything else the government does is with borrowed, or printed, money.

Entitlement spending is also growing much faster than the economy.

Since 1980, Social Security and the various income security programs have grown at an average annual rate of 6%, while Medicare and Medicaid have both grown at more than 9% annually, which includes population growth.

What Caused the Crisis? NOT Stable Money

"No economic crisis was ever caused by stable money. When you finally decide that's what you want, gold is your answer."

Will - Too Damned Big

Too big to fail is too large to allow to remain un-broken up.

For Whom Doth The Death Spiral Bell Toll?

"U.S. government debt currently totals around $16 trillion. The Treasury estimates that this debt will rise to around $20 trillion by 2015, over 100% of America's Gross Domestic Product.

That's not counting other current and contingent commitments not explicitly included in the debt figures - government support for Freddie Mac and Fannie Mae (known as government-sponsored enterprises) of over US$5 trillion and unfunded obligations of over $65 trillion for programs such as Medicare, Medicaid and Social Security. State governments and municipalities have additional debt of around $3 trillion."

Taking the Compassion Out of Jobs Growth

"Most people understand why taxing those who create jobs (generally upper-income people) will mean the creation of fewer jobs. Economists may argue about how many jobs will be destroyed for any given tax increase on job creators, but no one who understands the law of supply and demand will argue that there is no effect. Likewise, most people understand that a business that has to endure many expensive regulations will not have the funds to create as many new jobs or will be forced to increase prices for its products or services to cover the cost of the regulations. Higher prices mean fewer sales and, hence, fewer jobs. None of the above is rocket science, so most people "get it."

Current U.S. gross domestic product (GDP) is $15.6 trillion. If the economy grows at an average of 2 percent annually over the next eight years (in real dollars), GDP will be $18.3 trillion in 2020. (In reality, the economy has grown at an annual rate of about 2 percent since the end of the current recession in the spring of 2009, and now it is growing at less than 2 percent.) However, if the economy grows at an average rate of more than 4 percent, as it did from 1982 through 1989 under Ronald Reagan or from 1995 through 2000 under Bill Clinton), GDP will be about $21.4 trillion in 2020, or almost 20 percent larger in real terms than at a 2 percent growth rate."

Read more: RAHN: Tax-raisers lack compassion - Washington Times
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There's nothing so hard about this formula - if it's more expensive to employ people, fewer people will be employed. You don't hire a lawn man because it costs "too much". What if you could get 10 hours of lawn work done for five dollars? You'd be hiring! It's too obvious. Thus, it makes one question the motives of those who are smart enough to see this simple truth, but behave as if it were not true.

Esprit d'escalier

Esprit d'escalier ("wit of the staircase") is the French term for the
devastating riposte that one should have given at dinner but comes up
with only on the way out at the bottom of the staircase.

Will This Get Ugly?

... the president himself advanced the argument that "the video did it" in his speech to the United Nations. So, as Charles concluded, he is extremely vulnerable to a counterattack tonight from Governor Romney, who will have 90 minutes and much on-the-record evidence when he presents his case. That, however, raises the pressure on the governor not to screw it up a second time.

Tonight, therefore, is the Muhammad Ali-Joe Frazier contest of presidential politics.

In one important respect, however, Charles understated his argument. Though he observed that Obama had sent out other administration spokesmen to present the administration's false account, he argued the quite limited case that it was the president who was facing the music.

That may be true tonight and on Election Day. If, however, Romney persuades the world that the Obama administration has given a "misleading" account of the Benghazi murders to American television viewers, to the media, to the United Nations, and to the world at large, he will indict a great many people in addition to the president.

Simply list the people who have gone out in public to repeat the video argument - and related arguments such as the claim (maintained for eight days after the president used the phrase "acts of terror" in the Rose Garden) that it couldn't yet be said for certain that the Benghazi attack was a terrorist action

If this was indeed a deception, Vice President Joe Biden, Secretary of State Hillary Clinton, Ambassador Susan Rice, Director of National Intelligence James Clapper, White House aide David Axelrod, and press spokesman Jay Carney are only six of the people who apparently cooperated in it - though Mr. Carney is probably safe, since no one believes that the press guy is told what really happened unless that also happens to be the cover story.
I wonder if even this would make folk think twice about "their" elected leadership.

"...On The Cheap"

"Our politics," says Greve, "aims at inspiration on the cheap." We should reduce government's complicity in illusions by, for example, sending retirees "a statement showing the estimated present value of their old-age benefits; their lifetime earnings and contributions; and the earnings and contributions that it would have taken to 'earn' those benefits. We might then ask them who precisely should earn and remit the missing millions and in what sense it would be 'unfair' to modify the empty promises."

Rash promises were made, Greve says, "in an era of prosperity, when and because we thought we could afford them." Now they "are far too entrenched to be dislodged in the course of ordinary politics." Even granting Mitt Romney's embrace of something like his running mate's reforms, this year's politics are terribly ordinary. Although consensus is supposedly elusive, it actually is the problem. "Our operative consensus," says Greve, "is to have a big transfer state, and not pay for it."

Democracy is representative government, which is the problem. Democracy represents the public's preferences, which are mutable, but also represents human nature, which is constant. People flinch from confronting difficult problems until driven to by necessity's lash. The Claremont Institute's William Voegeli, commenting on Greve and the dubious postulate of continuous 5 percent growth, says: "There's good reason to fear that if the economy builds a 5 percent levee the polity will just come up with a 6 percent flood. We humans adroitly use scant and equivocal evidence to convince ourselves that the most congenial interpretation of events is also the most plausible and durable."

Writing in 1830, Thomas Babington Macaulay asked, "On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?" Greve's gloomy answer is: Because we actually see behind us protracted abandonment of the Founders' flinty realism about the need to limit government because of the limitations of the people.

Right, Wrong, Indifferent

The article linked below tries to make the case that - compared to other
nations like the US, the US is not that bad off. IOW, we're better off
than other countries more socialized than we are. Yawn.

Why then, aren't the authors advocating that we eliminate our more
socialist elements?

Of course, they do not, and instead bemoan the fact that the US does not
"protect" jobs as well as the more socialized economies, but ignores
that the result of such "protection" is that jobs growth and economic
growth in those nations has fallen behind US number for years.

The authors then quote research that points out a significant fact -
recessions based on monetary foul play, like the one the world is in now
- take a long time for recovery, as the present recession is.

Good points made, but why then does the leadership continue to keep
piling on with financial tom-foolery like spending increases,
quantitative easing, and a "health care program" that will vastly
increase federal expenditures? To say that the present administration
is not making things worse, by comparison with others with an even more
socialist bent than his, is hardly grounds for a "bye".

"With financial markets careening around the world, in January 2009 a
newly inaugurated President Obama acknowledged he had to fix the problem
pretty fast. "If I don't have this done in three years," he told NBC's
Matt Lauer, "then there's gonna be a one-term proposition." "

The authors make a case that the President "should have worked harder on

But at some point, this case is irrational. When the money is spent in
massive piles at the front end of the presidency, it better be spent on
the most important things. I frankly don't know what those things are,
but the cry of the statist is "we have to spend more money now on the
"crisis du jour." There's never any prioritization, there's never any
perspective offered along the lines of, "If we blow 800 billion today
trying to fix our funny money system, there's not likely to be more
money to burn to burnish our political army later." Or, "I know this
health care programs going to crowd out everything else in the budget,
but that's the way it goes, sorry I won't have any money left for jobs."

Now, the question of whether government can create jobs is another one
entirely, and I say "I'll believe it when I see it." It's easy to give
people money to do something. It's hard to employ people in a way that
the person's labor creates more value than it costs. For every
government job, the most that can be hoped for is that the cost for
employment allows other, productive employment, to happen.

For example, we expend a pretty penny on "national defense" annually,
but all that money is just gone - it creates no value per se. Money
spent to employ auto builders or web designers, on the other hand, in a
profitable corporation, results in greater value produced than cost

In short, all punditry to the contrary, there's not much that a
government can do to grow an economy by "creating jobs" except by
reducing the governmental load on businesses; IOW, make it less
expensive to hire someone.

Obama, of course, has done just the

I don't hold any hope that Romney's presidency will create any lasting
change in the economy except that he does not represent a mindset,
seemingly held by the president, that business is an evil to be
suffered, siphoned from, and used to create "social" outcomes the
president desires. Perhaps in the face of a less openly hostile
administration, business will get back to the basics: hiring people who
will help them profit (IOW will provide more productivity than expense).

Troubling, To Say The Least

Bing West writes about the lack of any military response after the Benghazi attack - where was the contingency planning?  

Middle Class - Coming or Going?

Cafe Hayek — where orders emerge

If you were to hear data on equality which showed there are more households in the upper quintiles, and fewer in the lower, would you be able to reconcile that data with the fact that there are more households earning higher levels of money since the 70s?

IOW - what is the difference between equality of outcome, and better outcomes across the board?

Apparently, this writer to the Cafe cannot make this discernment.

Friday, October 19, 2012

Samuelson on the $5 Trillion Lie

Here's Obama at one rally:

"My opponent, he believes in top-down economics, thinks that if you spend another $5 trillion on a tax cut skewed towards the wealthy that prosperity will rain down on everyone else."

It's a powerful argument, marred only by the fact that the $5 trillion tax cut is a fiction.

Let's see how this happened.

Some blame belongs to Romney. He has made many vague, inconsistent and contradictory promises. He would cut all individual income tax rates by 20 percent and then offset lost revenues by eliminating tax breaks -- but doesn't say which ones. He would reduce government spending from today's 23 percent of gross domestic product to 20 percent, a $450 billion annual cut -- but doesn't say how. He would balance the budget and raise defense spending. And so on.

On taxes, uncertainties abound. If you cut everyone's tax rates by 20 percent, the rich -- with the highest rates and the biggest tax bills -- get the biggest breaks. The present top rate of 35 percent drops to 28 percent; the lowest rate falls only from 10 percent to 8 percent. (Each reduction is one-fifth, or 20 percent.) If that were all, Romney's plan would indeed represent a windfall for the wealthy. Those with annual incomes exceeding $1 million would save an average $175,000, estimates the Tax Policy Center (TPC), a research group. (By the TPC's estimates, the 0.8 percent of taxpayers with incomes over $500,000 currently pay 28 percent of federal taxes.)

The BLUF: Neither pol has provided a plausible answer, but the 5 Trillion dollar tax break for the rich is imaginary. While Obama campaign has provided not even a whiff of how they'd arrested the currently screaming government debts or pay for any of the grand democratic programs, Romney/Ryan has a serious side - they've actually put a proposal on the table.

Horrible Case, Horrible Prosecution, Horrible Reporting

The winners?  The hate mongers.

The losers?  Virtually everyone.

Thursday, October 18, 2012

What Would Happen If A Presidential Candidate Was Not Economically Illiterate?

Cafe Hayek — where orders emerge
"Each man insists that America’s economy can be harmed by inexpensive imports – in other words, harmed by opportunities for voluntary exchanges that lower Americans’ cost of living."

Go read all of the Cafe's stuff today - right on the mark!

Wednesday, October 17, 2012

Words from 1849

Cafe Hayek — where orders emerge
And as true today:
It is of paramount moment to the English people that we should not allow ourselves to entertain an undue or exaggerated notion of our own importance as a nation, or to take a too unfavourable view of other countries.  It is through your national pride that cunning people manage to extract taxes from you.  They persuade you that nothing can be done abroad unless you do it; and that you are so superior to all other countries, that your next neighbour, France, for instance, is nothing but a band of brigands, and unless you are constantly on the watch, they will be ready to pounce upon you and carry off your property.

Friday, October 12, 2012

Save Big Bird Dammit!

So when Romney completely deflated that six-month "kill Romney" strategy - by looking reasonable, responsible, authoritative in demonstrating how his policies would help the middle class by stimulating economic growth - what did Obama have left?

Big Bird. The stupidest ad in memory. Has any president ever run an ad so small and trivial? After an unprecedented shellacking in a debate about very large issues, this is his response?

The Middle East is ablaze, the country drowning in debt, the fiscal cliff looming - and Obama's great pitch is that only he can save the $130 million enterprise that is the Sesame Workshop?

Thursday, October 11, 2012

Tracinski - The Death Spiral

Here is the basic pattern of the interest rate "death spiral." A
country's interest rates increase, making it harder to make the basic
payments on its debt. This make lenders even more nervous, so they
increase rates even more, making it even harder to service the debt,
which makes lenders raise rates again, and so on. You want an idea of
how bad this can get and how fast? Check out this grim little graph,
which shows interest rates on Greek debt spiking from a little over 3%
to 30% in about two years. That's what a real sovereign debt crisis
looks like, and you can see how Greece had no way out without
intervention from a larger and wealthier country like Germany.

This describes what the crisis looks like, but not what drives it. What
drives the crisis is the inability to stop borrowing or to pay down the
debt because massive, chronic borrowing is built into the system. It is
built into the system because the country has adopted a massive welfare
state and bloated government employment. Government has grown so big
that the private economy can no longer realistically be taxed enough to
support it. Nor can the size of government be reduced significantly,
because so much of the economy has become dependent on it that any
reduction in welfare payments or in the rolls of government employees
causes a massive increase in unemployment and deepens the recession. So
the only alternative is to keep borrowing at high levels, year after
year-and when the government can no longer do that, the country faces,
not a mere recession, but economic collapse. When massive spending cuts
are then forced onto a country, millions of people feel as if they have
been suddenly cut off for no reason, and they are driven into the
streets in rage.

That is what the Eurocrisis is about, and under Obama, America is
setting itself up for exactly the same kind of death spiral.

I don't know why the news talks about anything else - this is the one
bright shining object. Everything is drivel compared to this one
imperative. The fact that Ryan laid out an option, and was nommed for
VEEP as a result, is the only hopeful part of this election.

Tuesday, October 9, 2012

Not the Same Old Same Old

Cafe Hayek

A trip to the Cafe is always good for a dose of original thinking; thoughts that are not articulated in the same tired, mired thoughts of the "conventionally wise."

Friday, October 5, 2012


Late in the debate, when Romney for a third time referred to Obamacare's creation of "an unelected board, appointed board, who are going to decide what kind of [medical] treatment you ought to have," Obama said, "No, it isn't." Oh?

The Independent Payment Advisory Board perfectly illustrates liberalism's itch to remove choices from individuals, and from their elected representatives, and to repose the power to choose in supposed experts liberated from democratic accountability. Beginning in 2014, IPAB would consist of 15 unelected technocrats whose recommendations for reducing Medicare costs must be enacted by Congress by Aug. 15 of each year. If Congress does not enact them, or other measures achieving the same level of cost containment, IPAB's proposals automatically are transformed from recommendations into law. Without being approved by Congress. Without being signed by the president.

Taxation = Tyranny

Cafe Hayek — where orders emerge
As always, the Cafe pulls the quotes from those who see things as I do.  I'm grateful.


Obama was undone Wednesday in part by his dismissive arrogance. You could see him thinking annoyedly: "Why do I have to be onstage with this clod, when I've gone toe-to-toe with Putin?" (And lost every round, I'd say. But that's not how Obama sees it.)

Obama never even pulled out his best weapon, the 47 percent. Not once. That's called sitting on a lead, lazily and smugly. I wager he mentions it in the next debate, more than once - and likely in his kickoff.

On the other hand, Obama just isn't that good. Not without a teleprompter. He's not even that good at news conferences - a venue in which he's still in charge, choosing among questioners and controlling the timing of his own answers.

I have this fantasy sometimes - what if the petulant Obama just admits it's no where near as much fun being President as it was running for the job, and perhaps that's he's really tired of the whole thing and would rather just retire to a life of celebrity ...

Wednesday, October 3, 2012

Is That Keynesianism or The Brooklyn Bridge?

Cafe Hayek — where orders emerge

So many parts of the Keynesian idea make no sense, why did anyone buy such a product sight unseen? 

This post at the Cafe tells it clearly, simply.