Less Blood and Gore

They (David Blood and Al Gore) wrote this editorial in the WSJ and I sent these two letters in response:

Al Gore and David Blood don’t seem to understand tradeoffs (“We Need Sustainable Capitalism”, Nov 5). They are correct in recognizing that social bads like extreme poverty and disease deserve our attention, but they fail to see how their proposals to stop the “climate crisis”, by placing a price on carbon, stand in the way. With carbon-based energy such a significant portion of the budget, the only way much of the world’s poor — and I’m talking about more than just the American poor; they are rich by global standards — will make ends meet in an environment of taxed carbon is to either go without or be subsidized by the wealthy. Going without will ensure they stay in poverty; subsidization through the tax system leaves less money in the hands of entrepreneurs to help develop and distribute the medicines that will cure diseases. It will simply lead to more of the redistribution supported by the just-elected Obama administration.

We’ve heard their prognostications in other venues about the worst case-scenarios of doing nothing about the climate. It’s time we also had a discussion of the worst-case scenarios of taking action. If we do hold such a discussion, I’m sure a severe worsening of many of the ills Mssrs Gore and Blood hope to cure will be among them.

Matt Hutchison
Chicago

Al Gore and David Blood talk about their “new philosophy of investment management and business” (“We Need Sustainable Capitalism”, Nov 5), but I’m sad to tell them what their doing isn’t all that new or original. People have been trying to make a buck by manipulating the political system in their favor for some time now. While I’m all for their efforts to raise private money for renewable energy, clean technology, etc, these investments won’t be profitable for some time without governmental subsidies or usage mandates. The only way they can expect to generate returns for their investors is to pressure (or persuade) their friends in Washington to help them out. And judging by the rhetoric of newly-elected Barack Obama, who by his own account started slowing the rise of the oceans simply by being nominated for the presidency, Mssrs Gore and Blood will get plenty of help. New philosophy indeed.

Matt Hutchison
Chicago

I'm back, baby!

At least temporarily. I submitted the following letter in response to this editorial in the WSJ:

I understand the desire to pass the free trade agreement with Colombia, but to argue that one country (Colombia) “deserves...trade preferences” while others (its Andean neighbors) do not (Pelosi’s Trade Priorities, Oct 1) is the wrong way to go about it. Using trade as a political tool to influence foreign nations has only modest (if that) impact. Nations such as Cuba have lived without access to U.S. markets for 50 years. Who has paid the bulk of the price for that policy? Cuban citizens. Because they have been cut of from the gains from trading with the U.S., they have also been cut off from a higher standard of living. The people of Andean nations do not “deserve” a less harsh treatment simply because of the actions of their political leaders. The ability to freely trade with Americans is not something we should be bestowing upon those nations we feel deserve it. It is something we should allow unmolested not only because it is in the economic interests of the citizens of the U.S. and whoever their trading partners might be but also because it shows that we respect the “unalienable” right of liberty even when the leaders of those foreign nations do not.

Matt Hutchison
Chicago

Why is saying "I don't know" a bad thing?

From Jerry Taylor at Cato:

Tomorrow’s debate will likely produce few sparks. I’m against nuclear energy subsidies and don’t think the industry would survive without them. Thursday and Friday, however, will be more interesting. I don’t have the faintest idea what sort of personal automobiles will be on the market in, say, 2030, and even less idea what the energy economy of the next generation will look like. I suspect, however, that John thinks it’s all rather obvious where energy markets and technologies are heading and that he has the perfect master plan to most efficiently accelerate all the big-time changes that history has in store for us.

Saying “I don’t know” to questions like these is never that good of an idea if you want to dazzle people with your wisdom and insight. On the other hand, it’s hard to marshall the argument that “the oil age is over and the age of genetically modified gerbils on treadmills is coming” (or whatever) and then say that the government needs to do something to get us there. Well, if its so inevitable, then why must
government act at all? We’ll find out if John can manage to resolve that tension in what will likely be his argument.

He's referring to V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies and a debate they're having at the LA Times about the future of energy use and generation. I guess it's hard to be considered an expert when you don't know what's going to happen. Unfortunately, no one knows what's going to happen (although some might guess correctly on occasion), but admitting that doesn't put food on the table.

Gains from trade

I saw this by Pete Hoekstra and John Shadegg in the Washington Times quoted on Free Exchange:

Every month the United States runs a trade deficit of $60 billion, most of which is related to energy. Imagine the impact on the U.S. economy if we invested that money in the exploration and production of American energy. It would lead to job creation, it would ripple through the economy, the dollar would strengthen and we would finally see some stability in energy prices.

It followed this by the author of the Free Exchange post:

A bad reason for new drilling is that it will reduce our dependence on foreign oil. That's a bad reason because it won't, and it's a bad reason because "reduce dependence on foreign oil" is kind of a silly idea.

I agree. The idea of energy independence is pretty silly. First of all, it will never happen, no matter how much we (the government) "invest" in renewable energy. Second, the more resources we forcibly devote to energy, the fewer of those resources we devote to other, more productive endevours. But what got me interested in the Hoekstra/Shadegg quote was the idea that somehow our trade deficit can be otherwise "invested". I don't even know what that means. On this podcast with Don Boudreaux, he gives the example of buying a $2k laptop from Sony. It's a private transaction that doesn't incur debt (necessarily, though it could, but that's a different issue). If he instead bought the laptop (or oil) from a domestic producer, it doesn't mean "we" now have that money to spend or invest. In the end, you gave a producer American money for a good. That producer then must use that American money in places that accept American money (usually that means assets or good denominated in American money) or they can exchange it with someone into their home currency. That money will either be spent on American goods or invested in American assets.

Tyler Cowen sums up well my thoughts on the misguided idea of money leaving the country in a post about sovereign wealth funds:

If capital has "left" the U.S., it's because there was some gain from that transaction, such as when we buy oil. There's then a subsequent gain if those revenue are invested wisely in the United States. It's not just a wash through "recycling." If you spend some money in stores, and then some people then invest in our company, that's not a wash either.

A help for the housing market

Alan Greenspan:

He did offer one suggestion: "The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.

He estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000, of whom about one third are immigrants. "Perhaps 150,000 of those are loosely classified as skilled," he said. "A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale -- and hence help stabilize prices."

From Greg Mankiw.

I thought a similar thing a few months ago. Well, not the same thing because I was thinking about "illegal" immigrants as well, but that isn't as politically palatable as just focusing on skilled immigrants. It was in relation to a blog post on the AJC about how many homes are vacant because unskilled immigrants are returning home (or simply moving on) due to the lack of jobs/enforcement. The result is that the values of those homes still occupied are falling. The question was raised of whether someone would rather have their homes lose value or have illegal neighbors. The overwhelming response in the comments was that people would rather have their homes lose value. I was kind of shocked, but kind of not.

In the end, instead of trying to artificially boost demand, Congress should simply reduce (heck, remove) the artificial constraints on demand.

Don Boudreaux on lobbyists

From my inbox:

17 August 2008

Editor, The New York Times Book Review
229 West 43rd St.
New York, NY 10036

To the Editor:

Thomas Frank is confused. First he argues, in 2004, that capitalist materialism has been unleashed on this great land by, of all things, Americans' failure to be sufficiently materialistic. Now he asserts that the gigantic and powerful lobbying industry currently astride Washington is the child of the same free-market ideology that has allegedly succeeded in inflicting laissez faire on Americans ("What's the Matter With Washington?" August 17).

I waited in vain for reviewer Michael Lind to point out the obvious fact that, if the market really has become so dominant as Mr. Frank famously asserts, the government would have fewer, not more, favors to sell. Lobbying would be a dying industry.

Alas, the continued, kudzu-like growth of lobbying firms in Washington is powerful evidence against Mr. Frank's incessantly repeated insistence that free-market "idolaters" have shifted all power from government to markets.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
Enterprise Hall
George Mason University
Fairfax, VA 22030
703-993-1130 (office)

Selling immigration restrictions to the global waming crowd

Two posts about this report by the Center for Immigration Studies that concludes the following:

Overall, our findings indicate that the average immigrant (legal or illegal) in the United States produces somewhat less CO2 than the average native-born American. However, immigrants in the United States produce about four times more CO2 in the United States as they would have in their countries of origin...

When it comes to dealing with global warming, environmentalists in the United States have generally chosen to adopt what might be described as piecemeal efforts to oppose new sources of fossil fuel-based energy, such as the construction of new coal-fired power plants...But they have assiduously avoided the underlying issue of growing energy demand driven by immigration-fueled population growth...

But to simply dismiss the large role that continuing high levels of immigration play in increasing U.S. and worldwide CO2 emissions is not only intellectually dishonest, it is also counter-productive. One must acknowledge a problem before a solution can be found. The effect of immigration is certainly not trivial. If immigrants in the United States were their own country, they would rank seventh in the world in annual CO2 output, ahead of such countries as Canada, France, and Great Britain.

Unless there is a change in immigration policy, 30 million (legal and illegal) immigrants are likely to settle in the United States over the next 20 years. One can still argue for high levels of immigration for any number of reasons. However, one cannot make the argument for high immigration without at least understanding what it means for global efforts to reduce the emission of greenhouse gases.

It's kind of long, but it essentially says that because immigrants emit more CO2 in the U.S. than they would in their home countries, their impact on global warming should be considered in any efforts to increase levels of immigration. Why is it that they emit more CO2 here than at home? Because they are wealthier here than they would otherwise be. One of the big global warming arguments, to me at least, is that globally we're too wealthy and because of that wealth, we're emitting too much carbon into the air that is causing temperature change. Th point of the study seems to be that if we can keep these immigrants from getting richer by coming here, we can slow global warming. Additionally, if we can stop all of us from becoming richer, we can also slow global warming. Unfortunately, though, the second point seems to be the goal of all the climate alarmists.

This first blog post I saw about the study concluded with this by Ronald Bailey:

These figures are likely to be true. But is keeping people poor by depriving us of their labor and skills really the best way to address man-made global warming?

Of all the comments, I like this one best:

Of course, the best way to combat greenhouse gases is to drive American citizens into poverty and adopting the lifestyles the poor illegal immigrants enjoy in their native countries. But who would advocate that? oh, wait...

Dan Griswold adds the following:

What the CIS study is really arguing is that rich people pollute more than poor people, so the world would be better off if more people remained poor. The same argument could be used to oppose economic development in places such as China and India that has lifted hundreds of millions of people out of poverty in the past two decades.

Through the dark lens of CIS, the world is a better place when poor people remain stuck in poor countries, and poor countries remain poor.

Why are they so interested?

After discussing an effort by some to urge the "federal government to encourage states to adopt automated enforcement laws to reduce red-light running," Radley Balko notes the following:

What Alexander and Ladies' Home Journal don't disclose in the article, however, is that the National Campaign to Stop Red Light Running is funded by three private companies: Affiliated Computer Systems, Gatso USA, and Redflex, Inc. All three are in the automated traffic enforcement business, and all three stand to make millions should the campaign prove successful. That's a pretty big omission.

Bootleggers and Baptists abound. Surely those companies are only concerned about the safety of of drivers.

Homeschooling is legal (again) in CA

From Jacon Sullen at reason:

Last week a California appeals court reversed a February ruling that said state law permits homeschooling only by credentialed teachers. In the earlier ruling, noted here by Katherine Mangu-Ward, the Court of Appeal for the 2nd Appellate District concluded that the legislature had deliberately removed an exemption for homeschooled children from California's compulsory education law in 1929 and had never reinstated it. The decision alarmed tens of thousands of Californians who thought they had the state's approval in teaching their children at home. In last week's ruling, the court reconsidered, finding that the legislature had implicitly endorsed homeschools by exempting them from various regulatory requirements. "While the Legislature has never acted to expressly supersede" appeals court decisions that said a homeschool did not qualify as a "private full-time day school," the three-judge panel said, "it has acted as though home schooling is, in fact, permitted in California."

Thomas Donlan about the failed Doha round:

The real issues were not heard amid this cacophony. India and other developing countries don't need to protect subsistence farmers' tiny incomes; if a billion people live on a dollar a day and another two billion live on two dollars a day, it would take a mere $10 billion to double their income. And increased global trade could pay for such transition costs in very short order.

The developing countries really need cheap imported food and cheap imported capital so that hundreds of millions of subsistence farmers and sharecroppers can move off the land and enter more productive sectors of the economy. If India is going to create economic opportunity for all its people, it needs more mechanized agriculture and fewer peasants. As China has shown over the last 30 years, this is not quick, easy or pleasant, but it works.

In the same way, the U.S., the EU and a few other efficient farming countries don't need to subsidize any of their farmers: They have mechanized agriculture and they can produce food for the entire world without taking billions of dollars a year away from the rest of their economies.

No child should grow up thinking that their story, their hometown story, is not a part of the larger American story. It's time Washington stopped working for special interests and started working for rural America. So not only do I want to recruit the teachers, but I especially want to recruit the [?] in rural communities. I want to make sure that we're making investments in rural schools. I think we can connect all of America to 21st Century technology. We'll show that we value farming in this country by launching a program that gives a hand to the next generation of farmers and helps them buy their first farm.

From a new ad (I guess) by Barack Obama. You can guess what I think about this. I saw this on the WSJ Washington Wire blog. This is ridiculous. Anyone who can say "It's time Washington stopped working for special interests and started working for rural America...We'll show that we value farming in this country by launching a program that gives a hand to the next generation of farmers and helps them buy their first farm" with a straight face deserves a medal. Maybe 4% of the country works in agriculture but somehow they aren't a special interest. A simple look at Wikipedia (a killer source, I know) defines an interest group as "an organized collection of people who seek to influence political decisions." Farm lobby anyone? How does Obama define a special interest? Maybe they just aren't "special" enough.

The Byrd Amendment

I sent the following letter in response to this from the WSJ:

Senator Robert Byrd’s recent foray into protectionism isn’t his first (Byrd’s Bad Idea Is Back, Aug 8). His meddling has produced other “Byrd Amendments” designed to protect the few at the expense of the many. One of his most notable was an amendment to the Clean Air Act of 1977.

Congress was looking for a way to decrease pollution emissions in response to growing public demand, so Senator Byrd offered an amendment requiring utility companies to install expensive scrubbers that helped clean the air. Great idea, right? Unfortunately, a tax on emissions would have been cheaper because it would have forced utilities to find the most efficient way to reduce pollutions. Maybe the companies would have installed the scrubbers anyway. Or, maybe they would have switched to the more expensive “clean” coal (coal with less sulfur dioxide, which was the real pollutant) from the cheaper “dirty” coal. We’ll never know. Senator Byrd’s amendment made sure of it.

The significance is that the dirty coal came from Senator Byrd’s home state of West Virginia while the clean coal came from the West. The result was that he protected the mining interests in his home state from competition by mandating that all utility
companies use the same pricey technology, incentivizing the utilities to use the cheaper, dirty coal at the expense of both consumers, who then had to pay more for their energy due to the scrubbers, and the producers of the clean coal in the West. If only Senator Byrd cared more for U.S. consumers, both those living in and out of West Virginia, than he does for favored lobbies.

Matt Hutchison
Atlanta, Georgia

I guess this is why he (and Ted Stevens, John Murtha, etc) keep getting elected. See this post about term limits. I'll admit I don't understand all the arguments against term limits, but this is a pretty good reason for them.

Term limits

WSJ Sunday Political Diary:

U.S. Term Limits president Philip Blumel mocks Mr. Obama's attitude as "utter nonsense." He notes that lobbyists derive their power and influence from careerist politicians, giving rise to the so-called "iron triangle" of power in Washington: career politicians, federal agency bureaucrats and lobbyists. The idea of term limits is to break up that symbiotic and corruptive pact.

The argument that elections are a form of term limits is the standard reply from the business-as-usual crowd in Washington. "As an incumbent," says Mr. Blumel, "Mr. Obama knows full well that members of Congress have now skewed the laws to give themselves a virtual guarantee of a lifetime job. And as the self-appointed apostle of change, he ought to be taking the lead to change all that inequity."

That was in response to this from Barack Obama:

"I'm generally not in favor of term limits. Nobody is term-limiting the lobbyists or the slick operators walking around the halls of Congress. I believe in one form of term limits. They're called elections."

That is very closely related to this letter of mine in the WSJ. Checked politicians, either voluntarily or involuntarily, is the only real check on lobbyists.

Tradeoffs

I submitted the following letters to the WSJ in response to this editorial:

I’m happy to hear about Barack Obama’s favoring of a stronger dollar (“Barack and the Buck”, Aug. 8). Unfortunately, I fear he’s only making a well-timed political move related to high gas prices (not unlike Republicans banging the “drill now” drum) he doesn’t intend to carry out. The question for both him and the Republicans should be: “Why are you supporting this now instead of months or years ago?”. In Senator Obama’s case, I imagine it has something to do with an attempt to strike a balance between decreasing the cost of oil and appealing to his manufacturing base.

Many of us learned a long time ago that as the value of the home currency falls relative to that of foreign currencies exports rise (which is exactly what has happened in the US, especially over the last year) and imports fall. The reason imports fall, for example, is because their prices, in dollar terms, increase (oil, anyone?). The flip side of that is what Obama is hoping undecided voters in the Rust Belt don’t fully grasp: when the dollar strengthens, exports fall and imports rise. The result, of course, is that the prices of foreign imports, like oil, and the number of manufacturing jobs available to American workers will both decrease. While I’d like to see both candidates take a strong dollar stance, I don’t think the mercantilist mentality running through the country will let that happen. So much for a good idea.

Matt Hutchison
Atlanta, Georgia

It's been too long

Way too long. Actually, I think it's been two or three months since I updated the song at the top of the blog. I could do several, but since I'm only going to put one there, I must choose. This song isn't actually by The White Stripes but by the Raconteurs, Jack White's other band. It's from their most recent album, Consolers of the Lonely (here for the album on imeem and here for it on Amazon), and is called Top Yourself.


Enjoy.

"Plenty of stupid"

That was how Don Boudreaux described his email this morning. I wish I could say that I disagreed with his assessment:

8 August 2008

Editor, The New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

Paul Krugman is confused ("Know-Nothing Politics," August 8). While I agree that Bush's attack on Iraq was both stupid and immoral, many of the reasons that persons on the left (such as Mr. Krugman) offer against military intervention abroad apply equally to "liberals'" case for government intervention domestically.

Just as many on the right naively fantasize that foreign problems are best solved by force, "liberals" fantasize that domestic problems - real and imaginary - are best solved by force. Jobs disappearing in Ohio? No problem - force Americans to buy fewer foreign goods. Too many Americans without health insurance? Force taxpayers to give it to them. The "distribution" of income doesn't satisfy some Very Caring Person's criterion? Government should forcibly redistribute. A mine collapses in West Virginia? Uncle Sam should force mine-owners to increase safety. See. All very simple.

Unlike Mr. Krugman, I believe that both political parties are the party of the stupid - specifically Republicans are the party of the stupid and the hypocritical and the Democrats are the party of the stupid and the arrogant.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

Who's going to build the ladder?

I don't like the analogy, but I played along. I sent the following letter to this editorial in the AJC describing how the government is building the ladder that will get the economy out of its current hole:

In his August 8 editorial (“Rung by rung out of the hole”), Andre Jackson got his metaphor backwards by implying that it is the government that will “get us out of the hole”. No amount of monetary tinkering or Congressional grandstanding to show they are “doing something” is going to build the ladder he’s describing, especially not in an economy as dynamic as is ours. Instead, elected officials and government bureaucrats can do no better than to keep the needed tools and supplies necessary to build said latter – stable money for consumers to spend and businesses to invest – in the hands of the private sector and kindly step aside. Only then can the economy truly return to its feet and get back to making the U.S. the wealthiest nation the world has ever seen, just like it has in every other economic crisis we’ve ever experienced.

Required contributions

Don Boudreaux:

7 August 2008

Director, Coalition for Pulmonary Fibrosis

Dear Sir or Madam:

I received your e-mail encouraging me to ask my representatives in Congress to vote for H.R. 6567, which would "increase federal research funding for idiopathic pulmonary fibrosis."

Even though in March IPF stole the life of my dear mother, I cannot join your crusade for more taxpayer funding to fight this horrible disease. Congress does not conjure resources from thin air; any resources devoted to finding a cure for IPF must be taken from some other use - and there's no reason to suppose that Congress can judge better than private individuals how best to use resources. Who's to say that resources taken by government from the private sector to support IPF research would not yield even greater long-term benefits by being left in the private sector? Perhaps resources devoted to IPF research would otherwise have been used to cure
leukemia or to develop an automobile engine powered by water.

More importantly, being touched tragically by that disease gives me no moral claim to have Congress, in my name, take resources from other people. I can, and do, ask people to voluntarily fund IPF research. I cannot, and will not, support any effort to force them to do so.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

It just feels a little like blackmail

Maybe that's too strong, but I don't like it. Matt Miller starts strong:

1. The biggest threat to the poverty-ending power of capitalism today is the looming backlash against free trade and open markets in the developed world, especially in the U.S. If the rich world shuts its borders we’ll hurt economic prospects elsewhere in ways that no amount of “creative capitalism,” as discussed here, can begin to offset.
2. The paradox, then, is that the biggest, most “creative” boost American capitalists can offer the world’s poor is to ease the economic anxiety of workers here at home -- because it’s their insecurity that will fuel the protectionist backlash.

Then I got a little nervous:

3. Easing this economic anxiety means providing better health care and pension security for average workers.

Then I felt he fell off the truck:

4. This can’t happen without government playing a bigger role, and supplanting over time the central (and unique) role corporations have come to play in the American welfare state. It will also entail higher taxes.
5. American capitalists -- including, perhaps, Mr. Gates, though I’ve not seen him speak to these questions -- are generally confused about the necessity of this transition. On the one hand business leaders want to get out of the health care and pension business, because soaring costs are killing them. But in the next breath most executives say they don’t want “big government” more involved. Who else do they think is available?
6. In addition, American capitalists wrongly believe that the higher taxes needed to support this transition would hurt the economy, when the evidence from other advanced nations shows that the modestly higher taxes required to relieve corporations of this burden, and plug other gaps in the safety net, are perfectly consistent with strong economic growth. America would not become France or Sweden.

Why wasn't the answer education instead of appeasement? I have a really hard time with the idea of the idea of people blocking free trade unless given concessions. I feel the same way about income redistribution. I've heard people say that playing Robin Hood keeps the poor peaceful.

Immigrants and working conditions

I wrote the following letter in response to this piece in the WSJ by Thomas Frank:

After reading Thomas Frank’s recent piece (“Captives of the Meatpacking Archipelago”, August 6), I couldn’t quite tell if his criticism of conservatives was directed toward its policies about immigration or labor. (After all, the only way the “hellish conditions” he described even existed in the first place was because, the bosses had the workers, being illegal, “over a barrel”.) Though I concur with any immigration criticism, Mr. Frank also provides a fine example of how relatively un-”hellish” those conditions actually were.

The illegal immigrants who were working at the AgriProcessors plant (children included, which is unfortunate) were not forced to work under those conditions but chose to do so because of a lack of better options. When presented with a choice between returning to their home countries and working for little money on a dangerous job, we can see how they decided. While Mr. Frank has pretty good career options writing columns for The Wall Street Journal, those who risk so much to immigrate here illegally and work under those conditions, obviously don’t. It might make him feel good to help these workers make more money, for example, but when many of them lose their jobs due to increased competition for those higher wages from American-born workers and are then forced to take the next relatively more “hellish” job (or maybe even return home), I don’t think they will be so grateful.

Matt Hutchison
Atlanta, Georgia

I'm in utter disbelief

I really am. I saw this post by Matt Welch at reason, which led me to this post on the LA Times Opinion LA blog:

Democratic and Republican lawmakers in Sacramento just might be bailed out of their budget standoff by a new initiative that would slap a one-time wealth tax of 55% on Californians rude enough to have $20 million or more in property. The ballot measure wouldn't come to voters until June 2010 at the earliest, but that might not be a problem, seeing as how the current year's budget will probably still be stalled.

Secretary of State Debra Bowen announced today that the initiative is entering circulation. See the announcement here (pdf), and the initiative language here (pdf). The approach is, on the surface, the same as the Democrats' plan for closing California's gaping budget hole -- get it from the rich with new tax brackets. But the numbers differ and, when you get to the details you realize that this measure is creative. And by creative, I mean weird...

So, rich folk, you say you'd just take your money and Chevron stock and move to Telluride? Or the Bahamas? These guys are way ahead of you. The wealthy would have to pay to leave the state, whether their mode of exodus is a limousine or a pine box.

I read the PDF and it says the money (put into The Environmental Superfund) will be spent as follows:

1) To purchase 30% - 51% of the outstanding voting common stock of ExxonMobil Corporation.
2) To purchase 30% - 51% of the outstanding voting common stock of Chevron Corporation.
3) To purchase 30% - 51% of the outstanding voting common stock of General Motors Corporation.
4) To purchase 30% - 51% of the voting common stock of Ford Motor Company.
5) To purchase 30% - 51% of the outstanding voting common stock of Goldman Sachs Group.
6) To purchase 30% - 51% of the outstanding voting common stock of JP Morgan Chase Company.
7) To purchase 30% - 51% of the outstanding voting common stock of Citigroup Inc.

I just don't know what to think.

Legal theft

Walter Williams:

Edgar K. Browning, a professor of economics at Texas A&M University, has a new book aptly titled "Stealing From Each Other." Its subtitle, "How the Welfare State Robs Americans of Money and Spirit," goes to the heart of what the book is about: The rise of equalitarian ideology has driven Americans to steal from one another.

Browning notes certain kinds of equality have been a cherished value in America. Equality under the law and, within reason, equality of opportunity is consistent with a free society. Equality of results is an anathema to a free society, and within it lie the seeds of tyranny...

So what's Browning's solution? First, he reminds us of the biblical admonition "Thou shalt not steal." Redistribution programs produce the same result as theft. In fact, that's what a thief does: He redistributes income. The difference between government and thievery is mostly a matter of legality.

Taxes and the states

By Steven Malanga for RealClearMarkets:

I’ve often heard people around the country say that voters in places like California, New York and New Jersey (which instituted its own ‘millionaires’ tax on those earning $500,000 or more a year several years ago) get what they deserve. But beware. States that have taxed and spent themselves into a bind want everyone else to pay for their excesses. Even as Gov. Paterson excoriated his former colleagues in the state legislature for failing to recognize the magnitude of New York’s budget problems, last week he traveled to Washington, D.C., to urge the federal government to help bail out the state. Paterson argued creatively that the rest of the country should come to his aid because the Empire State is home to the country’s financial markets and thereby contributes disproportionately to the America economy--although I can imagine that there are many states that would gladly take those financial institutions off of New York’s hands if the governor considers them such a burden.

Paterson also contended that states like New York deserve aid because they send more in taxes to the federal government than they receive in return in spending. This is an old argument that one often hears from pols not only in New York, but in New Jersey, California and Massachusetts. Based on an annual ‘balance of payments’ study sponsored by former Sen. Daniel Patrick Moynihan from 1977 through 1999, the study found that certain states were always big losers. But even Moynihan realized that those states were mostly responsible for their own plight, because their federal legislators had led the way in constructing a tax system that not only redistributed income from the rich to others, but also redistributed income regionally.

The article starts by talking about how NY Gov. Paterson learned of several friends who had left the state due to high taxes and burdensome regulation. Now, he is asking the government (ie the citizens of other states) to pay him back for the revenue that was driven from his state.

"Lose the 'we.'"

Arnold Kling quotes Nicholas Lemann discussing a book by Arthur Fisher Bentley on political theory:

Under Bentley's rules, you can't talk about public opinion, because there is no such thing as "the public" (there are only groups) and opinions don't matter, only actions do. Abstractions like "the people" and "popular will" have no real content, either. "The public interest" is a useless concept, he says, because "there is nothing which is best literally for the whole people."

And adds:

I always thought that this was standard political theory. It was what my father taught me. Once, when I used the word "public interest" in one of my essays, he chided me that there is no such thing. It was his way of saying, "Lose the 'we.'"

This is pretty much the root good of a truly free society and why a truly democratic society creates problems. Whenever you try to pick on thing that is best for everyone, you will at the same time leave a lot of people unhappy.

Capitalism - defined

Well, not really. Jonah Goldberg responding to a critic of his support of capitalism:

Third, I agree that capitalism is flawed and that it doesn’t provide us with a sense of meaning. However, I don’t think that is it’s flaw. I don’t want the government to provide me with meaning. I don’t want to live in a society where politics is the chief provider of “meaning” either. Some may recall, I wrote a whole book touching on the problems with politics of “meaning.”

Fourth, I don’t believe that capitalism makes people irrelevant. Democratic free market systems respect individuals far, far, far more than systems which reject both democracy and free markets. Explicitly anti-capitalist systems treat the individual with barbaric indifference. In America, we lionize the individual. And, in our system, and those like it, the government is not openly hostile to the better and more authentic sources of meaning – faith, friends, neighborhoods, culture, civil society etc. Of course, sometimes the state oversteps its bounds, makes mistakes, gets in bed with business, whatever. But these are not the fulfillments of free market ideology. Most often they are violations of it.

The optimism of Gary Becker

From the Becker-Posner blog:

I am an optimist about the future prospects of America; that is, I believe the individuality, entrepreneurship, and drive in this country will continue to propel the economy and society forward at a good pace. The biggest risk to America's continuing success lies not in the considerations already discussed, but in the expansion of government regulations and controls that can throttle the dynamic energies of its competitive private sector. Clearly, various forms of government spending and regulation, such as spending on police and the military, on schools and other infrastructure, are crucial to any prosperous society. However, the tendency during the past half-century has been to go further than is warranted as different interest groups look to the government for help. Governments now often decide what consumer goods can be produced (see our blog discussion last week), subsidize housing and other goods, and regulate who can be fired and hired (especially in many European countries but also increasingly in the US). Governments also are placing greater stress on equality as opposed to opportunity and efficiency, and pay for medical spending, provide retirement incomes, and often impose heavy taxes on persons who earn more than average.

So far, this expansion of the role of government has not been a crucial deterrent to entrepreneurship and private energies in the United States-a much greater expansion of government has had much more harmful effects in countries like Italy and France. Although I remain optimistic, I do fear that interest group pressures toward a much larger role of government in the United States may become much harder to resist in the future, and that this could eventually kill, or at least badly wound, the free market-entrepreneurial goose that has been laying the golden eggs.

Is it worth it?

The following editorial appeared in yesterday's WSJ:

Yet at Doha, all of this wasn't enough to defeat the protectionists. The media spin of the moment is that this shows the rising power of the developing world. But the real dividing line in the world economy isn't this updated version of the North vs. South 1950s cliché. The real battle is between those who want to expand this era of global trade and prosperity, and those who want to carve out their own protected niches.

The latter seems to include Indian Commerce Minister Kamal Nath, who is the main villain in this week's failure. He preened as a Third World hero by refusing to open his country further to farm imports, insisting on a "special safeguard mechanism" that would have let countries jack up their tariffs if imports rose too rapidly. He claimed this would protect the "livelihood of millions of farmers" in India. But the rise of India's middle class has coincided precisely with the move of millions from the countryside to cities, as well as India's growing engagement with the world economy. More Indians will stay poorer longer because of his obstinance.

The U.S. political class also bears a substantial part of the blame. In its waning months, the Bush Administration has less power to persuade. But part of that weakness goes back to the original trade sins of its first two years. With its steel tariffs and overstuffed farm subsidy bill of 2002, the Administration sent a signal that domestic politics took precedence over U.S. global trade leadership. Its credibility never recovered.

I submitted the following letter in response:

Like many others, I was unhappy to hear of the recent failure of the Doha trade round (again) (“The End of Free Trade?”, July 31), but we shouldn’t be so quick to lay the blame (the “main villain”) at the feet of other countries. The U.S. is a nation that knows the benefits of trade, both for producers and consumers. We should be willing to assume international leadership on the issue of free trade by adopting these kinds of multilateral agreements, flaws and all, even when they don’t appeal to the mercantilist sentiment currently running through our country. If India wants to increase tariffs on farm imports, who are we to say it’s wrong to protect domestic agriculture, with our “do as I say, not as I do” policy of trade negotiations? We all know how lower barriers to imports are a boon to domestic consumers because of lower prices and greater product choices. If India were to increase farm tariffs and cut themselves off from these benefits, causing some pain for our already subsidized farmers, is that worth the gains available to us, them, and all other developed and developing nations from a more open world trade environment? Obviously it is to the negotiators. But don’t count me among that group.

Matt Hutchison
Atlanta, Georgia

Prices and dispersed knowledge - Hayek

From F.A. Hayek's The Fatal Conceit that I'm reading:

We are led - for example by the pricing system in the market exchange - to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions - economic, legal, and moral - into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.

Modern economics explains how such an extended order can come into being, and how itself constitutes an information-gathering process, able to call up, and to put to use, widely dispersed information that no central planning agency, let alone any individual, would know as a whole, posses, or control. Man's knowledge, as [Adam] Smith knew, is dispersed...Information-gathering institutions such as the market enable us to use such dispersed and unsurveyable to form super-individual patterns. After institutions and traditions based on such patterns evolved, it was no longer necessary for people to strive for agreement on a unitary purpose (as in the small band), for widely dispersed knowledge an skills could now readily be brought into play for diverse ends.

Who stole the American Dream?

By Rick Newman on Seeking Alpha:

The Mexicans and Salvadorans and Indians and Chinese have robbed us, too, because they've taken a lot of jobs that American are fully capable of doing for more money. What's the point of working hard if somebody else is willing to work even harder for less?
...
And the biggest villain, of course, is our own government. Where are the gasoline subsidies? Or the tax breaks that will give us the incentive us to work harder? How about a bigger mortgage interest deduction to make owning a home worth all the trouble? And why doesn't the government send us all some more money to help restore our work ethic and our quality of life?

Organic trustbusting

By Katherine Mangu-Ward for reason:

The phrase trust-busting always conjures sepia-toned images of pince-nez, Rough Riders, and bushy mustaches to me. But it's actually is alive and well: Yesterday, Whole Foods—apparently the Standard Oil of the 21st century—was hauled back out on the Federal Trade Commission's chopping block.

In early 2007, Whole Foods merged with another organic grocery chain, Wild Oats. The FTC decided that this looked like a trust that needed busting, arguing that "core" organic consumers would be stuck with only the Whole Food/Wild Oats hybrid for their shopping. We're talking about the people who need quinoa like turn-of-the-century householders needed their lamp oil.

A fast track decision let the merger continue, accepting Whole Food's argument that Wal-Mart and other traditional grocery stores have greatly expanded their organic offerings, and that even after the merger the chain has plenty of competition. But now an appeals court has revived the case by bouncing it back down to the lower court.

I, of course, am skeptical of anti-trust activity. I cringe just a little bit whenever I hear about a particular merger being slowed down substantially over monopoly concerns. I'm glad the XM-Sirius merger was approved last week, even if they had to make some ridiculous concessions.

Anyway, I thought this story was worth noting for similar reasons. Is it hard to imagine Wal-Mart and other grocers entering the organic food business if they thought they could make money in it? If Whole Foods raises prices to a high enough level, you can bet they'll jump in the fray with gusto and push prices back down.

The question is WHY?

From a recent article in The Economist:

The polls tell a dismal tale. Only 29% of Americans approve of the president. Only 14% approve of Congress. And just 6% view the economy positively. Yet many Americans combine despondency about the big picture with personal contentment. More than 80% say they are satisfied with their own circumstances. Even more are satisfied with their jobs. And although nearly everyone despises Congress, most Americans like their own representatives.

It is accompanied by a graph that shows an ever-increasing percentage of people answering "dissatisfied" to the question "How do you feel about the way things are going in America?".

Also, in an article today at Salon:

Earlier this month, Rasmussen Reports announced the humiliating finding that "the percentage of voters who give Congress good or excellent ratings has fallen to single digits [9 percent] for the first time in Rasmussen Reports tracking history." That extremely negative view of Congress cuts across partisan and ideological lines, as only small percentages of Democrats (13 percent), Republicans (8 percent) and independents (3 percent) believe that Congress is doing an "excellent" or even a "good" job. Perhaps most remarkable, some polls -- such as one from Fox News last month -- reveal that the Democratic-led Congress is actually more unpopular among Democrats than among Republicans, with 23 percent of Republicans approving of Congress compared with only 18 percent of Democrats. One would be hard-pressed to find a time in modern American history, if such a time exists at all, when a Congress was more unpopular among the party that controls it than among voters from the opposition party.

I think it's funny how often we rely on surveys that ask simply "Are you satisfied with...?", as if it doesn't matter "why" we are or are not dissatisfied. I might answer in the negative because I hear talk about raising taxes, destructive global warming solutions, or housing bailouts. Meanwhile someone else might answer in the negative because some people are too rich, congress isn't doing anything to keep our environment from wasting away, and too many villainous banks are foreclosing on people's home. Same answer, very different reasons. To me, it seems, those who are satisfied are effectively the "center" -- those who end up getting what they want most often. As the number of satisfied people get smaller and smaller, it just means we're getting more and more divided politically.

The politics of ethanol mandates

T. Boone Pickens in the LA Times (HT Hit and Run):

Back in 1996 when Bob Dole ran for president and I was his energy advisor, and he told me...on ethanol, he said, "Ethanol is, you say it's a bad fuel." I said, "Come on Bob, you spend more money making it than importing it." And he said, "Let me explain something to you about politics: There are 21 farm states, and that's 42 senators. Don't go any further." I'm getting the picture. I said, "They want ethanol." He said, "They're going to have ethanol." And so he said, "Don't waste any more of our time or your time telling us it's a bad idea, because they're going to do it."

Reason adds the following:

Apparently Pickens believes that taxpayers and ratepayers should help him finance his gigantic $10 billion wind farm. Like the ethanol barons before him, Pickens has learned to love subsidies and corporate tax breaks as much as next tycoon. Ah, hypocrisy.

Who's interested in the new housing bill

From Arnold Kling at Econlog:

The Center for American Progress is ecstatic over the $3.9 billion in community development block grants.

"Local governments could use the grants to purchase, renovate, and resell foreclosed homes, and then use the proceeds from these sales to repeat the process."

I get it. If I use my own money to purchases, renovates, and resell a home, that's greedy speculation. But if you use my money to do it, that's community development...

Basically, the housing bill rewards everyone who participated in the excesses of the housing market and punishes the rest of us.

Immigration to relieve poverty

From Kerry Howley at Reason:

Wage gaps between observably identical Nigerian workers in the United States and Nigerian workers in Nigeria (same gender, education, work experience, etc) are... considerable. They swamp the wage gaps between men and women in the US. They swamp the gaps between whites and blacks in the US. Actually, they swamp the wage gaps between whites and blacks in the United States in 1855. For several countries, the effect of border restrictions on the wages of workers of equal productivity "is greater than any form of wage discrimination (gender, race, or ethnicity) that has ever been measured." The labor protectionism that keeps poor workers out of rich countries upholds one of the largest remaining price distortions in any global market.

Who cares? You weren't planning on seeking employment in Nigeria anyway. The upshot is that even a very limited loosening of borders could do enormous, immediate good. No other poverty alleviation policy--microcredit, education, public health interventions, anti-sweatshop activism--compares with a work visa, even a temporary one.

Free markets and government intervention

By Will Wilkinson for Cato:

Many market institutions, like our advanced financial markets, are very far from being self-organizing outgrowths of unregulated market exchange. Instead they are, by and large, creatures of the vast body of law and government regulation that defines the rules of market exchange — that determine what may be bought and sold, and how — and are tightly integrated with more or less freestanding government institutions like the Fed. When these markets stumble, it’s just a rookie mistake of political economy to see that as problem with markets, per se, rather than as a problem with the way regulation and government institutions happen to have structured those markets and thereby structured the incentives of the individuals and firms that act within them.

People like to say that we're in our current mess because of the "free market", but that's only half the story. The market simply reacts to the framework forced around it by government.

A mixed up form of capitalism

From Steven Malanga for Real Clear Markets:

The U.S. has become a purveyor of what might best be described as selectively applied capitalism, in which we urge free markets and growth policies on the rest of the world but increasingly do not practice what we preach. Today, if you were building a country from scratch you would hardly look to the U.S. as a model of how to tax your businesses and residents, how to regulate your financial systems, or how to use markets and incentives to organize and run government most efficiently...

Nothing illustrates how difficult it is to end a government initiative, even when its raison d’etre has long passed, than the persistence of Fannie and Freddie. Several studies have estimated that today what Fannie Mae and Freddie Mac give us through their giant borrowing power and implicit government backing (which has recently become explicit) is a reduction in the interest rate on mortgages of about 25 basis points. In other words, the federal government has remained our biggest player in the home mortgage market through these two quasi-public entities for the sake of knocking a quarter of a percentage point off your mortgage.

Voting and self-interest

From Bryan Caplan at Econlog:

Most of the fear of low turnout probably rests on the empirically discredited Self-Interested Voter Hypothesis. If voters were selfish, then groups with unusually low turnout would become the punching bags of democratic politics. Fortunately, for all their flaws, voters have a strong sense of fair play. They may have crazy beliefs about the consequences of their favorite policies, but they are usually trying to promote the general interest. The main route to better policies isn't equalizing (or maximizing!) turnount; it's raising the average competence of the people who show up.

If you're a normal American, you're likely to conclude that we just need more (or better) education. But if you're an economist, it's hard to ignore a much cheaper alternative: Encourage people who don't understand the issues to stay home. At minimum, we should stop trying to raise turnout, and stop trying to make the politically apathetic feel guilty about non-participation. Apathy may not be a virtue, but it's a lot better than the activism of the irrational.

"The reality of the risk to society"

By Nobel Prize-winner Vernon Smith on Creative Capitalism:

But here's the rub: the longer the loan, and the greater the uncertainty of a stable economic environment, the greater the required upfront equity, or down payment. Taken to the limit, these factors can result in no one giving you a loan. No one is to blame, and intervention by a government agency to reduce the risk to the mortgage lender does nothing to reduce the reality of the risk to society.

Home buyers, who are also voters, don't like to accept that reality. Neither do the politicians who want to get elected and convince themselves, just as the potential home owners convince themselves, that you can get something for nothing -- that you can obtain low down payment loans on home purchases and avoid the inherent risks.

These risks hold for all assets -- almost all new inventions, products and businesses are not loan-worthy -- but homes represent the universally popular asset. Hence the emergence of the uneconomical but politically popular (and now discredited) GSEs: Fannie May and Freddie Mac, both now going south, unless rescued by the deep pockets of the US Treasury. That rescue is no less the mark of a Republican than a Democratic action; their divide here is mostly a matter of rhetoric.

Buying citizenship

From the Chicago GSB Magazine:

What if the United States began charging $50,000 a person for the legal right to immigrate? Nobel laureate Gary Becker, who came up with the idea, acknowledges it may be considered “repugnant” now. But he also says it could stanch the flood of illegal immigration, draw more skilled workers here, and even raise revenue for the country.

Becker’s not trying to eject illegal workers; in fact, he said, they could pay to stay. The idea is to upend the existing black market that exacts a much higher price for illegal immigrants — some who pay with their lives.

I could live with that. I'd still prefer it to be free, but unfortunately the political climate nowadays won't permit it. The thing I don't like it that it seems to say that immigrants can come as long as those who came first are compensated to somehow make up for the loss they will (presumably) experience.

Life's value

An interesting post at Cato by Jim Harper. He talks about how the EPA revised the value of a statistical life downward and how this is uncomfortable this is to people to think of. I've said before how we do this all the time, even if we don't think of it. For example, of course we value our lives, but we all drive fast or eat unhealthy food anyway. To live our lives in a way that completely eliminates any risk of danger, would, in my opinion, make life hardly worth living. Anyway, the paragraphs I like:

If you value life too highly, you will take steps to protect life and health that undermine the value of living. Why is life “precious”? Some say for it’s own sake. But most people believe it’s because of the wonderful range of experiences, adventures, tastes, emotions, and relationships we get to enjoy in life. The freedom. If we give up too much of that, focusing strictly on keeping our hearts pumping and air flowing in and out of the lungs, we’ve lost track of the reason for living. Simply maintaining bodies in a state of sentience is not what it’s all about. So regulatory policy must do what we must do as individuals: strike a balance between life and living. Fall too far out of balance in either direction and you’re either prematurely dead or living a life without meaning.

But if you disagree with the value the EPA is placing on human life, there might be something to that. The regulatory process makes a huge collective judgments about the value of life, lumping us all together into one big average.

We should be as free as possible to make our own judgments about risk and the value of life. It’s difficult with things like air pollution, but even those kinds of risks can often be controlled through individual judgments.

"Engaged, effective and focused"?

This is the second letter I sent to the WSJ this morning:

In his criticism of Republicans and “free marketeers”, Joseph Petrowski (“A Bipartisan Fix for the Oil Crisis”, July 10) neatly and succinctly expressed why many people don’t want government intervention with our energy situation. If the government, in fact, really was “engaged, effective and focused”, I think more people would be less concerned with its involvement. But unfortunately, that isn’t the case. First of all, with an approval rating in the low teens, it’s a wonder ANYONE wants Congress to do ANYTHING for fear of messing it up somehow. Secondly, our government isn’t structured in a way that will ever make it “focused” on much else that the re-election of its members or the perpetuation of its bureaucracy. And lastly, even if we were able to find a way to elect the most selfless politicians into office (and somehow keep them that way), they would run into what F.A. Hayek referred to as the “fatal conceit” when we charge them with picking the right technologies to subsidize or standards to mandate. Ironically, it’s the market mechanism Mr. Petrowski lauded in his appeal to Democrats, the amalgamation of the knowledge of millions of buyers and sellers manifested in prices, not the special interest-influenced selection by a small group of experts, bureaucrats, and politicians, that is best suited to address these kinds of problems.

Matt Hutchison
Atlanta, Georgia

I was a little confused by something Petrowski wrote in his article, so I added the following question for the editorial board at the end of my letter. We'll see if they respond.

By the way, was Mr. Petrowski saying that “the latest farm bill, ethanol and sugar tariffs, the cost of the Iraq war and Bear Stearns” are examples of free markets run amok? That’s the only reason I can think of why he would call criticism of biofuel subsidies and fleet mandates and the like naïve or hypocritical.

Should independence be a goal?

I sent the following letter, the first of two, to the WSJ this morning:

Much has been written (T. Boone Pickens and Rod Hunter are recent examples), explicitly or implicitly, about how we should wean ourselves from foreign oil for strategic reasons. The argument typically revolves around the fact that some of the countries most hostile to America are among those we buy a significant amount of oil and in buying that oil, we compromise our national security. But are there strategic reasons why shouldn’t work for energy independence?

If we as a nation are so beholden to these foreign countries who only want to see our downfall, why haven’t they already done something about it? Surely they know how catastrophic it would be for us if they simply shut off the valves. Doesn’t the reason have something to do with the fact that American consumers are the source of their wealth? Their way of life is tied to our way of life; they can’t disrupt ours without disrupting their own. I think the same could be said regarding acts of physical aggression. If foreign powers (such as Iran) decide to, say, fire a missile, when would they do it? When the benefits (whatever they might be) as they perceive them exceed the costs (lost oil revenues). The more we become energy independent simply for the sake of independence, we more we lower the costs of hostile behavior, making such behavior more likely. One of the great benefits of international trade is that it forces countries to behave because doing so is in their economic interest.

Matt Hutchison
Atlanta, Georgia

Graft and thugs in the Santa union

I actually don't know if it's really a union. Also, not terribly important, but I thought it was funny.

From the WSJ:

Then, in August last year, Mr. Connaghan disclosed that he had signed a contract with a Hollywood production company for a possible movie on a Santa convention. Mr. Connaghan acknowledged he stood to retain as much as $25,000 as the film's consultant, but said the group would also get up to $50,000. Some Santas said he was personally profiting as head of the organization. "I told him that is a conflict of interest and because of that you should resign," says Tom Hartsfield, 69, a founding amalgamator living in Panguitch, Utah...

Mr. Trolli then ascended to the presidency. His detractors say he began ruling with an iron fist in a white glove. His board stripped about 20 Santas of their membership for offenses such as maligning fellow Santas on Elf Net, a Web chat group run by the Amalgamated Santas. In November, he got the remaining board to agree to confidentiality agreements concerning board discussions. Mr. Hartsfield, who didn't agree with the new rule, complained on Elf Net. The message board's administrator, Jeff Germann, banned him from Elf Net for 60 days.

"He broke the rule," says Mr. Germann, a 6-foot-4-inch, 300-pound Santa from Springfield, Mo., whom some dissidents accuse of using his size to intimidate fellow Santas. Mr. Germann denies the charge: "The problem with being big is they always call you a bully."

Things became physical that month, when a Santa who had been banished from Elf Net tried to crash a board meeting of Amalgamated Santas at Knott's Berry Farm Resort Hotel in Buena Park, Calif.

"Our" money? Who is we?

Ray D. Madoff in an op-ed for the NY Times:

If this were only a matter of Leona Helmsley wasting her own money, no one would need to care. But she is wasting ours too.

The charitable deduction constitutes a subsidy from the federal government. The government, in effect, makes itself a partner in every charitable bequest. In Mrs. Helmsley’s case, given that her fortune warranted an estate tax rate of 45 percent, her $8 billion donation for dogs is really a gift of $4.4 billion from her and $3.6 billion from you and me...

There are other reasons the law should not encourage people to tie up their resources — and ours — for all time.

His argument is for increased spending requirements for private foundations. Apparently Leona Helmsley left $8 billion in a foundation for her pets or something, which means Uncle Sam doesn't get his share of the pie at her 45% rate. Mr Madoff doesn't like that. Somehow, he reasons, her money, now that she's gone, should be our money. However much he disagrees with how she spent her money, I don't see how anyone can believe he has a right to another's stuff, dead or alive. I don't buy the argument that because she is legally avoiding taxes, she's wasting someone else's money by doing what she wants with her money.

"Who is us and who is them"?

Third Cato post.

David Boaz on the congressional opposition to Inbev's proposed acquisition of Anheuser-Busch:

Maybe the real concern is that an “iconic” American brand will be owned by foreigners. Anheuser-Busch is indeed a classic piece of Americana, a company founded by German immigrants in a city founded by Frenchmen and named for the French king. And now, in an increasingly globalized world, it might be owned by a Belgian company that has been controlled by Brazilians since a 2005 merger. This sort of globalization is increasingly common. As Robert Reich said as far back as 1991, “It’s very hard to separate out any longer who is us and who is them. If you want to buy an American-made car today, you have a better chance buying an American-made car if you buy a Honda than if you buy a Pontiac LeMans, most of which is produced outside of the United States. People forget or they don’t understand the extent to which globalization has taken over these corporations — foreigners coming here, we’re going there. Chrysler owns a big chunk of Mitsubishi, Ford owns 25 percent of Mazda.”

Inflation and the Bible

Second Cato post.

Dan Griswold first quotes Gideon Gono, head of Zimbabwe's central bank, as quoted in this WSJ article and adds some well-placed commentary:

To justify his mismanagement Gono cites the Bible and Christianity:

"Anyone who says the bank governor should violate the head of state is violating a principle that Jesus Christ demanded of his disciples. A key element Christ looked for in his disciples was loyalty."

That begs the question: Loyalty to whom?

In reading his Bible, Mr. Gono must have missed the bit about “Thou shall not steal,” which is exactly what hyperinflation does. It massively expropriates wealth from private citizens and gives it to the government. When Peter and his fellow apostles were told by the government authorities of their day to stop preaching about Jesus (Acts of the Apostles, Chapter 5), they replied, “We must obey God rather than men.”

Is it so wrong to sell a vote?

Some good posts on the Cato blog yesterday. This is the first of three.

Dan Mitchell tells of a student's attempt to sell his vote for $10 (as reported here on Fox):

Max P. Sanders, 19, was charged with a felony Thursday in Hennepin County District Court after allegedly asking for a minimum of $10 in exchange for voting for the bidder’s preferred candidate. “Good luck!” …Sanders was charged with one count of bribery, treating and soliciting under an 1893 state law that makes it a crime to offer to buy or sell a vote. According to a criminal complaint, the Minnesota Secretary of State’s Office learned about the offering on the Web site and told prosecutors. Investigators sent a subpoena to eBay and got information that led to Sanders. “We take it very seriously. Fundamentally, we believe it is wrong to sell your vote,” said John Aiken, a spokesman for the office. “There are people that have died for this country for our right to vote, and to take something that lightly, to say, ‘I can be bought.’

It sounds pretty egregious to be sure, but is it all that different from what is being done already by special-interest groups and politicians? Special-interest groups promise support for a candidate (votes) for legislation favorable to their cause (subsidies, tariffs, barriers to competitor entry, etc). Politicians promise one another support (votes) on a given bill for legislation favorable to their cause -- election (usually in the form of earmarks or campaign cash). For the record, I don't advocate vote selling; I only find its condemnation by politicians hypocritical.

Tax-imposed inefficiency

Joseph Henchman of the Tax Foundation (HT: Club for Growth):

In 2005, the estimated time and money cost of complying with the federal Internal Revenue Code was 6 billion man-hours worth $265 billion.

If that's not an argument for a flat or even a much-simplified tax, I don't know what is.

Costs of African aid

From an LA Times op-ed by Edward N. Luttwak and Marian L. Tupy:

On a micro level, Africa is littered with failed projects financed by foreign aid, including a steel plant in Ajaokuta, Nigeria, that does not produce steel and agricultural projects in Mali that decreased rather than increased the production of grain. Millions of Africans have been uprooted, with their livelihoods destroyed, by the pursuit of harebrained agricultural and irrigation schemes dreamed up by ignorant and arrogant, if well-meaning, foreigners.

On a macro level, aid has kept predatory African states alive by enriching corrupt political leaders and paying the salaries of their bureaucrats, soldiers and police. Uganda, by no means an outlier when it comes to "budget support," receives 50% of its annual government revenue from foreign aid. Economist Paul Collier of Oxford University showed that aid pays for up to 40% of African weapons purchases. On a continent where interstate conflicts are mercifully rare, those weapons are often used to crush domestic opposition -- as has been happening in Zimbabwe.

Pulling aid away from dysfunctional African states seems like a shocking move. Allowing failing states to collapse, it will be said, could lead to anarchy and turn Africa into a haven for terrorists. In the aftermath of the U.S. invasion of Iraq, however, many now believe that terrorists are best confronted by security measures, including intelligence gathering and surgical strikes against individual terrorist groups, rather than by social engineering on the scale of entire countries.

He's a politician after all

Bob Herbert, in an op-ed for the NY Times, on Obama's directional lurching:

Only an idiot would think or hope that a politician going through the crucible of a presidential campaign could hold fast to every position, steer clear of the stumbling blocks of nuance and never make a mistake. But Barack Obama went out of his way to create the impression that he was a new kind of political leader — more honest, less cynical and less relentlessly calculating than most...

This is why so many of Senator Obama’s strongest supporters are uneasy, upset, dismayed and even angry at the candidate who is now emerging in the bright light of summer.

One issue or another might not have made much difference. Tacking toward the center in a general election is as common as kissing babies in a campaign, and lord knows the Democrats need to expand their coalition.

But Senator Obama is not just tacking gently toward the center. He’s lurching right when it suits him, and he’s zigging with the kind of reckless abandon that’s guaranteed to cause disillusion, if not whiplash.

Unvoluntarily voluntary

Jonah Goldberg in an LA Times op-ed:

In his speech on national service Wednesday at the University of Colorado, Obama promised that as president he would "set a goal for all American middle and high school students to perform 50 hours of service a year, and for all college students to perform 100 hours of service a year."

It's funny that, when the right seeks to use the government to impose its values, the left screams about brainwashing and propaganda. When the left tries it, the right thunders about social engineering. But when left and right agree -- as seems to be the case on national service -- who's left to complain? As ever, the slipperiest slopes are greased with the snake oil of "bipartisanship."...

Volunteerism is good. But why does every good thing need to be orchestrated by government? Most people think that churchgoing is a good thing. Does that mean the government should fund churches? That's what they do in Europe and -- surprise! -- most pews sit empty...

Indeed, there's ample evidence that countries with intrusive and expensive welfare states stifle their citizens' spirit of charity and volunteerism precisely because people conclude that every problem should be solved by government. Merely paying your taxes substitutes for charity, and cleaning up roadside litter for two years absolves you from doing anything more.

Required service is nothing more than free government labor. We might as well set their "service" up at the DMV, Social Security office, or DOT. It will essentially go straight to the bottom line, likely in the form of more money available as handouts to special interests. The sad thing is that it will be all be done in the name of love of country, when the primary beneficiaries will be politicians.

Don't worry - Congress knows

From my weekly email from Senator Isakson:

Last week, the Senate continued debate on a comprehensive housing package designed to stimulate the nation’s declining housing market as well as strengthen the regulation of Freddie Mac and Fannie Mae. This bill doesn’t bail anybody out, but it incentivizes buyers to come back to the marketplace. It provides liquidity to refinance loans that are under water. It motivates, inspires, and provides liquidity in the marketplace through Freddie Mac and Fannie Mae that does not exist right now.

Failure of the Congress to act, in my judgment, is going to cause us to have a protracted and devastating economic decline resting solely on the fact of the decline in the values of homes in America, the increase in the number of foreclosures, and the lack of liquidity in the lending market.

By saying that buyers need to be incentivized to "come back to the marketplace", he implies that home prices are too low and that buyers need to be brought back to bring values back to where they belong. How can he possibly suggest this? Would he have said the same thing after the tech bubble burst in 2000? Did Congress need to incentivize buyers to come back then? For all the people who can't afford houses when they were at their peak, falling prices are the best thing, and anything that artificially pushes prices higher hurts them. It only saves those who bought at the peak.

Medical choices

From a NY Times editorial:

A new national survey found that an alarming 20 percent of the population, some 59 million people in all, either delayed or did without needed medical care last year, a huge increase from the 36 million people who delayed or did not seek care in 2003...

According to the survey, the main reason is soaring medical costs, which have outstripped the modest growth in wages in recent years. High costs are deterring not only the uninsured from seeking care, but also many insured people who are struggling with higher deductibles, co-payments and other out-of-pocket expenses as their employers or health plans shift more of the cost burden to them.

Many patients with insurance said they went without care because their health plans would not pay for the treatment or their doctors or hospitals would not accept their insurance. Both insured and uninsured patients said they skipped treatments because they had trouble getting timely appointments, were unable to get through on the telephone, or could not make it to a doctor’s office or clinic when it was open. No doubt a weakening economy, high fuel prices, the home foreclosure crisis and general economic anxiety also played a role.

This was used as evidence in the case for universal medical care. First, I find it surprising (not really, I suppose) that they are so concerned that the high price has discouraged people from getting additional medical care. High prices discourage people from doing all kinds of things; many people eat less food, drive less-safe cars, and live in smaller or less-clean houses than they otherwise would. We can't all afford every treatment, every surgery, or every drug, just like we can't all afford every steak, every car, or every house. The medical care we have is a modern technological advance that costs money.

The second thing I think is funny that the "alarming" number they report of people who put off health care includes things like scheduling appointments and telephone frustrations. Considering how prompt we hear our Canadien and British friends receive care, I don't expect this to get better. And of course the economy had something to do with it.

Technological doping

I heard about both of these two issues in the same day.

The first is about the new Speedo LZR (from The Guardian) racing suit that is apparently pretty far technologically advanced:

It's a swimsuit so revolutionary that one athlete has claimed that it makes you feel like you're "swimming downhill". And, since it was launched in February, 38 world records have been broken by swimmers wearing it. Little wonder, then, that Olympic swimming teams are now falling over themselves to ditch their sponsors in order to get Speedo's LZR Racer swimsuit in the run-up to Beijing...

The suit took nearly four years to develop and involved enlisting the help of Nasa and a technique called computational fluid dynamics, says Jason Rance, head of Speedo's Aqualab, the company's global research and development facility. He says the swimsuit can reduce drag by up to 24%.

This article in Newsweek back in April quoted the coach of the Italian team as saying the swimsuit is technological doping. My guess is that he was only upset because his team has another sponsor. My wife told me she heard a story about it somewhere on NPR (can't find the link) that told me a lot of the other suit makers have since come out with their own versions of the suit.

The second is about a new type of golf ball (from the WSJ).

But it's how the pros hit it those humbling distances, and here at USGA headquarters, in a rather nondescript building out back, is ground zero in the war to keep those distances in check. Dick Rugge, a tall, thin 60-year-old, leads the USGA's efforts to keep the technology of golf balls from ruining the finer points of the game.

It is a battle many critics say was lost long ago. Sixteen players at the Open averaged more than 300 yards off the tee this month, while in the 1990 season, the top player on the PGA Tour averaged less than 280 yards. Jack Nicklaus uses the word "ridiculous" when he talks about the ball's distances.

I think it's funny how people are afraid of technological advancement for athletics. For some reason, we want to be able to keep the games in the same place they were 30, 40, or 50 years ago, equipment-wise, even though we know full well so many others things have changed since then to make comparability impossible. Basketball is probably the most equipment consistent over the years, and everyone knows you can't compare the careers of Lebron James to Michael Jordan to Oscar Robertson. So what if we can't compare Alex Rodriguez to Willie Mays to Babe Ruth or Tiger Woods to Jack Nicklaus to Bobby Jones? Better equipment only enhances the experience for fans and lets the athletes perform the best they can. Why should we limit their ability to perform at a high level just so we can compare their accomplishments to the past?

More visa's?

I laughed at an article in last weeks edition of The Economist ("Beauty and the Geek"):

IT'S not often that fashion models are paired with IT workers, except in the lurid fantasies of computer geeks. But because of a decision made back in 1990 they must compete for the same over-subscribed H-1B, a temporary work visa for specialised occupations. Until 2004, when the government lowered the cap on the number of H-1Bs it issued, it didn't matter so much. But now demand has far outstripped the limited number of visas available, and many foreign models are being denied the chance to sashay down America's catwalks.

Anthony Weiner, a New York congressman, wants to fix this tragic glitch. He has proposed a bill amending the rules so that the models will be reclassified into their own special immigration category. This would free up more visas for the nerds; and it would allow 1,000 models to strut their stuff in America each year, compared with just 349 in 2007, half the annual number admitted between 2000 and 2005.

It could be done in one of two ways, either of which I'd support. First, if it were an "earmark" of available visa's (ie carved out of the 65,000 or whatever H1-B's) then congressmen would be fighting to get special classifications for the highly-skilled, top-of-their-game talent businesses in their state need (ag scientists in IA, biotech in MA, finance PhD's in NY, tech in Ca). Then, I would hope, there would be pressure to increase the number of visa's to accommodate everyone. Second, if we'd give visa's to models in addition to the 65,000 available, we've raised the cap by 1000. Then, again, congressmen will try to get exemptions for businesses in their states, etc. Unfortunately, because the request is for models, I expect any proposed legislation will be mocked and not go anywhere.

Sanctions and Zimbabwe

Dan (not Clark) Griswold at Cato had this to say about imposing economic sanctions on Zimbabwe:

Events of the past few weeks have made it clear that President Robert Mugabe of Zimbabwe is a dictator and a bully who presides over a sham democracy epitomized by today’s mock “election.” But does that sad fact require or even justify imposing sanctions against that already tortured southern African country?...

I share the dismay with Mugabe’s thuggery and mismanagement of the economy, but count me skeptical that trade sanctions, oil embargoes and other economic reprisals would achieve anything positive.

If 165,000 percent inflation, widespread hunger, and mass shortages and unemployment have not undermined Mugabe’s government, Western sanctions are probably not going to make a crucial difference. Zimbabwe’s president and his sycophants will continue to enjoy their palatial homes, catered meals and chauffeured limos. Sanctions would only deepen the suffering of their unfortunate subjects. As our research at Cato has shown, economic sanctions almost never work.

Count me among that group. Because there are so many nation leaders out there willing to support rogue world leaders just to spite the U.S., my thought is that sanctions end up doing nothing more than punishing the citizens rather than the leaders. I think the more we expose the citizens to freedom and the wealth that free trade creates, the more likely they will demand more from their leaders. Cuba is a good example.

Paying the price to stay the same

An IBD editorial pointed me to a McKinsey Global Institute study that stated:

To meet commonly discussed abatement paths, carbon productivity must increase from approximately $740 GDP per ton of CO2e today to $7,300 GDP per ton of CO2e by 2050—a tenfold increase. This is comparable in magnitude to the labor productivity increases of the Industrial Revolution. However, the "carbon revolution" must be achieved in one-third of the time that economic transformation took in the Industrial Revolution if we are to maintain current growth levels while keeping CO2e levels below 500 parts per million by volume (ppmv), a level that many experts believe is the maximum that can be allowed without significant risks to the climate.

That's a heckuva lot. Again, we need to consider what is the cost of doing nothing and compare it to the cost of doing something. The IBD editorial says this increase in CO2 efficiency/use is necessary to maintain our standard of living. I know what their saying, but I wonder if standard of living is the right word. The research says it is necessary to maintain economic growth. To me, that says to maintain the level of increases in the standard of living. And I think it's important to add that it should be regarded as a global increase in the standard of living. And all of that says nothing about our actual ability to achieve the carbon emission goals.

"Barking Cats" and placing blame

Milton Friedman in his book Free to Choose.

The nature of government agencies:

What would you think of someone who said, "I would like you to have a cat provided it barked"? Yet your statement that you favor an FDA provided it behaves as you believe desirable is precisely equivalent. The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of government agencies once they are established. The way the FDA now behaves, and the adverse consequences, are not an accident, not a result of some easily corrected human mistake, but a consequence of its constitution in precisely the same way that a meow is related to the constitution of a cat. As a natural scientist, you recognize that you cannot assign characteristics at will to chemical and biological entities, cannot demand that cats bark or water burn. Why do you suppose the situation is different in the social sciences?

Who's to blame for pollution:

In the case of pollution, the devil blamed is typically "business," the enterprises that produce goods and services. In fact, the people responsible for pollution are consumers, not producers. They create, as it were, a demand for pollution. People who use electricity are responsible for the smoke that comes out of the stacks of the generating plants. If we want to have the electricity with less pollution, we shall have to pay, directly or indirectly, a high enough price for the electricity to cover the extra costs. Ultimately, the cost of getting cleaner air, water, and all the rest must be borne by the consumer. There is no one else to pay for it. Business is only an intermediary, a way of coordinating the activities of people as consumers and producers.

The costs of regulation

Two small bits from yesterday's WSJ editorial page.

The first ("Australia vs. eBay") is described as follows:

At issue is eBay's proposal to require its Australian customers to use its proprietary payment system, PayPal, for transactions. The Australian Competition and Consumer Commission thinks the move is anticompetitive because eBay's position as Australia's "leading online marketplace" means that shutting out other payment methods would hobble them unfairly...

Little wonder that the main objectors are the sellers, who pay PayPal's fees. Most, like Phil Leahy of the Professional eBay Sellers Alliance, say they're defending consumer choice. But given their own financial stake in the outcome, they're not exactly disinterested consumer champions. They object to the price eBay wants to charge. No regulation is forcing these sellers to use eBay.

The other "aggrieved" parties are banks and credit card companies such as the Australian Bankers' Association and American Express, which argue that they'll lose business if eBay shuts them out. EBay responds that other forms of payment -- namely bank-to-bank transfers and credit cards -- aren't as cheap or secure as PayPal. These companies could respond by improving their products. Instead, they're making their case to the antitrust regulator rather than to consumers.

It goes back to the idea that much antitrust regulation might be enacted in the name of choice for consumers (as if that alone is the goal) but is really about businesses that compete trying to make it easier on themselves. (Don Boudreaux has a great podcast about that here.)

The second ("Hairspray on Trial"):

The "trial" here involved a London hair salon owner named Sarah Desrosiers and an aspiring stylist, Bushra Noah, whose interpretation of her Muslim faith requires her to wear a headscarf at all times. Ms. Noah applied for a job. In their one brief meeting last year, Ms. Desrosiers decided that her refusal to show any hair wouldn't fit the trendy, "alternative" image that her Wedge salon in King's Cross seeks to project. Patrons and passersby, by her reasoning, like to see where their stylists' tastes run to – in Ms. Desrosiers's case to a dyed pink and blonde do on full display while she works.

Noah took her to court and won.

[The tribunal] found a novel crime: Ms. Desrosiers was guilty of "indirect discrimination" and causing Ms. Noah "injury to feelings."