Monday, November 10, 2008

Auto Wages Sphere: Related Content

Thursday, October 30, 2008

The Security Rating Game

Arnold Kling takes a look at a paper on the credit rating agencies and their part in the current crisis.

The Security Rating Game

When I hit the link to the paper I got "sevice unavialable". I am posting the link to this here so I can get back to it later.

Here is the link to the paper:

The Economics of Structured Finance

See also: Triple-A Failure Sphere: Related Content

Sunday, October 19, 2008

Healthcare shouldn't be linked to employment

Healthcare shouldn't be linked to employment
By Jeff Jacoby

Great article that tells the history of why healthcare is linked to employment.

With more than 90 percent of private healthcare plans in the United States obtained through employers, it might seem unnatural to get health insurance any other way. But what's unnatural is the link between healthcare and employment. After all, we don't rely on employers for auto, homeowners, or life insurance. Those policies we buy in an open market, where numerous insurers and agents compete for our business. Health insurance is different only because of an idiosyncrasy in the tax code dating back 60 years - a good example, to quote Milton Friedman, of how one bad government policy leads to another.

During World War II, federal wage controls barred employers from raising their workers' salaries, but said nothing about fringe benefits. So firms competing for employees at government-restricted wages began offering medical insurance to sweeten employment offers. Even sweeter was that employers could deduct those benefits as business expenses, yet employees didn't have to report them as taxable income. For a while the IRS resisted that interpretation, but Congress eventually enshrined the tax-exempt status of employer-based medical insurance in law.

Milton Friedman used to speak of the tyranny of the status quo. Once something becomes ingrained in the American political landscape it can seem impossible to change. Many people think the thought of leaving the employer based system as dangerous.

I worked for a company once where the health plan required me to sign on to release my records for basically any way that the insurance company wanted with no recourse. I was concerned with the privacy of the records. When I ran a small company and got quotes for health care, the health care agent would tell you about the health problems of different employees. One person had a spouse with cancer, another required lots of expensive persriptions. As an employer and in managment, you get hold of a lot of information that many people would consider private information.

Some people can't get jobs because the cost to insure them would break a small business. My little league baseball coach was a Vietnam Vet with a purple heart. He told me he had open heart surgury because of his injuries. I was a kid, I don't remember the details. But I do remember him saying that he couldn't get a job because nobody wanted to take the cost of his health insurance. It is quite possible that some people could never make more than it costs to treat them because of bad luck with fate. It is a sin that we cast these people out of the workforce because Employers have to pick up the tab and hiring them would break the bank. The least that we can do is let them work and do what they can to contribute to society.

Jacoby supports the McCain plan as a way to unleash the power of the market in reforming health care:

Unconstrained by consumer cost-consciousness, healthcare spending has soared, even as overall inflation has remained fairly low. Nevertheless, Americans know almost nothing about the costs of their medical care. (Quick quiz: What does your local hospital charge for an MRI scan? To deliver a baby? To set a broken arm?) When patients think someone else is paying most of their healthcare costs, they feel little pressure to learn what those costs actually are - and providers feel little pressure to compete on price. So prices keep rising, which makes insurance more expensive, which makes Americans ever-more worried about losing their insurance - and ever-more dependent on the benefits provided by their employer.

De-linking medical insurance from employment is the key to reforming healthcare in the United States. McCain proposes to accomplish that by taking the tax deduction away from employers and giving it to employees. With a $5,000 refundable healthcare tax credit, Americans would have a strong inducement to buy their own, more affordable, insurance, rather than relying on their employer's plan. As millions of empowered consumers began focusing on price, price competition would flourish. And as employers' healthcare costs declined, most of the savings would return to employees as higher wages.

I can't stress the underlined part enough. People have no clue what the bill is, they only know their copayment.

Another problem is that when you are not paying the bill, they don't have to give you good service. Go to a modern hospital today and see if you can get good customer service if you are an average person with no connections. It is more like a widget factory. Doctors make the rounds early in the morning so they can avoid even having to talk to anyone. Trying to get questions answered is a pain in the ass, and they make you feel like you are wasting their time pestering them. There are exceptions, but the system is cold and impersonal. And why should they care about you? You aren't paying!

Gerg Mankiw's blog pointed me to the above article. Here is his take on the Obama plan: Taxing the Uninsured

Most economists agree on these two propositions about tax incidence (covered in Chapter 6 of my favorite textbook):

    1. It does not matter which side of a market you tax. A tax on buyers is the same as a tax on sellers. In particular, a tax on employers is equivalent to a tax on employees.

    1. Because labor demand tends to be more elastic than labor supply, a payroll tax falls largely on employees.

Now consider the Obama health plan. A major element of the plan is an extra payroll tax on firms that do not give their workers health insurance. By the basic theory of tax incidence, this is equivalent to a tax on workers without insurance

(Edit note: I messed up the bullet point numbering when I quoted him)

It turns out that Obama's own Economic Policy Director, Jason Furman is in favor of McCain's approach according to this paper released in February

Mankiw states that:

Obviously, there is a lot of common ground between Furman and McCain on this specific policy reform. My guess is that most health economists would endorse the Furman-McCain plan.

When it comes to healthcare it is time to get rid of some poor regulations that mess up the incentive structure and let the market in to better direct resources. Sphere: Related Content

Saturday, October 18, 2008

Ron Paul & Winston Churchill

They both saw something coming.

Sphere: Related Content

Wednesday, October 15, 2008

Triple-A Failure

Triple-A Failure

Great article by Roger Lowenstein in the New York Times. It talks about the credit rating agencies and their role in mortgage backed securities. I like the way he traces one mortgage backed securities issue through the process.

As someone with substantial ignorance of the entire process I found it to be informative.

It got me thinking about the current call for regulation of the markets, as well as the accusations that Republicans have deregulated the system and are at fault for all this capitalism run amok.

Penn Central collapsed in 1970, and it was the biggest bankruptcy in US History. It was a financial disaster and people wanted answers. How could this happen?

In 1975 the "US Securities & Exchange Commission starts relying on credit ratings issued by nationally recognized statistical rating organizations (NRSROs) in its rule 15c3-1."

The government wanted institutional debt to be rated by government certified rating organizations, like Moody’s, Standard & Poor’s and Fitch. It appears that this has been how institutional debt has been regulated for the past 33 years. It doesn't appear the Republicans or Democrats put substantial changes into the regulation or the certification of the ratings agencies over the course of time.

As the article points out, the regulation may not have changed, but the times sure did. The article gave some great examples of how investment banks game the system, doing just enough to get a AAA rating.

The fact of the matter is that many of these MBS securities should never had a AAA rating. Hindsight is 20-20. When investors saw that AAA rating they thought that it was a safe place to make a return. Central banks across the world swallowed them up, as well as other large financial institutions. If your local bank manager bought some triple A rated securities and then lost his ass it is hard to color him a complete idiot as he was misled. Some of these were obviously horrible investments that were advertised at the highest grade.

Given the high ratings, the MBS sold. This cleared the market and allowed the originating institutions more money to go out and repeat the process because it paid.

I have no idea if government bureaucrats could do any better than professional credit rating agencies. One of the recomendations of the article was to decertify these ratings institutions of their offical government recognition. A case for deregulation in the NY Times?

Whom Can We Rely On?

The agencies have blamed the large incidence of fraud, but then they could have demanded verification of the mortgage data or refused to rate securities where the data were not provided. That was, after all, their mandate. This is what they pledge for the future. Moody’s, S.&P. and Fitch say that they are tightening procedures — they will demand more data and more verification and will subject their analysts to more outside checks. None of this, however, will remove the conflict of interest in the issuer-pays model. Though some have proposed requiring that agencies with official recognition charge investors, rather than issuers, a more practical reform may be for the government to stop certifying agencies altogether.

Then, if the Fed or other regulators wanted to restrict what sorts of bonds could be owned by banks, or by pension funds or by anyone else in need of protection, they would have to do it themselves — not farm the job out to Moody’s. The ratings agencies would still exist, but stripped of their official imprimatur, their ratings would lose a little of their aura, and investors might trust in them a bit less. Moody’s itself favors doing away with the official designation, and it, like S.&P., embraces the idea that investors should not “rely” on ratings for buy-and-sell decisions.

This leaves an awkward question, with respect to insanely complex structured securities: What can they rely on? The agencies seem utterly too involved to serve as a neutral arbiter, and the banks are sure to invent new and equally hard-to-assess vehicles in the future. Vickie Tillman, the executive vice president of S.&P., told Congress last fall that in addition to the housing slump, “ahistorical behavorial modes” by homeowners were to blame for the wave of downgrades. She cited S.&P.’s data going back to the 1970s, as if consumers were at fault for not living up to the past. The real problem is that the agencies’ mathematical formulas look backward while life is lived forward. That is unlikely to change.

I liked the whole article and it had much more than I discussed. I post it here so I can remember it and go back to it, as nobody has ever read or commented in this forum by lil ol me.

It is good to be king though. This is my domain and I make all the rules.

Here is an addition I found on Powerline:

Why were both rating agencies still rating FNMA and FHLMC AAA? National politics. A downgrade of the two "government sponsored enterprises" to BB (which the average behavior of the rating agencies would have dictated) might have--after the fact--been argued to be the "cause" of their failure, sure to be condemned by the CEOs of both firms and by senior government officials. This rating firms' reluctance to downgrade FNMA's and FHLMC's debt is understandable--no business wants to be singled out for criticism by the government, even if they are correct in their credit assessment.

Beware downgrading government agencies because you will be blamed for the collapse. But Dick Schumer can call out private banks and cause a run, no problem. Sphere: Related Content

Monday, September 22, 2008

Don't Bail Them Out, Firms Should Be Allowed to Fail

The best regulation of the market is this:

A fool and his money are soon parted.

If you take away the way the market naturally regulates entities you just took the floor out of the free market. Every activity has some risk. We all take risks every day in every aspect of our lives. Risk isn't all bad, because risk also has a chance of coming out OK. We call that reward. Taking away the risk undermines everyting.

The Pattern

The Latin America loan crisis would have broken the market. That is what they said, but I had no exposure. I think the market would have been fine. It was isolated enough. Ordinary Americans didn't have their nut in Latin America. But that was the 80's. While I had no exposure to Latin American loans that went belly up, as a taxpayer I did have exposure to the bailout.

We head to the 90's and the Mexican Peso was going to collapse. Our investment banks who showered money on the Mexican market were going to take a big hit. They argued, again, that the whole market was at stake. I had no exposure to the Peso. Again though, I did have exposure to the bailout.

Now we have another crisis. The talking heads tell us that the whole system is at stake. I have seen this before every decade like clockwork. I have no exposure to Fannie or Freddie, to Leeman or Bear Stearns. But I do as always have exposure as a tax payer.

Let these people fail. They need to fail. They need to be taught a lesson. If this country is going to fork over hundreds of billions of dollars lets start building nuclear reactors so we can be energy independent. Ordinary Americans need infrastucture and energy independence more than they need another Wall Street bailout. We have played this game before, and I am tired of it. And the bailouts just keep getting bigger.

I will have another post talking to the points that government is to blame. That isn't this post. Government has it's dirty hands all over this in may ways. That doesn't mean that these firms should be allowed to be kept afloat on the backs of the taxpayer.

We need Wall Street. We also need Wall Street less than we think. If firms are allowed to fail based upon their bad choices it won't be the end of the banking and finance industries. It will give us new blood though, and it will give them a heavy dose of caution going forward.

Let them fall. The world will not come to an end. Sphere: Related Content

Obama Astroturf

From the Jawa Report:

Hope, Change, & Lies: Orchestrated "Grassroots" Smear Campaigns & the People that Run Them

The internet, like the news media can be manipulated in many ways. They have professionals working on it round the clock. We live in the age of the fake grass roots effort.

Sad. Sphere: Related Content

Friday, September 12, 2008

Barack Obama fails the "Bush Doctrine" test!

BARACK OBAMA: In a conference call with reporters, Obama said Clinton would continue the "Bush doctrine" of only speaking to leaders of rogue nations if they first meet conditions laid out by the United States.

Does Barack Obama really know what the Bush Doctrine is? He should have Charlie Gibson explain it to him.

CHARLIE GIBSON: The Bush Doctrine, as I understand it, is that we have the right of anticipatory self-defense, that we have the right to a preemptive strike against any other country that we think is going to attack us. Do you agree with that?

Does Charlie Gibson really know what the Bush Doctrine is? He should have some other media experts and academicians explain it to him…

FRANK RICH (NYTIMES): “It was in September that the president told Congress that ''from this day forward any nation that continues to harbor or support terrorism will be regarded by the United States as a hostile regime.'' It was in November that he told the United Nations that ''there is no such thing as a good terrorist.''

MEDIA MATTERS: “But by asserting that Obama's policy on Pakistan is "essentially the Bush doctrine," Gibson was claiming that there is in fact a clear Bush doctrine.”

NORMAN PODHORETZ: Podhoretz claimed that the "animating or foundational principle of the entire doctrine" was this George Bush quote.

The advance of human freedom, the great achievement of our time and the great hope of every time, now depends on us. Our nation, this generation, . . . will rally the world to this cause by our efforts, by our courage.


“After Sept. 11, however, the Bush team embarked on a different path, outlining a muscular, idealistic and unilateralist vision of American power and how to use it. He aimed to lay the foundation for a grand strategy to fight Islamic terrorists and rogue states by spreading democracy around the world and pre-empting gathering threats before they materialize. And the U.S. wasn't willing to wait for others to help.”

JOHN LEWIS GADDIS (YALE HISTORIAN): “it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world.”


These are the same concerns confronting the Bush administration and shaping its actions. So it’s not surprising that Obama’s agenda sounds eerily similar to core elements of the Bush doctrine as articulated in the Bush National Security Strategy (2002) which declares that American-defined “values of freedom are right and true for every person, in every society,” and that an overarching goal of U.S. policy is creating “a balance of power that favors freedom,” and spreading “free markets, and free trade to every corner of the world.”


President Bush's recently announced strategic global doctrine, which for the first time justifies a preemptive U.S. strike against any regime thought to possess weapons of mass destruction, makes a mockery of the war on terrorism. A preemptive strike against Home Depot, where box cutters can be bought for a few bucks, would seem more relevant to disarming future terrorists.

JEFF JACOBY: "You are either with us, or you are with the terrorists"

The Bush Doctrine, advanced after 9/11, comes down to the idea that American and global security is best advanced by toppling repressive and hostile regimes through any means possible, including principally force.

BIG TENT DEMOCRAT (TALK LEFT): Charlie Gibson does not really understand what the Bush Doctrine means.

CBS NEWS (DICK MEYER): With characteristic confidence and simplicity, President George W. Bush tossed out the formulas of the modern Inaugural Address. He gave a short speech about one thing, what can now clearly be called the Bush Doctrine. He defined it in one direct sentence:

"So it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world."

SIDNEY BLUMENTHAL: The Bush doctrine has evaporated. Whether it was ever a doctrine rather than a rationale for an already decided upon invasion of Iraq is questionable. Certainly, the war in Afghanistan was a response to an attack on the US, not a pre-emptive strike. Rejected now by a member state of Nato through its democratic process, the doctrine per se has no practical future as an instrument of foreign policy, if it ever did.

“The big news out of the most recent Democratic presidential debate was that two of the leading Democratic candidates, Senator Clinton and Senator Obama, endorsed the Bush Doctrine that is at the core of our current president’s foreign policy.

JOHN PODHORETZ - For the record, when a distressed friend called to say he was made nervous by her failure to identify the Bush Doctrine off the bat, I had to stop for a moment and think about it because I wasn’t instantly sure whether the Bush Doctrine was the policy of preemption or the democratization of Arab lands. And I wrote an entire book about the Bush presidency.

What is the Bush Doctrine? Is it OK for Sarah to ask for some clarification? I personally think it is about freedom and free nations. I guess Charlie Gibson gets to write the history though, and his definition is the definition. Arrogant ass.


I am going to update this and add more definitions and comments on the Bush Doctrine.
Work in Progress.... Sphere: Related Content

Thursday, September 11, 2008

Does Barack Know The Bush Doctrine?

Here is part of the transcript from Charles Gibson and Sarah Palin:

GIBSON: Do you agree with the Bush doctrine?

PALIN: In what respect, Charlie?

GIBSON: The Bush -- well, what do you -- what do you interpret it to be?

PALIN: His world view.

GIBSON: No, the Bush doctrine, enunciated September 2002, before the Iraq war.

PALIN: I believe that what President Bush has attempted to do is rid this world of Islamic extremism, terrorists who are hell bent on destroying our nation. There have been blunders along the way, though. There have been mistakes made. And with new leadership, and that's the beauty of American elections, of course, and democracy, is with new leadership comes opportunity to do things better.

GIBSON: The Bush doctrine, as I understand it, is that we have the right of anticipatory self-defense, that we have the right to a preemptive strike against any other country that we think is going to attack us. Do you agree with that?

What is the Bush Doctrine?

Here is how Barack Obama defined the Bush Doctrine on the ABC news website:

Obama: Clinton Would Continue "Bush Doctrine"
July 26, 2007 11:21 AM

ABC News' Rick Klein Reports:

Sen. Barack Obama lobbed another verbal grenade at Sen. Hillary Rodham Clinton on Thursday, continuing a feud that first erupted at Monday night's Democratic presidential debate.

In a conference call with reporters, Obama said Clinton would continue the "Bush doctrine" of only speaking to leaders of rogue nations if they first meet conditions laid out by the United States. He went on to suggest that being "trapped by a lot of received wisdom" led members of Congress -- including Clinton -- to authorize the war in Iraq.

"The Bush administration's policy is to say that he will not talk with these countries unless they meet various preconditions -- that's their explicit policy, and that was the question that was posed at the debate," Obama said. "This is the assertion that she made during the debate and subsequently, was that she would not meet with various leaders unless certain preconditions were met. Now, if that's not what she means, then she should say so, but that was the question that was posed at the debate."

Maybe Charles Gibson should explain the Bush Doctrine to Barack Obama.

Frank Rich of the New York Times (The Bush Doctrine, R.I.P.) described the Bush Doctrine as

It was in September that the president told Congress that ''from this day forward any nation that continues to harbor or support terrorism will be regarded by the United States as a hostile regime.'' It was in November that he told the United Nations that ''there is no such thing as a good terrorist.''

Here is Media Matters on Charlie Gibson, Barack Obama and the Bush Doctrine:

During NH debate, ABC's Gibson characterized Obama's Pakistan position as "essentially the Bush doctrine," ignoring Bush contradictions

Summary: During the ABC News-Facebook Democratic debate, ABC News' Charlie Gibson said that Sen. Barack Obama's assertion that, as president, he would "press them [the Pakistani government] to do more to take on Al Qaeda in their territory," and that "if they could not or would not do so, and we had actionable intelligence, then I would strike," is "essentially the Bush doctrine: We can attack if we want to, no matter the sovereignty of the Pakistanis." But by asserting that Obama's policy on Pakistan is "essentially the Bush doctrine," Gibson was claiming that there is in fact a clear Bush doctrine on the question of whether the U.S. would strike Al Qaeda in Pakistan regardless of the sovereignty of Pakistan. Bush and administration officials have in fact made inconsistent statements on this issue.

Looks like a liberal cite has a problem with Charles Gibson's definition of the Bush Doctrine...

Is the Bush Doctrine Dead?
The president's critics are wrong. That includes the neocons.
Wednesday, August 23, 2006 12:01 a.m. EDT

Podhoretz claimed that the "animating or foundational principle of the entire doctrine" was this George Bush quote.

The advance of human freedom, the great achievement of our time and the great hope of every time, now depends on us. Our nation, this generation, . . . will rally the world to this cause by our efforts, by our courage.

If asked to define the Bush Doctrine myself, I would be in the Podhoretz camp on this particular point. I thought that the Bush Doctrine was about freedom, about the fact that history shows us that free people don't go to war with free people, and that our foreign policy would have more moral clarity if it expressed the same principles of our domestic policy.

More from Podhoretz:

So misrepresented has the Bush Doctrine been that the only way to begin answering that question is to remind ourselves of what it actually says (and does not say); and the best way to do that is by going back to the speech in which it was originally enunciated: the president's address to a joint session of Congress on Sept. 20, 2001.

Podhoretz had three pillars of the Bush Doctrine:

1) No moral equivalency (call a spade a spade). Bush wanted to make a clear line between good and evil. And referencing the Bush quote above about the advance of human freedom, it was clear that was the good. Dictatorships that harbored terrorists were the evil.

2) From Podhoretz:

The second pillar on which the Bush Doctrine stood was a new conception of terrorism... Under the old understanding, terrorists were lone individuals who could best be dealt with by the criminal-justice system. Mr. Bush, by dramatic contrast, now asserted that they should be regarded as the irregular troops of the nation-states that harbored and supported them. From this it followed that 9/11 constituted a declaration of war on the United States, and that the proper response was to rely not on cops and lawyers and judges but on soldiers and sailors and Marines.

3) Here is what Podhoretz states as the third pillar of the Bush Doctrine:

In thus promising to "pursue nations that provide aid or safe haven to terrorism," the president touched on the third pillar on which the Bush Doctrine was built: the determination to take pre-emptive action against an anticipated attack. But it was only three months later, in his State of the Union Address on Jan. 29, 2002, that he made this determination fully explicit:

I will not wait on events, while dangers gather. I will not stand by, as peril draws closer and closer. The United States of America will not permit the world's most dangerous regimes to threaten us with the world's most destructive weapons.


If we wait for threats to fully materialize, we will have waited too long. . . . The war on terror will not be won on the defensive. We must take the battle to the enemy, disrupt his plans, and confront the worst threats before they emerge.

The reason it was now necessary to act in this way, the president explained, was that the strategy we had adopted toward the Soviet Union during the Cold War (or World War III in my accounting) could not possibly work "in the world we have entered"--a world in which "unbalanced dictators with weapons of mass destruction can deliver those weapons or missiles or secretly provide them to terrorist allies."

The third pillar here would agree with Gibson's assesment of "anticipatory self-defense". The two certainly could disagree, because Gibson never cites "the foundational principle of the entire doctrine." according to Podhoretz Charlie Gibson gave us his definition, but that differs from Podhoretz. Is he right? I guess it depends on who you ask.

The fact that George Bush was the first President to advocate on behalf of a Palistiean State is an example of Podhoretz interpretation of the doctrine when it comes to freedom and self determination.

Time Magazine defined the Bush Doctrine:

The End of Cowboy Diplomacy

After Sept. 11, however, the Bush team embarked on a different path, outlining a muscular, idealistic and unilateralist vision of American power and how to use it. He aimed to lay the foundation for a grand strategy to fight Islamic terrorists and rogue states by spreading democracy around the world and pre-empting gathering threats before they materialize. And the U.S. wasn't willing to wait for others to help. The approach fit with Bush's personal style, his self-professed proclivity to dispense with the nuances of geopolitics and go with his gut. "The Bush Doctrine is actually being defined by action, as opposed to by words," Bush told Tom Brokaw aboard Air Force One in 2003.

Bush has never told us that he is introducing a doctrine. He never defined it as such. Other people have taken it upon themselves to define the Bush Doctrine. The people that will define it are historians.

Here is Yale historian John Lewis Gaddis on a brief history of American "Doctrines:"

The Monroe Doctrine

The Monroe Doctrine reflected a long American tradition—extending well back into the 18th century—of associating liberty, prosperity and security with continental expansion. Its principal author, Secretary of State John Quincy Adams, related that history to the crisis caused by the apparent intention of European monarchs—Great Britain’s excepted—to re­establish their colonies in the Western Hemisphere after Napoleon’s defeat. The course Adams set was that “the American continents, by the free and independent condition which they have assumed and maintained, are henceforth not to be considered as subjects for future colonization by any European powers.” Its feasibility lay in the fact that the British tacitly agreed with that policy and were willing to use their navy to enforce it. The Monroe Doctrine was unilateral, as presidential doctrines must be. But it was based upon a realistic calculation of power within the international system, as all doctrines should be.

The Truman Doctrine

The Truman Doctrine drew upon an equally long American tradition—reinforced by involvement in two 20th-century world wars—of opposing the domination of Europe by a single hostile power. Its principal author, then-Under Secretary of State Acheson, related that history to the crisis caused by the outcome of World War II, which left the Soviet Union in control of half of Europe. The course he set was that “it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” Its feasibility lay in George F. Kennan’s great insight that the Stalinist system and the international communist movement carried within themselves the seeds of their own destruction, so that the passage of time would favor the West if it could hold the line. The Truman Doctrine, like the Monroe Doctrine, was unilateral; but it, too, was based upon a realistic calculation of power within the international system.

And here is his take on Bush Doctrine:

The Bush Doctrine

So is there a Bush Doctrine, and if so will it meet this test of transferability? To answer this question, I’d look first for a statement delivered in a suitably august setting: Durable doctrines don’t appear as casual comments. Then I’d look for one that’s clearly labeled as a policy, not as a portrayal of adversaries or an explanation of methods for dealing with them: That’s why terms like “Axis of Evil” or “preemption” don’t constitute doctrines. Finally—especially in an historically conscious president—I would look for historical echoes.

The speech that best fits these criteria is the one President Bush delivered from the steps of the Capitol on January 20, 2005. As a student of Lincoln, he would have attached special meaning to the term “second Inaugural Address.” That was the moment to draw lessons from a past extending well beyond his own, to apply them to a current crisis, and to project them into an uncertain future. And indeed the President did announce—in a single memorable sentence—that “it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world.”

That is a current historian's view of the Bush Doctrine, which differs from many accounts.

He goes on to comment:

Initial responses, as usually happens with presidential doctrines, were mixed. Peggy Noonan, who wrote some of Reagan’s best speeches, described it as “somewhere between dreamy and disturbing.” George Will grumbled that “the attractiveness of the goal [is not] an excuse for ignoring the difficulties and moral ambiguities involved in its pursuit.” But the editors of the New York Times unexpectedly liked the speech, observing, “Once in a long while, a newly sworn-in president . . . says something that people will repeat long after he has moved into history.”
Sphere: Related Content

Tuesday, September 9, 2008

Religion in Schools

"Public schools teach religion, too-- not a formal, theistic religion, but a set of values and beliefs that constitute a religion in all but name. The present arrangements abridge the religious freedom of parents who do not accept the religion taught by the public schools yet are forced to pay to have their children indoctrinated with it, and to pay still more to have their children escape indoctrination."
- Milton Friedman, Free To Choose, pg 164. Sphere: Related Content

Monday, September 1, 2008

Sex Education Began In the 1960s

The Vision of the Anointed, Self-Congratulation as a Basis for Social Policy
By Thomas Sowell

The relevant part I quote from comes from pages 15-21, and it is entitled “Sex Education”. You can find it on Google books at the link above.

Sex Education

Sowell talks about the origin of sex education in public schools, tracing the origins back to the 1960s. In 1968, “fertility rates among teenage girls had actually been declining for more than a decade since 1957. Venereal disease was also declining. The rate of infection for gonorrhea, for example, declined every year from 1950 through 1959, and the rate of syphilis infection was, by 1960, less than half of what it had been in 1950. This was the “crisis” which federal aid was to solve.”

And how did that work out?

“As early as 1968, nearly half of all schools in the country—public and private, religious and secular—had sex education, and it was rapidly growing. As sex education programs spread widely though the American educational system during the 1970s, the pregnancy rate among 15- to 19-year old females rose from approximately 68 per thousand in 1970 to approximately 96 per thousand by 1980. Among unmarried girls in the 15- to 17-year old bracket, birth rates rose 29 percent between 1970 and 1984, despite a massive increase in abortions, which more than doubled during the same period. Among girls under 15, the number of abortions surpassed the number of live births by 1974. The reason was not hard to find: According to the Alan Guttmacher Institute, the percentage of unmarried teenage girls who had engaged in sex was higher at every age from 15 through 19 by 1976 that it was just five years earlier. The rate of teenage gonorrhea tripled between 1956 and 1975. Sargent Shriver, former head of the Office of Economic Opportunity, which led the early charge for more sex education and “family planning” clinics, testified candidly to a congressional committee in 1978: “Just as venereal disease has skyrocketed 350% in the last 15 years when we have more clinics, more pills, and more sex education than ever in history, teen-age pregnancy has risen.”

I had to type that all myself. Two paragraphs shouldn't get me hit with a copyright violation. It is on Google Books anyway. Check out the whole section, or indeed the whole volume.

He made the same points more succinctly in his book “Inside American Education”:

p. 63
“Teenage pregnancy was declining, over a period of more than a dozen years, before so-called "sex education" programs spread rapidly through American schools in the 1970s. Teenage pregnancies then rose sharply, along with federal expenditures on "sex education" programs and "family-planning" clinics, many located in schools. The pregnancy rate among 15 to 19 year old females was approximately 68 per thousand in 1970 and 96 per thousand in 1980.

.....Fertility rates among teenage girls had been declining since 1957, long before the massive, federally funded programs of the 1970s and before Roe v. Wade made abortion legal in 1973.”

Outside of the crack epidemic and AIDs, it seems as if every bad trend in America started in the 1960s. Does it surprise anyone that a government program to reduce pregnancy and sexually transmitted diseases was followed with more pregnancy and more sexually transmitted diseases?

You also have to add in the fact that great society programs started to expand welfare in the 1960s, giving a financial incentive from the government to become a single mother. That may have had a bigger impact than sex education. Not only do you get what you pay for with government, whatever you pay for you get more of?

And what did we do when these programs showed negative results? The answer is obvious, they must have been underfunded. Nothing says job security like a failed government program. Sphere: Related Content

Saturday, August 30, 2008

A More Perfect Union

Megan Mcardle at The Atlantic

The problem with teacher's unions is inherent in the way that Democrats talk about unions: by banding together, they say, you create a powerful counterweight equal and opposite to the power of the companies in negotiations.

So the schools have a gigantic, powerful bargaining bloc. Who doesn't have a bargaining bloc? The kids.

Of course, the customers of corporations don't bargain with unions either--but they have the right of exit, which is what prevents the unions (or their corporate bosses) from turning them upside down and shaking them until the last nickel falls out of their pockets. Unsurprisingly, the schools in this country that function worst are the ones where the kids have no realistic ability to exit. So for whom are those schools run? The teacher's unions, the principal's unions, the janitor's unions, the friends and relations of people with seats on the school board. The children have the least powerful voice. Which is why, as far as I can tell, every single thing that is proposed by any of these groups "for the children" has the primary side effect of employing more teachers/janitors/principals, paying same more, or making their jobs more pleasant.

For progress to become a reality we need to break the teacher's unions. I like the way she explains how the market is different for teacher's unions compared to other unions where market forces can hold it in check. This is effect of the government monopoly. Sphere: Related Content

Libertarian Sarah Palin

I like her more than McCain, Obama and Biden put together. It is time to put a libertarian in the White House.

The libertarian VP candidate
by David Harsanyi on August 29, 2008

… or, rather, as libertarian as you can hope for on a major ticket.

For Republican nominee John McCain, there are a numerous potential political downsides and upsides to choosing a relative unknown for VP. But stepping outside the horserace aspects of 2008, Palin is the most libertarian Republican that’s been on a major ticket for a long time. This ideological storyline should appeal to many Western voters.

Yes, Palin is pro-life and yes, she’s made a huge mistake by supporting windfall taxes on oil companies. But she was a tireless reformer against government waste in a state that is famous for it. She, after all, shut down the Bridge to Nowhere.

Palin sued the Federal government over its outrageous listing of the polar bear as a threatened species. She is an ardent supporter of the Second Amendment. Her views on the Drug War are more reasonable than most in Washington. Her framing of cultural issues is far less divisive and strident than some of what we hear coming from the hard social right.

Libertarians around the net:

Palin, an inspired choice.

Nice round up here:

Libertarian reactions to Sarah Palin pick

Even the guys at Lew Rockwell's LRC Blog seem to warm to her. Either hell has frozen over or she is one extraordinary individual.

The more I read the more I like her. It is about time. Sphere: Related Content

Tuesday, August 26, 2008

Cincinnati Public School Report Card - Disability Questions

From the Cincinnati Public School Report Card.

The percentage of “Students with Disabilities” is 20.3% for the district. That is more than one in every five kids.

Cincinnati is a market leader among Ohio cities...

District Disabled Students
Cleveland Metropolitan 10014 20.0%
Columbus City 8315 15.7%
Cincinnati City 6861 20.3%
Toledo City 5057 18.6%
Akron City 4379 17.5%
Dayton City 3038 20.2%

The state of Ohio defines disabilities as:

1) Autism
2) Cognitive Disability (mental retardation)
3) Deaf-blindness
4) Deafness
5) Emotional Disturbance
6) Hearing Impairment
7) Multiple Disabilities
8) Orthopedic Impairment
9) Other Heath Impairment (which includes various ailments including attention deficit disorder.)

A link to the pdf where the State of Ohio defines all of these is found here: Whose IDEA is this?

I view the fact that slightly over 1 in 5 kids in the school system are classified as disabled is alarming. What is worse is that in some schools over 1 in 4 students is disabled.

A history of disability statistics in Cincinnati Public Schools:

2008 20.30%
2007 20.50%
2006 19.70%
2005 18.50%
2004 17.00%
2003 16.90%
2002 16.20%
2001 14.40%
2000 12.30%

At the beginning of the decade only 12.3% of Cincinnati Public School Students were classified as disabled. That is about 1 in every 8 kids.

Lies, Damn Lies and Statistics

Ignorance is bliss of course, and I have no idea what types of disabilities are seeing spikes. I also don’t know if the state has changed the official working definition of disability over this time period. It would be interesting to see a breakdown of where the increases of disabled students are coming from.

I also wonder if money could possibly be an issue. Does the government pay more for schools to teach disabled kids? Do parents that want to collect SSI for their children have an incentive to pressure a school psychologist to label their kid disabled? Could any of these statistics be money driven? It is an honest question. I am a firm believer in the market. If you pay money for disabled kids the market will reward you will more disabled kids. That is how markets work. Sphere: Related Content

The Shot Heard Round the World!

Hyperbole is strength of mine. More appropriately this is the shot that is about to be heard around the world. Here is a clickable link to the article:

Dems Rally Against Unions!
OK, teachers' unions. Still ...

By Mickey Kaus

One panelist--I think it was Peter Groff, president of the Colorado State Senate, got the ball rolling by complaining that when the children's agenda meets the adult agenda, the "adult agenda wins too often." Then Cory Booker of Newark attacked teachers unions specifically--and there was applause. In a room of 500 people at the Democratic convention!

"The politics are so vicious," Booker complained, remembering how he'd been told his political career would be over if he kept pushing school choice, how early on he'd gotten help from Republicans rather than from Democrats. The party would "have to admit as Democrats we have been wrong on education." Loud applause!

Mayor Adrian Fenty of D.C. joined in, describing the AFT's attempt to block the proposed pathbreaking D.C. teacher contract. Booker denounced "insane work rules," and Groff talked about doing the bidding of "those folks who are giving money [for campaigns], and you know who I'm talking about." Yes, they did!

As Jon Alter, moderating the next panel, noted, it was hard to imagine this event happening at the previous Democratic conventions. (If it had there would have been maybe 15 people in the room, not 500.) Alter called it a "landmark" future historians should note. Maybe he was right.

Is this a "landmark" that future historians should note? Is this the shot heard round the world? Time will tell, but it gets me excited.

Cory Booker is the mayor of Newark, New Jersey. By his own words he was told that if kept pushing school choice his political career would be over. I don't think for a minute that this happened in isolation. I think every black Democrat politician presiding over an urban school district in decay has been told that if they look to the market for options that they are F'in finished in this town.

And I think that is a main reason that he got resounding applause. He was exposing the man behind the curtain. "I am mad as hell, and I am not going to take it anymore!!!"

Cory Booker broke the veil. It will be interesting to see what follows. He has at least served notice that you can't continue to push around black urban democrats and threatening them without the possibility that teachers unions will be exposed for compromising the futures of young black children for political considerations.

And again, those other Democrats at the convention are applauding because they know it is true. They know the make or brake pressure that is applied to all candidates in which they have to decide either for their community's children or their own political future.

Democrats are moving in the direction of school choice. More evidence abounds...

With the Democrats in Denver

Washington Mayor Adrian Fenty, his Newark counterpart Cory Booker, the Rev. Al Sharpton, New York City superintendent Joel Klein and others gathered to push for merit pay for teachers and other accountability measures for urban schools. The biggest obstacle, they all agreed, is "special interests," by which for the most part they mean teachers unions -- whose members will make up about a tenth of convention delegates, according to National Education Association executive director John Wilson.

Sharpton described the terrible schools open to many poor black children as the biggest civil rights issue of the 21st century. "If our parents could stand up to biting dogs in Alabama, we can stand up to special interests in America's cities," he said.

Fenty said he supports Obama and his message of change -- "and change is most important in education." He offered ongoing teacher contract talks in the District as "a real life example." Chancellor Michelle Rhee's proposed contract includes merit pay for teachers who achieve results. But the American Federation of Teachers, "which I don't think does anything for the District of Columbia," is weighing in against the contract. Why? "The only thing I can figure out is, the people who are elected [as union officials] want to keep their jobs."

Could this be a start of an avalanche? There is a strong undercurrent in the Democratic party for choice and change. Here is the rebuttal in the article...

The NEA's Wilson, in the audience, told me he found the references to special interests, and the exclusion of unions from the conference, "disrespectful to teachers, and naive . . . . You're not going to change the current system until you bring in teachers and their collective voice."

The NEA would like to have the teachers "represented", in fact he would like the teacher's unions to have run the forum. They could have proposed more spending. Who cares about results. Poverty pimps anyone? Meet the NEA.

Indeed, both big teachers unions insist they favor transformation and reform. But any time the talk goes to pay for performance or other ways to attract the best teachers to the worst schools, they change the subject to the problems with parents, or say the need for change is so big that we shouldn't get bogged down with little tactical things like the right to get rid of teachers who don't perform. There was a lot of hope expressed in the auditorium yesterday that Obama would stand up to the unions -- and for children who are being deprived a decent chance in life.

So far, Obama hasn't done much more than nibble at that one.

Like any issue, we have no idea what Obama will actually do. We can hope though...

We have been reforming our schools for as long as the NEA, the UFT and the Department of Education have been in existence. The only reform they don't want is market reform. It all boils down to this, the teacher's unions have a government monopoly, and they oppose people having the choice to avoid their monopoly.

Greg Forster of the Friedman Foundation posted on this here. That is what alerted me to this story.

The Friedman Foundation is a favorite of mine. They have a publication entitled "The School Choice Advocate" which I get in the mail. You can view the latest issue on PDF here.

I just go my last copy, and the cover story is about Democrats for School Choice. A timely cover is ever given what has happened at the Democratic Convention.

The article was written by a proud Democrat, Michael Tobman. Some quotes:

"Democrats are natural advocates for school choice principles and policies. That they haven't been is more about institutional ties that bind and outdated politics than it is about the actual substance of school choice"

Michelle Rhee (regarding school choice and teachers unions) at a press conference:

"We are finally going to put aside the rights and privileges and priorities of adults and return the focus to children"

Albert Sharpton (nobody calls him Albert but me!):

"Out children are drowning in the waters of indifference and old coalitions no longer work and no longer care"

Talk about politics making strange bedfellows. I am quoting Albert Sharpton. I still think he is a sleazebag though. I detest the man, but the enemy of my enemy is my friend in some cases, and thus I quote Reverend Al.

I think a gang rush to the door will be in effect at some point. I have always believed that School Choice is a Civil Rights issue and the next big Civil Rights issue in our country's future. At some point school choice will move from the controversial fringe to be an idea that is obvious and accepted by all. When will that happen? The date is coming close my friends.

And when it does, politicians will be exposed on being on the wrong side of history. They won't want that at all, for they are politicians. Once the shift is recognized as inevitable you will get a "gang rush to the door" That could be happening right now. The Times They Are A-Changin'

Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'. Sphere: Related Content

Sunday, August 24, 2008

Public Schools - Dumber Than Dirt

One man's peek into the future...

American kids, dumber than dirt
Warning: The next generation might just be the biggest pile of idiots in U.S. history

By Mark Morford, SF Gate Columnist

No, my friend takes it all a full step — or rather, leap — further. It is not merely a sad slide. It is not just a general dumbing down. It is far uglier than that.

We are, as far as urban public education is concerned, essentially at rock bottom. We are now at a point where we are essentially churning out ignorant teens who are becoming ignorant adults and society as a whole will pay dearly, very soon, and if you think the hordes of easily terrified, mindless fundamentalist evangelical Christian lemmings have been bad for the soul of this country, just wait.

It's gotten so bad that, as my friend nears retirement, he says he is very seriously considering moving out of the country so as to escape what he sees will be the surefire collapse of functioning American society in the next handful of years due to the absolutely irrefutable destruction, the shocking — and nearly hopeless — dumb-ification of the American brain. It is just that bad.

and this...

It gets worse. My friend cites the fact that, of the 6,000 high school students he estimates he's taught over the span of his career, only a small fraction now make it to his grade with a functioning understanding of written English. They do not know how to form a sentence. They cannot write an intelligible paragraph. Recently, after giving an assignment that required drawing lines, he realized that not a single student actually knew how to use a ruler.

It is, in short, nothing less than a tidal wave of dumb, with once-passionate, increasingly exasperated teachers like my friend nearly powerless to stop it. The worst part: It's not the kids' fault. They're merely the victims of a horribly failed educational system.

The collapse is going to be spectacular. Sphere: Related Content

Wednesday, August 20, 2008

Income Inequality

Cafe Hayek has a constest going on, and the comments are outstanding...

Link Sphere: Related Content

Tuesday, August 19, 2008

Quick Hits on Global Cooling

Is Climate Change… Racist?
by La Shawn Barber

And we aren't just "deniers" anymore. Krugman wants us to be labeled evil and immoral.

Climate Debate Daily is a useful site. I should link to it.

For a laugh, Newsweek from 1975 "The Cooling World"

New poll shows CO2 hysteria fading in the U.S.

Temperature Monitors Report Widescale Global Cooling Sphere: Related Content

Sunday, August 17, 2008

Obama Slams Clarence Thomas

For Clarence Thomas the lynching never ends. Obama didn't think that Thomas was a stong enough legal thinker. He then went on to praise Scalia for his "intellectual brilliance" and said that John Roberts was "clearly smart" & "thoughtful". I guess Thomas just doesn't measure up intellectually in Obama's eyes.

It is not the first time they have called him ignorant. Indeed, this appears to be straight out of the Democratic playbook...

While being interviewed on the NBC News program "Meet the Press" on Dec. 5, Sen. Reid was asked about the possibility of Justice Thomas replacing current Chief Justice William Rehnquist, who is currently being treated for thyroid cancer. Reid called Thomas "an embarrassment to the Supreme Court" and said his opinions "are poorly written."

In the same interview, Senator Reid praised Justice Antonin Scalia, calling him "one smart guy." Scalia and Thomas share many of the same views. Scalia, of course, is white.

Legal scholars are not as critical of Justice Thomas' legal prowess as are liberal politicians and activists. Commenting on liberal criticism of Thomas' jurisprudence, University of Wisconsin law professor Ann Althouse wrote: "It is my observation that liberals tend to lapse into the lazy belief that those who don't agree with them must be stupid or evil, and to me Reid's remarks look a bit like that. ... I realize the senators can't get away with opposing a judicial nomination on the grounds that they simply disagree with their opinions ... but to attack Thomas' intelligence is shameless."

Man do they hate Clarence Thomas You could only imagine what the reaction would be if the situation was reversed and Republicans were smeering a liberal who happened to be black. Could you even imagine?

Hat tip to Riehl World View Sphere: Related Content

Thursday, August 14, 2008

Cool in the Windy City

Decade has had fewest 90-degree days since 1930

Decade has had fewest 90-degree days since 1930
By Tom Skilling
August 13, 2008

August is the wettest and often the muggiest month of the year. Yet, summer heat continues in short supply, continuing a trend that has dominated much of the 21st Century's opening decade. There have been only 162 days 90 degrees or warmer at Midway Airport over the period from 2000 to 2008. That's by far the fewest 90-degree temperatures in the opening nine years of any decade on record here since 1930.

This summer's highest reading to date has been just 91 degrees. That's unusual. Since 1928, only one year—2000—has failed to record a higher warm-season temperature by Aug. 13.

What an inconvenient truth. Somebody should clue them in to the program. Global warming is here and the debate is over. Sphere: Related Content

Bring Out Your Dead!

Michigan Central Station

Flight of the dead: Suburban families move loved ones from Detroit cemeteries

Detroit has lost half its population since its heyday of the 1950s, and every year the city hemorrhages an estimated 5,000 people more. First it was white flight to the suburbs; then with the city's continued spiral into poverty and violence, blacks began to flee to those same suburbs. And while census figures show that whites are returning to some of the nation's largest cities, Detroit is experiencing a flight of a different kind. As the Imbrunones' second funeral demonstrates, Detroit is experiencing the flight of the dead.

The movement of the dead from the nation's largest black city to its overwhelmingly white suburbs is a small, though socially symbolic phenomenon, revealing the grinding problems of race, crime and economics that plague both sides of Eight Mile.

From 2002 through 2007, the remains of about 1,000 people have been disinterred and moved out of the city, according to permits stored in metal filing cabinets in the city's department of health. Looked at in another way, for about every 30 living human beings who leave Detroit, one dead human being follows. Moreover, anecdotal evidence compiled by a Detroit professor suggests the figure may be twice as high, meaning city records may be incomplete and that thousands upon thousands of deceased people have been relocated from the city over the past 20 years.

According to Dr. Stephen Vogel, the official numbers are vastly under reported...

Dr. Stephen Vogel, dean of architecture at the University of Detroit Mercy, believes the out-migration of the dead from Detroit is undercounted.

He and his researchers conducted a study three years ago, interviewing the director of each of Detroit's 28 cemeteries. According to that study, about 400 to 500 disinterments occur each year.

When even the dead flee you know you have hit rock bottom.

Could people left on their own ever do this to themselves? You look at the pockets of poverty in Detroit and those exposed by Katrina and you see the hand of government all over them.

Related: House Sells For $1 in Detroit Sphere: Related Content

Sunday, August 10, 2008

Let's Hear It For Government Health Care!

3 Southern California hospitals accused of using homeless for fraud

But as investigators began to unravel the incident, they say they found something far different: a massive scheme to defraud taxpayer-funded healthcare programs of millions of dollars by recruiting homeless patients for unnecessary medical services.

The elaborate enterprise churned thousands of indigents through hospitals over the last four years and billed Medicare and Medi-Cal for costly and unjustified medical procedures, federal, state and local investigators said Wednesday.

Those involved in the alleged conspiracy "ranged from street-level operatives to the chief executive of a hospital," U.S. Atty. Thomas P. O'Brien said.

Another abuse of government funding. Doesn't come as a surprise. This is what happens when you have government health care.

According to court filings, "runners" or "stringers" on skid row looked for homeless recruits. Prospects were offered small sums of money, typically $20 or $30, to be paid upon completion of a hospital stay of one to three days. The street recruiter typically received $40 for each homeless recruit with Medicare eligibility and $20 for each recruit with Medi-Cal benefits, according to the city attorney's lawsuit.

Some solicitations were direct, but others were coded, according to the city attorney's lawsuit. One alleged street pitch referred to the color scheme of the Medi-Cal eligibility card: "Red, white and blue, just make it do what it do, for me and you."

I have to hand it to them. It takes some moxy to have such an elaborate setup and to be selling government fraud on street corners...

From the New York Times:

Alleged Scheme Involved Homeless

LOS ANGELES — An investigation into what the authorities say was a scheme that used homeless people to bilk tens of millions of dollars from federal and state health insurance programs began four years ago with a tip from a rescue mission employee.

The employee, Scott Johnson, who works for the Union Rescue Mission in the heart of Skid Row, said he had noticed vans and cars loading up homeless people.

“Sometimes they were so full of people that they put people in the trunks of cars,” Mr. Johnson said Thursday as he passed out bottles of water to the homeless. “I wondered what was going on, so I called the state authorities.”

They certainly were not bashful about it. I guess you need a production line and a feeder if you want to generate millions of $ worth of claims.

And then their was this interesting quote from the times:

Although Medicare scams are relatively common, Mr. O’Brien said they usually implicated small clinics or doctors’ offices. The scale and duration of this enterprise is unusual, investigators said.

The fact that medicare scams are "relatively common" is just a thought in passing. The fact that this is the case doesn't merit much discussion. This case is just exceptional in scope. Perhaps they should look at numbers for health care expenditures on the homeless across the nation. They might even notice a patern.

Auditors of Medicare fraud should get down to busting businesses

Medicare bureaucrats promised to fix bogus billing six years ago, but the shenanigans continue. Our federal government gave $11 billion to crooked doctors and medical suppliers last year.

In South Florida, federal agents found that one out of three medical equipment businesses billing Medicare didn't exist. Unfortunately, they discovered that after the bogus "businesses" raked in $97 million in 2006.

Government Health Care is building on the great tradition of government housing and government schools. Let's hear it for Government Health Care! Sphere: Related Content

Friday, August 1, 2008

Jonah Goldberg on Capitalism

Link: The Spoiled Children of Capitalism by Jonah Goldberg

People ask, “Why is there poverty in the world?” It’s a silly question. Poverty is the default human condition. It is the factory preset of this mortal coil. As individuals and as a species, we are born naked and penniless, bereft of skills or possessions. Likewise, in his civilizational infancy man was poor, in every sense. He lived in ignorance, filth, hunger, and pain, and he died very young, either by violence or disease.

The interesting question isn’t “Why is there poverty?” It’s “Why is there wealth?” Or: “Why is there prosperity here but not there?”

At the end of the day, the first answer is capitalism, rightly understood. That is to say: free markets, private property, the spirit of entrepreneurialism and the conviction that the fruits of your labors are your own.

For generations, many thought prosperity was material stuff: factories and forests, gold mines and gross tons of concrete poured. But we now know that these things are merely the fringe benefits of wealth. Stalin built his factories, Mao paved over the peasants. But all that truly prospered was misery and alienation.

His approach should be applauded. Sometimes we don't find the correct answer because we aren't asking the right questions. I liked this one too:

[On Capitalism] Leaving religion out of it, no idea has given more to humanity. The average working-class person today is richer, in real terms, than the average prince or potentate of 300 years ago. His food is better, his life longer, his health better, his menu of entertainments vastly more diverse, his toilette infinitely more civilized. And yet we constantly hear how cruel capitalism is while this collectivism or that is more loving because, unlike capitalism, collectivism is about the group, not the individual.

Above is the reason that when we debate poverty in America we are debating relative poverty vs absolute poverty. Absolute poverty can't be found in America, and our working poor have a relatively high standard of living compared to the rest of the world or when compared to generations past. So we concentrate between the differences between the rich and the poor and promote class warfare. For those who stand to benefit, it is a winning strategy. For society as a whole it has harmful implications for freedom and prosperity. Sphere: Related Content

Larry Elder take's on CNN's "Black In America"

Here is the article: A Black Conservative Lament by Larry Elder

In the article a friend of Larry's wrote him a letter describing how he was interviewed for hours and then they cut him down to sound bites. He was ticked to say the least. Here is a shot from him:

They spoke to a professor from Columbia, who was droning on about how the legacy of slavery is to account for blacks' out-of-wedlock birthrate. Slavery?! This nonsense was seconded by another panelist. When I corrected them and said that the out-of-wedlock rate was lower during Jim Crow … eyes began rolling

I am tired of the legacy of slavery being the account for all black ills. Thomas Sowell has provided facts and figures for quite some time. The black family started it's collapse in the 60's (the 1960's, not the 1860s). The problems of black literacy and education also started in the 1960's. If we want to affix blame, we need to look back at what happened in the 1960s.

The money shot of the article comes from Elder:

The problems of the "black community" have to do with the welfare-state-induced breakdown (or, more accurately, non-formation) of the family. This causes a disinterest in education and leads to poor values, reckless and irresponsible breeding, as well as a lack of the job skills necessary in an information-age society. We also have grievance groups – black "leaders"; the oh-so-sympathetic media; fear- and guilt-laden whites who refuse to say (as they do to their own children) work hard and play by the rules; and many reluctant blacks who refuse to preach the message of "no excuses, hard work" for fear of being labeled "Uncle Toms."

I told my sister-in-law that nearly half of Harvard's black freshman class consists of blacks from the Caribbean or Africa – areas less prosperous with far less opportunity. Care to explain that?

I agree with the 'Sage from South Central' whole heartedly on these matters.

I watched Black in America on CNN. I tried to watch as much as I could but I didn't view the whole thing. When they talked about education I didn't see them bring up the idea of school choice and vouchers. Blacks support school choice more than any other demographic. How can you cover what it is like to be Black in America and discuss the issue of urban education without even bringing that up? I was stunned. I shouldn't have been.

When they talked about poverty, they never questioned if government programs we part of the problem. I think they are a large part of the problem, as does Larry Elder. They don't even ask the question.

The whole series is biased because of excluded viewpoints. I wonder who makes the decision that vouchers would not be covered. It would be one thing if they loaded the deck against the voucher movement, it is quite another when it isn't even raised as an issue. Sphere: Related Content

U.S. Leads The World In Illegal Drug Use

The War On Drugs sees no end in sight...

U.S. Leads The World In Illegal Drug Use (CBS)
Survey Says People With Higher Incomes More Likely To Use Legal And Illegal Drugs, Marijuana Use Widely Reported In U.S.

Despite tough anti-drug laws, a new survey shows the U.S. has the highest level of illegal drug use in the world.

The World Health Organization's survey of legal and illegal drug use in 17 countries, including the Netherlands and other countries with less stringent drug laws, shows Americans report the highest level of cocaine and marijuana use.

For example, Americans were four times more likely to report using cocaine in their lifetime than the next closest country, New Zealand (16% vs. 4%),

Marijuana use was more widely reported worldwide, and the U.S. also had the highest rate of use at 42.4% compared with 41.9% of New Zealanders.

In contrast, in the Netherlands, which has more liberal drug policies than the U.S., only 1.9% of people reported cocaine use and 19.8% reported marijuana use.

US leads world in substance abuse, WHO finds (Reuters)

Survey Finds U.S. Leads World in Substance Abuse (Fox News)

The World Health Organization Report:

Toward a Global View of Alcohol, Tobacco, Cannabis, and Cocaine Use: Findings from the WHO World Mental Health Surveys

You can read Friedman below, and that was back in 72 when Nixon was coining the phrase "War on Drugs".

Stop the insanity. Sphere: Related Content

Thursday, July 31, 2008

Today is Milton Friedman's Birthday

Milton Friedman is my hero. To celebrate his birthday I am going to repost a column he wrote for Newsweek in 1972. I have seen it posted a few places around the net. I assume that it is in the public domain.

In 1972 Richard Nixon was racheting up his War on Drugs. Looks like Uncle Milty was right all along.


Prohibition and Drugs

by Milton Friedman

From Newsweek, May 1, 1972

"The reign of tears is over. The slums will soon be only a memory. We will turn our prisons into factories and our jails into storehouses and comcribs. Men will walk upright now, women will smile, and the children will laugh. Hell will be forever for rent."

That is how Billy Sunday, the noted evangelist and leading crusader against Demon Rum, greeted the onset of Prohibition in early 1920. We know now how tragically his hopes were doomed. New prisons and jails had to be built to house the criminals spawned by converting the drinking of spirits into a crime against the state. Prohibition undermined respect for the law, corrupted the minions of the law, created a decadent moral climate-but did not stop the consumption of alcohol.

Despite this tragic object lesson, we seem bent on repeating precisely the same mistake in the handling of drugs.


On ethical grounds, do we have the right to use the machinery of government to prevent an individual from becoming an alcoholic or a drug addict? For children, almost everyone would answer at least a qualified yes. But for responsible adults, I, for one, Would answer no. Reason with the potential addict, yes. Tell him the consequences, yes. Pray for and with him, yes. But I believe that we have no right to use force, directly or indirectly, to prevent a fellow man from committing suicide, let alone from drinking alcohol or taking drugs.

I readily grant that the ethical issue is difficult and that men of goodwill may well disagree. Fortunately, we need not resolve the ethical issue to agree on policy. Prohibition is an attempted cure that makes matters worse-for both the addict and the rest of us. Hence, even if you regard present policy toward drugs as ethically justified, considerations of expediency make that policy most unwise.

Consider first the addict. Legalizing drugs might increase the number of addicts, but it is not clear that it would. Forbidden fruit is attractive, particularly to the young. More important, many drug addicts are deliberately made by pushers, who give likely prospects their first few doses free. It pays the pusher to do so because, once hooked, the addict is a captive customer. If drugs were legaily available, any possible profit from such inhumane activity would disappear, since the addict could buy from the cheapest source.

Whatever happens to the number of addicts, the individual addict would clearly be far better off if drugs were legal. Today, drugs are box incredibly expensive and highly uncertain in quality. Addicts are driven to associate with criminals to get the drugs, become criminals themselves to finance the habit, and risk constant danger of death and disease.

Consider next the test of us. Here the situation is crystal clear. The harm to us from the addiction of others arises almost wholly from the fact that drugs are illegal. A recent cominittee of the American Bar Association estimated that addicts commit one-third to one-half of all street crime in the U.S. Legalize drugs, and street crime would drop dramatically. Moreover, addicts and pushers are not the only ones corrupted. Immense sums are at stake. It is inevitable that some relatively low-paid police and other government officials-and some high-paid ones as well-will succumb to the temptation to pick up easy money.


Legalizing drugs would simultaneously reduce the amount of crime and raise the quality of law enforcement. Can you conceive of any other measure that would accomplish so much to promote law and order?

But, you may say, must we accept defeat? Why not simply end the drug traffic? That is where experience under Prohibition is most relevant. We cannot end the drug traffic. We may be able to cut off opium from Turkey but there are innumerable other places where the opium poppy grows. With French cooperation, we may be able to make Marseilles an unhealthy place to manufacture heroin but there are innumerable other places where the simple manufacturing operations involved can be carried out. So long as large sums of money are involved-and they are bound to be if drugs are illegal-it is literally hopeless to expect to end the traffic or even to reduce seriously its scope. In drugs, as in other areas, persuasion and example are likely to be far more effective than the use of force to shape others in our image.


Check out the Idea Channel on Milton Friedman: Sphere: Related Content

Wednesday, July 30, 2008

Obama notes ‘tragic’ US past

Obama notes ‘tragic’ US past
American history's "sad" aspects require action, the senator tells cheering journalists

A few quotes from the article:

"There's no doubt that when it comes to our treatment of Native Americans as well as other persons of color in this country, we've got some very sad and difficult things to account for," Obama told hundreds of attendees of UNITY '08, a convention of four minority journalism associations.

We have some horrible aspects to our history. One has to wonder how we can account for them. I thought they were already accounted for in the history of our country. A historical account may not be what Mr. Obama is looking for...

"I personally would want to see our tragic history, or the tragic elements of our history, acknowledged," the Democratic presidential hopeful said.

"I consistently believe that when it comes to whether it's Native Americans or African-American issues or reparations, the most important thing for the U.S. government to do is not just offer words, but offer deeds."

That is a mind blower in 2008. Is there some pro-slavery lobby that I missed? What about reparations and the 'words vs. deeds' angle? What deeds can we do to undo slavery (outside of 148 year old constitional ammendments)? As sharp and slick as he is, I was astounded he would say such a thing.

"Tragic elements" of our history have been acknowledged again and again. I often wonder it this is done to the extreme. If you have children you realize that come February it is black history month. I am not against it. I do question the wisdom of government schools teaching Kindergarten and First Grade students about slavery. It has been 148 years since we fought a bloody war to free the slaves. The sons and daughters of the free state of Ohio paid a high price for that freedom. Cincinnati played an integral part in the war.

My young children learned about slavery at school, not at home. I didn't think that it was a subject that was germane to a five year old. I am not really sure what the point is to single out black and white kids in class and tell them that blacks used to be slaves and white people used to own them. Perhaps they don't feel like they are singled out. It is tough to see how a five year old mind makes of such an issue.

It is the age issue that I have a problem with. Every child should be taught American history and that slavery is wrong. Does it have to start with five year olds? I guess you could debate the age of reason, but I don't think five cuts it. It is a great time though if you purpose is indoctrination. Get em young!

Obama's comments in Chicago are consistent with what he said on Meet The Press last Sunday.

"The biggest problem that we have in terms of race relations, I think, is dealing with the legacy of past discrimination which has resulted in extreme disparities in terms of poverty, in terms of wealth and in terms of income. Our inner cities are a legacy of what happened in the past.

And the question is less assigning blame or rooting out active racism, because that's not the reason that those inner cities are in such bad shape, but rather figuring out are we willing to make the investments to deal with that past history so we can move forward to a brighter future? And that involves investing in early childhood education, fixing the schools in those communities, being willing to work in terms of job retraining. And those are serious investments."

Are we willing to make the "investments"? As with the words vs. deeds rhetoric, it all comes down to money.

I guess decades of Great Society programs and Federal Funding have not been enough.

Related Blogs:

Things that Chap My Ass (Protien Wisdom) Sphere: Related Content

Sunday, July 27, 2008

Ron Paul: Something Big Is About To Happen

And it isn't pretty...

The Crisis Is Upon Us

I have days – growing more frequent all the time – when I'm convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.

You can read the whole thing there. I hope that he is wrong but I get that sick sinking feeling. Maybe it is because I fish for the type of news that makes me feel that way. Color me a masochist.

Paul is a fan of the Gold Standard. He would like to have US Dollars backed by Gold.

I think their would be both advantages and disadvantages to this. I also suspect it would be almost impossible to go back now. This country has such massive debt, it seems like that option left us a long time ago. We have debt at the Federal Level, the State Level, Local Levels. We have pension debt, social security debt, medicare debt. We have debt everywhere. And then their is personal debt. We are sinking in a world of debt. I can't see us realistically switching to a gold standard now just for this reason. We are off the ledge. Even trying to do this may hasten the day where it all hits the wall.

As far as the dollar goes, it is backed by nothing but faith. This is an advandtage to us, or at least it has been as Paul points out. The problem is what happens if the global economy loses faith in the dollar. My biggest fear is a massive devaluation in the dollar and rapid inflation.

It should be noted that on the bright side, many other major nations have serious structural issues as well. Europe's wellfare states face a demographic collapse and they have plenty of debt. China's one child policy has demographic implications that will be talked about for decades (I think it unsustainable). Japan has problems with debt and the banking sector that has been reported for quite some time.

So the bright side is that if countries flee the dollar they don't have too many options. But markets do find a way, and the way we have been managing the dollar is no way to run a railroad.

Ron Paul thinks that our money managers have been skillfull in the money manipulation during the decline, with much to our benefit (printing money in exchange for goods).

Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see.

But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country – and that's what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central banks' willingness to monetize our debt.

But he also thinks that this prolonged period of money manipulation has made a bubble "to become history's greatest".

The collapse is going to be spectacular. Sphere: Related Content

Does Government Spending Help or Hurt Race Relations?

This is a quote from Barack Obama on Meet the Press, 7/27/08 (link):

"The biggest problem that we have in terms of race relations, I think, is dealing with the legacy of past discrimination which has resulted in extreme disparities in terms of poverty, in terms of wealth and in terms of income. Our inner cities are a legacy of what happened in the past.

And the question is less assigning blame or rooting out active racism, because that's not the reason that those inner cities are in such bad shape, but rather figuring out are we willing to make the investments to deal with that past history so we can move forward to a brighter future? And that involves investing in early childhood education, fixing the schools in those communities, being willing to work in terms of job retraining. And those are serious investments."

It seems to me that Government and the "War on Poverty" were set up to adress those issues. We have been pumping taxpayer money into government programs for over four decades. Where has it gotten us?

It is a fair question to ask what amount of poverty is on account of government spending and the bad incentives that come with government entitlement programs.

Out of wedlock births for black Americans now top 70%. In the 1960's on 24% of black children were born to a single mom. We began programs that starting assisting single moms by giving them government payments. One of the basic rules of economics and government spending is based on incentives. If you pay for something you are going to get more of it. If you start paying for single mothers don't be surprised when you get more single mothers. If you start cutting checks for disabled kids don't be surprised when you get more disabled kids.

From the looks of it another round of Government anti-poverty programs could be a huge waste of resources that only make the problem worse. I am sure that past racism did have a negative affect on the black community, but I am not sure that government policies over the past four decades have done any better. If any "legacy" has more impact on the current envioronment I would venture that it is the more recent and massive federal programs.

Don't look for the "legacy" argument of black poverty to go away. If 70% of of black children are being born to single moms, what sort of poverty rate will they have 25 years from now when they are in their prime child bearing years? Looks like we have to deal with legacy for a long time.

Here are some of Thomas Sowell's thoughts on that legacy (From the book "The Quest for Cosmic Justice")...

In the United States, for example, many of the social problems of the contemporary black underclass are almost automatically attributed to "a legacy of slavery." The prevalence of fatherless families in the black ghettos, for example, has been widely explained by the lack of legally constituted families under slavery. But if one proceeds beyond plausibility and guilt to actually seek out the facts, an entirely different picture emerges.

A hundred years ago, when blacks were just one generation out of slavery, the rate of marriage in the black population of the United States was slightly higher than that of the white population. Most black children were raised in two-parent families, even during the era of slavery, and for generations thereafter. The catastrophic decline of the black nuclear family began, like so many other social catastrophes in the United States, during the decade of the 1960s. Prior to the 1960s, the difference in marriage rates between black and white males was never as great as 5 percentage points. Yet, today, that difference is greater than 20 percentage points- and widening, even though the nuclear family is also beginning to decline among white Americans....


The fact that large numbers of black Americans today who are not in the labor force has also been one of those things causally (and often rather casually) attributed to slavery. But again, if we go back a hundred years, we find the labor force participation rates among blacks were slightly higher than among whites, and remained so, on past the middle of the twentieth century. If we want to know why this is no longer so, again we must look to events and trends much closer to our own time.

Black literacy has also fallen. It is no legacy. Here is Gary North from Lew Rockwell on "The Good Old Days"

"By 1940, the literacy figure for all states stood at 96 percent for whites, 80 percent for blacks. Notice that for all the disadvantages blacks labored under, four of five were nevertheless literate. Six decades later, at the end of the twentieth century, the National Adult Literacy Survey and the National Assessment of Educational Progress say 40 percent of blacks and 17 percent of whites can’t read at all. Put another way, black illiteracy doubled, white illiteracy quadrupled. Before you think of anything else in regard to these numbers, think of this: we spend three to four times as much real money on schooling as we did sixty years ago, but sixty years ago virtually everyone, black or white, could read."

We can talk about the legacy of slavery and racism all we want, but historical facts fly in the face of Obama's "conventional" thinking. The real legacy that we are seeing come to play in regards to todays urban poor is the legacy of our Government's misguided and misdirected "War on Poverty".

Additional Reading
Broken Cities
By Steven Hayward
Liberalism’s urban legacy
Sphere: Related Content