Monday, April 30, 2007

First Annual White Heterosexual Male Scholarship

Reason is covering the fallout from University of Rhode Island College Republicans' announcement of the titular scholarship.

Applicants were asked, first, to certify that they were indeed white, heterosexual, American and male and then to answer two questions: 'In 100 words or less, what does being a White Heterosexual American Male mean to you? As a White Heterosexual American Male, what adversities have you had to deal with and overcome?

After the College Republicans refused to apologize, the Advisory and Review Committee voted to derecognize them, only backing down after the Student Senate overturned them on constitutional grounds.

Some of the comments on Reason's blog are quite interesting. I particularly liked, "Whatever else might be said about the general concept of a race-specific scholarship, it's clear that the intent here is to generate controversy and piss people off. So that certainly qualifies the College Republicans for the "obnoxious asshole" label." Seems that after all the effort spent educating people on the injustice of racial and sexual discrimination, straight white men still get no respect on campuses across the nation.

Foriegn Real Estate CD

EverBank Direct, a Jacksonville, Florida-based bank, is offering an interesting $1,500 minimum deposit CD that is indexed to Japan's real estate market. The 3.5-year CD pays no interest until its maturity date when holders will receive an interest rate equal to the performance of the Japanese real estate market over that period. Investors are guaranteed to get at least their principle back, but will have to pay taxes on anticipated interest annually and interest doesn't compound since it doesn't accrue until the maturity date.

More here.

How Much Does It Cost To Change A Lightbulb?

Remember that post from earlier this month about all the reasons why CFL's (Compact Fluorescent Light Bulbs) aren't a good idea? Then that "Got Mercury?" poster a few days later?

Well, now comes this gem of an article from the Financial Post entitled "The CFL mercury nightmare." It recounts the story of a woman from Maine who accidentally dropped and broke a CFL in her daughter's bedroom. Knowing that the bulb contained mercury, she called her local Home Depot who referred her to the Poison Control hotline, which referred her to the Maine Department of Environmental Protection, which sent to her home a specialist who found six times the state safe limit (300 billionths of a gram per cubic meter) of mercury in the bedroom.

"The DEP specialist recommended that Bridges call an environmental cleanup firm, which reportedly gave her a "low-ball" estimate of US$2,000 to clean up the room. The room then was sealed off with plastic and Bridges began "gathering finances" to pay for the US$2,000 cleaning. Reportedly, her insurance company wouldn't cover the cleanup costs because mercury is a pollutant.

"Given that the replacement of incandescent bulbs with CFLs in the average U.S. household is touted as saving as much as US$180 annually in energy costs -- and assuming that Bridges doesn't break any more CFLs -- it will take her more than 11 years to recoup the cleanup costs in the form of energy savings."
Now, that would be enough to warrant mention here, but the article isn't done yet. There is another aspect worthy of mention:

The article correctly points out the irony that environmental groups tout CFLs as a partial solution to global warming with one side of their mouth, while simultaneously decrying the dangers of mercury:
"Usually, environmentalists want hazardous materials out of, not in, our homes. These are the same people who go berserk at the thought of mercury being emitted from power plants and the presence of mercury in seafood. Environmentalists have whipped up so much fear of mercury among the public that many local governments have even launched mercury thermometer exchange programs.

"As the activist group Environmental Defense urges us to buy CFLs, it defines mercury on a separate part of its Web site as a 'highly toxic heavy metal that can cause brain damage and learning disabilities in fetuses and children' and as 'one of the most poisonous forms of pollution.'

"Greenpeace also recommends CFLs while simultaneously bemoaning contamination caused by a mercury-thermometer factory in India. But where are mercury-containing CFLs made? Not in the United States, under strict environmental regulation. CFLs are made in India and China, where environmental standards are virtually non-existent.

...

"As each CFL contains five milligrams of mercury, at the Maine "safety" standard of 300 nanograms per cubic meter, it would take 16,667 cubic meters of soil to "safely" contain all the mercury in a single CFL. While CFL vendors and environmentalists tout the energy cost savings of CFLs, they conveniently omit the personal and societal costs of CFL disposal."
The next question I have it "What about all of the fluorescent light bulbs we already have? Are we to understand that they have all of the same draw backs?"

HT: Fark

Sunday, April 29, 2007

Profitable Microfinance

I just read an article about SKS, a seemingly profitable microfinance investment program that generates 20% returns fo investors. It also has a 99% on-time repayment rate. I'm not sure what their total repayment rate is. Read more about it here. The article is also a good review of the points for and against micofinance in general.

Great quote I think applies to capitalism in general as well as microfinance: "'There's an entrenched idea that you're either doing charity or you're making money and there's nothing in between," he said. "I'm trying to walk the middle ground.'"

Saturday, April 28, 2007

National Relative Wealth

I found a very interesting article about media bias in reporting on economic matters at Cato-at-Liberty. It points out the language choices made when talking about economic policies, and I highly recommend reading it. Far more interesting, however, is the study it links to.

EU vs. USA is a report comparing the wealth of EU countries to the 50 States. It shows that Sweden is poorer per capita that Alabama, and that most European countries would rank in the bottom 5 states. It is a large PDF, but an excellent read.

Panama Has No Central Bank

I just found a fascinating (to me at least) story on the history of Panama's monetary system at Mises.org. The main factor, apparently, in Panama breaking away from Colombia was a disagreement over fiat money.

The country, now under democratic rule, is experiencing its 4th year of market economic growth well above 7%. So the policy makers who have said that abolition of the central bank is unfeasible need only look to Panama's macroeconomic environment, which has been favorable for over 100 years, to realize that it is, in fact, not only possible, but very beneficial.

The French Economy

On the heels of the recent reports of the French hating themselves even more than USians do, I followed a number of links and found this article on France by Donald Luskin at National Review Online. It is over a year old, but still has some very interesting facts in it. Here are some of the choicer bits:

[French] Average real GDP growth since 1991 has been 1.8% per year, compared to 3.1% for the United States. Its GDP per capita is lower than all but the poorest four U.S. states—lower even than Alabama, a state Krugman nastily described the week before last as being populated by people too poorly educated to work in automobile factories."
. . .
A report by the European consulting firm Timbro that found that total private consumption per capita in France is about half that of the U.S. The average French family has a lower standard of living than Americans living below the poverty level. Impoverished Americans have 16% more dwelling space per capita than the average French; the American poor are more likely to have a car, a dishwasher, a microwave oven, a personal computer, and a clothes drier.
. . .
I seem to remember something from about two years ago, when about 15,000 elderly people in France died in a heat wave. That's more than five times as many as were killed in the terrorist attacks of September 11, 2001. And why did it happen? In part, because most French households are too poor to afford air conditioners. But more importantly, those people died because so many doctors were on vacation.

I dislike the French for any number of reasons, be it their history of cutting off heads as public entertainment and public policy, their over-rated wines, or the fact that I am fantastically proud that my family descends from the English, traditional rivals of the continentals. That they continue, however, to fall into a pit of economic stagnation and societal collapse shouldn't fill me with this much joy. It just shouldn't.

New York's "Congestion Pricing" - Good or Bad?

There are some interesting details to the proposed plan (see my previous post, "Using Pricing to Solve a Problem") to charge drivers $8 ($21 for trucks) to enter certain parts of Manhattan. In general, I hold that congestion pricing plans are a good thing. After learning of some of the details of the plan recently proposed by Mayor Bloomberg of New York, I wonder if this particular implementation will do more harm than good (if you don't won't to read all the quotes, skip to the bottom):

"The mayor calls it a 'congestion fee.' In fact, it’s a tax and a penalty for using a motor vehicle. The revenue would go to mass transit, not to roads and bridges.

...

"Instead of using it to improve the roads and bridges used by drivers, Bloomberg each year would transfer hundreds of millions of dollars paid by drivers into financing more mass transit, which is already heavily subsidized by drivers and the general taxpayer. Overall, the plan would help support about a $50-billion expansion of NYC’s huge transit system.

"The plan hopes to capitalize on the media’s efforts to stampede the public into fear of global warming; it’s touted as environmental protection, hoping to disguise its true nature as a major new tax.

...

"Because the NYC plan would require an intricate, Big-Brother monitoring system to track each vehicle’s movements, just building the high-tech infrastructure is estimated to cost an initial $225 million, and the federal government is already being suggested as the source for that money.

...

"Rising fuel prices already provide free-market disincentives for drivers, but if they switch to mass transit, there will be fewer drivers left to subsidize that transit — thus the $8-per-day fee to make up the difference and keep the subsidies growing.

"We’re already hearing angry outcries from those who would be hurt by this fee. But imagine the even larger outcry if Mayor Bloomberg had proposed funding the mass-transit expansion by raising the fares on the subway and buses.

"What’s called the 'farebox recovery rate' covers about half the New York system’s annual operating costs — and none of the capital expenses — leading to an annual deficit in the billion-dollar neighborhood. Even so, riders there pay a larger share than in any other transit system in America. The average system recovers about 25 percent of its operating expense from fares, but none of its capital costs. And New York’s mass transit users wouldn’t be the ones paying for this $50-billion capital expansion.

"Traffic congestion is a serious problem. The U.S. Transportation Department has suggested various approaches that include 'value pricing,' whereby users of toll roads would pay higher rates during peak periods.

"However, true value pricing typically would use the extra fees to improve roads and bridges to handle the traffic. Bloomberg’s proposal instead would take the money paid by autos and trucks and send it to further subsidize mass transit."

It seems that a case could be made that this isn't an example of congestion pricing at all - but rather simply another tax on one segment of the population to subsidize activities of another segment. After all, the purpose of a congestion pricing scheme is to decrease the amount of congestion either (1) by reducing the total amount of traffic or (2) by establishing a schema under which the traffic would be more evenly distributed across different routes or times of day.

This plan does not appear to do either - there appears to be no incentive to drive at one time of day as opposed to another (except, of course, congestion, which is already present). So much for (2). As for (1), this plan could reduce the amount of car traffic on Manhattan streets. Where is that traffic going to go, though? Probably onto the mass transit system. Thus, New York will be trading one type of traffic congestion for another, unless, of course, the New York mass transit system has a lot of unused capacity during peaks hours that no one knows about.

Also, as the article points out, if this shift of traffic towards the mass transit system were to happen, it would cause another problem: there would be fewer people paying into the subsidization of the system (because fewer people would be paying the $8 fee), but more people would be riding, which would drive up operating costs, which would necessitate tax or fee increases (possibly on the people who are still driving on the streets).

I would contend, then, that this is not an actual congestion pricing plan:
  1. It will not achieve the goal of such plans.
  2. It does not conform to the generally accepted framework for a congestion plan in its proposed means of execution.
  3. It may not even be intended as a congestion plan, even though it is presented as one.
  4. Even if it is intended to be such a plan, intention alone is not sufficient for a plan to qualify as a congestion pricing plan - after all, simply because I intend a crime to be a good thing does not mean that it is one.

Andrew Roth's Quote of the Year

Quote from Jonah Goldberg:

Moderates believe in splitting the differences. The mean-spirited conservatives don't want a federal program designed to guarantee that small children never again get splinters. The impractical liberals want to implement the program, costing billions, right away. The moderate splits the difference and carries on as if he's incredibly brave for introducing legislation that will make a "fiscally responsible down payment" on this much-needed program. It should come as no surprise that these are the politicians I despise the most.
from Club for Growth

A Logical Defense of Capitalism

I highly recommend reading this short article by Tibor R. Machan from Free Market News entitled "Defending Capitalism's Integrity" in its entirety.

The best portions of the article:

"Even after the demise of the Soviet system of socialism—the only type that ever aspired to be a fully consistent version of that kind of political economy, with full collective ownership of the means of production (including, as Heilbroner himself noted in his own book, Marxism, For and Against, human labor)—many keep criticizing the fully free market system of capitalism.~ Libertarianism, which is the broader political equivalent of it, also gets this criticism, namely, that it has no room for a safety net for those in dire straits, those who are helpless, indigent, needy, unprepared to deal with market processes, etc. This is the usual mantra of the critics. More extreme versions of them, of course, don't like anything about capitalism and want some kind of dreamlike fully egalitarian system where the wealth is nearly evenly distributed, even if this means the complete destruction of productivity in such a human community. Better we are all equal and poor than we are unequal and most of us quite well off, with some even extraordinarily wealthy.

...

"It is possible in a fully capitalist system for some to remain left out. There can be innocent hard luck cases, there is no doubt about that. What doesn't follow is that government ought to do something about this. Instead, free men and women would have to muster the resolve to lend a hand where that's needed. And it's rank cynicism to deny that they would—after all, it is precisely in semi-capitalist systems that charity and philanthropy thrive today! Furthermore, to think that such help would not be forthcoming undermines the very idea that it is used to support, namely, that democratic governments can step in and do the job. That's because such governments are a reflection of the population, if they really are democratic. Which means if the people are mean and heartless, government would be so in spades."

Teaching the Philosophy of Capitalism

BB&T is sponsoring a program to educate business students in the philosophical aspects of capitalism:

"The University of Charleston and BB&T have teamed up to offer business students and the community an insight into the moral underpinnings of capitalism.

"'There is overwhelming evidence that capitalism produces a higher economic standard of living,' Phyllis Arnold, BB&T’s West Virginia president, said Friday at UC.

"BB&T will give UC’s Herbert Jones Division of Business a $350,000 grant over the next seven years to 'create a program on the moral and ethical foundations of capitalism,' Arnold said.

"The program will be based on the philosophy of writer Ayn Rand and her book 'Atlas Shrugged,' she said.

...

"We find that many graduates of business schools, while understanding the technology of business, do not have a clear grasp of the moral principles underlying free markets," she said.

...

"'Typically, business students are capitalists,' he said. 'but outside of their own desires they don’t really have an understanding of capitalism and that it can be morally defended.'"

Some of the Economic Mechanics of Auctions

FOXNews has an article about economist Susan Athey - something of a two page bio / interview. To be honest, I found most of the article rather boring. The part I found interesting and thought worth passing on was the author's exposition of some work Athey did with regard to timberland auctions and the way that they are conducted:

"Research [Athey] began as an undergraduate student has altered the way the American, Canadian and Australian governments auction off timberland. For instance, it was known that sealed bid auctions generate more money, i.e. higher bids, than those that allow open bidding. However, no one understood the reason for this.

"Athey helped solve the mystery. First, she mathematically predicted what buyers
should be willing to pay in an open auction. When they consistently came in lower than expected, the only plausible explanation was that 'bidders were colluding.'

"In other words, logging firms were agreeing, 'You let me win this round, I’ll let you win the next one.'

"You might be thinking, 'Duh!
Of course they were!' But it’s one thing to suspect this is going on and quite another to objectively demonstrate it.

"On the other hand, auctions that require bidders to submit
sealed bids raise more revenue than expected. Although competing firms might have an informal agreement on who should win a particular auction, the fact that bids are secret means the parties involved can’t confirm that the other side is sticking to the bargain. This causes each firm to bid higher than it would in an open auction.

"In addition, Athey found there’s another factor at work: increased competition.
Small logging operations are more likely to participate in sealed bid timber auctions because they have an equal chance of winning as the big guys — who, with their deeper pockets, could simply out-bid them in a live, out-cry auction.

"Another way Athey discovered bidders were gaming the system centers on how much they bid for certain types of trees. Again, it comes down to figuring out how to exploit the rules. When it pertains to timber auctions, two are central: (1) your overall bid is evaluated based on how much you
offer to pay for each species of tree you cut down; however, (2) the amount you ultimately pay is based on the number of trees of each species that you actually harvest.

'Say the government estimates that there’s a 50-50 percent mix of spruce and hemlock,' she says. 'But you think it’s mostly hemlock.' In this case, you’d put in a very high bid per spruce tree because you believe you won’t find a lot of those and, thus, won’t actually end up paying the price you’re offering. Your offer for the hemlocks might be slightly on the low side. But your generous bid for the spruce wood makes your overall bid much more attractive than your competitor’s so you win the auction.

"Think this doesn’t happen? According to Athey, 'In some extreme cases you have a firm bid five times the amount some trees could be worth.'

"This type of strategic thinking doesn’t just apply to trees! It affects everything from the approach companies use when they bid on government contracts to negotiating with a neighborhood kid to rake the leaves in your yard (you think there’s more of them than she/he does or vice versa)."

Friday, April 27, 2007

"Excess" Profits?

Sen. Robert Casey (D-Pa.) is "proposing a tax on 'excess' profits to help poor people pay for gasoline." The tax would be "a 50 percent tax on major oil companies profits from crude oil priced at more than $50 per barrel, where it has been trading for most of the past two years." (emphasis added). "Under Casey’s bill, money from the windfall profits tax would be used for a new program to help the poor pay for transportation costs."

The article also notes:

"Exxon Mobil was the third major oil company to report earnings in as many days. BP PLC, Europe’s second-largest oil company, on Tuesday reported a 17 percent drop in first-quarter earnings on lower oil prices and declining production. On Wednesday, ConocoPhillips said its first-quarter profit rose 7.7 percent, but the result was propped up by assets sales as it also was hurt by lower commodity prices."

So, the basic idea is that someone or something is obtaining too much profit (money received after expenses, etc. are taken into account) from high gasoline prices and the government should, therefore, forcibly take that money and give it away to poor people in what will doubtless be an extremely efficient and well managed affair. (For another example of a well managed government program to help people with transportation, read this article (HT: American Thinker) on the program to subsidize federal employee's metro passes).

Now, even if the idea that the we should take away profits from an entity and redistribute them as we see fit due to the fact that the private party is making "excess profits", wouldn't it be logical to think that we should start with the party whose making the most excess profits? Well, if that's the case, the government should start taking its own money, since the federal government alone makes more profit per gallon than the oil companies (HT: CARPE DIEM) (not too mention the profit that states and other jurisdictions make), to say nothing of gap between what the government makes and what gasoline retailers do.

While we're at it, we should go one step further. Why restrict ourselves to taking our government's money. Why don't we take money from all of the other world governments that are profiting because of high prices at the pump? What do I mean by that? Well, of the 20 largest oil companies in the world, 16 are government owned. Also, when people (especially politicians) start turning their guns towards "Big Oil" (especially Exxon Mobil, since it is the largest) because of its "excess profits" presumably derived from manipulating the market, they should perhaps consider that Exxon Mobil does not control the world oil supply. In terms of remaining supply, Exxon Mobil is 14th. I'll give you two guesses as to whether the first 13 are all public or private companies - but, you're only going to need one.

Another Bait & Switch - This Time With Alcohol

A British organization wants the government to prosecute parents who give children under 15 alcohol. Now, regardless of your stance on whether children of a certain age should be allowed to have alcohol and, if so, how much, and, if not, until what age, please notice the bait and switch used in the organization's justification for such a law: "Binge drinking by children can have serious consequences for brain function, significantly raises the risk of alcohol dependency in later life and diminishes their life chances."

So, the justification is that binge drinking is a problem. Even if the law were successful (which I doubt) in preventing binge drinking on the parts of minors, that does not justify outlawing all alcohol consumption by that demographic. That would be like outlawing driving because it would decrease the number of DUIs.

Oh, and for good measure, the organization, Alcohol Concern, "also wants a 16% rise in alcohol taxes, a ban on brewers selling to retailers at a loss, and a crackdown on under-age alcohol sales." I'm not sure if the first or the second one annoys me more. I generally do not like taxes, especially arbitrary ones that target a certain segment of the population or a certain activity just because some lobbying group has convinced the general population that there is something inherently evil going on. On the other hand, I really hate governments trying to dictate how a company can conduct its business.

Flat Tax Roundup

Daniel J. Mitchell has a great piece rounding up the state of flat taxes around the world. Interestingly, most of the countries that have implemented a flat tax are former Soviet countries, including Russia.

In effect, there is a global contest being waged. On one side are pro-market forces that value tax competition as a powerful force for better tax policy. The global tax reform revolution is a symptom of how globalization is pushing policy in the right direction. On the other side, however, are international bureaucracies such as the OECD (the European Commission and United Nations also oppose tax competition). These bureaucracies are asserting the right to dictate what they refer to as “best practices” in a way that would control the types of tax policy a jurisdiction could adopt.

So far, thanks in part to the Center for Freedom and Prosperity, this effort to create a global tax cartel has been thwarted. Assuming political developments (especially in the United States) do not alter the balance of power in favor of Europe’s welfare states, tax competition will continue to thrive and an “OPEC for politicians” will never materialize. Iceland is the only “first world” nation to jump on the flat tax bandwagon thus far—but it may merely be a matter of time before tax competition brings good tax policy to the rest of Europe and even the United States.

Flat taxes are an issue I am personally very interested in, and have written about several times. There are some interesting arguments, however, in favor of what has become known as the Fair Tax.

HT Club for Growth

Country that Dislikes France the Most: France

Admittedly, "hating" is a very strong word, but "disliking" just doesn't make for as good a title. Reuters is reporting that a recent survey polling more than 1,000 people in each of six western nations found that the country with the most respondents saying they had a negative view of France was France itself (the United States was a close second).

Thursday, April 26, 2007

Tax Receipts

From the Club for Growth:

The federal government set a new one-day record yesterday for personal income tax collections. They received $49 billion. That's roughly the GDP of Costa Rica.
Wow, that means our government spends way too much (we are still in a deficit), our economy is booming (since the take is a percent of income), and we are overtaxed (which I take as a given).

Wednesday, April 25, 2007

Free Office Space in Michigan

For this New York Times article:

"Michigan’s largest commercial landlord is offering free space as an incentive to attract business into the economically challenged state.

"The landlord, the Farbman Group, which operates 20 million square feet of office space and other real estate in Michigan, plans to announce on Wednesday a program called Michigan Now that will subsidize office and industrial space for start-up companies and companies new to the state.

"Farbman, based in Southfield, Mich., intends to accept applications for the program through June 30 and begin placing companies in available space by fall.

...

"Companies that are selected for the Michigan Now program will be responsible for utilities and other operating costs of their space, but Farbman will not charge rent, Mr. Farbman said. Office space in the Detroit area typically leases for $15 to $25 a square foot annually."
For more on Michigan's economy, see CARPE DIEM in general, and, in particular, yesterday's post entitled "Michigan: One-State Recession"

Monday, April 23, 2007

Gun Control and SWAT Teams

Reason Magazine has a post which references an article from Alexander Cockburn entitled "How to Stop the Next Campus Shooting: Bring Back the Posse." Reason has done a good job summarizing it:

Five years ago Peter Odighizuwa a 43 years old Nigerian student killed three faculty members at Appalachian Law School Dean with a semi-automatic handgun, but before he could wreak further carnage two students fetched weapons from their cars, challenged the murderer with guns levelled ,and disarmed him.

When the mass murder session began in the engineering building the police cowered behind their cruisers till Cho Seung-Hui finished off the last batch of his 32 victims, then killed himself. Then the police bravely rushed in, started sticking their guns in the faces of the traumatized students, screaming at them to freeze or be shot. Similar timidity was on display in Columbine....

..............

The Virginia Tech terrible massacre should prompt a radical review of the utility of SWAT teams which now infest almost every community in America. Each time there's a hostage taking or a mass murderer on the rampage, one sees the same familiar sight: overweight SWAT men, doubled up under the weight of their costly artillery, lumbering along in their body armor and then hiding behind trees or cars or walls while the killer goes about his business. SWAT teams perform most efficiently when shooting down unarmed street people menacing them with cellphones.

The answer is to disband SWAT teams and kindred military units, and return to the idea of voluntary posses or militias: a speedy assembly of citizen volunteers with their own weapons. Such a body at Columbine or Virginia Tech might have saved many lifes. In other words: make the Second Amendment live up to its promise.

........

The left complain about SWAT teams, but doesn't see that the progressives bear a lot of responsibility for their rise. If you confer the task of social invigilation and protection to professional janissaries--cops -- and deny the right of self and social protection to ordinary citizens, you end up with crews of over-armed thugs running amok under official license, terrorizing the disarmed citizens.
For the full, awful story of what SWAT teams have meant to U.S. justice, consult the expert: our own Radley Balko and his authoritative study.

First Mexican Tortillas, Now German Beer

The China Post is reporting that beer pricing are on the rise in Germany due to 100% increase in the price of barley over the last year. The price of barley is on the rise for two reasons: (1) an "extremely poor" 2006 harvest, (2) government subsidies for biofuels that are making it more profitable to plant crops other than barley.

"The price of barley, which is used to make malt, an essential ingredient in brewing, has doubled in the space of a year from 200 to 400 euros per ton on the German market.

"Brewers and farmers say an extremely poor barley harvest in 2006 has exacerbated an emerging trend of converting barley fields to growing the plants used in biofuels, such as rape seed. The amount of land used for growing barley in Germany is receding by five percent a year.

"The march of biofuels is inexorable. Of the 12 million hectares farmed in Germany, two million are already being used for plants which can be turned into biofuel.

...

"The impact of the biofuels is not restricted to beer, with the price of bread likely to rise by 10 percent as a result of reduced grain production, the German bakers' federation has warned.

...

"But Jens Redemacher, the head of the cereals division of the federation of German farmers, said the brewers also had themselves to blame.

"'They have demanded lower and lower prices for barley which has caused farmers to abandon growing it because it was no longer profitable. So biofuels are not the only culprits,' he said.

"The food industry is 'just going to have to get used to having a competitor for the purchase of cereals, especially those used for biofuels,' Redemacher said."
This is not entirely unlike the Mexican tortilla situation.

HT: Fark Headline

VA vs MD vis a vis GDP

It is amazing to me how things which I consider positive values are often portrayed as failings by others. For instance, this is the opening of a column in the Richmond Times Dispatch:

Maryland's approval of an expanded smoking ban and a so-called living wage - both rejected in Virginia - is a reminder that the neighboring states are politically worlds apart.

"Maryland has been able to maintain a broader view of the public interest, what government can both reflect and be a catalyst," said J. Douglas Koelemay, an information-technology lobbyist who works in both states.

"Virginia sometimes sinks back to glorifying the individual and characterizing the government as a burden or oppressive force."

Maryland is my home State, to which my friends can attest I am inordinately attached. My family came to Maryland with the colony ships Ark and Dove in 1634, and have been there ever since, so I can claim as much regional heritage and pride as anyone in the United States, but I can't say I view my State taking a "broader view of the public interest, what government can both reflect and be a catalyst," as a positive thing. Andrew Roth at the Club for Growth fired back at this dismissal of "glorifying the individual" with some statistics.

Virginia has a higher GDP per capita than Maryland. Virginia's unemployment rate is also better, 3% vs. 3.6%. And perhaps most importantly, Virginia's population growth rate has been higher, 8% vs. 6%, since 2000 with Maryland actually experiencing negative net migration in 2006.

So, as much as it pains me to say it, I must give credit to VA for being the freer State. Apparently others want to give them the blame for the same thing.

Pork (Spending) Makes Us Fat

Michael Pollan has an intriguing piece in the NYT Magazine linking farm subsidies to obesity. He argues that because corn and soy are so subsidized, products maid from them are much cheaper than they should be, leading to the proliferation of cheap junk food. Perhaps worse, the incentives to grow corn and soy and a few other commodities diverts most farming away from produce, significantly raising the price of what produce does exist (much of it having been imported from South America).

This is a text book example (hopefully literally, as it would make a very nice box in an econ book) of government's benevolent regulation, purporting to know better than those greedy markets what The American Farmer should be growing, and using the gentle hand of economic incentives to enforce their policy. The fact that it causes junk food to be far cheaper than fresh food is a text book example of unintended consequences. After all, why should an American farmer risk growing a crop of carrots that may or may not sell, or even make it to market without spoiling, when he can get paid just to grow corn, whether or not it sells?

HT: Reason Hit & Run

Sunday, April 22, 2007

Introducing Legislation

Maybe I'm naive, but I think that when a government official is responsible for introducing legislation, they should at least know what it does. I understand that most legislation is not actually written by elected representatives - a situation that I can fully understand, but they should at least know what the law that they are sponsoring does.

HT: Fark Headline

The Predators of Capitalism

The Baltimore Sun has a book review of Thomas K McCraw's "Prophet of Innovation: Joseph Schumpeter and Creative Destruction" in which is found this quote that I found worth repeating:

"Economists from Adam Smith on have recognized the importance of business competition. Schumpeter's contribution was to look closer, to see an ecological system in which some companies must die for others to thrive.

"Entrepreneurs are the system's predators, the force behind creative destruction. Henry Ford killed the carriage industry. Seiko put the Swiss watch business on its heels. Craig's List and Monster.com are swiping newspapers' bread and butter, classified ads."

Saturday, April 21, 2007

Monopoly on Russian Radio

I apologize if this is a little off topic, but I couldn't resist:

From this New York Times article:

"At their first meeting with journalists since taking over Russia’s largest independent radio news network, the managers had startling news of their own: from now on, they said, at least 50 percent of the reports about Russia must be 'positive.'

"In addition, opposition leaders could not be mentioned on the air and the United States was to be portrayed as an enemy, journalists employed by the network, Russian News Service, say they were told by the new managers, who are allies of the Kremlin.

"How would they know what constituted positive news?

“'When we talk of death, violence or poverty, for example, this is not positive,' said one editor at the station who did not want to be identified for fear of retribution. 'If the stock market is up, that is positive. The weather can also be positive.'

...

"The change leaves Echo of Moscow, an irreverent and edgy news station that often provides a forum for opposition voices, as the only independent radio news outlet in Russia with a national reach.

"'For Echo of Moscow, this is positive news,' Mr. Venediktov said. 'We are a monopoly now. From the point of view of the country, it is negative news.'”

Record Low Unemployment

Carpe Diem is reporting that in the last year 15 states' unemployment levels have reached record lows.

Alabama: 3.3% in November 2006
Alaska: 5.9% in March 2007
Arizona: 3.9% in March 2007
California: 4.7% in November 2006
Florida: 3.2% in October 2006
Hawaii: 2.0% in December 2006
Idaho: 2.8% in March 2007
Illinois: 4.0% in November 2006
Louisiana: 3.3% in July 2006
Montana: 2.0% in March 2007
Nevada: 4.1% in May 2006
New Mexico: 3.5% in February 2007
New York: 4.0% in March 2007
Pennsylvania: 3.8% in March 2007
Texas: 4.3% in March 2007
Utah: 2.3% in February 2007
Washington: 4.6% in March 2007
W. Virginia: 4.0% in January 2007

So that's good.

Using Pricing to Solve a Problem

Mayor Bloomberg of New York City is trying to implement an $8 "congestion fee" for drivers who enter Midtown Manhattan below 86th street (with some exceptions). Read more here.

For other resources, see:

CARPE DIEM on Congestion Pricing
The Reason Foundation's Mobility Project
Cafe Hayek's The Toll of Economic Ignorance

among others. . .

Friday, April 20, 2007

Marginal Cost and Infinity

One interesting law of economics is that, in a free market, prices will settle at the marginal cost of producing an item. No matter what it cost to produce the first item, if you can make another one for what people are willing to pay for it, you can sell it. If it costs two dollars to produce a candy bar (including the cost of ingredients, salary of the workers, mortgage on the factory, healthcare costs, advertising, a sufficient rate of return on investment for the owners, shipping to the store, everything), then the price of the candy bar will tend to settle at two dollars. Producing more candy bars may reduce the marginal cost.

In a mature industry, like candy, the factory could, theoretically, be all paid off, but ongoing costs never stop. Since the amount needed to pay the mortgage and advertising, etc. stays the same, it is divided among more candy bars, reducing the cost of each. However, apart from some economies of scale, the cost of the ingredients will not change for each candy bar. If there are 12 cents of stuff in a candy bar, the next candy bar will cost an additional 12 cents (plus more man hours worked, more wear on the machines, etc.). Everyone must be paid, the ingredients must be bought, the electric bill, repairs, the list goes on. When those costs are spread out over millions of candy bars, they become negligible, but still exist. Each additional candy bar costs the factory two dollars, the marginal cost, therefore the price will settle at two dollars.

What if the cost of the next candy bar was zero? What if the factory could just produce more candy bars infinitely, at no cost. What if a magic machine just poured out candy by the train load, with no input? The cost of the next candy bar would be zero. It would just fall out. In fact, you can’t stop it from coming out. Candy bars are just flowing from the machine at a prodigious rate. If you have the only such machine, you could of course stock pile the candy bars and sell them at the market rate--what everyone else who has to pay workers and buy sugar is charging. But what if your competitors all had their own machine? In a free market the price will settle at the marginal rate, the cost of producing one more of the item. If that cost is zero, then the price will settle at zero. It doesn't even matter that the machine cost the factory one billion dollars. If everyone has one, then no one can charge anything for the candy bars, since their competitors will just undercut them. If there is no cost to making another, then selling it for two cents is better than watching everyone go to the other guy and pay 3 cents. You aren’t losing money, just making less than you were, but that is better than not making any money. There is a race for the bottom, and soon candy bars are, for all intents and purposes, free. Now what?

A different example: what if each candy bar you sold could produce more candy bars? What if each piece of a KitKat you broke off instantly grew to the size of a whole KitKat, which tasted just as good? Even if the first candy bar costs one billion dollars to develop and produce, the price for them will soon plummet. As soon as you sell one, it begins multiplying. Soon everyone has one, and the price of another is virtually zero. Just ask a passerby, “Can I have a piece of your candy bar?” and if they are polite they will probably give it to you. Why not? It costs them nothing but the time to hand it to you, and they still have a whole candy bar. You may argue that the thing cost you one billion dollars to make, so the price should be one billion, but the price is only concerned with the cost of the next one, not the last one. Since the next candy bar can be had from anyone in the street, the price again drops to zero. At this point some armchair manager will say that the company should never have invested all that money into building a self replicating candy bar, and they would be right, but it makes no difference now. The world is about to be over run by delicious junk food, and you aren't making any money on it.

What if, instead of candy bars, you make music?

Population Growth Rates: US vs Them

The American Enterprise Institute as a very interesting article about population growth rates in various countries, focusing on the US, and what that means for global trends, economic growth, and international power in the coming decades.

Under current projections for the year 2025 the United States looks to be a more youthful country than China by such criteria as median age. In 2025, furthermore, China's 15-64 labor force will have been shrinking in total size for more than a decade; the corresponding U.S. manpower pool is expected to be increasing, albeit modestly. Perhaps even more striking, population projections by both the U.S. Census Bureau and the UN Population Division envision the absolute annual population growth of the United States to exceed China's by 2025.

I highly recommend reading the whole thing.
One observation I have made repeatedly (although not here) is that a social group that reproduces more quickly will overtake those that don't and pass their values onto the next generation.

HT Reason

The Long Tail Strikes Again (Hopefully)

I've been looking into microfinancing and I have to say, I like the concept quite a bit. It strikes me very much as one of those examples of the long tail kicking in.

For those unfamiliar with the term, microfinance generally denotes the practice of providing financial services (loans, extensions of credit, etc.) denoted in small monetary amounts to poor people in an effort to enable them to accumulate enough money to undertake whatever it is they want to do, e.g., by more equipment for a family business.

As I mentioned in a previous post, there are plenty of examples of sectors where capitalizing on the long tail has been very profitable. The premise upon which these examples are built is that there is a large, unserved market for small (or very small) amounts of goods or services (the long tail of the market) that has been overlooked by traditional business models precisely because their revenue potential is so small.

Microfinance seems to be another example of great possibility in this regard. Currently, there are 3 billion people in the world who survive on less than $2 per day. Obviously, these people (and their enterprises) are not good candidates for things like loans or lines of credit due to, among other considerations, the fact that they would be borrowing so little that the revenue stream would be barely noticeable next to that composed on even one modest mortgage in a developed country. As a result, there is an enormous amount of economic activity and growth that is simply not happening for want of capital.

Ironically, the problem isn't that there isn't enough capital to go around, but that the people who need it don't need enough of it [to make it worthwhile for someone to lend it to them]. (Granted, there are other problems, such as the lack of collateral, etc.)

Now, there are two sides to this situation, as I see it:

  1. An enormous amount of the earth's population lacks one of the most efficient and sure ways of eliminating poverty.
  2. There is an enormous amount of economic success to be had both for them and those who see this as a business opportunity - just as the market for small numbers of self-branded products has turned into a business opportunity for companies like CafePress.com.
Each of these situation assessments has an economic side and a, for lack of a better word, "human" side. (1) leans more towards the human, while (2) leans more toward the economic.

{tangent}

I have always been a big believer in the wisdom encapsulated in the saying "Give a man a fish, feed him for a day; teach a man how to fish, feed him for a lifetime."

One of the problems I have always had with various aid programs (especially government disbursed foreign aid, but also various private endeavors) is that they fail to affect any long-term solution to the problem of poverty. I suspect that at least one reason this is the case is that there is an over-emphasis, both amongst their decision makers and their donors, on the end of charity (admittedly, a good end), to the expensive of the means. If the end is charity (charitably helping poorly people), the means, logically, would be whatever lifts them out of poverty most effectively and in the most dignified way possible.

It seems, however, that the means are often times only vaguely attended to in the rush to simply give money away "charitably."

Where I am going with this tangent is that I would very much appreciate the ability to contribute to the elimination of poverty in an economically prudent and effective way, rather than just hoping that my money is being put to good, long-term use.

{/tangent}

Enter microfinancing operations like Kiva.org (for more examples, check out the Wikipedia article). Kiva allows people to loan a certain amount of money (as small as $25) to people in developing countries that need access to capital for various enterprises, like buying more equipment for a bread bakery, buying a drying machine for a family laundry service, or setting up a rural cellular communication service.

From what I have seen, Kiva allows donors the most control over their money, allowing them to choose specific people with specific projects to which to lend money. The service boasts a 97% re-pay rate and certainly seems to be achieving its goal of helping poor people lift themselves into higher income situations. The only downside that I see to it is that it currently does not benefit the lender in the form of interest - which will certainly mean that fewer people will participate. Kiva's website does say, though, that they are working on that and expect to be able to set up interest-bearing loans in the future. Granted, even with that, there will be little (economically) to recommend it as an investment - but it does seem like a fantastic way to aid poor societies in a long-term, efficient way.

On the other side of the issue, Thomas Dichter over at the Cato Institute contends that microfinance will not be nearly as effective as many people hope it will be:
Recent experience and the economic history of rich countries, however, suggest that those expectations are unrealistic. Most people, poor or otherwise, are not entrepreneurs, so there is little reason to think that mass credit would in general lead to viable business start-ups. Today as in the past, business start-ups in the advanced countries depend predominantly on savings and informal sources of credit; past forms of microcredit never played a role in small business development, and much microcredit is actually used for consumption rather than investment. In the history of today’s rich countries, moreover, economic growth occurred first, then came credit for the masses. That credit was and is predominantly for consumption rather than investment.
I would note, however, that, even if Dichter is right and microfinance will not have the huge impact many hope and expect it will, it still seems to be helping in some measure - and some is better than none.

I plan on following this issue as it continues to develop. If anyone has information on it, please send it my way.

HT for some content: TCS Daily

Thursday, April 19, 2007

Norway Making Commitments

USAToday is reporting that Norway plans on reducing its net greenhouse gas emissions to zero by 2050. Interesting tidbit: Norway is the world's fifth largest exporter of oil.

Ethanol and Ozone

The BBC is reporting that, according to one study, replacing 15% of gasoline used in cars with Ethanol would not actually reduce the number of pollution-related deaths due to Ethanol's effect of increasing the amount of ozone in the atmosphere.

Decisions

As I have mentioned here before, I consider the frequent (or omnipresent) lack of critical thinking on the part of most people in society to be one of its greatest ailments. I always delight, therefore, in finding an example of some clear, critical thinking - even more so when it is done at an abstract enough level to provide one with one or more principles with which to approach problems or situations of a similar type.

TCS Daily has an article entitled Politics, Decision Theory and Contradictory Complaints, which I consider to be one such example.

The thesis of the article is that decisions generally improve with the quality of the information to which the person making the decision has access. Lacking perfect information, there will always be the risk of mistakes. There are, however, generally two types of mistakes as with the MRI example offered by the author:

"Consider the decision about the MRI. Without the MRI, the doctor would guess to go with treatment plan A. Beforehand, no one can be certain whether or not the MRI will provide information that causes the doctor to switch to plan B. The MRI can either be valuable or not. And the MRI can either be ordered or not. This leads to four possibilities."



Order the MRIForgo the MRI
MRI would be valuablegood decisionType I error
MRI would not matterType II errorgood decision

That is, the two extremes correspond to the two types of mistakes that can happen. The author goes on to illustrate how efforts to decrease one type of error can cause an increase in the other type of error if those efforts are not based on an increased quantity or quality of information.

Now, none of this is rocket science, but it is a nice, clear, concise explanation and illustration (using several timely topics, I might add) of a principle that could come in quite handy when making certain types of decisions.

The full article is short and well worth the read.

Wednesday, April 18, 2007

Educational Disease

Brain cancer may cause debilitating headaches, but the cancer is the cause and the headache is a symptom of that disease. Some treatments of breast cancer might cause heart failure, but the cancer is still the root problem. If there’s no cancer, none of these problems exist.

The major educational problems in this country – poor student achievement, the achievement gap, low efficiency, high and climbing costs, social conflict, even discipline and safety – are not independent of each other. These problems are symptoms caused by the same disease: a government controlled and operated educational system.

Read the rest of Government Monopoly is our Educational Disease from Cato-at-Liberty

The World's Dream Factory

Carpe Diem has a nice post on the American Dream, and the fact that our unemployment rate is at a 6 year low.

Yet More Tax Competition

Switzerland is now lowering its taxes to compete with the London Hedge Funds. The French will not be pleased.

Resources Wasted on Taxes

Americans wasted 6.65 billion hours on their taxes this year. That is about 760,000 years. I say wasted because those hours did not produce anything of value. At all. It was a dead weight on society. This is one (and only one) of the reasons I dream of having one of those "taxes on a post card" plans implemented.

Of course all government spending is a dead weight on the economy. Some expenditures may be necessary (I am a libertarian, not an anarchist), but that does not make them productive. A police force may protect private property (when not confiscating it) and allow free interactions in a more organized and efficient way than would be possible in a dystopian, post-apocalyptic society, but other than the similar services provided by the justice system and military and maybe a few others, government expenditures are always a transfer of resources from those who own them to those who don't, usually with the result that they are used less efficiently than they would have been, and always with the overhead costs of government bureaucracy. Unless we evaluate those costs against the benefits program, we will continue to waste ever more of our efforts, resources, and time feeding monster that is our government.
HT Club for Growth

Tuesday, April 17, 2007

Energy Myths

The Manhattan Institute has released the results of a poll conducted on 1,000 Americans regarding facts about energy and American consumption thereof.

Some highlights:

  • As of February, 68% of Americans believe that the majority of US energy comes from oil. This is up from 63.2% in September 2006. In reality, oil accounts for 40% of US energy, mostly in the trnasportation sector of energy consumption, though it also accounts for a healthy portion of heat generation.

  • 54.6% of Americans think tha Saudi Arabia supplies most of the oil the US consumes. In reality, most of the oil the US consumes comes from the Americas, with the highest exporter or oil to the US being . . . (wait for it) . . . Canada. Here's the breakdown:

    RankCountryBarrels per day% of imports% of total consumption
    1 Canada 2,181,000 15.9 10.5
    2 Mexico 1,662,000 12.1 8.0
    3 Saudi Arabia 1,537,000 11.2 7.4
    4 Venezuela 1,529,000 11.1 7.4
    5 Nigeria 1,166,000 8.5 5.6
    6 Iraq 531,000 3.9 2.6
    7 Algeria 478,000 3.5 2.3
    8 Angola 473,000 3.4 2.3
    9 Russia 410,000 3.0 2.0
    10 United Kingdom 396,000 2.9 2.0
    11 Virgin Islands 328,000 2.4 1.6
    12 Ecuador 283,000 2.1 1.4
    13 Kuwait 243,000 1.8 1.2
    14 Norway 233,000 1.7 1.1
    15 Colombia 196,000 1.4 1.0



    SourceBarrels per day% of imports% of total consumption
    Persian Gulf nations 2,334,000 17.0 11.2
    OPEC nations 5,587,000 40.7 26.9
    Non-OPEC nations 8,127,000 59.3 39.1
    Western Hemisphere nations 6,779,000 49.4 32.6
    Western Hemisphere incl U.S. 13,867,000 n/a 66.7


The whole report is interesting and is easy to skim.

HT: Reason Hit and Run

More Flat Taxes

Macedonia is yet another country with a flat tax, and brags about it in advertisements. It seems that the pipe dream continues to look more reasonable. Maybe with in my lifetime it will be seen as possible for our country.

Monday, April 16, 2007

Tax Day Pipe Dreams

Reason has a great rundown of tax reform ideas floating about in pundit-land. The Flat Tax may seem like a dream now, but it is catching on around the world.

Essential Government Services

Why is it that one guy with a laptop can accomplish more in 20 minutes that an army of city officials and bureaucrats can in as many weeks?

HT Cato-at-Liberty

UPDATE: The Deadly Risks of Unlicensed Interior Decorators

From Reason:

New Mexicans who design interiors are now free to call themselves "interior designers," even if they are not licensed as such by the state. This month Gov. Bill Richardson signed a law that eliminates a protectionist speech restriction that was challenged on First Amendment grounds by an Institute for Justice lawsuit filed last September. If you're worried that anybody with a flair for color can now pretend to have the training necessary to be licensed, fear not: The term licensed interior designer will still be reserved for those who have met the government's credential requirements.

Well thank God that is over.

Unfair Taxation

I have posted before on the percentage of the tax burden paid by the top earners in the US (top 50% of earners pay 97%, and the top 5% pay almost 60% of the taxes). Investor's Business Daily conducted a poll asking people what they thought of their own tax burden. Not surprisingly, everyone thought that they pay too much, even those who don't pay at all.

The average family in America pays about $5,405 a year. But if you make less than $20,000, according to Congress' Joint Economic Committee, you not only don't pay any taxes on average, the government gives you money. The tax burden for those earners between $20,000 to $30,000 is also small — $520 on average.

Thus, it's surprising to see in our own national poll that 58% of those with less than $30,000 in income think they "pay too much" in taxes, while just 11% say they pay "too little." Especially since just 26% of the same income group say those earning $100,000 or more "pay too much."

I know I pay too much! What about you?

Greedy Capitalist Exploitation

Great investigative reporting into the nature of multinational corporations.

Even More Tax Competition

A year after the IMF published an analysis predicting that those countries that had a flat tax would transition back to "progressive" taxation, Montenegro is the latest to adopt truly fair taxation.
UPDATE: Russia just rejected a proposal to repeal their flat tax. So much for the IMF.

Thursday, April 12, 2007

The Rich Are Where The Money Is

The New York Times has an article entitled "In the Real World of Work and Wages, Trickle-Down Theories Don't Hold Up". If you just ate some poorly prepared blowfish and don't have any syrup of ipecac handy, read it. Yeah, it's that bad. Let's start at the beginning:

After an intriguing title, the author decides to introduce the reader to the real point of the article (a point completely different than the one implied in the title) - how we should implement a universal health care system. It's quite simple really: a universal health care system will cost a lot of money. Well, then, we just have to think as Willie Sutton did when he allegedly said "[I rob banks] because that's where the money is." The rich in this country are where the money is, therefore, we should tax them!

I quote: "In short, top earners are where the money is. Universal health coverage cannot happen unless they pay higher taxes."

Oh, but the author is aware that there are many opponents of this idea, many of whom point to the fact that taxing the rich (or businesses, etc.) will have a trickle down effect on the economy. Thus, for the rest of the article, the author tries to destroy the "Trickle-Down Theory" in an effort to justify taxing the rich to pay for everyone else's health care.

Now, first of all, notice that the author takes it for granted that there should be universal health care in this country. Now, I will grant him that he should not have to address every last facet of every argument leading up to his point - I just want you to notice that he takes it for granted.

Secondly, the Trickle-Down Theory is not the only argument against taxing the rich to pay for something from which everyone will benefit (there is an argument from justice, for instance), so, even if the author succeeds in his argument, he is far from justifying the project.

Ah, now we get to the straw man of the article: "Trickle-down theorists are quick to object that higher taxes would cause top earners to work less and take fewer risks, thereby stifling economic growth." In fact, while that certainly is a consideration, its more of a considerations with other issues, say Sarbanes-Oxley, for example. The real thrust of the Trickle-Down Theory's argument against taxing the rich and giving to the not rich (not just the poor) is that, with less money, the top earners in the country will invest less which will have a drag effect on the economy. Even though the money "still exists", it exists in the hands of the government, which never puts it to as productive a use as capital investing does.

What trickles down is less capital to loan to non-rich people and business to facilitate growth and less consumption by the rich of goods and/or services produced by non-rich persons. The trickle down that might be caused by top earners working less hours certainly would be a concern if it were a reality, but, as the author takes pains to prove, is not.

Next, there's a nice bait and switch for the rich:

"In the United States, trickle-down theory’s insistence that a more progressive tax structure would compromise economic growth has long blocked attempts to provide valued public services."
...
"Low- and middle-income families are not the only ones who have been harmed by our inability to provide valued public services. For example, rich and poor alike would benefit from an expansion of the Energy Department’s program to secure stockpiles of nuclear materials that remain poorly guarded in the former Soviet Union. Instead, the Bush administration has cut this program, even as terrorists actively seek to acquire nuclear weaponry."
So, in other words, because there are such things as public works that benefit everyone equally, namely, national defense and non-proliferation efforts, the rich should not care that this particular public work is essentially stealing from one group to give to the other.

Finally, we get the glorious conclusion to the author's argument:
"The rich are where the money is. Many top earners would willingly pay higher taxes for public services that promise high value. Yet trickle-down theory, which is supported neither by theory nor evidence, continues to stand in the way. This theory is ripe for abandonment."
Again, the argument about how the rich should willing pay for something of great value - to someone other than themselves. Also, once again, the idea that what the author has addressed is actually the trickle down theory and that the collapse of that particular objection would mean clear sailing for universal health care.

Unbelievable.

Tiger Woods A Threat to Our Way of Life?

From Donald Luskin in National Review:

In seven out of the ten years since Woods burst onto the golf scene he’s been the top money-earner on the PGA Tour. He has forced his best competitors into second place while pushing countless players at the bottom of the heap out of the pro game entirely. He also has nudged athletes of all stripes from the lucrative endorsements market. He’s the best-paid corporate mascot ever, lending his name and likeness to General Motors, General Mills, American Express, Accenture, Nike, and more.

Such success both on an off the course has paid very well. Woods can’t possibly spend all the money he makes. (He took in $100 million from his Nike deal alone.) And what he doesn’t spend he either saves or invests, no doubt putting ample resources into U.S. government securities.

So what is Tiger Woods doing that’s any different than what China is doing?

When people complain about trade, they rarely understand what is happening. I suspect that the reason for fear of trade is because politicians and the media (the most formidable bastions of ignorance in our nation)use terms designed to create fear and uncertainty. When people here "We are running a huge trade deficit," it sounds bad, but if they heard "We are getting lots of stuff cheaply from these people, allowing us to focus our resources other, more productive things, creating new wealth and improving our lot," it sounds better. Remember, both politicians and papers thrive on fear and bad news.

New, Dangerous, Monopoly

There is now only a single supplier of yet another essential service, and costs are about to jump through the roof for those who depend on it.

Would It Be Different If It Were Wal-Mart?

MSNBC has an article about how Target plans on adding 500 new stores over the next five years and plans ultimately to have somewhere between 2,500-3,000 US stores. I haven't heard much else about the announcement, which is itself interesting. Would it be different if Wal-Mart had just announced another store every 3.6 days for the next 5 years? Would there be protests? Would there be endless articles about how Wal-Mart destroys small towns?

If the answer to any of these or similar questions is yes, what does that mean? Does it mean that Target doesn't do those things? Are they an inherently better company or corporate citizen? Or, as I believe was posited in Good to Great (but I am very open to correction on that), is it simply that Target has been able to maintain a better image than Wal-Mart?

Job Market for Graduating Seniors

Yet another sign that the American economy is not, in fact, going down the tubes and so many are fond of saying: "The number of new college graduates hired by U.S. companies will be 17.4 percent larger this year than a year ago, says a survey by the National Association of Colleges and Employers, a human-resources organization."

Full MSNBC article here.

Stupid Tax Tricks

Yesterday, the Tax Policy Center held its "Stupid Tax Tricks Forum". Read this MarketWatch article for interesting news on the "Chicken Poop Credit" and other goodies.

Legal Drinking Age

There is a good article on the issue of the federal legal drinking age. There are too many parts of if that I would like to quote, so I'll have to resort to a bullet list. You should definitely read the entire article just to get a lay of the land with regard to the issue.

  1. "The first is that the age set by the legislation is basically arbitrary."
  2. "The U.S. has the highest drinking age in the world (a title it shares with Indonesia, Mongolia, Palau). The vast majority of the rest of the world sets the minimum age at 17 or 16 or has no minimum age at all."
  3. "It makes little sense that America considers an 18-year-old mature enough to marry, to sign a contract, to vote and to fight and die for his country, but not mature enough to decide whether or not to have a beer."
  4. "The drop [in alcohol related highway deaths since the minimum age first passed Congress in 1984] is better explained by safer and better built cars, increased seat belt use and increasing awareness of the dangers of drunken driving than in a federal standard [than by the legal drinking age]."
  5. "The age at highest risk for an alcohol-related auto fatality is 21, followed by 22 and 23, an indication that delaying first exposure to alcohol until young adults are away from home may not be the best way to introduce them to drink."
I have always been particularly hung up on points 1 and 3. I once saw an ad on television that was trying to convince under-agers not to drink. The narrator said - and I quote - "It's not just wrong, it's illegal." Being of a philosophical bent, my head almost exploded when I heard that piece of logical fallacy being broadcast on behalf of some government sponsored public awareness commercial. There is nothing essential to the age of 21 nor to alcohol that makes drinking underage "wrong". Rather, it is precisely because it is illegal that it is wrong.

This touches on another point made in the article regarding the fact that "thou shalt not drink before the age of 21" has become something of a sacrosanct moral principle in the American mind to the point where parents - even in states that have home exceptions - won't allow their 20.5 year old children to have a sip of wine with a celebratory dinner "because it is wrong".

This whole issue and the blind acceptance of an arbitrary (regardless of how prudent the exact age is) limit as a moral or ethical principle is one of the most obvious signs that people simply do not engage in critical thinking - a phenomenon which I personally consider to be one of the most profound social evils.

Got Mercury?

Confused? Read my previous post.

From a Duthie On Post - HT: American Thinker

Wednesday, April 11, 2007

Estonia Lowers Taxes, Again

This is a bit old, but still good to know. Estonia has a flat tax. Originally imposed at 26 percent, it is now 22 percent and will shorty be cut again to 18 percent. If only the land of the free could muster that kind of reform.

Update: The Czech Government is now proposing a flat tax.

A Convenient (and Excellent) Truth

From Donald Luskin's article on trade:

If you question whether global warming is happening, or whether human activity is causing it, or whether it’s worth doing anything about it, then you must be a crack-pot. You are standing athwart the “consensus of scientists.” You are disputing “settled science.” You are a “global warming denier,” the moral equivalent of an apologist for the Nazi holocaust.

But no such accusations are made against the protectionists who question the benefits of free trade among nations. Such people are in fact standing athwart 250 years of economics, and an overwhelming consensus of living economists. These protectionists are denying the enormous gains in standards of living and human freedom that are the direct result of free global trade.

Make no mistake about it. The benefits of free trade are settled science. It goes all the way back to the 18th century, beginning with the path-breaking work of Adam Smith and David Ricardo. From then till now, the science of economics has deepened its virtually unanimous embrace of free trade. Today’s best-selling college economics textbook, Macroeconomics by Harvard’s N. Gregory Mankiw, enshrines among the “ten principles of economics” the axiom that “Trade Can Make Everyone Better Off.”

Indeed it can, and indeed it has. During the last several decades of unprecedented global economic growth we have witnessed increasing global trade and falling trade barriers. For all the worry about “outsourcing American jobs,” the U.S. unemployment rate stands today at a low 4.5 percent. On the other hand, the Great Depression of the 1930s involved a collapse of global trade, triggered by the Smoot-Hawley Tariff Act. Back then there was no outsourcing. But the unemployment rate exceeded 20 percent.

Economic theory aside, and real-world results aside, there’s another fundamental argument for free trade. Simply, free trade is a human right. People have an unalienable right to trade with each other as they choose, be they next-door neighbors or half a world apart.

So why is it that when people question the free-trade consensus — when they deny the manifest evidence of its success or challenge its status as a human right — they are not treated like those who question global warming? Question the global warming consensus and you’re something between a fool and a Nazi. But question free trade? Ah … that’s different. That’s politically correct.


HT Carpe Diem

More of the UK Nanny State

From this FOXNews article:

Some of Britain's most socially incoherent families are in danger of being plucked from their homes and dropped into 'managed properties' that will teach them the values of being good neighbors, according to government housing plans announced on Wednesday."
...
"The 'respect agenda,' an effort introduced by Prime Minister Tony Blair in 2005, will set up 53 'managed properties' across the country. Their occupants will be identified as apathetic parents, rowdy ruffians and petty criminals. They will be allowed back into their communities if social workers from the Home Office determine they are fit to do so."
...
"They will be monitored by 'supernannies' who will conduct daily patrols on families and offer parenting advice and support.

I personally find this incredible. Perhaps there are many details of which I am unaware. Going simply off of what was in the article, it sounds like the idea is "let's find all of the worst people in terms of neighborly civility we can find, put them all in one place (referred to as "projects", no less), and wait for them to get better. Oh, and since it probably won't be an automatic phenomenon, let's through in some TV-style 'supernannies' to tell grown people how to act."

It seems to me that, for this project to even have a snowball's chance of working, there would have to be some compelling incentive for these people to "improve" or some compelling deterrent for them to remain the same. I don't really detect mention of either one of those in the article. Oh sure, they will be forcibly relocated, but I would guess that they're actually going to end up in nicer places that those which they left. No incentive/deterrent there. Again, I might not have all the facts, but there is also no mention of what happens if/when people don't "shape up" in a given amount of time. Are people confined to their supernanny's care indefinitely? Could they spend the rest of their lives there? Will the public continue to house them at no cost?

Oh wait, there's an incentive! Oh, darn, but it's an incentive for the wrong end. Oh well, we're the government, unintended consequences are part of our charter.

Tuesday, April 10, 2007

Request for Proposal

One concept of government waste holds that the best way to prevent overspending is oversight and a clearly stated set of requirements. For instance, if the navy wants a new type of ship, it seeks out proposals for concepts, then proof of concepts, then prototypes. The idea is that by choosing very carefully what to spend the money on, they will save money and get the best product. This is not a bad idea and makes a lot of sense, so much so that it is used by every large organization in the world. For the Federal Government, however, the end result is that so much time and effort is spent on the selection process that for anything less than $100 billion worth of warship, it would have been cheaper to just take the first bid and save 15 years of paperwork.

This is well illustrated by the requirements for paper towels.

C-fold paper towels provided shall have a minimum unfolded width of 10.25 inches, with a permissible variance of plus .25 or minus .50 inches, and maximum length of 14 inches.

Each towel shall have a minimum area of 130 square inches. The folded width of each towel shall be 3 inches, with a permissible variance of plus .25 or minus .50 inches."

The rate of absorption of paper towel material provided shall not be greater than 20 seconds for the absorption of 0.1 milliliter of water on any representative sample of paper towel as submitted."

The color of the paper towel shall be white, with a minimum brightness rating of 70 when measured in accordance with the requirements of test method T-452 of the Technical Association of the Pulp and Paper Industries."

The minimum thickness of 12 single plies of the paper towel material provided shall be 0.070 inch when measured under an applied pressure of 0.5 psig.

I would think that the best course of action would be to just sign a contract with a cleaning company and be done with it. I shudder to think of the hours of government employee time wasted drafting, revising, approving, implementing, overseeing, and enforcing this.


HT Cato-at-Liberty

Another Feed Update

Apparently, Blogger's "Short" feed option is buggy and, so, only post titles are coming through, rather than a short excerpt of the post. Until the issue is resolved, I've set the feed back to "Full". If this causes anyone problems, let me know.

Hydrogen Fuel

Reason Magazine has an interesting article about the economic feasibility of hydrogen fuel. It gets a little technical in places, but you can follow along easily if you don't get too hung up on it.

The point of the article is to say that the production and other logistical considerations of using hydrogen as a fuel require so much energy (which is produced using conventional means, presumably) that it would actually do more harm to the environment than to simply obtain the same amount of energy from coal, oil, etc.

The author does seem to take for granted that hydrogen would be manufactured in a central location and then transported to distribution points, a schema which, as I understand it, has already been replaced by the notion of producing the hydrogen at the distribution points themselves, thus saving all of the energy needed to store and transport. Even with this, though, the article stills maintains that the simple manufacturing of the hydrogen would be less efficient, even without any transportation and storage considerations.

Like I said, worth the read.

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