Saturday, April 30, 2011

Gallup's Economic Confidence Index is Terrible

Mired in debates at Debate Politics, I constantly have to get involved in arguments from progressives who say that Obama has not been terrible for the economy. The main statistics that I hear are the stock market and GDP. Let us get one thing straight: these are terrible measures of economic well-being. GDP counts a dollar spent by government to be just as good as a dollar spent by individuals. Let me ask, was a dollar spent on Mount Rushmore just as good as a dollar spent for food by a hungry family? Absolutely not, so then why do we not dock government spending at all? In our case, of course GDP is going to rise, look at spending over the last few years! Are we better off for it? It is debatable, but I have not seen the benefit. And the stock market could easily be in a bubble because of the monetary inflation from the Federal Reserve. I see it as poised for another crash (commodities spared). And how many of the companies in the stock market are only around because of direct injection of money from the government? The stock market, then, cannot be used to measure well-being.

Then what can we use? There is no perfect measure, but Murray Rothbard's Private Product Remaining (PPR) is a great measure. It is a little too negative, but I like it. Unfortunately, I cannot find updated statistics on it. As an alternative, I like Gallup's economic indices. They are a great source for real unemployment numbers, and also have a great measure called the Economic Confidence Index. It combines the responses of their Economic Outlook Index and their Economic Conditions Index. The result? The Economic Confidence Index is at its lowest point since September of 2009. Where is the improvement? Surely if Obama was doing a good job we would see these numbers getting better, but they are clearly getting worse.

Yes, I realize that these numbers are based on opinion and not fact, but you cannot deny that unemployment is not getting better and that federal debt is getting out of hand. And as for a more robust measure, how about Consumer Spending? It has not changed much since September of 2009, except that now people are spending more on gasoline and food. That means that spending on other things has gone down, and so people are getting less. Quality of life, therefore, is decreasing. The facts are out there, stop trying to deny reality.

Friday, April 29, 2011

The California Commercial About Banning Smoking

No doubt you've heard about California's budget problems. In response, California has stepped up on advertising about smoking! I know, it is a great plan to get us out of the budget mess. So, as a treat, I will link two commercials that California is airing about smoking.

Ah, this one is great. Listen to that sad music. Look at that innocent little girl trying on mommy's jewelery. She's ready to grow up and be great. Then oh no! She picked up that cigarette. Big tobacco knew she was impressionable and wanted to be popular. They made smoking be cool. They tricked her! Oh how horrible! Look at her now! That innocent little girl now has a hole in her throat and can barely talk. How sad.

Give me a break. "Big Tobacco" never forced her to smoke. She made the decision. If she did not want the consequences, she could have stopped smoking at any time. Yes, it is hard, but is it the tobacco company's fault? No. That's the same lame excuse that little kids make - the devil made me do it! Grow up. If you cannot choose for yourself then go live at home with mommy and daddy. Us adults in the real world have to face the consequences for our choices. Do not blame tobacco companies. Blame yourself. You'll get no sympathy from me.

The other popular commercial is called "Emerging Man." It shows a guy in an airplane, a restaurant, and then finally a hospital. He says that it is great that we have banned smoking in restaurants and airplanes. Is it really? If I want a smoke at a restaurant, I cannot have one because you say so? If I want it, you can go somewhere else. Or better yet, the owner can decide. Why do we have to exclude smokers from everywhere they go? If they make the choice, why should we ban them from the places they go? Not that I am a smoker, but what is so bad about it? I do not like going to restaurants that smell like smoke either, but smoke free sections are a good compromise. Just let the owner decide based upon consumer demands. Was that system really so horrible that we had to deny rights to smokers?

But that was not even the worst part of the commercial. What was miles worse was what the guy said at the end about how many people tobacco smoke kills. It is an absolute fabrication. When someone dies, they check if the person was a smoker. If the person was a smoker, then it is decided that it is a death related to smoking. The guy could have died in a car crash, but it would still be recorded as being related to smoking. I smell a rat. These statistics are obviously skewed, but they are never challenged on it!

Oh well. Smoking is bad anyway. If you want to encourage people not to do it, that is fine. Just do it with your own money, stop taxing me to pay for these commercials, and do not restrict people's rights. California should be off in the loony-bin as far as I am concerned.

Why not Syria and Yemen?

About a month ago Libya was the center story of the media. Nobody could take their eyes off of what was happening there. A revolution was sweeping across the Middle East, and for once the government was determined to fight back the protesters. What ensued was a civil war that gripped our modern sensibilities. What happened in Egypt and Tunisia was to our liking: there was a peaceful protest and a resolution was peacefully reached. When Libya came around, it was shocking.

And then came the response. The US and many other countries decided to impose a no-fly zone on the area and essentially the situation has not changed much since. We stepped in on behalf of the protesters. Now that it has happened, the civil war is still ongoing with no resolution in sight. Did we really have no plan as to what to do if the air superiority missions did not help topple the Libyan government? It seems not. For all of the criticism that candidate Obama hoisted upon Bush, he did the same mistake. He rushed into a war, and now what?

But it is even worse than that, because Obama has no consistent vision for his intrusions into the affairs of other nations. He attacked Libya because of what its government was doing to its citizens. It was supposed to be a humanitarian mission. So what about Syria and Yemen? Arguably the same thing is occurring there as occurred in Libya, yet nothing is being done. Well, sure, there are talks about sanctions, but active military involvement? Forget about it. So why is there a difference in the response? It is not random. There is a reason. These are political people and they have calculated reasons for why they do everything. So why the rush to war and now the current trepidation with respect to Syria and Yemen?

In my humble opinion (and feel free to disagree with me), this was never a response to the humanitarian needs. Ron Paul points out the hypocrisy beautifully. He says that even our humanitarian missions have a way of killing innocent civilians. So if the mission is not about saving lives, then what was it about? It was a response to the media; in other words, it was a way to score political points. Obama and the American government were being criticized for not doing anything in response to the events in Libya. This was the big story at the time, and the president could not look timorous. As a response to the growing unpopularity of Obama in response to the issue, he rushed the country into war without a consistent vision and without even a full plan.

To me, this is worse than rushing into a war without an exit strategy. I do not like nation building or meddling in the affairs of other nations, but at least Bush was consistent about it. Why is Obama getting nothing about this? The media has treated his response to Libya with kid gloves, and he is getting a free pass when he should be reamed. Granted, I am a non-agressionist and I would oppose the attacks from the start, but this was a reckless move and was purely political. War is far too serious to be a political game. Unfortunately for us, Obama thinks our military is nothing more than a pawn in a game of politics. War and destruction are things not to toy around with.

Wednesday, April 27, 2011

Obama Releases His Birth Certificate: Now What?

In a surprising move today, Barack Obama released his long form birth certificate. Of course, the conspiracy theories will continue and things will not really change. But is this even important? Obama has been in office for a few years now, and his first term will be ending relatively soon. Even if he was not born in this country, how long would it take to kick him out of office? Not quickly enough. And even if he was convicted, would things get any better? Just like when people called for Bush to be impeached, people were wary that Cheney would get the job. The situation now is very similar. Kicking out Obama would only give you Joe Biden in the Oval Office. Is that any better?

Besides, the whole issue was a distraction from the start.The real reason that people oppose Obama is because of his policies. The problem is not that he is a foreigner, but that his views are dangerous and destructive. I hope now that we can get off of this issue because it makes us lose focus on the idealogical battle. Our battle is not with the man Obama, but it is with the progressive/socialist ideology that property is evil and profit is immoral. Our war is with the philosophy that society acts and that individual action does not exist. It sees society as something to be shaped and controlled from above for their own good because people do not know any better. We are the defenders of liberty and equity. They fight for favoritism and corruption; we fight for recognition of individual rights. It is time to get back on this fight and away from the conspiracy theory distraction. Although it is fun for some people, in the long run it just does not matter.

Tuesday, April 26, 2011

The Jungle is Fiction and Upton Sinclair is a Liar

I wrote this post long ago on a forum I frequent. Many people use Upton Sinclair's The Jungle as their basis for fear of an unregulated market. I wrote this to show that the fear is unfounded because the book is a lie. I thought readers here would enjoy it.

I wanted this thread to mostly be about how the FDA and pure food and drug act came about. Most point to publication of The Jungle by Upton Sinclair. People read that and are appalled by how meat was handled back then. But should we really have kids reading this thinking that this is how things actually were? After all, The Jungle is a work of fiction. Theodore Roosevelt called Sinclair a "crackpot." In one of his correspondences, he wrote of Upton Sinclair, "Three-fourths of the things he said were absolute falsehoods. For some of the remainder there was only a basis of truth."

In terms of legislation, the real starting point was Neill-Reynolds Report. This was the report that was needed for the food safety regulations that were passed. But, of course, there were problems with it.

It turns out that neither Neill nor Reynolds had any experience in the meat-packing business and spent a grand total of two and a half weeks in the spring of 1906 investigating and preparing what turned out to be a carelessly written report with predetermined conclusions. Gabriel Kolko, a socialist but nonetheless a historian with a respect for facts, dismisses Sinclair as a propagandist and assails Neill and Reynolds as “two inexperienced Washington bureaucrats who freely admitted they knew nothing” 9 of the meat-packing process. Their own subsequent testimony revealed that they had gone to Chicago with the intention of finding fault with industry practices so as to get a new inspection law passed.

In the same year, the Department of Agriculture's Bureau of Animal Husbandry came out with a report that point-by-point refuted the worst of Sinclair's claims. Interesting that not many people hear about this.

According to the popular myth, there were no government inspectors before Congress acted in response to “The Jungle,” and the greedy meat packers fought federal inspection all the way. The truth is that not only did government inspection exist, but meat packers themselves supported it and were in the forefront of the effort to extend it so as to ensnare their smaller, unregulated competitors.

. . .

In the end, Americans got a new federal meat inspection law, the big packers got the taxpayers to pick up the entire $3 million price tag for its implementation, as well as new regulations on the competition, and another myth entered the annals of anti-market dogma

OPS is Much More Important than WHIP To Pitchers (Jonathan Broxton)

I wrote this reply to Mike Scioscia's Tragic Illness, a great blog about Dodgers baseball. He was talking about the implosion of the Dodgers bullpen last night and how though Broxton screwed it up, that he was not completely at fault.

There is a statistic for pitchers that I can’t understand why it is never brought up: oppOPS. Essentially, what is the average hitter’s OPS (on-base percentage plus slugging percentage) against Broxton. In 2009, it was a very good .479. In the first half of last year it went up to .585. In the second half it was a horrendous .909. For this year it is at .868. You can make all kinds of explanations for every blown save, and I think Mike had a very fair recap of what happened. Yes, the defense failed, but Broxton put himself into the situation to let it fail. But we cannot deny the fact that Broxton is just not effective anymore. We just need to figure out why/find a replacement. Now whatever happened, it happened in April or May of last year because that is when his oppOPS went higher than his career averages. By September Broxton became completely unusable. Whatever it was, it made him get hit harder and unable to find the plate.
As for possible replacements, why not Guerrier? His oppOPS the last two years has been .598, .625, and now .483. For Broxton: .479, .718, and now .868. I understand that he’s not as good as Broxton once was, but he is a whole lot better than Broxton is now.

The FDA Needs to Change Drug Trial Rules

Before a drug comes to market, it must be approved by the Food and Drug Administration. If you have a disease that the drug is meant to treat, you are not allowed to take it unless you are in a study or the drug has already been approved. But why are we not allowed to take the drugs before then? Yes, I know, safety, but if I have the choice between a potential cure and certain death, I’ll take the potential cure any day.

Milton Friedman was an opponent of the FDA because of this very issue. He even went so far as to say that many people have died needlessly as a result of this policy. So why do we still have it? It really just seems that people have a fixation on safety; that people cannot make decisions for themselves. This is nonsense. If people know the risks, what is wrong with allowing them to agree to this? It should be advertised as untested and that the risks are unknown, but people should be allowed to try it. Besides the fact that it would save many lives, it would also be good for research. There are many drugs that have been pulled from the market because even though it passed the drug trials, problems were discovered after. So why not try to get as much information as we can as soon as we can get it so that people will know the risks sooner?

The only reason that we still have this process is to make the FDA seem more legitimate and to appease those who are too scared to make decisions for themselves. There is no good rationale behind it. There are many drugs that are in the pipeline right now that go untested because they are still going through these long drug trials. It is time to end this unnecessary process and bring the newest scientific discoveries to the market before more people die needlessly.

Thursday, April 21, 2011

Rand Paul's Budget Proposal Is a Joke

Rand Paul, in an attempt to share the limelight with Paul Ryan (what's with all the 4-letter names, by the way?), has come up with his own budget that intends to deal with the budget. He says that the budget problem requires cutting spending in all areas, but then he makes two big exceptions: Social Security and Medicare.

I guess that his justification for this is that it would be politically unfavorable to touch these. Maybe he is trying to come up with a practical budget. But then again, he proposes to basically eliminate the Department of Education, and does that really seem like it would fly in today's political climate?

Rand Paul describes his budget this way:
My proposal, not surprisingly, has been greeted skeptically in Washington, where serious spending cuts are a rarity. But it is a modest proposal when measured against the size of our mounting debt. It would keep 85% of our government funding in place and not touch Social Security or Medicare. But by reducing wasteful spending and shuttering departments that are beyond the constitutional role of the federal government, such as the Department of Education, we can cut nearly 40% of our projected deficit and at the same time remove thousands of big-government bureaucrats who stand in the way of efficiency.

He is right, and I believe that the budget is too moderate and not realistic. He, at least, attacks defense spending, which is a major part of the budget, but not the other two major entitlement programs. Together, these three spending areas make up more than 50% of the Federal Budget. Attacking one is not enough, because, although Paul believes that this will eliminate the deficit, it does not deal with the fact that taxes are still too high.

That tax problem is something that nobody is dealing with. Sure, we could balance the budget by increasing taxation and decreasing spending, but is this the best way? We are still in the midst of a recession, and standard of living is not increasing. Decreasing the burden of government to allow more investment is the first step in the path to prosperity, but that will require lowering taxes. Is there a budget proposal that is realistic and allows for lower taxes? I have yet to see it. For Rand Paul, a self-described libertarian, his very moderate budget is a joke for ignoring that problem.

Wednesday, April 20, 2011

Is Green Energy the Only Solution to High Gas Prices?

Obama is clearly off his rocker. He is so out of touch with reality that it should be a concern that he is still in office. The fact that someone can think this is absurd. Yesterday, at a speech in Virginia yesterday, said that the only solution to gas prices in the long term is green energy. Wow. He needs to get a clue. I know that he will do anything that progressives want, but as the president of this country, he needs to look for the facts rather than the ramblings about utopia that the progressives are feeding him.

Why is this so disconcerting to me? Just look at the example. Spain during the last decade invested heavily in all things environmental. They built high speed trains across the country and invested in local transit systems. They also bet a lot of money that the green energy market would take off. This is the model that Obama and his henchmen want to follow so that one day we will all live in a world free of pollution. The problem is, Spain is bankrupt now. Green energy did not take off and the transit systems were not profitable. Obama, though, still has faith in this plan, but he does not realize why Spain failed. Green energy is still not cheap enough. The only way that this method of producing energy gets taken up by the private sector is with subsidies. Right there is your sign that it is not going to work. Maybe some day in the future, but today is not that day.

Furthermore, Obama is completely clueless as to how his policies are driving up gas prices. No, the Middle East is not the only reason that gas prices are rising right now. With an offshore drilling ban, we know that gas prices will have to be higher in the future. We cannot increase supply as we thought we once could. So speculators now will purchase a lot of oil to sell for a profit in the future, and who can blame them? They are basically conserving fuel so that we will have some in the future. Obama is completely ignorant that his own policy is driving this trend. If offshore drilling was allowed again then overnight there would be a precipitous drop in oil prices. It is not greed, it is government, once again, that is causing the problem.

Yet we go along with this man at the helm. We do not think twice about it. This man, who is so out of touch with reality, wields a profusion of power. We the people have power over this office, and we need to put the pressure on him to face the facts. The media glosses over this issue, but we know the truth. Obama is in denial, and it is time we make him realize it.

Tuesday, April 19, 2011

Art Carden on Freedom Watch with Judge Napolitano

Video Link

Listen at about 8:30. Enjoy!

Amtrak: Its Subsidy Keeps it Running

Amtrak ridership is up. Mostly due to rises in gas prices, people are seeing the rails as a way to beat the pump. It is looking to see its highest annual ridership this year if trends continue, and gas prices do not look to be going down anytime soon. Amtrak may finally be on its way.

Not now, not ever. Amtrak gets $1.5 billion every year from the government to keep it afloat. There is a map located here that shows how much the subsidy is per passenger on a certain line. It is pretty astounding. Why do we have subsidized rail transit in this country? Do we not think that private companies can do the job? The Great Northern Railway was able to build a transcontinental railroad without any government subsidies. The reason it could do this is because the project could attract capital because it was desirable. How desirable is rail today? Outside of a few small corridors it is completely worthless. Do we not trust private business to build the rail? After all, they are so greedy that they will take every profit motive. Why does it suddenly not apply to building infrastructure?

Amtrak is a joke. Getting rid of it will not make a dent in our budget, but it costs $5 per person in the United States every year. $5 here and $5 there adds up, and I sure would like to have that in my pocket instead of it being absolutely wasted by Uncle Sam.

A Response To: Is Anyone Listening to the S.&P.?

The quick answer, yes, and they should. L. Randall Wray, a professor of economics, tackled the question and said that we should just Ignore the Raters. Can anyone guess what political persuasion he favors? Well, no matter how crazy the viewpoint may seem, it needs to be responded to.

In what appears to be an attempt to influence the political debate in Washington over federal government deficits, Standards & Poor's rating firm downgraded U.S. debt to negative from stable. Yes, the raters who blessed virtually every toxic waste subprime security they saw with AAA ratings now see problems with sovereign government debt.

I really like that first sentence. Instead of asking why S.&P.'s downgraded the rating, Wray makes up something out of thin air. The view of that company could not be due to any real concerns; instead it is a political ploy according to Wray. Wow. And then after that, he attacks the credibility of the raters. Wray apparently does not know why the ratings were so high: not many people saw the price crash. Progressive economists did not see it, most investors did not see it, and these rating companies most certainly did not see it. In fact, the only people who were really concerned about the prices were Austrian economists. So, can we get a real argument as to why the outlook should not be changed?

Mind you, this has nothing to do with economics, government solvency or involuntary default. A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks. Similarly Chairman Alan Greenspan said that Social Security can never go broke because government can meet all its obligations by “creating money.”

Wray, you are an economist, and you cannot figure this out? The scenario that he is explaining is basically that the government can just print money to pay back the debt. Is he serious? Apparently the economist knows nothing about inflation. Paying back those debts with printed money would mean that investors would get less back than they paid in real terms. That is a real concern. I know progressive economists do not like to admit it, but inflation has real negative consequences, and this is one of the areas with negative consequences. The same idea holds for paying off social security with newly printed money.

Government needs to be concerned about pressures on inflation and the exchange rate should its spending become excessive. And it should avoid “crowding out” private initiative by moving too many resources to our public sector. However, with high unemployment and idle plant and equipment, no one can reasonably argue that these dangers are imminent.

I like the first two sentences, but then he goes and ruins it with his last sentence. Capital is not a homogenous item! Capital that is not being used today cannot just go to any sector. A crane is great for construction, but holds very little use to a farmer. In the same way, a construction worker is of no use to an accounting firm. The reason that capital is not being used is because we are not allowing companies to fail. If a construction company is overextended, it needs to contract. We do not need to prop it up. It merely prolongs the pain and we need to redirect our efforts to those sectors where people are demanding work be done. For example, we need less capital in the housing construction industry, so let it shrink already so we can redirect our capital elsewhere, where people actually want it.

Wray, as like most progressive economists, does not understand capital. They think that a hotel service worker can just easily move on to another industry and there will be no issues. Those of us with common sense know better, but those economists treat capital as a single homogenous unit. Their equations treat it as a single variable. This is just one reason why their models are seriously flawed. Why do we take their advice when we know they are wrong? At least S.&P.'s knows what is happening and is starting to get worried. Regular people have been worried for a long time. When will progressive economists wake up and realize the harm that their fallacious models have done?

To see a paper about how to deal with heterogenous capital (aka the real world situation) and what to do with it during a recession, take a look at this paper on

Monday, April 18, 2011

Is Doug McIntyre Right About the Benefits of Protective Tariffs?

Doug McIntyre is the host of Red Eye Radio, a nationally syndicated talk show known for letting callers talk about anything and everything. For the most part, the show is about politics, and McIntyre typically is of a conservative opinion. The show is generally entertaining and the debates and talks fascinating since McIntyre knows US History very well. I find myself agreeing with him most of the time, but there are a few issues about which I deeply disagree with him. The first that comes to mind, and most important I fell, is about his view of protective tariffs.

McIntyre frequently mentions, when talking about this subject, Japan, and how that country has used subsidies to grow its automotive industry. Because of those tariffs, he feels, the US automakers are basically unable to compete. As a result, the government should step in and use tariffs to make Japanese automobiles more expensive for US consumers. This will allow US automakers to compete and will also protect the automotive jobs that we already have. His position is not completely without merit. It is the same argument that has been made for centuries. Mercantile Europe formed its economic policies based on the idea. But were they better off for those protections?

The first example that comes to mind is the British and US relationship before and after the revolutionary war. Britain, to the American colonies, was essentially a parasite. The colonies would trade the goods that it had on its land, and the British would send back manufactured goods. The colonies were not allowed to manufacture anything at all, it had to be done on British land. It was assumed that this would be better for everyone involved since this would ensure that everyone had a trading partner. At the end of the revolution, though, these restrictions were gone and the US could manufacture goods. Instead of a decrease in trade due to the US now being able to manufacture, trade actually increased between the two countries. Where before the war there was basically a very high tariff on American manufactured goods, after the war the tariff was gone, and both countries were better off for it!

But why should this be? In a modern example, what does Africa have to offer the United States? How can it compete with what is the world’s most skilled workforce? David Ricardo solved the problem hundreds of years ago. What he came up with is today referred to as Comparative Advantage. It works as follows. Say the CEO of GE makes $15 million a year. He has a gardener whom he pays $15 an hour. Now, the CEO himself is not a bad gardener, and he would earn a wage of $20 a year if he worked as a gardener. Comparatively, the gardener would never be hired as a CEO. So the CEO has an absolute advantage over the gardener in terms of skill. However, it would be foolish for the CEO to work as a gardener. He makes much more money as a CEO. Because of this, the gardener has a comparative advantage against the CEO. So just because the CEO has more skills does not mean he will take both jobs. He will take the job that best suits him as will the gardener.

And this is what will happen with free trade with other countries. Even if they have subsidies that support certain industries, this does not mean that this country will be left without any work to do. It is nonsense. In order to support the subsidy, the Japanese government must suck away capital from other industries. This is an opportunity for foreign competitors. While the national industries of Japan must pay up to support the automobile industry, the US has a comparative advantage in those industries and can take over. This is where the jobs will come from even if there are subsidies in certain industries. A comparative advantage always exists. Mercantilism was abandoned long ago for good reason. Unfortunately it has come back in a major way, but the economies of the world grew at a much faster rate than we are today because they favored a better economic policy. Free trade is one of those better economic policies.

Sunday, April 17, 2011

Private Sector Job Growth: Before and After the Recovery

This graph is making its rounds about the internet, especially by Obama supporters and progressives in general. It is meant to show that the stimulus was successful and that our economy is doing well again. Unfortunately, though, and most seem to forget this, especially in politics, that correlation does not prove causation. I will now show that the conclusions reached in part by this graph are fallicious.

What is probably very important to look at is seasonally adjusted unemployment rates. Why is this important? Well, during certain times of the year we should expect higher employment than the rest of the year. Think of Christmas and all of the temporary workers that are hired to deal with all of the shopping going on. So what can we conclude from this graph? Unemployment does not seem to be decreasing at all. Rather, it has just stayed stubbornly high. Furthermore, how much are we not seeing in this graph by excluding those who are no longer listed as unemployed by the U-3 definition? Should unemployment, then, still be rising?

More importantly, how valuable are these jobs that have supposedly been created? Are they worthwhile jobs, are only fueled by government investment? In the Soviet Union, everyone had jobs, but everyone starved because people were not making what consumers wanted. How do we know that these jobs are necessary? The point of the stimulus is to create jobs by government investment, and jobs created as a result are independent of consumer demand. By all account, then, these are worthless jobs, and the investment that is used on these jobs is wasted as it could have been used to furnish a job that people do want done.

Finally, and most importantly, what assurance do we have that this is due to the stimulus? I could just as easily say that the growth is occurring despite the stimulus. These are two equally valid conclusions to draw from the graph. And it does not even answer the most important question: is quality of life starting to rise? I could imagine a country where everyone produces war goods. It would have the highest GDP, highest average wages, highest growth in income, etc. However, those people would be miserable. There would be no food, no consumer goods, nothing that makes life good. The statistics would be good, but the economy would be in terrible shape. Always keep that in mind when looking at economic indicators. Nothing can show you objectively quality of life, but theoretically, we know what it takes to achieve it. We need people who will do the jobs that people want done, we need competition to ensure low prices, and we need entrepreneurs and investors to make sure that we are investing in the best things possible. Under Obama and many other presidents of this and the last century, frankly, this has been opposed. So do not be persuaded by fancy statistics. We know the truth, and empiricism cannot overturn logic.

Saturday, April 16, 2011

Thomas Sowell's Plan to Cut the Budget

"The liberals' easy solution is just to increase taxes on "the rich." But, if you do the math, there aren't enough of "the rich" to cover the huge and record-breaking deficit."

Why will no politician admit what is obviously true? Thomas Sowell wrote an article detailing his plans about how to cut the budget. William Anderson, at his blog Krugman-in-Wonderland, points out that the point of these taxes for politicians is not about revenue, "but rather the economic and social vision that these people have -- and have for the rest of us, whether or not we want that 'vision' imposed upon us." So first and foremost, we must stamp out any claims that the budget can be fixed by just taxing the rich more. It is not going to work, and it is going to seriously hurt the economy. After all, it is not as if the rich do nothing with all of that money. That money is invested, it is loaned, and it is spent. All of these things create jobs. If you are going to demonize the rich, then do not forget the many rich people who have invested in your company and so have furnished your job.

But what about spending cuts? Are they feasible? Cuts will negatively impact many people, right? Well, first of all there should be a group of spending cuts that we can all agree upon that Sowell first mentions - subsidies for the rich. That is, farm subsidies and subsidies for "'green' policies." Ultimately, though, these spending cuts will not be enough, but they are cuts that need to happen for the sake of any sense of ethics. As for bigger cuts to programs that are much more popular, Sowell mentions the strategy used by Douglas MacArthur in World War II. He did not attack every island on the way to Japan, he only attacked those islands that he needed in order to get to Japan. His first recommendation?

Instead of attacking these programs as a whole, what is far more vulnerable is the compulsory aspect of these programs. If Medicare is so great, why is it necessary for the government to force people to be covered by Medicare as a precondition for receiving the money they paid into Social Security?

And the same applies for Social Security? Why not just allow people to opt out. He says (without any statistics as a reference but it is probably true) that someone who has a private retirement account is probably going to do better than the return on Social Security even if the stock market is down when he retires.

These all sound like great ideas, and I like them all, but I just do not see how these all add up to be enough. According to US Debt, we have $14 trillion in debt. What you do not hear about, though, is the $113 trillion we have in unfunded liabilities. Yes, the US needs to find $113 trillion to pay for all of these social spending programs. Frankly, that amount of money is not out there. The only solution, though no one is willing to fact it, is to completely and permanently end Medicare, Medicaid, and Social Security. There is no way around that fact, no matter how sobering the burden may seem. And is it really all that burdensome? After all, this country became the leader of the free world in the early 1900s before all of these social spending programs existed. So no, Mr. Obama, these programs did not make America great. Our economic policy of the 19th century made us great. We lead the world and we were in control. We were a creditor nation. These programs have made us a debtor nation, subject to the whims of those who have made loans to us. The path to greatness lies in abandoning these programs. People will be fine. They were back then and look at how much wealthier we are in this age.

Friday, April 15, 2011

Is Nullification a Practical Method for Limiting the Federal Government?

Nullification, one of the newer books out by author Tom Woods is about the use of nullification. Tom Woods recently went on Judge Napolitano's show Freedom Watch to talk about nullification and that video is posted on YouTube.

I generally like the work of Tom Woods, especially his writing about Catholic history and even the general state of economics. Meltdown is one of his most popular books, and was arguably one of the first books to come out after we got into this recession about the ultimate cause of the downturn.

This book, though, is a little less about economics and more about a political idea. Nullification is a method by which states can basically overturn a federal law by refusing to abide by it. One of the most important uses of it was before the Civil War when northern states decided to nullify the fugitive slave law. Since the Civil War, though, it has not been used much, but Tom Woods sees it as a definite possibility for states to regain their sovereignty. Jim Gourdie, a popular blogger over at Conservatives on Fire has written a few posts on this very subject that you can find here and here (if you are having trouble reading his posts just press ctrl+a to highlight the text).

So is Nullification a real possibility for limiting the size of our federal government? Tom Woods seems to think so, but what do you think?

Thursday, April 14, 2011

Why not Express Lanes?

Have you ever driven on the 10 just west of downtown Los Angeles? There we have a nice little innovation that separates the traffic that is exiting the freeway and the traffic that is going to travel a little bit further. Now I know that heading east everyone seems to equally be slowed down by the interchange, but heading west it works pretty well. The slow traffic is separated from the faster traffic. We should do this on a larger scale.

As we speak it is in the works right now. Much of the San Bernardino Freeway (as far east as El Monte) will have these express lanes that people will have to pay for. It is much the same for the Harbor Freeway down until the 105. The theory seems to work pretty well. By separating the express traffic from the exiting traffic, only the traffic that intends to exit soon will be slowed down. Those that want to travel further can continue on their way at good speeds. This sounds like it would be a nice feature to have to bypass downtown (and this was one of the main reasons that the Foothill Freeway was built).

But merely separating the traffic would not be enough. The express lanes would just get crowded with normal traffic as they are now. But what if people had to pay to use those lanes? You would still get to use the slow lanes for free, but you would also get the benefit if you choose of using the express lanes. With congestion pricing, around rush hour the price would be highest and at other hours would be lower. This would encourage a more constant use of the freeways instead of the rush hour usage that we see now where the freeways are over-utilized at peak hours and under-utilized at all other times. Toll lanes would tend to equalize that and make traffic flow more smoothly at all times.

It sounds pretty good from a theoretical basis, but people always make the case that such lanes would be “Lexus Lanes” and would only benefit the rich. We should remember that we are not an egalitarian society. Food is the same price for everyone, and so the rich can better afford it, yet do we complain about that? It is the same with virtually all goods in our society, yet we do not complain about that. Why should we complain about this? Access to the freeway is a commodity much like anything else. Yes, you pay taxes for it, but with the money from the toll roads we should be paying less in gas taxes.

We ignore productivity because we want to make things “fair” for everyone, and in the process of trying to make everything fair we forget equity. We are not a society of equals, nor should we be. Our society benefits those who produce the most so that quality of life rises for everyone. So let us not worry about what this would mean for the poor. This would only incentivize living patterns to where they should be given the cost of transportation. The result would be a smarter city arrangement and a more efficient transportation system. Our current system is a failure, so we might as well try it.

Larry Elder Interviews William Ayers

"Every great fortune involves a great theft" - this is a quote from William Ayers. Larry Elder, a local radio host from Los Angeles, had William Ayers on his show the other morning. Elder is a libertarian (so he says), and I like many of his views, though I disagree with his foreign policy views. Elder makes Ayers look like a nutjob, especially in the first half of the interview. Ayers, a member of the Weather Underground, a terrorist organization, later became a college professor. I thought this was a very entertaining interview and you can read it by following this link. It's sad how Ayers still thinks that he is completely innocent despite the destruction of property that he was involved in.

John Taylor's Chart Gets Hammered by Justin Wolfers

I had a blog post just the other day about some charts drawn up by John Taylor. In those charts, he detailed the correlation between investment and employment since 1990. He also had another chart that showed when government increased spending, that unemployment tended to rise, though the correlation in this chart was not as strong. But then came Justin Wolfers on the Freakonomics blog to spoil the part.

In a blog post from March 30, Wolfers pointed out something very interesting. He asked the question, why did John Taylor use 1990 as his start point? In fact, if he went back to say 1970, what would the chart look like? Well, Wofers made just that chart.

Well whoops. Apparently investment and unemployment are not all too well correlated. Wolfers tries to explain this by saying:

On balance, times in which the investment share is higher, are slightly more likely to be good times. But I’m not sure why. Is it—as Taylor asserts—that high investment shares create good times? Or is it that good times encourage investment? Or is it a third factor—perhaps in good times the government doesn’t need to prime the fiscal pump, and so the investment share is higher? Or is it something else?

I am not sure that I entirely agree with his conclusion. To me, the fact that there is such a strong correlation since 1990 cannot just be disregarded as a fluke. And why the entirely different pattern between 1970 and 1990? Wolfers says that the sample size is too small, but is 20 years really too small of a sample size? Instead, I think that this graph indicates a change in the economy between those two time periods.

But still, here I sit wondering what that change could be. Stagflation has entered into my mind, and a breakdown showing the points during the 1980s separate from the 1970s would be nice. Still though, it is not as if any of this really matters, because these economic data are subject to so many variables that trying to isolate any one thing as the cause through correlation studies is impossible. Theoretically, we know that with higher investment would come less unemployment. However, if the government is furnishing that investment, they will not be as effective at investing in the short term (corruption, fat union contracts), and in the long term that investment will not even pay off leading to a sluggish economy comparatively (money was spent on a wasteful investment instead of a better one). So however the debate on this chart ends up does not really matter to me. Theoretically we already know the answer; empiricism is just the refuge of the illiterate economist.

Wednesday, April 13, 2011

Whom Should we Blame for High Gas Prices?

I found an article not so long ago on about the energy situation (specifically what we were facing in 2008). Wikipedia has an article about the general 2000s energy crisis, and in the introduction to the article mentions declining petroleum reserves, peak oil fanaticism, Middle East tension, and that harbinger of doom also known as the speculator. The article on the Mises website, instead of asking who to blame, instead asks the very simple question, "Are gas prices really all that high?"

The first thing mentioned that needs to be accounted for is a general rise in prices.

First, we need to take into account inflation. The result of the Federal Reserve printing too much money is a loss of purchasing power of the dollar: something that cost $1.00 in 1950 would cost about $8.78 today. As for gas prices, in 1950 the price of gas was approximately 30 cents per gallon. Adjusted for inflation, a gallon of gas today should cost right at $2.64, assuming taxes are the same.

Which of course makes perfect sense. When we compare income of people over time, we take into account inflation, so we therefore should do the same with gas prices. However, inflation does not answer all of the questions, as gas prices around this time were in the $3 range (that sounds good right about now, doesn't it?). Inflation, however, is not the only thing that would cause prices to change. Look also to the government.

But taxes have not stayed the same. The tax per gallon of gas in 1950 was roughly 1.5% of the price. Today, federal, state, and local taxes account for approximately 20% of gas's posted price. Taking inflation and the increase in taxes into account (assuming no change in supply or demand) the same gallon of gas that cost 30 cents in 1950 should today cost about $3.13.

Now we are getting much closer to the actual price, but as has already been alluded to, supply and demand have changed with time. We are not working with the same supply of oil that we had in the 1950s and we do not have the same amount of demand that we had in that time period. This, also, must be taken into account.

Neither have supply or demand remained constant. The world economy is growing. China and India are obvious examples. At the same time, Americans continue to love driving SUVs and trucks. As for supply, we are prohibited (whatever the reasons may be) from using many of the known oil reserves in our own country. Furthermore, due to government regulation, the last oil refinery built in the United States was completed in 1976. In addition, the Middle East is politically unstable which leads to a risk premium on the world's major source of oil. It is obvious that the demand for oil has grown while supplies have been restricted.

The average price of gas in the United States today is approximately $3.25. The question is, why are gas prices not higher than they are?

Although figures are not provided, the article implies that since this third contributor more than makes up for the $0.12 per gallon difference. In fact, the article claims that gas prices are much lower than they should be given the factors used. This is probably due to more competition and higher efficiency in drilling oil and delivering it, in which case we should be very happy about the state of oil prices. What we should be angry about instead is inflation, taxes, and regulations that strangle our discovery of new oil supplies.

So yes, in the end, while answering the question of whether prices are all that high, the author Sterling T. Terrell concludes that the price today is not due to the market, but rather government interventions into that market. But what about the oil companies and their huge profit margins? The article did not neglect this contention.

Blaming greedy oil companies on the rising price of gas is simply irresponsible. The profit margins of a few selected industries are as follows:

Periodical Publishing 24.9%
Shipping 18.8%
Application Software 22.5%
Tobacco 19%
Water Utilities 10.2%
Major Integrated Oil and Gas 9.5%
Hospitals 1.4%
Drugstores 2.8%

Oil companies do make a nice profit, but shipping, water utilities, and other companies by comparison make a killing. Why do we hear nothing about the profit margins of these companies? Why do we only hear the demonization of oil companies?

Next time you hear about rising oil prices (I'm sure you hear a lot about it nowadays, actually), remember to take a skeptical look at the opinions of pundits (I'm talking to you Mr. Windfall Bill O'Reilly). Make sure that they take into account inflation, taxes, and government regulations before they try to convince you that the market is to blame.

Tuesday, April 12, 2011

Annals of Well, Duh, but not so fast Paul

Paul Krugman, everyone's favorite economist, runs kind of a popular blog over at the New York Times. Now, he is constantly ridiculed by libertarians as myself, and another economics blog posting just about this guy is more attention than he really needs. As such, I am writing this post not to call him out, because the guy has as much credibility as a Magic 8-Ball. Rather, I point out the image he posted in his blog to point something out about the way we calculate inflation in this country.

Krugman is constantly on a tirade against Austrian economists, and one of the important claims of Austrians is that higher commodity prices will make their way through various intermediate goods and ultimately result in higher prices for consumer goods. It makes sense theoretically. After all, if it costs more to make something, then it is going to sell for higher or not at all. So Paul Krugman, ever the empirical Aristotle, looks to a graph showing the relationship between commodity prices and core inflation (emphasis on core).

Aha! Paul Krugman finds that there is virtually no relationship between commodity prices and core inflation. Let us put aside the fact that a better representation of this data would be a scatter plot of commodity prices and core inflation 6 months later (because it is ridiculously hard to make out differences in core inflation from that graph). Rather, let us make what I consider to be the more devastating argument.

Directly from the Wikipedia article about core inflation, this economic indicator is defined as a measure of inflation that excludes items with volatile price movements. Well, that sounds interesting. We leave out those goods which do face price swings and only focus on the goods that do not face price swings. I wonder if that will tend to underestimate the price inflation that is going on. This measure also only looks at the goods that people are currently buying. Let's think about that. If the price of something has gone up, do you think that people will begin to buy less of it? So core inflation already has a bias against volatile price movements, and then it does it again!

The use of core inflation, while convenient for progressive economists like Paul Krugman, does not really measure the pain that everyday consumers are going through as a result of higher prices. Higher energy prices hurt us, higher food prices hurt us, so why do we just ignore these when we measure price inflation? My theory is that we only measure this so as to give credence to the bunk economics that the United States elite follows. Meanwhile, in the real world, we have to face the consequences of the poor decisions that they make, and we have these intellectuals in ivory towers trying to persuade us that it is not as bad as we think it is just so that they do not have to face the shame that is acceptance of the fact that their life's work is completely wrong. It is a high price that we all pay for their mistakes.

Monday, April 11, 2011

Should we Allow the Government to be Shut Down?

I wrote this post a few days ago in the heat of the political extravaganza that was the budget negotiations. Now that a deal has been reached this is probably no longer the hot button issue that it was, but I think the points I made are still just as valid.

Compromise is the favorite word in Washington these days. Reporters and Democrats in office say that compromise is needed in order to keep the government running before it shuts down this Friday. Plenty of doomsday scenarios will be thrown about, especially the idea that a shut down will stifle the recovery. But in the words of Obama, let us be clear, a shut down is the least of our worries.

Our national debt is past $10 trillion now, and the deficit in proposed budgets are also very large. So what is being compromised is not a way to deal with that debt (which, by the way, we are paying a ton of money to maintain), but rather this current budget which also looks to increase the debt. Democrats want to limit the spending cuts, and Republicans have become budget hawks. So right away, we should clear up this issue. What is basically being argued about is how much this budget will increase the debt.

But what about the argument that if we do not spend enough money or allow the government to shut down, that we will stifle the recovery? The contention, in short, is nonsense. A recovery for most people requires a growing economy. The economy grows when the wants of people are being satisfied more and more with time. So who knows what your wants are better: the government, or you? So then how does government spending increase the satisfaction of wants? Realize that we basically have a fixed store of economic value (though it grows with time), so when government spends more, it does not mean that total economic activity has increased. It only means that you have less to spend for yourself and government spends more deciding what you want.

There are many more arguments against government spending, but this should be the most convincing on a philosophical level. Though politicians and economists would not be convinced, they cannot ignore this basic fact. There also are the essential moral arguments such as property rights that government intrudes upon when it spends, but this argument has been ignored for centuries. So bring on the government shut down. It is not as if government spending ever made us better off than we would be without them.

Investment and Unemployment Correlation

I took this image today from Greg Mankiw's blog that you can find by following this link. He got the graph from John Taylor and you can find the blog post that this image is from in this link. So enough with the introductions, let's see the image.

I know, we can file this in the big dud category. The image, admittedly, is not very exciting. This should be intuitive. With more investment in the economy we get higher employment. In other words, with more investment, we can furnish more jobs. So why do I even point out this graph? Because it can be misconstrued. Looking at the chart alone, you cannot tell which causes which. And what are the implications? Does this mean that we should increase government spending to combat unemployment? Greg Mankiw says that interpretation of the chart can go many ways. Greg Mankiw tries to sway the argument, but you would not be able to tell by the way he talks. He does this by taking an image from a blog post that directly states a policy implication and takes away that implication and says make your own decisions. John Taylor, the man who originally created the image, had another chart on his blog post.

John Taylor posted this image to show that decreasing government spending does not seem to have an adverse effect on unemployment. On the contrary, it actually shows that decreasing government spending will serve to decrease unemployment. Greg Mankiw conveniently forget to mention this chart, only showing the other chart which could be used to imply that increasing government spending would decrease unemployment. John Taylor has shown that this is just false. I guess Greg Mankiw simply forgot? Yes, I am sure it was an innocent omission. Another day, another fake economist.

Sunday, April 10, 2011

A Response To: The Prosecution Rests, but I Can't

I found an interesting article in the New York Times today that you can read just by following this link. It is about a man named John Thompson falsely convicted of robbery of murder who was freed by a supreme court decision. About 15 years after his conviction, his lawyers found evidence that had been covered up. Most interesting was details about the blood sample which did not even match his. The prosecutors had covered up this evidence, but they face no penalties and continue practicing today.

He makes a very interesting point; why were the prosecutors not tried in court themselves? Now surely hiding evidence so that they could get a conviction that would put an innocent man to death seems immoral. Does it seem like it should be illegal? I will get back to this point at the end.

The reason that I put this article on a libertarian blog is because it relates to a kind of unique position I have about tainted evidence. Say a policeman goes into a home without a warrant and finds a bloody knife with the DNA of the victim and the murderer. A court would throw out the evidence in today's system even though we all would know who the murder was. If that was the only evidence, then the murderer would go free. Personally, I think that is insane. I realize that it is a deterrent toward that kind of activity, but I think there is a better solution. Instead of throwing out the evidence, why not use the evidence, but then hold the policeman liable for what essentially boils down to breaking and entering? This way, you would have a deterrent against this kind of unlawful activity by the police, but the guilty would also still face their punishment.

And I think that ties back to this case. By holding back their evidence, they indirectly lead to what would have been the murder of an innocent man. The person in the getaway car for a murder is also charged with murder, even though the contribution is indirect. In this case, this also seems to be the same. The prosecutors tried to indirectly put a man to death. That seems, very logically, as though that should be grounds for a conviction. It is something that we as a nation need to look at and decide, because this kind of manipulation of justice is immoral and directly harms innocent people. This kind of situation is exactly what the law was created for.

In case you were interested, the man was awarded money for his time spent on death row, so at least he is not completely without justice.

Friday, April 8, 2011

A Response To: It’s 2026, and the Debt Is Due

Greg Mankiw is an economics professor, in fact my brother took an economics class using one of his textbooks which when I looked over thought was worth its weight in dirt. Though I think his economic skills are dubious at best, he is not always wrong (as is the case with all people), so I thought that I would respond to his article that he had in the New York Times a few weeks ago. You can find the article by following this link.

He starts off his article very well. It begins with the populist call to arms about out of control government spending and a debt that seems to be growing exponentially. But then it begins to fall apart.

The seeds of this crisis were planted long ago, by previous generations. Our parents and grandparents had noble aims. They saw poverty among the elderly and created Social Security. They saw sickness and created Medicare and Medicaid. They saw Americans struggle to afford health insurance and embraced health care reform with subsidies for middle-class families.

Mankiw does not seem to know his history. Social Security was never a program meant to aid the elderly. From the start it was meant as another income tax, and it has been used as such since the day it was created. This is why the program is ready to go bust. Medicare and Medicaid were programs meant to keep Democrats in power, and it did until 1994 when Republicans finally took back the House of Representatives. And even if they were noble ideas, they have proven themselves to be miserable failures. We still have the poor in this country, and in fact these programs have only served to disintegrate the family. Why should a father care about his children if the government will take care of them? This is why the rates of single-parent households have risen so dramatically since these welfare programs were started.

Our efforts to control health care costs have failed. We must now acknowledge that rising costs are driven largely by technological advances in saving lives. These advances are welcome, but they are expensive nonetheless.

Mankiw is wrong once again. Rising health care costs are due to the AMA having so much political clout and limiting the number of doctors and medical schools. It is also due to government favoring non-profit hospitals and helping out HMO's which obscure prices from consumers. This is why prices have skyrocketed, and I have proven it in many posts in this very blog.

The economics guru then goes on to say that these problems could have been avoided if we only had taxed ourselves. This is nonsense. The reason that we are in this mess is because spending has not been controlled and estimations for the cost of programs have been far off. Just take a look at this chart.

But at least Mankiw sees the problem and is honest about it. Bond markets are now viewing treasury notes with distrust. People are losing confidence in the ability to pay back all of the debt that it has. At least he sees the problem, though he cannot correctly identify the source of it. He does not want to blame past administrations and the impossible promises of past generations.

As for his solutions, Mankiw mentions cutting higher income groups out of social security. While I would also do this, I just want to see the whole program eliminated entirely. People can save for their own retirement and private charity can fill the void. He also mentions limiting Medicare and Medicaid. This is also a good idea, but again I would rather see these programs completely eliminated. He then attacks subsidies, which while a good idea, is a very small part of the overall program.

After saying all this, he has to ruin it by saying that we need to raise taxes on all but the poorest Americans. This is funny though, because in his own blog he mentions that raising taxes will not bring in as much revenue as expected. Furthermore, he has also shown that despite higher tax rates in Europe, that the US and Europe basically get the same revenue per capita. Is this political pandering to the American left? It sure seems like it because he is plainly self-contradictory.

And then the real killer; he says that we should raise gas taxes by $2 per gallon. If he wants to limit traffic, then congestion pricing would be much more effective. If he wants to raise revenues, I do not see how this would work because such a tax would cripple the economy such that any gains would be offset by decreases in oil consumption.

He then says that we should have faced up to the problem long ago. But this is funny, as what he proposes would not even fix the problem. His cuts are not enough and his tax increases would not bring in any more revenue. We need to be real. Social Security has to face deep cuts as do the other social safety net programs. Once we start doing that and paying down the debt will we finally see a reduction in our national debt. Mankiw, like most other people, does not want to face this reality.

Do Compulsory Education Laws Cause More Harm than Good?

I'll begin with a quote from a favorite book of mine. I know it is long, but I think it really highlights this unquestioned law that we have in this country.

Going hand in hand with the spread of public education have been compulsory attendance laws, which have forced all children up to a high — and continually increasing — minimum age, to attend either a public school or a private school certified as suitable by the state apparatus. In contrast to earlier decades, when a relatively small proportion of the population went to school in the higher grades, the entire mass of the population has thus been coerced by the government into spending a large portion of the most impressionable years of their lives in public institutions. We could easily have analyzed compulsory attendance laws [p. 120] in our chapter on involuntary servitude, for what institution is more evidently a vast system of incarceration? In recent years, Paul Goodman and other critics of education have trenchantly exposed the nation's public schools — and to a lesser extent their private appendages — as a vast prison system for the nation's youth, dragooning countless millions of unwilling and unadaptable children into the schooling structure. The New Left tactic of breaking into the high schools shouting "Jailbreak!" may have been absurd and ineffective, but it certainly expressed a great truth about the school system. For if we are to dragoon the entire youth population into vast prisons in the guise of "education," with teachers and administrators serving as surrogate wardens and guards, why should we not expect vast unhappiness, discontent, alienation, and rebellion on the part of the nation's youth? The only surprise should be that the rebellion was so long in coming. But now it is increasingly acknowledged that something is terribly wrong with America's proudest institution; that, especially in urban areas, the public schools have become cesspools of crime, petty theft, and drug addiction, and that little or no genuine education takes place amidst the warping of the minds and souls of the children.

Murray Rothbard wrote this passage in For a New Liberty. In many ways, schooling did seem very much like incarceration. There were many classes which truly seemed like a waste. I could have been doing something productive for society and learning something while doing it instead of, for example, learning about the new art techniques that developed during the Renaissance, which, while interesting, is in no way useful to me. Then there is the fact that I was literally grounded to the campus for most of the day. I am not allowed to leave campus during lunch hours, but what purpose does that serve?

One day, maybe, we will look past our first reactions and try to see the real value that schooling has, especially our modern centralized system. A new approach is needed, as our schools today are nothing but centers of indoctrination of our society's most impressionable minds.

Wednesday, April 6, 2011

This is a Bad Day for Kershaw

But for Dodger fans, this is a great thing. Great pitchers always have off days. No one is always perfect, but a sign of a good pitcher is what he does with a bad day. Last year Kershaw had a bad day and did not last more than 2 innings. This year Kershaw has a bad day and he goes 6 innings giving up just 5 hits and 1 walk (and that one walk was an intentional one). That is just scary. In a park where many pitchers meet the agony of defeat, Kershaw can find something to be proud of.

The problem that most people have with the park is with their breaking balls. I am not all too familiar with the physics of why it is, but curve balls just do not break as much. But this was not Kershaw’s problem today. It seemed as though he could not find his release point. At times he had some wicked pitches, but his problem was with accuracy. Fast balls and curve balls would sail out of the zone, and more often than he would like that fast ball would sail right over the heart of the plate. He was hit hard many times, and Tony Gwynn Jr. saved his bacon with a great play off the wall that with most outfielders would have meant a double. This is why defense is so vital. Instead of a double to lead off the inning, Kershaw has an out.

So Dodger fans, let your hearts not be dismayed. Even the best have some bad days, but revel in the fact that Kershaw is only 23 years old and that a quality start with 8 strikeouts is a disappointing day for him.

As for the rest of the team, Ethier continues to hit well, Tony Gwynn Jr. continues to make the case that he should be starting over Marcus Thames, and Uribe looks like the rookie Kemp flailing away at those outside pitches (but he sure looks like he can handle the hot corner pretty well).

Tuesday, April 5, 2011

What is the Libertarian Solution to Pollution?

Libertarians and conservatives alike often get slammed for a supposed harsh view toward the environment. This mostly comes from the progressives and the environmentalists, but is their claim completely without merit? In the modern cultural millieu, it certainly has a sound basis. After all, who are the people who are always defending the environment at every turn? Without hesitation, most people would say that it is progressives. However, this argument is much more complex than it is usually portrayed, especially when it comes to the issue of environmentalism in libertarianism.

Conservatives are usually portrayed as haters of the environment by the progressive-minded. Although environmentalists are obviously the more staunch defenders of the environment, by the very nature of their name, this does not mean that the portrayal is correct. Conservatives typically look at the issue from the point of view of trying to maximize efficiency. Of course, there are some that think that environmental rules have gone too far, and they probably are not in the minority. However, the biggest qualm that conservatives typically have with regard to environmental laws is their very bloated nature. They claim that it is very difficult for businesses to stay in line with these regulations because of all the bureaucratic red tape involved. They have a case, but this does not mean that they hate the environment. All of the big conservative political pundits say that we need some kind of environmental rules; their problem is with the bureaucracy and that in some cases it goes too far.

However, as compared to libertarians, both progressives and conservatives get it wrong. The real problem that these two sides have with regards to this issue is that they believe that a certain amount of pollution is morally acceptable as long as the benefits outweigh the costs. To a libertarian, this is a repugnant view. What this does, in essence, is ignores the property rights of the individual in order to defend the presumed rights of the collective. I could write a book about why the collective does not exist outside the mind of individuals, but this is not necessary here. The fact is that because pollution is deemed acceptable despite the harm it causes to individuals, there is no way to put a price on pollution.

So what would libertarians do instead? I will defer to Murray Rothbard here and describe his views on the situation. In For a New Liberty, Murray Rothbard described how the rights of the individuals are severely restricted when it comes to pollution. Factories and other businesses are allowed to do as they will despite the harm the cause to neighbors. For instance, if I live in a neighborhood right next door to a factory and the pollution from that factory gives the town lung problems, the neighborhood is basically powerless to do anything. As long as the factory is within its bounds of acceptable pollution (arbitrarily decided by the government bureaucracy), then they are free and clear in the eyes of the law. This was not a system that grew organically through time like much of our common law; this was an invention of European governments (mostly British) during the Industrial Revolution. The neighborhood has no way to file a class action lawsuit; the business is basically free and clear. Of course, some would say that the people could simply leave and move somewhere else, but this ignores basic property rights. If I, as an individual, was to go to a house and spray paint graffitti all over it, I would have to pay dearly for it. Clearly, the current situation is detestable to libertarians.

Then what is the right solution? For the libertarian, the best situation is the one that does not involve any government. People living on their property would decide what a company would have to pay for the pollution that is going to be produced beforehand. If a company went beyond this, then they would be taken to court by nearby property owners. So imagine a neighborhood and a business that wants to build a factory right next to it. The business would have to contract with the neighbors in order to set a rate of compensation for the pollution that is caused. The benefits of this would be two-fold. First, property owners would finally get compensated for the real physical harm that is caused by pollution. Second, businesses would have more of an incentive to take the pollution where it would do the least harm. This is because businesses would want to minimize the cost of doing business and so paying the lowest rate possible for pollution is in their best interest. As a result, people would be fairly compensated and we would end up with cleaner cities.

But alas, this seems to be nothing more than a pipedream. Businesses would not want to trade the current situation for the one detailed because they would have to pay more to produce. Because of this, they would lobby hard to keep things the way they are. It is clear that the situation I describe would be much more equitable, but the powers that be have it in their best interest to avoid it. After all, whoever gets to decide how much pollution a company can emit has all the power in the world. Much like the baby who cries when his rattle is taken away, our government is dead set against giving up any of the power that it has gained, legally or illegally.