February 28, 2004

Confessions of a Welfare Queen

John Stossel on welfare for the rich:

In 1980 I built a wonderful beach house. Four bedrooms -- every room with a view of the Atlantic Ocean.

It was an absurd place to build, right on the edge of the ocean. All that stood between my house and ruin was a hundred feet of sand. My father told me: "Don’t do it; it’s too risky. No one should build so close to an ocean."

But I built anyway.

Why? As my eager-for-the-business architect said, "Why not? If the ocean destroys your house, the government will pay for a new one."

What? Why would the government do that? Why would it encourage people to build in such risky places? That would be insane.

But the architect was right. If the ocean took my house, Uncle Sam would pay to replace it under the National Flood Insurance Program. Since private insurers weren’t dumb enough to sell cheap insurance to people who built on the edges of oceans or rivers, Congress decided the government should step in and do it. So if the ocean ate what I built, I could rebuild and rebuild again and again -- there was no limit to the number of claims on the same property in the same location -- up to a maximum of $250,000 per house per flood. And you taxpayers would pay for it.

Thanks.

I did have to pay insurance premiums, but they were dirt cheap -- mine never exceeded a few hundred dollars a year.

Why does Uncle Sam offer me cheap insurance? "It saves federal dollars," replied James Lee Witt, head of the Federal Emergency Management Agency (FEMA), when I did a 20/20 report on this boondoggle. "If this insurance wasn’t here," he said, "then people would be building in those areas anyway. Then it would cost the American taxpayers more [in relief funds] if a disaster hit."

That’s government logic: Since we always mindlessly use taxpayer money to bail out every idiot who takes an expensive risk, let’s get some money up front by selling them insurance first.

The insurance, of course, has encouraged more people to build on the edges of rivers and oceans. The National Flood Insurance Program is currently the biggest property insurance writer in the United States, putting taxpayers on the hook for more than $640 billion in property. Subsidized insurance goes to movie stars in Malibu, to rich people in Kennebunkport (where the Bush family has its vacation compound), to rich people in Hyannis (where the Kennedy family has its), and to all sorts of people like me who ought to be paying our own way.

February 25, 2004

Old-fashioned views

Taki on John Kerry:

Did he or didn’t he? Get Kerry-ed away and have it off with an intern. It’s either one or the other, and I guess we have to take Alexandra Polier at her word and believe he didn’t. Kerry is one bad dude, and I don’t mean just because he didn’t do it. I mean his lifelong habit of getting a rich woman to pick up the tab. I know I’m being old-fashioned and all that, but I was taught that one marries for love, not money.

(...)

Kerry’s first wife was responsible for his political career. To say there was a lot of tension over money at the end would be an understatement. Heinz is reputedly careful not to spoil him too much, but if he wins the top prize the purse strings will loosen for good. After all, she, too, got it the old-fashioned way. She married into it. Does marrying two very rich women disqualify a man from the White House? Of course not, but then marrying for money is not illegal, just not very manly. Is a very rich woman someone not to pursue because of what it implies? Again, not in the least, but one has to be in love with the person, not the moolah. Am I being unfair to Kerry? Of course I am, but I don’t think my opinions matter very much. I’m just being old-fashioned and suspicious, and I have a hell of a lot to be suspicious about.

February 24, 2004

Privatize program now

Michael Tanner on the need for Social Security reform:

Social Security reform cannot be put off. In less than 15 years, the national retirement program will begin to run a deficit, spending more on benefits than it takes in through taxes. The IOUs in the Social Security Trust Fund are merely a claim against future taxes, not real assets that can be used to pay benefits. Overall, the system is more than $26 trillion in debt.

(...)

Some people say that the current budget deficits make Social Security reform, and, particularly, individual accounts, impossible. They point to the ''transition costs'' of moving to individual accounts. Since current taxes are used to pay current beneficiaries, allowing younger workers to invest their taxes will require a replacement form of revenue to protect current retirees. But given Social Security's unfunded liabilities, the transition does not really represent a new cost. It is just making explicit an already-implicit debt.

Of course, it would mean paying that debt now rather than later. It is true, therefore, that reforming Social Security will increase short-term budget deficits. But it will save trillions of dollars in the long term. In many ways, it is like refinancing your mortgage. Sure, you have to pay the points up front, but you save money in the long run.

Federal budget deficits are not a good thing. But letting current deficits stand in the way of Social Security reform is to saddle our children and grandchildren with a much bigger bill.

February 18, 2004

The Opium of the Professors

Edward Feser on contemporary academy:

The civilization of which I speak is, of course, Western civilization, whose origins lie in Greece, Rome, and ancient Israel, and whose characteristic modern elements include the Judeo-Christian religious tradition, the political ideals of individual rights, limited government and the rule of law, and a free-market or capitalist economic order. One would expect, then, that a curriculum designed to impart to the young a sophisticated understanding of the intellectual foundations of this civilization would emphasize, for example: Plato and Aristotle, the Old and New Testaments, Augustine and Aquinas, Locke and Smith, Burke and Tocqueville, Oakeshott and Hayek. But of course, it is extremely easy to acquire a bachelor's degree from a modern university without having encountered a single one of these figures or texts. It is also extremely easy for the student's sole encounter with the issues dealt with in such serious sources to be mediated instead by a steady diet of such spiritual poison as the shrill screeds of Howard Zinn and Noam Chomsky, works which amount to little more than vulgar political pamphlets devoid of intellectual heft, third-rate even by left-wing standards.

Fully to appreciate this shift in institutional purpose, let's imagine a young man just entering the contemporary academy, at great cost to immigrant parents of simple religious faith, who fled foreign tyranny to find in the United States the political liberty and economic opportunity that have always been its hallmark. Their ambitions for him are: that he comes to love his new country as much as they do and makes the most of the freedoms it offers him; that he thanks God continually for the great blessing He has provided in making that freedom possible; and that he strives to live his faith in a way that is worthy of that freedom -- a way that will make of him an asset to his country and to his fellow citizens, and that will bring honor to his family. In short, they dream of him returning from school an educated gentleman, whose piety and patriotism have been enhanced by an exposure to learning and high culture. Yet what remains after four years at the contemporary university, after the professors have had a chance to mold him according to their own vision of New Progressive Man? A dope-smoking, Che-Guevara-T-shirt-wearing foul-mouthed serial fornicator, whose conception of the higher moral life comprises recycling and voting a straight Green Party ticket, and whose idea of "spirituality" is hanging out with other New Age flakes at a Burning Man festival in the Nevada desert. He has been taught nothing about his religion except that it is a repressive sham, nothing about sexual morality except that there isn't any, nothing about his country and its history except that it is "racist," "sexist," "homophobic," and insensitive to people in wheelchairs, and would be much better if only if it was more like the country his parents had crawled under barbed wire to escape from.

February 17, 2004

The Lie of Egalitarianism

John Kekes interviewed by Jamie Glazov in FrontPage magazine:

Frontpage Magazine: Mr. Kekes, welcome to Frontpage Interview. Let me begin with your argument that the absurdity of egalitarianism is, among many other things, its flawed premise that justice requires overlooking whether individuals deserve what they have and whether they are responsible for what they do not have. Could you talk a bit about this?

Kekes: Egalitarians believe that the obligation of the government is to treat citizens with equal consideration and they interpret that primarily in economic terms. They think that a government that allows substantial differences in wealth is immoral and their policy is to change the existing differences in wealth by taxation. The money collected by taxation is then used to benefit those who have less.
The fundamental objection to this is that the egalitarian policy ignores the crucial question of how people have come to differ in wealth. If they earned their money by legitimate mean, hard work, intelligence, in tough competition, and not being afraid to take risks, then they deserve what they have. To take their money from them in order to benefit those who have made wrong choices, were afraid of taking risks, or lost in a fair competition is unjust because it takes from people what they deserve and use it to benefit those who do not deserve it. To say that a government that does not adopt this unjust policy is immoral is absurd. It is the precise opposite of the truth. and it is this falsehood that egalitarian rhetoric endlessly repeats.

February 16, 2004

Racial preferences more harmful than legacy policies in college admissions

Jonah Goldberg on racial preferences and legacy policies:

Now, personally, I don't care very much if schools drop their legacy policies. But let's be honest about what's really going on here and what isn't.

First of all, the ones who benefit most from legacy policies are the schools and the other non-rich students. The parents of legacies tend to be the biggest financial supporters of schools. If, all of the sudden, these boosters can't get their kids accepted, a major revenue stream will dry up or at least shrink. Millionaires, after all, are less likely to build libraries for schools that reject their kids. That means tuition will go up, disproportionately hurting poor and minority kids.

(...)

Moreover, the logic supporting the anti-legacy case simply makes no sense. Most people mock the rich kids who get daddy's help. If legacy preferences are bad, how does that make preferences for blacks good? You can't defend one bad policy by pointing out that there are other similarly bad policies.

Besides, and this is what we should remember during Black History Month, the two policies really aren't that similar. Race is different. America fought a Civil War largely over race. The civil rights movement, which we hear so much about this month and every other month, was morally compelling precisely because it said we should judge people by the content of their character not the color of their skin.

If schools want to have preferences for short people, gays or nerds that may be good or bad policy, but it's not "institutional racism." Assigning points based upon skin color is. At least in my book.

February 15, 2004

What's Wrong with Monopoly (the game)?

Benjamin Powell and David Skarbek explain what's wrong with Monopoly:

That's the real world. In the game Monopoly, owners of land and houses and hotels, though acquiring their possessions by luck, are flattered into believing they are masters of the universe, extracting profits from anyone who passes their way. There is no consumer choice and no consumer sovereignty. This is not a small detail. The entire raison d'etre of the market is missing, and thus the real goal and the guide of all production in a market economy.

Consumer choice is replaced by a roll of the dice. The player then becomes passive. Landing on property owned by another person creates not a mutual gain but a loss. In this way, trade is portrayed as "zero-sum." The elimination of consumer choice leads to the belief that businesses profit only at the consumers' expense.

(...)

To make the game resemble an economy with grants of government privilege, think of each square as an individual monopoly grant. Since the government has the ability to give out these grants, think of the government as the initial owner of each square at the start of the game. The initial price players pay for their land goes to the game's bank and should be thought of as a cost of lobbying the government to receive the special monopoly grant. The final step is to imagine that government compels the other players to buy from you and you from them, when a player lands on a grant of monopoly privilege.

Although reinterpreting the starting conditions of the game makes it more accurate, another problem is thereby created. The game's winner is not a wonderful entrepreneur but just the best rent seeker. He wins because he is the most successful at securing grants of government privilege and coercing other players into trading with them.

Monopoly may be fun to play but it leaves us with two unpleasant choices. The game either misrepresents the nature of trade in a market economy, or if slightly reinterpreted it glorifies rent seeking by making it the object of the game.
The States and Outsourcing

Radley Balko on jobs, outsourcing and state's economic and regulatory policies:

Protectionists often bring up Ohio as the prototype of a hard-working, breadbasket state whose manufacturing sector has fallen victim to free trade. But Ohio's also a case study in how a state government hostile to business pushes jobs to more hospitable locales. You've read the numbers above. But additionally, in the last few years, Ohio legislators have begun to feel the hangover caused by big spending habits fomented back in the freewheeling 1990s. As of 2003, the state faced a $720 million deficit. Ohio governor Bob Taft has promised to shrink the deficit not with cuts in state spending, but with new taxes, tax hikes, and new fees, as well as rollbacks of promised tax breaks. Taft's tax happy policy earned the Republican condemnation from the Club for Growth's Steve Moore, who called him one of the "worst governors in America." The Buckeye Institute, an Ohio free market think tank, reports that Ohio's aggressive pro-labor policies cost the state jobs even during the relatively strong economic period from 1982-1998. Zeroing in on the effect of mandatory union memberships on state economies, the Institute emphasizes that during that sixteen year period, states that mandated union membership in the manufacturing sector lost a net 996,000 jobs, while "right to work states" gained 493,000.

Let's look at the flip side. How well are states with business-friendly public policy doing at attracting and retaining jobs?

The anecdotal evidence suggests they're doing pretty well.

According to the Bureau of Labor statistics, the only state that actually gained net manufacturing jobs from 2000 to 2003 was Nevada. Nevada ranks 2nd on the SBSC's business-friendly list. It ranks 3rd on the Tax Foundation list. It ranks in the top four of CFO's list. Alaska lost only 900 manufacturing jobs over those same four years, which of course is likely due in large part to its population. Still, Alaska too ranked in the top four on the CFO list. Virginia made a big push in the late 1990s to attract tech firms to its D.C. suburbs and the Dulles corridor. Despite the tech bust, Virginia still has one of the lowest state unemployment rates in the country, and perhaps not coincidentally, ranks 14th on the SBSC list (and would likely rank higher were it not for Gov. Mark Warner's recent promise to raise taxes). South Dakota, which ranks number one on the SBSC list, also has one of the four lowest unemployment rates in the country, as of December 2003.

Again, this isn't a statistical analysis. But on its face, this cursory look at the data makes a lot of sense. For all the talk of offshoring, the cost of packing up a domestic plant and moving it overseas is pretty significant. Even outsourcing tech support and programming doesn't always make economic sense. American workers are still far more productive than, for example, Indian workers -- even when you factor in the lower wages. It's only when the onus of complying with federal, state and local tax laws and regulations becomes overly burdensome that it makes economic sense for a corporation to shop jurisdictions for a better deal.

February 12, 2004

The New Intellectuals

Lew Rockwell on the present intellectual environment:

The best journals today are not published by universities or large publishing houses, but by non-profits such as the Mises Institute, the Independent Institute, the Acton Institute, and many, many others. These are journals that seek to make a difference in the world. They aren't just manuals for state planning, as academic journals used to be. In books, no one takes marching orders from nationally approved lists as people did in generations past. As for news sources, you know the story: the cartel has been entirely smashed. The prominence of libertarian ideas in the debate today is notable, but what is most striking is the presence of debate at all! And the left does great good in exposing the nefarious plans of the Republicans, and drumming up antiwar sentiment.

Something resembling a free market in ideas is present today in a way in which it was not in the late 1940s and early 1950s. The debate, the conversation, is not national but global, and it goes on constantly in forums so numerous that it is impossible to keep up. The spread and speed of ideas makes it impossible for the state to manage opinion with anywhere near the degree of control it once had. Time was when a president on a major network spoke ex cathedra. Now he is subject to relentless criticism and even ridicule.

The Bush administration has never understood the changed political and cultural environment which it inherited when it took office. It operated on the old assumption that controlling the state and its major adjunct industries was enough to carry the day. To supercharge an economy and win a war was simply a matter of will and money. The lies were seen as an incidental, inevitable, and wholly justifiable part of statecraft.

But we live in times that devour anyone who aspires to be the one all-controlling national or international will. Real intellectuals - and they are everywhere today - will never stand for it. What has made the difference? Technology? Sure. Maybe the day of the monolithic nation state, managed from the top down, has just run its course. Or maybe the work of those who dared dissent from approved opinion in the 1940s, 50s, 60s, and 70s, is finally coming to fruition. Mises, Hayek, Rothbard, and all the other courageous people who never bought the line back then, gave a great gift to the world, which we are just now unwrapping.
Politicians' Rhetorical Ploys

Tibor Machan on how politicians manage to avoid though questions by using rethorical tricks:

It is the right time now to check in on how politicians and their staff try to hoodwink us all. It isn’t just candidates but a great many public policy celebrities who resort to various ploys-­as when they are asked about how they would handle this or that eventuality, and they decline on the grounds that they do not deal with hypotheticals. And it is all balderdash.

Fact is, hypotheticals are all we deal with as we go about setting our plans for whatever we do in our lives. As one philosopher, Stephen Law, put it recently in Think, a journal of UK’s The Royal Institute of Philosophy: "But actually, this [the evasion] is just a cheap rhetorical trick. It is part of the politician’s job to consider hypothetical questions, questions such as ‘What if the global economy takes a nose dive?’ and ‘What if interest rates rise?’ In fact, politicians are often very keen to answer such questions­-for example, they are more than happy to tell us what they will do if they win the election, even if it is rather unlike they will win."

(...)

What should be obvious is that politics is impotent to help us with much of anything in the world and, more importantly, those running for office and meddling in our affairs appear to know this plain and simple. They might well not be so evasive, so duplicitous, if they thought they actually had some solutions to problems we face and the silly journalists actually expect them to address. "What will you do if the market crashes?" What ditzy questions are these sorts anyway to a politician? But too many our journalists are ideologically on board with those who see the mighty state as the solver of our problems, so they keep addressing those who run for office and are in office as if they had a clue.

February 11, 2004

Long Lines and Cleared Markets

Good advice from Thomas DiLorenzo to all economists who study pricing practices:

It is sometimes said that long lines at theaters, sports events, and amusement parks are signs of a market that is not clearing and that prices should be raised. In fact, people pay in a combination of money and time costs, that's all. With a moderate-income clientele it makes sense for some people to ration by waiting rather than by cash. These are the low opportunity cost customers.

(...)

It is always more useful to think of profit-maximizing rationales for pricing practices that persist for long periods of time instead of falling into the "market failure" trap. Businesses that price in such a way year in and year out, and are profitable because of it, are not likely to be doing it because they are stupid.

February 10, 2004

Spending Like a Drunken Democrat

Peter Eavis on Bush's spending record:

Forget the liberation of Iraq, George W. Bush will be remembered as the president who bankrupted America.

Every president of the past 40 years has contributed to the dire fiscal problems from which the United States now suffers. Bush, however, by massively increasing government spending and doing nothing to reduce the looming burden of Social Security and Medicare, will receive more blame than any of his predecessors.

A quick run through the numbers shows why future generations, weighed down by a national debt that is now growing at $1.8 billion a day, will look back in bewilderment, wondering why Bush, despite Republican majorities in both houses of Congress, decided to go for broke.

Under his administration, the national debt has gone up a stunning 24 percent, to $7 trillion. A chief reason for that increase is that Bush has enthusiastically promoted an explosion in government spending. In 2004, federal government outlays are expected to exceed $2.3 trillion, which is $500 billion more than in 2000. At nearly $500 billion, the budget deficit is close to 4.5 percent of gross domestic product, the sort of ratio usually seen in developing countries that are about to implode. Contrary to the White House’s absurd projections, private economists expect annual deficits of between $400 billion and $600 billion over the next 10 years.

According to recent research, it’s not as if budget questions lack urgency. Medicare and Social Security are under-funded to the tune of $43 trillion. Both programs are in need of immediate reform, as Baby Boomers will soon start hitting retirement age. Yet Bush further bloated the Medicare imbalance in December with a new drug plan costing at least $400 billion over 10 years. As for Social Security, Bush made reform of this entitlement program a centerpiece of his election campaign. He even told former Treasury Secretary Paul O’Neill that his Social Security plans were "what got me elected," according to Ron Suskind’s Price of Loyalty. But, beyond forming a special commission, Bush has done nothing to further restructuring of Social Security, which casts doubt on any promises he makes on this subject in the 2004 re-election campaign.

One shocking aspect of the past three years is that so many prominent conservatives don’t seem to care that Bush has splurged like crazy and added over $1 trillion to the nation’s debt in the process. The Republican Party in Congress, despite an ill-deserved reputation for favoring fiscal discipline, has done nothing to prevent Bush from dragging us into a fiscal morass. Instead, the GOP has participated wholeheartedly in Bush’s LBJ-like largesse. Its swing away from fiscal first principles has been breathtaking. The last big spending bill that went through Congress was so full of pork that the Republicans who voted for it deserve the fate of the Gadarene swine.
Unsustainable spending will force tax increases

Bruce Bartlett on federal spending and future tax increases:

I believe that taxes will probably rise by an amount at least equal to the projected rise in entitlement spending. The two largest components of this are Social Security and Medicare. President Bush talks a great deal about the need to reform Social Security, but the budget makes clear that Medicare is in far worse shape and in much greater need of reform. Spending for Social Security is only projected to rise from 4 percent of GDP to 6.8 percent in 2080. But Medicare is projected to rise from 2 percent to more than 12 percent over the same period.

We can assume that a rise of 10 percent of GDP -- over $1 trillion per year in today's economy -- is the absolute minimum increase we can expect for Medicare. Projections of Social Security tend to be fairly accurate because they are driven mainly by demographics. But spending for Medicare is much harder to predict because the cost of medical services has risen sharply over time. The original estimate of Medicare spending after 25 years when the program was established in 1965 was low by a factor of 10.

The addition of an expensive new unfunded benefit to Medicare for prescription drugs means that future spending will be much, much greater than projected. When people are given something that is heavily subsidized, they use a lot more of it. Consequently, we can expect drug spending by the elderly to rise very rapidly, especially since drug prices are also likely to rise as demand outstrips supply.

The budget itself admits that these trends are "unsustainable." Since Congress will never reduce benefits to retirees, the only way to make the trends sustainable is by raising taxes significantly.

February 08, 2004

For Bush, It's Game Time

George F. Will on Bush's performance as president:

After the war, in May, on Polish television, President Bush said, "We found the weapons of mass destruction. You know, we found biological laboratories." No, we did not. "So what's the difference?" said the president in December about the failure to find WMDs, because "if [Saddam Hussein] were to acquire weapons, he would be the danger." Such casualness, which would be alarming in any president, is especially so in one whose vaulting foreign policy ambitions have turned his first term into Woodrow Wilson's third term, devoted to planting democracy and "universal values" in hitherto inhospitable places.

Once begun, leakage of public confidence in a president's pronouncements is difficult to stanch. This president's certitude that $400 billion "is enough to meet our commitments" for 10 years under the new Medicare prescription drug entitlement was followed by a one-third upward revision of the estimate. Especially dismaying was the fact that the president seemed not to know -- or, worse, care -- that an inherent problem with vast welfare state expansions is that no one can know crucial variables, such as, in this instance, the number of people choosing to participate and the coming menu of new drugs.

Republicans are swiftly forfeiting the perception that they are especially responsible stewards of government finances. It is surreal for a Republican president to submit a budget to a Republican-controlled Congress and have Republican legislators vow to remove the "waste" that he has included and that they have hitherto funded.

(...)

So far, the president's difficulties have been partially obscured by the sheer silliness of the Democrats seeking to replace him, all of whom want to run William Jennings Bryan's fourth campaign. Bryan lost three times, but today they are all prairie populists, even the fellow from Boston's Beacon Hill, inveighing against "special interests." That category, although capacious, does not encompass trial lawyers, teachers unions and hundreds of other Democratic clients, including Iowa beneficiaries of ethanol subsidies.

But if the president is to win a second term, and if it is to be worth winning, he must begin again to speak plainly and accurately, not just less foolishly than the make-believe Bryans.
Kerry-Edwards?

Article by Robert Novak:

High-ranking advisers to Sen. John Kerry privately say Sen. John Edwards has to be considered the top candidate for vice president on a Kerry-led ticket.

While Kerry and Edwards battle each other in Democratic presidential primaries and publicly disagree over international trade, they also are pulling their punches against each other. North Carolinian Edwards's decisive win last Tuesday in the South Carolina primary fortified Kerry advisers who want a Southerner on the ticket.

A footnote: Supporters of Rep. Richard Gephardt's abandoned presidential campaign have started pushing the former House Democratic leader for vice president. A Kerry-Gephardt ticket would pursue a non-Southern strategy, with Gephardt counted on to bring in his own state of Missouri and also help in industrial states.

February 04, 2004

'Special interests'

Thomas Sowell writes about how every candidate is opposed to 'special interests':

This election year we are sure to hear a lot about "special interests." Candidates of both major parties, as well as candidates of third or fourth parties, are sure to denounce special interests both hotly and repeatedly.

The secret of these verbal fireworks from all parts of the political spectrum is that only the groups supporting one's opponents are called special interests. Politicians do not call their own supporters special interests.

Therefore every candidate can be against special interests, and they differ only in how often and how loudly they say it -- and in the particular groups to whom they apply that label.

When Senator John Kerry proclaimed stridently that no special interests will be allowed in the White House when he becomes president, he was saying something absolutely meaningless. No one welcomes special interests into the White House because those groups that presidents welcome are their own supporters, who are never called special interests.

February 02, 2004

Release dates for The Passion of Christ

Canada 25 February 2004
New Zealand 25 February 2004
USA 25 February 2004
Greece 27 February 2004
Poland 5 March 2004
Portugal 11 March 2004
Ireland 12 March 2004
Hungary 26 March 2004
Norway 26 March 2004
UK 26 March 2004
Finland April 2004
Spain 2 April 2004
Russia 4 April 2004
Italy 7 April 2004
Argentina 8 April 2004
Germany 8 April 2004
Netherlands 8 April 2004