The Return of Capital Freedom

Since April 2006, nearly two years ago when I last posted, many changes have occurred ... and many things have stayed the same ...

A brief (and by no means all-inclusive) list:

In the market ...

• The 10-year Treasury rate was 4.84% -- today it is 3.56%
• Subprime loans lost their popularity as investments -- for reasons other than default risk
• The conforming loan limit increased from $417,000 to $729,750
• $1.23 bought 1 Euro -- today $1.56 buys 1 Euro
• 12¢ bought 1 Chinese Yuan -- today 14¢ buys 1 Chinese Yuan
• 1 gal of regular gasoline cost $2.56 -- today 1 gal costs $3.20

Throughout the world ...

• Former Pakistan Prime Minister Bhutto was assassinated after her return to Pakistan
• 20 million toys from China were recalled due to safety concerns
• A list of "new sins" was released by the Catholic Church, including pollution and making "too much" money

In politics ...

• Bids for the upcoming presidential election have been the highlight of the news
• There is no "conservative" or "classical liberal" Presidential candidate

In taxes ...

• The "rich" still pay most of the taxes, while a single woman earning $46k with two children pays no federal income taxes and receives around $3k Earned Income Credit
• Still, no one claims the poor aren't paying their "fair share"
• Taxes on gasoline average $0.47/gallon ... not to mention all of the indirect taxes associated with its production ...

In the blogging community ...

Capital Freedom has returned ...

There's No Such Thing As a Free Pretzel

When someone coined the phrase, "There's no such thing as a free lunch," they could just as easily have said there's no such thing as a free bag of pretzels, soda, or pillow. These are just a few things that airlines have begun to charge separately from the ticket price.

You might react strongly, as some passengers did, and claim that those greedy airline companies are just trying to pry more money from your wallet. "Sharon Ansara, a government supervisor from El Paso, Texas, flew an American Airlines flight from Dallas to Washington Monday morning. 'We didn't even get peanuts," she said after the 2-1/2 hour flight. "They offered us a snack pack for $4. It stinks.'"

Some airlines still offer their passengers a "free" lunch. "Continental Airlines is one of the few that still offers hot meals on domestic flights. Sandy Gorie, 45, a real estate project manager, lives in Cleveland and takes Continental to Washington on Monday mornings and returns on Friday nights. 'I've been doing this since November and my Continental experience has been great,' she said."

My flight is not made significantly more enjoyable by eating "free" bags of pretzels or drinking "free" soda or juice from little plastic cups. I don't mind bringing my own snacks or drinks in my carry-on bag. I am sure others value the convenience of being served in-flight meals to some extent, as do I. But how much do they value it? Airlines seem to have found that people are more concerned about the price of the ticket than whether their bag of pretzels will cost them $1. "American spokesman Tim Wagner said that passengers have made it clear that their first priority in buying an airline ticket is price. The company offers a la carte services -- such as snack packs -- for those willing to pay for them." Airlines will be able to earn more money from those with a high willingness to pay, and less from passengers like myself, who are not willing to pay for snacks on flights.

This reasoning reminds me of Landsburg's explanation of why popcorn at movie theatres is so expensive. Here's a brief summary: "Most people think that it's so expensive because the movie theater has a monopoly over concessions. Since you can't buy popcorn anywhere else, the theater owner has you over a barrel. But this view assumes that moviegoers decide to see movies without considering how much it's going to cost to buy popcorn or a soda. Are moviegoers so shortsighted as to carefully consider the price of admittance to a theater but not the price of concessions? No, say economists who have studied this issue. Moviegoers are well aware that popcorn is overpriced. But the price remains high because theater owners have learned that exorbitant prices enable them to reap big profits from moviegoers who care little about cost, while still collecting ticket fees from those who are concerned about the cost."

After reading about American Airlines and Continental, I did some research and looked up flights departing from Dallas, TX and arriving in Washington-Dulles International Airport, similar to the flight where Sharon Ansara, the government supervisor from El Paso, complained snack packs cost $4. American Airlines costs approximately $379 for a non-stop flight (about 2.5 hours total flight time) and no "free" snack. Continental Airlines, which would have offered her a hot meal, costs approximately $374 for a flight with 1 stop (about 5 hours total time). While Sharon might have received her "free" food, she would have had to pay with two hours of her time with only a $5 discount. Although I'm not sure what a government supervisor does or how much a government supervisor earns, two and a half hours of Sharon Ansara's time is probably worth more to her than $5 and a hot meal.

Dining with Lobbyists

Politicians have the unique ability to steal money from some people and give it to others. Regular people like myself don't. I've never been asked to disclose my dealings with lobbyists. It should be no surprise to anyone that a lobbyist has never invited me to dinner. Lobbyists have never given me thousands of dollars or expensive gifts. In fact, it shouldn't even surprise you that lobbyists have never given me as much as a dollar.

Politicians are approached by lobbyists constantly. Politicians can get lobbyists what they want.

Yet in recent news, politicians are trying to pass laws that limit their relationship with lobbying groups: "The Senate lobbying bill bans accepting meals from lobbyists, require lobbyists to make quarterly reports of their contacts with lawmakers, and force lawmakers to wait two years before accepting jobs lobbying Congress, up from the current one-year moratorium."

Regarding the new bill, "Sen. Susan Collins, R-Maine, said this increased openness would 'make a big difference' in enhancing public confidence. 'We cannot tackle the big issues facing our country if the public does not trust us to act in the public interest,' said Collins, chairman of the Homeland Security and Governmental Affairs Committee."

The public just might be able to trust politicians to act in the 'public interest' if politicians renounced their ability to make some people better off at the expense of others, not by passing finance reform measures, disclosing lobbyist ties, or creating new ethics committees. Congress is certainly willing to create a few regulations here and there and give up a few of the perks of the job in order to retain this, their most important ability.

Indoctrination Education

High school teachers in New Jersey and Colorado have used public classrooms as a forum for expressing their political views. Those who agree with their viewpoints applaud their teaching and those who disagree state that a classroom is not the proper forum to express political opinions.

The New Jersey high school teacher, Joseph Kyle, decided to hold a war crimes trial in which President Bush was the defendant. John Gibson, a Fox News commentator, noted that such a trial assumes that war crimes have been committed and that President Bush is a likely suspect. Meanwhile, Kyle had the support of local school officials and the school principal, who believed that there was nothing improper about the mock trial.

Many of Kyle's supporters think his idea for a mock trial of Bush for war crimes is ingenius, although I might note that it is certainly not original. Aljazeera had already reported about a mock trial of President Bush and British Prime Minister Tony Blair for war crimes back in January of this year, stating that "International activists and lawyers involved in the defence of Saddam Hussein say they will hold a mock trial of George Bush, the US president, and the British and Israeli prime ministers for alleged war crimes committed in Iraq and the Palestinian territories."

The debate has focused on whether the teacher's actions are appropriate in the public classroom setting. This is certainly the wrong focus. Can we ever expect unanimity on what topics should be approached, how subjects should be taught, or how rules should be enforced? Any reasonable person would have to admit that short of teaching absolutely nothing at all, such unanimity is unattainable. Regardless of which side is taught, parents and students will scream 'indoctrination!' This is why parents should be free to choose the type of education that is suitable for their children. This is why the costs of education should be borne solely by those who choose it, so that they can rank their preferences in order of importance and pay for the quality and kind of education they deem appropriate. Trying to create a one-size-fits-all public education system inevitably becomes a struggle to provide an education that no one absolutely hates, rather than an education that people truly love. In the end, we've created a public school system that fits no one.

Reinventing Katrina

Just what did they know and when did they know it? That seems to be the never ending question posed by the media in regard to Hurricane Katrina. Until now. The Associated Press obtained a video containing a briefing of the president on the day before Hurricane Katrina struck. In it, the president assured all that "We are fully prepared."

But the federal government does not prevent hurricanes. Nor can it assure us that everyone is "fully prepared." All government can do is take money from those who chose not to live in hurricane-prone areas and give it to those who did.

But in the news media's quest for a good story, they've ignored such realities.

Preferring to believe that government is God, the media has characterized its response as that of an emperor fiddling while New Orleans drowned. They write about Bush "at his vacation ranch in Texas" and a "relaxed Chertoff, sporting a polo shirt." This month's issue of Popular Mechanics has a great article entitled "Debunking Katrina Myths," in which the authors shed light on many of the exaggerations put forth by news sources. One myth is that government response was the slowest in history. However, this is not the case. "In fact, the response to Hurricane Katrina was by far the largest--and fastest-rescue effort in U.S. history, with nearly 100,000 emergency personnel arriving on the scene within three days of the storm's landfall."

Another pervading myth is that Katrina was one of the strongest hurricanes in history. This is also simply untrue, as Popular Mechanics points out, "it was in fact a large, but otherwise typical, hurricane. On the 1-to-5 Saffir-Simpson scale, Katrina was a midlevel Category 3 hurricane at landfall. Its barometric pressure was 902 millibars (mb), the sixth lowest ever recorded, but higher than Wilma (882mb) and Rita (897mb), the storms that followed it. Katrina's peak sustained wind speed at landfall 55 miles south of New Orleans was 125 mph; winds in the city barely reached hurricane strength. By contrast, when Hurricane Andrew struck the Florida coast in 1992, its sustained winds were measured at 142 mph. And meteorologists estimate that 1969's Category 5 Hurricane Camille, which followed a path close to Katrina's, packed winds as high as 200 mph."

While the Popular Mechanics article lists a few suggestions for lessons to learn from Katrina, many of which still utilize tax dollars but with an emphasis on local rather than federal response, it missed the most important lesson: Government is not God. It is this lesson that allows us to shed the belief that government knows best and can make our decisions and provide for our every need. It is this lesson that allows us to refute policymakers who claim, as Mayor Nagin did, that rebuilding New Orleans is "too important to be left to the market." It is this lesson that allows us to prosper.

Newsworthy Accidents

People in the media continue to assert their "right to know," that is, someone else's obligation to inform them, every time a story that they deem newsworthy comes out. As entertaining as the jokes about Vice President Cheney's hunting accident may have been, the story simply wasn't worth harping on for days. Cheney's mishap has no broader implications.

However, other accidents do have broader implications. We don't always hear about them, and they rarely make front page news.

How many of you knew, for example, that only weeks ago a Fairfax County, VA police officer "accidentally shot and killed an optometrist outside the unarmed man's townhouse ... as an undercover detective was about to arrest him on suspicion of gambling on sports."

Of course the media did not assert it's "right to know" when the officer's name was not divulged. According to the Washington Post, "The officer, a 17-year veteran assigned to the police tactical unit, was not identified. He was placed on leave with pay while police conduct both an internal administrative investigation and a criminal investigation."

Yet this officer's mistake cost 37-year old Salvatore Culosi his life.

Perhaps the media is more forgiving of police officers, whose job is to know how to handle weapons responsibly to protect people. While I can choose the people with whom I go hunting, I have no say in whether a police officer in my county is careful when arresting unarmed individuals. While most Americans will probably never encounter Vice President Cheney, let alone go hunting with him, many of them will encounter police officers. If news sources wanted an accident to be truly outraged about, this is it. If news sources really wanted to assert their "right to know," here's where they could do it. Instead, they are happy to drop the story without publishing the outcome of the investigation and without knowing even the officer's name.

If that's the case, why is she holding a sign to protest?

A photograph of a Muslim woman exercising her freedom of expression, courtesy of Yahoo news