Saturday, October 29, 2005

Postponing Posting

You may have noticed that my posts have been a bit more irregular recently.

I've been preoccupied with my new pets (see picture).

They hatched last week and have been following me around the house ever since. They are called Seramas -- the world's smallest chicken -- and generally weigh less than 1/2 pound when full grown. Sadly, the one on the left died last night.

I generally reserve my blog for topics of a less personal nature; however, some readers who noted that I generally post daily expressed concern over the tardiness of my posting and I felt a proper explanation was in order.

Friday, October 28, 2005

Cheap Oil

Oil companies reported high third quarter profits, coinciding with the quarter in which powerful hurricanes caused damage in the southeastern region of the U.S. Now a panel is investigating whether their recent profits were due to “gouging.”

In a fairy tale world, we’d love to blame increases in price on some evil person. We’d love to be able to make a law that allows us to purchase exactly what we want at exactly what we want to pay. But what do we want to pay? The price that I would always like to pay is zero. I would like to get what I want without having to give up anything.

The world simply doesn’t work that way. Prices are merely a reflection of the fact that there are not infinite resources and infinite simultaneous opportunities. When I choose to go sailing, I am choosing not to go biking. When I chose my profession, I gave up the opportunity to go into other professions at the same time. Regardless of the monetary cost, every decision we make has a cost.

Therefore, we make decisions as to what will serve our goals best. We choose what brings us the highest value at the least cost.

Politicians want to blame the stockholder-owned oil companies for charging too much. Call it greed, but oil companies exist to make money. This is truly a wonderful phenomenon. I personally would not enjoy walking to work in the rain. It would be quite inconvenient for me to have to discover, refine and store my own oil. Luckily, millions of people have worked out a great deal with oil companies – we pay them, and they supply oil and gasoline for us! I, for one, am quite happy with this arrangement. Judging from the profits that oil companies make, I’d say there are quite a few others who are too. What a good deal!

In the aftermath of recent hurricanes, the oil companies simply did what they set out to do from the start: provide oil and earn profits. We demanded oil, and they supplied it. It was not out of their generosity, but out of their desire for profit, that we benefited from having oil when we needed it most. Yet politicians threaten our mutually beneficial deal with the oil companies and would rather we place our faith in the generosity of oil companies instead of their desire for profit. It is much more reliable to place our faith in profit-seeking than in generosity.

Thursday, October 27, 2005

Private Donations

The title of an article today, "In Hurricane Tax Package, a Boon for Wealthy Donors ," is misleading. It suggests that provisions that allow greater tax deductions for charitable donations are good primarily for the wealthy.

The recipients of charitable donations should be even more happy about the provision. It serves to encourage donations on a much larger scale. For example, "Mr. Wilson said that he and his siblings gave away several million dollars a year and that the amount could double this year because of the provision," according to the article.

Noting the generosity of Americans, some are looking at the reduction in tax "revenues" as a problem associated with the provision. "Robert F. Sharpe Jr., a fund-raising consultant whose clients include the American Heart Association and the University of California, Los Angeles, estimated that the provision would spur $4 billion to $10 billion in additional giving this year; 2005 giving was already expected to exceed last year's total of $248 billion.

Mr. Sharpe said the additional giving would result in $1 billion to $3.5 billion in lost revenue for the Treasury, more than the $819 million Congress anticipated."

Let's see - $4-10 billion voluntarily given versus $1-3.5 billion surrendered under the threat of force. Which is the better deal? It seems that both the wealthy and not-so-wealthy benefit from this arrangement. If this is the case, why change the tax provision only because of the recent natural disasters? If people will voluntarily give more than the government can pry from their wallets, why should we involve the government in charity at all?

The rest of the language of the article merely praised Congress for its benevolence. Since we've been good and given to charity, "Congress was willing to give up some revenue" as our reward. Or, more properly stated, Congress will temporarily be stealing less of our pay if we donate it to charity. Nice to know that Congress is willing to give up some of my money, provided I choose not to keep it and instead donate it to an approved charity.

Tuesday, October 25, 2005

Saving One Life, Losing Three

With regard to the conversion from analog television transmissions to digital and the following proposals for subsidies for digital television (for those left behind in the conversion process), I posed the question, "Will this legislation save lives?"

I promised to post the best response to my inquiry. Of the responses I received, this one written by Vic best addressed my question and the tradeoff that the politicians sponsoring the subsidies did not consider.

Here is his answer:

"As with any decision, there is a tradeoff with this legislation—it is between spending that three billion on this digital conversion project and spending it elsewhere or nowhere at all (perhaps lawmakers could refund it as part of an overall reduction in government spending). The measurement by which we must judge this tradeoff is the number of lives saved, since the lawmakers claim that their legislation will “save lives”.

That claim means, then, that currently, lives are or will be ended prematurely by the inability of emergency personnel to communicate on an adequate number of frequencies, which would mean that there is or will be a shortage of frequencies. However, we know that that is not the case, because the whole proposed project is intended to shift the many millions of analog television viewers into the digital spectrum to make room for emergency users on the analog spectrum; that means that there are available frequencies on the digital spectrum right now.

It is unclear why emergency personnel instead cannot convert to the available digital frequencies if indeed they have already or soon will run out of analog ones. The answer must be either that digital frequencies will not save as many lives as analog frequencies will, which as absurd, or that the marginal (or total, depending on how the lawmakers would legislate it) conversion of emergency users to digital frequencies as demand for frequencies increases would cost more money, time, lives, etc. than converting all of the non-emergency users. If that is true, then that means that the three billion that supposedly would be sufficient for converting the non-emergency users would be insufficient for converting the emergency users.

In short, each of the following conditions by itself is necessary (but not sufficient) in order to save lives in emergency situations: analog frequencies have or will run out; the shortage hinders or will hinder, at the cost of human lives, the ability of emergency personnel to communicate; the legislation would eliminate the shortage and, therefore, the human cost; and it is more costly in money, time, lives, etc. to convert the emergency users than it is to convert the millions of television viewers, etc.

Lives are not at stake only in emergency situations, however. Even if, and only if, all of the conditions in the previous paragraph are met, the number of saved lives must be greater than the number of lives lost in non-emergency (and perhaps, still, some other emergency) situations. Those saved lives not only must outnumber any that were lost at the margin as a result of the very taxation of the three billion in the first place, but also they must outnumber the lives that could have been saved by putting that three billion to different use, if there is any other use that would outnumber the human cost of the original taxation.

I think it is virtually impossible to meet all of the conditions listed in the previous two paragraphs, which is necessary to do, in order to have a net increase in the number of lives saved. Therefore, the short answer to the first part of Capital Freedom’s question is 'no.' This legislation will not save lives."

Sunday, October 23, 2005

Theft in Disguise

Free handouts get more votes than free markets.

Politicians who don't succumb to special interests, who don't endorse transfer programs, don't get elected. Even while those politicians may make life better for everyone, they always get fewer votes. The recent election in Poland is yet another example of this phenomenon.

Are people so naive that they think government provides them with the best deal for their retirement, for their terms of employment, for their safety and security? Do people truly believe that a stranger with legislative ability truly cares for them, knows what they need, and is capable of providing it for them?

"Free handouts" -- often paid for by those who receive their purported benefits -- make a nation that would be prosperous a nation of theives. But this nation of theives doesn't have the courage to steal themselves. Instead, they make it legal for their elected officials to steal on their behalf and encourage them to do so. They coat their theivery in flowery language, claiming that they are merely enforcing the duty of the wealthy to "give back to the community."

Irresponsible people are afraid of free markets. They don't want the responsibility of working hard and providing for their families. They want their government to make someone else provide for them. Handouts don't make an "equal playing field." Instead, they make the irresponsible even more irresponsible. Handouts don't create opportunities. Instead, they destroy the ambition and work ethic that creates opportunities.

Saturday, October 22, 2005

Taxes Down the Tube

As though enough of your earnings didn't go to subsidies, transfer programs, protecting government sponsored monopolies, and creating more regulations to make your life more difficult and expensive, Congress has decided yet another way to spend your money.

But don't worry -- those politicians, with their omniscience and your tax dollars, have decided it is in your best interest.

"Committee Chairman Ted Stevens, R-Alaska, said Congress needs to do something ..." [1]

In order to free up radio spectrum for use in emergencies, they have drafted a bill that will end analog transmissions and switch to digital by April 2009. It's all in the name of "saving lives."

"Digital television promises sharper pictures and better sound than analog TV. But millions of Americans with older TV sets rely solely on free, over the-air-television, and they'll need some type of a converter box to keep receiving their television service." There's always a catch, isn't there?

Not to fear -- Congress is always happy to pat itself on the back for fixing problems it creates. Chairman Stevens is going to help consumers pay for those converter boxes. "'If we're mandating this (digital) conversion, we cannot leave people behind because they can't afford' digital television sets, he said." They estimated that 21 million households have analog television sets. Converters cost $50 and Stevens' hopes to create a $40 subsidy for each one. He is proposing to allocate $3 billion for the subsidy.

I did the math. Twenty one million households times one converter at $40 = $840 million, not $3 billion. If each household has three analog televisions, the cost for the subsidy is $2.5 billion. Apparently, Congress is feeling very generous with my money. Good thing that politicians' priority is with saving lives. I'm sure the two additional converters per underprivileged household will help them accomplish their goal.

Senator John McCain was even more thoughtful than Stevens. He just couldn't wait to make the picture on my television clearer and tried to speed up the process by two years to April 2007. "'There's only one thing more important than money - and that's lives,' he told the committee before his amendment to speed up the conversion was defeated."

Here's the question for you: Are they really saving lives? Why or why not?

Answers may be provided in the comments section or via email. If I receive a thoughtful answer, I'll post it next week.

Friday, October 21, 2005

Hussein on Trial

This was on the front page of the Washington Times yesterday:

"Dressed in a white open-necked shirt and dark suit, Koran in hand, Saddam displayed all the disdain that he had as Iraq's dictator, standing steady and keeping his voice even as he challenged the Kurdish judge.

'I won't answer to this so-called 'court,' Saddam said.

'Who are you? What are you?' he demanded. "I retain my constitutional rights as the president of Iraq.'"

Sometimes no witty remark is needed.

Thursday, October 20, 2005

Lobbying Against Lawsuits

I rarely have good things to say about new laws, but here's an exception.

Today, Congress passed a bill which states that victims of crime may not sue gun manufacturers. Politicians who oppose the bill claim that it is simply a product of the powerful influence of the gun lobby and the NRA. Perhaps that is what we can attribute the passage of the bill to; however, are the gun manufacturers wrong in asking for such protection? Is it ever the responsibility of the manufacturer if someone uses its product unlawfully?

"Our laws should punish criminals who use guns to commit crimes, not law-abiding manufacturers of lawful products," Bush was quoted as saying.

He's right. But I'll take it one step further.

Government exists to protect rights and its job is not to prevent people from having the potential to violate someone else's rights; it is only to punish those who act in a way which violates someone else's rights.

A person can only be responsible for his actions. If his actions are just, and in accordance with the law (which we often presume to be just), then the indirect results of his actions, whether we deem them positive or negative, do not reflect poorly on his own actions.

A gun manufacturer makes guns. Guns are tools that, when properly used, can save lives. Like household cleaners and automobiles, when improperly used, they can be a tool to injure or kill. There is nothing innate in the metal, wood, or synthetic materials that causes harm. There is nothing innate in the construction itself that violates someone's rights. The only thing that can possibly violate the rights of another are the unjust and unlawful actions of another human.

Gun manufacturers aren't asking for much. They're not demanding subsidies or protection from competition. They are not asking for protection from product liability suits or any suits that directly address their products. They are simply demanding that they only be held responsible for their actions, and not the actions of others.

Wednesday, October 19, 2005

Hospitals v. Health

Today's Washington Times contained an ad that covered most of page A7. Sponsored by the American Hospital Association, AAMC, Federation of American Hospitals and others, the ad read,

"When Natural Disasters Hit, America's Hospitals Are There.
When Fears Rise About a Flu Pandemic, America's Hospitals Are There.
When the World is an Ever More Dangerous Place, America's Hospitals Are There.
So why do some in Washington want to cut hospital funding?

Pressure to cut the budget has caused some legislators to think about cuts that would hurt hospitals. But why in a dangerous and uncertain world would anyone cut the front lines of America's health care?

America's Hospitals. First in hope. First in care. Always there."

Certainly emergency care is nice to have. But it doesn't have to involve government or tax dollars. In fact, cutting hospital funding might actually save lives.

The old adage, "prevention is the best medicine" rings true. Why is prevention the best medicine? Compared to treating a serious illness, prevention is usually less expensive and less risky. With finite resources, we want to maximize health, not necessarily hospitals. Prevention, being the cheaper means of maximizing health, should be preferred over hospitals and other, more expensive methods of increasing health.

Let's allocate $1000 to be divided between two categories: wages and hospital funding. In the first scenario, the government takes $100 of your wages to pay for hospitals. Your net income is then $900. Suppose that you require $500 to pay for food and shelter. Given the $900 wage, you have $400 remaining which you can spend on prevention. Prevention may come in the form of taking off work when you start to feel ill, of purchasing a safer vehicle or eating better food. Hospitals might not have as many amenities, but your health overall may be better than if more of your money was allocated to hospitals.

Now suppose the government believes it is its job to ensure that Americans all have adequate access to hospital services by taking more of your paycheck and giving it to hospitals. Now, the government takes $400 of your wage to pay for hospitals. Your net income is then $600. Assuming that your cost of food and shelter is fixed at $500, you have only $100 to allocate towards preventing illness or injury. Prevention, in this scenario, will cost you a higher percentage of your disposable income. Maybe you'll stick to the older vehicle without all the new safety features. Maybe you'll go to work even though you feel ill. You won't make the same investments in your health that you would have previously. Instead, you'll take chances with your health and the health of your coworkers.

Before we assert that cutting hospital funding is bad, perhaps we might examine the unintended consequences of taking other people's money that might have been allocated towards health measures and putting it to a less productive use, e.g. sacrificing preventative measures for expensive hospital visits. Increase hospital funding and you will continually need more hospitals.

Tuesday, October 18, 2005

Preferences & Costs

Given the choice between platinum and silver, which would you choose? Naturally, everyone’s first response would be platinum. It is more valuable, more rare and of higher quality than silver. Can we therefore expect that most people wear platinum jewelry rather than silver? On the contrary, we observe more people purchasing silver than platinum, even though silver is less desirable.

The same is true for workers. People might prefer an attractive employee than an unattractive one. People might prefer someone of their own race than of another race. People might prefer to hire only those who have obtained a Ph.D. However, these people do not express their preferences without incurring some cost.

Minimum wage laws reduce that cost. Employers can express their preferences for one race over another, for some physical attributes over others, and higher levels of skill over lower levels. Prior to the imposition of a price floor on wages, the worker who did not have the preferred level of education, was not of the preferred race, or did not possess the most attractive features could have the job that he desired. He merely had to lower his price enough. Prior to the imposition of minimum wage laws, he also had the freedom to do so.

People do not purchase more silver than platinum because they believe silver is the better material. They purchase more silver because it is cheaper. It provides a good substitute for platinum at a much lower cost. If the price of silver increases and the price of platinum is held constant, we should not believe this to be good for sellers of silver. Rather, we would find that it would benefit sellers of platinum because the relative cost of platinum is lower when the price of silver increases. When the price of silver goes up, more people will buy platinum. Likewise, minimum wage laws benefit those who are earning above minimum wage. When the price of the less desirable workers increases, more of the desirable workers will be hired.

Increasing the minimum wage will only magnify levels of discrimination on non-price bases. Employers face a downward sloping demand curve, just as everyone else. When their preferences become cheaper, they will indulge more of them. Minimum wage laws only serve to harm their purported beneficiaries by encouraging employers to more frequently express their preferences for a particular race, for higher skill levels or attractiveness.

Monday, October 17, 2005

Minimum Wage & Substitutes

Al Eisenberg believes that “Virginia's poorest workers need a raise.” Eisenberg, a Democrat representing Arlington in the Virginia House of Delegates, believes it is his job to make employers pay them a higher hourly wage.

Citing economists from Princeton and MIT, he states that an increase in the minimum wage will have “little or no effect on employment” and will not cost jobs. First, he needs to make up his mind: will the laws have little effect or will they have no effect on employment? Certainly if the increase is small enough, the effect will be small as well. But the effect is still there. This is why no one calls for making the minimum wage $50/hour. Suppose we did make the minimum wage $50/hour. Many attorneys, doctors, and actors would still be employed, but how many teenagers would be able to obtain a job at a nearby store? How many people who have not had the benefit of higher education would remain employed? If we make the assumption, as Eisenberg and others do, that the increase will have no effect on employment, how much do you expect to pay for your groceries when the cashiers are all earning $50/hour?

By removing the freedom to determine wages through voluntary exchange and negotiation, you are removing all bargaining power that the less desirable workers have.

It is an inescapable reality that we live in a world of scarcity and therefore look for the least cost method of obtaining the things we want. When one method of acquiring our wants becomes more expensive, we seek alternative, cheaper methods. No amount of legislation or minimum wage increases can change this fact.

When I was younger, there were no self-checkout lines at the grocery store. You didn’t scan your own credit card or bag your own groceries. Most offices had receptionists instead of recorded messages. All of these automations are substitutes for human labor. Increasing the cost of labor will only increase the profitability of substitutes. Eisenberg and the economists he references forget that elasticity changes over time. While we might not see an immediate response (manifesting itself in the decrease in quantity of labor demanded), we will see the response over time as companies develop cheaper ways of conducting business. If Al Eisenberg thinks he is helping the poorest workers in the long run, he is sorely mistaken.

Automation is not the only substitute for cheap labor. Skilled labor is another. Unions, even though their members earn well above the minimum wage, consistently support minimum wage laws. Why? Because unions care about all workers equally? No! Raising the minimum wage is purely a way to price their competition, i.e. the less skilled workers, out of a job. If minimum wage laws truly had “little or no effect” on employment, why do unions continue to spend resources supporting them?

Quoting the Economic Policy Institute, Al Eisenberg also states that, “if Virginians earning the minimum wage got an increase, not just the workers but also businesses, the economy and the society in general would benefit.” This statement alone should cast some light on the fallacy of his argument. If raising the minimum wage is clearly good for everyone, and good for “society in general,” why do we need a law that forces businesses to adopt a higher wage?

* Hat tip to Tim at the Arlington County Taxpayers' Association
** My apologies for the lack of posting over the past few days. I was not well for the last few days and appreciate the notes of concern.

Thursday, October 13, 2005

Introducing ... A New Bureaucracy

With a name that sounds more like it came straight out of an Austin Powers movie, the National Clandestine Service will be a new thread on the intelligence web, and purportedly the thread that will hold the web together.

One of their goals is to "'standardize tactics, techniques, training and procedures' throughout the intelligence community." On the surface, it sounds reasonable. But how do you standardize intelligence without compromising its usefulness? If there were a simple handbook that stated all techniques and procedures, would intelligence retain its value?

At the same time, the average person is not supposed to have access to the information that they are paying the CIA and now the NCS to discover. Yet we foot the bill for the new agency. We can accurately judge other agencies' competence and efficiency, but how do we judge whether we are paying too much for intelligence? If we can't know when the would-be evildoers are thwarted by the work of intelligence agencies, if we can't measure how many attacks might be avoided for every dollar we spend, how can we possibly say whether it is beneficial to create yet another organization?

I'd suspect the problem is not undersupply of tax dollars, as the call for an additional 50% increase in intelligence staffing might suggest. Perhaps it is the proverbial "too many cooks spoiling the broth," where too many people are involved and tasks are continually passed from one person to the next.

Politicians know that taxpayers cannot verify whether their money is being spent properly with regard to intelligence. They don't see the reports and they can't verify where the money is being spent, even if they tried. It would therefore make sense that politicians overemphasize the danger of terrorist attacks, creating color codes to emphasize alert levels that supposedly state the risk of a terrorist attack at any given time. Oddly enough, it has never been at or near zero, even though there are many days in which no terrorist attacks occur on U.S. soil. Underestimating the need for additional funding is not an attribute typically held by politicians.

Is there a dire need for a National Clandestine Service? Without addressing whether the gathering of intelligence is a legitimate function of government, I'd say no. The need for additional intelligence is overemphasized, not underemphasized, and given little monetary constraint, politicians will overspend, particularly when they know their spending cannot be evaluated.

Wednesday, October 12, 2005

Federal Emergency Mismanagement

At the risk of sounding terribly redundant, once again FEMA's incompetence has emerged in its handling of Hurricane Katrina. The only thing that we may rely on them to do without fail is squander resources and waste taxpayer dollars. It didn't end with letting former director Michael Brown go. The news just seems to get worse.

Today, "More than 9,000 mobile homes and campers meant for the victims of Hurricane Katrina are sitting unused at government staging areas while displaced families continue to live out of tents and shelters." FEMA attributes this to the difficulty in distributing the trailers due to the effects of Katrina. Let's not fall for their attempts to pin this on the effects of a natural disaster; this one is purely manmade.

James McIntyre, spokesman for FEMA, made a few telling remarks paraphrased in today's article.

1) "The mobile homes require more space than the campers, plus permits from local officials, and that takes time." Permits from local officials, last I checked, were not a side effect of Hurricane Katrina.

2) Prior to receiving a camper or trailer, "an inspector must determine if the proposed property is cleared enough for a trailer, and electricity must run to the site." If all that stood in the way of receiving a shelter were a few trees, people who wanted a trailer would be quite happy to clear the property themselves. Of course, they might need a permit for that too ...

3) "Officials at FEMA don't know how many people have signed up for the homes," yet FEMA should have all of this information, since "victims can call a toll-free number, use the Web or go to a relief center to register." If FEMA has taken the responsibility of providing an adequate number of homes and managing all requests for campers and trailers, shouldn't it know how many are needed? How quickly are they processing these requests if they don't even know how many there are?

It is no wonder that the author found no shortage of people still waiting for FEMA to deliver. "Raymond and Andra White of Gulfport, Miss., requested a trailer about a week after the storm and they're still living out of a tent on their property. The agency has yet to send an inspector to determine if their property is suitable."

I have little patience for incompetence, especially when I am paying for it. If we don't get rid of the failed Federal Emergency Management Agency completely, we should at least call it what it is: the Federal Emergency Mismanagement Agency.

Tuesday, October 11, 2005


I happened to be listening to the radio on my way to Ft. Belvoir this evening and overheard a commercial sponsored by Chevron. It encouraged listeners to conserve fuel by driving 55 mph instead of 65, and asked them to "do their part" in conservation.

What makes me conserve fuel? It certainly isn't radio commercials. The high prices I pay to fill up my car are encouragement enough to conserve. I don't take long drives without a compelling reason. I've even started carpooling to work on some occasions. None of these actions were brought about by environmentalists, politicians, and Chevron encouraging me to conserve. All were brought about by my utility maximization. If before I had to give up only 3/4 of an hour of my time to fill up my car with gasoline and now I have to give up a full hour of my time to pay for a tank of gas, I am not going to use as much. I'm not going to frequent the restaurants that are thirty miles away; instead, I'll go to the restaurants that are within five miles.

Prices are driven by scarcity, and human action is driven by prices. We all seek to spend as little as possible to attain our desired end. When prices rise, we find other ways of accomplishing those ends -- ways that cost less. We can thank the market for motivating our 'conservation efforts.'

Monday, October 10, 2005

My Oh Miers

As more information becomes available about Harriet Miers, she seems to become more of an enigma. What does she stand for?

From the start, there was talk of her contributing to Al Gore's campaign many years ago. According to WorldNetDaily, her law firm's PAC also contributed $1000 to Hillary Clinton in 2000. If we are looking for consistency, we won't find it here.

Yet President Bush expects us to trust him when he says she is a good pick and claims that, "senators of both parties will find that Harriet Miers' talent, experience and judicial philosophy make her a superb choice to safeguard the constitutional liberties and equality of all Americans. Harriet Miers will strictly interpret our Constitution and laws. She will not legislate from the bench." How can he be sure? Is his information more reliable than the information regarding WMDs in Iraq? Demanding for the American people to trust him on his nomination is too much for any elected official to ask.

More importantly, Bush is engaging in pure favoritism, selecting a nominee from his home state who worked for him personally, while turning a blind eye to much more highly qualified candidates.

It is the duty of the Senate to reject such nominations, in the spirit of Federalist #76 which reads, "the necessity of [requiring the Senate's] concurrence would have a powerful, though, in general, a silent operation. It would be an excellent check upon a spirit of favoritism in the President, and would tend greatly to prevent the appointment of unfit characters from State prejudice, from family connection, from personal attachment, or from a view to popularity."

Sunday, October 09, 2005

Costs of Taxation

The Adam Smith Institute blog had an entry this past week entitled, "Adam Smith and Taxes." The author made a good observation, noting that, "When work is taxed, people work less. They take fewer risks, because the risk/reward balance deteriorates – which means less innovation for the society. And they learn less, because we learn by doing things, so society's knowledge advances more slowly too."

People often forget that taxation discourages work and innovation. Of course people will still be productive to some extent; however, it will not be to the same extent that they would have been otherwise.

I generally consider myself a 'risk-neutral' person. I take risks when I feel my expected return (the return that takes into account risk) is greater than it would be in comparison to my available alternatives. Let's suppose I have an invention which I believe may benefit mankind immensely, and benefit my bank account immensely as well. Without taxes, I estimate my return at $100 million. With taxes, I might estimate my return to be $70 million. However, my risk has not changed from the $100 million estimate to the $70 million estimate. Although my invention may benefit mankind, I am less likely to undertake it when the expected return is lower. I may choose to enjoy my leisure time or to invest elsewhere instead of deciding to develop my great invention.

Taxation may pay for services that we consider to be in our interest, but they do so at the expense of goods and services that might have existed in their absence. These costs remain unseen to both the politician and the taxpayer.

Saturday, October 08, 2005

Semper Paratus

"Always prepared"

Politicians would have you believe that it is their duty to prepare for everything, regardless of the cost and regardless of whether their preparations are likely to be needed in the future. They consistently emphasize how bad things could be if they don't act now and take more of your earnings. Yet as much as they take dollar after dollar from my paycheck and yours, they never seem to be very prepared for events that do occur.

Now politicians feel it is their duty to plan for an avian flu epidemic. Avian flu is certainly a danger, and it has proven to be fatal when contracted. The strain of avian flu in 1918 killed 675,000 people in the U.S. Shouldn't we be worried?

Not all doctors think so. According to a recent article, "The fear 'is very much overdone, in my opinion,' said Dr. Edwin Kilbourne, an emeritus professor of immunology at New York Medical College, who has treated flu patients since the 1957 pandemic and has studied the 1918 flu. The bird flu, he said, is distantly related to earlier flus, and humans have already been exposed to them, providing some resistance. Scientists also say that the death rate may not be as high as it appears, because there may be some milder cases that have gone unreported."

Additionally, a number of things have changed since 1918. We simply don't die from as many diseases as people did back then. Penicillin wasn't available in 1918 and wasn't widely used until the second World War. There was no cure or vaccine for poliomyelitis, generally shortened to polio, which continued to kill and paralyze people in the U.S. until the 1950s.

If the government truly believes that avian flu poses immediate danger, it would allow people to research and produce vaccines and treatments without imposing a lengthy and costly FDA approval process that serves to discourage new inventions in medicine. We don't have to look far to recognize that the market consistently outperforms government when it comes to anticipating and preparing for real danger.

Friday, October 07, 2005

Freedom of Speech

In the news today, a woman named Lorrie Heasley, with the assistance of the ACLU, is suing Southwest Airlines for violating her civil rights.

According to the article, "A woman was booted off a Southwest Airlines flight for wearing a T- shirt that bore an expletive and images of President Bush, Vice President Dick Cheney and Secretary of State Condoleezza Rice." It continues with a quote from Ms. Heasley herself, "I have cousins in Iraq and other relatives going to war ... Here we are trying to free another country and I have to get off an airplane ... over a T-shirt. That's not freedom."

Well, Ms. Heasley, it is freedom. It is the freedom of Southwest Airlines to set terms and conditions on your use of its property (the airplane), and the freedom that you exercised when you agreed to purchase a ticket along with the terms and conditions that accompanied it. It is the freedom of Southwest Airlines to remove you from its property for violating those terms and conditions, particularly when they were agreed upon.

You can have all the freedom of speech the Constitution guarantees -- but not on someone else's property. The property owner has the right to exclude you from his property. Suppose I invite someone to my home who enjoys talking about video games. I do not enjoy listening to people talk about video games. While it may not be the best way to keep a friend, I have the right to tell my friend to leave if he does not cease to talk about video games. Could my friend sue me for any costs he incurred upon being told to leave my home? Suppose the timing of my request for him to leave coincides with rush hour traffic. Could he claim that I owe him for the additional time and gas he spent driving home? Of course not. Yet Ms. Heasley is demanding reimbursement for the costs she incurred for the remainder of the trip home. As the property owner, I choose whom I will allow to occupy my property at any given time. Why should it be any different for a business, such as Southwest Airlines?

Freedom of speech means that I can use my property to publish my ideas and I can speak freely on my property, even speaking out against the government. I exercise my freedom of speech within the bounds of my property rights. For example, I use my own laptop to write posts on this weblog. I do not enter your home, declaring my right to free speech, and proceed to preach the merits of capitalism and property rights to you. To do so would violate your property rights.

"Freedom" is not the ability to do anything you want, regardless of other people's rights. Freedom is the obligation of the government to refrain from interfering with your speech or actions unless you are violating another's property rights.

Wednesday, October 05, 2005

Fire FEMA Part II

"The Federal Emergency Management Agency's conduct code prohibits urban search-and-rescue teams from having guns." (AP) Someone at some point thought this sounded like a great rule to have, and now FEMA is strictly following it. It's more than slightly ironic that the prohibition would be placed on those rescuing people -- i.e. saving lives -- a reasonable assessment would not be that they are more inclined to use their weapons for harm.

In another display of sheer incompetence, FEMA told the Phoenix Fire Department's Urban Search & Rescue team to go home. Why? The Phoenix Search & Rescue team had brought police with guns along with them for protection. According to the article, "Officials told the Phoenix team on Sept. 26 that their help was no longer needed after members of the group were seen embarking on a helicopter flight with a loaded shotgun while helping with the aftermath of Rita. " It's bad enough that they brought police with guns, but I suppose the one shotgun on the helicopter was the last straw.

As I've said before: every time there is an 'emergency,' people mention sacrificing some of their rights, yet government never offers to sacrifice even its most absurd regulations. We've sacrificed billions of dollars in taxes in the name of "hurricane relief." And for what? To pay for FEMA to send firefighters home and then claim it needs more money?

Tuesday, October 04, 2005

Another 'Stealth Justice'

George W. Bush's record has been less than stellar lately. With outrageous spending and bad policy decisions, those on the left and right have grown to criticize him. His recent nominee for Supreme Court has become another point of criticism by those who probably voted for him in the past election.

President George W. Bush on Monday nominated a member of his inner circle, White House counsel Harriet Miers, for a Supreme Court vacancy, choosing a woman with plenty of legal experience but who is not a judge to replace the retiring Sandra Day O'Connor.

Miers, 60, a longtime ally of Bush's going back to his days as Texas governor, would be the third woman ever to serve on the Supreme Court. (Reuters)

I'm skeptical of appointing anyone to the Supreme Court who has never served as a judge. Everyone has to start somewhere -- but few start at the Supreme Court. However, lack of experience in that arena is not necessarily a disqualifying factor. Chief Justice Rehnquist was not a judge prior to his appointment, while Ruth Bader Ginsberg served as a judge for over a decade prior to her appointment. Understanding and properly interpreting the Constitution has little to do with how many years one has served as a judge.

While we don't know much about the new nominee, Bush does. With that said, I can't tell whether that is a good or bad thing. Is she a better choice than all of the potential Justices that he did not nominate? Who knows?

Judges, particularly those on the Supreme Court, are supposed to be free of political influence. Their decisions should be made solely to comply with the Constitution, and not to answer to politicians whose incentive is to manipulate the Constitution for their own purposes. Harriet Miers may be intelligent and may have good intentions, but as former White House counsel and a close ally of Bush, will her rulings be free of political influence and consistently in line with the Constitution? Again, who knows?

Harriet Miers might be stellar, and she might not. At this point, there's just no way to tell.

Monday, October 03, 2005

For a Limited Time Only

Last week, a reader emailed me this article, published in Wednesday's edition of the Washington Post. My apologies for not writing about it sooner.

It's simply another example of government being overly generous with other people's money -- and still not providing the quality service that the private sector is able to provide. Why we continue to trust government with exorbitant amounts of our salaries is beyond me.

FEMA insists that the contract was necessary; however, many criticize it for its waste, noting that the contract was "a $236 million agreement with Carnival Cruise Lines for three ships that now bob more than half empty in the Mississippi River and Mobile Bay. The six-month contract -- staunchly defended by Carnival [naturally!] but castigated by politicians from both parties -- has come to exemplify the cost of haste that followed Katrina's strike and FEMA's lack of preparation." It's analogous to someone running into a car dealership and saying they must have a car by the end of the day. At that point, their negotiating ability has gone down and the car salesmen are seeing dollar signs.

However, FEMA received an offer from Greece for two free ships! FEMA spokesman, Butch Kinerney is quoted as saying "Our priority was to get the ships in place as quickly as possible." As quickly as possible and at any cost to the taxpayer. Is a few days worth $236 million?

Even those housed on the cruise ships are getting a bad deal. Rather than sit in a harbor, those temporarily residing on the ships could have received a nice cruise complete with meals and entertainment. "If the ships were at capacity, with 7,116 evacuees, for six months, the price per evacuee would total $1,275 a week ... A seven-day western Caribbean cruise out of Galveston can be had for $599 a person," noted Sen. Tom Coburn (R-Oklahoma). But the ships are not at capacity; they are only at half capacity. The average price per person must be twice as much -- the price of four nice cruises.

The government's record on spending should be reason enough to take away its box of endorsed blank checks with our account numbers.

Sunday, October 02, 2005

China's 56 Years of Communist Rule

Drudge linked to this article, noting that China had marked its 56th year of communist rule yesterday. People often criticize capitalism for creating unequal income "distribution," and creating a gap between rich and poor. However, in capitalist systems, the poor have the ability to afford items that the poor in other countries simply cannot. We don't see people starving to death in the U.S., even when we claim that their income is "below the poverty line." Many people in the U.S. who are in "poverty" have televisions. The televisions might not be the $5000 high definition flat screen television that they'd like, but it allows them to watch the same programs as anyone else.

Interestingly enough, the article stated that a problem facing China is, "Increasing numbers of poverty-stricken farmers are protesting against widespread graft, industrial pollution and seizures of land for development. Analysts have warned that widening income disparities between the cities and countryside and rising unemployment could threaten social stability ... while city residents are buying their first cars and taking their first overseas vacations, farmers in the vast countryside still labor as they have for centuries."

Progress exists in a capitalist society where all can enjoy the freedom to use their labor and knowledge to help others -- and can make, and keep, their profits from doing so.

Saturday, October 01, 2005

Helping Big Business

It's easy to point out the obvious case of government conducting charity, i.e. helping the 'underprivileged' at the expense of the 'privileged.' With as much self-righteous indignation as they can muster, politicians make their caring, charitable nature (with other people's money) as much of a public display as possible. It is also pretty easy to criticize this form of government intervention as a matter of principle, at the risk of appearing to be unsympathetic to the plight of the underprivileged.

However, it takes far more sophistication to decipher government intervention that helps the 'privileged' at the expense of the 'underprivileged.' Such intervention is far more subtle. Politicians do not engage in the same self-righteous public display of this behavior. Instead, they cloak their intentions in the titles "consumer advocacy," "protecting Americans," and making information available "for the public good."

The USDA's National Animal Identification System follows the usual consumer advocacy/protection defense, as I mentioned in yesterday's post. The USDA website touts it as, "a national program intended to identify specific animals in the United States and record their movement over their lifespans. It is being developed by the U.S. Department of Agriculture (USDA) and State agencies—in cooperation with industry—to enable 48-hour traceback of the movements of any diseased or exposed animal. This will help to ensure rapid disease containment and maximum protection of America's animals."

Note the phrase, "in cooperation with industry," contained in the above quote. Ironically, they present it as though 'industry' normally would not cooperate with such requirements. However, it is 'industry' that supports it the most! What better way to put your competition out of business than to raise its cost enough so that it goes into another business altogether?

Read this article at National Hog Farmer. To summarize the conclusion: because the NAIS would "boost consumer confidence" in meat quality, it should be adopted. But how much "consumer confidence" is enough? According to the article, consumer confidence (according to a survey, the reliability of which I discussed previously), would rise from 6.5 to 7.4 on a scale of 1-10. Sure it would -- but at what cost? We could raise consumer confidence by having veterinarians inspect each animal every day. We could house animals in immaculate facilities and feed them only certified organic vegetables. We could hire personal trainers for them so that each animal had the proper amount of exercise. I'd be pretty confident that the meat that was produced was completely healthy. I'm also pretty confident I wouldn't be able to afford to have my filet mignon quite so often either.

This is why industry must go to government to mandate higher quality. Consumers such as myself are not willing to pay for it. But government, on the other hand, can forcibly take consumers' money to pay for programs such as the NAIS.

The NAIS doesn't make me better off. It does not make the small farmers or the people who raise animals for themselves better off. Politicians, catering to the special interests of large industries, make 'industry' better off at our expense.