Happy Mothers' Day to all of the mothers who:
- Teach their children the value of hard work ... not laziness
- Teach their children personal responsibility ... for both good decisions and bad
- Teach their children to be self-sufficient ... not reliant upon government
- Teach their children to be generous ... with their own money
- Teach their children to respect others ... including their property rights
- Teach their children timeless moral values ... not the values of the moment
- Teach their children self-restraint ... rather than instant gratification
and a special thank you to my Mom, for doing all of the above and more.
Sunday, May 12, 2013
Saturday, November 17, 2012
Why the Popular Vote Doesn't Matter
For years, the United States has had an electoral college, and this has been a subject of contention particularly given the nature of recent close elections. After elections, we compare the popular vote against the electoral college, naively believing that the popular vote is a perfectly accurate reflection of popular opinion. As we know from every economic principle - incentives matter. This means that people base whether they vote on a combination of variables, including whether they believe their vote will matter in their state.
Compare the length of the voting lines in swing states to the lines in clearly Democratic or Republican states. Guess what.. they are longer. If I'm a liberal voter in Texas, I might not show up to the polls knowing that my one vote will make no difference in the outcome of the election. If I'm a conservative voter in California, there's no way my vote will change the winner-takes-all electoral vote in the state. Likewise, if I'm a liberal voter in Washington, D.C., I am sure that the majority will choose the liberal candidate whether I show up to the polls or not. So why vote?
The point is not that we should or should not have an electoral college. That's a discussion for another post. It is that we need to understand that ex post facto reasoning does not work when analyzing election results. Having an electoral college influences the popular vote and to assume that we can derive meaningful data about popular opinion from observing the popular vote is misguided.
Compare the length of the voting lines in swing states to the lines in clearly Democratic or Republican states. Guess what.. they are longer. If I'm a liberal voter in Texas, I might not show up to the polls knowing that my one vote will make no difference in the outcome of the election. If I'm a conservative voter in California, there's no way my vote will change the winner-takes-all electoral vote in the state. Likewise, if I'm a liberal voter in Washington, D.C., I am sure that the majority will choose the liberal candidate whether I show up to the polls or not. So why vote?
The point is not that we should or should not have an electoral college. That's a discussion for another post. It is that we need to understand that ex post facto reasoning does not work when analyzing election results. Having an electoral college influences the popular vote and to assume that we can derive meaningful data about popular opinion from observing the popular vote is misguided.
Monday, June 18, 2012
Recommended Reading
Friends,
I rarely recommend reading material, but I received a book from my colleague and friend, Don Boudreaux, who compiled many of his letters to the editor in a book titled Hypocrites and Half-Wits. The letters, described as a "daily dose of sanity from Cafe Hayek," blend humor, wit and not-so-common sense in a selection of quick reads. You can find more information here. Highly recommend!
Cheers,
CF
I rarely recommend reading material, but I received a book from my colleague and friend, Don Boudreaux, who compiled many of his letters to the editor in a book titled Hypocrites and Half-Wits. The letters, described as a "daily dose of sanity from Cafe Hayek," blend humor, wit and not-so-common sense in a selection of quick reads. You can find more information here. Highly recommend!
Cheers,
CF
Thursday, June 14, 2012
We're Not Struggling as Much as You Think
According to a New York Times blog post, titled "Many Young Adults Still Struggle with Health Care Costs, Report Finds" by Ann Carrns yesterday, “Despite recent gains in offering health coverage to young adults, many still do not have coverage and have had to make tradeoffs because of medical costs.” How terrible.
People make tradeoffs every day because of costs. In fact, if there were no costs, there would be no reason to make tradeoffs. But there are always costs – it’s just a question of whether those costs are seen or unseen, how much those costs are, and who bears the cost. Tradeoff decisions do not imply that something costs “too much” – it just means that other things provide more value to us.
Young adults as a group make tradeoffs about health care because they are generally healthy. There should be little surprise that young adults estimate their health risk to be lower than the general population. This means their cost of foregoing healthcare is less than an older or less healthy adult. When choosing among health plans, they frequently pick the lower cost options, choosing to spend their money on things that hold more value to them now. Over time, their health care choices shift as well, and they may opt for additional coverage to match a higher likelihood of increased doctor visits as they age.
I have made tradeoffs because of medical costs as well – when I determine how much health coverage I want for the year, I am making a guess as to what my risk of a major medical issue will be this year. Of anyone, I am probably the best qualified to make this decision. I know if I smoke, if I drive recklessly, if I get enough sleep, if I eat healthy food, if I plan to have children, if I plan to take up extreme sports, or if I’m genetically predisposed to health problems. I also know what level of risk I am willing to absorb, and what I prefer to budget on healthcare versus what I prefer to budget on vacations, clothing, housing, or investments. It doesn’t matter if I make $10,000 or $100,000; I have to make tradeoffs because my wants are boundless, but my resources are finite.
The statistics in this article, at first glance, seem overwhelming.
“About 39 percent of young adults age 19 to 29 -- or about 18 million people -- went without health insurance for at least part of 2011, the report found, and more than a third had medical bill problems or were paying off medical debt.
Of those with medical bills or debt, 43 percent said they had used all of their savings, and a third said they had delayed educational plans as a result. Of those who were paying off accumulated medical debt, a quarter said their debt was $4,000 or more."
Of course, these are written to make it sound like a large percentage of the populace is facing exorbitant medical expenses and struggling to survive. Let’s look at these statistics a little bit more clearly.
The “43 percent” of those who had medical bills or debt and claimed they had used all of their savings (I won’t go into the various ways that people define ‘savings’) account for 14% of the population of young adults surveyed, or 2.5 million people. Of those, the 1.8 million who said they delayed educational plans a result likely did not do so purely because of cost – a medical issue, even if you are a millionaire, is a legitimate reason to delay education. Additionally, did they delay undergraduate education? Did they delay their MBA? Now for the “quarter who said their debt was $4000 or more” – this sounds like a staggering number of people – but here were are talking about only 3.5% of the population, an estimated 630,000 young adults. (Remember, the survey only covered 1,863 participants, and the reported margin of error for the study was plus or minus 3 percentage points.)
Let’s reverse the statistic: of all young adults, aged 19 – 29, 96.5 percent have less than $4000 in medical expenses, and 66 percent report having zero medical debt. Wow, we’re not doing so badly, are we?
Friday, December 25, 2009
Perception Management
Hope and change, hope and change ...
It seems that this was the message we heard last year, and we certainly were hoping for change after years of fiscal irresponsibility.
During the last year of the Bush administration, the budget deficit increased by about $450 billion. In the last year of Obama's presidency, it has increased by $1.8 TRILLION, or four times as much. What happened to fiscal responsibility? What happened to "not adding a single dollar to the deficit," as Obama promised just a couple months ago? Yet it seems that the public perception has been so well managed that people still believe that fiscal responsibility is on its way.
So how much is $1.8 trillion anyway? Given approximately 300 million people in the United States today, this is $6000 in debt for every man, woman and child. That's an additional $30,000 in debt for a family of five this year alone. And that number does not include interest and does not apply to the taxes that have already been paid.
So where is fiscal responsibility? Seems like the adage "if you tell a lie long enough, people will believe it" is true. Sorry, Virginia, but Santa Claus does not live in a white house in Washington, D.C.
It seems that this was the message we heard last year, and we certainly were hoping for change after years of fiscal irresponsibility.
During the last year of the Bush administration, the budget deficit increased by about $450 billion. In the last year of Obama's presidency, it has increased by $1.8 TRILLION, or four times as much. What happened to fiscal responsibility? What happened to "not adding a single dollar to the deficit," as Obama promised just a couple months ago? Yet it seems that the public perception has been so well managed that people still believe that fiscal responsibility is on its way.
So how much is $1.8 trillion anyway? Given approximately 300 million people in the United States today, this is $6000 in debt for every man, woman and child. That's an additional $30,000 in debt for a family of five this year alone. And that number does not include interest and does not apply to the taxes that have already been paid.
So where is fiscal responsibility? Seems like the adage "if you tell a lie long enough, people will believe it" is true. Sorry, Virginia, but Santa Claus does not live in a white house in Washington, D.C.
Wednesday, September 30, 2009
An Apple a Day Keeps Government Health Care Away
It has been a while since I've posted, but I was compelled to provide insight into the "Public Option" also affectionately known as HR 3200. The full text of the bill can be found here.
I am still in the process of reading the bill, as it is 1,017 pages long.
Here's the introduction, as stated in the bill itself:
What is wrong with the current system? As far as I can tell, the only issue that people are addressing is that the cost of medical procedures and visits to the doctor is often higher than what they would like to pay. Certainly no one *wants* to go to the doctor or *wants* to have surgery, let alone pay for it.
So what is the alternative? We know from economics 101 that if we control costs through regulation -- let's say we mandate that health care is free -- that suddenly demand rises and instead of allocating health care to those who value it most, we have to use other methods of allocation, such as first-come, first-serve, lotteries, relying on connections, etc. Health care, while it may become "cheap" becomes more scarce because it can't keep up with demand. I know what many of you are thinking, "People don't particularly enjoy going to the doctor -- how is demand going to increase?" Here's one way. Suppose that I have to bear the full costs of my decisions, good and bad, and I am contemplating taking up smoking, excessive drinking, and eating copious amounts of grease-laden food. I may think twice about engaging in unhealthy behavior if I know that I will have to bear the cost of medical procedures that become necessary as a result. However, if I know that the cost is a "shared responsibility" as it states in the introduction to HR 3200, I am more likely to engage in unhealthy behaviors now because the future cost is lower.
As I've said in previous posts, the extra few ounces of prevention that we take when we bear the full cost of our actions make a big difference. Knowing that a doctor's visit will cost me at least provides some motivation to ensure that I wash my hands thoroughly, that I put bandages on cuts, that I get adequate sleep, that I eat a balanced diet.
But what happens to that "ounce of prevention" when you institute "free" health care? Suppose that apples cost $1 and doctors cost $0. Following the "an apple a day keeps the doctor away" saying really isn't compelling when doctors are cheaper than apples, is it?
I am still in the process of reading the bill, as it is 1,017 pages long.
Here's the introduction, as stated in the bill itself:
(1) IN GENERAL- The purpose of this division is to provide affordable, quality health care for all Americans and reduce the growth in health care spending.(2) BUILDING ON CURRENT SYSTEM- This division achieves this purpose by building on what works in today’s health care system, while repairing the aspects that are broken.The first thing I notice is that the general purpose is for government to "provide" health care. But that's not all -- it aims to reduce the growth in health care spending as well. After that, I expected the next sentence to mandate that gravity stop weighing Americans down.(3) INSURANCE REFORMS- This division--
(A) enacts strong insurance market reforms;
so that all Americans have coverage of essential health benefits.
(B) creates a new Health Insurance Exchange, with a public health insurance option alongside private plans;
(C) includes sliding scale affordability credits; and
(D) initiates shared responsibility among workers, employers, and the government;(4) HEALTH DELIVERY REFORM- This division institutes health delivery system reforms both to increase quality and to reduce growth in health spending so that health care becomes more affordable for businesses, families, and government.
What is wrong with the current system? As far as I can tell, the only issue that people are addressing is that the cost of medical procedures and visits to the doctor is often higher than what they would like to pay. Certainly no one *wants* to go to the doctor or *wants* to have surgery, let alone pay for it.
So what is the alternative? We know from economics 101 that if we control costs through regulation -- let's say we mandate that health care is free -- that suddenly demand rises and instead of allocating health care to those who value it most, we have to use other methods of allocation, such as first-come, first-serve, lotteries, relying on connections, etc. Health care, while it may become "cheap" becomes more scarce because it can't keep up with demand. I know what many of you are thinking, "People don't particularly enjoy going to the doctor -- how is demand going to increase?" Here's one way. Suppose that I have to bear the full costs of my decisions, good and bad, and I am contemplating taking up smoking, excessive drinking, and eating copious amounts of grease-laden food. I may think twice about engaging in unhealthy behavior if I know that I will have to bear the cost of medical procedures that become necessary as a result. However, if I know that the cost is a "shared responsibility" as it states in the introduction to HR 3200, I am more likely to engage in unhealthy behaviors now because the future cost is lower.
As I've said in previous posts, the extra few ounces of prevention that we take when we bear the full cost of our actions make a big difference. Knowing that a doctor's visit will cost me at least provides some motivation to ensure that I wash my hands thoroughly, that I put bandages on cuts, that I get adequate sleep, that I eat a balanced diet.
But what happens to that "ounce of prevention" when you institute "free" health care? Suppose that apples cost $1 and doctors cost $0. Following the "an apple a day keeps the doctor away" saying really isn't compelling when doctors are cheaper than apples, is it?
Wednesday, March 18, 2009
Bailouts & Bonuses
It is widely recognized that bonuses are not a guaranteed supplement to a salary. They are typically given out of a company's profits, and when those profits are not there, bonuses are often withheld until the company is in a better position to award them. This is a function of a long-term plan that most companies operate under in a free market. However, when you institute a plethora of regulations, loopholes, and "free" taxpayer money, you have just warped this basic incentive towards long-term success. If I know that in spite of poor performance, I will receive large sums of money, am I likely to work harder and conserve that money towards promoting a stronger business model? Or am I more likely to spend that money now because I know that more will soon be on the way once the first round of funding runs out?
Instinctively, we react negatively when we hear about how our money is being given to AIG and doled out in large sums to executives. We are paying to run a company whose business model we disagree with! That is not fair! Of course, we blame the evil executives and call them greedy. But we forget that Congress and government intervention are fueling this greed. People are far more greedy when they are not spending their own money. We naturally agree with the free market, which gives us the incentive to forego short-term gain (and long-term losses) in favor of slow but steady long-term gains. The free market is just and fair, rewarding good decisions and punishing bad ones. The free market forces companies to make better decisions and spend wisely because otherwise they risk losing their incomes if they fail. Are the executives at AIG greedy? Sure! But we should not forget that it is the free market that reins in their greed and forces them to work for their bonuses, at least in the long-term. When we introduce government into the equation, we change the natural course of the market and give companies like AIG a free pass to do business with a short-term mentality rather than a long-term strategy. This is exactly what we are seeing now. AIG has not turned around in the last few months even with billions of dollars being handed over! What becomes the solution? If you ask Congress, they say that AIG just needs more money, or more conditions on how the next round of money should be spent.
What we seem to forget is that keeping the AIG name alive, does not mean that we are keeping AIG from failing. AIG has already failed. Any money that has been lost is already gone. We can either continue putting money into the bonfire in hopes of getting it back, or we can finally stop fueling the fire and let it slowly burn out.
Instinctively, we react negatively when we hear about how our money is being given to AIG and doled out in large sums to executives. We are paying to run a company whose business model we disagree with! That is not fair! Of course, we blame the evil executives and call them greedy. But we forget that Congress and government intervention are fueling this greed. People are far more greedy when they are not spending their own money. We naturally agree with the free market, which gives us the incentive to forego short-term gain (and long-term losses) in favor of slow but steady long-term gains. The free market is just and fair, rewarding good decisions and punishing bad ones. The free market forces companies to make better decisions and spend wisely because otherwise they risk losing their incomes if they fail. Are the executives at AIG greedy? Sure! But we should not forget that it is the free market that reins in their greed and forces them to work for their bonuses, at least in the long-term. When we introduce government into the equation, we change the natural course of the market and give companies like AIG a free pass to do business with a short-term mentality rather than a long-term strategy. This is exactly what we are seeing now. AIG has not turned around in the last few months even with billions of dollars being handed over! What becomes the solution? If you ask Congress, they say that AIG just needs more money, or more conditions on how the next round of money should be spent.
What we seem to forget is that keeping the AIG name alive, does not mean that we are keeping AIG from failing. AIG has already failed. Any money that has been lost is already gone. We can either continue putting money into the bonfire in hopes of getting it back, or we can finally stop fueling the fire and let it slowly burn out.
Tuesday, February 10, 2009
No Health Care for You!
We should have known that a bill that gets pushed through late on Friday nights and referred to with the word "emergency" is probably the kind that would need even more scrutiny than most. Fortunately, Betsy McCaughey with Bloomberg has brought to light some provisions that may be harmful to your health, noting that these are the handiwork of Tom Daschle, who, prior to being exposed for owing $140,000 in back taxes, was Obama's choice for Health and Human Services Secretary. Amidst the spending in the stimulus bill are provisions for health rules that will affect everyone in the United States. In it, McCaughey writes, the Office of the National Coordinator of Health Information Technology is given the power to "monitor [your] treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective."
McCaughey found that the provisions in the bill are nearly identical to those in Daschle's book, Critical: What We Can Do About the Health-Care Crisis. Daschle's book promotes setting up an appointed government agency to overrule the decisions you and your doctor make and "calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept 'hopeless diagnoses' and 'forgo experimental treatments...'"
Wait a minute ... "slow the development and use of new medications?" Isn't that what the FDA already does with it's testing processes that take 8-10+ years and billions of dollars for new drugs to enter the market? And, while we're talking about a "stimulus" bill, isn't this exactly the opposite of what a stimulus is supposed to do?
And what are these "hopeless diagnoses" that Daschle speaks of? What about breast cancer that has spread and requires expensive treatments? What about AIDS for which there is no cure -- are "experimental treatments" that could save people's lives, or at minimum make their last days more bearable, now a thing of the past? What about cerebral palsy? Lou Gehrig's disease? Alzheimer's? What about rare diseases that doctors know little about?
Do we really want a bureaucrat sitting behind a desk examining our medical history and deciding how our physician is allowed to treat us? Is there any stranger to whom we would give control over our bodies and health? We would be reluctant to give that sort of carte blanche to anyone outside of our immediate families -- if that! Ironically, I doubt if the decisions by this appointed government agency will be made with as much expediency as the stimulus plan that establishes it. How long do you think your medical record is going to sit on someone's desk while you wait for a decision on whether you can get medical care or not?
During his term as Senator of Illinois, President Obama stated that he rejected the Born Alive Infant Protection Act of 2002 that would require a second physician to be present during abortion procedures to administer care if an infant were born alive, because, it was "designed simply to burden the original decision ..." If "burdening the decision" is a terrible thing, Mr. Obama, how can you reconcile this position with the creation of an entire government organization, costing more in your stimulus plan than the Army, Navy, Marines and Air Force combined, that is designed for the sole purpose of burdening the decisions between doctor and patient?
McCaughey found that the provisions in the bill are nearly identical to those in Daschle's book, Critical: What We Can Do About the Health-Care Crisis. Daschle's book promotes setting up an appointed government agency to overrule the decisions you and your doctor make and "calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept 'hopeless diagnoses' and 'forgo experimental treatments...'"
Wait a minute ... "slow the development and use of new medications?" Isn't that what the FDA already does with it's testing processes that take 8-10+ years and billions of dollars for new drugs to enter the market? And, while we're talking about a "stimulus" bill, isn't this exactly the opposite of what a stimulus is supposed to do?
And what are these "hopeless diagnoses" that Daschle speaks of? What about breast cancer that has spread and requires expensive treatments? What about AIDS for which there is no cure -- are "experimental treatments" that could save people's lives, or at minimum make their last days more bearable, now a thing of the past? What about cerebral palsy? Lou Gehrig's disease? Alzheimer's? What about rare diseases that doctors know little about?
Do we really want a bureaucrat sitting behind a desk examining our medical history and deciding how our physician is allowed to treat us? Is there any stranger to whom we would give control over our bodies and health? We would be reluctant to give that sort of carte blanche to anyone outside of our immediate families -- if that! Ironically, I doubt if the decisions by this appointed government agency will be made with as much expediency as the stimulus plan that establishes it. How long do you think your medical record is going to sit on someone's desk while you wait for a decision on whether you can get medical care or not?
During his term as Senator of Illinois, President Obama stated that he rejected the Born Alive Infant Protection Act of 2002 that would require a second physician to be present during abortion procedures to administer care if an infant were born alive, because, it was "designed simply to burden the original decision ..." If "burdening the decision" is a terrible thing, Mr. Obama, how can you reconcile this position with the creation of an entire government organization, costing more in your stimulus plan than the Army, Navy, Marines and Air Force combined, that is designed for the sole purpose of burdening the decisions between doctor and patient?
Monday, February 09, 2009
What Crisis?
Hearing words like "crisis" and "catastrophic" used to describe today's current pre-"stimulus" economic climate has me wondering: how bad is it really? Is the average American going through foreclosure? No. Are the millions of renters worried about house prices dropping? No. Am I personally suffering right now? No. Am I unable to get health care? No. As a matter of fact, I would bet that most of us are faring pretty well, even if our stocks aren't looking as good as they were a few months ago.
But, you say, what about the people who are losing their homes (by which, I assume you mean the few who actually are losing their primary residences, not the ones who are deliberately walking away from their second, third, fourth, fifth investment homes)? Foreclosure is not a new phenomenon. In normal markets, there are foreclosures. In fact, most of the delinquent loans reinstate under more favorable terms, usually by extending the loan term to reduce the monthly payment, or forgiving a portion of the principal. Banks have an incentive to restructure their clients' loans because banks do not want to lose their revenue and right now they certainly do not want to be in the real estate business. This was not the case during the housing bubble. From 2004 - 2006 in particular, banks were all too happy to enter the real estate business because they could turn around and sell the house for a profit.
But, what about people who have lost their jobs? At 7.2%, unemployment today is still low by historic standards. Unemployment right now also does not represent an across-the-board decline in jobs. Rather, it represents a transition from one sector to another. People who used to be in the mortgage and banking industries are moving to other sectors. This process takes time and there is some, temporary unemployment. People are not unemployed because there is no work for them to do; they are unemployed because in their previous role, they were not able to bring as much value as they cost.
What about people who have lost money in the stock market? This is a complicated issue, as stock prices reflect expectations of higher taxes to pay for national health care programs, bailouts, stimulus packages, higher corporate tax rates in general, increased capital gains taxes on stockholders, etc. All of these cause stock prices to go down. Is the solution then to raise government spending, thereby raising future taxes and inflation, which will cause stock prices to further plummet? When faced with higher capital gains taxes, people opt to either sell their stock now before the tax hikes go into effect, or they abstain from entering the market. Either way, demand drops and as we know from Economics 101, this means prices fall too.
More spending on socialized health care, government bailouts of companies that made bad decisions, and $800,000,000,000 quick-spend plans is not "the price we have to pay" to "get us out of a catastrophe." The expectation of increased spending and higher taxes under the new administration is what led to many of the declines in the stock market, caused companies to have difficulty increasing capital to retain employees, and is causing more economic woes than are warranted. Instead of proving these expectations to be correct, let's turn the course around by allowing consumers and businesses to tell the government to take a back seat and see how capable we are of deciding where our money goes without their so-called help.
But, you say, what about the people who are losing their homes (by which, I assume you mean the few who actually are losing their primary residences, not the ones who are deliberately walking away from their second, third, fourth, fifth investment homes)? Foreclosure is not a new phenomenon. In normal markets, there are foreclosures. In fact, most of the delinquent loans reinstate under more favorable terms, usually by extending the loan term to reduce the monthly payment, or forgiving a portion of the principal. Banks have an incentive to restructure their clients' loans because banks do not want to lose their revenue and right now they certainly do not want to be in the real estate business. This was not the case during the housing bubble. From 2004 - 2006 in particular, banks were all too happy to enter the real estate business because they could turn around and sell the house for a profit.
But, what about people who have lost their jobs? At 7.2%, unemployment today is still low by historic standards. Unemployment right now also does not represent an across-the-board decline in jobs. Rather, it represents a transition from one sector to another. People who used to be in the mortgage and banking industries are moving to other sectors. This process takes time and there is some, temporary unemployment. People are not unemployed because there is no work for them to do; they are unemployed because in their previous role, they were not able to bring as much value as they cost.
What about people who have lost money in the stock market? This is a complicated issue, as stock prices reflect expectations of higher taxes to pay for national health care programs, bailouts, stimulus packages, higher corporate tax rates in general, increased capital gains taxes on stockholders, etc. All of these cause stock prices to go down. Is the solution then to raise government spending, thereby raising future taxes and inflation, which will cause stock prices to further plummet? When faced with higher capital gains taxes, people opt to either sell their stock now before the tax hikes go into effect, or they abstain from entering the market. Either way, demand drops and as we know from Economics 101, this means prices fall too.
More spending on socialized health care, government bailouts of companies that made bad decisions, and $800,000,000,000 quick-spend plans is not "the price we have to pay" to "get us out of a catastrophe." The expectation of increased spending and higher taxes under the new administration is what led to many of the declines in the stock market, caused companies to have difficulty increasing capital to retain employees, and is causing more economic woes than are warranted. Instead of proving these expectations to be correct, let's turn the course around by allowing consumers and businesses to tell the government to take a back seat and see how capable we are of deciding where our money goes without their so-called help.
Saturday, February 07, 2009
Inflation and Growth Are Not Synonymous
People often cite the monetary contraction that occurred around the beginning of the Great Depression as a reason to adopt Keynesian ideas that state spending and creating inflation by increasing the money supply are appropriate ways of increasing aggregate demand and spurring growth. In the five-year period from 1929 to 1933, the money supply dropped by one third. The effect is that each remaining dollar is more valuable in proportion to the amount that the money supply has declined. This causes the dollar to rise in value relative to other currencies, and is preferable when the country is an importer of foreign goods because, for fewer dollars, it is able to obtain more goods and services from overseas.
One would expect that imports in this time period would have risen dramatically; however, this was not the case. Instead, due to the high tariffs that were imposed at the same time -- most notably, the Smoot-Hawley tariff of 1930 which raised import taxes to unprecedented levels -- imports declined by 66% from 1929 to 1933, despite the contraction of the money supply which would have otherwise had the opposite effect on imports. In retaliation for the strict protectionist policies of the 1930s, other foreign trade partners imposed restrictions and raised tariffs on U.S. products, further crippling industries in the U.S.
The fact that a monetary contraction coupled with the most protectionist policies of the time were contributors to a depression should not lend credence to the idea that printing more money to spend is an effective method for increasing productivity. Assuming the same protectionist tariffs were in existence today and that the U.S. were an importer of many foreign goods, inflationary policies would magnify the decline in imports by decreasing the value of the dollar on the world markets and would spark more retaliatory policies from our trading partners and further economic declines.
One would expect that imports in this time period would have risen dramatically; however, this was not the case. Instead, due to the high tariffs that were imposed at the same time -- most notably, the Smoot-Hawley tariff of 1930 which raised import taxes to unprecedented levels -- imports declined by 66% from 1929 to 1933, despite the contraction of the money supply which would have otherwise had the opposite effect on imports. In retaliation for the strict protectionist policies of the 1930s, other foreign trade partners imposed restrictions and raised tariffs on U.S. products, further crippling industries in the U.S.
The fact that a monetary contraction coupled with the most protectionist policies of the time were contributors to a depression should not lend credence to the idea that printing more money to spend is an effective method for increasing productivity. Assuming the same protectionist tariffs were in existence today and that the U.S. were an importer of many foreign goods, inflationary policies would magnify the decline in imports by decreasing the value of the dollar on the world markets and would spark more retaliatory policies from our trading partners and further economic declines.
Finance 101
Politicians are constantly prescribing new programs to cure all of our financial woes and make everyone richer, healthier, thinner, smarter, happier and nicer. Now, if politicians were producing things of value with their own labor and money, they would be helping the economy. Instead, they take your money and your employer's, friends', neighbors' and family's and future generations'. When that isn't enough to pay for their expensive tastes in government programs, they just print more and make all of your dollars worth less. As overly simplistic as this explanation sounds, these are their only two options.
Somehow, politicians seem to believe that Americans will buy into (no pun intended) the idea that increased government spending is the cure. Undoubtedly, these Americans are the same ones who believe that they can pay off their debt by getting a new credit card. We can see on an individual level that people maximize their long-term wealth by spending on necessary things and investing what they can so that they are able to consume more in the future. When we face tough times, we spend less and we spend intelligently. The federal government would do well to follow the same sound financial strategy.
Somehow, politicians seem to believe that Americans will buy into (no pun intended) the idea that increased government spending is the cure. Undoubtedly, these Americans are the same ones who believe that they can pay off their debt by getting a new credit card. We can see on an individual level that people maximize their long-term wealth by spending on necessary things and investing what they can so that they are able to consume more in the future. When we face tough times, we spend less and we spend intelligently. The federal government would do well to follow the same sound financial strategy.
Friday, January 30, 2009
The Administration Has Begun...
Many Americans were very excited about the election of Barack Obama, believing he would bring change. And change is here.
Remember the "expensive" war in Iraq? Expensive it was, but nowhere near as expensive as the new "stimulus." Projections for how much the war in Iraq would cost in 2009 if it were to continue at its current rate were $136 billion. But President Obama's administration has made this number negligible, coming in with an Emergency Stimulus plan at nearly a trillion dollars. $1 trillion sounds like a big number, but just how big is it? $1 trillion is approximately the amount of individual income taxes that the government collects in a year ($1.0237 trillion in 2006, to be exact). That's right, for the amount of this "stimulus," Americans could have an income tax free year. Think about how much more everyone could do to stimulate the economy if they were allowed to keep their earnings instead of seeing it redistributed to those who are less productive than themselves.
This leads to the real reason why "stimulus" plans are not only misguided, but counterproductive. Anyone who has had a job knows that if you are known to be unproductive, if you don't show up to work, and if you don't carry your weight, your company does not offer you more money -- it (eventually) will fire you. The company offers its money to those people who were productive and helped the company succeed, so that it can continue to succeed in the future. This is the opposite of what these so-called stimulus plans do. They promote redistribution programs, which take money from those who were productive and give it to those who are not. But look at what great items are on the ticket... $600 million for the federal government to buy new cars, $650 million for DTV conversion coupons, and even $200 million towards planting grass on the National Mall.
Yet, the sentiment seems to be that economists nationwide are in full support of the need for the government to "jumpstart the economy" as though it is a car whose battery has died and there's some external force capable of making it run. President Obama seems to believe, "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy." The CATO Institute issued an article disputing this, signed by hundreds of economists. Among them were Nobel Laureates and respected college professors, but this is still by no means an inclusive list. These economists say, "With all due respect, Mr. President, that is not true." Government does not make the economy run. Economics is the interaction of billions of individuals who, in pursuing their own living, make the lives of others better. It is not taxes or government spending that spur new invention, new medicines, and new technologies. It is the promise of profit that drives people to devote themselves to countless hours of research and education. It is profit that causes even the most selfish people to concern themselves with the needs of others, and to meet those needs. Government ignores this true driver of growth and prosperity, and arrogantly presumes that our money is its money to throw away.
Remember the "expensive" war in Iraq? Expensive it was, but nowhere near as expensive as the new "stimulus." Projections for how much the war in Iraq would cost in 2009 if it were to continue at its current rate were $136 billion. But President Obama's administration has made this number negligible, coming in with an Emergency Stimulus plan at nearly a trillion dollars. $1 trillion sounds like a big number, but just how big is it? $1 trillion is approximately the amount of individual income taxes that the government collects in a year ($1.0237 trillion in 2006, to be exact). That's right, for the amount of this "stimulus," Americans could have an income tax free year. Think about how much more everyone could do to stimulate the economy if they were allowed to keep their earnings instead of seeing it redistributed to those who are less productive than themselves.
This leads to the real reason why "stimulus" plans are not only misguided, but counterproductive. Anyone who has had a job knows that if you are known to be unproductive, if you don't show up to work, and if you don't carry your weight, your company does not offer you more money -- it (eventually) will fire you. The company offers its money to those people who were productive and helped the company succeed, so that it can continue to succeed in the future. This is the opposite of what these so-called stimulus plans do. They promote redistribution programs, which take money from those who were productive and give it to those who are not. But look at what great items are on the ticket... $600 million for the federal government to buy new cars, $650 million for DTV conversion coupons, and even $200 million towards planting grass on the National Mall.
Yet, the sentiment seems to be that economists nationwide are in full support of the need for the government to "jumpstart the economy" as though it is a car whose battery has died and there's some external force capable of making it run. President Obama seems to believe, "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy." The CATO Institute issued an article disputing this, signed by hundreds of economists. Among them were Nobel Laureates and respected college professors, but this is still by no means an inclusive list. These economists say, "With all due respect, Mr. President, that is not true." Government does not make the economy run. Economics is the interaction of billions of individuals who, in pursuing their own living, make the lives of others better. It is not taxes or government spending that spur new invention, new medicines, and new technologies. It is the promise of profit that drives people to devote themselves to countless hours of research and education. It is profit that causes even the most selfish people to concern themselves with the needs of others, and to meet those needs. Government ignores this true driver of growth and prosperity, and arrogantly presumes that our money is its money to throw away.
Saturday, March 15, 2008
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 ...
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 ...
Wednesday, April 05, 2006
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.
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.
Thursday, March 30, 2006
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.
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.
Tuesday, March 07, 2006
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.
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.
Wednesday, March 01, 2006
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.
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.
Wednesday, February 22, 2006
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.
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.
Tuesday, February 14, 2006
Monday, February 13, 2006
Freedom of Speech & Religion
In the United States, we have devoted the first amendment to the Constitution to protect freedom of speech, freedom of the press, and freedom of religion. We’ve limited the role of government in deciding and enforcing all moral questions. Instead, we have designated government’s role as an alliance of people and states dedicated to protecting life, liberty and property.
However, universally it seems that people continue to run to government screaming of various perceived injustices. We allow government to take on the role of the elementary school teacher, to whom we run when the other kids make fun of us or don’t share their toys or refuse to let us join them in a game of football at recess. It is not enough that we have the right to our own lives, property and freedom. We want property belonging to others. We redefine terms like “public use.” We want our speech to be unrestricted, but insist that others do not have the right to insult us. We make up terms like “hate speech” so we can ask government to regulate what others say.
After Danish cartoonists published cartoons that negatively depicted Mohammed, a prophet according to Islam, there were more cries against freedom of speech. Arguments ranged from declaring that the press is an institution to serve the public interest to declaring that the cartoons fall under the category of “hate speech” and cannot be protected. They’ve all tried claiming that the issue is not freedom of speech, per se, but an issue of fairness or some other newly invented right.
Here are some of the arguments I’ve seen:
"The Danish cartoon controversy is not about freedom of religion versus freedom of expression, as the media is framing the debate. This is about the role of the media and journalists in our society … everyone should be respected and sensitively represented by the institutions that are intended to serve the public interest." [emphasis added]
"There is a fine line between criticism and abuse. One has the right to criticise aspects of Islam, but one should not have the right to make fun of Muslims or their faith."
(Both taken from Bangladesh news sources).
“Jyllands-Posten refused to publish caricatures of Jesus in 2003 because they would “offend” its readers. Why then is its invitation to caricature Muhammad protected by free speech provisions?” asked authors Na'eem Jeenah, Charles Amjad-Ali and Salim Vally in their article entitled, "This is Not About Freedom of Speech."
Why? As the owner of the paper and printing equipment, the newspaper can decide what it wishes to publish and what it does not. Had the newspaper chosen to publish caricatures of Jesus in 2003, those would have been protected under free speech. The decision not to offend in one instance can be motivated out of one’s moral convictions or one’s desire to keep profits high.
But the main reason why is to avoid occurrences such as this one, which are common in countries that allow the government to influence what is published or said.
"Two weekly newspaper editors charged with "harming religious feelings" by reprinting offensive caricatures of the Prophet Mohammed were released on bail Sunday after a request was made by Jordan's press watchdog." according to an Israeli newspaper.
Let’s not take the wrong lesson from the Danish cartoon controversy. We have freedom of speech not because we agree with everything that is said, but because we would like to speak when others do not necessarily agree with us. We have freedom of religion not because we believe all religions are equally valid, but because we wish to worship or refrain from worship as we choose. Freedom of speech should not come with the disclaimer that “anything you say can be held against you in a court of law.”
However, universally it seems that people continue to run to government screaming of various perceived injustices. We allow government to take on the role of the elementary school teacher, to whom we run when the other kids make fun of us or don’t share their toys or refuse to let us join them in a game of football at recess. It is not enough that we have the right to our own lives, property and freedom. We want property belonging to others. We redefine terms like “public use.” We want our speech to be unrestricted, but insist that others do not have the right to insult us. We make up terms like “hate speech” so we can ask government to regulate what others say.
After Danish cartoonists published cartoons that negatively depicted Mohammed, a prophet according to Islam, there were more cries against freedom of speech. Arguments ranged from declaring that the press is an institution to serve the public interest to declaring that the cartoons fall under the category of “hate speech” and cannot be protected. They’ve all tried claiming that the issue is not freedom of speech, per se, but an issue of fairness or some other newly invented right.
Here are some of the arguments I’ve seen:
"The Danish cartoon controversy is not about freedom of religion versus freedom of expression, as the media is framing the debate. This is about the role of the media and journalists in our society … everyone should be respected and sensitively represented by the institutions that are intended to serve the public interest." [emphasis added]
"There is a fine line between criticism and abuse. One has the right to criticise aspects of Islam, but one should not have the right to make fun of Muslims or their faith."
(Both taken from Bangladesh news sources).
“Jyllands-Posten refused to publish caricatures of Jesus in 2003 because they would “offend” its readers. Why then is its invitation to caricature Muhammad protected by free speech provisions?” asked authors Na'eem Jeenah, Charles Amjad-Ali and Salim Vally in their article entitled, "This is Not About Freedom of Speech."
Why? As the owner of the paper and printing equipment, the newspaper can decide what it wishes to publish and what it does not. Had the newspaper chosen to publish caricatures of Jesus in 2003, those would have been protected under free speech. The decision not to offend in one instance can be motivated out of one’s moral convictions or one’s desire to keep profits high.
But the main reason why is to avoid occurrences such as this one, which are common in countries that allow the government to influence what is published or said.
"Two weekly newspaper editors charged with "harming religious feelings" by reprinting offensive caricatures of the Prophet Mohammed were released on bail Sunday after a request was made by Jordan's press watchdog." according to an Israeli newspaper.
Let’s not take the wrong lesson from the Danish cartoon controversy. We have freedom of speech not because we agree with everything that is said, but because we would like to speak when others do not necessarily agree with us. We have freedom of religion not because we believe all religions are equally valid, but because we wish to worship or refrain from worship as we choose. Freedom of speech should not come with the disclaimer that “anything you say can be held against you in a court of law.”
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