Electronic Countermeasures

T-Rex totally had me at "oh snap"

2009-08-29T08:25:00.006-04:00

HR 3200 - the Health Care Enigma Act

2009-08-16T16:26:00.002-04:00

Between vacations and planning for future vacations and cutting the grass, I haven't had time yet to read the entirety of the bill which casts the entire US health industry to the tender mercies of the byzantine Federal bureaucracy. I don't expect this will matter much, since its authors haven't read it either and we as a nation lately appear discomfitingly insouciant regarding the notion of bills becoming law without anyone having specific knowledge of their contents. I imagine this is mainly so as to provide maximum scope for smart democrat lawyers to later make the law say whatever they want it to via the magic of litigation, which I suppose is great work if you can get it.

But no matter: the Czar of Muscovy is reading the bill, and you can find his trenchant analyses of its ghastly contents here. I highly encourage the visit.

L'affaire de Gates

2009-07-28T13:17:00.002-04:00

So much of the handwringing and bedwetting over the whole Henry Gates affair totally misses the point, to wit, that free taxpaying citizens should not be required to genuflect to law enforcement, no matter the race of any of those involved.

My Dad often, and wisely, advised "never argue with a man with a gun." While this is doubtless good advice, as a matter of public policy enforced on pain of arrest and detainment, it leaves much to be desired. Nevermind that no charges were ultimately filed in this particular case: merely detaining without intent to file charges is its own significant abuse of power.

I'll part ways with many law-and-order conservatives on this one, and point out this essay as neatly encapsulating what I think is the actual core issue here.

Ronald Reagan: Man from the Future

2009-07-19T11:50:00.001-04:00

Ronald Reagan had seen the future, and recorded a warning to us from across the decades.

If the Russians see what's going on here, why don't we?

2009-05-30T12:52:00.002-04:00

Pravda (remember them? the communist party newspaper that eventually went on to have a ridiculously overpriced cowhide bag named approximately after it) has correctly identified, in its lede sentence of a current editorial, what's going on with our current administration (I almost said "totalitarian regime").

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

There's just enough weird pro-Russian anti-western propagandaist nonsense in the article to convince me that Karl Rove didn't somehow land a job as an intern for the newspaper, like the following bit:

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

But it goes on from there, with a forthright directness of speaking which would be considered gauche in American society, to judge (despite the left's insistence that no one has the right to judge anyone about anything) our current trajectory and find in it a tragedy unfolding.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

It doesn't seem the former communists harbor any doubts about the tipping point for our own descent into communism.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

In 1984 anyone who supported a Pravda editorial over the US government would also have had to be wearing a Free Tibet t-shirt and a Mondale/Ferraro '84 pin. It's astonishing that a mere 25 years on, we've reached the depths that we have.

Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.

Yeah, I noticed that too, and yet it seems from all the non-existent outrage over this blatantly fascistic lurch toward statism that I and Pravda are the only ones who've noticed.

The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.

And they'd be right to laugh, to watch the world superpower suffer such obvious and self-inflicted and avoidable damage on itself.

BHO will prove to be our collective damnation.

An old argument with a new twist

2009-05-15T22:58:00.003-04:00

In observing mankind I find that I sometimes begin to suspect correlations and draw conclusions based on observations I make. Although this sounds totally banal, there is a subset of our population (cough donkeys) who would argue that drawing conclusions about tendencies from one's own observations is being judgmental, which I suppose them to mean as a pejorative. There was a time that the ability to draw general conclusions from specific sets of observations (I think this is called inductive reasoning, no?) might have been considered a good thing, as this ability is one of the handful of traits which separates man from the lower animals. But I digress.

One of the trends I noticed in college was that there was a moderately positive correlation between being a democrat and being a cat person. (And preferring Coke to Pepsi is positively correlated with being a communist, or at least a democrat, which obviously is pretty much the same thing. I kid.) What made this fun was the fact that my roommate at the time was a stern rightwing NROTC candidate who totally inexplicably liked cats. He also disagreed with my catlovers = democrats theory. Naturally enough, we spent the next several days arguing the point with an appropriate level of vigor, and we at some point reduced to debating which party a cat or a dog would tend to vote for in the upcoming 1992 presidential election. This was done with rather astonishing earnestness.

My theory, the truth which seemed so self-evident that I was surprised to have to even explain it, was that not only are catlovers democrats but the animals themselves would vote for democrats given the chance to, and dogs the opposite. The argument runs thusly:

1. Cats really don't do anything for you. They play, occasionally, more for their own amusement than your own. They perform no essential or even useful function within the household. Just like the unemployed street youth of Ann Arbor.
2. Cats clearly don't love their owners and labor under the delusion that they're smarter than we are. Just like the democrat kids angry at their parents for instilling and requiring discipline. (For some reason cat people agree with this assessment and find it sort of Hugh Grant rogueishly charming or something.)
3. Cats don't follow instructions, just like a bunch of unwashed hippie protesters ignoring orders to disperse their foul gatherings.
4. Cats nonetheless expect, due to their own apparent sense of wholly undeserved entitlement, for their needs and wants to be provided for them despite having made not the least attempt to earn them. Just like a 1991 pre-welfare-reform era welfare mom.

Pretty damning stuff, yes? On the same points:

1. Although performed with uneven competence, a dog takes seriously its mission to protect the household (even against mailmen and children) and secure the perimiter. A dog is surprisingly vigilant in this even when sleeping, as anyone who's ever seen a startled dog woken up by an imperceptible noise two blocks away can attest. A dog wants to earn its keep.
2. A dog loves everyone who hasn't run afoul of them within the context of item 1. Dogs in particular were fans of Ronald Reagan for his tireless optimism and cheerfulness.
3. Dogs follow instructions reasonably well provided they don't require patience or an unnatural act like ignoring available snacks or something.
4. Dogs therefore earn their keep, are cheerful warriors, and Just Want To Help The Ball Club.

Clearly a republican animal. That anyone could argue otherwise boggles the mind.

So with all this by way of a back story, recently I uncovered the fact that probable communist Eric Zorn has written the worst possible thing imaginable about dogs, Your dog does not love you and other cold-nosed truths. This bit of defamation was in response to a woman jumping into near-freezing water to save her dog.

Let me just say, hats off to Miss Craigie, and I think I'd rather hang out with her than a crabby old sourpuss like Eric Zorn. And my dog obviously loves me, so phllbtphlpt.

Income tax funtime

2009-04-18T17:50:00.001-04:00

Just for fun, and because posting has been a little light 'round here the past few weeks, I offer the following for your edification.

Completing polls vs unfocused whinging: which is more rewarding? Discuss.

2009-04-03T23:03:00.003-04:00

Whinging about the excesses and ridicularity of the government is fun--I do it all the time. But whinging with specific ideas to fix stuff can be rewarding too. If you've got better ideas than the ones I've tossed out above, and I know you do, leave them in the comments section.

But sir, it's wafer thin

2009-03-29T21:02:00.004-04:00

So I was reminded today that a few weeks ago I conducted a little poll here at ECM which asked my three-plus loyal readers to select one or more topics for a future essay. Climate change, nee global warming, came out the surprise winner. Compounding my astonishment at receiving more votes than I have readers, the "control" response concerning a request for instructions at having dropped a pencil received but a single vote. No matter my other preferences among the poll options, I would have voted for that myself. And although more than half the traffic here is generated from Star Wars-themed searches that turn up my recent foray into film criticism, nary a weary traveler selected the More Star Wars option. So go figure.

So climate change has seized the fancy of my several loyal readers, and I myself am somewhat curious as to what I'll uncover (see? objective inquiry without presumption of the outcome!). I've read a bit on the subject but a quick update or refresher on the latest writing on the subject won't hurt. It will likely be early summer before everything comes together and the long-awaited essay appears on the subject, but the waiting and the investment of additional time will make it only more delicious when it appears. And the whole climate change movement isn't likely to go away by then anyway, and if it does, then there's probably no need for me to write about it in the first place.

Besides, for the moment I sense an unexpected weakening of the Leninite BHO agenda in Washington. It's a long way from having been thwarted, and after all a tremendous amount of damage already has been done, but I'm hearing rumbles about slipping poll numbers and reluctance in the Congress to take on cap-and-trade, and that the $650B that was to provide in revenue (and politburo-type economic control) is now expected not to be available, calling into question the possibility of enacting the nakedly vote-buying Making Work Pay tax credit. If a touch of heretofore unsuspected democratic righteousness causes not one but two awful proposed programs to vanish at once, this can only be described as a good thing. But the reluctance to take up cap-and-trade pushes climate change a touch down the list of my priorities for the moment (leaving aside that my opinion of most of the political elements of the climate change movement, leaving aside the actual science, were actually a double-bluff XK-Red-27 technique to impose an otherwise obviously undesirable Bolshevik command-and-control apparatus which would be ultimately no less bloodthirsty than the original for its apparent love of the proletariat).

So for the moment my biggest concern is in matters economic. In that spirit I call attention to today's invaluable essay from Mark Steyn, entitled False Choice. It's wonderful enough to be worth quoting at length:

Writing in the Chicago Tribune last week, President Obama fell back on one of his favorite rhetorical tics: “But I also know,” he wrote, “that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people.”

Really? For the moment, it’s a “false choice” mainly in the sense that he’s not offering it: “a chaotic and unforgiving capitalism” is not on the menu, which leaves “an oppressive government-run economy” as pretty much the only game in town. How oppressive is yet to be determined: To be sure, the official position remains that only “the richest five percent” will have taxes increased. But you’ll be surprised at the percentage of Americans who wind up in the richest five percent. This year federal government spending will rise to 28.5 per cent of GDP, the highest level ever, with the exception of the peak of the Second World War. The 44th president is proposing to add more to the national debt than the first 43 presidents combined, doubling it in the next six years, and tripling it within the decade. But to talk about it in percentages of this and trillions of that misses the point. It’s not about bookkeeping, it’s about government annexation of the economy, and thus of life: government supervision, government regulation, government control. No matter how small your small business is — plumbing, hairdressing, maple sugaring — the state will be burdening you with more permits, more paperwork, more bureaucracy.

And don’t plan on moving. Ahead of this week’s G20 summit in London, Timothy Geithner, America’s beloved Toxic Asset, called for “global regulation.” “Our hope,” said Toxic Tim, “is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight . . . ”

“Global oversight:” Hmm. There’s a phrase to savor.

“We can’t,” he continued, “allow institutions to cherry pick among competing regulators and ship risk to where it faces the lowest standards and weakest constraints . . . ”

Just as a matter of interest, why not? If you don’t want to be subject to the punitive “oversight” of economically illiterate, demagogic legislators-for-life like Barney Frank, why shouldn’t you be “allowed” to move your business to some jurisdiction with a lighter regulatory touch?

[...]

Unfortunately, all of it costs money he doesn’t have. So he has to borrow it, in your name. Where does the world’s hyperpower go to borrow more dough than anyone’s ever borrowed in human history? More to the point, given that, partly at the behest of Obama and Geithner, almost every other western government is ramping up national debt to cover massive bank bailouts and other phony-baloney “stimuli,” is there enough money out there to buy up the debt that’s already been run up? Last week, at the official British Treasury auction, investors failed to buy the full complement of so-called “gilt-edged” 40-year bonds. Two such auctions have already failed in Germany. The U.S. Treasury, facing similar investor reluctance to snap up $34 billion of five-year notes, was forced to increase the interest it will pay on them. The Chinese and the Saudis have long taken the view that it’s to their advantage to own as much of the western world as they can snaffle up, but it’s unclear whether even they have pockets deep enough for what America and the many Bailoutistans of Europe are proposing to spend.

In their first two months, Obama and Geithner have done nothing but vaporize your wealth, and your children’s future. What began as an economic crisis is now principally a political usurpation. And, to return to the president’s “false choice,” that “chaotic and unforgiving capitalism” is exactly what we need right now. It’s the quickest, cheapest, fairest, most-efficient route to economic stabilization and renewal. A regimented and eternally forgiving global command economy with no moral hazard will destroy us all.

As they say, read the whole thing.

I think matters have reached a point where the legislative branch of the federal government has become nothing but a bunch of corrupt, unaccountable, self-dealing petty-tyrants-for-life. And I think what we need is a comprehensive framework of ideas--or one big idea--to restore accountability to the people in the manner of Newt Gingrich's 1994 Contract With America, which for all its faults mainly delivered on its promises and was ultimately betrayed because of the corrupting power of power itself. The elephants of the middle 'aughts lost their way, their principles, and all sense of restraint or accountability after a decade in power. It's taken the donkey two months to replicate that feat.

The problems with reform are that we trust in a group of men to govern us instead of the system. A favorite accounting aphorism is "let the system be the solution." When everything is ad hoc and the operators exercises maximum control to evaluate treatment of each item before it is recorded, the system inevitably fails because of the fallibility of its operators. When a system of rules, carefully adhered to, governs outcomes instead of individual judgments performed a thousand times over, results are better and more consistent, and errors made systematically are more easily detected and corrected than those which are introduced by hand at each of a million decision junctures.

The relevance here is that the donkey and the elephant have both proven themselves incapable of running a limited government when put in charge of a system which is essentially the rule of men instead of the rule of law (though, to be sure, I think the donkey's errors are more destructive and enervating). It is time we return to a system of the rule of law, not the rule of men, even if a constitutional amendment is required to pry the reins of power from their hands.

Quoth Madison in Federalist 51:

In republican government, the legislative authority necessarily predominates. The remedy for this inconveniency is to divide the legislature into different branches; and to render them, by different modes of election and different principles of action, as little connected with each other as the nature of their common functions and their common dependence on the society will admit. It may even be necessary to guard against dangerous encroachments by still further precautions. (Emphasis mine.)

It is unfortunate, however unapologetically undemocratic it is to point out, that one of the essential checks on the tyranny of the legislature has been undone by the 17th Amendment to the Constitution, which reduced the separation between the houses of the congress by rendering similar their modes of election. Since undoing that seems unlikely and any such plan would in all likelihood be falsely accused of racism by some convenient demagogue, perhaps it is time to consider some of Madison's "still further precautions" against the dangerous encroachments of the outlaw federal congress.

I am assembling my thoughts on this into an essay which will end up taking precedence over the one about climate change. In the meantime, I welcome your thoughts as to what one single constitutional amendment would do the most good to permanently restrict the type of behavior emitting from the congress these days.

As an accountant, I can't help but find this funny, no matter how big a geek that makes me

2009-03-20T21:25:00.010-04:00

Dinosaur Comics is hilarious and I recommend it with enthusiasm.

You'll like this sort of thing, if this is the sort of thing you like.

2009-03-19T21:27:00.003-04:00

There's more!

AIGainst all enemies, foreign and domestic

2009-03-17T21:07:00.009-04:00

Does anybody recognize this guy?

There is an interesting and kind of disturbing kerfluffle taking place the past few days over the now-infamous AIG bonuses, evidently paid to some of the worst offenders in the now-taxpayer-owned venture.

I have mixed feelings on the matter: it's of course offensive, unconscionable, etc, to use taxpayer money to pay these sorts of bonuses ($165M paid to 73 people per the Journal); let's get all our moral outrage out of the way up front here. Sure, angry and mortified, check.

But. There are two really big problems here with what the Congress is trying to do, and what BHO is badgering AIG to do, namely to return the money. Let's deal with the smaller of the two first:

Bonuses are funny things in the banking industry. I think banking bonuses are about as hard to stomach as Alex Rodriguez's steroids-inflated salary. I sure don't get that type of bonus as an accountant. But they are kind of like inflation in a way: actual inflation is hard to take, but what really keeps economists and central bankers up at night is the possibility of increasing inflation expectations. When the expectation of inflation takes hold it becomes largely self-sustaining and self-fulfilling--ask Jimmy Carter and Paul Volcker. This is why Bernanke spent so much time during last year's excursion into the realm of $147 oil talking insouciantly about "inflation expectations are well anchored," and so forth.

The problem with forcibly curtailing bonuses in the financial industry is that they are expected. They are just as expected (however unjustified) as a $44M contract for a pitcher with a career winning percentage just over .500 (cough Dan Heran). If you single out one company and forbid competitive bonuses, or one baseball team and mandate they not pay salaries competitive with those offered elsewhere, you get a slow-motion self-destruct sequence as talent predictably drifts away and new talent stubbornly refuses to be recruited. Policy has consequences, no matter how much you wish it didn't.

And, having injected $160B of taxpayer money into AIG, it would be kind of preferable not to voluntarily begin a chain reaction which necessarily must eventuate in AIG's certain implosion down the road just because we feel good about tipping that first domino. If we wanted AIG to fail, we had a golden opportunity last year to simply let it fail and allow for an orderly disposal of its assets in a bankruptcy. In a free market economy, we punish mistakes by permitting bankruptcies to happen. In the modern, perilously-close-to-socialist America, the only business mistakes we punish are when executives fail to genuflect quickly enough to avoid the displeasure of the Congress.

Which brings me to the larger point. There is an interesting post from David Freddoso over at the National Review blog, the Corner:

But why is Obama so outraged and surprised? Today we learn that he signed the very bill that quite clearly made those bonuses legal — the $787 billion stimulus package he had traveled around the nation promoting. The bill includes restrictions on executive compensation, but creates an exception for bonuses contractually obligated before February 11 of this year. The provision, and the exception, were inserted into the bill by the chairman of the Senate Banking Committee, Chris Dodd (D, Conn.), who has received more than $100,000 from AIG employees in the last 20 years, had written and inserted the relevant provision, with the relevant loophole. How can he, the president, or anyone else who voted for the stimulus, suddenly act surprised? Don't tell us they didn't read the bill.

House Republicans are already calling for a return of the money, and holding a press conference. Here is the statement from House Minority Whip Eric Cantor (R, Va.) from this afternoon.
“Today, news reports reveal that a last minute provision in the stimulus bill inserted by Democrats protected bonuses like those received by AIG executives. Taxpayers deserve better than this from their government, and this is just the latest reason why legislation must be transparent for all Americans to see before it is recklessly signed into law.”

UPDATE: Here is the loophole, from the section of the stimulus package that deals with compensation rules for TARP recipients:
The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

Frankly, it's hard to imagine how the government could prevent such contracts from being honored. But the presence of this loophole, in black and white, certainly gives the lie to all of this phony outrage — by the senator who created the loophole, by the president who signed it into law, and by everyone else who voted for the stimulus package.

Well, yes. But the difficulty in imagining it doesn't seem to have stopped the Congress from trying (from today's Journal):

Congress Looks to a Tax to Recoup Bonus Money

By JONATHAN WEISMAN, NAFTALI BENDAVID and DEBORAH SOLOMON

WASHINGTON -- Lawmakers moved to tax away almost all of the $165 million in bonuses paid to employees of tottering insurance titan American International Group Inc. as Obama administration officials scrambled to assign blame for the payouts.

Legislators, including Senate Finance Committee Chairman Max Baucus (D., Mont.), proposed to levy a special tax on the so-called retention bonuses paid to 73 people in AIG's Financial Products subsidiary. Recipients of the funds include 11 persons who no longer work at the company. Details of the various tax plans differed, but one idea calls for a tax rate of 90% to 95%, with much of the remainder claimed by state and local levies. Some lawmakers saw the move as an attempt to pressure the employees into giving up their bonuses voluntarily.

Some lawmakers may see it that way. This voter sees it rather differently and this stems from the fact that I see a government's duties as being narrow and limited: provide for common defense, ensure the rule of law and property rights, and provide an architecture in which persons who haven't broken a law can go about their business unmolested, free to pursue economic success or religious fulfilment or a great suntan or whatever makes an individual happy. I fail to find much in the Constitution or the Federalist Papers which suggests government should be involved in managing outcomes like this.

Because, at the insistence of the possibly criminal Chris Dodd, these AIG bonuses are legal. Shallow, greedy, possibly competitively necessary, whatever: they don't appear to have been illegal under a plain reading of the law. To write a law after the fact which criminalizes the bonuses appears to me to plainly run afoul of Article 1, Section 9 of the Constitution, which states among other Limitations on Congress, that "No Bill of Attainder or ex post facto Law shall be passed." That they may not be quite criminalizing the behavior, only seeking to write a law after the fact which de facto (if not de jure) prohibits the offending behavior and then find a way to apply this prohibition retroactively sounds rather like they have at best perhaps not violated the letter of Article 1, Section 9, while they have in fact willfully and almost gleefully micturated upon its plain spirit and intent. Bravo, gentlemen, and not even 8 weeks into Dear Leader's Reign (I almost said Reign of Terror).

If the Congress is willing to disregard the Constitution (and not for the first time just this year, either) in order to achieve the outcomes it prefers, and in order to select the winners and the losers depending solely on their own judgment (not to say depending on the size of their campaign contributions), we are in danger of having the Constitution itself rendered useless in broad disregard. One might argue the courts essentially supplanted the plain text of the Constitution with their own particular flavor of momentary whimsy years ago, and it's possible that the other two branches are even now racing to catch up.

The government has demonstrated that its chief principle in managing its affairs will be to adopt those positions which maximize its own control over events and the citizens of our fair republic and has done so while evidencing a, shall we say, diminished regard for the rule of law. History, and our mascot for the day at the top of the post, should teach us that this is an unwelcome omen.

The Most Evil Man in America, week of 3/9/2009

2009-03-10T21:29:00.005-04:00

This week let's award our inaugural Most Evil Man in America award to Anna Burger, since we're totally into equality of opportunity here and it would be wrong to disqualify anyone in advance from this prestigious award merely because of her gender. And thus we can comfortably anticipate the many weeks in which Nancy Pelosi will win this coveted award in future.

From today's Journal:

The Union Cudgel
Big Labor gets nasty on 'card check.'

Big Labor's drive to eliminate secret ballots for union elections has united American business in opposition, so labor chiefs are putting on the brass knuckles: The new strategy is to threaten companies with government retaliation if they don't stop lobbying against turning U.S. labor markets into Europe.

We wrote on February 13 about the letter from the labor consortium Change to Win to the Financial Services Roundtable, demanding that banks receiving Troubled Asset Relief Program money keep quiet about union "card check." To its credit, the banking lobby hasn't backed down. Now Big Labor is escalating, demanding in a February 23 letter to Secretary Timothy Geithner that Treasury muzzle the companies if they won't muzzle themselves.

"Firms receiving significant TARP assistance continue to lobby against the interests of hard working taxpayers," says the letter from Change to Win Chair Anna Burger. "For example, these firms continue to oppose legislation that would allow bankruptcy judges to modify mortgage loan terms, establish a Credit Cardholder's Bill of Rights and protect consumers from corporations that bury mandatory arbitration clauses in fine print."

There's at least two things wrong with this which make this such a fine example of the type of thinking it takes to win our award.

First, and most obviously, it totally disregards the fact that policy has consequences. American lawmaking has been rife with this particular intellectual fatuity for decades now, so this is hardly newly invented by Mrs Burger. But just in this single sentence, she has called for three policies which would have entirely predictable unintended consequences:

"allow bankruptcy judges to modify mortgage loan terms"
This is a favorite of the left these days, and finds much favor with probable future MEMA award winners such as Chris Dodd and the evil Barney Frank. It's much like the rest of their thinking on banking and mortgage policy in general, dating at least to the Community Reinvestment Act of 1977. The idea then was that these independent for-profit banks were behaving in a manner deemed unsalutary by certain aggrieved donkeys, in this case by a perceived discrimination in loan-making which disadvantaged individuals in certain neighborhoods. It may be unfortunate or insensitive to point out, but there are certain neighborhoods or zip codes with statistically high concentrations of poverty and/or unemployment, and were I a banker or a shareholder in a bank, I would most decidedly expect to make a less-than-fully-proportionate number of loans to such a neighborhood or zip code, merely in the interest of my own fiduciary responsibility of looking after other people's money. But, no matter how reasonable the logic or responsible the actors, the outcome is otherwise from the Congress' desires, so, lo!--a new law must be enacted which, if it does other than simply continue to permit bankers to act in reasonable and responsible ways with the money in their care, it must by definition encourage them to act unreasonably and irresponsibly, no?

Today the problem is not much different: the offending banks want to enforce their rights which were established in a voluntary contract between two free and willing parties by seizing the collateral they counted on when making the loan in the first place.

Let's pause for a moment and consider why mortgage loans are typically the lowest-rate borrowing vehicle available for individuals. In spite of the seemingly interminable wait to recover their principal, banks are willing to extend credit to buy a home for lower rates than they charge for a 4-year loan on a car, which after all is also a collateralized loan. This obviously is due to the quality of the collateral, both in its tendency not to depreciate like a car does (present housing market notwithstanding) and its tendency not to disappear should the repo man come looking for it. Once the Congress convinces banks that its private contracts will be forcibly rewritten should the Congress find it convenient for their purposes to do so, the quality of that collateral has been permanently downgraded. Today it might be a forced write-down in principal, tomorrow it might be an outright ban on foreclosure, but a bank with no confidence in the sanctity of its 30-year contract and security agreement will charge a higher interest rate to protect against its expected losses due to, ahem, the vicissitudes of public policy. Mortgage interest rates would be permanently skewed higher for any comparable set of economic conditions, and that sort of confidence-destroying would be hard to undo. If interest rates for car loans are 1-2% higher than for a mortgage, you would likely permanently add a similar amount to mortgages. On a $150,000 loan for 30 years, increasing the rate from 6% to 7% costs the borrower an extra $35,506 in interest over the life of the loan. That is the consequence of Mrs Burger's proposal: in order to protect those who recently made bad decisions in the mortgage market, the rest of us would have to pay for other people's mortgages not only directly via higher taxes, but also indirectly, via higher interest expense on our own future borrowings.

"establish a Credit Cardholder's Bill of Rights"
I assume she's still talking about a bill similar to the previous Congress' HR 5244, which she supported at the time. You can get into the details of this bill which never became law if you want, but suffice to say in short form: it's more of the same as the above. Banks' rights under the law are diminished, their right to change interest rates to existing customers if those customers' employment or credit situation makes them a worse credit risk are restricted, etc. I hate credit card companies as much or more than the next guy, but forbidding them from calibrating their prices for credit in response to changes in the default risks posed by their debtors is going to do one of two things: make them make fewer loans (or issue lower credit lines) in the first place, to a pool of only exceptionally-low-risk applicants; or charge everyone a higher rate out of the gate to compensate for the fact that they know they won't be able to adjust the rates of the one guy down the road who suddenly looks like a bad risk. Credit card companies are merciless and probably evil, granted, so to expect them to simply swallow the consequences on these proposed restrictions without passing on the cost to their customers in some way simply strains credulity. But no matter to Mrs Burger, as there oughta be a law 'gainst this unconscionable stuff.

"protect consumers from corporations that bury mandatory arbitration clauses in fine print"
If you think the best first recourse is to sue every time you have a dispute, or can think only of those swell punitive damages you can receive to permit you to live like a king in Patagonia off the Herculean effort you undertook to speak truth to power, etc, then arbitration is likely not for you. But, though Mrs Burger is clearly not among them, some may think the shyster lawyers involved in litigating every little thing for millions of dollars in the expectation that they'll win at least a few and pocket 33% and live like kings in Patagonia from the Herculean effort of litigating this one case are a bigger problem in society than a company trying to avoid facing countless spurious lawsuits which eventually prove more costly to defend than to settle in spite of their innocence.

Let's be generous, in the absence of hard data, and call this one an honest difference of opinion with Mrs Burger. But if you prohibit this practice, what will happen?

Any company with one of these mandatory arbitration policies must believe that this will save them money--else, why do it? Maybe they think each case will cost 20% less if it's arbitrated, maybe they think the arbitrator will never find against them, etc, but clearly they only do it if they think this will reduce some expense somewhere--warranty expense, legal expense, whatever. If this expense-reduction tool is legislated away, every CEO or board of directors who anticipates an increase in, eg., warranty expense from this can either keep their prices the same and eat the increased warranty cost, hurting their shareholders and also their workers as they now have less profit to reinvest into the company--or they can just jack up prices for everyone so that one guy who's gung-ho to have his day in court can do so.

There's a collective theme to all these items. In addition to the unintended consequence, which never seems to accidentally be a benefit, the theme here is that prices are increased for everyone so a select handful of stakeholders--home speculators, credit card spendthrifts, guys who like to sue--can have their cake and eat it too. Once you push enough handpicked constituencies through that graft mill, goods and services get pretty expensive for everyone.

Which brings me to another problem with Mrs Burger. She's advocating card check, which is designed so as to facilitate a more easy unionizing process for any particular shop. There can be no disputing its intent, which is to produce more unionized workers in this country. If this succeeds, consider for a moment how much your 99-cent box of paperclips will cost if it's made in a union plant with generous retirement benefits in California instead of in the Korean plant where it currently is. The same goes for everything else you buy. Do you think your $4.99 sub at Subway will be made any quicker or more cheaply by a union workforce with strict work rules? No: it's all a ploy to force us to band together and buy someone else a union lifestyle since none of us would want to pay for that ourselves. It's extortion, no different in substance from what the credit card banks do.

That Mrs Burger also commits the grande liberal faux-pas of also attempting to restrict the free speech of her opponents by asking the government to quash their lobbying efforts merely adds predictable insult to injury. No reasonable reading of the intent or spirit of freedom of speech permits Mrs Burger's calls for her opposition to be silenced to make any sense. Why do all these liberal types always want to silence their critics, rather than simply out-debating them? Why is it otherwise than cynical to disregard the secrecy of balloting just because secret ballots seem so often to go against your preferred outcome?

So, for all these sins that we've noticed and likely others that we have not, Mrs Burger wins the coveted Most Evil Man in America award for the week of 3/9/2009. Now someone should just design an appropriate trophy and post it in the comments section.

I do notice that no matter how many of these things we do, somehow I never end up being the 1 in 9 who gets a fat government check in the mail

2009-03-04T20:24:00.011-05:00

From today's Journal:

Mortgage Bailout to Aid 1 in 9 U.S. Homeowners

By MICHAEL M. PHILLIPS and RUTH SIMON

WASHINGTON -- The Obama administration announced details of a housing-rescue plan it said would help as many as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth.

Because if there's one thing more he can do to get on my nerves, it's make me pay the mortgage of people who make more money than I do and who live in a nicer house than I do. Honestly, does anyone proofread these things for simple sensibility before making these announcements?

The package represents an effort to tackle the political challenges inherent in any housing rescue. While the administration wants a sweeping program that would prevent millions of foreclosures, it doesn't want to be seen as rewarding the greedy or reckless.

Am I being hypersensitive by noting that the administration doesn't want to be seen as rewarding the reckless, while proffering no comment on its preference toward actually rewarding the reckless? I swear, it was early 1994 before I got this cynical over Bill Clinton.

It remains uncertain how successful the administration will be in overcoming one of the biggest problems to forestall private efforts to fix troubled mortgages: the objections of investors who own mortgage-backed securities.

I'm not sure when Dear Leader began caring about the investor class, except possibly if one means "caring about" in a malicious, possibly carnivorous sort of way.

Administration officials made a point of noting that the loan-modification program will not aid people who bought homes merely as investments[.]

As I was saying.

The second main component of the plan calls for Fannie Mae and Freddie Mac, the government-backed mortgage giants, to refinance loans for millions of borrowers who may owe more than their homes are worth, even if they are wealthy enough to afford their current payments. There is no income ceiling for beneficiaries. But they must have mortgages held or guaranteed by Fannie Mae or Freddie Mac, and they cannot owe more than 105% of the current value of their home.

That raises the possibility that homeowners considered well-off by national standards may qualify for public aid.

"It's not income-targeted," says a Freddie Mac official. "It's targeted to these borrowers who have been caught in the current environment."

OK, this is an important distinction, leaving aside that the "official" in question has simply skipped all the hard parts about proving that this mess is something that just happened to "these borrowers," and simply assumed that was so and jumped to the end where the caring federal government solves "these borrowers'" problems with my money. What's interesting and perhaps less maddeningly predictable is that people who are merely rich can benefit from the program, as the donkeys believe helping some nickel-and-dime garden-variety fatcat is a small price to pay for the eventual nationalization of our entire mortgage system. The investor class--as distinct from the class who are merely reasonably wealthy--has a pernicious inclination to make money that hasn't been formally blessed by Nancy Pelosi, and gets whacked twice by this whole approach: once as the mortgage-backed securities are written down, and again by excluding investors in real estate.

Don't misunderstand. I don't think we should do any of this, at all. But if Dear Leader is committed to throwing around my money with such abandon, it's instructive to note who he welcomes and who he excludes from the manna of his benificence.

At the end of December, 8.3 million borrowers, representing one in five U.S. single-family homes with mortgage debt, owed more than their houses were worth, according to a report Wednesday by First American CoreLogic, a Santa Ana, Calif., real-estate research firm.

Let me be the first to actually say, with regard to being underwater on a mortgage, so what? In general, especially if we're limiting our discussion (as above) to people who bought homes with the idea of living in them, going underwater on the loan just doesn't have much practical effect unless or until you need to sell it. So, yes, if in some trail-of-tears duress such a homeowner is forced to sell his house and move, being underwater would be really inconvenient. But otherwise, what's the big deal?

The ability to service a mortgage is related to the cash flow in and the cash flow out, and some unrelated third-party's valuation of the asset pledged as security for the loan is a problem for the lender, not the borrower. If your house suddenly fell to half its current value but nothing else changed, the only thing going on is that the people entering the market now will be relatively better off than you since they'd buy comparable houses for much smaller loans. Your ability to service your loan has not changed a bit. Just keep making your regularly scheduled payments and everything will eventually work its way out. If you lose your job too, you have a serious problem, but note that that's a totally separate problem from the mere fact of your negative equity. Also, you wouldn't be able to use your home's equity as a credit card to buy Escalades and trips to Aruba, but that's pretty much dried up on its own anyway.

Even if a large swath of the country suddenly had negative equity, there's no reason this need trigger a wave of abandoned houses either. If your house fell to half its current value, you might not like to continue making the original payments, but in many ways it beats living in a cardboard box so in general there's a sort of inertia which mitigates in favor of continuing to make the payments.

I will point out that this whole negative-equity phenomenon isn't entirely new and previously unseen in our fair republic. Anyone who's bought a new car with zero down is underwater for the first 18 months they own it. The path out of this is well understood (make 18 monthly payments and your equity goes positive), widely implemented, and this negative equity has not sparked a rash of brand-new but abandoned vehicles littering the sidewalks merely because "it's cheaper to walk away than keep making payments if it's worth less than I owe on it."

Finally, if you want to really fix this whole economy and you want to do it John Drunkard Keynes style, the best move would be simply to bail out everyone's credit card debt, on which the country is most assuredly underwater, if by that you mean the related assets are worth less than the related debt. As an added bonus, you can bet the debt will be maxed out again in short order, thereby stimulating the economy. Brilliant!

Everyone unfortunate enough to be in the 49% who still has to pay income taxes should prepare to write a check to the government for 100% of what they earn, in order to ensure the permanent maintenance of this procession of various and sundry hand-picked constituencies, one after another, 8.3 million sheep at a time.

Have you hugged your Tocqueville today?

2009-03-01T00:15:00.003-05:00

So perhaps the poll for this week should be: do you want BHO's Excellent Adventure of a budget/stimulus/recovery fantasy to work, or don't you?

I have mixed feelings on this: recessions, especially bad ones, are not to be wished for; but on the other hand, the success (or appearance of success) of an economic plan which reduces all of us to the level of Tocqueville's "industrious animals" has the (equally?) deleterious effect of rendering permanent such programs as Dear Leader can implement. I am convinced that even the success (much less its failed but permanent implementation) of the BHO atrocity exhibition is to doom our fair republic to share the European fate, to have our wills enervated at the teat of the government tutelage, to emasculate those among us prepared to work and compete and do the unpleasant tasks involved in providing for our families.

Is the success of this program to be wished, even at the expense of a recession? Or would a nation of free men rather be 20% poorer but continue to live as free men instead of being enslaved to the tender, caring mercies of a benevlolent despot of a federal government?

I ask rhetorically, of course. But this is what our nation has reduced to: a craven desire for comfort above freedom, and it will prove costly in the end.

The false aphorisms of our fathers

2009-02-25T21:49:00.003-05:00

I am puzzled--nay, not puzzled, but amused, or something close to it that mixes a grim resignation to laugh in the face of folly during our long march to the broad sunlit uplands with a desire to point out that I was right all along even though the point is now well past where that matters--anyway, I have gratefully noticed that two of the more annoying aphorisms of the past decade have entirely disappeared now, even though they're arguably more appropriate now than they ever were during the Bush administration.

See if you can place these in their proper context (cough, stimulus bill) but also recall the last time you heard a gleeful donkey utter them falsely about, oh, Iraq:

1. The definition of insanity is doing the same thing over and over but expecting different results.

2. The first rule of being in a hole is, stop digging.

Both of these dull ersatz witticisms were like having sand in your knickers--a dull, inescapably annoying presence which by all rights should disappear but doesn't. They basically offer as a substitute for actual argument, and are usually presented with a tiresome and entirely unearned sense of smug self-satisfaction. But these nonetheless were common phrases but a few months ago.

As we begin a, shall we say, experimental hair of the dog approach to combating the deleterious effects of the bursting of our recent credit bubble by spending everyone else's money in what will likely prove a vain attempt to re-inflate it, I surprisingly haven't heard Helen Thomas or Andrea Mitchell utter these aphoristic droplets of the wisdom of the gods; nor have I heard them lob up softball questions to an interviewee in a predictable attempt to elicit such remarks.

Has anyone else noticed this?

On balance I'd rather have the annoying folk wisdom but also a president who was bankrupting the country through more incompetence than malice than the reverse situation, which is pretty much what we have now. But, there you have it: I have identified a positive effect of the reign of Dear Leader! And you thought I couldn't do it.

Socialism lands in America

2009-02-13T21:37:00.007-05:00

From today's Journal:

Obama to Shift Focus to Budget Deficit

By JONATHAN WEISMAN
With a $787 billion stimulus package in hand, President Barack Obama will pivot quickly to address a budget deficit that could now approach $2 trillion this year.

He has scheduled a "fiscal-responsibility summit" on Feb. 23 and will unveil a budget blueprint three days later, crafted to put pressure on politicians to address the country's surging long-term debt crisis.

Speaking Friday to business leaders at the White House, the president defended the surge of spending in the stimulus plan, but he made sure to add: "It's important for us to think in the midterm and long term. And over that midterm and long term, we're going to have to have fiscal discipline. We are not going to be able to perpetually finance the levels of debt that the federal government is currently carrying."

Gosh, do you think so?

In my household we prefer to judge whether we can perpetually finance the levels of debt we're carrying before dropping a massive sum of cash on something. We actually have a name for the process ("budget") and we rather quaintly think of it as "deciding whether we can afford it." Though admittedly it's swell if you can get in the drunken orgy of spending first, and then can forcibly extort enough to pay for it by threat of force like the government does, without you yourself going to jail for this, which most of us who aren't high-level donkey cabinet appointees can't pull off.

This is shrewd, if a bit obvious, in a Sun Tzu kind of way. After all, the senate hasn't yet completed its formality of voting on the bill no one has had time to read, and it's not been signed into law yet, so scheduling a "fiscal responsibility summit" to address what is now referred to as a "debt crisis" before he's even finished inking the monstrosity of a law that causes the debt crisis takes a special type of chutzpah, and frankly I'm envious because I'd never be able to say any of that with a straight face. The bit of referring to the resultant debt as a "crisis" is especially rich for anyone with enough imagination to anticipate the forthcoming "emergency" legislation to raise taxes (presumably only on 49% of us)which will be so crucially urgent to the survival of the republic that no one will be permitted time to read or debate the bill before voting on it. I hope they call it something really catchy because the clever focus-tested name of the law is usually the only enjoyment I get from these things.

But anyone who believed that any of this cool new cash giveaway was temporary and that eventually, after the economy is saved by Dear Leader, we'd restore fiscal sanity by trimming some of this, ahem, one-time emergency spending rather than raising everyone's taxes to European levels probably was the sort who believed he was the change he had been waiting for, or perhaps is just a member of the 51% of the country who pay no income tax.

Any republican or conservative who found some trancendental nonsense reason to vote for Dear Leader back in November, you've by now been slapped upside the head with the cold tuna of reality. Let me be the first to say, welcome back, and thanks again for your thoughtful vote.

It did finally dawn on me this week what's really going on with all this, in a macro sense. It's been pretty clear for years that a large slice of our fair republic embraced the part of the American dream that involved owning large houses and fancy "luxury" trucks and multiple plasma TVs and whatnot, and a large slice of that group simply discarded as the "failed policies of the past" the notion that one's ability to actually pay for those things was more than tangentially related to the act of acquiring them. And now, when we as a society have maxed out our credit cards and borrowed every cent of equity from our houses and had a losing streak at the racetrack, we no longer recognize the need to stop. We simply band together under the belief that all of our shitty credit scores amalgamated into a single giant US Treasury Mastercard can allow the lifestyle to continue, at least until that stops working and the Chinese decide that they'd rather invest their billions in fireworks or something instead of worthless junk bonds issued with the full faith and credit of a government long ago bankrupted by 51% of its own people, and by then all this will generally be someone else's problem anyway.

And the best part of it is, if you're one of those who think this is a good idea, there's at least a 51% chance that you won't ever have to pay for it either. Shazam!, and congratulations. Really, for that 51%, all this is a smart play; they have little to lose in the short term and will be hurt relatively less than the rest of us in the long term, so why not?

Not to say that we're totally fucked or anything.

The Ghoul Steps Aside

2009-02-03T21:09:00.003-05:00

I'm delighted to read today that South Dakota wheat farmer Tom "the Ghoul" Daschle has withdrawn from his multiple appointments as Sultan of HHS and Healthcare Socialization Czar. The proximate reason for relieving the nation of what would surely follow from submitting the health care system to his tender mercies is that he is a tax cheat. An ordinary citizen, one who was actually subject to the laws imposed on us by our anointed political betters rather than levitating gracefully above them, would likely face criminal charges of tax evasion for his "oversight."

I've been slightly displeased to note lately that the same donkeys who so piously advocate taking more of my tax dollars as a matter of fairness, patriotism, etc, seem all to be tax cheats escaping from any real consequences of their willful transgressions. Charlie Rangel heads the Ways & Means Committee, which writes our fair republic's copious tax laws, though he himself seems not to pay his own taxes. Allegedly. And now alleged or admitted tax cheat Tim Geithner heads the federal department of which the benighted Internal Revenue Service is a part. In this context, BHO's nominee to the made-up playtime position of Chief Performance Officer ("Special Watchdog," quoth The One Himself) of an alleged or admitted tax cheat seems almost quaint in its embarrassing irony and general harmlessness. But Geithner heading Treasury boggles the mind. How can that man in clear conscience ever prosecute anyone for evading taxes, or even set rules and procedures for the supposedly evenhanded and just administration of our federal tax system? Cats and dogs lying down together, and the world has gone mad.

As many writers smarter and quicker to the pen than I have been have already said this week, it's no wonder donkeys advocate for higher tax rates...since they're all too clever, lawyerly, and politically connected to have to actually pay them. Badump-bump. Or is that not actually funny, but perhaps a legitimate criticism despite the sophomorically delicious symmetry of the presentation? The rule of law, even more than freedom and liberty, is what sets a civilized nation apart from a banana republic (freedom and liberty are what, within the pantheon of supposedly civilized nations, sets the US apart from France or Denmark, though our latest congress may be disposed in favor of dispensing with most of the things that set us apart from the Lands of Youth Street Riots). Arbitrary justice and arbitrary suspension of justice amount to essentially the same thing, and that a priveleged handful are quasi-exempt from the laws the rest of us toil under is unforgivable. Rangel and Geithner are clearly not penalized in the least for their offenses, which in the former case are ongoing for pete's sake.

Let's even be charitable for a moment, contrary to all appearances and to all of my established style of writing, and suppose all these multiple violations of the income tax code really are accidental. Unintentional oversights committed by some of the smartest people in the United States, each of whom possesses a vast familiarity with the workings of the federal government, and each of whom is wealthy enough to hire a batallion of CPAs and attorneys to ensure complete voluntary compliance with the internal revenue code. Yes, and let us suppose further that each of these civic-minded democrats who have achieved prominence within the party by decrying the greed of the rich and pledging themselves to the tireless pursuit of justice for the downtrodden and disenfranchised yearns desperately to comply with the tax code and pay their fair share of the burden of supporting the less fortunate. And let us suspend disbelief a further moment while imagining that despite the best intentions, they found themselves on the wrong side of the many byzantine twists of the 16,000 pages which make up the IRC.

Can there be a clearer indictment of the ridicularity of the whole social-engineering morass that is the IRC? Pray, brother Geithner and your elected masters in the federal congress, deliver us from the tyranny of the IRC and give us a tax code that actually makes sense. Alexander Hamilton's first federal tax code ran to three pages. If you really would like to see the tax gap eradicated and increase the productivity and profitability of small business, we could do so simply by deciding on whatever tax rate we want and applying it uniformly to all types of income. But that uniformity and transparency which you or I might find desireable traits of an elected government would strip our congressional masters of the power to select the winners and the losers, and to favor some constituencies and disfavor others. And wherever would they find the motivation to do such a thing?

Still, the Ghoul has been vanquished. We soldier on.

And so it begins

2009-01-20T20:57:00.005-05:00

I've actually been rather looking forward to today.

Not so much because I've been running low on wispy promises of hope. I do have plenty of that lying around as it is. But more because I have for a few weeks sensed that George Bush was done, that he had done all he could do, and that frankly as he sought to leave town with his head held as high as the last eight years of partisan whippings would allow, he wanted to be done as well.

And who could blame him? We live in tumultuous times and his has been a momentous presidency. There remains ample time for post-mortem analysis of the last eight years; in summary let's say for now that on the two biggest issues he faced--war and the fundamental role of government in a free society--he gets a passing grade on one, no matter the howls of the moveon.org jackals.

Apparently the least sensible 51% of our nation's electorate deplore George Bush, everything he has done or hasn't done, and everyone who has voted for him. Since leftists have no manners--is it still impolite to discuss politics or religion in mixed company, or does that only apply to conservatives?--one feels bombarded by the noise, the shouts of treason! lies!, the contentious acrimony of our political landscape, everywhere one goes. It's tiresome enough that like an exasperated parent, I'm willing to give the tyrant child their way just so as to have a bit of peace. And because Republicans tend to be older and less petulant than the Youth Movement, not to mention better employed, there tends to be far less preposterous and unhinged braying from the opposition party when the donkeys are in power. So the donkeys' collectively grotesque overreaction to the last eight years is about to be improperly rewarded by catapulting them to power with a relatively compliant--at least lucid--opposition party.

I have managed to remain neither impressed nor horrified by the new president's transition to power since the election, the neutrality of which sentiment I suppose is far superior to the likeliest alternative. I have heard a few pronouncements from our handsome new ruler that acknowledge the difficulty of real decisions made by grownups with real responsibility--buckling on closing Guantanamo comes to mind as merely the most obvious--which one might regard as a good thing in fair comparison to the juvenile and duplicitous (but deliciously persuasive) assurances he offered during the campaign that there Are No Hard Choices. My reassurance at hearing his modestly more responsible post-election remarks was tempered by my parental instinct to punish the child who lies and certainly not to reward such bad behavior, which after all only encourages its repetition. The last thing we should do is collectively encourage our political betters to lie to us with the assurance that it lies which are sufficiently comely will not be closely examined, yet here we are.

I think, as we embark upon what may be a long period of leftist ascendancy, that this analogy of the petulant and ill-disciplined child neatly encapsulates my thinking on the matter. Leftists today are, to a great extent, leftists because they lack the courage to make hard choices. They have used their ferociously superior intellectual prowess to convince themselves that the path of least resistance always coincides with the path of virtue--which is convenient enough to discover, once you've stipulated that the only path you'll consider is the path of least resistance. There's a childlike naivete to the whole thing which would be charming if it weren't so pernicious. I don't mean the courage to speak truth to power by writing snotty letters to the editor of the New York Times about how the teh Evil Chimpy McBushHitler has shredded the bill of rights (or at least the portions thereof receiving of leftist approbation).

Why is it the leftists are never the ones willing to stand up for our nation's heritage if that might offend some foreigner? Or support any war, over any principle, without pusillanimous cries that War is Never the Answer? If you can't think of any principle that would be worth fighting a war over, it's a sad little existence you have on your little planet. The idea of owning a gun to defend yourself? Deploying Pershing missiles in Germany to stare down the Soviets? Developing missile defense systems? (The word "defense" is right there in the phrase itself! Yet this is aggressive warmongering.)

Taking responsibility for the consequences of your own actions and bad decisions? How about acknowledging that the government can't actually tax and spend our way to national prosperity and that one must learn to compete in a scary world where--shudder--one might not succeed.

Why was it sexy in the 1980s and 1990s to wear Free Tibet t-shirts and flaunt the cynical and undemocratic realpolitik which supposedly prized stability over democracy and human rights, but when faced with an actual opportunity to remove an actual real-life brutal dictator from power, leftists immediately shat out Quagmire! No Blood for Oil! I suspect that the moment supporting freedom and human rights against dictators and all that stopped being sexy was when George Bush had the stones to actually do it, as the least worst option available, and the inconvenient and damnable unpleasantness of actually fighting for a principle instead of simply waxing philosophic about it promptly made it too much for the infantile Left to bear.

No, it's pretty obvious that any political position requiring a little steel in the spine will likely be exactly the opposite of what the donkey wants. My biggest hope for our new benevolent ruler is that his ambition to succeed tempers his ideological predisposition to genuflect before Nancy Pelosi and Ron Gettelfinger and the Sierra Club. If it does, there is a hope that only some, and not necessarily the worst, of our fears will be realized.

Blitzkreig

2009-01-10T21:23:00.003-05:00

Just a quick hit today:

The always trenchant Victor Davis Hanson has a new essay up today which, as usual, is essential reading. Mr Hanson touches on BHO's adoption of much of the reviled George Bush's policy stances, at least as far as foreign policy is concerned, and wonders whether the enthusiasm with which his impending ascension is viewed in, eg., the middle east, is because the Islamists think he will be a better partner or because they think his naivete will permit the Islamists' agendas to advance. I wonder.

If, like me, you can scarcely get enough Victor Davis Hanson, you should not fail to visit his own Private Papers collection of online writings, and visit it often.

Last year I read his startlingly good account of the the Pelopponesian War, entitled simply A War Like No Other. For all the nuanced talk among our university elites since the beginning of the Iraq war in 2003 about the Americans being like the "evil," militaristic Spartans, I actually found much of his description of Athenian public debate to be not terribly dissimilar from the destructively self-indulgent flavor of much of our own internal debates. If anything, I found the Spartan singularity of purpose and desperate sense of self-preservation to be utterly beyond what our country is presently capable of, since we feel so securely unthreatened that we feel we can safely indulge ourselves a little bit with the pretty, subtle sophistry of our presidential campaigns and senate debates.

Also, if you are the least bit interested in the notion of assymetrical warfare, Mr Hanson captures the essential struggle between a nation with an unparalleled army and another with a supreme navy, what happens when huge infantry forces are confronted with tiny mobile cavalry forces, the mixture between light and heavy infantry on the battlefield, and honor and morale in combat. It's doubtless the best military history I've read, and I recommend it if you have any interest in either the Pelopponesian War or assymetric warfare in general.

The Effs of Texas are upon you.

2009-01-06T00:01:00.004-05:00

Eff eff eff eff eff. Eff. EFF. Effin eff eff eff. EFF all of the effin effers. Eff. Eff eff eff eff eff eff eff eff. Effity effin effs.

I wish I could say something positive, but all I'm coming up with is Eff. Strangely, in a game I expected the Bucks to lose badly, one which I rather bravely dismissed as nearly unwinnable but remained hopeful they'd just make the final respectable, this particular three point loss was the most galling outcome I've seen since...I don't know. Florida '06? Michigan '96? USC three months ago?

Words fail. Eff.

Farewell the Trumpets, as the Brits would say

2008-12-30T23:52:00.006-05:00

There's a fascinating article in the Journal from earlier this week called "Russian Professor Predicts End of US." It's written by a Russian fellow called Igor Panarin. I'll let the article's author, Andrew Osborn, introduce Mr Panarin and his theory:

MOSCOW -- For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument -- that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. -- very seriously. Now he's found an eager audience: Russian state media.

In recent weeks, he's been interviewed as much as twice a day about his predictions. "It's a record," says Prof. Panarin. "But I think the attention is going to grow even
stronger."
Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry's academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

This whole concept intrigues me and has done for years.

It's easy to dismiss anyone who warns of Dire Things to Come as a nutjob, crackpot, Nostradomus wannabe, black-helicopter-Michigan-Militia type. And more often than not, this dismissal is probably appropriate. But a theme I have touched on repeatedly in my previous essays is the fundamental and profound unseriousness with which this country of ours conducts its affairs. I've been using Social Security as my favorite Most Pressing Issue in this regard since early 2005, when it became apparent that George Bush's fellow Republicans in the Congress were content to kick Social Security reform down the road to a future administration to deal with.

Surely we all recall the halcyon days of early 2005, no? The win in the bitter election season had produced some alleged political capital to the returning president, some of which he intended to spend on reforming the great hulking albatross of Social Security which hangs round our collective necks. By June 2005 this initiative was dead. While there's surely little point in rehashing the battles of two Congresses ago, the failure to either fix or kill Social Security when the president made it his top domestic agenda item is symptomatic of a large and unattractive feature of modern political discourse in the US (and Europe): a connection to reality that is tenuous and occasional at best.

The details of the Social Security budget aren't that essential for the current discussion, so allow me to summarize: at some point the number of workers paying into the system at present tax rates will be insufficient to support the projected number of retirees drawing from the system at present benefit levels. (Poof! Complex issues made simple.) At present we are (and even in 2005, we were) running some pretty considerable budget deficits even when Social Security was a net contributor to the federal budget, and it is to be supposed that the budget deficits would become unacceptably large at such time as Social Security becomes a net drain on the federal budget. (Leaving aside for a moment the fact that the Congress and our fearless and handsome president-elect appear prepared to regard even staggeringly, unfathomably large deficits with total insouciance.) There are a number of solutions, none of which is terribly complex:

1. Reduce future benefits in some way.

2. Increase future tax receipts in some way.

3. Some combination of 1 and 2.

4. Recognize that the system has become unwieldy for our current economic and demographic climate, and fundamentally restructure it.

5. Decide that all the above are politically undesireable in some way and defer the decision until the budgetary crisis is of sufficient gravity that politicians will be rewarded for taking "brave and decisive" steps to address it.

There are probably other approaches, but I'm pretty sure most of them are just a flavor variant away from being one of the above five.

Naturally our illustrious betters in the federal Congress (which was under nominal Republican control at the time) chose option number 5. In 2008 the foreclosure epidemic, with its effect on the credit markets, and the frozen credit markets' effect on the stock markets, and so forth created a sort of perfect storm where action was unavoidable. It will take a similar crisis in Social Security to achieve action there; I have observed through this that decisions taken at 2AM on a Sunday so as to be able to calm jittery markets before their Monday opening tend not always to be duly thought out. Has anyone really noticed that we've spent half the TARP money to no noticeable effect and with little accountability? That is, after all, $350 billion--mostly wasted because our political betters won't act on anything save perpetuating their own political careers, until God's own hammer comes down wreaking sweet vengeful justice on the wicked and innocent alike.

So how does this ressurection of a four-year old political non-event factor into our good Mr Panarin's forecast?

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces -- with Alaska reverting to Russian control.
[...]
He based the forecast on classified data supplied to him by FAPSI analysts, he says. He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.

California will form the nucleus of what he calls "The Californian Republic," and will be part of China or under Chinese influence. Texas will be the heart of "The Texas Republic," a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an "Atlantic America" that may join the European Union. Canada will grab a group of Northern states Prof. Panarin calls "The Central North American Republic." Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will be subsumed into Russia.
[...]
Interest in his forecast revived this fall when he published an article in Izvestia, one of Russia's biggest national dailies. In it, he reiterated his theory, called U.S. foreign debt "a pyramid scheme," and predicted China and Russia would usurp Washington's role as a global financial regulator.

Let's assume for the sake of discussion that he's wrong on the particulars, especially the date, and instead give consideration to the underlying question. This first step in the evaluation process is the one which normally is skipped--to talk like this about the United States after all seems more than a little ridiculous. So much easier to skip to the conclusion: nutjob. Impossible. But this skipping about over the hard parts of analysis strikes a bit as evidencing intellectual laziness, and it's here that we will find the seed of our fair republic's eventual undoing (never mind that our foreign debt is, in fact, fundamentally a pyramid scheme).

Let's start with what ought to be an uncontroversial proposition: the days of the United States being the world's sole military superpower, and its foremost economic power, will eventually come to an end at some point in the far reaches of future events--yes? Rome was once the world's mightiest empire and its capital and its reaches were referred to as "Eternal Rome." Now it's merely the 7th largest economy in GDP terms, which certainly isn't bad given that it comes mainly on the backs of Ferrari and Beretta, but it's a rather distant 7th at less than one-sixth that of the US. And less than a hundred years ago, Britain was the greatest empire in history in its geographic span and its military and economic prowess, and it is today similarly reduced in stature. And, for added relevance, the Victorian Empire came to an end as the result of a war which Britain won but which saddled them with insurmountable foreign debt and insufficient exports to actually satisfy their overseas financial obligations (does this sound familiar?). So: empires end. Yes?

Let's continue with what ought again to be uncontroversial: the world is an unfriendly (often hostile) and competitive place. Our own perpetual dominance of the world economy is by no means a certainty. China, with its >1B population and slave labor, may well overtake us one day. India, a nuclear-armed democracy with a population far greater than our own, may do so as well. What can keep us the world Number One is a lot of hard work, continued innovation, etc--basically the same instincts and attitudes that got us where we are to begin with. But so much of our ruling class has become totally divorced from the basic human condition--that of a medium-sized hairless mammal trying to ensure survival in a dangerous and difficult world--that we have become willing to tie our own hands competitively, simply assuming that our rightful place in the universe of nations will be ever unchanged and unchallenged.

Let's consider the accomplishments of the 110th federal Congress.

The current Congress will most likely be remembered for a $700 billion bailout lawmakers passed in October, in response to turmoil in financial markets. The bill allows the Treasury Department to buy troubled mortgages from financial institutions and stock in financial firms to limit the global economic fallout from drops in home prices and increases in foreclosures.

Top lawmakers quickly wrote the legislation in a series of round-the-clock negotiations with the White House over several days in late September. However, House lawmakers balked at being perceived as bailing out Wall Street and caught leadership by surprise by rejecting the initial measure — a move that sent stock prices plummeting.

A few days later, the bailout measure was approved by both chambers, but only after lawmakers added new oversight provisions for managing the $700 billion. Also, “sweeteners” were tacked onto the measure, including bipartisan mental health parity legislation and extensions for a package of popular tax breaks.

So even when faced with a genuine SHTF crisis, we confess ourselves unable to pay attention long enough to simply deal with the present crisis, at least without LOOK! A SQUIRREL!! funding special pet projects totally unrelated to dealing with the matter at hand. Exhibit A.

In 2007, lawmakers also passed an energy bill that that will raise fuel-efficiency standards for vehicles for the first time since 1975. Additionally, the measure would set new requirements for developing renewable fuels and contains numerous provisions to promote energy efficiency.

“This legislation is a historical turning point in American environmental policy,” House Majority Leader Steny Hoyer (D-Md.) said.

Exhibit B. The congress clearly has satisfied itself that we don't actually have to compete in the messy, fussy world of automotive manufacture. Evidently, we can instead focus our efforts on writing laws about how many miles per gallon to get, and that all cars be equipped with traction control, and the like--both measures have to make a congressman (or -woman, let's not be sexist by failing to recognize the contributions of women toward realizing these deleterious accomplishments) feel good about his work for the day. But it just raised the cost of every car sold in this country, and lowered the standard of living for every person who now has to pay more for a car. But our standard of living is so high, it won't matter if we shave just a little bit off of it so the congress can feel good about itself.

GOP lawmakers said Congress’ most significant action on energy came this fall when leaders opted not to renew a long-standing federal ban on offshore oil drilling.

True. But it failed to repeal the still-continuing ban on ANWR oil exploration despite what at the time was $4.50 gasoline. The Congress, evidently including even Republicans, has satisfied itself that we don't need to utilize resources that we already own here on US soil if it harms the delicate sensibilities of the greener members of the congress. Even if ANWR was only capable of making a small difference in the price of fuel, the clear choice was (and is) between (a) let's make a small difference in the price of fuel, and create a bunch of construction jobs in the process, or (b) let's leave ANWR pristine for the caribou and not create a bunch of jobs in the process. The slight degradation to the standard of living of everyone in this country who buys fuel won't matter much since our standard of living is really high anyway, and not creating the thousands of jobs the project implies is also appropriate since we have so many jobs laying around unused as it is.

Also, it's worth observing that the most positive accomplishment by the last congress was an act of omission, rather than comission, which kind of says it all.

Other key legislation that passed included [a] five-year, nearly $300 billion farm bill authorizing federal agriculture and nutrition programs, despite a White House veto.

Once we've run up the price of corn to astronomical levels thanks to ethanol mandates, which also increases the price of any products with corn as ingredients, or any animal products (eg., beef and milk) fed with corn, we should be looking for ways out of giving subsidies to farmers since their products are certainly priced quite generously at present. Instead we decided to give them $300B, which even by federal government standards is a reasonably large wad of cash. Our craven but otherwise excellent political overlords have determined that they don't want to ask farmers to sacrifice the subsidies they've grown accustomed to, especially given that the farmers might then make some of the politicians unemployed, so naturally asking them (the farmers--and, come to think of it, the politicians) to compete on a level field without subsidies is out of the question. Even though this reduces the average taxpayer's standard of living slightly (both because of the taxing which must be done in order to, ahem, redistribute the $300B and by inflating the price of most of our foodstuffs) this won't matter much because our own standard of living is teh awesome already.

It would be possible to continue--really, it would--but this ought really to summarize the flavor. Every time you hear a mandate issued by the government, you should wonder if a hungry competitor in China bears the same burden, and if we can simply assume repeatedly that our standard of living is just so awesome that we can afford to sacrifice little slices and bits of it at every turn for measures which make our elected betters feel warm and titilated inside. Our hungry competitors operate under no such compunctions, and the day may well come that our self-indulgence and intellectual laziness catches up with us.

Will that day be in summer of 2010 like Mr Panarin predicts? Probably not. He's probably just a nutjob. After all, the idea that a fractured United States would come under foreign influence is a bit implausible (especially the idea that the heavily armed part which includes Texas and Florida would come under the sway of Mexico; individual Texans are probably better armed collectively than the Mexican army, to say nothing of the Texas national guard; on balance, I'd say the Republic of Texas attacking Mexico is far likelier). And Canada absorbing the north-central states seems equally a bit ridiculous; no matter how goofy Michiganders are, something like 80% of them are rifle-toting deer hunters who would probably respond rather vigourously if the Mounties started streaming across the Ambassador Bridge.

America's day in the sun will likely end eventually. But I would much prefer it if most of its wounds were not self-inflicted by the capricious self-indulgence of our political classes and the pie-eyed democrats who elect them to rule benevolently over us.

George Lucas, military genius

2008-12-20T23:45:00.011-05:00

A couple weeks ago the first Star Wars was on Spike or something and I couldn't help but watch it. I'm talking about episode IV, "A New Hope," naturally, not the JarJar abomination.

I've seen this movie countless times. I don't remember whether I saw it in the theater, and I would have been about seven or something when it came out, so I probably wouldn't remember it anyway. But I remember it was a weird Tulip Craze type of obsession to talk about how many times one had seen it, and people would claim the most outrageous and financially unlikely things, like "I've seen it in the theater six thousand seventeen times," etc. My main recollection of it was that it aired on television in 1983 during the buildup toward what at the time was called Revenge of the Jedi (which I still call it to this day, since that was how I was introduced to it and it stuck).

So we recorded it on VHS from over-the-air, antenna-received broadcast, awesome commercials and all (I remember one particularly stupid one of a Mercury Cougar following people around for no clear reason but to remind them how Awesome it would be if they would buy a Mercury Cougar, and a bunch of Diet Pepsi ads where they basically refused to actually show the people doing the talking). My brother and I watched our VHS tape on a solid steel VCR which was almost as big as the 19" TV we were watching on, almost every day after school for about a year, just so we could increase our watch count. It was a preposterous waste of time, but fun nonetheless, and I grew up convinced that Star Wars was among the greatest cinematic achievements of all time (after the Indiana Jones movies, of course).

The general and acknowledged awesomeness of the movie notwithstanding, we always sort of winced at a lot of the dogfight-in-the-trench scene at the end, despite being kids and all. Among the reasons:

1. Gold Leader seemed really pompous and amused by his own dialog, in a Max Headroom kind of way. We always hated Gold Leader.

2. Gold Five sounded really dorky when he kept flatly insisting, in his angry monotone that Gold Leader "stay on target," prompting even the notorious tightass Gold Leader to tell him to "loosen up."

3. Gold Two just looked like a dork. His lips were like really fat and stuff. I had a hard time buying into him as a fighter pilot.

4. Y-wing fighters were also like really gay overall.

5. When Luke Skywalker switches off his targeting computer, his ground commander says "Luke, you switched off your targeting computer. What's wrong?" and Luke replies "Nothing, I'm all right," and no one decides that that non-explanation warrants any follow-up questions when some cornshucking sucker of a rookie pilot decides I'M GOIN' TO MANUAL right before an all-or-nothing weapons launch.

There were other reasons, but Indiana Jones flying in out of the sun and blowing the crap out of everyone with his lasers went a long way toward making up for the rest of this nonsense as far as my 1983 VHS-watching bad self was concerned.

What struck me when I watched this last week was how stupid all this scene was. They managed to get two three-fighter groups into the trench at different times, and both attempts played out mostly the same: one guy appointed as the only one who would take the shot, and the other two guys fly around behind him offering helpful suggestions ("stay on target") and getting shot down by tie fighters that got on their six, while attempting no evasive maneuvers of any kind. When Red Two gets hit and Luke instructs him "get out of there, you can't do any more good back there," I must say I have no idea what good he supposedly was doing before he got his dumb self hit. And Red Leader sounded altogether surprised when he said "they came at us from behind!" Do tell. And really, Indiana Jones is the only one who has his act together in this scene, flying in from above and catching Darth Vader too busy using the Force to even bother to check his instruments and notice a slow-moving freighter bearing down on him from above.

Then I noticed that the fat guy's name was actually "Porkins." You read that right. Good times.

I resumed making fun of the whole Gold Squadron of doofuses and suddenly became curious if any of these yahoos had ever acted again, or if the horrible weight of their collective sordid history as Gold Squadron had ruined their acting careers. Turns out Gold Leader was played buy a guy named Angus MacInnes, who has five dozen movie credits to his name after Star Wars and owns a pizza shop in Edinborough. Had I known that in 2005 when I was in Edinborough you can bet your sweet britches I would have popped in for a pie and reminded him to "stay on target."

Speaking of "stay on target," Gold Five (Graham Ashley) had already been dead four years when I started making fun of him. I feel kinda bad about that in retrospect, but kids can be so terrible. Gold Two (Jeremy Sinden) died in 1996, which also is sad and made me regret making fun of his character as a kid. Red Leader (Drewe Henley) more or less never acted again (one could argue the same is mostly true of Red Five). Porkins himself (William Hootkins) passed away in 2005, though not before becoming better known to Freebird as a character called U.S. Translator in the 2004 episode "Impact Winter" of the greatest television program (nay, the greatest fictional creation) since the days of Sophocles.

Not only did George Lucas create a movie with a climactic scene so militarily implausible as to invite doubt on the part of a 12-year old, but it seems like he singlehandedly ruined a bunch of careers too. The moral here, if there is one, is probably that it's not a good idea to become obsessed with an entertainment program, be it Star Wars or West Wing, because then you'll either waste all your money on boxed DVD sets of a crap television program or you'll waste all your time finding links to the personal back story of incidental characters on the sadly obsessive wookipedia.org just so you can populate your blog with them as you write three-decade-late critiques of thinly veiled francophilic explorations of the noblesse resiste during the Nazi occupation instead of doing honest work. Either way, it's just kinda sad.

Also, don't make fun of people, or you might one day regret it.

Tomorrow! The auto bailout? Or Al Gore's new pantaloons? Either way, you'll not want to miss it.

And the answer is...

2008-12-20T23:14:00.005-05:00

The two worst Amendments to our otherwise excellent Constitution came rapidfire under the deranged tutelage of Woodrow Wilson and WH Taft, no matter how much I'd rather blame the whole thing on Wilson. These are the 16th and 17th: the 17th rendered the Federal government immune from influence by the states, and the 16th gave them so much money that this immunity was certain to be abused. And, a century later, Ted "Chappaquidick" Kennedy remains a senator and his relative--I don't know and can't be bothered to look up what the relation is, as if it matters--Caroline, is about to become a deserving recipient of Hillary's old seat. And so it goes.

And, it must be admitted, both these ingenious (and disingenuous) naked power grabs came with solid Republican majorities in the senate, so the party of small government was as prone to flipping out back then as it has been the last eight years.

The third worst one I selected sort of for fun and was the 18th. I selected it mainly because I like booze and the idea of outlawing it by writing such a ban into the Constitution (which, think about it, we don't do now even for really bad stuff like heroin or tofu or Al Gore blowup dolls) strikes me as both utterly mad and also as a perfect example of what happens when democrats take sole posession of Congress and decide to write amendments.

Effin booze-hating democrats. And now they hate tobacco just as much, but are too drunk on the power and money which its taxes convey to actually have the courage (not to say honesty or integrity) to outright ban the stuff. And the party which has a crush on the idea of letting everyone smoke pot all the time (sorry, just for rigorously regulated and controlled "medical" use) thinks smoking pot is great but smoking cigarettes make you the devil--or just a devilishly handsome and wicked smart democrat president-elect, I guess.

I kid.

Mmm, card check. I got yer card check right here.

2008-12-13T12:09:00.005-05:00

So some rabble rousers at a North Carolina meat packing plant have finally succeeded in imposing their will on their co-workers and their employer.

The United Food and Commercial Workers, which had lost unionization elections at the 5,000-worker plant in 1994 and 1997, announced late Thursday that it had finally won. The victory was significant in a region known for hostility toward organized labor.

That the unionizing idea was voted down in 1994 and again in 1997 and was even being voted on again shows that unions never take no for an answer. Imagine the implications for this point under a card check regime, which we'll return to shortly.

The vote was one of the biggest private-sector union successes in years, and officials from the United Food and Commercial Workers said it was the largest in that union’s history.

Congratulations, now you can get in line behind General Motors in driving your employer into the ground as the price of your product rises due to higher labor costs and restrictive work rules, with no commensurate increase in product quality. As a consumer, I sure can't wait to pay more than I'm accustomed to for the same quality product I've always enjoyed from Smithfield. As a consumer, what's in it for me to pay more for a product that's of no higher quality?

Smithfield's competitors are probably celebrating as much as the pro-union thugs are today.

“It feels great,” said Ms. Blue, who makes $11.90 an hour and has worked at Smithfield for five years. “It’s like how Obama felt when he won. We made history.”

“I favored the union because of respect,” said Ms. Blue, who is black. “We deserve more respect than we’re getting. When we were hurt or sick, we weren’t getting treated like we should.”

Sigh. The "respect" canard. Pass.

Many unions are pushing Congress to pass legislation that would enable unions to organize workers by having them sign pro-union cards. “I would say in this case, it shows that the union can win without a card check,” [company spokesman Dennis] Pittman said.
But [union thug Joe] Hansen said the 15-year unionization fight showed how hard it was to win under the normal system.

I'd say the 15-year unionization fight shows that pro-union agitants are something of a cancer to a workforce insofar as they never can really be cleared out, no matter how many votes against unionizing you record.

Imagine the glorious world that awaits us if card check passes. If the first round of canvassing for signatures indicates any support whatsoever, union petitioners (not to say thugs) will be able to simply revisit all those who had previously turned them down and ask again for a signature.

And again. And again. And yet again, with more, ah, "feeling." And again in the parking lot at night on the way to your car. And perhaps again at your house some quiet evening at home. Why not? What's their incentive not to do this?

So congratulations to the union agitants at Smithfield. If there's one thing union propaganda teaches us, it's that even if the economy is crumbling around us, anti-competitive measures to effectively outlaw layoffs can still guarantee our jobs, salaries and rich benefits. Until the company dies.

Happy poll funtime hour

2008-12-11T13:43:00.002-05:00

I whimsically suggested that the 17th Amendment was one of my three least favorite amendments in my last post, and invited my three readers to try to guess what the other two were. Freebird pegged one of them (the evil 16th Amendment). Let's have a fun poll trying to guess the other. See above and keep on smilin'!

Go Blago!

2008-12-11T00:21:00.006-05:00

Rod Blagojavich is [pause while searching for a precise, delicious word and coming up with...] an idiot.

The fact that another Illinois politician has proven to be fantastically, willfully corrupt is really no surprise, though having the balls to try to sell an open senate seat while the media is still in Illinois covering (not to say celebrating) the ongoing BHO transition (not to say ascension) is pretty dumb. It's even dumb if you assume that Illinois is so corrupt and the media to infatuated, like a bunch of 7th-grade girls who think that pretty boy down the hall is just dreamy, to notice, since there was a grand jury investigation underway into corruption in the governor's office when he indulged in this tawdry shenaniganry.

I was reminded throughout this simply delicious episode that being in the opposition, as I now am, and finding oneself blissfully relieved of the constant grim obligation to defend the indefensible things that government is usually doing, has its moments of relief. Or comic relief.

Let me be the first to simply say, suck it Blago. You and Elliot Spitzer can go hang out and play canasta with Ted Stevens for a decade or so and stay the hell out of my wallet.

Is this what life was like for everyone before the advent of the cursed 17th Amendment to the Constitution (the third-worst amendment ever; see if you can guess the other two!), or just in the Workers' Republic of Illinois? Recall that in the halcyon days before Woodrow Wilson, state legislators directly appointed all US Senators, leaving half the Federal government directly accountable and beholden to the state governments. So it was similar to virtually every other Amendment to the Constitution and every significant Supreme Court decision, all of which have evolved our tender Federal government in one direction only: toward the constant accumulation of power at the expense of state governments and the people collectively (DC v. Heller being the exception that proves the rule). This modern and more democratic measure of popular election of US Senators is less than a hundred years old. It seems odd or even blasphemous for me to cast about in an unabashadly undemocratic fashion calling this transfer of power from the political elite to the people a major contributor to the evils facing the country. But it is.

Reread your Federalist Papers, especially #45-46, authored by James Madison. There was a time in America when it was possible to venture the following argument about the balance of power between the federal government and the state governments:

The State governments may be regarded as constituent and essential parts of the federal government; whilst the latter is nowise essential to the operation or organization of the former. Without the intervention of the State legislatures, the President of the United States cannot be elected at all. They must in all cases have a great share in his appointment, and will, perhaps, in most cases, of themselves determine it. The Senate will be elected absolutely and exclusively by the State legislatures. ... Thus, each of the principal branches of the federal government will owe its existence more or less to the favor of the State governments, and must consequently feel a dependence, which is much more likely to beget a disposition too obsequious than too overbearing towards them. On the other side, the component parts of the State governments will in no instance be indebted for their appointment to the direct agency of the federal government, and very little, if at all, to the local influence of its members. (Federalist 45)

But ambitious encroachments of the federal government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole. The same combinations, in short, would result from an apprehension of the federal, as was produced by the dread of a foreign, yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to a trial of force would be made in the one case as was made in the other. But what degree of madness could ever drive the federal government to such an extremity.
(Federalist 46)

What degree of madness indeed. Voila, in less than a hundred years, the gift that is the 17th Amendment keeps on giving, and has given us demagogues for senators, elected by a large enough body of people that they can be known by essentially none of their own constituents and must fail astonishingly before they can really be held accountable. I put it to you that the Federal government we have today, which has reduced the states to mere administrative entities in all but name, could never have achieved such total dominance over the states without the Senate having first gotten off the hook of having to report directly to the state legislatures for appointment.

It's hardly surprising that pre-17th Amendment Senatorial appointments were allegedly frequently tainted by backroom deals among the state legislatures. But is that really any worse than we apparently have now, with Blago going shopping in Illinois and an omnipotent and unapproachable federal government getting ready to give my hard-earned tax dollars away to those among us who made the worst decisions on home financing, and to companies that have made such a hash of relations with their employees that they have managed to burn through $18 billion in cash in the last 3 months.

Anyone who thinks the bailout passing Congress today will be a good investment for taxpayers hasn't been paying much attention. A bankruptcy makes so much sense on every level that only a bunch of politicians could fail to notice. For any company that made a crap product using labor that was twice as costly as their foreign-branded competition and tried to do so while shouldering decades of legacy labor costs into what's looking like a major recession, a bankruptcy would be a great opportunity for a do-over: unless, of course, the doubly-priced and under-efficient labor group is a major constituency of the majority party in Congress and the White House. Usually the democrats want judges to be deciding policy for everyone (I really don't need to cite an example here, do I?) because they know their scattershot social mumbyjack wouldn't fly in open elections. Why not allow a bankruptcy judge to decide what contracts GM can and cannot afford to keep without modifications?

Raise your hand if you think that GM's political charade of a plan will succeed in any serious way. Not the feel-good way of liberal official Washington, but the hard steely-eyed marketplace reality that all these "green" cars are either less desirable, or more expensive, or both, compared to what GM has been making already for years--or, presumably, GM would already have been making these highly desirable and highly profitable green small cars all along, no? They've designed a business rescue plan around what will please our anointed betters in Congress with their Haight-Ashbury sensibilities about environmentalism (I'm looking at you, Pelosi) or their UAW obsequiousness (Levin, Voinovich) or their desire to simply be able to touch and bless every individual dollar ever spent on anything in this country before it can be actually spent (gosh, so many examples, but Chris Dodd and the evil Barney Frank will suffice). They've done all this at the expense of any real and serious discussion of how this magical infusion of cash and happiness and grooviness is going to actually make money. As one who's about to become an owner of GM (thanks, Barney) I have some interest in knowing whether they'll actually be able to become profitable, and I fear I must confess to not seeing it.

So either (a) GM discovers a magical way to make small green cars profitably, without major overhauls to their union labor contracts, which they've never done before; or (b) they essentially burn through the $34B they're about to be given, transferring it to generally democrat union laborers as payments above-market-rate for their labor to produce cars no one really wants now that gas hit $1.49 today. In the former case you get to leave snotty messages at my blog saying "told you so," and I'll stand humbly corrected. In the latter case GM will be back for another $50 billion in six months, and once we've firmly established that they are too big, and the economy too fragile, for them to be allowed to fail, they'll get that second installment too.

Care to offer odds as to which is likelier?

DEATH TO THE BLUE RAT

2008-11-19T21:58:00.006-05:00

It's Michigan Week.

Contrary to past form, I've managed to remain substantially productive at work this week, but not because I think the game is automatic or anything. I'm old enough to remember John Cooper's Reign of Terror and have no illusions about the actual inevitability of any supposedly inevitable wins by The Ohio State University over the wicked, cheating scoundrels from Meatchicken. And literally everything in the world (apart from Meatchicken's obvious and terrific awfulness) points to scUM pulling the upset this week.

First-year coach at TSUN, not one of whom has ever lost their first game against Ohio State: check.

Ohio State never having ever, ever beaten Michigan five straight times: check.

Wildly overconfident tOSU fans with no sense of historical perspective on the rivalry and possibly infecting the mental composition of the actual Ohio State players who after all are only 20 years old and themselves have no sense of historical perspective on the rivalry: check again.

To remind myself to actively hate Michigan every day and with every fiber of my core, I will be watching ESPN Classic's rebroadcast of the 1995 and 1997 Ohio State self-immolations against TSUN when they are on this week. As a diehard Buckeye from way back in the day before all this "spread offense" business was all the rage with the kids, I must say I find Ohio State's 1996 loss to Michigan the most painful and inexplicable of the many stunning examples of John Cooper finding a comical and improbable way to lose to an inferior team from a cold and rat-infested northern climate. Since I'm really trying hard this week to get my anger up, allow me to ask rhetorically: why does ESPN never rebroadcast that 1996 loss, or the stunning shutout loss in 1993? The 1995 and 1997 losses are on all the time. Why not the 1988, 1989, 1990, 1991, 1999 or 2000 losses, which were no less bitter for being less surprising?

Yes, this makes me sort of a connessour of the many flavors of defeat, which was a dish annually served to us Buckeyes in barely differing vintages for thirteen long and desperate years beginning the same month the first George Bush got elected. (And, this being a political blog, I can't help but observe that we'll be getting a different but similarly rancid flavor of defeat for at least four years beginning the month that BHO was elected. See if you can guess what I'm referring to! End political aside.) I use this angle to remind myself never to let down my guard against the treacherous heathen from Ann Arbor--because that's just what they would want us to do.

Never stop hating Michigan just because they momentarily appear laughable and hapless. It's all a show and a clever ruse. If the Buckeyes fall for it and allow the improbable 20-point spread go to their heads, the northern rodents will ply their sneaky rodent wares on us all and rise up from their totally feigned ineptitude to stab our Godfearing Buckeye hearts with a plastic spoon melted down into a pointy prisonyard stabbing implement. Never trust a Michigan rodent. DEATH TO THE BLUE RAT.

More on GM from WSJ

2008-11-17T23:34:00.006-05:00

There's a great (subscription) editorial in the Journal today entitled Why Bankruptcy is the Best Option for GM, penned by Michael E Levine. Naturally this makes me feel just unsufferably smart for pointing some of this out a few days ago, and it's worth excerpting in areas I didn't explore:

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month.

I hadn't really forgotten the Jobs Bank, which is probably the most egregious example imaginable of union excess. Many former employees who were laid off report to the Jobs Bank office daily to "earn" eight hours' pay by playing cards and drinking coffee. Exactly what GM thought they were getting by offering this concession is hard to imagine.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.

So I'm not the only one who thinks throwing money at a failing company without reforming it first is a dumb idea. As a voting taxpayer, I kind of do have an interest in whether that money (mine, after all) is thrown about with reckless stupidity.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won't be able to carry the weight of GM's past.

Amen. It's gratifying to see that the grownups have joined the conversation.

Bailouts 'R' U.S.

2008-11-15T11:54:00.004-05:00

The $700B was naturally just the beginning.

Now that we've established in the public's mind that virtually every company in this grand old republic of ours is "too big to fail," there will be no end of requests. This week's pleas from General Motors (which the Michigan public naturally supports) and the good Mr Paulson's new and randomly-evolving strategy to now use the money to directly bail out consumers are a taste of what we're getting into here, where the general assumption is that the federal government can simply write checks to cure all ills.

BHO and Nancy Pelosi have chipped in with their helpful suggestions that we solve the nation's problems by extending unemployment benefits and increasing spending on food stamps, and also hire a bunch of workers to upgrade roads and other "crumbling infrastructure." This overlooks that unemployment insurance already runs for three months, and there is evidence suggesting that increasing the length of time a person can receive a check for not working may sometimes--surprise!--increase the duration of unemployment, but nevermind. And Nancy wants a(nother) $25B handout to GM.

Thankfully, the good news this week is that congressional Republicans have already started to regroup after the past several years of spineless and unprincipled opportunism have cost them two elections by wide margins. The Republicans in the first half of Bill Clinton's first term were a disciplined and (relatively) principled group; nothing quite lends focus to an operation like being the last line of defense against an ascendant liberal doctrine determined to shower the masses with taxpayer-funded hugs and rainbows and lollipops and soothing assertions that the scariest elements of competition and bad consequences can simply be legislated from existence.

John Boehner, from my temporarily blue state of Ohio, has come forth to lead Republican opposition to democrats' intentions to throw good money after bad by allocating some of the $700B financial system bailout to General Motors. Boehner observes that spending "billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy." [Applause--Ed.]

This makes sense on a lot of levels; the whole $700B spending spree by the government should be an alarming prospect of impending Soviet-style nationalisation to anyone who believes our economic freedom is part of the great tradition of personal liberty in the United States, or who believes that the innovations of free enterprise are the cause of our unprecedented economic hegemony among the other participants in the world economy, as I do.

The massive bailout made sense only in the context of avoiding something much, much worse, and the failure and resultant bankruptcy of any particular company doesn't elevate to that level. The only thing that elevates to the level of requiring an unprecedented nationalisation of private companies and the expenditure of that much money would be something truly horrifying that would rain down sweet justice on the innocent and guilty alike--such as the total failure of the banking system. The $700B we're talking about the government handing out to essentially whomever they think needs the cash is a staggering amount--more than the total cost of the entire Iraq war--and is the equivalent of a financial nuclear option. A hammer this big shouldn't be used against anything other than an existential threat, and the democrats have predictably cheapened the argument by (equally predictably) drifting toward turning the whole program into a broad giveaway to everyone and anyone who supported democrat campaigns.

The real issue here is whether we are willing, amid a severe economic challenge, to act like serious grownups for a little while and choose accordingly. The appropriate level of seriousness which this discussion requires is contrary to the norm in Washington, but not everything reduces to the cartoonish moral simplicity of the arguments offered by Chris Dodd and Nancy Pelosi--that we can give (another) $25B to GM and that the only measures we need take to ensure that we're not merely increasing the cost of the eventual bankruptcy is to place "severe limits" on executive compensation. This is a favorite bugaboo of the left, and is offered as the sole product of their supposedly serious review of GM's cost structure, and what needs to happen to ensure its longterm viability. It doesn't work.

Let's take a look. If we're going to do this honestly, now would be a good time for everyone to go download their very own copy of General Motors' 2007 annual report, so we can argue from facts instead of parroting talking points. There's a lot of typical glossy corporate propaganda in the report, but skip past about the first 40 pages and we can get to the meat of the financial statements.

According to the consolidated statement of operations (page 49), GM lost $38.7B last year. That's a truly awesome failure on many levels and approaches federal government levels of fruitless expenditure, but soak in the sheer awfulness of the number for a moment: a single company lost $38,732,000,000 in one year. And it would have been worse except for having sold a major component of the company during 2007 (the Allison Transmission business) and recording a gain of almost $4.6B on this. The number which should grab your attention here is Loss from Continuing Operations: $43.3B.

Against this monumental loss, Nancy Pelosi proposes "strict limits to executive compensation" as a magic bullet. Individual executives' compensation is public record, and can be found, among other places, here. How much do they make?

Including salary, stock awards, stock options, incentive and all other forms of compensation, they make a lot by the standards you and I are used to living on. Rick Wagoner, CEO and Chairman, makes $14M, which is obviously a lot. If you add up the total compensation of Wagoner, Fritz Henderson (CFO), Bob Lutz (Vice Chairman) and the two other group vice presidents named in the table, you get $38.9M, coincidentally contributing almost exactly 0.1% of GM's loss for the year. So if Nancy's "strict limits to executive compensation" could convince them to volunteer their time and work for free, GM's loss for 2007 would still be 99.9% of what it actually was. So while there may or may not be a playground issue of fairness going on, this executive compensation is not really where the money is.

Much of the money is in note 15 to the financial statements, Pensions and Other Postretirement Benefits, which is the grand legacy of decades of UAW extortion. Take a look at the table of benefit payments on page 107 of the annual report. In 2008 GM plans to write $7.6B in checks to its US pensioners; when you figure in non-US pensioners and other postretirement benefits (eg., free health insurance) the total balloons to $13.5B, so we've stumbled onto an apparently major component of it. The legacy of being under the thumb of the union for decades is the annual expenditure of more than thirteen billion dollars of checks written to people who no longer are productive contributors to the company.

[Technical note to other accountants: yes, this oversimplifies things, and the payments are technically from the Plan, not the Company, and yes, the Plan earns a non-trivial amount of interest on its assets so only a portion of this must be funded annually by cash contributions by the company. But the contributions cumulatively made by the company to the plan over the years represent foregone modernizations, capital improvements, R&D, etc; and the company and probably even the union wish at least some of that cash was still presently on hand to pay salaries.]

Page 50 of your GM annual report tells us that GM sold 9,370,000 cars worldwide in 2007. The $13.5B in postretirement benefits amounts therefore to $1,441 per car sold. This is how much a GM buyer pays to the union every time they buy a GM product, just for the union's former workers.

So what ultimately is the point of all this? That the UAW contributes more to GM's long term uncompetitiveness than do much maligned executive compensation packages. The union has been so successful for so long in its negotiations with management that it has finally actually bankrupted the company. I struggle to comprehend how a workforce can negotiate thirteen billion dollars a year out of its employer just for its retirees.

I recognize the issue of equitability at stake in renegotiating any of this, since real individual people who have reached retirement age and have planned their finances carefully around what their union promised them are not in a position to adapt to change very well after their working careers are over (leaving aside the hale healthy 50-year olds retired on pensions equalling their full pay and indexed for inflation, who I can't really feel sorry for despite my best efforts). It's not just that it was a bad deal for the company, though it was; it was so bad a deal for the company that it's going to kill the company outright.

Now. What do we do about this? If a federal bailout is to be made, it must be done with fundamental changes to GM's cost structure that make it viable. To do otherwise is simply to throw taxpayer money down the drain. None of GM's competitors (even Ford and Chrysler, to say nothing of the much more relevant Toyota) have this huge legacy of costs built into it. If GM is to be competitive, it's insufficient to simply say that executives should be paid less. The real question is whether GM can afford to continue to pay UAW wages and benefits when Toyota and Honda plants in this country largely don't. I don't think anyone should think it a good thing that reducing pay and benefits to union workers is the likeliest outcome, but if we're honest about the analysis, it is pretty clearly a necessary thing.

And, incidentally, if the company enters bankruptcy it will suddenly gain the legal right to negotiate alterations to many of the contracts which provided for these legacy costs. So for GM itself (though not its present shareholders), bankruptcy would actually have some salutary consequences. And contrary to the doom-and-gloom forecasts of millions of jobs lost, it's worth observing that when a company that size enters bankruptcy, it doesn't simply close its doors and sell off its remaining equipment. Worldcom, to name but a single example which occurs to me offhand, went into bankruptcy in 2003 and came back stronger than ever. The new GM would likely do the same.

Ultimately this entire issue, from union benefits to bailouts and the discussions about it in Washington all feature one prominent defect: a willingness to embrace wishful thinking and avoid hard choices. It would be great if union retirees could really quit at 50 on full salary and benefits for the rest of their comfortable lives (or accountant retirees, for that matter). But it is not affordable. Insisting that it is, or should be, or gosh-that's-what-we-were-promised doesn't change the fact that there's no such thing as a free lunch, however much we would want it to. Bailing out everyone in the country who's made a bad decision in real estate by conjuring money from thin air doesn't make everyone rich either. You can't legislate prosperity or argue that only the fatcat executives are to blame or should have to pay to fix the mess, because the money just isn't there. And if a federal stimulus could really fix this thing, let's stop messing around with a paltry $300 per person and let's really fix this thing.

If GM goes bankrupt and forcibly imposes some reality onto the discussion, that wouldn't necessarily be an entirely bad thing.

The big one

2008-11-11T01:06:00.002-05:00

For all the fuss about government-provided health care, bailouts to AIG, &c, a phenomenon approaches which I think probably demands more attention due to the sheer awfulness of the idea. We approach a tipping point at which more than half the voting public pays zero income taxes to the federal government.

When that point is reached, there is no recovering from what will prove an endless exercise in trying to squeeze more money from fewer people, in order to provide more services at greater cost to more people. Once a voting bloc gains the power to tax a minority without restraint, the largesse-addicted majority loses the incentive to work since raising someone else's taxes is simply so much easier; and, incidentally, the working and taxpaying minority loses the incentive to work as well since the return on incremental hours worked or capital risked will diminish rapidly.

An example of this principle in action can be observed at the level of state governments wrestling with the implications of falling tax receipts. During the halcyon days of the late 1990s, virtually every level of government everywhere ran a budget surplus, and most of them rather lazily allowed spending to increase far in excess of either inflation or population growth. When the economy tanked after the dot-com bust, state and local governments had managed to get their constituents used to certain levels of services and government spending, which they could no longer conveniently afford to provide. This phenomenon is one of the problems Michigan and Ohio have had, and they're still picking up the pieces. When I was in school up at Eastern Michigan, we spent a fair amount of time in my government accounting class discussing this process, and it was an instructive exercise.

One constant which you will notice as you listen to the budget debates in Michigan is that it is considered politically expedient to raise the cigarette tax repeatedly. In 2001, from a budget amounting to $35B, cigarette taxes amounted to $596M (1.7% of total state revenues from all sources). By 2007, the budget had increased to $39B despite the flagging Michigan economy, and cigarette taxes had roughly doubled to $1.1B (2.8% of total revenues). Since only 21.1% of Michiganders smoke, it's a politically low-cost proposition to raise cigarette taxes every time a budget crunch presents itself--certainly easier than proposing meaningful spending cuts no matter how badly the economy is doing.

Now it may be supposed that raising cigarette taxes is good in that it encourages people to quit since it's more expensive (though I haven't noticed a tremendous amount of success behind this concept in the usage of illegal narcotics, which suggests that some people will find the black market to be more appealing than forgoing cigarette consumption). To the extent this is true, it is certainly for the good, but there's more to it at work than just that. The 79% of Michiganders who don't smoke have increasingly turned to simply raising taxes on a minority to fund their perpetually expanding expectations of spending by the government. It's easy, it's cost-free, and it happens with little or no political opposition most every year in Michigan.

Soon, we who pay income tax to the federal government will become our own minority. When that happens, we will discover abruptly that we have no political power to oppose the ravenous calls of the largesse-receiving majority for us to furnish them with ever more shiny pretty government-funded baubles, and the noble wealthy liberals among us will be surprised to discover that by then it cannot be stopped.

Mark Steyn has an excellent essay out today on this subject, which as always is worth a read.

So where are we now?

2008-11-07T19:13:00.002-05:00

Quite the eventful week. A few quick takes on the election: mostly bad of course, since it's no secret I think elevating BHO to the presidency will have untoward consequences for the nation, and that I also regret what this outcome says about our nation and its priorities. But! Ever the optimist, there are a few silver linings to be had if one but pauses to look for them.

The bad:
I'll refrain from even talking about policy here, since frankly that's been exercised over and over for the past three months or so and there's nothing really to add, and it's obviously too late even if I had something new to contribute. But there's two things I think are especially unfortunate.

1. This outcome rewards past bad actions and therefore encourages future occurances of same.

What bad actions? The frenzied, paranoid, repulsive wallowing in a simmering broth of incoherent hate which has represented so much of Democratic opposition policy the past eight years. The years-long campaign at the expense of governing. The Machiavellian disregard for laws (eg. campaign finance) and civility, and the variously successful attempts to suppress free speech which the BHO campaign and its apologists and sycophants in the press have so enthusiastically embraced.

Leaving aside any actual policy outcomes, it would be preferable in a healthy and mature republic to have had repudiated all these bad actions. Is it even conceivable that Democrats will suddenly and unprovokedly abandon all these wildly successful strategies in future elections, or are we more or less permanently to be subjected to this?

2. What the outcome says about us.

I'm tempted to simply overlook the pedestrian observation that the average American doesn't pay much attention, as has been evidenced in countless Jay Leno man-in-the-street type interviews where a staggering number of people can't name the vice-president, etc. But, at the risk of piling on, I'll simply point out that if a Democratic congress has a lower approval rating than George Bush, the logic which was employed to justify sending more Democrats to power in congress simply eludes me. I rather suspect that a non-trivial proportion of actual voters are entirely unaware that Democrats have been running both houses of congress for the past two years.

Also, I must confess that I simply can't grasp how Democrats are given higher marks for how they would handle the economy (and that BHO was probably carried to victory substantially on the expectation that he would solve our current economic woes). Sure, they care more than Republicans. But what are the major business-related planks of Democratic policy? Higher taxes on rich people and corporations. Higher taxes on capital gains, even if that results in a reduction of taxes paid to the treasury, as a matter of fairness. "Ending tax breaks for corporations that ship jobs overseas." Protectionism.

All of these are gut-level reactions which utterly fail when put into practice, at least if their intent is to create jobs and economic growth. I'm sure I'll have ample leisure over the next four-to-eight years to go on about this at length, but for now I'll simply summarize that anti-growth policies do not help to create jobs or wealth, no matter how much we want them to.

The advent of the BHO presidency suggests that we've become totally unmoored and unserious, and we are collectively willing to overlook the fact that wishing things in great and profound earnestness doesn't make them so.

The good:
For a variety of reasons, having a black president will be good for the country. I would rather our first black president have been Condoleezza Rice (which I would have enthusiastically supported), because I think her policy instincts are vastly preferable to those of BHO. But the outcome of the election will at least serve to prove that America isn't just a great seething maze of racism, as some [coughJesseJacksoncough] racialist opportunists [coughAlSharptoncough] have made careers by insisting. Anything that marginalizes Sharpton et al, or at least quiets their rantings, does serve some practical good.

Further along those lines, now that we've demonstrated America's non-racist bona fides, perhaps we can all start to come to agreement that any form of race-based discrimination is bad, and we can start to see affirmative action relegated to the pantheon of those noble programs which have succeeded so thoroughly as to have therefore outlived their usefulness.

One other thing: the Democrats will now have to actually govern instead of simply trying to sabotage every element of public policy whose success might have tangentally afforded some credit to George Bush. Transforming the Democrats in Washington from a bunch of shrill bleating children advocating ridiculously bad policy at every turn and confident in their minority status preventing them from absorbing any actual responsibility, into a bunch of shrill bleating children with bad policy ideas who can now scarcely avoid responsibility for the actions of government, may sober them up just a little. Not much, in all likelihood, but perhaps enough to avoid the most pernicious of their own ideas.

Lastly, the Republicans may now understand that the last two elections are, more than just bad timing from having an economic meltdown in the eighth year of an administration, also a referendum on a party which failed to adhere to many of its own principles. Small government, fiscal responsibility, and the ability to treat the economy seriously and in a grownup fashion are not characteristics of George Bush's administration nor of the Republicans in congress in recent years.

The United States has survived worse than this, and will survive BHO as well, no matter how foolish and ill-considered his policies will likely be. Such good as can come of this should be embraced and advanced at every opportunity. So smile, be brave, and be well.

Where have I been?

2008-11-06T14:24:00.003-05:00

Hello...hellooo...

Is this thing on?

I apparently slept through an entire presidential administration since my last post (over at mu.nu) was the day after Indecision '04 as I recall. And here I am again.

Water under the bridge? Check. An incoming administration overflowing of exciting new ideas in spendthrift chicanery? Check again. Finally getting to play the role of dissatisfied opposition party instead of constantly fighting a grim rearguard action against the lies of the Kos Kids? Check check check. It's gonna be a thrilling ride the next four to eight years, and we'll break it all down right here at the newly improved Electronic Countermeasures.

2004-04-21T07:36:00.000-04:00

I've gone over the wall.

Check out the new and possibly improved home of Electronic Countermeasures at http://countermeasures.mu.nu.

See you there.

JKS.

2004-04-15T21:59:00.000-04:00

BLAH
Thank merciful heaven April 15 has come and gone (well, not for a few hours technically, for you last-minuters out there). I found a happy surprise when I did my taxes that I had a refund coming to me (which, yes, means I paid too damn much over the course of the rest of the year, I know). And part of the happy surprise was that the Bush tax cuts ended up with me having a lower overall tax bill this year, for which I for one am happy. Not everyone I've spoken to is.

Some individuals I know are actually angry at having received a refund this year based on the reduced tax rates and increased child tax credits permitted this year. Since for the first six months of the year everyone's withholding was calculated at the higher rate, almost everyone should have received a refund this year unless they were shrewd enough to trick their company's payroll department into withholding during the last six months of the year at a lower than normal rate.

I for one am pleased to keep more of the money that I work to earn, instead of less, but for those who find their refund check nothing more than a troubling reminder that George Bush has raped and pillaged the Treasury and singlehandedly wrecked the economy such that all posterity will curse his name, I direct you to the third column of page 60 on your Federal 1040 instruction book:

How Do You Make a Gift To Reduce the Public Debt?
If you wish to do so, make a check payable to "Bureau of the Public Debt." You can send it to: Bureau of the Public Debt, Department G, PO Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you file.

I offer this as a helpful suggestion to those magnanimous liberals out there who feel angry because they paid too little tax. Just pay whatever extra you think makes up your fair share, and don't ruin it for the rest of us. If you're really the utterly selfless bunch John Kerry seems to suggest you are, the coffers should be full in no time.

And! Remember this helpful tip for those considering making such a gift:

TIP You may be able to deduct this gift on your 2004 tax return.

The mystery majesty of government at work.

JKS.

2004-03-30T21:55:00.000-05:00

I don’t think I was quite precise enough in my last article.

Econopundit posted a few remarks on it, and pointed out a helpful paper published by the Bureau of Labor Statistics discussing the different series and their methodologies and reasons why they produce different measurements. Econopundit summarized his analysis as follows:

Viewed just as a series, differences between the two surveys are actually vanishing on a long-term basis, with a possible interruption in this trend following the last recession. The current uptick is sharp, to be sure, but we've seen at least one downtick (roughly '64-70) apparently just as sharp, and similar but smaller upticks following other recessions.

In short: neither data nor method seem questionable. If the two surveys correlated perfectly it would be a waste of tax dollars to collect them both. These are two useful and perfectly valid methods of measuring the same thing. Neither is "right." Neither is "wrong." The complement and validate each other.

This is true, but ignores the fact that there is also a derivative data series which is politically at play, which is not so much the absolute number of jobs, as the change in employment year-over-year (or administration-over-administration). The manner in which the separation between the two surveys series has recently increased (with the two data series heading in opposite directions) is not irrelevant.

Mathematically speaking: the two main data series (employment in the households survey, and employment in the payrolls survey) over time are themselves closely positively correlated with each other. A look at the graph which Econopundit posted over the weekend (and which I referred to yesterday) suggests something like a +0.8 correlation (just estimating by eye), which of course is quite high. The separation between them has sometimes increased, and sometimes decreased, but the two series have generally moved in the same direction and are highly positively correlated.

But recently the separation between them is increasing because one derivative series (year-over-year change in employment measured by the households survey) is positive, while the other derivative series (year-over-year change in the payrolls survey) is negative. This means that for the politically sensitive derivative measure of year-over-year change in employment, there is negative correlation between the two series. And although it is true that there have been sharp upticks in the separation between the other two series before, it is not quite accurate to say that those previous periods (eg, 1980-1985) are similar: while the separation between the surveys was increasing then, both series were increasing so the derivative series remained positively correlated. I maintain that the recent four-year period 2000-2003 has been unique due to the negative correlation of the two derivative data series, and that this shows some new and fundamental developments in the way work gets done and people get hired.

I actually agree with Econopundit’s last paragraph entirely. My main point in all this is not that the payrolls survey is wrong or should be ignored, but that the overall employment situation has evolved in some subtle ways not entirely or even closely summarized by merely quoting only the payrolls survey. It continues to be a disappointment that the drop in employment from the payrolls survey is all one hears about in the mainstream press—which, after all, is where the main body of voters will get their information when assessing George Bush’s performance in office. The households survey suggests other conclusions than the payrolls survey, and both need to be considered, which politicians don’t seem to be doing to any real extent.

2004-03-29T08:50:00.000-05:00

I've spent a bit of time looking around for someone else commenting on this business of net job creation during the Bush presidency, and I haven't found much of it. I have occasionally found a mention that acknowledges the increase in the employment figures reported by the household survey, but generally there is a pooh-poohing that it's not really proper to say that one data series is better than the other. This, generally, is true; as I pointed out in the last article, it's wrong to ignore one in favor of the other when one needs to consider both of them to gain a comprehensive perspective. But there's something a bit unusual going on in the economy right now that is illustrated only by the household survey of employment.

There is a neat graph in an article posted over the weekend over at Econopundit, which shows a graph over time of three data series: the payrolls survey; the household survey; and a Yale model which is a predictor of total employment. All three give different numbers, which isn't really the point. Econopundit picks up on one of the key points shown on the graph, but misses on another.

First, as Econopundit points out, the Yale model gives different absolute numbers than measured by either survey series, but as his graph shows, it does track very closely and has a highly positive correlation with actual employment. When the model says employment should go up or down, it generally does, and generally in proportion to the quantity predicted. And right now, under current tax policy, the Yale model predicts 10 million new jobs over the next four years. It probably isn't a coincidence that John Kerry has positioned himself to take credit for this development, by promising minor tinkering with the tax code which, he says, will create--ahem--10 million new jobs over the next four years.

The other point which I think is key is that, as Econopundit's graph shows, while the spread between the payroll and household surveys has evolved over time, nowhere else on the graph but presently do we see the two data series moving in completely opposite directions for a four-year period such as 2000-2003. The mere fact that such an unprecedented divergence of the two series has been going on for so long demands our attention, and points to some highly unusual employment market developments.

Employers right now, buoyed by consistent productivity gains, simply don't want to hire new people even though business has picked up. Overtime and temporary labor and outsourcing to independent contractors has supplied the difference. This has been good for the companies in question, who retain far greater flexibility in staffing and manpower levels; it has also been good for the independent contractors themselves, who now find themselves working for wages and profits, not just wages. It's a rather new trend, which deserves much more consideration and discussion than it has generally received. Demagoguing over jobs lost when measured by just one data series does not serve the country or the economy very well.

2004-03-14T00:18:00.000-05:00

Since the election of the Leader of the Free World will evidently hinge primarily on whether the nation has more or fewer jobs come November 2004 than it had under Bill Clinton, a close examination of the surrounding facts is in order.

Economic analysis isn't the easiest thing in the world, and it requires one to pay attention for an extended period to some subtle concepts, which much of the American public isn't necessarily good at. But in this case the stakes are sufficiently high in the coming election that we should try really hard to have an informed national debate on the subject. Soundbyte politics is easy; substance is hard. This is more technical than most of what I post, but for serious discussion of the facts this simply can't be avoided. I will be happy to elaborate on anything which I've not sufficiently explained; just leave a comment or send an email. This is my opening contribution to the serious national debate about economics which we truly need to have.

The Democrats will have us believe that the economy is really bad right now. The Republicans point to fantastic GDP growth, low interest rates, and low inflation and say that things are pretty swell. The Democrats counter that for those out of work, low prices and high GDP don't matter, and that there are too many of this sort out there. And that the economy is really, really bad unless you are a fat cat who works for Halliburton.

It's apparently all about jobs. Jobs, jobs, jobs. I keep hearing ceaselessly about jobs, and in particular the absolute number of jobs gained or lost under George Bush, as if that single number represents a competent referendum on his performance as President. The obsession with this particular data series strikes me as being a new and somewhat unusual target of economic fixation; during the "it's the economy, stupid" run-up to the 1992 election, for example, it was the unemployment rate that was the important number. During the 1970s, truly a dark economic time in America, the misery index, gained by adding the unemployment rate to the inflation rate, was frequently the main subject of complaint.

Now it's the absolute number of jobs gained or lost, presumably because the opposition party doesn't really think that complaints based on the unemployment rate or the misery index will stick. And they're probably right: the unemployment rate in January 2004 was 5.6% (compared to 7.3% at the time of the 1992 election), which is pretty close to the 5.0% unemployment rate which is traditionally considered "full employment." The misery index in January 2004 was a mere 7.5% (5.6% for unemployment, plus the 1.9% increase in CPI from January 2003 to January 2004; this figure compares to the 20.1% misery index in October 1980, at the end of Jimmy Carter's Reign of Terror). So, using the various historical shorthand forms, present conditions look reasonably good despite John Kerry's rather fatuous bellowing of the worst economic performance since Herbert Hoover.

Now this business of absolute numbers of jobs is a shifty target. We have been hearing for months of the mythical "2.2 million jobs lost under This President," which is presumably the numerical basis for the Herbert Hoover comparison (though naturally this disregards the fantastically larger overlying civilian workforce in 2001-2004, so that 2.2 million jobs lost under Hoover would have represented a far larger portion of the workforce suddenly out of work). At the same time we are told of a near-apocalyptic number of jobs being shipped overseas, which complaint we've heard over and over at least since NAFTA and presumably before. It's nothing new, but it's tempting to draw a correlation between the mythical 2.2 million jobs lost and this international outsourcing and blame the latter, for which protectionist policies are the natural solution.

So, before we go looking for the culprits of the problem, let's first examine what the numbers themselves specifically are and determine whether the mythical 2.2 million jobs lost is mythical after all, or real. Now would be a good time for you to run off to get the actual numbers in front of you, so we can all argue from the facts. Virtually all the numbers we'll use from here out are conveniently summarized in a document called Economic Indicators January 2004. This document is published monthly by the Government Printing Office and is a compilation of economic statistics gathered into one handy spot from various government sources.

Job growth (as reported by the Department of Labor's payroll survey) has, in fact, lately been disappointing. This is the data series Kerry has focused on, and it's here that he gets his claim of 2.2 million jobs lost. The number series, in summary, looks like this: (this is the table at the bottom of page 14 in the Economic Indicators. Job counts are given in thousands of jobs, and are yearlong averages.)

Table 1.
        Nonagricultural
Year      Employment
2000        131,785
2001        131,826
2002        130,341
2003        129,932

So this data series shows a loss of roughly 1.85 million jobs between the average for 2000 and the average for 2003. What if we look at the actual yearend number for 2000, just days before Bush took office (instead of the yearlong average) and compare it to the actual latest month, January 2004?

Table 2.
            Nonagricultural
Year          Employment
Dec 2000        131,953
Jan 2004        130,155

Still about 1.8 million jobs lost according to this figuring of the data. But the lowest monthly figure for 2003 (according to Economic Indicators January 2004) was 129,789 in August; this number actually reflects a decrease in the number of jobs of 2.16 million, compared to the December 2000 figure above, so at least we can confirm Kerry's 2.2 million jobs claim and we know how his numbers were derived. And even according to the data series Kerry evidently is referring to, it now would be more correct to speak of a decrease of 1.8 million jobs, not 2.2 million, which still seems to be the number I keep hearing.

Such monolithic reliance on a single data series is something that the astute listener should regard with some distrust. There is no such thing as a perfectly designed or totally comprehensive data series, and this one (Nonagricultural Employment) is no exception. The important thing is that whatever each series' shortcomings are, they are repeated each month and their values are therefore comparable over time. But the Department of Labor collects other data series as well, such as the Unemployment Rate, to provide collectively a more comprehensive treatment of our employment situation. The other data series we will consider in detail is Status of the Labor Force, and this is presented on page 11 of Economic Indicators January 2004.

The same time period considered above, 2000-2003, looks rather different in the Status of the Labor Force report, summarized as follows:

Table 3.
        Total Civilian
Year      Employment
2000        136,891
2001        136,933
2002        136,485
2003        137,736

This series shows, rather surprisingly, an increase in total civilian employment of 845,000 jobs from 2000 to 2003. Where does the difference between the two series come from?

It helps to know a bit about the methodology of the two series. The Nonagricultural Employment report comes from an employers' survey. Companies with employees and payrolls are the only contributors to this number. The Status of the Labor Force report comes from a households survey, where respondants are asked to characterize themselves as "working" or "not working." So what's the difference?

Footnote 1 on page 14 of our January 2004 report spells out what John Kerry's data series doesn't consider:

Excludes proprietors, self-employed persons, unpaid family workers, and private household workers. Data from the household survey [Status of the Labor Force] shown on p. 11 include those workers and also count persons as employed when they are not at work because of industrial disputes, bad weather, etc., even if they are not paid for the time off. In the series shown here [Nonagricultural Employment], persons who work at more than one job are counted each time they appear on a payroll, in contrast to the series shown on p. 11 where persons are counted only once--as employed, unemployed, or not in the labor force.

So anyone who quits, or is laid off, and then finds identical or other work as a self-employed independent contractor is counted as unemployed in John Kerry's data, even if they are in fact working and even if they are earning more than previously since they are working for profits and not wages. And, according to the household survey, more people themselves say they are working now than in Bill Clinton's last year in office.

So where have all those 2.2 million jobs (really 1.8 million) gone? Nowhere. They're mainly just working for themselves as proprietors now instead of for a corporate employer. It's just a different type of employment arrangement. It's worth stating again, since you hear so little of it:

More people are working now than were before George Bush took office. We have numbers to prove it.

Yes, yes, I hear John Kerry harrumphing, but those people now are uninsured and don't have unemployment insurance, and aren't fully protected by Workers' Compensation, etc. Maybe so. But sole proprietors can pay for unemployment insurance for themselves if they choose to pay for it (at least in Ohio, the laws of which I'm familiar with). They should pay into the Workers' Compensation fund for themselves, for their own protection, though they aren't legally required to. And as a small business owner myself, I know that it is possible to buy health insurance for a small company, though it can be expensive. It's a riskier way to make a living than by showing up for a wage-paying position with a company, but the returns tend to have more upside potential since the proprietor keeps all the profits (after tax, of course) and these tend to be higher than the wage value of a job.

How does all this play out in balance? According to the Department of Commerce's National Income report (top of page 4 in Economic Indicators January 2004), two components of national income--wages and nonfarm proprietors' income--summarize as follows: (all figures are in Billions of nominal dollars)

Table 4.
                      Nonfarm
                    Proprietor's
Year     Wages        Income         Total Income
2000    $5,782.7      $705.7           $6,488.4
2001     5,940.4       745.6            6,686.0
2002     6,019.1       783.4            6,802.5
2003     6,185.6       827.2            7,012.8

So wages are up, proprietors' income is up, and obviously total income earned by wage earners and proprietors combined (the group identified as "working" in the Status of the Labor Force report) is up during Bush's term. This is in nominal dollars, however, so we need to adjust for inflation, and report everything in "2000 dollars," which is simply an acknowledgement that the same dollar earned today has less purchasing power than one earned in a prior year. The baseline year can be any that is convenient, and we will adjust our 2001-2003 figures downward to use values equal to the value of a dollar in the year 2000. There are a large number of inflation measures available, reaching their results in different ways and giving (not incidentally) somewhat different answers.

It is my opinion that, as a measure of inflation, the Implicit GDP Deflator is much superior to the Consumer Price Index (though I'll give results according to both so it won't be supposed that I'm cherry picking only the favorable measures). The Personal Consumption GDP Deflator, applied to the income figures above, is as follows: (Nominal income is in Billions of current-year dollars; real income is in Billions of 2000 dollars.)

Table 5.
        Nominal      GDP         Real
Year    Income     Deflator     Income
2000   $6,488.4    100.000     $6,488.4
2001    6,686.0    102.038      6,552.5
2002    6,802.5    103.429      6,577.0
2003    7,012.8    105.298      6,660.0

Notes to Table 5:
1. Nominal Income is as calculated in Table 4 of this document.
2. GDP deflator figures come from the table Implicit Price Deflators for Gross Domestic Product on page 2 of Economic Indicators January 2004; the column used is for Total Personal Consumption Expenditures.
3. Real income is calculated as Nominal income divided by the GDP Deflator x 100.
4. The CPI index figures, where the years 1982-84=100.0, are as follows for the above period: 2000=172.2; 2001=177.1; 2002=179.9; 2003=184.0. Refer to the Bureau of Labor Statistics CPI reports, check the first box for US All Items, 1982-84=100 and press Retrieve Data.
5. Real income for the above years, in 2000 dollars deflated by CPI instead of the GDP deflator, is: 2000=$6,488.4; 2001=$6,501.0; 2002=$6,511.3; 2003=$6,563.1.

So even adjusted for inflation we are earning more income among our workers and proprietors now than before George Bush took office. The last question is to consider whether, when this increased income is divided among more people who report that they are working, all workers collectively are better or worse off now compared to 2000. (Income figures are in Billions of 2000 dollars; Civilian employment is in thousands of workers.)

Table 6.
         Real       Civilian       Real Income per
Year    Income     Employment      Employed Person
2000   $6,488.4     136,891            $47,398
2001    6,552.5     136,933             47,852
2002    6,577.0     136,485             48,188
2003    6,660.0     137,736             48,353

Notes to Table 6:
1. Real income is as calculated in Table 5 of this document.
2. Civilian employment is from Table 3 of this document.
3. Real income per employed person is real income divided by the number in total civilian employment. Note that, as Real Income (RI) is in $Billions and Civilian Employment (CE) is in thousands, it is necessary to take (RI/CE) x 1000000 to find Real Income per Employed Person.
4. For those interested in deflating nominal income by CPI, Real Income per Employed Person would be as follows: 2000=$47,398; 2001=$47,476; 2002=$47,707; 2003=$47,650.

You read it here first: more people are now working, and on average each of them is now earning more real income than before Bush took office.

I think it should be obvious that our true economic situation is far too complex for John Kerry's soundbytes about 2.2 million jobs lost and the worst performance against that measure since Herbert Hoover. I further posit that a close analysis of the numbers reveals that our economy now is, at minimum, no worse than before Bush took office--though I'd want to see the unemployment rate drop from 5.6% to the statistically "full employment" level of 5.0% before I suggested that everything was just swimmingly grand. But when John Kerry suggests unusual, European-sounding measures to halt a putative loss of jobs, an astute listener should be aware that the employment situation is by no means so simple or so bleak as Kerry claims.

2004-02-26T23:19:00.000-05:00

Your Federal tax dollars at work.
I was gratified to hear Alan Greenspan's testimony to Congress yesterday in which he called for cuts to Social Security spending as the most critical element of a deficit-elimination process. This is the only sensible approach to a problem which will presently balloon entirely out of control--spending on the elderly (Social Security and Medicare combined) already amounts to more than one-third of the total federal budget, and matters will only get dramatically worse from here as the Baby Boomers retire and health care costs continue to spiral out of control. Luckily I have devised a solution to both problems, which--posturing by the Democrats notwithstanding--has plenty to make everyone happy.

But, in order to present it in a credible and comprehensive manner, a few numbers would be in order. These will also serve to allow me to confirm for myself that the plan works before dispensing a bunch of facile platitudes on the subject which sound pretty as long as they're kept to generalities. Facts are good and are our friends. We'll leave the facile platitudes to the politicians, since they are almost universally incapable of doing any justice to any problem of even moderate complexity, which the current situation certainly is.

Remember the annual muted hooplah surrounding the release of the President's budget proposal? I saw a bunch of stock shots of a guy pushing a hand truck with stacks of budget documents on them, each one shrinkwrapped individually and about the thickness of four telephone books, and said to myself "Gotta have it." Yes, accountants can be such dorks sometimes, but the whole notion of having that many actual numbers to run my fingers through and see just how bad things really are--as measured with numbers, not volume of rhetoric--presents a really exciting opportunity to see what all this budget deficit fuss is all about and how it can be fixed. So I found myself wishing I could have my own copy, not just the fat cat members of congress, none of whom naturally read it anyway.

It occurred to me about that time that as a taxpaying citizen of a free republic, I by all rights should have a copy of the budget, at least if I wanted one, which I did. So I wandered off to the Office of Management and Budget website to commence making inquiries.

I already knew I could download much, or most, or theoretically all of it, from OMB's FY 2005 Budget page. But the ability to do so is rather theoretical, since in addition to the obviously named Budget of the United States Government, Fiscal Year 2005 (which itself contains some 33 chapters, each of which can be downloaded individually); there's also some supporting documents such as Analytical Perspectives, Budget of the United States Government, Fiscal Year 2005; a whole fascinating collection of Historical Tables, Budget of the United States Government, Fiscal Year 2005; and an Appendix which contains a further 35 chapters. And other stuff too. For some of it it isn't immediately obvious what overlaps with what, if in fact it does at all. It's a little overwhelming to try to look at online, even though it is in fact all there.

So the accountant in me decided that the thing to do was to get one of those really pretty shrinkwrapped bound hard copies all the cool kids in Washington are toting around these days. Hard copies are just so much easier to work with. So I followed OMB's link to the Government Printing Office's page to buy these very documents, and found out that sure enough they are available to buy for any schmo who wants one, provided that schmo has $250 he doesn't mind parting with to get his own pristinely geeky hard copy of the US budget and its various supporting documents. Which I don't, in fact, have, living as I do on a budget where American Express doesn't grant the same sort of consideration for deficit spending that Congress enjoys.

So, being cheap, I ordered the CD-ROM which contains all the budget documents and costs just twenty bucks. Which, yes, gets me right back where I started, having only electronic copies I'd have to print myself (just like the internet version), but at least I wouldn't have to download seventy-odd individual files, create a little file directory system for them, get bored and give up halfway through, etc. But it's here that things got funky.

First of all, twenty bucks is a bargain compared to the $250 they're asking for on the hard copy, but--again--for taxpaying citizens of a free republic, the feds ought to practically force everyone to take one of these, just so we can all play the role of informed voter debating from the facts. Instead they sell them, charging what seems to me kind of a steep price for a CD containing nothing but data which is in the public domain. I can buy fifty blank CD-ROMs from Office Depot for about $15, and churn out fifty copies of whatever is on that disc in the matter of a few hours. An additional two dollars each (let's be generous) for jewel case and printed liner notes, assuming these are inlcuded, plus fifty cents to mail the final product, and the government's actual cost is about $4 apiece, including labor. Perhaps the other sixteen dollars I paid is my gift to reduce the Federal debt and should be included on my IRS Schedule A as a charitable contribution. I could buy a disc from the thieving RIAA for less. Note to potential IRS inquisitors: I will not include any such thing on my Schedule A, the information on which really is entirely legitimate and painfully honest.

Next problem is that every clown in the country who cobbles together a weblog for his own amusement probably went through some of the same process I did, and these CDs must have sold like hotcakes because I ordered my copy only one day after it was released, and ten days later got a postcard informing me that my budget document was out of stock and should be available in another four to six weeks. Hmph. Given the modest difficulty of burning a disc and mailing it, I'm struggling to comprehend the possibility of facing a month and a half delay. Which, after all, represents a delay in receiving a one-year document which is nearly 12% of that year. I hope it's still relevant by the time I get it.

Adding insult to injury, I discovered today that GPO then proceeded to charge my credit card twice for the same order that I still haven't received. Grr.

So, the short form of all this is that while I have developed a scheme to save the country from the sure economic ruin which our present inertial course will eventuate in, I don't yet have the numbers to do fact-checking and so forth. So you'll all have to wait. But it's coming, eventually, just like my alleged CD-ROM is.

2004-02-23T01:14:00.000-05:00

And, since you've all been dying to know, we come finally to discuss John Kerry.
I've been watching the Democratic primaries with mixed feelings, which response is hard to avoid with such a bunch of vitriol, puerile taunting, demagoguing, and generally behaving poorly being broadcast with such alarming constancy by the news networks. I've been pulling for John Edwards as the best of the electable bunch (I have a lot of respect for Joe Lieberman, but primary races for either party tend to be really ugly affairs which reward campaign behavior which isn't Joe's strong suit). I don't think I agree with John Edwards on many things, and I know I didn't agree with Howard Dean on some things (Iraq, his current economic policy) though I agreed with him on others (gun owners' rights, and the fiscal moderation and discipline he demonstrated while he actually governed). I have no idea whether John Kerry and I agree on anything, because I have concluded that John Kerry believes in nothing. Except, naturally, for his desire to beat George Bush and propel himself to power. Which I don't agree with.

If you look up at the top left corner of this page you'll see my own little political axiom, which at its simplest is that all politicians are basically venal. I'm sure Howard Dean had more than a little fancy for the Oval Office, and I disagree wholly with his take on the Iraq war, but I believe him when he says he believes these things. And there's no doubt that what George Bush says is more than a little colored by the fact that he'd rather keep his job than lose it, but there's little doubt that what he represents as his core beliefs are genuine.

But I think John Kerry is the very worst sort of politician in this regard, one who is actuated solely by his venality, and is devoid of any real beliefs of his own. His rather tortured attempts to change his story and expain away his votes on the Iraq war resolution suggest that nothing he says or votes can be taken at anything like face value. It's worth noting that he voted against the 1991 Iraq war, despite its having UN approval, though he now explains that that was so President Bush 41could build more domestic support for the effort. And he voted for the current war, which he now says he opposed, and which war can be blamed on George Bush and Halliburton. (Come on. He's on the Senate Intelligence Committee. He's privy to all the intelligence the President reads, both during the Clinton administration's Operation Desert Fox and in the run-up to the current war. Saying that he only supported the war because of faulty intelligence--so it's not his fault and he can't be blamed for it--but then condemning George Bush for doing the same is absurd, and any thinking person knows it. I'm frankly insulted he expects that to fly, and more than a little appalled that so far, in fact, it is.)

And he voted for the Patriot Act, which in fact he co-authored, and which he now virulently opposes for, essentially, its "chilling effect." Tip to astute listeners: the supposed chilling effect, which you will hear cited as a basis for opposing all manner of Republican legislation, is only cited in the face of an utter absence of real and specific problems with the policy being criticised, and it means that not only have no actual abuses surfaced, that it's difficult even for educated critics to even imagine specifically what might go wrong.

Kerry voted for the Iraq Liberation Act in 1998, making regime change for Iraq the official position of the United States, though evidently not with any real seriousness of purpose, according to what he's been saying lately about how wrong it was for us to actually depose him. And, every Democrat's pal, Bill Clinton, signed this bill calling for regime change, so why all the Democratic angst when it comes time to actually do it? The same liberals who always wore FREE TIBET t-shirts in high school should have loved our kicking of a murderous oppressive tyrant from power, though in fact they were the loudest to oppose it for some reason.

Lest I digress into an analysis of the state of American Liberalism, which is perhaps a subject worthy of some attention but which would take us rather too far afield, let us return to John Kerry. I started to notice his yea on the Iraq war becoming but Bush assembled a "fraudulent coalition" and I didn't expect George Bush to fuck it up as badly as he did once Dean's consistently strident opposition to the war had made him (Dean) the temporary front-runner. Which vulgarity, in that Rolling Stone article, was an especially nice touch for the man who would be leader of the free world, as it nicely encapsulated not only that the way he actually votes shouldn't be held against him, but that he was also too angry to talk about it without having his grammar explode. Yale-educated three-term United States Senators have fully sufficient savvy and self-awareness to avoid any accidental embarassing choices of diction, and I haven't heard Kerry dropping F bombs on Tim Russert and Brit Hume, so I can only attribute this particular choice of language as a carefully considered maneuver to position himself favorably in whatever particular idiom he thinks the readers of Rolling Stone should view him in order for him to garner the support of another subsection of a demographic. Taken together, I must confess that I just don't buy it. He's faking it, and he doesn't even have the decency to be convincing about it.

So what? My problem with all this is that John Kerry is just Bill Clinton, devoid of charm and probably less likely to philander. His every policy focus-group tested, governing according to the latest opinion tracking polls, and always choosing what's momentarily most advantageous--not for the nation, but most advantageous to John Kerry's gaining and continuing in power. This habit was obvious and annoying, though slightly amusing, during the Clinton administration, when the economy was booming and the nation was generally at peace. Matters are rather more serious now, and as a consequence we don't have the luxury of playing silly posturing games with our policies or indulging leaders who just want to make everyone like them so they'll be re-elected. Because the easiest and most dangerous policy which Kerry will end up selling us before this is over is that we're not really even at war anymore.

The reason he'll sell this, and why I fear a dangerous number of Americans might buy it, is because it offers the easy path. It's much easier to say, and for a listener to hear, we're not really at war anymore, than to listen to George Bush say that we're at war; it will be long and difficult; there will be setbacks and men will die; and sacrifice will be needed from all of us. Which, if you've been listening, is pretty much what George Bush has been saying all along. It's the hard path, and it makes even a great wartime leader vulnerable in peacetime. It's why no less a leader than Winston Churchill himself was voted promptly out of office in the first election after the danger was past. No one wants to hear about sacrifice and toil and endurance, or vote for someone who offers nothing but.

None of which has anything whatever to do with whether we're really at war right now. We are. The absence of major attacks in the US since 9/11/2001 is significant and gratifying, but it does not mean our enemy has been beaten or has given up. For all the comparisons the Iraq war draws to Vietnam, I maintain that the overall War on Terror is much more like World War II than Vietnam, for it is fundamentally an existential conflict against a deranged enemy who will stop at nothing to see us wiped off the very face of the earth. Hitler and Hirohito had their armies and navies of hundreds of thousands of men to try to accomplish this; all the terrorists need is one major breach in nonproliferation security and they may be able to develop or acquire a nuclear weapon. Or, possibly worse, an enhanced strain of smallpox. Either one would be at least two orders of magnitude more deadly than 9/11 was, and would have the potential to cause the utter economic collapse of our civilization. That's what we're up against here, and it's every bit that serious.

This is not a game. I don't care exactly about the Nigerian yellowcake, or whether Saddam had actually tricked us into thinking he still had weapons he had really destroyed (which, really, does seem incredible). I really don't care whether "Mission Accomplished" was an arrogantly premature celebration of a victory not yet achieved, or was really meant just for the crew of one carrier who had served admirably and honorably. I really don't care whether George Bush's dental records prove he was at a meeting in Alabama for the ANG in the '60s, and whether the one meeting he missed was optional or supposedly mandatory. All that kind of quibbling is silly kid's stuff, and the fact that the Democrats are obsessed with it all shows just how profoundly unserious they are about winning this war, or even recognizing and admitting that it is a war and not just an elaborate law enforcement excercise. Right now we don't have the luxury of indulging silly politicians who want to pretend that the war is over, and we won, and we can all come home and disarm and celebrate the new Peace Dividend. Because right now that sort of thinking from the elected leaders in our highest offices has the ability to get an unseemly large number of us killed.

I can only say that I wish more Democrats still had the spirit of John F Kennedy, not John F Kerry, as we prosecute this long and shadowy war.

"Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty." John F Kennedy, Inaugural address, 1/20/1961.

2004-02-09T13:43:00.000-05:00

Since I'm on this little science kick of late, here are a couple other things you might have missed.
NASA, rather disappointingly, has decided to forego the final scheduled shuttle mission to service the aging Hubble Space Telescope, which was to have taken place next year. Evidently, NASA chief Sean O'Keefe has considered all the input from Hubble supporters as to its ongoing value, and the assessment of risk inherent in the mission from the astronauts' office, and has concluded that on balance it's not worth saving.

If you've never seen the famous Hubble Deep Field photograph, you should go check it out before even proceeding with the rest of this discussion. The Deep Field is a view nearly all the way to the end of the visible universe, in an average slice of sky near the Big Dipper which is no wider than the apparent size of a pencil eraser held at arm's length. And, for context, you might consider this comparison between the best ground-based photograph of the colliding galaxies NGC 4038/4039 and an image of the same from Hubble.

O'Keefe's decision is disappointing, of course, given all that Hubble has allowed us to learn over the past decade. With a fresh set of batteries, new gyroscopes for pointing and a new camera, HST could continue producing effective scientific research for another decade. Hubble never was expected to last forever, of course, but its replacement--formerly known simply as the Next Generation Space Telescope, now the James Webb Space Telescope--won't be ready for launch until 2011 at the soonest. And, as the new space telescope project will cost an unholy fortune, and with NASA now pinching pennies so as to enable the moon base and Mars shot (both discussed here previously), it is far from certain that the Webb Telescope will ever actually see first light. I can readily see a scenario, with the inimitable logic of government, where NASA is told on the one hand that this new Webb Telescope is far too expensive, what with us preparing to go to Mars and all, while HST is still operating; and on the other hand, that upgrading Hubble is an expensive and unaffordable luxury what with the Webb Telescope coming shortly online and all. It's possible we could talk ourselves into a situation where we are without any space telescope operating at visible light wavelengths at all, just a Mars program. And as excited as I am about the Mars program, orbiting telescopes allow some really fantastic science to be done and are just indispensable.

This decision to allow HST to kind of wither on the vine is also somewhat controversial, as a couple of NASA engineers have leaked an anonymous report to CNN arguing that a Hubble service mission is no riskier than any of the remaining 40 scheduled Shuttle missions required to complete the ISS. O'Keefe has asked for a second opinion, which he no doubt hopes will affirm his original decision (otherwise he's in no less an ambiguous situation than he's in now). There's been something of an outcry among interested members of the public, which I guess I'm contributing to here, even among non-scientists impressed by the fantastic images gleaned from HST over the years. The website SaveTheHubble.org claims over 18,000 signatures on their online petition to Congress and NASA not to scrap the telescope. Check it out and add your own if you'd like.

In happier news, as we expected, JPL has announced that the Spirit rover is back in business. Evidently its computers had some sort of Windows 95-era memory management issue, and Bill Gates was able to talk them through how to fix it. With two healthy rovers scrounging on Mars, we should be getting some exciting results from the missions.

2004-01-26T22:26:00.000-05:00

First of all, a hearty congratulations to NASA's Jet Propulsion Laboratory, for its success at landing a second rover, Opportunity, on the surface of Mars and sending back pictures.
As I wrote below when Spirit landed safely, putting a remote controlled craft on Mars is exceedingly difficult, and it's fantastic (and, no matter how excellent JPL's team, probably a little surprising) that both of them were successful landings. Kudos; and kudos again.

But, after an exciting initial splash and the return of some tantalizing data, the rover Spirit has encountered some problems. On Wednesday the communications signal was lost and all data transfer stopped. This naturally jeopardizes the rest of the mission and I'm sure JPL's engineers are working furiously to correct the problem and to do so as quickly as possible; the solar panels providing power to Spirit are only rated for a three month operating lifetime in the dusty, sandy Martian environment.

This kind of problem, while serious, is not uncommon. The entirely successful Galileo mission to Jupiter (and the Galileo Extended Mission to examine the four largest Jovian moons) was virtually dead on arrival at the giant planet when its high-gain antenna wouldn't unfurl. The initial plan had been to collect data just as fast as the spacecraft's sensors could, then use the high-gain antenna to transmit this data to earth in near real time (the data would pass through a buffer first, with the occasional buffer overrun captured on a backup tape recorder). Switching to the low-gain antenna would be like canceling your cable modem account and going back to a 2400-baud dialup modem, and I actually remember what using those was like.

The solution, which sounds simple but required extensive reprogramming and a significant change to the mission plan, was to capture all collected data directly to the tape recorder. This required the mission team to be much more selective about which data to collect, since the tape recorder's data capacity was not unlimited, and required huge blocks of time between close approaches for transmitting the contents of the tape recorder back to earth via the pokey low-gain antenna. It all worked brilliantly, and as the spacecraft lasted four times longer than anyone had expected, they eventually were able to collect all their data after all.

JPL announced yesterday that they had established some level of communication with Spirit, and had stopped the onboard computer from continuing to spontaneously reboot (probably calling Bill Gates at home on the weekend for tech support, or something similar). I figure since the spacecraft isn't totally non-responsive, it will be a matter of a few days until we have another successful mission-from-the-fire recovery story to talk about.

But all this brings us to President Bush's recently promulgated goal to send men to Mars, and the general skepticism which greeted the announcement. The main points were to (1) return to the moon; (2) establish a permanent presence there (the fabled moon base); (3) complete, then abandon in place, the International Space Station by 2008; and (4) use all the knowledge and technology developed in steps 1-3 to launch a manned expedition to Mars. Let's jump to the end and work our way backwards through these steps.

Why bother going to Mars at all? I wrote previously about a couple of the exciting prospects for life (or fossil remnants thereof) on the red planet. Let's stipulate that there are scientifically compelling reasons to explore the planet, and just consider whether it is better to do this with men or with remote control craft such as Spirit and Opportunity. The two main arguments I hear from the robots-only crowd are that sending human explorers is (1) too dangerous; and/or (2) that it adds complexity and cost to the mission which is not offset by a commensurate gain in expected return of scientific data.

The first of these, that it's too dangerous to risk human lives in this way, can be dispensed with swiftly. The tragedies of Apollo 1, Challenger, and Columbia notwithstanding, fear of loss is a poor reason to prevent pioneers from attempting to explore new terrain or develop new technologies. Lewis and Clark could have been killed by Indians or eaten by bears. The Wright brothers could have accidentally climbed to fifty feet and then flipped into a nosedive in the treacherous Kitty Hawk winds. But they, like modern astronauts, were volunteers for their particular missions, not ordered into harm's way against their will. The pioneer's personal safety is a poor excuse for society collectively to deny him permission to risk his own life in the advancement of human knowledge. The balance between personal risk and the mission's potential rewards is best evaluated by the pioneer himself, who will bear that personal risk. We would today scarcely credit Thomas Jefferson for forbidding the Lewis and Clark expedition, leaving the Pacific Northwest shrouded in continued mystery, for fear of the explorer’s safety.

The second is a bit tricky. There is no doubt that it adds cost and complexity to the mission, as food, water, and oxygen are all heavy and require much more fuel, and hence a much bigger and more expensive spacecraft, to carry them. And, while a robotic mission has only a few critical systems requiring redundant backups, a manned mission has many more critical systems which require triple-redundant backups. What, scientifically, do we gain from this?

A couple of things. Primarily, the mission gains massively in flexibility. A robotic mission has the ability to deeply explore one or two questions in a very narrow territorial area. But if one of those answers comes back with a negative answer, but a tantalizing possibility which begs of answering just a slightly different question, the robotic mission is over. NASA has to design a new spacecraft (2 years), build it (2 more years) and launch it (2 years flight time) before an answer can be had. And if that second answer demands a similar tangential inquiry, the six-year process begins anew.

A manned mission, with its larger, more complex (and, yes, expensive) facilities, could easily be equipped to handle a wide range of expected tangential inquiries by the crew. The results won’t necessarily be any better than would eventually be obtained robotically, but they will be available much faster. A human crew also has the ability to sample a much wider area, allowing qualified conclusions to be established much more decisively than after a more narrow sample (which would otherwise require a second follow up robotic mission six years hence). The extra cost involved greatly accelerates the whole learning process. We’re still, with the current rover missions, trying to answer the same fundamental questions as we were with the Viking missions in the 1970s—whether there is now, or once was, microbial life on Mars. Had the Viking mission been a well-equipped manned laboratory we would have had the answers to today’s questions thirty years ago. And if we land a manned lab on Mars today, we can immediately answer the questions we’d otherwise still be designing narrow-purpose spacecraft to answer in 2040.

The complexity of the spacecraft itself will also be somewhat offset by the improved ability of a human crew to land safely on the surface. The 20-minute lag of communications sent at light speed makes direct remote control of the landing impossible, so robotic craft have all their landing maneuvers preprogrammed. These programmed command sequences are not always successful, when presented with anything the least unexpected (ask the European Space Agency’s Beagle 2 team, or JPL’s Mars Polar Lander team, about this element).

Manned missions can’t replace robotic missions, and they don’t need to. The two are ideal complements to each other. There are places wholly impractical for manned missions (Europa, for example, with Jupiter's intense radiation so nearby). And for detailed global mapping, an unmanned orbiter can't be improved upon by sending humans along. And as a first inquiry, to see whether a planet is even interesting enough to study so intently, a cheap unmanned probe is superior. Both approaches to exploration have their merits and their place.

Now, moving backwards to the first three elements of George Bush’s Mars plan. It’s plain that a great big, Saturn V style of launch craft is probably not the best choice to go to Mars. We haven’t made anything nearly the size of the Saturn V (the Apollo launcher) in 30 years, and the Space Shuttle’s launcher is nowhere near as powerful. The Saturn V itself is not sufficiently powerful, nor does it have enough fuel capacity, to go directly to Mars anyway. And the type of craft, containing something of a laboratory, is far too heavy to launch with any rocket we have now or have ever built.

Payload weight presents a big problem in launches. For every pound of payload weight launched from earth, something like ¾ pound of fuel is required to elevate it to orbit (to say nothing of actually pushing it to Mars; this just escapes earth’s gravity). Rather perversely, this ¾ pound of fuel itself adds to the takeoff weight, requiring ¾ of its weight again in additional fuel (so ¾ of ¾ pound, or 0.5625 pound) just to lift the initial fuel amount, and so forth. While this calculation iterates infinitely (a third iteration requires ¾ of ¾ of ¾, or 0.421875 pound, etc), the resultant fuel increase at each iteration tapers off toward zero pretty quickly. To be all mathematically precise for a moment, this is known as a converging geometric series, so that as the limit of the number of iterations of this approaches infinity, the amount of additional fuel required for each iteration approaches the infinitely small (essentially zero). For a circumstance requiring ¾ pound of additional fuel per pound of payload, this ends up requiring approximately 1/(1-¾)=4 pounds of fuel per extra pound of payload all told. All this is approximate and just to illustrate the math concept involved; the actual numbers vary considerably depending on the precise type of fuel used, all of which have unique values for specific thrust and exhaust velocity and so forth. If you'd like to expand on the particulars for me, an email would be welcome.

So the idea of launching from a moon base makes some sense. The moon’s gravity is about 1/6 that of earth’s; if ¾ pound of fuel is required in the first iteration in the example above to lift one pound of payload to earth orbit, only 1/6 this amount (1/6 x ¾, or 1/8 pound) is required in the first iteration for a launch from the moon, so the total amount of fuel required per pound of payload to reach orbit from the moon is 1/(1-0.125)=1.14 pounds. Instead of requiring four pounds of fuel per pound of payload, only 1.14 pounds of fuel is required to launch a pound of payload from the moon. This eliminates the need for huge external fuel tanks like the shuttle uses, and enables a two-stage rocket (rather than a three-stage), further reducing the cost. And it may be more politically feasible to launch a fission-powered spacecraft (powering the trans-Mars trip, not the launch itself) from the moon than from earth, making the whole mission an even more efficient package.

The only problem with all this is the cost and expense involved in a moon base, and the lack of a really good reason to have one except for the Mars launch. It might be interesting to do it, just to practice our moon launch methodology with modern equipment, since the last time we were there we were still using vacuum tubes and slide rules; there are likely some scientific justifications for such a permanent presence there (if we can justify a permanent south pole base on the scientific merits, why not on the moon?). It just doesn’t seem all that compelling somehow. And part of the reason is the (rightly) much-maligned International Space Station.

I’ve kind of hated the ISS since its inception back in the 1990s, when funding was “found” for it in favor of funding the Superconducting Super Collider, which had the potential to advance fundamental physics knowledge in dramatic ways. The ISS is a money sinkhole, basically an artificially created purpose for NASA and its Russian partners. It’s an excuse to keep the aging shuttle fleet flying when they (let’s be frank) really aren’t doing much anymore apart from the occasional dramatic and valuable repair of a Hubble Telescope that couldn’t be done with cheap, disposable Delta rockets. It’s scientifically pointless. And yet…

The only reason to have it at all that makes any sense is as an assembly and docking point to launch a manned Mars mission. That’s been the one point that makes the whole project forgivable, in my opinion. There just has to be someone on that project team quietly scheming for when he can casually announce his station’s fitness for a jumping off point to Mars. From the ISS the orbit reaching fuel considerations above are manageable, because no matter how big the end product spacecraft is, it can be brought up to space in tiny parts, assembled at the ISS, and then launched on its way with whatever its final stage propulsion system would be, not a high-thrust low-efficiency takeoff stage. It seems a great and a cheap (compared at least to a moon base) solution, and frankly is so close to being ready (compared, again, to this proposed moon base) that I don’t see the point in going to the moon at all. Not, at least, if the main justification for it is to save launch weight for the eventual Mars mission.

I assume George Bush has people much smarter than I am advising him on this. I only hope they like the moon base because it is the technically best solution, not because of its ability to absorb all the money which can be thrown at it. I’m excited about the notion of a Mars mission, but I remain skeptical about this business of the moon base. We shall see.

2004-01-04T16:13:00.000-05:00

A successful Mars landing!
The brilliant folks at Jet Propulsion Laboratory smoothly landed a new six-wheeled roverbot, Spirit, on the surface of Mars at 11:35 PM EST last night. JPL has previously executed such sensational missiona as the Voyager mission to the outer planets; the first ever Mars landings (Viking 1 & 2); and Galileo, which finally allowed us to conclude that that planet's icy moon Europa likely has a subsurface liquid ocean which may possibly harbor life; and many, many other successful missions.

Even for an outfit which has enjoyed such success in the past, Mars is sort of the Bermuda Triangle of the solar system, and landing a craft on the surface is notoriously difficult; even successfully entering orbit has proven an elusive goal in the past. The European Space Agency unfortunately seems to have lost their Mars lander, Beagle 2, which was supposed to land on the surface on Christmas day (though, more happily, that mission's parent ship Mars Explorer has entered orbit around Mars, and is conducting burns to lower itself to its operational orbit over the next week). The apparent loss of Beagle 2 follows some costly and embarrassing failures in the late 1990s by JPL themselves, such as Mars Climate Observer, and the infamous Mars Polar Lander, which reportedly crashed upon landing because the JPL team was inputting metric figures into its computer, while the Lockheed subcontractor had programmed the computer to figure in English units, and the craft basically lost track of where it was. All this is not to mention the really notorious, billion-dollar Mars Observer mission, launched in 1992 and lost in 1993.

Why to mention all these past failures? Certainly not to rub it in; JPL is one of the finest teams in the aerospace industry. Only to illustrate how really, profoundly difficult it is to do what they just accomplished. Certainly not for want of trying, this is the first successful Mars landing since the very photogenic and popular Pathfinder/Sojourner mission which touched down on July 4, 1997, which itself had been the first landing since Viking. Yesterday's success is tremendously exciting, and the mission's ongoing progress can be followed at the JPL home page.

This is significant also because Mars is probably the second most exciting venue for solar system exploration right now, after the aforementioned tantalizing Europa possibilities. There are two ongoing and very illuminating orbiter missions: Mars Global Surveyor (which has taken high resolution photographs of the entire surface of Mars, yielding topographical knowledge simlilar to what we know about remote regions of Earth) and 2001 Mars Odyssey (largely intended to replace the lost Mars Climate Observer mentioned earlier). These have shown visual indications that Mars is currently possessed of some amounts of water, possibly sometimes in liquid form, though recent findings have not been encouraging to those believe Mars was once warm, water-covered, and basically Earthlike. The more water that is there now, the likelier that native Martian bacterial life forms may exist or may have existed; the past presence of liquid oceans would have made possible even more complex life forms in the past, which may be detectable in Mars's fossil record.

Remember the excitement in 1996 when Bill Clinton announced that NASA had found proof of past life on Mars based on analysis of structures found in a Martian meteorite? Those were suggestive, but the original analysis of that particular rock is now generally accepted as inconclusive at best. Spirit should be able to yield additional information on whether we should ultimately expect to find evidence of past native Martian life. I'll be watching their results eagerly.

2004-01-02T01:18:00.001-05:00

Naturally though, this was the best news of all today.
Nothing happened. And I can spend my day watching football and not, as surely bin Laden would prefer, watching the 24/7 news coverage of the latest atrocity perpetrated in the name of Islam's Greater Good. A Times Square filled with literally 1,000,000 drunk infidel hedonists, in the city which seems to be a preferred target anyway, on a day of some symbolic significance, must surely have presented itself as a terribly desireable target for our enemies. That they did not strike cannot be attributed to their sudden change of heart, or a preference for lower-profile operations; they didn't hit us there because they couldn't. They're too busy hiding in caves in Afghanistan, getting shot at by the 82nd Airborne; or conducting Palestinian-style small operations in Iraq.

It's important to be realistic in assessing what they're doing to us in Iraq. A soldier losing his life in combat is tragic, and represents the very worst thing imaginable for the soldier's family. But we're killing and arresting dozens of insurgents a month over there, in a battle front far from our home shores instead of in our own backyards. That we have heavily armed and exquisitely trained young men trading casualties and captures with our enemies, even at 1:1, is clearly better than the 3000:19 casualty ratio among civilians in our first city on 9/11.

A realistic assessment of affairs must produce the conclusion that things now are neither quite as bad, nor quite as good, as they could be. I hope to God our military can extinguish armed insurgency in Iraq soon and end the slow but accumulating loss of life there. But recall that in Vietnam we were losing 500 soldiers killed every week at the peak of casualties. As tragic as our individual casualties are in the present conflict, numerically they don't compare, even if the ephemeral nature of our enemies seems superficially similar.

The sooner we as a nation earn the reputation of having stomach for a hard fight, the sooner tinpot psychos will be disabused of the notion they can produce our capitulation by inflicting a few casualties. I'm hopeful that the Howard Deans of the nation don't manufacture enough distaste for the war simply by their incessant comparisons to Vietnam to cause our nation to actually capitulate, run our soldiers home for their own safety, thereby proving to bin Laden once again the lessons we taught in Beirut and Mogadishu.

2004-01-02T00:47:00.000-05:00

Happy Football Day!
Any day spent watching nine hours of football is probably a good one. The Rose Bowl, after more hype than I can recall seeing for a bowl matchup in recent years, was anti-climactic. Being an Ohio State man myself, I had to repress the dirty revulsion I felt from actually pulling for Michigan against the unsufferably arrogant "Men of Troy," as they style themselves these days. Go Blue, roll those Trojans. Only the fourth time ever I've cheered for Michigan in a game against some even greater evil, and Michigan has rewarded me by losing three of those. Maybe I should become a Michigan fan full time, which clearly would sabotage their program and drop them precipitously to the ignominious level of Northwestern. The only good thing about today's Rose Bowl was that seeing Michigan humbled does act as its own reward.

The Orange Bowl, surprisingly, was good. In a game I had exactly zero interest in watching, I found myself glued to the game for most of the last three quarters. After we were subjected to Jessica Simpson during the typical cartoonishly overwrought Orange Bowl Halftime Show (motto: "Just Like a Circus, But Our Clowns Aren't Funny"), Florida State lost on a watered-down version of Wide Right III, or whatever number they're up to by now. Poor Xavier Betia; he reminds me a little bit of Matt Frantz in 1986 but without the triumphant return a year later [/obscure football reference]. Betia hooked Wide Left the kick at the buzzer which would have beaten Miami in the 2002 regular season, and missed Wide Right today (though not at the buzzer). I'm surprised Bowden can find anyone to kick for him anymore, since the most memorable accomplishments of Florida State kickers end up immortalized in names like Wide Right III and end in the deportation of Polish kickers for drug use. And, speaking of unsufferable arrogance, it would have been nice to see Miami taken down another notch, though Florida State hardly projects the image of demure gentlemanly sportsmanship themselves, so I would probably have been disappointed with either possilbe outcome of the game.

Now the really important game is tomorrow night's Fiesta Bowl. We Buckeyes await eagerly, of course, clarification of whether Kansas State's all-world quarterback Ell "Aspiring to be Kobe Bryant" Roberson is--ahem--available to play, or whether he's in jail on a sexual assault charge. I wonder if a booster paying a quarterback's bail constitutes an improper benefit under NCAA rules; probably they would prefer to be silent on the "propriety" of such a sordid transaction. But, as I understand it, Roberson was doing whatever he was doing with this woman at 4:30 AM, while the team rules call for an 11 PM curfew. Should such a flagrant disregard of team rules be overlooked for the star quarterback? I'm pretty sure if a second-string offensive guard was guilty of such an infraction of team rules, he'd be benched for the coming game by most head coaches. Kansas State has an unwanted opportunity to show everyone how serious they are about discipline, and the obsolescant notion of rules applying to everyone.

Maybe they could sidestep the issue by saying that he wasn't out past curfew, he was just up really early and on his way to church when this thing mysteriously just happened to him. At least, from Ohio State's perspective, he seems to have his attention, shall we say, divided.

Go Buckeyes!

2003-12-23T10:40:00.000-05:00

More good news for America, and, incidentally, George Bush.
Final third quarter GDP figures were released today, showing a fantastically high 8.2% growth in GDP for the period. Let this be a lesson for anyone who would say, as I've heard often, that this president's (don't speak his name, it burns!) economic policies have resulted in the loss of 2.2 million jobs, the worst performance since Herbert Hoover, giving us incidentally the worst economy since the Great Depression.

It is true that Bush economic policy has not been entirely quite what I'd like to see. The deficit, pardonable at first while we got the War on Terror kicked off and decided we needed to whack Saddam, has ballooned to proportions which give pause for concern. But, Daschle & Co take note, there are only a few ways to actually cause a recession or massive loss of jobs by virtue of economic policy. There are only two levers by which the economy can be controlled: fiscal policy and monetary policy. The president has essentially no influence over the latter, which leaves us to consider how Daschle's claim could possibly be true with the President only recommending, not actually enacting, fiscal policy (which enacting is, after all, what Congress does for a living when it's not busy perpetuating its own existence).

So how could Fiscal policy produce a recession or massive loss of jobs?

1. It could be restrictive at the wrong time.
2. It could be neutral when matters plainly suggest loosening is in order, or loosen only a little when a lot is in order.
3. There are some really subtle and long term issues with currency valuation, which depends upon many other things on fiscal policy.
4. The size of the deficit has some theoretical long run impact on long term interest rates, which may nudge GDP (and hence job growth) in the wrong direction.
5. Protectionism, not strictly an element of fiscal policy, is generally not good for the economy on balance.
6. The tax code itself can, by its sheer complexity and the cost of ensuring compliance with its myriad byzantine provisions, reduce GDP.

Those are about it. Anything else from the fiscal policy side, which you're welcome to suggest, essentially has only fringe influence on the actual behavior of the economy. Let's briefly review our fiscal policy performance against the above items:

1. Being restrictive at the wrong time is bad for the economy. It basically means taking more money away from people just when the economy is getting into trouble and is headed for recession anyway. Restrictive fiscal policy relies either on increasing taxes or cutting government spending, neither of which has happened during the current administration.

2. Being neutral means relying only on automatic stabilizers for economic stimulus; or for tax receipts and spending to give opposing influences (both are presently stimulative). These automatic stabilizers refer to the tendency of tax receipts to automatically drop in a recession (fewer working people paying taxes); and the tendency of government spending to automatically increase in a recession (more welfare and other transfer payments to those same people now out of work). This is an acceptable response to a mild recession caused by the normal process of the business cycle (a recession caused by high interest rates, themselves a monetary policy response to check inflation in a high-GDP-growth environment). In a recession caused by the bursting of an asset bubble (such as our recent, post-Nasdaq collapse recession, or the decade long funk in Japan after the bursting of their real estate bubble) neutral fiscal policy relying on automatic stabilizers will not prove adequate. We've had three rounds of tax cuts, and are in no danger of accidentally having employed restrictive or neutral fiscal policy.

3. Let's leave aside discussion of what's really causing our currency to decline lately, and whether that's George Bush's fault; that's a complex discussion but it's not relevant to what we're considering here. Massive currency devaluation, which we've had a mild form of lately, tends to be beneficial to the economy in the short run as our exports become more affordable to foreigners, and they tend then to buy more of them. At the same time, foreign goods become more expensive to import into this country, so more Americans buy American goods. So the short run consequence of our recent currency trends would be to increase GDP and create jobs, not the opposite. In the longer run, a cheap currency tends to decrease foreign investment in US capital markets, making the cost of capital higher for US firms, which tends to result primarily in compromising worker productivity levels, not GDP or employment directly. [Yes, I'm aware that productivity will indirectly influence both GDP growth and employment. But all this is a change in the opposite direction from what we're experiencing now so it's not really relevant.]

4. A big deficit will, over time, tend to crowd out private investors and may result in long term interest rates being higher than they otherwise would be. All the estimates I've read credit this influence with being real but minimal, on the order of one-third to one-half of one percent (0.33% to 0.50%) higher interest rates. This element tends to be very slightly restrictive (most normal recessions come from the Fed increasing interest rates more like 3% to 4%) but is dwarfed by the fiscal stimulus which the deficit itself represents. I'd rather see a balanced budget, but it's simply not responsible to be running a surplus during a significant recession.

5. The steel tariffs were bad, and anyone who's read this space before knows I despised them. I'm glad they've been rescinded, and they were the one fiscal policy George Bush has embraced which was unquestionably bad for the economy. But the cost to the American workforce was estimated, even by opponents of the tariffs, at "only" about 30,000 jobs. For anyone looking to blame the whole 2.2 million jobs lost on President Bush, they will have to come up with more than just this one misguided instance of protectionism.

6. The tax code should be fundamentally reformed along the lines of what Ronald Reagan supervised in the early 1980s: cut all marginal rates, close as many loopholes as possible, and simplify the tax code. I've perused a copy of the actual IRS code (not the little instruction books or publications they give you, but the actual law), and it runs to literally 10,000 pages. The money a company spends on lawyers and CPAs to guide them through this maze is certainly better than running afoul of the law, but a simpler tax code would allow businesses (especially small businesses) to rechannel this money to be spent on higher wages to workers, newer machinery, more advertising, and generally growing the business instead of paying what is essentially a surcharge on tax compliance. Paul O'Neill spent his time as Treasury Secretary advocating tax reform instead of paying attention to current economic issues, and this rightly cost him his job; but tax reform shouldn't be abandoned just because it's not the single absolutely highest priority.

So what did cause this current recession, and why did we really lose these 2.2 million jobs? An asset bubble burst before George Bush came to office. There was a massive terrorist attack which cost the economy many billions of dollars directly. And a group of very bad men was identified who needed killing halfway around the world, which has contributed to a high deficit (though not directly affecting economic output). Anyone who would blame all this on George Bush clearly is angling for selfish political advantage, and has demonstrated themselves as being utterly immune to facts.

2003-12-23T01:21:00.000-05:00

A shout out to the Bread Villain and the Puppetmaster: how France helped us without really trying.
Sheesh. I get slammed at work for a couple weeks and all hell breaks loose while I'm away, and for a change the news is good.

Saddam's capture: Really good news.
Kadafi's newfound desire to be our pal: Really, really good news.

Kadafi, evidently concerned whether Libya or Syria (both current members of the Axis of Evil Junior Varsity) would get the big promotion now that the head rat in Iraq has been nabbed, decided to eliminate his nation from the running for the coveted #3 position when the new Axis of Evil rankings come out next year. It would be really extraordinary for Kadafi, who's been mostly (though not entirely) below our radar lately, to be pulling our leg on this one, just to provoke us by embarking upon the very path just concluded by Saddam; his intent seems genuine and legitimate from where I sit.

Why the sudden change of heart? And why would this be potentially even better news than Saddam's capture?

It's not likely that the scales have suddenly just fallen from Kadafi's eyes, rendering visible the wrongness of his prior sponsorship of terrorism, pursuit of WMD, and export of weapons and weapons technology. Likelier that the reputation of the United States among Arab nations has already undergone a dramatic shift, which may be a manifestation of that elusive "reaction of the Arab Street." Likely the French have actually helped us here, though certainly not intentionally, by shouting their shrill and repetitive condemnations of our president as a cowboy and the US as a rogue nation.

The French inability to cow us into submission before their evidently awesome moral superiority and aversion to violence, despite their confident assurances to their departed pal Saddam and their best efforts to do so, have likely gotten the attention of other nasty regimes around the world. Not all of them are necessarily properly afraid yet, but they should have noticed by now that only the Brits have any real ability to influence us once we get an idea into our cowboy heads, and that they're on our side anyway in most of these dustups so far. And they should certainly have noticed that the idea infiltrating our cowboy mentality these days is to go take the fight to our enemies, whomever we perceive them to be.

The French have done us a great service in making clear just how uncontrollable we are these days, even when self-proclaimed "great powers" do their utmost to dissuade us. So, I give here a heartfelt and genuine thank you to the pusillanimous de Villepain and his puppetmaster Chirac. You've both been quite helpful despite your intentions to the contrary.

American policy is once again to carry a big stick, and Libya has agreed to mend its erstwhile wayward ways as a direct result of this. Even Dean should be aware that the war he so despised has just greatly reinforced our ability to negotiate peace on favorable terms with the Arab world. Negotiations with, say, Iran which are not backed up by credible threat of force amount merely to asking really nicely for the mullahs to give up on their nuclear programs just because they're such swell pals of the US and lovers of democracy. It should be obvious that approach won't actually work.

[Yes, I'm aware that the Iranians are actually Persian, not Arab, strictly speaking. Let it go; I was on a roll.]

Update: As usual, Stephen den Beste over at USS Clueless has a couple of insightful posts on this matter.

2003-12-10T07:28:00.000-05:00

Maybe I'll have to stop referring to Tom Daschle as The Ghoul.
Daschle is becoming something of an unlikely hero of mine of late, as he attempts (with some success) to block some of the more egregious legislative efforts of the Republican Congress. And I say this as a Republican myself.

The aptly named Omnibus Spending Bill (a bill sweeping all manner of truly offensive local pork under the rug known as miscellany) passed the House Monday, supposedly providing for the continued financial operations of government but also including such essentials as changes to media ownership rules, overtime pay rules, and yet another extension of unemployment benefits. Daschle & Co blocked the bill's passage and let the Senate get out of town without voting on it till at least their January return to business, and hopefully not then either without some modification. The bill contains $7.5B for 7,000 "earmark" local projects. This bill, pork and all, increases Federal spending by "only" 3%, a much smaller increase than in recent years, but it's still faster than inflation has been.

This does seem to me to be a strong case for the line item veto. And not the watered down, legislatively enacted "allowance" that Congress unconstitutionally extended to the President in 1995 (later overturned by the Supreme Court), but a genuine Constitutional provision for one to allow individual items to be struck down so bills which are overall beneficial can be passed. I assume there's at least some good somewhere in the bill.

Nothing better illustrates the perverse political calculus involved leading me to support Daschle than the unemployment extension issue. I wanted the bill blocked temporarily to encourage some cleanup to a bill all too laden with wasteful spending. Daschle blocked it because it didn't contain enough wasteful spending in the form of more free money for the unemployed. Now unemployment benefits relate peculiarly to actual unemployment insofar as there is a marked tendency for anyone receiving benefits to continue not finding a job and to continue receiving benefits. According to the Wall Street Journal, (link for subscribers only) most recipients of unemployment benefits don't actually find a job until the final week before their benefits run out. Another extension, while charitably generous, would keep more people unemployed longer and into an election year to boot (perhaps an estimated 0.3% increase to the unemployment rate according the the Journal article cited above). Not to accuse Daschle of wanting to artificially create unemployment to hurt George Bush's re-election bid or anything, but I'd like to see Bush re-elected by presiding over a sound economic recovery and a budget which doesn't include all manner of Congressional pork intended simply to buy votes for incumbents.

We as a nation seem to be profoundly unserious. While fighting an existential war we quibble and bitch over carrier deck landings and the real purpose of holiday visits to Iraq, applaud Al Gore when he says unblushingly that the current war is the "worst foreign policy mistake" in our nation's history, and applaud serious, flagrant untruths such as calling the present economy the worst since the Great Depression. I'm sure this last is just an exhumation of the very same theme we heard during the 1992 presidential election, and it's about as true now as it was then; but since it was successful in garnering an election victory, truth need not be considered. Which is fortunate for those who repeat the lie, since it is not remotely true.

Meanwhile, with the largest deficit in history (some of which, eg War on Terror, and in my opinion, the War in Iraq, is justified, yes), Congressmen insert unrelated pork items into bills totalling $7.5B and applaud their own restraint for, I guess, not frivolously spending even more than that; and enact horrible and uncontrollable Medicare expansions. All to buy votes, to sustain their own venality and love of power. I refuse to believe that in the midst of a war against an enemy bent on our utter extermination, the most pressing issue facing the United States today is whether to give free pills to senior citizens. It's disappointing, to say the least.

Call me crazy, but delaying this bill to allow unemployment benefit extensions to expire and encourage a rethinking of all those pork projects seems like a good start.

2003-11-22T02:18:00.000-05:00

Today: a grownup returns to high school civics class, and is surprised by what he finds.
I recently completed a full reading of the Federalist Papers for the first time. It was the first time since high school I had cracked the cover of the book and my reaction to it was rather different than I recall the first time around.

America reveres its constitution, yet the men who wrote it would surely be astounded by the strength of today’s federal government and the comparative weakness of the states. This sentence, essayed a few years ago in a British newspaper (The Economist) surprised me a bit. I had always had a fond, though not particularly educated, admiration for the genius of the Founders, and I was surprised to consider that this whole thing had played out much differently from how they would have (mistakenly?) expected. This lit a match under the Jules Goldberg contraption which is my memory, and ultimately got me to thinking about the semester of US Government class in high school, during which we were required to read certain numbers of The Federalist Papers. It was the fall of 1988, Ronald Reagan had served our nation for eight mostly glorious years, and in spite of the general snarkiness fondly directed at our illustrious leader by many of my classmates, I had escaped the strenuously clever cynicism embraced by many my age and unironically considered myself lucky and proud to be an American.

At the time I had only limited understanding of how the federal government worked; sure, I knew the three branches, checks and balances and all that, and wrote a really compelling paper urging abandonment of the Electoral College in favor of the direct popular election of the president, as all high school students seem obliged to advocate at some point, but most of the nuances were completely lost on me. I nonetheless had a rather touching belief that what we as a people were about was right, and that our seemingly eternal system of government was the very best which the genius of man could conceivably produce. In comparison to the systems of government labored under by those in the USSR, China, East Germany, and even much of Europe in 1988, I was not altogether without basis in believing this.

So I was handed a dog-eared paperback copy of The Federalist Papers. The subject was broached with some introductory remarks from our instructor which seemed to last longer than could be believed, but from which all I absorbed was that the Papers were a plain-English explanation of how the Founding Fathers (thus were they still called in the halcyon days before political correctness) meant for the new Constitutional government to work, stripped of all the 18th-Century legalese of the Constitution itself. The papers had been written in opposition to a group collectively known as the Anti-Federalists, who had urged rejection of the Constitution.

This may have been bland oversimplification, but I’m pretty sure I wasn’t paying attention and that was all I gleaned from the introductory remarks. I already knew the Constitution represents an inspired form of government and was written by men of rare elemental genius; I didn’t know who these Anti-Federalists were but they sounded like assholes. They sounded to me like those Southern Rebs of a later era, intent on gratuitously wrecking everything for the rest of us, for sake of advancing their own selfish interests. And I was sure that this book, written after all by the guy on the ten-dollar bill, spoke the truth and advocated a form of government which could scarcely be improved.

But I didn’t want to read it. I was never terribly serious in high school about, well, classes or anything, and I recall harboring an aversion to completing the assignment for some reason. Which response was typical for me, and not particular to the reading assignment. No matter how much truth was contained in that book, I had little interest in reading a “plain-English” commentary on the subject written in 18th-Century prose, which was indistinguishable to me at the time from the King James Bible or Shakespeare. I was pretty sure I had all the truth I needed already, and didn’t want to sink the work into it to get any more.

Yeah. I was a pain in the ass in high school. If you’re wondering how I ever graduated with an attitude like this, you’re not alone.

So I kind of schlepped through the assignment, skimming through what we were to read and ignoring what we were to skim, bluffed my way through whatever exams or papers were required, and generally didn’t take much away from the whole experience, except that we were lucky Alexander Hamilton had been on our side and hadn’t been a Communist or something; and that upon my supposedly closer examination, the Anti-Federalists were still assholes.

Fifteen humbling years later, I found myself engaged in an online discussion with a gentleman over the real causes why the Federal government had become so much more powerful than the Founders would have expected, prompted by that throwaway remark mentioned earlier from The Economist. I’ve become a rather mild form of one of those states’ rights wackos: I believe the Federal government is rather too big and much too powerful for our collective good, but I don’t spend my free time scanning the horizon for black UN helicopters or refusing to drink fluoridated water or any other such silly nonsense. I was explaining my personal theory that virtually all our troubles along these lines can be traced to the sixteenth amendment, due to the power this allows of conditional appropriations, and that while repeal of this amendment is too radical a notion to be likely, it would result in a relationship between the States and Federal governments much more consistent with what the Federalists had wanted.

This gentleman surprised me by saying that it was the Federalists’ fault we were in this particular mess; the Anti-Federalists had objected to the original Constitution because it did too little to protect individual and states’ rights and did not contain effective checks upon the Federal government. Far from being crazed wackos, the Anti-Federalists had actually been right all along—the proposed Constitution sowed the seeds for its own eventual demise, and, once ratified, really did lead to a preposterously powerful national government. This whole notion slapped my ignorant little high school paradigm right between the eyes, and I realized that if I were to have any self-respect as a commentator on this particular subject, or if I could have the slightest pretense to holding an informed opinion, I’d have to look into this in some detail.

I’ve never read much direct political philosophy. I flatter myself I’m a practical analyst, not a philosopher, and most of my reading has been in economics and most of my arguing has been over economic policy. I’d always taken for granted that the system basically works, and never questioned how or why, and only debated what was best to be done within the system itself. That suddenly seemed rather a superficial conclusion to have reached with having conducted no real analysis whatever.

So I reached for my copy of The Federalist Papers, which I had bought (partially, perhaps, out of guilt for my treatment of it in high school) ten years ago yet had never opened, and began to read. I discovered delightedly that it’s not quite as textually dense as the King James Bible—though it’s close. But offsetting that happy discovery was the fact that it’s 600 pages long and it ended up taking me three months to plod through it all.

It was an eye-opening and profitable experience. The first thing that strikes the modern reader was just how dire the situation was when the Constitution was written. Everyone knows the Articles of Confederation were bad, but it’s rather lost on most of us today just how bad.

The entire Federal government in 1787 consisted of a unicameral legislature. That was it. It had some theoretically unlimited (but highly theoretical) abilities to levy troops and taxes, but no ability to enforce its levies. And it was to levy these not directly from the populace as a whole, but from the various state governments, which then had to take positive steps to comply with the Federal government’s requests. Or to partially comply. Or to drag their feet in interminable debate about which states are paying their fair share or more than, and whether to comply fully, partially, or not at all. Eventually. An modern analogy which comes to mind is the highly political debate in the US Congress which periodically surfaces about contributing troops to UN peacekeeping efforts, or even to paying UN dues; and the outcome to these discussions under the Articles of Confederation was about as timely and reliable as this modern analogue.

With the credit and survivability of the early Union seriously in doubt, there were at least some voices which advocated complete dissolution of the Union in favor of thirteen individual republics bound by nothing stronger than a NATO-style defensive alliance, or a series of bilateral defensive alliances, or even three or four miniature nations, comprised of the regional confederacy of several states. As preposterous as these ideas sound to the modern reader, discoursing on the dangers of such an approach occupied the first thirteen papers, suggesting that this outcome was not entirely out of the question even then (though the authors suggested this was a recent and outlandish notion).

So, having fought a rugged war for independence and struggled along under the ineffective Articles for some time, the Constitutional Convention in Philadelphia in 1787 passed this proposed constitution, with the stipulation that it would take effect if conventions in three-fourths of the states approved it. It’s not entirely clear what would have become of any minority of states which rejected ratification, should three-fourths have passed it. So with seven states having already ratified it, in 1788-89 James Madison, Alexander Hamilton, and John Jay wrote a series of essays encouraging adoption, which appeared in various New York newspapers during the debates in that state whether to support ratification.

With this as a backdrop, the three authors first discussed whether it would be advantageous even to sustain the Union (papers 1-13 argued that it would be); whether the current government was up to the task (14-22 argued that it was not); and then addressed more or less particular complaints which had been heard during the debates and which had appeared in newspapers and pamphlets over the remaining 63 articles.

The general tenor of the arguments directed against the Anti-Federalists is, indeed, an argument for stronger federal institutions. That was slightly disheartening, and seemed at the outset to suggest that my Anti-Federalist correspondent had perhaps been correct. But there’s more to it than that suggests.

It’s quite significant that the papers were written at a time when the entire history of the American Union comprised a period of tremendous weakness in the national government and a corresponding strength in the state governments; and that we read those papers today in a period where precisely the opposite is true. When Hamilton, especially, called for an energetic federal government, he did so relative to the striking ineptitude and helplessness of the federal government as it existed at the time. He urged that reason dictates that a government have powers adequate to execute their purposes, which itself seems unexceptional; he seemed to believe that the government needed to be as powerful as the Constitution proposed just in order to do those things expected of it by other sections of the Constitution.

But the Federalists were insistent that the proposed system was genuinely federal, not national. James Madison spent the entirety of paper 39 contrasting the characteristics of typical Federal, and typical National, governments, ultimately concluding that the proposed system had, well, a lot of both. Madison sums up the substance of the debate between the Federalists and Anti-Federalists smartly, by attributing the following amalgamation of arguments to the Anti-Federalists:

“But it was not sufficient,” say the adversaries of the proposed Constitution, “for the convention to adhere to the republican form. They ought, with equal care, to have preserved the FEDERAL form, which regards the Union as a CONFEDERACY of sovereign states; instead of which, they have framed a NATIONAL government, which regards the Union as a CONSOLIDATION of the States.” (Madison, Fed 39, emphasis in original)

He proceeded to show, over the balance of this paper, that the proposed government was of a mixed form, insofar as it guaranteed a republican form of government to the states: the states are sovereign within their own boundaries over certain administrative elements; the federal government is sovereign over certain other administrative elements within each state’s boundaries. This concept of dual sovereignty is the whole essence of Federalism.

The Constitution is to be founded on the assent and ratification of the people of America, given by deputies elected for the special purpose; (…) this assent and ratification is to be given by the people, not as individuals composing one entire nation, but as composing the distinct and independent States to which they respectively belong. It is to be the assent and ratification of the several States, derived from the supreme authority in each State, the authority of the people themselves. The act, therefore, establishing the Constitution, will not be a NATIONAL, but a FEDERAL act. (Ibid.)

In a further passage which could only be written before adoption of the 17th Amendment, which amendment provides for US Senators to be elected by the people at large, rather than state legislatures, Madison continues:

The House of Representatives will derive its powers from the people of America; and the people will be represented in the same proportion, and on the same principle, as they are in the legislature of a particular State. So far the government is NATIONAL, not FEDERAL. The Senate, on the other hand, will derive its powers from the States, as political and coequal societies; and these will be represented on the principle of equality in the Senate, as they now are in the existing Congress. So far the government is FEDERAL, not NATIONAL. (Ibid.)

This reliance on appointment of US Senators by the state legislatures is eye-opening for the modern American reader. The whole notion of relegating the appointment of Senators to a small legislative body instead of a popular vote seems so…undemocratic. This is addressed at some length in a later paper, and is a subject to which we shall return here as well.

Madison continues his argument to justify labeling the new government as mixed, neither quite national nor quite federal:

The executive power will be derived from a very compound source. The immediate election of the President is to be made by the States in their political characters. The votes allotted to them are in a compound ratio, which considers them partly as distinct and coequal societies, partly as unequal members of the same society. The eventual election, again, is to be made by that branch of the legislature which consists of the national representatives; but in this particular act they are to be thrown into the form of individual delegations, from so many distinct and coequal bodies politic. From this aspect of the government it appears to be of a mixed character, presenting at least as many FEDERAL as NATIONAL features.

If we try the Constitution by its last relation to the authority by which amendments are to be made, we find it neither wholly NATIONAL nor wholly FEDERAL. Were it wholly national, the supreme and ultimate authority would reside in the MAJORITY of the people of the Union; and this authority would be competent at all times, like that of a majority of every national society, to alter or abolish its established government. Were it wholly federal, on the other hand, the concurrence of each State in the Union would be essential to every alteration that would be binding on all. The mode provided by the plan of the convention is not founded on either of these principles. In requiring more than a majority, and particularly in computing the proportion by STATES, not by CITIZENS, it departs from the NATIONAL and advances towards the FEDERAL character; in rendering the concurrence of less than the whole number of States sufficient, it loses again the FEDERAL and partakes of the NATIONAL character. (Ibid.)

So how to reconcile the intent of the Founders to have produced a mixed government, and the observations of (among many others) The Economist and my Anti-Federalist correspondent that the Federal government has far, far more power than was ever intended in Philadelphia in 1787? Some participants in the Convention, including, as it turns out, Hamilton and Madison, had argued for a more nationalist government to begin with. But these notions were rejected, and the Convention finally approved a plan genuinely intended to ensure national security while preserving the substance, not just the form, of dual sovereignty. They intended it to be mixed, and it eventually became preponderantly unmixed nationalism. What happened?

It bears some consideration why the Founders believed the mixed government would retain some considerable permanence, and not be encroached on one side (oppression of the states by the Federal government) or the other (disregard of the Federal government by the states). Madison, again, writes:

Several important considerations have been touched in the course of these papers, which discountenance the supposition that the operation of the federal government will by degrees prove fatal to the State governments. The more I revolve the subject, the more fully I am persuaded that the balance is much more likely to be disturbed by the preponderancy of the last than of the first scale. (Madison, Fed 45)

This obviously proved wildly inaccurate. It’s clear that the actual practice, as embodied in the, shall we say, informally granted powers of the Federal government, have tended in precisely the opposite direction as anticipated—more power for the Federales, less power for the states. I don’t pretend to having my admiration for the Founders diminished by having stumbled upon such an error, but it is at this point one must recognize that while the practical system they put in place has worked rather well for some considerable time, some of their early judgments were entirely off the mark. Mistaken, indeed. I have a few notions how this has come to pass; but let’s consider Madison’s arguments: for this there is no better place to start than by examining paper 45, The Alleged Danger From the Powers of the Union to the State Governments Considered, fairly closely.

Madison begins paper 45 with the assertion that “HAVING shown that no one of the powers transferred to the federal government is unnecessary or improper, the next question to be considered is, whether the whole mass of them will be dangerous to the portion of authority left in the several States.” My purpose in this discussion is not to examine minutely all the arguments in favor of the Constitution, and I’m willing to grant at this point that most of the particular powers actually granted to the Federal government by the Constitution do, in fact, seem reasonable and consistent with its responsibilities; and that Madison, Hamilton, and Jay have presented a compelling enough justification for them in the papers which preceded number 45.

Madison continues in paper 45 by pointing to some historical analogies, which seem vaguely unsatisfying: the Achaean League, and the Lycian Confederacy, both of which had been discussed briefly in previous articles. The Achaean League was a federation of Greek city-states in the age of the early Roman Republic. The Lycian Confederacy was comprised of a number of city-state petty republics scattered throughout what is now Turkey, and was a few centuries after the dissolution of the Achaean League. Madison notes that

In the Achaean league it is probable that the federal head had a degree and species of power, which gave it a considerable likeness to the government framed by the convention. The Lycian Confederacy, as far as its principles and form are transmitted, must have borne a still greater analogy to it. Yet history does not inform us that either of them ever degenerated, or tended to degenerate, into one consolidated government. On the contrary, we know that the ruin of one of them proceeded from the incapacity of the federal authority to prevent the dissensions, and finally the disunion, of the subordinate authorities. (Madison, Fed 45)

It’s probably similar to the Convention’s planned government; and history doesn’t precisely say that either collapsed into nationalism. I may be looking at this too hard, but this probable similarity and absence of a known negative outcome isn’t an entirely compelling argument. But, returning to Madison:

The State governments may be regarded as constituent and essential parts of the federal government; whilst the latter is nowise essential to the operation or organization of the former. Without the intervention of the State legislatures, the President of the United States cannot be elected at all. They must in all cases have a great share in his appointment, and will, perhaps, in most cases, of themselves determine it. (Ibid)

This, presumably, refers to Article II, Section 1, which describes the term of the President and his manner of election: “Each state shall appoint, in such manner as the Legislature thereof may direct, a number of electors, equal to the whole number of Senators and Representatives to which the State may be entitled in the Congress,” describing thusly the composition of the electoral college (emphasis added). The general process, including the reliance upon the state legislatures to determine some of the particulars of the election, has held up reasonably well, but has (especially recently) seen substantial encroachments upon this power by the Federal courts.

Not all this encroachment has been for the worse; states being obligated to drop Jim Crow laws designed to minimize black participation in the electoral process is itself an unalloyed good, for example. But Florida 2000 was of course a horrible mess, with the US Supreme Court ultimately deciding how matters would be conducted in what should have been primarily (according to Article II) a state matter. This was necessary, or even possible, only because of the bizarre activism of the State Supreme Court, in its attempt to rewrite rules after the election and subject different parts of the state to differing methods and standards for the recount. In both these instances, (Jim Crow and Florida) the Federal courts put paid to what was legitimately bogus state laws (or activist judicial interpretation of state laws, in the Florida case); the only unfortunate element to these Federal rulings is that by now all parties recognize that the Federal courts are unambiguously in charge of how elections are run, and the state legislatures are reduced to determining trivial administrative elements to the election (the form, but not the substance, of certification for example). So with respect to this particular argument of Madison’s, one potential factor tilting the relative power in favor of the state governments has been eliminated by (admittedly otherwise salutary) Federal judicial activism. Madison continues:

The Senate will be elected absolutely and exclusively by the State legislatures. (Ibid)

This no longer applies, since the 17th Amendment devolved this power to the people at large. While this amendment was intended to reduce the rampant corruption which dominated the process of appointing US Senators in the state legislatures, it did remove one of the most significant hurdles to Nationalism (as opposed to Federalism). Even in cases where the Federal Congress does not overstep its constitutional limits, it has tremendous power to bully state governments by way of conditional expenditures. These are, as the name implies, Federal expenditures on state matters, which are approved only as conditioned upon state legislatures “voluntarily” adopting a policy preferred by the Federal Congress. An excellent example of this was the 1974 adoption by the Congress of a Federal 55-MPH “suggested” speed limit. This speed limit was binding on Interstate highways, but not on State highways; however, states were—shall we say—encouraged to voluntarily adopt the 55-MPH limit on State highways as well, by Federal threat of withholding highway maintenance monies which would otherwise flow from Federal taxpayers and ultimately to the states. The puzzling logic of a Federal tax, partially paid by Ohioans, which would then only be refunded to Ohio for use on maintaining Ohio roads if the Ohio legislature adopted the Federal position, is an effective (though not legal) breach of the principle of dual sovereignty espoused by the Founders at the time of ratification of the Constitution.

As well intended as the 17th Amendment may have been in fighting corruption, it is hard to imagine conditional expenditures being used to thwart Federalist (dual sovereignty) principles by a US Senate elected and beholden directly to state legislatures. Using a financial end-around such as the highway-monies-for-speed-limits measure to strip state legislatures of their original portions of sovereignty would not likely have been approved by a body elected by those very state legislators whose power would thereby be denuded. And preventing this subtle usurpation of state power was entirely the principle behind having the Federal Senate appointed by State legislatures:

It is equally unnecessary to dilate on the appointment of senators by the State legislatures. Among the various modes which might have been devised for constituting this branch of the government, that which has been proposed by the convention is probably the most congenial with the public opinion. It is recommended by the double advantage of favoring a select appointment, and of giving to the State governments such an agency in the formation of the federal government as must secure the authority of the former, and may form a convenient link between the two systems. (Hamilton or Madison, Fed 62)

Adoption of the 17th Amendment therefore was intended to curb one evil (corruption), but decidedly allowed expansion of another (nationalism). And, sadly, with the perhaps unavoidable influence of big money in politics today, I am scarcely convinced that corruption has even been meaningfully reduced in the election of US Senators today despite adoption of the 17th Amendment.

But back to Madison:

Thus, each of the principal branches of the federal government will owe its existence more or less to the favor of the State governments, and must consequently feel a dependence, which is much more likely to beget a disposition too obsequious than too overbearing towards them. On the other side, the component parts of the State governments will in no instance be indebted for their appointment to the direct agency of the federal government, and very little, if at all, to the local influence of its members. (Madison, Fed 45)

Hm. We have seen that the Federal judiciary now is the final arbiter of how states run their own elections, including that for president; that the Federal Senate is no longer dependent for its existence on the actions of the state legislature; and nowhere in this paper is the third branch mentioned (the judiciary). Even in its original form, the judiciary was dependent on the states only insofar as the Federal Senate exercised its advice and consent responsibility in the confirmation of Federal judges, and the Senators were themselves appointed by the State legislatures. The increased activism by, and reverence for, the Supreme Court, coupled with the 17th Amendment, have rendered all Madison’s arguments based on structures null thus far.

He continues by observing that there will be more State officers (of all departments) than corresponding Federal officers. This is perhaps unexceptional but is also somewhat unconvincing; his main argument here seems to be that since more of any given individual’s friends and family will be officers of his state than will be Federal officers in his state, the average citizen will feel more loyalty to the State officers (and hence the State government) than the Federal opposites. This is all slightly dubious but not really enough for us to dawdle over this point, with so much still to cover.

Suddenly Madison wanders rapidly into the weeds with his next expectation which failed to pan out:

It is true, that the Confederacy is to possess, and may exercise, the power of collecting internal as well as external taxes throughout the States; but it is probable that this power will not be resorted to, except for supplemental purposes of revenue; that an option will then be given to the States to supply their quotas by previous collections of their own; and that the eventual collection, under the immediate authority of the Union, will generally be made by the officers, and according to the rules, appointed by the several States. Indeed it is extremely probable, that in other instances, particularly in the organization of the judicial power, the officers of the States will be clothed with the correspondent authority of the Union.

Should it happen, however, that separate collectors of internal revenue should be appointed under the federal government, the influence of the whole number would not bear a comparison with that of the multitude of State officers in the opposite scale. (Ibid)

This, clearly, is as untrue as the original assertion that the states were likelier to bully or ignore the Federal government than the opposite, and is almost laughably inaccurate to anyone who’s ever dealt with the IRS. What happened here?

Well, the IRS is a good place to start. The IRS wasn’t formed until after the 16th Amendment was ratified, which only in 1913 authorized the Federal Government to enact an unlimited tax to be levied upon citizens’ income. Prior to the ratification of that amendment, the Federal government relied primarily on excise taxes for revenue. Total Federal outlays in 1912, the year before the collection of unlimited income tax was permitted, amounted to $690 Million. Ten years later, that figure had swelled to $3.289 Billion, a fivefold increase (Office of Management and Budget, FY2002 Federal Budget.)

After WWII concluded and the economy demobilized from a war footing, by 1947 Federal outlays dropped to $34.496 Billion (14.7% of GDP); by 2002 these figures had ballooned to $2.011Trillion and 19.5% of GDP. (Office of Management and Budget, FY2004 Federal Budget.) Growth in Federal government spending clearly outpaces economic growth, and nothing fuels a massive temptation to spend like the ability to massively increase taxes. The income tax allows precisely that.

This massive uptick in Federal receipts and outlays means that a greater proportion of total economic activity involves the Federal government as a direct participant than is strictly necessary, giving the Federales a disproportionate amount of influence as to how that money is spent. The conditional appropriations example from earlier applies as an excellent example here as well; the Federal government has no real relevance to questions of certain expenditures like maintenance of Ohio highways. If Ohioans paid more State taxes commensurate with paying fewer Federal taxes, Ohio’s elected state Representatives could decide or not decide on its own whether the State’s highways needed maintenance, and also could decide on its own whether to adopt the “suggested” 55-MPH Federal speed limit on its own roads.

It therefore follows clearly that the actual preponderance of Federal power at the expense of the State governments, quite contrary of what the Founders predicted would happen, can thus also be partially attributed to the 16th and 17th Amendments, both ratified in 1913. Granting the Federal government tremendous new powers of taxation at the same time as removing the primary mechanism for State governments to directly check the ambitions of the Federal government has led to a highly nationalistic result which, frankly, should have been easy to anticipate.

Add to this the Union’s strength being forged in a grim Civil War, and the sense of nationhood developed during two World Wars this past century, and the conscious attempts made during the New Deal to increase the relevance and influence of the Federal government over citizens’ daily lives, and it becomes rather clearer how the spirit of Federalism has waned somewhat, and a sense of nationalism has replaced it. It is not a mere antique artifact of the period’s written English that, during the time of the Founders, the Union was referred to as “These United States,” implying a plural group acting together; while today, of course, we refer to “The United States,” a monolithic body. Telephones, the internet, and air travel all contribute to nationhood, but must we have an inexorable march toward nationalism and the permanent abandonment of Federalism?

Now the ongoing sparring between the Federalists and Anti-Federalists during 1787-89 can be cast in rather a different light. Upon a short bit of further reading while preparing this article, I uncovered the fact that Hamilton had participated in the 1787 convention, but had quit in frustration when it was clear that his arguments in favor of installing a constitutional monarch would be rejected. He ultimately signed the Convention’s findings and draft Constitution, despite disagreeing with the plan himself, and argued in the Federalist Papers for ratification primarily because the alternative to ratification was a continuance of the status quo under the Articles of Confederation, which he believed would be fatal for the nation. And Madison may have preferred a much more nationalistic government himself, calling at one point for the Federal Congress to have a negative (veto) over laws enacted by the various state legislatures.

Clearly from all this, it is superficial to refer simply to the beliefs or intents of “the Founders,” as if they had a monolithic and uniform strategy which they enacted in the face of public opposition. That Hamilton argued against his own original position because he then believed the alternative was truly in the nation’s interest speaks highly of his patriotism, back when such a label had an actual meaning and was not mainly used in the negative against one’s political opponents. And for me, the debate between the Federalists and Anti-Federalists has only been explored from one perspective thus far, that of an advocacy piece authored collectively by a small group of Federalists. I have acquired a two-volume set from the Library of America, The Debate on the Constitution, which contains pamphlets, newspaper articles, private letters, and Convention speeches both for and against the proposed Constitution. I have moved this to the top of the reading queue.

These few thoughts on The Federalist Papers only, after all, address one element of the matter. So much remains to be read, digested, and discussed.

It’s amazing what studying the source documents can do for one’s understanding of politics. I only wish modern politics could just occasionally consist of civilized discussion, even disagreement, on principles, relieving us of the sight of Senators themselves waving silly placards and demagoguing over whether to give or not give free pills to senior citizens. That the world’s most august deliberative body is reduced to such claptrap is perhaps the biggest shame of all.

2003-11-21T13:20:00.001-05:00

In browsing this week's entrants into The Truth Laid Bear's New Weblog Showcase this week, two jump out as deserving some attention:

A new two-man wrecking crew has surfaced over at Indirect Proof. They've put out an article about Rush, and those who continue to (rightly) criticize him. The article itself is well-written, even if it's about an issue which doesn't interest me much. The blog itself looks to have some promise. The particular article in question is Fair Game.

And, though I hate piling on, Free Market Fairy Tales is written by a gentleman from the othe side of the big Atlantic pond and looks plainly very good. His current article, Europe Hates America, proves that not quite all Europeans hate America, the title of his article notwithstanding.

Check out these brand new weblogs and see if you like them.

JKS.

2003-11-20T11:41:00.001-05:00

I never ever thought I'd say this, but I'm with Ted Kennedy on this one.
This current Medicare expansion effort has produced some of the most puzzling politics you're ever likely to see. I find myself amazed to agree with Kennedy, Pelosi, et al, who want to block the Medicare bill--though not for the same reason they want to block it. The AARP is, amazingly, siding with Bush, who clearly wants passage of the bill, over Kennedy, who clearly wants to block it--though they still are not speaking the president's name despite his efforts on their behalf.

Now for my opinion of the particular merits of the bill, from the perspective of an actual end user, I'm inclined to defer to the "expert consumers" of the product of the bill, the AARP. They seem to like it. But the Wall Street Journal, for example, keeps complaining about expanding the benefit without sufficient fundamental reform to a program which is rapidly becoming utterly unaffordable in its current state; whatever fundamental reforms are contained in the bill are basically token gestures which, as I understand it, allow for seniors to opt into a competing private plan, only at their own choice, and only in 2010.

So the AARP likes it, conservatives don't like it, and yet Daschle and Kennedy think it's a "lemon" of a bill (Daschle's word). Daschle is a typically cynical politician, and here he is opposing something one of his most reliable constituencies is supporting. He's either so opposed to the notion of competition that the mere mention of the word, even in a token gesture context, makes him immediately curl up into a defensive fetal position and vote NO, or he's actually maneuvering to try to deny President Bush a domestic agenda victory which Republicans could use in 2004 as a model of how Republicans Get Results, even results for a core Democratic issue. As politicians include temporary, far future provisions in bills all the time, intending all along to change them before they actually happen (think of the ludicrous sunset provisions in year ten of the recent tax cuts), I'd bet on the explanation which is motivated entirely by 2004 electoral politicking.

So why do I oppose the bill, since it's clearly not for the same reason Kenndy and Daschle do? Simple: Medicare and Social Security already consume in excess of one-third of the Federal budget, and are projected to get horribly and unsustainably bigger all on their own. It's not sound in the long run already; despite the terrible political consequences of it, at some point we have to be serious about it, and differentiate our nation from Europe in our response to a social entitlement which so far outstrips our ability to pay for it. The Europeans preserve these programs, and politicians earnestly assure each other and their constituents that of course reducing the free money everyone gets from the government can't be reduced. This is one element of why European economic growth and productivity growth are embarrassed by comparison to the US.

At some point, preferably sooner than later, we should recognize that difficult and unpopular decisions will be necessary. Medicare is already horribly expensive and inefficient, and extending another free benefit (conservatively, almost laughably, estimated at some $400 Billion over ten years, but most analysts expect it will be much more, myself included) as part of this program is the very last thing we should be considering.

And--Tom Daschle take note--though it is rather impolitic to observe, this expensive free benefit is being granted to a demographic group--seniors--who have the highest average net worth of any demographic group in America. It's almost a little surprising that Redistributionist Daschle wants to give such a giveaway to--quite literally--The Wealthiest Americans, if only they could get those darned competition provisions out of it. Or it would be surprising, if anything he did were really on principle instead of just based on electoral propitiousness.

Now, truly, I'm greatly disappointed in Bush for pushing so hard to pass this. His tax cuts have certainly helped the economy, but on the spending side he is proving to be no fiscal conservative (and his free trade credentials are lagging as well). This entirely unaffordable benefit is clearly a sop to an electorally critical demographic, in an attempt to buy votes in 2004. And Daschle's, Kennedy's, and Pelosi's opposition to it is every bit as cynically an attempt to cost Bush senior citizens' votes next year's election.

The politics on both sides of this debate could kindly be called disappointing, at generous best. The actual merits of the bill are awful, based on our ability to afford it, and for once here's hoping Daschle will follow through on his threats of a filibuster. This bill is not only bad, but dangerously bad, and it needs to be defeated. I just hope the Democrats' cynicism is able to trump the Republicans' cynicism on this one.

JKS.

2003-11-18T00:40:00.001-05:00

Tonight the Sylvania City Council held its first public meeting since the election in which Issue 16 passed and two of the Gang of Four were unseated, and this time I was in attendance. It proved rather an interesting scene.

Our mayor, Mr Craig Stough, indicated that he had engaged in some discussions with the Metroparks, who are expected to manage operations of the Lathrop House once it is moved and opened for tours. Mr Stough suggested it would be more common for him to have formal approval of Council for these negotiations. Councilman Barbara Sears obliged by submitting a motion to formally re-grant authorization for Mr Stough to conduct these negotiations. Her motion was seconded and the rather muted fireworks began as the matter was cast open to discussion. Some of the potential obstacles which remain were illuminated.

Councilman John Billis, soon to no longer be a Councilman himself, took a subtly hostile position with the precise wording of the Issue language (that "the City of Sylvania shall not acquire the property known as the Lathrop House property and 5362 South Main Street, Sylvania, Ohio by appropriation;" and "the City of Sylvania shall not re-file any such action, or file a similar action for appropriation of the Lathrop property for a period of two years from the date of the enactment of this Ordinance." The full text of Issue 16 as it appeared on the ballot can be found here.)

Billis's position was that this language, explicitly forbidding appropriation of the property, fundamentally forbids as well any appropriation for the property; playing on the twin meanings of the word (in the first case, to expropriate, in the second case to allocate.) So Billis staked out the position that the City shouldn't spend any money on this issue at all, including any contribution to moving the house.

In fairness to Mr Billis, Mr Stough did acknowledge that he and other members of Council had been troubled all along by some of the precise Issue language, but that everyone knew that Billis's interpretation hadn't been anyone's intent. But Mr Billis's statement began a great movement away from compromise, now that the voters had decreed that a compromise was essential, which movement would unfortunately continue through many of the subsequent speakers.

One woman in the audience stood up and, reading a prepared statement, said that much of Citizens for Sylvania's campaign literature had been misleading and baseless, and that besides that it now constituted something of a legally binding campaign promise. She singled out Mrs Sears and Mr Kriner for having endorsed Issue 16, leading both to state for the record that this (emphatically) was not true. Still she continued to insist Mrs Sears had endorsed the Issue, till Mrs Sears flatly stated "Did not," beyond which the matter was not pursued. The speaker insisted that Citizens for Sylvania's campaign promises were binding but that they should not have included any consideration of the previous promises by Friends of the Lathrop House (hereafter FOLH) for funding to contribute to the move. She tacked on the rather surprising notion that Citizens for Sylvania was being insensitive to African Americans because of their stance on this whole issue.

Another woman in the audience stood up and read from another prepared statement, at considerable length, claiming essentially the same thing. She darkly hinted that the voters had been misled by Citizens for Sylvania's various promises, perhaps implying that the vote should therefore be set aside at least in spirit if not in fact (if that wasn't her intent, I'm not honestly sure what was). She made quite a point of mentioning that she was not speaking in an official capacity for FOLH, perhaps fearful of accidentally committing to anything. Much actual applause behind me when she was finished.

At this point some young man whose name I really wish I had caught, sharply attired in a red jogging suit quite inappropriate for the occasion, stood up to a chorus of hisses and quietly snarky remarks from immediately behind me. This fellow, evidently prominent in the Citizens for Sylvania campaign, said essentially can't we all just get along, which evidently was not satisfactory to the FOLH contingent, then insisted he was still looking for funding to try to move the house. He was evasive about where his campaign dollar figures came from, except to allow that the $150,000 relocation costs he had cited rather incredibly didn't include costs to excavate and prepare the new site. More hisses, not altogether unjustifiably, at this.

Another woman spoke, who angled toward forbidding Council from spending any money to help move the house by saying that Citizens for Sylvania's ads had specifically said that approval of Issue 16 would "stop wasting taxpayers' money." She suggested this implied a binding (or at least misleading, I forget precisely which horse she was hitched to by now) campaign promise, and that either that was why she had voted for it in the first place, or why she would have voted for it, if she had voted for it, which it didn't sound like she had. She got the mayor and the City's Law Director, Mr Jim Moen, to instruct her how to go about getting her own ballot initiative going to prohibit the City contributing funding to the relocation of the house. Much tittering of approval from behind me.

Sigh. So much heat, so little light.

I don't think Mr Billis's casuistic parsing of the language on the ballot issue holds water. Lots of words mean two things, and in this case "appropriation of the property" means quite clearly "expropriation of the property." The interpretation suggested by Billis would be credible only if the phrase "appropriation for the property" appeared in the ballot language, which then could scarcely be interpreted in the original, expropriation, sense. I was surprised Mr Moen waffled on this issue when pressed. He should clearly repudiate that argument now, before Mr Stough either negotiates from a position of great ambiguity, or (worse) negotiates terms which his Law Director may subsequently say are illegal.

The rest of the arguments all are more or less the same and so I'll address them together in a minute. The business about the campaign promises is a little troubling, but presently only a little. It does seem Citizens for Sylvania played a bit loose with the truth, giving only the cost for the move but not for the new site preparation. I'd be interested to know the legal relationship between St Josephs and Citizens for Sylvania.

But the numbers don't matter that much, at least not to me. I truly don't care much about the house either way; the historic credentials are ambiguous, and I'm just not that sentimental about it. This is impolitic to say, but I can get away with this since I'm not running for office. I supported Issue 16 because of property rights, and the much bigger issue is what fundamentally FOLH is now urging.

If the house is so important, and the site itself indispensable, the City could have bought it and its land when they were for sale. Or FOLH could have bought it. But then they would have had to pay for it, which ultimately the City evidently came to terms with during its eminent domain campaign.

But that's really the point. In this country we usually make people pay for the things they want. St Joseph wanted the land, they wanted to demolish the house, and they wanted to build a school where the house once stood. And they were willing to pay for all these things.

The position of FOLH is, basically, that they want to excercise authority over a piece of property, which authority normally comes from owning that property, without the muss or fuss of actually having to buy it. They want the house to remain undisturbed, but they don't wan't to pay for it. Since that idea was rejected by the voters, they now want the house moved instead of demolished, and they don't want to pay for that either. And now they rather spitefully don't want the City to either. They want the Church to pay for it alone. Usually people who take things they want but don't pay for them are fundamentally, at best, confidence men and card sharps. FOLH seems genuinely uninterested in compromise, only rather petulantly concerned with getting their own way. For free.

Were I a St Joseph parishoner or administrator, I'd be wishing that the house had been promptly demolished under cover of darkness the moment the demolition permit had been issued, for all the good two years of negotiations have produced. And I'd be questioning the legality of the City not reissuing that permit, since presumably the church had met all the application requirements and the voters have ruled that the City has no eminent domain interest in the site.

For myself, I found all the talk fascinating and horrible to watch. I hope the inauguration of the new Councilmen will put paid to some of this spiteful grasping and that an amicable compromise can actually be reached. I may prepare a few remarks to make at the next Council meeting in case more of this is indulged next month.

In the end, Mrs Sears's motion to authorize Mayor Stough's negotiation efforts was passed 5-2, with only Mr Billis and Mrs Scheidel voting against. Score one step for Council back in the right direction.

JKS.

Tomorrow: less politics, at last! Or maybe more. You be the judge.

2003-11-10T15:09:00.000-05:00

Those awful steel tariffs again, and why George Bush should run away from them screaming.
Today the World Trade Organization ruled that the foreign steel tariffs imposed by the Bush administration in 2002 are illegal. Good. They should be scrapped forthwith.

I think the steel tariffs are my #2 disappointment with the Bush administration. They were clearly a shameful sop to a fantastically inefficient industry with production locations scattered throughout midwestern states, like Ohio and Pennsylvania, critical to any successful presidential bid. It's a disgraceful attempt to buy votes by granting lpreferential treatment, which we as consumers (and some who are now unemployed) pay for collectively.

There are some 160,000 steel producing jobs in the US. There are some 12M jobs with companies which consume steel. Every one of those companies pays a higher price for raw materials today as a result of these tariffs; those companies which can pass on higher prices to their customers do so, making (for example) cars more expensive for consumers. Fewer cars get bought when they're more expensive, which itself costs jobs. Several estimates suggest that the cost to the US economy of these tariffs has been on the order of 200,000 jobs, more than the entire steel industry employs. I could go on with this analysis, but few disagree that on balance the tariffs are economically far worse than the ills they mean to cure. The real question is what any of this means politically.

Now the cold political calculus for Bush is what to do about the latest WTO ruling. He could stand his misguided ground and allow the tariffs to ride out the remaining sixteen months before their scheduled termination; he could scrap them immediately; or he could come up with some compromise approach. No comment yet from the administration on their intentions.

Memo to Karl Rove: The Steel Workers Union is so grateful for President Bush's politically bold and economically destructive stance on the tariff issue, that they've already endorsed Dick Gephardt for President in 2004. They didn't even wait to see whether Bush would maintain the tariffs first, which suggests that to them it doesn't matter to them in their decision whom to vote for. And let's face it, Labor is going to endorse a Democrat, without fail, no matter how ludicrous his politics. Even adopting preposterous Democrat-style policies like this terrible steel tariff won't earn George Bush the endorsement or gratitude of the labor unions.

So union types are going to vote against any unnamed Democrat running for President, regardless of what Bush does here. But the unclaimed middle of the electorate continues to be bombarded with claims by Daschle & Co of the number of jobs lost by This President, as they refuse to speak his name (it burns the ears to hear it!), which actually might influence some of them who are presently undecided.

There's not much point in enacting a bunch of tax cuts as a haymaker of a stimulus, and then simultaneously enacting protectionist policies which both cost the economy jobs and add an artificial component of inflation as we struggle to emerge into a real and recognizeable expansion. All that gives you is a fat budget deficit, while minimizing the positive impacts of the tax cuts. It's bad, and it's dumb economics I'd expect more from Democrats. But again I digress into the universally agreed economics of the thing.

The world politics are just as important here. Pascal Lamy has threatened retaliatory tariffs, and implied that these might be aimed at politically important states themselves. The point is that every job lost on account of these tariffs, or on the EU's or Japan's retaliatory tariffs, gives the Democrats more ammunition during next year's election. Bush has got exactly zero love from an industry which clearly dislikes him despite enacting the tariffs they wanted. So I say cut 'em loose and focus on the economics, for sake of the undecided middle who actually would consider voting Republican.

2003-11-09T15:41:00.000-05:00

I recently entered my humble little corner of cyberspace into the New Weblog Showcase at The Truth Laid Bear. This is a neat little contest in which new bloggers can throw one of their better posts out there for the world to see, and either earn (or not earn) a bit of readership.

I received eight votes (links from other bloggers) in the week I entered my Everyone's From Somewhere entry into the contest. Many thanks to those who were kind enough to link to the article.

One of the neat benefits to me, apart from receiving a few additional hits which may or may not have convinced those inquistive souls to drop by my blog again, was to see the blogs of those who linked to me. I figured that anyone who actually linked to my site shares some similarity of thought, ideas, or some other dark and inexplicable desire to Be Like Me. Who can tell what motivates such behavior?!

It turns out that of the bloggers who linked to me, all were good and do seem to share some of my perspectives. While I appreciated and enjoyed reading all of them, a couple stood out enough with bringing dissimilar perspectives to bear on their reporting of the world around them to become regular reads, some of which I've added to my purposefully short permanent link list over on the left there:

Susie, over at Practical Penumbra. She thinks her cat is a pirate, even a piratical ninja. I partially agree, insofar as I think cats should be forced to walk the plank, preferably forced by my dog if I can train her to do it. Susie also was kind enough to link to one of my articles, and her site is one of the more interesting apolitical sites you'll come across out there.

Professor Bainbridge, over at, well, Professor Bainbridge. I had checked out his site as he was a new entrant in the Showcase as well, and was fairly impressed, so naturally I was flattered that he linked to my article. He's a professor, though a law professor, and writes compentently about financial markets. It's a bit like reading my own economics and markets essays, though written well and by someone with the credentials to back them up. Even though he seems to have delinked my site (not very sportsmanlike) and inexplicably prefers wine to scotch, his site is excellent and worth a read.

Christian, over at A Life of Freedom, might be my evil twin if I weren't the evil one. And if he weren't a Libertarian. But he's written a number of good articles angling sharply in favor of limited government, a notion I can enthusiastically support.

And be sure to visit Interested-Participant, who seems to be quite a prolific writer, is a fellow Ohioan who seemed to agree with my position on Issue 1, and had the good sense to cast a vote for my article in the Showcase.

Thanks again to all!

JKS.

2003-11-09T14:33:00.001-05:00

WTF is the motivation for Al Queda to conduct an operation like this?
As I understand this, Osama has now started a war against his own country, one which is a principal sponsor and funding source for Wahabbi fundamentalism in particular and terrorists in general. This after the infidels have closed their air base on holy Islamic land, and the Saudis contributed to the ongoing success of Al Queda operations with their bland and noncommital response to the 5/12/2003 coordinated Riyadh strikes.

The May strikes at least made "sense," in the narrow meaning that that operation, directed as it was at a mostly-American target group in Osama's Holy Land, was consistent with his psychotic program of senseless maximal destruction inflicted on the west. I don't get what the hell he means to accomplish with this current operation. It's just noise, for sake of getting attention, a bit like a junior high student going on a shooting spree just because society's ignored and repressed him for too long, or some such similar nonsensical justification for gratuitous destruction. That this most recent atrocity does nothing to advance his larger cause is the only consolation which can be drawn.

Many Americans, myself among them, consider Saudi Arabia at best a declared neutral in the war on terror, and very likely a clandestine hostile. The state-funded mandrasses certainly are indirect contributors to the terrorist cause, and I've yet to hear about any really serious moves by the Saudis to freeze assets, or for them to crack down on local militant terrorists in any serious way. So, again, I ask what the hell Osama thinks he'll accomplish by attacking a nation which is probably more like his ally than his enemy in the war on terror? I just don't get it. It's a decision taken more in anger than as a practical strategic gesture. It's clear that our enemy is more a deranged psycho than a grand strategist.

The Saudi ruling family has been between a rock and a hard place for a while now, getting pressure from us to crack down on fundamentalism within their country and freeze assets being used to fund terrorist operations on the one hand; and on the other hand, facing a significant segment of their own population (the Wahabbis) who don't think the House of Saud is fundamentally pure enough for their tastes. If they don't realize it now, they will have to soon: appeasing terrorists, even if they represent a significant demographic within the country one rules, is no guarantor of safety. If Osama is going to pursue this line of activity, I would expect the Saudis to drift more toward being a clandestine friendly than a clandestine hostile, simply in their own attempts to stamp out this kind of mass murder in their own back yard. If this actually came to pass it would be a tremendous help in the war on terror.

JKS.

Update: Jim Lynch has a bit more on this, including some reaction from the Muslim world.

2003-11-05T21:23:00.001-05:00

Hooah, and other thoughts on yesterday's ballot returns.
Yesterday's election results were mostly satisfactory and overall I'm rather pleased. Readers from outside my little corner of Ohio who've followed my postings on the Lathrop House vs City Council struggles here will no doubt share my satisfaction that Issue 16 passed by a comfortable margin of some 700 votes, obliging the City to immediately drop its eminent domain proceedings against St Joseph's Church, and preventing them from refiling any similar motions in the next two years.

The issue was clearly the major determining factor in the Council races as well. I am pleased to report that councilman John Billis, by all accounts the ringleader of the Gang of Four, was unelected yesterday with extreme prejudice: he received the fewest votes of any candidate, despite his incumbency. In an open seven-candidate pool, with the top four vote-getters winning Council seats, the winners were Messrs Luetke, Haddad, Haynam, and Borell. In a very close battle for the fourth seat, Mr Borell defeated incumbent (and Gang of Four member) Bonita Scheidel by just 14 votes, 2661-2647. Whoever said that one vote (well, ok, fourteen) hardly matters?

I was delighted to see that Messrs Luetke, Haynam, and Borell were successful in their bids, and that Billis and Scheidel were unelected. I was disappointed that Haddad was retained instead of Flynn securing a seat, but the outcome was still very positive for those who prefer limited government, and I wish Mr Flynn success should he choose to make another bid at the next election.

I wrote previously that approving Issue 16 would not alone be enough to force the issue to conclusion for the Church, in consideration of other delaying tactics Council could introduce. But Council has now gone from a 4-3 majority supporting obstruction of the church building, to a 5-2 majority which prefers a compromise solution. I would now expect that Council would not gratuitously block the conditional use zoning approval, and that both sides in this debacle should come to a fairly amicable solution forthwith.

And, as I've written before, a compromise seems readily available: all it requires is for all parties who are so adamant in the need to preserve the house, to chip in financially to raise the (depending who one asks) $150,000 or so required to move it to a new site. Toledo Metroparks have agreed to operate and maintain it in its new location. There's really only one big question which remains unanswered: who pays for the relocation. I would scarcely consider it a compromise for the Church to have to move, at its own expense, a structure it considers valueless and which it would probably just as soon demolish. If there are others who value the structure so much, I would propose that those parties--who could, after all, have bought the house and land to begin with if they found them so valuable--pay the moving costs.

But that's a lesser detail compared to the joy of victory in the bigger scheme: our City has had a marauding couple of government hooligans, and the issue they embraced, kicked from office. Here's appreciating that the damage they can do in private life will be far less onerous than had they continued in power.

Further, the horrible Ohio Issue 1 initiative was rejected also (though in a rather close 51%-49% vote), making for a one-two-three electoral counterpunch in favor of limited government. Good for us. But for some reason, countywide voters also improved two property tax issues (one of them a new tax) which saddles me with still more government burden. Blech.

Still, all matters considered, a most satisfactory outcome. Congratulations to Sylvania's new councilmen-elect, and to St Joseph's Church, which can finally get down to business in its expansion.

JKS.

2003-11-02T16:20:00.001-05:00

Ohio Issue 1 assesment, short version.
So last night I put together a lengthy critique of Ohio Issue 1, which voters will pass judgment on this Tuesday. But I finished it at 4 in the morning while my new little son was keeping me awake, and I'm sure if I read it now it won't make half as much sense as it seemed to at the time. So here's the short form of it, and if I have time I'll edit the longer one and post it tomorrow for anyone who's interested in a closer analysis of it. Or maybe I'll forget about it till Wednesday, at which point it will be moot. Check back and see! Anyhow:

Short Short Version.
Issue 1 is bad. Bad bad bad bad bad.

Now for the details. You've probably seen the really vague TV spots with the Miller High Life guy doing the voiceover and promising up to 30,000 new jobs in exchange for whatever Issue 1 would do to us, which the ad doesn't exactly specify. So, naturally curious, I looked up the Issue language at the Lucas County Board of Elections Issues page. As I read it there are three good reasons to vote no on Issue 1:

1. It's a Constitutional Amendment;
2. It increases spending in a particularly dangerous way;
3. Contrary to what the ads say, it will result in higher taxes.

1. The constitutional amendment worries me. The constitution, whether Federal or State, is the source from which all other government authority is deduced. It's my contention that the government already has far too much in the way of authority, and I'm instinctively resistant to constitutional amendments which give it any more. And I'm forced to wonder, exactly what presently unconstitutional actions is the government contemplating? Read on and see.

2. Read the second point in the Issue, and note particularly the part which talks about authorizing state government to issue funds for "capital formation." What exactly is that?

Capital is a company's funding base--money it has and doesn't have to pay back, and can use for investing in equipment and new product lines and so forth. It fundamentally is company ownership--common stock, for example. Or non-voting stock, or a material ownership in a limited partnership. But what this means is that the State is asking permission to act as a venture capitalist, which results in--quite literally, and without overstating it--state-owned businesses. Certain formerly existing national acronyms who now go by the name "Russians" used to do that all the time, and I don't recall it working really well for them.

Now, as a practical matter, the State of Ohio isn't going to go nationalizing any companies, or any silly things like that. But as a part owner the state could have some say in how the company is managed. And, even with non-voting ownership, the state could cause stock prices and company valuations to fluctuate at their mere whim simply by buying or selling huge stakes in any company they wished to reward or punish. It's a horrible idea.

Suppose a really deserving company had some state funds showered on them in return for partial ownership, and that company's valuation went up. Suppose further that some governor or state senator's sister-in-law owned part of that stock themselves, and then benefitted from the increased valuation the state ownership resulted in. Even if it was innocent, there's a tremendous appearance of conflict of interest, and the charges and countercharges of this sort of thing would be perpetual--and some would likely be correct. The amount of oversight required to attempt to mitigate this threat would be prohibitive, and ultimately not effective anyway.

Allowing the government to buy stakes in companies allows too much scope for mischief. Remember: the system itself has to be the solution, and we cannot rely on the skills and integrity of whomever happens to hold office at a given point.

3. Finally, this is a bond issue. The state issues Ohio notes, gets the cash for them, and buys things with that cash now. The Federal government does this all the time via a process you're probably familiar with: the notes are called Treasuries, and the amounts financed in this manner are referred to collectively as the Federal Deficit. And as with the Federal Deficit, the Ohio Deficit will ultimately have to be paid back to the lenders, either through higher taxes or cuts to future services. Cutting spending is hard for the government, for a variety of reasons; most of which are fundamentally the fault of the citizenry, who have convinced ourselves that we have some kind of entitlement to government money, and vote accordingly. How will the interest and principal be repaid on these bonds? Do you really believe the government will cut spending to make room in the budget for repayment of the bonds, or will we ultimately have to have a tax increase to pay for them?

This seems as good a place as any to trot out my biweekly reference to Alexander Tyler, an 18th-century Scottish historian. He very aptly commented on this exact phenomenon, in the following well-known quote:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

In this country, State government collapses result not in dictatorship but in Federal bailouts. I really don't want the Federales running my fine state either.

Vote no on Ohio Issue 1, and slap down this silly nonsense before our Republican (?) state government does something really permanently damaging to us.

JKS.

2003-10-30T12:07:00.002-05:00

I’ve exchanged several messages with Mark Luetke, a challenger candidate for Sylvania City Council, regarding his position on the Lathrop House, eminent domain, and Issue 16. I’ve concluded from his responses that Mr Luetke would be a Councilman we friends of limited government can support, and I encourage a vote for Mr Luetke on the upcoming City Council ballot, in addition to votes for Borell, Flynn, and Hayman.

Mr Luetke’s position on the matter is much more nuanced than the short Toledo Blade article I referred to would suggest. He doesn’t personally support Issue 16, but has refrained from issuing a public position on the matter as part of his campaign, from a consideration for his current elected post as a member of the Sylvania school board, and his belief that it's not appropriate for an elected official to try to influence public support in either direction. I share this belief. I’ve concluded from our correspondence that Mr Luetke’s intention would be to honor the spirit of the voters’ will, as reflected in their vote on Issue 16, regardless of his own opinion of the Issue.

Part of Mr Luetke’s objections to Issue 16 as it stands is that whether it’s approved or not, it won’t really represent a permanent solution to the dispute. I wrote the other day about one additional source of delay the City might introduce, regardless of passage of Issue 16 (rejection of St Joseph’s zoning permit). And Mr Luetke doesn’t support eminent domain as an end to itself, preferring a negotiated solution to actual seizure of the property.

It’s clear from what he writes that there is still considerable scope for discussion of the matter, and that Ms Sears’ proposal to reconstitute the City’s negotiating team with the idea of actually reaching a solution need not have been fruitless. That the Gang of Four rejected it suggests that they would rather seize the property than negotiate a solution; although Mr Luetke doesn’t support Issue 16 his preference for negotiation over appropriation of the land makes his candidacy far preferable to any of the incumbents who are up for re-election.

I appreciate Mr Luetke’s preparation of a thoughtful reply to my inquiry; which, incidentally, was provided promptly in response to my request. Mr Luetke was also kind enough to grant permission for me to post his replies in full, which are given below:

On 10/29/2003, JKS wrote:
Mr Luetke,
I am certain you've received a disproportionate number of questions regarding your position on the Lathrop House, but as I'm sure you know this is among the most controversial issues enacted by our City Council in recent memory. Consequently, for many voters, like myself, this has become largely a one-issue election.

I read a summary in the Toledo Blade of your position on the matter, and I feel it needs clarification. As I understand it, your position is essentially that whatever solution is finally implemented should above all be a negotiated solution, and that satisfying this requirement is actually more important than whatever that compromise may happen to be.

From what I've read, a compromise solution which could be negotiated seems reasonably readily available by implementing the City's original position that the house be moved. The church supports that, and from my correspondence with some of the participants in the matter, it seems that at least three Council members support moving the house in principle: Mr Kriner, Ms Sears, and Mr Backus (though I understand Mr Backus may not support the specific site proposed).

Simply calling for compromise is easier, of course, than actually reaching one. Would you, as a councilman, support the proposed relocation of the house and support abandonment of the eminent domain proceedings?

I publish a weblog called Electronic Countermeasures, at which I have written about this matter at some length, and at which I tentatively offered an endorsement of a vote for you as a challenger candidate. I have promised my readers at least a summary of your response to the above question, and I would request permission to post your response in full to my weblog.

Respectfully,

Sylvania, OH
10/29/2003

On 10/30/2003 Mark Luetke replied with an email and an attached Word document as follows:
Email:

Attached is a long-form summary of my position on the Lathrop House matter. It may be more of a statement of principles than you requested–but I think a complicated matter such as this requires a bit of background and rationale. I am not sure where you came to the understanding that a negotiated solution "is actually more important than whatever the compromise may happen to be." The context is important to help you understand that any negotiated outcome would not be acceptable to me–that I would push an outcome in the directions I describe.

I do not want to address the background at the expense of your specific questions, however. So let me be clear on the points you asked about.

First, I do not support as a first step moving the house to some of the alternate sites discussed publicly by the City (early) and the church (consistently)–that is, "behind the yellow house" at the north side of the parking lot. I believe keeping it on the Ravine is important to its historic and educational use. I could support a proposal made by several members of Council to move it to a site on the ravine in Harroun Park–as long as proper public access is provided and costs are shared beyond just the City. Or, I could support any number of other solutions that more broadly address the location of the house vis-a-vis future church plans.

Second, I do not support eminent domain as the ultimate long term solution to this issue. It was put in place originally to permit additional negotiation, but that has not happened. The litigation has become an end in itself. But I personally do not support the solution to end the eminent domain contained in the Issue 16 referendum. It prohibits any city participation for two years–tying the hands of future elected officials on a broad array of related matters. I would work to end eminent domain litigation through a negotiated process as a member of Council.

Finally, a point you did not ask about but I believe is important. I would support the will of the Sylvania voters on Issue 16 no matter what the outcome. This means–win or lose–no further legal or legislative interference from Council to change the impact of the vote. I say this because I anticipate all sorts of plans will come forward to short-circuit the outcome–and I believe the people's vote needs to stand. I have purposely not taken a public position in Issue 16 because I do not believe it is appropriate for an elected official (member of school board) to use a position to influence an outcome. But I will support the result.

Hope this helps. If you have any questions you can feel free to call me at work–although I will be in and out today. The number is [snipped]. And please feel free to e-mail me at this address in the future–I get the messages a little quicker this way.

Mark
10/30/2003

Attached document:

Electronic Countermeasures

I am pleased to respond to your questions about my position on the Lathrop House issue. Here is essentially a summary of the conversations I’ve had with dozens of residents over the past few months–which were also reflected in my comments at the League of Women Voters Candidate Forum several weeks ago.

I am basing my position on four basic concepts.

First, that St. Joseph has been badly served by the City’s lack of consistency and leadership–essentially doing a 180-degree flip-flop on its original position regarding the House. Further, only the parish knows what is best for the parish; it is inappropriate for the City to make claims about which of its solutions should be acceptable to St. Joe’s.

Second, the Lathrop House has historic value and should be preserved on a Ravine site if at all possible. I can’t imagine a situation where it should be demolished.

Third, eminent domain was initially employed by the City to buy time for further negotiations. This has not happened, and eminent domain now has become an end in itself. The community is being held hostage by the legal proceeding.

Finally, any outcome of the Issue 16 vote will likely not resolve the Lathrop House matter for good. More legal challenges, legislative initiatives, zoning hearings (as you pointed out earlier at Electronic Countermeasures), and other delays could drag on for years. The Sylvania community (and, arguably, the St. Joseph parish community) are not well served by this extended process.

Therefore, only a solution that is worked through with the agreement of all sides can end the dispute in a timely manner and allow Sylvania re-focus on critical long-term issues. Dispute resolution within the boundaries of the concepts noted earlier is where I intend to focus my attention. I have no illusion that I can do this by myself. It needs to involve productive conversations with other members of counsel, the mayor, representatives of all sides and, perhaps, use of an outside facilitator.

(I have seen this approach work a number of times during my four years on the Board of Education: the Central Elementary environmental issue, potential budget cuts in the face of a levy loss, contract negotiations with our bargaining units.)

Several other considerations should play into any collaborative approach, specifically: the need to make St. Joseph financially whole on any solution that departs from its existing land ownership and land use plan; the need to spread financial cost of any solution away from the City of Sylvania alone in favor of partnerships with other governments and non-profit organizations; and the need to assure public access to the House and Harroun Park.

My experience is that both sides in the debate have become entrenched advocates of their respective positions (which is not wrong in a ballot issue campaign.) But my intent after the election would be to use a seat on City Council to bring a swift and fair resolution to any outstanding issues – no matter which way the vote goes–and allow Sylvania to get on with its other business.
10/30/2003

On 10/30/2003, responded as follows:
Mr Luetke:

Thank you for your thoughtful reply. There are a few points I'd like to follow up on briefly:

I gleaned the "compromise above all" summary from the admittedly short Toledo Blade article I linked to in my first email to you. Clearly that summary provided by the Blade was a bit superficial, which is why I thought I needed to ask you for clarification. From your responses here, it's plain that your position is much more nuanced than I was able to discern from the Blade, which was what I had hoped to learn.

I appreciate your abstention from establishing a public position on Issue 16 from a respect for your current elected post. I agree that public offices should not be used to influence voter support one way or another. And I do especially respect your intention to respect the will of the voters, regardless of your personal position on Issue 16. I do suspect that Council, as currently composed, may well attempt to circumvent the voters'will even if Issue 16 passes. That wold be an abuse of power, in my opinion.

It's interesting that you point out that the eminent domain was not originally intended to be followed to its ultimate logical conclusion. I have mixed feelings on that point: on the one hand, that means the City was not really intending to be as heavy-handed as it currently appears to be, which I guess would be preferable. But, conversely, if Council doesn't really believe they should seize the land, they are using the eminent domain tool in a situation where it would seem they themselves acknowledge it isn't appropriate. Eminent domain is a tool to acquire land for public use, not a tool to introduce a relatively open-ended delay to the process. As a supporter of limited government I find this–shall we say–creative construction of government authority somewhat troubling. Keep in mind that it costs a private party time and money to maintain two years of negotiations with the City, a cost which the City itself really doesn't incur from its part in the negotiations.

As far as some of the particular proposals of the precise new location for the house–and the sticky details of who pays for the move–these are probably best addressed after the election with the new Council. I wish you luck in the election as I conclude that you would be a Councilman friends of property rights and limited government can work with.

Thank you again for your answer to my inquiry. May I post your reply in full (without your work email and telephone number, of course) at Electronic Countermeasures?

Sincerely,

On 10/30/2003 Mark Luetke responded:

Feel free to use all or part of the response. I look forward to continuing this dialog with you after the election.

Mark

2003-10-29T13:51:00.001-05:00

Update: A little fact-checking never hurts.
A few updates to my crib sheet for voters (yesterday) with respect to this Sylvania City Council election are in order.

I wrote yesterday in support of voting for challenger candidates Borell, Flynn, and Haynam; I would tentatively extend that to support for voting for challenger candidate Mark Luetke as well.

It turns out that Patrick Kriner is not standing for re-election to Council this year, so four positions need to be filled. Mr Kriner will be missed, and this means that only two friendly voices amenable to limited government will be returning next year: Sears and Backus. Also returning is Milner, a proponent of the eminent domain proceedings.

So there are four other seats to fill on council, and seven names on the ballot. Those seven names include three incumbents: Billis, Haddad, Scheibel, all members of the Gang of Four who rammed this whole eminent domain thing through an often divided council. The only way to boot all three of them from office, which would be the best outcome, is to elect all four of the challengersin their places.

I discussed the first three challenger candidates yesterday, and the reason why supporting changes to Council itself are so important.

Mr Luetke seems to have adopted an approach to this eminent domain question from the Kofi Annan school of thought. His position, as summarized by the Toledo Blade, is that "both sides of the dispute should have been able to work out a solution to the Lathrop House problem. He said anytime a new personality is involved, the dynamic changes, and he would advocate for areas of compromise. He said he would look for that solution as a member of council." So, whatever the solution eventually is seems less important than that it be a negotiated solution. If he's willing to work constructively toward compromise--and as I've written, a compromise seems quite naturally available--he'd be an improvement over any of the three incumbents on the ballot.

Mr Luetke's main angle is a promise to improve Council's responsiveness to citizen concerns. In fact, on his campaign literature he provides his home phone number and email address, and promises to respond to all calls within eight hours. I'll email him for a clarification of his position on Lathrop House, and post here either a summary (or, with his permission, the full text) of whatever reply I get.

Now for one fact correction. In my original article on this subject, I cited a newsletter paid for by public funds to advocate support for Council's actions. I incorrectly stated that the cost for that newsletter had been $15,000; that amount refers to a second newsletter, prepared by the City and being mailed this week; the original newsletter I linked to cost $6,300. My apologies for the misstatement.

I understand that in a recent lawsuit a citizen argued that the use of public funds for such advocacy was illegal, and the court agreed. As a consequence the second newsletter from the City will supposedly be equally balanced and educational, not advocational. I'll post a few thoughts on it when I receive it, once I have the chance to see whether they have operated within the confines of simple educational motives. I'm not especially optimistic on this point.

JKS.

2003-10-29T00:28:00.001-05:00

Eminent domain revisited, and why simply passing Issue 16 isn't enough.
As I wrote the other day, citizens in our fair city of Sylvania, Ohio will soon have the opportunity to terminate one of the more flagrant abuses of political power in recent memory. The City Council has begun eminent domain proceedings to seize land owned by a local church, on which the church intends to build a school expansion. Citizens for Sylvania has gathered enough petition signatures to obligate the City to place an issue on the November ballot: Issue 16. A yes vote, which I am hopeful will be the result, will obligate Council to abandon its eminent domain action. This would be good, but by itself it will not be the end of the story.

The process of building most anything in a non-rural community involves two distinct steps, handled by different parts of the city or township government. The first is to obtaining zoning approval (which may require any number of combinations of Planning Commissions, Zoning Boards of Appeal, and City Council approvals to obtain, depending on the community and circumstances); the second is to obtain a building permit. Building permits are easy to get, and the biggest source of rejection is incomplete engineering drawings. This step is sometimes tedious, but the outcome is rarely in doubt.

Zoning approval is different. Each community one works in will have greatly varying zoning laws and processes for obtaining this approval, but the goal is the same: to ensure that new construction is appropriate for the neighborhood it’s being built in. This has some good intentions behind it and is probably indispensable; it’s the zoning process that prevents noxious industrial facilities being built in the middle of residential neighborhoods or downtown commercial districts, and constructions similarly offensive to existing neighbors.

Most cities have a dozen or more zoning designations: several each residential zones; agricultural zones; commercial zones; industrial zones; and one called Planned Unit Development. The last one is used in special cases which would otherwise require a zoning variance, and is extremely restrictive of future changes which might be considered by the owner.

The property the Lathrop House currently stands on is likely zoned either Residential-1 or Residential-2 (both medium density residential). Typically R-1 and R-2 have permitted uses which include single family dwellings (SFDs); accessory outbuildings like garden sheds; and public utility lines and wires and so forth. A building like a school would likely be a conditional use, meaning the zoning approval should eventually be issued unless, well, there’s a good reason not to.

Now with non-permitted uses either a zoning variance or a zoning change would be required, neither of which is usually easy to get, and it's often more sensible simply to buy a different property to begin with. A conditional use zoning approval is much easier to get, but unlike a permitted use, it’s not a slam dunk.

To get a conditional use permit, it’s necessary first for the Planning Commission to review the application and vote to approve it. In most cities the Planning Commission can only recommend, not grant, approval, and the matter is ultimately decided by a vote by the City Council. Council, in my experiences, has much of their own political agenda tied up in how they ultimately vote on the matter; whether the review of the facts by the Planning Commission resulted in a favorable or unfavorable vote often isn’t primary. Even if the use is conditionally permitted, and the Planning Commission recommends approval, Council can overrule them and deny the permit if they are disposed to be hostile to the applicant, and if they can find a good reason.

Those “good reasons” are pretty easy to find. Most city ordinances allow for the rejection of an otherwise acceptable conditional use application for any number of reasons, often including a catchall judgment provision at the end. If Council concludes, without proof, and solely in its judgment, that the issuance of the conditional use permit would have some adverse effect on the neighbors or the neighborhood, or that nearby property values may be diminished, it can reject the application based solely on that.

This means that the passage by the voters of Issue 16 won’t really be adequate by itself. After being thwarted by the church’s appeal over Council’s head, I rather doubt that Council would be inclined to approve the conditional use permit. If Council thinks that Lathrop House is really a historical treasure, surely they would be likely to conclude that approving the church’s conditional use application would have an adverse effect on the neighborhood if the approval is granted. In that case it could take a long court struggle to get the rejection overturned, even if the effort was ultimately successful, which it likely wouldn’t be. The church isn’t likely to gain approval in that environment for a conditional use permit any time quickly.

I’ve exchanged a couple of interesting emails with a gentleman who has been in a position to be familiar with the ongoing negotiations in the matter, from St Joseph’s side of the table. Once I realized that the project would still be in jeopardy if the current council members had any say in the matter, I asked for a few details about the positions of the individual members. Much of what follows below was gleaned from this correspondence, for which I am grateful.

Sylvania City Council is comprised of seven individuals: Keith Haddad; John Billis; Todd Milner; Bonita Scheidel; Read Backus; Patrick Kriner; and Barbara Sears. My first question was whether Council had acted unanimously throughout the proceedings over the past two years, making all members equally complicit in this fiasco. Here’s a crib sheet for interested voters considering their Council votes:

All seven members of council unanimously approved the eminent domain proceedings.
Haddad, the Council President, has supported the City’s actions at every step.
Billis has supported the City’s actions at every step.
Milner has supported the City’s actions at every step.
Scheidel has supported the City’s actions at every step.

Backus, Kriner, and Sears are somewhat less complicit than the above Gang of Four, who I believe should be voted from office with extreme prejudice for their roles in this mess. The other three have some reduced culpability, though none is blameless:

Sears made a motion to reconfiguring the city’s negotiation team with the object of getting an agreement before the election, which seems to represent a final good faith effort to solve this amicably. The Gang of Four, above, voted it down by a 4-3 vote, preferring to stay their course.
Sears and Kriner both say they are sympathetic with the church’s position, and find the proposed move to be an acceptable outcome.
Backus is not opposed to the move in principle, but finds the particular site proposed as the house’s new location to be objectionable.

From all this I conclude that a vote for Haddad, Billis, or Scheidel, is a vote for aggressive, bullying, busybodying in our City government. I recommend you do not vote for any of them. Milner is not standing for re-election on this ballot, so we will have to wait till next time to try to unelect him.

Sears, Kriner, and Backus, all of whom have conducted this business basically acceptably, are not standing for re-election this time.

Of the four challenger candidates on the ballot, three have specifically endorsed a termination of the eminent domain proceedings and a Yes vote on Issue 16. They are Doug Haynam; John Borell; and Patrick Flynn. I recommend a vote for all of them, and only these three. Voting for a fourth candidate dilutes support for the only three on the ballot who have aligned themselves with responsible limited government.

More, surely, to follow on this business as it evolves with only a week to the election. Please vote!

JKS.

2003-10-26T19:29:00.001-05:00

Fiscal Conservatism vs Libertarian Laissez Faire
I've uploaded all the previous posts and other messages on this subject exchanged between myself and Mark Peters, the last of which I posted the other day on this page.

I may post a better linking index here eventually, but for now the previous posts are easy to find; they're the only posts in the July-August archives.

7/18/2003 Mark A Peters In which the subject is introduced 7/18/2003 JKS In which my hackles get slightly raised by this whole Laissez faire business 7/19/2003 MAP In which Mark convinces me he's serious... 7/19/2003 JKS ...And in which I suddenly don't know if that's a good thing 7/20/2003 MAP In which Mark makes some excellent points... 7/21/2003 JKS ...Which pique my curiosity and prompt many questions 7/22/2003 MAP In which we finally understand each other, and get down to brass tacks 7/24/2003 JKS In which the employment of brass tacks is continued... 7/30/2003 MAP ...And concluded 7/30/2003 JKS In which a few concluding remarks and reading recommendations are made 8/1/2003 MAP In which more of the same 10/17/2003 JKS In which Hazlitt is discussed in some detail

Bringing us, thusly, to the present.

JKS.

2003-10-24T21:11:00.001-04:00

Everyone's from somewhere. And today you get to hear about my somewhere.

In my little suburban corner of Ohio we have a budding controversy wending its way through the courts--which wending will hopefully conclude soon as the matter will actually be put to referendum on the upcoming November ballot. St Joseph's Church in Sylvania, OH owns a bit of property which contains a ramshackle building of some alleged historical significance: the Lathrop House. This property is across the street from their main facility and is, according to the Church (which operates a Catholic school K-8 at the site as well) an essential part of their master strategic plan for the next 50 years. They intend to build a school expansion on the site where the Lathrop House currently stands, and the main argument is over what to do with the house.

There's been a lot of fairly passionate discussion from both sides on this issue. It seems that most parties are in agreement that preserving the house is generally preferable to tearing it down, and there has been much talk of dismantling the house and moving it to a nearby plot of land already owned by the city. For some reason the city has adopted--fairly late in the process--the position that the site itself is equally essential, and has begun eminent domin proceedings to seize, or at least forcibly purchase, the land from St Joseph's. It's at this point that I became interested, as can think of maybe one or two situations where eminent domain is not morally repugnant, and the preservation of a run-down house isn't normally one of them.

The house was evidently used as a stop on the Underground Railroad back before and/or during the Civil War; the ravine behind and below the house was evidently the main path of traffic for this activity. I used the word evidently twice in that sentence for a reason, and that is because this activity is alleged or believed to have occurred, but I've not seen any authoritative conclusions drawn on the matter; the City of Sylvania points to a single paragraph in a 1939 (!) issue of the Quarterly Bulletin of the Historical Society of Northwest Ohio as the only written proof of the matter they choose to mention. In this, some house called "Colonial House," presumably the same one presently in question, is identified as having been found to contain a secret basement room with beds in it, which could have been used for housing fugitive slaves. It's on page 3, second column, third paragraph of the excerpt of the Bulletin posted by the City here. In the City's Resolution 28-2001 , the City describes the "local legend" (the actual resolution language) that the house was part of the Railroad, and cites some architectural findings which may tend to grant more credence to that legend. It's really not very conclusive, and it's not as firm a basis as I'd like to see from a city government about to commit an eminent domain land seizure; read them and judge for yourself.

The retention of physical history is important, and the desire to see the house preserved is understandable. But before the city council of our quaint little community violates the most fundamental tenets of the rule of law and the private ownership of property, a fairly close examination of the facts and the recent history of the matter is warranted.

The church bought the property fairly recently, in October 2001. Before that, according to the City of Sylvania'stimeline, the private owner of the building had asked the City whether it might be interested to buy the property for $750,000, which frankly is more than the property was worth. The city not surprisingly did not make an offer based on this discussion, and instead aligned itself with a group of private investors who wanted to renovate the house into a bed & breakfast. The City did offer to spend up to $175,000 to buy property surrounding the building for a park, presumably in order to allow the investors to come up with a smaller amount to offer for just the building and a small parcel of land. The City says an offer was submitted by this group (but doesn't discuss terms of the offer) at about the same time the Church submitted an offer for $350,000, which was accepted by the previous owner. I expect that the other offer (which the City was indirectly a party to) was for less money, or it would have been accepted instead. The Church immediately applied for a demolition permit upon closing on the property, which application was reviewed by the City and a permit was issued on 11/5/2001.

At this point in the narrative the waters become murkier. The Church expressed a desire for everyone to just get along, and a willingness to do its part to ensure that happened; to that end, they agreed not to excercise their demolition permit while discussions were ongoing. The City seemed to consider moving the house and acceptable solution, and on 11/17/2001 passed a Resolution (the same one referenced above) calling on the Church to not demolish the house and to instead consider relocating it. A few months later, on 3/4/2002, Council even passed an Ordinance providing partial funding for the move: the City claimed, in this ordinance, that the total cost to move the house was estimated at $115,000; acknowledged that Friends of Lathrop House had come up with $25,000 themselves, and directed the Mayor to spend "an amount not to exceed" $50,000 as the City's contribution. Just two weeks later the Council reversed themselves, passing a Resolution which stated emphatically that the house should remain standing on its present site.

It's hard to say precisely what's happened since then. During the remainder of 2002 there were evidently several offers and counter offers for a land swap, where the Church would take position of a nearby parcel of City property and build its school expansion thereon; and there was discussion of moving the house to a plot of City property 100 yards north on Main St. Both parties seem to make some vague and somewhat contradictory claims over the intermediate steps during th rest of the negotiations, which aren't really particularly important as they didn't go anywhere.

Evidently the Church tired of all the interminable negotiations, and stated that without an executed written agreement being concluded by 3/31/2003,the building would be razed on 4/1/2003. The City sought a restraining order preventing this action, but was denied on the grounds that the demolition permit had been legitimately issued by the City. So the City revoked its duly issued permit, essentially by fiat. On 3/26/2003 the City Council resolved to appropriate the property from the dioscese, and two days later they filed their complaint of eminent domain and deposited $400,000 (their estimation of the value of the property) with the court as the down payment against the eventual forced sale of the property.

Leaving aside certain questions such as whether $400,000 is a fair price and whether the relocation of a historic house from its original to a nearby site destroys the historical value of the structure, Council actions in this matter are disappointing. The City could have purchased the property when it was for sale had it believed it to be so valuable. While the City, in its recent newsletter on the issue, sniffs that the buyer's original asking price of $750,000 was not acceptable and that the City was "not afforded any opportunity to purchase the house at the price St Joseph's paid," this is somewhat duplicitous; property negotiations are not conducted as an auction, where everyone has one last chance to better their previous offer before they lose the opportunity to buy. If multiple prospective buyers are negotiating with a single seller concurrently, both would-be buyers are well aware that it's a bit of a poker game. The buyer asks a price, both sellers offer a counter, and--clarifications of terms and details aside--everyone gets just one shot in these cases. The first time a seller has an offer he'd like to accept, he either takes it or allows the other would-be buyer a blind chance to beat the first price by completing and submitting his bid, if one is already in process (meaning the second prospective buyer knows he has to beat some price, but he doesn't know what that price is). If the second bid is not as high, the first bidder wins--end of discussion, period. It's terribly, grossly unethical for a seller to fudge around the confidentiality of the bids or to offer second chances to one but not both. Council naturally understands this but omits it from its argument.

I also find the City's revocation of a duly issued permit, merely because the excercise of this legally-issued permit would displease Council, to reflect an attitude of self-importance unbecoming a council of elected public servants. That our civilization follows the rule of law, not the rule of men, is the very first principle upon which liberal democracy is based. Council has disregarded its own laws by revoking a permit it had issued as a result of its own due processes.

It also, through the Church's negotiating in good faith, gained a two-year delay from when the Church bought the property, to when the City may forcibly expropriate it from them. During that time the Church has been paying the interest on the bank note; spent (by their claim) $50,000 on engineering, surveys, and plans; and fantastic amounts of time dealing with Council meetings, Council Executive sessions, ad hoc meetings with Council and Friends of the Lathrop House, etc. I've ushered building plans through a number of Planning Comissions, Zoning Boards, and City Councils in Ohio, and even when they are disposed to be friendly toward a project it sometimes requires really unfathomable amounts of time and patience. Dealing with a Council disposed to be antagonistic toward a project results in all the above, plus it's then unpleasant too. Interminable negotiations are essentially free from the City's perspective, since they'd have to pay whatever Councilmen and Planning Comission members are involved to do that sort of work anyway. But it costs a private organization money, and the City allowed this to go on for seventeen months until the Church finally called their bluff and threatened to actually demolish the building. I'm disappointed in Council and I intend my vote in the November elections will reflect that.

Citizens for Sylvania circulated a petition to request the City abandon its eminent domain proceedings, among other things (such as pay the Church's legal fees incurred up to that point in this matter). I was pleased to be one of the roughly 1700 signators to the document, but which request was ultimately rejected by Council. The matter has now been scheduled to be put to a popular vote as Issue 16 on the November ballot. City Council has spent $15,000 from the City Treasury (a smallish sum, sure, but that's hardly the point) to print the newsletter mentioned above, to influence voters into supporting Council actions throughout these proceedings. Council referred to them as educational, which I suppose is an allowed purpose; but the newsletter doesn't seem impartial and educational to me, but rather reads like an advocacy paper. Read it and judge for yourself. Voters may have elected this Council to represent them, but probably did not intend to elect them into positions where Council would then spend the voters' own money to influence the otherwise gullible sensibilities of, well, the voters. I'm sure that's not what I voted for.

But the most fundamental and important issue is the eminent domain itself. I hate eminent domain, even when it makes sense to use it. And it only makes sense to use it when there's no hope of compromise, otherwise it's wielded far too casually. If a city wishes to built an airport, and needs to purchase and demolish 100 homes in order to do it, and there's one holdout who says he won't sell for any price--maybe then it makes sense, but I still don't feel good about it. But otherwise the project comes unglued, as you can't build most of an airport on most of the desired land, and leave one house right between the runways. But if a compromise is possible to keep all of the parties mostly happy, or at least somewhat happy, it is immoral and unacceptable to execute eminent domain instead of compromising. And in this case the compromise is to preserve the building but not on its current site. No one's quite happy if that happens--not even the church, which has dealt with this issue at considerable time and expense for two years now. But it allows everyone to get something out of it. If you're willing to endorse eminent domain just because the government doesn't like the offered compromise, that grants far too much authority and discretion to the government, which is not a positive precedent. Permitting excessive discretion to the government--any government--allows all manner of pernicious mischief to follow. It's important to have the system itself be the solution, and not rely on the integrity or competence of whomever happens to occupy an office.

I'm disappointed in my City goverment and I will tell them so, and I mean to vote against the authors of this debacle (in addition to voting for Issue 16 itself). I'll let you all know how it turns out. And now that you know more than you probably wanted about the internecine struggles of a suburban Ohio community, I imagine you can't wait either.

JKS.

2003-10-22T20:35:00.000-04:00

So you knew I'd get around to talking about Kobe Bryant eventually. And I won't disappoint, with a quick preliminary take on some of the elements of the case and what it says about us as a nation.

There are several issues here which seem important to consider. The always trenchant Steven den Beste discusses one of them today: the perception that the standard of proof (and hence, the presumption of innocence) is much less rigorous in rape trials than others. He observes that in most violent crimes, if a victim and an accused offer testimony which contradicts one another, acquittal is the normal result in the absence of additional evidence. This is a good thing, otherwise the entire criminal justice system is reduced to the rigor of a good-old-fashioned witch trial, where conviction requires nothing generally more than an accusation to be offered. In most civilized nations that sort of criminal justice system is known as a "kangaroo court."

From the portions of the Bryant proceedings which I've been unable to ignore, despite my most strenuous efforts, I can gather that (a) this young woman voluntarily joined Mr Bryant in a forum--shall we say--outside her normal professional duties; (b) both parties agree sexual intercourse was consummated; (c) this young woman says the sex was not consensual; (d) Mr Bryant says it was. I've not heard of any hard proof except that it can be forensically demonstrated that the two did, in fact, have sex.

Now rape is a difficult crime to prosecute for a lot of reasons, not least because additional eyewitnesses are often not available, and victims are sometimes reluctant to confront their alleged attackers. But prosecution is made easier by the unusually broad definition of the crime. I would suggest there is a grave difference between forcible, violent, coercive rape; and a situation where a woman suddenly feels uncomfortable and maybe changes her mind in the midst of a previously consensual encounter and her partner is not overquick in adapting to her new mindset. Yet both are treated essentially identically under the law. It's mainly the latter type, acquaintance rape, that most of what I'm saying here applies to.

That such an offense as this, which is nearly unprovable, is criminal does suggest a willingness on our nation's part to have our criminal justice system produce convictions even in the face of an utter absence of proof--just an accusation, and a jury's decision that the accuser and her accusation are more credible than the accused's denials. And in a trial for an alleged crime with no witnesses and no physical evidence, the jury can't take two opposing statements from individuals they don't know and decide beyond a reasonable doubt that the woman accuser is being truthful without the defense having a chance to counter with attacks on the accuser's credibility. The manner in which the crime is alleged and (attempted to be) proven allow the defense no other avenue, no matter how unfair this may seem to women in general and to the accuser in particular. It's unpopular to say, but if a woman really does have sex with three different men in three days then she's less credible an accuser, with her protestations of innocence of her intent, than one who doesn't. If an accuser can offer no proof at trial but her word, she has to be prepared to have the credibility of her word examined vigorously.

None of this absolves rapists of anything. But there's a balance between victim's rights and accuser's rights, and assigning automatic credibility to an accuser in a case without physical evidence--just because she's a woman, and women wouldn't lie about such things--reflects an unfortunate shift away from the presumption of innocence.

The enactment of laws pertaining to special crimes, with special standards for prosecution and conviction, from which only a portion of the population can obtain easy convictions, seems decidedly contrary to the spirit of American jurisprudence. But my biggest objection to all of this is that the range of penalties, at least in Colorado, is also so broad as to possibly be unconstitutional. My understanding is that if Mr Bryant is convicted of this crime, on the mere strength of his accuser's word, the judge can impose any penalty he damn well pleases, from simple probation up to and including life in prison. Felonious assault--having some scumbag beat the crap out of you, with a weapon capable of inflicting fatal harm--doesn't usually have a range of penalties which include life in prison.

Laws which are draconian all out of proportion to similar-sounding offenses are usually the result of disproportionate influence or corruption in the bodies making the laws. In Ohio it's a misdemeanor to lie to police in reporting a theft; but God forbid you should repeat that same lie to your insurance company, or you are suddenly guilty of a felony. I'm left to wonder what rational standard could produce the belief that lying to a private company with which you conduct voluntary business is worse than lying to law enforcement while they attempt to investigate a crime. Insurance companies and their interests are, shall we say, extremely well-represented to lawmaking bodies in this country.

I would warrant that women, long considering themselves an oppressed minority, have achieved similarly excellent representation among lawmakers. Recall the American Political Axiom at the top of this page; a certain group of politicians emphasises special treatment or consideration for women, or racial minorities, whichever. This can take the form of affirmative action, or reduced threshholds of proof in prosecuting felony cases. That demographic group votes disproportionately for the politicians urging their cause. That same group of politicians, recognizing the best source for perpetuation of their own power, panders to that demographic all out of proportion to justice.

Out of proportion to justice? For no other type of crime but date rape is the burden of proof so low, and the discretion of the judge so broad, as to enable largely arbitrary "justice" to be dispensed based on the disposition of the judge. I think our culture of sensitivity and empowerment of women has become guilty of overreach on this one.

Naturally this may result in a large number of flaming angry emails; but I'd ask you to regard this in the spirit of an honest inquiry of gender equality issues before you label me as a pig of some sort (whatever the current nom-de-oppression is these days). If Mr Bryant did rape that young woman I hope they find him guilty and he goes to prison. If he had done it forcibly and she had the results of medical exams to back up her claim that she had been violated by someone with Mr Bryant's DNA I'd agree wholeheartedly that he go away for a very long time. But I lack confidence in the proceedings to actually marry justice to the outcome, and fear that the scales are tilted such as to almost require active proof of innocence in these cases of accused date rape--again, cases where eyewitnesses and hard proof are already in short supply. This is not a standard consistent with historical American jurisprudence. Even in cases involving conspiracy and the notoriously elusive charge of racketeering, there is a fundamental presumption of innocence of the accused, and the charges need not be met with an active proof of innocence to result in acquittal. The noble causes of equality before the law, and gender equity, are poorly served by adopting specially lowered standards for prosecution of date rape, no matter how difficult.

Special treatment under the law is often a strong indication of early signs of tyranny, and even a tyranny of the majority is still tyranny. I'd urge everyone to pay attention to this case (though the media will ensure that at any rate), and to consider how they would respond to such a circumstance as a "he said/she said" when summoned to serve on a jury.

JKS.

2003-10-20T15:46:00.001-04:00

On one of the comments boards over at Eject! Eject! Eject!, a new conspiracy theory surfaced about the "true motivation" of the administration's decisions to wage war in Iraq. One of the central points of this new thesis is that the administration sees a threat to American economic "hegemony" in Iraq's decision to sell oil denominated in Euros rather than US dollars. The true threat, as evidently perceived by the administration, is that the rest of OPEC has expressed some interest in doing the same.

The motivation for OPEC here is not difficult to discern: the dollar has been dropping against the Euro. This means that if recent oil sales had been denominated in Euros instead of dollars, the sellers (OPEC) would have seen increased revenue from their exchange rate gain; instead, what has happened is that those buyers who first convert their Euros to dollars have seen reduced costs of oil. The main beneficiary of the current state of affairs are those European nations who are members of the Euro zone and who are net importers of oil. This is a simple reflection of exchange rate risk, which sometimes benefits and sometimes harms Europe, OPEC, and the rest of the world (though not the US). And it is possible to hedge adequately against this risk if one is truly concerned about it.

But the manner in which this reform has been suggested suggests something beyond a reduction in exchange rate risk. Consider, for example, the following:

>>Prime Minister Datuk Seri Dr Mahathir Mohamad has proposed for oil to be traded in the euro equivalent of the dollar to protect producers from currency manipulation and hedging against the weakening greenback. He said oil-producing countries are feeling the impact of the weakened dollar which had depreciated sharply against the euro.

"[But] should the euro depreciate against the dollar, then payment should be made in dollars. This is a kind of hedging," Dr Mahathir said.<< (Business Times in Malaysia, "PM Argues That Oil Should be Traded in Euros," 6/17/2003)

The damning aspect of this is that OPEC's suggestion is that they be allowed the "flexibility" to resume trading in dollars if and when that becomes more to their advantage. Note that a hedge is simply a means of reducing or eliminating risk, not a maneuver designed to produce a gain. It is clear that this effort as proposed above is not really designed to simply eliminate exchange rate risk, so much as ensure that all exchange rate fluctuations, of whichever direction, benefit OPEC. That is emphatically not a hedge, despite what the Malaysian Prime Minister would suggest. And no rational buyer of any product would allow themselves to be trapped or cajoled into such a contract relationship.

A commenter at Eject!3.com pointed to an essay in support of his theory that George Bush went to war in Iraq over this whole dollar-denomination issue, rather verbosely entitled
The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, by an author by the name of William Clark. It's sponsored by Indymedia, which immediately gives the reader cause for concern. But the mere fact of its origin is not sufficiently compelling an argument to discredit the theory, so I did read it and gave it some thought. The paper is well-written enough to seem superficially credible, and the mistakes (though many are present) are not obvious, so I prepared a few remarks on it which were also posted at Eject!3.com. A lightly edited version of these is presented below.

This was at least one of the more interesting conspiracy theories I've encountered, so I'm glad I read it. If you're interested in giving the left a fair hearing before offering rebuttal, you could do worse than to follow the link I provided above and give the essay a quick read. I believe what I've said below sufficiently discredits Mr Clark's analysis to an objective reader, though I did not get too much into some of the technical details. If there's any element you'd be interested to see treated in more detail, drop me an email and I'll see what I can do for you.

If I've missed something and am myself completely mistaken, please take the opportunity to give me a free education!

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Short version: the author makes a few good points which I agree with, but makes some mistakes in his economic analysis, and ultimately I think his final conclusion is not rational.

Longer version:
The author is correct in saying that it is to the US advantage to maintain the status quo with respect to the standard currency for oil transactions, all things considered. But he greatly overstates how valuable this is; the main benefit here to the US is the elimination of the exchange rate risk, though even here it often works to our disadvantage, not our advantage.

I still maintain that the only reason you're hearing about this Euros-for-oil idea right now is that the dollar is dropping against most other currencies right now. If the dollar starts to rebound you'll stop hearing about this right quick, as it would then cost the sellers of oil money to sell in Euros. I warrant that as much as most of the oil-selling nations dislike the US, they don't dislike us enough to engage in financial transaction disadvantageous to their own interest, just to hurt us too.

And US economic policy is not simply to make the dollar as strong as possible, as the author seems to think; rather, given the dollar's basic fundamental strength, US policy is generally to keep it basically stable. Understand that dollar movements against other currencies cut both ways, and that the US Treasury Secretary recently (misguidedly, in my opinion) applauded the dollar's recent fall for the boost this would provide to US exports (and hence, US GDP, and US employment figures). The flip side is that the fall in the dollar tends to discourage foreign investment in US assets, and capital is harder to raise; this means to US companies that capital-intensive projects to improve efficiency and cut costs must be forgone or postponed, and therefore large and permanent drops in the dollar have elements which are depressive in the long term to US GDP. The whole situation is much more complicated than Mr Clark suggests.

The increase in dollars in circulation by virtue of the oil currency denomination isn't all that significant. Many nations get their oil-buying dollars direct from US consumers via US purchases of foreign goods, so it's not like foreign nations have to go out of their way to buy dollars they'd otherwise not need just so they can consummate their oil purchases. Remember that big US trade deficit we hear so much about; this tends to greatly increase foreign holdings of dollars compared to US holdings of foreign currencies. The holding of dollars by foreign nationals is good for the US in the long run, as it represents foreign investment in US capital, but it's financed largely by the trade deficit, which was $536 Billion in the 12 months ended June 2003. The huge trade deficit itself is less good for the US, though ultimately it's somewhat self-correcting; if eventually we buy so much from foreigners and sell so little in return that the whole world is just saturated in US dollars, demand for the acquisition of additional dollars will decrease. This means the value of the dollar will decrease (and this may be what we're observing now), reducing US consumption of foreign goods and facilitating (via that weak dollar) increased export of US goods, till some equilibrium (or cyclical range, at any rate) is achieved.

The author advocates pegging the dollar and the euro in a "trading band with reserve status parity," which is a fancy was of saying he wants to artificially force exchange rates to be confined within a narrow range, rather than allowing the market to determine it freely; and that we pronounce that the euro is just as good a reserve currency as the dollar. Fixed exchange rates are good policy in some really narrow circumstances, like when a nation with a tremendously weak and volatile currency is trying to artificially encourage foreign investment beyond that which the market has already resulted in, while it works earnestly on its fundamentals. This works reasonably well for a while, provided the weak nation's fundamentals don't proceed to get worse; if this happens, the currency will ultimately collapse horribly and the exchange rate pegging only will have intensified and postponed the collapse. Pegging a major country's (or bloc's) currency to the dollar would essentially be an acknowledgement of the dollar's superiority and would be very unusual policy.

Contrary to what the author suggests, European economies (which may be large in absolute size) have some considerable structural deficiencies, and will not grow faster than the US economy in any sustainable way any time soon. As long as the US continues to have faster average growth than Europe, with low inflation and a stable government, merely saying that the Euro is just as good as a reserve currency doesn't do anything. As long as the US economy offers better growth prospects than the Euro zone, the dollar's long-term trend will be upward against the Euro. And pegging two currencies with an ever-widening gap in fundamentals will ultimately not prove helpful. It is this that makes the dollar useful and attractive as a reserve currency.

Since we didn't buy any oil from Iraq prior to the recent war, and we stopped selling/giving oil to North Korea, those two nations' decisions to stop using the dollar to denominate their oil transactions didn't do anything really to hurt us. The trivial amount of reserves ($10B) held by Hussein would do nothing really to weaken the dollar by virtue of their mere conversion into Euros; consider that this amount is similar to the amount of reserves held by Peru or Columbia, and that by comparison China holds $365B and even Poland holds $30B. Dropping $10B on the exchange market is no big deal.

Now, I don't want to be gratuitously negative about this, but I noted that the essay was posted on Indymedia. Indymedia is well-known for its tremendously liberal slant. The author of the essay even goes so far as to suggest that the media are willing participants in a conspiracy to suppress the information contained in the Clark essay, though he doesn't point out what the media gets for its end of the bargain in suppressing the information. I feel obligated to regard any unsubstantiated conspiracy theory proffered by a biased source (whether liberal or otherwise) with extreme skepticism.

One other general, fundamental issue I take with the essay is the ruthless, godlike competency that Mr Clark rather surprisingly ascribes to the Bush administration. I have not been impressed with either Treasury Secretary appointed by President Bush; Paul O'Neill is a decent man but was clueless as Treasury chief, and Snow seemed downright pleased with the dollar's weakening (leading as it does in the short term to a boost in US exports but causing a decrease in foreign capital investment in the long term). And we all know liberal opinion surrounding Mr Bush's personal intelligence.

Despite this, the author would have us believe that this administration has adopted a long-term strategy centered around an economic subtlety which is difficult to understand, which they don't intend to explain, and that they will pursue this (in their first term!) via a war that the liberals would have us understand no one wanted. I'm not sure most government officials (in this administration or any other) work amid such certainty of their methods. Not all of them even agree on the best practices to achieve a basically agreed set of ends. To suggest that there is some ultra-efficient, essentially infallible, monolithic "corporate-military-industrial network conglomerate" (Clark's actual term; hereafter CMINC) pulling all the strings with absolute certainty that the actions they influence will produce the results they want is, I think, to ascribe far too much competence to our government officials. What was this omnipotent CMINC doing during the Clinton administration? Was Clinton a tool of the CMINC as well? If not, and by Clinton merely winning an election the CMINC was thwarted for eight years, I'd suggest that maybe it's not really so powerful after all.

All things considered, having read the argument offered by Mr Clark, I am respectfully unconvinced.

JKS.

2003-10-19T15:59:00.001-04:00

Over the past couple of months I've been having an ongoing discussion with a gentleman by the name of Mark Peters. He’s a well-read amateur economist with a strong free market inclination, so we have much in common. In fact, the discussion has been particularly interesting because we do share so much similarity in economic policy preferences, and I actually find myself engaged in a discussion with someone who’s arguing economic policy slightly from my right, which is most unusual.

Now as much as we agree on the basics, we’ve managed to run on to some considerable length about some of the details, and in our most recent exchange Mr Peters recommended a book called Economics in One Lesson, by Henry Hazlitt. The following is my reply, and though it is tailored to our previous discussion in particular, it may be of some interest to a wider audience, so I’m posting it here.

I will be posting all our previous exchanges in the archives in the next day or so, to provide some context for all this.

Thanks again to Mr Peters, who has kindly granted his permission for me to re-post his previous messages on this site.

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Mr Peters,
I had been interested to continue or previous discussion, and thought the best preparation for doing so would be to read the book you recommended by Hazlitt. I’ve read most of it, and I find myself agreeing with the great majority of what he has to say. I was a bit surprised by finding the bulk of the book so agreeable to my opinions, as you had recommended it to me based on it being a fuller explication of your point of view on a few of the matters we disagreed on.

I had only a few objections to the book, leaving aside its obvious and unavoidable appearances of age: many of his chapters were dedicated to fighting off arguments you don’t hear much of any more, while Kerry and Gephart and company offer somewhat more subtle arguments which are equally preposterous and equally destructive. But it doesn’t seem to cover any really new ground (for me, anyway). I have a modest amount of college economics background, and the book clearly is aimed at an audience which (a) doesn’t; and (b) believes a bunch of silly things about protectionism, minimum wages, and general intervention in the markets. I am also a staunch fiscal conservative, and I found that for me the book was essentially preaching to the converted, and doing so without much new supporting detail.

I also thought it was surprising to read several approving references to Wealth of Nations in the Hazlitt book you recommended, as I thought you had said you found classical economics too riddled with errors to be useful.

I recall that you protested that you’re not a libertarian, but Hazlitt certainly was. I hope you’ll forgive me for continuing to refer to your essential argument as being libertarian (small “l” anyway) in what follows.

It’s been my observation that libertarianism is primarily a philosophy, and that like most other philosophy studies, discussion of it centers on logic and the absence of any internal contradictions. I said before that I think that’s what libertarianism has going for it primarily: it is one of the only systems for which its application never results in contradictory results. Unfortunately it does this by maintaining a simple premise and insisting on its universal applicability, which produces results that are admittedly self-consistent, but sometimes a trifle simplistic. But part of the problem with employing a simple argument and insisting on its universal applicability is that it invites refutation of the whole system simply by disproving one of its elements (or citing one instance where its application produces unacceptable results). I really don’t claim to have “refuted” libertarianism, of course, in any logically rigorous way. But I’ve identified enough outcomes which seem like weaknesses or errors to me, to say that I remain therefore unconvinced of the system as a whole. I think consequently the philosophy will never be dominant in the US, though it will likely continue to influence fiscal conservative policy—and that generally in a good way.

I agree that our main differences here are that you’re using philosophical arguments and I’m using economic arguments. I think it’s possible to carry on the discussion that way without both parties pointlessly talking past one another, because I agree with you that good economics depends on good philosophy. But I’d take your assertion one step further and point out that philosophy is just a group of ideas until it’s experimentally confirmed, and in this field economics is the experimental science. Aristotle, for all his obvious genius, was philosophically convinced (which was good enough for everyone till Newton) that a heavy object must fall faster than a less weighty object. Philosophy diverges from truth if it is never checked by experiment.

I recently pointed out to another correspondent that there is a difference between policy and philosophy, and that it’s important to know when to argue which. Economics is neat in that good philosophy (free capitalism) almost always results in good policy. But some of what I’ll discuss below is explicitly a policy decision, since we would ask the taxpayers of the United States whether and how to invest their money, and the outcomes will have significant economic consequences to total societal wealth. In these cases, I would suggest that allowing a philosophy argument to dictate an economically suboptimal policy is a poor decision.

If you want to argue that in cases of government intervention, the invisible opportunity cost is more expensive than the benefit, we can at least discuss that sensibly. But if you would argue that there should be zero cost to a program which provides a clear benefit, just because it’s the government implementing it, then you’re making an argument that doesn’t talk to me as an economist. To that I’d suggest that the argument is not well suited to a policy discussion.

Now, less generally, about the book:

I agree that minimum wages create inflation and unemployment; that tariffs hurt the consumers and economy they purport to protect; that redistribution of wealth (beyond a very minimal safety net, which as a taxpayer I do find myself willing to pay for) is fundamentally unjust. Our main disagreements in our previous series of essays eventually were reduced to some fine points, at what I called the extreme edges of capitalism—exactly where things get a little messy and I start to doubt the workability of a monolithic libertarian solution. I was hoping to see those particular cases treated in the book, since you had recommended it as a more elaborate treatment of your main thesis (which, if memory serves, we were debating primarily via monopolies and trust-busting activities by the government). I was therefore a little surprised to see that monopolies are not defended in the book anywhere that I could see. It’s not in the index, it’s not in any of the chapters I read in their entirety, and I didn’t happen across it in the chapters I skimmed. If it’s in there somewhere, please point it out to me.

I did find one specific point in the book I disagreed with—again, endangering the logical validity of the whole all-or-nothing premise. This didn’t surprise me, as I had expected to find one or two around the edges of the argument, even though I agreed with the great bulk of it. In the chapter “Credit Diverts Production,” Hazlitt essentially makes the argument that government loans always distort markets and should never be made. I disagree, having myself benefited from the loan guarantees provided by the Federal government for me to attend college—and, I hope, having benefited society in some small way in return. As I think that observing a single instance where libertarian philosophy produces suboptimal results sufficiently justifies my skepticism of the system as a rigorous basis for economic policy, I want to examine this case of Federally guaranteed student loans with some particularity.

There is a clear benefit to society for this program: a more-educated workforce will certainly produce economic benefits compared to a less-educated workforce (more inventions, more scientific basic research, a cure for the common cold to allow more days spent at work, whatever). More people with more knowledge allows more wealth to be created than the converse. I hope that idea is sufficiently self-evident I don’t need to really elucidate it further, but I hope you’ll tell me if we disagree here.

The trouble is that college is expensive, and college students don’t normally have much in the way of established credit or demonstrable ability to repay a loan from an independent financial institution. The government’s provision of a guarantee for a loan I could otherwise not have gotten has allowed me to finish a degree, get a good job, help both myself individually and therefore also the economy in general, and (incidentally) pay back the loan to the bank with interest.

Now I would expect that your main objection to this is in opportunity cost—what else society (meaning collectively the taxpayers who essentially all chipped in to guarantee my loan) could have done with the money. As it was only a Federal guarantee, and the Federal government itself didn’t issue me the money, the opportunity cost is initially with the bank who lent me the money at lowish interest rates. But the bank’s loan to me always yields a higher interest rate than (say) Treasury securities, while still being nearly risk-free. And if the bank really doesn’t need to add more low-risk, low-yield securities to its portfolio it can (and often does) sell the loan to another debt service agency who is actively seeking to add such assets to their portfolio. So it’s essentially voluntary on the part of the lending institutions, at zero cost to the US Treasury until someone defaults.

Yes, some people default on these loans, but we’ll get to that in a minute. So far we’ve established that many students are helped and therefore the economy benefits; and that the banks making the loans aren’t really out any kind of opportunity cost since they can rebalance their portfolios easily if they want to. I’m interested in considering how Hazlitt’s argument of “crowding out” more efficient and creditworthy loan applicants works in this case.

Hazlitt illustrates this argument by example of a pair of farmers who want to get a loan to buy a new tractor, or possibly an entire farm. One farmer has good credit, by having “efficiently” managed his affairs; the other farmer, presumably by being “inefficient,” has poor or borderline credit. Under the bank’s normal credit standards, the second farmer will not qualify for a loan. The Federal government guarantees his loan on his behalf, and the bank is thereafter willing to make the loan to either farmer.

Now Hazlitt’s point, if I understand it correctly, is that this has the potential to crowd out the efficient farmer, since there are only so many farms and so many tractors to go around, and now the less efficient farmer has an equal shot to be the one to get it. I was frankly shocked to read Hazlitt suggest that only farmer A or farmer B can get the tractor, but not both: our whole economic system creates wealth by creating things, and this capacity is essentially infinitely expandable in the long run. I think Hazlitt makes a fundamental error here; tractor production is not a zero-sum activity.

I think this makes no sense when talking about buying a tangible item like a tractor, but it makes some sense admittedly with respect to buying farmland. Now the important aspect of this is that he suggests what is really being lent is the farm or the tractor itself, rather than just the money, since there are only so many farms to go around. Now that we’ll have all these inefficient farmers getting the loans to buy one of the fixed populations of farms out there, while relatively fewer efficient farmers can get theirs, capital is therefore less efficiently employed. The efficient producers are crowded out.

So, to return to our particular modern example, how does this “crowding out” phenomenon hurt the “efficient” population of students with good credit? It makes their less-efficient peers more able to get loans to finish college, yes; but this doesn’t really prevent the students with good credit from also finishing college in most cases. The worst it might do would be to render a good student with good credit equally likely to get into and finish at Harvard, as the good student with bad credit (though I recall reading that Harvard considers “an applicant’s ability to pay” as one of its criteria when considering who to accept). And once everyone’s enrolled into whatever college they’ve chosen and which has accepted them, nothing hampers the good students from outcompeting their classmates (making valedictorian, therefore getting that fabulous job, etc) regardless of what everyone’s credit score is.

So there may be some small amounts of crowding out in some pretty unusual cases in the student loan guarantee program. But we’re looking for enough hidden opportunity cost to override the benefit to society provided by the program as a whole, and the small crumbs of opportunity cost we may have uncovered in the “crowding out” argument don’t make it. If those crumbs are enough to convince you to tank the entire program, then I respectfully redirect you to the philosophy vs policy discussion above.

Now for the defaulters, and the case for opportunity cost here is much stronger. The default rate is (not unexpectedly) pretty high for these programs, though it has dropped below 6% for the past several years (see this graph from the Department of Education), aided by low interest rates and an improving process of loan selection by the Federal government. This selection process is evidently based on certifying an entire school as an institution whose students are eligible for Stafford loans, and disqualifying entire schools which have too high a default rate. From just a cursory Googling I turned up an article about this, here, just as one example.

I’d agree that the early 1990s default rates according to that first graph above were unacceptable, and even current default rates are expensive: a 5.4% default rate on a loan program issuing $48B per year in loans (refer to the 2004 OMB budget in the Dept of Education section, here) amounts to a budgetary expense of $2.6B annually. While this undoubtably a lot of money, it’s important to keep it in context: it comes out of a Federal budget of $2298B (OMB again), and goes to support an economy worth $9837B in 2002 (The Economist Pocket World in Figures, 2003 edition, pg 222). By contrast, we spend $748B a year on retired folk via social security and medicare. Although I think those programs are horrible and not affordable, again we have to talk policy from where we are right now; and the cost for the student loan program is trivial in comparison. I think that in order to keep the US university system, and by extension American workers in general, the highest quality and most productive in the world, the $2.6B annually is affordable. Surely at least 0.02% of our annual GDP can be ascribed to having an excellently educated workforce.

So I saved the strongest argument against for last and came up with some comparative figures which (to me) make the student loan program look reasonable and affordable. I guess I would prefer to have hard figures as to what specific incremental contribution the loan programs make to the economy, but I am not aware of any immediately and the case seems persuasive to me even without it. It seems to me that the “productivity miracle” the US has experienced the past decade cannot be wholly unrelated to the education of our workforce.

As much as I’ve enjoyed our discussion (and would welcome another of your consistently thoughtful replies), I conclude that I still find rigorous libertarianism to be kind of troubling at its edges. I think it’s a good guide to policy, but I don’t find the philosophy itself sufficient to blindly use it as policy. I hope my tedious and detailed treatment of this one particular case can illustrate why.

Regards,
JKS.
10/17/2003

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