March 31, 2009

Quote of the Day

So let's recap - Krugman was wrong about the previous strategy having been "always bonds", wrong about the switch to equities being executed at the market peak, and wrong about possible losses amounting to "hundreds of billions" of dollars, we presume. He also misspelled "Guaranty". But he did find an opportunity to explain how stupid conservatives are. Mission Accomplished! -- Tom Maguire

March 30, 2009

Mexican Violence

Jeffrey A. Miron, senior lecturer in economics at Harvard University, says legalize:

Prohibition creates violence because it drives the drug market underground. This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead.

Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after.

Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it's permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.

The only way to reduce violence, therefore, is to legalize drugs. Fortuitously, legalization is the right policy for a slew of other reasons.

Prohibition of drugs corrupts politicians and law enforcement by putting police, prosecutors, judges and politicians in the position to threaten the profits of an illicit trade. This is why bribery, threats and kidnapping are common for prohibited industries but rare otherwise. Mexico's recent history illustrates this dramatically.

Prohibition erodes protections against unreasonable search and seizure because neither party to a drug transaction has an incentive to report the activity to the police. Thus, enforcement requires intrusive tactics such as warrantless searches or undercover buys. The victimless nature of this so-called crime also encourages police to engage in racial profiling.

Hat-tip: Mankiw

Posted by John Kranz at 8:11 PM | What do you think? [10]
But Boulder Refugee thinks:

The Refugee can definitely jump on board with the "state's rights" thing. When it comes to Las Vegas, he hates the place but would not attempt to overturn any of its laws through federal intervention; he will be content to confine his protest to never moving there and visiting as rarely as business requires.

However, he cannot reconcile the idea that it's not OK for the feds to abbrogate individual rights, but it's ok for a state to do so. It's either a right or it isn't, and it can be regulated or it can't ("it" being defined at its indefinite best). Hmmm...

-The Refugee, happy to wear the social libertarian and non-populist labels (while noting that JK ducked the polygamy argument)

Posted by: Boulder Refugee at March 31, 2009 4:57 PM
But jk thinks:

I don't crusade for polygamy, but I'd like to get gub'mint out of the marriage business, and if that means a few legal instances, I'll live with it. Your kitty cat question hits my real distinction which is adult, informed consent.

Some States in a functioning Federalist Republic will overstep their regulatory aegis and curtail what is actually a right (I'm guessing Justice Brandeis saw this as well in his "laboratories of Democracy.") If they go too far, citizens can pursue redress in the courts. More likely, people can vote with their feet as you do vis-a-vis The Silver State.

I will ask a direct question: do you not own your own body and are you not uncomfortable giving government the authority to tell you what you can and cannot do at no harm to others?

Posted by: jk at March 31, 2009 6:04 PM
But Boulder Refugee thinks:

In principle, I agree that it is my body to do with as I please; same principle with respect to my property.

The slippery area that rears its ugly head is the phrase "at no harm to others." I'll take some examples.

As owner of my body and property, I have the right to engage in risky behavior. Let's first consider seat belts and motorcycle helmets. It is my personal decision to take risks of riding without either. If I get hurt, it's my problem. But wait. Suppose I require flight for life. After the helicopter is dispatched to me, another accident occurs elsewhere. The helicopter cannot be in two places at one time, and unfortunately, the other party dies. Of course, we'd need an alternate universe to know if a seatbelt/helmet would have changed the outcome, but it arguably could have. Did my behavior, possibly harming no one else, actually harm to the other party? Arguably so. Moreover, the emergency response equipment is publicly funded. (Perhaps a true Libertarian would argue that it is up to each individual to make provisions for his own emergencies, but that's just not practical.) Since the equipment attending to me will be publicly funded (even though I may be charged some fee), does the government have a right to regulate my behavior on public roads? Yes, I think so. Obviously, the degree is subjective. (For the record, I support seat belt laws but not helmet laws. Seatbelts protect passengers that should not be subjected to risks as dictated by the driver, whereas motorcycles are generally very individual.)

Now, the sticky issue of abortion. I do not believe that a fetus is part and parcel of a woman's body, and therefore not entirely subject to her whims. Nevertheless, I take a secular view to the issue. As we define death, we should also define life. Death is defined as the absence of brain waves. Therefore, I would define life as the presence of brain waves. Fetuses get brain waves at about 12 weeks. I would therefore permit abortion up to the point when brain waves are present, but not thereafter. (Exceptions for a woman's health not withstanding.) I would not permit partial birth abortion under any circumstances. Does that tell you where I stand? Any good labels? -grin-

Posted by: Boulder Refugee at March 31, 2009 10:28 PM
But jk thinks:

Segues to Libertarian joke: "So, you believe a 14 year old should be able to trade sex for drugs in a public park?" "What do you mean, public park?"

You're describing a corner case with a shortage of medical services. I would ask you to compare this to Senator Webb's piece in Parade about the US incarceration rate. You are correct in being able to point out some benefits of the War on Drugs, but the cost is a huge loss of liberty. And the externalities of creating well funded domestic and foreign drug cartels.

You and I are pretty close on abortion. I have used "viability" which is a lot more than 12 weeks, but yours is less ambiguous. They both attempt to define a line between conception and birth which I feel is required. Both would prohibit D&X, yet both would allow fertility clinics to operate.

Posted by: jk at April 1, 2009 10:19 AM
But Boulder Refugee thinks:

Unfortunately, I don't think it is such a corner case. It is an illustration of finite resource allocation in action and the resulting government regulation related to that resource. It is what we have to look forward to if heathcare is nationalized, as you have so ably opined in these pages previously.

Posted by: Boulder Refugee at April 1, 2009 10:31 AM
But johngalt thinks:

The answer to that one is easy: Don't nationalize health care. Your med-evac example is specious in a free market because entrepeneurship will expand med-evac supply to meet demand. (Coincidentally, an hour ago I spoke with a med-evac paramedic at the county service center about the proliferation of such helicopters along the front range.) In a free market no accident victim is more deserving than another, provided he has the resources to pay for the service received. Yes, sometimes there are more accidents than helicopters and it is possible that someone could die as a result. That is what we used to call "life."

I'll make the same abortion argument I've made here before, and also to some social conservatives at the CO GOP convention last year: Yes, abortion is the intentional killing of a human being (and is so at any time after conception) but any time prior to birth that fetal baby is a physically dependant human being having a parasitic relationship with the mother. The mother, and only the mother, has a moral right to decide the baby's fate prior to birth. Yes, D&X is atrocious, but it is less so than the spectre of government coercion in either direction. (If the government can forbid abortion it could just as easily demand it for whatever reasons it may choose.)

JK has done an excellent job countering BR's excellent examples. It has been worth every long paragraph.

Posted by: johngalt at April 1, 2009 1:06 PM

Megan McArdle on GM

One of my favorites pens a superb post on the Government's plan for GM, She points out that while the government's motives are to preserve as many jobs as possible, any real viability for the company will require huge cuts in employment and costs. If that's not good enough, she compares the Obama Administration's plan to one of my favorite South Park Episodes:

Posted by John Kranz at 7:48 PM | What do you think? [0]

Banana Republic Economics

Mary Anastasia O'Grady sees a reflection of Latin American Economics as the current Congress and White House use the crisis (Hayek, call your office!) to expand government control over the finance system. Her expectation of its playing out in Mexico seems a shadow of how I expect it to play out here:

There the Institutional Revolutionary Party (PRI) ruled a corporatist state for 70 years and finally got voted out in 2000. Now, the old guard of the party is trying to launch a comeback. While most Mexicans see the economic contraction as a crisis, PRI "dinosaurs" (not unlike White House Chief of Staff Rahm Emanuel) view it as an opportunity. It offers them a chance to regain power and again practice the potent politics of economic nationalism.

Posted by John Kranz at 3:29 PM | What do you think? [1]
But Perry Eidelbus thinks:

I wasn't thinking of Mexico, but rather Venezuela. Not that there's a hell of a lot of difference, between the two or between either and Obama's African Marxism.

And The One will no doubt follow further in Chavez' footsteps. If not sooner, then starting on November 6, 2012, there will be a push to repeal the two-term limit. You'll see marches and "get out the (corrupt) vote" efforts, organized by the likes of ACORN and the Black Panthers, to make Obama's 2008 campaign look as flaccid as Dole-Kemp '96.

Posted by: Perry Eidelbus at March 31, 2009 12:45 PM

March 29, 2009

Was it Kierkegaard or Dick Van Patton?

"Was it Kierkegaard or Dick Van Patton who said 'if you label me, you disregard me?'" Wayne's World viewers realize it sounds better in Cantonese.

Some comments, several posts down, blossomed into a discussion of how many axes are required to classify polities. Nanobrewer expressed some interest in continuing, and political Zoology has always been of great interest to me.

tg offers a good baseline with The Republican Liberty Caucus's RLC LiberGraph. My favorite two-axis graph is from Pew and I have cited it frequently in the context of asking my big-L libertarian friends how they expect to govern with a 9% electorate.

My gripe with the RLC's is its defining "personal liberty" as a scalar quantity. I tried to explain that I prefer a strict enforcement of just laws, and I turned to Bastiat (understandable and avoidable) to define them. I score myself high on the personal liberty scale. I'd go along with the whole libertarian agenda of legal drugs, prostitution, gay marriage, and helmetless motorcycle riding; things that do not harm me, you may do.

Two places I tend to stray off the libertarian reservation are my acceptance of strict -- almost authoritarian -- enforcement of laws that do hurt me. I cited Mayor Giuliani as an example. Let's make insider trading legal but let's put graffiti taggers in stocks in the public square It seems more than semantic to ask whether this knocks down my personal liberty score or represents a different axis.

My second libertarian heterodoxy and gripe with both the RLC and Pew scales are their domestic-only metrics. I cited Deepak Lal's Liberal International Economic Orders and my willingness to support an international military presence to defend the infrastructure of free world trade. That would get me kicked out of a Reason soiree before they ran out of cocktail wieners.

So I vote for Pew's, and I add a parameter for "crime tolerance." Many libertarian-types are willing to put up with a lot of crime to preserve expression and insulation from police.

I then add an international military axis from isolationist (Rep. Ron Paul) to adventurist (President Bush).

I propose four axes:

  • Social Liberalism

  • Economic Liberalism

  • Authoritarianism

  • Military Adventurism

But then again, I'm just your typical, Authoritarian, Social Liberal, Economic Liberal, Adventurist...

Posted by John Kranz at 4:17 PM | What do you think? [3]
But nanobrewer thinks:

Here's where I'll have to part with JK. Too many additions will result in an eye chart; nice for a story, a blog post, or perhaps an academic paper, useless for nudging our paradigm towards much needed change, IMO.

First: I think rating military adventurism as a deciding, ideological factor is potentially ruinous. One of the great successes of our American experiment has to keep the military under civilian, political control. Use of the military should always stem from deeper beliefs,
like protecting economic rights (e.g., free trade) or extending our ideas of personal liberty beyond our borders.

I've been thinking about this over the last couple of days and really do think one more axis is needed, and am nearly as sure that no more than one should be included. I find the Pew report, well-considered, properly analyzed (as always) and a bit troubling. Perhaps this was the populist wave McCain tried to ride?

All for now; I hate to dis&run but I need to winnow my 3-axis thoughts down to a manageable size, get some personal things in proper order prior to leaving town for business, and be sure JK isn't alone on this topic.

Posted by: nanobrewer at March 29, 2009 8:20 PM
But jk thinks:

Safe travels, nb. Email me your 3-axis (jk [the cat] three sources [doth protest too much] com)and we'll reopen this.

Posted by: jk at March 30, 2009 12:59 PM
But T. Greer thinks:

I am with nanobrewer on military adventurism. It seems to be to narrow a lens with which to gauge worldviews. Where would you put the President who puts diplomatic pressure on a country in order to bring about free-trade reforms? What about the President who agrees to sell nuclear material and technology to key allies? Where on the spectrum falls the President who will use military force to protect economic interest but will not do the same for the sake of human rights and liberties?

A better spectrum for analyzing foreign affairs is the realist-idealist range. On one side you have those folks who approach the rest of the world with a cold dose of realpolitick, interested only in securing America's power. On the other side you have those idealists who believe that American foriegn policy should be rooted in American values; democracy, free trade, and liberty are ends in and of themselves, not just means to further American influence or power.

It is not hard to classify most people on this spectrum- Whereas I believe that supporting the Saudi regime is amoral, hypocritical, and unbefitting America, JK has stated that he believes this course of action to be a necessary evil. That puts me closer to the idealist side of the line than him.

But on the other hand, JK has stated before that the creation of a stable democracy in Iraq is reason enough to commit thousand of U.S. troops to the nation, even though the Iraqi democracy that emerges might not have American interests in mind. That puts him closer to the idealist side of things than most of America.

Posted by: T. Greer at March 31, 2009 12:42 PM

March 28, 2009

What is the Constitutional Term Limit on Dictator of the United States?

Hot on the tail of my blog showing Twice as many now believe U.S. evolving into socialist state comes former Speaker of the House of the United States, Newt Gingrich, saying the country is heading to a dictatorship.

"My specific reference was to dictatorial powers, that I thought that Secretary of the Treasury Geithner was asking for, where he would decide what companies to take over, he would decide under what circumstances, and let me tell ya, the American system was not built for one bureaucrat to decide whether or not they're gonna take your property. (...) And then look at what they're trying to do on the budget, where they're trying to ram through a resolution, to break the rules of the Senate, to be able to get through both an energy tax increase and a massive change in our health system on 51 votes, which is clearly a power grab of unprecedented proportions. I think dictatorial is a strong word, but it may frighteningly be the right word."

Is anyone else beginning to wonder why Obama doesn't seem concerned about re-election?

But johngalt thinks:

The inference that Obama may not intend to step down was mine, based solely on the similarities between the Obama regime and the Hugo Chavez regime.

I'm not a big "drug war" guy but the laws should be enforced or changed - I generally lean toward the latter.

Let's talk about his current punditry in a more objective manner. Consider his latest incarnation of a contract proposal:

I find little to disagree with here. Probably some elements of item 12 are first on that list.

Posted by: johngalt at March 29, 2009 1:25 PM
But johngalt thinks:

Oh, and on "dictatorial" I say it's time to call a spade a spade. Only in a politically correct forum can that be disparaged as "alarmist."

Posted by: johngalt at March 29, 2009 1:27 PM
But T. Greer thinks:

But JG- hes not a dictator. Not yet anyway.

The Merriam-Webster Online dictionary gives three definitions for dictator:

a: a person granted absolute emergency power
b: one holding complete autocratic control
c: one ruling absolutely and often oppressively

Which of these labels does Obama fit into? Option A can be scratched off the list pretty quick, as Obama does not have emergency powers of any sort (yet). Option C can likewise be knocked down, as Obama does not have absolute control over the lives of the citizens of the Unites States. This leaves us with Option B- but here to we have problems. Obama is not the only autocrat in Washington; like most Presidents he must wrangle with Congress. Indeed, from what I have seen he had to pull all stops in order to do so.

Posted by: T. Greer at March 31, 2009 12:24 PM
But johngalt thinks:

Excuse me if it seems like I'm parsing words but I was careful to say "dictatorial" and not "dictator."

dictatorial –adjective
1. of or pertaining to a dictator or dictatorship.
2. appropriate to, or characteristic of, a dictator; absolute; unlimited: dictatorial powers in wartime.
3. inclined to dictate or command; imperious; overbearing: a dictatorial attitude.

Both 2 and 3 fit administration policies.

Posted by: johngalt at April 1, 2009 1:11 PM
But T. Greer thinks:

Hey, if I pull a dictionary out on you, feel free to parse words all you want!

BTW: I will cede the point.

Posted by: T. Greer at April 1, 2009 4:32 PM
But Jason Kennerly thinks:

Not at all - as long as Republicans keep pulling boners in public like this, one after another, he's a virtual shoe-in in 2012.

The total collapse of the crooked financial system has completely revealed the falsity of the so-called "social conservative" position that once made Republicans so popular. Whats left - it was the last Republican administration that increased spending and government regulation (albeit, perhaps not where regulation was *actually needed*) more than any other in history, so you can't exactly blame that on democrats any more.

Remember, kids, the net ROI on war and weapons is always either zero, or negative!

Posted by: Jason Kennerly at April 3, 2009 3:14 PM

March 27, 2009

The Virtue of Selfishness

Last month Keith and I discussed Christian charity in the context of Rand's Objectivist philosophy that "altruism is incompatible with freedom, with capitalism, and with individual rights. One cannot combine the pursuit of happiness with the moral status of a sacrificial animal" she said.

A recent post on Dr. Helen's blog has a clip of Ayn Rand explaining selfishness to Phil Donahue: (very near the end) "If you made it yourself... then you should keep all of it. Why shouldn't you, you made it?"

The comments include a discussion of charity. Trey says, "I agree with Rand's political philosophy, but her ideas concerning charity go against my spiritual beliefs" and Laura says, "For me, and presumably for Trey, charity is a primary virtue" and "For a Christian, charity is not optional. We don't need to make other people be charitable, but we ourselves must be."

Naturally, I had to chime in.

Laura and Trey, You may not need to make other people be charitable, but the leftists in our government do. Since you consider charity to be a "primary virtue" then you cannot fault the leftists for forcing others to "be charitable" (as you said you must be.)

This is how Christian altruism enables Marxist-Leninist policies to proliferate in western governments. (If something is "virtuous" then how is a government mandate for it not also virtuous?)

Honorable mention also for Rand's slapdown of Donahue over middle eastern oil (at the very end of the clip.)

Hat tip: Cyrano via email

UPDATE - 3/30, 01:57 EDT: Posted a new comment on Dr. Helen (number 26).

Laura, I certainly don't believe that government mandated virtue is virtuous, but was making the case that "charity as virtue" is part of the leftists' justification for implementing their statist policies within a government that, as Seerak so eloquently stated it, "vested moral and political sovereignty in the individual." Or at least did so at its inception. My intent was not to "explain Christianity to Christians" but to explain how the Christian tradition of charity is leveraged by non-Christians, anti-Christians even, to further their own collectivist, egalitarian aims.

The original subject here was Rand's opinion on charity, which you quoted from her as essentially "not a moral duty or a primary virtue." But one must also be consciously aware of the distinction between charity and altruism. Charity is, as Rand said in your quote, "helping other people, if and when they are worthy of the help and you can afford to help them." But when a philosophy makes a virtue of helping other people without first making these individual value judgements or worse, after first judging them unworthy of help, then charity becomes altruism. This is the type of "charity" that is practiced by governments, for everyone must be treated "fairly" and "equally" in that context. It is not merely that this charity is forced upon the givers, but that the receivers can be completely void of any redeeming value and still receive.

At the beginning of the Donahue interview Rand said she regarded altruists as "evil." In an essay on Man's Rights by Ayn Rand she wrote: "America’s inner contradiction was the altruist-collectivist ethics. Altruism is incompatible with freedom, with capitalism and with individual rights. One cannot combine the pursuit of happiness with the moral status of a sacrificial animal." This is the moral and philosophical base for her assertion at the end of the Donahue interview, "If you made it yourself... then you should keep all of it. Why shouldn't you, you made it?"

For those who have further interest, I discussed this essay on my own blog where I attempted to show how America's founding fathers unwittingly laid the foundation for the socialist future we now see our country rushing towards. See:

The 6:18 pm March 28 comment there by 'Seerak' is interesting too, and worth a read...

But T. Greer thinks:

I dunno JG. One can agree with the statement, "Reading Atlas Shrugged is a good thing" without also agreeing with the statement "The government should force everybody to read Atlas Shrugged", right?

Furthermore, I would propose that this is a common misunderstanding of what the word "charity" truly means. Like many words ("virtue" being the most amusing example) the meaning of the word seems to have changed substantially over the several thousand years of its use.

These days, charity is just some ostensibly kind action you would normally perform for someone you care about, save that for it to count as "charity" you cannot really have any feelings towards the recipient at all. In fact, the less self interest involved in the transaction, the more "charitable" your happen to be.

I shudder for those who think this to be a virtue. Certainly the Apostle Paul did not. Originally, charity was "the pure love of Christ." Indeed, the word used in the original Greek - "agape" - means "love." In this sense then, charity is performing actions of service for another being because you love them.

I am quite sure that Christ would condemn performing "charitable" actions for any other reason than this. After all, did he not chastise those "who appear righteous unto men, but within are full of hypocrisy and iniquity" with the “damnation of hell”?

I imagine a like judgment would be reserved for governments that pervert charity.

Posted by: T. Greer at March 28, 2009 1:58 PM
But Keith thinks:

Once again, I'm late to the table on a subject where I'm actually qualified to weigh in. Hmmmph. Shame on me.

TG, I agree with your proposition on the drift in the meaning of the word "charity," including your use of the word "agape" from the Greek - which was translated with the Latin "caritas" in the Vulgate, and became "charity" in the King James to distinguish it from the feelings-based affection that "love" would imply. Most modern translations use "love." C.S. Lewis' "The Four Loves" would be useful here. The word's use as "giving money" is a more recent usage than most would know.

Within Christianity, giving ought never be an act of obligation - after all, if it's an obligation, then it is not voluntary, and if not voluntary, then it's no good. That quote JG cites - "For a Christian, charity is not optional" - makes no rational sense, does it? If the act is not optional, but is mandatory, then it's not charity, but sort of a divine taxation. Yes?

Since Sunday is coming, allow me to drop an odd thought. If you all happen to have a Bible around somewhere, visit the fifth chapter of Acts, the first eleven verses, for the incident of Ananias and Sapphira. A man, Ananias, sold a piece of land and donated a part of it to feed the church, keeping the rest for himself - but pretended he was donating the entire proceeds. Peter's rebuke in verse four is critical: "While it remained unsold, did it not remain your own? And after it was sold, was it not at your disposal?"

In terms our modern ears would appreciate, what Peter was saying was "You were never under any obligation to give any part of your property. While you owned the land, your ownership was legitimate and respected; after you sold it, the money with yours to do with as you see fit." Neither God nor the church leadership ever laid any burden on him and his wife to pony up a dime. Fancy that!

If that's the only sermon you have to endure this weekend, count yourselves blessed. Perhaps one day, I'll regale you with a few instances where there, in fact, is a command to be selfish - and I'll bet a nickel you can't find them.

See? There's a benefit to having a Shepherd Book along for the ride after all.

Posted by: Keith at March 28, 2009 3:57 PM
But johngalt thinks:

Clarification: When I wrote: "(If something is "virtuous" then how is a government mandate for it not also virtuous?)" it was meant to be rhetorical. I used it as a one sentence version of the argument that leftists would make to justify government force in the name of a "virtue."

I certainly don't agree with that notion, but meant to illustrate that when Christians themselves go to the leftists and say, "you can't make people do that against their will" that part of their rebuttal will be, "why not, since charity is such a good thing? More of it is even better!"

TG is obviously not the only one to misinterpret me (so clearly I was not clear enough) - Laura back on Dr. Helen's blog read me the same way. Interesting stuff back over there. I need to (as I expected) go back and engage - soon. Alas, chores come first.

Posted by: johngalt at March 29, 2009 1:42 PM
But T. Greer thinks:

@JG: Sorry to misinterpret your words. I appreciate you clarifying what you meant on this point.

@Threesource Admins in general: Dagny asked a question on the post half way down the page from here that is relevant to this post but is a side-point to the political-axis discussion being had down there. As I do not want to distract from that discussion, I shall post my answer to it here. If this is inappropriate, feel free to delete this post.

Dagny writes, "Keith states that Christianity is based on, "a well-informed, evidence-based faith." Please, Keith, can you explain what that means? My understanding is that the main definition of faith in religious terms is, belief WITHOUT evidence."

I would suggest that once again we have a case where the passage of time has created a word that in now the opposite of its original meaning. One says "I have faith that he will pull his life together" or "I have faith in the American people's ability to meet the challenges of the world", the implication being that you are stating what you want to be true but is in no way self evident.

This is not faith, in its original sense. Found in the first verse of eleventh chapter of Hebrews is the correct definition: "Faith is the assurance of things hoped for, the evidence of things not seen."

Thus, having faith does not mean believing in something despite evidence to the contrary- it means having accepted evidence that is so strong no other belief could be possible.

I can illuminate on the nature of this evidence if you wish. (I imagine Keith will come along and with his preachery way of writing things explain it better than I can, as he usually does.) For the moment, my time pressed self will yield up these words from the book of Matthew:

"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you:
For every one that asketh receiveth; and he that seeketh findeth; and to him that knocketh it shall be opened

---Note to admins: Delete the preceding post. I html'd it wierd and my name is missing.---

Posted by: T. Greer at March 29, 2009 4:28 PM
But johngalt thinks:

Dagny's gone to bed so I'll take the liberty of asking you what observable evidence there can be which justifies belief in the unknowable?

By "observable" I mean objectively so, i.e. it's always there, every time, and can be seen by any observer (and not just Pons and Fleischmann.)

The phrase "Faith is the assurance of things hoped for, the evidence of things not seen" says to me that faith is a substitute for the assurance or the evidence.

Posted by: johngalt at March 30, 2009 2:17 AM
But Keith thinks:

JohnGalt and All: My apologies - as you can probably imagine, Sunday is a a busy workday for me, and I didn't have the opportunity to come back and participate in the conversation.

Out of respect for you, my gracious hosts, I'm going to not postjack ThreeSources and turn this into a theology blog. Instead, I'm going to invite you all to let me shift the venue for the faith part on this topic over to my turf here:

I hope y'all will forgive me the presumption, but I have taken the liberty of dedicating the thread to Dagny and JohnGalt, owing to it being their comments on this post and the "Twice As Many Now Believe.." post that prompted mine. The red carpet has been rolled out...

Posted by: Keith at March 30, 2009 5:37 PM

We Do Requests

Somebody wanted a government grant spam blond? We asketh, the Internet provideth:


Posted by John Kranz at 1:02 PM | What do you think? [2]
But johngalt thinks:


I actually wanted a capitalism blonde. Sigh.

Posted by: johngalt at March 27, 2009 3:15 PM
But Keith thinks:

jg: Won't settle for a blonde with some capital? I appreciate a man who can't be bought.

Posted by: Keith at March 27, 2009 4:53 PM

March 26, 2009

Just another spring blizzard

Like jk said, the Colorado wing is snowed in. When life hands you lemons, make lemonade!

These pictures are a bit misleading. The snow around the house ranges from bare patches to 3 foot drifts, depending on where the wind left it. Out in the field it's about a foot deep all over. The 4-wheeler is just 2 wheel drive and I had trouble getting through in a few places.

Thanks for the snow tube aunt Leah!

Colorado Posted by JohnGalt at 11:23 PM | What do you think? [2]
But nanobrewer thinks:

Thanks for the pix, JB. NB is down in Texas these days doing what the 21st century demands for employment (have laptop, will travel), and misses the mountains, the snow, and the Three Sources of my personal strength; two of which look a great deal like the ones riding that sled.

Posted by: nanobrewer at March 28, 2009 12:42 PM
But johngalt thinks:

I hope your Tejas assignment is as temporary as can be, NB. Being away from your spouse and worse yet, your kids, is one of the highest personal costs I know of.

I recently thanked an Air Force Lieutenant for his service - at DIA en route from D.C. to Warren AFB in Cheyenne - and asked him if he has a family. He did not. "It's because people like you do what you do that people like me can devote themselves to their family," I told him. I also apologized to him for his current commander-in-chief, but that's another story.

Posted by: johngalt at March 30, 2009 12:57 PM

A Cheap Shot


John J Miller points out (and Insty links)

More than a month ago, Tim Geithner announced a new website: “The website will give Americans the transparency they deserve," he promised. As of today, however, the website is still under construction.

Are you feeling more confident about the adminstration now?

I got a kick out if it. But to be fair, there is quite a bit else going on on the webpage. I don't know what the wizkids at Treasury have planned (an animated Hamilton Avatar?) but I suspect they may have just forgotten to remove the "under construction" text.

Just more of that trademark ThreeSources fairness y'all tune in for.

Twice as many now believe 'U.S. evolving into socialist state'

Before Obama was elected president a good friend disputed our impassioned arguments that America is becoming a socialist country. "I've been to Europe many times and I know what socialism looks like. We're not there and we're not going there anytime soon." Every time I see him I resist the urge to ask him about this again. But TechnoMetrica Market Intelligence has been asking, and compared the answers now to those from last August.


A thumbnail summary of the results is that among Republicans and independents, the group who believes America is becoming a socialist country has doubled (from 1/3 to 2/3 of Republicans and from 1/4 to 1/2 of independents). Democrats, more eager to support the ideology than speak its name, were more likely to see socialism in our future under Bush than Obama.

The link is a brief essay and explains the results of the larger poll as representing three groups: Undeclared Socialists, Passionate Capitalists, and Hybrid Deniers. (Worth reading just to see those in the squishy middle called "deniers.")

But T. Greer thinks:

JK & JG- You have taken everything I was going to say about the liberty/centralized power scale out of my mouth. Darn.

For the record, I am also a fan of those nice quandrant political scales. The one used by the Republican Liberty Caucus is my favorite of such sorts.

Posted by: T. Greer at March 27, 2009 1:42 PM
But johngalt thinks:

Yes, I found it ironic myself that I found so much common ground with the Ozark preacher. (Preachers ain't all bad, right Keith? :) The best parts of Christianity really are just Perry and the founder's 'Natural Law' and Uncle Eric's 'Juris Naturalis.' This is very similar to Rand's "true nature of man as a rational animal" development for an objective morality. As such, I'm on board.

If the "social conservatives" like Huckabee would just "get out of our bedrooms" they would find much less resistance to the balance of their values.

Posted by: johngalt at March 27, 2009 3:29 PM
But Keith thinks:

jg: The best parts of Christianity really are just Perry and the founder's 'Natural Law' and Uncle Eric's 'Juris Naturalis.' Ummmm... not sure I'll go that road; somehow I'm more comfortable saying the best part of Christianity is that it's objectively true in its claims, thereby appealing to the rational animal in me. On the other hand, I'm totally satisfied with Rand's "man as a rational animal" parallel, but as Christianity is not a blind leap of faith into the unknown so much as a well-informed, evidence-based faith.

jg, I find as ironic as you do the fact that you find more common ground with Huckabee than I do! What's clear is that you and I are running on some parallel tracks; the task of sorting people into Conservatives/Non-Conservatives can be as problematic as that of sorting them into Christians/Non-Christians. We've dealt with that more than once on my side; for a teaser, see this:

One thing that's clear in both discussions is that neither self-identification nor media judgments are definitive. Complicating matters on my side, of course, is that the ultimate decider on who falls into which category have some longer-lasting consequences...

I don't have any children, but I'm going to have to check out the Uncle Eric books.

Posted by: Keith at March 28, 2009 3:19 PM
But dagny thinks:

I realize that this post is almost off the page and this is straying from the topic but I can't let it go. Keith states that Christianity is based on, "a well-informed, evidence-based faith." Please, Keith, can you explain what that means? My understanding is that the main definition of faith in religious terms is, belief WITHOUT evidence. I was raised Catholic BTW. I therefore have an overwhelming philosophical problem with this concept. If I am supposed to believe in God without evidence, who gets to decide what God says and wants? Unless God is speaking directly to me (and he hasn't) do I believe my priest? My Rabbbi? My Mullah? The Bible, which was written by men and re-translated many times?

Now we have a new can of worms. If I take what religion teaches without evidence, what else can I be talked into believing? Global warming? Keynesian economics? Multi-culturalism? Subjectivism in general?

So please tell me, what EVIDENCE am I supposed to base my faith on? This is not a rhetorical or sarcastic question, but one I have been asking for years to a chorus of ridiculous answers.

Finally, and on yet another subject, there has been a lot of traffic lately on the subject of, "Mark to Market," accounting rules not the least of which comes from my beloved. And as Keith says above, "Once again, I'm late to the table on a subject where I'm actually qualified to weigh in." I'm looking forward to a detailed "weigh-in" on this subject from an accounting perspective in the next month or so. But I claim that no one can expect such from someone in public accounting in the last 2 weeks of MARCH. So you can all look forward to a boring, expository filled with TLA's in the future.

Posted by: dagny at March 28, 2009 9:38 PM
But nanobrewer thinks:

Excellent comments, all. I'll be directing my personal contacts to this discussion. Huckster vs. McCain? C’mon, old news, let’s move along. The Preacher is good at what he is; let him reside there. I'd like to take up the discussion of political classifications, even hoping it gets its own post. I see there’s a Wiki article started on this.

1. I think classifications are useful, as people do want a 'team' to be on, to root for, and feel like they are in the game.

2. The way to get classifications into widespread use, is to get people to adopt them. Labels are assigned from the top down, a social model that nearly never works but that’s so easy, and feeds the egos of those from Rush 2 Obama; thus, their frequency. The easy part, btw, is what makes popularity in the media world, not the real world.

3. To get widespread use, they need to be simple and understandable.

So, I think two-axis (Lib/Cons. R/D, Socialist/Capitalist, etc….) approach is too divisive to get broad appeal. Even the very simple, 4-quadrant approach now adopted by RLC, as noted by TG (for more, see the end) I think is too complex.

I propose a three-axis model.
Economic Freedom
Personal Liberty
Moral(ity) Index

The first two are well known, hopefully well understood, and useful, powerful, pertinent, and rooted in our constitution. The third is where I’m moving into new ground, inspired by JK’s comments on morality and the need for force to back up the rule of law, even to create the peace necessary for it to develop, at times. I used a vague term for the third leg intentionally. I want those who participate to paint their own portrait of just what this implies. The overall thrust must once again be, as The Founders struggled with, how much power over these items must government be granted?

I think I need help from TS’ers. Probably first is how this is described: labels are bad as we all agree. “Classifications”, “categories”, etc. are all too pedantic and scream “top down” with all the divide&conquer implications they deserve. “Parties” has been used and abused. I want a new word that evokes the concept of ‘teams’, much like Tiger Teams in the working world. It implies voluntary association, as well as a direction and progress in a way the term ‘focus group’ does not. Hmm, caucus is reasonable. What say you?

I grant TS the right to share my eMail address to any who wish to contribute off line.

As an aside, let me take a moment to proselytize on the 4-axis from Nolan’s ideas, and now adopted by the Rep. Liberty Caucus. It looks identical to the 4-quandrant scale used by the AfSG folks who picked up on Nolan’s ideas to start the 10-question, “World’s Smallest Political Quiz.” I was once vastly enamored of the idea, and the implementation. If this had some lasting affect, I missed it. Pity, since I think our 100-year experiment with the current party system has run its course.

Posted by: nanobrewer at March 29, 2009 12:52 AM
But Keith thinks:

Dagny and All: My apologies - as you can probably imagine, Sunday is a a busy workday for me, and I didn't have the opportunity to come back and participate in the conversation.

Out of respect for you, my gracious hosts, I'm going to not postjack ThreeSources and turn this into a theology blog. Instead, I'm going to invite you all to let me shift the venue for the faith part on this topic over to my turf here:

I hope y'all will forgive me the presumption, but I have taken the liberty of dedicating the thread to Dagny and JohnGalt, owing to it being their comments on this post and the "Virtue of Selfishness" post that prompted mine. The red carpet has been rolled out...

Posted by: Keith at March 30, 2009 5:35 PM

Chavez cheated. Really?

Jimmy Carter, call your office...

Investor's Business Daily reports that CIA cybersecurity experts know he fixed his 2004 recall referendum.

Two weeks ago, at a field hearing before the U.S. Election Assistance Commission in Orlando, Fla., CIA's Steve Stigall cited Venezuela, along with Macedonia and Ukraine, as examples of the risks of electronic voting.

Of course, most of us "knew" this at the time, and many had evidence:

While Carter was declaring Venezuela a democracy, the scam was not entirely unnoted. Mathematicians at universities like Yale, Johns Hopkins, MIT, University of Santa Cruz and in Venezuela all found a "very subtle algorithm" in the voting software that adjusted the ballot count in Chavez's favor, the Herald noted.

And like my call to correct the fraudulent ratification of the 16th Amendment, IBD wants this 5-year old screw up remedied.

Carter dismissed them arrogantly and a New York Times editorial abusively told the Venezuelan opposition to "grow up," and accept Chavez as president. They shouldn't. And neither should we.

That the U.S. now recognizes this vote was a fraud means we should fix our mistake. It's vital for democracy in this hemisphere.

Venezuela Posted by JohnGalt at 4:49 PM | What do you think? [1]
But Keith thinks:

jg: pay no mind to Jimmeh. He's just feeling pretty full of himself now that he's no longer THE WORST PRESIDENT IN AMERICAN HISTORY.

And no, I'm not reopening THAT can of annelids.

Posted by: Keith at March 26, 2009 7:35 PM

Another Chance Against McCain-Feingold

The court whiffed on McConnell v FEC. But the WSJ Ed Page reports the Roberts Court may get a shot at restoring the First Amendment in Citizens United v. Federal Election Commission

With Chief Justice Roberts, Justice Alito has previously taken a cautious, piecemeal approach to campaign finance law. But as the current case shows, McCain-Feingold is a blunt instrument that gives federal bureaucrats the power to decide what kind of campaign advertising is allowed during an election. If "Hillary: the Movie" isn't allowed, then Michael Moore's documentaries should be banned, and newspaper endorsements would also be suspect despite a specific carve-out in the law. If newspapers didn't have that carve-out, then maybe so many editors wouldn't cheerlead for this kind of law.

McCain-Feingold is a frontal assault on political speech, and President Bush's decision to sign it while claiming to dislike it was one of the worst moments of his eight years in office. Citizens United gives the Justices a new opportunity to chip away at this attack on the First Amendment, and even better if they use it to declare the whole thing unconstitutional.

Amen on that's being one of the lowest moments in two W terms. I'd add McConnell v FEC as one of the lowest of the recent Court.

SCOTUS Posted by John Kranz at 4:26 PM | What do you think? [0]

Back to the Caves

A good friend of this blog sends a link to The New Yorker (and yes, the page has a cartoon in it). David Owen makes one of the more intelligent and compelling cases that energy consumption is required to advance human comfort and prosperity. Owen flatly states that "the world’s principal source of man-made greenhouse gases has always been prosperity."

The recession makes that relationship easy to see: shuttered factories don’t spew carbon dioxide; the unemployed drive fewer miles and turn down their furnaces, air-conditioners, and swimming-pool heaters; struggling corporations and families cut back on air travel; even affluent people buy less throwaway junk.

Where Owen diverges from your average right wing, DAWG-denyin', knuckle-draggin' whacko is that he thinks it is great. He only worries that efforts to revitalize the world economy might succeed -- and concomitantly raise carbon footprints.
The environmental benefits of economic decline, though real, are fragile, because they are vulnerable to intervention by governments, which, understandably, want to put people back to work and get them buying non-necessities again—through programs intended to revive ordinary consumer spending (which has a big carbon footprint), and through public-investment projects to build new roads and airports (ditto). Our best intentions regarding conservation and carbon reduction inevitably run up against the realities of foreclosure and bankruptcy and unemployment. How do we persuade people to drive less—an environmental necessity—while also encouraging them to revive our staggering economy by buying new cars?

Those bastards!

My e-mailer suggests (so pointedly I wish had share permission) that these people have no plans to join us in the caves when we are driven back. They'll spin off a check for carbon offsets before they climb aboard he Gulfstream. But I do appreciate Owen's honesty.

But johngalt thinks:

And where Owen diverges from your average tofu-munching, prosperity hating, disaster du jour statist is in having even the slightest concern for "putting people back to work."

Kenneth Green, a self-proclaimed carbon taxer, writes in The American about the practical difficulties of reducing "greenhouse gas" emissions either through regulation or by a cap and trade plan.

With such a huge swath of the economy's productivity based on energy production and consumption, the government will be creating a new financial instrument of massive proportion. Did the current economic turmoil not teach us the importance of deliberation in creating new kinds of poorly understood financial instruments?
Posted by: johngalt at March 26, 2009 4:40 PM

March 25, 2009

Pitts: Elections Have Consequences

Congressman Joe Pitts has an interesting set of graphs showing party control of government vs the markets and jobs.

See them all here

This one struck me as rather interesting.

The biggest upticks where when GOP control of the House and Senate occurred. I leave to the readers to decide if it's because of the luck (dot-com boom & housing boom) or mad skillz.


(tip to Lesa C)

Apologizing to Drunken Sailors...

From RedState with a list of five congressional reps to call.

Posted by John Kranz at 4:54 PM | What do you think? [0]

One More Unemployed...

Or "Who'd Want to Leave a Great Job Like A.I.G. 2?"

The NYTimes carries a former AIG associate's resignation letter.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

Yeah, well not New York Attorneys General. Maybe Senator Grassley will travel to this man's home and kill him with a sword in front of his family.

Hat-tip: Mankiw

Posted by John Kranz at 2:40 PM | What do you think? [1]
But Keith thinks:

This is the same gentleman I brought up a few hours ago on "Who'd Want to Leave..." If Grassley brings a sword, would it be wrong to hope Mr. DeSantis exercises his Second Amendment rights while they still exist?

I'm also hoping Mr. DeSantis doesn't get the same treatment as the former CEO of the Royal Bank of Scotland:

Posted by: Keith at March 25, 2009 3:40 PM

The Unregulated Bailing out the Regulated

Michael Barone has a great column today in US News and World Report. He notes a little flaw in the current narrative of the need for more regulation. "[Geithner] is asking the most unregulated parts of the financial system—hedge funds, private equity firms—to bail out the most regulated part of the financial system—the banks."

Democrats like Barack Obama and Barney Frank, at least on the campaign trail or in sound bites, have portrayed the financial crisis as the product of deregulation. The solution, they say, is more regulation. In that vein Frank, one of the brainiest members of Congress, is proposing that the Federal Reserve become a regulator of systemic risk, with the power to regulate firms that because of their size or strategic position are of systemic importance.

As always for Barone, great stuff, plenty germane the day after the President told us the problem with AIG was that the governmnet didn't have enough authority.

Hat-tip: Instapundit

Newspapers: Who Cares?

If your face is too ugly to be on TV or your voice too gravelly to be on the radio, you can still write copy for them or the teleprompter (hell, be a Presidential speechwriter even!)... because those media models seem to be surviving.


With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.

"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.

A Cardin spokesman said the bill had yet to attract any co-sponsors, but had sparked plenty of interest within the media, which has seen plunging revenues and many journalist layoffs.

Cardin's Newspaper Revitalization Act would allow newspapers to operate as nonprofits for educational purposes under the U.S. tax code, giving them a similar status to public broadcasting companies.

Under this arrangement, newspapers would still be free to report on all issues, including political campaigns. But they would be prohibited from making political endorsements.

So a newspaper's liberal bias becomes more important in the articles.

Does anyone else remember the Candlestickmaker and Whale Oil Distillers Revitalization Acts of 1880 and 1894? The Telegrapher and Railroad Brakeman's Relief Act of 1902?

Yeah, I don't either.

But T. Greer thinks:

Zen Pundit (and commentators) called it first.

Posted by: T. Greer at March 25, 2009 7:06 PM
But jk thinks:

Taranto had a nice riff as well.

Posted by: jk at March 25, 2009 7:55 PM
But Perry Eidelbus thinks:

Erm, I've only been using the example of horses and buggies for...47 months now.

Let Amtrak Die

"A century ago, would we have subsidized horse carriage manufacturers, or whip-makers, because they couldn't compete against the new automobiles?"

Posted by: Perry Eidelbus at March 26, 2009 11:04 PM

March 24, 2009

Rare Props for Senator Specter

You read that right. Instapundit links to a Jennifer Rubin piece that claims Specter's vote may kill card check:

But things haven’t worked out as planned for Big Labor. Red state Democrats were balking. Democratic operative Lanny Davis has been peddling alternatives in hopes of gaining support for the bill.

Then today Sen. Arlen Specter, whose vote would be needed to cut off the anticipated filibuster in the Senate, uncorked what appeared to be a knockout blow to Big Labor. He finally signaled his opposition on the floor of the Senate after weeks of speculation and the emergence of primary challengers. He announced that he would not support cloture, although he left the door open for more modest amendments to federal labor law.

Sometimes you gotta love pragmatism. This guy infuriates you 20 times a year. But, every now and then, he gives you a leadership vote or stuns you with a little Republicanism. Had Pat Toomey (may the Club for Growth bless his holy name!) won the primary, He would've likely lost the election and PA would seat one more union stooge. And we'd have card check.

Pennsylvania Posted by John Kranz at 6:44 PM | What do you think? [0]

Quote of the Day

Commenter V the K (don't know, don't want to know) at GayPatriot on the paucity of MSM coverage for Tea Party protests:

You know what would be a fun experiment though? Call the media and let them know there’s going to be a big protest against the War in Afghanistan, or against “Big Oil,” or against “fat cat executives.” Something like that. Then, when the media shows up, all the protesters drop their left-wing cause signs and pick-up their tea party signs.

Dark Spot on the Horizon

Professor Mankiw picks up on a bleak datum in a great post about expected growth rates. Much has been made of the differential between CBO, White House, and private sector estimates. No one doubts that the growth rate will determine when and if we ever get out of this insane spending. But there is no shortage of dissent on the expected rates.

The CBO forecast includes -- and Mankiw highlights -- a somber thought:

Projected growth from 2015 to 2019 is also below historical average growth rates, a difference that is more than accounted for by slower growth in the labor force because of the retirement of the baby boom generation. Over the postwar period, the labor force grew at an average annual rate of 1.6 percent; by contrast, we project it to grow only 0.4 percent per year in the period from 2015 through 2019. As a result, potential GDP grew 3.4 percent per year on average in the postwar period, but CBO expects that it will grow by only 2.4 percent annually (allowing for a tad more productivity growth) in the 2015-2019 period.

No, we're not Europe yet -- but we are not postwar America either. The birthrate is unlikely to provide the labor force we will need to work out of the coming deficit.

Let the record show that I am not a demography-is-destiny guy or even a deficit hawk. But to ignore the economic ramifications of slower population growth -- at a time when it will be needed -- is careless. The two million HB-1 visas idea is looking better to me all the time!

Posted by John Kranz at 3:46 PM | What do you think? [0]

A Public-Private Partnership

A good friend of this blog sends a link. Arnold Kling explains the latest Treasury plan, in March terms:

Suppose that a week ago I had entered a March Madness pool, paid $10, and filled out a bracket.

Suppose that right now my bracket is looking weak, with only about half the teams I picked to make the sweet 16 still in the tournament. I have not been mathematically eliminated from winning the pool, but I need extremely good luck the rest of the way. (Incidentally, this example is hypothetical. I don't follow college basketball, and I don't enter any pools.)

At this point, my entry is no longer worth $10. If I were to sell it, I might get fifteen cents for it. If I were a bank, my bracket would be a toxic asset.

Now, along comes Tim Geithner with a fistful of taxpayer dollars..."

You've read half of it, click through and finish.

But Keith thinks:

jk: theoretically, it's kind of like putting these "toxic assets" in InTrade and seeing what people would be willing to risk against the odds of the asset paying off.

I think Mr. Kling is onto something - a creative, free-market way of selling off the assets to whatever willing buyers there might be out in the investing public. Could we put them into shiny aluminum briefcases and have Howie Mandel broker them off a la "Deal or No Deal"? Could we just peddle them on eBay? Seems to me eBay might be a good market for them; we could see what people will bid. Some buyers will get a bargain, and some will get worthless paper - but at least they're freely assuming the risk.

Picture this: Monty Hall says to you: "you're holding a March Madness bracket of questionable value. Do you want to keep it, or do you want to trade it for the check behind Door Number Two, where Timmy Geithner is standing?"

Posted by: Keith at March 24, 2009 6:51 PM
But jk thinks:

If he shows you the empty door first, take it.

Posted by: jk at March 24, 2009 7:06 PM
But nanobrewer thinks:

Another great one from Dr. Kling; his analyses are getting more and more lucid (and readable!) every year.

A great one from Kudlow was on TCS Daily last week (where I first found Dr. Kling) noting how the FASB rules changes to allow cash-flow accounting to prevail over the silly distressed last-trade mark-to-market will do as much to rescue the financial markets than anything Geithner is likely to propose, probably more.

Here's Kudlow's article, but it's still heavy on the heat and deft with the light:

Posted by: nanobrewer at March 26, 2009 7:43 AM
But Perry Eidelbus thinks:

That won't work, nanobrewer, at least not for the government. That would be negating what government did to help fuel the crisis, when what government wants is to create new regulations to fix something it screwed up in the first place.

As I recently wrote on my own blog, the feds instituted mark-to-market accounting at the worst possible time. It was not a coincidence. I directly accuse the feds of doing it deliberately to blow things up, thus preventing banks from lending. Then the feds step in: "Say, you need capital so you can lend again? No problem, take some of ours -- but we want an equity stake in youse."

Posted by: Perry Eidelbus at March 26, 2009 10:05 AM
But nanobrewer thinks:

Ooooh, Perry, I try to stay away from the conspiracy-mindedness of the deliberacy of gummint actions. I prefer, in general, to lean towards the Heinlein premise: "Never attribute to malice that which can be adequately explained by stupidity."

Sure, there are elected officials who are Socialists, and others who are but don't realize or accept it. More specifically, I believer bureaucrats act to enlarge their own serving tray. One of the most important components of enlarging a bureaucracy is increasing its public image. M2M has been pushed around for a long time, I've been hearing about from Libertarian econoblogs for quite a while (and think it was active in some areas, previously). I think with the elevation of The One, all the liberal kooks are out of the woodshed at no time since Pandora opened that damned box.

So, no, I don't think the people who enacted M2M rules were out to destroy US Capitalism; if they were, then the rules would not have been reversed so quickly (hmmm, was it a quick reversal?)

Now, I do share you concern about those in the the ranks of the unelected; but usually they have to march to the speed of whomever is pounding the drums; the time of the Obamacons is quickly fading, I think.

Still, this is why those concerned with public liberty need to get out and preach the gospel of hard work and personal responsibility. I've been doing it for over 20 years, and got damn near hoarse by last September.

These current fiascoes were urgently needed to strip that many more megaphones away from the FraDodd's, and give them back to those that can speak to, and thereby expand the American experience.

I'll try to keep up here, as there's more to say and much, much more to do.

Posted by: nanobrewer at March 28, 2009 12:33 PM

Who'd Want to Leave a Great Job at A.I.G.?

Any moderately sentient being:

NEW YORK (Reuters) - A handful of senior executives working within American International Group Inc's controversial financial products unit have resigned, said a company spokeswoman late on Monday.

The division is at the heart of the financial problems that brought AIG to the brink of bankruptcy last September, saved only by a taxpayer bailout that has now swelled to as much as $180 billion.

The spokeswoman declined to specify the exact number of resignations, noting they were expected to be "manageable," and said there were indications that more will follow.

Let's recap. We the People bought an 80% stake in AIG. Now we're chasing away any competent people who might be able to run it, unless they have no objection to being remunerated like a forklift driver.

Now, we'll ask investors to "partner" with the taxpayer. The sales pitch is: "If you lose money, that's great. If you make money, we'll demonize you and bill-of-attainder your ass."

Posted by John Kranz at 12:22 PM | What do you think? [8]
But Keith thinks:

Time out, guys - I've hearing two different stories on this, and I'd like a little clarification. As I understand it, these "bonuses" may not mean what what the masses think they mean.

I keep hearing most commentators treating these like performance bonuses - a chunk o' dough to reward a great employee for exceptionally profitable performance. If that's the case, and the performance of each of those employees was as stunningly unprofitable as it seems, then I can see the masses getting irate.

But I also hear from a handful of people that these were retention bonuses, not performance bonuses: "we're devolving this department. We know this is likely a dead-end job without a future, but we need talented people like you to oversee the demise of it. Therefore, we want you to commit to working twelve months in this chaos. If you make it the full twelve months, we're reward you at the end with this bonus check."

I've been unable to find a definitive answer on this. Can anyone help out on this?

While the public should be funding them either way, it seems to me that a lot of the public's venom - and the politicians' populism -is based on the belief these are performance bonuses.

By the way, Perry, I wish more people were talking about what you've got in your third paragraph. All the rage of the politicos about the bonuses is like the misdirection of a stage magician - keep people's eyes on the gesturing of the wand so they don't notice where the real action is happening. By keeping the proles seething about the bonuses, no one is stopping to ask "waitaminit - what about the rest of the loot that Congress frittered away on this?"

Posted by: Keith at March 24, 2009 7:10 PM
But jk thinks:

Keith. I wish I could help you out but I find it a distinction without a difference. I don't know that every business unit at AIG lost money. Executives who were successfully staffing departments, selling insurance, or completing long-term infrastructure projects were fighting long odds and deserve recompense.

There goes jk, always a sop for Wall Street Fat Cats. But seriously, my problem is Congress breaking the sanctity of contract, very likely passing a Bill of Attainder, and harassing private sector employees for cheap populist electoral gain.

I'm guessing the truth is that nobody really knows or will ever know if the bonuses were good or bad. But we know Congress got an automatic pay raise: 'Nuff said.

Posted by: jk at March 24, 2009 7:21 PM
But Keith thinks:

jk: I agree with you in the outcome, but my disagreement is on the specific point. And I don't read you as being "a sop for Wall Street Fat Cats" - I read you as being committed to the sanctity of valid contracts.

Here's my beef: our elected overlords are fanning the flames of this issue in terms of the recipients being rewarded with a bonus despite the obvious poor performance. That implies it's a performance bonus, and I'm not sure that's true; I'm of a mind to say that our elected overlords are being, shall we say, disingenuous.

Put yourself, momentarily, in the mindset of someone who is open to the notion of taxpayer bailouts of key industries, or who at least thinks "well, we've gotta, 'cause if we don't, companies will go out of business, and the American economy will be crippled" - which is to say, someone other than me, you, and collectively the economic stance of this blog in which we all participate. To that man, there's a difference in this argument between a performance bonus and a retention bonus. that man understands that if it's a retention bonus - a reward for enduring the full measure of his contract period - it must be honored, but if it's a performance bonus - a reward for achieving measurable goals of profit, productivity, whatever - then since his tax money is financing it, he has a right to know what those measurable goals were and whether they were actually met.

Yeah, it's a hairsplitting point, but the talking heads are telling us "look at the poor performance of AIG, but these guys were getting their bonuses." I think the talking heads are inciting rage wrongly on the point.

To make it personal: in my eight-to-five secular job, I'm in the insurance industry. The firm is run by executives and producers who are good, solid, Hayek-and-Friedman economic conservatives (really, you all would like these guys). The CEO came out a couple of weeks ago and shared the news: we didn't have a profitable year last year, not due to lack of effort, but due to the economoc downturn. As a result, since there was no profit, there is no profit sharing. We all understood, and accepted it. Profit sharing is sort of a collective performance bonus.

That's the point and the distinction I'm trying to make. Hope that helps -

Posted by: Keith at March 24, 2009 9:07 PM
But Perry Eidelbus thinks:

"the market forces which dictated them"

You know me well enough, of course, to know that I not only believe in a free market that allows bonuses to be paid, but also a free market in which a company is driven into the ground and thus can't pay bonuses to those responsible. It's really quite simple in a free market. A failing business has no money, hence no money to reward the incompetent and irresponsible.

Keith, some bonuses were in fact paid to retain talent, and at least 11 of those are now former employees. That's what's so laughable. Other bonuses were performance-based, to the top revenue producers -- except that much the CDS revenue is now, uh, offset by the resulting liabilities, hence AIG's massive losses. Either way, AIG would have cleary gone into bankruptcy, so you simply make your case before a bankruptcy judge. It's another of those things that government makes unnecessarily complex.

Now, you see my point about the bonuses being miniscule. On my blog I recently made the point that Congress will run through $165 million in not even half an hour, and the $170 billion it's pumped into AIG won't even cover three weeks of federal spending.

Posted by: Perry Eidelbus at March 25, 2009 11:39 AM
But Keith thinks:

Just spotted this early this morning, and it seems to support my read of the situation, at least as regards *some* of the recipients:

If I read this aright, the "bonus" was more like "deferred compensation." It was a retention bonus for a commitment to work for a set period of time. In fact, this guy ALSO worked for a year for a salary of $1, so the ONLY thing he was working for was the bonus. And this guy wasn't one of "those who dug AIG into this gigantic hole."

Sounds like unpaid indentured servitude.

What say you in light of this letter, assuming (and I do) that what he says in the letter is true?

Perry: thank you for the well-written response. Since it now appears that, at least in this case, the retention bonus was intended to retain talent FOR A SET PERIOD which was fulfilled (even were he to resign the day after its fulfillment), how should he have acted differently? Would you say that his mistake was in accepting a deferred compensation package without a guarantee that the employer would have the resources to keep its end of the bargain?

Posted by: Keith at March 25, 2009 12:26 PM
But Perry Eidelbus thinks:

Deferred compensation makes a LOT of sense, at least for those who received it. It's the same with departing CEO's "golden parachutes" that are in fact bonuses for past good work. Where I work, deferred compensation is paid out in four installments: one quarter that December, and the additional quarters in the three following Decembers. Thus it's perfectly possible for someone to have left the company but still receive a bonus even three years later.

This doesn't explain retention bonuses, but a bankruptcy judge can sort it all out. In fact, the company need not be liquidated, only restructured with certain contracts cancelled. Employees and former employees seeking their bonus payouts can treat it like an annual review: "This is why my performance justifies the promised bonus, out of whatever's left." It would have to be on an individual basis so that the deserving get something while the undeserving get nothing. The schmucks who sold CDS to the tune of hundreds of billions of dollars (that AIG can't cover them is the very source of its losses, remember) would have a hard time, but someone in a profitable division could be paid out.

It's always possible, if not likely, that deserving employees and ex-employees get less, or maybe nothing at all. That's the rub. When you work for a company, you implicitly accept the risk that it can go under. Even an employment contract is still no guarantee. You never know when you'll get maybe only the first installment of your deferred compensation, but that gives everyone an incentive to work the best they can and keep the company afloat.

Posted by: Perry Eidelbus at March 26, 2009 10:35 AM

March 23, 2009


I got a book for my Kindle, and I confess I did not pay much attention to its background. The book is titled "James Madison and the Future of Limited Government. edited by John Samples" And a quick search brings up the CATO page of a symposium featuring all the essayists in the book. CATO offers a paperback and an ebook; Amazon has only the Kindle edition.

I am not yet all the way through it yet but it is scarily reflective of current ThreeSources discussion. Madison on nullification, Madison on tyranny of the majority, Madison on the amendment process and potential to devolve into little-d democracy. I'll post a review corner pretty soon, but I would highly highly recommend getting your hands on it where you can. Amazon has a free Kindle reader app for the iPhone and iTouch.

It's not long but it is comprehensive and thoughtful.

It did inspire my melancholy comment on the difficulty of structuring limited government. We traffic in a lot of certainty around these parts. And I confess when it comes to economics I am pretty sure that the principles I espouse will optimize prosperity and individual freedom. But giving people the right amount of control over the law that governs them is somewhere between voodoo and art. I'm happy that we added the 13th Amendment, but I weep that the same process allowed the 18th.

I don't think anybody could have done better than Madison, and I wouldn't trust our current political class to create the menu for a lemonade stand much less seat a Constitutional Convention. Perhaps we accept the current Constitution with its flaws and failures, but find a political class that will live within its definitions.

Philosophy Posted by John Kranz at 4:41 PM | What do you think? [2]
But johngalt thinks:

Sounds excellent. Is it available as a *book*?

On your closing missive, haven't we already tried that "trustworthy political class" idea long enough to convince you it's a detour-less road to the U.S.S.A?

Posted by: johngalt at March 23, 2009 5:17 PM
But jk thinks:

That CATO link has a paperback for $7.50 (the Kindle version is $3.60). I wonder if a little aggressive browsing on the CATO site wouldn't find you most of content for nothin'

Yes, the last line is inartfully worded and poorly thought. I have wondered that a new or existing party might sell itself as a "Constitutional" party. That might popularize a good portion of the libertarian platform and escape some of the loonier labels. I did not mean a better political class, perhaps a better electorate. Both, like Barbie's math, are hard.

Posted by: jk at March 23, 2009 5:44 PM

Cut Down All The Damn Trees!

CO2 is a threat to Public Health

WASHINGTON -- The Environmental Protection Agency has sent a proposal to the White House finding that carbon dioxide is danger to public health, in a step that could trigger the enforcement of stringent emissions rules under the Clean Air Act.

If approved by the White House Office of Management and Budget, the endangerment finding could make regulations of greenhouse gases across the economy tougher than those prepared but not approved by the Bush administration. The EPA submitted the proposed rule to the White House on Friday, according to federal records published Monday.

The executive branch can control every aspect of the economy that uses energy. "Stroke of the pen, law of the land." It's back to the caves, friends -- game over.

But johngalt thinks:

Where do I go for a permit to use PCBs to control dust on my driveways or DDT to kill the mosquitoes so prevalent in the Old Dry Creek corridor passing in and near my farm?

If mammal breath is such a "hazard to human health" then how can emission of ANY of it be justified? Just shut the fracking gas/oil/coal plants DOWN. None of this pantywaist "right to pollute in a socially acceptable way" bullshit.

I call this a win-win proposition: It would make environmentalists happy, because modern society would basically cease to exist. And it would make me happy because voters would then use their stone tablet ballots to vote each and every environmentalist maggot out of public office across the land. (Even if it's so they can watch American Idol again, I'll take it.)

Posted by: johngalt at March 24, 2009 5:16 PM

Luskin on AIG Frothing

Some serious choir-preaching to the ThreeSources faithful, but Don Luskin posts his column today, and it is a gem:

I've been writing here over the last several weeks that the big problem the stock market now faces is the extreme instability of the political environment. I rest my case. Now, unless this foaming mad-dog of a Congress can be subdued, the wonderful stock market rally of the last couple weeks can be declared over and done, and it's back to the bear market—with a vengeance.

And then the Fed can print all the money it wants, and buy all the mortgage-backed securities it wants. And all we'll get for it is a lot of inflation. If it's going to turn into growth, then Congress is going to have to stop changing the rules of the game constantly. Without stable rules, it's not even a game. It's nothing but a street-fight.

A successful economy depends more than anything else on the rule of law. There has to be a stable set of rules governing the interactions between economic players, and between players and the government. Sometimes the rules need to be changed, but there need to be rules about how to change the rules.

Posted by John Kranz at 2:50 PM | What do you think? [1]
But johngalt thinks:

"Laws" and "rules" and "rules about how to change the rules." Gee, this sounds awfully familiar.

Posted by: johngalt at March 23, 2009 4:11 PM

Quote of the Day

In endorsing Obama last year, the Washington Post described the next president as "a man of supple intelligence, with a nuanced grasp of complex issues and evident skill at conciliation and consensus-building." This would be a good time to employ those talents. A show of leadership, including a firm pledge to veto any punitive tax legislation that reaches his desk, could help calm the storm that threatens to make the current crisis much more destructive.-- James Taranto
Posted by John Kranz at 10:11 AM | What do you think? [1]
But Keith thinks:

"... supple... nuanced... evident skill..." Isn't that pretty close to the words the tailors used to sell the Emperor on his New Clothes? By analogy, then, would we be fair to substitute this: "... a man of absent intelligence, with no grasp of complex issues and vaporware-level skill at conciliation and consensus-building..." Too harsh?

As for Mr. Tarantino's hoped-for show of leadership, I don't think it will be forthcoming. With an administration based on class warfare and the destruction of wealth and markets,I'd say vetoing any punitive tax legislation isn't in the cards.

Posted by: Keith at March 23, 2009 1:53 PM

March 22, 2009

Quote of the Day

"In the United States calling someone a socialist is often an insult, striking at the heart of American individualism and raising the fear of government fingers in everyone's business." -- Reuters
Economics and Markets Posted by Harrison Bergeron at 2:54 PM | What do you think? [5]
But Perry Eidelbus thinks:

But, but, where Joe Biden comes from, it's not called socialism, it's called "fairness"!

Theft is theft, no matter what euphemism is used.

Posted by: Perry Eidelbus at March 22, 2009 8:43 PM
But jk thinks:

Scranton, PA?

Posted by: jk at March 23, 2009 10:11 AM
But Perry Eidelbus thinks:

Yes. You don't remember when he made that comment?

Posted by: Perry Eidelbus at March 23, 2009 12:23 PM
But johngalt thinks:

"Socialism is for ants." -johngalt

Posted by: johngalt at March 23, 2009 2:40 PM
But HB thinks:

John Galt,

This is actually not so:

Posted by: HB at March 24, 2009 10:04 PM

March 21, 2009

Norah O'Donnell v. Maxine Waters

I don't even have a comment for this. Just make sure to watch the whole thing, especially toward the end where Waters explains why she doesn't think that Congress should read the bills they vote for -- SERIOUSLY!

111th Congress Posted by Harrison Bergeron at 11:47 PM | What do you think? [0]

Review Corner

I cannot vouch for historical accuracy of this film. Several items seemed to contravene my understanding of events or basic beliefs about the personnel involved.

Disclaimers aside, "Cadillac Records," based on the the true story of Chess Records founder Leonard Chess is a lot of fun. Narrated by Cedric the Entertainer -- who makes an awesome Willie Dixon -- the movie tells the tale of Len who goes all in to create the studio and label. He plays pretty fast and loose with the rules but creates a viable enterprise and makes stars out of a young Muddy Waters and younger Little Walter. Chess does payola without apology and takes all the money coming in, capriciously providing Cadillacs and houses in lieu on any real accounting or belief in what ThreeSourcers might call property rights.

That was accepted as basic exploitation when I grew up, but the Len Chess character makes a pretty good defense of himself as providing positive impact. Howlin' Wolf, who was always known as an astute businessman, hurls a few bon mots at his less sophisticated colleagues. "I own this truck, it don't own me," he tells Muddy and his Cadillac. Later on, Muddy asks Chess for money for Little Walter's funeral and Wolf throws in a big pile of bills saying "I don't need no daddy."

The last half of the movie is lifted by the superb performance of Mos Def as Chuck Berry -- and the show is stolen by Beyonce Knowles's Etta James.

Great music, great fun. If you want history read a history book -- I give it four stars. I should confess that I am not a scholar of the period and that my misgivings do not constitute proof of inaccuracy. There were just a few parts that lacked verisimilitude.

Review Corner Posted by John Kranz at 6:39 PM | What do you think? [0]

Mexican Gun Canard

Sounds like a great name for a band or a fruity drink with an umbrella in it, but SayUncle avuncularly posits that it is an urban myth that deserves to die. Alone. In the hot sun.

It keeps coming. Except that it’s not real. Testimony from law enforcement officials concludes that, generally, military hardware is not flowing into Mexico from the United States. We gun nuts have been saying that for years. More testimony here. The experts on the panel do not conclude that more gun control is the answer.

But this canard continues to be parroted by the press and the anti-gunners, but I repeat myself.

Posted by John Kranz at 11:26 AM | What do you think? [2]
But T. Greer thinks:

Hmmm. Did SayUncle read the congressional reports he linked to? I did not have time to watch the C-SPAN testimonies, but I did go ahead and read all three of the testimonies contained in the second link. Guess what? Only one of the three testimonies was in concordance with his position. The latter two (not being from the NRA like the first) were rather stringent on the need to reduce gun shipments to Mexican cartels.

Of course, the fact that someone bore testimony to congress claiming that Mexico's problems are all due to America's faults does not make it true. But it does make one wonder how he can justify the statement "the experts... do not think more gun control is the answer" when he has cited sources that state the opposite?

Posted by: T. Greer at March 22, 2009 1:57 AM
But Perry Eidelbus thinks:

These experts could very well be correct. But their argument is akin to blaming gravity for airplane crashes.

I found the previous conversation too late, but I'll renew it somewhat here. The problem with "let's stop guns going to Mexico" is that there's no solution, no government solution, that will work without infringing the individual's right to keep and bear arms. Every possible measure you can think of will not deter the criminal while harming the peaceable citizen.

I'd rather live in a society where, although criminals have weapons, I have every freedom to arm myself equally. History shows that disarming the criminal does nothing to the "illegal" outlets but does make it harder, if not impossible, for peaceful citizens to buy "legally."

Posted by: Perry Eidelbus at March 24, 2009 3:59 PM

March 20, 2009

Republic or Oligarchy

Most of us, I'm sure, are familiar with the idea that "left" vs. "right" or "liberal" vs. "conservative" are imprecise definitions of political philosophy. What I've promoted instead is that political structures are organized along a continuum from fully collectivized to complete individual liberty.

This excellent video presentation by YouTube's "notdemocracy" describes the balance as one between "total government" and "no government." Five basic types of government cover the spectrum: monarchy - oligarchy - democracy - republic - anarchy. But only two of these are "stable" forms of government: oligarchy and republic. The other three naturally evolve into one of those two. (Hint: Everything becomes an oligarchy except a republic.)

Readers who watch this will understand why I consider it so important to fight for the integrity of the original Constitution, which means removing antithetical amendments to it such as the 16th.

Hat tip: Dr. Ignatius Piazza via jg's friend Russ.

But Perry Eidelbus thinks:

Not that excellent. Whoever put this together blindly clings to "law" and does not recognize the concept of peaceful capitalist anarchy, just because it has no "law." So what? We have plenty of "law" today, and what has that done for personal liberty?

When this guy speaks of "law," is he talking about natural law or man-made law? Is he talking about the natural right to defend yourself and your property, which are a priori and need no legislation to enforce or guarantee? No, he speaks of "law" in the sense of rule.

Now, the problem with republics is that they degenerate into democracy. Tytler said, "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 the very start of our "republic," the federal government practiced wealth redistribution. It was a trickle but increased during the days of "internal improvements," then in the 20th century with the welfare state.

As far as "stability," that exists only with slaves who don't rise up against their masters. Everything else about human society will wax and wane.

Posted by: Perry Eidelbus at March 21, 2009 4:04 PM
But johngalt thinks:

I don't know about this guy, but he refers to America's founders. They attempted to establish a man-made law that codified natural law - and no more. Then they attempted to preserve man's inalienable rights from future man-made laws via the Constitution. The Constitution is the only thing that stood in the way of a natural degeneration to democracy and beyond.

You may be able to cite examples of wealth distribution based on tariffs and fees but I think you'll agree the real heavy lifting wasn't possible until the progressive income tax effectively enacted by the 16th Amendment. That was in 1913. Democracy in America is, therefore, essentially a 20th century phenomenon.

As for anarchy as a desirable political system, I think even Rand would agree with the proposition that "the proper amount of government makes everyone freer." Of course this statement is vague as to quantitization of "proper" but clearly it is more than "none."

Posted by: johngalt at March 21, 2009 7:09 PM
But caritas thinks:

I think that people who watch this video dont realize that the creator pulled a lot from Plato's republic, that book went through these steps in much the same way but what Plato left out was that his republic was in reality not a republic but an oligarchy because the people would be ruled by a guardian class, and that the transitions from republic to democracy usually have to be sparked.

Posted by: caritas at March 22, 2009 1:54 AM
But jk thinks:

I like the video's rejection of absolute democracy. It's a good introduction to those who don't understand why "one man, one vote" is not the ideal.

It does, however, imply the existence of an ideal law. I appreciate rule by law but suggest we have not yet seen the text of that ideal. The original Constitution we all admire permitted slavery and counted people as three-fifths based on their skin color.

You want to keep all the Amendments but the 16th? Then it is a Republic? That seems awfully capricious. You call shenanigans on Wilson, but Lincoln had Federal troops in place to push the 14th. I think the 12th and 17th do more to degenerate republicanism into democracy. (You'll recall I wanted to rescind both until I encountered Governor Blogojevich, now I am not so sure.)

It is damned difficult to structure law; stop by my HOA meeting or get Sugarchuck to tell you a tale or two about township council. My problem with this video is that it papers over this difficulty. Like Perry, I see it championing a Law that does not exist.

Caritas -- great handle but you have to share it with my test server at work. I do wish I had a webcam to watch Johngalt as he reads your accusation of promulgating Platonicy.

Posted by: jk at March 22, 2009 12:25 PM
But johngalt thinks:

I didn't take caritas as accusing me of promulgating [word] Platonicy [?]. He said Plato's Republic was an oligarchy. That's more than I know on the subject, but it agrees with what I and the video have said.

Which is not that the 16th Amendment is the Constitution's only problem, nor that the Constitution was perfect. I agree with the idea of an "ideal law" analogous with Perry's "natural law." That this law is "a priori and need[s] no legislation to enforce or guarantee" is proven false by the violation of this law all over the world (including, more and more, here in the USA.)

The Constitution sought to guarantee natural law. It did the job fairly well right up to the point where amendments such as (but not limited to) the 16th were adopted by unconstitional processes.

Some (ahem) have suggested the American people would quickly re-ratify the 16th Amendment if so proposed. I say it was more likely in 1913, before the public really understood what it would lead to. And yet it was necessary at the time to falsify the results in the state legislatures. In the full light of day, with a complete airing of the facts, it doesn't even fare as well as the old ERA (equal rights amendment).

Posted by: johngalt at March 23, 2009 2:52 PM
But Perry Eidelbus thinks:
I don't know about this guy, but he refers to America's founders.
Well, that in itself means nothing. Many liberals today refer to the Founding Fathers, like when Democrats proclaim themselves "The party of Jefferson."

Even then, which Founding Fathers? Jefferson believed in real liberty, while Alexander Hamilton was a statist who desired one United State government to rule all (which is what

They attempted to establish a man-made law that codified natural law - and no more. Then they attempted to preserve man's inalienable rights from future man-made laws via the Constitution. The Constitution is the only thing that stood in the way of a natural degeneration to democracy and beyond.
Yes and no. The problem with the Constitution is the consolidation of power, and making it absolute law without any ability to question it. If you don't obey, for example, the 16th or 18th Amendments, no matter how bad the law might be, you're a criminal.

Declaring something "the law" does not necessarily mean it is right or proper. Many bad things have been set forth as legislation, statute, etc. Now you might say, by what standard are we to craft law? It's simple: is a particular "law" doing anything for all persons' lives, liberties and property, or is it a bad law that redistributes and/or targets specific individuals or groups?

"The rule of law" does not mean that law must always be obeyed. It means that whatever law there is, it must apply equally to everyone, else it's merely the rule of men.

You may be able to cite examples of wealth distribution based on tariffs and fees but I think you'll agree the real heavy lifting wasn't possible until the progressive income tax effectively enacted by the 16th Amendment. That was in 1913. Democracy in America is, therefore, essentially a 20th century phenomenon.
It most dramatically increased speed in the 20th century, yes, but "internal improvements" began in the early 19th, as did the first income tax under Lincoln. It became a matter of the federal government getting more money from the states, and borrowing more.

All the money in the world doesn't matter if the government has no desire to spend it, and if the people have no desire to elect officials who will redistribute their neighbors' wealth. The "democratic process" took root in the early 19th century as people began asserting their "right to vote," and by the late 1830s the U.S. national debt necessarily increased. It wasn't as much as the 20th century, but relative to the budget then, it was tremendous. The national debt had nearly been paid off under Andrew Jackson, then started going up under Van Buren.

As for anarchy as a desirable political system, I think even Rand would agree with the proposition that "the proper amount of government makes everyone freer." Of course this statement is vague as to quantitization of "proper" but clearly it is more than "none."
Government must exist only with the consent of the people. Not just "the majority" of the people, but "the whole people" constituting everyone. Thus the "proper" amount is the maximum that any given person is willing to give.

Even so, you're talking about a "political system" rather than a government. That's where corrupt favor-trading and wealth redistribution enter.

Posted by: Perry Eidelbus at March 23, 2009 9:41 PM

Oh Give Me a Break!

No, not John Stossel, but jk has got to step into the breech and defend President Obama. The President has apologized for his "Special Olympics" remark.

“He expressed his disappointment and he apologized, in a way that was very moving,” [Special Olympics Chairman Tim] Shriver said on ABC's “Good Morning America.” “It’s important to see that words hurt, and words do matter. And these words that in some respect can be seen as humiliating or a put-down of people with special needs do cause pain, and they do result in stereotypes."

No, no, no. I claim moral authority as the holder of a valid handicapped parking permit, and defiantly say "if you were offended by that remark, you have worse problems than your disability."

I disagree with the President on seemingly every matter of policy and economics, but I will not take up this particular cudgel. Obama was making a joke at his own expense and I cannot see it as "humiliating or a put-down of people with special needs."

Posted by John Kranz at 4:31 PM | What do you think? [4]
But johngalt thinks:

True enough. Also true is that you don't need to pounce on the first opportunity to defend the president in order to prove your fairness and consistency to our readers.

I watched the prez on Leno last night too and thought he was very respectable and likeable, if not "presidential." But I'm not going out of my way to stand up for the man until he at least gives me some "hope" that he's "changed" from his mission to further collectivize the greatest nation on earth. Until then, he's an enemy of the state.

Posted by: johngalt at March 20, 2009 5:16 PM
But Keith thinks:

Meh. I say we let this guy handle the "Special Olympics" comment:

I'd say he holds the Absolute Moral Authority label on this issue better that Cindy Sheehag ever did. I'll just say that anyone who smacks his head into the side of a helicopter and tries to enter his own office through a window he thought was a door ought not be making any "Special Olympics" cracks. If Kolan's not offended, I'm not either, but I've got $50 that says he can spot the Prezznit 85 pins and still whoop 'im.

Posted by: Keith at March 20, 2009 5:49 PM
But jk thinks:

If the WH was on top of things, they would have this guy in.

I'm not sure I go too far to defend the President, jg (anybody ask LatteSipper?) I'll risk that label.

Posted by: jk at March 20, 2009 7:22 PM
But Perry Eidelbus thinks:

It was an incredibly stupid thing to say, but what's truly offensive is the double standard.

Can you imagine if GWB or McCain had said something like that? We wouldn't have heard the end of it for weeks. Look here for great satire on what the liberal media would have written.

Posted by: Perry Eidelbus at March 21, 2009 4:08 PM

Leveling the Playing Field


Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a "weapon" to protect U.S. manufacturing, just a day after one of China's top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.

Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help "level the playing field" if other countries haven't imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years.

Well, a flat Earth would be a level playing field.

Hat-tip: Reason and Insty

Posted by John Kranz at 12:25 PM | What do you think? [3]
But Perry Eidelbus thinks:

Walter Williams had an analogy about trade protectionism: if you're at opposite ends of the boat, and the other guy blows a hole in his end, are you going to blow a hole in yours?

But this is even worse. We'll be responsible for creating the initial hole, then China retaliates, and we'll retaliate by swamping the boat so that, uh, they'll sink. Yeah.

Posted by: Perry Eidelbus at March 20, 2009 12:37 PM
But jk thinks:

But it will be fair!

Even worse, many of the globalwarmies don't really object to a global recession. They think there will be less carbon when we all go back to the caves.

And don't miss Perry's post about how "explorers started a trek to the North Pole to get evidence about global warming, and bad winter storms not only stopped them but also prevented their latest (very much needed) supply plane from landing."

Posted by: jk at March 20, 2009 12:49 PM
But johngalt thinks:

Smoot - Hawley, call your offices.

Later in the WSJ piece: "China is seeking to require importers of its carbon-intensive goods to bear the emission costs, concerned that targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation." And where is anyone's concern over how "impos[ing] a cost on carbon" would "cripple [America's] growth as an industrializing [or -ized] nation?"

From Lawrence W. Reed's 'Great Myths of the Great Depression':

Foreign companies and their workers were flattened by Smoot-Hawley's steep tariff rates and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods. (...) The stock market, which had regained much of the ground it had lost since the previous October, tumbled 20 points on the day Hoover signed Smoot-Hawley into law, and fell almost without respite for the next two years.
Posted by: johngalt at March 20, 2009 2:11 PM

March 19, 2009

Whose House for Our Party?

WASHINGTON — Few supporters are answering President Barack Obama's call for nationwide house-party gatherings this weekend to build grass-roots support for his economic stimulus plan.

A McClatchy survey of sign-up rosters for a score of cities across the country revealed only 34 committed attendees in Tacoma, Wash., as of midafternoon Friday; in Fort Worth, Texas, only 54, and in Sacramento, Calif., just 78.

Man, I so totally forgot about that. I know all ThreeSourcers want to gather to build grass-roots support for the stimulus plan. Where are we meeting?

Hat-tip: Instapundit, who suggests the Tea Parties are doing better.

But Boulder Refugee thinks:

That depends upon what your plan to stimulate us is.

Posted by: Boulder Refugee at March 19, 2009 3:58 PM
But jk thinks:

I was thinking of government cheese and Dom Perignon.

Posted by: jk at March 21, 2009 11:17 AM
But johngalt thinks:

In that case, I agree to host! All we need now is crackers.

Posted by: johngalt at March 21, 2009 7:15 PM

Duke Coach Should Read EE

Hearing that the Blue Devils did not make the Presidential Final Four bracket (now Silence Dogood is sorry he voted for him), Coach Mike Krzyzewski suggested "[A]s much as I respect what he's doing, really, the economy is something that he should focus on, probably more than the brackets."

I'm disappointed. Were Coach K a regular reader of ThreeSources friend The Everyday Economist, he'd know that lost productivity is a myth.

Speaking for myself, I'd as soon President Obama collected stamps as "fix" the economy.

Posted by John Kranz at 1:19 PM | What do you think? [3]
But Keith thinks:

jk: But Obama is "fixing" the economy - in the very same sense that a veterinarian uses the word. It'll never reproduce again.

Posted by: Keith at March 19, 2009 4:51 PM
But Boulder Refugee thinks:

Sorry, Keith, you didn't get me on this one - I had no coffee in my mouth! Fool me once...

Posted by: Boulder Refugee at March 20, 2009 11:59 AM
But Keith thinks:

See, Refugee, Obama did say he was going to "take out his scalpel" when he was going over the stimupalooza bill. You didn't think he was talking about a line-item veto and earmarks, didja? He knows, and everyone knows, he doesn't have a line-item veto.

I'm thinking the White House menu will be serving Wagyu beef, arugula, and Rocky Mountain oysters.

Posted by: Keith at March 20, 2009 12:15 PM

Quote of the Day

AIG's managers may be this week's political target of choice, but the message to every banker in America, indeed every business in America, is that you could be next. At least we haven't yet seen the resolution that was proposed in the English parliament, in 1720 in the aftermath of the South Sea bubble, that bankers be tied in sacks filled with snakes and tipped into the Thames. But it's still early days. -- WSJ Ed Page
Good line, but the editorial includes a more important and serious point. Many of us at ThreeSources have been willing to say that if government money comes with restrictions that are too onerous, "Good!" But there are two flaws. First, a lot of Banks had this money crammed down their throat -- talk about yer predatory lending:
One consequence will be that every bank executive in America will try to repay his Troubled Asset Relief Program, or TARP, money as rapidly as possible. The political punishment for accepting public money is becoming higher than the benefits of the extra capital cushion. According to Wells Fargo Chairman Richard Kovacevich, "If we were not forced to take the TARP money, we would have been able to raise private capital." On Tuesday, Bank of America CEO Ken Lewis joined the rush for the TARP exits, saying he hoped to pay back the $45 billion BofA has received by 2010 if not sooner. It's hard to argue with the sentiment.
But the other problem with mixing pepper sauce into the lemonade to keep folks away is that the marginal banks will not accept it and only the most troubled institutions will consent to participate. We'll inject liquidity in all the zombies and let banks with the flu waste away (couple too many metaphors, but you get my drift).

If you say the way to fix this is to have government stay out altogether, it's hard to argue.

Posted by John Kranz at 11:39 AM | What do you think? [0]

March 18, 2009

Live Free or Pay the Fine!

The scourge crept up Rte 128 and they've now metastasized: .

But now, legislators are close to passing a seat-belt law under a push by Democrats who gained control of the state Senate, House and governorship in 2006 for the first time in a hundred years. The Democrats have been boosted in the polls by a wave of migration from other states, including famously liberal Massachusetts, over the past decade.

This, good people, is why the "liberaltarian" Democrat-libs will never be anything. Down deep, they just do not get the idea of liberty.

Posted by John Kranz at 3:30 PM | What do you think? [0]

Off to See the Wizard

I had read a little bit of this, but the BBC has a nice compendium of "The Wizard of Oz as Economic Parable:"

At a time when some economists fear an onset of deflation, and economic certainties melt away like a drenched wicked witch, what can be learnt from Oz?
In 1964, high school teacher Henry Littlefield wrote an article outlining the notion of an underlying allegory in Baum's book. He said it offered a "gentle and friendly" critique of Populist thinking, and the story could be used to illuminate the late 19th Century to students.

Since its publication, teachers have used this take on the tale to help classes understand the issues of the era.

Timely and germane. Sadly, I also learned recently that E. Y. Harburg who wrote all those fantastic lyrics for the movie "She's not only merely dead, she's reall most sincerely dead" was a Communist and a Moonbat. Sigh.

Hat-tip: Mankiw

Posted by John Kranz at 1:22 PM | What do you think? [1]
But Perry Eidelbus thinks:

Never bought this idea, myself. I dismiss it as reading too much into an author's works. Furthermore, Baum wrote a lot more books about Oz -- were those parables too?

On the other hand, the fantastic musical "Wicked" is a political allegory with a libertarian (almost Randian) flavor. Or maybe I'm just reading too much into it.

Posted by: Perry Eidelbus at March 18, 2009 3:33 PM

"Subsidy Footprint"

Here's a new topic for Mankiw to ponder: Screw the "carbon footprint" nonsense (on the basis of Global Warming cum Climate Change being no more than a massive swindle - sorry TG, I'm still not convinced) and focus on the principle of subsidy inflows and outflows, for individuals and corporations.

A Bangladeshi blogger talked about it last July as 'Subsidy-neutral lifestyles and businesses.' He's got a good start but some of his underlying ideas are crap. (Such as "... some part of that fuel price is being paid by those poor kids ...") But he captures the essential idea in his closing paragraphs:

There is also another dimension. In many capital markets of the world, there are separate indexes that include only companies that fulfill certain kind of benchmark. For example, an investor who is looking for Sharia complaint investment, there is an index in NYSE that helps you do that. If you are looking for companies who are environmentally responsible (i.e. green), there are many services available to help with that.

In line with this, in Bangladesh, some civil society or NGO organiation should offer a service to identify the amount of money that different business houses are getting as government subsidy, they get it through different generalized subsidy mechanisms of the government (e.g. fuel subsidy, electricity subsidy, water subsidy, etc) even though the business might not need it. Once that information is public, the individual companies can try to become subsidy-neutral. Once they become subsidy-neutral, only the amounts above that should be treated as tax-deductible CSR expense, if government wants to go that route.

Any takers for this initiative, to offer services to the individuals and to the businesses, so that they can become subsidy-neutral if they want to?

But this omits the other half of the subsidy-balance equation: How much did each business/individual pay in taxes, fees, regulatory compliance costs, etcetera, etcetera?

Let all the peoples of the world see an objective calculation of this balance - for individuals, for corporations, for governments. Then and only then can we engage in a conversation about "fairness."

But jk thinks:

I just fear that there is no one left worthy of fund inclusion. Probably for the best, as Milton Friedman reminds us, a Corporation's goal is to maximize value for its shareholders. Lobbyin' and subsidizin' is going on and you have to play with the rules as they are and not how you'd like them to be.

Posted by: jk at March 18, 2009 1:43 PM
But johngalt thinks:

I don't think you're feelin' me, bro. If there were "no one left worthy of fund inclusion" then where do subsidies come from?

An objective assessment should find that the aggregate "subsidy footprint" of the planet is necessarily ... zero.

Posted by: johngalt at March 18, 2009 4:02 PM

March 17, 2009

The Right to Contract -- Gone!

WASHINGTON – Talking tougher by the hour, livid Democrats confronted beleaguered insurance giant AIG with an ultimatum Tuesday: Give back $165 million in post-bailout bonuses or watch Congress tax it away with emergency legislation.
Read that again, Read it in context if you want. These bonuses were part of people's compensation package (probably in some part because of government meddling that people take more pay as "bonus," but let's not even go there now). Now the Federal government says "take that pay back, break your contract" or we will tax it away from you (AM I THE ONLY ONE WHO'S EVER HEARD OF A BILL OF ATTAINDER?)

These people have lost all moorings.

But Keith thinks:

Stunning. This is simple contract law. While I may have an issue with agreeing to pay these guys such-and-such salary and bonus regardless of performance (heck of a way to run a business, but we ARE talking about AIG), but once those contracts are agreed to and signed, they must be honored. People like Dodd, Grassley and Frank know this; they are merely posturing for the press and the voters. They know what they're talking about is illegal; their only concern is looking tough for their re-elections.

Know what? In view of the average voter's performance, I've venture to say that's a working strategy.

Those executives with their bonus may or may not (and this would be an interesting debate) have some moral obligation to say "you know, I'm embarrassed about my role if AIG's collapse, and I don't feel right about taking this money. Here, take it back," but that's not legally enforceable. I'd be interested to know how many of them already have the estates up for sales and are preparing to relocate to come tropical place known for umbrella drinks and a lack of extradition treaties.

For the record, Costa Rica is beautiful this time of year, but I wouldn't be leaving a forwarding address.

Posted by: Keith at March 17, 2009 6:57 PM
But johngalt thinks:

How can anyone hold these "executives" at AIG culpable for AIG's troubles given the absolute instability that resulted from mark to market accounting? They were victims of government interference in the economy just like the rest of us.

Posted by: johngalt at March 18, 2009 12:10 PM
But Perry Eidelbus thinks:

I blogged a bit last night on this, which I mostly won't repeat here. It comes down to the simple principle of morality: it's wrong to make other people liable for someone else. Let AIG and its people work it out amongst themselves, and leave the rest of us out of it.

If the U.S. taxpayer weren't put on the hook for AIG's woes, then we wouldn't care whether or not the executives get paid. The company would otherwise have gone bankrupt, and any bonus-seekers would stand in line with all the other creditors.

There might be a contract, which with a bankrupt company is squeezing blood out of a stone. No problem with this in a just world. In a just world, where people are not robbed by "government" to prop up companies, these executives can explain to a bankruptcy judge why they should get a single penny in bonuses considering that they're the ones who drove the company into the ground.

Posted by: Perry Eidelbus at March 18, 2009 3:40 PM

He Said He'd Trash NAFTA!

Mexican truckers, the bete noir of The Teamsters, got smacked down. Now our friends to the South retaliate:

Mexico said it would increase tariffs on 90 industrial and agricultural goods, likely to include politically sensitive farm products, after Congress last week killed a pilot programme allowing a limited number of Mexican trucks on American highways. Mexico obtained a judicial ruling in 2001 under the North American Free Trade Agreement (Nafta) allowing it to impose such sanctions, but has held off since the US introduced the pilot scheme.

So glad that everybody loves us now that Obama is President!

Hat-tip: Instapundit

UPDATE: Missed this great editorial in the WSJ today.

By rejecting Mexican trucks, the Administration violated the North American Free Trade Agreement and picked a needless fight with a good neighbor. The White House scrambled yesterday in the wake of the Mexican announcement, saying it wants to work with Mexico to come up with a new trucking plan. But unilateral treaty violations aren't the way to get other nations to negotiate concessions.

President Obama may think 90 products is no big deal, but from such little tariff fights do larger trade wars sometimes develop. Especially in a time of economic hardship, populist and nationalist passions are dangerous and can be hard to control. Mark this episode as another early example in which Mr. Obama has refused to stand up to a powerful Democratic interest group, with damaging consequences.

Posted by John Kranz at 1:22 PM | What do you think? [3]
But Boulder Refugee thinks:

Obama's foreign policy can be summed up thusly: open a dialog with your enemies (Iran, Syria, North Korea, Hamas) and punish your friends (Mexico, Colombia, UK, Canada). Our prior "cowboy" could at least tell the difference between white hats and black hats.

Posted by: Boulder Refugee at March 17, 2009 2:28 PM
But jk thinks:

Yup. And Brazil

RIO DE JANEIRO (AP) — His meet and greet with the U.S. president was bumped to Saturday, and when the White House announced his official visit, they misspelled his name.

Posted by: jk at March 17, 2009 6:59 PM
But Perry Eidelbus thinks:

"If goods don't cross borders, armies will." - attributed incorrectly to Bastiat

It applies similarly to Mexico. If they can't sell us enough goods legally, they'll smuggle more drugs illegally.

Posted by: Perry Eidelbus at March 18, 2009 3:46 PM

Pay no attention to those Demagogues Behind the Gavel

Sen. Chuck Grassley (R - C2H5OH) is in the news. The headline reads "Senator suggests AIG execs should kill themselves"

"I suggest, you know, obviously, maybe they ought to be removed," Grassley said. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

Now, I was going to write a humorous post and say, finally, I agree with the Senior Senator from Ethanol on something. But by the time I clicked "New Blog Entry" it wasn't funny anymore.

Let's recap. These villains, guilty of the crime of selling insurance and financial services, have lost more than anybody in the downturn: as a percentage or in dollars, nobody has lost a lot more. Barney Frank and President Obama want to take modest bonuses away. Don't look at the total number the AP shouts at you, AIG is a huge company and much of their pay comes from bonuses.

Now a (kinda, sorta) Republican on the banking committee -- let's not spend too much time discerning how much jest is involved -- suggests this "honorable" solution.

How about you, Senator? How about your lack of oversight in your 673 years on the banking committee? How about Rep. Frank in the House and all the apologists for Fannie and Freddie in both chambers? We want scalps from business but automatic pay raises for legislators.

UPDATE: Heh: AIG execs demand Senators "resign or commit suicide"

Posted by John Kranz at 9:58 AM | What do you think? [7]
But johngalt thinks:

Excellent rant my brother. All you left out was the outrage over public employee defined-benefit pensions, which we're all somehow on the hook to continue funding as though the economy never tanks:

"CalPERS said in October that if returns fell more than 20 percent during 2008, the state and more than 100 local governments might have to increase their payments for employee retirement benefits as much as 4 percent for the fiscal year beginning July 2010."

Posted by: johngalt at March 17, 2009 1:22 PM
But johngalt thinks:

On second thought, you also left out the $billions that AIG subsequently disbursed to banks: $44bn in the USA, $58bn to overseas banks. Beck called it "money laundering."

Hat tip: Beck

Posted by: johngalt at March 18, 2009 12:26 PM
But Perry Eidelbus thinks:

Beck is an utter moron. This was NOT money laundering. AIG was paying out the tens of billions that it owed, largely to banks.

It's immoral to make the U.S. taxpayer pay for AIG's massive losses, but the fact is that AIG's massive losses stem from contractual obligations.

Like any insurer, AIG writes policies. But AIG's unprecedented woes are because, unlike most insurers, it sold a lot of credit default swaps (insurance policies in case a debt instrument is not paid) that it couldn't cover. That its people knew they couldn't cover, actually: they figured that while the economy was good, and bank revenues and tax receipts stayed high, it could collect nice premiums and not have to pay out much.

Posted by: Perry Eidelbus at March 18, 2009 4:03 PM
But johngalt thinks:

Highly respected Denver radio host Mike Rosen made that point to a caller yesterday: "AIG was an insurance company. The payments to banks were for covered losses."

But it's still appropriate to characterize the transfers as "laundering" if only in a political sense. Imagine congress holding a vote to approve sending $58bn in bailout cash to European banks.

Posted by: johngalt at March 19, 2009 2:40 PM
But jk thinks:

I cringed a little at the word "laundering."

"Laundering" is pejorative. And while no-cable-guy has no opinion on Mr. Beck one way or t'other, I would direct you Don Luskin's post: That Was The Whole Point.

But that's what it means for a company to be "systemically important" -- that it has obligations to third parties, the failure of which would set off a domino effect of continuing collapse. When it is said that these "funds" are "funneled," that's just provocative language for saying that AIG was able to pay its debts, which was the whole purpose of the bail-out.

Posted by: jk at March 19, 2009 3:15 PM
But Perry Eidelbus thinks:

Yes, I had already read Don's post, and I already knew why AIG was paying "foreigners." By the time AIG was nationalized, the whole Street already knew its massive losses were from credit default swaps.

That's another thing about the crisis: the media acts like something's breaking news, when it was common knowledge in the financial industry for months.

Posted by: Perry Eidelbus at March 21, 2009 4:13 PM

March 16, 2009

Spam in the Age of Obama

Kinda says it all, don't it?


Philosophy Posted by John Kranz at 4:30 PM | What do you think? [2]
But johngalt thinks:

Capitalism needs a makeover. Maybe a blonde?

Posted by: johngalt at March 16, 2009 5:28 PM
But Keith thinks:

JohnGalt: this IS the makeover. The pre-bailout version was Matthew Lesko - who, I suspect, has retired from the wacky commercial business pending confirmation of his appointment as a deputy to Timothy "Timmay!" Geithner.

Posted by: Keith at March 17, 2009 11:34 AM

Hope and Change

It is so awesome now that President Obama is in charge that everyone once again loves the United States. Like, say Colombia:

"The treatment we have received from sectors within U.S. society and by sectors of that country's Congress is unjust to Colombia. And I will tell you something more: it is undignified. Look, like many Colombians I have felt humiliated when they mistreated us," [Colombia's vice-President Francisco Santos] told newspaper El Tiempo in an interview published Sunday.

"While we are not just allies and friends, but the only country in Latin America where the United States has a positive image, they mistreat us anyway. And how! This is the cost we need to evaluate when discussing plan Colombia," Santos added.

Now that we've sent that unilateralist cowboy back to Texas, I can hold my head high once again.

Hat-tip: Instapundit

Posted by John Kranz at 1:18 PM | What do you think? [0]

Nationalized Citi

Oh man, has everybody seen this? (Very not safe-for-work language, unless you actually work on a dock as a longshoreperson.) Funny stuff!

Hat-tip: Don Luskin, who is concerned that AIG will get the same %^&*! treatment. We The People now own it, and our new Democrat Overlords are convinced that we should not pay anybody more than $95K to run it.

Posted by John Kranz at 11:11 AM | What do you think? [3]
But Keith thinks:

I can relate. My wife and I refinanced our home, and two months ago, the lend sold my gorram mortgage to rutting Citi. We're humped.

Posted by: Keith at March 17, 2009 11:27 AM
But johngalt thinks:

I'd much*E9 rather have a mortgage account with Citi than a deposit account.

Posted by: johngalt at March 17, 2009 12:48 PM
But Keith thinks:

Noted and agreed - but I can tell you just from my short experience that their customer service department really does rival the DMV. Life really does imitate art.

Posted by: Keith at March 17, 2009 1:04 PM

March 15, 2009

Quote of the day

"I'm telling you right now," Mr. [Alec] Baldwin declared, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television is going to collapse and it's all going to go to California." Well, well. Apparently taxes do matter, at least when it comes to filming "30 Rock" in Manhattan.....-- Dr. Helen
UPDATE: The quote if from the WSJ Ed Page
Posted by John Kranz at 7:54 PM | What do you think? [0]

At Last, The Government will Protect Us!

Dan Eggen quotes President Obama at the WaPo:

"There are certain things only a government can do," Obama says in the address. "And one of those things is ensuring that the foods we eat, and the medicines we take, are safe and do not cause us harm."

That's all of politics in a nutshell my friends I'm not sure that that appeared in the print edition or is a blog feature, but click through if you want to read about how evil Bush politicized, underfunded and ignored the FDA at the expense of our safety. (You try doing all three of those!)

But this is what one of my favorite bass players would call "the crux of the biscuit." How many voters believe that? I'm afraid too many. A Republican-leaning relative of mine assured me one day that the only reason the grocery store doesn't sell bad meat is USDA regulation. Most people treat me like a crazy old delusional uncle when I tell them stories of the FDA, ImClone, Sam Waksal, and Martha Stewart. They think I am making it up.

Congress Posted by John Kranz at 11:45 AM | What do you think? [1]
But Perry Eidelbus thinks:

I had forgotten about our nullification discussion, which we can continue since it's now scrolled off.

TG, a warning before you even take a peek: if you wish to have constructive discussion with me, then you'd better cease your logical fallacies and misrepresentations of my own words.

Posted by: Perry Eidelbus at March 15, 2009 1:07 PM

March 14, 2009


A little flare up a few weeks ago did not rekindle (Why didn't Amazon name the Kindle 2 the "ReKindle?") a continuing discussion of what blog friend nanobrewer calls "dramatech."

I had worried that the new "Terminator: Sarah Connor Chronicles" was heading in a bad direction, and I have to confess that I was not sure Joss Whedon and Eliza Dushku's "Dollhouse" was going to live up to my overinflated expectations.

I never mind admitting I was wrong, as long as it is in very inconsequential matters, and I must say Mea Maxima Culpa, I was way off. I haven't really enjoyed a show, while it was airing, in decades. I watch things I expect I will like on DVD or digital delivery. But I confess I have fallen for FOX's Friday lineup in a big and geeky way. I started watching Sarah Connor just for Summer Glau, and the show got better and better. I can't wait for Friday now to see "my shows;" I like my work well enough that Friday's otherwise another day.

The plotline and the pacing of the Terminator series is pitch perfect. I think they are losing some of the artistic cinematography and creative use of music that captured me last season, but I am hooked on the plot and characters. I read that the show hurts for female viewers and I wonder if it is because all the interesting characters are women. Watching Jesse command the USS Jimmy Carter in 2027 opens another window into that complex personality. But it occurred to me that guys are all drones in the hive. They don't really do anything interesting -- I hope they're at least attractive.

[Spoiler alert for Dollhouse...]

Dollhouse is starting to show its Whedonesque manner. "Oh please oh please oh please," I said last night "please let the ATF be the bad guys and not the Branch Davidians cult." I've spoiled too much already for those with it sitting on your TiVo, but let's say that there was some classic Whedon ambiguity.

Whedon's real gift is the story arc. He's good at dialog and presentation. But you have to watch his shows in seasons. One or two episodes may or may not grab you, but the characters travel in multi-seasonal story arcs. When Spike reads his poem to the coffeehouse in "Not Fade Away," an arc is resolved that spanned multiple series -- and you feel that life has meaning. There are some nice subplots brewing on Dollhouse; I hope the good folks at FOX have the foresight and perseverance to see it through. I'll be there.

Posted by John Kranz at 12:09 PM | What do you think? [3]
But Terri thinks:

I'm completely with you on both shows JK. Excellent analysis on both shows.

Posted by: Terri at March 15, 2009 9:43 AM
But nanobrewer thinks:

This almost makes me want to start watching TV again. Fridays, eh?

Posted by: nanobrewer at March 15, 2009 10:36 PM
But jk thinks:

Oh yeah, Friday night on FOX network, You might catch up on the FOX website or hulu (there are only three episodes of Dollhouse out so far). Both of these shows are pretty good.

Posted by: jk at March 16, 2009 10:19 AM

March 13, 2009

Way cool

I thought these were cool and I could not resist when Professor Reynolds said they had dropped to $69.95. It just showed up, and this thing is major cool. Look, it even does dogs:

UPDATE: I have a crazy idea. I just emailed the singer in "Berkeley Square" to see if she'd like to join me in a project. I want to do a Virtual Coffeehouse. Each week I will put up a new YouTube of a single song. I will put up a web page with archives, but want to release them serially, like Charles Dickens. Low tech, no overdubs -- just try to catch a live coffeehouse vibe.

I'll let you know how it goes. I'll link here and on Facebook when anything happens. In the meantime, shoot me any ideas you have that would make it better. I said I was not gonna do stuff like this...

Posted by John Kranz at 3:59 PM | What do you think? [0]

I Kumpleetlee suk

Professor Mankiw was too embarassed to share his score. I think mine was 56%.

Spelling test.

Posted by John Kranz at 3:52 PM | What do you think? [5]
But Perry Eidelbus thinks:

26 out of 27 for me -- I thought that asking for the American preference of "acknowledgement" was a trick question, so I submitted it that way for both questions. Never knew all this time that I spelled it with the British preference, but I should have guessed because it asked about "judgment" versus "judgement."

Posted by: Perry Eidelbus at March 14, 2009 11:34 PM
But jk thinks:

I'm impressed. I was expecting Johngalt and Dagny to spank me -- and I'm not surprised you did: but 25/26 is damn good.

Posted by: jk at March 15, 2009 11:24 AM
But jk thinks:

OK. I have to share a story. I don't know where my bad spelling ends and my bad typing begins, but those of you who have suffered both around here will appreciate this.

I was shopping for domain names for my new project. I don't know how many of you do that, but GoDaddy is like a Soviet grocery store anymore. What you want is sold and you have to hope that you can find something you can stand ( was a nice exception but that is pretty arcane). Second or third try I hit Avaialble! Awesome.

I bought it and had the inner glow of finding one of the great domain names. I love the prosody. It's spellable. It says what it means and means what it says. I was going to start giving it out as my personal address. Then I looked closely at the receipt.

I am now the proud owner of COFFEEEHOUSELIVE.COM -- we put the "EEE" in coffee. Rats ass. I scored (insanely long but descriptive), (sorta works), and (great prosody, spellable, but doesn't make sense).

My bad typing costs my employer tens of thousands dollars a year and untold pain around ThreeSources. It is only fair that it cost me #9.95 and some heartbreak.

Posted by: jk at March 15, 2009 11:37 AM
But johngalt thinks:

20 of 27: 74% for me. Perry rocks!

Posted by: johngalt at March 18, 2009 3:58 PM
But Perry Eidelbus thinks:

What can I say...champion speller ever since third grade!

I attribute my good spelling to the fact that my parents taught me to read. No "Hooked on Phonics" crap, just solid reading so I'd learn words and how sentences can be formed. Once you read enough well-written material, you can tell when a word is spelled incorrectly. It just looks funny.

I went to a private school in the Philippines for K and first grade, which did no harm, but my parents already had laid the foundation. By the time I started second grade in the U.S. at a public school, I was far beyond my age group.

In second grade, we were given weekly assignments to alphabetize a 20-word list (something that a lot of junior high NYC students would have trouble with, unless it's comprised of rappers' and divas' names). I had started the school year late and didn't know what the teacher meant, so I just submitting the unsorted list and got a zero. Then I realized what she wanted. Oh, hey, no problemo!

Posted by: Perry Eidelbus at March 18, 2009 4:24 PM

Quote of the Day

[Senator Kent (D - ND)] Conrad, for his part, has been reminding everyone that he was a key player at the president's Fiscal Responsibility Summit -- which took place somewhere after his votes for the $33 billion increase in children's health insurance and $787 billion stimulus, though before his vote for the $410 billion omnibus and its 9,000 earmarks. He's also been talking about the deficit Mr. Obama "inherited," just to keep things in perspective as his committee works on the president's $3,600,000,000,000 budget blueprint. -- Kim Strassel, WSJ Ed Page
111th Congress Posted by John Kranz at 11:47 AM | What do you think? [0]

March 12, 2009

Whew! That was close!


WASHINGTON – Congress' automatic pay raises are in little immediate danger of being scrapped for good, even with the economy slumping and millions of Americans unemployed. House Speaker Nancy Pelosi on Thursday would not commit to holding a vote on a bill to do away with the annual cost-of-living increases. She pointed out that Congress recognized the economic crisis by voting this week to skip next year's raise.

In so doing, though, lawmakers defeated a Senate measure to abolish the automatic pay hikes and force them into the deep discomfort of casting actual votes to give themselves raises.

No one is rushing to defend the current system in a tanking economy that has rendered the annual raise a quaint memory for many outside Washington.

Hey, when you're getting the job done, you deserve to get paid!

Constitutional Taxation

One or two of you may have noticed my comment under Tuesday's Quote of the Day. Fewer still may have followed any of the links. I got a chance to investigate futher today.

From a November 7, 2002 Press Release by Paul Andrew Mitchell, B.A., M.S., Counselor at Law, Federal Witness and Private Attorney General:

On a much broader scale, the absence of liability statutes raises the specter of widespread government fraud, going all the way back to the year 1913. And, there is no statute of limitations on fraud.

The main problem which the SUBPOENA seeks to solve is to confirm, once and for all, the apparent absence of any federal statutes which create a specific liability for income taxes imposed by subtitle A of the Internal Revenue Code.


The absence of any statutes creating a specific liability for subtitle A income taxes means, quite simply, that federal income taxes are totally and completely voluntary, in the common everyday meaning of that term. Liability only begins when Form 1040 is signed.

So it would seem that refusing to complete a tax return, or even completing it and refusing to sign it, may legally absolve an individual of any federal income tax liability. I met a man who actually adhered to this strategy in the early 1990's. At the time I thought he was a madman. Now I believe I've found his justification.

But what of that pesky federal witholding that AlexC lamented?

Further stunning proof that these taxes are truly voluntary can be found at IRC section 3402(n). Here, Congress has authorized a form called the “withholding exemption certificate” abbreviated “WEC”. The term “withholding exemption certificate” occurs a total of seventeen (17) times in that one statute alone.

However, the Internal Revenue Service (“IRS”) has never created an official form for the WEC.

I haven't yet found any information on the status of the legal action since the date of this press release. (Is there an honest judge left anywhere in the United States Federal Government?) Here, however, is Counselor Mitchell's brief essay "Let's Dismantle the IRS: This Racket is Busted"

Let’s Dismantle IRS:
This Racket is Busted


Paul Andrew Mitchell
Private Attorney General

All Rights Reserved without Prejudice

It’s time to dismantle the Internal Revenue Service. This organization has outlived its usefulness.

The hunt was on, several years ago, when activists like this writer confirmed that IRS was never created by any Act of Congress. It cannot be found in any of the laws which created the U.S. Department of the Treasury.

The U.S. Supreme Court quietly admitted as much, at footnote 23 in Chrysler Corp. v. Brown. In a nation governed by the rule of law, this omission is monumental.

The search for its real origins has taken this nation down many blind alleys, so convoluted and complicated are the statutes and regulations which govern its employees rarely, if ever.

The best explanation now favors its links to Prohibition, the ill-fated experiment in outlawing alcohol.

The Women’s Temperance Movement, we believe, was secretly underwritten by the petroleum cartel, to perfect a monopoly over automotive fuels. Once that monopoly was in place, Prohibition was repealed, leaving alcohol high and dry as the preferred fuel for cars and trucks, and leaving a federal police force inside the several States, to extort money from the American People.

All evidence indicates that IRS is an alias for the Federal Alcohol Administration (“FAA”), which was declared unconstitutional inside the several States by the U.S. Supreme Court in 1935. The result of the high Court’s decision in U.S. v. Constantine confined that FAA to federal territories, like Puerto Rico, where Congress is the “state” legislature.

Further confirmation can be found in a decision by the First Circuit Court of Appeals in Used Tire International, Inc. v. Manual Diaz-Saldana, which identified the latter as the real “Secretary of the Treasury.” The Code of Federal Regulations for Title 27 also identifies this other “Secretary” as an office in San Juan, Puerto Rico.

This is ominous data. It serves to suggest that IRS has no authority whatsoever to mail envelopes from the “Department of the Treasury.” Such obvious deception is prohibited by federal mail fraud statutes, and defined as a predicate to racketeering.

Moreover, the vagueness now proven to frequent the Internal Revenue Code forces a legal conclusion that the entire Code is necessarily void, read “no legal effect.” The high Court’s test for vagueness is obviously violated when men and women of common intelligence cannot agree on its correct meaning, its proper construction, or its territorial application.

Take, for instance, a statute at IRC section 7851. Here, Congress has said that all the enforcement provisions in subtitle F shall take effect on the day after the date “this title” is enacted. These provisions include, for example, filing requirements, penalties for failing to file, and tax evasion.

Guess what?

Title 26 has never been enacted into positive law, rendering every single section in subtitle F a big pile of spaghetti, with no teeth whatsoever. Throughout most federal laws, the consistent legislative practice is to use the term “this title” to refer to a Title of the United States Code.

To make matters worse, conscientious courts (an endangered species) have ruled that taxes cannot be imposed without statutes assigning a specific liability to certain parties.

There are no statutes creating a specific liability for taxes imposed by subtitle A of the Internal Revenue Code. This is the set of statutes that impose the federal income tax.

Look at it this way: if Congress imposed a tax on chickens, would that necessarily mean that the chickens are liable for the tax?

Obviously not! Congress would also need to define the farmer, or the consumer, or the wholesaler, as the party liable for paying that tax. Chickens, where are your tax returns?

Without a liability statute, there can be no liability.

This now opens another, deeper layer in this can of rotting worms. If IRS is really using fear tactics to extort an unlawful debt, then it qualifies for careful scrutiny, and prosecution, under the Racketeer-Influenced and Corrupt Organizations Act aka “RICO”.

How fitting, and how ironic, that IRS is legally domiciled in Puerto RICO.

When we get down to brass tacks, we find that Congress encourages private Citizens to investigate and bust rackets, mainly because it perceived a shortage of public prosecutors talented enough to enforce RICO statutes against organized crime syndicates.

This shortage is the real reason why the RICO statute at 18 U.S.C. 1964 awards triple damages to any party who prevails, using the civil remedies it provides. And, happily, State courts like the Superior Court of California also enjoy original jurisdiction to litigate and issue these remedies.

All of this would approach comedy in the extreme, were it not also the case that IRS launders huge sums of money, every day, into foreign banks chiefly owned by the families that founded the Federal Reserve system.

Did you think the Federal Reserve was federal government? Guess again!

One of the biggest shocks of the last century was an admission by President Reagan’s Grace Commission, that none of the income taxes collected by IRS goes to pay for any federal government services.

Those taxes are paying interest to these foreign banks, and benefit payments to recipients of entitlement programs, like federal pension funds.

So, the next time your neighbors accuse you of being unpatriotic for challenging the IRS, we recommend that you demand from them proof that IRS is really funding any federal government services, like air traffic control, the Pentagon, the Congress, the Courts, or the White House.

Don’t hold your breath.

Honestly, when all the facts are put on a level table top, there is not a single reason why America should put up with this massive fiscal fraud for one more day.

It’s now time to dismantle the Internal Revenue Service.

Keeping all those laundered funds inside this country will result in economic prosperity without precedent in our nation’s history.

Let’s bury IRS beneath the Titanic, where it can rust in peace forever along with the rest of the planet’s jellyfish.

America deserves to be a living, thriving Republic, not another victim of Plank Number Two in the Communist Manifesto.

About the Author:

Paul Andrew Mitchell is a Private Attorney General and
Webmaster of the Supreme Law Library on the Internet:

See also:

“U.S. Secretary of the Treasury Falls Silent in Face of SUBPOENA for Tax Liability Statutes”

“31 Questions and Answers about the IRS”

“What Is the Federal Income Tax?”

“Electronic Censors Found at U.C. Berkeley’s Law School”

“Private Attorney General Backs UCB’s Graduate Instructors”

“Paul Mitchell Blasts Clinton, Rubin for Racketeering”

“Paul Mitchell Applauds House Vote to Kill IRC”

“Paul Mitchell Urges Nation to Boycott IRS”

“The Kick-Back Racket: PMRS”

“Congresswoman Suspected of Income Tax Evasion”

“Our Proposal to Save Social Security”

“Charitable Contributions by the Federal Reserve”

“Legal Notice in re Withholding Exemption Certificates”

“A Cogent Summary of Federal Jurisdictions”

“BATF/IRS -- Criminal Fraud”

“Income Taxes and Government Fraud”

“A Monologue on Federal Fiscal Fraud”

“Miscellaneous Letters of Correspondence”

# # #

But jk thinks:

I s'pose. I know a guy (and I think you do, too) who makes an impassioned and reasonable sounding case that he does not have to pay taxes because of a non-capitalized 's' in State in the 14th Amendment.

So, that works just fine until he gets a job and has to explain it to HR that "he doesn't need to fill out a W-4 because he is a sovereign citizen of the State of Colorado." I just think this will land you in the same (rhymes with 'jackpot') place.

The sad part of my disbelief, though, is the alacrity with which our State and Federal legislators would rectify any situation that threatened incoming revenue. I don't think that a Congress that just passed a trillion or two in spending last month would allow a return to 19th Century funding.

Posted by: jk at March 13, 2009 10:38 AM
But johngalt thinks:

I gave a few minutes thought to the consequences of a tax that everyone has to pay. Since one can't get blood from a turnip and government spending can't stop on a dime, the deficit would be monumental until outflows could be made to match inflows. It would be chaotic - perhaps even disastrous (particularly in urban areas.) But it would be RIGHT.

Posted by: johngalt at March 13, 2009 11:30 AM
But jk thinks:

Stop me if I'm just being argumentative. But I think you're falling into the Libertarian trap of "misoverestimating" your electoral support.

Again I suggest that your most optimistic scenario is realized. Justice Ginsberg, writing the concurrent opinion of the court's 8-0 majority (Associate Justice Scalia was hunting with Dick Cheney) vacates the 16th Amendment.

You and I would cheer; Rep Ron Paul and Jeff Flake would jockey for position; The Fair-taxers would fill SPAM-filters everywhere...

...and the rest of the world would act as quickly as it could to overcome this little procedural obstacle. This could threaten health care to children! The AARP would mobilize 60 million hotel-discount card holders with a TV blitz. In the end a crushing majority would line up to get back to the status quo ante before their checks were delayed.

Sad, perhaps, but I cannot look at any recent election cycles and see a desire for a do-over (maybe on "Dancing with the Stars...")

Posted by: jk at March 13, 2009 2:31 PM
But johngalt thinks:

"... this little procedural obstacle."

Are you suggesting that the Constitution of the United States could be amended by an act of congress, or of the president?

I suppose you have cause there because that's what's been done in the case of the 16th amendment, and others. I'm afraid the constitution has become nothing more than a rallying cry for freedom-loving Americans. It sure doesn't stop our government from doing what it damn pleases.

Posted by: johngalt at March 17, 2009 1:26 PM
But jk thinks:

I'm suggesting that they'll do whatever it takes. If they can ignore it they will, but if they have to, they will break the world land speed record in ratifying a new amendment. They could do it in three days, with very little objection.

Posted by: jk at March 17, 2009 1:54 PM
But johngalt thinks:

Maybe I'm just a rube. Two-thirds of the members of both houses of congress, then majority vote by legislatures of three-fourths of the states seems a tall order to me. Three days? Really?

And a separate question: You really don't think we could muster 34 senators OR 145 congressmen to keep America as the world's sole Republic?

Posted by: johngalt at March 17, 2009 6:08 PM

Where goods cross borders...

Where goods cross borders, armies (and terrorists?) don't.

Daniel Doron proposes free trade as a not-so-new idea to Mideast peace:

Following Israel's conquest of the West Bank and the Gaza strip in 1967, Gen. Moshe Dayan wisely let the Palestinians manage their economic affairs. His "open bridges" policy facilitated the free movement of goods and people, and brought prosperity to the private sector. Hundreds of thousands of Palestinians were employed in Israel for much higher wages than under Jordanian and Egyptian rule. Living standards quintupled and agriculture, manufacturing, education, health and the status of women and children rapidly improved. Arabs enjoyed freedom of movement in Israel, yet there were practically no incidents of terrorism. Israelis shopped and ate in Arab towns. Their spending provided a lion's share of a skyrocketing Palestinian GDP.

Then the UN moved in and we got an extensive aid and refugee regime...

Posted by John Kranz at 12:32 PM | What do you think? [3]
But Boulder Refugee thinks:

Who you callin' a refugee, man?!?

The Refugee will not pretend to be a mideast scholar, but he does not recall the bucolic past that Doron seems to describe. Moshe Dayan was also the guy who drove the tanks across the Egyptian, Syrian and Jordanian borders, so the Arabs learned not to mess with him.

Palestinians have been refugees since 1948. I would, however, categorize them as voluntary refugees. The Israeli's encouraged Palestian repatriation after the war for independence, but most refused awaiting the day when the Arab armies would drive the Jews in to the sea. Jordan, Saudi Arabia, Syria and other Arab nations refused to grant them citizenship in order to maintain a festering sore in the side of the Israelies.

Nevertheless, the terror did not start because commerce was discouraged, but because of some Fatwa's and political decisions to use the open borders as an opportunity to inflict terrorist acts on the Israelies. Were these to end, I'm sure Israel would gladly reopen the borders.

As a side note, some of the best food that The Refugee ate while in Israel were in Palestian restaurants - all while Kartushya rockets were begin fired from Lebanon.

Posted by: Boulder Refugee at March 12, 2009 6:33 PM
But jk thinks:

<tompettyvoice>You don't have to live like a refugee...</tompettyvoice>

Not sure it was sweetness and light in '73, but I think Dolon's point holds that much of the "peace process" has made it worse. The WSJ Ed Page has run some compelling stories on the UN refugee camps that perpetuate refugeeism and impede real solutions.

I am the Goyische Zionist and second to none in my support for Israel over those that lob rockets. The point is the importance of economic integration, which I believe was much better pre-Arafat and is not addressed in any "peace processes" we see today.

Posted by: jk at March 12, 2009 7:05 PM
But Perry Eidelbus thinks:

I'm glad the WSJ reminds us that Israel did not always blockade Gaza and the West Bank. How long do we suppose it'll be before the New York Times mentions this?

The Palestinians have no one to blame but themselves. They turn a blind eye to their own, who smuggle weapons and explosives, and use free travel as a means for blowing up Israeli civilians, and then Palestinians have the audacity to accuse Israel of causing a humanitarian crisis. To hell with them all.

Posted by: Perry Eidelbus at March 14, 2009 11:39 PM

March 11, 2009

RAH Syllogism


Hat-tip: Mankiw

Posted by John Kranz at 6:01 PM | What do you think? [0]

Somebody Tell Angel

Promise Written in Blood still not a binding contract, when the legal requirement of consideration is absent. No word on whether saying "cross my heart, hope to die, stick a needle in my eye" would have changed the analysis. -- Eugene Volkh
Posted by John Kranz at 2:51 PM | What do you think? [0]

What? No Gulfstream Vs?

Imagine is a Republican -- oh never mind:

Pelosi, who clashed with the military to get nonstop service when she flies home to California with police protection on government planes, revealed a particular fondness for Gulfstream's sleek G-5 - a plane glamorized in Hollywood films and rap videos.

"It is my understanding there are no G-5s available for the House during the Memorial Day recess. This is totally unacceptable . . . The speaker will want to know where the planes are," a Pelosi aide wrote in an angry e-mail to the military.

Hat-tip: Instapundit

But johngalt thinks:

Can't her entourage travel in a squadron of Air Force Priuses?

Posted by: johngalt at March 11, 2009 5:02 PM
But jk thinks:

It was pointed out that she is hypocritical, not only on environmentalism, but also on her anti-militarism.

Posted by: jk at March 11, 2009 5:13 PM
But Perry Eidelbus thinks:

Michelle Malkin has been covering this so well. Pelosi also wants the unprecedented transfer of a plane to an airport 30 minutes away from where she "has business" (meaning her country home), instead of 1.5 hours away from her official residence.

My personal note to Pelosi: "Go fly coach, bitch."

Posted by: Perry Eidelbus at March 14, 2009 11:41 PM

DAWG Denyin'

I wish to clarify my position on climate change. If you've heard it, skip to the link and enjoy John Fund's brutal takedown of VP Gore.

If you're new 'round here, please accept my argument with the proponents: they do not use accepted scientific methods to evaluate their theories and resolve differences. One of my heroes is Dr. Karl Popper. His writings on philosophy and politics are superb, but he is best known for his scientific epistemology. Popper is - among many things -- the codifier of what we know as the scientific method.

To be accepted by the scientific community, a theory must display predictive power. Most famously, Albert Einstein's Special and General Relativity both predicted complex phenomena that could not be verified by the instruments of their day. Yet, as atomic clocks, and rocket ships, and radio telescopes were invented, underpaid graduate students used those devices to test Einstein's assertions. So far, they have all come true, and Einstein's theories are well accepted.

But it's worth noting that Einstein's theories are still not completely accepted and that a scientist who questions them is not shunned as "A Relativity Denier." He better have something to back up his claims, but his claims can be heard.

Not so to one with the temerity to suggest that Global Warming is not Anthropogenic and Deleterious. Nope, then you're a denier. Segue to John Fund (which must be read in full). VP Gore will not debate Vaclav Klaus, who doubts the W; Bjorn Lomborg, who questions the D; or Dr. Willie Soon of Harvard who asks what VP Gore hopes to accomplish.

At the Wall Street Journal's ECO:nomics conference in Santa Barbara, California, Mr. Gore was initially scheduled to appear with Czech President Vaclav Klaus, a noted skeptic on global warming. Mr. Gore changed his schedule so he could appear the previous day. President Klaus told me this week that the major reason he agreed to travel from Europe was the chance to interact with Mr. Gore. "I don't understand all of this reluctance to engage with others," he told me.

Back to Popper, and real science: the heroes are the iconoclasts who buck "consensus" and say the Earth is not flat, the Sun does not revolve around the Earth, and a four pound stone does not fall four times as fast as a one pound stone. "Eppur Si Muove."

But nanobrewer thinks:

Glad to be a denier, and not just because you're one, JK. I'm a bit proud, even, to have converted my brother from being a proponent to a doubter.

And, surely, don't any liberals read this: Asher's blog at Daily Tech is a fount of new-ledge (give THAT one to your spelling test!).

Posted by: nanobrewer at March 15, 2009 11:09 PM
But jk thinks:

No, they don't read that nb, "The Science is Settled&tm;" and they are on to saving the world, not reading every little meaningless fluctuation of data.

Lastly, be careful with the deference -- nobody treats me that nicely around here.

Posted by: jk at March 16, 2009 12:30 PM

March 10, 2009

Freeman Pulls Appointment

I don't like to overestimate the influence of bloggers and new media -- but I think they can claim credit for this:

Director of National Intelligence Dennis C. Blair announced today that Ambassador Charles W. Freeman Jr. has requested that his selection to be Chairman of the National Intelligence Council not proceed. Director Blair accepted Ambassador Freeman’s decision with regret.

Obama's Jew-hatin' pick will not head the NIC. Conventional MSM took no interest in this story at all. I think it was kept alive by blogs, (and perhaps talk radio). Bret Stephens had a devastating piece in the WSJ Ed Page today that Chinese dissidents disapproved the pick and can hardly be considered part of the all powerful Israeli lobby.

Sad to see M&A?

I never thought the day would come when I would be sad to see a big corporate takeover. It generally brings out my inner Schumpeter. Especially in this economy, we need deals, deals, and deals.

Two great articles, however, have ruined my enthusiasm for Merck - Schering Plough. Derek Lowe, blogging at the Atlantic, doesn't see the move as friendly to R&D:

I have to say, I'm sorry to see the end of both. Drug discovery is risky and complicated, and it needs as many different viewpoints and shots on goal as possible. Big mergers like this don't help the industry's ecology much. Today's merger isn't as disturbing as the Blob-like growth of Pfizer, but it's still not happy news.

Even worse is the WSJ Ed Page's clear refutation of animal spirits in the deal. They see it as Big Pharma (boo! hiss! bastards!!!) retrenching in advance of a bad government climate disfavoring innovation.
These deals are good short-term news for shareholders of the target companies, some of whom have been beaten down for years. Merck's offer for Schering-Plough, for example, is a 34% premium over Friday's close. But the deals also come amid a worsening political (and hence economic) climate for drug makers and health-care stocks generally. Aside from the merger premiums of recent few days, health stocks have been hammered in 2009.
So it's no wonder that, this time, drug companies are looking to diversify both geographically and into biotechnology. Yet neither one is all that safe a haven. The U.S. is the last major pharmaceutical market without universal price controls, and as such has been the world's main financier of new drug discoveries. In a world of government-run and -priced health care, biotech innovation will also be as much at risk as traditional drug development. The biggest price we may pay for a health-care system run from Washington are the therapies we never get as a result.

For investors and the economy, the recent rout in health stocks is a case of wealth destruction. For the rest of us, it's also a sign of the health destruction that will result if Washington's current policy trajectory becomes law.

Health Care Posted by John Kranz at 12:53 PM | What do you think? [3]
But johngalt thinks:

Yeah. Try explaining that last bit to even an above average Obama voter.

Posted by: johngalt at March 10, 2009 3:04 PM
But Boulder Refugee thinks:

Agreed that Big Pharma is hunkering down and that removal of the profit motive will kill innovation and therefore new therapies. Assuming we avoid that pitfall (here's hoping), the consolidation is not a bad thing. Truth is, large companies, as a breed, are terrible at ground-breaking innovation. They tend to pursue low-risk courses and have bureaucratic proceeds that stifle rapid movement. Thus, Big Pharma tends to partner with Little Pharma. The little guys develop the promising compounds, but don't have the money to get them to market. Big Pharma has the ~$1 billion that it takes to bring a drug to market and that's where they step. Schumpeter lives, unless Obama kills him.

Posted by: Boulder Refugee at March 11, 2009 12:15 PM
But jk thinks:

Normally, I'm with you, br, but this wave doesn't smell right. M&A activity in a less distorted market would do everything you say. I think Lowe and Gigot have valid concerns that these deals are only good in a distorted market and would not necessarily make sense without the shadow of government takeover.

My tireless (perhaps tiresome) drumbeat is that government controls scare private investment out of the sector (you gonna buy pharma today?) That being the case (how's my subjunctive, Keith?) the smaller, efficient, innovative firms will be starved of capital and will have to hide out as divisions of big firms.

Full disclosure: my current drug trial is a Genetech-developed compound but the trial is done by Roche. I guess their relationship is a little more formal now.

Posted by: jk at March 11, 2009 12:36 PM

Quote of the Day

The greatest tyranny has the smallest beginnings. From precedents overlooked, from remonstrances despised, from grievances treated with ridicule, from powerless men oppressed with impunity, and overbearing men tolerated with complaisance, springs the tyrannical usage which generations of wise and good men may hereafter perceive and lament and resist in vain.

At present, common minds no more see a crushing tyranny in a trivial unfairness or a ludicrous indignity, than the eye uninformed by reason can discern the oak in the acorn, or the utter desolation of winter in the first autumnal fall. Hence the necessity of denouncing with unwearied and even troublesome perseverance a single act of oppression. Let it alone, and it stands on record. The country has allowed it, and when it is at last provoked to a late indignation it finds itself gagged with the record of its own ill compliance. -- from the Times of London, Aug. 11, 1846.Hat-tip: WSJ

Posted by John Kranz at 12:39 PM | What do you think? [1]
But johngalt thinks:


Now, in contemporary terms, "When good men permit the theft of small portions of private property by government under color of law they have little recourse when, at the taker's sole discretion, that theft is rapidly enlarged."

This train of thought naturally stopped first at the 16th Amendment. A 'google' of "16th amendment controversy" took me to the ongoing effort of one Paul Andrew Mitchell, Private Attorney General residing in San Diego, CA, to end the IRS on the grounds that the 16th Amendment was never ratified.

(I might never have taken such a notion seriously absent the spectacle that is Global Warming/Climate Change theory cum government coercion.)

AlexC may yet get his "Tea Party!"

Supreme Law update highlights here.

Posted by: johngalt at March 10, 2009 4:06 PM

March 9, 2009


The guy doesn't do a bad Geithner...

Hat-tip: Mankiw

Posted by John Kranz at 8:00 PM | What do you think? [0]

Why politicized economic development is dangerous

I recently wrote on the danger of politics driving scientific research. The obvious case of this now is all of the government "investments" being proposed in the name of "saving the planet from irreversible damage due to climate change."

But even if man-made climate change was real (sorry tg, is real) and even if "renewable" energy sources were beneficial to counter it, the least effective entity to make them a reality is - wait for it - government.

Consider the following essay on "One Reason Governments Spend So Much" from the 'Uncle Eric' book: Whatever Happened to Penny Candy?

Industries generally develop in three stages. First is scientific feasibility, second is engineering feasibility, and third is economic feasibility.

Using the airline industry as an example, the question in the 1800s was: "Is long-distance air travel possible?"

In the 1800s, balloons were already in use but were not practical. The problem to solve was the heavier-than-air machine.

The Wright Brothers in 1903 proved scientific feasibility. They risked their time, money and lives to show that a heavier-than-air machine could fly.

Lindbergh, in 1927, proved engineering feasibility. He risked time, money and his life to show that long-distance air travel was possible.

This gave investors enough confidence to risk their money in the aircraft industry. In 1935 the Douglas Company came out with the DC-3, which was the beginning of economic feasibility.

The modern airline industry resulted from all this risk-taking. Today, a middle-class American can go anywhere in the world much faster, and in much greater comfort, than a Roman emperor could. Travelers fly because the benefits are greater than the costs. This is economic feasibility.

This three-step model explains why governments are terrible at economic development. The "experts" who comprise the government gamble with other people's money, so they tend to confuse scientific and engineering feasibility with economic feasibility.

Once science and engineering prove something can be done, those who comprise the government will do it - even if the costs are greater than the benefits. [emphasis mine]

This economic development of the economically unfeasible is precisely the modern story of:

Wind power
Solar photovoltaic power
Ethanol (both glucosic AND celluosic)
Hydrogen fuel cells
Dual-mode hybrid cars
The list goes on...

But Keith thinks:

Just to add to the entertainment value: "But even if man-made climate change were real..." is the grammatically accurate construction. Heh.

JohnGalt: great post, and the model of three-stage development makes plain, even to a poor, dumb country boy like me, why government-run economic development doesn't work. And to boot, it's much more elegant than me just saying "a government that can't even balance its own checkbook has no business fiddling with the economy."

I'd only propose one small change to the quote rfrom the essay. Where the author wrote "Once science and engineering prove something can be done, those who comprise the government will do it - even if the costs are greater than the benefits" in the last paragraph, it seems to me that the last phrase should omit the word "even" and the hyphen, thusly: "... those who comprise the government will do it if the costs are greater than the benefits." If the benefits are greater than the costs, entrepreneurs and private industry will do it, without the necessity of government meddling. Profit motive being what it is, and all that.

Ergo, government will ONLY do it if its benefits do not justify its costs, and that applies to every item in your list. QED, yes?

Posted by: Keith at March 9, 2009 3:18 PM
But jk thinks:

Ahh, the punchline from a great old gag can be trotted out:

I congratulate Keith on his use of the subjunctive.
Posted by: jk at March 9, 2009 4:32 PM
But Keith thinks:

Thanks, jk...

Say, on the subject of government and the economy, I've been reading in the news today that Warren Buffett has been quoted as saying the U.S. economy "fell off a cliff." I've read that three times today, and every time, all that comes to mind is...

"It was pushed."

Posted by: Keith at March 9, 2009 5:11 PM
But johngalt thinks:

Wellll, I was trying to have some fun with TG, saying "was" as in "past tense" ... before it was largely discredited, then replacing it with "is" as a sop to him since he's not yet comfortable with the "denier" badge of courage.

I admit - sometimes my jokes trip over their shoelaces.

Oh, and yes, I do fully agree with your improvement of the closing paragraph. Well done!

Posted by: johngalt at March 10, 2009 12:25 AM
But jk thinks:

Tough room, jg, you know that as well as anyone.

Posted by: jk at March 10, 2009 1:34 PM
But T. Greer thinks:

Eh, I though the post was funny. I also think you have highlighted one of the biggest problems with the Eco-stimulus crowd. What they call progress is in actuality a retardation (word?) of Western civilization.

Posted by: T. Greer at March 11, 2009 12:19 PM

March 8, 2009

Tepid is as tepid does

I don't know that this is fair, but I present it for your viewing pleasure:

UPDATE: My gut instinct to question fairness was right:

Okay, Greyhawk weighing in: I can't see the video right now, but I'm concerned it might be one compiled to give the impression that the current President of the United States lacks the support from the military his predecessor had. That is not the case, and to imply otherwise is an insult to the integrity of the US military, and in my mind reflects both wishful thinking and ignorance on the part of anyone making the claim.

And more: Okay - now that I've had a chance to see it I can say it's worse than what I thought. The first video above is the cheapest of cheap shots. Marines in the Obama video have been clearly called to attention, and are standing at attention when he enters. Whooping it up for the Commander in Chief therefore is not an option. Period. As for the fadeout, cheers can be heard (and they aren't 'tepid') until the audio is cut to go "back to the newsroom".

Posted by John Kranz at 1:07 PM | What do you think? [3]
But Perry Eidelbus thinks:

Clearly the Marines not enthusiastic for Obama are racists! Off to the re-education camps with them!

Posted by: Perry Eidelbus at March 8, 2009 1:21 PM
But AlexC thinks:

I was tweaking the volume... first turning it down for Bush, turning it up for O (to make sure i could hear ANYTHING), then turning it way down as I near wetmyself from fright.... then back up.


Posted by: AlexC at March 8, 2009 5:12 PM
But johngalt thinks:

Apparently America's military men and women (at least the ones in attendance) "Support the President, but not his mission."

Posted by: johngalt at March 8, 2009 11:24 PM

March 7, 2009

Politicization of Science Deux

A bit of comment persiflage last week about how DAWG has become a left-vs-right issue. Randall Parker lays out the problem and even a few solutions:

Why has the debate over global warming become so partisan with most on the Left and Right taking opposing positions? Some on the Left argue that people on the political Left are more willing to consider the evidence of science. But I see a more likely reason: People on the Right do not like high taxes and suspect the argument for restrictions on carbon dixoide emissions is just a convenient opportunity to increase tax revenues and the size of government. The Obama Administration demonstrates the truth of these suspicions. A half trillion dollars a year is a lot of money.

I'll let you click though to see the solutions, but it is basically Mankiw's point of making carbon taxes neutral. I've made my voice heard enough on that, but compared to a huge revenue windfall for government, I'd like it just fine.

Hat-Tip: Instapundit

March 6, 2009

The Economist: No, old chap."

Not wowed by the President's first budget across the pond:

Sadly, these plans are deeply flawed. First, Mr Obama’s budget forecasts that the economy will shrink 1.2% this year then grow by an average of 4% over the following four years. It might if the economy were to follow a conventional path back to full employment. But this is not a conventional recession. The unprecedented damage to household balance sheets could well result in anaemic economic growth for years, significantly undermining the president’s revenue projections. The economic outlook continues to darken and the stockmarket has already tumbled to 12-year lows. Mr Obama may either have to renege on his promise to slash the deficit to 3% of GDP in 2013 from more than 12% now, rein in his spending promises or raise taxes more.

Second, Mr Obama’s scattershot tax increases are a poor substitute for the wholesale reform America’s Byzantine tax code needs. Limiting high earners’ deductions for mortgage interest, local-government taxes and other things is certainly more efficient than raising their marginal tax rates even more. But it would be better to replace such deductions for everyone with targeted credits, abolish the alternative minimum tax (an absurd parallel tax system that ensnares a sizeable chunk of the upper middle class), and implement a broad sales tax. Rather than simply eliminating the sheltering of corporate income from abroad, Mr Obama could have broadened the corporate tax base and lowered the rate. In sum, Mr Obama could simultaneously raise more revenue and make the tax code simpler and more conducive to growth. But he hasn’t.

Hat-tip: Mankiw

Posted by John Kranz at 6:33 PM | What do you think? [1]
But johngalt thinks:

This seems an appropriate place to mention that I just fixed the broken link for the Corporate Taxes radio commercial in my comment on the Going John Galt post. (I can't believe nobody called me on it. Didn't anyone try listening to it?) :)

Posted by: johngalt at March 7, 2009 12:03 PM


Glenn Reynolds was asking readers to name just one area where the Obama Administration has shown competence. "Just one," asks the Professor. A reader suggests his keeping Gates on as SecDef and following through with Bush's victory strategy in Iraq. I'd give a few points for that but it's more status quo ante than hope and change.

Ive suggested that his picking Senator Clinton for SecState was pretty inspired. She's about the best Democrat I can imagine in the post.

On second thought (painful, cackling video at the link):

GENEVA—Secretary of State Hillary Clinton opened her first extended talks with Russian Foreign Minister Sergei Lavrov by giving him a present meant to symbolize the Obama administration’s vow to “press the reset button” on U.S.-Russia relations.

She handed a palm-sized box wrapped with a bow. Lavrov opened it and pulled out the gift: a red button on a black base with a Russian word peregruzka printed on top.

“We worked hard to get the right Russian word. Do you think we got it?” Clinton asked.

“You got it wrong,” Lavrov said.

Instead of "reset," Lavrov said the word on the box meant “overcharge.”

Stunning! I don't believe Russian scholar Secretary Rice would have missed that, but can you imagine the howls? This Administration was gonna "repair our relations in the world community" and I know a lot of moderates and Libertarians who were excited about that aspect of his candidacy. The early signs are not good. We dissed our best allies during PM Brown's visit, now a goofy antic goes awry with Russia. Iran has enough Uranium for a bomb, an Israel-hater is put up to head the NIC, we go to the UN racism festival and then pull out.

Heck of a job, Baracky!

UPDATE: The Hits keep coming!

Hillary Clinton raised eyebrows on her first visit to Europe as secretary of state when she mispronounced her EU counterparts' names and claimed U.S. democracy was older than Europe's...

Posted by John Kranz at 4:50 PM | What do you think? [3]
But AlexC thinks:

The Hillary pick was a case of "keep your friends close, keep your enemies travelling-around-the-world-and-out-of-the-Senate-being-a-potential-obstructionist-opponent-plotting-for-a-primary-in-2012"

Now he can say she was part of the Administration, and it's her fault too.

I applaud the President for restoring our nation in the eyes of foreign powers... Great Britain, Russia, Iranians, Israel and Australians not withstanding.

Posted by: AlexC at March 6, 2009 9:14 PM
But johngalt thinks:

As painful and embarassing as Sec Clinton is I think we'll all be thankful she's tied to the O administration for the reason AC suggests.

New bumper sticker: Hope for Change in '10 & '12

Posted by: johngalt at March 7, 2009 11:19 AM
But Perry Eidelbus thinks:

The rest of the world loves it. They really do.

The Europeans love that we're taking the lead in "fighting global warming," which means we'll wreck our economy. The only way Europe can compete with us is by dragging us down to their non-productivity.

The Russians are laughing their пОпа off at our stupidity. They have absolutely no reason to think we'll be tough in negotiating nuclear disarmament or a missile shield in Poland.

Mugabe and other dictators know we won't do a thing against them, and we'll keep sending aid shipments for them to steal.

Al Qaeda knows they just need to bide time. They have a brother in the White House, after all.

Posted by: Perry Eidelbus at March 8, 2009 1:14 PM

Worse Than The Great Depression

Did we need more bad news right before the weekend? Don Luskin has got it.

Over the last couple years I loved to ridicule all the scaremongers who always said this, that or the other thing is “the worst since the Great Depression.” I stand by my ridicule, for the most part -- those prophets of doom were mostly broken clocks who look right now just by sheer luck. But there's no question now that things have gotten quite bad in the economy and the markets.

So let me do the preachers of Armageddon one better. Today's stock market isn't just the “worst since the Great Depression,” like they're so fond of saying. No, it's even worse than the Great Depression.


[...]In other words, to be no worse than the catastrophe that happened to stocks in the Great Depression, the S&P 500 today would have to rally 17%.
Which it ain't doin' (S&P500 up 0.83). Read the whole thing.

UPDATE; Original post said "DJIA down 97 and change." I needed a browser refresh. ThreeSources apologizes for the error.

But johngalt thinks:

Fascinating graph. But I think there are some errors.

I read "-56.4% loss to date" and "-49.0% loss in the Depression, to this day." The index is then only 7.4% below the Depression pace, not 17%. right?

And how can the loss "since stimulus enacted" be larger than the loss "since Obama inauguration" since it didn't go up in the interim? I think those two numbers may be reversed.

Again though, fascinating perspective. Democrats will tell you it was down 50% before Obama had a chance to start "fixing" it. And 40% before he was even elected. But save the banking crisis in Sept-Oct the loss is a series of steep declines every time Obama got his way with something. Perhaps it would be good for America if he failed once in a while.

Posted by: johngalt at March 7, 2009 11:37 AM

Why Politicized Science is Dangerous

Yesterday I commented that there's "another important dragon to be slain before" the next elections for congress and for president. That dragon is the myth of man-made global warming caused by our use of economical, safe and abundant energy sources. Many of us have long contended that the idea is founded upon pseudo-science. The late Michael Crighton agreed and in an appendix to his wonderfully entertaining and thought provoking novel 'State of Fear' he wrote "Why politicized science is dangerous."

Imagine that there is a new scientific theory that warns of an impending crisis, and points to a way out.

This theory quickly draws support from leading scientists, politicians and celebrities around the world. Research is funded by distinguished philanthropies, and carried out at prestigious universities. The crisis is reported frequently in the media. The science is taught in college and high-school classrooms.

I don't mean global warming. I'm talking about another theory, which rose to prominence a century ago.

Read on below-









But jk thinks:

Careful, jg, TR has some strong followers around here. Sure he wanted to control capitalism from Washington, lock up his enemies and kill the enfeebled, but he displayed prodigious intellectual powers, looked good in casual clothes, and said "bully!" a lot.

Posted by: jk at March 6, 2009 2:36 PM
But johngalt thinks:

One of Crighton's points is how, after the horrors perpetrated in the name of the theory became widely known, "nobody was a eugenicist and nobody had ever been a eugenicist."

You'll recall I suggested not long ago that we start a permanent record of Global Warmists today, for the historical record.

My favorite thing about TR was "speak softly, and carry a big stick."

Posted by: johngalt at March 6, 2009 3:47 PM
But T. Greer thinks:

@Jg: I read that book and thought it sucked. (Tidal waves=result of climate change?) On the other hand, I thought the appendix you link to was quite insightful. It is rather sad to me that one's views on AGW are determined by your political affiliation. These days it seems that if you believe in "protecting the environment" then AGW is a self-evident fact not worth examining, while if you are of the free-market crowd, there is no way the climate could ever be linked to man's activities on the Earth.

This is a false dichotomy. It is perfectly acceptable to hold that warming may be influenced bu man and that free markets should not be interfered with for the environment's sake. Indeed, this is the exact position I hold.

Posted by: T. Greer at March 6, 2009 5:30 PM
But T. Greer thinks:

@Jk: Hahahha. Enough already! I think we have covered this before- Roosevelt's views on eugenics never led to anything more than a desire to make immigration laws stricter. Vilifying him for politicizing science makes no sense. Everything else you have listed is irrelevant to the subject of this post and has been discussed already.

Posted by: T. Greer at March 6, 2009 5:32 PM
But jk thinks:

Okay, I'll leave TR alone.

I enjoyed the Lomborg clip. He inspired the D in DAWG and I think his position is reasonable and defensible.

I hold that the debate was politicized by the left: those who Popper said would have us go back to the caves. Suddenly, the inefficacy of their ideas was meaningless: we had to take on the whole Nader-Kucinich platform or all of our children will die!

The DAWG advocates then claimed that "the science was settled" because a poll was taken. Popper, again, pointed out that science is not really done that way.

Yes, it is too bad that something important has devolved into childish bickering -- but, Mommy, they started it!!

Posted by: jk at March 6, 2009 7:04 PM
But johngalt thinks:

But it isn't called global warming anymore tg, it's "climate change." That way the charade can be continued whether the trend is warmer or cooler. Which is fortunate for them since now, it's cooling.

The market interference you allude to is the setting of arbitrary limits on emission of mammal breath. "First they came for the dioxins, then the beneficial pesticides, then the fluorocarbons, oxides of nitrogen and sulfur compounds, and when they came for carbon dioxide there were no pollutants left to say - you can't regulate non-pollutants!"

Posted by: johngalt at March 7, 2009 8:11 PM

Mark-to-Market Accounting (and other Arcania)

Steve Forbes was on Fox's 'America's Newsroom' with Megyn Kelly this morning advocating the repeal of the "mark-to-market" accounting rule. He said it was rescinded in 1938 by FDR and led to economic recovery at the time - doing so now to reverse the Bush administration's return to it would have a similar benefit, he claimed.

I'm sympathetic to this cause based only on what I've learned from watching news stories over the last many months, so Forbes' plea to "call your congressman" because the president can change the rule by executive order got me back on the 'net to learn more.

According to Wikipedia, "Mark-to-market" was instituted by FASB's FAS 157 effective for fiscal years starting after November 15, 2007. It required assets to be valued on balance sheets for what they could be sold for, not their maturity value. [This is my non-financial professional interpretation of a bunch of technical jargon.]

In last year's TARP bill responding to the banking crisis was the authority (section 132) to suspend mark-to-market. Section 133 also directed SEC, Federal Reserve and Treasury to conduct a study on the policy and report back to congress within 90 days. SEC issued a report on December 10, 2008 concluding that mark-to-market would remain.

In the interim FASB issued new guidance that attempted to show how mark-to-market should be applied to determine the fair value of an asset "when the market for that financial asset is not active." Essentially, although the valuation should be made based on market value at the time it should reflect "the price that would be received by the holder of the financial asset in an orderly transaction (an exit price notion) that is not a forced liquidation or distressed sale at the measurement date."

Even in times of market dislocation, it is not appropriate to conclude that all market activity represents forced liquidations or distressed sales. However, it is also not appropriate to automatically conclude that any transaction price is determinative of fair value. Determining fair value in a dislocated market depends on the facts and circumstances and may require the use of significant judgment about whether individual transactions are forced liquidations or distressed sales.

To my untrained eye there appears to be much hocum, wet-finger gauging and other assorted subjectivities inherent in the rule. By way of example:

In determining fair value for a financial asset, the use of a reporting entity’s own assumptions about future cash flows and appropriately risk-adjusted discount rates is acceptable when relevant observable inputs are not available.


Broker (or pricing service) quotes may be an appropriate input when measuring fair value, but they are not necessarily determinative if an active market does not exist for the financial asset.

So the question is, "Is this any way to run a transparent free-market?" Seems more like job security for accountants and auditors to me. What was so bad about mark-to-value in the first place that we had to employ this inanity? There's some intelligent-looking discussion of it here.

Help us Perry! You're our only hope!

UPDATE: Hate to but in another's post, but Forbes has a guest editorial in the WSJ today which collects a lot of this.

But Perry Eidelbus thinks:

Search your feelings, young padawan. You know what I say to be true.

The dark side surrounds us. Ever-vigilant we must be, if we are to overcome.

"He said it was rescinded in 1938 by FDR and led to economic recovery at the time"

This is nonsense. Forbes can't even get his facts straight, unless he's talking about the "recovery" that was (a) only statistical and (b) was as good as a physical therapist helping someone to walk again after the therapist hit him with a car. Real recovery didn't occur for nearly another full decade, and not just because one accounting rule was repealed. We don't need the government to stop making rules for businesses: we need to STOP the government from making rules for businesses.

However, repealing it is a start, though don't hold your breath. Those of you familiar with me and my writings know that I've called this a crisis perfectly engineered by government. Purposely caused and well-planned. The institution of mark-to-market was timed to make everything blow up at once, so we won't see it reversed until the damage is truly catastrophic.

I wrote last September:

I'm not an accountant, but I take a simple Austrian view: let buyers and sellers agree on whichever method works best for them. I personally view the clash over accounting methods as a red herring. It's coming down again to government setting rules that could very well be wrong. Both have strengths and weaknesses.
Mark-to-market realizes that we may not know something's true future value, so at the time we can only value it based on a current market price. Mutual funds' NAV, and margin account values, necessarily go by MTM. Part of my job is approving employees' personal investments based on being low enough that they won't negatively impact our clients' trades, and when they're trading options or futures, we go by what's effectively MTM. The problem is when you bought something for $1 million, and if it declines in value, mark-to-market means your books will show a loss. But in fact, you won't experience a loss unless you're actually trying to sell the whatever at that moment. If I buy a $500K house that in a year is worth less, even if it's down to zero, that doesn't necessarily mean I'll go bankrupt.
Now when you're dealing with something illiquid and/or uncertain in value, mark-to-model is useful. But even so, it inherently leaves people free to value changing/uncertain prices pretty much at whatever they want. Warren Buffett's been to correct to call it "mark-to-myth," although not to the extent he'd like us to think. But a lot of investing companies have used it to hide losses in their investments, and if they had had to report things based on mark-to-market.
In the end, we need not complicate things with accounting methods. We need only to let buyers and sellers be free to agree on a price, and for each side to accept the consequences of the decision without using government to coerce others into bailing out one or both sides. Putting this into an example, if you're going by mark-to-model in what you're offering to sell me, but I insist on mark-to-market, we of course won't agree. But it's not the accounting method that's important, it's the *price*. Value is subjective, however you calculated it.
Do you see how well this works? If you sell me a widget that the market says is worth $1, but I think it will be worth $10, I might offer you $2. You can value it at $2 or $3 on your ledgers, and call it "mark-to-model" or whatever you want. All it matters is that I can buy it, and you can sell it to me, at a price we agree on.

If I run a bank, and certain assets are worth zero on the current market, taking my bottom line negative, but I have a billion in cash, why shouldn't I be able to make loans? Our financial officers need only record the assets properly in our books, with two sets of values. If there's fraud, e.g. a willful misrepresentation of material facts, there were plenty of laws prior to SarbOx that punish such wrongdoing.

If a bank's owners don't like what management is doing, if they feel that money is being lent out imprudently when the assets are unlikely to recover, then they can fire the management. There is always some way for the free market to hold people accountable, without the government having to step in with its absurd rules.

Posted by: Perry Eidelbus at March 6, 2009 1:20 PM
But jk thinks:

The answer is no, as in no way to run a free market.

However, once you have let the gub'mint in (insuring deposits, enforcing leverage ratios, &c.), you are stuck with their regulatory arm. Unlike the stimulus, it is not some evil scheme foisted on us to kill capitalism. If the government is responsible for margin requirements and leverage ratios, they make the rules about how assets are valued.

Put me down with Forbes for rescinding it, however, just another unintended consequence of government intrusion. Once the feeding frenzy begins, mark-to-market certainly amplifies it.

Posted by: jk at March 6, 2009 2:33 PM
But johngalt thinks:

Case in point: Enron. While I completely agree with Perry's sentiments, it does no good for investors who "lost their entire life savings" to see the fraudsters frog-marched off to jail. Even if the punishment DID fit the crime (which it doesn't) those people have still "lost everything."

Qwest's Joe Naccio just lost his legal appeal for insider trading which netted him (and his wife) many millions of dollars so what's his punishment? 6 years in a country club prison. How many of us wouldn't take that deal if it weren't illegal? (Hell, I spent that long in a bad marriage!)

All told the solution appears to be, make the punishment for fraud more severe (longer terms in dirtier jails) and DIVERSIFY YOUR GORAM PORTFOLIO!!

Posted by: johngalt at March 7, 2009 11:49 AM

Snubbing Our Friends

I have a Canadian co-worker... who finds it his place to tell Americans how to run their country. Fine, I guess, but telling Canada how to run their country is off limits.

Anyway... for eight long years he kvetched about how Canadians were offended that President Bush made his first phone call as President to the Mexican Prime Minister instead of the Canadian one.

I guess it was a big deal or something.

I'm still waiting for him to realize that President Obama called Hamas first, from the White House. Hamas. He called them. First.

So I'm saving that bomb for the opportune debate.

Continuing on... what is his deal with Great Britain?

First was shipping the bust of Winston Churchill back, then a photo-op snub with Prime Minister Brown... and now we find out about the Obama - Brown gift exchange.

Mr Brown's gifts included an ornamental desk pen holder made from the oak timbers of Victorian anti-slaver HMS Gannet, once named HMS President.

Mr Obama was so delighted he has already put it in pride of place in the Oval Office on the Resolute desk which was carved from timbers of Gannet's sister ship, HMS Resolute.

Another treasure given to the U.S. President was the framed commission for HMS Resolute, a vessel that came to symbolise Anglo-US peace when it was saved from ice packs by Americans and given to Queen Victoria.

Finally, Mr Brown gave a first edition set of the seven-volume classic biography of Churchill by Sir Martin Gilbert.

That's classy stuff, from the nation that gave birth to us AND still leads the world in class.

What did Mr President Obama give to the Browns?

Twenty five DVDs of America's greatest films.



They also gave the Prime Minister's children models of Marine One.

Embarassing. Did they even think about this? There's no one in the White House qualified to tell the President and his family that those gifts are kind of lame?

Sounds like they are amatuers.

(tip to Ace of Spades)

But johngalt thinks:

Only one more in a long list of reasons the new president is an embarassment to America. There should be a Vegas line on who gets fed up with Obama first - American liberals or the "world opinion" he was supposed to restore America's favor with.

Wonder if he got the DVDs at Costco.

Posted by: johngalt at March 6, 2009 2:09 AM
But Perry Eidelbus thinks:

Don't feel embarrassed, guys. Seriously. You dind't vote for him, right? You didn't put him in power, so whatever he does does NOT reflect on you. His lack of taste reflects poorly on those who still support him, but we can still hold our heads up high.

In return for that beautiful first edition of the Churchill biography, Obama could have given an autographed copy of something by...Ward Churchill! And a defused pipe bomb, autographed by Bill Ayers?

Posted by: Perry Eidelbus at March 6, 2009 1:34 PM
But Boulder Refugee thinks:

Sorry, PE - as an American, I am embarrassed for having a president with so little class. On the plus side, the reaction of the British press is pretty entertaining.

Posted by: Boulder Refugee at March 6, 2009 5:05 PM
But T. Greer thinks:

Eh, this is one of those screw ups all Presidents have. Yes, it was tactless, but I doubt it will have any permanent damage.

On the other hand, *insert shamless self-promoting link*, the way Obama has gone about treating our Eastern European allies looks like it might have some actual dangerous consquences.

Posted by: T. Greer at March 7, 2009 10:09 PM
But Perry Eidelbus thinks:

To reiterate, it's not our fault he's in the White House. So indeed we have every right to say, "We told you so!" I simply refuse to feel the least bit ashamed about someone who hardly "represents" me.

Yes, TG, what's truly dangerous is Obama cozying up to Putin's puppet and others. They knew from the day he announced his campaign that he'd be weak. They knew, and 69 million Americans either didn't know or were willfully blind. We're returning to the Carter doctrine of playing nice and praying for the best.

Posted by: Perry Eidelbus at March 9, 2009 12:27 AM

March 5, 2009

But Keith thinks:

Coincidence? I don't think so...

Oh, wait... that was your point, right?

Posted by: Keith at March 5, 2009 5:05 PM

Quote of the Day Deux

Don't you think the Dow would stop dropping if we had a President who would stop signing pork bills? -- Chris Matthews 2:20
Get outta town! HT: Instapundit
Politics Posted by John Kranz at 12:59 PM | What do you think? [8]
But jk thinks:

Your point is taken, Keith, but Matthews's context in the story makes signaling out the president as fair as it is leg-tingle inducing. (Sad really, that's a spark of the old Chris Matthews who was worth watching).

@Keith Calhoun: The block grants, tax payments, credits and generally incestuous interconnectivity would keep lawyers busy longer than splitting up the Beatles -- the Feds would have the 11th Amendment to hide behind. I'd make sure to have plenty of ammunition.

Posted by: jk at March 5, 2009 3:45 PM
But Perry Eidelbus thinks:

I've probably mentioned it before in comments, and I know I have on my blog, but here's how the original federal model of taxation worked. Most Americans aren't aware that the first income tax wasn't instituted until Lincoln's presidency, let alone the original proportional model.

The census wasn't just for statistical curiosity and to determine Congressional representation. It was also to determine a state's share of the federal budget. If a state had 10.9123% of the population, then its legislature had to pony up 10.9123% of the federal budget. How it raised money was up to the state, but isn't it funny how such a system makes states compete with each other on the basis of tax burdens and tax structure? Additionally, rich and poor states alike would never want pork-filled federal spending. They all had to pay a proportional share. Imagine West Virginia residents actually having to pay for the roads the federal government builds for them! (Which wouldn't have happened originally, anyway, because that was not deemed a proper function of the federal government. It was purely a state matter.)

The Constitution's prohibition against a state paying in anything but gold or silver coin was precisely for the purpose of taxation. Otherwise a state could print up as much worthless paper money to meet its obligations.

As I commented recently, secession was very much viewed by Jefferson and other Founding Fathers as a sacred right. The colonies did, after all, secede from Great Britain. If a state didn't want to be a part of grotesque federal spending, it could then secede and say to its former Union, "Spend whatever the hell you want. We want no part of it."

Posted by: Perry Eidelbus at March 5, 2009 4:35 PM
But jk thinks:

Perry, I don't think you can extrapolate from Jefferson, one of the most radical of the founders, to say "the founders" approved of secession. Jefferson famously wanted to regularly "water the tree of liberty with blood of patriots and tyrants."

Madison and Monroe were rather famously against nullification and feared secession. In the next generation, even the slave-holding Jackson and Tyler spent their Presidencies fighting to keep the Union intact (yes, Tyler changed after).

Posted by: jk at March 5, 2009 5:07 PM
But Perry Eidelbus thinks:

Monroe was not one of "The Founders" I speak of. He was very much "after the fact" when it came to the colonies' secession from Britain, and the formation of the new government.

Madison, of course, was there from the start of the Constitution's ratification. Though he had a principal part in forming the national government, he still very much prized a state's sovereignty over a federal compact. This was the man who wrote, "The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite."

With the Ninth and Tenth Amendments saying what they do, how can a state be denied its right to secede? Or did the states come from the union, as Lincoln tyrannically argued, rather than the other way around? Not until Jackson (who was not perfect) and later presidents was it argued that states didn't have a right to secede. Remember that it was the northeast Federalists, those in favor of a stronger national government, who were threatening that their states would secede if the national government were too oppressive.

You're also confusing the act of secession with the right to secession. Few want the country to break up (that was Madison's fear, NOT the fundamental right of secession) unless there's no better solution. The colonists did not openly rebel until all their remonstrations were proven futile. But in the times that try men's souls, dissolving political associations becomes necessary and just.

You say that Madison opposed nullification, but nullification of what? What he said was that a state cannot nullify the Constitution, i.e. the specific document that the states had ratified. But should a state not be able to nullify something that the federal government does which is unconstitutional or what the Constitution does not give federal jurisdiction over (e.g. left to the states or the people)?

You can regard Jefferson as radical for what he said, but he was correct: liberty cannot be gained or preserved with compromise.

Posted by: Perry Eidelbus at March 6, 2009 3:17 PM
But T. Greer thinks:

@Perry: After the fact? Mr. Monroe was a prominent delegate to the Virginia State Ratification Convention. (And an anti-federalist to boot!) I do not how much more involved you could expect him to be in the formation of the young Republic's new government. (Certainly he did more than Jefferson, who was away in France at the time.)

And to be more on point- Perry, I think you are missing the point. No one here has disputed a state's right to secession. Quite a few have disputed a state's right to nullification.

Now we have talked about this before. My objections to nullification are listed at the bottom of that post, as is your riposte. So that we do not have to cover this ground again, I suggest we skip to where we left off.

Let us start with the proper authority for the nullification of laws: the judiciary. It is with the judiciary the responsibility lies for the determination of the legality of congress’ edicts. You have stated that this concept began with Marbury vs. Madison, and that I am but a sheep for mindlessly accepting Marshall’s power-grabbing decision. This view is in ignorance of history. The framers knew and argued for a judiciary with the powers recognized in Marbury.

Consider the words of Philadelphia Convention heavyweight James Wilson as he argued for the Constitution during the Pennsylvania Ratifying Convention:

“I had on occasion, on a former day, to state the power of the Constitution was paramount to the legislature acting under that Constitution; for it is possible that the legislature, when acting in that capacity, may transgress the bounds assigned to it, and an act may pass, in the usual mode, notwithstanding that transgression; but when it comes to be discussed before the judges,--when they consider its principles, and find it to be incompatible with the superior power of the Constitution, --it is their duty to pronounce it void.”

(Collected Works of James Wilson, pg. 204. Bold Emphasis added.)

And here is Alexander Hamilton, Philadelphia and New York Ratifying Convention delegate, writing as Publius, in Federalist No. 78:

“Some perplexity respecting the rights of the courts to pronounce legislative acts void, because contrary to the Constitution, has arisen from an imagination that the doctrine would imply a superiority of the judiciary to the legislative power...

If it be said that the legislative body are themselves the constitutional judges of their own powers, and that the construction they put upon them is conclusive upon the other departments, it may be answered, that this cannot be the natural presumption, where it is not to be collected from any particular provisions in the Constitution. It is not otherwise to be supposed, that the Constitution could intend to enable the representatives of the people to substitute their WILL to that of their constituents. It is far more rational to suppose, that the courts were designed to be an intermediate body between the people and the legislature, in order, among other things, to keep the latter within the limits assigned to their authority. The interpretation of the laws is the proper and peculiar province of the courts. A constitution is, in fact, and must be regarded by the judges, as a fundamental law. It therefore belongs to them to ascertain its meaning, as well as the meaning of any particular act proceeding from the legislative body. If there should happen to be an irreconcilable variance between the two, that which has the superior obligation and validity ought, of course, to be preferred; or, in other words, the Constitution ought to be preferred to the statute, the intention of the people to the intention of their agents.”

(The Federalist Papers, 1987 Penguin Books ed., pg. 438. Bolded emphasis added.)

These are but two examples I have marked in books that I own. If you wish me to, I could scour the internet for more such quotations, as I know Ellsworth and more than a few Virginia Federalists (not the least being named Marshall) used similar arguments in the Connecticut and Virginia Ratification Conventions. In all cases, those who voted for the Constitution knew exactly what the role of the judiciary should be. It is clear that by its very nature the judiciary’s role is to interpret the Constitution.

The same cannot be said for the states. I find it funny that you fault a SCOTUS whose primary role is to interpret laws “because the Constitution does not explicitly say so” and yet gladly hand that power over to the states, despite the fact that the Constitution is just as silent on this matter. Perhaps you own a special copy of the Constitution that contains an article detailing the manner by which states have the authority to interpret federal laws?

This brings up the central problem with Calhon-style nullification: despite Jefferson’s protests to the contrary, the Constitution was never a compact between the states. Rather, it was a document ratified by WE THE PEOPLE, and gained its authority not by the states of its Union, but by the people residing thereof. James Wilson detailed this excellently in his remarks to the Pennsylvania convention:

”State sovereignty, as it is called, is far from being able to support its own weight. Nothing less than authority of the people could either support it or give it efficacy.... In this country, the supreme, absolute, and uncontrollable power resides in the people at large; that they have vested certain proportions of their power in the state governments; but that the fee-simple continues, resides, and remains, with the body of the people.
If we go a little further on this subject, I think it shall be seen that the doctrine of original compact cannot be supported consistently with the best principles of government…. Because a contract once entered between the governor and governed becomes obligatory, and cannot be altered without the consent of both parties. The citizens of United America, I presume, do not wish to stand on that footing with those to whom, from convenience, they please to delegate the exercise of general powers for the sustaining and preserving of the Union... The people fetter themselves with no contract.”

(Collected Works of James Wilson, pg. 255. Bold Emphasis added.)

Wilson spoke of a plain truth: the Constitution is not a compact between states, nor a compact between the states and the federal government. If either of these were true then Lincoln’s war would have been justified. He would be correct in stating that the Southern states had no right to break the compact they made with Union without the Union’s consent.

All of this leaves us with an essential question: what happens when the judiciary errs? Who shall watch the watchmen? If we have decided that the states cannot do this, that leaves one other option- the citizens themselves.

I have one gripe with the way you phrase this concept. You stated, ”It is the right and duty of anyone, whether a private citizen or government official, to nullify a bad law.” I have already discussed why the judiciary is the sole branch of government with the authority to nullify laws; I shall now discuss the implications of private citizens with the power of nullification.

The implications of this notion are – to be frank – dangerous. Indeed, I can think of no quicker way to erode the rule of law than this. In essence, your view of the Constitution is not all that different than those progressives championing their Living Constitution. In your case, no law is binding. Every citizen chooses which laws he does not think to be Constitutional (i.e. every law he dislikes), and ignores it.

Think about what you are advocating here. As with Living Constitution theory, your would have the Constitution cease its role as the legal document governing the conduct of the federal government, it soon degenerating into the mere opinion of those reading it. The only practical difference between the two philosophies is that progressives concern themselves only with the opinion of the nine justices on the SCOTUS, while your viewpoint will have 300 million individual interpretations of what the Constitution should mean.

Does this destruction of nullification mean that citizens have no method of redress when the government begins to approach their rights? Of course not. There are two options on the table for any citizen who feels a law to be unjust and dangerous. (Hint: nullification is not one of them.)

The first is civil disobedience. Dr. Martin Luther King, in writing his “Letter from Birmingham Jail” outlined the proper way to conduct such a response to an unjust law:

“In no sense do I advocate evading or defying the law, as would the rabid segregationist. That would lead to anarchy. One who breaks an unjust law must do so openly, lovingly, and with a willingness to accept the penalty. I submit that an individual who breaks a law that conscience tells him is unjust, and who willingly accepts the penalty of imprisonment in order to arouse the conscience of the community over its injustice, is in reality expressing the highest respect for law.”

(“Frequently Requested Documents: Letter From Birmingham Jail.” Bold emphasis added.)

The second response is rebellion. If rights are being trampled upon and the Constitution no longer serves to check the federal government, every man can work above the Constitution and exercise his right to protect himself from oppression. But make no mistake, this is not nullification. It is the renouncement of a corrupt government entirely. If you shoot a police officer for illegally entering your house, he loses both the ability to infringe on your privacy and the ability to protect you from criminals. So it is with government. You cannot elect to break laws that do not strike your fancy and yet hold true to the rest. You are abandoning the entire system. If and when such action is necessary, the Constitution (and all legal laws who use it as their foundation) no longer has any authority from you at all.

Thus, we have two choices when confronted with an unjust law. You can break it and accept the legal consequences for doing so, or you can withdraw your consent for a government that creates unjust laws all together.

Posted by: T. Greer at March 7, 2009 4:06 PM
But jk thinks:

Thanks, tg, for beating me to a swift defense of James Monroe. Dude fought at Yorktown and served as a foreign emissary to Presidents Washington and Jefferson. Nobody wou;d seriously ascribe the intellectual heft of a Jefferson his direction, but nor would I disqualify his opinion.

Our own "Era of Good Feelings" may be as short-lived as Monroe's, however. I take a third tack on nullification. I'm a big fan of Lysander Spooner and consider individual jury nullification as a foundation of liberty.

I certainly don't see it as reserved to the judicial branch, though in our history of tripartite government, they have been the most reliable (not unlike being the smartest of the Three Stooges).

Posted by: jk at March 8, 2009 12:19 PM

Quote of the Day

In reaction, Republicans, true to form, set sail for a deserted island to ponder a dispute between Rush Limbaugh and Republican National Committee Chairman Michael Steele. At issue: Who's captain of the GOP Titanic. -- Dan Henninger, in a great column "Has Obama Buried Reagan?"
Well worth a read in full.
Politics Posted by John Kranz at 11:13 AM | What do you think? [2]
But johngalt thinks:

I agree with Henninger - Rush is on the right track. Republicans tried the GOP version of the "third way" with McCain and only succeeded in garnering the support of Republicans and other conservative types who viewed him as the lesser of two evils. Now that we have the greater evil in the White House it will be even easier for an unapologetic "prosperity conservative" to compete in '12. (And in congress in '10.)

Henninger points to another important dragon to be slain before then - the "saving" of the planet:

There isn't much in his [Obama's] plan to stir the national soul. It's about "sacrifice" now so that we can live for a future of small electric cars and windmills. This may move the Democratic Party's faith communities, but it cannot revive a great nation."

To answer Henninger's title, they haven't buried Reagan yet but they're shoveling dirt as fast as they can because they know his "shining city on the hill" is the greatest enemy of their "carbonless" future.

They stragegized to make Limbaugh the "face" of the GOP for the same reason they paint a vibrant industrial economy as "blast furnaces and factory chimneys" and the Global Warming movement as "save the [cute, cuddly] polar bears:" image-conscious political fashion.

Personally I think giving Limbaugh such prominence will backfire on them - to the extent that Rush hammers the Reagan ideas into the mushy heads of future GOP candidates. (Preferrably cute and cuddly ones. Sarah, are you listening?)

I tell despondent family members to listen to Rush every day. Not because they need to learn the ideas, but for the sense of hope he inspires.

"Knowledge of what is possible is the beginning of happiness." - George Santayana

Posted by: johngalt at March 5, 2009 12:55 PM
But Boulder Refugee thinks:

The Refugee agrees with JG on this one. Rush is a thought leader in the Republican party generally and the conservative movement specifically. Rush is never on the ballot and is unlikely to ever negatively sway any race.

It's true that the Republicans do not currently have a personification. But just four months removed from the last election, it doesn't matter. Important issues will emerge as Obama/Polosi/Reid socialize the country. As issues crystalize, personalities will emerge. If anything, the Dems are shooting all their ammunition while the enemy is still out of range. Attacking Rush really does nothing to further their current agenda. They have all the votes they need under any circumstances. The result of those votes will be up for referendum in two years.

Posted by: Boulder Refugee at March 5, 2009 4:45 PM

March 4, 2009

Creepy Is as Creepy Does

I've been a little tough of the folks at Reason, especially since I devoted my life to Libertario Delenda Est! (maybe blog friend tg will supply a real translation for me -- "How Many Libertarians??")

But Jacob Sullum hits this out of the park. I cringed when I heard the President say this:

It is our responsibility as lawmakers and educators to make this system work. But it is the responsibility of every citizen to participate in it. And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It's not just quitting on yourself, it's quitting on your country—and this country needs and values the talents of every American.

The collectivism implicit in this rhetoric is pretty creepy. Evidently all of us have a duty to optimize our educations so we can maximize our earnings and give our country the full benefit of our talents.

Hat-tip: Instapundit

Philosophy Posted by John Kranz at 8:26 PM | What do you think? [5]
But Perry Eidelbus thinks:

Well, remember that Sullum is a syndicated columnist and published in many other places. He's no mere Reason lackey.

Posted by: Perry Eidelbus at March 4, 2009 8:58 PM
But AlexC thinks:

Wouldn't it be easier to just ask public high schools to not suck as hard?

They should be producing citizens able to function in "today's modern" society.

But Heaven forbid he would ask more of the government school industrial complex. There are unions to court and money to raise!

Posted by: AlexC at March 5, 2009 1:38 AM
But jk thinks:

Just as "50 is the new 40," college is the new high school. Those who used to get college degrees now have to get a Master's.

David McCulloch's biography of John Adams has a great bit when young John Quincy Adams is disappointed to not be accepted into Harvard. He is 15, speaks Latin, Greek, Russian, French and English, has a solid foundation in Geometry and deep knowledge of the classics. They respectfully ask him to study more and apply next year.

200 years later, with computers, Internet, libraries, and inexpensive transportation and lighting, how many kids come out of Harvard with the education that was insufficient to get our sixth president in?

Posted by: jk at March 5, 2009 10:40 AM
But johngalt thinks:

Keep in mind that the Progressive agenda here is to erase the distinction between professionals and laborers in the workforce. "Equality" baby.

If they make college education all but compulsory then it will amount to nothing more than grades 13-16 of secondary school. And don't expect them to require anyone to pay for this "education" themselves. We'll do it collectively, through the state.

Posted by: johngalt at March 5, 2009 12:18 PM
But Keith thinks:

Finally! Something to distinguish the current regime from past efforts at creating a Glorious Workers' Paradise. There was a time that having an education earned you a trip to the killing fields; now in America, everyone owes it to society to get edumacated.

Snarking aside, a college education is becoming as worthless as a high school education - and don't forget, I'm in California, where the public schools are notorious failures. Over the years, I've interviewed numerous college grads for positions, including over a dozen from my alma mater (UC Berkeley). I've hired one Berkeley grad and rejected the rest from that school as unqualified. Having seen what the public colleges are cranking out, I long for the days of apprenticeships.

JG is right - this trend is doing nothing more than spreading 12 years of a bad education over 16 - or more, given the number of candidates I see that are taking the scenic route and acquiring their BA after a leisurely six or seven years.

Posted by: Keith at March 5, 2009 2:38 PM

Will the last Democrat please turn out the lights...

That's the last Democrat who values business, and I have long guessed it to be CNBC's Jim Cramer. Not speaking his mind is not among his faults, and he has criticized Secretary Geithner and President Obama enough to get a dismissive rebuke at the WH Press Conference (Nixon is looking pretty level-headed by comparison).

He says it all here, complete with trademark sound effects:

Posted by John Kranz at 1:15 PM | What do you think? [1]
But johngalt thinks:

Since Obama's intention is to hide the market-destroying effects of his agenda within the already declining market he can't "put his agenda on hold." If he did it would be impossible, even for him, to claim that wrapping government's hands around producer's throats for the purpose of subsidizing meritless technology boondoggles has no deleterious effects. Sorry Jim - the agenda is the problem, not the timing.

I did like Cramer's analogy of Obama to strontium-90!

Posted by: johngalt at March 4, 2009 3:15 PM

Blue Dog Sighted in US Senate

Evan Bayh (D IN) takes to the WSJ Ed Page today against the omni-porcine spending bill:

The Senate should reject this bill. If we do not, President Barack Obama should veto it.

The omnibus increases discretionary spending by 8% over last fiscal year's levels, dwarfing the rate of inflation across a broad swath of issues including agriculture, financial services, foreign relations, energy and water programs, and legislative branch operations. Such increases might be appropriate for a nation flush with cash or unconcerned with fiscal prudence, but America is neither.

Posted by John Kranz at 12:39 PM | What do you think? [1]
But johngalt thinks:

Excellent. Evan Bayh (and Russ Feingold, I understand) are starting to get it. And it's not *just* the $8 billion in earmarks, it's the 8% increase in a $400 billion plus partial-year budget. "The American people" care about that too, Senator Schumer.

Yet the administration's answer is Tim "The Tax Man" Geithner saying, "I don't know of a single economist who suggests lowering spending in a recession."

Posted by: johngalt at March 4, 2009 3:20 PM

Don't Tease Me Like This

Senator Larry Kudlow? Professor Reynolds links, but I had to view a cached copy, so I have reprinted the entire post:

As conservative economist on the weeknight CNBC show "Kudlow and Co.," Larry Kudlow just last month was poking at U.S. Sen. Christopher Dodd, D-Conn.

Dodd "has yet to divulge fully his sweetheart mortgage deals with the former Countrywide," Kudlow said in a Feb. 13 screed. "He's re-fi'ed his mortgages, but we don't know those documents, either. Instead of being impeached, he's still around."

Now, it appears as if the TV show host and economic consultant and syndicated columnist may be going directly after Dodd.

Politico reporter Josh Kraushaar reported Monday that Kudlow "confirmed his interest" in running against Dodd in 2010.

"It's the kind of thing where I'm talking to friends, talking to strategists, talking to my wife, and praying on it," Kraushaar reported Kudlow as saying. And Kudlow also told him he had met with National Republican Senate Committee chairman John Cornyn of Texas over dinner last week to discuss the idea. "He seems to think it would be a good race and a national race," Kudlow said.

He wouldn't be the first TV commentator to leave the media world for politics. But it's generally felt that one shouldn't remain in a bully pulpit of TV advocating impeachment for a politician while planning to run against him.

"While Kudlow said he has been talking to 'friends,' 'strategists,' his 'wife,' and NRSC chairman John Cornyn about a potential run against Sen. Dodd in 2010, the one group of people noticeably not on this list are Kudlow's superiors at CNBC," says Erikka Knuti, communications director for the progressive media watchdog group Media Matters. "Until Kudlow makes a final decision, CNBC has an obligation to their viewers to make certain he never uses their airwaves to attack a potential political rival."

Previously at the NBC owned cable news networks, first Chris Matthews and then Joe Scarborough toyed with entering (or re-entering in Scarborough's case) the political arena, but in the end neither did.

UPDATE: Ed Morrissey seems in!

Posted by John Kranz at 12:23 PM | What do you think? [2]
But johngalt thinks:

I'll be audacious and suggest that this is the sort of thing that happens as a result of the Tea Parties. Not only does Kudlow see his fellow non-hippie Americans taking to the streets because they're mad as hell and not gonna take it anymore, he shares the sentiment. It becomes a catalyst for things many of us would never have seriously considered before.

Posted by: johngalt at March 4, 2009 3:23 PM
But jk thinks:

Brother jg makes a superb point.

Posted by: jk at March 4, 2009 3:35 PM

Quote of the Day

When you are dealing with kids, who are our future, how can you consider it pork or unreasonable spending? -- Tony Pearsall, former police captain and city councilman in Vallejo,, CA, whose nonprofit group would get one of those earmarks.
You can't waste money on children? I think I might be able to find some emprical dispositives.

March 3, 2009

Going John Galt

One of my new favorite reads, Citizen Paine, looks at going John Galt.

Don’t get me wrong here - I am NOT in favor of tax increases, and I do generally believe that higher taxes will discourage the thing being taxed. But in the case of income, when we’re talking about highly successful and motivated people, it just doesn’t make sense for someone to “drop out” and stop working when their business earns $250K due to higher marginal tax rates.

Dammit. I was hoping to take off October through the end of December. ;)

Read it all.

But Keith thinks:

I'm not certain I agree with the quoted paragraph. Prior to the Kennedy cut in the marginal tax rates, didn't a significant number of producers effectively withhold further productivity once they hit the top strata - and then after the cut to rates, cease withholding that productivity, resulting in greater earnings and thereby greater tax revenue? Was not that withholding of productivity effectively a John Galt strategy?

One thing I've done is to aggressively make more of my spending tax-deductible - while not curtailing my productivity, I've gotten serious about doing my share to starve out the IRS beast. Part of my house, some of my mileage, my entire cellular telephone bill, and my vacation in Costa Rica with my wife, were all tax deductions for me last year.

By the way, the notion that Citizen Payne uses in that article, that the tax increase Obama is implementing is modest and not sufficient to justify going Galt, doesn't work for me. First, I think he underestimates the size of the increased burden on the producers, and second, the Tea Tax was not all that onerous. I'd be interested in seeing just how great a share of income the tax burden was on our colonial forebears.

Posted by: Keith at March 3, 2009 4:13 PM
But johngalt thinks:

"Pay no attention to that man behind the curtain. Instead, focus on what I'm doing to the income tax rates. See, everyone under 200K gets a tax cut!" - The Great Houbama

Meanwhile, watch how he empties your wallet:

Corporate Taxes Wherein the average taxpayer has an extra $3190 tax burden each year.
UPDATE - 3/07/09: Fixed broken link
Carbon Taxes Wherein aforementioned corporate taxes skyrocket.

Social Security Taxes Whereby workers earning over $95K per year join together to pay the first $400 of FICA tax for every worker earning less than $75K - year after year after year...

(Please do not mistake this ad-hoc collection as an exhaustive list of new Obamatax schemes.)

Posted by: johngalt at March 3, 2009 5:33 PM
But jk thinks:

DOGPILE!!! Yeah, I am skeptical as well. I'd underscore Perry's observation that economics happens at the margins. Look at the housing calamity when most Americans are staying put, paying their bills, and generally doing exactly what they'd be doing were housing 10% less or 25% more.

If you're a fatcat Democratic lobbyist and you can add $110,000 of income by turning the red knob on your desk from 2 to 2.5, then the increase in take-home pay looks pretty good.

But if you are going to add a shift, hire more staff, purchase machinery, work significantly more hours, increase debt -- all without any guarantee of success, the difference between an extra 70K or 60K might weigh in on your decision. And what happens next year? What is my state going to do to continue the new post-stimulus baseline spending?

At the margins, marginal rates will certainly influence behavior. Just because every $300K lawyer doesn't hang it up to become a freegan (stop chortling. tg!) does not mean that productivity was not negatively impacted.

Posted by: jk at March 3, 2009 5:56 PM
But sugarchuck thinks:

"it doesn't make sense for someone to drop out and stop working when their business earns $250K due to higher marginal tax rates" my ass. I was talking to a close family member last night who works as a physician at a high profile medical facility in Minnesota and as she sees it, it doesn't make sense not to drop out. Currently she sees patients, conducts research, and serves as Vice Chair of her dept.. There is no question that she is highly motivated and and an extremely dedicated, productive member of her community and she's nobody's fool. By cutting back to part time and reducing her salary she can avoid higher taxes, and keep her take home pay at close to the level it is now. What she loses by doing less is more than made up for by the extra time she will have with her family and the opportunity to pursue more personally fulfilling goals. What is lost? Her facility loses out on the patients she would have seen. They will have to been seen by others who may not be very willing to pick up the added burden or they will be lost to another institution; good-bye revenue. Patients that would have benefited from her experience in the long term management of a terminal illness will also lose out.

Just as the tax rates are on the "margins", so too will the lack of productivity be on the margins. You can't fault my relative. As she puts it, " I'll be damned if I'm going to work 60-100 hours a week and give it to Obama." And you can bet she's not the only one doing the math on this. You don't have to close your shop and move to the islands to drop out, as Citizen Paine might suggest. You can drop out by making your effort coincide with the returns. Do less, invest less, risk less.

Tax effort, ambition, ingenuity and hard work and you will have less effort, ambition, ingenuity and hard work. Welcome to the Obamanation!

Posted by: sugarchuck at March 4, 2009 9:15 AM
But jk thinks:

Tell her to hang in there, sc, I believe President Obama is going to fix the health care system as well.

Posted by: jk at March 4, 2009 12:46 PM
But johngalt thinks:

A brother suggests - via email - that I mightn't have been persuasive enough with my "everyone's taxes are goin' up no matter what the tax tables say" message. ;) So...

Anyone around here remember this pre-election posting?

Also, as I pondered yesterday's comment this morning I realized I didn't give as much attention to the first link as I'd intended. It is a 60-second radio spot telling people how much corporate income taxes cost individual families and there's a 30-second companion TV spot. They're excellent.

Posted by: johngalt at March 4, 2009 2:56 PM

Tigerhawk Stands Up for the Working Affluent

I much prefer to read a blog entry than watch a long video where some boring old lawyer is going on and on about his politics. Yet I am prepared to make an exception for this. Tigerhawk preaches to the ThreeSources choir a little here, but it is very very well said.

Hat-tip: Instapundit

Posted by John Kranz at 1:16 PM | What do you think? [0]

On Tea Parties - Where's Your Sacred Honor?

... In which I infuriate my fellow travelers on the right.

The next big "tea party" is going to take place on April 15th.

Building upon the success of the February 27th "Chicago Tea Party" Rallies, many of the organizers are now working to develop an even larger day of protests set to happen on April 15th, 2009.

These protests are known as the Tax Day Tea Party rallies.

It's really the perfect day.

Likely a beautiful spring Wednesday spent standing around with fellow conservatives and libertarians with signs and chants.

Completely not like the original Boston Tea Party.

In fact, looking at the Wikipedia article, these protests are exactly NOT like the Boston Tea Party.

There's no inspired action.

Samuel Adams said to the assembly "This meeting can do nothing more to save the country". As though on cue, the Sons of Liberty thinly disguised as either Mohawk or Narragansett Indians and armed with small hatchets and clubs, headed toward Griffin's Wharf (in Boston Harbor), where lay Dartmouth and the newly-arrived Beaver and Eleanor.

The Sons of Liberty was a revolutionary secret society... and they were likely Longshoreman on this night.
The casks were opened and the tea dumped overboard; the work, lasting well into the night, was quick, thorough, and efficient. By dawn, over 342 casks or 90,000 lbs (45 tons) of tea worth an estimated Ł10,000 or $1.87 million USD in 2007 currency) had been consigned to waters of Boston harbor. Nothing else had been damaged or stolen, except a single padlock accidentally broken and anonymously replaced not long thereafter.

I think it's a disservice to our earliest patriots to call a tax protest a Tea Party. Standing around like a bunch of dopey lib-tards swinging signs and chanting is no way to run a protest.

You say you want a revolution? Don't wear a seatbelt.

You say you want a revolution? Buy your cigarettes or prescription drugs duty-free or in Mexico.

You say you want a revolution? Idle your car in the driveway all day long, polluting the earth, making Gaia cry. I'd settle for burning leaves in a barrel.

You say you want a revolution? Dig around your drawers and find old stamps and mail envelopes around!

You say you want a revolution? If you're on a 1099 don't file quarterly estimated payments. W2ers are hosed. *

You say you want a revolution? Make a bon-fire / marshmallow roast with stacks of tax forms and tax guides. Invite your neighbors.

You say you want a revolution? On April 15th, don't file your 1040... or send it back empty.

That, my friends, would be a real tea party. How many tens of thousands or hundreds of thousands of tax payers (out of the 150 million) would it take to put a wrench in the works? (I guess you would have to mail it back though)

It is tax fraud, however... and you're guilty until proven innocent in the IRS's eyes. That's where you need to focus, if you want a "tax" revolution.

Standing around with your friends and future friends? Really inspirational... for the history books.

* It's a sign of how f'd up our system is that your government forces you to pay your taxes! You can't withhold your withholding!

But jk thinks:

Your words hit home, ac. I have asked the same question a thousand time of my niece who marched to stop the Iraq War. I have suggested as many times that her efforts were better spent supporting candidates; earning money for a candidate, PAC or 527; or even writing letters to the editor. I can't hold my rightist friends to a different standard, though they are finally answering P.J. O'Rourke's question of "why don't we all march when they raise capital gains rates?"

To directly address your points, I do not want a revolution. I want the losers who inhabit incumbencies in our present Constitutional system to see that there is a breaking point and that they have found it. It is a signal that their cushy seats are in danger if they continue to overtax the productive.

A big crowd on the evening news seems like a good way to send a message. Better than burning tax forms. As far as not filing and not paying -- I take your point that it is far braver than "marching" but how does that result in a less collectivist government? Even if it is wildly successful -- Congress says "okay, we'll ignore the results of the last elections and capitulate to the demands of the non-payers."

Is that the next tool for war opponents or gay marriage activists or those who oppose the infield fly rule? Elections matter and unless you want to move off the US Constitution, I don't think you really want a revolution.

Posted by: jk at March 3, 2009 2:09 PM
But Boulder Refugee thinks:

Interesting idea, AC. Imagine if every taxpayer filed two returns: one actual return (its compulsory) and one fake return (fake name, fake SSN, fake employer ID). Of course, you'd need a fake W2, but those forms are available on the web. You also would not want to file a form with a refund due, lest the IRS cut a check in good faith and it be deemed fraud. It would be better to have a balance due with no attached payment and let the IRS try to track it down. Now there's a civil disobedience protest.

Posted by: Boulder Refugee at March 3, 2009 2:30 PM
But Keith thinks:

jk: if you want to take up arms against Astroturf or the designated hitter (I've boycotted the entire American League), I'm with you, but the infield fly rule is sacred.

Okay, that was jollity and frivolity. More on a serious note, this post really cuts to the real issue. The Tea Party Protests - do they actually accomplish anything more than wearing whatever color ribbon we're supposed to be wearing this week? Do they "raise awareness?" Fine. Mission accomplished: awareness is raised. Do they "show solidarity?" Check. But I imagine our overlords in Washington glancing out from behind their venetian blinds saying "okay, they've got that out of their system. Back to destroying capitalism."

All the sign-waving, ribbon-wearing, or bumper-sticker-sporting in the world accomplishes nothing, other than perhaps persuading some of the people in the "Indifferent" or "Don't Know" columns to change their stances, and I don't think there are many people in that subset.

I too hope it doesn't come to violent revolution, but having watched the percentage of America voting over the years for the candidate of the left - Gore, Kerry, and now Obama - progressively increase, there's a part of me that wonders if the nation has gone irreversibly around the corner. Besides, with Obama's current strategy of making increasing numbers of people clients of the nannystate, and waging war on the investor class and the productive class in order to sap those resources, I wonder whether the voting public can be turned back.

Plus, with the Republican Party's identity crisis (read: Schwarzenegger, Snowe, Specter, etc.), electing Republicans doesn't necessarily equate to electing conservatives and constitutionalists.

For the record, I also am not in favor of a Constitutional Convention. Without a mechanism to limit it to specific issues, there is far too much opportunity for mischief.


Besides, we all know that the FBI and the BATFE read these blogs, so our secret plans to overthrow the nation and rule for ourselves in the aftermath show NEVER be posted here.

Posted by: Keith at March 3, 2009 2:55 PM
But AlexC thinks:

To be clear, i'm not calling for revolution.

I'm saying "tangible" protests... calling these protests "tea parties" is besmirching the original tea party.

A response/disagreement on the 'cooler....

Posted by: AlexC at March 3, 2009 2:56 PM
But johngalt thinks:

Hey brother, don't knock it [taxpayer "Tea Parties"] if you haven't tried it! ;) Here are a few observations:

1) Rome wasn't built in a day.

2) One hard-working, tax paying adult conservative "protester" equals at least 10 tatooed punk hippies on the impact scale. (Since everyone knows the latter do this kind of stuff as foreplay.)

3) Any opportunity to foster discussion of GOOD ideas is worthwhile. Everyone who hears is one more person than would have if it wasn't said.

4) "When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle." Edmund Burke - 1770

5) If we shun any effort that seems too trivial or uninspired or impotent, where do we find our courage to do something "consequential?"

I sense your frustration, and I feel it too. But I also feel the groundswell of what Keith calls "rugged individualism" which inspires me to the continued belief that most Americans have a breaking point when it comes to this collectivist bull-crap.

I think unbridled Democrat control of government may be the foul medicine our mixed economy needed to inspire popular support for evolutionary change - where our elected officials take their oath to uphold the Constitution SERIOUSLY. As Obama and the powerlusting Pelosi take us out of the warm pot and throw us into a hot one it only serves us better that the pot is as hot as they can make it.

Posted by: johngalt at March 3, 2009 4:20 PM
But Keith thinks:

jg: I dearly hope you're right about the breaking point. Four (or worse, eight) years of where this economy and the republic are headed presently represent an abyss into which I do not enjoy staring.

That being said, I have friends who didn't like McCain, and actually considered voting for Obama solely because they knew the damage caused would scare people into voting conservative in '12. I argued against burning the nation down to rebuild it, but your last paragraph does show the only silver lining I can see in this dark cloud.

Finally, the Refugee has already counseled me today about giving fair warning before the turn of a friendly snark. That thing about tattooed hippies and foreplay? Not only did I choke on my coffee, I'm now in need of brain bleach to get that image off my cerebral cortex.

Posted by: Keith at March 3, 2009 4:32 PM

Reason 147 not to read the articles

The good folks at Playboy have the scoop of the century. Rick Santelli? The Tea party? Protests? All a big plot -- a shadowy, nefarious conspiracy to take down The One:

As you read this, Big Business is pouring tens of millions of dollars into their media machines in order to destroy just about every economic campaign promise Obama has made, as reported recently in the Wall Street Journal. At stake isn't the little guy's fight against big government, as Santelli and his bot-supporters claim, but rather the "upper 2 percent"'s war to protect their wealth from the Obama Adminstration's economic plans. When this Santelli "grassroots" campaign is peeled open, what's revealed is a glimpse of what is ahead and what is bound to be a hallmark of his presidency.

Don't rush out to buy the next issue so you can drown yourself in all this lascivious content. It seems they have airbrushed the story out of existence. But Megan McArdle had a copy open in a browser...

Hat-tip: Insty

But Keith thinks:

I read a similar story yesterday at Michelle's:

The efforts to discredit the Tea Party movement is in full force. I think what we're seeing is efforts to turn a lie into accepted truth by frequent repetition.

Posted by: Keith at March 3, 2009 1:06 PM

2,000 Words, at least

Well, to be fair, it is two pictures.

So very sad. So very funny.

March 2, 2009

Obama Tax Collection Strategy: Brilliant!

With the string of tax cheats nominated to key positions in the Obama administration, most recently Ron Kirk, the Machiavellians among us believe that he is having difficultly finding prominant Democrats who are not tax cheats. But The Refugee now understands that Obama's nominations are actually an incredibly clever ruse to enhance government revenue. He simply finds a Democrat who failed to pay his/her taxes, nominates said person to an important post and - voila! - a check arrives at the IRS. Brilliant! The Refugee is worried, however that Obama will run out of positions before he runs out of Democrats.

Obama Administration Posted by Boulder Refugee at 6:49 PM | What do you think? [6]
But Keith thinks:

I have to confess I was transported to a happy place when I envisioned America running out of Democrats. Refugee, did you mean that in the French Revolution sense, or the Soylent Green sense?

When that happens, do we move on to the RINOs?

Posted by: Keith at March 3, 2009 11:25 AM
But Boulder Refugee thinks:

Keith: This is actually an extension of PayGo. The nominee has to owe enough in back taxes to cover his/her salary for at least one year. Obama understands that he has a gold mine buried among Democrat tax dodgers. Surely we can all stand in awe of magnificence of this plan. It's his secret weapon to cut the deficit in half by 2012.

Posted by: Boulder Refugee at March 3, 2009 11:59 AM
But Boulder Refugee thinks:

And one other thing: Can we all agree, that based on Joe Biden's criteria, this is the least patriotic administration in history?

Posted by: Boulder Refugee at March 3, 2009 12:01 PM
But Keith thinks:

I totally forgot that Biden equated paying higher taxes with patriotism. Why, yes, you're right, that would make this the least patriotic administration in history.

Would you in turn grant me that Joe Biden is probably the greatest insurance policy against impeachment in history?

Posted by: Keith at March 3, 2009 12:09 PM
But Boulder Refugee thinks:

Keith, please warn a guy before you lay out one of those lines. The Refugee nearly spit a large swig of Cafe Mocha all over his laptop!

Posted by: Boulder Refugee at March 3, 2009 1:02 PM
But Keith thinks:

Refugee: like Phil Vassar says: "I'll take that as a yes."

Posted by: Keith at March 3, 2009 4:20 PM

Is this the way to go?

I'm interested in thoughts/comments on James Baker's opinion piece in the Financial Times regarding the prevention of "zombie banks".

Posted by LatteSipper at 3:30 PM | What do you think? [6]
But Boulder Refugee thinks:

ls: PE may have a more detailed explanation, but for my money this is spot on. Failure is an inevitable facet of capitalism. Now, one might say, "Many people will be hurt (financially) if they fail." True, but saving them likely "hurts" an even larger number. That is, money must be taken from many people (taxes) in order to give it to the banks. Taxes, and therefore government largesse, are a zero-sum game. That is, one dollar must be taken from one person in order to give it to another (the amount given is actually less than a dollar because of bureaucratic overhead).

Many people do not realize that capitalism is a system designed to benefit the consumer. Socialism is designed to benefit the producer. When we "save" a company, we do so at the a price to the consumer: higher taxes, lower quality of services and perhaps higher prices. No one wants the financial system to collapse. But as Baker so eloquently points out, the difference is between liquidity and solvency.

There, ls - now you have a target to shoot at.

Posted by: Boulder Refugee at March 2, 2009 6:00 PM
But jk thinks:

I agree with Baker on the problem and severity but I'm not sure I'll go all the way with his remedies. Specifically, more than 250K of FDIC insurance seems excessive. I left my comfort zone in supporting the increase from 100K to 250, for Baker's reason: preventing a run. Above that point, you clearly are asking middle class Americans to subsidize the risk premiums of over-leveraged banks and not-so-working class depositors.

The stress test is already underway, whether Jim or I like it or not. When we talk about Government picking winners and losers it is usually a metaphor. Their regulatory aegis allows them to close failing banks, but after we watched them save AIG and throw Lehman to the wolves, I start to wonder how much of this we want.

His bifurcation of liquidity and solvency rings true and aligns perfectly well with the liquidity vs. counter-party risk discussions we've enjoyed around here. (Well, I enjoyed them...) In remedy, I break with some of my economic betters and claim it is a distinction without a pragmatic difference. Some government backing, distasteful as it is, will be required to prevent a meltdown. Do we need much more than we've done? I'd say not.

Lastly, Baker misses a point that has been made well on the WSJ and IBD editorial pages: the need for new banks and instruments to take over. A little Schumpeter please! Geithner & Co (as did Paulson) can't imagine life without BoA or Citi. But they would not be here had government propped up their sclerotic competitors when they pioneered (Go DU!) new services and vehicles.

Posted by: jk at March 2, 2009 6:56 PM
But Boulder Refugee thinks:

Thanks for the Pioneer shout-out, JK. With one week left in the regular season, they are ranked 5th in the country and tied for third in the Pairwise rankings, thus virtually assuring them of a slot in the national tournament.

Posted by: Boulder Refugee at March 2, 2009 10:46 PM
But johngalt thinks:

Anyone still checking this thread?

Speaking of the Pioneers, how about an informal 3 Sources social at an upcoming home game? I'm not familiar with their schedule or ticket availability but dagny and I and the girls might be able to dedicate an evening to this in the near future. Care to take the lead, BR?

I'll leave this idea buried here in the comments for now, at least until I clear it with Mrs. galt (who is working crazy "busy season" hours these days.)

Posted by: johngalt at March 4, 2009 3:29 PM
But jk thinks:

We have radio contact, Houston. Sounds intriguing to me. BR is a season-ticket-thick-or-thin-win-or-lose-devoted fan (who's been kind enough to share). Let me know what's up, I could sit with Galts and we could all meet up at period breaks.

Posted by: jk at March 4, 2009 3:41 PM
But Perry Eidelbus thinks:

I was not going to comment, but you did ask for my opinion, BR. :)

Here we go.

Unfortunately, the US may be repeating Japan’s mistake by viewing our current banking crisis as one of liquidity and not solvency. Most proposals advanced thus far assume that, once confidence in financial markets is restored, banks will recover.
Good. He seems to recognizes that there was always plenty of liquidiy.
Evidence – a mountain of toxic assets, housing market declines, a sharp economic recession, rising unemployment and increasing taxpayer exposure through guarantees, loans, and infusion of capital
Ahem, and federal laws and regulations that continue to force banks into insolvency despite having capital, and federal mucking of market forces that prevent people from determining true "fair value" of assets.
We should act decisively. First, we need to understand the scope of the problem. The Treasury department – working with the Federal Reserve – must swiftly analyse the solvency of big US banks. Treasury secretary Timothy Geithner’s proposed “stress tests” may work. Any analyses, however, should include worst-case scenarios. We can hope for the best but should be prepared for the worst.
No. It's far easier to, gee, let things fail on their own.
Next, we should divide the banks into three groups: the healthy, the hopeless and the needy. Leave the healthy alone and quickly close the hopeless.
Why bother? The healthy will succeed on their own. The hopeless will fail on their own. The needy will succeed or fail depending on what private individuals deem is better: if there's a good chance for profit, or if they're just throwing good money after bad.

Stein's law about current accounts also applies to this: if something cannot continue forever, it will stop. Despite Paul Krugman's outright misrepresentation, Stein used it to say that active steps need not be taken to stop something that will on its own.

The needy should be reorganised and recapitalised, preferably through private investment or debt-to-equity swaps but, if necessary, through public funds. It is time for triage.
Private investment only. Leave government out of it. Stop the immoral raping of taxpayers to save institutions they don't care about.
To prevent a bank run, all depositors of recapitalised banks should be fully guaranteed, even if their deposit exceeds the Federal Deposit Insurance Corporation maximum of $250,000 (€197,000, £175,000).
Actually, a bank run should be allowed to happen. If a bank has been so imprudent, it should be allowed to fail.
But bank boards of directors and senior management should be replaced and, unfortunately, shareholders will lose their investment. Optimally, bondholders would be wiped out, too. But the risk of a crash in the bond market means that bondholders may receive only a haircut. All of this is harsh, but required if we are ultimately to return market discipline to our financial sector.
Again, let them fail on their own. Failure will ensure that bad managers are fired.
This is not a call for nationalisation but rather for a temporary injection of public funds to clean up problem banks and return them to private ownership as soon as possible.
Yes, yes, and similar things "This is not what you think this is" were said about the Anschluss.

If it were the Bush 43 administration, I'd figure they'd be incompetent at worst. But the agenda of Obama's administration is nationalization, and driving our entire financial industry into the ground will soften up enough Americans into accepting a federal takeover.

As president Ronald Reagan’s secretary of the Treasury, I abhor the idea of government ownership – either partial or full – even if only temporary. Unfortunately, we may have no choice. But we must be very careful. The government should hold equity no longer than necessary to restructure the banks, resume normal lending and recoup at least a portion of taxpayer investment.
"There are no necessary evils in government. Its evils exist only in its abuses."
After replacing bank management with new private managers, the government should have no say in banks’ day-to-day operations.
Say this in your best Captain Kirk voice: "Riiiiight."

Riiiiight. Obama and his Cabinet won't try to inject "social justice" agendas into bank decisions, I'm sure.

The FDIC can assist. Just this year, it has placed more than a dozen American banks – admittedly all small – into receivership. We might also consider setting up something akin to the Resolution Trust Corporation, created in 1989 to liquidate the assets of failed savings and loans. The RTC eventually disposed of almost $400bn in assets of more than 700 insolvent thrifts.
Only a bureaucrat could propose even more bureaucracy. Liquidating a failed business needs no more than a regular bankruptcy court.
To avoid bank runs and contain market disruption, the Treasury should announce its decisions at one time.
That's just the problem: every time Obama or one of his minions opens a mouth, the stock markets tank because consumers lose even more confidence.
Washington will also need to co-ordinate its actions with other major capitals, especially in western Europe and east Asia. At best, this will encourage other countries to take similar steps with their own banking systems. At a minimum, other governments can prepare for the financial turmoil associated with the announcement.
Uh, has Baker been paying attention to the news? Europe can't even get itself together on the bailout.
This approach is not pretty or easy. It will cost a lot of money, with the lion’s share coming from US taxpayers, at least in the short to medium term. But the alternative – a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road – could truly be historic folly.
Heads, the U.S. taxpayer get sodomized. Tails, the U.S. taxpayer has to perform fellatio. Yeah. Either way, the U.S. taxpayer gets screwed.
Eventually our banks and economy will start to recover. When they do, we would be wise to avoid another Japanese mistake – raising taxes. To counter mounting debt created by government stimulus packages, Japan increased taxes in 1997. Consumption dropped and the country’s economy collapsed.
This much is true at any part in any economic cycle. Raising taxes has historically not produced as much revenue as cutting them.
Our ad hoc approach to the banking crisis has helped financial institutions conceal losses, favoured shareholders over taxpayers, and protected senior bank managers from the consequences of their mistakes. Worst of all, it has crippled our credit system just at a time when the US and the world need to see it healthy.
What did you expect from government action taken to "fix" a crisis that it caused through its short-sightedness and ineptitude?

Posted by: Perry Eidelbus at March 4, 2009 9:05 PM

Gotta Love the UN

"It took longer than it should have," notes the WSJ Ed Page, " but the State Department finally decided late last week to drop out of the horror show that is the United Nations conference on racism."

The new Obama team first thought its diplomatic charms could deter a repeat, and it dispatched negotiators to Geneva for the preparatory meetings. They got nowhere, which isn't surprising given that the preparatory committee is chaired by Libya, aided by vice chairs Iran and Cuba. "The document grew from bad to worse," said a U.S. official, in explaining the walkout.

Libya, Cuba and Iran co-chairing a conference on racism. We passed irony a long time ago and have driven completely through self-parody -- I don't know what you call this new uncharted territory. The short piece is worth a read in full, reminding that "[Obama diplomats'] animating conceit is that the world dislikes America merely because the Bush Administration wasn't solicitous enough of world opinion. But Durban II shows that many countries hate us merely for who we are and what we stand for."

Posted by John Kranz at 11:49 AM | What do you think? [0]

Business Boom

Guns, Ammo, and Ayn Rand:

Sales of Ayn Rand’s “Atlas Shrugged” have almost tripled over the first seven weeks of this year compared with sales for the same period in 2008. This continues a strong trend after bookstore sales reached an all-time annual high in 2008 of about 200,000 copies sold.

“Americans are flocking to buy and read ‘Atlas Shrugged’ because there are uncanny similarities between the plot-line of the book and the events of our day” said Yaron Brook, Executive Director at the Ayn Rand Center for Individual Rights. “Americans are rightfully concerned about the economic crisis and government’s increasing intervention and attempts to control the economy. Ayn Rand understood and identified the deeper causes of the crisis we’re facing, and she offered, in ‘Atlas Shrugged,’ a principled and practical solution consistent with American values."

Posted by John Kranz at 11:40 AM | What do you think? [0]

March 1, 2009

But jk thinks:

If Jon Stewart smugly shouts it into the camera, it must be true. I do fear for the Republic, as many young people get their news from comedy shows.

There are some very important questions of balance of powers and Federalism at stake here, ls. It is not about "Democrat money." States have to cede additional authority to the Federal Government and frugal states have to increase baseline spending and decide where to fund that in future years. The answer for most will be to send their goober-natorial successors, hat-in-hand, back to DC to trade more control of local policies for more Federal jack.

Of course it will politically difficult to refuse, and not many can get away with it. Those who are are making a damned principled stand -- no irony, sarcasm, or scare quotes.

I'm sure happy that Stewart has a punching bag in a successful young Indian-American Executive. That will help him through Bush withdrawal. Governor (soon Secretary) Seibulus gave a pretty lackluster response from the Kansas state house a year ago. I don't remember a lot of vicious attacks.

Posted by: jk at March 2, 2009 12:27 AM
But Latte Sipper thinks:

Having read numerous caustic comments regarding Obama, Biden, and numerous other moonbats on this site, I thought references to political satire and humor were OK. Now that I realize the level of sensitivity around poking fun at sincere politicians with the correct viewpoint, I'll avoid making the same mistake in the future.

Posted by: Latte Sipper at March 2, 2009 9:57 AM
But jk thinks:

And tell your moonbat friends to stay away too!!

You'd have to understand my whole thought process, ls. I was happy to see a post from you, then trepidation set in as I saw it was a link to the Daily Show. (Imagine my sending you an Ann Coulter column). Then, I give it a look-see -- he can be very funny sometimes, I'll admit.

The first link of yours is an archetype of the problem I have with Stewart (& Colbert). To make the gag work, he omits a huge hunk of information. I watched almost all of the shows that he excerpted and there are some very important considerations of balance of powers here.

Instead, he edits the clips down to a few seconds that make Republicans look bad, and inserts his own line about Democrat money vs. Republican money. A decent gag, but I know a million twenty-somethings clicked off the show and felt really informed about their knowledge of politics and national affairs.

Posted by: jk at March 2, 2009 11:07 AM
But johngalt thinks:

Yes, latte, I was happy to see a post from you as well. I haven't had a chance to watch the clips yet but I take from your comments that you're still pleased with the direction the nascent Obama Administration is headed. I hope you continue to join us here because I'd like to know at what point your particular camel's back breaks. In other words, how far can unchecked Democrat ideology push the market economy out and replace it with "equalization boards" and "stabilization acts" before various Obama voters get cold feet and pine for the "good old days" when even though corporations were "ripping them off" they still knew what to expect from week to week and year to year and could afford to live a prosperous lifestyle.

I'm still amazed at the irony of ten year-old SUVs sporting OBAMA bumper stickers... "Cause I think gas SHOULD cost $4 a gallon!" I'm still waiting for tiered pricing at filling stations:

"Customers with "Obama" bumper stickers are free to pay double."

Posted by: johngalt at March 2, 2009 12:45 PM
But Latte Sipper thinks:

The problem jk cites with the Daily show is true of most political discourse today, serious or not - latching on to one element and holding that up as representative of the whole. I believe that the Daily show often does a fine job of capturing the silliness and political theater on display in Washington and on our 24x7 news outlets. BTW, young people getting their news from comedy shows is no more frightening than old, er, people of any age getting their news from Fox. Regarding jg's comment, I'm still happy I voted for Mr. Obama. I certainly do have concerns about our current economic state - I'm not sure that the Obama administration has all of the answers or, if they did, if we as a nation could pull together and move in the same direction to execute the answers. I'm certainly not smart enough or informed enough (damn you John Stewart!) to know what the right answers to our current predicament are. I think we all have a tendency to like the solutions that come from our side of the tracks, from those espousing the principles that we've already latched on to. Having admitted my ignorance (what a crappy debater I am), I feel quite comfortable that the laissez-faire, cut taxes and all will be well approach of the right is not the answer. Flame on good sirs.

Posted by: Latte Sipper at March 2, 2009 3:16 PM
But jk thinks:

I have canceled cable service and must now try to get by without The Daily Show or Fox News. Don't know nuthin' about nuthin' anymore.

I hate being forced to defend FOXNews, as most of it sucks rags. I do watch FOX News Sunday which runs on the FOX broadcast network (Channel 31 in Denver) but is produced by, and features the talent of FOX News.

I will say that the hapless, helpless cocooning conservative about whom you are so worried was treated to a vigorous 15 minute roundtable debate featuring Democrat Governors Ed Rendell (PA) and Jennifer Grandholm (MI) and Republicans Tim Pawlenty (MN) and Mark Sanford (SC). Rendell, the former DNC Chair, is no shrinking violet, nor was Ms. Granholm. Sanford explained at length why he was looking to eschew some of the funds; Pawlenty had his problems with the stimulus but felt it clearly in the best interests of his state to accept and use it; Granholm offered to take all fifty states' worth if she could; Rendell gave an impassioned and reasonable explanation that the bill was relief as well as stimulus, and that it was good to provide for "people that are hurting."

Balance of powers, baseline spending, charges of racism against Gov. Sanford, and expectations of stimulus effects were all discussed. Granny Smith N. Wesson got a pretty informative look as she was waiting for the Daytona 500 to start. Later a panel of pundits including Juan Williams and Maura Liasson of NPR discussed the politics surrounding what was said.

Stewart grabbed a few of his clips from that interview, added his "Democrat Money" gag and two of his trademark smug yells-at-the camera. I don't see those two programs as being equivalent.

My problem, and I have been consistent over time and over the more palatable Steven Colbert, is that -- just like your economic suggestions -- the incentive is off. FOX and the New York Times struggle to provide accurate information, and I'd even say they both struggle to be fair. It is hard enough without trying to fit in a gag. Making it comedy will compound the problems that news providers face.

And, yes, your suggestion that tax cuts and lasseiz faire are not the answer is also driven by the wrong incentive structure. The market will make errors, government will make errors. The market has incentive to fix them quickly. Government generally is incented to double down. Only gub'mint could Look at the problems caused by Fannie and Freddie and suggest subsidizing low cost refinancing of delinquent mortgages.

Posted by: jk at March 2, 2009 5:11 PM

Debt Up To Our Eyeballs

This is not good.

From Senator Tom Coburn's twitter:

new debt proposed by Administration's budget is larger than the total amount of debt accumulated by the government from 1789 to today

Just remember that the Democrats ran on a fiscal responsibility platform, calling President Clinton's surpluses a good thing (tm).

Well, not so much anymore.

(h/t Snowflakes in Hell)

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