Garbanzo Toons

Milton Friedman - The Free Lunch Myth

It would have been Milton Friedman's 100th birthday today. He's still relevant, and for our own good, we'd better listen to him.

Labels: economics, Milton Friedman

posted by Harry @ 8:15 PM 0 comments

Gas Prices

At their highest this Spring, gas prices around my neighborhood were a bit over $4.00 per gallon. Then they started going down. Last week they were $3.49, better, but still almost double what they should be.

So then, Barack "Smartest Man in the Room" "Don't Drill Here" Obama decided to release 30 million barrels of oil from the Strategic Oil Reserve, something that other presidents avoided doing even when prices spiked at $4.15 a gallon under the last Bush, but only releasing a few million barrels in response to Hurricane Katrina. Apparently those other presidents simply didn't have the mental agility, the sheer brain power that Mr. "Hope and Change" has when it comes to economic issues. Talking out of both sides of his ass, as always, we read,

Although the impending summer demand clearly has the Obama administration worried, the White House would not make any predictions about the effect that the release will have on prices at the pump.

“We’re not making predictions about market prices, which go up and down,” a senior administration official said. “This is about addressing the supply disruption and the prices will be what they are.”

Well, it's a good thing they didn't make any predictions, because back in my neighborhood, gas prices are now up to $3.79 a gallon. Thank you Barack Obama, Soooper Genius.

Now how about issuing some drilling permits so that the evil, greedy oil companies can get more oil to the market and perhaps knock down prices for us poor, beleaguered, overworked, underpaid, overcharged consumers.

Labels: economics, gas prices, Obama

posted by Harry @ 3:20 PM 0 comments

Dirty, Filthy, Greedy Capitalists

In the midst of the Obamacare debate, an astounding and possibly racist, imperialist discovery has been made. Capitalism is responsible for lowering medical costs. Can you believe it?

In some of the most significant changes in decades, hospital systems are beginning to post their prices publicly and offer a range of help, including big discounts to uninsured and underinsured people with limited household incomes.

Health insurers also have embraced the trend. Blue Cross Blue Shield of Michigan, Health Alliance Plan, Priority Health and Aetna are among those with improved Web sites that provide the average cost of a procedure. Some sites even zoom in on local prices when visitors type in their ZIP code.

"It's a fundamental shift" in how health care prices are set and publicized, said Stephen Hathaway, chief revenue officer for the Detroit-based Henry Ford Health System.

The changes come as Michigan's uninsured population has grown to 1.35 million, an increase of 200,000 between 2007 and 2009, the latest year of information available from the state health department.

Didn't Obama and his progressive minions assure us that only the government can bring down health care costs? And they insisted that only their preferred method, strong government intervention to the point of forcing all citizens to buy health insurance from from a government insurance provider )as private insurance companies are to be driven out of business) would insure that we Americans continue to enjoy some of the world's best medical care. This, of course, doesn't apply to the over 700 organizations (including labor unions who fought long and hard to encourage the passage of Obamacare) who have been given waivers so that they do NOT have to participate in Obamacare because it's driven up their health care costs. Huh? What? Driven costs up?

Wait. Did up become down, and down become up? Have I not been informed of Progressive changes in the English language? Or is somebody not being honest with the American public?

But seriously folks, now that it has been demonstrated once again that Capitalism and free markets are responsible for lower costs, greater wealth creation, greater freedom, increased innovation, a better standard of living by just about any honest measure you can choose, and that increased government control over the economy leads to the opposite, why are some people still clamoring for more government spending to "create jobs."

Do some people absolutely refuse to learn?

Update:
I found this article after I posted.

“It’s an industry that’s going through the roof,” said Mark Semple, president of Vancouver-based Passport Medical. “It’s wait times, it’s cost, it’s price, it’s quality and accessibility.”

Retired accountant Gary Davidge of Calgary started looking into hip replacements two years ago when they cost $45,000 U.S. in Arizona. When the arthritis pain in his hip intensified in December, a medical broker found him a price of $18,800 in Montana.

Although Mr. Davidge’s preference would have been to have his operation at home funded by Canada’s public health system, the average wait was a year to 18 months, and no one could tell him with certainty when the surgery would take place.

So, as others before me have asked, where do the Canadians go (and where do we go) to escape socialized medicine?

Labels: capitalism, economics, economy, Obama, Obamacare, Progressives

posted by Harry @ 10:27 AM 2 comments

Krugman's Alternative Universe

I've got some very liberal friends. Paul Krugman is their economist of choice. He is the darling of the left, especially when he skewers some conservative pundit. I've read some of his columns and seen a bit of his - um - skewering on Youtube, and I have to say that I think he's put his politics ahead of his thinking. Yes, I know he's a Nobel laureate and all, but I think he needs to reexamine some of his economic beliefs. Well actually, according to this piece by James Taranto at the Wall Street Journal, linked by way of House of Eratosthenes, maybe he unknowingly has. Either that, or he assumes that his uncritical, adoring fans will blindly accept anything he says as received wisdom, so it really doesn't matter what he says or if it has any basis in reality. Reading some of his NY Time columns and watching pieces of his TV appearances, he's probably right - about his sycophants, that is, but dead wrong about a lot of things that matter.

Former Enron adviser Paul Krugman takes note in his New York Times column of what he calls "the incredible gap that has opened up between the parties":

Today, Democrats and Republicans live in different universes, both intellectually and morally.

"What Democrats believe," he says "is what textbook economics says":

But that's not how Republicans see it. Here's what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning's position (although not joining his blockade): unemployment relief "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

Krugman scoffs: "To me, that's a bizarre point of view--but then, I don't live in Mr. Kyl's universe."

What does textbook economics have to say about this question? Here is a passage from a textbook called "Macroeconomics":

Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries.

So it turns out that what Krugman calls Sen. Kyl's "bizarre point of view" is, in fact, textbook economics. The authors of that textbook are Paul Krugman and Robin Wells. Miss Wells is also known as Mrs. Paul Krugman.

It seems Krugman himself lives in two different universes--the universe of the academic economist and the universe of the bitter partisan columnist. Or maybe this is like that episode of "Star Trek" in which crewmen from the Enterprise switched places with their counterparts from a universe in which everyone was the same, only evil.

Like Spock, the evil Krugman is the one with the beard.

Kind of funny, ain't it? What is also humorous is that this bit of inconsistency will be ignored by the NY Times and all of Krugman's followers.

Labels: economics, New York Times, Nobel Prize, Paul Krugman

posted by Harry @ 5:36 PM 1 comments

Is This Really Rational Thought?

OK, I disagree with the premise. That doesn't make the editorial writer stupid. But for the Free Press to run thinking this sloppy, I just have to wonder how the writer and the editor make a living in their jobs. The article begins,

Anyone who still can't understand why health care reform should be the government's business need look no further than the pharmaceutical industry, which is raising its prices at the fastest rate in years despite an economic downturn that has pushed most consumer prices lower.

It ends,

What federal lawmakers should take away from this is the necessity of giving the government broad authority to negotiate drug prices for Medicare and Medicaid recipients, just as large private insurers do. Economists are divided over how effective such reforms will be at reining in prices, but as current price trends show, what consumers pay for prescriptions is too important a cost driver to be left entirely to the private market.

But inbetween these two paragraphs, it is written,

Pharmaceutical industry spokesmen cite the need to maximize profits on popular drugs whose patent protection is about to expire. But most outsiders believe drug makers are anticipating government regulations that may limit their ability to raise prices in the near future. Economists recall a similar spike in 2006, just before Congress agreed to subsidize prescriptions for tens of millions of Medicare recipients.

So, according to this editorial, pharmaceutical companies are raising their prices in response to predicted government policies, which are going to interfere with their abilities to price their products as they see fit. That is neither your mother's nor Adam Smith's private market. What the Free Press is calling for is more government interference to solve problems created by previous government interference in the marketplace. But somehow, the government jumping in and distorting the market to the point that people can't afford their medicine is the fault of the "private market." That's a cycle (and a tactic to increase demands for more government) as old as governments. The problem is that we are taught to forget or ignore previous government episodes of big government screwing up the market in order to make us accept the next round of interference, which, with past experience as our guide, will only lead to more problems.

With the pharmaceutical industries one of the scapegoats du-jour, I suppose we can expect to see more "hard hitting" editorials exposing them for daring to make a profit in these times of economic turbulence . . . caused by whom? Oh yeah, a government that is out to solve all of our problems - at the cost of - greater and more numerous problems.

Labels: Detroit Free Press, economics, government, Universal Health Care

posted by Harry @ 8:16 PM 1 comments

More Reasons to Appreciate Thomas Sowell

Thomas Sowell is one of the great minds in the world today. If the MSM and the rest of those who control the output of information in this country weren't so stupidly "progresssive" he would get the recognition he deserves. It's a loss to our nation that he isn't more widely recognized and pushed on readers by the idiots running our MSM.

Labels: economics, education, Thomas Sowell

posted by Harry @ 8:12 PM 1 comments

And It's Only Going to Get Worse

From Mallard Fillmore,

Labels: economics, government

posted by Harry @ 7:28 AM 2 comments

A Daily Dose of Stupid

I found some really stupid things written in the Detroit Free Press this morning. At least I thought they were stupid. The writers of these pieces would obviously disagree with me. And it has come to the point for many people, that any idea they disagree with is an exercise in stupidity. That is a foolish way to think. You've got to have the facts or at least a decent argument to back up your thoughts. I may or may not have either.

The first selection is this article, reprinted in its entirety.

The American Civil Liberties Union released a report Tuesday that said the U.S. government's crackdown on terrorism financing has hampered the religious freedom of American Muslims by making it difficult for them to donate to Islamic charities.

Called "Blocking Faith, Freezing Charity," the 166-page report is based on 120 interviews with Muslim donors and leaders.

The report said that nine American Muslim charities, including the Dearborn-based Goodwill Charitable Organization, have been shut down since the Sept. 11, 2001, terrorist attacks as a result of government action during the Bush administration.

Muslims can still give to charities. There are many worthwhile charities who cater to people of all religions. If we infidels are constantly expected to reach out to the Muslims in our midst, shouldn't they at least make a minor gesture back? You know, send a few dollars to Goodwill, or the Salvation Army, or any of the hundreds of other charities in this country. If they wish to contribute to Islamic charities, shouldn't there be some sort of monitoring of these charities to make sure none of their zakat goes to jihad? Or have I committed an islamophobic thought crime by wondering if Islamic charities support jihadist murderers merely because there is a documented history of this support?

Next, we have a letter written to the Free Press,

Former Gov. William Milliken was being characteristcally modest in his Sunday column ("Make Michigan nation's clean energy powerhouse"), because history shows he was a leader before his time when it comes to renewable energy. Had the federal government supported his efforts back in 1976 to promote solar and wind energy in Michigan, we would now be at the head of the curve instead of catching up to it.

Having been a renewable energy advocate back in the 1970s, I saw a great burst of promise regarding our state's energy independence when Gov. Milliken signed Michigan's renewable energy tax credit into law. As a result, some 300 startup companies in solar and wind energy-related businesses were born in our state. That was 1976!

One or two years after the 1976 bill signing, the startup companies died on the vine because of a lack of will by the feds to support ongoing energy conservation tax credits. I pray that we are not going down that same road again.

No, these energy companies didn't die to to government inaction, they died due to consumer inaction. We, the American consumers, weren't interested. If these renewable energy concepts were as great as claimed, there would be no need for the government to shove them down our throats they way they are doing now. There would be no need for the never-ending "green" propaganda campaigns in our schools and media. People would buy them on their own because they would see an advantage to them beyond moral posturing. Unless, of course, we are too dumb to know what is good for us and we need the government to act as a benign guide and caretaker.

And speaking of government as caretaker, nursemaid, mommy, and daddy, here's another delightful letter.

Big banks that still have billions of dollars of uncollectable debt on their books want to repay the government the TARP funds. I wonder if the only reason they wish to repay is to get away from government control in regard to the excessive compensation in the form of stock options, pay and bonuses for top executives and boards of directors?

Well, wouldn't you? Or should executive pay be decided by the government? Some people would say yes to that, under the delusion that their pay will never be government approved. It's only the rich who have to be controlled by kindly Uncle Sam, not we, the people, right?

Oh, and by the way, Obama killed a fly today. It was quite an event. It was too late to be reported in today's Free Press. It still made me wonder if this was serious reporting. Vanderleun, at American Digest has written the post I was thinking of writing about this major event. Of course, he's written it much better than I would have, so we can all be thankful that I read his before attempting my own.

Labels: American Digest, Detroit Free Press, economics, energy, islam, Obama

posted by Harry @ 7:05 PM 0 comments

What? Words Have Meanings?

Do words have absolute meanings? Or do they only have relative meanings, only meaning what each individual wants a word to mean? When we speak of a person being "African American" we, in the U.S. mean a person who is black. But is that accurate, or is it merely politically correct? In a politically correct world, words are only allowed to have the meanings that the PC police allow, whether the meanings are accurate or not. According to this article,

Can a white person be an African-American? Paulo Serodio, a 45-year-old naturalized American of Portugese heritage born in Mozambique, says yes. He is suing the University of Medicine and Dentistry of New Jersey for discrimination that he says led to his suspension.

He told ABCNews.com that his instructor, Dr. Kathy Ann Duncan, asked the students for self-definitions during a discussion on culture and medicine. Serodio identified himself as a “white African-American.” He says Duncan later told him never to refer to himself as that again, because it was “offensive” to others in the class.

and

In 2004, a white high-school student (born in Johannesburg) named Trevor Richards was suspended from an Omaha, Nebraska school after distributing posters that promoted him as a candidate for the school’s "Distinguished African-American Student" award. WorldNetDaily.com reported that this story sent “shock waves across America as debate rages over who can claim rights to the term ‘African-American.’”

What does “African-American” mean? Merriam-Webster’s Online Dictionary defines the term as “an American of African and especially of black African descent.”

So if only people of black African descent should be allowed to refer to themselves as African-American, what is Serodio? "There are people of all races who are African," Serodio told ABCNews.com. He said he had no problem identifying himself in that way until Duncan’s class.

In our quest to create a "color-blind" society, we have created a society based almost totally on race and ethnicity. On standardized tests in schools, students are always asked for their race. Race is a factor in deciding if schools have made Adequate Yearly Progress. Obama is facing pressure to name a Supreme Court justice based on ethnicity and gender rather than the quality of a nominee's jurisprudence. (Unfortunately, Obama agrees with the race/gender/sexual orientation based criteria.) The world's financial markets are in ruin due to congressional meddling in the housing market designed to give minority groups and "people of color" greater access to home ownership whether they could afford to buy a home or not.

And now, people get upset when a white immigrant to the United States from an African country dares to call himself "African American." Can't we just admit that this is an unintended consequence of the need for radical inoffensiveness? Can't we use this as a clue that if ethnicity truly doesn't matter, we need to stop defining everyone based on the criteria of skin color and ethnic origin?

My children are Russian and Polish (and Greek according to stories from my grandfather) on my side. Looking at photos of my mother's dark-eyed Russian family from the early 20th century, I'm guessing there is some Mongol in our blood. The Mongols did rule Russia for 300 years. On my wife's side, they are mostly Mexican and Polish - and Hungarian and Irish. So, in our enlightened Age of Obama, how are my children to be labeled?

I checked the "Hispanic" box on their birth certificate. Yep, if playing the race derangement syndrome game will give my children an advantage, I'll go along with it. Why shouldn't my kids be compensated because some of their ancestors, back in the mists of the past, may or may not have faced oppression and prejudice from that racist, Whitey? If we are truly intent on creating the mythical level playing field, shouldn't all participants be judged on the content of their character rather than the color of their skin? (That last line sounds familiar. I must have written it at some time in the past. I hate when I plagiarize myself.)

Labels: economics, racism

posted by Harry @ 10:04 PM 4 comments

Thoughts on Cuba and Other Stuff

Yes, I'm really too busy to blog, and this is not the post I was going to post. But when I'm too busy go toss off thoughts at an unsuspecting (and uncaring)Blogosphere, I use other people's thoughts. First, here are some thoughts on Cuba from Nat Hentoff, and them some that are more succinct from Michael Ramirez. I love the way he can portray such strong emotion in just two hands. The man can draw!

New Pulitzer prize-winning columnist Eugene Robinson of the Washington Post, who has made 10 reporting trips to Cuba, writes (April 14) that the Congressional Black Caucus delegation was either naive or disingenuous "not to notice ... or acknowledge that Cuba is hardly the paradise of racial harmony and equality it pretends to be."


If these Black Caucus members — so lauded by Fidel for being accompanied by King's "aura" — had asked him and Raul for permission to look around Cuba on their own, they would have


heard considerable evidence from Afro-Cubans about their lower status in Michael Moore's paradise. However, adds Eugene Robinson, "maybe they were too busy looking into Fidel's eyes."

And I was going to comment on the fact that Earth Day is on Lenin's birthday. But that's been taken care of at People's Cube.

Meanwhile, at the Free Press, there are the usual calls for more government intervention to "help the poor".

Personal finances are not traditionally the purview of public officials. But in these tough times, government certainly has an interest in helping constituents protect their assets and create financially stable households. The life savings of many New Orleans residents were washed away during Hurricane Katrina. In some cities, a cash economy has become a public safety problem, with people becoming "walking ATMs" on days when pay or government checks are issued.

That's why the National League of Cities and the Cities for Financial Empowerment Coalition are working with many of their members, including Detroit, to ensure that consumers are financially literate and that banks offer deposit, payment, credit and electronic products that meet the needs of the unbanked. The league's "Bank on Cities" campaign includes education and outreach efforts that partner with local banks.

Thomas Sowell sees through the sloppy thinking of the Free Press and everyone else who wants more government intervention in order to force check cashing offices out of business while also forcing banks to give loans to people whether or not they can pay them back.

Words are not the only things that enable political rhetoric to magically transform reality. Numbers can be used just as creatively — and many voters are even more gullible about statistics than they are about words, apparently because statistics seem more objective.

The latest congressional crusade is to clamp down on small finance companies that provide “payday loans” and check-cashing services in many low-income neighborhoods, where there are few banks.

A common practice in making small loans of a few hundred dollars for a few weeks is to charge about $15 per hundred dollars lent. Politicians, the media, community activists, and miscellaneous other busybodies are able to transform these numbers into annual percentage charges of several hundred percent, thereby creating moral melodramas and demands that the government “do something” about such “abuses.”

Of course, these loans are seldom borrowed for a year. They are often loans for a couple of weeks or less, to meet some difficulty of the moment, suffered by people who live from payday to payday, whether they are being paid by a job or are receiving checks from Social Security, unemployment compensation, or welfare.

The alternative to getting a payday loan may be having the electricity cut off or not having money to buy some medication. It is worse to borrow from illegal loan sharks, who have their own methods of collecting.

While $15 per hundred dollars may sound like a high rate of interest, it is not all interest. The finance company incurs costs just to process a loan, and these costs are a higher proportion of the total cost for a small loan than for a large loan.

When Oregon imposed a limit of 36 percent annual interest on what a finance company could charge, that meant charging less than $1.50 for a $100 loan for a couple of weeks. A dollar and a half would probably not even cover the cost of processing the loan, much less the risks of default.

Not surprisingly, most of the small finance companies making payday loans in Oregon went out of business. But there are no statistics on how many low-income people turned to loan sharks, or had their electricity cut off, or had to do without their medicine.

This is just one of the many ways in which self-righteous busybodies leave havoc in their wake while going away feeling noble.

Labels: Cuba, Detroit Free Press, economics, Michael Ramirez, Nat Hentoff, The People's Cube, Thomas Sowell

posted by Harry @ 6:16 PM 0 comments

Basic Economics, Part 2

Well, I finally finished the book, Basic Economics . . . about a week ago. It's just taken me this long to find the time to write a brief post on it.

After finishing it, I think that it's even more worth reading than I did in the first post. Yes, Sowell does repeat himself at times, using the same story to illustrate more than one point, but the fact remains that he makes a great case for free markets over a controlled economy. But we've seen that. Think of the differences between East and West Germany, North and South Korea, Eastern and Western Europe, Cuba and the United States. Don't forget Taiwan and Hong Kong vs. China. Which way were people running? Who was killing people in order to stop their escape from workers' utopias? And then there's the rise of Singapore, while the countries around it remain mired in poverty. The fact that there are some in government and media who still want us to believe that the economy can be brought under control without destroying it, makes me wonder if these intellectuals are half as smart as they think they are. Who are they trying to kid?

The chapters on "Market Myths" and government meddling are worth rereading. Except you (or at least I did) end up getting angry that special interests are allowed to feed off of the rest of us in the interest of "fair trade" and "preserving American jobs". Why do special interests have so much power anyway? It's because the government has too much control over the economy as it is. They have created a system that fosters corruption, that has industries battling each other for government largess. In creating tariffs in order to protect jobs in the American steel industry, more jobs were lost than were protected due to artificially high steel costs. Why is sugar so expensive? Because of tariffs leveled against foreign sugar? Remember the gas lines under Jimmy Carter in the late 70s? They were because of laws capping the price of gasoline. Power shortages in California? Same cause, different politicians. Why do our leaders do this? In order to buy votes of course. Their first loyalty is to themselves.

Both Obama and Hillary are out to kill the goose that laid the golden egg in their rush to redistribute wealth from those who earned it to those who want it. They're going to kill us with Universal "Health Care." One of the biggest points Sowell makes is that all of these schemes to "level the playing field" and to end "exploitation" of the poor by the rich, price controls, wage controls, have all been tried numerous times throughout history, and they've led to increased misery and suffering every time. A major theme throughout the book is that there is a reason that things have prices. And if we allow the government or any organization, even if they pretend that they are benevolent, to raise or lower prices or wages according to whim, they will skew the market and cause shortages and worse chaos than there was before the meddlers began "fixing" things. You know what else? The Great Depression was not a failure of Capitalism, It was a failure of government. These are all facts and concepts that aren't taught in our schools, so people don't know. They're open to every demagogue who promises to make life easier and increase their wealth at the expense of the "evil greedy capitalist."

OK, that's it. No more posts on this book. I've said everything I have to say . . . I think. Now go out and read it.

P.S. Over at American Digest, there is an interesting post that relates directly to all of this and gives another reason . . . not . . . to . . . vote . . . for . . . O - b - a - m - a. Or will it be O'Bama for St. Patrick's Day?

And who is more of a Lady Macbeth? Hillary Clinton or Michelle Obama?

Labels: American Digest, books, economics, Obama, Thomas Sowell

posted by Harry @ 7:14 PM 1 comments

Basic Economics

I just happen to be reading Thomas Sowell's book, Basic Economics. It's the updated and expanded third edition. He's added new information and entire chapters since the second edition. There are also quizzes on each chapter at the end. I like the quizzes because if I were studying this the way I should be studying it, taking these quizzes would help me remember what I've read. Page numbers are given to help one find the answers to the questions. And it's not even like the questions are that difficult if you've read the book. The way Sowell explains things, a lot of this stuff is common sense.

Maybe I'm weird, but I'm finding most of this book fascinating. It could be because I'm interested in the subject. Or maybe I enjoy learning new things. Perhaps it's because I like seeing self-defeating myths smashed with a healthy dose of rationality and intelligent thought. There are a lot of real life examples in the book demonstrating how and why some economic theories work and others don't. One reviewer on Amazon simplistically titled his review, Capitalism Good, Communism Bad. He then went on to trash the book. Some people don't like it when their cherished irrational beliefs can't handle the reality of life. Sowell does compare the success of Capitalism to the failures of Communism, but due to the general disdain among our elite opinion makers of Free Market Capitalism, I think Sowell was right to make these comparison as often as possible. Not that it will quiet the free market haters, but it does offer lessons to those who will read and listen honestly. And it shows why people who still believe in Socialism and Communism just don't get it.

Reading this book helped me appreciate two articles in the current issue of City Journal. The first one is Hearts of Darkness by Michael Knox Beran.

Paternalism was supposed to be finished. The belief that grown men and women are childlike creatures who can thrive in the world only if they submit to the guardianship of benevolent mandarins underlay more than a century’s worth of welfare-state social policy, beginning with Otto von Bismarck’s first Wohlfahrtsstaat experiments in nineteenth-century Germany. But paternalism’s centrally directed systems of subsidies failed to raise up submerged classes, and by the end of the twentieth century even many liberals, surveying the cultural wreckage left behind by the Great Society, had abandoned their faith in the welfare state.

Yet in one area, foreign aid, the paternalist spirit is far from dead. A new generation of economists and activists is calling for a “big push” in Africa to expand programs that in practice institutionalize poverty rather than end it. The Africrats’ enthusiasm for the failed policies of the past threatens to turn a struggling continent into a permanent ghetto—and to block the progress of ideas that really can liberate Africa’s oppressed populations.

The intellectual cover for the new paternalism comes from economists like Columbia’s Jeffrey Sachs, who in his recent bestseller The End of Poverty argues that prosperous nations can dramatically reduce African poverty, if not eliminate it, by increasing their foreign-aid spending and expanding smaller assistance programs into much larger social welfare regimes. “The basic truth,” Sachs says, “is that for less than a percent of the income of the rich world”—0.7 percent of its GNP for the next 20 years—“nobody has to die of poverty on the planet.”

Sachs headed the United Nations’ Millennium Project, created in 2002 by Secretary-General Kofi Annan to figure out how to reverse poverty, hunger, and disease in poor countries. After three years of expensive lucubration, the project’s ten task forces concluded that prosperous nations can indeed defeat African poverty by 2025—if only they spend more money. “The world already has the technology and know-how to solve most of the problems faced in the poor countries,” a Millennium report asserted. “As of 2006, however, these solutions have still not been implemented at the needed scale.” Translation: the developed nations have been too stingy.

We’ve heard this before. The “response of the West to Africa’s tragedy has been constant throughout the years,” observes NYU economist William Easterly. From Walt Rostow and John F. Kennedy in 1960 to Sachs and Tony Blair today, the message, Easterly says, has been the same: “Give more aid.” Assistance to Africa, he notes, “did indeed rise steadily throughout this period (tripling as a percent of African GDP from the 1970s to the 1990s),” yet African growth “remained stuck at zero percent per capita.”

All told, the West has given some $568 billion in foreign aid to Africa over the last four decades, with little to show for it. Between 1990 and 2001, the number of people in sub-Saharan Africa below what the UN calls the “extreme poverty line”—that is, living on less than $1 a day—increased from 227 million to 313 million, while their inflation-adjusted average daily income actually fell, from 62 cents to 60. At the same time, nearly half the continent’s population—46 percent—languishes in what the UN defines as ordinary poverty.

Yet notwithstanding this record of failure, the prosperous nations’ heads of state have sanctioned Sachs’s plan to throw more money at Africa’s woes. In July 2005, G-8 leaders meeting in Gleneagles, Scotland, endorsed Sachs’s Millennium thesis and promised to double their annual foreign aid from $25 billion to $50 billion, with at least half the money earmarked for Africa. This increased spending, the Gleneagles principals proclaimed, will “lift tens of millions of people out of poverty every year.” No doubt, too, Africans will soon be extracting sunbeams from cucumbers.

Using logic, reason, and the 60 year record of failure of other African poverty reduction programs that have consisted of throwing money at Africa, he shows why the people involved in the current scheme are either deluded or are self-serving liars.

The other article is, Criminalizing Capitalism by Nicole Gelinas.

Politicians and business pundits saw Enron’s collapse as an unprecedented market failure that cried out for a new remedy. Hadn’t the country’s best stock analysts believed the Enron “story”—permanently high growth through dazzling innovation? Hadn’t the nation’s bond-rating agencies awarded Enron a rating implying that prudent investors could lend to the doomed company? Hadn’t Enron’s “independent” auditors and outside counsel signed off on its crazy financial statements? And hadn’t Enron employees who had invested heavily in company stock seen their life savings evaporate?

Yet Enron was actually an example of how markets work—messily, sometimes tardily, but in the end with ruthless efficiency. Even as most Wall Street analysts bought Enron’s sales pitch and accepted its financial statements, investors slashed the value of the company’s shares in half—far surpassing declines in the broader market—during the year before the accounting scandal broke. Investors had begun to withhold money before the government launched investigations. When Enron declared bankruptcy in December 2001, the regulators were left only to certify the market’s verdict. Those investors and lenders who hadn’t scrutinized the company lost money, as they should have.

Though Enron didn’t signal a market failure, it was a business failure, of course. The company overvalued its assets while undervaluing its liabilities—the oldest trick in the fraud book but also sometimes an honest mistake. In the 1930s, Samuel Insull, a utility entrepreneur who created the modern power grid, did the same thing; so did savings and loan banks in the 1980s. Enron’s chief financial officer, Andy Fastow, did it by vastly overstating the company’s assets and hiding liabilities, such as off-the-books sums owed to outside “investment partnerships” (he stole cash on the side, too). It was easy for Enron to perform accounting hocus-pocus because many of its assets, such as a one-of-a-kind power plant in India and speculative broadband ventures, were difficult to value. Enron’s assets were worth what Enron said they were—until the market decided otherwise. By booking future profits right away, Enron worsened its predicament; a mistake or a lie compounded over 20 years is far greater than one that covers only one year. What’s more, the company didn’t disclose clearly enough, in hindsight, that it was funding those precarious investment partnerships with its own stock—which it might have to replace with cash if the stock price fell.

In its effort to clean up and micromanage the market, the government only makes things worse. As Sowell points out repeatedly in his book, controlling the market is an impossibility. Others have tried and failed. We have examples of these failures both throughout history and in today's world. But for some reason, people still think the market can be reigned in and made to behave, that it can be forced to be kind and gentle to "the people."

Sowell's book, these articles, and reality all show that it can't.

All of this should be read in their entirety. In fact, I'm thinking about buying extra copies of Basic Economics for some family members.

Labels: books, City Journal, economics, Thomas Sowell

posted by Harry @ 1:40 PM 5 comments

Raise Taxes?

Our infrastructure is crumbling. The only reason any of us noticed this was due to a bridge collapsing in Minnesota. What should we, excuse me, I mean, what should our elected officials do? One of the standard answers to all that is ailing our country from the left side of the aisle is: Raise taxes! Those fool Republicans and their "tax cuts for the rich" are causing our country's roads, bridges, and power grid (remember the black out a couple of years ago?) to crumble into dust around us. It's all being held together by the cobwebs that remind us of the years of neglect.

Fortunately for us, there is Thomas Sowell. And Thomas Sowell says,

The real problem is that the political incentives are to spend the taxpayers' money on things that will enhance politicians' chances of getting re-elected.

There may be enough money available to maintain bridges and other infrastructure but that same money can have a bigger political pay-off if spent building something new instead of maintaining and repairing existing structures.


When money is spent building a new community center, a golf course, or anything that will be newsworthy, there will be ribbon-cutting ceremonies and the politicians who cut the ribbons can expect to see their pictures in the newspapers and on TV.


All that keeps their name before the public in a positive role and therefore enhances their prospects of being re-elected.


But there are no ribbon-cutting ceremonies when bridges are being repaired or pot-holes are being filled in. These latter activities may be more valuable than a community center or a golf course, but they are not nearly as photogenic.


The preference for showy projects that will enhance a politician's career prospects is not peculiar to current politicians. Adam Smith pointed out the same thing about politicians in 18th-century Europe.


We can vote the rascals out but the new rascals who replace them will face the same incentives and in all likelihood will respond in the same way.


A pattern that has persisted for more than two centuries is likely to continue unless something fundamental is changed.

Sowell also says,

Those who live by talking points now have a great one: "How can we fight an expensive war and repair our neglected infrastructure without raising taxes?"


Plausible as this might sound, tax rates are not tax revenues. The two things have moved in opposite directions too many times, over too many years, for us to take these clever talking points at face value.


This administration is not the first one in which a reduction in tax rates has been followed by an increase in tax revenues. The same thing happened during the Reagan administration, the Kennedy administration and the Coolidge administration.


Tax rates and tax revenues have moved in opposite directions many times, not only at the federal level, but also at state and local levels, as well as in foreign countries.


How many times does it have to happen before people stop equating tax rates with tax revenues? Do the tax-and-spend politicians and their media supporters not know any better — or are they counting on the rest of us not knowing any better?

Besides, we know how readily and how easily our government wastes our tax dollars. From the Citizens Against Government Waste website, we have this choice tidbit,

Members of the Senate Transportation/Treasury Appropriations subcommittee paved the way for another year of reckless spending by adding 874 pork projects totaling $1.28 billion in the fiscal 2006 Senate Transportation, Treasury, Judiciary, and Housing and Urban Development Appropriations Act. Not satisfied with grabbing money for parochial projects, the appropriators also included $5 billion for 18 programs that the president suggested eliminating or reducing. Programs resurrected from the scrap pile of presidential cuts include $150 million for the Revitalization of Severely Distressed Public Housing account (the HOPE VI Program), $25 million for the National Defense Tank Vessel Construction Program, and $24 million for the Department of Housing and Urban Development’s Office of Rural Housing and Economic Development.

That of course is only the beginning, and it's only one bill. They've been doing this for years . . . with our money.

Of course, there's more. There's always more. We taxpayers provide our elected representatives a bottomless well in which to dip from. According to John Stossel,

By now you've probably heard that a new Government Accountability Office (GAO) report states:


From 1999 through 2005, the USDA "paid $1.1 billion in farm payments in the names of 172,801 deceased individuals. ... 40 percent went to those who had been dead for three or more years, and 19 percent to those dead for seven or more years." One dead farmer got more than $400,000 during those years.

But wait, it gets better,

An amendment that would have withheld subsidies from farmers with incomes of $250,000 or more was rejected by the House.

Hmm, maybe I didn't mean better. I'm sure there's another word for what I really meant, but I try to watch my language.

CONCLUSION: Congress already has the money. If they thought more about working for the country rather than pandering in order to get reelected, this wouldn't be an issue. If Progressives who hate Capitalism would take the time to learn a bit about real world economics, there wouldn't even be this stupid debate.

Labels: Citizens Against Government Waste, Congress, economics, government waste, John Stossel, Minnesota bridge, Thomas Sowell

posted by Harry @ 9:40 PM 5 comments

An Intelligent Voice Rings Out

According to this article,

Africa must stop blaming its colonial past for its problems and instead point the finger at the continent's leaders, the prime minister of the west African archipelago of Cape Verde said.

Colonialism and its legacy of slavery played "an important role in the deterioration of the situation in Africa" but "Africans have had Africa in their hands for half a century," Cape Verde Prime Minister Jose Maria das Neves said in an interview with the Portuguese news agency Lusa.

"You can't continue to justify the current situation of the continent with colonialism, slavery and unfair trading terms," he said.

"Responsibility for the current state of affairs in the African continent lies firstly in the hands of African leaders who must assume their responsibility to develop a clear strategy for Africa's future that takes advantage of all of its human capabilities and natural resources," he added.

Of all the nations of Africa, only Ethiopia and Liberia escaped the shackles of colonialism.

Ghana in 1957 became the first African nation to obtain independence when it broke free from British control. Dozens of other former African colonies followed its example over the coming years.

Many analysts argue that corruption and despotic regimes in many African nations have their roots in the colonial era when colonial governments had absolute power.

Cape Verde, an arid archipelago in the Atlantic about 500 kilometres (300 miles) off the coast of Africa, is seen by many international donors as a model state since it gained independence from Portugal in 1975.

While the country has a high unemployment rate, it is seen as politically stable with an emerging prosperity. The
International Monetary Fund estimates it will post economic growth of 5.5 percent in 2006.

Yes, the continent of Africa was horribly taken advantage of by both Christian and Muslim colonists and imperialists. The Christians have left. The Muslims still oppress. But it is time to stop being a victim.

Labels: economics

posted by Harry @ 9:28 PM 0 comments

Reaction to Al Gore's New Flick

No I haven't seen An Inconvenient Truth, and I don't intend to. Sure, a lot of critics love it, and I know some of my friends will be going, but what will its effects be? On me, that is. I don't watch slasher movies (well . . . except for Sorority House Massacre 2 on the recommendation of Joe Bob Briggs), because I don't react well to the endings to the ones I've seen (except for Sorority House Massacre 2, because I don't remember the ending. Other parts I do remember). The killer usually survives somehow to cruelly terrorize more victims in the sequel. If, on the off chance that the killer does die at the end, a new one is introduced to continue to bloodshed - in - the - sequel.

This is Al Gore's sequel, so we are safe on that front, but from the trailer, this is a scary movie, one might even say, the work of a fear monger. We know that the killer in a slasher movie is a figment of the writer's imagination. Al Gore wants us to believe, and many do believe it already, that his movie presents the truth . . . um . . . which is probably why he chose this title.

So how would I react to this movie? Stop driving my car maybe. I could ride my bike to work. I don't work that far from home. It would be tough in the winter, but I could do it. The bike would wear out faster due to the winter conditions. I'd have to buy a new one eventually. But a new bike would use up too many of the Earth's resources. I would have to go on Ebay or Craig's List to find a used one. But then, what about the energy I'd have to use to power my computer? Find a bike in the newspaper? They cut down trees for the paper, use nasty chemicals in the production of the paper and the ink, and they use precious coal or oil, both contributers to global warming, in the creation of the papers, not to mention that they are delivered in trucks with internal combustion engines that spew global warming constituents into the atmosphere. I will have to steal a bike. Please don't tell anyone.

My children can walk to school. My wife depends on her car too much for her job, so she will have to quit. She can stay at home. She will have plenty of time to walk to the local markets to purchase only organic foods, which we will cook over a wood fire, so we can combat global warming by not using either an electric or gas stove, since both are bad for the Earth in their own way.

Then again, we will have to cut down trees for our wood fuel, so my family will from now on, only eat uncooked food; raw meat, raw veggies and fruits; we will adjust in order to save the Earth. But all of the produce has to be delivered to my local market, which means more pollution from those dreaded Detroit creations; trucks. We will have to grow our own crops, organically of course.

We will no longer use our furnace. We will dress warmly in the winter and be out feeding our cows and sheep in the winter. The exercise will keep us warm, and we will have meat all year long, plus a surplus for barter. We don't want to use money anymore because it has to be manufactured, leading to you-know-what. I won't have any money anyway. At this point, I will have to quit my job to allow enough time for what has become my new farming lifestyle.

To avoid all of those difficult changes, I am just going to skip Al Gore's horror movie. I will not react well to it.

Labels: Al Gore, An Inconvenient Truth, economics, environment, movies

posted by Harry @ 1:51 PM 2 comments