Monthly Archives: July 2011

Social Security Trust Fund: Accounting Kabuki

The looming government debt ceiling crisis has cause Obama to threaten inability to pay Social Security checks. It’s renewed the debate, which I’ve hashed out many times (here, here, here and here, for posterity’s sake), whether the Social Security “Trust Fund” is a veritable asset or merely a convenient accounting fiction used to hide deficits.

I, of course, believe it to be the latter. But M.S., writing for The Economist’s Democracy in America blog, tries to make some analogies about the trust fund’s “accounting kabuki”:

I mean, look, our bank accounts are an accounting fiction. Everyone knows exactly how much money is in anyone else’s bank account: none. There is no money “in” our bank accounts; our banks have already spent it. Our so-called bank account is just an IOU, a promise from our bank to pay us up to the amount specified in our balance.

There are two things here. The first is that the bank account is merely a promise, which is true. This is clearly analogous to the Social Security Trust Fund. The second part, though, is the problem. Making good on the promise is the bank’s responsibility, NOT MINE.

If I want to withdraw money from the bank, they have a legal and moral responsibility to give it to me. It doesn’t matter to me where they get it, but it creates no obligation on me to get that money back.

If they told me that they’d give me my money, but they’d have to garnish my wages for the next year in return, however, I’d be a little pissed off. That’s what the Social Security Trust Fund is.

The key is that American taxpayers are the ones who are being “paid back” out of the Social Security Trust Fund, while American taxpayers are also the ones doing the paying. It’s not an accounting fiction because we have two different line items on the bill, it’s an accounting fiction because the revenues ultimately come from the same place!

From the point of view of the Social Security Administration, of course, the IOU’s are an asset. They are a claim on future government revenue that is essentially on par with the debt that China or institutional investors buy from the US. I.e. from an accounting standpoint, it is a “promise” that carries some heft. However, from the point of view of the American taxpayer, it is additional debt that must be repaid through higher taxation. They’re going to get it from our paychecks, it’ll just come from the line that says “FED INC TAX” rather than the lines that says “SOC SEC TAX” or “MEDICARE TAX”. It still comes out of the same paycheck, which means whether it’s an accounting kabuki or not, it still costs us more money.

Quote Of The Day

Is Gold in a bubble? The Economist thinks so. But instructive is something they wrote back in 1980, just before the culmination of the last major gold bubble:

In equity markets, there is much truth to the saying never sell on a strike. In the gold market, which has become in some ways the reverse image of equities, a suitable variant might be never buy on the end of the world. You cannot, after all, take it with you.

A year from now, I’d think that gold will be well under $1,000 per ounce, or as high as north of $5,000 per ounce. That’s not a recommendation to buy gold, however. If it’s north of $5,000 per ounce, that means that things in the United States will have gone so horrendously wrong that owning the gold at that price will be little solace, as you very well may not even want to trade it for dollars.

I learned years ago to never bet against my alma mater, the Purdue Boilermakers. Even if I win my bet, I’m still unhappy with the outcome. It’s much the same with gold. Betting on the end of the world sucks if you’re wrong, but sucks even more if you’re right.

My Take [So Far] On Google+

Having “grown up” online — a bit more than most of my contemporaries, as I had the techno-geek life of BBS’ing and AOHell in the early days of the internet — I’ve always had as much of an “online” presence as off. Today, this means that many of my personal hobbies, whether it be making/drinking beer, watching Purdue sports, arguing about politics, and making offensive jokes are activities coordinated and tailored to specific online forums as well. Homebrewing, Boilermaker football, and arcane anarcho-libertarian musings quickly bore the snot out of my friends and family in the offline world, and I’ve gotten in trouble with my wife more than once for those jokes.

In fact, it was the jokes that both largely made me effectively leave Facebook, and to be excited about the “Circles” feature in G+. Facebook has an inherently flat structure that ensures that if someone is your “Friend”, they can see essentially everything you post. This has two downsides:

1. It causes you to avoid friending certain people that you may not WANT to see every little thing about you.
2. It makes it bothersome to write about something that a small subset of your friends might be interested in, but others won’t care about.

I know that my beer friends don’t care about my political rants. My political friends don’t care about the status of my latest homebrew creations. I might occasionally want to highlight something I’ve written politically to my friends/family, but they certainly don’t want to be inundated with it. And my mother-in-law DOESN’T need to hear most of my jokes. And I’ve actively avoided friending many people in the political realm, many Purdue folks I know *only* through online sites, because I had no way to filter out the topics they wouldn’t be interested in. And I’ve especially never wanted to include coworkers or business contacts on Facebook, of course, because some of the discussions I get into would be completely inappropriate for a professional working relationship.

Circles changes that, and allows one to make a much LARGER social network that is more properly segmented based on common interests. And since people can reside within multiple circles at once, I don’t have to decide whether someone goes in “Friends” or “Beer”; they can be in both if we have that interest in common.

For that reason, I think G+ is a far better platform — for me — than Facebook.

However, Circles and “following” also allows a bit of Twitter-like asymmetric information dissemination that becomes very interesting. In essence, it’s like having your G+ account be both your Facebook social network and a more interactive Twitter account. With Twitter, the people who want to see my public status updates and the people who I choose to see don’t have to be the same. Ezra Klein has been talking about this quite a bit as G+ largely replacing Twitter for him, as he can reach the same sort of people, have more substantive discussions that can be more easily followed, but doesn’t have to necessarily subject his incoming stream to the rants of libertarian crackpots like myself.

Unfortunately, this becomes worlds less useful to me. The reason is simple — I have to tag posts as “Public” for those who are “following” me to see them. Most people who choose to “follow” me that I might not want to add to circles and have them appear in my timeline are in the political realm. I don’t particularly want to make my political posts “Public”, as that means anyone in my “Friends”, “Family”, “Beer”, or “Coworker” circles can automatically see them — creating the very annoyance factor that Circles are meant to avoid. This may be acceptable for Ezra Klein, who is a public figure due to his prominence as a political journalist, but not something that my non-political friends want to be subjected to from me.

For me, then, I’m left with a dilemma. Twitter is designed to be a broadcast medium, and it’s generally understood that you take the good with the bad if you choose to follow someone. Those who want to hear about my beer or politics know to ignore me during Purdue football games, just as I ignore many of them during specific things they tweet about that I don’t particularly care about. The etiquette of the medium is different than it is on Facebook, and people who will be annoyed by seeing more than three Facebook status updates a day from one person find that to be a slow day on Twitter.

I believe that the etiquette of G+ will more closely echo that of Facebook, which is why the different circles allow you at least filter certain people out of certain subjects. Thus, I can’t see myself sending many things out as “Public”. As a result, the very benefit of an asymmetric network is lost. What I’d really like is the ability to filter certain circles out of my ‘standard’ timeline — that way I can put all my asymmetric follows into a circle, and only go and have that circle show up in my timeline on demand. Otherwise, I simply won’t add those people to any circles, and since I essentially avoid “Public” posts most of the time, they won’t be able to see almost anything I write.

Google+ has the built-in structure to fundamentally change the way that we structure social networks. People I’d never have friended on Facebook previously (i.e. work colleagues, acquaintances, people I *only* know online, etc) now have a place and I can segment my message based on the audience likely to see it. That seems like it might be a game-changer, but needs a bit of tweaking before it’ll be 100% there so that people can figure out the new etiquette of the medium.

Guest Post: A Five-Part Plan For Fixing America’s Health Care System

Today’s post was written by regular commenter Dr. Gregory Tetrault (aka “Dr. T”). Dr. Tetrault is a clinical pathologist who has directed four different medical laboratories since 1989. He was an Associate Professor of Pathology and Laboratory Medicine at the University of Tennessee Medical Center until 2009. His plan below is, IMHO, a realistic way to introduce crucial market-based reforms into our medical system while still maintaining a social safety net. Enjoy!

Health care costs have increased far faster than the general rate of inflation for decades. The most important cause was the transition from out-of-pocket payments for routine medical care (common in the early 1960s) to employer-based or government-based insurance or health maintenance organization (HMO) coverage. This produced price insensitivity among consumers, who believed that their insurance premiums paid for all the medical care as they wanted, and allowed medical costs to rise rapidly. We cannot rein-in health care costs without making drastic changes to our health care payment systems. My five-part proposal, if implemented, could reduce health care costs.

  1. Dissociate health insurance from employment.

    Employers don’t provide home insurance or vehicle insurance. They should not provide health insurance, either. A disadvantage of the current situation is that workers with chronic health problems become tied to their employer—if they switch employers their new health care plan typically will not cover their existing medical problems. Another disadvantage of the current situation is that most employers offer only a few health insurance options. Workers who opt out rarely get fully reimbursed for what the employer would contribute, cannot deduct health insurance premiums from their income taxes, and usually pay more for health insurance because they aren’t in a group plan.

  2. Require all adults to either purchase catastrophic health insurance for themselves and their dependents or provide proof that they can afford a moderately expensive hospital stay.

    This proposal is similar to the requirements in most states that all vehicle owners buy insurance or provide proof that they can pay for damages. The requirement violates libertarian principles, but it is necessary because clinicians and hospitals must provide medical care even if the ill or injured patient cannot pay. A fully libertarian approach would mean refusing to care for patients who cannot recompense providers at a mutually acceptable price. We aren’t ready for that much libertarianism.

  3. Require health insurance companies to accept all customers (no cherry picking) with only moderate stratification of premiums based on age and controllable risk factors (such as smoking).

    Insurers and others apparently forget that the purpose of insurance is to spread the costs of catastrophic events across the pool of insured persons. Insurers should not be classifying, sub-classifying, and sub-sub-classifying individual risks before calculating premiums. They should lump similar persons into large groups and charge everyone in each group the same premium. Example groups: 40- to 49-year-old male non-smokers, 20- to 29-year-old female smokers, 0- to 5-year-old children, etc. As an incentive for healthy behavior, insurers could offer discounts to those who can prove they are fit and in above-average health.

  4. Give a tax credit for health insurance premiums based on the cost of a minimal coverage policy to lessen the financial impact on the lower middle-class.

    This credit would replace the tax-deduction given to employers who provide health insurance to employees. The credit is capped at the cost of the minimum required health insurance plan to prevent large tax credits for those who buy expensive, low-deductible or full-coverage insurance.

  5. Create a taxpayer-funded (or, better yet, a charity-funded) health insurance voucher program for low income persons.

    This would replace Medicaid. Eligible persons would choose a health insurance provider and a coverage plan and use vouchers to pay all or part of the premiums. The eligible persons would be responsible for their out-of-pocket health care expenses, but health care providers could offer discounts, delayed payment plans, or free care (something that is not allowed under current Medicaid and Medicare rules).

This five-part proposal will give workers bigger paychecks (no employer health insurance deductions) and return most routine care to an out-of-pocket payment system. The mandatory catastrophic health care insurance will prevent bankruptcies after serious illnesses or injuries. The proposal allows people to purchase however much health insurance they desire from HMOs, preferred provider organizations (PPOs), or other types of plans. Implementing this proposal would make people aware of the full costs of health care services. Some people will refuse expensive care or negotiate lower charges. Such actions will reduce overall health care costs.

Businesses will be pleased because this proposal reduces operating costs: no administrative personnel will be needed for handling employer-based health insurance. Productivity would rise slightly because employees would not spend working hours choosing employer-provided health insurance plans or solving problems related to health insurance claims.

Health care providers will experience reduced billing costs because most people will pay directly for routine medical care, dentistry, prescriptions, laboratory tests, and imaging studies such as x-rays and simple ultrasound exams. Elimination of Medicaid with its poor reimbursement and excessive documentation requirements will greatly benefit many providers.

The losers if this proposal is implemented are: employees who work in health insurance benefits subdivisions of businesses, government bureaucrats who hoped to control the health care economy, and advocates of ‘nannystate’ government who believe that Joe and Jane Average are incapable of making health care financial decisions lose. The winners outnumber the losers by at least 1,000 to 1.

Does Gay Marriage Imperil Free Speech?

One would think that one has very little to do with the other. That is, unless one is Gary Bauer, who seems to be taking a tactic I’ve seen too often out of leftists suggesting that if someone in the private sector wants to fire you for saying something bigoted, that it’s an assault on your freedom of speech.

Recently, Frank Turek, an employee for computer networking firm Cisco Systems, was fired for authoring a book titled “Correct, not Politically Correct: How Same-Sex Marriage Hurts Everyone.” Turek had a stellar work record and never talked about his religious or political views on the job.

But after a homosexual manager at Cisco Googled Turek’s name, learned about his views and complained to a human resources professional at Cisco, Turek was immediately fired.

Also recently, Canadian sportscaster Damian Goddard was fired for declaring his opposition to gay marriage. Rogers Communications fired Goddard after he tweeted his support for Todd Reynolds, a hockey agent, who had earlier voiced his opposition to the activism of Sean Avery , a New York Rangers player who was part of the New Yorkers for Marriage Equality campaign in the lead-up to the same-sex marriage vote in the New York State Legislature.

Now, I don’t know the workplace policies of either corporation, but I would assume that in the first case, Turek violated some section of his employment contract with Cisco. I might call that an overreaction, but I wouldn’t call it a violation of his freedom of speech. It was, rather, an exercise in freedom of association (or, in this case, disassociation). The second case, the sportscaster is a public figure, and I think it’s quite likely that Rogers Communications might believe that his thoughts on gay marriage would impact ratings or the bottom line.

Should either corporation be forced to retain an employee that publicly espouses values — values that I’d call bigoted — inconsistent with those of the corporation? Cisco is a multinational company with highly diverse employees, and it’s quite possible that someone hired to put together leadership seminars [as Kurek was] may not be seen as a leader himself if he publicly advocates legal oppression against people who he is to lead.

But let’s take it a step farther. Let’s assume instead that either Kurek or Goddard were advocating against interracial marriage. Let’s say that Kurek was writing books claiming interracial marriage hurts families, and that the races shouldn’t mix. After all, many of the arguments at the time of Loving v. Virginia were based on religious beliefs. Would Gary Bauer be defending either? I fail to see any difference in principle here — in both cases, one would be arguing against legal equality based upon one owns religious convictions of what defines a proper marriage. And in both cases, the issue at hand LEGALLY [not morally] is whether the state can withhold access to a LEGAL CONTRACT between two adults.

Bauer continues with a slightly more thorny issue:

Same-sex marriage is already having a chilling effect on religious freedom. In states that have legalized civil unions or gay marriage, Catholic adoption agencies have been shuttered or lost their tax-exempt status for refusing to let gay couples adopt children.

Last week in Illinois, Gov. Pat Quinn affirmed a decision by the Illinois Department of Children and Family Services not to renew adoption contracts with Catholic Charities for the same reason because of the state’s law recognizing same-sex civil unions.

This seems like outright state hostility to religion, when viewed through Gary Bauer’s eyes. However, from a legal perspective, the 14th amendment demands equality before the law. If gay marriage is legal, then gays should be allowed the same rights as straights when it comes to adoption. And if an agency looking to work with the state on adoptions refuses to comply with equal protection clauses, those agencies should not get state funding.

Again, this can be greatly simplified if we refer back to other cases of equality before the law. Should adoption agencies be free to take state funds and refuse to allow interracial straight couples to adopt? Should state charter school funds be given to schools which admit white and asian students, but bar blacks and hispanics? The state itself is barred from discrimination in most cases, and while some wholly private organizations can discriminate, state adoption contracts and state school funding are most certainly not wholly private. If a religion wants to work WITH the government, they have to do so on the government’s terms.

I would think that if the arguments were advanced today, Gary Bauer would call the person advocating against interracial marriage a bigot. I think if someone were arguing for re-segregating the schools, Gary Bauer would call that person a bigot. A Gary Bauer of 50 years ago, I’m not so sure.

Of course, a Gary Bauer of only 3 years ago might give us a different tone:

Last week, a few days before Pope Benedict XVI’s visit to America, TV talk show host Bill Maher went on a profanity-laden tirade against the Pope and the Catholic Church. On his HBO Real Time program, Maher claimed that the Pope “used to be a Nazi,” and called the Catholic Church a “child-abusing religious cult” and “the Bear Stearns of organized pedophilia.”

The result: (Cue sound of crickets chirping.)

Maher believes he can get away with such overt bigotry under the pretext of “creative license.” As Maher said in his non-apology apology: “Now first of all, it was a joke, during a comedic context…”

And when the Catholic League confronted HBO about why it continues to give Maher airtime, the station insisted that his anti-Catholicism was a matter of “creative freedom.” Needless to say, such “creative freedom” would not be extended to those who make racist, anti-gay or anti-Muslim remarks. Ask Don Imus.

Based on a *very* charitable reading of that op-ed, one can potentially infer that Bauer things nobody should be fired for bigoted remarks, and that he’s merely upset at the double standard of the left. It seems, based on my reading of his article, that his concern with the double standard is that Bill Maher isn’t punished, not that right-wingers who make bigoted statements are.

Gary Bauer is not fighting for religious freedom, he’s fighting for the right to espouse bigoted politics with no social cost. Sorry, Gary, that’s just not how it works. You might not think that treating gays like they’re not worthy of the same legal rights is bigotry, but I’m afraid that an ever-growing portion of the country disagrees with you on that. If we call you on it, that doesn’t mean you’ve lost your right to free speech. It means we think you’re a bigot.

Government: Shows A Loss While Selling Money

I was passed this story by a relative, and thought it was absolutely genius:

Would you take advantage of a federal loophole that gives you a free first-class flight anywhere on Earth?

That’s what hundreds — possibly thousands — of shrewd travel enthusiasts are doing, in light of a 2005 law that unwittingly created a weird case of supply and demand.

The law intended to push more $1 coins into circulation. Dollar coins are cheaper for the U.S. Mint to maintain because coins don’t need to be replaced as often as the $1 bill.

The U.S. Mint sells the coins at face value, using taxpayer money to cover shipping and handling costs. If you want to buy $1,000 in coins, you simply pay $1,000 on your credit card and wait for the shipment to arrive in the mail.

Credit card rewards enthusiasts leapt at the program. They use a simple strategy: Purchase coins. Wait for coins to arrive in mail. Deposit. Use deposit to pay credit card. Repeat.

Brilliant! It’s a bit of a hassle, but no more of a hassle than dealing with the TSA. At least if you’re in the middle of a government groping, you can bask in the solace that your flight is free.

Now, some may suggest that taxpayers paying the shipping & handling is worth it if the coins are making it into circulation, given that the coins themselves are a better deal for the US Mint. So what happens to those coins?

A spokesman for the U.S. Mint calls this an “abuse.” Depositing the coins directly in a bank doesn’t put the coins in circulation. The banks simply send that money back to the Federal Reserve — often still clad in its original U.S. Mint packaging.

Yep. The government doesn’t have the balls to discontinue the dollar bill, so they set up a “voluntary” (& subsidized through packing/shipping costs) circular trade that does nothing but increase costs on all aspects of our system and doesn’t even manage to put the coins in circulation.

Well done, Washington!

Quote Of The Day

Apparently Federal Employees in many jobs are more likely to die than be fired… And we’re not talking the Dept. of Defense here…

Of course, it’s entirely understandable, as the Federal Government only hires dutiful, public-minded and competent people:

HUD spokesman Jerry Brown says his department’s low dismissal rate — providing a 99.85% job security rate for employees — shows a skilled and committed workforce. “We’ve never focused on firing people, and we don’t intend to start now. We’re more focused on hiring the right people,” he says.

Spoken like someone who has never had to decide anything based on P&L, in an industry without competition.

And, of course, there’s the implication that greedy money-grubbing corporations are less focused on hiring the right people. Considering they have a bottom line to meet, I’d say they’re *more* likely to be so focused.

Hat Tip: Reason Hit & Run

Too big to fail: Washington edition

From Megan McArdle, a list of reasons why the Federal Government is too big to fail (or even pause):

  • The nation’s nuclear arsenal is no longer being watched or maintained
  • The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
  • The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don’t have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
  • All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
  • Our embassies are no longer operating, which will make things difficult for foreign travellers
  • No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
  • Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
  • The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who’s going to be teaching your kids without a special property tax assessment.
  • The market for guaranteed student loans plunges into chaos. Hope your kid wasn’t going to college this year!
  • The mortgage market evaporates. Hope you didn’t need to buy or sell a house!
  • The FDIC and the PBGC suddenly don’t have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
  • The TSA shuts down. Yay! But don’t worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don’t have a vacation planned in August, much less any work travel.
  • Unemployment money is no longer going to the states, which means that pretty so, it won’t be going to the unemployed people.

Now, how many of the companies that leftists were screaming were “too big to fail” could have had one one-hundredth the impact of a Federal Government failure? Yet these same leftists who recognize too big to fail as a bad thing want to endow the Federal Government with ever more power. Amazing.

Policing the Right Way: A Positive Personal Encounter with a Highway Patrolman

Many of my detractors may assume that I am someone who encounters the police on a regular basis since I am very critical of bad cops. The truth is personal encounters with the police are very rare for me; it’s very rare that I get pulled over and I haven’t had the cops called on me since I was in my early 20’s.

Well, my streak of not getting pulled over came to an end last Thursday. I was driving to my mother-in-law’s house when I saw the dreaded flashing lights in my rearview mirror. As I pulled over having no idea why I was being stopped, I started thinking about the “10 Rules for Dealing with Police.”
With my window rolled down and my hands on the steering wheel (always a good idea to keep your hands where the police can see them) the highway patrolman asked why I thought he pulled me over. I shrugged and patiently waited to hear his response.

So why did I get pulled over? I didn’t have a license plate on my front bumper. The bracket for my front plate had broken off some months ago. When he told me his reason for pulling me over, I pointed to the plate that I had put just inside the front windshield. From there the patrolman explained that by Colorado law, the plate has to be attached to the front of the vehicle because sometimes the plate falls off in hit-and-run collisions (a plate left at the scene makes it very easy to identify the vehicle’s owner).

I have lived in three states, one of which does not even require a front plate at all (at least when I lived there). I wasn’t sure exactly what the Colorado law was so I took the gamble that placing the plate on the dash would be good enough. It wasn’t.

Of course there’s the old expression: “ignorance of the law is no excuse for breaking the law.” The patrolman was well within his rights to write a citation but he chose to give me a verbal warning instead. A verbal warning and something else: a business card with his name and badge number.

The patrolman handed me the business card and said that I could call the number on the card to make a comment about the stop whether good or bad.

“When did they start doing this?” I wondered. I was taken aback. What kind of comments would I leave if I actually called the number?

As I reflected on this, on balance I thought the patrolman did his job well. Though he could have written the citation, he decided to inform me instead of punish me. For my part, I followed rule #1 (Always be calm and cool) and was very respectful (again, this may surprise my detractors that I wasn’t being snarky toward the patrolman. It probably helped that my wife answered the one question that annoyed me: “Where you folks headed?”). In following this first rule, I didn’t need to worry about the other nine.

But the thing that impressed me the most about this encounter with an officer of the law was the business card. Apparently the Colorado DPS actually cares about how well their patrolmen do their jobs! How refreshing! This in a time of police scandals, use of unnecessary force, and “professional courtesy” that has plagued the Denver Police Department and departments across the country.

What the business card policy (?) says to me is that yes, the police work for me. It’s a statement that recognizes that the job of the police it to serve and protect me: their customer, their boss, the person who pays his salary.

This is how the police should do their jobs and I hope this is something we will see more of more generally.

Quote of the Day: Wet Blanket Edition

President Obama and his sycophant Keynesian friends in the MSM can’t quite figure out why his policies haven’t improved the economy. Maybe President Obama should listen to an actual job creator, Steve Wynn to get some clue about why businesses aren’t expanding.

Here is an excerpt from Wynn from a recent conference call where he describes Obama’s policies as “the greatest wet blanket to business, and progress and job creation in my lifetime.”

[Partial transcript, Wynn responding to a question during the Q&A portion of the conference call]

“Well, here’s our problem. There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas. I know that I could do 10,000 more myself and according to the Chamber of Commerce and the Visitors Convention Bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000 […] And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems — that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration. And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America. You bet. And until we change the tempo and the conversation from Washington, it’s not going to change. And those of us who have business opportunities and the capital to do it are going to sit in fear of the President. And a lot of people don’t want to say that. They’ll say, “Oh God, don’t be attacking Obama.” Well, this is Obama’s deal, and it’s Obama that’s responsible for this fear in America. The guy keeps making speeches about redistribution, and maybe we ought to do something to businesses that don’t invest or holding too much money. We haven’t heard that kind of talk except from pure socialists. Everybody’s afraid of the government, and there’s no need to soft peddling it, it’s the truth. It is the truth. And that’s true of Democratic businessman and Republican businessman, and I am a Democratic businessman and I support Harry Reid. I support Democrats and Republicans. And I’m telling you that the business community in this company is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.

Paul Krugman’s Statistical Reality

I have a saying: “When everyone around you seems crazy, it’s probably you.” Useful advice, to be sure.

Well, everyone around Paul Krugman seems to be misinformed:

Well, here’s a little secret: most voters don’t sit around reading Clive Crook columns or debating the Bowles-Simpson plan. They have a gut sense — things are getting better or they’re getting worse — and mainly vote on that basis. They’re not paying attention at all to this stuff.

Well, alright, not everyone. Just the vast majority of voters. Unfortunately for Krugman, this statement reveals something about him rather than the voters. Krugman is the one who is out of touch with reality.

How can that be? Isn’t Krugman formulating his ideas based on massive amounts of economic data? Kind of. He has access to more economic statistics than do most of us, but in aggregate “most voters” by far have the upper hand. Every voter has a checkbook to balance and ends that need to meet. Every voter gets to experience the economy first hand. In contrast, all Krugman has is a position that shields him from economic hardship and a glut of statistics.

Krugman lives in a statistical reality. People around him could be losing their jobs left and right, but as long as unemployment remained flat, Krugman would insist that there is no employment crisis. He could suddenly find his dollars not stretching as far, but as long as core inflation remained flat, Krugman would insist that there is no inflation. He could see small businesses closing left and right, but as long as the calculated regulatory burden upon them remained the same, Krugman would claim that they’re not over-regulated.

Now, checking one’s personal reality against the statistics is not necessarily a bad thing. In the first case, one might see people losing their jobs left and right when a factory closes down. Doesn’t mean there is a broader employment crisis. In the second, there could be local factors raising prices. In the third, it could be any number of local or temporary things hurting small businesses.

The problem comes when the statistics are at odds with the reality experienced by the vast majority of people. A reasonable person in that case would begin to question the statistics. Krugman, an academic at heart and a political hack by trade, bitterly clings to the statistics in the face of reality. The statistics tell him a story that he wants to believe: interventionist government is good for the economy. That is Paul Krugman’s statistical reality.

The reality of the current economy is pretty clear. Things are bad and getting worse. The only people to whom the bad news is unexpected are academics, journalists, and politicians. Krugman, arguably all three at once these days, desperately wants to believe that his statistical reality is the true one — so desperately, in fact, that he will insist that the experiences of millions of Americans are invalid and that the conclusions they draw from them are mere “gut instinct”.

Sorry Paul, when everyone around you seems misinformed, it’s probably you.

Ron Paul’s First 2012 Political Ad Warns Republicans to Avoid Repeating the Mistake of Trusting Democrats on Taxes and Spending

Can the Republicans trust Democrats and compromise by raising taxes in exchange for spending cuts in this debt ceiling debate? Ron Paul says “no” in his first 2012 political ad.

Why not trust Democrats? Ask former President George H.W. Bush what happened to him when he broke his infamous “Read my lips” promise that he wouldn’t raise taxes.

Hopefully, Republican’s will listen to Dr. No for a change, if only on this critical issue.

Cultural Tensions Between Conservatives and Progressives is a Feature Not a Bug

Whether you consider yourself more of a conservative or a progressive (as defined below), have you ever stopped to think about what our culture would be like today if your side had ever “won” the culture war? Would this truly be a culture you would like to be part of?

Before I go any further, for the purpose of clarification I think it’s important to define some key terms namely “conservative” and “progressive” as I’m not using these terms necessarily in the political context that readers here and elsewhere are most familiar with (though in the political context, I find both these terms to be often quite ambiguous).

According to the World English Dictionary, the most appropriate definition for the purpose of this post for conservative is “favouring the preservation of established customs, values, etc, and opposing innovation.” The same dictionary’s definition for progressive is “favouring or promoting political or social reform through government action, or even revolution, to improve the lot of the majority: a progressive policy” (this definition is a little more off the mark IMO; progressives don’t necessarily have to use government via the political process to change the culture).

In thinking of my original question with these definitions in mind, I also find it instructive to learn about other cultures. Believe it or not, my inspiration for this post and raising this question came from watching a documentary series on TLC called “My Big Fat Gypsy Wedding.” My wife introduced me to the series just the other day. Because I knew next to nothing about Gypsies and being the curious person I am, I decided to watch several episodes with her that we had recorded on the DVR. This documentary series follows several British/Irish Gypsy families and interview the few trusted outsiders (the bridal dress makers in-particular) to give viewers a small glimpse into their culture.

What did I learn about English Gypsy culture? I learned that they are a very closed community; very resistant to allowing outsiders in. Girls are married off at a very young age in very extravagant weddings, many are engaged by the time they are fourteen (girls who marry at 20+ are considered old). Wedding receptions are especially important events for both single Gypsy boys and girls as this is where many find their mates. Teen and even preteen girls are scantily clad and dance provocatively (almost like stripper moves) to attract the boys who are encouraged to “grab” one of the girls for a kiss (i.e. often against her will). At first glance, watching the reception Gypsy culture seems quite hedonistic. But then I learned that Gypsies are actually quite strict on the question of sex. Cohabitation and/or premarital sex is an absolute taboo as to engage in either would bring shame to their families. Divorce is also a big no no and marrying non-Gypsies is rare and frowned upon (to put it mildly). Gypsy girls are usually taken out of school at a very young age to help care for younger siblings and therefore illiterate. Most have no dream of having a career or even a menial job outside the home as they are expected to be good housewives for their families (the woman’s place is in the home which is usually a camper trailer). According to the show, there is no notion of equality between men and women in Gypsy culture. These aspects of Gypsy culture isn’t likely to change anytime soon as many Gypsies fear that any change would further threaten their culture already in decline (according to the show, there are some 300,000 Gypsies in the UK).

In watching this, I couldn’t help but think of our own culture and then culture more generally. There’s nothing all that unique about gender roles in Gypsy culture, even as appalling as we might find them. This sort of male dominance is common throughout world history and has crossed nearly all cultures at one time or another. It wasn’t all that long ago when this was how our culture treated women. I doubt that all that many American conservatives would want to return to that time. Progressives challenged the notion that women should be second class citizens and I would argue that our culture has benefitted. Yet at the time, conservatives must have thought such change would doom our culture.
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Kevin Drum Is An Innumerate Hack

Kevin Drum don’t grok numbers. I think we all knew that. But occasionally he goes so far over the edge that it calls for correction, and today’s one of those days.

Kevin has taken a handy chart (originally here), and drawn some trendlines onto it to proclaim that we don’t have a spending problem at all:

I’ve added some handy lines to show the general trajectory of spending and taxes over the past three decades. Putting aside the Great Recession, which has temporarily cratered revenues and imposed a burst of stimulus spending, the trend is clear: spending has generally gone down, but so have taxes. Future healthcare expenses are a big issue, but the current deficit just hasn’t been primarily a spending problem. It’s been a tax cut problem.

So let’s start at the beginning:

  1. Based on his graph, we don’t have a problem at all. Spending as a percentage of GDP is clearly trending down, as is revenue. If his trendlines are accurate and continue, I’m a happy guy.
  2. In fact, spending is trending down FASTER than revenue, so deficits as a percentage of GDP would be shrinking. Also makes me happy.

The fact that Drum doesn’t even SEE either of these points when he draws his trendlines is further proof that he’s an innumerate hack. If his trendlines were accurate (and they’re not, which I’ll cover later in two ways), they actually suggest that we really don’t have much of a problem at all. Certainly that’s not what he’s trying to prove.

Further, he blames the tax cuts on the spending drops, despite seeing a big jump in revenues after the Bush tax cuts. What he overlooks is that the mid-90’s revenue boom was economy-related, based on the tech bubble, and the mid-00’s revenue boom was economy-related, based on the housing bubble. The current 15% revenue is caused partly by tax rates but mostly by the recession, just as the current 25% spending is caused partly by stimulus spending but also largely by stagnation in GDP. He sees lines on the graph but doesn’t understand their meaning.

But all that analysis belies the point that his trendlines are utter bunk. First, they’re hand-drawn with no rhyme nor reason whatsoever. Warren Meyer at Coyote Blog used Excel to draw proper trend lines, and while the direction of trend is accurate, the slope of the spending drop is MUCH more gentle than Drum’s line. Drum shows spending dropping from 23% of GDP in 1981 to roughly 19% in 2010. Warren’s line shows spending dropping from 22% of GDP to only 20% of GDP. Doesn’t look so striking, does it?

Further, Meyer takes Drum to task for his selection of 1981 as a start point. 1981 was a local maxima of revenue as a percentage of GDP (remember that we were just trying to come out of stagflation at the time), so Meyer draws a similar graph with 1950 [chosen to ensure the extreme spending spikes of WWII were not a factor] as a start date instead, and when you look at Meyer’s graph, you see a much more stark difference in trendline. Frankly, believing as I do that Drum is an innumerate hack (and seeing the source of his graph), I don’t suggest that Kevin Drum chose 1981 deliberately; I personally think Drum isn’t capable of even understanding the point of Meyer’s criticism here.

So I decided to take Drum at face value, and use the President (via OMB) & Congress’ (via CBO) projections of spending and revenue over the next 10 years, keeping Drum’s 1981 start date, to see how those trend lines line up. After all, if we’re going to criticize Obama’s spending and taxation, we should probably criticize the spending and taxation that this President and this Congress are authorizing, not the past.

Here are the trends:

As you can see, 1981-2010 revenue & spending is identical, but the projections diverge somewhat.

  • The CBO projections MUST assume that all current law executes without change. As I pointed out previously, this assumes that ALL of the Bush tax cuts expire, ALL of the temporary stimulus spending expires, and actually assumes that discretionary spending tracks inflation, which is lower than historically occurs. Thus, they’re not only assuming that the tax cuts “for the rich” expire, they’re assuming ALL the Bush tax cuts expire, as is currently slated by law to occur.
  • The OMB budget assumes both lower spending and lower revenues than the CBO, but I haven’t looked in detail to see how they’re getting there. I generally trust the OMB less than the CBO, but I wanted to provide both sets of numbers as the OMB is essentially the number based upon Obama’s policy.
  • In both cases, defense spending as a percentage of GDP drops significantly over the course of the decade, as wars in Iraq and Afghanistan wind down. Thus, the spending impact of defense is not driving this spending jump. However, nondiscretionary spending in the Medicare/Medicaid & Social Security ARE big drivers of that spending jump.

That said, you can see in both cases that the trendline for revenues is up, and the trendline for spending is up, BOTH based upon the start date of 1981, which — deliberately or not — skews the numbers to higher start points for both revenue and spending. And you can see in both cases that the slope of the spending line rises faster than the slope of the revenue line. This is true even in the CBO projection, which fully ends the Bush tax cuts in 2012.

What does it mean if you completely end the Bush tax cuts and quickly wind down the cost of Bush’s wars, and spending STILL rises faster than revenues? Sounds like a spending problem to me…

As I said before, I don’t think Kevin Drum is being deliberately manipulative with these numbers. To believe that, I would have to give him credit for understanding these numbers. Instead, I believe he’s an innumerate hack. I’d ask myself why he continues to be paid, but judging by the grunting matches in his comment section between tribes of Republican and Democrat apes, it appears that there’s a market for his particular brand of mindless drivel.

Exactly what you’d expect…

“The state is broke. Unemployments about to tank. Public Health insurance has no funds. All other agencies as well. Its a mess. What in Gods name is happening?” — A question from a friend

It’s rather simple really…

The government spent everything they could squeeze from us when the economy was good. Then, when the economy went bad, instead of cutting back like all of us real people had to; they convinced a bunch of people that the way to make the economy better was to spend MORE.

It’s basically the same thing that always happens. Governments don’t ever really help economically (when they do, it’s tempered by the opportunity cost they impose on others); and they usually hurt. They (in the person of politicians) take credit for when private businesses do well, tax us all as much as they can get away with (thus reducing productivity, efficiency, and future growth) and they “spread the wealth around” a bit to buy votes, planting the idea in the heads of people who don’t understand economics (that would be most people), that it was the government making everybody better off; so they can convince you to let them spend even more the NEXT time they do this to us.

Exactly as you would expect…

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

A Brief Constitutional Lesson for Congresscritters… Particularly those from Kentucky…

United States Constitution
Article 1, Section 7


All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

The issuance of debt is a revenue raising measure. The “debt ceiling” is, in fact, legislation initiated in the House of Representatives, which authorizes the executive branch to issue debt through the treasury (and by extension the federal reserve), up to a specific limit.

This “debt ceiling” and authorization of debt issuance; allows the executive branch to raise revenue in a constitutionally legitimate way; because the revenue is raised under the auspices of specific authorization by the house or representatives.

Neither the Senate, nor the House, acting separately or together; has the authority or ability to delegate this exclusive power of the house, to any other entity, including the president. In fact, it would be a clear violation of the principle of separation of powers to do so.

That is all.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

The Painful Human Cost Of Government Shutdown

We runs out of da booze:

Hundreds of bars, restaurants and stores across Minnesota are running out of beer and alcohol and others may soon run out of cigarettes — a subtle and largely unforeseen consequence of a state government shutdown.

In the days leading up to the shutdown, thousands of outlets scrambled to renew their state-issued liquor purchasing cards. Many of them did not make it.

Now, with no end in sight to the shutdown, they face a summer of fast-dwindling alcohol supplies and a bottom line that looks increasingly bleak.

“It’s going to cripple our industry,” said Frank Ball, executive director of the Minnesota Licensed Beverage Association, which represents thousands of liquor retailers in the state.

The Ugly Mug, a popular bar near Target Field, doesn’t have enough beer to get through the baseball season.

“Our inventories are diminishing rapidly over the next month,” owner Erik Forsberg said. He was among a cluster of bar and restaurant owners who appealed Tuesday to a court-appointed special master to be allowed to continue buying alcohol during the shutdown. “When [the Twins are] back on Thursday and people can’t get Budweiser and they can’t get whatever, they’re just going to go somewhere else.”

Come Labor Day, cigarette smokers will be in the same bind.

The state has stopped issuing the tax stamps that distributors must glue to the bottom of every pack before it’s sold for retail.

I wonder what’s going to happen to all the normal restaurants because they can’t renew their state-issued food purchase licenses? And to the gas stations who can’t renew their state-issued gas purchase licenses? If the government doesn’t exist to grant its blessing to purchases, isn’t the state going to entirely shut down?

Perhaps I’m being a bit flippant here. But more accurately, we’re simply looking at an unintended consequence of antiquated blue laws that suggest that state government has a legitimate role in the controlling the wholesale distribution of alcohol — NOT the retail distribution, mind you. I’m sure the liquor licenses of these vendors aren’t in question, or they couldn’t serve booze now. So this restriction is doing nothing to change whether or not underage minors can purchase liquor — only whether legitimate liquor-license-holding bars and restaurants can purchase form wholesalers.

This, more accurately, is simply a problem that is to be expected when you must ask government permission in order to operate and earn your livelihood. When the government isn’t around to answer their phone, you’re stuck in the unenviable position of losing your income or breaking the law. The fact that individual establishments need a license to even purchase wholesale liquor is the problem. That some bars may run dry due to this government shutdown is merely a symptom.

State governments need to start treating alcohol more like any other product — at least in the distribution pipeline. At the retail level, it can clearly be argued that laws against underage purchase are justifiable, but in the distribution chain, the state government need not be involved AT ALL.

The Family Leader’s Pledge Provides Litmus Test for Social Conservatives AND Libertarian Leaning Republican Primary Voters

Just last week, a “pro-family” group that calls itself “The Family Leader” laid out a 14 point “Marriage Vow” pledge for G.O.P. presidential primary candidates to sign as a condition of being considered for an endorsement from the organization. Among the more troubling points of this pledge, at least for those of us who care about limited government and individual liberty: vow support for the Defense of Marriage Act and oppose any redefinition of marriage, “steadfast embrace” of a Marriage Amendment to the U.S. Constitution that would “protect” the definition of marriage in all states as “one man and one woman” and “Humane protection of women” from “all forms” of pornography. Another point of the pledge reads “Rejection of Sharia Islam and all other anti-woman, anti-human rights forms of totalitarian control” which I find quite ironic in that many of the 14 bullet points would be almost perfectly in sync with Sharia Islamic law.

In the introduction to the pledge, there was language that suggested that black families were better off during slavery and more likely to be families that included both a mother and a father than “after the election of the USA’s first African-American president.” This language was later struck from the document that included the pledge.

For most of the G.O.P. field, candidates were reluctant to sign and offered no comment. Mrs. Tea Party herself, Michele Bachmann, however; couldn’t sign the pledge fast enough – even before the reference to black families was removed. Rick Santorum also signed, Jon Huntsman said he doesn’t sign pledges, Newt Gingrich reportedly won’t sign the pledge unless there are additional changes to the language (How could he? Isn’t he on wife number 3?) Mitt Romney rejected the pledge calling it “inappropiate for a presidential campaign” and a Ron Paul spokesman said the congressman “has reservations” about the pledge and “doesn’t want the government to dictate and define traditional marriage.”

Gary Johnson, true to form, effectively vetoed the pledge.

Actually, this is an understatement. Gov. Johnson blasted the pledge calling it “un-Republican and un-American.”

Government should not be involved in the bedrooms of consenting adults. I have always been a strong advocate of liberty and freedom from unnecessary government intervention into our lives. The freedoms that our forefathers fought for in this country are sacred and must be preserved. The Republican Party cannot be sidetracked into discussing these morally judgmental issues — such a discussion is simply wrongheaded. We need to maintain our position as the party of efficient government management and the watchdogs of the “public’s pocket book”.

This is exactly what this so-called marriage vow is: a distraction. The Tea Party movement was successful in the 2010 elections because the focus was on the economy, limited government, and liberty NOT divisive social issues.

Gov. Johnson continues:

This ‘pledge’ is nothing short of a promise to discriminate against everyone who makes a personal choice that doesn’t fit into a particular definition of ‘virtue’.

While the Family Leader pledge covers just about every other so-called virtue they can think of, the one that is conspicuously missing is tolerance. In one concise document, they manage to condemn gays, single parents, single individuals, divorcees, Muslims, gays in the military, unmarried couples, women who choose to have abortions, and everyone else who doesn’t fit in a Norman Rockwell painting.

Maybe The Family Leader has done as all a huge favor? By pressuring candidates to sign the pledge in hopes of receiving The Family Leader’s precious endorsement, those of us who want to have some idea of how serious these candidates are about limited government and freedom now have a litmus test of sorts. Michele Bachmann and Rick Santorum receive an F, Jon Huntsman and Newt Gingrich maybe a B, Mitt Romney and Ron Paul an A, and Gary Johnson an A+. The rest who have yet to respond get incompletes.

Obviously, for so-called values voters, the grades would be awarded in the opposite way (i.e. Johnson gets an F and Bachmann an A+). This pledge exposes the divide within the Republican Party and the battle for the party’s soul. Will G.O.P. primary voters nominate someone who will welcome individuals (especially independents) who aren’t necessarily found in a Norman Rockwell painting or will they once again nominate someone who panders primarily to white Christian men who want to tell you what to do in your bedroom?

If they win, we might as well get used to the idea of 4 more years of President Barack Obama.

Double Standards

Now, I’m not one to regularly bang the feminist drum around here… But this is f’ing ridiculous:

Officer Sashay Brown returned to work in May after having her second child. At first, she worked a desk job. Soon after, though, she was forced to patrol the city streets under a new department policy that was meant to force officers who had made dubious claims of health issues back to the street. The Washington Examiner first reported the new policy last week.

“Because of my condition, I am unable to wear my [bulletproof] vest,” Brown wrote in her June 12 request to be detailed back to her station on limited duty. “Wearing my vest is extremely painful and could clog my ducts and slow down the production of my milk supply.” She was then checked out by a department doctor, who advised that Brown be given a limited-duty desk job.

In a June 24 memo to Brown, medical services branch director William Sarvis wrote, “I have reviewed your case and determined that you will not receive authorization to participate in the limited duty work program.”

Sarvis said that until department doctors determine Brown is fit for full duty, she’d either have to take sick leave, or unpaid leave if she didn’t have sick days left.

I’ve been known to offer criticism for some police policies, such as the paid vacations administrative leave that officers often get placed on after shooting someone in a questionable fashion. Or, of the viability at all of public sector unions that work to allow “spiking” of pensions to ensure that officers retire at higher pensions than they ever received in salary. That goes without even getting into the militarization of police in the drug war and the “thin blue line” mentality towards whistleblowers that seems to pervade the industry.

I just don’t understand how you can have a workplace where all that goes on, but if a woman who wants to continue working, and has been advised by the department’s own doctor to go on limited duty, she gets told she has to take sick time or unpaid leave.

I simply can’t imagine such a double standard to be evidence of anything other than outright discrimination.

My family and I spent the past weekend with some friends in northern California, both of whom are police officers. We were discussing work, vacation time, etc, and the husband asked me how my employer accounts for sick time, and I told him that sick time is paid, accounted for separately from vacation time, and generally not really worried about unless someone abuses it to the point where it needs to be addressed. His response: “At least in the private sector you’re allowed to address it. We have some guys taking the max 25-30 days sick every year and can’t do a thing.”

I’m sure the new department policy in this case was put in place to crack down on people abusing the system — something that likely has been going on for many years. Applying the policy in what appears to be such a tone-deaf discriminatory manner is not likely to win them any PR points, and might get them slapped with a lawsuit. Well done, morons!

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