Posts tagged ‘trade’

The Plan For Universities to Raise Tuition to Infinity

Via the WSJ, President Obama is proposing debt forgiveness for student borrowers

The White House proposes that the government forgive billions of dollars in student debt over the next decade, a plan that cheers student advocates, but critics say it would expand a program that already encourages students to borrow too much and stick taxpayers with the bill.

The proposal, included in President Barack Obama's budget for next year, would increase the number of borrowers eligible for a program known casually as income-based repayment, which aims to help low-income workers stay current on federal student debt.

Borrowers in the program make monthly payments equivalent to 10% of their income after taxes and basic living expenses, regardless of how much they owe. After 20 years of on-time payments—10 years for those who work in public or nonprofit jobs—the balance is forgiven.

Already, it's pretty clear that many students pay little attention to size of the debt they run up.  Easy loans for students have essentially made them less price sensitive, however irrational this may seem (did you make good short - long term trade-offs at the age of 18?)  As a result, tuition has soared, much like home prices did as a result of easy mortgage credit a decade ago.  The irony is that easier student debt is not increasing access to college for the average kid (since tuition is essentially staying abreast of increases in debt availability), but is shifting student's future dollars to university endowments and bloated administrations.  Take any industry that has in the past been accused of preying on the financially unsophisticated by driving them into debt for profit, and universities are fifty times worse.

So of course, the Progressives in the White House and Congress (unsurprisingly Elizabeth Warren has a debt subsidy plan as well) are set to further enable this predatory behavior by universities.  By effectively capping most students' future financial obligations from student debt, this plan would remove the last vestiges of price sensitivity from the college tuition market.  Colleges can now raise tuition to infinity, knowing that the bulk of it will get paid by the taxpayer some time in the future.  Just as the college price bubble looks ready to burst, this is the one thing that could re-inflate it.

Postscript:  By the way, let's look at the numbers.  Let's suppose Mary went to a top college and ran up $225,000 in debt.  She went to work for the government, averaging $50,000 a year (much of her compensation in government is in various benefits that don't count in this calculation).  She has to live in DC, so that's expensive, and pay taxes.  Let's say that she has numbers to prove she only has $20,000 left after essential living expenses.  10% of that for 10 years is $20,000 (or about $13,500 present value at 8%).  So Mary pays less than $20,000 for her education, and the taxpayer pays $205,000.  The university makes a handsome profit - in fact they might have given her financial aid or a lower tuition, but why bother?  Mary doesn't care what her tuition is any more, because she is capped at around $20,000.  The taxpayer is paying the rest and is not involved in the least in choosing the university or setting prices, so why not charge the taxpayer as much as they can?

Postscript #2:  It is hard to figure out exactly what Elizabeth Warren is proposing, as most of her proposal is worded so as to take a potshot at banks rather than actually lay out a student loan plan.  But it appears that she wants to reduce student loan interest rates for one year.  If so, how is this different from teaser rates on credit cards, where folks -- like Elizabeth Warren -- accuse credit card companies of tricking borrowers into debt with low initial, temporary rates.  I  find it  a simply astounding sign of the bizarre times we live in that a leading anti-bank progressive is working on legislative strategies to get 18-year-olds further into debt.

My Problem With Benghazi...

... was not the crisis management but Obama's throwing free speech under the bus.

I can live with poor crisis management.  I have been a part of enough to understand that things are different in real time than they look when monday-morning quarterbacking the events.  In particular, it can be very hard to get reliable data.  Sure, the correct data is all likely there, and when folks look back on events, that data will be very visible and folks will argue that better choices should have been made.

A great example of this is when historians sort through data to say that FDR missed (or purposely ignored, if you are of that revisionist school) clear evidence of the Japaneses surprise attack on Pearl Harbor.  Sure, the correct clues stand out like flashing lights to the historian, but to the contemporary they were buried in 10,000 ostensibly promising false leads.

In real time, good data is mixed in with a lot of bad data, and it takes some time -- or a unique individual -- to cut through the fog.  Clearly neither Obama nor Clinton were this individual, but we should not be surprised as our selection process for politicians is not really configured to find such a person, except by accident.

No, the problem I have with Benghazi is that when push came to political shove, the President threw free expression under the bus to protect himself.  I am a sort of city on the hill isolationist, who prefers as much as possible for the US to have influence overseas by setting a positive example spread through open communications and free trade.  In this model, there is nothing more important for a US President to do than to support and explain the values of individual liberty, such as free expression, to the world.

Instead, it is increasingly clear he blamed some Youtube video, an exercise in free expression, for the tragedy.  And not just in the first confused days, but five days later when he put Susan Rice on TV to parrot this narrative.  And when the Feds sent a team to arrest and imprison the video maker.  And days after the Rice interviews when Hillary parroted the same message at the funeral, and days after that when Obama spoke to the UN, mentioning the video 6 or 7 times.    Obama took to his bully pulpit and railed against free speech in front of a group of authoritarians who love to hear that message, and whose efforts to stifle speech have historically only been slowed by America's example and pressure.

Moms with Ivy League Educations

Apparently it is somewhat unethical in the feminist world for women to go to the Ivy League and then become a full-time mom.   I know several women who have Ivy League undergrad or graduate degrees and have, for at least part of their lives, been full time moms.  I am married to one, for example.  I have a few thoughts on this:

  1. People change plans.  Life is path-dependent.  Many women who ended up being full time moms out of the Ivy League will tell you that it still surprises them they made that choice.
  2. Why is education suddenly only about work?  I thought liberal arts education was all about making you a better person, for pursuits that go far beyond just one's work life.  I, for example, get far more use of my Princeton education in my hobbies (e.g. blogging) than in my job.   The author uses law school as an example, and I suppose since law school is just a highbrow trade school one might argue it is an exception.  But what is wrong with salting the "civilian" population with non-lawyers who are expert on the law?
  3. Type A Ivy League-trained full-time moms do a lot more that just be a mom, making numerous contributions in their community.  I am always amazed what a stereotyped view of moms that feminists have.
  4. If spots in the Ivy League, as implied by this article, should only be held by people seriously wanting to use the degree for a meaningful lifetime career, then maybe the Ivy League needs to rethink what degrees it offers.  Ask both of my sisters about the value of their Princeton comparative literature degrees in the marketplace.  By this logic, should Princeton be giving valuable spots to poetry majors?
  5. I can say from experience that the one thing a liberal arts education, particularly at Princeton which emphasized being well rounded, prepared me for was being a parent.  I can help my kids develop and pursue interests in all different directions.  One's love of learning and comfort (rather than distrust) of all these intellectual rubs off on kids almost by osmosis.  In other words, what is wrong with applying an Ivy League education to raising fabulous and creative kids?
  6. The author steps back from the brink, but this comes perilously close to the feminist tendency to replace one set of confining expectations for women with a different set.

Oh and by the way, to the author's conclusion:

Perhaps instead of bickering over whether or not colleges and universities should ask us to check boxes declaring our racial identity, the next frontier of the admissions should revolve around asking people to declare what they actually plan to do with their degrees. There's nothing wrong with someone saying that her dream is to become a full-time mother by 30. That is an admirable goal. What is not admirable is for her to take a slot at Yale Law School that could have gone to a young woman whose dream is to be in the Senate by age 40 and in the White House by age 50.

I would argue the opposite -- the fewer people of both sexes who go to law school to be in the Senate by 40 and the White House by 50, the better.

Update:  My wife added two other thoughts

  • Decades ago, when her mom was considering whether she wanted to go to graduate school, her dad told her mom that even if she wanted to be a stay at home mom, a good graduate degree was the best life insurance she could have in case he died young.
  • Women with good degrees with good earning potential have far more power in any divorce.  How many women do you know who are trapped in a bad marriage because they don't feel like they have the skills to thrive in the workplace alone?

The Road to Totalitarianism is Paved with Good Intentions

The first three times I read this, I was sure it was supposed to be ironic and sarcastic.  I am increasingly convinced that this was written for real

Mayor Michael Bloomberg’s ban on sugary drinks is good for you, New York, and for the rest of the country, too.

And here’s something else, a guaranteed wager: Winston Smith, the suffering protagonist in George Orwell’s “Nineteen Eight-Four,” would trade every aspect of the society dreamed up for him by the sadistic totalitarian government in place of a ban on sugary drinks in 16-ounce cups any day.

There I said it. I know the sentiment is unpopular. I know people will fear the ramifications of a ban on that black bubbling cola in their plastic Big Gulps because they believe it is the road to bigger restrictions on more of their choices. It won’t.

We are a nation of fatties. According to the Centers for Disease Control and Prevention, or CDC, more than one-third of United States adults -- 35.7 percent -- are obese. And obesity is expensive.

Medical costs associated with obesity were estimated at $147 billion in 2008, the CDCnoted. And for people who are obese were $1,429 higher than those of normal weight. While sugary drinks like soda and fruit drinks are not the only culprit here, it is a fact that people are consuming these beverages at an alarming rate. Something needs to be done.

I am sure long-time Coyote Blog readers will not the Health Care Trojan Horse (TM) -- using the socialization of health care costs to justify coercive interventions in individual choices that used to be considered personal.

I have been studying HG Wells of late.  One thing I didn't know about him before is that for all his skepticism about the future in many of his books, and all his prescience about the worst impulses of man, he believed it was possible to create an ideal government that would a dictatorship of the elite, scientific, and enlightened.  Historians called that view "naive", and at the time it may have been. But to hold this sort of view today, as this author does, given history, is simply insane.  Power begets more power.  Coercion begets more coercion.

There really is a very simple test for this - simply imagine the coercive power you advocate in the hands of your worst political enemy.  Still happy with it?  I bet not.

Let's Ban Exports of Dow Chemical Products

I have written before that trade policy is generally ALL corporate cronyism -- tariffs or restrictions that benefit a narrow set of producers at the expense of 300 million US consumers.

Mark Perry has yet another example, though with a small twist.  Most corporations are looking for limits on imports of competing products and/or subsidies for their own products exports.  In the case of Dow Chemical, they are looking for limits on exports of key inputs to their plants, specifically oil and natural gas.  CEO Andrew Liveris wants to force an artificial supply glut to drive down his input prices by banning the export (or continuing to ban the export) of natural gas.  If gas producers can't sell their product?  Tough -- let them try to out-crony a massive company like Dow in Washington.

But here is the irony -- there is absolutely nothing in his logic for banning natural gas exports that would not apply equally well to banning the export of his own products.   Like natural gas, his products are all inputs into many other products and manufacturing processes that would all likely benefit from lower prices of Dow's products as Dow would benefit from lower natural gas prices.

So here is my proposal -- any company that publicly advocates for banning exports for its purchases must first have exports of its own products banned.

Ugh - Proposals for Loyalty Oaths

Arizona is generally more intelligently managed, at least fiscally, than California.  But while that state still is treated seriously for all its dysfunctionality, Arizona is often a media laughing stock.  This is in large part due to the fact that Conservatives in the Arizona legislature just can't seem to stop themselves from proposing a few absurdly goofy pieces of legislation each session.

House Bill 2467, sponsored by Republican state Representatives Bob Thorpe, Sonny Borrelli, Carl Seel, T.J. Shope, and Steve Smith, proposes the following:

"Before a pupil is allowed to graduate from a public high school in this state, the principal or head teacher of the school shall verify in writing that the pupil has recited the following oath:

"I, _________, do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic, that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge these duties; so help me God."

Smith and Shope are also in on House Bill 2284. Whereas current Arizona law says students in public schools can opt out of doing the pledge if they so choose, Smith's and Shope's proposal says only a child's parents can let them avoid reciting the pledge.

So they want to make it harder to opt-out of the current loyalty oath (Pledge of Allegiance) and then add a new loyalty oath.

Historically, loyalty oaths are the hallmark of dictators, the Caesers and Hitlers of the world.  In a free society, loyalty is earned by a government.  When government officials demand a blank check in the form of a loyalty oath that pledges allegiance no matter what the government does, watch out.

A few other observations:

  • I love the part in the oath above that says "I take this obligation freely."  Sure.  We won't give you the diploma you have in every other way earned without taking the oath, a diploma practically required to function in our society, but the oath is voluntary.  This is the kind of double speak that is a hallmark, along with loyalty oaths, of a dictatorship.
  • Apparently to graduate in Arizona, this would force every student to acknowledge the existence of God
  • I understand what it means for the President to preserve and defend the Constitution.  But what does it mean for the average high school graduate?  Just what is this obligating them to do?  And what is the penalty for not doing it?
  • I would gladly trade having all high schoolers in the state embrace this oath for simply having our state officials, in particular our Sheriff Joe Arpaio, being true to this oath.

My New Favorite Store, and I Haven't Even Been There. Plus, Christmas Game Recommendations

In my high school days, I used to play a lot of wargames from Avalon Hill and SPI.  I once spent an entire summer playing one game of War in Europe, which had a 42-square-foot map of Europe and 3500 or so pieces.     Each turn was one week, so it was literally a full time job getting through it in a couple of months.

All that is to say I spent a lot of time hanging out at game stores, particularly Nan's in Houston (a great game and comic store that still exists and I still visit every time I am in Houston).  I play fewer wargames now, but I still like strategy games that are a bit more complicated than Monopoly or Risk.  But it is hard to find a game store with a good selection (if there is one here in Phoenix, I have not found it).

But I definitely want to try this place -- the Complete Strategist in New York City.  Click through for some good game pr0n.

His list of games is good, though I have never played Gloom and I have never been a huge fan of Carcassonne.  Ticket to Ride is an awesome game and is perhaps the most accessible for kids and noobs of either his or my list.  If you recognize none of these games, it is a great place to start (there is also a great iPad app).   To his list of games I would add:

All of these games tend to present simple choices with extraordinarily complex scoring implications.  In most cases, one must build infrastructure early to score later, but the trade-off of when to switch from infrastructure building to scoring is the trick.  Five years ago Settlers of Catan would have been on any such list, but it is interesting it is on neither his nor mine.

Once you catch the bug, there are hundreds of other games out there.  My son and I last summer got caught up in a very complex Game of Thrones expandable card game.  Recommended only for those who love incredible complexity and are familiar with the books.  There are also a couple of games I have liked but only played once so far.  My son and I last summer played a fabulous though stupidly complex game of Twilight Struggle (about the Cold War, not hot vampire teens).  This is considered by many to be one of the greatest war / strategy games ever.  We also tried Eclipse (space game, again not the teen vampires) which we liked.  I have played Le Havre and Puerto Rico as iPad apps.  They were OK,  but I think the fun in them is social and the of course does not come through in the iPad app.  In the same vein, tried to play Agricola with my kids and they were bored stiff.

Update:  When in doubt, research it on Board Game Geek.  Their game ranking by user voting is here.

A Quick Reminder to Swedish Workers

Apparently Swedish unions are demanding a looser monetary policy

Forget Chuck Schumer's cat-out-of-the-bag 'get back to work' comments to Bernanke, now it is union-leaders who are advising the world's central bankers. "There is a not a single reason not to lower rates" exclaims Sweden's trade union confederation to the central bank as he begins negotiations with employers on wage deals for next year. His demands (for lower rates) are "far from excessive" and he adds "should not cause inflation" as Swedish organized labor have "never called for levels that ... could not be supported economically."

Inflation and monetary debasement have always been Progressive favorites -- until, of course, they were not.  Consider the plight of the worker in Weimar Germany

By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. Food riots broke out. Parties of workers marched into the countryside to dig up vegetables and to loot the farms. Businesses started to close down and unemployment suddenly soared. The economy was collapsing.

It was total hell.  If a worker's family member could not find something to buy in the morning with the worker's morning pay packet, the money was worthless by dinner time.  Not to mention the incredible lost productivity of all those man-hours spent running around trying to find goods on shelves (of which we got a small taste post-Sandy, as people spent hundreds of dollars of their own time waiting in queues because the government would not let gas station owners charge them an extra $20 for scarce gasoline).

Can the Majority Vote to Have A Minority Send Them Money?

Barack Obama argues that the last election gave him a mandate to raise taxes on the rich.  Put another way, he is arguing that 52% of the people voted to raise taxes on 2%.  Did they?

Well, they certainly did something like this in California.  Let's take a look at two propositions:

  • Prop 30, which propose to raise taxes on on the rich to help close the deficit (there was a token 0.25% sales tax increase for cover, but everyone knew it to be a tax on the rich).
  • Prop 39, which was a broad-based income tax increase which raised taxes on most everyone (or at least on the 50% or so who pay income taxes).

So, let's look at the results:

  • Raise taxes on only the very rich:  PASS
  • Raise taxes on everyone (including me):  FAIL

The California election was a crystal clear mandate:  People want more taxes as long as they are on somebody else.  By targeting the richest few percent, we can get a lot of money but make sure the people taxed don't have any hope of fighting the increase, even if they vote as a block.

So I think Obama clearly has a mandate to raise taxes on not-me.  The question is, do we think we have, or do we want, a government where this is possible?  Where majority votes can do anything they wish to minorities?

I should hope not.  I will remind you of a famous quote, from a different context, but entirely relevant:

First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the socialists,
and I didn't speak out because I wasn't a socialist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for me,
and there was no one left to speak for me.*

 

* there seem to be many variations on this out there, you may have heard other similar versions.

My Abusive Spouse Just Offered Me Flowers

I got a call today from the National Conference of Mayors.  They wanted to send somebody by to talk to me about just how committed these great folks were to small business success.

The call began poorly, as their representative tried to use a tactic I mostly only get from penny-stock boiler rooms - pretending that she and I had talked some time in the past and that I had committed to meeting with her.  I suppose this tactic might have worked with a frazzled exec, but it is one sure fire way to immediately get me pissed off in a phone call.  After telling her that she and I had no such call and that I did not appreciate the cheap telemarketing tactic, I said that I had absolutely no desire to help the mayors put some fake pro-business patina on their activities that are generally hostile to commerce and free markets.   I told them that I did not want a subsidy, handout, any special access, training programs, etc., I just wanted to be left alone.  I was not going to participate in some program where I get my picture taken shaking some politicians right hand while he is whacking me with a stick with his left.  The representative, to her credit before she hung up, admitted she gets this reaction a lot.

One only has to look at their "plan" (pdf)  to see what their vision entails for "helping" small business.  Here is a summary of the planks:

  1. More Federal spending on local infrastructure
  2. More Federal unemployment spending and lower Federal payroll taxes
  3. Create new Federal subsidy and loan programs and job training programs for businesses in favored, sexy-sounding industries (e.g. "manufacturing" or "high-tech").  I presume someone starting a restaurant or hair salon or without any political clout need not apply.  To their credit they also advocate free trade agreements and visa reform, though they then lose that credit by also advocating failed ideas like "trade adjustment assistance" and "metropolitan export plans"
  4. More Federal spending in urban areas (police, job training, affordable housing, community development).

As will not be surprising, absolutely nothing in the Mayor's plans dealt with actual issues under their control, such as business, occupational, and occupancy licencing reform.   Also not surprisingly, the mayors call for hundreds of billions of dollars in new Federal spending narrowly aimed at urban areas without once explaining why these can't or shouldn't be funded locally.  If Los Angeles wants more money for its police, or trains, or schools, and if that spending has real demonstrable value to the city, then why can't they sell the new taxes and spending to their own citizens?  Why do they need the money from the Feds (ie from the rest of us)?

But you can just see the corporate state a work.  A few companies will cynically climb on board, knowing this is all BS, but also knowing that they will get a nice subsidy or sweetheart project in exchange for letting the majors check their "pro-business" box  (pro-business used here as distinct from pro-market).

 

Why Do I Think This Penalty Would Have Been Waived on GE or Dreamworks?

Politicians certainly live in their own world:

The Environmental Protection Agency has slapped a $6.8 million penalty on oil refiners for not blending cellulosic ethanol into gasoline, jet fuel and other products. These dastardly petroleum mongers are being so intransigent because cellulosic ethanol does not exist. It remains a fantasy fuel. The EPA might as well mandate that Exxon hire Leprechauns.

As a screen shot of EPA’s renewable fuels website confirms, so far this year - just as in 2011 - the supply of cellulosic biofuel in gallons totals zero.

“EPA’s decision is arbitrary and capricious. We fail to understand how EPA can maintain a requirement to purchase a type of fuel that simply doesn’t exist,” stated Charles Drevna, president of American Fuel & Petrochemical Manufacturers (AFPM), the Washington-based trade association that represents the oil refining and petrochemicals industries.

I will remind Republicans thought that ethanol is a bipartisan turd, this particular requirement having been signed into law by President Bush.

Cap and Trade and the Corporate State

For years, one of the problems I have had with the way CO2 cap and trade systems were structured was a fear that these systems would devolve into cronyism, with the companies best able to lobby the government getting allocations while less connected companies had to pay.  It seems this is already occuring in California:

 The California Air Resources Board (ARB), the regulator of the forthcoming program, held a workshop in Sacramento on Monday where it discussed plans to give away more free permits to prevent leakage in “trade-exposed” industries like cement production, oil refining and food processing.

Over the first three allowance auctions, which begin in November, the state will sell 48.9 million allowances and give away 53.8 million allowances, according to ARB.

Any company deemed to have either a high, medium or low risk of leaving the state will receive all the allowances they need to comply with the program during the first two-year compliance period, from 2013-2014, rather than have to buy the permits at regular auctions.

But those in the low and medium risk groups are currently scheduled to see their allotment of free allowances start to decline in 2015 by as much as half.

ARB officials on Monday said they are conducting studies examining the leakage risk of companies based on their historical energy costs and trade flows.

Don't be fooled by the quasi-scientific-sounding language here about categories of "trade exposure."  The reality will be that companies with political clout will get the permits, and companies without such clout will not.  This is a system that will favor large manufacturers over smaller companies.  It will also, oddly, apparently shift the burden of compliance from large manufacturers to service companies  (since service companies are the least likely to be "trade exposed.")  Of course, any manufacturer still operating plants in California is crazy anyway.

How About A Left-Right Coalition Against the Corporate State?

I am encouraged to see this from the Left.  Kevin Drum writes, in response to a proposal for California state licensing of dog groomers:

What's unfortunate, I guess, is that this would all be unobjectionable if it were a voluntary certification program. If you want to pay more to take Fido to a certified groomer, go right ahead. If you want to save money, then don't. But critics are almost certainly right that a voluntary license would become a required license in pretty short order. After all, Vargas's proposal may be for a voluntary license right now, but that's only because he's failed to get support for a required license in the past.

What's more, if the program were voluntary I'm not sure why you'd need the state involved in the first place. If there's really a demand for this kind of certification, it seems likely that a trade association of some kind would set something up. And if there isn't, then why bother?

Right on!  I wish Drum would carry this same thinking further into other economic spheres (why are consumers powerful enough to handle dog grooming choices suddenly infantile when it comes to health care decisions) but I am encouraged none-the-less.  There is room, I think, for a left-right coalition against corporate cronyism (of which licensing is among the worst forms, helping to protect incumbent businesses against upstart competitors).  Unfortunately, such cronyism is so deeply ingrained in both Romney and Obama that it is certainly not going to happen in this election.

Part-Time Job for College Student

The trade group that represents companies like mine that privately operate public parks is looking for a college student to work part-time for us, either this summer or into the fall.  The ideal committment is 20 hours a week for 6-10 weeks but we could accommodate fewer hours for a longer span of time.  We are willing to pay in the ballpark of $13 an hour plus expenses (phone and Internet bills, etc).  We anticipate the candidate would work from his or her own home (or dorm) and already has access to a computer and Internet connection as well as a word processing software of some sort.

Job responsibilities would include:

  • Working with our members to accumulate and organize our intellectual property vis a vis this business.  This includes marketing material, regulatory and statutory information, how-to guides, etc.
  • Working with our partner agencies, like the US Forest Service, to get statistics on our members' scope  (e.g. we don't even know how many US Forest Service parks are run privately) and to synthesize these into marketing materials

The candidate need not have any specific knowledge of our business, and we have experts in the organization that can supply contacts and information.  Being an all-volunteer organization, we need someone with the time and the focus to gather and organize the information we have.  The candidate will have direct contact with the CEO's of most of the key players in this industry as well as with senior staff officers of a number of public recreation and lands agencies.    We want someone who is bright and unafraid to approach, even pester, strangers for information.  Quantitative skills and/or economics or business-related studies are a plus but are not required.  Experience with web tools such as content management systems like WordPress also a plus.

If someone is interested, have them email me at warren -at- camprrm *dot* com or hit the email link above.

First Rule of Budget Politics

Proponents of higher taxes and larger government often criticize small government folks in Congress for being "obstructionist" and "not willing to compromise."

But here is the problem:  Coyote's first rule of budget politics is to never trade current tax increases or "temporary" spending increases for future spending cuts, because the future spending cuts never happen.  Ever.  Not once.  In fact, I would not agree to trading current tax increases for current spending cuts, because taxes will stay forever but spending cuts will just be over-ridden in a few months.

Here is a recent example:

Last summer, Republicans in Congress agreed to increase the federal debt limit in exchange for the Democrats’ pledge to cap future spending at agreed-upon levels. The compromise was embodied in the Budget Control Act; discretionary spending was to increase by no more than $7 billion in the current fiscal year. I wrote yesterday about the fact that the Democrats intended to violate the Budget Control Act by increasing deficit spending on the Post Office by $34 billion. The measure probably would have glided through the Senate without notice had Jeff Sessions not challenged it. Sessions insisted on a point of order, based on the fact that the spending bill violated the Budget Control Act. It required 60 votes to waive Sessions’ point of order and toss the BCA on the trash heap.

Today the Senate voted 62-37 to do exactly that. This means that the consideration that Republicans obtained in exchange for increasing the debt limit is gone. Moreover, some Republicans–I haven’t yet seen the list–voted with the Democrats today.

One principal lesson can be drawn from this experience. It happens all the time that Congressional leaders will trumpet a budget agreement that allegedly saves the taxpayers trillions of dollars–not now, of course, but in the “out years.” But the out years never come. Tax increases are rarely deferred to the out years; they take place now, when it counts. But spending cuts? Never today, always tomorrow.

Purported agreements about what federal spending will be years from now are utterly meaningless. Congressmen will make a deal, brag about the ostensible savings in the press, and then walk away from it the moment our backs are turned, as the Democrats (and a handful of Republicans) did today.

When folks say, "we just want a compromise" on budget issues, what they are really saying is "we want to roll you.  We are hoping you are stupid enough to trade for future cost reductions that will never happen.  We can get away with this because we have an ally in the press, who always treats promises of future cost reductions as entirely credible and believable and thus paint those who are skeptical of them as radical obstructionists."

A Vivid Reminder of How The Climate Debate is Broken

My Forbes column is up this week.  I really did not want to write about climate, but when Forbes conctributor Steve Zwick wrote this, I had to respond

We know who the active denialists are – not the people who buy the lies, mind you, but the people who create the lies.  Let’s start keeping track of them now, and when the famines come, let’s make them pay.  Let’s let their houses burn.  Let’s swap their safe land for submerged islands.  Let’s force them to bear the cost of rising food prices.

They broke the climate.  Why should the rest of us have to pay for it?

The bizarre threats and ad hominem attacks have to stop.  Real debate is necessary based on an assumption that our opponents may be wrong, but are still people of good will.  And we need to debate what really freaking matters:

Instead of screwing around in the media trying to assign blame for the recent US heat wave to CO2 and threatening to burn down the houses of those who disagree with us, we should be arguing about what matters.  And the main scientific issue that really matters is understanding climate feedback.  I won't repeat all of the previous posts (see here and here), but this is worth repeating:

Direct warming from the greenhouse gas effect of CO2 does not create a catastrophe, and at most, according to the IPCC, might warm the Earth another degree over the next century.  The catastrophe comes from the assumption that there are large net positive feedbacks in the climate system that multiply a small initial warming from CO2 many times.  It is this assumption that positive feedbacks dominate over negative feedbacks that creates the catastrophe.  It is telling that when prominent supporters of the catastrophic theory argue the science is settled, they always want to talk about the greenhouse gas effect (which most of us skeptics accept), NOT the positive feedback assumption.  The assumption of net positive climate feedback is not at all settled -- in fact there is as much evidence the feedback is net negative as net positive -- which may be why catastrophic theory supporters seldom if ever mention this aspect of the science in the media.

I said I would offer a counter-proposal to Mr. Zwick's that skeptics bear the costs of climate change.  I am ready to step up to the cost of any future man-made climate change if Mr. Zwick is ready to write a check for the lost economic activity and increased poverty caused by his proposals.  We are at an exciting point in history where a billion people, or more, in Asia and Africa and Latin America are at the cusp of emerging from millenia of poverty.  To do so, they need to burn every fossil fuel they can get their hands on, not be forced to use rich people's toys like wind and solar.  I am happy to trade my home for an imaginary one that Zwick thinks will be under water.  Not only is this a great way to upgrade to some oceanfront property, but I am fully confident the crazy Al Gore sea level rise predictions are a chimera, since sea levels have been rising at a fairly constant rate since the end of the little ice age..  In return, perhaps Mr. Zwick can trade his job for one in Asia that disappears when he closes the tap on fossil fuels?

I encourage you to read it all, including an appearance by the summer of the shark.

Price Signal Flashing

OK, those of you looking for a business opportunity, Taylor dominates the soft-serve ice cream machine business.   Today one of our machines broke.  We got a quote for a refurbished machine -- with trade-in of our old macine - $14,000!  The brand new ones cost as much as a car.

So investors -- there is your flashing price signal.  There should be a big enough umbrella here to make some money with a good design and thoughtful sourcing.  And I can tell you everyone who uses these machines is eagerly awaiting such an entrant.

Money Does Not Corrupt Politics, State Power Corrupts Politics

Kevin Drum asks whether money corrupts politics, and comes to the conclusion that it does.  I disagree.

Money does not corrupt politics, the expansion of state power corrupts politics.  Every time the state gains a new power to take money from person A and give it to person B, or to throttle company A's business in favor of company B, private individuals start to scheme how they might access that power to their own benefit.

Think back to the much smaller US government of the 19th century.  Don't you long for the day when political corruption mainly meant packing the Post Office with one's kin?  It is absolutely no coincidence that the largest political scandal of that century (the Crédit Mobilier) accompanied the largest expansion of Federal power in that century (the Federally-funded construction of the Transcontinental Railroad).

Political corruption follows the power.  Sure, this power is often bought in dollars, but if we were to entirely ban money from the political process, the corruptions would remain.  And it would shift payment from money to other goods, like quid pro quo's, barter, and access to grass roots labor supplies.  Anyone remember machine politics?

Here is an example from an Administration schooled from an early age in Chicago machine politics

The Heritage Foundation has issued a new report that charges the Obama administration sent presidential earmarks, taxpayer dollars, to Democratic lawmakers to help convince them to vote for controversial proposals such as cap and trade and the health care bill.

“When you examine the recipients of those grants, there were at least 32 vulnerable house Democrats who received significant federal grant money during the run-up or directly after the votes on those pieces of legislation,” says Lachlan Markay, one of the authors of the report.

The amount of earmarks spiked around the time of difficult votes such as cap and trade, then dropped, only to spike again around controversial financial regulations known as Dodd/Frank, and spiked the most just before the vote on the health care bill....

On their websites, lawmakers didn’t advertise their votes, but did tout at length the money they’d gotten for various local projects.

“As a way to counteract the negative voter sentiment that would come from voting for unpopular legislation,” says Markay. “These were attempts to make sure that constituents knew they were bringing money home to their district.”...

Numbers from the non-partisan Congressional Research Service show that the value of administration earmarks under President Obama increased by a 126 percent in his first two years in office and the actual number of administrative earmarks increased by 54 percent.

Those are dramatic increases that are 11 times more than Congress itself increased earmarks, which the White House did not explain today.

By the way, of all the ways that access to political power can be bought, political spending under our current rules is by far the most transparent.   Just as in narcotics or prostitution, a ban wouldn't eliminate it, it would simply drive it further underground and into other forms of currency.

IRS Harassing the Tea Party?

Sure seems like it.   Here is the list of questions the Ohio Tea Party has asked as part of their application, which should be routine, for 501(c)4 status.  The Virginia Tea Party had similar requests, including apparently a demand for donor lists and confidential materials which the IRS says will be made public.  The latter seems part and parcel of recent initiative on the Left (seen also in the whole Heartland fiasco) to out confidential donors of Conservative and libertarian organizations while demanding no similar transparency of organizations on the Left.

By the way, I am President of a 501(c)4 organization  (basically a trade group) and I can say with some authority that we never have received any sort of parallel set of questions from the IRS vis a vis our status, so this is either a very new requirement or one especially crafted to apply only to the Tea Party.  I can say from all too much experience that having a Federal agency sit on a request for 9 months and then suddenly demand incredible amounts of work in just a few days from the private party is absolutely typical.

Trade is Cooperation, Not War

First, I will admit that this was probably a throwaway line, but it does represent the worldview of a lot of Americans.  In an article showing a funny story about poor preparation of college students, Kevin Drum ended with this:

This does not bode well for our coming economic war with China, does it?

Trade is not war.  Trade is cooperation, exactly the opposite of war.   By definition, it benefits both parties or it would not occur, though of course it can benefit one more than the other.

Treating trade like war is a very dangerous game engaged in by some politicians.  At best, it leads to protectionism that makes the country poorer.  At worst, it can lead to real war.

Consider two examples of a country treating trade like war, both from Japan.  In the 1930's, Japan developed an imperial desire to directly control all the key resources it needed, rather than to trade for them.  The wealthy ports of China and iron-rich Manchuria were early targets.   This desire was compounded when the US used trade embargoes as a policy tool to protest Japanese invasions and occupation of China.  This eventually led to war, with Japan's goal mainly to capture oil and rubber supplies of southeast Asia.  Obviously, this effort led to Japan essentially being left a smoking hole in the ground by late 1945.

The second example was in the 1980's, as Japan, via MITI, actively managed its economy to promote trade.  The "trade as war" vision was common among Japanese leaders of the time.  The results was a gross, government-forced misallocation of resources and bubble in the real estate and stock markets that led to a couple of lost decades.

 

Keep Your Law Off My Body, err, or Maybe Not

Massachusetts liberals up the penalties for women (and men) using their bodies in ways the government does not like.   Proving once again that the women's groups' motto, "keep your laws off my body," was in fact a fake libertarianism, aimed at exactly one thing -- abortion -- and nothing else.  Those on the Left who mouthed this slogan seem to be A-OK with regulating consensual sex, salt and soda pop consumption, access to medical procedures, health care choices, etc.

Also, this seems to be yet another law that purports to promote women's rights by treating them like they are ignorant rubes unable to make the smallest decisions for themselves.  The implicit assumption in the law is that all prostitutes are in the profession solely due to male compulsion.  This is consistent with a certain philosophy among feminists that all behaviors of women with which they don't agree are not due to a normal excercise of free will by people who simply have different preferences, but are due to some sort of enslavement by the patrimony.

But one high-priced online hooker said she’s no victim — and she doesn’t know any women who are.

“If you are an escort, you go into it of your own free will,” she said. “Absolutely no one is forced into doing this. You don’t have to be affiliated with any agency. I’m not forced to do anything I don’t want.”

What’s more, the new law’s focus on johns, she said, will hurt her lucrative-though-lawless trade.

“If that’s the law that’s been written, then yes, it’s going to impact business,” she said when read the new penalties.

There is no doubt that some women get into situations where they are abused or forced into work or have a large portion of their earnings taken.  But this tends to be a result of the profession being underground, giving women no legal recourse when they are abused and defrauded.  If one really is worried about women's working conditions, the best thing to do is legalize prostitution, instantly giving them access to the legal system to redress wrongs.

I AM Doing Good

I accidentally watched a few minutes of a morning show today, something I try really hard to avoid.  Matt whats-his-name was interviewing Richard Branson, and they were talking about the importance of corporations "doing good".  Once startups get going, Branson said, they need to start doing good for people, meaning I guess that they buy carbon offsets or something.

Guess what?  If my startup is succesful, I am already doing good.  I can't make a dime unless I create value for people net of what they pay me.  Every customer walks away from our interaction better off, or they would not have voluntarily elected to trade with me (and if they are not better off, I will never see them again and I will find lots of nasty stuff chasing future customers away on the Internet.)  I am tired of this notion that a succesful business person's value can only be judged by what he or she does with their money and time outside of business.  I understand the frustration with a few Wall Street and GE-type executives who are living like fat ticks on their connections with government, but most of us only are succesful if we do something useful.

This, from Carpe Diem, is along the same lines.  He looks at an editorial from the DC paper about the entry of Walmart, which says among other things

Despite the peacocking by Gray and others after the agreement was signed, the District is receiving mostly crumbs. Walmart has committed to providing $21 million in charitable donations over the next seven years, an average of $3 million a year. That's a pittance."

Walmart does not have to do squat for the community beyond its core business, because selling  a broad range of goods conviniently and at really low prices is enough. Or if it is not enough, they will not make money.  The promise of $21 million to some boondoggle controlled by a  few politician's friends is just a distraction, I wish they had not done it, but I understand that this is essentially a bribe to the officials of the DC banana republic to let them do business.

Postscript:  I have no problem with doing charitable work outside of work.  Both my company and I do, by choice, though unlike Richard Branson I don't need to have a crew of paid PR agents making sure everyone knows it.

A Small Victory

A small victory against the relentless march of the state regulators and licensors

Eyebrow threading to remove facial hair, a practice which has ancient roots in Eastern countries such as India and Iran, is gaining popularity around the country.

And threaders can now operate freely in the state without a cosmetology license after an October court settlement determined that the Arizona Board of Cosmetology would no longer regulate the trade.

The consent judgment resulted from a lawsuit filed in Maricopa County Superior Court by five threaders, including Gutierrez.

The threaders argued that the Board of Cosmetology was merely trying to help more traditional hair removal outfits remove a source of low-cost competition.  The threaders were represented by the IJ, who do great work for economic liberty

Chinese Consumers Thank the US Senate

From my Forbes post today, the following letter:

From:  The Consumers and Small Businesses of China

To:   The United States Senate

Re:  Currency Exchange Rate Oversight Reform Act of 2011

Dear Senators:

Thanks!  For years, our government has pursued a currency and trade policy that has subsidized your American consumers at the expense of our own here in China, and while we are unsure exactly why you would want to end this arrangement (we presume due to powerful lobby by your large manufacturers), we are happy that you are doing so....

A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called "dumping" represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields and creating inflationary pressures.

Every single step China takes to promote exports is in effect a transfer of wealth from Chinese citizens to Americans, and we are tired of it.

Read it all.

More Corporate Welfare, in the Form of a Currency War

From the Hill, the ghost of Hawley-Smoot returns

 The Senate voted Monday to advance legislation pressuring the Chinese government to stop undervaluing its currency, a practice most economists agree is giving the country an unfair trade advantage and is costing the U.S. jobs.

The Senate voted 79-19 to end debate on a motion to proceed to the bill, the Currency Exchange Rate Oversight Reform Act of 2011. While the vote does not mean the bill has passed, the strong show of support suggests it could well be approved in the upper chamber by the week’s end. Passage through the House is less clear, however, and GOP leaders have given no indication they will move forward with it.

Senate Democratic leadership, responsible for bringing the legislation to the Senate floor, heralded it as a way to create jobs and right a long-standing trade imbalance with China.

“China is by far the biggest exploiter of predatory currency practices,” Sen. Charles Schumer (D-N.Y.) said Monday. “[T]hese currency policies artificially raise the price of U.S. exports and suppress the price of imports into the United States, undermining the economic health of American manufacturers and their ability to compete at home and around the globe.”

This is a great example of how a group, in this case the Democratic Party, can say they are against corporate welfare, but in fact be 100% behind it simply by changing the terms used.

Look at the sentence in bold.  Another way to write this would be "we want a law to help a few visible and influential manufacturers who most compete with China, but hurts consumers (ie every single American) and every business that uses imported raw materials.

Protectionism like this is corporate welfare for a few large manufacturers.  I find it amazing the reporter can say that "most economists agree" an undervalued Chinese currency is costing us jobs.  My sense is that most economists don't agree with this statement.  All this law will do is unilaterally increase consumer prices and raw material costs, and I know few economists who think this is stimulative.

A cheap yuan is a direct subsidy of American consumers by the Chinese, and I am not sure why we shouldn't let it continue as long as they are dumb enough to keep doing it.