The case for any republican

Dear Wize-guys,

I apologize for being remiss in my blogging duties. All my wize time for the last three months had been tied up in money school. You'll probably hear more about those adventures as the paper chase continues. Suffice to say for now that I am an expert in matters regarding the Fed (which is to say that I know more than President Obama about how it should work) and I can also read between the lines of a financial statement for any publicly traded company like Enron, etc. I am a danger only to myself, however, if I spot something interesting I will also let you know about it. Hopefully the added dimension of my econ training will make me a better blogger too.

While I was gone, I did manage to see a few segments of the big government preservation debates. On the plus side, I think some good topics have gotten some air. Unfortunately, I don't see that anyone other than Ron Paul gets a vote.

Here are the tiebreaker scenarios (to cop an NFL analogy):

1. Ron Paul: Gets a bye all the way to Super Tuesday. Sentimental favorite.
2. Newt. Vulnerable but a high scorer.Very creative.
3. Mitt: Best defense but no firepower.
4. Pick 'em

If Ron Paul is still in the race when he gets to my state's primary: Hands down. It's not even close. A pro-life libertarian can not be topped in this ranking.

If for some reason he's out of the race, then it gets difficult.  You then apparently have to choose among three remaining options. Stay home. Newt. Mitt.

Maybe it's better to work from the bottom up:

Herman's out. Tim Pawlenty is out. Who else? Gary Johnson? His ideas are mostly right, but he can't even get on the debate stage, and when he does, he scares people.

I can't make a case for Michele B. or for Rick S. I know they mean well. I know they would want to do the right thing, but neither one has advanced any thoughts beyond framing their own bona fides. We get it. You are both wonderful people. The problem is, you can't fix this. This economy, this climate of stagnation and non-productivity. What would you do to fix it? I'm not hearing ideas.

Perry? I can get past his mental lapses, and his heart also seems to be in the right place. However, his solution to America's problems is to treat everybody like a Texan. Suck it up, big boy. It's a free world, get out there and get to work. You know. Texas works because Texas works, not because Rick made it work; and unfortunately, Rick thinks he can export Texas to Minnesota, Oregon, and Delaware. I'm not seeing it.

Stay home is a pretty decent option.

Romney. Romney. What to do about Romney. Seems to have a good grasp of what's wrong. Doesn't seem to be too driven to change things though. He totally represents the right wing of the big government party (which is establishment republicans and all democrats). Would I get out of bed to vote for Romney? I think I'll have to do more research.

Which leaves us with Newt. Could I vote for Newt? Maybe. I think his ideas are bigger than anyone else on the planet. I like having him around. He would be highly entertaining, especially if he wields his veto pen. My positive recollections of Newt were when he shut down the government. It was the only week in the last 23 years that I felt the oppression of big government start to lift. He pushed Bill Clinton to drop health care, and revamp welfare, and balance the budget. Sounds just like the kind of stuff we need now.

Yeah sure. I've heard the bad stuff. He accepted an advance on a book. He worked for Fannie Mae. Sounds like a free market guy so far. Left two wives. That's actually better than keeping one while cheating on her (hello again Bill). He's a loose cannon. Okay, but at least he fires in the right direction.

Am I ready to vote for Newt? Maybe. Watch this space. He may be an acceptable backup, in case people aren't ready for Dr. Paul.

So, fellow Wize-guys. Let me have it.

Wizer One-Liner #27

When you take into consideration that most of the establishment republicans - and all the democrats - are against Newt Gingrich, it's pretty easy to see why he's winning this particular beauty pageant.

Prisons on The Tarmac

Every street is choking

Looks like too much traffic on the road
No fun in driving
You wait in line forever just to go
Heavy roar of engines
Sitting in your prisons on the road
-- John Mayall, Prisons on the Road

The old Mayall tune makes its way into my consciousness every once in a while when I find myself in a traffic situation. As bad as a 15 minute delay is to us highway bound low-lings, it's even worse for people who are in enough of a hurry that they resort to buying a seat on an airplane.

The recent Hartford situation reminded me why I judiciously avoid flying. People spend hours of their lives waiting in security lines, waiting for shuttle buses, waiting hours for the simple process of taking off and landing, only to wind up in a different city with natives that may or may not be up to the task. For the question of whether I would take a two hour flight, or drive for 7 hours, I pick the latter. It's not the time, it's the hassle. I'm blessed with relatively clear middle-of-the-country highways, so driving is not as much of a chore as it might be if I were on, say, the Jersey Turnpike. Still, there are countless recent "innovations" that have soured me for air travel.

1. Obviously, the TSA
2. Not just the TSA, but the whole security thing. -- A security station is supposed to make us feel safer, but actually has the opposite effect: If it was safe, why do they need security? If there is security, it must be inherently unsafe. I think L. Neil Smith in his Prometheus Award winning The Probability Broach had the right idea: Let people carry their weapons on the airplane, but issue plastic bullets. That way if a gunfight breaks out, it won't compromise the hull integrity. People will be safer, because it's a self evident situation. ...but I digress.
3. Time. So much time and energy is wasted in the process of boarding and deboarding a plane. If airplane service actually met the expectations of the flyers, there would be plane-side parking, heated garages, and food service much like an NFL stadium. Instead, you park 3 miles away, crowd into a shuttle bus, only to stand in a 30 minute bafggage line and a 30 minute security line. Air travel is supposed to save time.
4. Very often it doesn't, especially when you wind up in a different city from the one listed on your boarding pass.
5. Nickels and Dimes: Due to the inefficiency of most corporate travel policies, the airlines have to quote the lowest possible fare price, and as a result must charge you to check luggage, charge you for an aisle seat, charge you for overhead compartment space, and even now for the bag of peanuts. All just to make their minimum acceptable margin of profit. I liked it better when the prices were simply too high, and everything was covered.
6. Why does my laptop have to be shut off and put under the seat? In the event of unexpected turbulence, where my laptop winds up is the least of our problems. Leave me alone. My computer is the only productive piece in this entire flight. Better yet give me enough room so I can arrange things in a more organized fashion.
7. Enough room. Right. In days past, you could select a slightly higher priced flight that would have some open seats, so you could lay your work out on the seat next to you. Fat chance of that, now. You are the middle seat. All the flights are the same price. And all of them are full.
8. How did things get so that there is no differentiation between airlines? Why are they all the same? I would have paid more for better service. Is the whole air travel industry a slave of the business bean-counters, who would just as soon fedex their employees to the next client meeting in Tucson?
9. Then there's sheer incompetence. Gates being unavailable, because the previous airplane hasn't left, because, he can't get pushed away from the gate, because  the staff is overloaded, because the babysitter couldn't make it.
10. Let the people off the damn airplane. They would rather be 4 blocks away from the terminal and on the ground than couped up on the airplane. Who in the world thinks it's better to sit there waiting for an impossible situation to get better?

Give me my prison on the road. I'm clearly better off than the poor folks in that prison on the tarmac.

Wizer One-Liner #26

Attention Occupiers: Crony Socialism is not a solution.

Karl Marx and the false premise

Capitalism is not an 'ism.' It is closer to being the opposite of an 'ism,' because it is simply the freedom of ordinary people to make whatever economic transactions they can mutually agree to. -- Dr.Thomas Sowell

I have spent some time defending the notion of capitalism but have now discovered that it's a false premise. From now on, the question of "How do you defend capitalism", will be relegated to the wrong question heap. The real question is "how can you defend (or not defend) the free market?"

Here's an important distinction, put into play by Chris Whalen.

"Marx created the term 'capitalism'. It's a pejorative, insulting description that says all economic activity is a matter of greed," Whalen explains. "If you're any sort of libertarian. If you believe in American principles of democracy and free enterprise, just the fact we use the term 'capitalism' should insult you. We need new labels."

People are conditioned to blame "capitalists" for a lot of economic ills. To be sure, it's still the best descriptor for "Crony Capitalists", and many other such capitalists who are not of the free market variety. These would include Jeffrey Immelt, Warren Buffet, Ken Lay, and Bernie Madoff.

From now on, I am no longer a capitalist.

Pardon me, but..

It's not the kind of thing you really want to commemorate, is it? Every time our enemies see us wringing our hands over the missing towers, they can take deep satisfaction that we still feel the effects. Maybe, just maybe, we would have been better off clearing the space and putting up a Wendy's, a Starbucks, and a Walmart. That would have showed the bastards that they didnt leave a permanent dent in America.

I know one thing, the endless rehashing was irritating at best. This incessant decade-long weepathon is not something we want our enemies to count on every time they try to take us down, is it?

Productivity Growth is key

When I said 'Change we can believe in,' I didn't say, 'Change we can believe in tomorrow.' Not 'Change we can believe in next week.' We knew this was going to take time.  -- Barry Obama , Chicago Birthday Fundraiser

I ran out of gas. I... I had a flat tire. I didn't have enough money for cab fare. My tux didn't come back from the cleaners. An old friend came in from out of town. Someone stole my car. There was an earthquake. A terrible flood. Locusts! IT WASN'T MY FAULT, I SWEAR TO GOD! -- Jake Blues, to the Mystery Woman, The Blues Brothers Movie, 1980
 
Markets will rise and fall but no matter what some ratings agency might say, we're still America, and we always have been and always will be a triple-A country -- Barry Obama, first press conference 8/8/11 after the S&P downgrade on 8/5/11
"First Comes Denial" .  -- Elizabeth Kübler-Ross
 
I did, I promised a moratorium on Obama bashing. Sorry, It's just that it's hard to do a consequential blog these days without giving credit where credit is due. 
 
I am amazed that the Tea Party is assigned any blame whatsoever in all this. The 56 members of congress who pledged any allegance to the Tea Party were eventually cut out of the debt deal, and then when S & P downgrades the government for not cutting anything of consequence, all of a sudden it's the Tea Party's fault? Wow, talk about poor aim.
 
And the S&P? Finally the folks paid to watch it all call it like they see it, and both teams want to kill the umpire.
 
Meanwhile, the Bush-Obama depression continues unabated. QE3 will probably be launched today, which will boost the stock market, and tie up another trillion in capital. More support for Wall Street, at a time when it is Main Street that needs the help.
 
The answer is productivity growth, of course. We need everybody working. We need to create an environment where private investments are made, where people are free to work, and where companies are free to hire them. I believe we're not that far away, in economic proximity if you will, from a recovery. But we are far away politically. The additional headwinds applied by Obama make it all the harder, but it's evident that less federal spending is the one crucial thing that will free the capital and create the positive momentum Main Street needs. Yes, lower taxes, if applied correctly could work. And fewer employment regulations would help as well.
 
The Wizer's Plan for Productivity Growth?: A one year moratorium on the minimum wage.
 
Instead, we get speeches about taxing corporate jets and subsidizing electric cars. These are not big ideas. No one can rally around government interference in technology. This is policy by sound-bite. 
 
Finally, there is this Obama notion of a balanced approach. What in the world is balanced about increasing taxes on one percent of the citizenry? Seriously?
 
The most tragic and pathetic aspect of all this? That we feel powerless to improve the situation before November of 2012. Unbelievable. We have to do better.
 

Help me out with this

London Telegraph News item:

(...) Fears that a recovery in the world's biggest economy is running out of steam were heightened as official figures showed GDP in the US rising 1.3pc in the second quarter, against expectations of a 1.8pc rise. In a chastening statement the Commerce Department also downgraded first-quarter growth from an initial estimate of 1.9pc to just 0.4pc.

(...) The extent of the uncertainty hanging over the US economy was underlined as the head of the World Bank warned that politicians were courting "calamity" by not coming to an agreement ahead of a deadline on Tuesday next week. "To be blunt, to have a debt default in the United States would not only be a financial calamity but should be an embarrassment for every American," said Robert Zoellick.

Okay, so if I understand this correctly, our ecnomy is running out of steam, and the thing we are patently expected to do is raise the debt limit. I had to read that twice. I might be dense (or is it daft), or maybe the London Telegraph's version of The Queen's English is a little imprecise on this, but I don't quite see how raising the debt limit improves the GDP situation. In fact, by raising the debt limit, we will have yet more capital reallocated to government programs and less available for productive work.

Shouldn't everybody be calling on us to lower the debt limit? As Mark Thornton writes:

(...) reducing the debt ceiling would force the government to stop borrowing so much money from credit markets. This would leave significantly more credit available for the private sector. The shortage of capital is one of the most often cited reasons for the failure of the economy to recover.

Lowering the debt ceiling would force federal-government budget cutting on a large scale, and this would free up resources (labor, land, and capital) and force a cutback in the federal government's regulatory apparatus. This would put Americans back to work producing consumer-valued goods

It's clear that the current administration has positioned us between the proverbial rock and the hard place. The confidence in the economy depends on raising the limit. The future of the economy requires that we lower it. Both of these must happen. The "When" of when these triggers are pulled will be defining and historic. It is going to create many millionaires, and ruin many thousandaires. Paul Volcker might have been able to prescribe the right sequence, but the administration chased him away. No one left in the executive branch who knows what to do.

Even the big boys (outside of perhaps Soros and Immelt) don't know which road to take right now. There's no reason to be confident that the right levers will be pulled, or even in the right order. But when the newspapers (especially the ones in Europe) start to lecture us with the kind of conflicting advice we're getting, it's high time to tune them out.

Coffee Economics

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance. – Murray Rothbard

Let's have a moratorium on the subject of what you can buy if you didn't buy that cup of coffee this morning, shall we? I have now read my 3000th article and saw a 3000th TV clip regarding how I can save $3.95 a day by skipping a trip to Starbucks. Please. Don't do me that way. I know little things add up.

Sure, I can make better coffee at home, and often do. I can make cheaper coffee at home, too, and I do that every morning. But if I stroll into the coffee emporium, I have already made my decision. I'm not going to think about the $52,312 I could have had in the bank if I just didn't do this another 250 times a year.

Not all of economics can be boiled down to coffee, though you would think so reading some of these accounts.

At the risk of decaffienating my own point, I now do a real public service, and show what you can buy if Starbucks were money.

1 ounce of gold: approximately 531 Quad Grande Americanos

Going to ponder this a little while enjoying my morning cup.

Not Just Unconstitutional

Health care is too expensive, so the Clinton administration is putting Hillary in charge of making it cheaper. (This is what I always do when I want to spend less money — hire a lawyer from Yale.) If you think health care is expensive now, wait until you see what it costs when it's free. -- P.J. O'Rourke, Speech delivered May 6, 1993 for the opening of the Cato Institute's headquarters in Washington, D.C.

When I hear partisans in Washington talk about Obamacare, I hear things like, "too expensive", "problems with death panels", "need to roll back some of the provisions", and so forth. I hate debating the finer points of Obamacare, because to do so is to concede the validity of it.

Obamacare. Excuse me, but what article of the constitution covers this one? Seems to me we could have already dispensed with this insanity on simple constitutionality grounds. Like a B-class horror movie, where the weapon surely already exists to kill the beast, the monster won't die. Instead, we're trying to figure out how to save it. As with many other monstrous provisions of the administration, this one needs to be defeated dramatically and completely.

Aside from the non-constitutionality, which is reason enough, there are plenty of common sense reasons to dump this approach.

1) The cost to the US for all uncompensated care is estimated at 35-50 billion /year. Why do we need a 1.44 trillion dollar program to cover that? If it were simply about covering the medical providers for the shortfalls, we could pay for it out of petty cash. I could run that program with 25 people.

2)  Obamacare is a disproportional tax on the healthy. Why subsidize the unhealthy by forcing the healthy to pay for their care? If I don't have to pay for it, maybe I will take up smoking, carousing, and eating at McDonalds. This one really frosts me because on so many other issues, the government wants to engineer a result, like more ethanol, less food; or higher stock prices, lower wealth. Here, they want everyone to have average health, at the expense of the truly healthy.

3) Obamacare is a disproportional tax on the young. Young persons simply do not need a full measure of health insurance. We already tax the young to fund the social security and medicare administrations. They will be paying the 14.3mm debt until the end of time. Please, let my children go.

4) Obamacare eliminates choice. That is unAmerican on the face of it, isn't it? Senator John Sherman is surely rolling in his grave.

5) Obamacare eliminates incentives to stay healthy. When a health care recipient finds out what it really costs to keep him safe and healthy, he might try a little harder to stay that way. Instead, he probably won't see the bill.

Off the top of my head, there must be at least a couple dozen other reasons not to do this. If we would start every bill with the constitutional authority well defined as to why it has a right to exist as a bill, we could avoid lengthy debates (let alone lengthy blog posts). Again, it seems that we are trying to tame this beast, when by all points of reason, we should be killing it.

But let's talk about one of the reasons given for why Obamacare would make sense in any society. The high cost of health care. How did we get here? Andrew Foy sums it up really well here. At one time, people did their own relationships (personal and transactional) with their doctors. Service was provided like many others, and paid for in the same way.

Then, government muscled in on the business, and the rest was gobbled up by private insurance companies. Now (as can be quickly seen from the chart), we pay less of our own medical care than ever. That would seem to be a strong case for leaving it alone, but in that trend are the seeds of the system's destruction. By paying 10% of our health care costs, we have lost track of what it really costs to bandage up a foot, or diagnose a boil.

With big insurance, medicare, medicaid, and union negotiated co-pays, none of us has the slightest clue what health care really costs and why. Why anyone would think that that would change for the better by paying a bureacrat to stand in the way of the transaction is ludicrous.

So, now, the government wants to eliminate the last vestige of a free market. Only two outcomes are possible and both of them bad.

1) Health care costs skyrocket as a new layer of bureacracy settles in. 36 million people and the other 300 million who had insurance are now finding more reasons to seek free medical care. If its free, demand surely goes up, doesn't it? Doctor's offices are flling quickly, and 20% of the doctors are checking out of the system, because the pay no longer justifies the long hours.

2) Real health care drops to subsistence levels with people opting to get healthcare outside the system. to avoid the long lines and poor service. Overall health falls dramatically, and people are discouraged from getting the help they need.

Probably both.

In a few short years, people will be finding ways to opt out of government medical care. But they won't be able to opt out of the higher taxes that feed it. In that way it is the same exact problem as social security. An ineffective and expensive insurance program, that people will cease to rely on.

End it, don't mend it.