Impressive Podcast

The guest on this week’s EconTalk podcast is Richard Epstein of New York University and Stanford’s Hoover Institution and he discusses regulation.

I highly recommend listening to the whole podcast.  Epstein does an excellent job of discussing the intricacies and problems with things like the health care legislation, the financial reform and the FDA.

With about 16 minutes in the podcast, Epstein launches a criticism of Keynesian economics that I haven’t heard before.  In case you don’t know, Keynesian economics underpins government expansionary efforts like stimulus spending.

Epstein:

It [Keynesian economics] never tells you where it is that you’re supposed to quit. Take something like unemployment benefits. If 52 weeks are better than 26 weeks and 99 weeks are better than 52 weeks, are we going to say 200 weeks are better than 99 weeks?

If I were an enterprising reporter, I might be inclined to start asking politicians when will we know to pull government out?  When will we know that we should move unemployment back to 26 weeks?  When will we know that we don’t “need” stimulus spending?  When will we know when the health care bill is making things better?

Of course, the easy answer would be, we will know it when we see it.  When the economy is back in shape.

Next question: So, if the economy gets back in shape, say when unemployment reduces to 6%, can we count on you to sponsor legislation to shorten the duration of unemployment benefits?

Milton Friedman – Open Mind

Here’s an excellent, and topical, interview with Milton Friedman.

Around the 7 minute mark, Friedman says:

I have often in talking to audiences, especially liberal audiences, offered them a challenge.  I challenge you to name me a single social measure which has accomplished its intended objectives rather than opposite, which has not done more harm than good.

Around the 22 minute mark, the host Richard Heffner says,  “…you just said that mankind is selfish and greedy and that has always been the battle cry of those who said, ‘therefore, we must impose controls upon them.’”

Friedman: Therefore, we have to put power in the hands of other greedy and selfish men.

Heffner: That’s the philosophic basis of the argument that the government must step in.

Freidman: It’s a false argument.  It assumes somehow that government is a way in which you put unselfish and ungreedy men in charge of selfish and greedy men.  Government is an institution whereby the people who have the greatest drive to get power over the fellow man get in a position of controlling them.  Look at the record of government.

That’s what government supporters never seem to recognize.  That was one of the points of this post, Anyone Mad At The Government? People in government are no different than the CEOs of the corporations that everybody gets so mad at (while voluntarily buying and benefiting from the products their companies produce).

We demonize CEOs and want to fire them when they screw up – which I have no problem with – but we also want to give government more power when it screws up.  That make no sense to me.  Some might say, “but you can always elect a different person in government.”  Which takes me back to Friedman’s last comment, “Look at the record of government.“

Concentrated Power

Sunday 219 people, less than half the total in my high school graduating class, decided what’s best for the rest of us.

The Founders wrote a document to prevent the concentration of power.  I don’t believe 219 people deciding the health care fate of 300 million was their intent.

Power has concentrated in this country into the hands of people who do not understand the purpose of the Constitution — including those duly elected representatives who have sworn oaths to uphold it.

Perhaps the Founders should have added an oath for voters.  To earn the right to vote in Federal elections, one must swear an oath to vote for candidates that will indeed uphold the Constitution.  That way they might take it upon themselves to understand the Constitution before swearing the oath and when they don’t vote accordingly the rest of us can hold them accountable for violating their oath.

Why Do I Need Land Line?

In this tough economy, as each of us Backseat CEO’s comb our income statements to rid it of unnecessary expenses to push to our bottom lines, I find myself pondering why I have a land-based phone line and cell phones.

A co-worker made an excellent point, if true:  911.  A 911 operator knows where you’re calling quicker from on a land line, but not necessarily with a cell phone.  In an emergency situation where a  few seconds can make a difference, that’s a valuable benefit.

Also, along the same lines, I only have one cell phone.  I may not always have that near me, whereas my land line phones are always in the same spot scattered throughout my home.

I think my co-worker saved a land line cancellation for now.  However, I will review my next bill to see if I’m paying for extras I don’t need.

That’s part of the basic financial responsibility of a manager: to periodically review the expenses within their control to ensure that the company or household is getting the value for the money.

My recommendation is to do this on a cycle that makes sense for the expense.  For monthly expenses, like a phone bill, a manager may want to review that annually to see if the benefit is worth the cost and to see if there are better alternatives that can be more cost effective.

Feedback Thomas Sowell Style

Thomas Sowell explores a similar thread as Walter Williams yesterday, in his column The Fallacy of “Fairness”: Part III.  Key lines:

Tests and other criteria which convey the realities of their existing capabilities, compared to that of others, can have what is called a “disparate impact,” and are condemned not only in editorial offices but also in courts of law.

But criteria exist precisely to have a disparate impact on those who do not have what these criteria exist to measure. Track meets discriminate against those who are slow afoot. Tests in school discriminate against students who did not study.

Disregarding criteria in the interest of “fairness”– in the sense of outcomes independent of inputs– adds to the handicaps of those who already have other handicaps, by lying to them about the reasons for their situation and the things they need to do to make their situation better.

I’ll repeat that last part, ” adds to the handicaps of those who already have other handicaps, by lying to them about the reasons for their situation and the things they need to do to make their situation better.”

That reminds me of something written by two well respected business leaders – Jack Welch formerly of GE and Howard Schulz, founder of Starbucks.  Both wrote about their thoughts on removing people from jobs that they weren’t very good at it.  Of course, they did this for business reasons, to improve the business.

But, both made an excellent point.  They felt keeping and under performer in a position was more disrespectful to the person than trying to shield them from the truth and may eventually lead to a much colder, harder lesson for those people.

A great example of this are the awful singers who audition for American Idol and are devastated when they hear the judges  tell them the truth.  It should not get to the point where someone who doesn’t remotely have singing talent make it in front of the American Idol judges.

Honest and accurate feedback was either never given to these people or never received.