Now this is enlightened thinking

I enjoyed this post from Russ Roberts at Cafe Hayek.

In it he contrasts the visions of how the world works between tea partiers and elites.

Tea partiers like freedom generally on moral grounds, principle and because it provides the most for the most.

The elites can’t see that.  They can’t see that their quality of life is dependent nearly every second of every day on someone else and, for the most part, these people provided what they needed and wanted through a decentralized system of prices. The enlightened elites can’t or don’t seem to want to fathom this.  Doing so might mean that we may not need them to tell us how to live.  Can’t have that.

Disgraceful

I recently saw a Democrat political ad charging the Republican opponent of favoring the Fair tax.

The ad tried to give the impression that the Republican candidate was for increasing taxes by presenting this as a new sales tax of 23%.

The producers of the ad could claim that it’s technically correct. The Fair tax would be a new tax.

But, I wonder how they would explain why they didn’t mention that it would eliminate and replace the current income tax system.

I imagine the real answer is:  The ad targeted the moderate voter who is generally for lower taxes and doesn’t follow politics much.  It’s designed to give the impression that the candidate they may be thinking about voting for supports higher taxes, which is blatantly false.   It may also be designed to give the impression that Democrat candidate supports lower taxes, which is also blatantly false.

Look,  I know election ads are a dirty game and they must work because those moderate voters seem to respond to such nonsense.  But, this one went even further out-of-bounds and further reduced the low credibility the Democrat candidate had.

If you’re willing to cheat so shamefully on TV in front of everyone before you are elected, what are you going to be willing to do once you are elected?  Shameful.

Why the US Economy is in a low

I was recently introduced to Charles Rowley’s blog, yet another George Mason University professor.

Here’s a nice paragraph from a recent post:

The reason why the United States economy is in such a current low growth situation is because its government and its citizens developed  unsustainable appetites for consuming more than they earned. September 2008 was the justifiable consequence of such profligate behavior. U.S. citizens learned their lesson the hard way and are now saving to  find a sustainable route out of personal indebtedness. The U.S. government, with the unfailing support of its Treasury Secretary, is fighting against this endeavor every inch of the way. For every dollar that private citizens save, their wretched government dissaves in multiple numbers.

This is a great way to frame what’s going on.

Prediction

I don’t often make predictions, but here’s one.

I predict that Warren Buffett is not as good at succession planning as he is at investing.

Rand Paul on Dennis Miller Show

Here are Rand Paul’s top five issues from the interview he did on the Dennis Miller Show last week:

1. Deficit is a big issue.  Need a balanced budget amendment.
2. We need term limits.  They [politicians] go and stay too long and they become corrupted by the system.
3. I think they should read the bill before they vote on them.  They should wait one day for every 20 pages and that will keep them busy for a while.
4. Every bill should point to where in the Constitution they get the authority for the bill.
5. They shouldn’t pass any laws that they exempt themselves from.

I’m not sure I care much about #1.  I think it can have some bad unintended consequences.  For example, tax cuts are passed with a sunset date because of the current balanced budget rules.  I think this is bad because it just loads the hopper for political power.  “You want me to vote to extend your tax cut, then sign my bill.”

#2 sounds good, but I’m not sure that will solve many problems.

I do like #3 through #5.

Jon Stewart on NPR

I happened to catch the last few minutes of an interview with Jon Stewart on NPR on last Friday’s afternoon drive home.

The interviewer asked Stewart to describe a time when he felt it all came together for him on his show.

Stewart described a time after 9/11 when he said Democrats let their political wills get in the way of a “no-brainer” decision.  They held up legislation to pay the medical costs of the heroes of 9/11.  Stewart said that looking at that frustrating situation through the lens of comedy was helpful.

As I listened, I was reminded of how I use to think about government long ago and just how from that I am now.

Stewart was frustrated with government and Democrats of the time.  He couldn’t fathom how they could let their own motivations stand in the way of doing something that seemed so right.  I use to think like that too. I was 20 years old then.  Everything seemed simple to me.  Government should do the right things and not do the wrong things.

And, of course, I was the perfect judge of what those things were!  And, of course, I had no qualms using government to force my fellow citizens to fund or participate in the right solutions.  Why wouldn’t they?  It’s their responsibility! And, of course, I could never be wrong.

Unlike Stewart, though, I learned over the past couple decades because I asked some simple questions and sought out the answers to those questions.  And, I often considered that I could be wrong (and still do).

I’d ask and look for answers to questions like:

Why didn’t that work the way I thought it should?

Why do we seem fairly well satisfied with goods and services made available to us through free markets while we bitch and moan nonstop about government? And if you don’t think we bitch and moan about government, tell me why there are three radio stations in my market dedicated to political discussions nearly 24/7 and none dedicated to discussing goods and services provided by the free market.  Or explain to me why Stewart’s show itself–which focuses heavily on political satire–is so successful.

Why is it when politicians win elections, they seem to behave differently than we thought they would?

Why is government unable to fix things that aren’t working well (e.g. public education)?

Instead of answering these questions, Stewart learned how to poke fun at news events in a way that sounds reasonable, funny and entertaining to people who share the viewpoints I held when I was 20. 

On the NPR program, Stewart described one key problem with politics (though I don’t think he realized it)–it’s an ineffective way to get what you want.  And, that’s exactly why it’s so juicy to talk about.

Economist Walter Williams explains why politics is so heated in his column, Bitter Partisan Politics.

I like the Lexus LS 460. I also like Dell computers. Many other people have a different set of preferences. Some might prefer a Cadillac and an HP computer while others prefer a Chrysler and IBM computer. With these strong preferences for particular cars and computers, we never see people arguing or fighting in an effort to impose their preferences for cars and computers on other people. There’s car and computer peace. Why?

You buy the car and computer that you want; I do likewise and we remain friends.

Suppose our car and computer choices were made in the political arena through representative democracy or through a plebiscite where majority ruled. We would decide collectively whether our cars would be Lexuses or Cadillacs or Chryslers. We also would decide collectively whether our computer would be a Dell or HP or IBM computer.

I guarantee you there would be nasty, bitter conflict between otherwise peaceful car and computer buyers. Each person would have reason to enter into conflict with those having different car and computer tastes because one person’s win would necessarily be another person’s loss.

Try a simple experiment the next time you go out to eat with a group of friends.  Tell everyone they must order the same drink and size and they will vote on what that drink is.  Majority wins.  Then keep doing it.  The first time, people may give in for the sake of the group.  But, if you keep doing it, eventually it will raise hostilities.  Those giving up their drink preference for the group’s decision will not tolerate it for long.

It never seems to occur to folks like Stewart that there are better ways to get the end result they want without relying on the government.  They continue to complain about politicians doing EXACTLY WHAT WE ALL DO (including Stewart)–and that is take care of our self-interests and satisfy our preferences.  We want to order the drink we like.

Thomas Sowell also explained well in his book, Applied Economics, why political decision-making is so contentious and ineffective, which I excerpted in this post last March.

Folks like Oprah mistake Stewart as a smart guy who should be listened to for political commentary rather than seeing him for what he really is, a talented entertainer.  I’d recommend Oprah invite folks like Walter Williams, Thomas Sowell, Don Boudreaux and Russ Roberts if she’s looking for smart people with good political commentary.  Better yet, I’d love to see any of these guys on the same show as Stewart to counter his points directly.

I see Stewart as guy who puts a dime in a vending machine where drinks cost a dollar and is perplexed that the vending machine won’t give him a Coke.  He proclaims that it should work.  He makes jokes about it and builds a TV show around those jokes.  He has a good act.  He’s developed such an aura of confidence and condescending that he can sell a bunch of people on his belief that when he puts a dime in the vending machine, it should work.  It’s absurd that it doesn’t!  Putting a dime in the machine is a “no-brainer”.

It never seems to occur to Stewart that he may be wrong.  Perhaps we shouldn’t expect government to solve our problems.  Perhaps we should look closer at private, unforced solutions and less at public, forced dictates.

That way, instead of using government to impose his will on the rest of us and moaning when politicians don’t agree with him, Jon can easily help solve the problem.  He can contribute to the cause voluntarily and use his air time and celebrity to encourage his fans to donate as well.

Given the outpouring of voluntary giving following events like the Tsunami, Katrina and the Haiti earthquake, I think we should learn that such efforts can solve problems and we should encourage more of that.

Nice Video on Wealth Creation

Bill Whittle asks for 10 minutes of your time in the following video to explain how conservatives view wealth and where it comes from:

I like the central premise that liberals tend to view wealth as a fixed pie to be split among people, while conservatives tend to view it as something that derives from win-win trades.

To illustrate, I liked the graphics he showed of LA in the 1800’s and today.  Bill asks how it LA changed so much if wealth was a fixed amount?

My favorite part of the video starts at 4:16 where Whittle does an excellent job of explaining how he created a little bit of value as an office temp making $7.50 per hour for an insurance company by cross-checking a list of customers with a list of checks sent.

I made that insurance company just a little bit wealthier.  By confirming those check mailings, I was reducing loss of customers due to frustration and error.  I was reducing the amount of time that higher level, more valuable employees would need to spend undoing the damage caused by unsent checks and all the rest.

A cross-checked and confirmed list was more valuable than one that wasn’t.

To me, this example is easier to identify with than the examples often given by econ professors, and given by Whittle later in the video about trade between primitive tribes.

I know few people who can adequately explain the value they produce in their job for their employers or the value they find in the stuff they purchase on a daily basis.

I also enjoyed the final few seconds of the video.  “I would be much more impressed with your moral outrage…”  Great line.

What value do you produce for your employer or your customers?  Why are you worth more than what they pay you?

Well Said

In this morning’s Wall Street Journal Opinion, Emilio Karim Dabul writes about NPR’s Taxpayer-Funded Intolerance.  Dabul begins with some refreshing honesty:

As an Arab-American of Muslim descent, I am not offended by this because in all honesty I have had the same reaction in similar circumstances. In Berlin a couple of years ago, my flight was delayed because, we were told, one of the passengers, who was in a wheelchair, needed extra assistance. When she finally was brought into the waiting area, she was covered from head to toe in traditional Muslim dress and only her eyes were visible. What happened? I grew nervous. I got on the plane just the same, but with trepidation.

Was my response rational? Yes and no.

Then he addresses a common criticism of Juan Williams’ comment.

It was not Muslims in traditional garb who hijacked those planes on 9/11, and it certainly was not Muslim women in veils and wheelchairs. If anything, an Islamist terrorist wants to blend in, not stand out.

However, it was not a traditional sort of terrorist attack I feared in this case, but perhaps something unexpected: a traditional Muslim woman in a veil, confined to a wheelchair, who was loaded with explosives.

That may make me guilty of an overactive imagination, but perhaps not.

I mention all this for one main reason. I grew up surrounded by Islamic culture, went to Islamic events, and was used to seeing women in traditional Muslim clothing, and yet when that woman appeared at the Berlin airport, I was scared.

Then he puts Williams’ comment into perspective:

That’s all Mr. Williams was saying. He didn’t say that they should be removed from the plane, treated differently, or anything close to that. He simply said he got nervous. And for that, he was fired.

Then he throws in this reality check:

The reality is that when Muslims cease to be the main perpetrators of terrorism in the world, such fears about traditional garb are bound to vanish. Until such time, the anxiety will remain. In the long run, it’s what we do with such fears that matters, not that we have them.

Here I think Dabul identifies the root cause of Williams feelings.  The root cause is the behavior of some in an easily identifiable group, not bigotry.  Rather than expecting folks like Williams to modify who makes him nervous, we should first expect the folks that caused his nervousness to change.

Sowell Agrees on Barney Frank

Thomas Sowell wrote two columns this week about Barney Frank, the politicians’ politician.

From the first:

Barney Frank is a master of rhetoric, who does not let the facts cramp his style.

Barney Frank was all over the media, pointing the finger of blame at everybody else. When financial analyst Maria Bartiromo asked Congressman Frank who was responsible for the financial crisis, he said, “right-wing Republicans.” It so happens that conservatives were the loudest critics who had warned for years against the policies that Barney Frank pushed, but why let facts get in the way?

Ms. Bartiromo did not just accept whatever Barney Frank said. She said: “With all due respect, congressman, I saw videotapes of you saying in the past: ‘Oh, let’s open up the lending. The housing market is fine.'” His reply? “No, you didn’t see any such tapes.”

“I did. I saw them on TV,” she said. But Barney Frank did not budge. He understood that a good offense is the best defense. He also understands that rewriting history this election year is his best bet for keeping his long political career alive.

Good for Maria for not backing down.  This if from the second Sowell column:

Politicians who say we need more regulation almost never mean regulation in the sense of impartially enforcing explicit rules, such as the accounting rules that Fannie Mae was violating to cover up its own risks. They mean regulation with arbitrary powers, such as those under the Community Reinvestment Act, which enable regulators to carry out the agendas that politicians give them.

In other words, they pull the wool over our eyes by making us believe that their power grabs are for our own good. This paragraph reminded me of Arnold Klilng’s first question on this blog post.

if the problem was that we deregulated too much over the past 20 years, then why doesn’t the bill [financial regulation] simply reset regulations to what they were 20 years ago? or 30 years ago?

 

Random Thoughts

It strikes me as odd that people who believe government spending on infrastructure is good because it stimulates the economy (e.g. creates jobs for workers and encourages more efficient travel and shipping of goods with more road capacity) often are the same people who want to tax the same economic activity they sought to stimulate because they perceive that activity to have negative externalities like pollution and global warming.

It also strikes me as odd that the people who support socializing medicine because they believe everyone has a right to free medical treatment, seem to be the first people to assert that since they now help shoulder the burden for our medical costs they have a right to tell the rest of us how to live in order to minimize those costs.

In both cases, I can assure you that such people haven’t given much consideration that they may be wrong or that their thinking is somewhat paradoxical.