Straight talk with Seth

We have bullies in schools because we don’t punish them.

Next question, why don’t we punish them?

Many reasons.

Teachers and administrators are scared of the bullies too. Some have guns and can find  where you live.

Teachers and administrators don’t want to hassle with it.

Some teachers and administrators are bullies too.

Administrators don’t want to expel bullies because they will lose some funding (though, they’d find out they wouldn’t need to expel many bullies, because many would come into line and they would find more people would want to send their kids to that school).

Administrators don’t want to expel bullies because of threats of lawsuits, the mere hassle of which can cost resources and time.

Administrators don’t want to expel bullies because they believe everyone is entitled to an education, no matter how bad they act.  And they believe they can talk it out, rather than enforcing real consequences.

Cost Benefit Analyses Suck

Rick Santorum wrote in the Wall Street Journal this past weekend about his Economic Freedom Agenda.  Most of it sounds good.  This part bugged me though:

I’ll review all regulations, making sure they use sound science and cost benefit analysis.

One reason it bugs me is that Candidate Obama made a similar promise four years ago. The Obama/Biden campaign promised to go through the budget and “keep the stuff that works and stop the stuff that doesn’t.”

Sounds good, but it didn’t happen.  And there’s a good reason it didn’t happen.  That brings us to the second reason Santorum’s comment bugged me: It’s impossible.

Believing it is possible is a true marker of naiveté or willing deceit.

Cost benefit analyses sounds good to a lot of people. They teach you cost benefit analysis in college, after all, no?

But cost benefit analyses have a major weakness — they’re usually wrong.  They’re wrong for a couple of reasons.

First, cost benefit analyses can be made to say what you want them to say, so they are subject to the same political wills as if the cost benefit analysis didn’t exist. The cost benefit analysis serves one purpose: to fool those who don’t understand this about cost benefit analysis.

Publicly funded stadium, museum and public transit projects are notorious for such analysis.

Even when a cost benefit analysis is conducted with the best of intentions by supposedly competent folks, it is usually wrong. As I mentioned here, Richard Feynman said:

The first principle is that you must not fool yourself…and you are the easiest person to fool.

He said this because he specialized in finding where experimental physicists had fooled themselves while conducting their experiments.

Unfortunately, the only true cost benefit crucible is the real world — and even that can be misinterpreted, and often is.  Economists still debate whether FDR’s actions in the Great Depression helped or hurt.

The truth is that government programs face incentives different from the free market. There’s always plenty of reasons to keep a government program around, even when it clearly does not have desirable outcomes (e.g. minimum wage).

But, the main reason to keep a program in the free market is if its doing its job.  If its not doing the job, the market (or “us”) finds ways to use those resources better.

The restaurant where I had my first W2 job went out of business long ago. It was bulldozed and replaced with a convenience store that does brisk business and has for years.

Had it been a government program, the old restaurant would still be open, supported by your always forgiving tax dollars.  It wouldn’t have many customers, but that’s okay. Politicians will claim they are keeping folks employed. Voters can feel good about voting for them for that reason and the cooks in the restaurant feel great about getting paid to not work that hard.

Ask folks then if they’d like to keep the restaurant, they might be inclined to say yes, you know, to keep the workers employed.  Ask them if they eat at the restaurant, they would tell the truth. No.

Nobody would be able to see the true opportunity cost of all that. They would never have guessed that had the restaurant been allowed to go out of business, it would have been replaced by a convenience store that produces much more value for the community and more jobs. And higher paying jobs.

Ask folks in the community now if they’d like to put the restaurant back in place of the convenience store and most would laugh at you.

Markets vs. Committee

Box office receipts tell us which movies the public, in general, preferred.  The Oscars tells us which movies a small group of people preferred.

As people who follow the Oscar’s each year should know, these two sets of preferences don’t often line up.

When we hand over large swaths of our markets to committees, we may satisfy the preferences of the committees, but not the everyone else.

Imagine a world where only the Oscar-worthy movies were made.  Consider which of your favorite movies wouldn’t exist.

“Why I Support Obama”: Points 2 & 3

The second point made by the Facebook Obama Supporter (from this post) was:

He ended the war in Iraq and is drawing the war in Afghanistan to a close.  Like he said he would.

In my original post, I mentioned that only one point was really related to the President’s job.  This is it.  The President is the Commander-in-Chief of the military and responsible for our country’s security and foreign policy.

I think the Obama supporter makes a good point here. But, Obama’s other foreign policy and security measures leave a bit to be desired.  Stepping over the Congressional balance of power to get involved in Libya, along with his domestic actions, tells me that the President doesn’t hold the Constitution or his oath to defend it in high regard.

The third point made by the Obama supporter was:

He thinks women should have access to free preventative health care.  Why is that an issue?

This is a free country and even the President can think what he wants.  However, actually providing this as President is not in his job description.  Forcing other to provide this makes this country less free.

For me, this is like saying that according to my Homeowner’s Association covenants, it’s my neighbor’s job to stock my fridge with free bottled war.  My supporting argument is very similar to the supporting argument for free birth control: Without it I might die of thirst and if I’m dying of thirst, that will cause many social costs, like I might steal water from others.  Or, society will lose my production.

But, most people will instantly see problems with my argument.

One problem is that there is no such thing as free bottled water. Someone would need to pay for it. So, had the Obama supporter said “third-party paid preventative care” instead of “free preventative” care this would be more accurate.

A key problem is that HOA does not have the power to force my neighbor to provide me with bottled water. It’s not in the HOA covenants and if someone tried to amend our covenants to add this, the other homeowners would have a good laugh.  What’s not funny is how many people think it’s okay for our Supreme HOA to do things that aren’t in its covenants, for no better reason than thinking, ‘that’s the way things ought to be.’

Finally, the most devastating blow to my argument is that I will not die of thirst if my neighbor doesn’t provide me with bottle water.  Potable water, while essential to my life, is cheap and clean enough from the tap or bottle that very few people in our country go without it.

Also, I’m guessing that the average cost of water, even from the tap, is about the same or more than the average cost of women’s preventative care on a monthly basis.  Yet, amazingly we don’t have arguments about having the government force third parties to provide everyone with water.

And, if there are a few people who have trouble paying their water bill, we take a more targeted approach than changing the entire water delivery system for everyone.  We help them out voluntarily.

Online Dividend Reinvestment Plan Investing?

Here’s an idea: + Dividend Reinvestment Plans (DRPs)

There are some online accounts for DRPs, but what I’ve seen so far are clunky.  It seems like there’s potential to retail the idea.

If anyone knows of anything that I’m missing, please let me know.

Think Before You Vote

“Get Out and Vote” campaigns annoy me because they encourage folks to wield their political power recklessly.

To help offset the “Get Out and Vote” campaigns for the upcoming presidential election, I propose a “Think Before You Vote” campaign.

The key messages of the campaign would be:

1.  We encourage you to think more if the reason you plan to vote for your candidate is anything like these:

  • I’d like to go have a beer with him (or her).
  • He (or she) is so good-looking!
  • I just think he’ll (or she’ll) be really good for our country!
  • I just think he (or she) is what this country needs!
  • The dude on MTV told me to.
  • That’s who all my friends are voting for.
  • Because I’d never vote for the other guy.

We recommend not deciding who to vote for until you can complete these reasons:

  • While in these previous positions…  …he (she) accomplished…
  • He (she) supports this position because…
  • He (she) believes the Constitution means…
  • He (she) believes the role of the Federal government is…

2.  If any of the reasons that you want to vote for your candidate is because you want to force your fellow citizens to do something because you think it’s a good idea, then I think you owe it to your fellow citizens to explain why you think it’s a good idea and what makes you so sure (like, is there real world evidence to support your claim?).

3.  Can you clearly articulate both sides of the key issues that are important to you and why you believe your side is correct?  You should be able to answer yes.

4. Can you carry on productive political discussions with those who disagree with you?  You should be able to truthfully answer yes before you vote.

Do you and your fellow citizens a favor.  Think before you vote!