Less College for All

As I frequently write on this blog, college education isn’t what it use to be because of the heavy government subsidies. Just a few days ago I wrote:

College degrees no longer signal intelligent self-starters with moxie. Now degrees are signals risk averse, color-by-numbers people. Bureaucratic employers value these people for their conformity and aversion to risk.

Robert Samuelson agrees in the Washington Post. He wrote:

The college-for-all crusade has outlived its usefulness. Time to ditch it.

The real concern is the quality of graduates at all levels. The fixation on college-going, justified in the early postwar decades, stigmatizes those who don’t go to college and minimizes their needs for more vocational skills. It cheapens the value of a college degree and spawns the delusion that only the degree — not the skills and knowledge behind it — matters. We need to rethink.

Thanks to Mark Perry of Carpe Diem for the link.

Tee up the discussion on the Constitution

I don’t agree with E.J. Dionne of the Washington Post on much, but I do agree with this from his column:

We badly need a full-scale debate over what the Constitution is, means and allows – and how Americans have argued about these questions since the beginning of the republic. This provision should be the springboard for a discussion all of us should join.

I came away from my high school civics class with the impression that the Constitution was a living document that could be interpreted by the Supreme Court for the times.  I believe many share that view because I often hear that repeated.

That understanding is not correct.  But, the incorrectness has had good company, including a good number of Supreme Court justices.

There’s two reasons that understanding is incorrect.  First, the idea of the Constitution is to compartmentalize authority in government and to provide checks and balances to prevent the consolidation of power into too few hands — something that motivated the founding of our country.

The legislature has the power to make laws.  The judiciary has the power to determine if something is lawful.  Giving the judiciary the power to interpret laws as they see fit for the times essentially gives the judiciary a power it was specifically intended not to have — to make laws.

If the judiciary can interpret the Constitution like soothsayers interpret Nostradamus prophecies, then there really isn’t much that the judiciary cannot do.  And that isn’t much of a check or balance.

So, you might ask, but the Constitution is a living document designed to change with times, isn’t it?

That brings us to the second reason that the general understanding of the Constitution is incorrect.  It is a living document.  But its life emanates from Article V not judicial interpretation.  Article V is titled Amendment.  The Constitution can be amended at any time.

The Constitution has been amended twenty-seven times.  If we’d like to change the scope of government powers, then we should do it correctly through amendment.

Hopefully this renewed interest in the Constitution will lead to more people unlearning incorrect knowledge about it, just like I have done.  I owe that unlearning primarily to Thomas Sowell and his books, The Vision of the AnointedConflict of Visions and Intellectuals and Society.

Here are a collection of other Constitutional comments from today.  From Roger Pilon in today’s Wall Street Journal:

Thus the first question the new Congress should ask of any proposed law is: Does the Constitution authorize us to pursue this end? If not, that ends the matter. If yes, the second question is: Are the means we employ “necessary and proper,” as constrained by the principles of federalism and the rights retained by the people that are implied by a government of enumerated powers? In essence, the Constitution is no more complicated than that. It was written to be understood by ordinary citizens.

From Don Boudreaux of Cafe Hayek (see the comments section of the linked blog post):

Even the leftist Yale law professor Bruce Ackerman – quite a respected scholar, and justly so – admits that the text of the Constitution, read as it is written and as the framers intended, would get rid of the vast majority of what Uncle Sam has done since the early 1930s. See Ackerman’s fine 1991 book We the People. Ackerman goes on to argue that the Constitution was amended informally (i.e., not via Art. V) by a change in Americans’ understanding of the proper role of government.

Constitutional originalists want the Constitution to be read as closely as possible according to its actual texts; scholars such as Ackerman want the ‘amendments’ created by changes in Americans’ attitudes to be read into the document.

Finally, Charles Rowley on his blog:

The Constitution places a dagger right at the heart of the progressive movement in its efforts to overturn limited government without resort to major constitutional amendments.

I am thankful that we are finally getting to the point where we are going to have this discussion.  This is a much better climate than a year ago when asked about the Constitutionality of the health care legislation, Nancy Pelosi replied, “Are you serious?”  I guess it proves the old saying, sometimes things have to get worse before they get better.

Is this a pay increase or a pay cut?

According to this Washington Post article, President Obama’s budget proposes a 1.4% pay increase for government civilian and military personnel next year.  The article says this is less than the 2% civilian and 3.4% military pay increases this year.

Democrats are notorious for referring to spending increases as decreases.  For example, if the budget of the Department of Energy has been growing at 5% a year and is then reduced to 4%, in the past Democrats would call this a 1% spending cut, even though they are still increasing spending by 4% from the previous year.

Why aren’t they consistent when describing salary changes?  Using their lingo, a 1.4% pay increase is  a 0.6% cut for civilians and 2.0% cut for the military.

I’ve always thought that referring to a year-over-year increase as a cut was absurd and meant to be deceptive for those who don’t pay too close attention.  The fact that they are not consistent by referring to these pay increases as cuts confirms that.

Clever Buffett

I read in this Wall Street Journal article that Warren Buffett and Bill Gates are starting a campaign to persuade wealthy people to donate half their wealth to charity (charity bubble anyone?).

It reminded me of a long-standing disagreement I have with Warren Buffett.  Buffett’s business and investment acumen are undeniable.  But his political, economic and tax policy viewpoints are naive.  One of Buffett’s key investment tenets is to stick with what you know.  He should adhere to this tenet in matters of the economy and taxes.

Several years ago, Buffett came out in favor of the estate tax and said the tax system isn’t fair (or just) because he pays a higher rate than some of his employees.  From an ABC article in 2007:

Buffett says he pays 18 percent of his salary to the IRS while the rest of his staff pays nearly twice that — 33 percent, a lopsided equation that put Buffett in a Robin Hood frame of mind.

“Frankly, an economy where my receptionist pays a lot higher tax rate than, than I do does not strike me as a just economy,” he told lawmakers.

Strangely, in 2003 Buffett published a column in his newspaper, the Washington Post, making a similar case (see copy of his Washington Post article by clicking on more at the end of this entry) regarding cuts in dividend tax rates.  In the 2003 article, he wrote that his tax rate was the same as his receptionist’s, about 30%.

First, I’d be interested to know what changed between 2003 and 2007 to lower his tax rate from 30% to 18%.   Did the tax code change, did his income change and put him in another tax bracket or did the type of income or tax he used to calculate his tax rate change between his two analyses?

Second, in my next post, I’ll show that Buffett used hypocrisy in 2003 to arrive at the conclusion that he would pay a much lower tax rate than his receptionist if Berkshire Hathaway paid a dividend to its shareholders and the tax law that he was criticizing passed.  His hypocrisy is that he uses inconsistent approaches to view his wealth and tax rates.  I think the way he views his wealth is valid.  The way he views his tax is not valid, nor is it consistent with the way he views his wealth.

Click to read Buffett’s 2003 Washington Post article:

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Planning for the Worst

A friend sent me a link to Richard Posner’s column in the Washington Post, From oil spill to the financial crisis, why we don’t plan for the worst.

For the most part, I agree with Mr. Posner’s column, but I do have some thoughts.

I think Posner misses the role government played in the financial crisis.  I agree with Russ Roberts’s take that there was a feeling government would step in if things got bad.  Robert’s makes the case that the precedence of bailouts had been set for 30 years.  Government officials were deeply entwined in the debacle by setting public goals to expand home ownership and directing Freddie and Fannie to buy bad mortgages to fulfill their goals of expanded home ownership.  They had a horse in the race.  Why would they let if fail?

Government involvement distorted price signals in the market – something that gets no attention in the media.  Instead of buying a mortgage based solely on the economics (can this guy pay it back, will the house be worth this much?) they were also buying an implied option of a government bailout (if the guy can’t pay back or housing prices go down, government will step in and I’ll get something back).

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