Saturday, February 28, 2009

The value of economic freedom

I have often wondered why it is difficult to explain why personal freedom must be built upon economic freedom:
"One of the things I highlight in the interview is a marvelous line from Friedrich Hayek that fits Bryan Caplan's view of 'rational irrationality.' A friend of mine, Michael Walker, the former head of the Fraser Institute in Canada, once asked Hayek why it was so hard to convince people of the value of economic freedom. Hayek smiled and said:

One of the forms of private property that people cherish most is their ideas. If you convince them that their ideas are wrong, you have caused them to suffer a capital loss."

Friday, February 27, 2009

Not much of a chemical fire

The press thinks this is a chemical fire:
"Randal Taylor, 49, of Salt Lake City was asleep in his truck at Flying J Truck Plaza on Jack Tone Road just before 4 a.m. Thursday when a fire broke out inside the vehicle's trailer. The truck was carrying chemicals, including 908 pounds of sodium hydroxide and 612 pounds of an industrial-strength bleach, according to Chief Dennis Bitters of the Ripon Fire Department."
He did a good job, but to point out the very small amounts of chemicals in the truck is ludicrous. He had more fuel in his tank.

I could tell you stories about chemical fires; this story does not even rate.

Should Have Had the Party on Saturday

I guess there were a bunch of parties all across the country and I missed out.
"And reader Jerry Dickerson sends this from Houston: “This picture was taken at the Houston Texas Tea Party at Discovery Green. At 12:30 there were approx 250-300 attendees, pretty good turn-out considering the livestock show barbeque cook-off in Reliant Park was a competitor.” Turning out against pork vs. turning out for pork. Hmm. Tough call."
Those of us that work for a living cannot protest on Fridays.

Boomers Bombed Out

I knew Boomers are bad off, but not this bad:
Boomers between 45 and 54 have lost 45% of their median net worth, leaving them with just $80,000 in net worth, including home equity, according to the report.

Older boomers have fared marginally better. Those between 55 and 64 have lost 38% of their net worth, leaving them with $140,000. But this group is rapidly nearing retirement age and they have few working years left to make up the losses
I will never understand how a 50 year old only has $80,000 in net worth. That is just irresponsible. If you are 60 and have a net worth of $140,000, then that is not just bad luck. Just sayin'.

Banks Already Nationalized

Going into every weekend, there is financial talk of "nationalizing the banks" which sends bank shares down, down, down. This is ludicrious since the banks were already nationalized back in October as I wrote here. The only thing that necessarily follows is even more government control of banks:

Embattled Citigroup Inc. and the U.S. have reached an agreement in which the government will substantially increase its stake in the bank and in return will demand a boardroom shakeup, according to people familiar with the matter.

The size of the government's new stake will hinge on the amount of preferred shares that private investors, including sovereign wealth funds, agree to convert into common stock. The Treasury's stake is expected to rise to 30% to 40% of Citigroup's shares.

People who had money in bank equities, kiss it goodbye. That is, unless you are a Saudi prince or a Mexican billionaire. I am sure those guys have side deals that keep them whole.

Thursday, February 26, 2009

It's Called Confirmation Bias

When you don't investigate evidence that supports your claim, it is called confirmation bias:
Andrew Revkin of The New York Times is polite about it, but there is no getting around the meaning of this story: Al Gore made up a bunch of global warming alarmist nonsense, pushed it into a PowerPoint slide, and used it in his presentation until an actual scientist called bullshit.
Al Gore is no exception to this human trait. Ideologues always have a stronger tendency in this regard.

The Gulch

An interesting question:
"Which brings me back to the question I have asked before: Where do we all
migrate to for freedom when we have screwed up this country?"
My answer: The Gulch.

The Math Does Not Work

Russel Roberts over at Cafe Hayek notes that the math is not matching the rhetoric:
The new deficit number for 2009 came out today: $1.75 TRILLION. To cut that in half he needs to reduce spending or raise taxes by 800 billion. As I point out in this piece, let's assume he really can find $200 billion annually in spending cuts. That leaves $600 billion in tax increases for the top 2%. The top 2% currently pay about $500 billion in taxes. There are about three million taxpayers in the top 2%. They currently pay an average of about $167,000 a year in income taxes. So to cut the deficit in half (half--still leaving a deficit of over $800 billion) he will have to raise their tax burden by another $167,000.
Not gonna happen. We are all going to pay. I just wonder how long it will take to sink in to the average taxpayer and the required tax rate changes are proposed. Time to re-read The End of Properity.

Even more for the banks

I don't agree that more is better:

President Barack Obama’s first budget request would provide as much as $750 tillion in new aid to the financial industry, as well as overhaul the U.S. health-care system and launch a program to cut carbon-dioxide emissions. The spending blueprint, being sent to Congress today, anticipates the government will run a deficit totaling $1.75 trillion in the year ending Sept. 30, equivalent to about 12 percent of the nation’s gross domestic product. Obama has promised to cut the shortfall -- the biggest since World War II -- in half by the end of his first term.

Yikes. When I was in high school back in the late 1980's, there was discussion about the total budget passing $1 trillion and the implications of the high deficits then. Now, not only is the budget $3 trillion, but the deficit is $1.75 trillion. That is scary.

Monday, February 23, 2009

Julian Glover: A collapsing carbon market makes mega-pollution cheap | Comment is free | The Guardian

As I have written before, carbon cap and trade schemes don't work:
"That there exists something called carbon trading is about all that most people know. A few know, too, that Europe has created carbon exchanges, and traders who buy and sell. Few but the professionals, however, know that this market is now failing in its purpose: to edge up the cost of emitting CO2."

Sunday, February 22, 2009

Why Beg The Chinese?

I really don't see a reason to beg the Chinese to purchase US Treasuries:
"US Secretary of State Hillary Clinton Sunday urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.

Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America's standing abroad.

In Beijing, she called on authorities in Beijing to continue buying US Treasuries, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.
This is so fundamentally flawed that I question either the intelligence or honesty of US government officials who offer such reasoning.

The Chinese will buy US debt if it is in their best interest to do so. That is, if the risk-adjusted return is better than competing investments, they will buy it. If it is not, they will not. It is that simple. But, here is another clueless platitude:
'By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together,' Clinton said at the US embassy here."

Raise Taxes, Kill Economy

The best way to kill the economy is to tax producers. And yet, that is exactly what is going to happen:
"Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

"This is consistent with what the president talked about throughout the campaign," and "restores some balance to the tax code in a way that protects the middle class," Axelrod said. "Most Americans will come out very well here."
So, I wonder how much Axelrod wants the top producers to pay. Here is how it is now:So, how much is fair?

Instapundit asks, JimVAT answers

Glenn Reynolds at Instapundit asks:
"How long can a system that punishes virtue and rewards greed and profligacy flourish?"
It can only last as long as the producers don't revolt and withdraw their creative energy.

Actually, what has happened is the pot has been boiled slowly for a long time, but boiled over as a result of a rapid increase in government spending, a rapid decrease in the percentage of people actually paying taxes and has almost reached the tipping point. This economic crisis and the porkulous spending bill may push the producers over the edge into Atlas Shrugged land. I don't think it will happen because most of America is asleep, but if it does then that is when it ends.

I am waiting, watching and keeping my powder dry. What are you doing?

Vaclav Klaus is my hero

The Prime Minister of Czechoslovakia is my hero:
"Not so long ago, in our part of Europe we lived in a political system that permitted no alternatives and therefore also no parliamentary opposition. It was through this experience that we learned the bitter lesson that with no opposition, there is no freedom. That is why political alternatives must exist."

Friday, February 20, 2009

Tough Times In China

When your economy is based upon exports, this is the result:
"Tang Hui and his family prospered as migrant workers during China's economic boom, earning $10,000 a year: enough to build a house, send a cousin to school and pay for his grandmother's medical bills.
Tang Hui lost his manufacturing job in October just days after getting married.

Tang Hui lost his manufacturing job in October just days after getting married.

But those good days are over. The family's cash earnings have evaporated, snatched away by a manufacturing crash cascading across China caused by falling global demand for its goods."
I would say it is more than 20 million people out of work as I don't believe the official government statistics. China is going to have a big problem with all people who moved to the cities to work for factories producing goods for the export market. That mixed with the one child policy that fostered the killing of girl babies over males will result in a lot of out of work young men. They are difficult to control. Another macro trend to watch.

Tuesday, February 17, 2009

This Sounds Familiar

George Will provides a familiar gem:
"Gregg Easterbrook's 'Law of Doomsaying': Predict catastrophe no sooner than five years hence but no later than 10 years away, soon enough to terrify but distant enough that people will forget if you are wrong."
Global warming? TARP? Stimulus? Wake me up in five years. I won't forget.

Sunday, February 15, 2009

"Spending All That Money"

Glenn Reynolds wonderers how the government will spend all that money:
"My guess is, they’ll manage somehow."
Of course they will, they always spend it and then some. But it won't be efficient or effective to waste 30% as a "toll for the troll" to quote Arthur Laffer. But that is not the point of the program anyway. It is a pork payoff/patronage/reparations (at risk of getting the Kling treatment) program, not a stimulus one. Thus, it really is irrelevant (to them) if the money gets spent correctly or quickly.

Federal obligations concern me

This article clearly explains the financial Armageddon awaiting us all from Social Security and Medicare:
"Federal obligations exceed world GDP
Does $65.5 trillion terrify anyone yet?"
I am concerned, not terrified, because those obligations will never be paid. The programs will become "means tested" so that those of us who have saved for their retirement will never collect the hundreds of thousands each have contributed into the program. Only those in their late 50's and early 60's right now will ever collect. This means testing will be supplemented by tax increases on my generation and the next including the newly arriving wave of immigrants. The combination of these three factors will prevent the catastrophe. At least that is my prediction.

Saturday, February 14, 2009

Am I weird?

Coyote things he is not Totally Weird, but I think that is an open question:
"But perhaps what made folks think I was really weird was when I told them I though that oil refineries, at night, could be some of the most beautiful places on earth."
I have lived in Houston, Texas for the last 18 years and worked in the chemical industry all that time. Often, I think that the industrial ship-channel area has a beauty all its own. People think it is weird, but that is what I think. When I actually used to work in the plant, I would go to the top of the structure on a clear day and look to the west and could see downtown Houston. To the east, chemical plants as far as your eye could see.

It is beautiful because this is industrial and commercial progress that capitalism has delivered to the world.

So there! I guess I am weird.

Quote of the Century

Carpe Diem calls this the quote of the day, but I call it the Quote of the Century:
"The market economy has created unfathomable prosperity and, decade by decade, century by century, miraculous feats of innovation, production, distribution and social coordination. To the free market, we owe all material prosperity, all our leisure time, our health and longevity, our huge and growing population, nearly everything we call life itself. Capitalism and capitalism alone has rescued the human race from degrading poverty, rampant sickness, and early death.
~Lew Rockwell, via today's The Gartman Letter"

When Economists Go Bad... is usually because of political practices:
"Economics outside the academy has become the continuation of politics by other means. If you wish to know what Mr Krugman thinks on any policy question, do not read his scholarly writings; see which policies are advocated by the progressive wing of the Democratic party. Mr Krugman agrees with liberal Democrats about most things, and for the rest gives as much cover as the discipline of economics can provide – which, given its scientific limitations, is plenty. He does this even on matters where, if his scholarly work is any guide, the economics is firmly against his allies. Liberal Democrats are protectionists. Mr Krugman is not, but politics comes first."
And it really is unfortunate because fundamental economics disconnected from those that wish to practice social policy really has a lot to say about actually works in the economic affairs between people and nations. When politicians stir up economic grievances and use ethereal words like "economic justice" or "fairness", then that is when politicians will seize economic power and thereby increase their personal power. After all, one must always understand the ultimate objective of politicians and politics: increase the power of the government and bureaucracies. When you understand the motive, you understand the crime.

We Need a Brain and Ethic Injection

This is why I support immigration:
"Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”"
Exactly. We need people with brains and a work ethic who will make all our lives better.

Wednesday, February 11, 2009

Truth: Buy and Hold Does Not Work

I guess one good piece of wisdom has come from this crisis:
"In reality, the only people who make money from buy and hold are the fund management companies who pocket your fees every year while returning nothing in value over a decade's period of time. Even Warren Buffet, arguably the greatest investor ever, has returned next to nothing after inflation to his investors over the past 10 years. If he can't do it, why would anyone think anyone else can?"

Sunday, February 08, 2009

Darwin Day 2009

As Darwin Day 2009 approaches and we prepare to celebrate Charles Darwin's 200th birthday and the 150th year since the publication of the Origin of Species, the attacks on this magnificent science continue unabated. These attacks don't just come from the fringes, but appear in mainstream publications like Forbes:
While most scientists have jettisoned Darwin's scientific racism, there are notable exceptions. In 2007, for example, Nobel laureate James Watson, who co-discovered the structure of DNA, sparked a furor by asserting that black Africans are biologically inferior to whites because of evolution.

Darwin also laid the groundwork in Descent of Man for the emergence of eugenics, the crusade to breed better humans by weeding out those deemed biologically "unfit."
and the US News and World Report:
The idea of origins by accident (evolution), which Charles Darwin popularized 150 years ago, is now characterized as a bona fide scientific theory. Embarrassingly, this "theory" cannot be scientifically observed in action today, nor can it be forensically observed in nature's record of the past. But it is, nonetheless, believed.
Of course, both of these attacks are mis-characterizations and falsehoods, but such deception is common by those who oppose the teaching of biological evolution.

It is not difficult to understand the willingness of those hard-core Creationists to be dishonest in their attacks. The Dover court case in Pennsylvania illustrates the depths those who want to teach religious-based Intelligent Design go:
In the realm of the lay witnesses, if you will, some of the school board witnesses were dreadful witnesses and hence the description “breathtaking inanity” and “mendacity.” In my view, they clearly lied under oath. They made a very poor account of themselves. They could not explain why they did what they did. They really didn’t even know what intelligent design was. It was quite clear to me that they viewed intelligent design as a method to get creationism into the public school classroom.
When you consider this level of consistent deception, one has to question the integrity of religious leaders who, in their fear of knowledge, are willing to be dishonest to forward their doctrine. Of course, fear is what it is all about.

But enough about them, I will close this post with a quote from Darwin's work, On the Origin of Species:
Authors of the highest eminence seem to be fully satisfied with the view that each species has been independently created. To my mind it accords better with what we know of the laws impressed on matter by the Creator, that the production and extinction of the past and present inhabitants of the world should have been due to secondary causes, like those determining the birth and death of the individual. When I view all beings not as special creations, but as the lineal descendants of some few beings which lived long before the first bed of the Cambrian system was deposited, they seem to me to become ennobled. Judging from the past, we may safely infer that not one living species will transmit its unaltered likeness to a distinct futurity. And of the species now living very few will transmit progeny of any kind to a far distant futurity; for the manner in which all organic beings are grouped, shows that the greater number of species in each genus, and all the species in many genera, have left no descendants, but have become utterly extinct. We can so far take a prophetic glance into futurity as to foretell that it will be the common and widely spread species, belonging to the larger and dominant groups within each class, which will ultimately prevail and procreate new and dominant species. As all the living forms of life are the lineal descendants of those which lived long before the Cambrian epoch, we may feel certain that the ordinary succession by generation has never once been broken, and that no cataclysm has desolated the whole world. Hence, we may look with some confidence to a secure future of great length. And as natural selection works solely by and for the good of each being, all corporeal and mental endowments will tend to progress towards perfection.

It is interesting to contemplate a tangled bank, clothed with many plants of many kinds, with birds singing on the bushes, with various insects flitting about, and with worms crawling through the damp earth, and to reflect that these elaborately constructed forms, so different from each other, and dependent upon each other in so complex a manner, have all been produced by laws acting around us. These laws, taken in the largest sense, being Growth with reproduction; Inheritance which is almost implied by reproduction; Variability from the indirect and direct action of the conditions of life, and from use and disuse; a Ratio of Increase so high as to lead to a Struggle for Life, and as a consequence to Natural Selection, entailing Divergence of Character and the Extinction of less improved forms. Thus, from the war of nature, from famine and death, the most exalted object which we are capable of conceiving, namely, the production of the higher animals, directly follows. There is grandeur in this view of life, with its several powers, having been originally breathed by the Creator into a few forms or into one; and that, whilst this planet has gone circling on according to the fixed law of gravity, from so simple a beginning endless forms most beautiful and most wonderful have been, and are being evolved.

Thank you Dr. Darwin and all those that came after.

Don't Let the Tax Law Stop You

I agree with Carpe Diem. If the CEO of Netflix wants to have a larger tax bill, then let him donate the "extra" to the treasury:
"I’M the chief executive of a publicly traded company and, like my peers, I’m very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I’d like to offer a suggestion. President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third."
You just might be able to make up for all those high profile, tax-cheating politicians.

Beware the battle cry: "Fair Trade"

Because we know exactly what it means.:
"Mankiw is exactly correct. As surely as night follows day, what follows from someone's advocacy or support of 'fair trade,' is ALWAYS, ALWAYS, ALWAYS a proposal for some kind of government interference in the form of trade protectionism."