Friday, December 29, 2006

Lieberman off the mark

In an oped piece in the Post Senator Joe Lieberman writes,

“Radical Islamist terrorist groups, both Sunni and Shiite, would reap victories simultaneously symbolic and tangible, as Iraq became a safe haven in which to train and strengthen their foot soldiers and Iran's terrorist agents.”

Joe- What are you talking about? Sunni’s and Shi’ites hate each other! Do you think that they will simply set up sovereign terror training camps and live happily ever after attacking the west/Israel? No, they will fight each other.

The real problem is that there will be killing fields in mixed ethnic neighborhoods and regional forces will intervene on behalf of their kin. Since both sides and their backers are relatively equal they will balance each other. It wont be pretty but is sure wont be laid back terrorist utopia.

Although I do not think a troop surge will fix the problem I hope it does because it is only a matter of time until it is a reality.

Thursday, December 28, 2006

Sowell 08

Thomas Sowell’s article in National Review today is wonderful. I was simply going to quote it but almost every line is quotable. My final decision is to just take the top three and link the article.

Progressives are in the business of complaining and denouncing — as a prelude to seeking sweeping powers to control other people’s lives, in the name of curing the ills of society.

“Progressives” in the media and among academics and intellectuals claim to be interested in ending poverty but the production of more output is the only way to end poverty for millions of people.

The real obsession of the Left is in gaining power or, at the very least, engaging in moral exhibitionism

Honorable Mention:

Except for people who can’t work or won’t work, there is very little real poverty in the United States today, except among people who come from poverty-stricken countries and bring their poverty with them.

Thank You John Goodman

Health care costs now accounts for 16% of the economy and is growing rapidly. While there are many causes the solution is simple: subject health care to free market forces. For all intent purposes health insurance (in its current incarnation) has taken away price signals that coordinate consumer behavior. This is because small co-pays take away the need for price shopping. Price has becomes irrelevant.

Imagine the price a can of soda would be if consumers based their decision on, either real or perceived need and brand. Soda insurers would merely attempt to find ways to restrict consumption such as restricting certain vendors and limiting the number of sodas covered but would have no instrument to control price. Since consumers have no need to price shop, producers have no need to compete with prices. Their only economic drive would be to improve quality so consumers prefer their product which only forces them not to be much worse than the competition and suppress entry of new competitors. A can of soda, under such a scenario, would probably be $10, or more.

This example probably sounds silly but there is no other insurance market that provides the consumer access to a product. Insurance is meant to prevent the consumer from loss or harm. So why must insurance cover every doctors visit and prescription instead of just hospital visits or necessary surgeries which actually prevent loss or harm? Changing the definition of health insurance from a stop-loss preventive measure to something that covers every single product or service that can be remotely connected to “health care” is the cause of millions of Americans being without any insurance. Employers have an incentive to pay for coverage that will bring their employees back to work but not to pay for tissues and aspirin. Less people covered means even higher prices because hospitals must charge more to recoup the losses they incur from uninsured patients not paying their bills.

The solution? Higher premiums, which force the health care consumer to price shop, health savings accounts which allow people to save, tax free, for when they need the money most, and complete coverage for catastrophic events. A good article in the Post today describes the fight Economist John Goodman has been waging for a well over a decade. Amazingly, the Post reports that consumers don’t like paying higher prices for visits to the doctor (investigative reporting at its best). The first consumers enrolled in such plans will pay more because it will take time for market forces to readjust the prices there is no doubt that prices will come down.

The second part of this equation, reigning in out of control litigation, I’ll leave for another time.

Wednesday, December 27, 2006

Freedom Fighters as Democrats? Not so fast.

It is time to debunk the ridiculous idea that libertarians should join forces with liberals. Libertarians, for the most part, are upset with the Republican party. This is no secret. Despite holding the presidency and both branches of congress federal spending has gone wild. Spending for war, education, and health care has increased at an LBJ pace. Bureaucracy has become the solution and not the problem. The bureaucratic failure of the FBI, CIA, and other agencies caused our inability to foresee or stop 9/11. Fix for the problem: create another huge bureaucracy to combine the efforts of the other failed bureaucracies. Problem: Americans complain about the high cost of prescription pills. Republican solution: create a convoluted law that increases the already bloated federal healthcare system to handout pills free. There are several other examples of how Republicans have betrayed the Ronald Reagan legacy of freedom but the real question is how to fix the problem. We can either work to bring the Republican party back to its roots or try and change the world view of every Democrat. I vote to stick with the Republicans.

Two issues cited by Brink Lindsay on why Libertarians should defect are gay marriage and abortion. While important, these issues do not do not drive libertarians to the polls, trump economic issues, or constitute governmental powers which unnecessarily reach into our lives. Gay marriage is not, and has never been illegal. The government in no way says who can, and cannot get married; they only say that a gay couple cannot receive a marriage license. The first time any homosexual is arrested for being a party to, attending, or planning a gay marriage then libertarians everywhere should fight it tooth-and-nail. Until that time the issue is not very important in the freedom agenda. Remember marriage is simply a document that contractually obligates a man and a woman to stay together for the purpose of procreation. There is no reason for gay couples to enter into such a contractual agreement which puts the state well within its ability to deny issuance of a marriage license.

Libertarians also don’t universally support Abortion rights either and when they do it is not a driving issue. Their belief depends on when each individual believes life begins. If you believe that abortion is simply removing a bunch of cells from a woman then restricting the procedure would be beyond the scope of the government. Conversely, if you believe that life begins at conception then it is perfectly reasonable to say that the government should be able to restrict the taking of life. If you don’t think that government should have the ability to create a simple framework for societal behavior (ban murder, rape, theft) then you are an anarchist and not a Libertarian.

While the connection between Libertarians and Democrats is fuzzy the economic divide is deep. Free trade, low taxes, and economic freedom in general are the antithesis of Democratic politics. The power base of the Democratic party is first-and-foremost Unions. Despite the decline of Union power in recent history they still provide plenty of ground troops and money for Democratic campaigns. Unions vehemently oppose free trade, fight against the ability of people to freely be employed, and acquire increased pay and benefits for their members through pressure rather than worker efficiency. There is no way that the Democrats can completely split from the Union agenda.

Democrats such as Barney Frank say that they will support free trade, and deregulation in exchange for increased benefits for workers. This is nonsense. When Barney Frank says free trade he really means fair trade. When he says deregulation he doesn’t mean taking away government control, he means exchanging one onerous regulation with another onerous regulation with a different title. Libertarians will not get what they want while he will be expanding “benefits” beyond what is compatible with the freedom agenda. Congressman Frank’s vision of America is similar to Europe where there is government provided health care, companies cannot freely hire and fire employees, and regulation chokes off foreign competition from certain industries.

Simply citing common ground in opposition to farm subsidies is not enough for the seismic shift that is being bantered about. Democrats have not opposed the Republican spending binge (their only opposition is that they can’t spend it how they want not that is spent) while they have fought against the good things that Republicans have done. Democrats want to repeal the tax cuts, have fought against Social Security privatization, oppose health savings accounts, and killed CAFTA. Republicans simply lost their bearing as opposed to Democrats which are going in the opposite direction.

Tuesday, December 26, 2006

Santorum hits the mark

"To negotiate a truce with [Iran] at this point would be to negotiate our terms of surrender."

Rick Santorum

Iran: Searching for Spare Change

According to a study published by the National Academy of Sciences Iran’s oil revenues could disappear by 2015. Currently Iran produces about 3.7 million barrels a day (which is below the OPEC quota), which earns them about $50 billion a year in an economy that only has a GDP of $181.2 billion. This accounts for a staggering 80% of Iran’s total exports.

The geopolitical implications of an Iran with no oil revenue are clear. Iran’s relative decline in power will effect the situation in Lebanon, the Shi’ite/Sunni balance of power, and stability in Iraq. They will be wholly dependent on Russia for nuclear technology and support to keep their lights on and they will begin to resemble North Korea, economically and militarily.

The difference between the two countries is that Iran will be forced to confront pressure for reform from their young population (median age 24.8). While it is impossible to know if the Ayatolla will fall as the Shah before did it is obvious that Iran will no longer have the resources to consolidate the Shia crescent.

While a weakened Iran is desirable for American foreign policy it may eliminate the only major opposition to Sunni consolidation of power and the flourishing of Sunni extremist groups- especially in Iraq. Stay tuned, this could get ugly.

Sowell 08

"Lofty talk about "social justice" or "fairness" boils down to greatly expanded powers for politicians, since those pretty words have no concrete definition. They are a blank check for creating disparities in power that dwarf disparities in income -- and are far more dangerous."

Thomas Sowell

Friday, December 22, 2006

Freedom on the Move

McCain-Feingold campaign finance, which is a direct assault on the freedom of speech, was dealt a blow yesterday. The law stops ads from mentioning a political candidate by name 30 days before a primary and 60 days before a general election.
McCain-Feingold restricts free speech more than almost any law since the Alien and Sedition act. The major difference between the two is that the former was concocted when this country was still an infant. Many leaders were still trying to navigate the waters of Democracy with recent memory and historical perspective of how governments handled dissent in a time of distress (we were on the cusp of war). Although that is no excuse for their behavior it is worth noting that the Federalists tacit disdain for democracy existed from the start.
I am actually troubled more by support for the McCain-Feingold than I am over how it is obviously unconstitutional. Politicians will always attempt to increase their power over the people. This is inherently obvious. Leaders have a natural inclination towards increasing their power. Every law, somehow, increases governmental powers. But the problem here is that the public somehow things that by ceding obviously enumerated rights to the government that we can perfect democracy, and by extension society.
As with everything the government does, it will not stop at banning the timing of ads. As people find ways to voice their opinions in other ways, power hungry leaders will continue to find ways to silence them. Why? Because democracy checks consolidated power. People who believe that society is perfectible want to make it perfect when the outcome of their efforts will only lead to tyranny. They think that having the government finance campaigns would be oh so perfect. This boggles my mind. How will allowing those already in power having influence on the means to be elected more democratic? It takes away the publics ability to check power when they are not allowed to influence who is elected.
At the very least there is one federal court that thinks the most basic of all speech, political speech, should be protected. Lets all hope this is the end of McCain-Feingold and just a bump in the road to mute.

Thursday, December 21, 2006

"What might serve Democrats best at this point is misdirection and demagoguery. They can encourage Republicans in the Senate to filibuster [the minimum wage increase] or, failing that, pass a bill so ridiculous that even President Bush will have to veto it. Then tell voters the Man is keeping them down."

Jeremy Lott

Check your wallet - there is a burgler among us!

Wednesday, December 20, 2006

Military Growth

I would like the Bush administration to answer one question regarding his plan to increase the number of soldiers. What is the goal?
Besides increasing the influence of the Army within the defense structure, I don't see how it will increase our strategic advantage. He says that it is because the war on terrorism is going to be "long". That means that either we will have a large force in Iraq for many years or that there will be another Iraq style adventure. Is this their desired direction?
The Joint Chiefs of Staff argued that an increase in force levels will "deter potential adversaries from aggressive moves based on an assumption that American power was bogged down in Iraq". This logic fails on two levels. First, it is based on an old fashioned two front war mindset. Their cold war thinking should be abandoned for a hot spot approach. The hot spot approach focuses on the ability to quickly and efficiently move forces to quell problems. Global terrorism is a result of weak/failed states and the loss of governments ability to their people which cannot be defeated with tank columns.
Secondly, troops will not be recruited and sufficiently trained for battle for years. Citing Iraq as a reason for increased troop levels must then be based on an assumption of a substantial commitment there. The Weekly Standard is not going to win a political tug of war with the American people. After Bush's troop surge the political will for policing Baghdad will be infinitesimal.

Troop Levels

Troop Surge Fallacy

Critics of the neocon troop surge plan have missed the boat. They are correct that increased troop levels will not right the ship but not for the correct reasons.
Opposition to surge:

  • Not enough troops
  • Increased demands may break military readiness
  • more troops will cause more violence
There are enough troops for a short term show of force. We cannot uphold our current commitments around the world but only means that we must prioritize. If Iraq is the priority, then the troops exist. Shifting troops from Korea and Europe would provide enough forces for the foreseeable future. This may not be an advisable option but to say it is not possible is untrue.
Deficient funding, and not increased demands are what threaten the military. Since the end of the Cold War our military has been slowly phasing equipment used to fight large WWII style wars and phasing in light, faster, and more technologically advanced equipment. The new military works very well in that it can move forces quickly and strike decisively. No military in the world can begin to compare. We are no longer striking a military force and are instead trying to suppress an entire population. We are stripping a nut by using the wrong wrench. What difference will a temporary surge make? We can complain about stripping the nut further but we still must use the wrong wrench if we ever want it off.
The worst of the arguments is that an increased presence will cause more violence. What the hell does this mean? If you don't poke the beehive you will never get the honey. I suspect that those that make these arguments leave the plastic on a new couch (just a hunch).

My rejection of afore mentioned arguments does not signal my support for more troops. I simply feel that their arguments are disingenuous. The people who bashed Rumsfield/Bremer for not sending more troops at the outset of the war are the same people who are now saying more troops will cause more violence.

Sending more troops is not the answer but we should reject the false reasoning of many critics.

Tuesday, December 19, 2006

Minimum Wage Silliness

Raising the minimum wage is pure silliness. State governments are falling over each other to raise the wage floor, preempting the federal government. This should have a minor economic impact in the current economic environment because they are not raising it above the equilibrium wage rate (true for most areas). Illegal immigrants picking vegetables in California make more than the federal minimum. Why? Because their output is worth more. The equilibrium rate has naturally risen above the minimum through efficiency which creates greater output.
The problems will start when we experience growth stagnation. When the next recession hits the higher minimum will cause a boom in unemployment. Why? Because if a worker is worth 6 dollars an hour and a business is forced to pay them 7 an hour they will cut their labor force.
In the short term teenagers will enjoy higher wages; in the long term unemployed bread winners will not be able to find a job.

Hedge Fund Regulation: Fools Gold

In the latest edition of Foreign Policy Sebastian Mallaby makes the case against hedge fund regulation . Mallaby makes the case that hedge funds create stability in the market. His argument injects reality into he demagogic political climate. Simply put hedge funds apply the breaks to major market fluctuations. As speculative risk takers, hedge fund managers are willing and able to pump funds into the market during trough and pull back during crests. This adds stability, not volatility. The volatility is simply transferred to high dollar investors that are willing to accept greater risk.

Regulators normally bemoan the lack of information available to the public, but this is a silly argument. If investors were so concerned (and this is the supposed target benefactor) then they wouldn’t be tripping over each other to get into a fund. As Mallaby outlines, managers are still subjected to a majority of the rules that keep them clean such as insider trading laws.

Hedge fund investors know what they are getting into, and the market is more stable because of their willingness to take risk. There is no reason whatsoever to take away a citizens freedom to choose how they invest their money.

Let me choose (or not) trans fats

Liberty on the Run: The Massachusetts legislature will be considering a bill that will ban all trans-fats. While there is no need to explain how this puts freedom on the run, I think there are two points that should be explored.

What do politicians think will be the net benefit to society (besides their reelection)? They say the reason is to curb obesity, especially in children, because it will increase quality of life and lower health care costs. Both of these points are dubious. Each individual should choose what they believe to be quality in their own life. If an individual believes that consuming McDonald's French fries will bring them a quality life then they should be allowed to consume that product.

The second point about saving health care costs is articulated by people who know nothing about economics. By artificially raising the price of food they are placing a tax on the people who can least afford to pay more; the poor. Shifting the burden from health care to food consumption equals no net change. Furthermore, the businesses most affected are not the corporate conglomerates, (which have been phasing out trans fats) but small businesses. McDonalds may be able to financially handle a shock but no the family owned neighborhood dinner.