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Friday, September 16, 2005

Why Return To New Orleans?

Robert Musil opines that many of the poor evacuees from New Orleans will not return. They plan on staying in Houston. I agree. Why would anyone poor return to the hopeless life they led in New orleans when there is opportunity in Texas?

Musil also compares Katrina with the Northridge earthquake in Los Angeles- Santa Monica of 1994. Many Santa Monica residents never returned as the landlords never rebuit or up-graded to code because of rent control there. He writes:

In areas experiencing similar force and shock from the quake and having similar geological characteristics, apartment houses in Los Angeles in general fared far better than structures of similar age and style in Santa Monica. The difference was mostly to be found in the fact that Los Angeles landlords had upgraded their structures far more extensively and thoroughly than their Santa Monica counterparts - mostly as a result of differences in the rent control laws between the two cities...

Santa Monica did not sufficiently permit landlords to effectively "pass along" earthquake retrofitting costs to renters. But, probably more importantly, many Santa Monica landlords didn't want to preserve their structures. Landlords reasoned that given the Santa Monica laws, total destruction of one's apartment house in an earthquake was not necessarily a bad thing.

There has to be low-income housing to return to. Given the expected welfare, statist local and state governemnt in New Orleans and Louisiana, the attraction of entrepreneurship is absent. And with it, people motivated to move in.

Thursday, September 15, 2005

The Big Easy Was In Control or Chaos?

Michael Brown, the former FEMA head, has been interviewed by the NYT and paints an initial picture of an inability to figure out the status of Louisiana because of stonewalling by the locals, Governor Blanco in particular. Her televised performance gives Brown's account credence.

"I truly believed the White House was not at fault here," he said. He focused much of his criticism on Governor Blanco, contrasting what he described as her confused response with far more agile mobilizations in Mississippi and Alabama, as well as in Florida during last year's hurricanes.

While Blanco accepted responsibility, she denied FEMA was stonewalled in any way:

Governor Blanco said Wednesday that she took responsibility for failures and missteps in the immediate response to the hurricane and pledged a united effort to rebuild areas ravaged by the storm, adding, "at the state level, we must take a careful look at what went wrong and make sure it never happens again." A spokesman for Ms. Blanco denied Mr. Brown's description of disarray in Louisiana's emergency response operation. "That is just totally inaccurate," said Bob Mann, the governor's communications director. "Everything that Mr. Brown needed in terms of resources or information from the state, he had those available to him."

Disarray is in the eyes of the beholder. Check out this clip and tell me if there was not complete chaos in New Orleans:

http://www.wimp.com/orleans/


Chernobyl's Mythology

Michael Fumento asks:

Why would an energy-craving nation (the U.S.) that also demands a pristine environment put the kibosh on a limitless form of power (nuclear energy) that produces no air pollution and no emissions environmentalists claim cause global warming?

It is Chernobyl's mythology. Fumento explains that rather than the half million expected deaths deaths from radioactive fallout, there were 4,000. Rather than the claimed 30,000 immediate deaths, there were 47. Other problems, like children drinking contaminated milk, were avoidable (except in a totalitarian socialist state).

He reports something I had never read before:

Tragically, women as far away as southern Italy aborted their babies because of environmentalist propaganda essentially claiming they’d be born with three eyes and tentacles. Yet the report finds no evidence for excessive birth defects.

Fearmongering kills. And costs.

Never mind that nuke plants supply 20% of our energy and yet have never harmed a single American, nor that there’s never been an accident in France where they supply 75% of the nation’s energy.

Never mind that accidents caused by natural gas, petroleum products, and accidents and
black lung disease from coal take a steady toll of lives each year. Never mind that we’re constantly bombarded with radiation from above (the sun) and below (the earth).

And never mind that even U.S. reactors designed four decades ago are incomparably safer than Chernobyl. Newer technologies such as “
pebble bed reactors,” in which the radioactive material is sealed in small graphite balls, are safer still.

Repeating Friedman

Repeating Milton and Rose Friedman:

[I]f an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

On Sacrifice, Government vs. Private Response and Price Gouging

From Bob Novak:

When Congress was called back before Labor Day to pass a $10 billion first installment, [Senator Tom] Coburn on Sept. 1 declared Congress should "make budget sacrifices of its own if we expect the American people to do the same." On Sept. 6, Sen. John McCain, a longtime anti-pork crusader, joined Coburn's effort. They declared: "Members of Congress should, at least temporarily, deny themselves a few of the comforts of political office." But there has been no word of support from Republican leaders or the administration.

The $15.3 billion in OMB proposed cuts is just the beginning of the Coburn "sacrifices." He would cut into $27 billion of spending earmarked by individual senators and House members in this year alone. As chairman of the Senate subcommittee on federal financial management, he has found $41.5 billion in government overpayments because of poor accounting practices, $1.2 billion in an "over-priced" renovation of United Nations headquarters, $18 billion in General Services Administration (GSA) middle-man fees and $46 million in cost overruns at the Securities and Exchange Commission (SEC).

From Thomas Sowell on the response of government and private enterprise in Katrina relief:

Well before Katrina reached New Orleans, when it was still just a tropical depression off the coast of Florida, Wal-Mart was rushing electric generators, bottled water, and other emergency supplies to its distribution centers along the Gulf coast.

Nor was Wal-Mart unique. Federal Express rushed 100 tons of supplies into the stricken area after Katrina hit. State Farm Insurance sent in a couple of thousand special agents to expedite disaster claims. Other businesses scrambled to get their goods or services into the area.
Meanwhile, laws prevent the federal government from coming in without the permission or a request from state or local authorities. Unfortunately, the mayor of New Orleans and the governor of Louisiana are of a different party than President Bush, which may have something to do with their initial reluctance to have him come in and get political credit.


In the end, there was no political credit for anybody. There was just finger-pointing and the blame game.

Larry Elder on "price gouging":

Alabama Attorney General Troy King says price gouging occurs when the seller prices an item or service at 25 percent or more above the average price which was charged in the same area 30 days before the governor declares a state of emergency. The law allows exceptions for price increases attributable to "a reasonable cost."

Hm-mm, does this apply to, say, housing prices?

For example, the city of Baton Rouge, almost 80 miles from New Orleans, saw its population double as a result of the people displaced by the hurricane and flood. Practically overnight, housing prices in Baton Rouge increased some 20 percent. Yet one reporter explained, "In a phenomenon familiar to Southern California's housing market, prices are rising not so much because sellers are gouging, but because buyers are bidding up the prices." "Not so much"?

In economists Milton and Rose Friedman's classic book "Free to Choose," they explain supply and demand. " . . . [I]f an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another. . . . Prices . . . transmit information. . . . Suppose that a forest fire or strike reduces the availability of wood. The price of wood will go up. That will tell the manufacturer of pencils that it will pay him to use less wood, and it will not pay him to produce as many pencils as before unless he can sell them for a higher price. The smaller production of pencils will enable the retailer to charge a higher price, and the higher price will inform the final user that it will pay him to wear his pencil down to a shorter stub before he discards it, or shift to a mechanical pencil. . . . Anything that prevents prices from expressing freely the conditions of demand or supply interferes with the transmission of accurate information."

Wednesday, September 14, 2005

Federal Relief makes For Moral Hazard

In discussing the federal relief being proposed for Katrina victims and the rebuilding of the damage, John Tamny provides historical perspective on federal responses to disasters. He focuses on the Mississippi flood of 1927 where the attitude of politicians and the public was that it was up to individuals and charity to work through recovery. He writes:

Massive aid has never worked to do more than temporarily patch an injured economy, and it won’t work this time. More important, it has to be asked whether or not today’s federal bidding wars between the political parties are examples of “moral hazard” at its worst.

This is not meant to minimize the truly awful impact of Hurricane Katrina on Louisiana and Mississippi. But if U.S. taxpayers are going to pay each time a natural disaster strikes within our borders, won’t there be less incentive on the part of states, municipalities, and builders to plan and construct cities and housing developments with local hazards in mind?

Is the MSM Reporting The "News"?

The MSM gotcha-gang has been relentless in pursuing the "Bush failure" angle over objectively providing information. I would like to know how the response to this catastrophe compares to others. I want to know what services were expected from what sources in what expected time frame. Too much is expected in a vacuum. Seeing people consoling hungry, crying babies at the Superdome provided poignant pictures or watching houses and cars floating in a river that used to be a street is something no one can avoid looking at (and no one should be faulted for seeking a Pulitzer Prize in the process) but I would like to know the nuts and bolts of what is happening. Reporting news is not the focus of the MSM.

Skip March writes the following:

The recent exchange between NBC reporter David Gregory and Scott McClelland, White House Press Secretary underscores the tension that exists between the White House and the MSM media. Frankly, McClelland could have handled it better. But although on the surface Gregory's question regarding the President's confidence in Mike Brown seems to be reasonable, it also underscores the presumptions MSM reporters have about the role of the federal government and its responsibilities.

Overwhelming focus on the Federal Government's responsibility in response to Katrina in particular has virtually given the Mayor of New Orleans, the Governor of Louisiana and the Police Chief of New Orleans a free pass on responsibility. It has also allowed Democratic leaders to do nothing more than blame, fingerpoint and avoid any responsibility for their own Party in this disaster. This coverage has missed the mark on the fact that this disaster has been decades in the making.

Another disturbing problem about the MSM's objectivity in its reporting just came to light in David Gregory's remarks on Imus this morning. The President has just taken another level of responsibility for the Federal response to Katrina. Reporter Gregory commented that this taking responsibility was not typical of this Administration. This certainly reveals some level of gamesmanship going on which the MSM has taken on, that is having the objective of getting President Bush to apologize or accept responsibility beyond what may be appropriate. The President's recent acknowledgement is more a response to political fallout from perceptions largely framed by the MSM. I did not hear Gregory comment that the Mayor, Governor or any other Louisiana official has not even come close to taking any responsibility, let alone having a clue. Objectivity is again undermined.

This is not so much a comment on David Gregory as it is on the MSM as I have seen this type of talk growing since the Iraq war started where the tremendous gains and successes are covered as an afterthought.

Sacrifice Should Come From Government

We read a lot about price gouging, especially during a disaster when goods and services become scarce. Showing economic ignorance, politicians warn that price gouging will be prosecuted. Their foolish supporters applaud.

But what I am most fearful of is tax gouging. The costs of war, damage caused by natural disasters or a new crisis discovered by an Ivy League professor result in public approval of higher government spending. The call is made that we all need to sacrifice to alleviate the problem. Then, never ones to check on the progress or value of the program, politicians keep on subsidizing it forever. Was the crisis ever really a crisis? Who knows.

If the people sought private enterprise to deal with the crisis, that new industry or entrepreneur would remain in business so long as there was demand for those goods or services at the prices charged. They would either make it rich or flame out. They can become the next GE or IBM or they can make some money and then try something else. But the people who need the goods or services will make that decision.

The Katrina event shows that philanthropy can provide the financial assistance for many of the needs. Individual effort can take care of the rest. For those forlornly unable to cope, there are churches, family and temporary government provends. The last can be supported by revenues already received by government without additional taxes. Rather than raising taxes, there are significant elective programs within the current budget that must be cut at the same time.

Veronique de Rugy estimates there is $24 billion of pork in last year’s Omnibus bill for bridges and to and from nowhere. She found another $56 billion of cuts easily made in the budget. $80 billion is an excellent start. Note that these are cuts that keep on giving. Besides diverting this money this year, it can be done next year too. Then, when New Orleans and other areas are at the point of self-sufficiency, the spigot can remain closed and the money can remain (not go back) in the hands of the citizens.

In other words, the government needs to make the sacrifice this time. As de Rugy states:

Being compassionate should not prevent lawmakers from being responsible leaders.

Tuesday, September 13, 2005

Intelligent Design of Economic Theory

Arnold Kling in Tech Central equates people's faith in the competence of government bureaucracies as a sort of belief in Intelligent Design. When it misfunctions their answer is more money and more centralization (eg No Child or Homeland Security). The free market philosophy is more akin to Darwinism. The Intelligent Design economists hope that the right leader will properly run the agency while free marketers allow competition and smaller scales to work more efficiently.

Read Kling's take. Very interesting.

"New" Democrats Want More Money

George Will gives Illinois Democrat Barack Obama the sweetest bow-tied dressing down about his claim that Washington's indifference smacked of racism. Will wrote:

America's always fast-flowing river of race-obsessing has overflowed its banks, and last Sunday on ``This Week'' Sen. Barack Obama, Illinois' freshman Democrat, applied to the expression of old banalities a fluency that would be beguiling were it without content. Unfortunately, it included the requisite lament about the president's inadequate ``empathy" and an amazing criticism of the government's ``historic indifference'' and its ``passive indifference'' that ``is as bad as active malice.'' The senator, 44, is just 30 months older than the ``war on poverty'' that President Johnson declared in January 1964. Since then the indifference that is as bad as active malice has been expressed in more than $6.6 trillion of antipoverty spending, strictly defined.

The senator is called a ``new kind of Democrat,'' which often means one with new ways of ignoring evidence discordant with old liberal orthodoxies about using cash -- much of it spent through liberalism's ``caring professions'' -- to cope with cultural collapse. He might, however, care to note three not-at-all recondite rules for avoiding poverty: graduate from high school, don't have a baby until you are married, don't marry while you are a teenager. Among people who obey those rules, poverty is minimal.

I wish I said that.

I've Got Blisters On My Toes!

Unions are paying people to picket Wal-Mart in the Vegas area. While few of the picketers actually worked at Wal-Mart, picketer Sal Rivera has. He told Las Vegas Weekly:

"I can't complain. It wasn't bad. They started paying me at $6.75, and after three months I was already getting $7, then I got Employee of the Month, and by the time I left (in less than one year), I was making $8.63 an hour."

Rivera worked in maintenance and quit four years ago for personal reasons, he says. He would consider reapplying.

The union is paying him $6 per hour. He should consider that the store pays more and is air-conditioned.

Picketers who get blisters on their feet have been buying balm from the Wal-Mart pharmacy. At a very reasonable price. No joke.

On Punishment

Like Allen Gorin, I am also not a biblical scholar. But I know where Allen got the first quote below. We are both reading Joseph Telushkin's "Biblical Literacy". I highly recommend this book. I have gathered that the God of the Old Testament did not hold back punishment where it was due, and only when Abraham and Moses gave strenuous arguments against destroying everyone in a town did He relent or at least give people a chance to correct their behavior. The Bible is clear that human beings sometimes need punishment, sometimes quite brutal, to learn valuable lessons.

A wonderful and sensitive 8-year old boy, Tommy, is a close friend of my daughter's. He is slight and not very masculine. As school began last week, this second-grader has been taunted and picked on by a bully on the bus. Tommy has been claiming he is too ill to attend school but it is clear he is in fear of the bully. The school has been apprised and they have spoken with the bully to cease the behavior. The clincher is that some of the boys on Tommy's street who have played with him all summer long have adopted to treating Tommy just as the bully did! They have been taunting Tommy in the same manner as the bully had.

Does this indicate why punishment is required?

Compassion's Value Has Limits

Further on Prager's "Feminization" article, Allen Gorin writes:

There is a Talmudic saying appropriate to this subject: "He who is compassionate when he should be harsh will, in the end, be harsh when he should be compassionate." (alternatively expressed as "He who is compassionate to the harsh will, in the end, be harsh to the compassionate.")

Compassion is a wonderful trait. So is love, conviction, tolerance et al. But like knowing which tool in a toolbox is appropriate for a particular situation, the key to life is knowing when it's wise to be compassionate (or tolerant, loving, ????) and when applying such a trait is likely to bring negative results.

The Bible's Book of Ecclesiastes, in its most famous passage, drives home this point of balancing life's traits in the following verse:

"To everything there is a season.
And a time for every purpose under heaven.
A time to be born and a time to die.
A time to plant and a time to pluck up that which is planted.
A time to kill and a time to heal.
A time to tear down and a time to build up.
A time to weep and a time to laugh....
A time to keep silent and a time to speak.
A time to love and a time to hate.
A time for war and a time for peace."

Those who have made "compassion" their God also bring to mind one of my wife's favorite sayings: "When all you have is a hammer, everything looks like a nail!" Lacking other mental/moral skills with which to engage life's challenges, these compassion-extremists play head-trips with themselves in order to square reality with their limited mindset. Most often, this manifests in their failure to confront evil, because their "value system" simply doesn't know how to deal with it. So they rationalize away evil's existence, in one way or another, managing to feel good in the process. That is, until they get mugged by reality--after which the brightest bulbs in the pack become conservative.

PS For those of you tempted to think that I'm some sort of Bible scholar...........I'm not. I learned most of Ecclesiastes' famous passage courtesy of the 60s group The Byrds, in the hit "Turn, Turn, Turn." According to Neal, the Byrd's Greatest Hits album was one of only two that I ever bought--what can I say, I'm a frugal guy--and so I memorized every word on both albums.

Emotional Nation

Dennis Prager discusses the "feminization of society" today. He says that Judeo-Christian values do not treat equality as synonymous with sameness and that "men and women are profoundly different".

He writes that America is becoming for feminized.

The Left has been successful in supplanting masculine virtues with feminine ones. That is why "compassion" is probably the most frequently cited value. That is why the further left you go, the greater the antipathy to those who make war. Indeed, universities, the embodiment of feminist emotionality and anti-Judeo-Christian values, ban military recruiters and oppose war-themed names for their sports teams.

A sentiment such as "War is not the answer" embodies leftist feminine emotionality. The statement is, after all, utter nonsense, as many of the greatest evils -- from Nazi totalitarianism and genocide to slavery -- were quite effectively "answered" by war.

I always asked people when it would be the answer? After a nuke has exploded in NYC? The same people who talk this way say "Never Again" in another context. They are lying.

Skip March adds:

Dennis Prager's article on the feminization of society raises some interesting questions and perspectives regarding "compassion". As usual the devil is in the details, that is how do we act with, carry out, live with compassion. Do we enable, rely on handouts requiring nothing in return, deny realities (sometimes harsh) or do we empower, hold accountable with clearly understood standards, acknowledge realities (sometimes harsh)? The definition of compassion through our behaviors as a society, culture, country will determine whether we grow and thrive or we die by imploding or by whithering on the vine. I've seen the latter choices work best at the individual, societal, cultural levels in my lifetime.

Prager sees some of the failure of schools due to feminine virtues "gone wild"(my quotation). He writes:

They are increasingly run by women -- women with female thinking moreover. Such thinking leads to papers no longer being graded with a red pencil lest students' feelings be hurt; to self-esteem supplanting self-discipline as a value; to banning games such as dodge ball in which participants' feelings may get hurt; to discouraging male competition; to banning peanut butter because two out of a thousand students are highly allergic to peanuts.

In a masculine society governed by Judeo-Christian values (which include a masculine-depicted and compassionate God), feminine virtues are adored and honored. In a feminized society, male virtues are discarded.

Unemotional Responses To Emergencies Are Appreciated

More on reasoned responses to calamity. Mark Steyn explains how the Democrat play-book continues to show they only call draws when it is third and long (anybody get the analogy and who won the Eagles game last night?):

[L]et's go to Nancy Pelosi, leader of the Democratic Party in the House of Representatives. At a meeting in the White House last week, she had the guts to walk up to the flailing Bush and demand he immediately fire the head of the Federal Emergency Management Agency.

"Why?" asked Bush.

"Well," said Mrs Pelosi, and then paused. "For everything." Another pause. "It was so slow."

"Thank you for your advice," said the President drily.

I'm often dismissed as a Bush cheerleader, though I disagree with him on immigration, education and bombing Syria. But come on, a guy doesn't have to be great to be better than Nancy Pelosi, the armchair general of armchair generalities.

These days, the Republicans are the party of small government and the party of big government, and the party of all points in between. The Democrats, meanwhile, are the party of emotive know-nothings, the go-to guys for soap-operatic sobbing and righteous histrionics. You can understand why the 24-hour cable-news networks love the Dems. Just stick a camera in front of New Orleans's Mayor Nagin: "To those who would criticise, where the hell were you?" he roared the other day. "Where the hell were you?" In a town you're not the mayor of, happily. That's how most Americans react. But the media think, wow, this is great television, he really socks it to Bush. And, if life were an especially bad daytime soap, he would. But ask Democrats for specifics and they're either as blank as Mrs Pelosi or as mired in their ancient tropes as Jesse Jackson, who demanded Bush appoint more high-ranking blacks to the hurricane relief effort. Charges of Republican "racism" rang particularly hollow in the context of New Orleans, where sodden blacks might be better advised to ponder what they have to show for being a wholly-owned subsidiary of the Democratic Party for four decades.

I am with Steyn on having problems with Bush on "immigration, education and bombing Syria" and I'll add government growth, expanded entitlements, trade inhibitors, not vetoeing campaign finance laws. But give me a calm reaction to an emergency and allowing the pros to do the jobs they are trained for over caterwauling and "feel your pain" politics any day.

An Unknown Giant Dies. We All Can Learn

He was not a media product. He did not sing songs and then do something lewd in public. He was not a noted activist using victims as a means to fame and fortune. He assisted people, regular people with some assets, in the pursuit of financial security for almost 70 years. That is why I am writing this.

97-year old securities broker at Bear Stearns, John Slade, died recently. He worked until the day he died. He was an amazing success. Jewish, he left Germany in 1936 and began a career as a runner and worked his way up to partner and eventually executive vice president and director of Bear Stearns in 1985.

Meanwhile, having left Germany an athlete who was denied play-time because of his religion, the impetus for his leaving Germany, he represented the US in the Olympics in 1948, when he played on the U.S. field hockey team. He also took a break from work to serve in the Army during WWII.

Healthy, wealthy and full of vigor and brains Slade called himself "the luckiest man in the world" and said he never planned to stop working.

What do we get from this life? Perseverance pays off. Brains and instinct to decide to leave Germany when he needed to. Choosing America to live where such talents can pay off with an amazing life. Immigrants do it all the time. Witness the success of Asian immigrants today.

Thanks to Bill Suda for this article.

Monday, September 12, 2005

Kelly Nails The Know-It-All Media

Jack Kelly outlines the remarkable speed of response by the government in Katrina relief. Quoting Jason van Steenwyk, a Florida Army National Guardsman mobilized six times for hurricane relief:

"The federal government pretty much met its standard time lines, but the volume of support provided during the 72-96 hour was unprecedented. The federal response here was faster than Hugo, faster than Andrew, faster than Iniki, faster than Francine and Jeanne...The United States military can wipe out the Taliban and the Iraqi Republican Guard far more swiftly than they can bring 3 million Swanson dinners to an underwater city through an area the size of Great Britain which has no power, no working ports or airports, and a devastated and impassable road network."

The critics have shown their ignorance of logistical problems in an area the size of England where, Kelly explains:

[P]ower lines are down, telecommunications are out, no gasoline is available, bridges are damaged, roads and airports are covered with debris, and apparently [journalists] have little interest in finding out.

Quoting Steenwyk once again:

You cannot speed recovery and relief efforts up by prepositioning assets (in the affected areas) since the assets are endangered by the very storm which destroyed the region.

People were blaming Bush days after the storm hit. How can anyone professing a reasonable mind know enough of any of the logistics and actions taken make a valuable assessment at that time. Understandably, they were not aided by the media (like Harry Smith and other water-logged talking heads) or they were succumbing to their baser instincts.

They may not know how to preposition assets before a storm hits but journalists know how to place prepositions in their ignorant diatribes.

Racism's Benign Abettor

Racism charges are being made by many due to the perceived tardiness of federal relief in New Orleans. I have argued that reliance on the federal government to provide services of any kind is fraught with likely incompetence, even absent catastrophic conditions. I have argued that pushing responsibility to the lowest level of government and, radical as it sounds, to individuals and private enterprise, has a better chance of succeeding than seeking bureaucracy’s answers.

John McWhorter, in his piece on Times On Line “Focus: White do-gooders did for black America”, wonders how Katrina uncovered any latent racism. While McWhorter recognizes racism against blacks exists, he finds the culprit is white Leftists who:

“[I]n the late 1960s, in the name of enlightenment and benevolence, encouraged the worst in human nature among blacks and even fostered it in legislation. The hordes of poor blacks stuck in the Superdome last week wound up there not because the White Man barred them from doing better, but because certain tragically influential White Men destroyed the fragile but lasting survival skills poor black communities had maintained since the end of slavery.”

I find the racism charge fails as the size and extent of the disaster would have found the government's response, under any administration, even under a President Jesse Jackson, wanting no matter what the skin complexion of the majority of the victims.

McWhorter concludes with:

“[W]e should all remember...[is] Katrina is a tragic close-up of a group of people staggering after, first, a hideous natural disaster but, ultimately, an equally hideous sociological disaster of 40 years ago.”

Skip March
writes:

I have listened (and it's about enough) to various pundits tell us how Katrina and its aftermath have raised, renewed, elevated the awareness of Americans about poverty and the disproportionate black population that lives at or below the poverty level in the US. To suggest after trillions of government dollars spent on poverty and the overwhelming charity of Americans from all backgrounds that America is not aware of this situation is outrageous.

Yes there is poverty and the black population suffers disproportionately. But the reason is not racist, insensitive, unaware America, it is the liberal welfare policies and programs that have perpetuated and exacerbated this problem and destroyed much of the inner city black family. This is where America has lacked awareness and I would suggest lacks awareness of the uncaring, insensitive policies of liberal politicians.

Stupid Government Tricks Are Coming

Paul Jacob advises on the prices of fuel oil and the foolishness of the Hawaii price control scheme:

Robert L. Bradley, Jr., president of the Institute for Energy Research, notes that though crude oil prices have increased above their historic average by a whopping 185 percent, gasoline prices have increased by only 25 percent. Increased efficiency in refining and transportation and marketing have actually decreased the margins for profits off of each barrel of oil. It looks like the increased profits of the oil refineries rest on that old principle of business: volume, volume, volume. Oh, and efficiency, too.

But those are mainland statistics. Are things different back on the distant island of Hawaii? Well, gasoline prices are higher, naturally. It's an outpost, so increased costs of transportation alone should lead to higher prices for consumers. Though the prices appear to be as natural as anything in society, Democratic politicians have been listening to the complainers. (I guess whining is natural, too.) And they've gone and done something. That's the biggest difference so far.

Scott Foster of Advocates for Consumer Rights, one of the groups that pushed the Hawaii oil cap bill, declares that his harebrained notion is "a grand experiment," and that his "hopes are very high." Looking to spread the gospel of regulation, he added, "If this bill works here, there are a lot of other states that are watching it and might do likewise."

When the electorate yells "Just do something!", hold onto your wallets and expect things to get worse.

Some Economic Thoughts On The Port Of New Orleans

Mike Taylor provides this on the Port of New Orleans and free market issues (see earlier post on this):

In my previous work, the Port Authority of New York and New Jersey was my biggest client. I worked mostly with the Aviation Department so I’m by no means an export on port economics. But one thing I did learn on the job was that the port business is very price competitive. The major reason for this is that ports up and down the coasts of these United States compete with each other for business.

As with most things, competition is a good thing for the ultimate consumer. Ports compete on “prices per ton” of cargo. As a matter of course, the majority of cargo coming into America’s ports is from Europe, Asia, South America and the African countries. If a shipper does not like the quote and service he gets from one port, he can go to the next.

The availability of ports in the United States offers “good substitution” for a shipper. Say you’re BMW, making some of your cars in Germany, putting these cars on a ship in Hamburg on the river Elbe and out to the Atlantic via the North Sea. Your cars are ultimately bound for a variety of states in the US as varied as New York, Florida, Ohio, Iowa, Kansas, Montana and California.

BMW can choose among various US ports for entry: Baltimore, Boston, Charleston, Chicago, Duluth, Houston, Jacksonville, New York, Philadelphia, Port Canaveral, San Francisco, Savannah, Seattle, Tampa, Toledo and New Orleans. (That’s at least 16 choices!)

From these ports, BMW cars are loaded onto trucks for delivery all across the United States.

No doubt BMW has sophisticated computer models that analyze trucking costs and have made a determination which port is most price efficient. If BMW can’t ship to New Orleans, they can choose among the other ports. Some will have a higher cost, but that cost is minimal as once the cars get to a port as they are transported many further miles inland no matter which port BMW chooses. New Orleans might have been the optimal choice for BMW, but now that New Orleans is closed, the other US ports are going to compete like madmen to get BMW’s business. BMW is still in a “buyer’s market” despite Katrina.

What does all this mean? Although shutting down New Orleans will likely have an upward price effect on goods coming into the United States because the options for shippers are one fewer, existing port competition should nullify most of that effect.

Oil refining, now that’s a different topic…


Michael Taylor

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