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Friday, January 06, 2006

We Are Close To The End

Not be hysterical or anything. More from my liberal Baby Boomer friend (he is real, I swear).

Liberal:

we're a debtor nation; our glory days are coming to an end

My response:

May I quote you on that? When did we become a debtor nation? Our deficits began around 1787 when Hamilton was forced to borrow on the amounts we had already borrowed in the Revolution. He chose to pay off the notes issued to finance the war. He did not seek World bank forgiveness.

Bill Suda asks:

Didn't they say the same thing about us when Japan was a principal buyer of our notes?

Then after I accused the liberal of interfering with competition, he writes:

Liberal:

I don't limit competition- big successful companies are in the business of limiting competition its the nature of that beast to do so

My response:

Actually, you are correct about the big business nature to dislike competition. But they only get to do so with governmental assistance. See licensing regulations, taxation, fees, Sarbanes-Oxley, minimum wage, social security, tariffs. All of the latter examples of anti-competitive factors are created by government. I know. I know. It is just the Republicans. And the Democrats.

Not part of my response but for you readers:

The Index of Economic Freedom ranks the US tied for 9th place among countries of the world. Not bad but it could be much better. Likely modern day liberal economic policies would drop us considerably. Why? Because (from MARY ANASTASIA O'GRADY of the WSJ):

The 2006 Index of Economic Freedom, published today by the Heritage Foundation and The Wall Street Journal, provides powerful clues. The annual report surveys 157 countries, grading property rights protection, the regulatory environment, tax rates, fiscal policy, government intervention in the economy, monetary policy, black markets and trade policy, assigning each a numerical rating. Each country falls into one of four categories: "free," "mostly free," "mostly unfree" and "repressed." This year's results are here.

All of the factors listed are negatively effected by modern liberal economic policy though President Bush can improve significantly (especially in trade policy, anti-trust and of course spending).

In related bad news of the US economy:

The Labor Department's fresh snapshot of the nation's jobs climate, released Friday, also showed that the unemployment rate dipped from 5 percent in November to 4.9 percent in December, as some people left the labor market for any number of reasons...For all of 2005, the economy added 2 million jobs -- a solid amount and about the same as the year before. The unemployment rate averaged 5.1 percent last year, an improvement from the 5.5 percent average registered in 2004.

Medical Services Have To Be Paid By Insurance?

Oh, and I forgot the best point Friedman made to Kuttner. Friedman explained that medical insurance has largely not picked up dental coverage. Friedman says to Kuttner:

MF: ...in the case of medicine, I would really like to see, and I wish I were competent myself to do it myself, a comparative study between dentistry and medicine.

RK: But dentistry is peripheral. It’s a very small fraction of total health spending.

MF: A very small fraction with exactly the same kind of problems, and I would like to know whether there has been any less technological development in dentistry than there has been in medicine, whether costs have gone up anything like in medicine. They all have the same kind of problems. The key problem of medicine is third party payment. Nobody pays his own bills.

Meanwhile, as Kling is reminded (and so reminds me), laser eye surgery is outside of insurance coverage and the free market with its developing technology has brought down the cost while improving the technique over the past decade.

China Is Going To Call In Its Loans!!!

Here is where the fears are proven right or wrong: The Financial Times reports that China is diversifying its investments.

China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets.

Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn (€12.4bn) a month – it could put heavy downward pressure on the greenback.


The public statement was light on particulars. Reports Financial Times:

The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.

This was reported as likely since July, 2005 in the CHINAdaily.com. I'd hold off from jumping from the 14th floor just yet. We will see what the paring down will actually be.

Adds Mike Taylor:

Let’s say that China dumps US debt… what will happen to the interest rate on American debt?

China holds about 12% of all outstanding US debt (http://www.treas.gov/tic/mfh.txt), roughly $248 billion. Let’s say they dump it all, who do they dump it on?

Someone has to BUY that debt from China… remember that a marketplace is made up of a buyer and seller that agree on a price that is beneficial to both.

There is tremendous daily trading volume on US debt that happens every day, potential buyers of the dumped US debt would have a choice to make: Do I buy this US debt at a certain interest rate/risk or do I buy another country’s debt at a certain interest rate/risk?

Although the Chinese are offering a LOT of US debt, they still have to make an attractive price to foreign buyers by lowering the price of the underlying security and thereby raising the effective interest rate. This means the Chinese would have to take LESS for the US debt they hold than it is actually WORTH… a bad deal for the Chinese… they lose money. The US debt is priced by the marketplace and is determined by the economic performance of the United States vis-à-vis other countries… the price isn’t determined by whether the Chinese like US debt, dislike George Bush or have a toothache that day.

Short-term, the amount of US debt on the market will cause the interest rate to rise on new debt issues coming out of United States… but long-term the interest rates are set by the marketplace of all foreign debt. Some economists estimate that about 12 other countries would have to raise their debt interest rates simultaneously to affect the rate offer on new debt coming from the United State.

What is the probability that 12 nations will get together and raise their rates…in effect shelling out billions of their currency for no other reason than the Chinese want to get back at the US? Practically zero.

So if you’re the Chinese government, you have to ask yourself, do you feel lucky? Well… do you, punk?!?

-- Mike

La. Deserves More Money Says Gov

Louisianna Gov. Blanco is complaining about the federal cash her state is receiving. It is getting more than half of the federal relief money, over $6 billion of the close to $12 billion.

Kuttner's Claimed Killing Of Milton Friedman

The American Prospect's Robert Kuttner interviewed Milton Friedman recently. The discussion ranged from the Fed's monetary policy to unemployment and public schooling. Kuttner consistently pursued Friedman's views on the propriety of government intervention in these matters seeking to find concessions that such intervention was warranted and successful.

Friedman always couched his approval of such interventions as permissive acts based on humanitarian choice over sound economic principles. Friedman also suggested libertarian half-measures in order to avoid displacing jolts to society. Kuttner consistently found these comments indicative of support for government intervention. Kuttner keeps on missing Friedman's point.

For instance, regarding health care and school vouchers, the discussion went:

RK: Would you regulate insurance companies to make it illegal for them to refuse to insure people who were deemed to be at risk of getting sick?

MF: No, I wouldn’t.

RK: So in other words someone who is elderly, just wouldn’t be able to get insurance, because the insurance companies couldn’t make a profit insuring that person.

MF: Well that’s why I am saying there could be a government role

RK: In what, subsidizing the ability to purchase insurance or….?

MF: In providing catastrophic insurance for people who cannot afford it.

RK: Now is that a humanitarian argument or is that an efficiency argument?.

MF: Humanitarian.

RK: And what about school vouchers, where you are on record in favor of them, but the public realm would pay the freight?

MF: My ideal school system would be one in which parents would be responsible for supporting their children, as they are responsible for feeding and clothing them, in which if the government has any role at all it is solely on a humanitarian basis, for those cases of indigent families who simply cannot afford to school their child.

RK: So you see only a humanitarian argument. You don’t see an efficiency argument?

MF: We have a system now in which the government finances schooling. We cannot get from here to there [a complete free market] in any single step, and I see vouchers as a measure that goes in the right direction and would improve enormously the quality of schooling for the great majority of children.

RK: Do you place any stock in the notion of positive externalities, or is this purely a humanitarian argument.

MF: Number one, it’s mostly a humanitarian argument, not because I do not recognize positive externalities. There are some. What you have to do is differentiate between average externalities and marginal externalities. Suppose in the absence of government involvement, half the children were not in school. Then the positive externalities would provide a very strong case for government involvement. I do think it would make this country impossible to live in, and it could not be a free society, if you had half the population never schooled On the other hand, what if in a free market 98 percent or even 90 percent of kids go to school and are getting adequate schooling. Then on the margin, is there any great externality involved? Very little I think. Now, what are the facts? In Britain, before you had compulsory schooling, in 1870 or 1880 or whenever it was, something like 90 percent of the kids were going to school. In fact, educational performance did not go up after government got involved.

RK: So, in the context of America in the 21st century, the bottom quartile of the income distribution probably couldn’t pay the going rate to have their kids schooled, so how would their kids get schooled?

MF: Well in the first place that’s not clear to me. In every society, however poor, the bottom quartile does school their children. The reason why the bottom quartile has low disposable income is partly because of our lousy educational system plus the taxes they now pay for that school system. One of my major reasons for being in favor of vouchers is because I believe that defects in our educational system play a major role in the growing inequality of income.

RK: So, your middle ground is that for people who’d have to spend something like 50 percent of their disposable income on tuition, those people would get government vouchers?

MF: No. Hold on. We shift back and forth between utopia and reality. In the utopia, yes. In reality, I want universal vouchers. Everybody pays taxes. Everybody is entitled to vouchers. I believe that if you have vouchers only for low-income people, it would be a very bad program for several reasons. A program for the poor would be a poor program. They say that about Social Security.

RK: Yes, I believe that too.

Apparently, Kuttner then wrote his analysis of the "debate" and found that he had defeated the noted Nobel prize winning economist. Here is Arnold Kling's review of Kuttner's claimed victory.

Kuttner considers Friedman's claimed lack of knowledge of facts as reported by Kuttner disingenuous. He writes: "A signature Friedman debating technique is to disclaim knowledge when conversation moves into an area where the facts are at odds with his theories."

Kling sees it as showing humility. Writes Kling:

Genuine humility is a feature of libertarian conservatism, which may be the fundamental reason that it differs from neoconservatism. If you think you have all of the answers, then it is difficult to resist passing No Child Left Behind Laws and other expressions of government hubris. Libertarian conservatives believe that we do not know enough to justify imposing our will on others through government. Supporters of activist government believe they know more than we do. I fear that they know less.


Thursday, January 05, 2006

Liberal On China Calling In Their "Loans"

More from my liberal baby Boomer friend. He now opines on the trade deficit and China holding US "debt":

Liberal:

we're in deep shit when they call in the loans or stop buying new debt?

My answer:

They have the soundest investments in the world and your scenario will not happen. There are no loans. They own securities that they can sell. Did you read Friedman or not?

Mike Taylor's blood pressure just boiled. He writes:

Fer cryin’ out loud… this guy (?) has no clue as to what he’s talking about.

You can’t “call in” a federal note… this isn’t the short term corporate bond market. The Chinese are not a bank and they have not secured their purchase of federal debt with collateral. Federal debt has a marketplace and that’s the way that holders of federal debt free themselves from the purchase.

Again, my grasp of economics is rudimentary at best… but here’s

If the Chinese stop buying American federal paper there are plenty of others willing to purchase US debt. Because, once more, we have one of the most stable and growing economies in the world and we’re all throwing off tremendous tax revenues to the federal government.

The Chinese are not doing us any favors by holding our debt… they’re investors just like everyone else in the federal debt marketplace.


Tell your friend that he should “First, seek to understand…”. If he’s unwilling to undertake that step he can’t be an effective debater.

-- MTT


I must add:

The Chinese have invested large sums of money in labor and capital to create products. They can now choose to sell them wherever they want. As a seller, you want a good customer that will pay a price that provides you a profit after deducting all of the costs of production and transportation, etc.

Even then you have to be willing to accept a buyer's currency. Do you want to waste your effort marketing to people in Cuba and Venezuela where the government cannot be trusted fiscally and could easily decide to nationalize your goods or retail outlets? Do you market to countries with low per capita income? No, you choose a risk free, wealthy, highly productive buyer. Then after you have their currency, you can either place it under your mattress or reinvest it where one receives the best (or safest) return---in the US.

With the greenbacks, the Chinese can choose to buy hard goods, build buildings, invest in the stock market, buy banks or purchase Treasury notes. Like Mike said above, the currency they hold that is called "debt" are not traditional bank loans. These are investment "securities". They have trade value and pay out scheduled interest. The Chinese in vest here because they choose this country's position as a relatively low tax, free market with high growth. There are few alternatives. Absent the implementation of economicly foolish tax increases and other government measures, the Chinese will continue investing in America forever.

The comment of my self-avowed "Liberal" friend deserves publication because he is a college educated, intelligent voter. He is representative of millions of Americans. His comments show an economic ignorance that is easily swayed by Paul Krugmans and other MSM pundits who tell them what they want to hear.

Batting .999 Is No Success In Fighting Terror

Ann Coulter explains how ludicrous is the argument by Democrats that Bush should have gotten warrants approved by the FISA court prior to wiretapping citizens since FISA was a "rubber stamp" (per James Bamford) anyway.

Naturally, one must then ask why go through such a formality and add delay to an investigation of likely terrorists if it is just going to approve the request all of the time? Since the people who were investigated had come up in "rolodexes' discovered from 2002 CIA raids on terrorists, it appears logical that the overseas communications were worth a listen. Isn't part of "Bush's failure to stop 9-11" a failure to connect the dots? Here are the dots and boy are they big!

Coulter disputes the "rubber stamp" allusion:

According to the Seattle Post-Intelligencer, the FISA court "modified more wiretap requests from the Bush administration than from the four previous presidential administrations combined."

In the 20 years preceding the attack of 9/11, the FISA court did not modify – much less reject – one single warrant request. But starting in 2001, the judges "modified 179 of the 5,645 requests for court-ordered surveillance by the Bush administration." In the years 2003 and 2004, the court issued 173 "substantive modifications" to warrant requests and rejected or "deferred" six warrant requests outright.

Even Bush critic-come-lately Andrew Sullivan calls the lack of a terror attack in the US since 9-11 "a big achievement". You have to bat 1.000 in this game.

Only Michael Jordan Has A Chance Winning a 4 on 1 game

The WSJ published a long essay written by Mark Steyn who sees a likely demise of Europe due to the demographics of Muslim and European populations. It is a "must read". Steyn explains:

As a famous Arnold Toynbee quote puts it: "Civilizations die from suicide, not murder"--as can be seen throughout much of "the Western world" right now. The progressive agenda--lavish social welfare, abortion, secularism, multiculturalism--is collectively the real suicide bomb.

He lays out the data:

"Replacement" fertility rate--i.e., the number you need for merely a stable population, not getting any bigger, not getting any smaller--is 2.1 babies per woman. Some countries are well above that: the global fertility leader, Somalia, is 6.91, Niger 6.83, Afghanistan 6.78, Yemen 6.75. Notice what those nations have in common?

Scroll way down to the bottom of the Hot One Hundred top breeders and you'll eventually find the United States, hovering just at replacement rate with 2.07 births per woman. Ireland is 1.87, New Zealand 1.79, Australia 1.76. But Canada's fertility rate is down to 1.5, well below replacement rate; Germany and Austria are at 1.3, the brink of the death spiral; Russia and Italy are at 1.2; Spain 1.1, about half replacement rate. That's to say, Spain's population is halving every generation. By 2050, Italy's population will have fallen by 22%, Bulgaria's by 36%, Estonia's by 52%. In America, demographic trends suggest that the blue states ought to apply for honorary membership of the EU: In the 2004 election, John Kerry won the 16 with the lowest birthrates; George W. Bush took 25 of the 26 states with the highest. By 2050, there will be 100 million fewer Europeans, 100 million more Americans--and mostly red-state Americans.

Mike Taylor disputes Steyn's thesis that this data reflects an inevitable trend:

Does this essay by Steyn not fall victim to the same mistakes attributed to Thomas Malthus?

(At the risk of sounding didactic, Thomas Malthus was a 19th Century economist/philosopher that predicted that the population would eventually outstrip its ability to feed itself... leading to inevitable mass famine... and that inevitability would come sooner rather than later. According to Malthus, our grandparents should have been struggling to find enough calories and you and I should be fighting each other over scraps of bread.)

I have no doubt that Steyn's current population trends are accurately reported. But it is a common mistake to convert short-term trends into long-term predictions.

At one point in the 1950's we Americans were paving a lot of roads in this country and creating an interstate highway system. We were pouring concrete over the countryside at an impressive rate. If we had taken that short-term trend out to its "logical" conclusion we would would not have much grass left to walk on today... the United States would be covered in asphalt.

But Wyoming is still largely unpaved.

Just as Malthus was wrong in predicting famine and environmentalists were wrong in predicting an earth covered with roads rather than forests Steyn is LIKELY to be wrong in predicting a Muslim takeover of society for two reasons.

There is a regression to the mean for most things in life, and that's certainly true in large-scale phenomena. The birth rate among Muslims is likely to fluctuate in the future. Further, Muslims are likely to intermarry among non-Muslims producing less Muslim offspring.

Secondly, Steyn assumes that Muslims will always retain their philosophical rigidity, bringing with them the Sharia law they practiced in their home countries. Is it not more logical to assume that Muslim attitudes will moderate over time as they are exposed to Western culture?

In the future, Muslim men may find that a wife working outside the home is an economic benefit that will over-ride what is said in the Koran. Muslim men may find that their local imam is "full of it" when he calls for jihad. Especially if it conflicts with a skiing trip to Gstaad.

Is it not more difficult to completely dominate and control women if those women have the right to vote?

Is it not more logical to assume that moderation is more likely?

I disagree.

I find Steyn's predictions quite logical.

For one, there is segregation of Muslims in Western culture (meaning Old European culture and society). They are not through voluntary and societal means being inculcated into Western values. Second, Western values look like hypocritical mouthings by fools in Old Europe. The arthritic leaders create no indication of pulse. Third, and most important, there is no Western culture in Europe. That was the main point of Steyn's article. Old Europe is merely, as Rush refers to Florida, "God's waiting room". There is no Christian culture or values to adopt, no free market entrepreneurialism to pursue and little rugged individualism that all people can relate to as in the United States.

So I see no method to create Westerners out of the large and growing immigrant population in Europe. We should recognize the effect of values on people. Right now the value system that contains a moral law is Sharia in Europe. So the Muslims are provided no alternative.

Certainly, within the confines of Europe, Muslim population may drop. But only through reduction of the welfare state and mass deportations. Neither is likely given the European stomach for a free market---remember the recent EU Constitution vote? Numbers and motivation matter in war. The Europeans may not want war but they are smack dab in the middle of one ---want it or not. Like our liberal Democrats (save Suda and Lieberman), Europeans either want to ignore the facts and take the ostrich approach or look out for themselves by draining the continent of wealth and resources (human resources, that is--look at the brain drain to the US).

History (from the 600s to the present) has shown the Muslim world's rigidity of thought. Today, even when Muslim men marry Western women, they revert to dogma upon a return to their countries (see Phyliss Chesler's experience as a Afghan captive after moving to her Muslim husband's home). And that is the point! Europe is Arabia North.

Mike, I am no adherent to Malthusian economics. But, it is a population game in this war. And there is no evidence of a will to win by one of the players.

Mike responds:

So I'm not sure what you mean by "There is no Christian culture or values to adopt...".

What I would argue is that there are enough Christian/Western values in Europe that people find attractive and would want to keep. E.g., womens' suffrage.

As for the lack of entrepreneurial spirit in Old Europe, I don't think that Muslim countries lack entrepreneurial spirit, I think they bring that with them.

I would also take issue with your assumption that Muslim populations could drop "only through reduction of the welfare state and mass deportations". The classes are not static, even if a welfare state slows down upward mobility.

Eventually the welfare state will bankrupt itself and Muslims currently on the dole will face real economic alternatives. Some of them will become middle class European citizens. This transformation will not be as fast as it would be in the United States, but it has to happen. Like the ex-Soviet Union is doing right now... The welfare state can not be supported ad infinitum. It will get ugly, but change will come.

I also take exception to your view that Islamic (or sharia) law is intransigent. It may be intransigent in Muslim countries because religion is the state.

Of course Muslim men revert to sharia practices with their Western wives when they return home, sharia law is the government in many Muslim countries and a Western woman gives up her Western rights living under Muslim government. Sad, but true.

My point is that women won't give up their rights if they remain in Europe. And I don't think they will vote themselves out of their rights if they remain in Europe, no matter how big the Muslim population gets.

I might also propose that what Bush has started in Iraq, giving women the right to vote, is a concept that will revolutionize Islamic societies in the Middle East. That could be as big a social force as anything that is happening in Europe.

Once the economy starts favoring two-income households there will be no stopping the adoption of more "Western values"...

Finally, how would one go about "winning" a population war?

My final comment:

By scoring.


Wednesday, January 04, 2006

Boston Builds More Projects And Thinks It Is Good

I once heard Jack Kemp say that no one brings their rental car to the car wash prior to returning it. Housing guru Howard Husock explains that Boston's Mayor Menino is building massive amounts of subsidized low-income housing that will be a bane to the City for years to come. Husock writes:

The fact that there are often long waiting lists for new subsidized developments should be discounted; there would be similar long lines if the city began to sell gasoline at 50 cents a gallon. Moreover, subsidized developments are hard to maintain. Indeed, some 754 of the ''new" subsidized units created during the Menino years have been public housing units which had fallen into total disrepair.

Like Milton Friedman, Husock feels that rather than subsidizing housing or providing welfare, use of earned income tax credits for those below certain levels of income are a better incentive for better use of government largesse.

Do We Abandon Spying Then?

Andrew Sullivan, brilliant, insightful and courageous (while sometimes very wrong, as we all can be) offers this comment of George Bush's stewardship of the US during these imposing and dangerous times:

You can say this for the president. The powers he seized after 9/11 have indeed apparently helped neuter al Qaeda as we once knew it. That's a big deal and a big achievement. We haven't been attacked since: another big deal, in my book. But the flip-side of unchecked executive power is also the chance of self-reinforcing error (WMD intelligence) and abuse of power (authorizing torture against domestic and international law).

A "big deal"? I'd say. Andrew never advises us which is worse---the intrusion on our liberty by eavesdropping on suspected Al Qaeda subversives who are conversing with people in the Middle East versus the obvious benefit of trumping attempts at domestic terror. He never was a fence-straddler before.

Meanwhile, writer Jack O'Neill, author of "Echelon, Somebody's Listening", wrote last week in the Washington Times:

The New York Times concedes the story starts with the CIA capture of top al Qaeda operative Abu Zubaydah in Pakistan in March 2002. With Zubaydah's capture came a treasure trove of eavesdropping intelligence sources -- e-mail addresses, cell phone numbers, and personal phone directories. These are prime intelligence sources that may lead to the infamous "dots" often used in the phrase "Why didn't our intelligence agencies 'connect the dots?' "

Some of Zubaydah's telephone numbers and e-mail addresses are in the United States. How long do you think these domestic numbers would remain active after Zubaydah's arrest is made public? Hours? One day? Two?

I suppose the following comment is Sullivan's answer: "The founders divided government for a good reason. It may be time to tame the prince." What does Andrew suggest as a replacement intelligence resource?

Thankfully Bush is not a fence-straddler.

The Liberal's Blog: Kos

Today was my first look at Kos or Daily Kos or whatever it is (here look for yourself). It is the hot liberal-Dem blog that I guess is read by all. I have read that he (or they) are anti-Bush, anti-Republican, anti-conservative (and no doubt anti-libertarian). And after looking it over---- he-they are!

Thanks to soxblog for sending me to this item.

On the cowardice of the Republicans, Kos writes:

These blowhards pretend they are macho even as they piddle on themselves in abject terror from every "boo!" that comes out of Osama Bin Laden's mouth. They like to speak about how tough they are, even though they send others to fight their battles and couldn't last a day in places like Iraq, or Sudan, or the El Salvador of my youth, or any other war-torn nation.

Bill Suda (you self-proclaimed liberal), you bust my chops to keep things non-partisan and on a purposely high level. After reading Kos, I see you are absolutely right. Thanks for the continued policing. May this blog never drop to that level.

Mike Taylor explains:

… on Fox News last night, (“most scintillating two minutes in television!”) the main proponent behind the “Daily Kos” is 34 year-old Markos Moulitsas Zúniga. I remember his lovely sentiments about the four people who were murdered in Fallujah, Iraq and had their bodies hanged from a bridge.

“They are there to wage war for profit. Screw them.”

http://www.littlegreenfootballs.com/weblog/?entry=10440

I believe that these contractors were involved with delivering food supplies to soldiers and Iraqis.

Nice guy, huh?

NYC Transit Strike- Government Monopoly

John Stossel's take on the NYC transit strike will make ideologues of both liberal and conservative bents scratch their heads. And maybe think.

Stossel explains that the right to strike for better wages is part of the free market. Our inherent property right to our labor and its fruits are equal to the property rights of the employers. But, the government as employer gets to use tactics unavailable to private employers--- the law that made such a strike illegal.

NYers may be happy that such a law exists but it replaces a better free market solution. Writes Stossel:

If private enterprise ran a city's buses, there would be many different bus companies, with many different contracts with their workers. If one bus company's workers walked out, trains and other bus lines would still be available. This would make a strike much less harmful to the public, but more dangerous to the company, which could find itself out of business. Some London subway-station workers just celebrated the new year with a 24-hour strike; London bus service, operated by private companies, was not interrupted. Too bad New York government, instead of privatizing the bus lines it runs, is taking over the lines operated by private companies.

Libertarians will explain that all functions people generally consider the jursidiction of government are better handled by private companies. We have written about the privatization of water services in Atlanta. There the private company providing the public water is doing it at 60% of the cost, better service, replacement of long-degraded mains and the ability to fire the Company if warranted. Try firing a government agency.

(Even the Atlanta case included some City dissatisfaction with the private service. Notices of default resulted in marked improvements. Such is the natural effect of private enterprise. The customer gets what he wants to pay for.)

The strike proves the point of people who prefer competition over monopoly. Which in this case was a government monopoly. As Stossel points out, the NYC subway system was originally constructed by private companies. They were taken over the the government afterward. And run happily ever after.

Tuesday, January 03, 2006

Oregon Unemployment Got Worse Under Min Wage Law

Econopundit shows how min wage proponents lie about its effect on employment. The NYT had this quote:

Tim Nesbitt, the former president of the Oregon A.F.L.-C.I.O., said that despite having one of the highest minimum wages in the country at $7.25 an hour, Oregon had twice the rate of job growth as the rest of the country.

But Econopundit has the actual data:

[A]s the rest of the US explores life with unemployment rates around 4.9%, Oregon languishes at 6.5% -- just what that big bad economics textbook says will happen!

That is something NYT writer John Broder dubbed "so much bullshit". Name-call when you don't have the argument.

Critical Thinking Is MIA

Malcolm Gladwell's book, "Blink, The Power of Thinking without Thinking", discusses the value of making instant decisions over the method of pain-staking, logical analysis. An antidote to this view is "Think: Why Crucial Decisions Can’t Be Made in the Blink of an Eye" by Michael R. LeGault. In an interview with Frontpage, Legault says:

I’ve always been intrigued by the way people think in a social sense, how they solve problems in everyday life; why some people make better decisions than other people. Since our decisions are based on our thoughts, it seemed clear that it is the way we think that ultimately determines the type of society we live in—-the United States, France or Nigeria. Thought preempts social and cultural conventions, government, even law. If we rank thought on a scale ranging from objective (that is rooted in sense experience and reason) on one end and subjective (founded on emotion and ideals) on the other end, we see that all advanced societies and civilizations have been objective—from classical Greece to the British empire.

From opposition to sound economic policy (see Sowell on the liberal "thinking" on tax cuts) to debating against capital punishment or gun control to fighting terrorism, we are seing very little critical thought in America from the Left. Knee-jerk reactions to proposals joined by volume and rudeness tend to be the norm of current debate. Just like personal decisions regarding whom we marry, what we buy or what we do about our employment are better made after thoughtful reflection, so does our macro policy improve with deliberation. But such takes work, challenge to dogma that we may have invested years in believing and losing our emotional cocoons. However, it makes us mature and more productive.

Legault sees the fallacy of the knee-jerk to the deliberative in the Harvard-Summers controversy. He states:

In Think I argue that political correctness, because it is based on an advanced form of lying, actually works against the ends it hopes to achieve. When Harvard president Larry Summers is rebuked and professionally censored for proposing (as many, many years of testing suggest) that innate, gender-related cognitive tendencies and abilities account for the dominance of men in sciences and math, it largely hurts the cause of recruiting more women into the sciences. How can you work toward a specific end if you can’t openly discuss the facts?

Look at the current arguments for raising minimum wages. rarely does it recognize or counter the empirical proof of the harm done to minority and teen hiring, macro employment numbers, small business creation and business migration. The downside of ignoring the empirical or, per Legault, thinking, is to hinder development for the people minimum wage proponents claim they wish to help.

As George Harrison wrote: "Try thinking more if just for your own sake".

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