Tuesday, January 31, 2012

Sentimentalists, The Old Order, The Middle Ages, Custom and Prescription into Associations, Ranks, Guilds vs. Realistic, Cold, and Matter-of-Fact Social Structure Based on Contract with Status of Least Importance

“No doubt one chief reason for the unclear and contradictory theories of class relations lies in the fact that our society, largely controlled in all its organization by one set of doctrines, still contains survivals of old social theories which are totally inconsistent with the former. In the Middle Ages men were united by custom and prescription into associations, ranks, guilds, and communities of various kinds. These ties endured as long as life lasted. Consequently society was dependent, throughout all its details, on status, and the tie, or bond, was sentimental. In our modern state, and in the United States more than anywhere else, the social structure is based on contract, and status is of the least importance. Contract, however, is rational - even rationalistic. It is also realistic, cold, and matter-of-fact. A contract relation is based on a sufficient reason, not on custom or prescription. It is not permanent. It endures only so long as the reason for it endures. In a state based on contract sentiment is out of place in any public or common affairs. It is relegated to the sphere of private and personal relations, where it depends not at all on class types, but on personal acquaintance and personal estimates. The sentimentalists among us always seize upon the survivals of the old order. They want to save them and restore them. Much of the loose thinking also which troubles us in our social discussions arises from the fact that men do not distinguish the elements of status and of contract which may be found in our society.

Whether social philosophers think it desirable or not, it is out of the question to go back to status or to the sentimental relations which once united baron and retainer, master and servant, teacher and pupil, comrade and comrade. That we have lost some grace and elegance is undeniable. That life once held more poetry and romance is true enough. But it seems impossible that any one who has studied the matter should doubt that we have gained immeasurably, and that our farther gains lie in going forward, not in going backward. The feudal ties can never be restored. If they could be restored they would bring back personal caprice, favoritism, sycophancy, and intrigue. A society based on contract is a society of free and independent men, who form ties without favor or obligation, and co-operate without cringing or intrigue. A society based on contract, therefore, gives the utmost room and chance for individual development, and for all the self-reliance and dignity of a free man. That a society of free men, co-operating under contract, is by far the strongest society which has ever yet existed; that no such society has ever yet developed the full measure of strength of which it is capable; and that the only social improvements which are now conceivable lie in the direction of more complete realization of a society of free men united by contract, are points which cannot be controverted. It follows, however, that one man, in a free state, cannot claim help from, and cannot be charged to give help to, another. To understand the full meaning of this assertion it will be worth while to see what a free democracy is“. - William Graham Sumner, What Social Classes Owe to Each Other, 1883

The Seemly Without End Greek Debt Crisis

The ongoing saga, the never solved, the ever changing Greek debt situation. A very confusing situation. The problem is solved yesterday, then its suddenly not solved. Then another meeting is announced for next week which will solve the situation. Then next week comes and no accord.

Seems oddly confusing. -Or- was the Greek debt situation explained long ago?


"It's very good jam," said the Queen.
"Well, I don't want any to-day, at any rate."
"You couldn't have it if you did want it," the Queen said. "The rule is jam tomorrow and jam yesterday but never jam to-day."
"It must come sometimes to "jam to-day,""Alice objected.
"No it can't," said the Queen. "It's jam every other day; to-day isn't any other day, you know."
"I don't understand you," said Alice. "It's dreadfully confusing."

-Through the Looking Glass.

The Word Sustainable is Unsustainable


H/T: Carpe Diem. Source: http://xkcd.com/1007/

Monday, January 30, 2012

Coincidentally irrelevant events can increase one’s “fair share“.

When acquiring your “fair share” one must know the process. Below is a story of "process".

The University of Chicago Medical Center hired Michele Obama in 2002 as executive director of programs for community relations, neighborhood outreach, volunteer recruitment, staff diversity and minority contracting. The hospital was kind enough to promote her in 2005 to vice president of community relations, neighborhood outreach, volunteer recruitment, staff diversity and minority contracting and raise her salary from $121,000 to $317,000 per year. Of course this took place when Michele’s husband had been elected US Senator which is purely coincidental and is completely irrelevant. Speaking of other coincidentally irrelevant information, Barack in 2006 requested an “earmark” for funds for the construction of a new hospital pavilion at The University of Chicago Medical Center. That request was shot down by congress (ops!). (1)

The moral to the “fair share” story is: coincidentally irrelevant events can increase one’s “fair share“. Therefore, one wants to increase one's level of coincidentally irrelevant events in order to increase one's "fair share".

(1) http://www.factcheck.org/2009/05/michelle-obamas-salary/

Sunday, January 29, 2012

“Fair Share”: The Allocation Process of Fair-Share-Units



Suppose one viewed the political argument of “fair share” as fair-share-units? That is, if one considers the fair share argument, that of transferring [redistribution], what about considering the argument in terms of transferring or redistribution of fair-share-units from some sort of production realm to some sort of recipient realm.

Putting aside one’s political view of redistribution, consider the following:

(1)    In the abstract, regarding these units of fair share, is it possible that one would experience a production problem of fair-share-units as no incentive exists for production?

(2)    On the consumption side of fair-share-units, would one experience a grand incentive to consume?

(3)    Skipping by utility, marginal utility, production frontiers, etc. …. would there be any chance [using particular debate jargon of particular debaters] of these fair-share-units being affected by “greed” or “hoarding”?

(4)    Would there exist a “1%” of fair-share-unit holders and the other “99%”?

(5)    Would the consumption of fair-share-units create “envy” and lead to class warfare distinctions among those consuming fair-share-units?

(6)    If fair-share-units, the production thereof, suffered problems, is it possible that fair-share-unit production would have to be “bailed out”?

Economics is the allocation of scarce resources with alternative uses. If the allocation thereof, with free participants in a free market is politically framed as greed, hoarding, 1% vs. 99%, envy, class warfare, and bail outs…. then the allocation process of fair-share-units would be otherwise?

Saturday, January 28, 2012

Not In My Back Yard (NIMBY): Residential Solar Panel Arrays

‘I was reminded of this when I read a recent article in ClimateWire (sub. req.), by Lacey Johnson, “Boom in Solar Panels injects NIMBY Battles into Neighborhoods.”

The story begins with Barbara Katz, whose hilltop home in historic north Baltimore, amid roaming wildlife, was threatened by her neighbor’s plan to install an 600-panel solar array. Johnson reports:


“My initial reaction was, ‘Oh my gosh, this is going to be an eyesore,’” remembers Katz, who was confronted by a plan for more than 600 ground-based solar panels on her neighbors’ lawn. “No one would want this in their backyard. It looks like it’s an industrial park.” ‘ - Robert Bradley, Jr., Master Resource, 01/27/2012


Link to the entire article appears below:

http://www.masterresource.org/2012/01/micro-solar-nimbyism/

ObamaCare and the Supreme Court: What’s Are The Arguments and Briefs Filed?

‘In the last week, the main parties in the health reform lawsuit began filing their opening briefs. Advocacy, consumer and trade groups – including AHIP, America's Health Insurance Plans – weighed in by filing amicus briefs as well.

Oral arguments are scheduled for five and a half hours over three days: March 26-28. The Court will hear arguments about four different issues:





*The constitutionality of the individual mandate.

*The constitutionality of the Medicaid provisions: Are they an illegal commandeering of the states' autonomy?

*Whether the Anti-Injunction Act bars review of the mandate until after 2014: This centers on whether the penalty for not having insurance is a tax, since the Anti-Injunction Act prohibits lawsuits stopping a tax until after the tax goes into effect.

*Which other pieces of the law should fall if the mandate is found to be unconstitutional.

HealthReform GPS has posted a detailed backgrounder on the constitutional issues before the Court and how the lower courts have ruled.

Response petitions, reply briefs and arguments will continue to be filed according to a series of deadlines that extend from now until March 7. These are among the briefs that have been filed with the Court so far:





*A 130-page brief by the Justice Dept., arguing for the mandate. It says that the mandate is needed to break the cycle of cost-shifting that makes health insurance expensive and unaffordable. The administration argues that there are lots of other mandates the federal government has imposed over the years, but the case isn't really about whether Congress can require Americans to buy insurance. It's about whether Congress can regulate the timing and method of payment of health care services.

*A 123-page brief by the 26 states saying that the Medicaid expansion is illegally coercive because states have no real choice in the matter. "No state is exempt from the massive penalty — the loss of the entirety of funding under the single largest grant-in-aid program for the states," the brief says.

*A 169-page brief by the 26 states and the National Federation of Independent Business saying that if the individual mandate is unconstitutional, the rest of the law must be struck down, too.

*An amicus brief by 36 Republican senators, and another filed by the American Center for Law & Justice and signed by about 120 congressional Republicans arguing the same point.

*An amicus brief filed by the American Action Forum and signed by more than 100 economists, including Nobel laureates, also on the issue of severability. It says, "Without the individual mandate, the ACA's reforms, including but not limited to guaranteed issue and community rating, would cause a steep increase in premiums – the opposite of Congress' express intent."

*An amicus brief by AHIP and the Blue Cross Blue Shield Association that argues that if the individual mandate is found to be unconstitutional, the market reforms (for example, guaranteed issue and community rating) must be struck as well.

Meantime, Supreme Court Chief Justice John Roberts defended the Court's ethical standards and Justices Clarence Thomas and Elena Kagan, who continue to be under pressure by some to recuse themselves from the health reform law challenge. "I have complete confidence in the capability of my colleagues to determine when recusal is warranted," Chief Justice Roberts wrote. "They are jurists of exceptional integrity and experience whose character and fitness have been examined through a rigorous appointment and confirmation process." ‘ - Humana, Humana Connections, 01/12/2012

Friday, January 27, 2012

Solyndra Inc., Beacon Power, and now Ener1: Green Cronyism and Bankruptcy - Your Tax Dollar Working to Pick Losers!

“The parent company of an electric car battery maker that received a $118 million grant from the Obama administration filed for Chapter 11 bankruptcy protection on Thursday.

New York-based Ener1 said it has been affected by competition from China and other countries.

Ener1 subsidiary EnerDel received a $118 million stimulus grant from the Energy Department in 2009, and Vice President Joe Biden visited the company's new battery plant in Indiana last year.

Ener1 is the third company to seek bankruptcy protection after receiving assistance from the Energy Department under the economic stimulus law. California solar panel maker Solyndra Inc. and Beacon Power, a Massachusetts energy-storage firm, declared bankruptcy last year. Solyndra received a $528 million federal loan, while Beacon Power got a $43 million loan guarantee.” -Fox News, 01/27/2012

Below is a link to the entire article which includes video.


http://www.foxnews.com/politics/2012/01/27/parent-obama-backed-battery-maker-goes-bankrupt/

“Fair Share”: another name for politico constituency building through the use of other peoples‘ money.



“Fair share” or a version thereof has been used many times by politicos over the years. Two components exist: fair and share.
“Fair” has very little meaning other than what one wants it to mean in a particular context. Generally, given a context of political debate, where fair is very often used, fair is said to mean: what you are doing or advocating and what someone else is not doing or advocating. That is, “fair” is how one paints the world vs. other portraits available that conflict with one’s own painting of the world.

Examining the politico’s use of "share", within the phrase fair share, means something exists that needs divided. Now comes the introduction of an implicit underlying assumption of zero sum thinking. That is, the desire of the politico is to politically frame the talking point that one party is gaining at the expense of another party. Hence the real underlying manufactured argument is that  party B deserves additional gains from party A based upon "something" existing in the abstract that somehow was divided improperly.

Therefore, "fair" and "share", are combined into an argument ultimately of: "advocating deserve". The politico advocates deserve by selling zero sum thinking by framing the argument as one party can only gain from the loss of another party regarding some abstract something that was divided somehow improperly. Hence the loss requires restoration, additional gains, or “deserves”.

In point of fact, with a free people in a free market, exchange only occurs at mutual exchange. That is, two free parties do not exchange unless each party perceives a gain and hence we come to exchange at mutual self-interest. Party A does not cause an exchange trigger at the detriment of party B as no exchange would occur as B would not find his self-interest. B turns down the zero sum exchange and goes elsewhere to seek an exchange of mutual self-interest.

If 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 only gain at the expense of another. - Milton Friedman

The politico argument is then exposed, as regardless of the manufactured abstract something that was somehow divided improperly, exchange is mutual self interest driven not zero sum driven. There is no need to restore, cause additional gains, or “deserve” as mutual self interest occurred at exchange, not zero sum.

Regardless of the economics of exchange, the politico presses on by further framing parties to exchange as now being classes to exchange (parties suddenly, notionally and purposely become classes). The politico frames exchange as not occurring between “parties” rather occurring between distinct “classes” with particular assigned attributes with attributes either trumpeted or vilified as the debate point unfolds. It remains the zero sum argument, side stepping mutual exchange reality, however goes one step further and frames parties as good vs. bad classes and classes butting heads resulting in zero sums.

The final stage of the political argument is to substitute “shirk” for “deserve”. The politico purposely puts forth the fallacy that one class is gaining at the expense of another class as being a stone cold fact, and in order for the losing class to made whole, a shirking partner needs introduced. The shirking partner is politicos through the mechanism of government who will redistribute the abstract something that was somehow divided improperly. The power to act as the shirking partner (a partner who takes part of the value and provides none of the effort) through the imposition of a cost [tax] then allows the politicos through the mechanism of government to build a dependent political constituency class through redistribution of the value extracted.


What is purposely left out of this debate is that "work" is irritating toil. Apparently the irritating toil is required of some, and the value produced by the irritating toil becomes a "claim" or "right" which  is deserved by others. Stated alternatively, the irritating toil of work producing value, comes complete with a shirking partner, a shirking partner who then takes part of the value and provides none of the effort, and uses such value as a political constituency building exercise. That the abstract something that was somehow divided improperly is then purposely captured by the politico as a value used directly for dependent political constituency building.
 

Wednesday, January 25, 2012

Manufacturing Jobs Peaked, On a World Wide Basis, Years Ago: Not a Singularly US Phenomena

Talking heads, pundits, and media types supporting current public policy [more accurately termed politico policy], are always in search of a statistical data point, holding forth statistics as fact, then making the leap that the data point constitutes complete evidence of an open and shut case…..have recently latched onto the data point of an increase in manufacturing jobs.

One must realize that the mantra of “manufacturing job” is a panacea. That is, implicit to the “manufacturing jobs” mantra of the politico and their intelligentsia following is that this particular job category, the rise and fall thereof, is the fix all. If manufacturing jobs are falling then this is the key to economic woes and the falling jobs number is due to some evil exogenous force. The rise in manufacturing jobs is a key to economic success and, of course, any rise thereof is directly due to politico policy.

Obviously the panacea and the political wrangling around this particular panacea is political dupery. However, the greater political nitwitery is that manufacturing jobs, the decline thereof, is a world wide phenomena and not singularly a US phenomena. Manufacturing jobs on a world wide basis peaked years ago yet overall output continues to increase. Technology and automation, as in the agricultural sector of the past, are supplanting the need for human workers. This technology and automation supplanting the need for human workers results in better more innovative product at a lower real cost.

Where the political dupery and political nitwitery merge is: if one is successful in attracting manufacturing jobs and builds upon the panacea, and if one looks forward considering that the current batch of dupes and nitwits being long gone twenty years hence, then one finds themselves in a 20 year future economy that has attracted an economic sector that’s worldwide employment opportunities have peaked years ago and which the unemployment is decreasing at an increasing rate while output increases at an increasing rate.

How does one frame the panacea at this 20 year future point? That is to say, how does one explain to the people alive 20 years hence that dupery and nitwitery purposely attracted an economic sector that was in decline in relation to human employment? How does one explain that nitwits attracted a sector akin to 1920’s and 30’s agriculture declining employment, and now its 1950 and agriculture is shedding jobs at a maximum rate while output skyrockets. And when manufacturing runs its course and becomes the agriculture of today, employing 3% of the employed work force yet producing mass abundance, how does one frame the panacea?

Tuesday, January 24, 2012

Environmentalism as an exclusionary, barrier to entry, denial scheme?

“In turning down Keystone, however, the President has uncovered an ugly little secret that has always lurked beneath the surface of environmentalism. Its basic appeal is to the affluent. Despite all the professions of being "liberal" and "against big business," environmentalism's main appeal is that it promises to slow the progress of industrial progress. People who are already comfortable with the present state of affairs -- who are established in the environment, so to speak -- are happy to go along with this. It is not that they have any greater insight into the mysteries and workings of nature. They are happier with the way things are. In fact, environmentalism works to their advantage. The main danger to the affluent is not that they will be denied from improving their estate but that too many other people will achieve what they already have. As the Forest Service used to say, the person who built his mountain cabin last year is an environmentalist. The person who wants to build one this year is a developer."
- William Tucker, Environmentalism and the Leisure Class, American Spectator, 01/20/2012

Link to the entire article appears below:

http://spectator.org/archives/2012/01/20/environmentalism-and-the-leisu

The Free Lunch Phenomena and Election-eering

'The economist does, normally, attribute precise meaning to the terms "more" and "less." Moreover, if a similar model of rational behavior is extended to the collective-choice process, we are able to derive propositions about individual behavior that are parallel to those contained in economic theory. If the hypotheses are valid, the representative individual should, when confronted with relevant alternatives, choose more "public goods" when the "price" of these is lowered, other relevant things remaining the same. In more familiar terms, this states that on the average the individual will vote for "more" collective activity when the taxes he must pay are reduced, other things being equal. On the contrary, if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity. In a parallel way, income-demand propositions can be derived. If the income of the individual goes up and his tax bill does not, he will tend to choose to have more "public goods." '- James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

In a nice compact and succinct fashion Buchanan and Tullock have added grand insight to when people are more adverse or less adverse to additional “public goods”. But what if the politico or special interests through politico enablers, given short term political time horizons of the politico [next election] frame something for nothing through debt?

For instance, taxes are neither reduced nor increased, and income is constant, yet the demand for “public goods” is increased through the use of debt. Hence the politico is able to exercise political constituency building through taxpayer debt rather than taxpayer dollars. It’s the proverbial free lunch.

Politicos come and go. However their reign as politician, the series of short term political time horizons, accumulate into a summation or accumulation of the series of short term political time horizons [political short term “spending“ horizons]. Politicos, past and present, exercising political constituency building through taxpayer debt, the series of free lunches merely accumulate into a mountain of debt.

The politico, with a political constituency built through taxpayer debt, can not allow the flow of public goods, of what every type, to be reduced to the dependent constituency or else the politico risks failure in reelection as the dependent constituency seeks another politico that will keep the pipeline of goods flowing.

Therefore, the politico, faced with the accumulation of free lunches [looming debt accumulation and debt service costs] needs to raise taxes to keep past promises and more future promises flowing. However, we know from Buchanan and Tullock that “… if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity.”

Hence the politico attempts to deflect austerity [reduced public goods] by reframing the spending as “needed, necessary, and required“. That current spending levels, debt service costs included, are needed, necessary, and required or else massive pain and suffering will occur, bridges will crumble, pot holes everywhere, police and fire may not have sufficient safety service resources, children will not be educated, and so the argument goes. In reality, the spending has nothing to do with pain and suffering other than the pain and suffering the politico experiences if not reelected. That in essence the underlying argument is to keep the flow of spending at a level to preserve dependent political constituency and hence achieve reelection.



The True Cost of Public Education - CATO

Sunday, January 22, 2012

Weltschmerz

It is impossible to imagine the universe run by a wise, just and omnipotent God, but it is quite easy to imagine it run by a board of gods.- H.L. Mencken


 

Taking five economists, F.A. Hayek, Milton Friedman, Thomas Sowell, Robert Lucas and Thomas Sargent, and boiling down many of their observations, one might make the following consolidated-compact summation:

Markets never clear perfectly. Why? Serially uncorrelated errors. Hence no perfection can occur. The imperfection is the "entry point" by the collectivist in the "all markets will clear" phenomena. "Entry point" meaning the entry point for the market intervention argument. Paradoxically, intervention-distortion advocated by collectivists merely creates an environment that magnifies serially uncorrelated errors. That "imperfection" is the entry point and "perfection" is the argument.... when in fact perfection become additional imperfection. (1) (2) (3) (4) (5) (6) (7) (8)

Sowell has made the observation that collectivists have a common thread debate point which is: comparison of a perfect world with the real world outcomes of free people in a market based economy. The debate point is that of perfect vs. real. That somehow, someway market intervention of central planning by a central authority will move one toward perfect from the actual/real outcome. Keep that in mind for a moment.

Enter Robert Nozick. In his book Anarchy, State, and Utopia a grand argument is put forth that limited government, property rights [the rule of law] with free people in a market based economy is very likely utopia. Please keep this point in mind for a moment. (9)

Specifically, the collectivist debating point of perfect vs. real purposely paints the chasm between the supposed perfect world and the real world as Gotham: a dark, “unfair”, “unequal” world. Its an argument of depression to the audience, that one should be depressed that perfect is not achieved.

Returning to the consolidated-compact summation [above] and Sowell and Nozick’s proposition, one unfortunately finds the evidence over the last five decades is that intervention-distortion advocated by collectivists merely creates an environment that magnifies serially uncorrelated errors -or- more succinctly dystopia. In other words, the grand notional experiment of The Great Society, for example, has fallen flat on its collectivist face resulting in differing shades of dystopia. The grand experiment may well have proven Robert Nozick’s theory.


Weltschmerz [Velt-shmairts]:


Noun, often capitalized

(1) mental depression or apathy caused by comparison of the actual state of the world with an ideal state,

(2) a mood of sentimental sadness. (10)





Notes:

(1) The Fatal Conceit: The Errors of Socialism. F.A. Hayek.

(2) After Keynesian Macroeconomics, Robert E. Lucas and Thomas J. Sargent, 1978.

(3) A Conflict of Visions, Thomas Sowell.

(4) The Visions of the Anointed, Thomas Sowell.

(5) Milton Friedman, Richmond Federal Reserve Economic Quarterly, volume 83/2 Spring 1997.

(6) The Invisible Hand in Economics and Politics, Milton Friedman, Institute of Southeast Asian Studies, 1981.

(7) Intellectuals and Society, Thomas Sowell.

(8) The Road to Serfdom, F.A. Hayek.

(9) Anarchy, State and Utopia, Robert Nozick

(10) Merriam-Webster

Saturday, January 21, 2012

Pawns and Politics

Public Policy or Politico Policy?

How does one define public policy and what in the world does the “public” have to do with “public policy”?

Public policy eludes to grass root, spontaneous order/emergent order policy that the public demands. Nay, nay. Public policy doesn’t exist. On the other hand, politico policy does in fact exist. The vast majority of “policy” appears, and is due to, the "vision" of a group of politicos and/or appears due to special interests through politico enablers. Stated alternatively, public policy eludes to the plans of the many whereas, in reality, politico policy is the plans of the few.

Political science, at the end of the day, is the altruistic notion that a well informed voter, a voter completely abreast of all issues, votes for the best political candidate that in turns makes public policy decisions in the public’s best interest. Politicos desperately want the public to believe this fairy tale. Does one perpetuate such nonsense -or- does one explain public choice theory which examines special interests, politico enablers of special interests, crony capitalism, and economic rent seeking of taxpayer dollars. That is to say, public choice theory examines how politicos through the mechanism of government build constituency through taxpayer dollars. -Or- as defined by James M. Buchanan of George Mason University: public choice theory is politics without the romance.

Does one really add insight using the phrase "public policy"? -Or- is insight gained with the use of the phrase “politico policy”?


Is it public policy that awards E. Gordon Gee, president of The Ohio State University, over $1,500,000 per year in compensation? -Or- is it politico policy that awards such compensation? Is it public policy to award Solyndra millions of dollars in the form of taxpayer financed subsidies or is it politico policy that awards such monies? Is it public policy that causes the existence of lobbyists or is it politico policy that causes the existence? Does a firm receive tax subsidies to locate in a particular state due to public policy or politico policy? (1)

Notes:

 

(1) College Presidents' Salaries, The Chronicle of Higher Education, 02/03/2010

http://chronicle.com/article/College-Presidents-Salaries/63874



































 

Thomas Sowell on Barack Obama

Thursday, January 19, 2012

Revisiting William Graham Sumner from 1883: A Society That Refuses a Class Structure Must Be a Society With No Special Class Rights



“If we refuse to recognize any classes as existing in society when, perhaps, a claim might be set up that the wealthy, educated, and virtuous have acquired special rights and precedence, we certainly cannot recognize any classes when it is attempted to establish such distinctions for the sake of imposing burdens and duties on one group for the benefit of others.”

“If words like wise and foolish, thrifty and extravagant, prudent and negligent, have any meaning in language, then it must make some difference how people behave in this world, and the difference will appear in the position they acquire in the body of society, and in relation to the chances of life. They may, then, be classified in reference to these facts.”

“The class distinctions simply result from the different degrees of success with which men have availed themselves of the chances which were presented to them. Instead of endeavoring to redistribute the acquisitions which have been made between the existing classes, our aim should be to increase, multiply, and extend the chances.”

“Such expansion is no guarantee of equality. On the contrary, if there be liberty, some will profit by the chances eagerly and some will neglect them altogether. Therefore, the greater the chances the more unequal will be the fortune of these two sets of men. So it ought to be, in all justice and right reason. The yearning after equality is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which can do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization. But if we can expand the chances we can count on a general and steady growth of civilization and advancement of society by and through its best members. In the prosecution of these chances we all owe to each other good-will, mutual respect, and mutual guarantees of liberty and security. Beyond this nothing can be affirmed as a duty of one group to another in a free state.” (1)

Notes:

(1) What Social Classes Owe to Each Other, William Graham Sumner, 1883, pages 98 and 99.

Chuck Woolery Returns: The Topic of "Democracy"

Wednesday, January 18, 2012

Buffaloed in Buffalo -or- The Home of The Public Employee Face Lift

“This is an old story for Buffalo. Ever since the city began losing its manufacturing base in the 1950s and gradually declined into one of America’s poorest cities (the poverty rate today is nearly 29%), the federal and state governments have poured hundreds of millions of dollars into subsidized redevelopment schemes that have yielded few tangible benefits.

Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.

Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades’ failures have been a dozen or so businesses in the theater district—”one of Western New York’s most heavily subsidized stretches of real estate,” said the Buffalo News.”

“But Buffalo also struggles because it remains among the highest-taxed localities in the country. According to Cato Institute scholar Dean Stansel, a Buffalo resident pays 25% more in income taxes than does the average resident in America’s 100 largest metro areas. Buffalo’s 8.75% sales tax, according to the Tax Foundation, is the fifth highest among the country’s 120 cities with more than 200,000 residents. And the property-tax burden in Buffalo and surrounding Erie County ranks in the top 10% nationwide.

These taxes have gone to support a spendthrift local government that nourishes itself at the expense of the private sector. In 2003, then-Gov. George Pataki appointed a financial control board to audit Buffalo’s finances. The Buffalo Fiscal Stability Authority accused city government of financial mismanagement, inadequate oversight, and fragmented record keeping. It detailed numerous wasteful practices in city government, including loading employee contracts with expensive provisions.

The city’s virtually insolvent school district, for example, paid for elective cosmetic surgery for its teachers and other staff. “Buffalo must have the best looking teachers in the country,” says John Faso, a former member of the control board, which lobbied unsuccessfully to have the perk ended. It continues today, to the tune of some $6 million a year.

The city also struggles to cut spending because of expensive state-imposed mandates, including a union-friendly binding arbitration law that results in rich public-employee contracts, and a state law that allows unionized public workers to continue receiving the benefits of a contract—including pay increases—even after the contract has expired. Good luck getting concessions from union leaders in new contract negotiations under such conditions.”

“In the Empire State, the official version of Buffalo’s decline is that the city lost its manufacturing jobs to cheap overseas competitors. But the flight of blue-collar jobs from upstate New York began in the late 1950s when businesses and investment bolted to more competitive American states, not to foreign countries. Today, business executives consistently rank New York one of the least desirable states in which to open or expand a business.” (1)

Read the entire essay, How Stimulus Spending Ruined Buffalo, at either of the following links:

http://online.wsj.com/article/SB10001424052970204409004577156603296740624.html




http://newyorklibertyreport.com/?p=4717



Notes:

(1) How Stimulus Spending Ruined Buffalo, The Wall Street Journal, weekend edition, 01/14-15, 2012, Steven Malanga

Tuesday, January 17, 2012

Know the Truth About Government Health-Care: The Video.

Regarding the web site Dirty Spending Secrets Dot Com

"It’s the seedy underbelly of Washington, D.C. The hallways of Congress are often dark alleys of wasteful spending and pork-laden deal-making. Down these lanes, shadowy special interests and empire-building bureaucracies lie in wait to relieve innocent taxpayers of their hard-earned money. They spend billions on wasteful programs, pet projects, and the accumulation of personal power. They threaten to bankrupt our country as our national debt soars out of control." - dirtyspendingsecrets.com

The web site Dirty Spending Secrets Dot Com is informative, enlightening, as well as entertaining. You'll laugh, you'll cry, you'll kiss your tax dollars goodbye! Link as follows:
http://www.dirtyspendingsecrets.com/

Sunday, January 15, 2012

A Charming Tale of Political Nitwitery and Your Tax Dollar: Neighborhood Stabilization Program (NSP).


There are two distinct camps of thought regarding the US housing bubble: (a) the government induced bubble caused by decades of housing market intervention augmented by a cheap money bubble created by the Federal Reserve 2002-2004,  (b) greedy bankers. Regardless of which school of thought one subscribes to the US housing bubble resulted in a mortgage foreclosures crisis, resulting in an economic down turn, resulting in millions of lost jobs and consequentially millions of discouraged workers, with a lingering result of lost wealth in housing values.

Setting aside for a moment which school of thought one might subscribe to, congress set out to mitigate the effects of the now burst bubble and associated cascading consequences by introducing legislation known as the Housing and Economic Recovery Act (HERA). Within this particular legislation was a sub component known as the Neighborhood Stabilization Program (NSP).

The Neighborhood Stabilization Program was recently studied by The Federal Reserve of Richmond to find what stabilizing effects the program managed to produce. The title of the study is: Neighborhood Stabilization – Putting Policy into Practice. The results? One might want to pay particular attention to the following which is part of the study’s conclusion:

“….framing neighborhood stabilization as an emergency relief program posed special challenges for recipients. Despite its tight deadlines, NSP1 was also characterized by complex rules and policies, and for indirect recipients, an additional layer of bureaucracy that stymied quick progress. In addition, the pressure to obligate funds quickly seems to have forced recipients to choose the most efficient strategies from the five eligible uses and to change plans midprogram. As one local government official remarked during our visit, “We have been so focused on following the NSP1 grant rules and getting the program up and running that your visit was the first time we have thought about the broader context of stabilization”. (1)


In the report are cited five case studies, two in Ohio, one each in South Carolina, Virginia and Pennsylvania. From the report and the report’s conclusion one can easily see that the participants of the five case studies suffered from the standard deficiencies associated with federal bureaucratic top-down central planning and extremely complicated and time delaying regulations.

The Neighborhood Stabilization Program (NSP), the aim thereof, was to quickly stabilize a housing market suffering from unprecedented foreclosure rates. That is to say, the program is politically depicted as causing only positive externalities with no negative externalities associated. That politicos through the mechanism of government are quick to point to supposed market based negative externalities but government based programs are politically framed as only causing positive externalities. Stated alternatively:

“The point, rather, is to provide background for asking why the free-rider, collective-action, externality problems that are regularly identified as sufficient reason for restricting the role and scope of markets are so seldom identified as reasons for restricting the role and scope of government”.  -   Dr. Donald Boudreaux, department of economics George Mason University (2)

What was not part of the Federal Reserve of Richmond’s report is a report entitled Chronology: Neighborhood Stabilization Program, The Modesto Bee, 01/03/2012. One should take a moment and go to the link below and read the report. It’s a charming tale of general conflicts of interest, city councilmen and conflict-of-interest-rules, non-profits with individuals compensated in excess of $400,000, family members of the participants living in taxpayer renovated structures, exorbitant spending and extravagant purchases, shoddy workmanship, "egregious deficiencies", city bureaucrat resignations, the FBI, and HUD's Office of Inspector General. You’ll laugh, you’ll cry, you’ll kiss your tax dollars goodbye.



Chronology: Neighborhood Stabilization Program, The Modesto Bee, 01/03/2012.


Notes:

(1) Community Scope, vol2, Issue 2, 2011, Neighborhood Stabilization - Putting Policy into Practice



 










Saturday, January 14, 2012

EPA Regulations as a Job Creator and Other Pixie Dust Fairy Tales

The Last of the Ford Ranger Pickup Trucks –Sort Of


The last Ford Ranger, a smaller compact pickup truck, was produced in the US for the US market December, 2011. However, the Ford Ranger is still being build, completely redesigned, but only available in foreign markets.

“It has only been a month since the last Ranger rolled off the assembly line at a closing Minnesota plant, but the repercussions are still rolling through Ford.”

“At least twice during the big auto show in Detroit, Ford executives were called upon to defend their decision to kill the Ranger in the U.S. and Canada. Part of the reason the issue resurfaced is the same executives' buoyant predictions that a redesigned Ford Ranger for the rest of the world is going to be a great success.”

“But Mark Fields, Ford's president of the Americas, says the same vehicle can't succeed in the USA. Too close in size to the Ford F-Series. A shrinking market of small-pickup buyers, only 2% of the market.”(1)

Below is a link to the entire article which includes a photo of the redesigned Ford Ranger pickup being sold overseas:




Notes:
(1)    Ford execs defend killing Ranger pickup in USA, Usatoday, 01/13/2012, Chris Woodyard.

Thursday, January 12, 2012

Obama Recess Appointments: No Recess, No Problem!


"Remember those terrible days of the Imperial Presidency, when George W. Bush made several "recess appointments" to overcome Senate opposition? Well, Czar George II never did attempt what President Obama did yesterday in making recess appointments when Congress isn't even on recess.

Eager to pick a fight with Congress as part of his re-election campaign, Mr. Obama did the Constitutional equivalent of sticking a thumb in its eye and hitting below the belt. He installed Richard Cordray as the first chief of the Consumer Financial Protection Bureau and named three new members to the National Labor Relations Board. He did so even though the Senate was in pro forma session after the new Congress convened this week.

A President has the power to make a recess appointment, and we've supported Mr. Obama's right to do so. The Constitutional catch is that Congress must be in recess." - Contempt for Congress, Editoral, Wall Street Journal, 01/05/2012

Link to complete essay appears below:

http://online.wsj.com/article/SB10001424052970203471004577140770647994692.html?mod=rss_opinion_main

“Winning” by Debbie Wasserman Schultz

Wednesday, January 11, 2012

Dog Houses, Fallacies, and Elizabeth Warren

“Nobody in this country got rich on his own. Nobody. You built a factory out there good for you, but I want to be clear, you moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because the police forces and the fire forces the rest of us paid for….because of the work the rest of us did”. - Elizabeth Warren 09/2011



Warren’s statement is incorrect and the root fallacy of the argument is worthy of investigation. Let us first visit Robert Higgs:

 

“….some views expressed by Elizabeth Warren and certain politicos of a previous era to the effect that the government has every right to take at least a big chunk of your earnings and, in some expressions, even your entire earnings for purposes the rulers stipulate.

Nearly ten years ago, the great political philosopher Anthony de Jasay wrote a charming little essay related to this matter called “Your Dog Owns Your House.” There, he spells out some of the ways in which such sweeping claims—by your dog or the rulers—are incoherent, absurd, and indefensible, and he sketches how to think more sensibly about the issue.” Why Your Dog Doesn’t Own Your Entire House, and the Government Doesn’t, Either. - Robert Higgs (1)

Higgs points us to Anthony de Jasay’s essay Your Dog Owns Your House:

“How soon, in reading the above [de Jasay basically states the essence of Warren‘s basic argument (as stated above)], did you spot the underlying, crucial fallacy? Its course is a mixture of the plausible and the preposterous, and any reader who gets a little lost in the backing and filling between such opposites has an excuse of sorts for being bemused. However, clearing away the muddle is fairly straightforward provided we refuse to be impressed by verbiage, but stick doggedly to common sense, hard as that may sometimes be to do in the face of the massive browbeating that seeks to enthrone the verbiage.

There is a minor and a major point to recognize. The minor point is that the "framework" is not a person, natural or legal, to whom a debt can be owed, "institutions" do not act, "society" has no mind, no will, and makes no contributions. Only persons do these things. Imputing responsibility and credit for accumulated wealth, current production and well-being to entities that have no mind and no will is nonsense. It is a variant of the notorious fallacy of composition.

Once this is understood, we can move on to the major point. All contributions of others to the building of your house have been paid for at each link in the chain of production. All current contributions to its maintenance and security are likewise being paid for. Value has been and is being given for value received, even though the "value" is not always money and goods, but may sometimes be affection, loyalty or the discharge of duty. In the exchange relation, a giver is also a recipient, and of course vice versa.” (2)

But what about “…marginal productivity and imputation theory undermines the sort of facile claims made by Elizabeth Warren…”? Here Higgs send us to production and exchange:

 

Production as Indirect Exchange

In our discussion of the Neoclassical theory of pure exchange, we claimed that in order for a household to demand goods, it must obtain purchasing power by the sale of its endowments of goods. Let us now assume that instead of being endowed with "goods", households possess "factors" which provide "factor services" -- such as labor, capital, land and, perhaps, entrepreneurship.

The initial problem with this for a theory of exchange is that factor services are not demanded by other consumers: capital, land, labor, etc. offer no utility reward by themselves and thus are not "demanded" by other consumers. Imagine placing a land-owner and a laborer together: the laborer demands corn, the land-owner demands shoes. What do they offer in return? The land-owner offers land (which gives no utility and thus is not demanded by the laborer) and the laborer offers labor (which the land-owner has no use for). It seems, then, that when people are endowed with factors, they simply cannot trade with each other.

The problem this poses for the Neoclassical theory of value is immediately evident. Neoclassical theory claims that the value of an object depends on its scarcity. An object is scarce if more of it is desired by consumers than is available in the economy. However, on first approximation to a production economy, we encounter the apparent paradox that nothing seems scarce! Factors are limited in availability, that is true, but as they yield no utility, they are not desired by consumers. In contrast, produced outputs yield utility and thus are desired by consumers, but they are not limited in availability (if an output is in short supply, more can always be produced). Thus, it seems as if neither factors nor outputs are "scarce": what is limited in availability is not desired, what is desired is not limited in availability.

So how do we get out of this dilemma? The answer is quite simple: production. The basic principle is that "[t]he demand for commodities is indirectly a demand for factors of production." (G. Cassel, 1918: p.90). Someone may demand shoes, but, in order to do so, they are effectively demanding the labor of a shoe-maker and the capital services of his shoe-making tools. Therefore, via production, commodity demands translate into factor demands. Equivalently, factors are demanded solely because of the commodities they produce. In other words, factors are demanded not for their intrinsic worthiness to the other consumers, but rather because they can be converted to consumable goods via production, and it is these utility-yielding goods which are desired by consumers.

 

To use the felicitous phrase made famous by J. Trout Rader, production is indirect exchange. Our earlier landowner and laborer can exchange their land and labor "indirectly" with each other via the production technology which converts those factors first into corn and shoes. As L�on Walras suggests, one can "abstract from entrepreneurs and simply consider the productive services as being, in a certain sense, exchanged directly for one another instead of being exchanged first against products and then against production services." (Walras, 1874: p.225).

 

With the exchange problem resolved in this way, the implications for value theory are immediately evident: what is desired (outputs) bears down on something that is limited in availability (factors). Production is the intermediary element: it translates consumers' desires for goods into a desire for factors. But this is only half the story. The other half is that the limited availability of factors makes outputs limited in availability. Thus, production solves both sides of the problem: factors now have value because more of them are desired than are available; outputs have value because they have now become limited in supply.

"Prices are paid for the factors of production in accordance with the general principle of scarcity, because it is necessary to restrict demand for them in such wise that it can be met with the available supplies. The costs of production of a commodity are, from this standpoint, simply an expression of the scarcity of those factors of production required to make it."
(G. Cassel, 1918: p.168).
 

This idea is so important that we ought to baptize it and restate it as follows:

Neoclassical Principle of Value in Production:
(1) Factors have a price because the goods they produce are demanded by consumers. If a factor produces goods which are not demanded, then that factor will have no price, no matter how rare that factor is.
(2) Produced goods have a price because the factors which go into their production are limited in availability. If the factors which produce a good are infinitely abundant, the resulting good will not have a price no matter how desired that it is.” (3)
 
 

Now returning to Higgs:

“Set aside for the moment the not-inconsiderable difficulty that if each has a just claim on everything you earn, all together they have a claim on a large multiple of everything you earn. For present purposes, however, let’s forget about Fido and lump all of the others together, again à la Warren and Co., as the “government,” whose contribution to your earnings is essential and therefore warrants a claim on everything you earn.

Even with this generous concession, a major difficulty remains: absent your effort, your earnings would also have been zero, notwithstanding the government’s contribution of all the infrastructure and protective services emphasized by Warren and others. No work, no product, no earnings. And you did, after all, do the work.

The error here is an old one in economics. It once plagued economists in their attempts to explain the distribution of the social product between suppliers of the various factors of production—land, labor, capital, and so forth, depending on the precise specification of factors. The puzzle was finally solved, more or less, by something known as the marginal productivity theory of distribution.

The operative word is marginal. Here, as in so many other places where erroneous economic reasoning crops up, the mistake comes from all-or-nothing thinking. In our case, no dog, no house; no fire department, no earnings; no police force, no earnings; and so forth, including, please recall, no work, no earnings. To make headway one must recognize that many inputs of services contribute jointly to the production of a good or service. But it is absurd to suppose that because each of them is essential—in the sense that if it were completely withdrawn, no product would be produced—each of them has a valid claim to the entire output.

The marginal productivity theory of distribution maintains that if each factor supplier is paid the value of the marginal product of the factor service provided, each will be rewarded in accordance with a coherent concept of the extent to which his factor supply accounts for the output, and together the rewards received by all factor suppliers will add up to exactly the amount of the output produced by the joint efforts of all. (This theory work perfectly only under the assumption of a particular production technology, known as constant returns to scale, but that difficulty does not invalidate completely the basic idea the theory expresses, especially in regard to marginal productivity as the key concept.)

 

This sort of explanation is known in economics as imputation theory. Among other things, it explains why factor values depend on (are “imputed” from) consumer valuations of final outputs, not vice versa, as the classical labor theory of value and other theories maintain.

In any event, an understanding of marginal productivity and imputation theory undermines the sort of facile claims made by Elizabeth Warren, leading politicos associated with the New Deal, and all too many others, both inside and outside the political apparatus. Of course, if the rulers can’t claim that they deserve everything you’ve earned by using this sort of bogus reasoning, they’ll surely come up with another equally bogus reason for doing what all rulers and their stooges seek to do—to plunder you to the fullest feasible extent."(4)

 

 

 

Notes:

(1) Why Your Dog Doesn’t Own Your Entire House, and the Government Doesn’t, Either. - Robert Higgs, 01/06/2012

http://blog.independent.org/2012/01/06/why-your-dog-doesnt-own-your-entire-house-and-the-government-doesnt-either/

(2) Your Dog Owns Your House - Anthony de Jasay, 04/22/2002

http://www.econlib.org/library/Columns/Jasaydog.html


(3) http://homepage.newschool.edu/~het/essays/margrev/walrex.htm#production

(4) Why Your Dog Doesn’t Own Your Entire House, and the Government Doesn’t, Either. - Robert Higgs, 01/06/2012

 

 

 

 

 

 

 

Sunday, January 8, 2012

Solyndra Comes in Many Forms


The Solyndra boondoggle/bamboozle and its many associated headlines, essays written, and discussions there of, appears to many readers as special interests and crony capitalism through politico enablers specifically in the alternative energy business. Stated alternatively, the boondoggle is specific to alternative energy.

Solyndra is merely a public choice theory poster child example, not specific to alternative energy, rather a single example regarding the more general concept that: notional propositions are put forth as fact, the notional proposition being special interest associated, and the entire exercise resulting in crony capitalism enabled by politicos through the use of taxpayer dollars.

That is to say, Solyndra comes in many forms. A most excellent example of the “many forms” appeared in an essay entitled Solyndra on Rails, The Wall Street Journal, 01/05/2012. The essay, a Wall Street Journal editorial, pieces together the high speed rail proposition of linking San Francisco and Los Angeles to the Solyndra example. (1)

Both Solyndra [alternative energy, specifically solar] and high speed rail [passenger rail in non-high density population masses and passenger rail when consumer revealed preference is for anything but being a rail passenger] are notional propositions. That is, in both cases the proposition is merely notional with no supporting empirical evidence that the proposition is economical. However, the economy of the proposition is supplanted by notion of the proposition.

Note: notional propositions are but forth as fact, argued by verbal virtuosity, uses a debate stratagem of denying its opponents legitimacy, with the notional proposition merely based “on the way things ought to be”, ending with the notional proposition being no more than painting the world in one’s own self image.

In the California high speed rail case the initial cost has ballooned (as with many notional propositions):

“California Governor Jerry Brown has a big dream about a very expensive train—$98.5 billion to be precise, running from San Francisco to Los Angeles. Neither the ballooning cost of building it, nor growing public opposition, nor a string of negative expert assessments have cooled the Governor's ardor. So that leaves the California legislature to derail this boondoggle.” (2)


In a world of low debt and many taxpayer dollars available, the notional proposition of a high speed train may well have been pushed through by politico enablers. However, the current case is high debt and few taxpayer dollars available. Hence with few dollars available the notion has ran into evidence:


“The case for the bullet train was iffy from the start and is now beyond salvation. A withering report this week from a state-appointed panel ought to drive the last nail in. The California High-Speed Rail Peer Review Group, asked to judge the project, declared it "not financially feasible." It said the rail route's first leg, in the Central Valley between Merced and Bakersfield, would be especially noneconomic. And it asked the legislature not to approve Governor Brown's plans to issue the first $2.7 billion batch of bonds this month to start construction on the 520-mile network.

The panel blew up just about every assumption offered about California's answer to the French TGV. The current cost estimate, already triple what was sold to voters in 2008, will likely come in even higher. Federal, much less private, financing won't be forthcoming. Projections for passenger traffic and revenues are unrealistic. The state auditor, the inspector general, California's watchdog Legislative Analyst's Office, the U.S. House Transportation Committee, among others, arrived at similar conclusions.”
(3)

The crown jewel of this editorial/essay lies in the vision of the anointed. That given the evidence that the notional proposition is not feasible, the politico enabler, determined to follow through with painting the world in one’s own self image, is undeterred in using taxpayer dollars that most assuredly will complete the vision of the special interests and become profit for the associated crony capitalist:

“Governor Brown won't hear of such fiscal realities. His spokesman said the peer review study "does not appear to add any arguments that are new or compelling enough to suggest a change in course." “ (4)


Notes:

(1) Solyndra on Rails, The Wall Street Journal, 01/05/2012

http://online.wsj.com/article/SB10001424052970203471004577141082857692506.html

http://www.trainorders.com/discussion/read.php?4,2652714,2653247

(2) ibid

(3) ibid

(4) ibid





 



Homeowners Insurance Rates on the Rise in 2012

"Homeowners insurance premiums are starting to rise after tornadoes, hail, winds and lightning slammed U.S. insurance companies' balance sheets throughout 2011." - usatoday, 01/04/2011, Adam Belz.



Link to entire article appears below:

http://www.usatoday.com/money/industries/insurance/story/2012-01-04/homeowners-insurance-rising/52367258/1

Saturday, January 7, 2012

Bowl Attendance Dips to 1978 - 1979 Carter Malaise Level


“Tuesday night's Sugar Bowl was the 30th of this season's 35 games, each of which also was played last season. The total attendance for those games is more than 2.5% lower this season than it was last season. If this trend holds for the remaining five games, the average bowl attendance for the season would fall to 50,542. That would be the lowest since 1978-79, when the number of games expanded to 15 from 13 and the average was 48,404. (In 2002-03, when the number of games expanded to 28 from 25, the average was 50,575.)” - usatoday, 01/04/2012

Link to the entire article appears below:

http://www.usatoday.com/sports/college/football/story/2012-01-03/college-football-bowl-attendance/52368758/1