Category Archives: Economics

Business, Economics, Political Commentary

Ahhhhnuullld The Democrat

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I’m listening to the evening news on my last night in LA, after the announcement that the state unemployment is in double digits, hearing the RINO Governator talking about how “creating jobs is his highest priority.”

Well, ignoring the issue of “creating jobs” (which can be done by simply handing out money stolen from the taxpayers or borrowed from future taxpayers to pay people to do various things of various and dubious value, often negative) as opposed to creating wealth and not making war on prosperity, here’s an idea, Arnie.

How about doing an analysis of previous California policy to figure out why the jobs were destroyed, and stop doing and start undoing those things? Or is that too hard?

Business, Economics, Media Criticism, Political Commentary

That’s Not The John Maynard Keynes That I Knew

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Apparently, President Obama and the Congressional Democrats have thrown Keynes under the bus, too, even though they don’t realize it:

…it is true that government direction of capital is something Keynes advocated. But the current direction of capital by government is being conducted in a manner that flies in the face of Keynes’s underlying justifications for such state involvement.

For example, the stimulation of investment has thus far been ad hoc. The Treasury and Federal Reserve have infused capital into some firms but not others. In the case of financial firms, the rationales have been to promote liquidity or prevent insolvency or both. The government has moved on to direct capital into the troubled automobile industry. The Federal Reserve and the Treasury are buying mortgage-backed securities, thereby making more credit available to the housing industry. The construction trades are expecting a huge infusion of capital under the rubric of “infrastructure” spending. And now an enormous list of other industries has been approved for temporary stimulation by the Obama administration.

It is difficult to imagine that Keynes would be enthusiastic about these temporary and discretionary policies given his diagnosis of the fundamental problem.

The historical record is helpful here. Keynes opposed immediate, short-term stimulus in 1937 when the British unemployment rate was 11 percent—much higher than we are experiencing today. Furthermore, he opposed temporary reductions in the short-term rates of interest because he believed that variability of interest rates sent the wrong long-term message. As he argued in “How to Avoid a Slump,” an article in the Times of London newspaper, “A low enough long-term rate of interest cannot be achieved if we allow it to be believed that better terms will be obtainable from time to time by those who keep their resources liquid.”

Of course, most of these people are far too economically illiterate to even understand Keynes. Instead, they simply adulate him as a god and use him as an excuse to do what they want to do anyway, regardless of whether or not it’s truly Keynesian.

[Update early evening]

More historical ignorance: Barack Obama versus Henry David Thoreau. Now, Thoreau was actually sort of a loon, and his “wisdom” is highly overrated, as P. J. O’Rourke has amusingly pointed out in the past, but the notion that the small-government philosopher would have approved of the “stimulus” plan is ludicrous.

Business, Economics, Political Commentary, Space

Thoughts On COTS

…along with fixed-price versus cost-plus, appropriate payment milestones, and “skin in the game,” from Jon Goff.

We have to come up with much more innovative means of reducing the cost of access to orbit, something that Ares I doesn’t do at all. Charles Miller just became “Senior Advisor” on space commercialization with NASA’s Innovative Partnership Programs Office, so perhaps he will be able to help implement some of these kinds of ideas.

Economics, Political Commentary

We Don’t Need No Stinkin’ Health Czar

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So sayeth Paul Hsieh:

The Obama administration would control costs by creating a new Federal Coordinating Council for Comparative Effectiveness Research to determine which treatments are deemed most effective and thus eligible to be paid for by government. These decisions would be based on statistical averages that cannot take into account specific facts of individual patients.

Yet good physicians must consider precisely these specifics when treating their patients. If you are suffering from abdominal pain due to gallstones, who should decide whether medication or surgery would be more effective for you?

The doctor who has felt your abdomen, listened to your heartbeat, and knows your drug allergies? Or the bureaucrat who got his job by telling the right joke to the right person at the right Washington cocktail party?

We don’t need czars, “health,” cars,” “drugs” or otherwise, period. Last time I checked, this was America, not Russia.

This recent (in the past couple decades) appetite in the American body politic for czars is just another sign of incipient fascism. As Paul notes, we aren’t (yet) serfs in need of a czar, even if the left is intent on making us that way.

Here are some related thoughts from James Capretta:

Opponents of market-based reform plans like to cite USA Today-type stories to discredit the whole concept of ownership, consumer choice, and competition in health care. But, in reality, the article again points to the need for a systematic reform which would give individually-purchased insurance the same tax advantage as now provided to employer-paid premiums. That change by itself would give the individual market the size and scale it needs for more stability. And then the competition which consumer choice provides would entice lower cost, higher quality products into the market as well. Over time, the financial advantages enjoyed by today’s dominant employer-based plans would give way to the security of owning stable insurance that can be kept even as job circumstances change.

Health insurance is another area in which politicians screw up the market, and then demand more (and more damaging) intervention to fix the problems caused by the screwing up, while blaming an unfettered market that didn’t exist.

Economics, Media Criticism, Political Commentary, Science And Society, Technology and Society

The Democrat War On Science

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John Tierney has some useful thoughts on the politicization of science in the new administration:

Most researchers, Dr. Pielke writes, like to think of themselves in one of two roles: as a pure researcher who remains aloof from messy politics, or an impartial arbiter offering expert answers to politicians’ questions. Either way, they believe their research can point the way to correct public policies, and sometimes it does — when the science is clear and people’s values aren’t in conflict.

But climate change, like most political issues, isn’t so simple. While most scientists agree that anthropogenic global warming is a threat, they’re not certain about its scale or its timing or its precise consequences (like the condition of California’s water supply in 2090). And while most members of the public want to avoid future harm from climate change, they have conflicting values about which sacrifices are worthwhile today.

A scientist can enter the fray by becoming an advocate for certain policies, like limits on carbon emissions or subsidies for wind power. That’s a perfectly legitimate role for scientists, as long as they acknowledge that they’re promoting their own agendas.

But too often, Dr. Pielke says, they pose as impartial experts pointing politicians to the only option that makes scientific sense. To bolster their case, they’re prone to exaggerate their expertise (like enumerating the catastrophes that would occur if their policies aren’t adopted), while denigrating their political opponents as “unqualified” or “unscientific.”

“Some scientists want to influence policy in a certain direction and still be able to claim to be above politics,” Dr. Pielke says. “So they engage in what I call ‘stealth issue advocacy’ by smuggling political arguments into putative scientific ones.”

My concern with Chu and Holdren is that they are Club of Rome types who seem to be anti-technology. I’m sure that they would say that they are in favor of “appropriate” technology (yet another leftist theft of an intellectual base, like “progressive”), but it amounts to having no faith in our descendants to come up with technological solutions to today’s burgeoning problems. That inability to account for technological improvement is at the heart of apocalyptic predictions like world-wide famine and California agriculture drying up from lack of water. It’s that same blindness (and ignorance of basic economics) that resulted in Holdren and Ehrlich losing their bet with Julian Simon

Not to say, of course, that famines and droughts can’t occur, but if they do, it will be a result of foolish (or evil) government policies, not an overabundance of carbon in the atmosphere.

Business, Economics, Media Criticism, Political Commentary

The Next Stage Of Wrecking The Economy

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Get ready for the cram down:

Now, maybe higher interest rates on home loans would be a good thing. Home ownership is heavily subsidized in this country, and the reason bankruptcy law currently protects banks from losses on principal is so that they can keep mortgage-interest rates low. But is Congress really going to let mortgage-interest rates rise as a result of this new law? Liberal interest groups already think credit-card interest rates are a crime against humanity. Can you imagine the hue and cry whenever mortgage-interest rates start to tick up?

The more likely scenario is that Congress passes some new law that keeps mortgage-interest rates suppressed, even though the new bankruptcy law has exposed banks to greater risk. If your goal is to re-inflate the housing bubble and create another credit catastrophe, well, there you go.

It’s truly infuriating the way politicians muck with the market, then implement more mucking to deal with the unintended consequences of the first muck, and then blame laissez-faire capitalism for the problems. And the media let them get away with it, repeatedly.

Business, Economics, Media Criticism, Political Commentary

The Man Who Talked Back

Jimmy Pethokoukis:

In 1937, there was a radio debate between Wendell Willkie— later to become the 1940 Republican presidential nominee—and Franklin Roosevelt administration official Robert Jackson—later a Supreme Court justice—about the proper economic role of government. (The event and its fallout are wonderfully described in the outstanding book “The Forgotten Man” by Amity Shlaes.)

By all accounts, Willkie won easily by arguing that FDR’s efforts at nationalizing the utilities industry, his dramatic tax increases, and his administration’s push for prosecutions of businessmen had frozen the private sector with fear and prevented the country from returning to prosperity. The Saturday Evening Post would later dub Willkie “The Man Who Talked Back” against the New Deal and Big Government. I would love to see a debate between Santelli and Obama spokesperson Robert Gibbs.

Yeah, I’d pay to see that, but they’d have to institute a mercy rule, I think, after the first ten minutes.

I hope that Santelli is ready for his upcoming IRS audit.

Business, Economics, Political Commentary, Space

Space Billiards

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There is an excellent and comprehensive discussion of the recent satellite collision over at The Space Review today. There is plenty of blame to go around, from perverse incentives in the military, to government policies that are long on rhetoric and short on funding and priority, and corporate risk taking:

It also appears that either Iridium or the JSpOC terminated the collision screening for the Iridium constellation at some point between July 2007 and the collision in February 2009, as Iridium has made repeated public statements that they did not receive any warning. Likewise, the US military has stated that they did not have any warning. The following additional comment by Campbell at the same event may shed some light as why this happened:

That said, this isn’t aviation; the Big Sky theory works [emphasis added]. We figure that the risk of a collision on any individual conjunction is about one in 50 million. However if we have 400 a week for ten years, you can do the math; clearly that risk is something bigger than zero. As I said, our coordination with JSpOC is great.

Basing the protection of the largest low Earth orbit constellation of satellites on such a theory, even when there is a significant amount of data showing that it could be false, leads one to question the decision-making process involved. Perhaps Iridium decided that they could not afford the resources to deal with the decision-making and maneuver planning to properly operate their satellites in a safe manner. If that is indeed true—and there is no known hard evidence either way—then they placed the short-term financial well being of one company over the long-term welfare of all.

Clearly, the entire international system in place for dealing with this kind of problem (to the degree that it exists at all) needs to be overhauled.