The Barefoot Mailmen

Obama is right about taxation of hedge fund partnerships

2011-06-30T12:36:00.001-04:00

One of the most outrageous industry specific tax breaks is the preferential tax treatment of "carried interest" for hedge fund and private equity partnerships.

In a hedge fund or private equity partnership, the fund managers get paid by the limited partners (i.e. investors) in two ways: an annual fee, usually 1-2% of assets under management, and a percentage of any investment gains made by the fund, usually 20%. This 20% participation fee is known as carried interest.

For some reason, our tax code treats carried interest as if it were a capital gain, and is therefore taxed at a 15% rate and is excluded from payroll taxes. But carried interest is not really a capital gain. We are not talking about the hedge fund managers own money here, we are talking about a management fee. Yes it is a highly uncertain, contingent fee, but it is still a fee nonetheless.

Hedge fund managers claim that the preferential treatment is justified because the fee is uncertain and risky. But there are lots of occupations where the ultimate income is highly uncertain - a lawyer who works on contingency, an author or composer who gets paid via royalties, or a salesmen who works on commission - yet all of these folks pay taxes at ordinary rates.

The President has proposed that the preferential taxation of carried interest be eliminated, and I agree with him. His problem is that he may have to fight some members of his own party on this one - particularly Charles Schumer.

By the way, I only agree with the President with respect to the preferential nature of the tax rate, not with the idea that 15% is too low of a tax rate. I think all income should be taxed at a flat 15% rate, whether you work at a hedge fund or not.

Farewell to the Glenn Beck Program on Fox

2011-06-28T10:44:00.008-04:00

In honor of the final week of the Glenn Beck TV program on Fox News, I have assembled a list of my favorite moments from the show.

February 2010, Glenn Beck vs. Joe Klein. My favorite comedic moment was this clip where he lampoons Joe Klein and the Ivy League faculty lounge, donning a tweed smoking jacket and a pipe. I've watched it a dozen times or so and it never gets old. Just hilarious.

Look it up Joe, it's true. It almost makes it sound like you don't know what you are talking about. And it also kind of turns your entire nasty little blog entry into...anti-intellectual drivel!

August 2009, Beck exposes Van Jones. Beck makes history by airing a devastating mini-documentary on the radical background of White House clean energy czar Van Jones. Thanks to Beck and a revelation that Van Jones was a 9/11 truther, Van Jones resigned just a few weeks later. Beck 1, White House 0.

July 2010, Beck devotes entire show to Hayek's Road to Serfdom. It wasn't Beck at his best...I am not sure Beck actually read the book before doing the episode. But it didn't matter. Within hours, the book jumped to number one on Amazon.com.

February 2010, Beck addresses CPAC. This was not actually part of his TV program, but it might as well have been. The best moments: his rock star introduction set to the music of Muse, and the moment he brings out his chalkboard.

January 2009, The Inconvenient Debt. This was very early on in the show's history, and I think was one of the first Beck clips that went viral. He parodies Al Gore to demonstrate the dramatic and frightening rise in the nation's money supply. Who said monetary policy makes for bad TV?

May 2010, "The Plan". Yes, he is a self described rodeo clown, but in May of 2010, Beck devoted an entire week to outlining a plan to solve the country's fiscal problems and reversing 100 years of progressivism. He discusses how to cut entitlements, education, health care, and yes, even defense spending. Making policy conversations accessible and entertaining...Beck at his best.

October 2009, Glenn vs. Anita Dunn. In the fall of 2009, White House communications director Anita Dunn spearheaded an unusual White House strategy to attack and marginalize Fox News, calling the network "opinion journalism masquerading as news". A few weeks later, Beck reveals a video of Anita Dunn making a speech where she calls Mao one of her "favorite philosophers". Was she joking when she said that? Most likely. She claims she was "being ironic". But at a minimum, it showed really bad taste. And after going after Fox, did she really think she was going to get the benefit of the doubt? Beck 2, White House 0.

And perhaps the funniest part of all of this was on the next episode, when Beck's staff member manning the White House hotline is dressed in a Mao suit. Hilarious.

March 2009, Beck apologizes to audience for Massa interview. On March 7, 2010, Democratic Congressman Eric Massa accused the White House of orchestrating an ethics investigation "to oust him because he had voted against overhauling health care". Beck is intrigued and lands an hour long interview with the former Congressman, hoping to get some insight into possible Chicago style political tactics from the White House. The interview is a complete disaster, as Massa backs away from his previous statements and is preoccupied with pointing out that he did not engage in "groping", only "tickling". At the end, Beck apologizes to his audience for wasting their time.

January 22 2010, Beck airs documentary "The Revolutionary Holocaust". Beck takes a huge risk and it pays off. Jonah Goldberg, who is featured in the documentary, described it as follows: "It is very, very hard hitting. It’s the sort of thing that would never, ever, have been allowed on TV 20 years ago."

March 13 2009, Beck launches 9/12 project, cries on air. Here is where it became clear that Beck was interested in more than just putting on a news show. The 9/12 project becomes a strand of the tea party movement, and not an insignificant one. Critics are hysterical because Beck cries on air.

April 15, 2009: Beck leads tea party rally at the Alamo. This was perhaps the moment where the tea party movement really started to take hold. As the media and the White House are geniunely confused by the tea party protests (after all, taxes had not gone up yet!), Beck defines the tea party as a non-partisan movement concerned with one issue - the dramatic growth in government spending. From his opening monologue:

(The media) continues to think that the tax day tea parties are all about Barack Obama or they are all for the GOP. It’s not because they don’t try to understand, I don’t think they are capable of understanding. But since the media are watching, I am going to speak very, very slowly. As I understand it, at least the way I see it here, these have nothing to do with the Democratic party, other than the Democrats suck (roar from crowd). However, no more than the Republicans suck (even louder roar from crowd). This has nothing to do with how much Barack Obama is spending, it’s about how Barack Obama AND George W Bush AND both Congresses have been spending for years.- Glenn Beck

Farewell to the Glenn Beck TV program on Fox News. It made history and was unlike anything we have ever seen or will ever see again on TV.

What not to say after losing the NBA championship

2011-06-13T11:13:00.004-04:00

Lebron James following the Game 6 loss to the Mavericks:

All the people that were rooting me on to fail, at the end of the day they have to wake up tomorrow and have the same life they had before. They have the same personal problems they had to today. I’m going to continue to live the way I want to live and continue to do the things that I want with me and my family and be happy with that.

Well, I wasn't rooting for him to fail, but after reading that quote, I'm sure glad he did!

Calling all Senate Democrats

2011-05-18T18:05:00.003-04:00

.... it's time to do your jobs. It is now 749 days and counting since the Democratic-controlled Senate passed a budget.

Romney doesn't know anything about economics

2011-05-17T10:02:00.003-04:00

Maybe that is an exaggeration, but here is my point. Conventional wisdom says that because Mitt Romney was a successful business man, that he is also a great candidate when it comes to economic issues.

Really? I'm sorry, but understanding economics and being able to manage a business are two very different things. The economy doesn't run like a business. And anyone who thinks that it can be managed like a corporation is terribly misguided.

Back in 2008, I recall that Romney was clamoring for a "stimulus!" and was mocking McCain for his proposal to cut government spending as a way to forestall the recession. And of course, you don't need to look much further than his awful health care plan for more evidence of his economic ignorance.

So this line of thinking that says "yes, I know Romney is a flip-flopper who reverses himself on issues like abortion, immigration, campaign finance, etc...but that's okay because he's great on the economy!" needs to end now.

Romney is the quintessential "pro-business" candidate. What we need is someone who is "pro-market" and understands the limitations on the role of government, both practically and constitutionally.

Romney nomination would be as if the tea party never happened and would reverse all of the progress of the last 24 months.

That is why lately I have been leaning in this direction.

Book: Selfish Reasons to Have More Kids

2011-05-13T13:58:00.004-04:00

I recently finished the book Selfish Reasons to Have More Kids by George Mason economist and Econlog blogger Bryan Caplan, and it is a wonderful read for anyone interested in the topic of parenting or grandparenting.

Here is the book summary:

We've needlessly turned parenting into an unpleasant chore. Parents invest more time and money in their kids than ever, but the shocking lesson of twin and adoption research is that upbringing is much less important than genetics in the long run. These revelations have surprising implications for how we parent and how we spend time with our kids. The big lesson: Mold your kids less and enjoy your life more. Your kids will still turn out fine.

The book also presents this theory that most of us "overcharge" ourselves for the cost of having a child, because we overestimate the impact we have on our children in the long run. In other words, the costs of having a child are really less than we think they are.

He's not saying that everyone must have a kid, or that if you are happy with 1 or 2, that you have to have 2 or 3. He is simply presenting a point of view, one that may convince someone who is on fence to go ahead and have another child.

Yesterday, Caplan appeared on the Dylan Ratigan show. Link to video here.

T.G.I.Fla.

2011-05-06T17:48:00.005-04:00

A week of Florida headlines:

MONDAY, MAY 2

Wearing Only a Smile, Nudists Seek out the Young and the Naked
Loxahatchee Groves, Fla.

TUESDAY, MAY 3

Nothing to see here. Move along. (Why oh why did I promise a week's worth of headlines?). I'll make it up to you later, promise.

WEDNESDAY, MAY 4

Cops: Fighting woman hid knives and drugs in her private parts and fatty skin folds
Fort Myers, FL

THURSDAY, MAY 5

Here we take a break from the kookiness to remember that Florida has its share of wonderful stories, too:

Toddler ready to go after having seven transplanted organs at Jackson Memorial.
Miami, FL

FRIDAY, MAY 6

From the sublime back to the ridiculous

Bicycling Flower Thieves Hit Orlando Florida
Orlando, FL

BONUS ROUND: the best of April

Police arrest man accused of urinating on cough drops at Walgreens
Sanford, FL

BONUS ROUND: the best of All Time

This apparently happened in March, but I just heard about it today.

Herman Cain vs. Bill Clinton

2011-05-06T14:05:00.007-04:00

Herman Cain, former CEO of Godfather's Pizza, made quite a debut last night as a candidate for President of the United States. I am not jumping on any bandwagon - I am particularly concerned about his apparent enthusiasm for the TARP bailout back in 2008. He seems to be trying to ride the tea party wave, but since the tea party was in large part a protest against bank bailouts, this makes little sense.

But what is worth watching is the video below from a 1994 Health Care Town Hall with Bill Clinton. Cain, speaking as the CEO of Godfather's Pizza, takes on Clinton and destroys any possibility of the Clinton health care law being enacted into law in a matter of about 6 minutes.

Early on in the discussion, Cain asks Clinton: "If I am forced to do this, what will I tell those people whose jobs I will have to eliminate."

Clinton then responds by trying to convince Cain that the costs will really not be as high as he says, and then suggests that Cain would be able to pass the cost on to his customers. After all, all of his competitors would be in the same boat. And to this comment, Cain's response is simply devastating:

In the competitive marketplace, it simply doesn't work that way, because the larger competitors have more staying power before they go bankrupt, then the smaller competitor.

This is a fantastic insight. Regulations do impose costs on large corporations, but they often have a disproportionately larger impact on smaller businesses. In other words, regulations build a competitive "moat" for the larger players by making it more difficult and more costly for the smaller competitors to compete.

Hayek/Kaynes Round 2!

2011-04-28T11:52:00.002-04:00

Tax burden

2011-04-26T14:23:00.008-04:00

A friend of mine recently argued, "raising taxes slightly on the highest income earners produces large amounts of revenue. " That seems like a reasonable argument, until you take into account how few rich people there are relative to everyone else. Here are some of my back of the envelope calculations based on numbers provided by the Tax Foundation:

If you raised everyone's tax rate by 1% you would generate about $17 billion more from the top 1%, and about $67 billion from everyone else.

If you raise taxes on the top 1% by 20 percentage points, (from 35-55%), you raise about $337 billion. Raise tax rates on everyone by 5 percentage points, and you raise about $421 billion.

If you raise taxes on the top 1% by 50 percentage points, (from 35-85%) you raise about $842 billion. Raise tax rates on everyone by 10 percentage points, and you raise about $842 billion (not a typo).

Of course, all of this ignores behavior changes and incentive effects. If you raise rates 20 or 50 percentage points, the static analysis above would not hold, because people would go out of their way to earn less. It’s not that they would be “lazy”, the word some have used to try and disparage the supply side argument. It’s that at 85% marginal rates, people spend more time sheltering income than earning income. At 85%, the return on sheltering income would be so much higher than just about anything else you could do with your money.

Below is an amazing graph from the American Enterprise Institute. Conventional wisdom says that the payroll tax is progressive because it is capped. But maybe the proper way to measure is to take into account what everyone puts in versus what you get out. If you get more out than you put in, that is a negative tax, and if you put in more than you get out, it’s a positive tax.

The graph below from shows just who is really paying the social security tax. Hat tip to Veronique de Rugy.

Limbaugh brilliance

2011-04-19T13:52:00.008-04:00

On today's program, he said something to the effect of:

I keep hearing about how great the 90's were, and that we need to go back to the Clinton tax rates. Well, okay, if the 90's were so great, then let's go back to the level of spending that we saw in the 90's.

I'm mad at myself for not thinking of that one.

Here is inflation adjusted per capita total government spending:

And total spending as a percent of GDP:

Columnist who accuses Douthat of not having a clue, has no clue

2011-04-19T09:43:00.008-04:00

Yahoo finance columnist Dan Gross thinks he's really nailed Ross Douthat in his column NYTimes Columnist Douthat Needs a Clue on Taxes. He writes:

I'm not quite sure where Douthat pulled that $94,000 figure from. Perhaps from the same place where he got the notion that a family making $94,000 "pays 15 percent in federal taxes." Look at the Internal Revenue Service's 2010 tax tables and you'll see that a family filing jointly, earning $94,000, is squarely in the 25 percent tax bracket. Because the first $68,000 of their income is taxed at lower rates, their total federal income taxes would come in at about 17 percent.

But there's more to federal taxes than income taxes, especially when you're in the lower tax brackets. This fictional family would also pay payroll taxes for Social Security (4.2 percent, thanks to this year's payroll tax cut) and Medicare (1.45 percent). So a family of four making $94,000 is already paying about 22.5 percent of its income in federal taxes, and is looking at a 30.65 percent marginal rate on income earned up to the Social Security cap.

This is how the math actually works out for this family of four making $94K:

Adjusted Gross Income: $94,000
less Standard deduction: $11,400
less Exemptions: $14,600
Taxable income: $68,000

Tax $9,369

less Child tax credit: 2,000
less Making work pay credit: 800
Tax owed after credits: 6,569

Marginal tax rate: 15%
Effective tax rate: 11%

So, the tax they are paying is actually 11%. Even if you include social security and Medicare payroll taxes, which total $7,191, the effective tax rate would still come in under 15%.

Stunningly sloppy.

Practice makes perfect

2011-04-15T10:04:00.002-04:00

I don't know if President Obama is, as Democratic Senator Bob Kerrey once said of Bill Clinton, an "unusually good liar," but he certainly works hard at it.

The impact of George Washington's ignorance of the internet on Constitutional interpretation

2011-04-06T14:59:00.008-04:00

In Little Rock on his book tour, Supreme Court Justice Stephen Breyer argued (in the words of an AP reporter) "that judges need to apply the Constitution's values with an eye toward the changing times." The Court's job, he said, was to discern how to apply the Founders' values to the modern world "George Washington didn't really have a view about the Internet," he said, drawing laughter from the crowd of about 650 people at the Statehouse Convention Center. This is a commonly stated observation, and it's always puzzled me that liberals find it clever. I mean, George Washington did not have a view about lots of things: telegraphs, phonographs, typewriters, telephones, microphones, electrified megaphone, radios, televisions, highway billboards, walkie-talkies, and Ubbi Dubbi. So what? The point Justice Breyer is making is that the new technology sometimes raises questions about how pre-existing laws should be applied. But this does not change the judge's job, which is to apply the law as it is written to the new facts. Justice Breyer's comment that the Court "should apply the Constitution's values with a pragmatic view toward present circumstances, rather than focusing only on the document's historical meaning" is at best banal, and at worst pernicious. First, no judge disregards "present circumstances" while "focusing only on the document's historical meaning." The originalist judge does not, for example, define the First Amendment's provision that Congress shall make no law ... abridging the freedom of speech" and define "speech" to mean only those forms of speech available in 1789 such as pamphlets and books, but not radio shows and movies. (This is what Judge Breyer is suggesting his opponents do, with his joke about the internet). Rather, originalist judges are inclined to think that the free speech clause protects only speech, as that term was generally understood, regardless of method of transmission. Thus, an originalist has no doubt that statements on internet blogs qualify as "speech," even though George Washington never read one, but are skeptical about whether nude dancing does. If the judge sees his role as to apply the Constitution's "values" in a "pragmatic" way, it is very tempting for him to think that any result that seems"unpragmatic" or "impractical" must be incorrect. Bans on abortion seem impractical given the judge's views about family arrangements and sexual morality, illegitimacy rates, etc., so ipso facto the bans on abortion must be unconstitutional. "Pragmatism" becomes a synonym for "a result that I like." Honoring the Constitution's "values" can be a way to dodge the limitations of the actual text. But what better encapsulates the Constitution's genuine "values" than the Constitution's words?If the judge sees his task as applying the words of the Constitution to present circumstances, the words themselves as a tether, which can prevent him or her from straying too far from what the people actually agreed to when they approved the Constitution (which is, after all, a document made of words). This approach does not always prevent a judge from allowing his own preferences to cloud his interpretation -- not by a long shot --but it's better than the alternative, which provides no brake at all on judicial willfulness. Justice Scalia tells a joke to illustrate this. Two men are walking in the woods and come across an angry bear. They start running. The first man says, "I don't think we're going to make it." the second guy responds, "I don't need to outrun the bear, I just need to outrun you!" To Breyer's credit, he is aware of this quip and usually includes it in his speeches. Which makes it even more peculiar that he is so impressed with that crack about George Washington and the internet.

Quote of the week from Mark Steyn on the EIB

2011-04-04T15:11:00.002-04:00

"Baseball should have a season, not taxes." - Mark Steyn

The MJ of Killer Whales

2011-03-31T12:35:00.006-04:00

Remember the killer whale at Sea World who killed its trainer in front of a live audience last year? You may recall he grabbed the trainer by her hair and pulled her underwater, drowning her either before or after severing her spine. Apparently he had been involved in the deaths of two other people before that. The whale's name is Tilikum, which in the language of the Chinook means "friend." Well yesterday Friend made his comeback performance in front of 5,000 animal lovers at Sea World in Orlando. No word yet whether People magazine will characterize this -- as they usually do when a celebrity resumes making money after getting caught doing something awful -- as a "triumph over adversity." Comments one observer:

Death by whale is uncommon, but that’s not to say Tilikum won’t strike again. Trainers are extra cautious around the whale, and no longer rub him manually. What he doesn’t get in human touch, he gets in the form of high-powered hoses.

From an objective standpoint, Tilikum’s return to SeaWorld’s performance lineup must be qualitative. He must be an awesome whale, capable of high jumps and the finest beach-ball balancing. Additionally, considering his massive frame, he must excel at the audience whale splash—a fan favorite.

Tilikum is the Michael Jackson of killer whales. Promoters will book him and crowds will come see him regardless of his personal turmoil.

Via First Thoughts

Social security trust fund accounting

2011-03-30T15:57:00.008-04:00

Don Boudreax at Cafe Hayek has some great posts on how the Federal government's accounting in regard to the Social Security Trust Fund is fraudulent. He writes:

When sensible people ... note that these obligations are so massive that honoring them in full will require drastic tax hikes or spending reductions, accounting-challenged defenders of the status quo exclaim “Not to worry! The Social Security trust fund holds lots of U.S. Treasury bonds. Those bonds are assets. So Social Security’s obligations are covered!”

But those bonds are held by the same party that issued them, namely, Uncle Sam; the creditor here is one with the debtor.... The bonds in the ‘trust fund’ are no independent source of revenue for Uncle Sam to tap into to meet his Social Security obligations as these bonds would be if they were issued instead by, say, Microsoft or by Her Majesty’s government in the U.K.

Here is an example:

Suppose I have a savings account with $10K, and I empty it to pay for a car. Most sane people would say that I now have a car worth $10K, and a savings account worth $0.

If I were the federal government, however, the accounting would be a little bit different. When I empty the savings account, I would replace it with an IOU from myself, and claim that the IOU is worth $10K. So I now have a car worth $10K and an IOU (from myself) "worth" $10K. All of a sudden, I have assets worth $20K!

At some point in the future, my income falls short of my expenses, and I need money, so I begin selling assets. I eventually get to the $10K in IOUs and have no choice but to sell them. But here’s the problem: because the person who is obligated to make the IOU payments is me, and I am in no position to make those payments, so the IOUs are worthless!

How did this happen? It was never an asset to begin with.

Who are these greedy owners?

2011-03-18T15:56:00.008-04:00

I was in an email discussion with a few friends on various labor issues, and one of them wrote this:

If I had a business where I made shoes and could hire 5 American workers to make let's say 50 pairs of shoes per day, why would I send the work to another country where I could hire 10 people to make more shoes for the same price or less? Because I would make more money....mind you what I was making a profit prior to firing the American workers ...it is greed pure and simple...no one needs that much money.

My question to him was, who exactly are these greedy people? After all, I am a shareholder in thousands of companies through my ownership of index mutual funds. Through those investments, I am seeking a return on my money - a profit. It's these investments that provide money to companies to buy machinery and equipment and factories and offices, i.e. capital. Capital is what makes workers more and more productive, and ultimately allowing workers to demand higher and higher wages.

And regarding the "no one needs that much money", again, who is he talking about? I know that I am invested in thousands of companies, and that some of these companies that I own will be incredibly profitable while others will quickly go bankrupt. On average, I will make a return that is the "market return" - as will the average investor - pensioners, 401K participants, IRA holders, etc. So when you see one highly profitable company, that doesn't mean that the investors in those companies didn't have 10 other investments that fared poorly. So again, I don't know exactly who he is talking about.

Just a reminder

2011-03-15T16:08:00.005-04:00

Natural disasters do not create economic growth.

If they did, anytime we had a recession, the remedy would be to destroy as much stuff as possible.

My children's first economics lesson

2011-03-04T10:16:00.006-05:00

A couple of weeks ago, I was driving around with my two 4 1/2 year old twins, and we drove by an ice cream place that we used to go to sometimes, and my daughter asked, "Why don't we go that ice cream place anymore?"

I explained to them that I thought the prices were too high for what you get. They didn't quite get it, so I said, "Imagine there are two ice cream stores right next to each other, and both stores served the same exact ice cream. However, one store charged $10 for a cup of ice cream, and the other store charged $3 for a cup of ice cream. Which place would you go to?"

First they said that they would go to the store that charged $10. After all, $10 ice cream sounded better than $3 ice cream. But I reminded them that the ice cream in each store was exactly the same, and asked, "Why would you pay $10 when you can get the same thing for $3?" And finally, the light went off.

I asked, would anyone go to the store that charged $10? And they said "no".

Pushing the issue, I then asked, should the ice cream store that was charging $10 be able to force the other ice cream store to also charge $10, so that it's more "fair". And they said "no". First lesson complete.

Walter Williams on unions

2011-03-01T15:08:00.003-05:00

"A union's struggle for higher wages is not against the employer, it's against other workers". - Walter Williams on the EIB Network, 2/28/2011

Collective bargaining vs. individual bargaining

2011-03-01T09:11:00.005-05:00

As I said here, I have no problem with collective bargaining. The problem is when it excludes individual bargaining.

Dave Henderson makes a similar point in responding to a WSJ column by Bob Barro, who explains collective bargaining this way:

An analogy for business would be for all providers of airline transportation to assemble to fix ticket prices, capacity and so on. From this perspective, collective bargaining on a broad scale is more similar to an antitrust violation than to a civil liberty.

Henderson makes a correction:

An analogy for business would be for providers of airline transportation to vote to force all airlines, even those that don't want to join, to comply with ticket prices that the business association sets. In other words, the key ingredient that Bob Barro misses is the element of coercion. ... The power to be the sole bargaining agent is a power, not a right. There's no such thing as the right to make peaceful people join something they don't want to join.

Rand Paul on David Letterman

2011-02-26T09:30:00.009-05:00

Rand Paul’s performance on David Letterman is a must watch.

Some highlights. Here Paul gets Hayekian:

It’s not that government is inherently stupid, although that is a debatable point, it’s that they don’t get the same signals. You and I get signals…we have to pay our employees, we have to make a profit…the public sector doesn’t have that.

And here he argues for the virtues of competition for solving problems in education:

I think competition makes us better, you have to compete with other late night comedians, I have to compete with other physicians...

Perplexed, David Letterman ends the interview this way:

I think he’s wrong about some of the stuff he’s saying, I just don’t know why.

Rand Paul is very skilled at explaining complicated economic and policy concepts in a way that is both non-threatening and easy to understand. He's a real asset to conservatives and the Republican party, and needs to get on as many of these kinds of shows as possible.

A "problem"? Hardly.

[Update]

Some more reactions, and here.

From mortgage banker to brewer

2011-02-24T17:42:00.009-05:00

A wonderful brew pub has just opened in our neighborhood, and below is an excerpt from an article describing how the venture came to be:

“’I started home brewing 17 years ago when I lived in Colorado, after leaving the mortgage business a few years back I met Jim and Lisa Hill from Corner Café and decided to start brewing craft beer for their customers. We removed some old equipment from their kitchen, installed a 35-gallon unit and started brewing. Mr. Webster’s experience and success at Corner Café fueled a desire to expand and Tequesta Brewing is the result.”

"After leaving the mortgage business?"

Economist Arnold Kling has been promoting a new paradigm for thinking about macro-economics. He calls it patterns of sustainable specialization and trade, or PSST for short.

From Econtalk:

Kling rejects the Keynesian approach that emphasizes shortfalls in aggregate demand ...instead, Kling invokes the mutual exploration between entrepreneurs and workers for profitable opportunities that pay well using the workers' skills. This exploration takes time, involves trial and error, and can have false starts because businesses sometimes fail or employees are difficult to find or match with employment opportunities.

I think the story of the brewer fits into this paradigm. The Keynesian story says, we have a decline in demand for mortgage related services, so we need to institute a policy that gets demand back up. It doesn't matter what kind of demand, just get it back up.

The PSST story sees it differently. Here we have an industry that attracted a tremendous amount of capital and labor, (a result of bad government policies perhaps), it was unsustainable, and now a re-calculation is taking place. Many people that made a living in the mortgage business just a few years ago are searching for a new, or perhaps their true, pattern of sustainable specialization and trade, and that process can be painful. I think that is was is happening with the mortgage banker turned brewer. And if the crowds that line up to taste his creations are any indication, I'd say his search is complete.

Russ Roberts tells the truth

2011-02-24T17:40:00.001-05:00

On unions:

The effect of unions, to the extent they are effective at all, is to make it harder for people to find work in particular areas. Unions try to raise wages above what they would otherwise be. Employers respond by trying to substitute capital for labor or more skilled workers for less skilled workers.

You want negotiating power? Get educated. Get a skill. What keeps wages up in a world of 7% unionization in the private sector is that I have alternatives. So stay in school and study something serious that has value alongside whatever else you’re interested in. Or study something interesting that has little market value. But if you do that, don’t complain about your low salary and lack of a union.

The bottom line–you don’t need a union to protect you from your employer. You need alternatives–you need to have a skill that more than one employer values. If you have no skills, you are in trouble and the union won’t help you either except at the expense of other workers.

Wisconsin: Some must see videos

2011-02-22T21:06:00.006-05:00

Check out this video from the Wisconsin Republican Party.

Watch Joe Scarborough ask, why haven't we seen these signs on the evening news.

And more from Joe Scarborough, who politely destroys Jeffrey Sachs's conspiracy theory by simply reading an excerpt fromthis column from left-wing blogger Richard Cohen.

Ryan makes the connection

2011-02-21T09:22:00.006-05:00

"Uncontrolled debt means job creation goes away." -Paul Ryan

It's not just about an accounting formula. Public debt has real effects on expectations, confidence, and ability to plan for the future. In other words, reduce the spending to the reduce the debt and you will get growth.

And he's got it in the right order. It's not growth will take care of the debt, it's take care of the spending and the debt, and we will get growth.

Public servants

2011-02-18T16:53:00.003-05:00

I have always found it curious that politicians who make a living commanding and coercing and taxing are called "public servants", while those in the private sector who can only earn a living by providing something of value to the public and literally "serving" others, are not.

"Worker rights"

2011-02-18T14:27:00.015-05:00

The term "worker rights" is often used, particularly in the context of collective bargaining. For example, in this column, Governor Walker of Wisconsin is accused of "removing bargaining rights" and "undercutting worker rights".

I have no problem with the concept of unionizing or collective bargaining. What I do have a problem with is when an employee is required to join a union and is not allowed to negotiate outside of the collective bargaining agreement. In other words, collective bargaining is fine, but it crosses the line when it takes away the right of an individual to engage in "individual bargaining".

For example, in Wisconsin, imagine there is a job opening, and the collective bargaining agreement states that that particular position requires a salary of$50K per year and must include X and Y benefits. My question is, can some unemployed person compete for that job by saying, "I really need the work, I would be happy to do the job for $40K". Or can someone say, "You don't need to buy health insurance for me, I already have it through my spouse".

I would consider the right to make those offers and engage in individual bargaining part of "worker rights". But if that is not allowed, then "worker rights" are not actually rights at all, they are just ways that those who are already employed reduce competition for their jobs. In the name of “worker rights”, they actually take away the rights of the unemployed to compete for jobs.

But I am no expert in public employee unions and collective bargaining, so maybe I am wrong about this.

[Update]

Here is another way to think about it:

Imagine you have two people. Both equally qualified for an opening. The union's collective bargaining agreement says the state must pay $50K. The first person doesn't really need the job. Their spouse makes $150K plus per year, they just want the job to make some extra money. And then there is another person who really needs the work. Their family is in big trouble, and they really need a paycheck. Therefore, to get the job, that second person is willing to work for less; they are willing to accept $40K per year.

Generally, the market would handle this problem beautifully; the problem being, which worker needs the work the most? The market signal is the price, in this case the price that the worker is willing to accept as a wage. The offer of the lower wage provides the information regarding who needs the job the most. But with collective bargaining, this market mechanism breaks down.

The union would say to that person - too bad. You are not allowed to compete for that job based on compensation. That would violate our precious collective bargaining agreement.

In the name of "worker rights", the union took away the rights of that person to negotiate directly with the employer. The union says...I 'm sorry if you are about to be put out on the street, we need to keep the wages of our union members nice and high.

I find that morally reprehensible.

What is Mark Levin's problem?

2011-02-17T09:13:00.004-05:00

Last week, he was bashing Mitch Daniels, endorsing this silly post over at American Thinker where Daniels is blamed for the Bush/Republican Congress deficits of the early 2000s. This week, Levin is back to bashing Chris Christie, this time over Christie's decision to not join other states in opposing Obamacare.

If Chris Christie thinks he needs to save his political capital for his fight against the unions, then that is what he should do.

Don Boudreaux to Donald trump: "You're fired!"

2011-02-11T15:54:00.003-05:00

Economist and serial letter-to-the-editor/open-letter writer Don Boudreaux published this brilliant letter to Donald Trump on his blog Cafe Hayek:

Dear Mr. Trump:

Congratulations on your successful talk at the recent CPAC gathering. Please, though, indulge me as I ask you a few questions.

You promise that, as U.S. President, you won’t raise taxes. But you also promised to obstruct trade between Americans and the Chinese, presumably by raising tariffs. Because tariffs are simply taxes on imports, you can’t avoid raising taxes if you raise tariffs. So will you or will you not raise taxes?

You advocate, not free trade, but “fair trade.” Can you define “fair trade”? If I voluntarily buy from Mr. Lee and Mr. Lee voluntarily sells to me, can such an exchange ever be unfair? Both parties to the exchange presumably gain, while the only people who lose are Mr. Lee’s competitors. Given your claim that the billions of dollars worth of profits that you’ve earned are evidence of your own remarkable “intelligence and abilities,” surely you don’t wish to tilt the playing field in favor of domestic producers, for to do so would be to give these producers unfair advantages in winning the patronage of American consumers. Any profits they make under such unfair circumstances wouldn’t be evidence of intelligence and ability but, rather, of political connections and monopoly power. Wouldn’t such protection from competition be unfair?

You assert that “We are rebuilding China because we buy their products.” What do the Chinese do with the dollars that we use to buy their products? Do they burn these dollars or otherwise not use them commercially? (If so, is that bad?) If the Chinese do not burn their dollars, then they (or other foreigners with whom the Chinese deal) must use these dollars either to buy American products or to invest in the U.S. economy (or both). To the extent that foreigners buy our products, by your reckoning they must be “rebuilding” America. To the extent that foreigners invest in America, they are – what? Do such investments harm America? Does foreign investment in America not help to “rebuild” America? If not, why not?

I’m interested to know your answers.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University

"Crusoe Ethics"

2011-02-07T09:23:00.004-05:00

This was an interesting post over at Ricochet.com.

In this scenario, the desert island dwellers currently survive only by eating fish. Alas, these fish, being hard to catch, are in short supply. Then one day, an entrepreneur, who adores fish, saves up his meager rations, and still goes hungry for days, in order to fashion a technical innovation: a net. This net enables him to catch more fish more efficiently in future. As a result, he can now dine heartily.

In addition, he loves fish so much that he is unwilling share any of them with his fellow island dwellers, who are currently starving. These other islanders offer him what they can in exchange. But as I said, he loves his fish. So he refuses all their offers, and keeps all he catches for himself.

The other islanders are understandably aggrieved. They claim that it is intolerably unfair that he should have many more fish than they do. They also argue that the fish will benefit them more than they will benefit him. After all, whereas they need to fish simply to survive, he only wants them to pleasure his palate. Accordingly, he should share at last some of his fish with them.

In response, while munching on a mullet, he argues that they have no right to the fish. By dint of his own industry and intelligence, he has designed and created the net. He now uses that same net to catch all the fish. No one else was involved, or is involved. So the fish he catches are indisputably his: only his labour is here getting mixed with the natural world, no one else's. Hence, no one else but him is entitled to the fish. This means that, no matter how much other people want the fish, or need the fish, they cannot have the fish, unless he voluntarily decides to share them, which, sadly for them, he will not currently do. Nonetheless, no one has the right to take any fish from him by force: that would be a violation of his inalienable right to the specific fruit of his prsonal labour. Even God has decreed as much, some say.

You--on behalf of your starving self, family, or clan--now have the possibility of stealing fish from his bountiful private stash. Is it right or wrong to steal his fish? And if it is right to steal them, what is wrong in principle with a welfare state supported via taxation? Where and now do you draw the line for when it is right to steal what is indisputably the property of others for the greater benefit of the many?

I can't get past the idea that if the man really wanted more fish, if he really "adores" fish that much, then what he would probably say to the others on the island is the following: "You can't have my fish and you can't have my net, but I'll tell you what. I need some time to sleep and rest and eat my fish. When I am not using my net, you can use my net, and whatever you catch, we will split 50/50."

He would end with many more fish, as would the other islanders. Everyone would be better off.

Under the scenario described above, he is not so so much a self-interested profit maximizer; he is a sociopath. His utility gains come from seeing other people suffer, not from acquiring more fish.

Some might point to this example and argue that this is why we need government - to protect us from sociopaths. But I would argue that this is why we need competition. Competition is the ultimate mechanism for providing consumer protection.

Under this scenario, ultimately someone would adopt his idea and "put him out of business", or at least make him entirely irrelevant.

Spending freeze logic

2011-01-26T15:05:00.004-05:00

A college student gets $250/month spending money from his parents, and they promise to increase that amount each year to account for inflation. But then he goes ahead and spends $500/month, using his parent's credit card to make up the difference.

The college student says to his parents: "Don't worry, from here on out, I am going to freeze my spending at $500/month. You don't have to give me that allowance increase that you promised. See, I am saving you money!"

I will never understand

2011-01-26T14:45:00.005-05:00

I will never understand why some potato farmer in Idaho needs to send his tax dollars to Washington so that they can be then be used to fix a bridge in South Florida that he will never use.

It's not as if the politicians and bureaucrats in Washington are wizards at allocating resources. The incentives are terrible and more importantly, they don't have the knowledge that is required to make these kinds of decisions. They act as if they are engineering experts that know exactly which bridges and roads need to be fixed better than the people who actually live there.

I saw a pothole on my way in to work today. I'm not sure why Congress didn't know about it already, but maybe I will call them so they can pass legislation to fix the pothole.

Status Update

2011-01-24T13:54:00.000-05:00

From a friend of mine on Facebook:

I'm going to sit my Grandfather down today to watch The Jersey Shore so he can see what he risked his life for in WW2

Obamacare does not reduce the deficit

2011-01-21T14:50:00.004-05:00

Here is Greg Mankiw on the absurd claim that Obamacare reduces the deficit:

I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.

Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit. But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.

I tried to make a similar argument last year, but unlike my clumsy attempt, this is brilliant.

Capitalism and free trade in practice

2011-01-21T11:48:00.003-05:00

I rest my case

2011-01-19T21:54:00.005-05:00

When I saw these headlines, there was no doubt in my mind in which state the events they describe occured. I swear it's the humidity that makes us act this way.

Burglars snort man's ashes, thought it was cocaine

MIAMI Wed Jan 19, 2011 3:11pm EST

MIAMI (Reuters) - Burglars snorted the cremated remains of a man and
two dogs in the mistaken belief that they had stolen illegal drugs, Florida sheriff's deputies said on Wednesday.

Read the whole thing. That took place about 90 minutes south of where I live. This next one happened about an hour north.

Cow attacks man, wife hits animal with truck to save husband

ST. LUCIE COUNTY — A 70-year-old man was flown to a local trauma center with serious injuries over the weekend after a cow attacked him at a ranch, according to a recently released St. Lucie County Sheriff’s Office report.

Oscar Wilcox was flown to Lawnwood Regional Medical Center & Heart Institute in Fort Pierce following the New Year’s Day incident at a ranch in the 10300 block of Carlton Road. He was listed Tuesday in critical condition, a hospital spokeswoman said.

Wilcox’s wife told a deputy that her husband was working on a fence in the pasture when she heard him scream. She drove into the pasture and saw a cow “attacking” her husband.

“She was able to hit the cow several times with the truck to get it off of her husband,” the report states.

That my friends, is what true love is all about. When you see a cow trampling your husband, ram her with your F150 untl she stops.

My beloved Florida, rendering satire impossible since 1845.

The unfortunate result of credit card "reforms"

2011-01-13T15:00:00.007-05:00

CNBC has produced an interesting spot on the rise of "Payday lending".

There is no doubt that this trend was in part caused by the weak economy and the "credit crunch", but another factor that should not be overlooked is the credit card "reforms" recently passed by Congress.

Price controls inevitably lead to shortages. There is really no way around that fact. In this case, when you cap fees and rates on credit cards, it sounds like a good idea, but consumers who really need credit (to fix a car or keep the heat on or avoid bouncing checks) go elsewhere, and often end up paying much higher fees and rates, whether it comes from payday lending, pawn shops, or even loan sharks.

Mark Halperin's advice

2011-01-11T17:31:00.004-05:00

Put this alongside Eugene Robinson in the living in a parallel universe category.

A cheap shot from the Morning Joe roundtable

2011-01-11T10:25:00.007-05:00

The crew on Morning Joe this morning was lecturing Sarah Palin on how important it was for her to make a statement regarding the Giffords tragedy and the tone of political discourse in the country.

Again, what does she have to do with any of this? What a cheap shot. Yet, they were clearly convinced that they were being fair and balanced, and that they were conducting a careful examination of the issue from both sides.

But as Jonah Goldberg said this morning, "You can’t cover a debate that shouldn’t exist in the first place 'fairly.'"

Eugene Robinson: Violent political rhetoric comes exclusively from the right

2011-01-10T10:29:00.001-05:00

This is just incredible.

Pima County Sheriff accusses Palin and Angle of being accessory to mass murder; Brokaw praises Sheriff

2011-01-10T09:09:00.011-05:00

I was watching MSNBC this morning and Tom Brokaw was praising the Pima County Sheriff for speaking out against inflammatory political rhetoric. This the same man who has made several TV appearances arguing that the Tucson massacre was linked to conservative political rhetoric. He even went so far as to call out Sarah Palin and Sharron Angle. Last night I watched Geraldo Rivera interview the Sheriff, and Geraldo ended the interview by asking him, "Are you sure you don't want to take anything that you just said back?". The Sheriff declined.

So why is Mr. Brokaw praising this guy? How did Mr. Brokaw not notice the fact that the Pima County Sheriff was accusing his political opponents of accessory to mass murder?

As for Palin, I find it infuriating that she is being linked to this. But I guess if you are going to be dumb enough to use "crosshairs" on a map targeting specific Congressman, and something like this happens, then there are going to be consequences.

And she definitely should not have said that thing a couple of months ago about "punishing our enemies".

Correction: It was the President who talked about "punishing our enemies".

GOP "looking backwards" and "living in the past"

2011-01-05T09:08:00.005-05:00

Those are the talking point I keep hearing when I turn on MSNBC. The White House and the Democrats are trying to frame any effort to repeal or fix the health care law as a sign that the Republicans don't care about jobs, and are instead "living in the past".

It's a curious approach considering the fact that 1) the law has for the most part not been implemented, and 2) the health care law and the willingness of employers to hire people have a lot do with one another.

The best explanation of the financial crisis

2011-01-04T09:42:00.012-05:00

Russ Roberts of George Mason University, host of the wonderful weekly podcast Econtalk (and creator of the Youtube sensation Hayek vs. Keynes rap video) was unsatisfied with many of the competing explanations about why the 2008 financial crisis occurred. He was no fan of Fannie Mae and Freddie Mac or of the Community Reinvestment Act, and he acknowledges that Federal reserve policy was likely a contributing factor. But none of these stories fully explained why privately owned financial institutions acted so recklessly, to the point where they put their own existence in jeopardy. After researching the financial industry and interviewing several dozen experts on the topic, Roberts developed his own theory about why the crisis took place.

His narrative, entitled "Gambling With Other People's Money", focuses on the role of the creditor. He asks, why did creditors continue to lend to financial institutions that engaged in increasingly risky and leveraged activities? After all, creditors don’t participate in the upside of these risky bets, so why in the world did they go along with it without demanding higher and higher interest rates, or asking for more collateral, or requiring covenants that restrict the amount of risk the borrower takes on?

His answer is that over the course of the last three decades or so, with only one or two exceptions (e.g. Drexel Burnham), the government has never allowed creditors of any large financial institution to take a loss. In every case, not only were these institutions bailed out, creditors were made completely whole. They weren’t asked to take 50 cents on the dollar, or even 90 cents on the dollar. In every case, they received 100 cents on the dollar. He then asks “Did the rescue of creditors in the past increase the chances of future rescues sufficiently that creditors were careless?” He concludes yes.

He also makes an important distinction between the incentives of equity holders vs. creditors.

Equity holders don't want to get wiped out, but they are typically diversified, and they want a lot of risk-taking by some of their investments so they can make high rates of return on the upside. But because creditors don't share in the upside, they only care about the downside, and need to make sure the firm stays solvent. So, it's creditors that monitor solvency, not equity holders. It’s creditors who monitor prudence and recklessness.

For me, Roberts's narrative is the most compelling that I’ve read.

Below is a link to the paper, and a link to the podcast where he presents his story.

http://mercatus.org/publication/gambling-other-peoples-money

http://www.econtalk.org/archives/2010/05/roberts_on_the_2.html

My inner Grinch stirs

2010-12-23T14:24:00.008-05:00

Do these people want to turn me into the Grinch? From today's Wall Street Journal, a story that makes my heart shink three sizes:

Beyond Gifts, More Homes Make Room for Wrapping
Anyone wanting to buy all the gifts in "The Twelve Days of Christmas" should prepare to do a lot of wrapping—364 presents if all items mentioned in the entire song are wrapped.
Linda Howard is ready. The second floor of her 8,000-square-foot Los Angeles home has all the materials to give presence to her presents
"I have ribbons galore assorted by colors, little cellophane, big cellophane, boxes, wrapping paper of all colors and holidays, cellophane bags, gift bags, bows, flowers and candy canes," says Ms. Howard, a wedding and event planner and frequent hostess.
As the hours count down to Christmas, an increasing number of Americans are heading into their wrapping rooms, spaces found mainly in large, upscale homes
dedicated to gift-wrapping and other crafts. Real-estate listings are touting
wrapping rooms more frequently, and organizational outfitters like the Container
Store have created specialized products to trick them out.

In other news . . . does this woman want to turn her husband into the Grinch?

Real Life Grinch? Man Dislikes His Home's 27 Christmas Trees
Real life grinch - or simply a man who's had enough? You decide.
Of the more than two dozen Christmas trees in their home, B.J. Cornstubble is
only attracted to one -- the Grinch tree.
"We started out with one tree," said his wife, Jo Cornstubble.
"Those were the good ole days," B.J. joked. The Cornstubbles live in the historic Levi-Welder House, and each year, Jo adorns the 5,500 square-foot home with Christmas decorations galore.
She starts decorating in September, pulling ornaments and fixtures from their equally as big carriage house. It's an organized operation, Jo said, with plastic
bins stretched to the ceiling.
"In the middle of summer, I'm like, 'how far do I want to go this year,'" she said. "And I'm still at it."
Though he takes the Yuletide ambush in stride, B.J. is a self-proclaimed Grinch when it comes to the holiday, hence the Grinch tree lovingly dedicated to him.
And this year, Jo somehow managed to out-decorate previous seasons.
She decorated 27 or 28 (they lose count) themed Christmas trees . . .

Two thoughts: (1) Twenty-seven trees! (2) Cornstubble, really? That's a name straight out of Dickens.

Yet another scientific breakthrough produced by stem cell research that doesn't require the destruction of human embryos (a continuing series)

2010-12-14T10:25:00.005-05:00

Timothy Ray Brown, an HIV-positive American living in Germany, received a stem-cell transplant in 2007 as part of treatment for leukemia. Three years later, he appears to be free of HIV. Reports the Huffington Post:

On the heels of World AIDS Day comes a stunning medical breakthrough: Doctors believe an HIV-positive man who underwent a stem cell transplant has been cured as a result of the procedure.

Timothy Ray Brown, also known as the "Berlin Patient," received the transplant in 2007 as part of a lengthy treatment course for leukemia. His doctors recently published a report in the journal Blood
affirming that the results of extensive testing "strongly suggest that cure of HIV infection has been achieved."
Brown's case paves a path for constructing a permanent cure for HIV through genetically-engineered stem cells.

The Huffington Post story leaves out a rather important detail. Were these stem cells harvested from human embryos? Fortunately, Fox News doesn't leave its readers guessing, and reports that the transplant was a bone-marrow transplant from a donor with "a rare, inheritend gene mutation that seems to make carriers virtually immune to HIV infection." What is more, the transplant appears to have cured Mr. Brown of leukemia too.

Unfortunately, this sort of treatment will not be widely available anytime soon, as explained in the Fox News article:

The transplant appeared to wipe out both diseases, giving hope to doctors, but Dr. Anthony Fauci, director of the National Institutes of Allergy and Infectious Diseases, who has been studying HIV/AIDS for almost 30 years, said while this is an interesting proof of concept, it’s absurdly impractical.

“It’s hard enough to get a good compatible match for a transplant like this,” Fauci told FoxNews.com, “But you also have to find compatible donor that has this genetic defect, and this defect is only found in 1 percent of the Caucasian population and zero percent of the black population. This is very rare.”

Fauci said while this patient is “functionally cured” this is not something you can do with every HIV- infected individual.

“This is not prime time to me at all,” he said. “This is a very unusual situation that has little practical application for a simple reason. This donor not only had to be a good compatible match, but the donor had to have a genetic defect of cells that do not express the receptor that the HIV virus needs to enter the cell.”

Fauci also pointed to the fact that this transplant process is not only expensive, it’s incredibly painful and complicated, and requires the patient to start a whole new regimen of drugs.

“This patient is trading one poison for another. He may not have to be on antiretroviral drugs anymore, but he has to take immunosuppressant drugs now to prevent the rejection of his transplant cells. Again, what this is, is an interesting proof of concept, but it’s absolutely impractical.”

Dr. Thomas Quinn, director of Johns Hopkins Center for Global Health told FoxNews.com that he is very familiar with the “Berlin patient” case.

“This was a new report that looked much deeper into whether HIV could still be present or lurking in the body in some way, not cured, and since the transplant he remains viral free and his cells appear to be resistant to infection,” he said.

Quinn said he agrees with the researchers on this case that it would be qualified as the first HIV cure, opening the door to alternative means of curing HIV.

“He [Brown] has been without therapy for three years and appears to be free of the virus,” he said. “It gives hope to the millions of people infected with HIV that cure is a feasible option in the future.”

Even though Brown’s procedure proved to be successful, Quinn also warns that this was a rare case and a bone marrow transplant is not a cure-all for other HIV patients.

“It is a near fatal procedure that he had to have done because of the leukemia, but this procedure is very expensive and you have to be transplanted with a donor who is shown to be already resistant to HIV,” Quinn said. “You’re asking for a tall order to replicate this in the future.”

Even so, who would have predicted 10 or even 5 years ago that stem cells -- adult stem cells -- could be used to spare even one patient from death by HIV and leukemia? Many other cures we take for granted today were once considered "unusual" and "impractical" and even "near fatal." Who knows what will come of this in the years ahead? (Particularly, one hastens to add, if people who support funding for adult-stem-cell research along these lines are not pilloried as being "anti-science.")

I will leave for our readers to ponder why HuffPo chose to omit the fact that adult stems cells were used and perhaps give the impression that this amazing development was due to embryo-destructive stem cell research.

(Previous posts on stem cell research can be found here, here, here, here, here, here, and here.)

Of apples and rising seas

2010-12-13T17:57:00.002-05:00

In the late 1980s, environmentalists charged that a pesticide called "Alar" left cancer-causing residues on apples, in such quantities that comsumers' health was endangered. Whether they were right about this or not (the EPA now seems to say not), there was a huge outcry about Alar in the press. I remember one of the network news reports showed a particularly tendentious image -- a lonely farmworker in overalls, sitting on a bench in the middle of an apple orchard, his work put to a halt due to the boycott on Alar-treated apples. It was an absurd photo, as if he was forced to sit out there in the fields until the EPA decided what to do about Alar. But it conveyed the right message: only did Alar threat our lives, it threatened this man's livelihood!

I was reminded of this by the Associated Press story from last week about how the rise in the oceans caused by global warming threaten the Marshall Islands. Titled "If an Island State Vanishes, is it Still a Nation?" the article explains that if U.N. projections are correct, much of the island may be underwater by 2100. It was accompanined by a photo of an islander looking on in sorrow as the ocean topples palm trees lining the shore near his home.

Lucky thing for that guy, it isn't actually happening. Follow the link to see why it's a safe bet he'll be able to stand in that same spot and eat an (Alar-free?) apple years from now.

Our ambassador to Haiti is blowing it

2010-12-13T17:27:00.002-05:00

.... at least that's the takeaway from this column by Mary Anastasia O'Grady, who covers Latin America for the Wall Street Journal. She writes:

In a moment last week when Haitians were struggling to overcome yet another misfortune—this time a fraudulent election—the U.S. State Department's top honcho for the region, Arturo Valenzuela, put his energy elsewhere. He went to Tegucigalpa where he spent two days trying to force the Honduran government to drop criminal charges against deposed president Manuel Zelaya.

Very few U.S. administrations have gotten much accomplished when it comes to Haiti, but it would be nice if the present one would try.

(Readers who would like to help the situation in Haiti might consider making a donation to Hands Together for Haiti, or Samaritan's Purse.)

Megyn Kelly makes moral case against estate tax

2010-12-10T10:44:00.004-05:00

I didn't think it was possible for Megyn Kelly to get more attractive.

Discussion on estate tax starts at 2:30:

By the way, Anthony Weiner makes the case for the estate tax on budgetary grounds. But the fact is that the estate tax raises very little revenue for the government, and some have even argued that it's a revenue loser.

Joy Behar not a literary scholar

2010-12-09T16:42:00.006-05:00

“I read a lot of C.S. Lewis when I want some divine inspiration” – Sarah Palin

“Didn’t he [C.S. Lewis] write children’s books?” – Joy Behar

Find a CS Lewis bibliography here. Looks like more than fifty works, and only seven are the books from the Chronicles of Narnia series.

H/T to Katrina Trinko at NRO.

Obama calls GOP "hostage takers"

2010-12-07T15:16:00.003-05:00

A new addition to Obama's greatest hits.

Oh, and this one: the "GOP's central economic doctrine" is "tax cuts for the wealthy."

Limbaugh: All savings are spent

2010-12-07T15:03:00.006-05:00

Limbaugh nails it, debunking the myth that only Keynesian, targeted tax cuts "stimulate" the economy.

Okay I save it. What does that mean? ... Some goes in a bank account, but then what does the bank do with it? They spend it. Whomever I give my money to spends it. I might buy stocks with it. I might buy municipal bonds. Everything that people do with their money is "spending it", one way or another.

Amen. All savings are ultimately spent. Savings are just "spent" on capital, and capital is what is required for economic growth.

The two year tax extension...

2010-12-07T13:39:00.005-05:00

...does not solve the uncertainty issue. If you are a business looking to make an investment in a new project, you don’t care what tax rates are in the next two years, you care what they are for the next 10 years.

Not only that, a business person probably cares less about tax rates in the early years, because a new project usually involves upfront costs, such as hiring and training new employees or purchasing new equipment, and those costs can usually be deducted either immediately or during the first few years. The profits, if they come at all, come in the out years.

Boehner backs Flake for Appropriations

2010-12-07T11:16:00.010-05:00

This is encouraging.

Unfortunately, it looks like earmarker Jerry Lewis will be Chairman, but Stephen Spruiell has argued that Flake will have a major impact as a member of the panel.

This 60 Minutes feature on Jeff Flake and his efforts to ban earmarks is a must watch. I think it's from 2008.

This week's signs of the Apocalypse

2010-12-01T19:09:00.005-05:00

Floridians behaving strangely. That could be a daily section in every Florida newspaper. For example, take this trio of fun headlines from the Palm Beach Post.

Loxahatchee Groves to decide what to do about overpopulated nudist camp

West Palm Beach woman charged with stabbing boyfriend repeatedly with fondue fork

12-year-old boy and father charged with beating elderly man at Delray Beach Target

[[[UPDATE - Dec. 2, 2010]]]]

Sigh.

Suspect lies about carjacking because he can't find his car, Boynton police say

Classroom Beating: Florida Student Gets Pummeled While Teacher Sits Back

That last headline is via Drudge, as is this one, which is too gross for me to copy here.

Sitting ducks

2010-11-23T09:24:00.005-05:00

I am not going to over-react to the new TSA screening procedures, but I am concerned about one thing. It seems to me that a natural terrorist target is the line of people waiting to go through security at any major airport. All a terrorist would need to do is walk-up to the area with some kind of firearm or explosive device. The problem of getting through security is solved, because there would be no need to actually get on an airplane.

Shouldn't we be working on speeding the process up so that we don't invite such an attack?

Robin Hood movie

2010-11-22T10:06:00.004-05:00

Finally saw Robin Hood with Russell Crowe this weekend, and added it to my list of the best conservative movies.

Bailing out Ireland

2010-11-22T09:03:00.004-05:00

In 1997, I was in Ireland visiting some friends who had just arrived there and were planning on staying for about six months. They were looking for a job, but not having much success. One evening, they were talking to a couple of young Irishmen, guys in there 20's, asking them if they knew of a good place where a couple of Americans might find a job for 5 or 6 months. And they responded, "Why don't you just go on the dole?"

We laughed, but now I know, this is how that ends.

"We don't want to turn the social safety net into a hammock"

2010-11-19T11:48:00.002-05:00

Extremist Paul Ryan on Charlie Rose.

High fives all around

2010-11-17T15:55:00.009-05:00

The Alaskan Senate race has just been called for Lisa Murkowski. The Alaskan Federal contractor community is thrilled!

"Welcome to the club"

2010-11-15T08:56:00.003-05:00

Christopher Hitchens reflecting on his support for the Iraq War:

I learned that very often the most intolerant and narrow-minded people are the ones who congratulate themselves on their tolerance and open-mindedness. Amazing. My conservative friends look at me and say, 'Welcome to the club. What took you so long?' Well that's what it took and I think it's worth recording.

The insanity of our tax code

2010-11-11T12:44:00.004-05:00

Imagine a family where the father earns $100K, they have three children, and the wife takes classes at a local college and spent $10K on tuition and other related expenses. They have $15K in mortgage interest, $4K in property taxes, and $2K in charitable deductions.

The income tax for that family in 2009 would have been $2,540. That's right, by jumping through a bunch of hoops, a person who makes $100K can have an effective tax rate of 2.5%.

It gets worse. If he works really hard and manages to earn an extra $25K, making his total income $125K, their taxes skyrocket to $11,027. That's an additional $9K in taxes for an extra $25K in earnings. That's almost 36% tax on that last $25K, even though our highest tax rate is 35%.

Insanity.

Pelosi going after the toddler vote

2010-11-11T09:22:00.003-05:00

Nancy Pelosi said yesterday that the deficit commission's proposal to raise the retirement age to age 68 by 2050 and age 70 by 2075 is "simply unacceptable", and that we need to keep our "promises to our seniors".

Does she realize that the commission is proposing raising the retirement age on my 4 year old twins?

Actually, I told my son this morning that it didn't look like he was going to get his social security until he was 70, and he said "No!!!!", just as if I was telling him that we didn't have time to go out for ice cream. So maybe Nancy is onto to something.

But seriously, if President Obama wanted to see his approval rating go up by about 10 points, he should come out against Pelosi on this one. But I doubt he will.

No son, you are not allowed to dress in drag for Halloween

2010-11-08T17:32:00.021-05:00

This blog post by a mother about her five year old son who dressed up as Daphne from Scooby Doo is all over my Facebook news feed. Everyone loves her. The adoring comments have included "Thank God that there are mothers who are not afraid to let a child express individuality!" and "What a great mom!".

Besides the photo of the child, the thing that jumped out to me in this article was the following statement: "Halloween is the time of year that you can be whatever it is that you want to be".

I'm sorry, but that's just not true. He's five. Parents can set boundaries on what is and what is not appropriate. Actually, let me re-state that. Parents should set boundaries on what is and what is not appropriate.

Does this rise to the level of being inappropriate? To each his own, but I think so. If my son asked to dress in drag for Halloween, I would say no. Plain and simple. The list of costumes I would deem inappropriate is a long one, and dressing in drag is certainly on that list.

And it's not because I think it's going to turn him gay, or because I would be ashamed or wouldn't love him. I just don't think that it is appropriate for a 4 or 5 year old to dress up in drag. That's it.

Maybe Mike Castle deserves some of the blame

2010-11-08T09:52:00.010-05:00

Yesterday on Meet the Press, political consultant Mike Murphy said this about the Republican Senate loss in Delaware:

I have a bone to pick with Jim DeMint...There has to be some level of pragmatism inside the party leadership

I never followed the Castle campaign that closely, but it seems to be that Castle deserves at least some of the blame for running a terrible campaign. Pat Caddell pointed out on a Ricochet podcast that Castle completely misread the primary electorate, and should have "thrown himself" at the tea party over the summer. Another idea? Maybe Mike Castle should have shown some "pragmatism" by picking up the phone and calling Jim DeMint. If he had done so, maybe he would be on his way to the Senate.

There has also been a lot of talk about the fact that the tea party Senate candidates fared poorly on Tuesday night. That is not exactly true considering what happened in Wisconsin, Florida, Pennsylvania, and Kentucky.

A clearer pattern is the fact that the self funded billionaires and hundred-millionaires all lost - Fiorina, Whitman and McMahon. I've read that the GOP backed these candidates in part based on their willingness and ability to fund their own campaigns.

But is that really the way to go? I mean, look at Scott Brown. He won in a deep blue state not because he was a billionaire, he won because he was a highly attractive, highly effective candidate.

And perhaps there is a conflict of interest here. Political consultants may love candidates like Meg Whitman because she can afford to spend $160 million on airtime and political consultants. Reports show that Mike Murphy was paid something like $90K a month to work on the Whitman campaign.

But according to Pat Caddel, Meg Whitman was completely mismanaged and overexposed. He argued that the campaign was designed to get consultants rich and not necessarily get her elected.

Perhaps there is an issue of incentives - an agency problem as they call it. Maybe political consultants don't always have the same incentives as the party or the candidates.

So maybe going forward we should be more "pragamatic" as Mr. Murphy likes to say, and focus on nominating candidates that can actually attract votes, rather than nominating candidates purely based on their ability to afford the likes of Mike Murphy.

Ed Shultz: Rand Paul hangs out with the birthers

2010-11-04T09:49:00.005-04:00

"He's just the kind of guy that would keep the birth certificate conversation alive." -Ed Schultz

That's right, the guy who sincerely believes that we are in the midst of a debt crisis, is going to spend his time talking about birth certificates.

I think what they were really disturbed by was Rand Paul's Goldwater-esque acceptance speech:

America will remain great if and when we understand that government cannot create prosperity. We have to understand that it comes from ourselves. It does not come from government. We are the creators of that prosperity. Until we understand that, we cannot truly defend and protect our liberties.

Some thoughts from last night

2010-11-03T14:18:00.010-04:00

I got two of my four wishes from last night. That's about what I expected, although Tancredo was never really close.

And I’m most happy about Rubio, Toomey and Rand Paul winning their elections. They are principled, smart, articulate, and persuasive. The Democrats would have loved to have Sharron Angle around to beat up on, but they won't get that opportunity. Instead, they will have to deal with these three very formidable Freshman Senators, and that will present a real problem for them.

And on Sharron Angle, she was just a weak candidate, and yes, maybe the tea party movement got carried away with her nomination. But with the tea party wave, yes, you might get some weaker candidates like Angle and O’Donnell, but you also get Paul and Toomey and Rubio and Johnson up in Wisconsin. I don't think in the real world you can get one without the other.

In the real world, the options are more like:

Option 1 (5 Republicans):Arlen Specter (yes, I know he switched parties, but stick with me), Charlie Crist (FL), Mike Castle (DE), Sue Lowden (Nevada), and Trey Greyson (KY), or

Option 2 (3 Conservatives and 2 Democrats):Pat Toomey (R), Marco Rubio (R) , Rand Paul (R), Harry Reid (D), and Chris Coons (D)

To me, option 2 is clearly the superior result, and that's the way it turned out. So overall, it was a great result, even in the Senate.

Oh, and another great result: the hot chick who drives too fast, can handle a weapon, and wants to slash federal spending is now the new Congresswoman from South Dakota.

Fear the boom and bust returns

2010-11-02T17:07:00.002-04:00

A new video has been posted on youtube featuring an interview with the stars and creators of the Keynes vs. Hayek "Fear the Boom and Bust" music video.

The director of the video John Papola has this wonderful insight into the difference between Hayek and Keynes:

Too much aggregation is a problem that is pretty pervasive in the way these things are talked about. We heard about having too much slack capacity. Well, slack capacity to make what? What are we making with this slack capacity? If it’s capacity to build more houses that we don’t need, maybe that slack capacity doesn’t tell us anything about what’s going on.

I think Hayek looked at the world in terms of coordination, producing specific things for a specific demand. It’s not blobs of GDP that we buy and sell, and if we stop buying them, somebody else can buy them for us.

My wish list for tonight

2010-11-02T16:35:00.005-04:00

Below is my wish list for tonight, in increasing unlikelihood.

- Pat Toomey wins in PA by 5+, Rand Paul wins in KY wins by 10+, and Marco Rubio wins in FL by 15+
- 60+ seats in the House, including an Allen West victory in my home district
- Tom Tancredo wins the CO governorship, so I can see some heads explode
- Rob Steele defeats John Dingell and/or Sean Bielat defeats Barney Frank. How glorious would that be?

The race card...again

2010-11-02T10:56:00.011-04:00

Pulitzer prize winning columnist Eugene Robinson goes back to the race card one more time. He asks:

One thing that struck me from the beginning about the tea party rhetoric is the idea of reclaiming something that has been taken away.

...

Take it back from whom?...Again, who's in possession of the government right now, if not the American people? The non-American people? The un-American people?

...

I have to wonder what it is about Obama that provokes and sustains all this tea party ire. I wonder how he can be seen as "elitist," when he grew up in modest circumstances -- his mother was on food stamps for a time -- and paid for his fancy-pants education with student loans. I wonder how people who genuinely cherish the American dream can look at a man who lived that dream and feel no connection, no empathy. I ask myself what's so different about Obama, and the answer is pretty obvious: He's black.

The words that come to mind when reading this column are predictable, un-insightful, un-imaganitive, and unoriginal.

Here's a clue Eugene. Before he was elected, the President said he wanted to "fundamentally transform the United States." Once he got into office and started governing, it became apparent to many that he meant it.

The tea party movement is opposed to this "fundamental transformation". The tea party wants limited government.

As Chris Christie says, "That's the fight." It's a fight between people who want government limited, and the people who believe there should be no limitations on government power. It doesn't matter what color the President is. That has absolutely nothing to do with it.

Now I am going to go vote for the Latino for US Senate and the black guy for US Congress.

President to hecklers: Don't stop heckling, go heckle the Republicans

2010-11-01T08:51:00.009-04:00

What kind of President, when being heckled, doesn't ask the hecklers to stop heckling, but instead suggests they go heckle Republicans.

I put this in the same category as the "bitter clinger", "not thinking clearly", "you think they would be saying thank you", "Republicans need to sit in the back seat", "We're going to punish our enemies" comments. If I was an Obama supporter, I'd be shaking my head asking myself "What in the world is he thinking?"

Pat Caddel watched that video for the first time last night as a guest on Sean Hannity's show and said "This is not the guy people thought they voted for." Caddell and Doug Schoen elaborate on this point in this column:

Obama is conducting himself in a way alarmingly reminiscent of Nixon's role in the disastrous 1970 midterm campaign. No president has been so persistently personal in his attacks as Obama throughout the fall. He has regularly attacked his predecessor, the House minority leader and - directly from the stump - candidates running for offices below his own. He has criticized the American people suggesting that they are "reacting just to fear" and faulted his own base for "sitting on their hands complaining.

...

With the country beset by economic and other problems, it is incendiary that the president is not offering a higher vision for the nation but has instead chosen a strategy of rank division. This is an attempt to distract from the perceived failures of his administration. On issue after issue this administration has acted in ways that are weakening the office of the president.

The Tancredo Surge

2010-10-27T21:47:00.007-04:00

Get ready for heads to explode if this actually happens. Tom Tancredo is within the margin of error in the latest polling for the Colorado governor's race. As Glenn Beck said on his show today, if he wins, "what a message that would send".

Tancredo's number one issue of course is illegal immigration. Personally, I have mixed feelings on the whole illegal immigration issue. I see immigration as a free trade issue, and the fact that we have illegal immigrants is in large part due to the massive trade barrier that is our immigration policy. But I have always had a soft spot for Tom Tancredo. To him, illegal immigration issue is not a wedge issue designed to siphon off votes, it's a matter of principal.
Plus, he is a down the line conservative on all other issues, including economic issues, the role of government and Federalism.

Speaking of Federalism, on the Glenn Beck show today he discussed the idea of kicking off a 10th Amendment revolution. He describes it as an effort to "draw a line in the sand" when it comes to Washington's encroachment on the states.

The only thing that worried me was that he said the first person he is going to call to launch this effort is NJ Governor Chris Christie. Uh...I'm not so sure about that. A great way for Chris Christie's numbers to plummet would be for him to stop talking about teachers unions and the NJ fiscal crisis and start hanging out with Tom Tancredo.

Tancredo needs to give Christie some space to do what he doing up in NJ, and just maybe he will have the opportunity to move on and do it for the entire nation. So Tom, please don't call, and Gov Christie, if he does call, consider not answering.

Tea Party Extremist!

2010-10-26T09:31:00.002-04:00

Remember when the GOP establishment told us that we needed to nominate Charlie Crist?

Behold, this performance, by Marco Rubio in front of the Miami Herald editorial board.

Government should neither discourage or encourage risk taking

2010-10-25T09:24:00.009-04:00

Peter Robinson has an excellent post on supply side economics over at Ricochet. But he does include this statement which I take some issue with:

The government ought to encourage individuals to form enterprises, take risks, and invest.

One one hand, I understand what he is saying. The government is too often in the business of discouraging investment, work and risk taking. On the other hand, the idea that the government should be encouraging risk taking is problematic.

After all, the politician's favorite way to encourage risk taking is by putting taxpayers on the hook for losses. Whether these policies are explicit, (i.e. loan guarantee programs, deposit insurance, or other subsidies), or implicit (i.e. government sponsored enterprises such as Fannie and Freddie, the Federal Reserve's habit of flooding the banking system with liquidity every time Wall Street gets into trouble, or the broader notion of "too big to fail"), these policies distort the process by which the market prices risk. This leads to mal-investment, speculative bubbles, and ultimately, taxpayer bailouts. Exhibit A is the housing and financial crisis, as explained by Russ Roberts in his white paper entitled "Gambling with Other People's Money".

The amount of risk that should be financed in our economy is ultimately something that should get settled in the capital markets through millions upon millions of negotiated transactions between those who need capital (business enterprises) and those who provide capital (investors). The idea that politicians and bureaucrats are capable of shaping, molding and fine tuning the capital markets without doing harm is the kind of thinking that will lead to the next financial crisis.

Is Peter Robinson arguing for subsidies and loan guarantees and too big to fail? Not at all. My point is that if we are ever going to win the historical argument over what caused the financial crisis, I think we should get the language right.

UK Economy headed for depression

2010-10-21T11:55:00.010-04:00

Well, that is what has to happen now that they've announced that they are:

cutting 500,000 government jobs, slashing spending by 25 percent, including a 19 percent cut in welfare spending, and changing the state pension age for men and women to 66 by the year 2020.

I guess this should be called de-stimulus. Think of all that money that's going to be "taken out of the economy". And what's going to happen to economic growth when the "multiplier" is applied to a negative number? Are they crazy? Haven't the Brits read Paul Krugman?

[Update]
Predictably, Krugman is now saying that the UK is likely headed toward a severe recession.

What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.

Jeremy Warner has this response in the UK Telegraph:

The big point missed by those who think elevated public debt doesn’t matter is that these periods of excessive debt utterly crippled the UK economy. Indeed, Britain’s decline through the twentieth century as an economic superpower directly correlates with increased indebtedness.

Michelle Obama violates election laws, ho-hum

2010-10-14T23:28:00.005-04:00

Drudge is reporting that after early-voting in Chicago, the First Lady stuck around the polling place to ask voters to support her hubby's fellow Dems. Said one voter, "She was telling me how important it was to vote to keep her husband's agenda going."

Drudge notes that this activity would seem to run afoul of Illinois Statutes Section 17-29(a), which (he writes) provides: "No judge of election, pollwatcher, or other person shall, at any primary or election, do any electioneering or soliciting of votes or engage in any political discussion within any polling place [or] within 100 feet of any polling place."

These sorts of statutes are common. Florida's version prohibits any person from attempting to "solicit voters" inside a polling place or within 100 feet of the entrance to a polling place. The election clerk assigned to each polling place is supposed to mark off the 100-foot no-solicitation zone before the polls open. "Solicitation" is defined broadly to include "seeking or attempting to seek any vote, fact, opinion, or contribution; distributing or attempting to distribute any political or campaign material, leaflet, or handout; conducting a poll [except exit polls]; seeking or attempting to seek a signature on any petition; and selling or attempting to sell any item."

The idea is to protect voters from being physically bullied, verbally browbeaten, or otherwise leaned on as they head into the polls. You know, like if a world-famous figure, say the spouse of the most powerful man in the free world, hung around telling voters whom they should vote for.

In all seriousness, it doesn't bother me too much that Michelle Obama talked up a few voters. It also does not surprise me when Democrats disregard election laws. In 2008, I served as a poll-watcher for the McCain-Palin campaign in a very heavily Democratic precinct in South Florida. A few weeks before election day, the campaign hosted a training for lawyers like me who were to serve as poll-watchers. They explained that, as poll-watchers we weren't there to promote our candidate (that was forbidden by the law prohibiting "solicitation"). Nor were we to offer any kind of advice to voters (that was a job for the election clerks and their deputies) or even speak to them. Rather, by law, our only role at the polling place was to observe, make sure election laws were being followed, and report any problems to the election clerk. Apparently the Obama campaign didn't tell this to its own poll watchers.

On election day, my counterpart from the Obama campaign sat next to the entrance to the polling both (within 5 feet of the entrance, much less 100), with a large, professional looking sign with something like VOTING RIGHTS HOTLINE in block letters, inviting them to call 1-800 number if they encountered problems trying to vote. I called the 1-800 number -- it was the Obama campaign's national headquarters, which answered with an automated greeting from the candidate. He also wore a cap emblazoned with "Florida Election Lawyer." When I asked him about this, he admitted that he lived in New York, not Florida, he was not admitted to practice law in Florida, and he did not practice election law. I also saw him speak with several voters well within the 100-foot limit.

I mentioned all of these things to the election clerk, who seemed markedly unfamiliar with the regulations it was her job to enforce. But after much cajoling, she asked the Obama poll-watcher to move, and after she asked him several times, he did so, at least for a little while, before returning to his (illegal) post. One saving grace was that he was incredibly lazy, and spent most of the day just sitting slumped under his sign. He was a cheater but not a very good one.

After consulting with the McCain election-law headquarters, I figured it was not something worth going to the mattresses over. The precinct was something like 99.5% Democrat, and the campaign's legal team had more important things to worry about, and so did the Florida Bar. And the fact is, the guy wasn't influencing anyone's vote with his sign or his stupid hat. But for me it was a little lesson in at least some Democrats willingness to ignore the rules on election day.

If you are in the tea party, you are not allowed to collect Medicare

2010-10-13T13:28:00.020-04:00

A common critique from some on the left about the tea party movement is that many in the movement are hypocrites for saying we need limited government, while at the same time benefiting from various government programs. This article in Rolling Stone magazine promotes this theme by talking about how Senate candidate Joe Miller received benefits from something called the Denali KidCare program back in the 90's, but has since publicly criticized the program. Miller defended himself by saying that he is opposed to Federal funding of the program, not to the program in general.

The author then launches into a wider critique of the tea party movement.

I can’t even tell you how many people I interviewed at Tea Party events who came up with one version or another of the Joe Miller defense. Yes, I’m on Medicare, but… I needed it! It’s those other people who don’t need it who are the problem!

Or: Yes, it’s true, I retired from the police/military/DPW at 54 and am on a fat government pension that you and your kids are going to be paying for for the next forty years, while I sit in my plywood-paneled living room in Florida watching Fox News, gobbling Medicare-funded prescription medications, and railing against welfare queens. But I worked hard for those bennies! Not like those other people!

This whole concept of “good welfare” and “bad welfare” is at the heart of the Tea Party ideology, and it’s something that is believed implicitly across the line. It’s why so many of their political champions, like Miller, and sniveling Kentucky rich kid Rand Paul (a doctor whose patient base is 50% state insured), and Nevada “crazy juice” Senate candidate Sharron Angle (who’s covered by husband Ted’s Federal Employee Health Plan insurance), are so completely unapologetic about taking state aid with one hand and jacking off angry pseudo-libertarian mobs with the other.

(He really zinged Rand Paul on that one...ha, ha..."sniveling rich kid". And Sharon "crazy juice" Angle...stop, please stop. I am falling out of my chair.)

Anyway, on the surface, this argument seems clever, but if you use your brain for a second, you realize it makes no sense. First of all, it would be like me saying that anyone who was against the Bush tax cuts should refuse to accept them and send the money back to the US Treasury immediately; or that anyone who is demanding that we end our "addiction" to oil should not only refuse to drive a car, but should also refuse to buy any product that was ever placed on a truck or a plane; or that someone who believes in socialized medicine should refuse any treatment or medicine that was ever developed in the pursuit of profit.

But more importantly, does this guy realize that when the government takes over a function that was otherwise provided by business and/or charity, that it then puts those businesses and charities out of business? With Medicare, for example, the government essentially destroyed the private market for health insurance for the elderly. There are no private options. So what else are people supposed to do? Plus, people are forced to participate. They have to pay in, there is no opt out. So, is it really hypocritical for someone to oppose the existence of Medicare, but then also kindly ask their representatives in Congress to make sure that the government has the resources necessary to ultimately pay for the Medicare benefits that were promised to them - benefits that they were forced to pay for over the course of their entire career? I don't think so.

And on that Sharon Angle thing, getting health insurance through your state government, when you are employed by the state government and it's part of your entire employee compensation package, is not the same thing as receiving a government benefit. It's not even close.

This should make Paul Krugman happy

2010-10-11T09:50:00.005-04:00

Greg Mankiw has a wonderful, must read essay today in the NY Times.

I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article. I turn down most but accept a few.

And I acknowledge that my motives in taking on extra work are partly mercenary. I don’t want to move to a bigger house or buy that Ferrari, but I hope to put some money aside for my three children. They will never lead lives of leisure, but I hope they won’t have to struggle to find down payments to buy their own homes or to send their kids to college.

Suppose that some editor offered me $1,000 to write an article. If there were no taxes of any kind, this $1,000 of income would translate into $1,000 in extra saving. If I invested it in the stock of a company that earned, say, 8 percent a year on its capital, then 30 years from now, when I pass on, my children would inherit about $10,000. That is simply the miracle of compounding.

Now let’s put taxes into the calculus. First, assuming that the Bush tax cuts expire, I would pay 39.6 percent in federal income taxes on that extra income. Beyond that, the phaseout of deductions adds 1.2 percentage points to my effective marginal tax rate. I also pay Medicare tax, which the recent health care bill is raising to 3.8 percent, starting in 2013. And in Massachusetts, I pay 5.3 percent in state income taxes, part of which I get back as a federal deduction. Putting all those taxes together, that $1,000 of pretax income becomes only $523 of saving.

And that saving no longer earns 8 percent. First, the corporation in which I have invested pays a 35 percent corporate tax on its earnings. So I get only 5.2 percent in dividends and capital gains. Then, on that income, I pay taxes at the federal and state level. As a result, I earn about 4 percent after taxes, and the $523 in saving grows to $1,700 after 30 years.

Then, when my children inherit the money, the estate tax will kick in. The marginal estate tax rate is scheduled to go as high as 55 percent next year, but Congress may reduce it a bit. Most likely, when that $1,700 enters my estate, my kids will get, at most, $1,000 of it.

HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working. "

90%! I think about this stuff all of the time and never quite thought about it this way. Brilliant.

Can't we use this somehow?

2010-10-07T09:37:00.001-04:00

This still amazes me.

My final thought on the fire department story

2010-10-07T09:05:00.004-04:00

Dave Henderson at Econlog references a private fire service company in Arizona called Rural/Metro Fire Department. Their website is worth taking a quick look at. Henderson points out that this company will respond to calls from non-subscribers, but charges a multiple of their annual fee to provide the one time service.

Furthermore, I imagine this privately owned fire service, with a reputation to protect, would go out of its way to avoid the bad publicity that would come with sitting idly by as someone's house burns down.

On the other hand, the government run fire department in Tennessee, with its monopoly status, and its government employees blindly following dumb bureaucratic rules, and its lack of foresight on how to handle calls from non-subscribers, allowed the house to burn down.

And libertarians are supposed to be on the defensive on this one?

Fire story does not work as an attack on libertarianism

2010-10-06T14:16:00.007-04:00

John Stossel made this point on O'Reilly last night, and Dave Henderson makes a similar point over at Econlog. In terms of this episode demonstrating the problem with libertarianism, there is one major problem: the fire-department was a government-run fire department. If there had been a private sector alternative, most likely, a for-profit fire service would have been happy to put out the fire for say a five or ten thousand fee. Instead, the fire fighters were adhering to overly rigid, bureaucratic rules.

Dave Henderson writes:

It's bizarre for a statist to attack libertarians when his own statist alternative works out badly...What's next... blaming libertarians because government schools are so lousy?

Firemen watch as man's house burns down

2010-10-05T12:33:00.030-04:00

There has been a lot of discussion about this story. Over at Volokh, Orin Kerr asks readers if paying for the fire-fighting service that the man neglected to pay for should be made mandatory, and over at The Corner, Dan Foster says that this episode is "bad for libertarians", and argues that the fire department should have tried to stop the fire since the homeowner was willing to pay full price for the service.

I agree that it's not exactly the best PR moment for the cause of libertarianism. I guess I wish that the fire department had stopped the fire and then sent a bill for every last dime worth of expenses and trouble they had incurred. And then if the homeowner failed to pay, they perhaps should have been to able to go to the man's insurance company to seek reimbursement (although that is a legal issue that I am not all that familiar with).

Which brings me to my main point. The other important player in this whole equation is the insurance company that was insuring the man’s home. Apparently, the insurance company is on the hook for the loss.

My guess is that insurance companies are now going to want to change their contracts to include a requirement that policy holders pay for a fire-fighting service if it's not otherwise provided. It would work the same way that a mortgage contract works, where the lender requires the borrower to maintain a homeowners insurance policy. The insurance company could even set up an escrow account on behalf of the homeowner to make sure the fee is paid.

So no, a government mandate is not necessary. The marketplace will work this out in about a second, assuming the state insurance board approves such a change and the mayor and the town hold firm on this policy.

[Update]

Arnold Kling, in arguing in favor of private, for-profit fire service , says:

I think that the solution to the problem of how to get people to pay the membership fee would come from fire insurance. I would assume that if you want to get fire insurance, the fire insurance company will be much more receptive to writing a policy if you maintain your membership fees. Mortgage lenders, in turn, will require fire insurance. As long as the vast majority of people who own their homes free and clear also obtain fire insurance, not many people would go without fire protection in this scenario.

Taxing the "rich"

2010-10-04T21:01:00.003-04:00

I think we need to change the language. It's not an increase in taxes on "the rich", it's an increase in taxes on:

1) people who hire people
2) people that we buy stuff from
3) people who buy stuff from us, and/or
4) people who lend money or provide capital to people who do any or all of the above.

Socialism's war on the real world, part 402 -- Insurance

2010-10-02T10:31:00.005-04:00

Adam Freedman at Richochet reports:

The Advocate General of the European Union's highest court has declared that insurance companies shouldn't be able to charge men and women different rates for products.
The suit was brought by plaintiffs complaining about men having to pay more for insurance. Advocate General Juliane Kokott didn't deny that insurers charge different rates based on actuarial facts -- women live longer, drive more safely, etc. -- but nonetheless insists that such differential pricing violates the EU's anti discrimination codes. The Advocate General's opinion isn't binding on the court, but it's likely the court will follow her.

Here's a link to the Wall Street Journal article cited by Freedman (subscription required).

This is just another chapter in the Left's long war on real life. The Left's insistence that any unequal outcome (such as higher insurance rates for men than for woman) is evidence of discrimination leads to nonsense such as Kokott's report. Kokott admits that the insurers charge different rates due to actuarial facts, not discrimination. And yet, she finds that the insurers are in fact committing illegal discrimination. The maddening thing is that, as a matter of statutory interpretation, she may be correct -- the EU anti-discrimination codes may be so over broad as to outlaw decisions that are rational, well-intended, and probably essential to a well-functioning, non-discriminatory insurance regime.

What do the EUrocrats think is the alternative to insurers' setting rates according to actuarial statistics derived from real life differences in the way men and woman live? Do they imagine that banning the actuarial tables will result in lower rates for men? It seems to me that tailoring insurance rates according to how people actually live is a protection against racial or gender bias, in that they provide a way for insurers to base their rates on real life rather than assumptions.
It's not a perfect system (some men are very safe drivers, some women are very risky ones), but it allows for a degree of tailoring a system that ignores gender differences would not.

One hopes that the supergeniuses devising the Obamacare regs do not draw inspiration from Ms. Kokott.

Rush on the "Family Guy"

2010-10-01T12:20:00.006-04:00

Here's a preview of Sunday night's forthcoming Family Guy episode, starring Rush Limbaugh.

Rush groupie: "Love the Hummer Rush, how do you like it?"

Rush: "It is the best. I'm not saying that you have to be gay to drive something else, but if you drive something else, it probably means you are a guy that likes to pleasure other men sexually."

As Rush says in the promotional interview, "If you can't laugh at yourself, there's no reason to be alive."

This week's signs of the apocalypse

2010-09-30T17:50:00.004-04:00

LaBron James says race was a factor in the public backlash over the way he left Cleveland for the Miami.

Gap sells acid-washed, pre-faded blue jeans for toddlers. "This staple is both put-together and fun!"

The guy who invented the Segway died when his Segway rolled off a cliff. (This is so horrible it isn't even funny and does not belong in this silly post).

A story appeared in a major political publication with the subheadline: Ring legend Mick Foley explains how Tori Amos changed his life.

President Obama, in a fawning interview with Jann Wenner in this month's Rolling Stone, kinda sorta admits that his job involves more than just doing the opposite of whatever George W. Bush did; and in so doing reveals that he may have been the least thoughtful presidential nominee in history:

What has surprised you the most about these first two years in office? What advice would you give your successor about the first two years?
Over the past two years, what I probably anticipated but you don't fully appreciate until you're in the job, is something I said earlier, which is if a problem is easy, it doesn't hit my desk. If there's an obvious solution, it never arrives here — somebody else has solved it a long time ago. The issues that cross my desk are hard and complicated, and oftentimes involve the clash not of right and wrong, but of two rights. And you're having to balance and reconcile against competing values that are equally legitimate.

Oh, the irony

2010-09-30T15:46:00.010-04:00

"Finding $700 billion is not easy." - President Obama, Wednesday September 29, 2010

Seriously? Since when has he had problems finding $700 billion? He's really killing it at these town hall events.

Thatcherism

2010-09-30T11:48:00.004-04:00

A Margaret Thatcher quote referenced in Claire Berlinksi's new book, There Is No Alternative: Why Margaret Thatcher Matters.

We must not focus our attention exclusively on the material, because though important, it is not the main issue. The economic success of the Western World is a product of its moral philosophy and practice. Economic results are better because the moral philosophy is superior. It is superior, because it starts with the individual, with his uniqueness, his responsibility, and his capacity to choose.... Choice is the essence of ethics.... Good and evil have meaning only insofar as man is free to choose."

There is no sales tax provision in Obamacare

2010-09-28T16:07:00.006-04:00

There is a misleading email going around that is getting people riled up regarding the health care bill. While I am generally in favor of getting people riled up in support of a good cause, there is a problem with this one.

The email says the following:

Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after obama's re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes your November and 2012 votes more important? Oh, you weren't aware this was in the obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either (result of clandestine midnight voting for huge bills they've never read). AND, there are a few other surprises lurking.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book.

People have the right to know the truth because an election is coming in November!

First of all, there is no sales tax provision. Yes, there is a 3.8% Medicare surtax on investment income, and yes investment income can include capital gains from the sale of real estate. But it is not a tax on gross proceeds, which would be like a sales tax.

Second, even if a person does have some capital gains from the sale of a property, if the particular piece of real estate happens to be a "qualified personal residence", the first $500K (married)/$250K (single) in capital gains is exempt from all tax, including this new tax.

And third, the 3.8% Medicare surtax only applies to those making more than $250K (married)/$200k (single) in income.

But I do believe that the 3.8% Medicare surtax on investment income in general is a big problem. It’s a tax on capital and will encourage those people who have capital to spend more time and effort trying to avoid taxes rather than putting their capital toward its most profitable and productive use.

And even more troubling, the $250K/$200K threshold is UNINDEXED, meaning there is no inflation adjustment. So it’s going to impact more and more people over time. Eventually everyone.

Wall Street is shrinking

2010-09-28T10:05:00.011-04:00

Yesterday, the headline on Yahoo Finance was Get Ready For The Fixed Income Bloodbath. The short article described the increasingly dire employment situation on fixed income trading and brokerage desks throughout Wall Street.

Fixed income desks are going to be subject to severe layoffs, according to a highly placed Wall Street insider with information about the plans of his firm and the plans of rivals. "It's going to be a blood bath. Volume is down for everything except Treasuries and Munis. These guys aren't making money and soon they'll be out of their jobs."

Today, Andy Kessler, a frequent columnist at WSJ writes:

“In my estimation, there are too many traders, bankers and salesmen to support the new level of business. Wall Street firms also have too much capital that they scramble to generate returns on. Both need to shrink over the next five years."

According to Arnold Kling over at Econlog, this is what the financial crisis was largely about. In other words, it was the market's way of shouting "the financial sector is too big and it needs to shrink". In the midst of the financial crisis back in September 2008, Kling wrote in an open letter to Ben Bernanke:

Today, it is clear that the U.S. financial sector needs to shrink. As another one of your former classmates, Ken Rogoff, has pointed out, the financial sector has accounted for an unusually large share of corporate profits in recent years. It is time for this country to shift talent and capital elsewhere. In order for that to happen, some firms in the industry need to tighten their belts, some weaker firms need to merge with stronger firms, and the weakest firms need to fail.

I also recall around that time one of the regulars on CNBC's Fast Money saying something to the effect of: "For too long, we have had way too much financial engineering and not enough real engineering. That's going to change."

So maybe that is what is happening. Despite TARP and despite 0% Fed Funds rates that usually ensure bank profits, profits and stock prices are down on Wall Street, which is the market's way of telling us that Wall Street still needs to downsize. And it looks like it may be happening. But fortunately for those in the cross-hairs, it's just happening very slowly thanks to TARP and 0% Fed Funds rates.

The Blaze.com: "Chris Christie's greatest hits mix"

2010-09-24T13:16:00.012-04:00

As with any greatest hits collection, some fans may be disappointed to discover that one of their favorite tracks has been left off. For me, it's the track entitled "You punch them? I punch you.":

The tax issue is about property rights

2010-09-24T09:30:00.002-04:00

I mentioned that here, and here is a post from John Hood making a similar point:

I know it’s been said before, but it merits repeating: the debate about taxes in general, and about extending the Bush tax cuts in particular, only sounds like the issue in question is fiscal. It’s not. The Right and Left differ on tax policy primarily because of a difference in values.

Broadly speaking, the Right believes that your stuff is yours. The Left believes your stuff doesn’t really become your stuff until the government says it is. So the Right sees taxes as a way to pay for necessary government services. The Left sees taxes as an instrument of social control and redistributive justice.

...

I agree with the supply-side argument that virtually all Americans benefit from the growth effects of keeping marginal tax rates low. But the most important reason to extend the tax cuts for everyone is that it is wrong for the government to steal and redistribute income.

Chris Christie on Squawk Box

2010-09-22T09:57:00.005-04:00

Chris Christie spent yesterday morning on CNBC's Squawk Box and was fantastic as usual. Watch this segment where he discusses the idea of tax policy and uncertainty. When the Wall Street econ geek makes the argument that there was uncertainty during the Reagan years because taxes were cut more than people thought they were going to be, Christie responds:

That is such a false, fake argument. I mean seriously...The uncertainty of lower taxes is something people can deal with. The uncertainty of not knowing if you can meet your payroll, the uncertainty of not knowing what health care is going to cost, brings paralysis.

My favorite quote from Christie on yesterday's show was his response to the question about his manner and his tell-it-like-it-is approach: "My mom's Sicilian, so I don't know any other way to act."

"It's an important distinction"

2010-09-22T07:48:00.005-04:00

Here is Chris Matthews commenting on the President saying that tax cuts are gifts.

He talked today for example about people getting a check from the government in the form of a tax cut. That's not the way it works!

Obama: Tax cuts are "gifts"

2010-09-20T15:15:00.013-04:00

The President brought up this idea that tax cuts need to be paid for today, but he also said something even more revealing and outrageous. When discussing the idea of extending the tax cuts for those making more than $250K (married)/$200K (single), he said that "we can't give $700 billion away to some of America's wealthiest people."

So not only do lower taxes need to be "paid for", we really should look at any tax cut as a gift. It really does sound to me like he believes that all income and wealth produced in an economy is by default property of the government.

Which brings me to another point. Many on our side are pointing out that raising taxes in a recession is bad economic policy. It is, but is that really the point? Doesn't that imply that it is okay to raise taxes when times are good?

This discussion and debate needs to be framed not it terms of "not raising taxes in a recession", it needs to be framed in terms of property rights. If there was ever a time the American people might be willing to hear such an argument, it might be now.

Dick Morris: Not the time to triangulate

2010-09-16T09:47:00.009-04:00

Dick Morris was on Hannity last night and made the case that when the biggest issue to voters is deficits and fiscal issues, being on the "far right" is not a detriment like it can be with other issues. On the contrary, being a right wing conservative can be a benefit even in the context of a general election. Why? Because if voters are looking for someone who will cut spending and reduce the size and scope of government, and all of the candidates are promising to do so, voters know that only the conservative candidate is being sincere. When it comes to spending and deficits, he says "it's not about left vs. right, it's about sincerity vs. insincerity".

Say what you want about "Mr. Dickmorris.com", but occasionally he arrives at some very interesting insights, and I think this is one of those times.

[Update]

Here is the link to Dick Morris's column on the subject, and here is the part worth reading:

When social issues like abortion, gays, and guns dominate the political discourse, moderates have a big advantage. Voters in these times tend to measure themselves on a left to right spectrum and find those flanked sharply to their right to be extremist on these issues and reject their candidacies.

But these days, social issues are in remission and economic/fiscal problems have, understandably, taken center stage. In this environment, purists of the right have a big advantage because nobody doubts the sincerity with which they embrace the goals of limited government, low taxes, and reduced spending. Politicians of all stripes – including most Democrats – vow allegiance to them as does the overwhelming majority of the electorate. In this environment, the distinctions of left and right give way to the difference between sincerity and insincerity, leaving the voters to judge. With candidates like Sharron Angle in Nevada or Christine O’Donnell in Delaware or DioGuardia in New York, voters don’t have to guess. They know real conservatives when they see them.

Also, this is where the nickname "Mr. Dickmorris.com" came from.

The Rush Limbaugh theory on Mark Sanchez's poor performance

2010-09-14T17:23:00.007-04:00

Ines Sainz, in a Samson and Delilah sort of way.

After watching this CBS interview, it appears that the whole team was distracted.

Lileks on the power of Fox News

2010-09-14T13:50:00.003-04:00

This from the comment section over at Ricochet:

I still remember the first time I stumbled across Fox news - I went into a fugue state, stood stock-still, wet myself, then lost 48 hours, after which I found myself on the lawn burning back issues of the New Republic. Even the ones in which I appeared. I don't know what kind of mind-control beams those guys use, but they are good. - James Lileks

Mike Barnicle on Boehner: "How is it that he ended up as a Republican?"

2010-09-13T09:33:00.010-04:00

That was Mike Barnicle's response after watching Luke Russert's piece about John Boehner's working class background. Russert traveled to Boehner's hometown of Reading, Ohio, visiting the small home that Boehner lived in with his 11 brothers and sisters, and the family owned tavern that he used to scrub down for 4 or 5 hours at the crack of dawn each Saturday morning. Russert also explains how Boehner took 7 years to complete his undergraduate degree at Xavier because he was working full time during the day just to put himself through college.

As for Barnicle's response, it was typical, honest and revealing. For many, it is inconceivable how someone from a working class background could eventually become a conservative Republican.

Congratulations to Russert for doing the piece. It is devastating to caricature that the left is trying to create about the Minority Leader.

Watch the video here.

By the way, like I said, I love Boehner!